<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
------------------------------------
GULF CANADA RESOURCES LIMITED
(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:
(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.:
(3) Filing Party:
(4) Date Filed:
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<PAGE> 2
GULF LOGO
GULF CANADA RESOURCES LIMITED
NOTICE OF
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
An Annual and Special Meeting (the "Meeting") of the holders
("Shareholders") of ordinary shares ("Ordinary Shares") of GULF CANADA RESOURCES
LIMITED (the "Company") will be held in the Auditorium, 3rd floor, Gulf Canada
Square, 401 - 9th Avenue S.W., Calgary, Alberta, Canada on Wednesday, the 11th
day of May, 1999, at the hour of 2:00 p.m. (Calgary time) for the purposes of:
1. receiving the report of the directors and the Consolidated Financial
Statements of the Company and its subsidiaries for the year ended
December 31, 1998, and the Auditors' Report thereon;
2. electing directors of the Company;
3. appointing auditors, with remuneration to be fixed by the directors;
4. considering and, if deemed advisable, passing a resolution to reserve
an additional 8,000,000 Ordinary Shares for issuance under the
Incentive Stock Option Plan (1994) (the "1994 Plan); and
5. transacting such further and other business as may properly come
before the Meeting.
Shareholders are invited to attend the Meeting. Only Shareholders of record
at the close of business on April 2, 1999 will be entitled to vote at the
Meeting except to the extent that a person has transferred any Ordinary Shares
of the Company after that date and the new holder of such shares establishes
proper ownership and requests not later than ten days before the Meeting to be
included in the list of Shareholders eligible to vote at the Meeting.
Shareholders who are unable to attend the Meeting are requested to date,
sign and return the enclosed form of proxy in the envelope provided for this
purpose to the Company c/o Montreal Trust Company of Canada, 600, 530 - 8th
Avenue S.W., Calgary, Alberta, T2P 3S8.
DATED at Calgary, Alberta, Canada this 30th day of March, 1999.
By Order of the Board,
"CRAIG S. GLICK"
Craig S. Glick
Secretary
<PAGE> 3
GULF CANADA RESOURCES LIMITED
401 - 9TH AVENUE S.W.
CALGARY, ALBERTA
T2P 2H7
MANAGEMENT PROXY CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT PROXY CIRCULAR ("PROXY CIRCULAR") IS FURNISHED IN
CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF GULF CANADA RESOURCES
LIMITED ("GULF" OR THE "COMPANY") OF PROXIES FOR USE AT THE ANNUAL AND SPECIAL
MEETING OF SHAREHOLDERS OF THE COMPANY (THE "MEETING") to be held at the time
and place and for the purposes set forth in the accompanying Notice of Annual
and Special Meeting. The solicitation will be primarily by mail but proxies may
also be solicited personally or by telephone by regular employees of the Company
without special compensation. In accordance with regulatory requirements, Gulf
will pay brokers or nominees holding Ordinary Shares of Gulf in their names or
in the names of their principals for their proper expenses in sending
solicitation material to their principals. The cost of solicitation will be
borne by the Company. Information contained in this Proxy Circular is given as
of March 26, 1999 unless otherwise specifically stated.
This Proxy Circular and the accompanying notice and form of proxy are being
mailed to Shareholders on or about April 19, 1999. The annual report to
shareholders for the Company's financial year ended December 31, 1998 is also
being mailed to shareholders contemporaneously with this Proxy Circular,
although the annual report does not form a part of the material for the
solicitation of proxies.
APPOINTMENT OF PROXIES
Shareholders desiring to be represented at the Meeting by a proxyholder
must deposit their proxies with Montreal Trust Company of Canada, 600, 530 - 8th
Avenue S.W., Calgary, Alberta, T2P 3S8, no later than 4:30 p.m. (Calgary time)
on May 7, 1999 or with the Chairman of the Meeting prior to the commencement of
the Meeting.
A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER OF GULF), OTHER THAN PERSONS DESIGNATED IN THE FORM OF PROXY
ACCOMPANYING THIS PROXY CIRCULAR, AS NOMINEE TO ATTEND AND ACT FOR AND ON BEHALF
OF SUCH SHAREHOLDER AT THE MEETING AND MAY EXERCISE SUCH RIGHT BY INSERTING THE
NAME OF SUCH PERSON IN THE BLANK SPACE PROVIDED ON THE FORM OF PROXY. PROXIES
MAY BE REVOKED ANY TIME PRIOR TO THEIR USE BY DELIVERING A DOCUMENT EXECUTED BY
THE BENEFICIAL OWNER OR HIS OR HER ATTORNEY, AUTHORIZED IN WRITING, EITHER TO
THE ATTENTION OF THE CORPORATE SECRETARY AT 1600, 401 - 9TH AVENUE S.W.,
CALGARY, ALBERTA PRIOR TO 4:30 P.M. (CALGARY TIME) ON MAY 7, 1999, OR TO THE
CHAIRMAN OF THE MEETING PRIOR TO THE COMMENCEMENT OF THE MEETING. PROXIES MAY BE
REVOKED AT ANY TIME PRIOR TO THEIR USE.
VOTING RIGHTS
As at March 26, 1999, there were outstanding 348,950,044 Ordinary Shares,
each of which carries the right to one vote. The presence in person or by proxy
of shareholders holding at least 5 per cent of the Ordinary Shares will
constitute a quorum for the transaction of business at the Meeting. The Ordinary
Shares represented by proxy will be voted or withheld from voting in accordance
with the instructions of the beneficial shareholder on any ballot that may be
called for and, where the person whose proxy is solicited specifies a choice
with respect to any matter to be voted upon, the Ordinary Shares shall be voted
in accordance with the specification so made. IF NO CHOICE IS SPECIFIED, THE
ORDINARY SHARES REPRESENTED BY SUCH A PROXY WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS, AND "FOR" THE APPOINTMENT OF ERNST & YOUNG AS AUDITORS, WITH
REMUNERATION TO BE FIXED BY THE DIRECTORS.
The form of proxy confers discretionary authority with respect to
amendments to matters identified in the Notice of Annual and Special Meeting of
Shareholders or other matters which may properly come before the Meeting or any
adjournment thereof, including the replacement of any nominee identified for
election to the Board of Directors if such nominee is unable to serve or will
not serve.
Under corporate law applicable to the Company, shares that are registered
in the name of a nominee, including brokers, and not beneficially owned by the
nominee may not be voted on any matter in the absence of instructions from the
beneficial owner of the shares.
1
<PAGE> 4
Every question submitted to the Meeting shall be decided in the first
instance on a show of hands. A shareholder or proxyholder entitled to vote at
the Meeting may demand a ballot either before or after any vote by show of
hands. In case of an equality of votes, the Chairman of the Meeting shall both
on a show of hands and at a poll have a second or casting vote in addition to
the vote or votes to which he may be entitled as a shareholder or proxy nominee.
Directors will be elected by a plurality of votes cast by shareholders. The
twelve nominees receiving the highest vote totals will be elected as directors
of the Company. The auditors of the Company will also be appointed by a
plurality of the votes cast. Therefore, abstentions will have no effect on such
matters. A simple majority of the votes cast at the Meeting is required to
approve any other matter which may be voted on at the Meeting.
The Board of Directors has fixed the close of business on April 2, 1999 as
the record date (the "Record Date"). All of the holders of record of Ordinary
Shares of the Company at the close of business on April 2, 1999 will be entitled
to vote at the Meeting except that if a shareholder transfers Ordinary Shares
after such date, the person who acquires the Ordinary Shares may vote those
Ordinary Shares at the Meeting if, not later than 10 days before the Meeting,
that person requests the Company to add his or her name to the list of
shareholders entitled to vote at the Meeting and establishes that the person
owns such Ordinary Shares.
BENEFICIAL OWNERSHIP OF SECURITIES
MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 26, 1999, certain information
with respect to the ownership of Ordinary Shares as to all persons or groups
known by the Company to be the beneficial owners of 5% or more of the
outstanding Ordinary Shares, the Cumulative Redeemable Auction Perpetual Senior
Preference Shares, Series 1 ("Series 1 Preferred Shares") and Cumulative
Redeemable Auction Perpetual Senior Preference Shares, Series 2 ("Series 2
Preferred Shares") and of: (i) each director, (ii) each nominee for director,
(iii) each of the executive officers named in the Summary Compensation Table
("Named Executive Officers") who are currently employed by Gulf and (iv) all
executive officers and directors of the Company as a group. Unless otherwise
indicated, each of the following persons may be deemed to have sole voting and
dispositive power with respect to such shares. Information set forth in the
table with respect to beneficial ownership of Ordinary Shares has been obtained
from filings made by the named beneficial owners with the Canadian securities
regulators or the U.S. Securities and Exchange Commission ("Commission") or, in
the case of executive officers and certain directors of the Company, has been
provided to the Company by such individuals. The address of the Company's
directors is care of Gulf Canada Resources Limited, 401 - 9th Avenue S.W.,
Calgary, Alberta T2P 2H7.
