<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Harken Energy Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Harken Energy Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
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(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:
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(4) Proposed maximum aggregate value of transaction:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
HARKEN ENERGY CORPORATION
16285 PARK TEN PLACE, SUITE 600
HOUSTON, TEXAS 77084
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 2000
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Harken Energy Corporation, a Delaware corporation
("Harken"), will be held in the Boardroom of the American Stock Exchange, 86
Trinity Place, New York, New York on Tuesday, June 13, 2000, at 10:00 a.m., New
York time, for the following purposes:
(1) To elect three Class A Directors of Harken to hold office in
accordance with Harken's Certificate of Incorporation until
the 2003 Annual Meeting of Stockholders and until their
respective successors shall be duly elected and qualified; and
(2) To transact such other business as may properly be brought
before the Annual Meeting or any adjournment or postponement
thereof.
The Board of Directors has fixed the close of business on April 20,
2000 as the date of record for determining the stockholders entitled to notice
of and to vote, either in person or by proxy, at the Annual Meeting and any
adjournment or postponement thereof.
Harken's Annual Report on Form 10-K, a Proxy Statement containing
information relating to the matters to be acted upon at the Annual Meeting and a
form of Proxy accompany this Notice.
You are cordially invited to attend the Annual Meeting. WHETHER OR NOT
YOU PLAN TO ATTEND, YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY
SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER
THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. Your vote is important. The giving
of such proxy does not affect your right to revoke it later or vote your shares
in person if you should attend the Annual Meeting.
By Order of the Board of Directors
Larry E. Cummings
Secretary
Houston Texas
April 28, 2000
<PAGE> 3
HARKEN ENERGY CORPORATION
16285 PARK TEN PLACE, SUITE 600
HOUSTON, TEXAS 77084
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 2000
SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of the Board of Directors
of Harken Energy Corporation, a Delaware corporation ("Harken"), in connection
with the Annual Meeting of Stockholders (the "Annual Meeting"), which will be
held in the Boardroom of the American Stock Exchange, 86 Trinity Place, New
York, New York, on June 13, 2000, at 10:00 a.m., Eastern time, and at any
adjournments or postponements thereof, for the purposes set forth in the
accompanying notice. This Proxy Statement and the accompanying Proxy was first
mailed to stockholders of record on or about April 28, 2000.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on April 20,
2000 as the Record Date (herein so called) for determining the holders of common
stock, $.01 par value per share, of Harken ("Common Stock") entitled to notice
of and to vote, either in person or by proxy, at the Annual Meeting. The shares
of Common Stock are the only shares of capital stock entitled to vote at the
Annual Meeting. On April 20, 2000, Harken had 163,216,509 shares of Common Stock
outstanding.
QUORUM AND VOTING
The presence, in person or represented by proxy, of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes are counted for purposes of determining whether
a quorum is present. If a quorum is not present or represented by proxy, the
stockholders entitled to vote thereat, present in person or represented by
proxy, have the power to adjourn the meeting from time to time, without notice
other than an announcement at the meeting until a quorum is present or
represented. At any such adjourned meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally called.
In the election of Directors, each holder of Common Stock upon giving
proper notice will be entitled to cumulate his, her or its votes by voting the
total number of shares of Common Stock held by such stockholder at the close of
business on April 20, 2000 multiplied by the number of Directors to be elected,
as such stockholder may see fit. Any holder of Common Stock who intends to
cumulate his, her or its votes is required to give written notice of such
intention to the Secretary of Harken on or before the day preceding the election
at which such holder intends to cumulate his, her or its votes. Notice may be
given on the Proxy. All holders of Common Stock may cumulate their votes if any
holder has given such written notice. Discretionary authority to cumulate votes
is not being solicited. On any matters other than the election of directors
submitted to a vote of the stockholders at the Annual Meeting or any adjournment
thereof, each stockholder will be entitled to one vote for each share of Common
Stock owned of record by such stockholder at the close of business on April 20,
2000.
Abstentions and broker non-votes will have no effect on the election of
nominees to the Board of Directors.
1
<PAGE> 4
ACTIONS TO BE TAKEN UNDER THE PROXY
Proxies which are properly executed and returned will be voted at the
meeting and any adjournment thereof in accordance with the instructions thereon.
Any proxy upon which no instructions have been indicated will be voted FOR
election of management's three Class A Director nominees.
