<PAGE>
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:
(X) Preliminary Proxy Statement ( ) Confidential for Use of the
Commission Only(as permitted)
by Rule 14a-6(e) (2)
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CROWN CENTRAL PETROLEUM CORPORATION
(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 transaction 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>
[LOGO OF CROWN CENTRAL PETROLEUM CORPORATION]
CROWN CENTRAL PETROLEUM CORPORATION
ONE NORTH CHARLES STREET
BALTIMORE, MARYLAND 21201
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 14, 2000
---------------------------
To the Stockholders of CROWN CENTRAL PETROLEUM CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders of Crown
Central Petroleum Corporation (the "Company") will be held at the Turf Valley
Conference Center, 2700 Turf Valley Road, Ellicott City, Maryland on Thursday,
the 14th day of December, 2000 at two o'clock in the afternoon, Eastern Standard
Time, for the following purposes:
1. ELECTION OF DIRECTORS. To elect a Board of eight (8) directors, each to
serve for the next succeeding year and until his or her successor is
elected and has qualified. Six (6) directors will be elected by the
holders of Class A Common Stock and two (2) directors will be elected by
the holders of Class B Common Stock.
2. SHAREHOLDER PROPOSAL. To vote upon a shareholder proposal, if properly
presented at the meeting.
3. OTHER BUSINESS. To transact such other business as may properly come
before the meeting. The Board of Directors of the Company knows of no
other business that will be presented for consideration at the Annual
Meeting.
Details respecting these matters are set forth in the Proxy Statement.
Only stockholders of record at the close of business on November 15, 2000 will
be entitled to notice of and to vote at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE PAID,
ADDRESSED ENVELOPE AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE THE PROXY BY GIVING
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY AT THE ADDRESS ABOVE OR BY
EXECUTION AND DELIVERY OF A LATER DATED PROXY.
By order of the Board of Directors,
Dolores B. Rawlings,
Vice President - Secretary
<PAGE>
CROWN CENTRAL PETROLEUM CORPORATION
ONE NORTH CHARLES STREET
BALTIMORE, MARYLAND 21201
---------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 14, 2000
---------------------------
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
Proxies on behalf of the Board of Directors of Crown Central Petroleum
Corporation ("Crown" or the "Company") for use at the Company's Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the Turf Valley Conference
Center, 2700 Turf Valley Road, Ellicott City, Maryland on Thursday, the 14th day
of December, 2000 at two o'clock in the afternoon, Eastern Standard Time. This
Proxy Statement and form of Proxy will first be mailed to stockholders on or
about November 20, 2000.
The Board of Directors of the Company has fixed the close of business on
November 15, 2000 as the record date (the "Record Date") for the determination
of Company stockholders entitled to notice of and to vote at the Annual Meeting.
Accordingly, only holders of record of Class A Common Stock, par value $5.00 per
share ("Class A Stock"), and holders of record of Class B Common Stock, par
value $5.00 per share ("Class B Stock"), at the close of business on the Record
Date ("Record Holders") are entitled to notice of the Annual Meeting and to
attend and vote at the Annual Meeting. The holder of a valid proxy will be
permitted to attend the Annual Meeting and to vote the stock of a Record Holder.
To be valid, a proxy must either be in writing and be signed by the Record
Holder or be authorized by an electronic transmission from the Record Holder.
In addition, to be valid, a proxy cannot have been revoked or superseded by a
valid proxy with a later date.
The Proxy Card provided with this Proxy Statement is for completion both by
holders of Class A Stock and by holders of Class B Stock. If a stockholder owns
shares of Class A Stock, the stockholder should vote on the election of the
directors to be elected by the holders of Class A Stock. If a stockholder owns
shares of Class B Stock, the stockholder should vote on the election of the
directors to be elected by the holders of Class B Stock. If a stockholder owns
shares of both Class A Stock and Class B Stock, the stockholder should vote on
the election of all directors. All properly executed proxies delivered pursuant
to this solicitation will be voted at the Annual Meeting, or any adjournments
thereof, in accordance with instructions contained therein, if any. IF NO
INSTRUCTIONS ARE INDICATED, SHARES OF CLASS A STOCK AND CLASS B STOCK FOR WHICH
EXECUTED PROXIES ARE RECEIVED WILL BE VOTED:
. FOR THE ELECTION OF THE NOMINEES NAMED IN THE PROXY AS DIRECTORS OF THE
---
COMPANY,
. AGAINST THE SHAREHOLDER PROPOSAL, AND
-------
. IN THE DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING.
The execution and return of the accompanying Proxy Card will not in any
way affect a stockholder's right to attend the Annual Meeting and, if such
stockholder's proxy is revoked, to vote in person. The stockholder giving the
proxy has the power to revoke it at any time before it is exercised by filing
with the Secretary of the Company a written revocation or a duly executed proxy
bearing a later date. Presence at the Annual Meeting will not, of itself,
revoke a proxy.
1
<PAGE>
The expense of the solicitation of proxies by the Company for the Annual
Meeting, including the cost of preparing and mailing this Proxy Statement, will
be borne by the Company. Proxies may be solicited by use of the mails, by
personal interview or by telephone or other electronic means and may be
solicited, to a limited extent, by officers and directors and by other employees
of the Company. Brokers, nominees, fiduciaries and other custodians will be
requested to forward soliciting material to the beneficial owners of shares and
to request authority for the execution of proxies and will be reimbursed by the
Company for their expenses in forwarding such material.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE, EXECUTE AND RETURN THE PROXY CARD
SENT TO THEM WITH THIS PROXY STATEMENT.
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MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
Election of Directors. Eight (8) directors are to be elected, each to
serve until the next annual meeting of stockholders and until his or her
successor is duly elected and has qualified. Six (6) directors will be elected
by the holders of Class A Stock, and two (2) directors (who may not be employees
of the Company or any subsidiary of the Company) will be elected by the holders
of Class B Stock. See "Voting at the Annual Meeting - Voting Rights of Class A
and Class B Stock" for a description of the voting rights of Class A Stock and
of Class B Stock in the election of directors. A plurality of all votes cast by
the applicable class will be sufficient to elect each such director. For
purposes of the election of directors, abstentions and broker non-votes will not
be counted as votes cast and will have no effect on the result of the vote.
Shareholder Proposal. If properly presented, a shareholder proposal will
be voted on at the Annual Meeting. Two-thirds of all of the votes cast on the
proposal will be necessary to approve the shareholder proposal. See "Voting at
the Annual Meeting - Voting Rights of Class A and Class B Stock" for a
description of the voting rights of Class A Stock and Class B Stock as to the
approval of the shareholder proposal. For purposes of the vote on the
shareholder proposal, abstentions and broker non-votes will not be counted as
votes cast and will have no effect on the result of the vote.
VOTING AT THE ANNUAL MEETING
Outstanding Shares; Quorum. At the close of business on the Record Date,
there were 4,817,394 shares of Class A Stock outstanding and ______ shares of
Class B Stock outstanding. The presence, in person or by a properly executed
and delivered proxy, of the holders of a majority of the votes of Class A Stock
and Class B Stock entitled to vote at the Annual Meeting, taken together, is
necessary to constitute a quorum at the Annual Meeting. For information with
respect to stockholders who own more than 5% of the outstanding Class A Stock or
Class B Stock, see "Security Ownership by Certain Beneficial Owners and
Management."