<TABLE>
<CAPTION>
NUMBER PERCENT
NAME AND ADDRESS CLASS OF SHARES OF CLASS
- ---------------- ----- ---------- --------
<S> <C> <C> <C>
A&G RESOURCES CORPORATION................................... Ordinary 52,205,476(1) 14.96
c/o 141 Adelaide Street West
Suite 310
Toronto, Ontario M3H 3L9
SOUTHEASTERN ASSET MANAGEMENT, INC.......................... Ordinary 36,840,400 10.55
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
PARTICIPANTS GROUP.......................................... Ordinary 41,895,606 12.00
c/o Torch Energy Advisors Incorporated
1221 Lamar, Suite 6000
Houston, Texas 77010
MANNING & NAPIER ADVISORS, INC.............................. Ordinary 31,576,594 9.04
1100 Chase Square
Rochester, New York 14604
ROBERT H. ALLEN............................................. Ordinary 43,001(4) *
RICHARD H. AUCHINLECK....................................... Ordinary 1,100,017(5) *
STANLEY H. HARTT............................................ Ordinary 18,001(5) *
RAYMOND H. HEFNER, JR....................................... Ordinary 208,136(6) *
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NUMBER PERCENT
NAME AND ADDRESS CLASS OF SHARES OF CLASS
- ---------------- ----- ---------- --------
<S> <C> <C> <C>
H. EARL JOUDRIE............................................. Ordinary 176,619(5) *
T. MICHAEL LONG............................................. Ordinary 14,284,953(7) 4.09
THE RIGHT HONOURABLE DONALD F. MAZANKOWSKI.................. Ordinary 23,413(5) *
ALAN H. MICHELL............................................. Ordinary 20,501(5) *
HELMUT M. NELDNER........................................... Ordinary 48,198(5) *
Preferred 10,000 *
(Series 1)
WALTER B. O'DONOGHUE, Q.C................................... Ordinary 27,656(5) *
RONALD N. ROBERTSON, Q.C.................................... Ordinary 20,248(5) *
MAUREEN J. SABIA............................................ Ordinary 1,000 *
DENNIS FEUCHUK.............................................. Ordinary 196,967(8) *
CRAIG S. GLICK.............................................. Ordinary 273,833(9) *
DONALD HRAP................................................. Ordinary 257,515(10) *
DOUGLAS MANNER.............................................. Ordinary 316,167(11) *
HENRY W. SYKES.............................................. Ordinary 218,334(12) *
LYNNE WALKER................................................ Ordinary 368,868(13) *
All directors and executive officers as a group (18 persons) Ordinary 17,613,427(14) 5.04
Preferred 10,000 *
(Series 1)
</TABLE>
*Means less than 1 per cent.
Notes:
1. Shares owned by A&G Resources Corporation ("AGRC") are pledged to (and under
U.S. securities law may be deemed to be indirectly beneficially owned by)
four former lenders to Olympia & York Resources Credit Corp., which filed
for protection under the Companies' Creditors Arrangements Act (Canada)
("CCAA"). Due to this pledge arrangement, one of these lenders, The Hongkong
and Shanghai Banking Corporation Limited, may be deemed to have indirect
beneficial ownership of 34,153,658 (9.79%) Ordinary Shares. The other
lenders may be deemed to have indirect beneficial ownership of less than 5%
of the Ordinary Shares. See "Shareholders Agreement" for additional
information on the lenders.
2. The Participants Group is composed of nine entities which entered into a
shareholders agreement ("Shareholders Agreement") and certain other
agreements with Gulf and AGRC in connection with the acquisition of Ordinary
Shares in 1995. The Participants are The 1818 Fund, L.P., Ontario Teachers'
Pension Plan Board, Wand/Gulf Investments, L.P., Medard Trust, University of
Chicago, Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance
Company and Bonray, Inc. None of the participants individually owns 5% or
more of the outstanding Ordinary Shares. See "Shareholders Agreement" for
additional information on the Participants.
3. The Alliance Capital Management L.P. Group includes Alpha Assurances Vie
Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA
Courtage Assurance Mutuelle, AXA-UAP, Donaldson, Lufkin & Jenrette
Securities Corporation, Equitable Companies Inc. and the Equitable Life
Assurance Society of the United States.
4. Includes 10,000 Ordinary Shares owned by Mr. Allen's wife and 18,000 shares
subject to stock options which may be exercised within the next 60 days.
5. For each director other than Mr. Auchinleck and Mr. Joudrie, this number
includes 18,000 shares subject to stock options which may be exercised
within the next 60 days. The number of shares held by Mr. Auchinleck
includes 895,617 shares subject to stock options which may be exercised
within the next 60 days. The number of shares held by Mr. Joudrie includes
168,000 shares subject to stock options which may be exercised in the next
60 days.
6. These Ordinary Shares are owned by Bonray, Inc, which is a member of the
Participants Group. Mr. Hefner is the President of Bonray, Inc. and owns,
together with his wife and adult children, all of the capital stock of
Bonray. Mr. Hefner may be deemed to be the beneficial owner of the Ordinary
Shares owned by Bonray. Also includes 18,000 shares subject to options owned
by Mr. Hefner which may be exercised within the next 60 days.
7. Represents 14,257,366 Ordinary Shares owned by the 1818 Fund II, L.P. Brown
Brothers Harriman & Co. ("BBH & Co.") is the general partner of the 1818
Fund. By virtue of a resolution adopted by BBH & Co. designating Mr. Long
and Mr. Lawrence Tucker (also a general partner of BBH & Co.) or either of
them, as the sole and exclusive partners of BBH & Co. having voting power
(including the power to vote or direct the vote) and investment power
(including the power to dispose or direct the disposition) with respect to
the Ordinary Shares owned by the 1818 Fund, Mr. Long may be deemed to
beneficially own the shares owned by the 1818 Fund. Also includes 18,000
options owned by Mr. Long which may be exercised within the next 60 days.
3
<PAGE> 6
8. Includes 142,167 shares subject to stock options which may be exercised
within the next 60 days.
9. Includes 261,833 shares subject to stock options which may be exercised
within the next 60 days.
10. Includes 255,975 shares subject to stock options which may be exercised
within the next 60 days.
11. Includes 242,667 subject to stock options which may be exercised within the
next 60 days.
12. Includes 217,334 shares subject to stock options which may be exercised
within the next 60 days.
13. Includes 295,000 shares subject to stock options which may be exercised
within the next 60 days.
14. Includes 416,700 restricted Ordinary Shares. Includes 2,640,593 shares
subject to stock options which may be exercised within the next 60 days. The
directors and officers as a group hold 500 shares and 639,996 options which
may be exercised within the next 60 days of Gulf Indonesia Resources Limited
(cumulatively less than one percent). Gulf owns approximately 72% of this
subsidiary.
ELECTION OF DIRECTORS
The following persons are nominees proposed by management for election as
directors of the Company to serve until the next annual meeting of the
shareholders of the Company or until their successors are duly elected or
appointed. If any vacancies occur in the slate of such nominees because any
nominee is unable to serve or will not serve, the discretionary authority
conferred by the proxies appointing management nominees will be exercised to
vote such proxies for the election of any other person or persons nominated by
management. The Company, however, does not anticipate any such occurrence. The
nominees for election as directors, their ages, cities of residence, principal
occupations for the past 5 years and the year in which each became a director of
the Company are set forth below.
ROBERT H. ALLEN (Age: 71)
Director since 1995
Houston, Texas
Managing Partner, Challenge Investment Partners (mining related
investments) since 1992; Chairman of the Board of Gulf Indonesia Resources
Limited (oil and gas exploration and production); Director of Federal
Express Corporation (delivery services), University of Texas Investment
Management Company (money management).
RICHARD H. AUCHINLECK (Age: 47)
Director since 1998
Denver, Colorado
President and Chief Executive Officer of Gulf; President since 1998, Senior
Vice President of Gulf since 1995 and Vice President of Gulf since 1993;
1976 to 1993, employee of Gulf; Director of Gulf Indonesia Resources
Limited (oil and gas exploration and production).
GARY L. COUNTRYMAN (Age: 59)
Boston, Massachusetts
Chairman of the Board of Liberty Mutual Insurance and Liberty Mutual Fire
Insurance Company since 1998; Chairman and Chief Executive Officer of
Liberty Mutual Insurance and Liberty Mutual Fire Insurance Company since
1992; Director of several public and private corporations.
STANLEY H. HARTT (Age: 61)
Director since 1993
Toronto, Ontario
Chairman, Salomon Smith Barney Canada Inc. (investment bankers) since 1996;
Chairman and Chief Executive Officer of Camdev Corporation (real estate)
since 1990; director of O&Y Properties Corporation (real estate developer),
and Sun Life Assurance Co. of Canada (insurance).
4
<PAGE> 7
H. EARL JOUDRIE (Age: 64)
Director since 1993
Toronto, Ontario
Chairman of the Board of Gulf; director of Abitibi Consolidated Inc.
(ground wood paper producer), Algoma Steel Inc (steel manufacturer),
Canadian General Insurance Group Limited (insurance), Consolidated Carma
Corporation (real estate development), Canadian Tire Corporation Limited
(retail), Canadian Utilities Limited (utilities), Rayrock Yellowknife
Resources Inc. (minerals exploration), Trenton Works Ltd. (steel car maker)
and Zargon Oil & Gas Ltd. (oil and gas exploration).