Each of the nominees for election as directors has agreed to serve if
elected. Harken knows of no reason why any of the nominees for election as
directors would be unable to serve. Should any of the nominees be unable to
serve, all proxies returned to Harken will be voted in accordance with the best
judgement of the persons named as proxies except where a contrary instruction is
given.
Harken knows of no other matters, other than those stated above, to be
presented for consideration at the Annual Meeting. If, however, other matters
properly come before the meeting or any adjournments thereof, it is the
intention of the persons named in the accompanying proxy to vote such proxy in
accordance with their judgement on any such matters. The persons named in the
accompanying proxy may also, if it is deemed advisable, vote such proxy to
adjourn the meeting from time to time.
PROXY SOLICITATION
The expense of the solicitation of proxies will be borne by Harken.
Solicitation of proxies may be made in person or by mail, telephone or telegraph
by directors, executive officers and other employees of Harken. Harken will
request banking institutions, brokerage firms, custodians, nominees and
fiduciaries to forward solicitation material to the beneficial owners of Common
Stock held of record by such persons, and Harken will reimburse such entities
for their reasonable out-of-pocket expenses. Harken has retained the services of
ChaseMellon Shareholder Services to solicit proxies by mail, telephone,
telegraph or personal contact. The estimated cost of the professional
solicitation will be approximately $5,000 plus out-of-pocket expenses.
REVOCATION OF PROXY
Any stockholder returning the accompanying proxy may revoke such proxy
at any time prior to its exercise (a) by giving written notice to the Secretary
of Harken of such revocation; (b) by voting in person at the meeting; or (c) by
executing and delivering to the Secretary of Harken a later dated proxy.
OWNERSHIP OF COMMON STOCK
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of April 20, 2000, there was no person known by Harken to
beneficially own five percent (5%) or more of the outstanding shares of Common
Stock.
2
<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the number of
shares of Common Stock beneficially owned by each Director, each named executive
officer, and all of Harken's Directors and executive officers as a group as of
April 20, 2000.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME OWNED CLASS
- --------------------------------------------- ----------------------- ------------------------
<S> <C> <C>
Michael M. Ameen, Jr. 101,000(1) (2)
Larry G. Akers 10,000 (2)
Mikel D. Faulkner 1,941,242(3) 1.19%
Bruce N. Huff 788,750(4) (2)
Gary R. Petersen 75,000(5) (2)
Donald W. Raymond 203,750(6) (2)
Guillermo Sanchez 468,750(4) (2)
Hobart A. Smith 130,950(6) (2)
Stephen C. Voss 778,750(4) (2)
Gary B. Wood 338,750(7) (2)
Larry E. Cummings 329,239(8) (2)
All Directors and Executive Officers 6,938,531(9) 4.25%
As a Group (17 Persons)
</TABLE>
(1) Includes 80,000 shares issuable within 60 days upon exercise of options
issued by Harken.
(2) Less than one percent (1%).
(3) Includes 1,891,242 shares issuable within 60 days upon exercise of
options issued by Harken.
(4) Represents shares issuable within 60 days upon exercise of options
issued by Harken.
(5) Includes 75,000 shares issuable within 60 days upon exercise of options
issued by Harken.
(6) Includes 81,250 shares issuable within 60 days upon exercise of options
issued by Harken.
(7) Includes 48,588 shares owned by Concorde Financial Corporation which is
90% owned by Dr. Wood, 75,000 shares owned by Partners Trust and 10,000
shares held by Stephanie's Partners Trust, both trusts established for
the benefit of Dr. Wood's children, 10,000 shares held by J&L Partner's
Trust, of which Dr. Wood is the primary beneficiary, 10,000 shares held
by Wood Management Trust, of which Dr. Wood is a potential beneficiary,
and 83,750 shares issuable within 60 days upon exercise of options
issued by Harken.
(8) Includes 287,564 shares issuable within 60 days upon exercise of
options issued by Harken.
(9) Includes 6,019,906 shares issuable within 60 days upon exercise of
options issued by Harken.
3
<PAGE> 6
PROPOSAL ONE: ELECTION OF DIRECTORS
The number of directors constituting the full Board of Directors of
Harken has been established as ten (10) in accordance with Harken's Bylaws. The
Certificate of Incorporation provides that the Board of Directors be divided
into Classes A, B and C, with staggered terms of three (3) years each. There are
presently nine (9) members serving on the Board of Directors with an open seat
existing in Class "C", which previously had four (4) Directors in that Class.
