<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for
Use of the Commission
Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
POGO PRODUCING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
________________________________________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
POGO PRODUCING COMPANY
PAUL G. VAN WAGENEN
CHAIRMAN, PRESIDENT &
CHIEF EXECUTIVE OFFICER
March 24, 1998
Dear Shareholders of Pogo Producing Company:
You are cordially invited to attend the 1998 Annual Meeting of Shareholders
of Pogo Producing Company (the "Company"), which will be held in the Century II
Room, Renaissance Houston Hotel, Six Greenway Plaza, Houston, Texas 77046, on
Tuesday, April 28, 1998, at 10:00 a.m., CDT (Houston time).
At the meeting you will be asked to consider and vote upon: (1) election of
three directors, each for a term of three years; (2) ratification of
the appointment of independent public accountants to audit the financial
statements of the Company; and (3) such other business as may properly come
before the meeting or any adjournment thereof.
We hope that you will find it convenient to attend the meeting in person.
However, whether or not you expect to attend, in order to assure your
representation at the meeting and the presence of a quorum, please date, sign
and promptly mail the enclosed proxy. A return envelope is provided, and no
postage need be affixed if mailed in the United States.
Sincerely,
/s/ Paul G. Van Wagenen
Paul G. Van Wagenen
Chairman of the Board
5 GREENWAY PLAZA, SUITE 2700 HOUSTON, TEXAS 77046-0504
P.O. BOX 2504 HOUSTON, TEXAS 77252-2504
713/297-5000 FAX 713/297-5100
<PAGE>
POGO PRODUCING COMPANY
P.O. BOX 2504
HOUSTON, TEXAS 77252-2504
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1998
------------------------
TO THE SHAREHOLDERS OF
POGO PRODUCING COMPANY:
Notice is hereby given that the Annual Meeting of Shareholders of Pogo
Producing Company (the "Company") will be held at the Century II Room,
Renaissance Houston Hotel, Six Greenway Plaza, Houston, Texas 77046,
on Tuesday, April 28, 1998, at 10:00 a.m., CDT (Houston time), for the
following purposes:
1. To elect three members of the board of directors to serve until the
2001 annual meeting;
2. To approve the appointment of Arthur Andersen LLP, independent
public accountants, to audit the financial statements of the Company
for the year 1998; and
3. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 6, 1998, are
entitled to notice of and to vote at the meeting or any adjournment thereof.
You are cordially invited to attend the meeting in person. Even if you plan
to attend the meeting, however, you are requested to sign, date and return the
accompanying proxy as soon as possible.
By Order of the Board of Directors,
/s/ Gerald A. Morton
GERALD A. MORTON
Corporate Secretary
<PAGE>
POGO PRODUCING COMPANY
5 GREENWAY PLAZA, SUITE 2700
HOUSTON, TEXAS 77046-0504
713/297-5000
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the board of directors (the "Board of Directors") of Pogo Producing
Company (the "Company") to be voted at the Annual Meeting of Shareholders to be
held at the time and place and for the purposes set forth in the accompanying
notice.
This proxy statement and the accompanying proxy card are being mailed to
shareholders beginning on or about March 24, 1998. The Company will bear the
costs of soliciting proxies in the accompanying form. In addition to the
solicitation of proxies by mail, proxies may also be solicited by telephone,
telegram or personal interview by officers and regular employees of the Company.
The Company also expects to retain D.F. King & Co., Inc., a professional proxy
soliciting firm, to assist in the solicitation of proxies. The Company
anticipates that the fees and expenses it will incur for such service will be
less than $25,000. The Company will reimburse brokers or other persons holding
stock in their names or in the names of their nominees for their reasonable
expenses in forwarding proxy material to beneficial owners of stock.
VOTING OF SHARES
As of the close of business on March 6, 1998, the record date for
determining shareholders entitled to vote at the meeting, the Company had
outstanding and entitled to vote 36,245,212 shares of common stock,
par value $1.00 per share ("Common Stock"). The Company has no other class
of stock outstanding which is entitled to vote at the meeting. Each share
of Common Stock is entitled to one vote with respect to
the matters to be acted upon at the meeting. Shareholders are not allowed to
cumulate votes in the election of directors. The presence, in person or by
proxy, of the holders of a majority of the votes represented by outstanding
shares of Common Stock is necessary to constitute a quorum at the annual
meeting.
In accordance with Delaware law, a shareholder entitled to vote for the
election of directors can withhold authority to vote for all nominees for
director or can withhold authority to vote for certain nominees for director.
The affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by proxy, and entitled to vote at the annual meeting of
shareholders is required to elect directors to the Company's Board of
Directors and decide any proposals that may be brought before the meeting,
including the appointment of Arthur Andersen LLP to audit the financial
statements of the Company for 1998. Abstentions from proposals are treated
as votes against that particular proposal. Broker non-votes on proposals
are treated as votes withheld by the beneficial holders of the applicable
shares and, therefore, such shares are treated as not voting on the proposal
as to which there is the broker non-vote.
<PAGE>
All duly executed proxies received before the meeting will be voted in
accordance with the choices specified thereon. As to a matter for which no
choice has been specified in a proxy, the shares
represented thereby will be voted by the persons named in the proxy (1) FOR the
election as directors of the three nominees listed herein, (2) FOR the
appointment of Arthur Andersen LLP, independent public accountants, to
audit the financial statements of the Company for 1998 and (3) in the discretion
of such persons in connection with any other business that may properly come
before the meeting.
REVOCABILITY OF PROXIES
Shareholders have the unconditional right to revoke their proxies at any
time prior to the voting of their proxies at the annual meeting by (i) filing a
written revocation with the secretary of the Company at the address set forth on
the attached Notice of Annual Meeting of Shareholders, (ii) giving a duly
executed proxy bearing a later date, or (iii) attending the annual meeting and
voting in person. Attendance by shareholders at the annual meeting will not, of
itself, revoke their proxies.
ELECTION OF THREE DIRECTORS
Unless contrary instructions are set forth on the proxies, it is intended
that the persons named in the proxy will vote all shares represented by proxies
FOR the election as directors of Messrs. Jack S. Blanton, William L. Fisher and
Paul G. Van Wagenen, each of whom is presently a director of the Company.
If the three nominees are elected at this meeting, each will serve for a
term of three years ending in 2001. The Restated Certificate of Incorporation of
the Company provides for the classification of the Board of Directors into three
classes having staggered terms of three years each. The seven continuing
directors named below will not be required to stand for election at this
meeting, as their present terms expire in either 1999 or 2000. Should any of
Messrs. Blanton, Fisher or Van Wagenen become unable or unwilling
to accept nomination or election, the persons acting under the proxy will
vote for the election, in his stead, of such other person as the Board of
Directors may recommend. Management has no reason to believe that any of the
nominees will be unable or unwilling to serve if elected to office. Proxies
cannot be voted for more than three nominees, including those listed below.