T. MICHAEL LONG (Age: 55)
Director since 1995
Greenwich, Connecticut
General Partner of Brown Brothers Harriman & Co. (private bankers) since
1983; Co-Manager of the 1818 Fund L.P. II and the 1818 Fund III L.P.
(private equity investments); Nobel Biocare, AB (dental implants); Director
of Gulf Indonesia Resources Limited (oil and gas exploration and
production); Columbia/HCA Health Care, Inc. (health care) and Vaalco Energy
Company (oil and gas exploration and production).
THE RIGHT HONOURABLE DONALD F. MAZANKOWSKI (Age: 63)
Director since 1993
Vegreville, Alberta
Corporation Director and Business Consultant since 1993 when he retired
from political office where he had held various Cabinet positions with the
federal government of Canada; Director of Gulf Indonesia Resources Limited
(oil and gas exploration and production), Power Group of Companies
(diversified holding companies), Canadian Utilities Limited (utilities),
Shaw Communications Incorporated (communications), Weyerhauser Company
(forestry products), IMC Global Inc (fertilizers), Great West Life
Assurance, Investors Group (insurance) and Canada Broker Link.
ALAN H. MICHELL (Age: 68)
Director since 1993
Montreal, Quebec
President of A.H. Michell Consultants Inc. (management consulting) since
1990; director of Royal Trust Corporation of Canada and of The Royal Trust
Company (trust companies), Abitibi Consolidated Inc. (ground wood paper
products).
HELMUT M. NELDNER (Age: 60)
Director since 1995
Edmonton, Alberta
Corporate Director since 1994, prior to which he was President and Chief
Executive Officer of TELUS Corporation (telecommunications) since 1990;
Director of ATCO Ltd. (utilities); Canadian Utilities Limited (utilities),
Alberta Power Limited (utilities), CU Power International Limited
(utilities) and ATCO Structures Inc. (manufacturing).
WALTER B. O'DONOGHUE, Q.C. (Age: 66)
Director since 1995
Calgary, Alberta
Partner, Bennett Jones (law firm) practicing corporate law since 1980;
Director of several public and private corporations; Member, Alberta
Securities Commission.
RONALD N. ROBERTSON, Q.C. (Age: 68)
Director since 1995
Toronto, Ontario
Partner, Fasken Campbell Godfrey (law firm) since 1964.
5
<PAGE> 8
MAUREEN J. SABIA (Age: 57)
Toronto, Ontario
President of Maureen Sabia International Inc. since 1986; Director of O & Y
Properties Corp. (real estate developer), Canadian Tire Corporation Limited
(retail), Hollinger Inc. (newspaper and publishing) and Chairman, Export
Development Corporation (export credit agreement) 1991-1994.
Mr. Hartt is chairman of Salomon Smith Barney Canada Inc. Salomon Smith
Barney Canada Inc. and its predecessors have acted as underwriter on a number of
securities transactions undertaken by the Company for which it received
customary fees. Mr. O'Donoghue is a partner with Bennett Jones, a law firm which
acts for the Company on a variety of matters. Messrs. Hartt, Joudrie, Michell
and Robertson also serve as directors of A&G Resources Corporation.
In 1998, the Board of Directors held 10 meetings. Each director of the
Company attended at least 80% of the meetings of directors.
The Board of Directors has established three Committees, an Audit
Committee, an Executive Committee and a Compensation and Pension Committee. The
Audit Committee reviews and evaluates the scope of the audit, the accounting
policies and reporting practices, internal auditing, internal controls, certain
security procedures and other matters deemed appropriate and in so doing confers
with Gulf's auditors and Controller. This Committee held 4 meetings in 1998 and
was composed of R.H. Allen, A.H. Michell and W.B. O'Donoghue. Each member of the
Audit Committee attended each meeting of the Committee. The Executive Committee
consists of Messrs. Joudrie, Allen, Long and Hartt. The Executive Committee held
3 meetings in 1998. The Compensation and Pension Committee is further described
in the Executive Compensation section.
EMPLOYMENT HISTORY OF OFFICERS
The following provides certain information about executive officers of the
Company who are not directors of the Company:
<TABLE>
<S> <C>
DENNIS G. FEUCHUK
1995 - present Vice President and Controller of Gulf
1974 - 1995 Employee of Gulf
CRAIG S. GLICK
1996 - present Executive Vice President and Chief Financial Officer and
Corporate Secretary of Gulf
1995 - 1996 Senior Vice President, Law and Corporate Services and
Corporate Secretary of Gulf
1994 - 1995 Senior Vice President, Acquisitions of Torch Energy Advisors
Incorporated, an oil and gas advisory company ("Torch
Energy")
1985 - 1994 Associate and subsequently Partner with Vinson & Elkins
L.L.P. (law firm)
DONALD HRAP
1997 - present Vice President, North America, Operations of Gulf
1982 - 1997 Employee of Gulf
DOUGLAS MANNER
1997 - present Vice President and Chief Operating Officer of Gulf
1993 - 1997 Senior Vice President of Ryder Scott Company, petroleum
engineering company
HENRY W. SYKES
1998 - present Senior Vice President, Business Development and General
Counsel of Gulf
1983 - 1998 Associate and subsequently Partner, Bennett Jones (law firm)
LYNNE WALKER
1997 - present Vice President, Human Resources and Corporate Services of
Gulf
1986 - 1997 Employee of Gulf
</TABLE>
6
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following tables set forth all annual and long term compensation for
the three financial years ended December 31, 1998 (to the extent required by the
applicable securities legislation) of the Company's Chief Executive Officer, its
former Chief Executive Officer and its six other executive officers employed at
December 31, 1998 who had the highest individual aggregate salary and bonuses
during the fiscal period ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------------- ---------------------------------------
AWARDS PAYOUT
---------------------------------------
SECURITIES RESTRICTED
OTHER UNDER SHARES OR
ANNUAL OPTIONS/SARS RESTRICTED LTIP
NAME AND SALARY BONUS COMPENSATION GRANTED SHARE UNITS PAYOUTS
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) $
---------------------------------------------------------------------------------------------------------------------------
R.H. Auchinleck 1998 520,930 --(2) 314,600(1) 1,100,000
President and Chief 1997 329,828 500,675 255,726(3) 253,495
Executive Officer 1996 275,004 42,830
275,000
---------------------------------------------------------------------------------------------------------------------------
J.P. Bryan(4) 1998 133,330 --(2) 71,711(5)
President and Chief 1997 800,001 1,430,500 761,895(7) 214,000
Executive Officer 1996 800,004 136,849 964,900
800,000
---------------------------------------------------------------------------------------------------------------------------
D. Feuchuk 1998 225,000 --(2) 167,292(8) 35,000
Vice President and 1997 225,000 241,039 244,046(9) 165,500
Controller 1996 195,000 -- 21,435
129,675
---------------------------------------------------------------------------------------------------------------------------
C.S. Glick 1998 391,891 77,623(10) 246,768(11) 305,000
Chief Financial 1997 312,501 500,675(2) 285,221(12) 253,495
Officer, Executive 1996 275,004 -- 42,830
Vice President and 275,000
Corporate Secretary
---------------------------------------------------------------------------------------------------------------------------
D. Hrap 1998 225,000 -- 24,239 40,000
Vice President, North 1997 147,910 121,429 -- 180,000
America, Operations
-----------------------------------------------------------------------------------------------------------------------
D. Manner 1998 225,000 --(2) 163,509(13) 40,000
Vice President and 1997 96,346 76,665 100,330(14) 150,000
Chief Operating
Officer
---------------------------------------------------------------------------------------------------------------------------
H.W. Sykes 1998(14) 218,204 13,471(15) 168,846(16) 250,000
Senior Vice
President, Business
Development and
General Counsel
---------------------------------------------------------------------------------------------------------------------------
L. Walker 1998 225,000 --(2) 147,630(17) 40,000
Vice President, Human 1997 187,799 206,996 220,703(18) 216,000
Resources and
Corporate Services
<CAPTION>
<S> <C>
--------------------------------------
--------------------------------------
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)
--------------------------------------
R.H. Auchinleck 62,982
President and Chief 42,129
Executive Officer 29,183
--------------------------------------
J.P. Bryan(4) 5,612,255(6)
President and Chief 42,129
Executive Officer 32,000
--------------------------------------
D. Feuchuk 9,131
Vice President and 30,856
Controller 15,500
--------------------------------------
C.S. Glick 27,500
Chief Financial 17,571
Officer, Executive 11,911
Vice President and
Corporate Secretary
--------------------------------------
D. Hrap 23,190
Vice President, North 13,500
America, Operations
--------------------------------------
D. Manner 19,816
Vice President and 3,750
Chief Operating
Officer
--------------------------------------
H.W. Sykes 9,281
Senior Vice
President, Business
Development and
General Counsel
--------------------------------------
L. Walker 28,816
Vice President, Human 23,488
Resources and
Corporate Services
</TABLE>
Notes:
1. Includes $251,661 paid to Mr. Auchinleck as compensation for increased
living expenses incurred as a result of Mr. Auchinleck's assignment in
Denver, Colorado, U.S. All U.S. dollar amounts paid in 1998, except for
bonus amounts, have been converted to Canadian currency at the 1998 average
exchange rate of US$1 = CDN$1.4831.