Three Class A Directors will be elected at the Annual Meeting to hold office
until the 2003 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified.
NOMINEES FOR ELECTION AS CLASS A DIRECTORS:
<TABLE>
<CAPTION>
DIRECTOR
NAME, AGE AND BUSINESS EXPERIENCE SINCE
- ----------------------------------------------------------------------------------- -----------
<S> <C>
MIKEL D. FAULKNER (Age - 50) - Chairman of the Board of Harken since February 1982
1991; CEO of Harken since 1982, and President of Harken from 1982 until
February 1993.
BRUCE N. HUFF (Age - 49) - President of Harken since March 1998 and Chief 1996
Financial Officer since January 2000; Senior Vice President and Chief
Financial Officer of Harken from 1990 to March 1998.
GARY R. PETERSEN (Age - 53) - Managing Director of EnCap Investments LC for the 1997
last five years; Director of Nuevo Energy Company, Energy Capital
Investment Company and Equus II.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RE-ELECTION OF MESSRS.
FAULKNER, HUFF AND PETERSEN TO THE BOARD OF DIRECTORS.
VOTE REQUIRED TO BE ELECTED AS A DIRECTOR
To be elected a Director, each nominee must receive the affirmative vote of a
plurality of the votes duly cast at the Annual Meeting.
4
<PAGE> 7
DIRECTORS CONTINUING IN OFFICE:
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME, AGE AND BUSINESS EXPERIENCE SINCE EXPIRES
- --------------------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
MICHAEL M. AMEEN, JR. (Age - 76) - From 1989 to the present, Mr. Ameen has 1994 2001
served as a part time consultant to Harken with regard to Middle Eastern
exploration projects; Independent Consultant on Middle East Affairs for the past
seven years; Director of American Near East Refugee Aid (a charitable
organization).
GARY B. WOOD, PH.D. (Age - 50) - Founder and Chief Executive Officer of Concorde 1995 2002
Companies (Concorde Financial Corporation; Concorde Capital Corporation;
Concorde Funds; and OmniMed Corporation), a private investment management and
mutual funds group he founded in 1981 in Dallas, Texas. Serves on the boards of
several private and public companies: International Hospital Corporation
(Chairman), Eoriginal, Inc. (Vice-Chairman), and Positron Corporation (OTC). He
also serves on the boards of several civic organizations: Society of
International Business Fellows (Chairman), the Health Industry Council of the
Dallas/Fort Worth Region (past Chairman), Parkland Health and Hospital System,
and the Ronald McDonald House (finance committee).
DONALD W. RAYMOND (Age - 62) - Consultant to Harken from February 1993 to August 1993 2002
1995; Chairman, CFO and Treasurer of Chuska Resources Corporation from 1988 to
February 1993; President and Director of Sireen Oil, Inc. from 1990 to present.
STEPHEN C. VOSS (Age - 51) - Executive Vice President and Chief Operating 1997 2002
Officer of Harken since September 1998, Senior Vice President of Harken from
1990 to September 1998.
LARRY G. AKERS (Age - 62) - From 1996 to the present, Mr. Akers has acted as an 2000 2001
independent energy advisor/consultant. From 1978 to 1988, he served as Chairman,
President and CEO of ESCO Energy, Inc. From 1969 to 1978, Mr. Akers served as
exploration and development manager for Laclede Gas.
HOBART A. SMITH (Age - 63) - From June 1991 to the present, Mr. Smith has served 1997 2001
as a consultant to Smith International Inc., an oil field service company;
previously Mr. Smith served as Vice President Customer Relations for Smith
International, Inc.
</TABLE>
5
<PAGE> 8
DIRECTORS' MEETINGS AND COMMITTEES
During 1999, the Board of Directors held three meetings, which included
two regularly scheduled meetings and one special meeting. The Board of Directors
also acted by written consent five times. The Board of Directors has standing
Audit, Compensation and Special Committees. During 1999, the Audit Committee,
comprised of Messrs. Ameen, Petersen and Smith, held two meetings and acted by
written consent once. The Audit Committee reviewed the financial statements of
Harken and received reports and other communications from Harken's independent
auditors. During 1999, the Compensation Committee, comprised of Messrs. Raymond,
Wood and Ameen, held two meetings and acted by written consent once. The
Compensation Committee is responsible for selecting parties eligible for grants
of stock options, for making and setting terms for such grants and for setting
compensation for the executive officers of Harken and its subsidiaries. During
1999, the Special Committee, comprised of Messrs. Wood, Smith, Ameen and Huff,
held four meetings. The Special Committee reviewed and made determinations
concerning several matters involving certain derivative securities previously
issued by Harken.
