<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 sec. 240.14a-11(c) or sec. 240.14a-12
MITCHELL ENERGY & DEVELOPMENT CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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)(l) 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:
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[ ] 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> 2
MITCHELL ENERGY & DEVELOPMENT CORP.
[MITCHELL ENERGY LOGO]
2001 TIMBERLOCH PLACE -- P. O. BOX 4000
THE WOODLANDS, TEXAS 77387-4000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 25, 1997
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of MITCHELL
ENERGY & DEVELOPMENT CORP. (the "Company") will be held at The Woodlands
Executive Conference Center and Resort, 2301 North Millbend Drive, The
Woodlands, Texas 77380, on Wednesday, June 25, 1997, at 10:00 A.M. Central
Daylight Time, for the following purposes:
1. To elect a Board of thirteen (13) directors;
2. To consider and act upon a proposal to appoint Arthur Andersen LLP
as the Company's independent public accountants for the fiscal year ending
January 31, 1998; and
3. To transact such other business as may properly come before the
meeting.
Holders of both Class A Common Stock and Class B Common Stock are entitled
to notice of the Annual Meeting; however, only holders of Class A Common Stock
of record at the close of business on May 7, 1997, are entitled to vote at the
Annual Meeting or any adjournment or adjournments thereof.
Information concerning the matters to be acted upon at the Annual Meeting
is set forth in the accompanying Proxy Statement.
CLASS A COMMON STOCKHOLDERS:
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES,
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING. THE PROXY IS REVOCABLE
AT ANY TIME PRIOR TO THE VOTING OF SUCH PROXY.
A copy of the Annual Report to Stockholders for the fiscal year ended
January 31, 1997, has preceded this Notice and Proxy Statement.
By Order of the Board of Directors,
/s/ THOMAS P. BATTLE
Secretary
May 15, 1997
<PAGE> 3
MITCHELL ENERGY & DEVELOPMENT CORP.
2001 TIMBERLOCH PLACE -- P. O. BOX 4000
THE WOODLANDS, TEXAS 77387-4000
PROXY STATEMENT
SOLICITATION AND REVOCABILITY OF PROXIES
Proxies are being solicited by the Board of Directors of the Company for
use at the Annual Meeting of Stockholders to be held on June 25, 1997, and at
any adjournment or adjournments thereof. In addition to mailing proxy materials,
such solicitations may be in person or by telephone by directors, officers or
employees of the Company, who will receive no additional compensation therefor.
Upon request, the Company will reimburse banks, nominees, and agents of the
stockholders for reasonable costs incurred by them in sending proxy materials to
beneficial owners of the Company's Class A Common Stock and its Class B Common
Stock (collectively, "Common Stock"). The entire cost of soliciting proxies in
the accompanying form will be borne by the Company.
This Proxy Statement and the proxy cards are first being mailed to
stockholders on or about May 15, 1997.
A PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTING OF SUCH PROXY BY THE
SUBSEQUENT EXECUTION AND SUBMISSION OF A REVISED PROXY, BY WRITTEN NOTICE OF
REVOCATION TO THE SECRETARY OF THE COMPANY, OR BY VOTING IN PERSON AT THE
MEETING.
VOTING OF PROXIES
It is the policy of this Company to provide stockholders complete privacy
in voting. Proxy cards are returned in envelopes to our independent tabulating
agent, who receives, inspects, and tabulates the proxies. Voted proxies are not
seen by nor reported to the Company, except in aggregate number and in limited
circumstances.
The proxy card accompanying the Proxy Statement mailed to each stockholder
of record of the Company's Class A Common Stock at the close of business on May
7, 1997, is designed to permit such stockholder to vote in the election of
directors and on the proposals described in this statement. It provides space
for a stockholder to withhold voting for any or all nominees for the Board of
Directors, or to abstain from voting for any proposal if so desired.
The proxy card specifies Bernard F. Clark, Vice Chairman of the Company,
and Thomas P. Battle, General Counsel and Secretary of the Company, to vote all
shares represented by proxies returned to the Company. A stockholder wishing to
name as his proxy someone other than those designated on such proxy card may do
so by crossing out the names of the two designated proxies and inserting the
name of the person he wishes to act as his proxy. In that case, it will be
necessary for the stockholder to sign the proxy and deliver it to the person
named and for the person so named to be present and vote at the meeting. Proxy
cards so changed should not be mailed to the Company.
When a stockholder's proxy card specifies a choice with respect to a matter
being voted upon, the shares will be voted accordingly. If no such
specifications are made, the shares will be voted for the election of all
nominees as directors, in favor of the appointment of Arthur Andersen LLP as the
Company's independent public accountants, and in accordance with the discretion
of the person voting it with respect to any other business properly before the
meeting. The election of directors and the ratification of the appointment of
Arthur Andersen LLP as independent public accountants will require the
affirmative vote of a majority of the shares of Class A Common Stock voting in
person or by proxy at the Annual Meeting, assuming a quorum is present. The
Bylaws of the Company require, for a quorum, the presence at the Annual Meeting
in person or by proxy of the holders of a majority of the shares of capital
stock of the Company entitled to vote. Thus,
<PAGE> 4
abstentions and broker non-votes will not be included in vote totals and will
have no effect on the outcome of any vote, although they will be counted in the
determination of a quorum.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of record of shares of Class A Common Stock of the Company at
the close of business on May 7, 1997 are entitled to vote at the Annual Meeting
or any adjournment or adjournments thereof, each share having one vote on each
matter to be presented at the Annual Meeting. There were 23,055,658 shares of
the Company's Class A Common Stock outstanding on the record date.
To the knowledge of the Company, the only person owning beneficially more
than five percent of the Company's outstanding Class A Common Stock, its only
class of outstanding voting securities, as of March 14, 1997 is as set forth in
the following table:
<TABLE>
<CAPTION>
TOTAL AMOUNT
OF CLASS A
COMMON STOCK
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OF CLASS
---------------- ------------ --------
<S> <C> <C>
George P. Mitchell.......................................... 14,726,604* 63.9%
2001 Timberloch Place
The Woodlands, Texas
</TABLE>
- ---------------
(*) See notes (a) and (b) to the table under "Security Ownership of Management."