7
<PAGE> 10
2. Bonus was paid in U.S. dollars and converted to Canadian dollars at the
exchange rate on December 31 of US$1 = CDN$1.4305 in 1997 and US$1 =
CDN$1.5333 in 1998 for the purpose of this circular.
3. Includes moving allowance of $142,670 and $74,673 paid to Mr. Auchinleck as
compensation for increased living expenses incurred as a result of Mr.
Auchinleck's assignment in Denver, Colorado, U.S. All U.S. dollar amounts
paid in 1997, except for bonus amounts, were converted to Canadian currency
at the 1997 average exchange rate of US$1 = CDN$1.4267.
4. Mr. Bryan resigned as President and Chief Executive Officer in February,
1998.
5. Includes $64,411 paid to Mr. Bryan as compensation for increased living
expenses incurred as a result of Mr. Bryan's assignment in Denver, Colorado,
U.S.
6. Includes severance of $5,607,138 paid to Mr. Bryan. Severance amount was
paid in U.S. dollars and converted to Canadian dollars at the exchange rate
on February 28, 1998 of US$1 = CDN$1.4237.
7. Includes moving allowance of $142,670 and $256,020 paid to Mr. Bryan as
compensation for increased living expenses incurred as a result of Mr.
Bryan's assignment in Denver, Colorado, U.S.
8. Includes $72,465 paid to Mr. Feuchuk as compensation for increased living
expenses incurred as a result of Mr. Feuchuk's assignment in Denver,
Colorado, U.S.
9. Includes moving allowance of $142,670 and $72,006 paid to Mr. Feuchuk as
compensation for increased living expenses incurred as a result of Mr.
Feuchuk's assignment in Denver, Colorado, U.S.
10. Includes bonus paid in kind. Converted to Canadian dollars at the exchange
rate on December 31, 1998 of US$1 = CDN$1.5333.
11. Includes $189,323 paid to Mr. Glick as compensation for increased living
expenses incurred as a result of Mr. Glick's assignment in Denver, Colorado,
U.S.
12. Includes moving allowance of $142,670 and $104,008 paid to Mr. Glick as
compensation for increased living expenses incurred as a result of Mr.
Glick's assignment in Denver, Colorado, U.S.
13. Includes $108,698 paid to Mr. Manner as compensation for increased living
expenses incurred as a result of Mr. Manner's assignment in Denver,
Colorado, U.S.
14. Includes moving allowance of $50,000 and $41,111 paid to Mr. Manner as
compensation for increased living expenses incurred as a result of Mr.
Manner's assignment in Denver, Colorado, U.S.
15. Mr. Sykes joined the Company on June 15, 1998 as Senior Vice President,
Business Development and General Counsel.
16. Includes 500 units of Athabasca Oil Sands Trust valued at $18.25 per unit or
$9,125.00.
17. Includes $151,491 paid to Mr. Sykes in respect of certain tax obligations.
18. Includes $108,698 paid to Ms. Walker as compensation for increased living
expenses incurred as a result of Ms. Walker's assignment in Denver,
Colorado, U.S.
19. Includes moving allowance of $142,670 and $62,532 paid to Ms. Walker as
compensation for increased living expenses incurred as a result of Ms.
Walker's assignment in Denver, Colorado, U.S.
8
<PAGE> 11
STOCK OPTIONS GRANTED AND EXERCISED
The following table sets forth certain information with respect to stock
options granted under the Incentive Stock Option Plan 1994 (the "1994 Plan")
during the financial year ended December 31, 1998 to each of the Named Executive
Officers. The exercise price of the options granted to the Named Executive
Officers was the last board lot price of the Ordinary Shares on the date
immediately preceding the date of the grant.
OPTIONS/SAR GRANTS DURING THE MOST
RECENTLY COMPLETED FINANCIAL YEAR
<TABLE>
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
MARKET VALUE OF
% OF TOTAL SECURITIES
SECURITIES UNDER OPTIONS/SARS UNDERLYING
OPTIONS/SARS GRANTED TO EXERCISE OR BASE OPTIONS/SARS ON
OPTIONS IN GULF GRANTED EMPLOYEES IN PRICE THE DATE OF GRANT EXPIRATION
CANADA (#) FINANCIAL YEAR ($/SECURITY) ($/SECURITY) DATE
RESOURCES LIMITED
- ---------------------------------------------------------------------------------------------------------------------------
R.H. Auchinleck 1,000,000 21.75% 7.30 7.30 February 23, 2008
100,000 2.17% 7.90 7.90 April 29, 2008
- ---------------------------------------------------------------------------------------------------------------------------
D. Feuchuk 35,000 .76% 7.90 7.90 April 29, 2008
- ---------------------------------------------------------------------------------------------------------------------------
C.S. Glick 250,000 5.43% 7.30 7.30 February 23, 2008
55,000 1.19% 7.90 7.90 April 29, 2008
- ---------------------------------------------------------------------------------------------------------------------------
D. Hrap 40,000 .87% 7.90 7.90 April 29, 2008
- ---------------------------------------------------------------------------------------------------------------------------
D. Manner 40,000 .87% 7.90 7.90 April 29, 2008
- ---------------------------------------------------------------------------------------------------------------------------
H.W. Sykes 250,000 5.43% 6.65 6.65 June 14, 2008
- ---------------------------------------------------------------------------------------------------------------------------
L. Walker 40,000 .87% 7.90 7.90 April 29, 2008
- ---------------------------------------------------------------------------------------------------------------------------
OPTIONS IN GULF
INDONESIA
RESOURCES LIMITED
- ---------------------------------------------------------------------------------------------------------------------------
R.H. Auchinleck 150,000 15.33% 19.3125 19.3125 Feb. 23, 2008
2,500 .26% 11.19 11.19 Nov. 2, 2008
- ---------------------------------------------------------------------------------------------------------------------------
C.S. Glick 2,500 .26% 11.19 11.19 Nov. 2, 2008
- ---------------------------------------------------------------------------------------------------------------------------
H.W. Sykes 50,000 5.1% 11.25 11.25 June 14, 2008
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note:
Gulf Indonesia Resources Limited ("GRL") was a wholly owned subsidiary of the
Company. Gulf sold a portion of its interest in GRL in an initial public
offering in 1997 and currently owns approximately 72% of GRL.
9
<PAGE> 12
AGGREGATED OPTIONS/SAR EXERCISES DURING THE MOST
RECENTLY COMPLETED FINANCIAL YEAR AND
THE FINANCIAL YEAR END OPTIONS/SAR VALUES
The following table sets forth certain information with respect to stock
options held by the Named Executive Officers during the financial year ended
December 31, 1998 and based upon a closing Ordinary Share price on December 31,
1998 of $4.48, the value of unexercised options at such year end.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FINANCIAL YEAR END (#) AT FINANCIAL YEAR END ($)
SECURITIES ACQUIRED AGGREGATE ---------------------------------------------------------------
ON EXERCISE VALUE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------------------
R.H. Auchinleck 784,283 1,072,867 120,099 1,778
- -------------------------------------------------------------------------------------------------------------------------------
D. Feuchuk 50,000 148,600 132,500 230,000 1,350 630
- -------------------------------------------------------------------------------------------------------------------------------
C.S. Glick 261,833 517,992 21,500 --
- -------------------------------------------------------------------------------------------------------------------------------
D. Hrap 180,975 120,325 1,256 419
- -------------------------------------------------------------------------------------------------------------------------------
D. Manner 150,000 40,000 -- --
- -------------------------------------------------------------------------------------------------------------------------------
H.W. Sykes 125,000 125,000 -- --
- -------------------------------------------------------------------------------------------------------------------------------
L. Walker 204,000 124,000 -- --
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
BLACK SCHOLES VALUATION OF OPTIONS
The fair value of each Gulf option granted to the Named Executive Officers
is estimated at the financial year end using the Black Scholes option-pricing
model with the following assumptions: expected volatility of 30%, risk-free
interest rate of 5.4 per cent, no payment of common share dividend and actual
life.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
EXERCISABLE VALUE UNEXERCISABLE VALUE
AT FINANCIAL YEAR END AT FINANCIAL YEAR END
NAME ($) ($)
- --------------------------------------------------------------------------
R.H. Auchinleck 1,496,061 1,870,015
- --------------------------------------------------------------------------
J.P. Bryan 3,801,034 0
- --------------------------------------------------------------------------
D. Feuchuk 147,136 311,398
- --------------------------------------------------------------------------
C.S. Glick 361,768 792,080
- --------------------------------------------------------------------------
D. Hrap 241,682 180,865
- --------------------------------------------------------------------------
D. Manner 236,250 64,080
- --------------------------------------------------------------------------
H.W. Sykes 279,750 260,563
- --------------------------------------------------------------------------
L. Walker 249,060 175,302
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
The fair value of each GRL option granted to the Named Executive Officers
is estimated at the financial year end using the Black Scholes option-pricing
model with the following assumptions: expected volatility of 42%, risk-free
interest rate of 5.0 per cent, no payment of common share dividend and actual
life.
