<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 [ ]
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
Panhandle Royalty Company
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] 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:
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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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
Notice of Annual Shareholders Meeting To be held February 28, 1997
Notice is hereby given that the annual meeting of the shareholders of Panhandle
Royalty Company (the "Company") will be held at the Marriott Hotel, 3233 N.W.
Expressway, Oklahoma City, Oklahoma, on February 28, 1997, at 9:00 A.M., for
the following purposes:
1. To elect two directors;
2. To ratify the selection of Ernst & Young LLP as independent auditors for the
Company;
3. To consider and act upon any other matter which may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on January 14, 1997, shall be
entitled to vote at the meeting.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE PREPAID ENVELOPE
ENCLOSED FOR YOUR CONVENIENCE.
YOUR VOTE IS IMPORTANT.
By order of the Board of Directors
Michael C. Coffman, Secretary
Oklahoma City, Oklahoma
January 27, 1997
Panhandle Royalty Company
Grand Centre, Suite 210 5400 N. Grand Boulevard
Oklahoma City, Oklahoma 73112
January 27, 1997
<PAGE> 3
Proxy Statement
The accompanying proxy is solicited by the Board of Directors of Panhandle
Royalty Company (the "Company") for use at the annual meeting of shareholders
(the "meeting") to be held Friday, February 28, 1997, and at any adjournment(s)
thereof.
When the proxy is properly executed and returned, the shares it represents will
be voted at the meeting in accordance with any directions noted
thereon. If no direction is indicated, it is the intention of the
persons named on the enclosed proxy t vote the proxy for the nominees
for director set forth thereon, and for the ratification of the
selection of Ernst & Young LLP, as independent auditors for the
Company. Should other matters come before the meeting, the proxy will
be voted as the board of directors of the Company may, in its
discretion, determine.
If the enclosed form of proxy is executed and returned, it nevertheless may be
revoked at any time before it is exercised, by signing and sending to
the Company a later dated proxy or a written revocation, or by
attending the meeting and voting in person.
The mailing address of the Company is Grand Centre, Suite 210, 5400 N. Grand
Blvd., Oklahoma City, OK 73112. It is anticipated that the proxies and
proxy statements will be mailed to shareholders on or about January
27, 1997.
The cost of the solicitation will be borne by the Company. It is not
contemplated that the solicitation will be other than by mail.
Voting Securities
The Articles of Incorporation of the Company provide for one vote for each
owner of class A common stock, irrespective of the number of shares of class A
common stock owned by the shareholder. At the meeting, unless specifically
provided otherwise by the Oklahoma General Corporation Act, each holder of
class A common stock shall be entitled to cast one vote. Votes may be cast by
shareholders either in person or by proxy. The owner of class B common stock
has no voting rights.
All holders of class A common stock of record at the close of business January
14, 1997, shall be eligible to vote. As of January 14, 1997, there
were 677,846 shares of the Company's class A common stock of record,
held by 2,208 shareholders. To the best knowledge of the Company, no
individual or group, as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, owns, beneficially or of record, more than five
percent of its voting stock.
The holders of a majority of shares of class A common stock issued and
outstanding must be present at the meeting, in person or by proxy, to
constitute a quorum.
A proxy is enclosed for your signature. Please return it immediately, dated and
signed exactly as the stock appears in your name. If stock is held in joint
<PAGE> 4
tenancy, both joint tenants should sign the proxy card. Proxies for stock held
by a corporation should be signed in the full corporate name, by the president
or other authorized officer. In the event the record owner of stock is
deceased, the personal representative, executor or administrator should sign
the proxy and a certified copy of the letters of appointment should be attached
to the proxy.
The Company knows of no arrangement, the operation of which would result in a
change in control of the Company at any future date.