Voting Rights Of Class A Stock And Class B Stock. The holders of record
of Class A Stock are entitled, voting separately as a class, to elect and to
remove all directors other than directors to be elected by any other class or
classes or series of stock. The holders of record of Class B Stock may elect
and remove two (2) directors, who may not be employees of the Company or of any
subsidiary of the Company. There are no classes of stock other than Class A
Stock and Class B Stock currently outstanding.
Except with respect to the election of directors as described above, in
all proceedings in which action of the stockholders of the Company is to be
taken, each share of Class A Stock shall entitle the holder of record thereof to
one vote, and each share of Class B Stock shall entitle the holder of record
thereof to one-tenth (1/10) vote. Except with respect to the election of
directors, holders of Class A Stock vote together with holders of Class B Stock
as a single class.
The Company Savings Plan. A unit of T. Rowe Price serves as the trustee
for the Company's Employees Savings Plan and the Employees Supplemental Savings
Plan (collectively the "Savings Plans"). Each plan participant with an
investment in Class A Stock or Class B Stock will be given a form of proxy by
the trustee to be used to instruct the trustee how to vote the Company stock
held in the Savings Plans for the benefit of the participant. Shares for which
no instructions are timely given will be voted as provided in the Savings Plans
by the trustee in the same proportion as the votes cast with respect to those
shares for which the trustee receives proper instructions. There is no
provision in the Savings Plans to permit the trustee to grant a proxy to a plan
participant, and as a result, all shares of Class A Stock and Class B Stock held
in the Savings Plan will be voted by the trustee in accordance with the
procedures described in this paragraph.
ELECTION OF DIRECTORS
At the Annual Meeting, eight (8) directors will be elected, each to serve
until the next annual meeting of the stockholders and until his or her successor
is duly elected and has qualified. Six (6) directors will be elected by the
holders of Class A Stock, and two (2) directors (who may not be employees of the
Company or any subsidiary of the Company) will be elected by the holders of
Class B Stock.
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<PAGE>
INFORMATION CONCERNING THE NOMINEES
The names and ages (as of September 30, 2000) of those persons nominated
by the Company to be directors of the Company, as well as their principal
occupations for the last five years, directorships held by them in certain other
publicly held companies, the year in which they became a director of the Company
(if they are presently a director of the Company) and certain other information
with respect to such nominees are set forth below. The first six (6) nominees
listed are presented for election by the holders of Class A Stock, and the last
two (2) nominees listed are presented for election by the holders of Class B
Stock.
There are no family relationships among any of the current directors.
Frank B. Rosenberg, Senior Vice President - Marketing and a nominee for election
as a director of the Company, is the son of Henry A. Rosenberg, Jr., Chairman of
the Board, President and Chief Executive Officer. Stanley A. Hoffberger, a
nominee for election as a director of the Company, is married to Judith R.
Hoffberger, Henry A. Rosenberg, Jr.'s sister, and is the brother-in-law of
Henry A. Rosenberg, Jr., Chairman of the Board, President and Chief Executive
Officer. There are no other family relationships among the directors and the
executive officers, and there is no arrangement or understanding between any
directors and any other person pursuant to which the director was elected.
Proxies received will be voted in the manner directed in the proxy or, if
no direction is made, for the election of the nominees named below. Although it
is not expected that such a contingency will occur, if any nominee declines or
is unable to serve, the proxies will be voted for a substitute nominee and,
unless otherwise directed, for the other nominees named below.
4
<PAGE>
<TABLE>
<CAPTION>
Name and Age on Principal Occupation for Last 5 Years; Director
September 30, 2000 Directorships in Public Corporations Since
------------------ -------------------------------------- --------
<S> <C> <C>
Nominees for election by the holders of Class A Stock:
Michael F. Dacey (56) Private investor. 1991
Stanley A. Hoffberger (71) Private real estate developer. N/A
Barry L. Miller (52) Senior Vice President, Treasurer and Chief Financial Officer of Rosemore, Inc. N/A
since January 1999; Vice President - Taxation of American Trading and Production
Corporation from May 1995 to December 1998; Assistant Treasurer and Director of
Taxation of American Trading and Production Corporation from February 1987 to
April 1995.
Frank B. Rosenberg (42) Senior Vice President - Marketing of the Company since April 1996; Vice President N/A
- Marketing of the Company from January 1993 to March 1996.
Henry A. Rosenberg, Jr. (70) Chairman of the Board and Chief Executive Officer of the Company since May 1975 1955
and President since March 1996.
John E. Wheeler, Jr. (47) Executive Vice President - Chief Financial Officer of the Company since April N/A
1998; Executive Vice President - Chief Financial Officer and Treasurer of the
Company from February 1998 to April 1998; Senior Vice President - Finance and
Treasurer of the Company from October 1996 to January 1998; Senior Vice President
- Finance of the Company from April 1996 to September 1996; Senior Vice President
- Treasurer and Controller of the Company from June 1994 to March 1996.
Nominees for election by the holders of Class B Stock:
Jack Africk (72) Retired. Formerly, Vice Chairman, UST, Inc. Also a director of Tanger Factory 1991
Outlet Centers, Inc.
The Reverend President, Loyola College in Maryland since July 1994. 1995
Harold Ridley, S.J. (61)
</TABLE>
The Board of Directors recommends that the stockholders vote FOR the nominees
---
presented above.
Possible Nomination of Director by Golnoy Barge Company, Inc.
In a letter dated January 27, 2000, Golnoy Barge Company, Inc., a
Missouri corporation ("Golnoy"), provided notice that Golnoy would nominate Mr.
Paul A. Novelly for election to the Board of Directors of the Company. According
to the Schedule 13D filed with the Securities and Exchange Commission on January
14, 1983 and Amendment No.11 dated November 18, 1999, Mr. Novelly, along with
Golnoy, and their affiliates, own or control 14.70% of the issued and
outstanding Class A Stock and 3.48% of Class B Stock.
5
<PAGE>
PRESENT BOARD OF DIRECTORS
In addition to Messrs. Dacey and Henry A. Rosenberg, Jr. who have been
nominated to continue to serve as directors elected by the holders of Class A
Stock and Mr. Africk (currently serving as a director elected by the holders of
Class A Stock) and Father Ridley (currently serving as a director elected by the
holders of Class B Stock), who have been nominated to serve as directors elected
by the holders of Class B Stock, the following individuals are currently serving
on the Board of Directors:
<TABLE>
<CAPTION>
Name and Age on Principal Occupation for Last 5 Years; Director
September 30, 2000 Directorships in Public Corporations Since
------------------ -------------------------------------- --------
<S> <C> <C>
George L. Bunting, Jr. (59) President and Chief Executive Officer, Bunting Management Group since July 1991. 1992
Also a director of Baltimore Equitable Society, Guilford Pharmaceuticals Inc. and
Mercantile Bankshares Corporation.