2
<PAGE>
NOMINEES
The following table sets forth information concerning the three nominees for
election as directors at the 1998 Annual Meeting, all of whom are current
directors of the Company, including the business
experience of each during the past five years and the number of shares of
Common Stock beneficially owned by each based on information as of March 1,
1998.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
------------------------
PERCENT
NUMBER OF OF
NAME AND BUSINESS EXPERIENCE SHARES CLASS(2)
---------------------------- ------------ --------
<S> <C> <C>
JACK S. BLANTON has been President of Eddy Refining 47,000(3) *
Company since 1958 and Chairman of the Board of Houston
Endowment, Inc. since 1990. Mr. Blanton, 70, has served
as a Director of the Company since 1991 and currently
serves as the Chairman of its Compensation Committee.
Mr. Blanton also serves as a director of SBC
Communications Inc., Baker Hughes Incorporated and
Burlington Northern Santa Fe Corporation.
WILLIAM L. FISHER is and has been a Professor of 35,000(3) *
Geological Sciences and occupant of the Barrow Chair of
Mineral Resources at the University of Texas at Austin
for more than five years. Dr. Fisher, 65, has served as
a Director of the Company since February 1992 and
currently serves as a member of its Compensation
Commitee.
PAUL G. VAN WAGENEN has been Chairman of the Board, 57,304(4) *
President and Chief Executive Officer of the Company
for more than the last five years. Mr. Van Wagenen,
52, has served as a Director of the Company since
1988 and currently serves as the Chairman of its
Executive Committee.
</TABLE>
- --------
(1) Under regulations of the Securities and Exchange Commission (the "SEC"),
shares are deemed to be "beneficially owned" by a person if he directly or
indirectly has or shares the power to vote or to dispose of such shares,
whether or not he has any economic interest in such shares. In addition, a
person is deemed to own beneficially any shares as to which he has the
right to acquire beneficial ownership within 60 days, such as by exercise
of an option or by conversion of another security. Each person has sole
power to vote and dispose of the shares listed opposite his name except as
indicated in other footnotes. Percentages are rounded to the nearest one-
tenth of one percent.
(2) An asterisk indicates less than 1%.
(3) The shares listed include 35,000 shares subject to options
exercisable within 60 days.
(4) The shares listed include 11,417 shares held for Mr. Van Wagenen's account
under the Company's Tax-Advantaged Savings Plan, 20,000 shares subject
to options exercisable within 60 days, and 1,846 shares granted as
restricted stock to Mr. Van Wagenen during 1997 pursuant to the
Company's 1995 Long-Term Incentive Plan (the "Incentive
Plan") which have not yet vested.
3
<PAGE>
DIRECTORS WITH TERMS EXPIRING IN 1998, 1999 AND 2000
The following table sets forth information concerning the nine directors of
the Company not standing for re-election at the 1998 Annual Meeting,
including the business experience of each during the past five years and the
shares of Common Stock of the Company beneficially owned by each based on
information as of March 1, 1998.
CURRENT DIRECTORS
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED(1)
--------------------
NUMBER PERCENT OF
NAME AND BUSINESS EXPERIENCE OF SHARES CLASS(2)
---------------------------- --------- ----------
<S> <C> <C>
TOBIN ARMSTRONG has been engaged for more than five years 45,000(3) *
in the ranching business. Mr. Armstrong, 74, has served
as a Director of the Company since 1977 and currently
serves as a member of its Compensation Committee.
His present term expires in 2000.
W.M. BRUMLEY, JR., has been engaged for more than 76,994(4) *
five years in managing his personal investments. Mr.
Brumley, 69, has served as a Director of the Company
since 1977 and currently serves as the Chairman of its
Audit Committee. His present term expires in 1999.
JOHN B. CARTER, JR., was elected a director of Sterling 105,000(4) *
Bancshares in 1997. Previously, he was Chairman of
Houston National Bank for more than five years.
Mr. Carter, 73, was originally elected to the Company's
Board of Directors in 1977 and currently serves as a
member of its Executive and Audit Committees. His
present term expires in 1999.
WILLIAM E. GIPSON, has been an independent petroleum 64,052(5) *
geologist and the President of Wines of Pheasant
Ridge for more than five years. Mr. Gipson, 73, has
served as a Director of the Company
since 1970 and currently serves as a member of its Audit
Committee. His present term expires in 1998.
GERRIT W. GONG has been the Director of Asian Studies for 26,000(6) *
the Center for Strategic and International Studies, in
Washington, D.C. for more than five years. Dr. Gong, 44,
has served as a Director of the Company since 1993 and
currently serves as a member of its Audit Committee.
His present term expires in 2000.
J. STUART HUNT has been engaged for more than five 5,500(7) *
years in managing his personal investments. Mr. Hunt,
76, has served as a Director of the Company since 1983
and currently serves as a member of its Executive
and Audit Committees. Mr. Hunt is
also a director of CMS Nomeco Oil & Gas Co.
His present term expires in 2000.
FREDERICK A. KLINGENSTEIN has been Chairman of 2,168,906(8) 6.0%
Klingenstein, Fields & Co., L.L.C., an investment ad-
visory firm, since 1989. Mr. Klingenstein, 66, has
served as a Director of the Company since 1987 and
currently serves as a member of its Executive and
Compensation Committees. His present term expires
in 1999.
</TABLE>
(Table continued on following page)
4
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
OWNED(1)
--------------------
NUMBER PERCENT OF
NAME AND BUSINESS EXPERIENCE OF SHARES CLASS(2)
---------------------------- --------- ----------
<S> <C> <C>
NICHOLAS R. PETRY is Chairman of the Board of Petry 91,000(4) *
Company and Managing Partner of N.G. Petry Construction
Company and Mill Iron Ranches. He has been engaged in
such businesses for more than five years. Mr. Petry, 79,
has served as a Director of the Company since 1981 and
currently serves as a member of its Executive and
Compensation Committees. His present term expires in
1998.
JACK A. VICKERS has been the owner of The Vickers 40,100(4) *
Companies for more than five years. Mr. Vickers, 72, has
served as a Director of the Company since 1985.
His present term expires in 2000.
</TABLE>
- --------
(1) See note 1 to table entitled "Nominees."
(2) An asterisk indicates less than 1%.