Security Ownership of Management
The following table sets forth, as of January 17, 1997, the number of shares of
the Company's class A common stock beneficially owned by each director and
nominee for director of the Company, and by all directors and officers of the
Company as a group, the nature of the beneficial ownership of such shares, and
the percent of the outstanding shares of such stock represented by the number
of shares owned by such person or group:
<TABLE>
<CAPTION>
Amount and Nature Percent of
Director or Group of Beneficial Ownership Class
- ------------------ ---------------------------- -----------------
<S> <C> <C>
Dean Brown 1,250 shares, sole voting *
and investment powers
Michael A. Cawley 100 shares, sole voting *
and investment powers
Sam J. Cerny 100 shares, sole voting *
and investment powers
E. Chris Kauffman 3,100 shares, shared voting *
and investment powers
H W Peace II 6,523 shares, shared voting *
and investment powers
Robert A. Reece 5,848 shares, sole voting *
and investment powers
Jerry L. Smith 7,024 shares, sole voting 1.0%
and investment powers
All directors and 8,544 shares, shared voting 1.3%
officers as a and investment powers
group (9 persons) 24,325 shares, sole voting 3.6%
and investment powers
32,869 shares, total 4.8%
</TABLE>
* Less than 1% owned
<PAGE> 5
Proposal Number One: Election of Directors
The following persons are the present directors of the Company:
<TABLE>
<CAPTION>
Positions and Offices Served As
Presently Held with Director
Present Name Age the Company Since Term Ends
- ---------------- --- ---------------------- ----------- -----------
<S> <C> <C> <C>
Dean Brown 69 Director, Chairman of 1983 Feb. 1998
the Board
Michael A. Cawley 49 Director 1991 Feb. 1998
Sam J. Cerny 64 Director 1993 Feb. 1997
E. Chris Kauffman 56 Director 1991 Feb. 1997
H W Peace II 61 Director, Chief 1991 Feb. 1999
Executive Officer and President
Robert A. Reece 52 Director 1986 Feb. 1999
Jerry L. Smith 56 Director 1987 Feb. 1999
</TABLE>
All those named above also hold office in the Company's inactive subsidiary,
PHC, Inc.
There are two vacancies for three year terms beginning February 1997. Nominees
for the vacancies are Sam J. Cerny and E. Chris Kauffman. The board
of directors of the Company has no reason to believe that either of
the nominees will be unable to serve as director. However, if either
nominee should be unable, for any reason, to accept nomination or
election, it is the intention of the persons named in the enclosed
proxy to vote those proxies for the election of such other person, or
persons, as the board of directors of the Company may, in its
discretion, determine.
THE DIRECTORS RECOMMEND THAT THE SHAREHOLDERS ELECT
SAM J. CERNY AND E. CHRIS KAUFFMAN
The following is a list of the current executive officers of the Company, all
of whom hold office at the discretion of the board of directors. Any officer
may be removed from office, with or without cause, at any time by te board of
directors.
<TABLE>
<CAPTION>
Positions and Offices
Presently Held with Officer
Name Age the Company Since
- -------------- ----- -------------------------- -------
<S> <C> <C> <C>
Dean Brown 69 Chairman of the Board 1991
H W Peace II 61 Director, Chief Executive 1991
Officer and President
Michael C. Coffman 43 Vice-President, Chief Financial 1990
Officer, Secretary and Treasurer
Wanda C. Tucker 60 Vice-President of Land 1990
</TABLE>
All those named above also hold office in the Company's inactive subsidiary,
PHC, Inc.
<PAGE> 6
Information Regarding Nominees, Directors and Officers
Dean Brown is an attorney and certified public accountant. He has been engaged
in the practice of law since 1957, and is a member of the law firm of
Green, Brown and Stark, in Oklahoma City.
Michael A. Cawley is an attorney and is the president and chief executive
officer of the Samuel Roberts Noble Foundation, Inc. He has been
employed by the Noble Foundation for the last five years. Prior to
joining the Noble Foundation, he was engaged in the practice of law in
Ardmore, Oklahoma, with the firm of Thompson & Cawley. He is also a
director of Noble Drilling Corporation and Noble Affiliates, Inc.
Sam J. Cerny is a geological engineer and has been employed by Shell Oil
Company, Cleary Petroleum Corporation and it's successor company,
Grace Petroleum Corporation, where he served as President/CEO from
1976 to 1991. He is a past president of the Oklahoma Independent
Petroleum Association and for the past five years has been active as a
petroleum management consultant.