Patricia A. Goldman (58) Retired. Formerly, Senior Vice President - Corporation Communications, USAir, Inc. 1989
Also a director of Erie Family Life Insurance Company and Erie Indemnity Company.
William L. Jews (48) President and Chief Executive Officer, CareFirst, Inc. since January 1998; 1992
President and Chief Executive Officer, Blue Cross and Blue Shield of Maryland from
April 1993 through December 1997. Also a director of Municipal Mortgage and
Equity, L.L.C. and the Ryland Group, Inc.
Thomas M. Gibbons (74) Retired. Formerly, Chairman of the Board, Chesapeake and Potomac Telephone 1988
Companies, part of Bell Atlantic Corporation.
</TABLE>
Attendance. The Board of Directors held twelve meetings during 1999.
All of the directors attended in person or telephonically at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
committees on which he or she served during the year.
Compensation of Directors. Each director who is not an employee of the
Company or a subsidiary of the Company is paid $12,000 per year for serving as a
director and a meeting fee of $750, plus travel expenses, for attendance at each
meeting. Each non-employee director who is a member of any standing committee
of the Board of Directors other than the Executive Committee is paid $3,000 per
year for serving on each such committee. The chairman of any committee other
than the Executive Committee is paid a fee of $1,000 for serving in that
capacity. Directors who are employees receive no separate compensation for
serving on the Board, on any Board committee or as Chairman of any committee.
See "Interest of Management and others in Transactions with the Company and its
Subsidiaries" for a description of Mr. Africk's prior consulting agreement with
the Company.
Under a Deferred Compensation Plan for non-employee directors, a director
may defer all or a portion of his or her compensation for payment after his or
her termination as a director. The plan provides for the accrual of interest
quarterly on the funds at the 90-day Treasury Bill rate in effect at the
beginning of the quarter. The director may elect to receive the deferred
compensation in one lump sum payment or in a number of annual installments (not-
exceeding ten).
BOARD COMMITTEES
Executive Committee. The Executive Committee has the authority to act on
behalf of the Board of Directors between meetings of the Board. Mr. Rosenberg
serves as Chairman and Messrs. Africk and Gibbons are members of the Committee.
The Executive Committee did not meet in 1999.
Audit Committee. Mr. Bunting serves as Chairman and Mr. Dacey, and
Father Ridley currently serve as members of the Audit Committee. The Audit
Committee met five times during1999. Prior to the Annual Meeting of Stockholders
in 1999, Mr. Africk served as Chairman and Messrs. Bunting and Dacey were
members of this Committee. The functions that this Committee performs under its
charter include: (i) recommending the selection of independent public
accountants and reviewing with such accountants the audit scope and the results
of the audit engagement, (ii) reviewing matters pertaining to internal audit and
other internal control procedures, (iii) reviewing the
6
<PAGE>
audited and the unaudited financial statements to be submitted to the Board for
approval, (iv) reviewing substantial claims by or against the Company, (v)
reviewing the Company's financing plan and its compliance with debt covenants,
(vi) reviewing current accounting-related matters affecting the Company, and
(vii) reviewing the effect of the scope of non-audit services rendered by the
independent public accountants on their independence.
Executive Compensation and Bonus Committee. Mr. Gibbons serves as
Chairman and Ms. Goldman, Mr. Africk and Mr. Jews currently serve as members of
the Executive Compensation and Bonus Committee (the "Compensation Committee").
The Compensation Committee met three times during 1999. Prior to the Annual
Meeting of Stockholders in 1999, Father Ridley served as a member of the
Compensation Committee. The Compensation Committee has the principal
responsibility for the administration of the Company's annual executive
incentive plan, which is known as the Executive Performance Incentive Plan, the
1994 Long-Term Incentive Plan (the "Long-Term Plan") and the 1999 Long-Term
Incentive Plan (the "1999 Long-Term Plan"). The Compensation Committee also has
the authority and duty to submit recommendations to the Board with respect to
the salaries of the Chairman of the Board and President and with respect to
plans for the compensation of executives of the Company, including amendments to
any compensation plans.
Nominating Committee. Mr. Jews serves as Chairman and Messrs. Africk,
Bunting and Rosenberg are members of the Nominating Committee. The Nominating
Committee did not meet in 1999. The Nominating Committee has the principal
responsibility of assisting the Board choose the persons that will be nominated
by the Company for election to the Board of Directors of the Company and of
recommending to the Board matters related to the line of succession within
senior management.
Committee of Independent Directors. Mr. Dacey serves as Chairman and Mr.
Africk, Mr. Bunting, Mr. Gibbons, Ms. Goldman, Mr. Jews and Father Ridley are
members of the Committee of Independent Directors (the "Independent Committee").
The Chairman and the members receive no compensation for their service on the
Independent Committee. The Independent Committee was established at a Board of
Directors meeting on January 27, 2000 and therefore did not meet during the year
ending December 31, 1999. The Independent Committee has the authority to review
and evaluate strategic alternatives for the Company, to enter into negotiations
with respect to the terms of a strategic transaction, including negotiating on
behalf of the Company a definitive transaction agreement, and to make a
recommendation to the Company Board of Directors as to the course of action, if
any, the Company should pursue. At its meeting on January 27, 2000 the
Independent Committee retained Skadden Arps, Slate, Meagher & Flom LLP to act as
special legal counsel to the Independent Committee.
REPORT OF EXECUTIVE COMPENSATION AND BONUS COMMITTEE
On an annual basis, the Company engages an internationally known
management consulting firm to assist it in performing a review of its executive
compensation practices. The Company's compensation philosophy, objectives, and
total direct compensation packages which consist of base salary and annual and
long-term incentives, are reviewed. The results of this study are carefully
considered by the Compensation Committee in connection with its approval of the
compensation to be paid to the Company's executive officers.
The following objectives and guiding principles have been identified in
establishing the Company's executive compensation program: (1) provide a strong
link between management and stockholder interests by rewarding executives for
the creation of stockholder value, (2) attract and retain key executive talent
by providing competitive total reward opportunities based on the Company's
performance, (3) provide an appropriate balance between short and long-term
reward opportunities, and (4) ensure there is a clear line-of-sight between
reward opportunities and performance controlled or directly influenced by the
executive.
Specifically, base salaries are targeted to the median or fiftieth
percentile of overall competitive practices. Recommendations for base salary
adjustments for officers are determined by considering the executive's position,
experience, knowledge, skills, and job performance and the strategic importance
of the individual and the position, as reflected in the Chairman's
recommendations to the Compensation Committee. Annual incentive and long-term
incentive awards are each targeted to generate total cash compensation between
the fiftieth and seventy-fifth percentile of competitive practices and are based
on the Company's performance.
7
<PAGE>
The Company's competitive position is determined by conducting an annual
survey of the practices of other companies, both national and regional,
including companies of similar size and focus within the petroleum industry.
Eight of the nine companies most recently selected as industry comparables are
included in the twenty-six companies in the Value Line Integrated Petroleum
Index shown on the Performance Graph in this Proxy Statement.