Harken does not have a Nominating Committee. Nominations for directors
of Harken are considered by the entire Board. Stockholders wishing to recommend
a candidate for consideration by the Board can do so in writing to the Secretary
of Harken at its corporate offices in Houston, Texas, giving the candidate's
name, biographical data and qualifications. Any such recommendation must be
accompanied by a written statement from the individual of his or her consent to
be named as a candidate and, if nominated and elected, to serve as a director.
During 1999, each current member of the Board of Directors attended or
acted upon at least seventy-five percent (75%) of (i) the meetings of the Board
of Directors (held during the period during which he was a Director), and (ii)
the meetings of the committees on which he served (held during the periods that
he served on such committees).
COMPENSATION OF DIRECTORS
In 1999, each non-employee Director of Harken received an annual
retainer of $10,000 plus $2,500 for each committee on which the Director serves.
Non-employee Directors do not receive any additional fees for meetings attended.
In addition, each non-employee Director then serving was granted options to
purchase 50,000 shares of Common Stock at an exercise price of $0.8125 on
December 30, 1999. The exercise price of the options granted in 1999 was equal
to the market price of the Common Stock on the date of grant. Mr. Akers, who was
elected to the Board of Directors on February 7, 2000, was granted on April 6,
2000, options to purchase 50,000 shares of Common Stock at an exercise price of
$1.00, which exercise price was equal to the market price of the Common Stock on
the date of grant.
CERTAIN MATTERS INVOLVING DIRECTORS AND EXECUTIVE OFFICERS
In July 1997, Gary R. Petersen was elected to the Board of Directors of
Harken. Mr. Petersen is also a Managing Director of EnCap Investments L.C.
("EnCap"). EnCap has historically provided financial consulting and investment
banking services to Harken. On May 19, 1998, pursuant to an Asset Purchase and
Sale Agreement, Harken purchased working interests in oil and gas properties
located in Southern Louisiana from St. Martinville Partners, Ltd. and Bargo
Energy Company. EnCap has a significant equity interest in St. Martinville
Partners. Harken issued an aggregate of 2,716,483 shares of Common Stock to St.
Martinville Partners, Ltd. and Bargo Energy Company, which had an approximate
value of $16,250,000 at the time the transaction was consummated. In July 1999,
Harken paid cash of approximately $4,000,000 in additional consideration to St.
Martinville Partners, Ltd. and Bargo Energy Company upon the resolution of
certain contingencies resulting from the purchase. Harken believes that the
terms of the transactions were no less favorable to Harken than those which
could have been obtained from an unaffiliated party.
In October 1997, Harken entered into a Development Finance Agreement
with EnCap and certain affiliates of EnCap (the "EnCap Investors"). EnCap serves
as the general partner of three of the EnCap Investors and Mr. Petersen
6
<PAGE> 9
serves as a director of a fourth EnCap Investor. In connection with the EnCap
Development Finance Agreement, EnCap received an investment banking fee of
$500,000. In October 1999, Harken purchased all the interests and rights held by
the EnCap Investors for $20,000,000 cash. Harken believes that the terms of the
transaction were no less favorable to Harken than those which could have been
obtained from an unaffiliated party.
In addition, in December 1999, Harken acquired certain oil and gas
leases covering nine exploration prospect areas from Benz Energy, Incorporated
("Benz"), for a purchase price of $12,000,000 evidenced by a convertible
debenture given by Harken to Benz (the "Debenture"), which Debenture bears
interest at 5% per annum and is convertible into Harken Common Stock at a price
of $6.50 per share. An amount of the principal of this Debenture equal to
$4,071,320.74 is due and payable on May 26, 2003. The remaining $6,803,679.26
amount of the principal of this Debenture is due and payable on November 26,
2003. EnCap is considered to be an affiliate of Benz due to its equity ownership
in Benz. EnCap also has elected two members to the Benz Board of Directors, one
of which is Mr. Petersen. Harken believes that the terms of the transaction were
no less favorable to Harken than those which could have been obtained from an
unaffiliated party.
During 1997 and 1998 Harken made loans to Bruce N. Huff, Stephen C.