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of each class of the
Company's Common Stock owned beneficially by each of its directors and nominees
for director, by its executive officers named in the Summary Compensation Table
and by all directors and executive officers as a group as of March 14, 1997:
<TABLE>
<CAPTION>
Total Amount Total Amount
of Class A of Class B
Common Stock Common Stock
Beneficially Percentage Beneficially Percent
Name Owned(a) of Class A Owned(a) of Class B
---- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
Robert Baldwin............................ 500 * -- *
Bernard F. Clark.......................... 33,571(c) * 40,271(c) *
William D. Eberle......................... 599 * 599 *
Roger L. Galatas.......................... 12,750 * 18,033 *
Shaker A. Khayatt......................... 266(d) * 266(d) *
Ben F. Love............................... 2,500 * 2,500 *
Walter A. Lubanko......................... 4,000 * 4,000 *
George P. Mitchell........................ 14,726,604(b) 63.9% 13,760,923(b) 47.8%
J. Todd Mitchell.......................... 16,739 * 16,739 *
M. Kent Mitchell.......................... 24,348 * 24,348 *
Constantine S. Nicandros.................. 2,000 * -- *
Philip S. Smith........................... -- * 14,000 *
W. D. Stevens............................. 33,250 * 56,417 *
Allen J. Tarbutton, Jr.................... 25,890 * 38,725 *
Raymond L. Watson......................... 2,500 * 2,500 *
J. McDonald Williams...................... -- * 2,500 *
All directors and executive officers
as a group (17 persons)................... 14,894,284(b-e) 64.6% 13,994,848(b-e) 48.6%
</TABLE>
- ---------------
* Less than 1%.
2
<PAGE> 5
(a) Unless otherwise indicated, beneficial owners have sole rather than shared
voting and investment power respecting their shares, other than shared
rights created under joint tenancy or marital property laws as between the
Company's directors and officers and their respective spouses, if any.
(b) Includes shares held by George P. Mitchell's wife (511,253 Class A and
511,253 Class B), as to which Mr. Mitchell disclaims beneficial ownership.
(c) Includes shares held by Mr. Clark's wife (16,172 Class A and 15,872 Class
B), as to which Mr. Clark disclaims beneficial ownership.
(d) Includes shares held by Mr. Khayatt's wife (266 Class A and 266 Class B), as
to which Mr. Khayatt disclaims beneficial ownership.
(e) Includes shares which certain officers have a right to acquire within 60
days following March 14, 1997 by exercising stock options. The following
shares underlying such unexercised options were added to the holdings of
each of the following executive officers: Mr. Galatas -- 5,000 Class A and
16,833 Class B; Mr. Mitchell -- 40,000 Class B; Mr. Stevens -- 30,000 Class
A and 55,667 Class B; Mr. Smith -- 14,000 Class B; Mr. Tarbutton -- 13,500
Class A and 25,333 Class B and all executive officers as a group 53,500
Class A and 164,833 Class B. No director or nominee for director (other than
Mr. Stevens and Mr. Mitchell) has the right to acquire any shares within
such 60 day period.
PROPOSAL 1 -- ELECTION OF DIRECTORS
Thirteen directors are to be elected and qualified, for a term commencing
on the date of this Annual Meeting and continuing until the next Annual Meeting
of Stockholders or until their successors have been duly elected and qualified.
Each nominee listed below currently serves as a member of the Company's Board of
Directors and was elected at the Annual Meeting held on June 26, 1996. In the
event that any nominee for director should become unavailable to serve, it is
intended that votes will be cast, pursuant to the proxy card, for such
substitute nominee as may be nominated by the Board of Directors. The Company
has no present knowledge that any of the nominees will be unable to serve.
The nominees for directors are as follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE
---- --- ------------------------------------------------- --------
<S> <C> <C> <C>
Robert W. Baldwin.................... 76 Consultant (Energy/Management); President of Gulf 1983
Refining and Marketing Company, a division of
Gulf Oil Corp. (1975-1981)
Bernard F. Clark..................... 75 Vice Chairman of the Board of the Company 1962
William D. Eberle.................... 73 Chairman of the Board of Manchester Associates, 1976
venture capital consulting (since 1977); Of
Counsel on trade issues to Kaye, Scholar,
Fierman, Hays and Handler, attorneys-at-law
(since 1993)
Shaker A. Khayatt.................... 61 President and Chief Executive Officer of Khayatt 1972
and Company, Inc., investment banking (since
1979)
Ben F. Love.......................... 72 Advisory Director of Texas Commerce Bank N.A., 1990
since 1995; Chairman and Chief Executive Officer
of Texas Commerce Bancshares, Inc. (1972-1989)
Walter A. Lubanko.................... 71 Chairman and President of W. A. Lubanko & Co., 1972
Inc., investment banking (since 1977)
George P. Mitchell................... 77 Chairman of the Board and Chief Executive Officer 1947
of the Company
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS SINCE
---- --- ------------------------------------------------- --------
<S> <C> <C> <C>
J. Todd Mitchell..................... 38 President of The Discovery Bay Company, a seismic 1993
data analysis software company (since 1992);
President of and geologist for Dolomite
Resources, Inc., a mineral exploration and
investments company (since 1987)
M. Kent Mitchell..................... 44 President and Chief Executive Officer of Bald 1988
Head Island Management, Inc., real estate
development and sales (since 1983)
Constantine S. Nicandros............. 63 Chairman of CSN and Company, an investment and 1996
consulting firm (since 1996); Chairman, President
and Chief Executive Officer of Conoco Inc.
(1987-1996); Vice Chairman of E.I. du Pont de
Nemours and Company (1991-1996)
W. D. Stevens........................ 62 President and Chief Operating Officer of the 1992
Company (since 1994); President of Exxon Company,
U.S.A. (1988-1992)
Raymond L. Watson.................... 70 Chairman of the Executive Committee of the Board 1983
of Directors of The Walt Disney Company,
entertainment company (since 1984); Vice Chairman
of The Irvine Co., real estate development (since
1986)
J. McDonald Williams................. 55 Chairman of Trammell Crow Company, real estate 1994
services (since 1994); President and Chief
Executive Officer of Trammell Crow Company
(1990-1994); Managing Partner of Trammell Crow
Company (1977-1990)
</TABLE>
There are no family relationships by blood, marriage or adoption between
any nominee for director or any of the executive officers of the Company, except
that J. Todd Mitchell and M. Kent Mitchell are sons of George P. Mitchell.