The Company's most recent survey analysis of compensation practices shows
that officers' base salaries, total cash compensation (base salary and annual
incentives) and total direct compensation (total cash compensation plus the
estimated annualized present value of long-term incentive awards) are below the
median. The Compensation Committee is, to the extent practicable, attempting to
insure that increases in base salaries and total cash compensation are targeted
to median levels. During 1999, there was no increase in the base salary
previously established for Mr. Henry A. Rosenberg, Jr. The Committee believes
that Mr. Rosenberg is in the comparable median salary range for chief executive
officers.
In 1994, the Company adopted, with stockholder approval, the Long-Term
Plan. In 1996, it adopted the Performance Incentive Plan; and in 1999, the 1999
Long-Term Plan which is a stock performance plan with cash payments based on
stock appreciation. These Plans are intended to provide additional incentives
to officers and senior managers for improvements in Company-wide performance.
The 1999 Performance Incentive Plan is a cash plan offered to officers,
senior management and other salaried employees. Minimum, target and maximum
awards are established by the Compensation Committee for the Plan year.
Executive officers can earn a target award of 35-65% of base salary based upon
the Company's performance, as measured by EBITDAAL, which is defined as earnings
before interest, taxes, depreciation, amortization, abandonments and LIFO
accounting provisions. EBITDAAL must meet the annual minimum threshold approved
by the Compensation Committee for any awards to be earned in a Plan year. The
Company's 1999 actual operating performance did not meet the minimum threshold
and no incentive awards were earned under the 1999 Performance Incentive Plan.
The 2000 Executive Performance Incentive Plan also establishes target awards of
35-65% of base salary. Awards will be based on a combination of EBITDAAL and
performance goals established for each operating unit and corporate department
and require the Company to achieve a positive net income for the year.
The Long-Term Plan is designed to provide incentives to officers and key
employees who have significant responsibilities for the successful
implementation of the Company's long-term business strategies. The Long-Term
Plan provides for awards of non-qualified stock options ("Options") for the
purchase of the Company's Class B Stock and for Performance Vested Restricted
Stock ("PVR Stock"), which is also awarded in shares of Class B Stock. Awards
are made by the Compensation Committee, and no participant may receive Options
for more than 150,000 shares of stock or more than 50,000 shares of PVR Stock in
any one year.
PVR Stock is issued to a participant subject to the attainment of
performance goals and the satisfaction of various restrictions established by
the Compensation Committee. The performance goals are currently based upon the
Company's operating performance as measured by EBITDAAL. In addition, three-
year Net Income on a FIFO Basis must meet the minimum threshold approved by the
Compensation Committee for any awards of PVR Stock to vest at the end of the
performance cycle. In 1996, the Compensation Committee amended the Plan to
permit PVR Stock that has not vested at the end of the performance cycle to vest
at the end of five years rather than being forfeited by the participant. This
feature is intended to help the Company retain the services of participants in
the Long-Term Plan and to simplify the accounting treatment of PVR Stock.
The 1999 Long-Term Plan is also designed to provide incentives to
officers and key employees and to encourage the retention of these executives.
The 1999 Long-Term Plan is a stock performance plan that provides for cash
payments based upon stock appreciation during a three-year performance period.
Participants were granted a number of Units that were based upon competitive
long-term incentive awards available to executives in similar positions. A
$14.91 Unit Strike Price was established for the 1999 grants under the Plan.
The Unit Strike Price was based on the average stock price of Class B Stock
during the previous three years, and it was significantly higher than the
current market price of Class B Stock. Cash awards will be calculated by
multiplying the number of Units granted to the Participant times the
appreciation in the stock price at the end of a three-year performance period
over the Unit Strike Price of $14.91. Participants in this Plan are, therefore,
rewarded for results that directly contribute to increases in stockholder value
over the performance period.
8
<PAGE>
The Company's Supplemental Retirement Income Plan for Senior Executives
(the "SRI Plan") and the Executive Severance Plan (the "Severance Plan") are
designed to provide competitive executive benefits that are consistent with
current practices. All officers at the Vice President level and above are
participants in the SRI Plan, and benefits vest after five years of service.
All current officers at the Vice President level and above have been designated
as participants in the Severance Plan; however, Mr. Henry A. Rosenberg, Jr.
voluntarily withdrew from the Severance Plan in 1998. Under the Severance Plan,
as amended in 1998, if a participant is terminated without good reason within
two years of a change of control, as defined in the Severance Plan, the
participant receives credit for enhanced age and service under the SRI Plan and
the immediate payment of SRI Plan benefits. In addition, the participant
receives a payment of three times the executive's annual salary, full payment
under the annual Performance Incentive Plan, an additional contribution equal to
a three-year Company match for participants in the Savings Plans, the
continuation of certain welfare benefits for a three-year period, a payment
equal to the excise tax on the basic severance benefits and certain other
miscellaneous benefits. The Committee views the Severance Plan as a typical
executive benefit that will help insure stability and continuity of employment
of key management personnel at the time of a proposed or threatened change of
control, if any.
It is not currently anticipated that any officer could earn annual
compensation in excess of one million dollars under the existing compensation
plans. Stockholder approval of the Executive Performance Incentive Plan would be
required for compensation under this plan to qualify for deductibility under
Section 162(m) of the Internal Revenue Code. Some additional limitations on the
PVR Stock portion (but not the portion relating to Options) of the Long-Term
Plan might also be required to qualify that compensation for deductibility. The
Compensation Committee will consider recommending such steps as may be required
to qualify either annual or long-term incentive compensation for deductibility
if that appears appropriate at some time in the future.
This report has been submitted by the Compensation Committee: Thomas M.
Gibbons, Chairman; Jack Africk; Patricia A. Goldman; and William L. Jews.
9
<PAGE>
INTEREST OF MANAGEMENT AND OTHERS IN TRANSACTIONS WITH THE COMPANY AND ITS
SUBSIDIARIES
Consulting Agreement. From November 1, 1993 until April 28, 2000, Mr.
Africk served as a general business adviser and consultant to the Company for
which he was paid a consultancy fee of $3,000 per month. His work in this
capacity was in addition to his service as a director, committee chairman and
member of any board committee.
Rosemore. Rosemore, Inc. ("Rosemore"), through its wholly-owned
subsidiary, Rosemore Holdings, Inc., holds 2,366,526 shares of Class A Stock and
591,629 shares of Class B Stock. All of the stock of Rosemore is held by Trusts
for the benefit of Henry A. Rosenberg, Jr., his sisters, Ruth R. Marder and
Judith R. Hoffberger, and for members of their respective immediate families.
Mrs. Hoffberger is married to Stanley A. Hoffberger, who has been nominated to
become a member of the Board of Directors. Rosemore, Rosemore Holdings, Inc. and
various individuals who are beneficial owners of Rosemore stock are a "group" as
that term is used in Section 13 (d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act"), and have filed Schedule 13D's to report their holdings of
Class A and Class B Stock.