Voss and Richard H. Schroeder, each at that time a Director and executive
officer of Harken in the amount of $50,000, $95,000 and $250,000 respectively.
In 1999, Harken made a loan to Larry E. Cummings, an executive officer of Harken
in the amount of $67,750. At December 31, 1999 Harken had outstanding loans to
Mr. Huff, Mr. Voss, Mr. Schroeder and Mr. Cummings in the amounts of $50,000,
$95,000, $250,000 and $67,750 respectively. As of April 20, 2000 these amounts
remained the same. Each loan is evidenced by a promissory note bearing interest
at the rate of 7 percent per annum and is due and payable upon 30 days notice
from Harken. Each of the promissory notes is secured by options to purchase
shares of Common Stock held by such officers and Directors.
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
compensation paid during fiscal years 1999, 1998 and 1997 to Harken's Chief
Executive Officer and Harken's four most highly compensated executive officers
other than the Chief Executive Officer (the "named executive officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
---------------------------------------------------------------- --------------------------------
Securities
Underlying
Name and Principal Fiscal Other Annual All Other Options/SAR's Other
Position Year Salary Bonus Compensation Compensation (#) Compensation
- ------------------ ------ ------------ --------- -------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mikel D. Faulkner 1999 $ 255,000 $ 84,904 $ 22,424(1) -- 730,000 --
Chairman and Chief 1998 $ 295,000 $ 200,000 $ 23,917(2) -- 350,000 --
Executive Officer 1997 $ 215,000 $ 130,000 $ 20,050 -- 850,000 --
Bruce N. Huff 1999 $ 195,000 $ 55,000 $ 29,125(3) $ 50,725(11) 460,000 --
President and Chief 1998 $ 225,000 $ 120,000 $ 21,327(4) -- 205,000 --
Financial Officer 1997 $ 180,000 $ 75,000 $ 7,962 -- 500,000 --
Stephen C. Voss 1999 $ 195,000 $ 55,000 $ 22,000(5) -- 460,000 --
Executive Vice President 1998 $ 225,000 $ 120,000 $ 17,000(6) -- 205,000 --
1997 $ 180,000 $ 75,000 $ 14,853 -- 500,000 --
Guillermo Sanchez 1999 $ 163,005 $ 11,500 $ 16,394(7) -- 160,000 --
President of Harken de 1998 $ 156,250 $ 40,000 $ 8,005(8) -- 100,000 --
Colombia, Ltd. 1997 $ 125,000 $ 25,000 $ 7,159 -- 250,000 --
Larry E. Cummings 1999 $ 150,000 $ 10,000 $ 15,769(9) $ 20,294(11) 120,000 --
Vice President, General 1998 $ 150,000 $ 25,000 $ 8,414(10) -- 50,000 --
Counsel and Secretary 1997 $ 110,000 $ 15,000 $ 4,212 -- 50,000 --
</TABLE>
- ----------------------
(1) Includes $2,616 relating to use of a company car, $9,808 for unused
sick leave and vacation time, and $10,000 of 401(k) matching.
(2) Includes $13,244 relating to use of a company car, $5,673 for unused
sick leave and vacation time, and $5,000 of 401(k) matching.
(3) Includes $7,875 relating to use of a company car, $11,250 for unused
sick leave and vacation time, and 10,000 of 401(k) matching.
(4) Includes $12,000 related to a car allowance, $4,327 for unused sick
leave and vacation time and $5,000 of 401(k) matching.
(5) Includes $12,000 related to a car allowance and $10,000 of 401(k)
matching.
(6) Includes $12,000 related to a car allowance and $5,000 of 401(k)
matching.
(7) Includes $6,394 for unused sick leave and vacation time and $10,000 of
401(k) matching.
(8) Includes $3,005 for unused sick leave and vacation time and $5,000 of
401(k) matching.
(9) Includes $5,769 for unused sick leave and vacation time and $10,000 of
401(k) matching.
(10) Includes $3,414 for unused sick leave and vacation time and $5,000 of
401(k) matching.
(11) Compensation related to relocation expenses.