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
EXERCISABLE VALUE UNEXERCISABLE VALUE
AT FINANCIAL YEAR END AT FINANCIAL YEAR END
NAME ($) ($)
- --------------------------------------------------------------------------
R.H. Auchinleck 419,249 333,767
- --------------------------------------------------------------------------
J.P. Bryan 635,999 284,667
- --------------------------------------------------------------------------
C.S. Glick 317,999 148,267
- --------------------------------------------------------------------------
D. Hrap 63,599 28,467
- --------------------------------------------------------------------------
D. Manner 158,999 71,167
- --------------------------------------------------------------------------
H.W. Sykes 49,898 92,019
- --------------------------------------------------------------------------
L. Walker 63,599 28,467
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
</TABLE>
COMPANY PENSION PLANS
The Company had a defined benefit and other pension plans for its executive
officers, all of which were either terminated or frozen in 1995. Of the Named
Executive Officers, only Messrs. Auchinleck, Feuchuk and Hrap and Ms. Walker
will receive benefits from these plans. Payments to Mr. Auchinleck, Mr. Feuchuk,
Mr. Hrap or Ms. Walker from these plans will commence upon their respective
retirement and will be determined by a formula based on their highest annual
salary in the three years prior to retirement.
All Named Executive Officers participate in the Money Purchase Pension Plan
("MPP"), a defined contribution plan. For each Named Executive Officer, the
Company contributes to the MPP a percentage of salary based on years of pension
service. The years of pension service and corresponding percentages are outlined
in the following table:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
PERCENTAGE OF SALARY
NUMBER OF YEARS OF CONTRIBUTED TO THE MONEY
PENSION SERVICE PURCHASE PENSION PLAN
- -------------------------------------------------------------------------
0 to 5 years 4%
- -------------------------------------------------------------------------
6 years to 10 years 6%
- -------------------------------------------------------------------------
11 years to 15 years 8%
- -------------------------------------------------------------------------
15 years or more 10%
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
</TABLE>
The maximum amount of contribution allowable by Revenue Canada for the 1998
calendar year is $13,500. If the Company's contribution exceeds the Revenue
Canada maximum, the excess is taxable income to the individual.
An individual must be registered in the MPP for a minimum of two years in
order for the contributions to vest. If an individual leaves Gulf's employment
within two years of plan membership, any funds contributed up to the date of
termination are forfeited. Officers that were relocated to the Denver office
continue to have pension assets in Canada.
A U.S. plan has been established with the same terms and conditions as the
MPP, although subject to different contribution limits. The contribution
schedule and vesting conditions are the same as those in Canada.
EMPLOYMENT AGREEMENTS
In January 1995, Gulf entered into employment agreements with Mr. Glick.
Mr. Auchinleck entered into his current employment agreement with the Company in
February, 1996. Mr. Feuchuk entered into an employment agreement with the
Company in February 1996. Mr. Manner, Mr. Hrap and Ms. Walker entered into
employment agreements with the Company in September, 1997. Mr. Sykes entered
into an employment agreement with the Company in June, 1998. The term of each
such employment agreement shall continue at the discretion of the Board
11
<PAGE> 14
unless voluntarily terminated by the employee. All of the aforementioned
employment agreements provide that the officer is entitled to severance upon
being terminated without cause or upon certain other specified events of
constructive dismissal and upon certain stated events, including without
limitation, a change of control in the ownership of Gulf.
If a Named Executive Officer is entitled to receive severance under his
employment agreement, then he is entitled to receive and Gulf is obligated to
pay or provide the following:
1. an undiscounted cash amount equal to one month's base salary
multiplied by the number of years of service of the Named Executive
Officer with the Company subject to a minimum entitlement and payment
equal to 24 months base salary and a maximum entitlement and payment
equal to thirty months base salary (36 months and 42 months,
respectively, in the case of Mr. Auchinleck);
2. an undiscounted cash amount equal to the value of all those benefits
plans and programmes provided by the Company and equal to one month
for every year of service with the Company and a minimum entitlement
and payment equal to 24 months of benefits value and a maximum
entitlement and payment equal to thirty months of benefits value (36
months and 42 months, respectively, in the case of Mr. Auchinleck);
3. an undiscounted amount equal to the product obtained by multiplying
the target bonus under the Company's compensation plan by two (three
in the case of Mr. Auchinleck);
4. all options for the purchase of shares of the Company which have been
granted by the Company to the Named Executive Officer prior to
January 31, 1995 under the Executive Stock Option Plan (1990) or
(1994) but which have not yet vested shall immediately vest on the
date of termination of the Named Executive Officer and the Named
Executive Officer shall be entitled to exercise all such options for
the purchase of shares of the Company for a period of five (5) years
from the date of termination;
5. all options for the purchase of shares of the Company granted by the
Company to the Named Executive Officer since January 1, 1995 under
the 1994 Plan or otherwise to the date of termination but which have
not yet vested shall immediately vest on the date of termination and
the Named Executive Officer shall be entitled to exercise any or all
such options for the purchase of shares of the Company for a period
of two (2) years from the date of termination; and
6. normal and any supplementary pension benefits in effect on the date
of termination, determined on the basis of an additional two years of
credited service and age as of that date (3 years in the case of Mr.
Auchinleck).
DIRECTORS' FEES
The annual fee paid to each director, other than the Chairman of the Board,
is $15,000 for his or her services as director. The Chairman of the Board
received $24,000 for services as the non-executive Chairman of the Board.
Directors, including the Chairman of the Board, are entitled to an annual fee of
$3,000 for their services as a member of any committee of the board and an
additional $1,500 for acting as the Chairman of any committee of the board
provided such committee has met at least once during the calendar year.
Directors also receive $900 for each board and committee meeting attended in
person and $600 for each board and committee meeting attended by conference
call. Directors are paid quarterly. Directors have the option of receiving all
or a portion of their fees in Gulf Ordinary Shares instead of cash. The purchase
price is equal to the closing price for Gulf Ordinary Shares on The Toronto
Stock Exchange ("TSE") at the end of the quarter when payment is made.
Notwithstanding the above, directors who are employees of Gulf do not receive
compensation for service on the board or board committees. Each director is
reimbursed for all reasonable out-of-pocket expenses incurred incidental to
attending a board or committee meeting.
In late 1998, the Compensation Committee reviewed alternatives to the
Company's board compensation program. In February, 1999 the Compensation
Committee adopted the board compensation program described below.
The annual retainer for each director, other than the Chairman of the
Board, is $30,000 cash and the equivalent of $15,000 in Restricted Share Units
("RSUs") or Deferred Share Units ("DSUs"). RSUs and DSUs mirror actual shares
and vest after four years. The Chairman of the Board will receive $50,000 cash
and the equivalent of $25,000 in RSUs or DSUs. A director has the option of
taking the cash component of his or her annual retainer in
12
<PAGE> 15
stock. If the director elects to take stock, the stock will be eligible for
participation in the Leverage Purchase Plan (LPP) which provides that for each
share of the Company acquired by the participant and held for two years, the
participant will be granted three SAR's for each share purchased. Only that
stock which is received in lieu of cash compensation will be eligible for the
LPP.
Directors including the Chairman of the Board, are entitled to an annual
fee of $3,000 as a member of any committee of the board and an additional $2,000
for acting as the Chairman of that committee of the board. Again the director
can elect to take his or her committee retainers as cash or stock. If taken as
stock, the stock will be eligible for participation in the LPP. Directors also
receive $1,000 for each board and committee meeting attended in person and $500
for each board and committee meeting attended by conference call. Directors will
continue to be paid quarterly and can elect to receive all or a portion of their
fees in Gulf Ordinary Shares instead of cash.
In addition to the above enhancements, the Company has introduced stock
ownership guidelines for all directors.
The Company's Directors have been granted options in the Company and in its
subsidiary, Gulf Indonesia Resources Limited.
SECURITIES AND OPTIONS GRANTED TO THE BOARD OF DIRECTORS(1)
<TABLE>
<C> <C> <S> <C>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
SECURITIES, OPTIONS
GRANTED EXERCISE OR BASE PRICE
DATE OF GRANT (#) ($/SECURITY) EXPIRATION DATE
- ------------------------------------------------------------------------------------------------------------------
April 30, 1998(2) 6,000 7.90 April 29, 2008
- ------------------------------------------------------------------------------------------------------------------
February 24, 1998(3) 150,000 19.3125 February 23, 2008
- ------------------------------------------------------------------------------------------------------------------
November 3, 1998(4) 2,500 11.19 November 2, 2008
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
1. These grants were made to all directors except Mr. Auchinleck.
2. The grants were for options in the Company.
3. These grants were for options in GRL and made to Messrs. Auchinleck and
Allen who served on the Board of GRL in 1998.
4. These grants were for options in GRL and made to all directors who served on
the Board of GRL in 1998.
COMPOSITION OF THE COMPENSATION AND PENSION COMMITTEE
The members of the Compensation and Pension Committee (the "Compensation
Committee") at December 31, 1998 were Mr. Long (Chairman), and Messrs. Hartt and
Mazankowski. The Compensation Committee met 5 times in 1998. No current member
of the Compensation Committee was an officer or employee of the Company or any
of its subsidiaries during 1998, or formerly an officer of the Company or any of
its subsidiaries.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for administering the Company's
executive compensation program and stock incentive plans and oversees the
retirement plans. The Committee seeks to attract, retain and motivate a
qualified management team, which the Committee believes is essential to the
enhancement of shareholder value. The Compensation Committee believes that a
substantial portion of annual compensation should be performance driven and
received only when the Company meets targeted goals approved by the Committee or
when the executive is a substantial factor in the success of major projects
which benefit the Company. The Compensation Committee also seeks over the long
term to provide significant equity based compensation in the form of share
options to align the interests of management with the interests of stockholders.