Rosemore participates in the Company's working capital and letter of
credit facility established pursuant to a Loan and Security Agreement by and
among Congress Financial Corporation, as Administrative Agent for First Union
National Bank and Congress Financial Corporation, as Lenders, and the Company
and various Company subsidiaries, as Borrowers. Rosemore's participation
resulted in an increase of $50,000,000 in the credit limit under this facility.
Rosemore is compensated at competitive rates for its participation in the
facility as it relates to the availability of certain letters of credit issued
for the account of the Company. Payments for 1999 comprised of commitment and
utilization fees totaled approximately $147,000. Of this amount, in accordance
with the terms of the working capital facility, Rosemore paid approximately
$49,000 to First Union.
During the first quarter of 2000 Rosemore agreed to guarantee crude oil
purchases by Crown, subject to certain limits. The maximum amount that Rosemore
guaranteed at any one time was $61 million. Rosemore has reduced the size of
the facility to a maximum of $40 million, and has advised Crown that it is
agreeable to the continuation of this facility through the end of November,
2000. As of November 15, 2000, there were $ million in crude
oil purchase guarantees by Rosemore outstanding under this facility. The
Company pays Rosemore at competitive rates for these outstanding performance
guarantees. Through September 30, 2000, the Company had incurred $246,700 in
guarantee fees payable to Rosemore. Rosemore also made available to the Company
during the year 2000 up to $16.2 million in unsecured cash borrowings. The
Company borrowed up to $8 millon under this facility, and the facility has since
expired. The expiration of Rosemore's agreements to provide performance
guarantees and unsecured cash borrowings would likely result in the Company's
inability to maintain current production levels assuming oil prices remain at or
exceed current levels.
The Company terminated its aircraft lease with General Electric Credit
Corporation in early 1999. Rosemore subsequently entered into an aircraft lease
with General Electric Credit Corporation. The Company then assigned its lease
with the Maryland Aviation Administration of hanger space at Martin State
Airport to Rosemore, and Rosemore has purchased from the Company for $345,000
the leasehold improvements, furniture and various supplies and spare parts
formerly used by the Company in connection with its operation of the aircraft
and the related charter activities.
During 1999, Rosemore and its subsidiaries purchased certain
entertainment and oil product related assets of the Company for approximately
$208,000.
Rosemore entered into an Agreement and Plan of Merger dated April 7, 2000
(the "Merger Agreement"), with the Company. The Merger Agreement proposed that
the Company be merged into Rosemore Holdings. Under the Merger Agreement, the
public stockholders of the Company would have received $9.50 per share in
exchange for their Company stock if the Merger had been approved by the
Company's stockholders. The Merger Agreement was submitted to the Company's
stockholders for approval at a special meeting of stockholders on August 24,
2000. The Merger Agreement did not receive the requisite two-thirds approval
from the Company stockholders and following the meeting the Merger Agreement was
terminated by the Company and Rosemore.
10
<PAGE>
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
None.
11
<PAGE>
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Owners of More than Five Percent. The following table sets forth the
class of shares of Company common stock, and the amount and percentage of that
class, owned by all persons known by the Company to be the beneficial owners of
more than 5% of the shares of any class of the Company's common stock on
September 30, 2000:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF TITLE PERCENT
BENEFICIAL OWNER OF CLASS AMOUNT OF CLASS
------------------- -------- ------ --------
<S> <C> <C> <C>
Rosemore "Group" (a) Class A 2,401,232 49.85
One North Charles Street Class B 954,368 17.31
Suite 2300
Baltimore, MD 21201
Novelly "Group" (b) Class A 708,375 14.70
8182 Maryland Avenue Class B 182,800 3.48
St. Louis, MO 63105
Dimensional Fund Advisors Inc. (c) Class A 288,850 6.00
1299 Ocean Avenue, 11th Floor Class B 291,100 5.54
Santa Monica, California 90401
Heartland Advisors, Inc. (c) Class B 900,000 17.14
789 North Water Street
Milwaukee, WI 53202
Franklin Resources, Inc. (c) Class B 309,600 5.90
Mariners Island Boulevard
P.O. Box 7777
San Mateo, CA 94403
</TABLE>
--------------------
(a) Rosemore Holdings, Inc., a wholly owned subsidiary of Rosemore, owns
directly over 49% of Class A Stock and over 11% of Class B Stock. Trusts for
the benefit of Mr. Henry A. Rosenberg, Jr., his sisters, Mrs. Ruth R. Marder
and Mrs. Judith R. Hoffberger, and for the benefit of members of their
respective immediate families hold all of the stock of Rosemore. Rosemore,
Rosemore Holdings, Inc., and various individuals who are beneficial owners
of Rosemore stock are a "group" as that term is used in Section 13(d)(3) of
the Exchange Act; accordingly, the Rosemore group has filed reports on
Schedule 13D with the SEC to report its holdings of Class A and Class B
Stock. Rosemore Holdings, Inc. is the holder of 2,366,526 shares of Class A
Stock and 591,629 shares of Class B Stock, and other members of the Rosemore
group are the holders of 34,706 shares of Class A Stock and 362,739 shares
of Class B Stock. Class B Stock shown in the table includes 82,270 shares of
stock granted to members of the Rosemore group as performance vested
restricted stock under the Company's 1994 Long- Term Incentive Plan and
263,039 shares that members of the Rosemore group have a right to acquire
pursuant to options granted under the 1994 Long-Term Incentive Plan that
vested on or before September 30, 2000. No additional options will vest for
members of the Rosemore group within 60 days of September 30, 2000. The
percentage calculation is based on the shares outstanding plus the shares
that may be acquired pursuant to vested options granted to members of the
Rosemore group.
(b) This information was obtained from a report on Schedule 13D dated January
14, 1983 and Amendment No. 11 dated November 8, 1999, which were filed with
the Commission. The Novelly Exempt Trust, Golnoy Barge Company, Inc. and
others acknowledge that they are a "group" as that term is used in Section
13(d)(3) of the Exchange Act.
(c) Information concerning the stock holdings of Dimensional Fund Advisors
Inc., Heartland Advisors, Inc. and Franklin Resources, Inc. was obtained
from reports on Schedule 13G and amendments to those schedules that have
been filed with the Commission. Each of these three entities reports that
it is registered as an investment adviser.