The nominees for directors hold the following directorships in other public
corporations: William D. Eberle -- America Service Group, Ampco-Pittsburgh
Corp., Barry's Jewelers, Inc., Fibreboard Corporation, Mid-States, PLC, Showscan
Entertainment, Inc., and Sirrom Capital Corporation; Ben F. Love -- Burlington
Northern, Santa Fe Corp. and El Paso Energy Company; Constantine S.
Nicandros -- Cooper Industries, Inc., and Keystone International, Inc.; Raymond
L. Watson -- The Walt Disney Company and Tejon Ranch Company; and J. McDonald
Williams -- A. H. Belo Corporation.
George P. Mitchell could be deemed to be a control person with respect to
the Company by virtue of his ownership of Common Stock of the Company.
During the Company's fiscal year ended January 31, 1993, Eprotek Inc., a
company of which Shaker A. Khayatt was secretary, filed a petition under federal
bankruptcy laws. During the past five years, approximately 60 out of about 1800
real estate partnerships in which J. McDonald Williams is or has been a general
partner are or were involved in Chapter 11 bankruptcy proceedings. Mr. Williams'
ownership interest in such partnerships resulted from his role as a managing
general partner of Trammell Crow Company.
The Company's Board of Directors has an Audit Committee which consisted
during all or part of the Company's fiscal year ended January 31, 1997
(hereinafter "fiscal 1997") of Ben F. Love, Walter A. Lubanko, Constantine S.
Nicandros, Raymond L. Watson and J. McDonald Williams. During fiscal 1997, the
Audit Committee met four times. The functions performed by the Audit Committee
include reviewing the nature of the services rendered by the Company's
independent public accountants, relating to both auditing
4
<PAGE> 7
and nonauditing services. The Committee also reviews, with representatives of
the independent public accountants, the scope of the independent public
accountants' audit of the Company's financial statements, results of those
audits, and any significant weaknesses in internal accounting controls
identified by the independent public accountants in the course of their audit.
The Committee each year recommends to the Board of Directors the appointment of
a firm of independent public accountants for the coming year, and reviews the
various other presentations and reports to the Board of Directors relating to
accounting matters and financial statements.
The Company's Board of Directors has a Compensation Committee which
consisted during all or part of fiscal 1997 of Robert W. Baldwin, William D.
Eberle, Shaker A. Khayatt, M. Kent Mitchell and Raymond L. Watson. During fiscal
1997, the Compensation Committee met three times. As stated in its Report on
Executive Compensation beginning at page 10 of this Proxy Statement, the
Compensation Committee establishes policies with respect to compensation for
executives, determines pay levels for senior executives including all named
executive officers, reviews compensation levels for all other members of Company
senior management, and sets and monitors overall compensation and benefits
programs and policies for the Company's entire work force.
The Company's Board of Directors has an Executive Committee which consists
of Ben F. Love, William D. Eberle, M. Kent Mitchell, J. Todd Mitchell and W. D.
Stevens. The Executive Committee met one time during fiscal 1997. The function
of the Executive Committee is to (i) select and nominate successor(s) to George
P. Mitchell in the event he were disabled or otherwise unable to function as
Chairman of the Board and Chief Executive Officer of the Company, (ii) nominate
individuals to serve as directors of the Company, and (iii) perform such other
functions as are delegated to it by the Board. The Committee will consider
stockholder recommendations for director sent to the Executive Committee, c/o
Thomas P. Battle, Secretary, Mitchell Energy & Development Corp., P.O. Box 4000,
The Woodlands, Texas 77387-4000.
The Company's Board of Directors met six times during fiscal 1997 and held
two special telephonic meetings. Each director attended more than 75 percent of
the aggregate number of meetings of directors and committees on which he served.
Currently, each director who is not an employee of the Company receives
$47,500 a year for serving as a director and for serving as a member of one or
more committees. Each director who is an employee of the Company receives $100
for each directors' meeting which he attends. All directors are reimbursed for
any travel, lodging and other expenses incurred in connection with attending any
meetings of directors or a committee. Additionally, the Company offers to pay
the premium on a $100,000 term life insurance policy for any of its non-employee
directors who choose to maintain such coverage. Currently the Company provides
such insurance for four of its non-employee directors at an annual premium of
$181 per policy.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for the
Chief Executive Officer and the four other most highly compensated executive
officers of the Company for services rendered in all capacities during the
fiscal years ended January 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term Compensation
------------------------
Securities
Annual Underlying
Compensation(a) Stock
----------------- Option LTIP All Other
Fiscal Salary Bonus Awards(b) Payouts(c) Compensation
Name/Principal Position Year ($) ($) (#) ($) ($)
----------------------- ------ ------- ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
George P. Mitchell............ 1997 744,167 320,000 60,000 -- 231,845(d)
Chairman and CEO 1996 680,004 200,000 60,000 -- 237,365(e)
1995 680,004 150,000 -- -- 230,882(f)
W. D. Stevens................. 1997 445,845 320,000 45,000 -- 27,251(g)
President and Chief 1996 400,008 200,000 32,000 -- 24,600(h)
Operating Officer 1995 400,008 150,000 -- -- 22,601(j)
Philip S. Smith............... 1997 347,556 150,000 21,000 127,500 20,853(k)
Senior Vice President 1996 347,556 89,400 21,000 -- 20,853(k)
1995 347,556 75,000 -- -- 20,882(k)
Roger L. Galatas.............. 1997 287,400 127,500 19,000 33,250 17,244(k)
Senior Vice President 1996 287,400 82,000 16,500 32,838 17,244(k)
1995 287,400 75,000 -- -- 17,244(k)
Allen J. Tarbutton, Jr. ...... 1997 286,008 127,500 19,000 12,750 17,160(k)
Senior Vice President 1996 286,008 83,400 16,500 -- 17,160(k)
1995 286,008 75,000 -- -- 17,160(k)
</TABLE>
- ---------------
(a) In accordance with Securities and Exchange Commission ("SEC") regulations,
no amounts have been reported for perquisites and other personal benefits
since the aggregate value of such items provided to each named officer was
less than the lesser of 10% of his annual compensation or $50,000.