In 1995, the Compensation Committee approved a compensation plan,
consisting of three components:
1. Base Salary: The Compensation Committee reviewed and analyzed salaries and
compensation paid by its competitors and others in its business provided by
management of the Company to determine an industry average for the various
executive offices of the Company. Under the compensation plan during 1998,
the Compensation Committee targeted base salaries at market or above for
each executive position, depending on the Committee's subjective judgment as
to the executive's ability to influence the Company's results.
13
<PAGE> 16
2. Cash Bonus Program: The Compensation Committee expects that performance
driven compensation in the form of annual bonuses will generally constitute
between one-half and one-quarter of an executive officer's total annual
compensation. At the beginning of each year, the Compensation Committee
approves corporate targets and weightings for production levels, reserve
additions, cash generation, costs and earnings. The Compensation Committee
approves bonuses to be allocated among officers and employees in the event
the targets for the year are met or exceeded. In 1998, the Company did not
achieve the corporate targets set by the Committee for bonus purposes. The
Compensation Committee, however, authorized the payment of bonuses in
amounts considerably less than target bonus amounts to two executive
officers and bonuses to six employees of the Company.
3. Share Option Program: Share options are a key element of the Company's
long-term executive compensation program. The Committee believes that share
options serve to align the interests of executive officers with those of the
shareholders over the long term. The number of options granted to a
particular executive officer is based on the Compensation Committee's
subjective determination as to each officer's ability to impact corporate
results. Options are generally granted once a year and have an exercise
price equal to the market price on the day preceding the date of grant.
Options granted generally vest in a three year period. During 1998,
4,595,925 options were granted to Gulf employees of which 2,020,000 were
granted to the Named Executive Officers. The long-term Executive
Compensation Plan described below, will result in less emphasis on options.
The Company's executive officers who are resident in the United States are
employed by a wholly owned U.S. domiciled subsidiary of the Company. The U.S.
Omnibus Budget Reconciliation Act of 1993 places a limit on the amount of
certain types of compensation for executive officers which may be tax deductible
for U.S. federal income tax purposes by the Company's subsidiary which employs
the officers. The Company's policy is to design and administer compensation
plans which meet the goals and legal requirements described above. Where it is
consistent with this compensation policy, the Committee will also attempt to
structure compensation programs that are tax-deductible by the Company's
subsidiary.
Chief Executive Officer
The compensation of the Chief Executive Officer is determined by the
Compensation Committee under the Total Compensation Plan in the same manner as
the compensation of other executive officers. The Committee targeted the base
salary of Mr. Auchinleck during 1998 to position him competitively with leading
international oil and gas producers. During 1998, Mr. Auchinleck received
options to purchase 1,100,000 Ordinary Shares of the Company and options to
purchase 152,500 common shares of GRL.
1999 Executive Compensation Plan
In late 1998, the Compensation Committee began to review alternatives to
the Company's executive compensation program. At meetings in December, 1998 and
up to February, 1999 the Compensation Committee reviewed materials prepared by
third party consultants and other information which it considered relevant,
including the decision to close the Company's Denver office as well as
continuing low oil prices. In February, 1999 the Compensation Committee adopted
the executive compensation program described below.
The 1999 Compensation Plan consists of three principal components: base
salary; short term incentive program (cash bonus); and a long term incentive
plan.
The base salary and cash bonus components of the Company's executive
compensation plan remain substantially unchanged from those previously in place.
The Long Term Incentive Plan ("LTIP") was designed to increase emphasis on
long term incentives as a part of executive compensation, particularly given the
Compensation Committee's concerns about a lack of cash bonus in the current oil
price environment and a significant erosion of value in the existing stock
option plan. The LTIP is intended to build a meaningful equity stake in the
Company for all participants; provide effective retention incentives; and reward
stock price performance. This is accomplished through a balanced program
providing for annual grants of stock options, restricted share units or deferred
share units, stock appreciation rights, and the creation of a leveraged purchase
plan. In addition, the Company has introduced stock ownership guidelines for all
executives.
The stock option plan is unchanged from the plan currently in place.
Options granted under this plan will vest one third immediately, one third in
one year and one third in two years. Stock Appreciation Rights ("SAR's") are a
14
<PAGE> 17
cash vehicle which mirrors stock options, and which vest as to one third
immediately, one third in one year and one third in two years. Restricted Share
Units ("RSUs") and Deferred Share Units ("DSUs") also mirror actual shares and
vest after four years. The Leveraged Purchase Plan provides that for each share
of the Company acquired by a participant and held for two years, the participant
will be granted three SAR's for each share purchased.
The Compensation Committee retains the flexibility to change the mix and
level of grant of each component of the LTIP from year to year.
The Compensation Committee believes that with the adoption of the new LTIP,
the Company has an executive compensation program in place which ensures that
interests of the Company in attracting and retaining executive officers of the
necessary quality is maximized.
T. Michael Long
Stanley H. Hartt
Donald F. Mazankowski
FIVE YEAR TOTAL SHAREHOLDER RETURN COMPARISON
[GRAPH - COMPARISON OF CUMULATIVE TOTAL RETURN]
<TABLE>
<CAPTION>
GULF TSE 300 INDEX
---- -------------
<S> <C> <C>
31-Dec-93 100.00 100.00
31-Dec-94 102.38 99.82
31-Dec-95 133.93 114.33
31-Dec-96 238.10 146.74
31-Dec-97 238.10 168.71
31-Dec-98 106.67 166.04
</TABLE>
LIABILITY INSURANCE OF DIRECTORS AND OFFICERS
Gulf provides directors' and officers' liability insurance covering losses
to Gulf for reimbursement of directors and officers, where permitted, and direct
indemnity of directors and officers where corporate reimbursement is not
permitted by law. The insurance protects Gulf against liability, including
costs, subject to standard policy exclusions, which may be incurred by directors
and/or officers acting in their capacity as such for Gulf and its subsidiaries.
All directors and officers of Gulf and its subsidiaries are covered by the
policy on a blanket basis and the amount of insurance applies collectively to
all.
The annual premium in 1998 was $257,930 and was paid entirely by Gulf. No
allocation of premium was made to directors as a group or officers as a group.
The amount of insurance purchased is U.S. $100 million in any one year for any
combination of losses involving corporate reimbursement and/or direct indemnity
of directors and officers. Losses are subject to a deductible of U.S. $500,000
for corporate reimbursement with no deductible for indemnification of directors
and officers.
In January 1995, Gulf also purchased a Run-Off Policy for a period
commencing January 25, 1995 and expiring on January 25, 2001 to provide director
and officer liability insurance in the amount of U.S. $35 million, with a
similar deductible and for a premium (paid in 1995) of $1,097,500, for the
directors and officers who held their positions on January 25, 1995.
15
<PAGE> 18
SHAREHOLDERS AGREEMENT
ORDINARY SHARES OWNED BY AGRC
In 1989, Olympia & York Resources Credit Corp. ("Borrower"), the parent
corporation of AGRC, entered into loan agreements with certain lenders (together
with their successors and assigns, the "AGRC Lenders"). The Ordinary Shares of
Gulf currently owned by AGRC were pledged as collateral for the loans to the
Borrower. In 1992, Borrower and certain of its affiliates filed for protection
under the CCAA. In 1993, a plan was sanctioned under the CCAA and the AGRC
Lenders are free to realize on the pledged Ordinary Shares.
Based on the most recent Schedule 13D filed with the U.S. Securities and
Exchange Commission with respect to the Ordinary Shares owned by AGRC, there are
currently four AGRC Lenders which, due to the pledge arrangement, under U.S.
securities law may be deemed to have indirect beneficial ownership of the
Ordinary Shares owned by AGRC which beneficial ownership is expressly disclaimed
in the Schedule 13D and are described as follows:
<TABLE>
<CAPTION>
ORDINARY SHARES PERCENT
NAME OF LENDER BENEFICIALLY OWNED OF CLASS
- -------------- ------------------ --------
<S> <C> <C>
Commerzbank International, S.A.................... 6,592,236 1.89
Credit Lyonnais................................... 3,353,781 0.96
The Hongkong and Shanghai Banking Corporation
Limited......................................... 34,153,658 9.79
TCW Special Credits Fund V -- The Principal
Fund............................................ 8,105,801 2.32
---------- -----
Total............................................. 52,205,476 14.96
========== =====
</TABLE>
On January 25, 1995, the Company, AGRC and the Participants entered into a
shareholders agreement ("Shareholders Agreement") and a registration rights
agreement ("Registration Rights Agreement"). In addition, on January 25, 1995,
the Participants entered into an agreement among themselves ("Participants
Agreement"). Based on information filed with the SEC, AGRC currently owns
52,205,476 (14.96%) Ordinary Shares and the Participants currently own an
aggregate of 42,830,772 (12.28%) Ordinary Shares, or a total of 95,036,248
(27.2%) Ordinary Shares.