8
<PAGE> 11
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SAR's
Underlying Granted to Exercise Basis Grant Date
Options/SAR's Employees in Price Expiration Present
Name Granted Fiscal Year ($/sh) Date Value(1)
- ----------------------- ------------- -------------- ----------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Mikel D Faulkner 250,000 7.9% 250,000 @ $2.25 05/05/09 $ 375,000
480,000 14.9% 480,000 @ $0.8125 12/30/09 $ 259,200
Bruce N. Huff 160,000 5% 160,000 @ $2.25 05/05/09 $ 240,000
300,000 9.3% 300,000 @ $0.8125 12/30/09 $ 162,000
Stephen C. Voss 160,000 5% 160,000 @ $2.25 05/05/09 $ 240,000
300,000 9.3% 300,000 @ $0.8125 12/30/09 $ 162,000
Guillermo Sanchez 60,000 1.9% 60,000 @ $2.25 05/05/09 $ 90,000
100,000 3.1% 100,000 @ $0.8125 12/30/09 $ 54,000
Larry E. Cummings 40,000 1.2% 40,000 @ $2.25 05/05/09 $ 60,000
80,000 2.5% 80,000 @ $0.8125 12/30/09 $ 43,200
</TABLE>
- --------------------------
(1) The grant date present value of these options was calculated based upon
the Black-Scholes valuation method which calculated such present value
as $1.50 per each option with a grant date market price of $2.25 and
$0.54 per each option with a grant date market price of $0.8125. This
analysis took into consideration the grant date market prices of the
Common Stock of $2.25 per share on May 5, 1999, and $0.8125 per share
on December 30, 1999, and assumed a four year life of such options and
a risk free rate of return of 5.0%.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Number of Underlying Unexercised In-The-Money
Shares/SAR's Options/SAR's at Option/SAR's at
Acquired on Value Fiscal Year End Fiscal Year End (1)
------------- -------- ---------------------------- ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mikel D. Faulkner -- -- 1,891,242 1,555,000 $ -- $ --
Bruce N. Huff -- -- 626,250 1,063,750 $ -- $ --
Stephen C. Voss -- -- 616,250 901,250 $ -- $ --
Guillermo Sanchez -- -- 468,750 391,250 $ -- $ --
Larry E. Cummings -- -- 287,564 197,500 $ -- $ --
</TABLE>
- --------------------------
(1) The closing price for the Common Stock as reported on the American
Stock Exchange as of December 31, 1999 was $0.8125. Value was
calculated on the basis of the difference between the option exercise
price and such closing price multiplied by the number of shares of
Common Stock underlying the option.
9
<PAGE> 12
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee"),
which is composed of three independent non-employee directors, develops and
oversees Harken's executive compensation strategy. The strategy is implemented
through policies and programs designed to support the achievement of Harken's
business objectives and the enhancement of stockholder value. The Committee
reviews on an ongoing basis all aspects of executive compensation. The Committee
regularly reports to the Board of Directors on all items of compensation.
The Committee's executive compensation policies and programs support
the following objectives:
o To offer compensation opportunities that attract high quality
individuals to Harken, motivates them to perform at their highest
levels and rewards them for outstanding achievement.
o To align management's compensation with the annual and long-term
performance of Harken.
o To maintain a significant portion of management's total compensation at
risk, tied primarily to the creation of stockholder value.
The basic elements of Harken's executive compensation strategy are:
Base salary. The Committee annually reviews each executive's base
salary. In establishing annual compensation for executive officers, the
Compensation Committee takes into consideration many factors in making a
determination of aggregate compensation. Such factors during 1999 included: (i)
the financial results of Harken during the prior year; (ii) the performance of
the Common Stock in the public market; (iii) prior compensation paid to such
executives over the past five years; (iv) compensation of executive officers
employed by companies comparable to Harken; (v) the achievements of management
in completing significant projects during the year; and (vi) management's
dedication and commitment in support of Harken. Although the Committee compares
the compensation paid to Harken's executive officers with compensation paid by
comparable companies, the Committee uses such comparison only as one factor in
determining compensation levels for Harken's executive officers and the
Committee does not set a target compensation level in comparison to the range of
compensation paid by comparable companies. The Committee exercises its judgement
based upon the above criteria and does not apply a specific formula or assign a
weight to each factor considered. After reviewing the above described factors
and taking into account the recommendations of the Chief Executive Officer, the
Committee set salary levels for 1999. Cash compensation for 1999 was set, on
average, at the same or lower than 1998 levels as a reflection of the lower
crude oil market prices that existed at the beginning of 1999.
Cash bonuses. The Committee annually determines cash bonus levels based
upon the same factors considered when setting each executive's base salary. In
1999, cash bonuses ranged from 6.7% of base salary to 33.3% of base salary.