12
<PAGE>
Directors, Nominees and Officers. The following table sets forth the
number of shares of each class of Company stock and the percentage of each class
owned by each of the directors, by each nominee, by certain executive officers
and by all directors, nominees and officers as a group on September 30, 2000:
<TABLE>
<CAPTION>
SHARES OF SECURITIES BENEFICIALLY OWNED
ON SEPTEMBER 30, 2000 (a)
---------------------------------------
CLASS A STOCK CLASS B STOCK
------------- -----------------
NAME AMOUNT % AMOUNT %
---- ------ --- ------ ---
<S> <C> <C> <C> <C>
Jack Africk -- -- 500 (b)
George L. Bunting, Jr. -- -- 1,000 (b)
Michael F. Dacey 1,000 (b) -- --
Stanley A. Hoffberger -- -- -- --
Thomas M. Gibbons 200 (b) -- --
Patricia A. Goldman 100 (b) -- --
William L. Jews -- -- 200 (b)
Barry L. Miller -- -- -- --
Thomas L. Owsley 100 (b) 52,471 (c) (b)
Rev. Harold Ridley, S.J. -- -- 100 (b)
Frank B. Rosenberg (d) 1,863 (b) 52,586 (c) (b)
Henry A. Rosenberg, Jr. (e) 2,399,369 49.81 901,782 16.48
Randall M. Trembly 11,774 (b) 103,986 (c) 1.96
John E. Wheeler, Jr. 3,264 (b) 72,762 (c) 1.37
All directors, nominees and officers
as a group including those
listed above (21 individuals) 2,423,896 50.32 1,370,644 (f) 23.55
</TABLE>
----------------------
(a) Each director holds sole voting and investment power over the shares listed
except for Mr. Dacey, who holds his stock jointly with his wife; however, in
one or more cases the stock may be registered in the name of a trust or
retirement fund for the benefit of the director. In the case of officers of
Crown, the table includes interests in shares held by the trustee under the
Savings Plans, Class B Stock granted as performance vested restricted stock
under the 1994 Long-Term Incentive Plan (but not shares of performance
vested restricted stock granted but subsequently forfeited) and shares
subject to options. See footnote (c).
(b) Represents less than one percent of the shares outstanding.
(c) Includes vested options as follows: Mr. Owsley, 41,686 shares; Mr. Frank B.
Rosenberg, 39,613 shares; Mr. Trembly, 67,003 shares and Mr. Wheeler, 52,813
shares. The percentage calculations are based on the shares outstanding plus
the shares that may be acquired pursuant to the vested options granted to
the executive.
(d) Mr. Frank B. Rosenberg disclaims membership in any filing "group" as that
term is used in Section 13(d)(3) of the Exchange Act.
(e) Mr. Henry A. Rosenberg, Jr. is chairman of the board of Rosemore. The shares
listed are the shares owned by the Rosemore group other than shares reported
separately in the table as owned by Mr. Frank B. Rosenberg. Of the shares
listed above, Mr. Henry A. Rosenberg, Jr. holds 32,525 shares of Class A
Stock and 305,591 shares (including PVR Stock) of Class B Stock individually
and in Crown's Savings Plans. The Class B Stock shown on the table also
includes 223,426 shares that may be acquired by Mr. Henry A. Rosenberg, Jr.
upon the exercise of vested options granted under the 1994 Long- Term
Incentive Plan. The percentage calculation is based on the shares
outstanding plus the shares that may be acquired pursuant to vested options
granted to Mr. Rosenberg.
(f) Includes 570,865 shares that may be acquired pursuant to vested options
granted under the 1994 Long-Term Incentive Plan or under the 1995 Management
Stock Option Plan. The percentage calculation is based on the shares
outstanding plus the shares that may be acquired pursuant to vested options.
No additional options held by the executive officers will vest within 60
days of September 30, 2000.
Compliance with Section 16(a). Based upon a review of the Forms 3, 4 and
5 and any amendments thereto filed with the Commission and furnished to the
Company as well as letters provided to the Company by various reporting persons,
the Company is of the opinion that no reporting person has failed to file on a
timely basis the reports required by Section 16(a) of the Exchange Act during
the Company's most recent fiscal year.
13
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to, earned by or
paid to the Chief Executive Officer and the other four most highly compensated
executive officers for all services rendered in all capacities to the Company
and its subsidiaries during the last three fiscal years. The positions shown on
the table are those held by the officers on December 31, 1999:
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
----------------------------------------------- -----------------------------
Securities
Other Underlying All
Name and Annual Options/ Other
Principal Position Year Salary Bonus Compensation(a) SARs(b) Compensation(c)
------------------ ---- ------ ----- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Henry A. Rosenberg, Jr. 1999 $600,000 $21,093 148,000 $23,975
Chairman of the Board, 1998 600,000 21,659 43,900 19,847
President and Chief 1997 591,668 $321,390 20,519 50,000 20,799
Executive Officer
Randall M. Trembly 1999 $260,004 $18,600 55,000 $12,130
Executive Vice President 1998 255,008 18,600 16,400 12,837
1997 236,680 $163,391 17,250 17,600 12,170
John E. Wheeler, Jr. 1999 $255,004 $20,817 55,000 $12,407
Executive Vice President- 1998 241,671 21,761 15,500 10,607
Chief Financial Officer 1997 201,672 $ 79,868 18,913 7,800 9,974
Thomas L. Owsley 1999 $220,008 $18,798 25,000 $11,905
Senior Vice President- 1998 210,008 18,891 7,300 11,641
Legal 1997 188,008 $ 55,514 17,112 5,800 10,455
Frank B. Rosenberg 1999 $195,000 $18,537 23,000 $10,007
Senior Vice President- 1998 185,000 19,880 6,500 9,507
Marketing 1997 160,000 $ 56,983 18,363 6,300 8,228
</TABLE>
------------------------
(a) These amounts include automobile allowances, gasoline allowances, and the
tax gross-ups applicable to the gasoline allowances. Perquisites below the
required reporting levels are not included in this table.
(b) The 1999 grants are Appreciation Units, and the 1998 and the 1997 grants are
stock options for the purchase of shares of Class B Stock.
(c) These amounts include imputed income related to excess life insurance,
payments for executive medical insurance and the Company's matching payments
under the Savings Plans. In 1999, the imputed income for Mr. Henry A.
Rosenberg, Jr. was $12,768; for Mr. Trembly, $552 and for Mr. Owsley, $898.
The executive medical payments for each of the officers listed in the table
were $2,207. The Company's matching payments under the Savings Plans were
for Mr. Henry A. Rosenberg, Jr., $9,000; for Mr. Trembly, $9,371; for Mr.
Wheeler, $10,200; for Mr. Owsley, $8,800 and for Mr. Frank B. Rosenberg,
$7,800.
14
<PAGE>
SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
Number of % of
Securities Total SARs
Underlying Granted to
SARs Employees in Base Expiration
Name Granted(a) Fiscal Year Price Date
---- ---------- ------------ ----- ----------
<S> <C> <C> <C> <C>
Henry A. Rosenberg, Jr. 148,000 29.51 $14.91 Dec. 31, 2001
Randall M. Trembly 55,000 10.96 14.91 Dec. 31, 2001
John E. Wheeler, Jr. 55,000 10.96 14.91 Dec. 31, 2001
Thomas L. Owsley 25,000 4.98 14.91 Dec. 31, 2001
Frank B. Rosenberg 23,000 4.59 14.91 Dec. 31, 2001
</TABLE>
------------------------
(a) All of the securities shown are for Appreciation Units granted under the
Company's 1999 Long-Term Incentive Plan. The value of the Appreciation Unit
is equal to the excess of the average fair market value of the Class B Stock
during the last thirty days of the performance period which began on January
1, 1999 and ends on December 31, 2001 over the fair market value of the
stock in the three calendar years preceding the performance period, which
was $14.91 per share. There is no potential realizable value of the
Appreciation Units at assumed annual rate of stock price appreciation of
either 5% per year or 10% per year for the three year term of the 1999 Long-
Term Incentive Plan.
