<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Panhandle Royalty Company
- --------------------------------------------------------------------------------
(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)(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:
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(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):
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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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(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 26, 1999
Notice is hereby given that the annual meeting of the shareholders of
Panhandle Royalty Company (the "Company") will be held at the Hilton Inn
Northwest, 2945 N.W. Expressway, Oklahoma City, Oklahoma, on February 26, 1999,
at 9:00 A.M., for the following purposes:
1. To elect three 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 12, 1999, 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
/s/ MICHAEL C. COFFMAN
-------------------------------------
Michael C. Coffman, Secretary
Oklahoma City, Oklahoma
January 22, 1999
<PAGE> 3
PANHANDLE ROYALTY COMPANY
GRAND CENTRE, SUITE 210
5400 N. GRAND BOULEVARD
OKLAHOMA CITY, OK 73112
January 22, 1999
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 26, 1999, 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 to 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 22, 1999.
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 12, 1999, shall be eligible to vote. As of January 12, 1999, there were
682,524 shares of the Company's class A common stock of record, held by 2,134
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.
(1)
<PAGE> 4
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
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 12, 1999, 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>
Michael A. Cawley 100 shares, sole voting *
and investment powers
Sam J. Cerny 1,200 shares, sole voting *
and investment powers
E. Chris Kauffman 3,100 shares, shared voting *
and investment powers
H W Peace II 8,371 shares, shared voting 1.2%
and investment powers
Ray H. Potts 160 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 10,392 shares, shared voting 1.5%
officers as a and investment powers
group (9 persons)
27,103 shares, sole voting 4.0%
and investment powers
37,495 shares, total 5.5%
</TABLE>
* Less than 1% owned
(2)
<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> <C>
Michael A. Cawley 51 Director 1991 Feb. 2001
Sam J. Cerny 66 Director 1993 Feb. 2000
E. Chris Kauffman 58 Director 1991 Feb. 2000
H W Peace II 63 Director, Chief 1991 Feb. 1999
Executive Officer and
President
Ray H. Potts 66 Director 1997 Feb. 2001
Robert A. Reece 54 Director 1986 Feb. 1999
Jerry L. Smith 58 Director, Chairman of 1987 Feb. 1999
the Board
</TABLE>
All those named above also hold office in the Company's inactive subsidiary,
PHC, Inc.
There are three vacancies for three year terms beginning February 1999.
Nominees for the vacancies are HW Peace II, Robert A. Reece and Jerry L. Smith.
The board of directors of the Company has no reason to believe that any of the
nominees will be unable to serve as director. However, if any 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
HW PEACE II, ROBERT A. REECE AND JERRY L. SMITH
(3)
<PAGE> 6
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 the board of
directors.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
PRESENTLY HELD WITH OFFICER
NAME AGE THE COMPANY SINCE
- ---- --- --------------------- -------
<S> <C> <C> <C>
Jerry L. Smith 58 Chairman of the Board 1997
H W Peace II 63 Director, Chief Executive 1991
Officer and President
Michael C. Coffman 45 Vice-President, Chief 1990
Financial Officer,
Secretary and Treasurer
Wanda C. Tucker 62 Vice-President of Land 1990
</TABLE>
All those named above also hold office in the Company's inactive
subsidiary, PHC, Inc.
INFORMATION REGARDING NOMINEES, DIRECTORS AND OFFICERS
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 eight 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 is 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 had been involved with the Agency since it
was formed in 1981. In addition, he is the chief financial officer and treasurer
of the Insurance Center Agency, Inc. He is also a director of First State Bank
in Oklahoma City and is chairman 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 thirty-five
years he has been employed as a geologist, in management or as an officer and/or
director with companies 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.
Jerry L. Smith for the last eight 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.
(4)
<PAGE> 7
Ray H. Potts holds a master's degree in geology from the University of Missouri.
He was employed for six years as an exploration geologist for the Pure Oil
Company and in 1967 formed Potts-Stephenson Exploration Company, later changed
to PSEC, Inc. In 1997 PSEC, Inc. was sold to ONEOK Resources Company. Mr. Potts
is currently active in the oil and gas industry and has been involved in several
national and state trade associations, geological societies and numerous civic
activities.
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 nine 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 has held the position of Vice
President of Land for the past nine years.
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 1998. The
committee reviews officer performance, and recommends compensation amounts for
officers and directors. The retirement committee composed of E. Chris Kauffman,
Robert A. Reece, Ray H. Potts 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, 1998, 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, 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
NAME AND ALL
PRINCIPAL OTHER
POSITION YEAR SALARY BONUS COMPENSATION
-------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
H W Peace II 1998 $122,750 $25,600 $ 22,215 (1)
President & 1997 $113,750 $25,600 $ 20,903 (1)
Chief Exec. 1996 $108,750 $15,600 $ 18,653 (1)
officer
</TABLE>
(1) Represents value of 846 shares for 1998, 702 shares for 1997,
and 888 shares for 1996 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.
(5)
<PAGE> 8
Outside directors are paid $1,000, 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 fair market
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, Jerry L. Smith, 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 1998 and 1997, no payments were made to Mr. Smith, 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 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
(6)
<PAGE> 9
ANNUAL FINANCIAL REPORT
Copies of the annual report to shareholders for the fiscal year ended
September 30, 1998 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 2000
annual meeting of shareholders, such proposal must be received at the Company's
principal office on or before September 24, 1999, 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
/s/ MICHAEL C. COFFMAN
-----------------------------------
Michael C. Coffman, Secretary
January 22, 1999
(7)
<PAGE> 10
P R O X Y
PANHANDLE ROYALTY COMPANY, GRAND CENTRE #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 26, 1999, 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 (Three vacancies, each for a 3-year term)
HW Peace II [ ] FOR [ ] WITHHOLD AUTHORITY TO VOTE FOR
Robert A. Reece [ ] FOR [ ] WITHHOLD AUTHORITY TO VOTE FOR
Jerry L. Smith [ ] 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
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: ________________ 1999
------------------------------
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.