(b) These options were granted under the Company's 1995 Stock Option Plan at an
exercise price equal to the fair market value of the stock on the date of
grant. Such options are exercisable within ten years from the date of grant
and vest over a three-year period.
(c) LTIP Payouts consist exclusively of cash payments under the Company's Bonus
Unit plans.
(d) For Mr. Mitchell, this consists of amounts contributed toward his personal
life insurance program ($210,000), rentals paid to him for business-related
use of properties that he owns ($21,345) (see "Certain Transactions") and
directors' meeting attendance fees ($500).
(e) For Mr. Mitchell, this consists of amounts contributed toward his personal
life insurance program ($210,000), rentals paid to him for business-related
use of properties that he owns ($26,765) (see "Certain Transactions") and
directors' meeting attendance fees ($600).
(f) For Mr. Mitchell, this consists of amounts contributed toward his personal
life insurance program ($210,000), rentals paid to him for business-related
use of properties that he owns ($20,282) (see "Certain Transactions") and
directors' meeting attendance fees ($600).
(g) For Mr. Stevens, this consists of Thrift and Savings Plan contributions
($26,751) and directors' meeting attendance fees ($500).
6
<PAGE> 9
(h) For Mr. Stevens, this consists of Thrift and Savings Plan contributions
($24,000) and directors' meeting attendance fees ($600).
(i) Not used.
(j) For Mr. Stevens, this consists of Thrift and Savings Plan contributions
($22,001) and directors' meeting attendance fees ($600).
(k) For the indicated amounts, this consists exclusively of Thrift and Savings
Plan contributions.
STOCK OPTIONS
The following table shows the stock options granted to the named executive
officers during fiscal 1997 and the potential realizable value of those grants
(on a pre-tax basis) determined in accordance with SEC rules. The information in
this table shows how much the named executive officers may eventually realize in
future dollars under two hypothetical situations: if the stock gains 5% or 10%
in value per year compounded over the ten-year life of the options. These are
assumed rates of appreciation and are not intended to forecast future
appreciation of the Company's Class B Common Stock. Also included in this table
is the increase in value to all common shareholders using the same assumed rates
of appreciation.
OPTION GRANTS IN FISCAL 1997
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------- Potential Realizable Value
Number of Percent of at Assumed Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise for Option Term(c) Grant
Options Employees in Price Expiration ---------------------------- Date
Name Granted(a) Fiscal Year(b) Per Share Date 5% 10% Value(d)
---- ---------- -------------- --------- ---------- ------------ ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
George P. Mitchell.... 60,000 12.0% $18.125 2/21/06 $ 683,940 $ 1,733,220 $319,200
W. D. Stevens......... 45,000 9.0 18.125 2/21/06 512,955 1,299,915 239,400
Philip S. Smith....... 21,000 4.2 18.125 2/21/06 239,379 606,627 111,720
Roger L. Galatas...... 19,000 3.8 18.125 2/21/06 216,581 548,853 101,080
Allen J. Tarbutton,
Jr.................. 19,000 3.8 18.125 2/21/06 216,581 548,853 101,080
Increase in value to all common stockholders(e)............................ 591,357,000 1,498,600,000
</TABLE>
- ---------------
(a) The securities underlying the options are shares of Class B Common Stock.
(b) Based on the total number of options granted to employees under the 1995
Stock Option Plan.
(c) Calculated over a ten-year period, which is equal to the maximum term of the
options.
(d) Calculated using the Black-Scholes option pricing model, based on the
Company's current dividend policy, volatility based on stock price data
over the five years preceding the option grants (0.2758) and a risk-free
interest rate (5.56%), which equaled -- at the time of the option
grants -- the yield on U. S. Treasury Strips with a time to maturity that
approximates the seven-year estimated average life of the options. The
result is a Black-Scholes option value of $5.32 per share. The Company does
not believe that the values estimated by this model, or any other model,
necessarily will be indicative of the values to be realized by an
executive.
(e) Calculated using the $18.125 per share closing price of the Class B Common
Stock on February 21, 1996 (the date of all the fiscal 1997 option grants)
and the total weighted average number of common shares outstanding during
fiscal 1997.
7
<PAGE> 10
Shown below is information with respect to the number of stock options and
stock appreciation rights ("SARs") exercised during fiscal 1997, the aggregate
dollar value realized upon exercise, the total number of unexercised options and
SARs, if any, held at January 31, 1997, and the aggregate dollar value of
in-the-money, unexercised options and SARs, if any, held at January 31, 1997.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1997
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT JANUARY 31, 1997 AT JANUARY 31, 1997
ACQUIRED ON VALUE (#) ($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
G. P. Mitchell............. -- -- 20,000 100,000 $100,000 $470,000
W. D. Stevens.............. -- -- 70,667 126,333 210,835 466,665
P. S. Smith................ -- -- 7,000 35,000 35,000 164,500
R. L. Galatas.............. -- -- 15,500 30,000 68,125 140,500
A. J. Tarbutton, Jr........ -- -- 32,500 30,000 137,188 140,500
</TABLE>
RETIREMENT PLAN
Eligibility for participation in the Company's qualified Retirement Plan is
extended to all employees (except those employees paid solely on a commission
basis and employees of the hospitality subsidiary of the Company), including
executive officers, on an equal basis, on each February 1 and August 1
immediately following the completion of one year of participation service.
Pension benefits are determined by final average annual compensation where
annual compensation is the sum of amounts shown in the columns labeled "Salary"
and "Bonus" in the Summary Compensation Table.