E. Chris Kauffman is a vice-president of Campbell-Kauffman, Inc., an
independent insurance agency in Oklahoma City. He has been involved
with the agency since it was formed in 1981. He is also an advisory
director of Memorial Bank of Oklahoma City and trustee of the Central
Oklahoma Transportation & Parking Authority.
Robert A. Reece is an attorney, and for the last five years has been of counsel
with the firm of Crowe & Dunlevy. He is active in the management of
his family's investments.
H W Peace II holds bachelors and masters degrees in geology. For 32 years he
has been employed as a geologist, in management or as an officer
and/or director in the petroleum industry. He has been employed by
Union Oil Company of California, Cotton Petroleum, and Hadson
Petroleum Corporation. He has been president of the Company since
1991.
<PAGE> 7
Jerry L. Smith for the last six years has been the owner of Smith Capital
Corporation in Dallas. This corporation is a private investment firm
focusing on commercial real estate and securities. Mr. Smith also
serves as Treasurer and as a Director of the Association of Graduates
of the United States Air Force Academy.
Michael C. Coffman is a certified public accountant. Since 1975, he has worked
in public accounting and as a financial officer of three publicly
owned companies involved in the oil and gas industry. He has been an
officer of the Company for the last six years.
Wanda C. Tucker has been a full-time employee of the Company since 1978 and has
served in various positions with the Company and is crrently vice
president of land.
None of the organizations described in the business experiences of the Company
directors and officers are parents, subsidiaries, or affiliates of
Panhandle Royalty Company.
The Board of Directors has three committees. The audit committee is composed of
three directors; Sam J. Cerny, Robert A. Reece, and Jerry L. Smith,
all of whom are outside directors. The audit committee recommends
engagement of the independent auditors, considers the fee arrangement
and audit results, reviews the Company's financial statements, and
considers the comments of the auditors on internal controls. This
committee met one time during the last fiscal year. A compensation
committee composed of three directors, Michael A. Cawley, E. Chris
Kauffman and H W Peace II, met one time during 1996. The committee
reviews officer performance, and recommends compensation amounts for
officers and directors. The retirement committee composed of Dean
Brown, E. Chris Kauffman, Robert A. Reece and Michael C. Coffman, Vice
President, oversee the administration of the Company's Employee Stock
Ownership Plan. This committee met once during the year.
During the fiscal year ended September 30, 1996, the board of directors held
six meetings. At each meeting a quorum of directors were present.
Remuneration of Directors and Executive Officers
The following table sets forth the remuneration received by the Company's
executive officers for services, in all capacities, to the Company and its
subsidiary during the fiscal year ended September 30, 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
Name and All
Principal Other
Position Year Salary Bonus Compensation
- ------------- ---- --------- -------- -------------
<S> <C> <C> <C> <C>
H W Peace II 1996 $108,750 $15,600 $ 18,653 (1)
President &
Chief Exec. 1995 $103,750 $15,600 $ 17,880 (1)
Officer
1994 $98,750 $15,500 $ 17,146 (1)
</TABLE>
(1) Represents value of 888 shares for 1996, 1,052 shares for 1995,
and 1,079 shares for 1994 of Company stock contributed to the
Panhandle Employee Stock Ownership Plan (ESOP) on Mr. Peace's behalf.
The ESOP is a defined contribution plan, non-voluntary and
non-contributory and serves as the retirement plan for the Company's
employees. Contributions are at the discretion of the board of
directors and, to date, all contributions have been made in shares of
Company stock. Contributions are allocated to all participants in
proportion to their salaries for the plan year and 100% vesting occurs
after three years' of service.
<PAGE> 8
Outside directors are paid $750, plus travel expenses, for attending each
meeting of the board of directors and $200 for each committee meeting
of the board. Any director who must travel in excess of 50 miles to
attend a meeting receives an additional $100 for each meeting. Outside
directors can elect to be included in the Panhandle Royalty Company
Deferred Compensation Plan For Non-Employee Directors (the "Plan").