(3) The shares listed include 25,000 shares subject to options
exercisable within 60 days and 3,300 shares held in a family partnership
in which Mr. Armstrong is the general partner.
(3) The shares listed include 30,000 shares subject to options exercisable
within 60 days.
(4) The shares listed include 40,000 shares subject to options exercisable
within 60 days.
(5) The shares listed include 25,000 shares of Common Stock subject to
options exercisable within 60 days and 3,000 shares of Common Stock held
in trust by Mr. Gipson for the benefit of his children.
(6) The shares listed include 25,000 shares subject to options exercisable
within 60 days.
(7) The shares listed include 5,000 shares subject to options exercisable
within 60 days.
(8) See note (3) to table entitled "Principal Shareholders." The shares
listed include 25,000 shares subject to options exercisable
within 60 days.
ORGANIZATION AND ACTIVITY OF THE BOARD OF DIRECTORS
The Board of Directors currently includes three standing committees, the
Executive Committee, the Audit Committee and the Compensation Committee.
From time to time, additional committees are appointed by the Board of
Directors as needed. As of March 20, 1998, the three standing committees
were composed of the following members: the Executive Committee was comprised
of Messrs. Van Wagenen (Chairman), Carter, Hunt, Klingenstein and Petry;
the Audit Committee was comprised of Messrs. Brumley (Chairman), Carter,
Fisher, Gipson and Gong; and the Compensation Committee was comprised
of Messrs. Blanton (Chairman),
Armstrong, Fisher, Klingenstein and Petry. The functions of the Audit
Committee are to recommend to the Board of Directors the firm of independent
public accountants to be engaged to audit the financial statements of the
Company, to review the plan and scope of the audit, to review with the auditors
and Company officers the Company's significant accounting policies and its
internal controls, and to have general responsibility in connection with
related matters. The Compensation Committee approves any form of compensation
for the Company's employees; administers the granting of employment contracts
to certain officers of the Company; and administers long-term compensation
under the Company's Incentive Plan, including the granting of stock
options and bonuses to certain key employees. The
Board of Directors has no standing nominating committee.
5
<PAGE>
The Board of Directors held four meetings during 1997. The Audit and
Compensation Committees each held two meetings during the year. The
Executive Committee held one meeting during the year.
No director attended fewer than 75% of the total
meetings held during 1997 by the Board of Directors or any committee
thereof on which he served.
COMMON STOCK OWNED BY DIRECTORS AND OFFICERS
The following table sets forth information regarding the Common Stock
beneficially owned by each of the Company's executive officers named in the
Summary Compensation Table that appears under "Executive Compensation" and all
of the directors and officers of the Company as a group based on information as
of March 1, 1998.
<TABLE>
<CAPTION>
NUMBER
OF SHARES
BENEFICIALLY PERCENT
NAME OWNED(1) OF CLASS(2)
- ---- ------------ -----------
<S> <C> <C>
Stuart P. Burbach..................................... 55,027 *
Kenneth R. Good....................................... 96,724 *
Radford P. Laney...................................... 36,273 *
Sammie M. Shaw........................................ 66,271 *
Paul G. Van Wagenen................................... 57,304 *
All directors and executive officers as a group (26
persons)............................................. 3,228,718 8.9%
</TABLE>
- --------
(1) See note (1) to table entitled "Nominees." The shares listed include: (a)
shares subject to options exercisable within 60 days as follows: Mr.
Burbach, 46,958 shares; Mr. Good, 77,521 shares; Mr. Laney, 24,333 shares;
Mr. Shaw, 38,874 shares; Mr. Van Wagenen, 20,000 shares; all directors and
executive officers as a group, 678,815 shares; (b) shares held under the
Tax-Advantaged Savings Plan as follows: Mr. Burbach, 6,327; Mr. Good,
16,237; Mr. Laney 9,836; Mr. Shaw, 2,279; Mr. Van Wagenen, 11,417; all
directors and executive officers as a group, 99,463 shares; and (c)
shares of restricted stock granted pursuant to the Incentive Plan that
have not yet vested as follows: Mr. Burbach, 1,230 shares, Messrs. Good
and Laney, 861 shares; Mr. Van Wagenen, 1,846 shares; all
directors and executive officers as a group, shares.
(2) An asterisk indicates less than 1%.
6
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, with respect to each person (or "group"
within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) who is known by the Company to be the
beneficial owner of more than 5% of the Common Stock of the Company, the number
of shares beneficially owned as of March 6, 1998 or, as applicable, the
date of filing of the document indicated in footnote (1), together with
the percentage of Company's shares outstanding as of March 6, 1998, which
such amount represents. To the Company's
knowledge, no person or group holds 5% or more of the Company's 5 1/2%
Convertible Subordinated Notes due 2006 (the "2006 Notes").
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
-----------------------
SHARES PERCENTAGE
------------ ----------
<S> <C> <C>
State Farm Mutual Automobile........................... 5,520,077(2) 15.2%
Insurance Company
and certain affiliates
One State Farm Plaza
Bloomington, Illinois 61701
Frederick A. Klingenstein,............................. 3,126,551(3) 8.6%
John Klingenstein and
Klingenstein, Fields & Co., L.L.C.
787 Seventh Avenue
New York, New York 10019
FMR Corp............................................... 2,856,964(4) 7.9%
and certain affiliates
82 Devonshire Street
Boston, Massachusetts 02109-3614
PRIMECAP Management Company............................ 2,804,600(5) 7.7%
225 South Lake Avenue #400
Pasadena, CA 91191-3005, and
Vanguard/PRIMECAP Fund, Inc
P.O. Box 2600, Valley Forge,
Pennsylvania 19482
Goldman Sachs & Co. and................................ 2,385,098(6) 6.6%
The Goldman Sachs Group, L.P.
85 Broad Street
New York, New York 10004
</TABLE>
- --------
(1) See footnote (1) to table entitled "Nominees." Information in the table and
footnotes is based on the most recent respective Statement on Schedule 13G
or 13D or amendment thereto filed by such persons with the Securities and
Exchange Commission (the "SEC"), except as otherwise known to the Company.
(2) Of such 5,520,077 shares, 3,180,145 shares are reported as beneficially
owned by State Farm Mutual Automobile Insurance Company, 957,766 shares by
State Farm Life Insurance Company, 1,235,766 shares by State Farm Insurance
Companies Employee Retirement Trust and 146,400 shares by State Farm Fire &
Casualty Company. The Schedule 13G filed jointly by such entities indicates
that such entities may be deemed to constitute a group but states that each
such person disclaims beneficial ownership as to all shares not
specifically attributed to such entity in this footnote and disclaims that
it is part of a group.
