<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 25, 2000
Notice is hereby given that the annual meeting of the shareholders of
Panhandle Royalty Company (the "Company") will be held at the Renaissance
Oklahoma City Hotel, 10 North Broadway, Oklahoma City, Oklahoma, on February 25,
2000, 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 17, 2000, 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 25, 2000
<PAGE> 3
PANHANDLE ROYALTY COMPANY
GRAND CENTRE, SUITE 210
5400 N. GRAND BOULEVARD
OKLAHOMA CITY, OK 73112
JANUARY 26, 2000
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 25, 2000, 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 26, 2000.
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
share 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 per share of
stock owned. 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 on
January 17, 2000, shall be eligible to vote. As of January 17, 2000, there were
2,056,986 shares of the Company's class A common stock of record, held by
approximately 2,540 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 17, 2000, 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 300 shares, sole voting *
and investment powers
Sam J. Cerny 5,100 shares, sole voting *
and investment powers
E. Chris Kauffman 9,300 shares, shared voting *
and investment powers
H W Peace II 27,702 shares, shared voting 1.3%
and investment powers
Ray H. Potts 480 shares, shared voting *
and investment powers
Robert A. Reece 17,544 shares, sole voting *
and investment powers
Jerry L. Smith 21,072 shares, sole voting 1.0%
and investment powers
All directors and 32,665 shares, shared voting 1.6%
officers as a and investment powers
group (9 persons)
83,529 shares, sole voting 4.0%
and investment powers
116,194 shares, total 5.6%
</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 52 Director 1991 Feb. 2001
Sam J. Cerny 67 Director 1993 Feb. 2000
E. Chris Kauffman 59 Director 1991 Feb. 2000
H W Peace II 64 Director, Chief 1991 Feb. 2002
Executive Officer and
President
Ray H. Potts 67 Director 1997 Feb. 2001
Robert A. Reece 55 Director 1986 Feb. 2002
Jerry L. Smith 59 Director, Chairman of 1987 Feb. 2002
the Board
</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 2000.
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
(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 59 Chairman of the Board 1997
H W Peace II 64 Director, Chief Executive 1991
Officer and President
Michael C. Coffman 46 Vice-President, Chief 1990
Financial Officer,
Secretary and Treasurer
Wanda C. Tucker 63 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 for the
last 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 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 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. He is also a director of National Bank of Commerce.
H W Peace II holds bachelors and masters degrees in geology. For thirty-six
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 nine 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 is immediate past
Treasurer and 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 since 1990.
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 ten 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 1999. 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, 1999, the board of directors
held five 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, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Name and All
Principal Other
Position Year Salary Bonus Compensation
- ---------------------- ------ --------- --------- ------------
<S> <C> <C> <C> <C>
H W Peace II 1999 $ 125,000 $ 13,100 $ 20,715 (1)
President & 1998 $ 122,750 $ 25,600 $ 22,215 (1)
Chief Exec. 1997 $ 113,750 $ 25,600 $ 20,903 (1)
officer
</TABLE>
(1) Represents value of 2,717 shares for 1999, 2,538 shares for
1998, and 2,106 shares for 1997, 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. All directors are participating in the Plan.
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 1999 and 1998, 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, 1999 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 2001
annual meeting of shareholders, such proposal must be received at the Company's
principal office on or before September 23, 2000, 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 25, 2000
(7)
<PAGE> 10
PROXY
Panhandle Royalty Company
Grand Centre, Suite 210, 5400 North 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 25, 2000, 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.
<TABLE>
1. ELECTION OF DIRECTORS (Two vacancies, each for a 3-year term)
<S> <C> <C> <C>
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
</TABLE>
( 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: , 2000
------------------------------
------------------------------------
SIGNATURE
------------------------------------
SIGNATURE, IF HELD JOINTLY
WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, 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.