Under the Shareholders Agreement, the parties had agreed that the Board of
Directors would be composed of 12 persons. The Company agreed that it would
solicit proxies in favour of the nominees as director of both AGRC and the
Participants for so long as such parties collectively held more than one-third
of the issued and outstanding Ordinary Shares. The collective holdings of the
AGRC and the Participants being less than one-third of the Ordinary Shares, the
Company is no longer required to solicit proxies for the nominees of AGRC or the
Participants. In addition, the Company agreed that it would solicit proxies for
the nominee to the Board of Directors of The 1818 Fund L.P. II for so long as
The 1818 Fund L.P. II held more than 1 million Ordinary Shares. As a result, the
Company has not requested the advice of AGRC or the Participants as to their
nominees, and has not received such advice. All nominees for election to the
Board of Directors are nominees of management of the Company, other than Mr.
Long, who is a nominee of The 1818 Fund L.P. II.
The Shareholders Agreement also provides that notwithstanding the fact that
the Company has no obligation to solicit proxies for any particular nominees,
the Participants and AGRC will vote all Ordinary Shares held by them in favour
of persons designated by each of them. Based on their current holdings of
Ordinary Shares respectively, AGRC will have the right to name three persons,
and the Participants will have the right to name three persons, for whom each
will be required to vote.
The Shareholders Agreement and Participants' Agreement also contain
provisions granting the parties a right of first refusal on any sales of
Ordinary Shares and "piggy-back" rights with respect to sales of Ordinary Shares
owned by another party on January 25, 1995 and any not disposed of in accordance
with the Shareholders Agreement (such Ordinary Shares owned on January 25, 1995
are referred to as "Subject Shares").
16
<PAGE> 19
The following table describes the ownership of the Ordinary Shares subject
to the Shareholders Agreement:
<TABLE>
<CAPTION>
TOTAL ORDINARY SHARES TOTAL SUBJECT
BENEFICIALLY OWNED(1) Shares Owned(1)
---------------------- --------------------
NAME OF PARTICIPANT NUMBER PERCENT NUMBER PERCENT
- ------------------- ----------- -------- ---------- -------
<S> <C> <C> <C> <C>
The 1818 Fund II, L.P.(2)............................... 14,257,366 4.09 12,673,214 3.63
Ontario Teachers' Pension Plan Board.................... 12,298,242 3.52 7,128,571 2.04
Wand/Gulf Investments L.P.(3)........................... 1,791,571 0.51 1,791,571 0.51
Medard Trust(4)......................................... 2,851,464 0.82 2,534,643 0.73
University of Chicago................................... 1,000,000 0.29 1,000,000 0.29
Liberty Mutual Insurance Company........................ 8,556,145 2.45 7,605,462 2.18
Liberty Mutual Fire Insurance........................... 950,682 0.27 845,051 0.24
Bonray, Inc............................................. 190,136 0.05 169,010 0.05
---------- ----- ---------- -----
All Participants........................................ 41,895,606 12.00 34,682,679 9.94
========== ===== ========== =====
</TABLE>
Notes:
(1) All Ordinary Shares owned by a Participant are subject to the voting
provisions of the Shareholders Agreement while only Subject Shares, defined
as Ordinary Shares owned on January 25, 1995, are subject to the rights of
first refusal set forth in such agreement.
(2) BBH & Co. is the general partner of the 1818 Fund. BBH & Co. may be deemed
to own beneficially the Ordinary Shares owned by The 1818 Fund. By virtue of
the resolution adopted by BBH & Co. designating Mr. Lawrence C. Tucker and
Mr. T. Michael Long, or either of them, as the sole and exclusive partners
of BBH & Co. having voting power (including the power to vote or direct the
vote) and investment power (including the power to dispose or to direct the
disposition) with respect to the Ordinary Shares owned by the 1818 Fund,
each of Messrs. Long and Tucker may be deemed to own beneficially the shares
owned by the 1818 Fund.
(3) Shares indicated as beneficially owned by Wand/Gulf Investments, L.P. may
also be deemed to be beneficially owned by Wand (Gulf) Inc., its general
partner ("Wand (Gulf)") and Mr. Bruce W. Schnitzer by virtue of Wand
(Gulf)'s and Mr. Schnitzer's relationship with Wand/ Gulf Investments. Mr.
Schnitzer, having voting power (including the power to vote or direct the
vote) and investment power (including the power to dispose or direct the
disposition) with respect to the Ordinary Shares owned by Wand/Gulf
Investments, may be deemed to own beneficially the shares owned by Wand/Gulf
Investments.
(4) Medard is the record owner of the Ordinary Shares which are beneficially
owned by Mr. Edmond Tavernier. Mr. Tavernier, as Trust Protector of Medard
with sole voting power (including the power to vote or to direct the vote)
and sole investment power (including the power to dispose or direct the
disposition) over the Ordinary Shares owned by Medard, may be deemed to
beneficially own the shares owned by Medard. Beneficiaries of Medard may
receive dividends on the Ordinary Shares and proceeds of sale of Ordinary
Shares.
The Participants and AGRC have agreed to consult on all matters submitted
to a vote of shareholders of Gulf under the Canada Business Corporations Act or
in accordance with a court order. If either the Participants (as a group) or
AGRC does not approve the matter to be voted on, each Participant and AGRC are
obligated to vote all Ordinary Shares owned against the matter. If both the
Participants (as a group) and AGRC approve the matter to be voted on, the
Participants and AGRC can vote on the matter in their discretion.
The provisions of the Shareholders Agreement relating to voting for
directors are subject to certain shareholding thresholds and terminate with
respect to the Participants or AGRC, as applicable, upon the earlier of (i)
either the Participants or AGRC, as applicable, ceasing to own 10% of the
outstanding Ordinary Shares and (ii) 10 years following the January 25, 1995
closing date. The provisions dealing with the voting of Ordinary Shares on
matters submitted to Shareholders terminate five years following the January 25,
1995 date or, if earlier, when either the Participants or AGRC no longer own 10%
of the outstanding Ordinary Shares.
The Registration Rights Agreement obligates the Company, subject to certain
limitations, upon request of AGRC and/or the Participants to register the shares
held by them. The selling shareholders under the Registration Rights Agreement
are required to pay all costs of the registrations effected under the agreement.
APPOINTMENT OF AUDITORS
Unless it is specified in a proxy that the Ordinary Shares represented
therein be withheld from voting on the appointment of auditors, the persons
named in the enclosed form of proxy intend to vote the Ordinary Shares
represented therein for the appointment of Ernst & Young LLP as auditor of Gulf
until the next annual meeting of shareholders following the Meeting, at a
remuneration to be fixed by the Board of Directors. Ernst & Young LLP have been
auditors of Gulf, either solely or jointly with another auditor, for more than
10 years.
Representatives of Ernst & Young LLP will be present at the Meeting and
will have the opportunity to make a statement and to respond to appropriate
questions.
17
<PAGE> 20
SPECIAL BUSINESS
RESERVATION OF ADDITIONAL SHARES
UNDER THE INCENTIVE STOCK OPTION PLAN (1994)
Shareholders will be asked to approve, by a majority of the votes cast at
the Meeting, the reservation of an additional 8,000,000 Ordinary Shares for
issuance under the Incentive Stock Option Plan (1994) (the "1994 Plan"). The
1994 Plan was approved by the Shareholders on April 27, 1994, at which time
there were 1,514,300 Ordinary Shares remaining reserved for issuance and
unallocated. The reservation of an additional 15,000,000 Ordinary Shares for
issuance under the 1994 Plan was approved by the Shareholders on May 3, 1995.
The reservation of an additional 6,000,000 Ordinary Shares for issuance under
the 1994 Plan was approved by the shareholders on April 30, 1997. As a result of
the issuance of additional options to purchase Ordinary Shares pursuant to the
1994 Plan since that time, there were only 1,390,236 Ordinary Shares remaining
reserved for issuance as of December 31, 1998. The purpose of the 1994 Plan is
to provide effective incentives to all employees and directors of the
Corporation and its subsidiaries and to reward such persons in relation to the
performance and growth of the Corporation and a total return to shareholders,
thereby aligning the interest of these persons with those of the shareholders.
There are currently insufficient shares remaining available to fulfil this
purpose. It is therefore proposed that the number of Ordinary Shares reserved
for issuance be increased by an additional 8,000,000 Ordinary Shares to provide
a sufficient incentive for the 1994 Plan.
The increase in the number of Ordinary Share reserved for issuance under
the 1994 Plan is subject to the approval of the shareholders. It is also subject
to approval of the Toronto and Montreal stock exchanges and to filing with the
New York Stock Exchange. A resolution to approve the increase in the number of
Ordinary Shares reserved for issuance under the 1994 Plan will be presented to
the Meeting.
PROPOSALS BY SHAREHOLDERS
Shareholders desiring to submit proposals at an annual meeting must comply
with applicable provisions of the Canada Business Corporations Act. Shareholders
may present proposals for inclusion in management's proxy circular to be mailed
in connection with the annual meeting of shareholders in 1999 provided that such
proposals are received in the Company's principal executive office on or before
November 26, 1999, and that proposals are required by the applicable terms of
the U.S. Securities Exchange Act of 1934 or Canada Business Corporations Act to
be included in the Company's proxy circular.