(Footnotes continued on following page)
7
<PAGE>
(3) Frederick A. Klingenstein and his brother John Klingenstein are affiliates
of Klingenstein, Fields & Co., L.L.C. Of such 3,126,551 shares, 3,126,551
shares are reported as beneficially owned by Klingenstein, Fields & Co.,
L.L.C., 2,143,906 shares by Frederick A. Klingenstein and 2,316,320 shares
by John Klingenstein. Frederick A. Klingenstein, John Klingenstein and
Klingenstein, Fields & Co., L.L.C. each reported shared dispositive power
with respect to 2,143,906 shares, 2,316,320 shares and 3,126,551 shares,
respectively, and shared voting power with respect to 1,751,666 shares,
1,605,828 shares and no shares, respectively. Frederick A. Klingenstein and
John Klingenstein each reported sole voting power with respect to 710,492
shares and 564,654 shares, respectively. In addition, Frederick A.
Klingenstein beneficially owns, and has sole voting and dispositive power
with respect to, 25,000 shares subject to options exercisable within 60
days. Frederick Klingenstein disclaims beneficial ownership of a portion of
the shares attributed to him above. John Klingenstein disclaims beneficial
ownership of a portion of the shares attributed to him above. Shares
attributed to each individual include shares owned jointly with his wife,
by trusts of which he is the trustee and by others who have granted him a
power of attorney to vote and dispose of shares.
(4) Of such 2,856,964 shares, 2,856,964 shares are reported as beneficially
owned by Fidelity Management & Research Company ("Fidelity"),
a wholly-owned subsidiary
of FMR Corp., as a result of acting as investment advisor to various
investment companies. The Schedule 13G states that Mr. Edward C. Johnson,
together with Abigail P. Johnson and various members of Mr. Johnson's
family and trusts for their benefit, through their ownership of voting
common stock and the execution of a shareholder's voting agreement, may
be deemed to form a controlling group with respect to FMR Corp. Mr.
Johnson, FMR Corp. and the funds controled by Fidelity have the sole power
to dispose of such 2,856,964 shares. Neither FMR Corp. nor Mr. Johnson has
the sole power to vote or direct the voting of such 2,856,964 shares,
which power resides with the board of trustees of Fidelity Funds. Fidelity
carries out the voting of the shares under written guidelines established
by the board of trustees of the Fidelity Funds.
(5) Of such 2,804,600 shares, PRIMECAP Management Company reported shared voting
and shared dispositive power with respect to all 2,804,600 shares and, in
a separate but related filing, Vanguard/PRIMECAP Fund, Inc. reported
shared voting and shared dispositive power with respect to 2,000,000 of
such shares.
(6) In the Schedule 13G filed jointly by Goldman, Sachs & Co. and The Goldman
Sachs Group, L.P. on February 14, 1998, each entity reported shared voting
power and shared dispositive power with respect to all 2,385,098 shares.
The Schedule 13G filed jointly by such entities further indicates
that each such entity disclaims beneficial ownership of the common shares
beneficially owned by managed accounts and certain investment limited
partnerships, of which a subsidiary of either entity is the general
partner or managing general partner, to the extent partnership interests
in such partnerships are held by persons other than such
entity or its affiliates.
8
<PAGE>
EXECUTIVE COMPENSATION
I. SUMMARY COMPENSATION TABLE. The following table (the "Summary Compensation
Table") sets forth certain information regarding annual and long-term
compensation of each of the named executive officers of the Company during
1995, 1996 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS
------------------------------ ---------------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL BONUS COMPENSATION STOCK OPTIONS COMPENSATION
POSITION YEAR SALARY($) ($) ($)(2) AWARDS (#) ($)(4)
------------------ ---- --------- ---------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul G. Van Wagenen..... 1997 $710,622 $75,000(1) -- $75,000(3) 50,000 $84,500
Director, Chairman of
the Board, President 1996 612,495 75,000 -- 37,500 50,000 47,000
and Chief Executive
Officer 1995 528,117 20,000 -- 20,000 50,000 9,240
Kenneth R. Good......... 1997 $286,464 $35,000(1) -- $35,000(3) 25,000 $44,500
Executive Vice 1996 244,575 37,500 -- 18,750 25,000 28,250
President 1995 213,028 12,500 -- 12,500 25,000 9,240
Stuart P. Burbach....... 1997 $263,130 $50,000(1) -- $50,000(3) 20,000 $59,500
Executive Vice 1996 222,503 37,500 -- 18,750 20,000 28,250
President - Exploration 1995 196,000 20,000 -- 20,000 20,000 9,240
Radford P. Laney........ 1997 $224,375 $35,000(1) -- $35,000(3) 14,000 $44,500
Senior Vice President 1996 186,875 37,500 -- 18,750 14,000 28,250
and Manager of
Worldwide New Ventures 1995 161,750 12,500 -- 12,500 10,000 9,240
Sammie M. Shaw(5)....... 1997 $210,625 $25,000 -- -- 10,000 $ 9,500
Vice President--
Operations 1996 180,985 25,000 -- 12,500(3) 14,000 22,000
1995 160,290 20,000 -- 20,000 12,000 9,240
</TABLE>
- --------
(1) This amount represents a bonus paid pursuant to the Incentive Plan in
equal parts cash and restricted stock, being valued at the fair market
value of the Company's common stock at their grant date (August 1, 1997).
(2) No executive received perquisites or other personal benefits in any year
shown which exceeded 10% of his salary.
(3) This amount represents the fair market value at their grant date (August 1,
1997) of unvested restricted stock awards made to the named individuals
pursuant to the Incentive Plan. Each such award shall vest in two equal
increments, on August 1, 1998, and August 1, 1999, contingent upon,
among other things, such employee's continued employment with the
Company through August 1, 1998 and August 1, 1999, respectively. As of
December 31, 1997, the aggregate
restricted share holdings granted during 1997 and their value (based upon
a per share price of $29.50, the closing price of the Common Stock as
reported on The New York Stock Exchange, Inc. Composite Transactions
Reporting System for December 31, 1997) of each of the named individuals
were: Mr. Van Wagenen, 1,846 shares worth $54,457, Mr. Burbach, 1,230 shares
worth $36,285 and Messrs. Good and Laney, 861 shares each worth $25,400.
Dividends on the Common Stock referred to in this column are
not payable until such shares become fully vested as described above.