15
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(a)
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options/SARs at FY-End
----------------------
Exercisable Unexercisable
----------------------- ------------------------
Name Options SARs Options SARs
---- ------- ---- ------- ----
<S> <C> <C> <C> <C>
Henry A. Rosenberg, Jr. 192,126 -- 45,934 148,000
Randall M. Trembly 55,669 -- 16,801 55,000
John E. Wheeler, Jr. 45,046 -- 12,934 55,000
Thomas L. Owsley 37,319 -- 6,801 25,000
Frank B. Rosenberg 35,346 -- 6,434 23,000
</TABLE>
---------------------
(a) The Options are for the purchase of Class B Stock. There were no unexercised
in-the-money Options or SARs at fiscal year end.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR(a)
<TABLE>
<CAPTION>
Name Number of Units Performance Period
---- --------------- ------------------
<S> <C> <C>
Henry A. Rosenberg, Jr. 148,000 January 1, 1999 -
December 31, 2001
Randall M. Trembly 55,000 January 1, 1999 -
December 31, 2001
John E. Wheeler, Jr. 55,000 January 1, 1999 -
December 31, 2001
Thomas L. Owsley 25,000 January 1, 1999 -
December 31, 2001
Frank B. Rosenberg 23,000 January 1, 1999 -
December 31, 2001
</TABLE>
-----------------------
(a) All of the units listed are Appreciation Units granted under the Company's
1999 Long Term Incentive Plan. The value of the Appreciation Unit is equal
to the excess of the average fair market value of the Class B Stock during
the last thirty days of the performance period which began on January 1,
1999 and ends on December 31, 2001 over the fair market value of the stock
in the three calendar years preceding the performance period, which was
$14.91 per share.
16
<PAGE>
PENSION PLAN TABLE (a)
<TABLE>
<CAPTION>
Years of Service
----------------
Remuneration 15 20 25 30 35 40 45
------------ -- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$150,000 $ 54,000 $ 72,000 $ 94,500 $117,000 $139,500 $162,000 $184,500
200,000 72,000 96,000 126,000 156,000 186,000 216,000 246,000
250,000 90,000 120,000 157,500 195,000 232,500 270,000 307,500
300,000 108,000 144,000 189,000 234,000 279,000 324,000 369,000
400,000 144,000 192,000 252,000 312,000 372,000 432,000 492,000
500,000 180,000 240,000 315,000 390,000 465,000 540,000 615,000
600,000 216,000 288,000 378,000 468,000 558,000 648,000 738,000
</TABLE>
---------------------
(a) The table above reflects the retirement benefits (life annuity with 60
months certain) that would be payable under the Company's Retirement Plan at
various base salary levels and years of service projected to normal
retirement. The table assumes that the participant has earned the annual
remuneration shown in the table in every year of credited service. The
Retirement Plan is a career average plan with benefits based on taxable
compensation. Limitations imposed by the Internal Revenue Code or any other
statute are not reflected in the table since the Company's Supplemental
Retirement Income Plan for Senior Executives is designed to provide or
restore to participants the benefits that would have been received under the
Retirement Plan if calculated without regard to such limitations. All
officers at the Vice President level and above participate in the
Supplemental Retirement Income Plan. Mr. Henry A. Rosenberg, Jr.'s normal
retirement date was December 1, 1994. His credited service at that time was
42 years and 4 months. The estimated credited service projected to normal
retirement for the other current executives listed in the Summary
Compensation Table is: Mr. Trembly, 27 years and 10 months; Mr. Wheeler, 41
years and 8 months; Mr. Owsley, 23 years and 6 months and Mr. Frank B.
Rosenberg, 38 years and 7 months.
17
<PAGE>
PERFORMANCE GRAPH
-----------------
[GRAPH APPEARS HERE -- SEE PLOT POINTS BELOW]
1994 1995 1996 1997 1998 1999
Crown Common 100 119 98 170 57 44
AMEX Market Value Index 100 126 134 163 166 214
Value Line Int. Petr. Index 100 130 169 217 239 430
The graph above plots the cumulative stockholder's return on a $100 investment
in the Company's Common Stock (Class A and Class B Stock combined on a weighted
market value basis) over a five-year period, assuming that all dividends are
reinvested. The American Stock Exchange Market Value Index and the Value Line
Integrated Petroleum Index are also shown on the graph for comparative purposes.
It should be noted that the Value Line Index includes a number of major oil
companies that are significantly larger than the Company. Many of these
companies are also engaged in the upstream production of both crude oil and
natural gas and are in other lines of business in addition to their petroleum
refining and marketing activities.
18
<PAGE>
SHAREHOLDER PROPOSAL
Paul A. Novelly of 8182 Maryland Avenue, Clayton MO 63105, as trustee of
the Paul A. Novelly Living Trust U/I Paul A. Novelly dated July 28, 1982, has
advised the Company by letter dated November 24, 1999 that, in his capacity as
trustee, he is the owner of 16,325 shares of Class A Stock, and that he intends
to present the following shareholder proposal for consideration at the Annual
Meeting:
Shareholder Proposal: Submitted By Mr. Paul A. Novelly, Trustee U/I Paul A.
Novelly dated July 28, 1982
RESOLVED, That the stockholders of Crown Central Petroleum Corporation
believe that, for the purpose of maximizing stockholder value, the Board of
Directors should take immediate action to cause the sale, merger or other
disposition of the company or its assets as a whole.
Supporting Statement: Submitted by Mr. Paul A. Novelly, Trustee U/I Paul A.
Novelly, dated July 28, 1982
I have been a stockholder of Crown Central Petroleum Corporation since the
early 1980's. During that time, I have watched the value of my investment in
Crown decrease from a high of more than $40 per share to its recent values of
less than $5 per share. In the past decade, Crown reported net income only
twice (in 1990 and 1997), and in the period from 1990 through 1998, Crown
incurred net losses averaging $12,085,000 per year. Crown's revenues decreased
from $2,060,000,000 in 1990 to $1,264,000,000 in 1998, a 38% decrease. Industry
statistics show that in virtually every financial category, Crown performs below
its industry and sector peers and below the S&P 500.
I am not satisfied with my investment in Crown and a dramatic change is
required in Crown's strategic direction. Crown's refineries and network of
gasoline stations and convenience stores together should make it an attractive
candidate for an acquirer seeking additional sources of refined petroleum
products or additional retail outlets.
A company which I control, Apex Oil Company, Inc., has expressed interest
in merging with Crown. After our attempts to engage in substantive discussions
with Crown and its representatives failed, we forwarded a more specific proposal
directly to Crown's board of directors. I do not believe that either Crown or
its board has responded to the Apex proposal in any meaningful manner.
More importantly, I am not aware of either Crown or its board having taken
any other affirmative, strategic action that reasonably may be expected to
increase stockholder value. I am not insisting that Crown's board agree to a
merger between Crown and Apex on the terms which have been proposed. I am
concerned, however, that Crown's board may decide to make only cosmetic changes,
sell only a portion of its operations (such as valuable service stations) or
worse, do nothing. At this point, I believe that Crown's board must undertake
immediate action for the sale, merger or other disposition of the company or its
assets as a whole. Without this approach, Crown will continue what I believe to
be the failed policies - and woefully inadequate financial performance - of the
past several years.