1997 PENSION PLAN TABLE FOR PROXY DISCLOSURE
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION FOR
36 CONSECUTIVE ANNUAL RETIREMENT INCOME AT AGE 65 EXPRESSED AS A STRAIGHT LIFE ANNUITY
MONTHS IN LAST --------------------------------------------------------------------------
120 MONTHS YEARS OF SERVICE
PRECEDING --------------------------------------------------------------------------
RETIREMENT 10 15 20 25 30 35 40
- ---------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$250,000.................. $ 53,892 $ 80,838 $107,784 $107,784 $119,784 $139,748 $154,415
$300,000.................. $ 65,092 $ 97,638 $130,184 $130,184 $144,585 $168,682 $186,283
$400,000.................. $ 87,493 $131,239 $174,986 $174,986 $194,186 $226,551 $250,018
$450,000.................. $ 98,693 $148,040 $197,386 $197,386 $218,987 $255,485 $281,886
$500,000.................. $109,894 $164,840 $219,787 $219,787 $243,788 $284,419 $313,753
$600,000.................. $132,294 $198,441 $264,588 $264,588 $293,389 $342,288 $377,489
$700,000.................. $154,695 $232,042 $309,390 $309,390 $342,991 $400,156 $441,224
$800,000.................. $177,096 $265,643 $354,191 $354,191 $392,592 $458,025 $504,959
$900,000.................. $199,496 $299,245 $398,993 $398,993 $442,194 $515,893 $568,695
</TABLE>
Eligible employees will receive a retirement benefit equal to the greater
of the amounts computed under the following two benefit Formulas A and B upon
retirement. The monthly benefit payable under Formula A is equal to 1.65% times
average monthly compensation (defined as the average of the compensation
received in the 36 highest-paid consecutive calendar months in the last 10 years
of employment) plus 0.45% times average monthly compensation in excess of 150%
of covered compensation (defined as the average of Social Security Wage Bases
over the 35 years prior to the Social Security Retirement Age), such sum then
being multiplied by the lesser of years of credited service or twenty years. The
monthly benefit payable under Formula B is equal to 1.1% times average monthly
compensation plus 0.45% times average monthly
8
<PAGE> 11
compensation in excess of 100% of covered compensation, such sum then being
multiplied by years of credited service (up to 35 years of service). Under both
formulas, accrued benefits are 100% vested after five years of credited service.
The Employee Retirement Income Security Act of 1974 ("ERISA"), as amended
by the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA") and the Tax
Reform Act of 1986, currently limits (i) the maximum benefits payable or
accruing under the Company's Retirement Plan and Thrift and Savings Plans on a
combined annual basis, (ii) the total benefit payable under the Retirement Plan
annually (currently $120,000), and (iii) the amount of compensation which can be
included for benefit calculation purposes (currently $150,000). The Company has
adopted supplemental arrangements on a non-qualified basis to provide that all
employees be credited with the full benefit accruing to such individuals under
the Retirement Plan notwithstanding such combined annual limitation, and to
maintain for certain employees who may be affected by the annual benefit limit
(for fiscal 1997, each of the named executive officers) total benefits upon
retirement at approximately the levels shown in the table set forth above.
Based on certain assumptions (which includes Board of Directors' approval),
illustrated above are the approximate annual benefits to which employees would
become entitled upon retirement at age 65 under the Retirement Plan and the
supplemental, non-qualified plans. The benefits set forth in the table reflect
the greater of the Plan's two formulas, are computed on a straight life annuity
basis, and would not be further reduced by Social Security income. For the
individuals named in the Summary Compensation Table of this Proxy Statement, the
credited years of service under the Retirement Plan, as of January 31, 1997, are
as follows: George P. Mitchell, 50 years; Roger L. Galatas, 18 years; Philip S.
Smith, 17 years; W. D. Stevens, 3 years; and Allen J. Tarbutton, Jr., 23 years.
Federal law requires that any active employee start receiving his/her
pension no later than the April 1 following the calendar year in which the age
70 1/2 is reached. Any such employee will continue to receive credit for any
additional service rendered after age 70 1/2. For fiscal 1997, George P.
Mitchell received pension payments from the Retirement Plan totaling $163,221
and payments from the supplemental non-qualified retirement plan of $374,073.
SUPPLEMENTARY LIFE INSURANCE AND OTHER AGREEMENTS
The Company has agreements with Roger L. Galatas, Philip S. Smith and Allen
J. Tarbutton, Jr., whereby the Company will pay to such officer or his estate an
amount, up to a maximum of $250,000, upon the death of such officer or his
retirement at or after age 65, provided he is still employed with the Company at
his death or at age 65, whichever occurs first. The Company has purchased a life
insurance policy on Mr. Smith's life to insure against such risk. There was no
cost to the Company for this policy for fiscal 1997 as a result of the prior
conversion of such policy to universal life coverage.
SUPPLEMENTAL SURVIVING SPOUSE BENEFIT
The Company also has an agreement with George P. Mitchell, whereby the
Company will pay to Mr. Mitchell's surviving spouse, if any, a supplemental
surviving spouse benefit in the event that Mr. Mitchell dies while still
employed by the Company, or following termination of employment resulting from
total and permanent disability. Such supplemental surviving spouse benefit shall
be in an annual amount equal to the greater of (i) Mr. Mitchell's annual base
salary from the Company in effect at the time of his death or as of the date he
becomes totally and permanently disabled, or (ii) $625,000, and shall be payable
until the earlier to occur of (i) 36 monthly installments or (ii) the death of
such surviving spouse.
SEVERANCE COMPENSATION
The Company has severance compensation agreements with Roger L. Galatas,
Philip S. Smith and Allen J. Tarbutton, Jr. The terms of the severance
agreements are invoked only in the event of a change of control (i.e., George P.
Mitchell no longer holds majority voting control of the Company). Generally, if
the executive is no longer employed in a substantially equivalent position and
being paid a salary at least equivalent to the salary being paid immediately
prior to the change of control ("Loss of Position"), the executive will receive
an
9
<PAGE> 12
amount monthly ($9,600 for Mr. Galatas; $11,250 for Mr. Smith; $9,600 for Mr.