(Footnotes continued on following page)
9
<PAGE>
(4) These amounts represent Company matching contributions to the Tax-
Advantaged Savings Plan, including $9,500 for each of the
named individuals in 1997, and the right to recieve a deferred cash bonus
pursuant to the Incentive Plan, which bonus is contingent upon
such employee's continued employment with the Company
through August 1, 1999, in the following amounts: Mr. Van Wagenen,
$75,000, Mr. Burbach, $50,000 and Messrs. Good and Laney, $35,000
(5) Mr. Shaw retired from the Company on January 1, 1998.
II. STOCK OPTION PLANS. Option Grants Table. The following table shows
further information on grants of stock options during 1997 to the named
executive officers which are reflected in the preceding Summary Compensation
Table. The Board of Directors granted no stock options with stock appreciation
rights in 1997.
OPTION GRANTS IN 1997
INDIVIDUAL GRANTS
<TABLE>
- -------------------------------------------------------------------------------------------------
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED EXERCISE OR BASE
OPTIONS TO EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME GRANTED IN 1997 ($ PER SHARE)(1) DATE PRESENT VALUE(2)
---- ---------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Paul G. Van Wagenen..... 50,000 10.4% $40.625 July 31, 2007 $1,164,100
Kenneth R. Good......... 25,000 5.2% 40.625 July 31, 2007 582,050
Stuart P. Burbach....... 20,000 4.2% 40.625 July 31, 2007 465,640
Radford P. Laney........ 14,000 2.9% 40.625 July 31, 2007 325,948
Sammie M. Shaw.......... 10,000 2.1% 40.625 July 31, 2007 232,820
</TABLE>
- --------
(1) The option exercise price was 100% of the fair market value of the Common
Stock on August 1, 1997, the date of grant. Generally, options granted
under the Company's stock option plans to employees become exercisable in
three equal increments on each of the three anniversaries following the
grant date. In addition, if a change of control of the Company were to
occur, the unvested options would become immediately exercisable subject,
in certain instances, to the discretion of the Compensation Committee of
the Board of Directors.
(2) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options and applying certain assumptions thereunder,
including an underlying security price on the date of grant equal to the
exercise price set forth above, the expiration set forth above, a risk
free rate of interest during the life of the options equal to 6.18% (the
rate of interest on 10-year U.S. Treasury Bonds on the grant date of the
options), a $0.12 annual dividend rate over the life of the options and
volatility during the life of the options equal to 35.27% (the average
monthly price volatility for the Common Stock for the four years preceding
the grant date).
1997 Option Exercises and December 31, 1997 Values Table. Shown below is
information with respect to unexercised options to purchase Common Stock
granted under the Company's stock option plans to the named executive officers
and held by them at December 31, 1997.
10
<PAGE>
AGGREGATE OPTION EXERCISES IN 1997 AND 1997 OPTION VALUES AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
SHARES HELD AT OPTIONS AT
ACQUIRED DECEMBER 31, 1997 DECEMBER 31, 1997(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- -------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Paul G. Van Wagenen..... 85,000 $2,064,063 20,000/100,000 $ 24,789/$123,961
Kenneth R. Good......... -- -- 77,521/ 50,000 830,450/ 61,977
Stuart P. Burbach....... 2,000 61,125 46,958/ 40,000 523,733/ 49,586
Radford P. Laney........ -- -- 24,333/ 26,667 188,774/ 24,789
Sammie M. Shaw.......... -- -- 38,874/ 23,334 453,616/ 29,750
</TABLE>
- --------
(1) Based on the per share closing price of the Common Stock as reported on
The New York Stock Exchange, Inc.'s Composite Transactions Reporting
System for December 31, 1997 ($29.50).
III. RETIREMENT PLAN. The Company maintains a noncontributory retirement plan
(the "Retirement Plan"), covering all salaried employees, under which the
Company annually makes such contributions as are actuarially necessary to
provide the retirement benefits established under such plan. The following
table shows estimated annual benefits payable under the Retirement Plan upon
retirement at age 65, based on average annual salary during the five highest
consecutive years of the ten years before retirement, to persons having the
average salary levels and years of service specified in the table.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE ANNUAL YEARS OF SERVICE AT RETIREMENT
SALARY BEFORE --------------------------------------------
RETIREMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000........................ 58,366 77,821 97,276 116,732 136,187
300,000........................ 88,366 117,821 147,276 176,732 206,187
400,000........................ 118,366 157,821 197,276 236,732 276,187
500,000........................ 148,366 197,821 247,276 296,732 346,187
600,000........................ 178,366 237,821 297,276 356,732 416,187
700,000........................ 208,366 277,821 347,276 416,732 486,187
800,000........................ 238,366 317,821 397,276 496,732 556,187
</TABLE>
Benefits under the Retirement Plan are based on a percentage of employee
earnings, length of service and certain other factors and are payable upon
normal retirement at age 65, upon early retirement at age 55 or after
termination of employment under certain circumstances. The Retirement Plan
provides that annual benefits under such plan are limited to the maximum amount
prescribed by sections 415 and 401(a)(17) of the Internal Revenue Code of 1986,
as amended (the "Code"), for pensions payable under tax-qualified retirement
plans. For 1997, the Code provides that the annual compensation of each
employee which is to be taken into account under the Retirement Plan cannot
exceed $150,000, and the maximum allowable pension benefit payable under such
plan would be limited to $120,000. In order to maintain benefit levels under
the Retirement Plan to which they would otherwise be entitled but for
limitations prescribed by the Code, the Company has entered into agreements
with Messrs. Van Wagenen and Good to supplement their (and their spouses')
benefits under the Retirement Plan in the event and to the extent that these
Code limitations reduce the retirement benefits that would otherwise be payable
to such individuals under the Retirement Plan.
11
<PAGE>
Messrs. Van Wagenen, Good, Burbach and Laney each have
approximately eighteen, twenty, ten and twenty credited
years of service, respectively, under the Retirement Plan.
Mr. Shaw retired on January 1, 1998.
IV. TAX-ADVANTAGED SAVINGS PLAN. The Company has a Tax-Advantaged Savings
Plan (the "Savings Plan") in which all salaried employees may participate.
Under the Savings Plan, a participating employee may allocate up to 10% of such
employee's salary as a tax-deferred contribution (subject to a maximum dollar
limitation of $9,500 for 1997), and the Company makes matching contributions of
100% of the amount contributed by the employee, up to 6% of such employee's
salary.