For these reasons, I ask that you vote FOR the resolution I propose.
Board of Directors Statement in Opposition
The Board of Directors recommends that you vote AGAINST this shareholder
-------
proposal because it attempts to prevent the Company from realizing shareholder
value through the sale of selected assets in separate transactions, or through a
refinancing of Crown's debt.
The Board of Directors has explored a sale of the whole Company through a
lengthy and thorough process. The Company's stockholders did not approve a buy-
out proposal for the whole Company from Rosemore, Inc. at $9.50 per share. The
Company is, at the date of this proxy solicitation, continuing its efforts to
reach an agreement with the proponent, Mr. Novelly, and his affiliate, Apex Oil
Company, on their proposal to acquire control of Crown Company. No other
proposals have been made to acquire the whole Company.
If the Company is unable to reach an agreement with Mr. Novelly and Apex
Oil Company that receives the support of the Company's stockholders, the Company
wants to be free to pursue shareholder value through any other
19
<PAGE>
available alternative, including the sale of selected assets or a refinancing of
Crown's debt, or both. If approved, this shareholder proposal would seek to
prevent the Company from exploring other alternatives and to press the Company
into negotiating only with Mr. Novelly and Apex Oil Company, who are the only
party other than Rosemore, Inc. to have expressed an interest in acquiring the
whole Company. The proposal would seek to do this regardless of whether other
alternatives could yield greater value for the Company's stockholders, and
regardless of whether Mr. Novelly and Apex Oil Company are able to present to,
and agree with the Company on, a proposal that would receive the support of the
Company's stockholders.
THE BOARD OF DIRECTORS THEREFORE RECOMMENDS THAT YOU VOTE AGAINST THIS
-------
SHAREHOLDER PROPOSAL.
20
<PAGE>
OTHER MATTERS
Management does not know of any business other than the election of
directors and the vote on the shareholder proposal that may come before the
meeting. However, if any other business should properly come before the
meeting, the proxies will be voted with respect thereto in accordance with the
direction of the stockholders.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The principal independent public accountant for the Company and its
subsidiaries since the organization of the Company has been Ernst & Young LLP or
its predecessors, and such firm has been selected again for the current fiscal
year. A representative of Ernst & Young LLP will be present at the Annual
Meeting. Their representative does not intend to make a formal statement but
will respond to any questions.
INFORMATION INCORPORATED BY REFERENCE
The Company's Financial Statements and Supplementary Data (Item 8),
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Item 7) and supplementary financial information with respect to
Quarterly Results of Operations are set forth in the Company's Annual Report on
Form 10-K (as amended) for the fiscal year ended December 31, 1999 and are
hereby incorporated by reference. The Company undertakes to provide to you,
without charge, upon written or oral request and by first class mail or equally
prompt means, within one business day of receipt of such request, a copy of any
and all of the information that has been incorporated by reference into this
proxy statement. Please direct all requests to Crown Central Petroleum
Corporation, P.O. Box 1168, Baltimore, Maryland 21203, Attention: Dolores B.
Rawlings, Vice President - Secretary (telephone number: (410) 539-7400).
STOCKHOLDERS' PROPOSALS FOR THE 2001 ANNUAL MEETING
Proposals of stockholders of the Company intended to be presented at the
Annual Meeting of stockholders of the Company in 2001 must be received by the
Secretary of the Company, One North Charles Street, P.O. Box 1168, Baltimore,
Maryland 21203 on or before December 28, 2000 and must otherwise comply with the
rules of the Commission and the Bylaws of the Company to be eligible for
inclusion in the Proxy Statement for the Annual Meeting in 2001. Any
stockholder proposal received by the Company later than December 28, 2000 will
be deemed untimely.
By order of the Board of Directors,
Dolores B. Rawlings,
Vice President - Secretary
November 20, 2000
21
<PAGE>
[LOGO OF CROWN CENTRAL PETROLEUM CORPORATION]
DETACH HERE
PROXY
CROWN CENTRAL PETROLEUM CORPORATION
P.O. BOX 1168
BALTIMORE, MARYLAND 21203
PROXY FOR CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Solicited on behalf of the Board of Directors
for the Annual Meeting of Stockholders - December 14, 2000
Reserving the right of revocation, the undersigned hereby appoints as his or her
proxy or proxies, with full power of substitution, Thomas L. Owsley, Dolores B.
Rawlings, and Henry A. Rosenberg, Jr., or any one or more of them, to vote all
Class A Common Stock and Class B Common Stock of the undersigned at the Annual
Meeting of Stockholders of Crown Central Petroleum Corporation, a Maryland
corporation, to be held at Turf Valley Conference Center, 2700 Turf Valley Road,
Ellicott City, Maryland on December 14, 2000 or any adjournment of said meeting.
This proxy when properly executed will be voted in the manner directed by
the undersigned stockholder. If no direction is made, this proxy will be voted
for the election of the nominees named, and against the Shareholder Proposal,
--- -------
and at the proxy holder's discretion on any other matter or matters which may
properly come before the Meeting.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
[LOGO OF CROWN CENTRAL PETROLEUM CORPORATION]
CROWN CENTRAL PETROLEUM CORPORATION
Refiners/marketers of petroleum products and petrochemicals
One North Charles Street
P.O. Box 1168
Baltimore, Maryland 21203
This proxy card is provided for completion both by holders of Class A Stock and
by holders of Class B Stock.
If a stockholder owns shares of Class A Stock, the stockholder should vote on
the election of the directors to be elected by the holders of Class A Stock.
If a stockholder owns shares of Class B Stock, the stockholder should vote on
the election of the directors to be elected by the holders of Class B Stock.
If a stockholder owns shares of both Class A Stock and Class B Stock, the
stockholder should vote on the election of all directors.
DETACH HERE
Please mark
[X] vote as in
this example.
The Board of Directors recommends a vote FOR the nominees listed. The Board of
Directors recommends a vote AGAINST the Shareholder Proposal and to
GRANT discretion under item 3.
1. Election of six (6) Directors. Election of two (2) Directors.
Class A Common Stock Nominees: Class B Common Stock Nominees:
Michael F. Dacey Jack Africk and
Barry L. Miller, Stanley A. Hoffberger, Rev. Harold Ridley, S.J.
Frank B. Rosenberg, Henry A. Rosenberg, Jr.,
and John E. Wheeler, Jr.
FOR WITHHELD FOR WITHHELD
ALL FROM ALL BOTH FROM
NOMINEES NOMINEES NOMINEES BOTH NOMINEES
[ ] [ ] [ ] [ ]
2. Shareholder Proposal requiring the immediate sale of the Company or its
assets as a whole.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion on any other matter which may properly come before said
meeting or any adjournment thereof.
GRANTED WITHHELD
[ ] [ ]
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
This proxy should be signed by the stockholder in person. If a joint
account, all joint owners should sign.
Signature: ___________________________________ Date: ________________