Tarbutton) for 60 months following the Loss of Position. No payments for Loss of
Position due to a change of control shall be owed or paid to an executive after
he reaches the age of 66, or if he voluntarily severs employment with the
Company for any reason other than Loss of Position or if the Company discharges
such executive for cause.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 (the "Exchange Act") that might incorporate future filings, including
this Proxy Statement, in whole or in part, this Compensation Committee Report on
Executive Compensation and the Cumulative Shareholder Return Graph on page 13
shall not be incorporated by reference into any such filings.
ROLE OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for administering compensation programs for the Company's
executives. Responsibilities of the Committee include:
- Establishing policies with respect to compensation for executives;
- Determining pay levels for senior executives including all named
executive officers;
- Reviewing compensation levels for all other members of Company senior
management; and
- Setting and monitoring overall compensation and benefits programs and
policies for the Company's entire workforce.
The Committee is comprised of five non-employee directors.
COMPENSATION PHILOSOPHY
The Company's overall compensation philosophy is to provide executives with
compensation opportunities which reflect:
- Overall Company performance relative to historical performance, Company
goals and objectives, and industry and national economic conditions;
- Individual efforts and contributions which have added value to the
success of the Company;
- Competitive market pay levels and practices; and
- Internal equity issues.
While the Committee considers pay levels and program practices of other
companies of similar size and operating characteristics, pay levels for the
Company's executives are necessarily a function of individual and Company
performance, including expected future financial and operating conditions.
The companies included in the industry groups in the Cumulative Shareholder
Return Graph on page 13 are not exclusively the same companies with which the
Company compares compensation practices and levels. By nature of the Company's
diversified business operations, it must consider such practices in the
Exploration and Production, Gas Services, and Real Estate industries in
evaluating competitive salaries for individual executives. In choosing the
companies with which to compare compensation levels and practices, the Company
considers those companies with whom it competes for executive talent in each
line of business.
In 1994, a study conducted by an independent consulting firm concluded
that, while the Company's total compensation program was competitive, the
relative mix of compensation components (i.e., base salary, bonus and
stock-based compensation) were quite different from that of other companies. In
general, the Company's base salary component was a much larger proportion of the
total compensation package than were bonuses
10
<PAGE> 13
and/or stock related rewards. During the past two years, the Company has shifted
emphasis away from base salaries and toward variable "at risk" compensation
which is more closely tied to Company performance. In fiscal years 1995 and
1996, the Committee directed that base salaries for the executive group,
including the named executives, remain constant. Concurrently, formal annual
incentive bonus targets were established which were comparable to those found
among competitive companies. In addition, an annual long-term incentive award
program (1995 Stock Option Plan) was implemented to further align the Company's
total compensation package with competitive norms.
In determining overall compensation, the Committee does not assign
quantitative weight to different factors or follow mathematical formulae.
Rather, the Committee exercises its discretion and makes a judgment after
considering the factors it deems relevant. A discussion of each of the key
elements of the Company's executive compensation program and the factors
considered in setting each element follows. In determining any one element, the
Committee necessarily considers the effect the element has on the total
compensation package.
[Note: Effective for tax years beginning on or after January 1, 1994,
Section 162(m) of the Internal Revenue Code (the "Code") limits the
deductibility of certain compensation paid to the CEO and to each of the four
highest paid executive officers who are employed at year end to $1 million per
year. However, the policy of this Committee is to establish and maintain a
compensation program which maximizes the creation of long-term shareholder
value. In this regard, the Committee is obligated to the Board and to the
shareholders of the Company to recognize and reward performance which increases
the value of the Company. Accordingly, the Committee will continue to exercise
discretion in those instances where a purely mechanical approach necessary under
tax law considerations would compromise the interests of shareholders.]
BASE SALARIES
Base salaries for executive officer positions are determined in part by
competitive pay practices. Each year, the Company obtains information through
participation in industry specific executive compensation surveys conducted by
independent consultants. The Committee analyzes the survey information and makes
adjustments to reflect the Committee's assessment of individual performance,
experience and scope of responsibility. In fiscal 1997, an analysis of
competitive data found in such surveys indicated that, while the mix between
cash and stock-based compensation still differs from competitive norms, base
salaries and targeted bonus levels are much more in line with those found among
comparable companies. As such, the Committee approved salary increases in fiscal
1997 for nearly all executives, excluding three of the named executives.
ANNUAL INCENTIVE BONUSES
Executives are eligible to receive annual cash bonuses based on the overall
performance of the Company, as well as individual contributions and performance.
Bonuses are designed to reward performance, and as such, are not guaranteed.
Awards are determined based on the Committee's discretionary assessment of
performance. Some of the factors the Committee considers in its assessment
include:
- Revenue;
- Divisional operating earnings;
- Net earnings;
- Reserve replacement; and
- Expense reduction.
Bonuses are not based on specific achievement of predetermined criteria; rather
the Committee considers all of the above factors, as well as the current and
expected operating climate, when deciding on specific awards. This discretion
allows the Committee to utilize its judgment in granting awards which, it
believes, truly
11
<PAGE> 14
reflects individual effort expended and the results produced by those efforts.
For fiscal 1997, a target percentage of salary was established for each
executive based on competitive data for similar positions among comparable
companies. In consideration of each of the above factors, actual annualized
bonuses awarded for fiscal 1997 performance averaged 95% of target award levels.
In addition to granting bonuses to executives, fiscal 1997 bonus awards
were extended to a larger number of employees below the executive level than in
recent years. These awards were not broad-based but, rather, discretionary and
based on individual contribution.
LONG-TERM INCENTIVES
Long-term incentives are provided pursuant to the Company's Stock Option
Plans. Prior to fiscal 1993, such incentives were also provided to certain
executive officers (but not the CEO) pursuant to the Bonus Unit Plan. Both types
of plans provide a direct link between shareholder return (through stock price
appreciation) and long-term incentive compensation for executives. Awards are
granted on an annual basis and at the sole discretion of the Committee.
Stock Options
The Company utilizes stock options as a method of aligning shareholder and
executive interests. The criteria for determining individual awards include
promotions, scope of responsibility and organizational level. Stock options
granted to named executive officers during fiscal 1997 are set forth on page 7
of this Proxy Statement in the table entitled "Option Grants in Fiscal 1997."