Funds contributed to the Savings Plan by an employee and the earnings and
accretions thereon may, according to instructions from such employee, be used
to purchase shares of Common Stock or to invest in certain mutual funds managed
by The Vanguard Group of Investment Companies ("Vanguard"), including a money-
market fund, a long-term bond fund, a balanced fund (investing in both stocks
and bonds), a growth and income fund and a growth stock fund. The employee may
redirect the investment of these amounts quarterly. Matching funds contributed
to the Savings Plan by the Company are invested only in Common Stock. All
contributions to the Savings Plan are held by entities controlled by Vanguard.
Participants in the Savings Plan may exercise voting rights over shares of
Common Stock held in accounts established under the Savings Plan for their
benefit.
V. SUPPLEMENTAL AND EMPLOYMENT AGREEMENTS. Messrs. Van Wagenen, Good, Burbach
and Laney have each entered into two-year employment contracts, effective
February 1, 1998, with the Company. Such contracts provide for minimum annual
salaries for Messrs. Van Wagenen, Good, Burbach and Laney of $770,000,
$305,000, $285,000 and $240,000, respectively. The contracts also provide for
continuation of coverage in the Company's employee benefit plans and programs
during the contract term. In addition, upon termination of employment by reason
of death or disability, by the Company without cause, by the employee for good
reason (as defined in the employment agreements), or within six months after a
"change of control" (as defined below) of the Company, the employee is entitled
to (i) compensation theretofore owed, (ii) three years' salary and bonus, (iii)
compensation for retirement benefits that would have been earned had the
employee completed the remaining term of the employment contract, (iv) coverage
under the Company's compensation plans and practices for the remaining term of
the employment contract and (v) payments to compensate the employee for the
imposition of certain excise taxes imposed under the Code on payments made to
such employee in connection with a change in control of the Company. "Change of
control," as defined in the employment agreements, includes certain events
constituting a change in the control or management of the Company (whether by
merger, consolidation, acquisition of assets or stock or otherwise).
The Company also has a supplemental disability plan under which amounts may
be payable to officers of the Company from time to time in the future.
Supplemental disability amounts are in addition to existing programs and are
designed to bring total monthly disability benefits to a level equal to 60% of
monthly salary at the time of disability. The participants in such plan include
Messrs. Van Wagenen, Good, Burbach and Laney.
VI. COMPENSATION OF DIRECTORS. Each director, other than those who are
regularly employed officers of the Company, receives an annual director's fee
of $18,000. In addition each director, other than those who are regularly
employed officers of the Company, receives a fee of $1,000 for each meeting of
the Board of Directors (including meetings of the Executive Committee, which
acts for the Board of Directors) actually attended and a fee of $250 for each
meeting of the Compensation Committee or Audit Committee actually attended.
Pursuant to the terms of the Company's Incentive
12
<PAGE>
Plan, each Non-Employee
Director is granted options to purchase 10,000 shares of Common Stock on the
first business day of June following such director's initial election or
appointment and options to purchase 5,000 shares of Common Stock each year of
his service as a director thereafter. The Company also reimburses directors
for travel and related expenses incurred in attending meetings of the Board
of Directors or its committees.
VII. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION. The
Compensation Committee of the Board of Directors has furnished the following
report on executive compensation:
The Compensation Committee (referred to hereafter as the
"Committee") periodically reviews the compensation of the
Company's executive officers and customarily meets
in July of each year to consider executive officer compensation
generally, as well as specific compensation matters. In 1997,
the Committee followed essentially the same policies and
practices that it had followed during the prior year. In July 1997,
the Committee reviewed (i) personnel evaluations of the Company's
key employees, including executive officers; (ii) compensation
guidelines suggested to the Company, together with comparables of
industry peer group companies ("Peer Group"), prepared by an
independent compensation consultant; (iii) information regarding
the Company's results in meeting its principal business objectives;
and (iv) the recommendations of management. The Committee
ultimately approved salary levels and, where appropriate, bonuses
and stock option grants for Company employees, including
executive officers. In connection with these determinations, the
Committee reviewed the general terms and conditions of
employment of all employees of the Company including, but not
limited to, each executive officer, and considered compensation
practices within the industry. In addition to compensation studies
submitted by the independent consultant, the Committee considered
advice of legal counsel and the individual views of Committee
members on the Company's goals and objectives in reaching its
decisions concerning executive officer compensation, including
stock option grants and bonuses. See Items I and II above, entitled
"Summary Compensation Table" and "Stock Option Plans" for further
information on cash compensation, stock option grants and bonuses.
The Peer Group was selected after an examination of
companies in the Company's industry that had similar property
holdings in similar geographic areas, foreign as well as domestic.
From that group, with the help of outside independent consultants
practicing in the field of public company executive compensation,
nineteen companies having a statistically meaningful range of
market capitalization and gross revenue were chosen and analyzed.
The companies selected for review for determining competitive
compensation include those seven companies comprising the Proxy
Statement Peer Index for that year, plus twelve other
companies, which cumulatively comprise the nineteen-company
Peer Group described above. Based upon information provided by
the Company's independent consultants, generally the Company's
officers were, in the case of base salary, near the middle of the
range of base salary and short-term bonus provided executive
officers of Peer Group comparators and, in the case of
long-term compensation and
bonuses, including stock options, in the lower half of similar
compensation provided to executive officers of the Peer Group
comparators.
The Committee believes, and the executive compensation
arrangements so reflect, that a blend of current cash compensation,
fringe benefits, and long-term incentive compensation is
appropriate. Current cash is provided by salary and bonuses alone,
the Company having instituted in 1995 a cash and/or stock bonus
policy awarding a combination of cash and/or Company stock to
those key employees it thought appropriate in order to assist in
retention as well as to
13
<PAGE>
reward past performance and encourage
Company stock ownership. Pursuant to this policy, fifteen key
employees of the Company (including the Chief Executive
Officer) were awarded cash and/or stock bonuses in August
1997. Generally, one-third of each bonus was paid immediately in equal
portions of cash and stock. The second-third of the bonus (which
will be paid in equal portions of cash and stock) will vest on
August 1, 1998, and the final one-third will similarly vest on
August 1, 1999, contingent upon continued employment of the bonus
recipient through these dates.
Executives, like all employees, participate in a
tax-qualified retirement plan and a tax-qualified savings plan
maintained by the Company (including an excess benefit
arrangement adopted in December 1993, which is designed to
provide to its executives, including the chief executive officer and
other management employees, benefit opportunities otherwise
curtailed by the application of certain limitations of the tax code), as
well as in certain welfare benefit programs elsewhere described,
which arrangements in the aggregate are substantially similar to
those provided by the Peer Group comparators. Long-term
incentive to executives is achieved through modest grants of stock
options priced at market on the date of grant and with traditional
terms and conditions.