These cash bonuses were determined by the Committee based primarily upon factors
and achievements made by management during the 1998 calendar year.
Long-term incentive compensation. Harken's long-term incentive
compensation consists of Harken's Stock Option Plans.
The Committee views the granting of stock options and restricted stock
awards as a significant method of aligning management's long-term interests with
those of the stockholders. The Committee encourages executives, individually and
collectively, to maintain a long-term ownership position in Harken's Common
Stock. The Committee determines awards to executives based on its evaluation of
criteria that include responsibilities, compensation, past and expected
contributions to the achievement of Harken's long-term performance goals, and
current practices of comparable companies. The exercise price of all stock
options granted in 1999 was at or above the closing price of Common Stock on the
date of grant and all stock options vest incrementally over a four-year period.
Restricted stock grants may be used selectively to attract and retain executives
and to recognize outstanding performance; however, no restricted stock awards
were made in 1999.
10
<PAGE> 13
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Mikel D. Faulkner is the Chief Executive Officer and Chairman of
the Board of Harken.
The Committee took note of the fact that Harken made significant
progress in 1998 towards implementing its overall business strategy. Harken
completed several acquisitions of oil and gas properties in 1998 which increased
Harken's domestic oil and gas reserve base and made progress in its Colombian
exploration efforts. The Committee also noted that oil and gas prices were low
at the beginning of 1999.
The Committee decreased Mr. Faulkner's base salary by 13.5% for 1999
compared to his base salary for 1998. A cash bonus of $84,904 was granted to Mr.
Faulkner. The Committee also granted Mr. Faulkner options to purchase 730,000
shares of Common Stock, which vest in equal increments over a four-year period.
In granting options to Mr. Faulkner, the Committee took into consideration,
among other factors the Committee found relevant, the amount and terms of the
options already held by Mr. Faulkner.
COMPENSATION AND SEPARATION PAYMENTS FOR A FORMER VICE-CHAIRMAN/DIRECTOR
Mr. Richard Schroeder served as Vice-Chairman of Harken for the first
six months of 1999, and as a Director of Harken for the first nine months of
1999. He resigned as Vice-Chairman on June 22, 1999 and as Director on September
17, 1999. Mr. Schroeder received his prorated annual salary until the date of
his resignation as Vice-Chairman. At the time of his resignation as
Vice-Chairman, Mr. Schroeder signed a consulting agreement with Harken pursuant
to which he receives a monthly consulting fee of $16,250 and office
reimbursement allowance of $3,250. This consulting agreement extends for
eighteen (18) months after the date of his resignation as Vice-Chairman. In
addition, the terms of certain loans made by Harken to Mr. Schroeder totaling
$250,000 were extended for the duration of the consulting agreement.
FEDERAL INCOME TAX CONSIDERATIONS
In 1993, the Internal Revenue Code was amended to place a $1.0 million
cap on the deductibility on compensation paid to individual executives of
publicly held corporations. The Committee took this into account, however, upon
review of the available regulations and interpretations, decided that it would
not make the deductibility of Harken's compensation for federal income tax
purposes a criterion to be used in establishing compensation of the named
executives during the present review cycle. The Committee took into
consideration the belief that the current compensation levels of these
executives would not be subject to the cap. The Committee continues to recognize
that compensation should meet standards of reasonableness and necessity, which
have been part of the Internal Revenue Code for many years.
By: Donald W. Raymond
Dr. Gary B Wood
Michael M. Ameen, Jr.
This foregoing report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent it shall be
specifically incorporated by reference; and shall not otherwise be deemed filed
under such Acts.
PERFORMANCE OF THE COMMON STOCK
The following performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference the proxy
statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that Harken specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
11
<PAGE> 14
The graph below compares the cumulative total stockholder return on the
Common Stock for the last five fiscal years with the cumulative total return on
the S&P 500 Index and the Dow Jones Secondary Oils Stock Index over the same
period (assuming the investment of $100 in the Common Stock, the S&P 500 Index
and the Dow Jones Secondary Oils Stock Index on December 31, 1994 and
reinvestment of all dividends).
[GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Harken Energy Corp. $ 100 $ 80 $ 140 $ 330 $ 90 $ 40
S&P 500 Index 100 138 169 226 290 351
Dow Jones Secondary Oils Stock Index 100 116 143 151 111 125
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has served as independent public accountants for
Harken since fiscal year 1979. A representative of Arthur Andersen LLP will be
invited to attend the Annual Meeting and to make a statement if such
representative desires to do so, and, if in attendance, will be available to
respond to appropriate questions.