Based on information provided by industry surveys and independent consulting
firms regarding long-term incentive compensation practices, the Committee has
decided that annual stock option grants should be awarded to executives,
including the CEO, based upon multiples of their salaries similar to those used
by comparable companies.
For the second consecutive year, awards were granted under the Company's
1995 Stock Option Plan to executives and key employees in an effort to bring the
Company in line with competitive practices as well as promote mutual commitment
to the achievement of longer term performance goals.
Bonus Unit Plan
Prior to implementation of annual grants under the 1995 Stock Option Plan,
bonus units were used as a part of the Company's long-term incentive program for
executives. Upon the redemption of bonus units, grantees receive gross
compensation in amounts equal to the difference between the market price of the
Company's common stock and a floor price (the market price of stock when the
units were awarded). The remaining bonus units, which have a floor price of
$15.875, were granted in December 1991 and expire on December 3, 1997, at which
time any then-outstanding units will be automatically redeemed.
CEO COMPENSATION
The Committee is also responsible for establishing pay levels for the CEO.
The compensation of the CEO reflects the same elements, and the Committee
considers the same factors described for the other executives in determining the
CEO's total compensation (i.e., base salary plus bonuses plus long-term
incentives). A recent evaluation of Mr. Mitchell's total compensation against
competitive data revealed that it approximated the 50th percentile of the total
cash compensation of the CEOs of comparable companies. Mr. Mitchell's bonus
award for fiscal 1997 was determined in much the same manner as the other named
executives, with a target percentage of salary established based on available
competitive data. In consideration of all factors, the actual amount paid to Mr.
Mitchell was 71% of said target. Mr. Mitchell received a 10.3% increase in base
salary during fiscal 1997. In addition, Mr. Mitchell was granted stock options
for the second consecutive year in a continuing effort to bring his long-term
compensation more in line with CEOs of comparable companies.
12
<PAGE> 15
As the founder and majority owner of the Company, Mr. Mitchell has a
significant portion of his wealth invested in the Company's stock. His
significant stock ownership provides a strong incentive for Company management
to maximize shareholder value.
The Company contributes $210,000 per year toward Mr. Mitchell's personal
life insurance program. Mr. Mitchell is currently receiving distributions from
the Company's pension plan (as required by IRS regulations and based on previous
contributions made on his behalf). No additional contributions are being made on
Mr. Mitchell's behalf to the Company's Thrift and Savings Plan.
Mr. Robert W. Baldwin
Mr. William D. Eberle
Mr. Shaker A. Khayatt
Mr. M. Kent Mitchell
Mr. Raymond L. Watson
CUMULATIVE SHAREHOLDER RETURN GRAPH
The following graph sets forth cumulative total shareholder return for the
Company's voting Common Stock, the Standard & Poor's 500 Stock Index ("S&P 500
Index") and the Dow Jones Oil-Secondary Index for the years indicated as
prescribed by SEC rules. The information contained in this graph is not
necessarily indicative of future Company performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG MITCHELL ENERGY & DEVELOPMENT CORP., THE S&P 500 INDEX
AND THE DOW JONES OIL -- SECONDARY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD DOW JONES OIL - MITCHELL ENERGY &
(FISCAL YEAR COVERED) S&P 500 SECONDARY DEVELOPMENT CORP.
<S> <C> <C> <C>
1/92 100 100 100
1/93 111 108 117
1/94 125 121 151
1/95 125 108 119
1/96 170 127 139
1/97 214 159 181
</TABLE>
* Total return for each of the last five fiscal years ending January 31. Assumes
$100 was invested on January 31, 1992 in the Company's voting Common Stock or
in the indicated index and that dividends were reinvested as received.
13
<PAGE> 16
CERTAIN TRANSACTIONS
When the Company became a publicly owned corporation in 1972, it adopted a
policy that it would not permit its officers and directors to compete with the
Company in any manner and that it would not, on terms less favorable to the
Company than could have been arranged with an unaffiliated third party, enter
into any of the following transactions: (i) make loans to officers, directors or
stockholders and (ii) sell to or purchase from its officers or directors any
properties or interests therein. Management of the Company believes that all of
the transactions summarized below are in keeping with this established policy.
Prior to the time the Company became a publicly held corporation, George P.
Mitchell acquired interests in several oil and gas properties in which the
Company also owns interests and for which the Company is operator. The Company
distributes to Mr. Mitchell his share of the revenues and charges him for his
share of the costs and expenses associated with these oil and gas operations.
For fiscal 1997, Mr. Mitchell's indebtedness to the Company on these oil and gas
transactions also represented by open accounts may be summarized as follows:
<TABLE>
<S> <C>
Largest aggregate indebtedness at any time during the
period.................................................... $147,875
Amount outstanding at January 31, 1997...................... -0-
Rate of interest paid or charged on overdue
accounts, if any.................The Chase Manhattan Bank prime + 1%
</TABLE>
These accounts are settled on a regular basis in accordance with customary
business practices.
G. Scott Mitchell, an adult son of George P. Mitchell, through LifeForms,
Inc. ("LifeForms"), a company of which he is Secretary/Treasurer and in which he
and his brother M. Kent Mitchell have a 44% ownership interest and a 5%
ownership interest, respectively, during fiscal 1997 purchased 152 developed
lots for residential development in The Woodlands from a subsidiary of the
Company, at a total purchase price of $5,550,744. The price contracted for and
paid and the terms of payment for each lot were comparable to those paid to the
subsidiary by unrelated parties for similar lots in the same areas. Also during
fiscal 1997, LifeForms paid $218,046 toward The Woodlands' participative
builders' advertising program. In addition, LifeForms obtained construction
mortgage financing from Mitchell Mortgage Company, a wholly owned subsidiary of
the Company, in an aggregate amount of $22,235,000, which loans bear interest at
an annual rate equal to two percent above the prevailing bank prime commercial
loan rate, plus an additional one percent fee paid on amounts drawn under such
loans. The outstanding principal amount of such loans was $1,555,000 as of
January 1, 1997, when the Company sold a 51% interest in Mitchell Mortgage
Company to Fort Bend Savings and Loan Association of Rosenberg. Such advertising
and financing arrangements with LifeForms are similar to arrangements with other
builders in The Woodlands.