The Company's only long-term compensation plan is its
Incentive Plan. No options have been granted under that plan
at a discount to current market price; therefore, compensation to an
executive from the option plan depends entirely on increases in the
market value of the Company's common stock, with the result that
stock options benefit an executive if, and only to the extent that,
similar benefits are received by the Company's stockholders.
Moreover, the continued service requirements (which delay vesting)
applicable to the stock option grants insure that, in the usual
circumstances, the executive must render substantial services after
the grant of options before being able to realize any value with
respect to such grant.
The Committee has adopted its executive compensation
policies and practices with a view to engendering in management
the principle that improving the Company's value is of paramount
importance and that Company value is measured, to a lesser extent,
by reference to improvement in the market value of the Company's
common equity, as reflected on the national exchanges on which
such equity is traded and, to a greater extent, by the most recent
year's results relating to the principal corporate business objectives
publicly enunciated by the Company in 1996 and established by the
Committee as criteria against which executive officer performance
would be measured during the period August 1996 through July
1997. These objectives include (i) maintaining or increasing
hydrocarbon production levels, leading to additional revenues and
earnings; (ii) growing the hydrocarbon reserves asset base; (iii)
maintaining appropriate levels of debt and interest for an entity the
size of the Company, and controlling overhead and operating costs
consistent with the Company's activity levels; and (iv) expanding
exploration and production activities in geographic areas that are
proven to be consistent with Company expertise. The Committee
determined in July 1997 that in every case the stated objectives had
been demonstrably met to a high degree of success during the prior
twelve-month period. In making its decisions, the Committee takes
into account (i) success in achieving the principal corporate
business objectives articulated above; (ii) evaluations by the
Committee and others of the individual performance and
achievement of executives; (iii) the increase in the Company's value
as measured by its stock price and increase in reserve base; (iv) the
individual's prior compensation level, including the number and
terms of options already held by such individual, (v) with respect to
individuals that have entered into employment contracts with the
Company, the minimum salaries provided for therein; and (vi)
compensation paid to Peer Group executives. The Committee does
not assign
14
<PAGE>
weights to particular factors, and determination by the
Committee of the exact levels of compensation, including salary,
fringe benefit, and stock option awards, is based on all factors taken
as a whole, but is ultimately subjective.
In August 1997, the chief executive officer's base cash salary
compensation was increased by 14%, with participation in
employee benefit plans and fringe benefit programs remaining
essentially constant. The Committee's determination of the chief
executive officer's salary and stock option grant was based
principally on the Company's achievement of its principal business
objectives for several consecutive years, and the Committee's
judgment that the chief executive officer's compensation package
was and has been near the middle of the range of similar compensation
for such officers in the Peer Group. For example, as to the four principal
business objectives enunciated by the Company and utilized as a
measurement of criteria by the Committee, (i) with a 1996 daily
average of 11,968 barrels, the Company enjoyed its highest levels
of crude oil and condensate production in its 27-year history. Including
plant products, the daily average was 14,141 barrels, also an all
time best. Although natural gas daily production volumes of 107.7 million
cubic feet per day in 1996 were lower than they were in 1995, it
was forseen that natural gas production was expected to jump by 70-80%
in 1997 due to the onset of significant production in the Gulf of Mexico
and the Gulf of Thailand from projects successfully conducted by the
Company in 1996 and earlier; (ii) the Company replaced
187% of its proven hydrocarbon reserves produced during the year,
bringing the estimated 1996 year-end proven reserves base to 658.6 billion
cubic feet equivalent, the highest level in the Company's
entire 27-year life span; (iii) year-end 1996 total debt of $246.2
million is less than one-half of the debt level of $515.0 million at
year-end 1985; and (iv) the acquisition of a dozen
new leases in 1996 in the Outer Continental Shelf
area of the Gulf of Mexico and the accelerated exploration and
development activities in the Gulf of Thailand evidence significant
expansion of the Company's core activities. In addition, the
Committee noted the substantial contribution the chief executive
officer's management style and work ethic made to the maintenance
of the high morale of the Company's employees.
In addition to its annual July meeting, the Committee also
customarily meets in January of each year. In January 1998, the
Committee determined to renew and to extend the Company's
employment contracts. At the time such contracts were renewed
and extended, minimum salaries were established in each contract
which equaled the compensation currently being received by such
key employee, as established in the annual salary review during the
prior August. Seven key employees of the Company presently have
such employment contracts. The Committee believes that the
employment contracts are necessary to secure for the benefit of the
Company the services of the individuals offered the contracts on the
terms and conditions therein stated, and to provide management
stability in the event of significant corporate control events such as
a tender offer, significant change in stock ownership or a proxy
contest. See Item V above, entitled "Supplemental and
Employment Agreements," for further information on certain of the
employment contracts.
Under Section 162(m) of the Code, certain deductions
otherwise available to the Company by reason of its incurrence of
executive compensation expenses might not be deductible if (i) the
aggregate of such amounts otherwise deductible in a single year by
the Company with respect to one executive exceeds $1,000,000;
(ii) the executive officer is the Company's chief executive officer, or
one of the four other most highly compensated officers (determined
in each case as of the last day of the year); and (iii) there is not
available an exception or exemption which would exclude
15
<PAGE>
the compensation from the limitation. Amounts payable or accrued
under (i) the Company's tax-qualified plans; (ii) certain fringe
benefit plans that do not result in income to the executive; and (iii)
its stock option grants will all be excluded in considering whether
the $1,000,000 level for a particular executive in a particular year
has been exceeded. After considering Company estimates of
compensation payable to
its executive officers, the fact that stock
option compensation will not be considered in such determination,
and the advice of counsel, the Committee believes that this
provision of the Code is unlikely to have any impact upon the
Company in the near term.
THE COMPENSATION COMMITTEE:
JACK S. BLANTON, CHAIRMAN
TOBIN ARMSTRONG
WILLIAM L. FISHER
FREDERICK A. KLINGENSTEIN
NICHOLAS R. PETRY
VIII. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The
Compensation Committee of the Board of Directors consists of Messrs. Jack S.
Blanton (Chairman), Tobin Armstrong, William L. Fisher, Frederick A.
Klingenstein and Nicholas R. Petry. No member of the Compensation Committee was
an officer or employee of the Company or any of its subsidiaries during 1997 or
engaged in any transactions or business relationships during 1997 that would
require disclosure under Item 404 of Regulation S-K under the Securities Act of
1933, as amended, the Exchange Act or the Energy Policy and Conservation Act of
1975 as promulgated by the Securities and Exchange Commission.