The Plan provides that each eligible director can individually elect
to receive shares of Company stock rather than cash for board meeting
fees and board committee meeting fees. These unissued shares are
credited to each directors deferred fee account at the fairmarket
value of the shares on the date of the meeting. Upon retirement,
termination or death of the director, or upon a change in control of
the Company, the shares accrued under the Plan will be either issued
to the director or may be converted to cash, at the directors'
discretion, at the fair market value of the shares on the conversion
date, as defined.
In addition to the above, Dean Brown, chairman of the board of directors, who
is not an employee of the Company, is entitled to receive a $100 per
hour fee for time spent, other than board or committee meetings, on
Company business. During fiscal 1996 and 1995, no payments were made to
Mr. Brown under this arrangement.
Proposal Number Two: Selection of Independent Auditors
The board of directors of the Company has selected the certified public
accounting firm of Ernst & Young LLP as independent auditors to be employed by
the Company, subject to ratification by the shareholders of the Company at the
meeting. Ernst & Young LLP served as independent auditors for the Company
during the Company's last fiscal period. A vote of the majority of the
shareholders present at the meeting, in person or by proxy, is required for
approval of this proposal.
A representative of Ernst & Young LLP is expected to be present at the meeting
<PAGE> 9
to respond to appropriate questions, and will have an opportunity to make a
statement if so desired.
THE DIRECTORS RECOMMEND THAT THE SHAREHOLDERS
RATIFY THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS
Annual Financial Report
Copies of the annual report to shareholders for the fiscal year ended September
30, 1996 are being mailed simultaneously with this proxy statement.
Other Matters
The board of directors of the Company is aware of no other matters which may
come before the annual meeting. If any such matters should properly come before
the meeting, it is the intention of the persons named in the enclosed proxy to
vote such proxy as the board of directors may, in its discretion, determine.
Future Proposals
If a shareholder wishes to submit a proposal for presentation at the 1998
annual meeting of shareholders, such proposal must be received at the Company's
principal office on or before September 25, 1997, if it is to be included in
the Company's Proxy Statement for that meeting.
Form 10-KSB
A copy of the annual report to the Securities and Exchange Commission on FORM
10-KSB is available, free of charge, upon request made to:
Michael C. Coffman, Secretary
Panhandle Royalty Company
5400 N. Grand Blvd. - Suite #210
Oklahoma City, OK 73112
By Order of the Board of Directors
January 27, 1997 Michael C. Coffman,
Secretary
<PAGE> 10
(FRONT OF CARD)
P R O X Y
PANHANDLE ROYALTY COMPANY,
GRAND CENTEE #210, 5400 N. GRAND BLVD.,
OKLAHOMA CITY, OK 73112
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINT DIANE M. COLEMAN, DORRETTA K. MOORE, WANDA C.
TUCKER, AND EACH OF THEM, PROXIES AND AUTHORIZE THEM TO REPRESENT AND TO CAST A
VOTE FOR THE UNDERSIGNED ON EACH PROPOSAL, AS DESIGNATED BELOW, AT THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY 28, 1997, OR ANY ADJOURNMENTS
THEREOF. SHOULD OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE PROXIES
ARE FURTHER AUTHORIZED TO VOTE THEREON AS THE BOARD OF DIRECTORS MAY, IN ITS
DISCRETION, DIRECT.
1. ELECTION OF DIRECTORS (TWO VACANCIES, EACH FOR A 3-YEAR TERM)
SAM J. CERNY ___ FOR ___ WITHHOLD AUTHORITY TO VOTE FOR
E. CHRIS KAUFFMAN ___ FOR ___ WITHHOLD AUTHORITY TO VOTE FOR
2. PROPOSAL TO RATIFY SELECTION OF ERNST & YOUNG LLP, AS INDEPENDENT
AUDITORS FOR THE COMPANY.
___ FOR ___ AGAINST ___ WITHHOLD AUTHORITY TO VOTE FOR
(PLEASE SIGN ON REVERSE SIDE)
<PAGE> 11
(BACK OF CARD)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE NOMINEES AND FOR PROPOSAL 2.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW
DATED: ________________ 1996.
-----------------------------
SIGNATURE
-----------------------------
SIGNATURE, IF HELD JOINTLY
WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, AS EXECUTOR, ADMINISTRATOR, TRUSTEE, OR GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