During fiscal 1997, Mr. Mitchell purchased 220 acres of timber property
from the Company for $456,500 in cash. The terms of the sale, including the
price contracted for and paid to the Company, were the same as those included in
contracts entered into with unrelated third parties for similar property in the
same area.
Both GPM, Inc., a corporation wholly-owned by Mr. Mitchell, and Mrs.
Mitchell lease space from a subsidiary of the Company. The total rent paid
during fiscal 1997 was $84,581. In addition, the Company provides, at cost,
various administrative services to GPM, Inc., including temporary personnel,
telephone, property tax, insurance and legal services, and copier equipment,
which during fiscal 1997 aggregated $99,608.
GPM, Inc. is also included in the Company's high deductible Workers'
Compensation program. During fiscal 1997, GPM, Inc. reimbursed the Company for
claims and/or losses under such Workers' Compensation program in the amount of
$297,120.
During fiscal 1997, the Company incurred business promotion charges in the
amount of $84,689 at hotels owned by a company of Mr. Mitchell's in connection
with the Galveston Mardi Gras celebration.
The Company paid Mr. Mitchell rental reimbursements in the amount of
$21,345 during fiscal 1997 for lodging expenses when he is out-of-town on
Company-related business and for Company-related use of properties which he
owns.
14
<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
M. Kent Mitchell, a director of the Company and a member of the
Compensation Committee, has a 5% ownership interest in LifeForms. See "Certain
Transactions" for a discussion of certain business transactions during fiscal
1997 between such company and the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Exchange Act ("Section 16") requires that reports of
beneficial ownership of Common Stock and changes in such ownership be filed with
the Securities and Exchange Commission by the Company's directors and executive
officers. The Company is required to conduct a review and to identify in its
proxy statement each director or officer who failed to file any required reports
under Section 16 on a timely basis. To the Company's knowledge, all Section 16
reporting requirements applicable to its other directors and executive officers
were complied with for fiscal 1997.
PROPOSAL 2 -- APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company proposes the appointment of Arthur
Andersen LLP, independent public accountants, to audit the accounts of the
Company for the fiscal year ending January 31, 1998. If the stockholders do not
appoint Arthur Andersen LLP, the selection of independent public accountants
will be made by the Board of Directors, and Arthur Andersen LLP may at that time
be considered for such appointment.
Arthur Andersen LLP has served as the Company's independent public
accountants continuously since 1973. Representatives of Arthur Andersen LLP will
be present at the Annual Meeting of Stockholders and shall be accorded the
opportunity to make a statement if they so desire, and will also be available to
respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
To permit the Company and its stockholders to deal with stockholder
proposals in an informed and orderly manner, the Bylaws establish an advance
notice procedure with regard to the nomination (other than by or at the
direction of the Board of Directors) of candidates for election to the Board of
Directors and with regard to certain matters to be brought before an Annual
Meeting of Stockholders. In general, written notice must be received by the
Secretary of the Company not less than 20 days nor more than 60 days prior to
the meeting and must contain certain specified information concerning the person
to be nominated or the matters to be brought before the meeting as well as the
stockholder submitting the proposal. A copy of the applicable Bylaw provisions
may be obtained, without charge, upon written request to the Secretary of the
Company at the address set forth on page 1 of this Proxy Statement.
In order to be included in the proxy materials for the 1998 Annual Meeting,
stockholder proposals must be received by the Company on or before January 16,
1998.
15
<PAGE> 18
OTHER MATTERS
The Board of Directors does not intend to bring any matter before the
Annual Meeting other than those mentioned above. However, if any other matters
should be properly presented to the meeting for action by the stockholders or
should otherwise come before the meeting, it is intended that the holders of the
proxies with discretionary authority to vote on such other matters will vote
thereon in their discretion.
By Order of the Board of Directors,
/s/ THOMAS P. BATTLE
Secretary
16
<PAGE> 19
MITCHELL ENERGY & DEVELOPMENT CORP.
[MITCHELL ENERGY LOGO]
<PAGE> 20
PROXY
MITCHELL ENERGY & DEVELOPMENT CORP.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 25, 1997
The undersigned hereby appoints Bernard F. Clark and Thomas P. Battle,
or either of them, as Proxies, with power of substitution, and authorizes them,
or either of them, to represent the undersigned at the Annual Meeting of
Stockholders of Mitchell Energy & Development Corp. to be held on June 25,
1997, or any adjournment thereof, and to vote as follows the number of shares
which the undersigned would be entitled to vote if personally present.
This Proxy will be voted in accordance with your instructions or, if no
instructions are indicated, will be voted for the election of all nominees as
directors, in favor of the appointment of Arthur Andersen LLP as the Company's
independent public accountants, and in accordance with the discretion of the
person voting it with respect to any other business properly before the
meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 21
PLEASE MARK YOUR
VOTES AS INDICATED [ X ]
IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL NO. 1
AND "FOR" PROPOSAL NO. 2.
1. Election of Directors
FOR all nominees WITHHOLD AUTHORITY
listed (except as to vote for all
indicated to the contrary) nominees listed
[ ] [ ]
Nominees: Robert W. Baldwin, Bernard F. Clark, William D. Eberle, Shaker A.
Khayatt, Ben F. Love, Walter A. Lubanko, George P. Mitchell, J. Todd Mitchell,
M. Kent Mitchell, Constantine S. Nicandros, W. D. Stevens, Raymond L. Watson
and J. McDonald Williams.
To withhold authority to vote for any individual nominee, write that nominee's
name in the space provided below.
- ------------------------------------------------------------------------------
2. The appointment of Arthur Andersen LLP as the Company's Independent public
accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the Proxies are authorized to vote on such other
business as may properly come before the meeting.
I PLAN TO ATTEND MEETING. [ ]
Signature(s) Date
------------------------------------------- ----------------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