16
<PAGE>
IX. PERFORMANCE GRAPH. Set forth below is a line graph comparing the yearly
percentage change in the cumulative total shareholder return on the Company's
Common Stock against the cumulative total return of (i) the Standard & Poor's
500 Stock Index, (ii) the Standard & Poor's Domestic Oil Index, (iii) a Peer
Index (the "Old Peer Index") selected by the Company composed of Anadarko
Petroleum Corporation, Apache Corporation, The Louisiana Land & Exploration
Company, Noble Affiliates, Inc., Pioneer Natural Resources Company (a company
formed during 1997 by the merger of Parker & Parsley Petroleum Company, a
member of the Old Peer Index, with MESA Inc.), Santa Fe
Energy Resources, Inc. and Seagull Energy Corporation, and (iv) a new Peer
Index (the "New Peer Index") selected by the Company composed of Anadarko
Petroleum Corporation, Apache Corporation, Noble Affiliates, Inc., Oryx
Energy Company, Pioneer Natural Resources Company, Santa Fe Energy
Resources, Inc. and Seagull Energy Corporation, each for the period of five
fiscal years commencing December 31, 1992 and ended December 31, 1997.
The performance graph presented below differs from that presented in prior
years in that the Company is changing its Peer Index, in part, because of
the merger in 1997 of The Louisiana Land & Exploration Company into
Burlington Resources Inc., a corporation that the Company did
not deem appropriate, due to its size, for inclusion in the New Peer Index,
and the inclusion in the New Peer Index of Oryx Energy Company, a corporation
that the Company deemed to be a suitable replacement for The Louisiana Land
& Exploration Company due to its size, business activites and business focus.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD OLD NEW S&P DOMESTIC
(FISCAL YEAR COVERED) POGO S&P 500 PEER INDEX PEER INDEX OIL
<S> <C> <C> <C> <C> <C>
1992 100.00 100.00 100.00 100.00 100.00
1993 163.41 110.08 140.15 129.05 105.27
1994 173.70 111.53 126.92 111.63 111.26
1995 277.96 153.45 157.71 137.82 126.67
1996 466.37 188.68 205.50 190.16 162.53
1997 292.12 251.62 198.04 178.58 178.58
</TABLE>
Note: The stock price performance for the Company's Common Stock is not
necessarily indicative of future performance. Total Shareholder Return
assumes reinvestment of all dividends.
17
<PAGE>
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
approved and recommends voting FOR the appointment of Arthur Andersen LLP as
independent public accountants to audit the financial statements of the Company
for the year 1998. Such firm has examined the Company's accounts since its
organization.
A representative of Arthur Andersen LLP will attend the annual meeting and
will have the opportunity to make a statement and to respond to appropriate
questions.
ANNUAL REPORT
The annual report to shareholders, including financial statements for the
year ended December 31, 1997, has been mailed to shareholders. The annual
report is not a part of the proxy solicitation material.
PROPOSALS BY SECURITY HOLDERS
Proposals intended to be presented by shareholders at the Company's 1999
Annual Meeting must be received by the Company, at the address set forth on the
first page of this Proxy Statement, no later than November 24, 1998, in order
to be included in the Company's proxy material and form of proxy relating to
such meeting. Shareholder proposals must also be otherwise eligible for
inclusion.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE AND OTHER MATTERS
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC and the New York
Stock Exchange initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Officers, directors
and greater than ten-percent shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with, except that
Mr. Klingenstein failed to correctly file one report which was subsequently
corrected by an amendment thereto.
A petition for relief, pursuant to Chapter 11 of the U.S. Bankruptcy Code,
was filed by Mr. Hunt on June 14, 1993, in the U.S. Bankruptcy Court for the
Northern District of Texas, Dallas Division. A plan of reorganization in this
case was approved by the bankruptcy court and consummated on March 23, 1995.
18
<PAGE>
OTHER BUSINESS
Management does not intend to bring any business before the annual meeting
other than the matters referred to in the accompanying notice and at this date
has not been informed of any matters that may be presented to the meeting by
others. If, however, any other matters properly come before the meeting, it is
intended that the persons named in the accompanying proxy will vote on such
matters pursuant to the proxy in accordance with their best judgment.
By Order of the Board of Directors
/s/ PAUL G. VAN WAGENEN
----------------------------------
Paul G. Van Wagenen
Chairman of the Board
March 24, 1998
19
<PAGE>
POGO PRODUCING COMPANY
PROXY PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD TUESDAY, APRIL 28, 1998.
The undersigned hereby appoints Paul G. Van Wagenen and John O. McCoy, Jr.
jointly and severally, proxies, with full power of substitution and with
discretionary authority, to vote all shares of Common Stock of Pogo Producing
Company that the undersigned would be entitled to vote at the 1998 Annual
Meeting of Shareholders, or at any adjournments thereof, on all matters which
may come before such meeting, all as set forth in the accompanying Proxy
Statement, including the proposals set forth on the reverse side of this
proxy. ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE
DIRECTED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR THE PROPOSAL TO APPROVE
THE APPOINTMENT OF ARTHUR ANDERSEN LLP TO AUDIT THE FINANCIAL STATEMENTS OF
THE COMPANY FOR 1998.
IMPORTANT -- This Proxy must be signed and dated on the reverse side.
<PAGE>
POGO PRODUCING COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
1.ELECTION OF DIRECTORS For All
Nominees - Jack S. Blanton, For Withheld Except
William L. Fisher and / / / / / /
Paul G. Van Wagenen
NOMINEE EXCEPTION
____________________
2. APPROVAL OF THE APPOINTMENT OF For Against Abstain
ARTHUR ANDERSEN LLP as independent / / / / / /
accountants, to audit the financial
statements of the Company for 1998.
ALL SHARES WILL BE VOTED AS DIRECTED HEREIN AND, UNLESS OTHERWISE DIRECTED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR THE PROPOSAL TO APPROVE
THE APPOINTMENT OF ARTHUR ANDERSEN LLP TO AUDIT THE FINANCIAL STATEMENTS OF
THE COMPANY FOR 1998.
The undersigned hereby acknowledges receipt of the
Notice of, and Proxy Statement for, the Annual
Meeting and the 1998 Annual Report to Shareholders of
Pogo Producing Company.
Dated: _______________________________________ , 1998
_____________________________________________________
Signature
_____________________________________________________
Signature
NOTE: Please sign exactly as your name appears on the
reverse side of this proxy. Joint owners should each
sign. Executors, Administrators, Trustees, etc.
should give their full title. Corporations should
sign with their full corporate name by an authorized
officer.