Harken has not selected independent public accountants for fiscal year
2000. Selection of independent public accountants for fiscal year 2000 will be
made by the Board of Directors, based upon the recommendations of the Audit
Committee.
12
<PAGE> 15
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors, which is composed of
three independent non-employee directors, reviews and discusses with Harken's
auditors and management Harken's audited financial statements. The Audit
Committee does not now have a charter, but it plans to adopt a written charter
at the Board of Director's meeting to be held following the Annual Meeting on
June 13. The Audit Committee's report follows:
April 18, 2000
To the Board of Directors of Harken Energy Corporation:
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 1999.
We have discussed with the independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter
from the independent auditors required by Independence Standard No. 1,
Independence Discussions with Audit Committees, as amended, by the Independence
Standards Board, and have discussed with the auditors the auditors'
independence.
Based on the reviews and discussions referred to above, we recommend to
the Board of Directors that the financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1999.
By: Michael M. Ameen, Jr.
Gary R Petersen
Hobart A. Smith
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Harken's Directors and executive officers, and any
persons who own more than ten percent of a registered class of Harken's equity
securities, to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of Harken. Directors, executive officers and greater
than ten-percent stockholders are required by SEC regulations to furnish Harken
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms and written
representations from certain reporting persons, Harken believes that all filing
requirements applicable to its Directors, executive officers and persons who own
more than 10% of a registered class of Harken's equity securities have been
complied with during 1999.
13
<PAGE> 16
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Under the SEC's proxy rules, stockholder proposals that meet certain
conditions may be included in Harken's proxy statement and form of proxy for a
particular annual meeting. Stockholders that intend to present a proposal at
Harken's 2001 Annual Meeting of Stockholders must send the proposal to Harken so
that it is received at Harken's principal executive offices no later than
December 31, 2000 to be considered for inclusion in the proxy statement and form
of proxy related to the 2001 Annual Meeting of Stockholders. Stockholders that
intend to present a proposal that will not be included in the proxy statement
and the form of proxy, must give notice to Harken no later than March 15, 2001.
Any and all such proposals and notices should be sent to the attention of the
Secretary of Harken. Any and all such proposals should be in compliance with
other applicable Securities and Exchange Commission regulations in order to be
included in Harken's proxy materials or in its presentation at the 2001 Annual
Meeting.
By Order of the Board of Directors
Larry E. Cummings,
Secretary
Houston, Texas
April 28, 2000
14
<PAGE> 17
HARKEN ENERGY CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 13, 2000
The undersigned hereby (1) acknowledges receipt of the Notice of Annual
Meeting of Stockholders of Harken Energy Corporation ("Harken") to be held June
13, 2000, and (2) constitutes and appoints Sreven C. Voss, Larry E. Cummings and
Karen S. Bustamante and each of them, attorneys and proxies of the undersigned,
with full power of substitution to each, for and in the name, place, and stead
of the undersigned, to vote, and to act in accordance with the instructions set
forth below with respect to, all of the shares of Common Stock of Harken
standing in the name of the undersigned or with respect to which the undersigned
is entitled to vote and act at that meeting and at any meetings to which that
meeting is adjourned. In their discretion, the proxies may vote upon such other
matters as may properly come before the meeting.
PROPOSAL ONE: Election of three Class A directors of Harken, to hold
office in accordance with Harken's Certificate of Incorporation and
Bylaws until the 2003 Annual Meeting of Stockholders.
Nominees: Mikel D Faulkner, Bruce N. Huff and Gary R. Petersen.
<TABLE>
<S> <C>
[ ] FOR each of the nominees listed above, [ ] WITHHOLD AUTHORITY to vote
except marked to the contrary below. for each of the nominees listed above.
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY ONE NOMINEE, WRITE
THE NAME OF SUCH NOMINEE IN THE SPACE PROVIDED BELOW.)
----------------------------------------------------------------------
<PAGE> 18
You are encouraged to specify your choices by marking the appropriate
boxes (SEE REVERSE SIDE), but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. This Proxy will be
voted as specified. If no specification is made this Proxy will be voted FOR the
proposal. Your shares cannot be voted unless you sign and return this card.
- -------------------------- ------------------------------- ------------
(Signature) (Signature) (Date)
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON, JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH.