COMPLIANCE WITH SECTION 16 OF THE U.S. SECURITIES EXCHANGE ACT OF 1934
Section 16 of the U.S. Securities Exchange Act of 1934 ("Exchange Act")
requires that each director and executive officer and certain shareholders file
certain forms with the Commission reporting their beneficial ownership of
Ordinary Shares. Based solely on records available to the Company, it appears
that each director and executive officer of the Company complied with its
reporting obligations under Section 16. All directors and officers of Gulf have
complied with all Canadian insider trading reporting obligations and the
information is publicly available.
18
<PAGE> 21
DIRECTORS' APPROVAL
The contents and sending of this Proxy Circular have been approved by the
Directors of the Company.
GULF CANADA RESOURCES LIMITED
"CRAIG S. GLICK"
Craig S. Glick
Secretary
Calgary, Alberta
March 30, 1999
19
<PAGE> 22
SCHEDULE "A"
CORPORATE GOVERNANCE
The Toronto Stock Exchange Committee on Corporate Governance in Canada has
issued a series of proposed guidelines (the "TSE Guidelines") for effective
corporate governance. The TSE Guidelines address matters such as the
constitution and independence of corporate boards, the functions to be performed
by boards and their committees and the effectiveness and education of board
members.
Gulf's Board of Directors and senior management consider good corporate
governance to be central to the effective and efficient operation of Canadian
corporations and have addressed the TSE Guidelines below.
An "unrelated" director for the purposes of the TSE Guidelines is a
director who is free from any interest and any business or other relationship
which could, or could reasonably be perceived to, materially interfere with the
director's ability to act in the best interests of the Company, other than
interests arising from shareholding. In defining an unrelated director, the TSE
Guidelines placed emphasis on the ability of a director to exercise objective
judgment, independent of management. The TSE Guidelines also made an informal
distinction between inside and outside directors. The TSE Guidelines considers
an inside director a director who is an officer or employee of the Company or
any of its affiliates.
The composition of Gulf's Board of Directors may be impacted by the
Shareholder Agreement, which provides that AGRC and the Participants are
required to support each other in voting for a certain number of directors,
depending on the percentage of outstanding Ordinary Shares held by that party.
As between AGRC and the Participants, the Shareholders Agreement provides that
at present shareholding levels, at the 1999 Annual and Special Meeting of
Shareholders, each shall be required to vote for three directors named by each.
Gulf does not provide formal education programs for new directors, but does
provide such orientation and information as individual directors may request.
All directors, notwithstanding the manner in which they were nominated, are
required to act in the best interests of the Company.
Gulf's Board of Directors has three committees, an Executive Committee, a
Compensation and Pension Committee, as well as an Audit Committee. All members
of committees are non-management directors and a majority of all members are
unrelated, as required by the TSE Guidelines. Gulf believes that the size of its
Board is sufficiently small that certain matters that might otherwise be
delegated to committees can be dealt with effectively by the entire Board, such
as the consideration of environmental and corporate governance issues. Gulf
therefore does not have a committee specifically responsible for such issues.
The Compensation Committee has reviewed the compensation of the directors in
light of their risks and responsibilities, as required by the TSE Guidelines. As
a result of the review, the Compensation Committee adopted a new compensation
program for the Board of Directors. As well, each director is granted stock
options annually pursuant to Gulf's Incentive Stock Option Plan (1994) to more
closely align the interests of the directors with those of Gulf's Shareholders.
In addition, Gulf's Board of Directors has the ability to function independently
of management and has the ability to engage outside advisors, at the Company's
expense, should the Board of Directors or individual directors so wish, as
specified in the TSE Guidelines.
Gulf's Board of Directors is responsible under applicable law for the
management of the business and affairs of the Company. The Board retains all
powers which are not expressly delegated to management. In connection with the
delegation of power to management, the Board, as suggested in the TSE
Guidelines, explicitly retains the power to, and does, consider such matters as
the appointment and monitoring of senior management (although not the training
of senior management), short and long term strategic planning, and general
oversight of risk management strategies. The Board has also established the
position of internal auditor, who reports directly to the Audit Committee of the
Board, to monitor internal controls and management information systems. In
connection with the review by the Board of strategic planning matters, the Board
approves the corporate objectives of the Chief Executive Officer and senior
management, also as suggested by the TSE Guidelines.
A-1
<PAGE> 23
GULF CANADA RESOURCES LIMITED
ANNUAL AND SPECIAL MEETING, MAY 11, 1999
PROXY
The undersigned shareholder of Gulf Canada Resources Limited (the
"Company") hereby appoints Richard H. Auchinleck, President and Chief Executive
Officer, or failing him, Craig S. Glick, Executive Vice President, Corporate and
Chief Financial Officer and Secretary, or instead of either of the foregoing,
..................................................................... as the
nominee of the undersigned to attend and act for and on behalf of the
undersigned at the ANNUAL AND SPECIAL MEETING OF THE COMPANY TO BE HELD ON MAY
11, 1999 (the "Meeting"), and at any adjournment or adjournments thereof, to the
same extent and with the same power as if the undersigned was personally present
at the said Meeting or such adjournment or adjournments thereof and, without
limiting the generality of the authorization and power hereby given, the said
nominee is specifically directed to vote the Ordinary Shares registered in the
name of the undersigned at the Meeting,
<TABLE>
<S> <C> <C>
[ ]FOR the election as directors of all or [ ]WITHHOLD FROM VOTING for all nominees
nominees listed below (except as listed below
marked to the contrary below)
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW).
R.H. Allen, R.H. Auchinleck, S.H. Hartt, H.E. Joudrie, T.M. Long, D.F.
Mazankowski,
A.H. Michell, H.M. Neldner, W. O'Donoghue, R.N. Robertson, Maureen Sabia
<TABLE>
<S> <C> <C>
[ ]FOR the appointment of Ernst & Young or [ ]WITHHOLD FROM VOTING on the
LLP as auditors, with remuneration to appointment of Ernst & Young LLP as
be fixed by the directors. auditors, with remuneration to be
fixed by the directors.
[ ]FOR the ordinary resolution to or [ ]AGAINST the ordinary resolution to
reserve an additional 8,000,000 reserve an additional 8,000,000
Ordinary Shares for issuance under Ordinary Shares for issuance under
the Incentive Stock Option Plan the Incentive Stock Option Plan
(1994) (the "1994 Plan"), as (1994) (the "1994 Plan"), as
described in the accompanying described in the accompanying
Management Proxy circular. Management Proxy circular.
</TABLE>
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE
MANAGEMENT OF THE COMPANY AT THE DIRECTION OF THE
BOARD OF DIRECTORS. This proxy confers
discretionary authority with respect to amendments
to matters identified in the Notice of Annual
Meeting of Shareholders or other matters which may
properly come before the Meeting or any
adjournment thereof. This proxy also authorizes
the replacement of any nominee identified above
for election to the Board of Directors if such
nominee is unable to serve or will not serve.
Management knows of no such amendments, other
matters or anticipated replacements as at the date
hereof. The Ordinary Shares represented by this
proxy, if appointing the persons designated as
nominees above, will be voted or withheld from
voting in accordance with the instructions of the
shareholder on any ballot that may be called for
and, where the person whose proxy is solicited
specifies a choice with respect to any
<PAGE> 24
matter to be voted upon, the Ordinary Shares shall
be voted in accordance with the specification so
made. IF NO CHOICE IS SPECIFIED, THE ORDINARY
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF DIRECTORS ,"FOR" THE
APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS, WITH
REMUNERATION TO BE FIXED BY THE DIRECTORS AND
"FOR" THE RESERVATION OF ADDITIONAL ORDINARY
SHARES FOR THE 1994 PLAN.
A SHAREHOLDER HAS THE RIGHT TO APPOINT A
PERSON (WHO NEED NOT BE A SHAREHOLDER OF THE
COMPANY) OTHER THAN THE PERSONS DESIGNATED AS
NOMINEES ABOVE TO ATTEND AND ACT FOR AND ON BEHALF
OF SUCH SHAREHOLDER AT THE MEETING AND MAY
EXERCISE SUCH RIGHT BY INSERTING THE NAME OF SUCH
PERSON IN THE BLANK SPACE PROVIDED ABOVE.
This proxy must be executed by the
shareholder or an attorney authorized in writing
or, if the shareholder is a corporation, its
corporate seal must be affixed or this form of
proxy must be signed by an officer or attorney
thereof duly authorized indicating the capacity
under which such officer or attorney is signing.
Dated ________________________________________
(if undated, the proxy will be deemed to
bear the date on which it was mailed to
the shareholder)
Signature ______________________________________
(please sign, date and mail promptly in
the enclosed envelope)
Signature of Co-owner __________________________
TO BE EFFECTIVE, PROXIES MUST BE RECEIVED
BEFORE 4:30 P.M. (CALGARY TIME) ON MAY 7, 1999, BY
MONTREAL TRUST COMPANY OF CANADA, 600, 530 - 8TH
AVENUE S.W., CALGARY, ALBERTA, T2P 3S8, OR BE
DEPOSITED WITH THE CHAIRMAN OF THE MEETING PRIOR
TO THE COMMENCEMENT OF THE MEETING. PROXIES MAY BE
REVOKED AT ANY TIME PRIOR TO THEIR USE.
