PRIMA ENERGY CORPORATION
1801 BROADWAY, SUITE 500
DENVER, COLORADO 80202
(303) 297-2100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 8, 1995
Notice is hereby given that the Annual Meeting of Stockholders of Prima Energy
Corporation, a Delaware corporation, will be convened at 2:00 p.m., Mountain
Daylight Time, on Thursday, June 8, 1995, in the Forum Room, Norwest Bank
Colorado, N.A., 1740 Broadway, Denver, Colorado, for the following purposes:
1. To elect one director, as the Class I director, for the term expiring in 1998
or until his successor shall be elected and qualified;
2. To ratify the selection of Deloitte & Touche LLP to serve as independent
auditors of Prima Energy Corporation, for fiscal 1995; and
3. To transact such other business as may properly come before the Meeting or
any adjournment or adjournments thereof.
Only stockholders of record at the close of business on May 3, 1995, are
entitled to notice of and to vote at the Meeting.
Stockholders are cordially invited to attend the meeting in person. Whether or
not you plan to attend the meeting in person, please indicate your voting
instructions on the enclosed proxy, date and sign it, and return it promptly in
the enclosed envelope. In the event you do attend the meeting in person, you
may withdraw your proxy and vote in person. Your vote is important.
BY ORDER OF THE BOARD OF DIRECTORS
SANDRA J. IRLANDO
Secretary
Denver, Colorado
May 5, 1995
<PAGE>
PROXY STATEMENT
PRIMA ENERGY CORPORATION
1801 BROADWAY, SUITE 500
DENVER, COLORADO 80202
(303) 297-2100
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 8, 1995
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Prima Energy Corporation (hereinafter "the
Company" or "Prima"), Suite 500, 1801 Broadway, Denver, Colorado 80202, to be
used at the Annual Meeting of Stockholders (the "Meeting") to be held in the
Forum Room, Norwest Bank Colorado, N.A., 1740 Broadway, Denver, Colorado, on
Thursday, June 8, 1995, at 2:00 p.m., for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement
and the enclosed Proxy Card were sent to stockholders on or about May 5, 1995.
All expenses for soliciting Proxies, including clerical work, printing and
postage, will be paid by the Company. The Company will reimburse brokers and
other persons holding stock in their names, or in the name of nominees, for
their expenses in sending Proxy materials to principals and obtaining their
Proxies. In addition to solicitations by mail, officers, directors and
employees of the Company may solicit Proxies by telephone or by personal
interviews. Such persons will receive no additional compensation for such
services.
Shares represented by a properly executed Proxy will be voted at the Meeting
and, when instructions have been given by the stockholder, will be voted in
accordance with those instructions. If no instructions are given, the
stockholder's shares will be voted as recommended by the Board of Directors.
A Proxy may be revoked at any time by a stockholder before it is exercised by
giving written notice to the Secretary of the Company or by signing and
delivering a Proxy which is dated later, or if the stockholder attends the
Meeting in person, by either notice of revocation to the inspectors of
election at the Meeting or by voting at the Meeting.
QUORUM AND VOTING
Only stockholders of record at the close of business on May 3, 1995, will be
entitled to vote at the Meeting. On that date, there were issued and
outstanding 3,880,396 shares of the Company's $0.015 par value common stock
("Common Stock"), entitled to one vote per share. In the election of directors,
cumulative voting is not allowed. There are no outstanding shares of preferred
stock.
A majority of the outstanding Common Stock, present in person or by Proxy and
entitled to vote, will constitute a quorum for the transaction of business at
the Meeting. Under Delaware law and the Company's Certificate of Incorporation,
if a quorum is present at the Meeting, the nominee for election as Class I
director who receives the greatest number of votes cast at the Meeting by the
shares present in person or by Proxy and entitled to vote shall be elected as
the Class I director. The affirmative vote by the holders of a majority of
the shares of Common Stock present in person or by Proxy at the Meeting and
entitled to vote on the subject matter is required to ratify the selection
of Deloitte & Touche LLP as the Company's independent auditors for fiscal
1995. In the election of the Class I director, any action other than a vote
for a nominee will have the practical effect of voting against the nominee.
Abstention from voting on Proposal 2 on the Proxy Card or on any other matter
presented at the Meeting will have the practical effect of voting against any
such matter since it is one less vote for approval, while broker nonvotes on
any such matter will not be considered "shares present" for voting purposes.
At the 1993 and 1994 Annual Meeting of Stockholders, approximately 88% and 86%
respectively of the then outstanding shares of the Company's Common Stock
were present in person or by Proxy.
BENEFICIAL OWNERSHIP OF PRIMA'S COMMON STOCK
The following table sets forth, as of April 20, 1995, the beneficial ownership
of Prima's Common Stock (i) by each person or group of persons known by the
Company to beneficially own more than 5% of the outstanding Common Stock, (ii)
the nominee as Class I director and each of the directors of Prima, (iii) the
executive officer named in the Summary Compensation Table set forth under the
caption "Executive Compensation" below, and (iv) the nominee and all directors
and executive officers as a group.
Amount and Nature
Name and Address of Beneficial Percent
of Beneficial Owner Ownership (1) (2) of Class
Richard H. Lewis....................... 569,148 (3) 14.61%
1801 Broadway, Suite 500
Denver, Colorado 80202
Robert E. Childress.................... 179,418 (4) 4.62
1801 Broadway, Suite 500
Denver, Colorado 80202
Douglas J. Guion....................... 102,893 2.65
1801 Broadway, Suite 500
Denver, Colorado 80202
John P. Lockridge...................... 236,230 (5) 6.09
1801 Broadway, Suite 1250
Denver, Colorado 80202
George L. Seward....................... 123,862 (6) 3.19
2710 County Rd. No. 39
Yuma, Colorado 80759
Robert G. James........................ 424,000 (7) 10.93
80 Ludlow Drive
Chappaqua, New York 10514
Employee Stock Ownership Trust......... 312,430 (8) 8.05
with Robert E. Childress and
Sandra J. Irlando as Trustees
1801 Broadway, Suite 500
Denver, Colorado 80202
All directors and executive
officers as a group (10 persons)....... 1,364,686 (9) 34.86
(1) Except as stated in the following notes, each person has sole voting and
investment powers associated with the shares stated as beneficially owned by
him.
(2) Beneficial ownership includes shares over which the indicated beneficial
owner exercises voting and/or investment power. Shares of Common Stock subject
to options currently exercisable or exercisable within 60 days are deemed
outstanding for computing the percentage ownership of the person holding the
options but not deemed outstanding for computing the percentage ownership of
any other person.
(3) Includes 16,000 shares purchasable under the Prima Energy Corporation 1993
Stock Incentive Plan, 26,648 shares allocated to Mr. Lewis' account in the ESOT
as a participant in the ESOP and 60,000 shares owned by the wife and children
of Mr. Lewis. Mr. Lewis disclaims beneficial interest of the shares owned by
his wife and children.
(4) Includes 2,002 unallocated shares held by the ESOT as to which Mr.
Childress has shared voting and investment powers by virtue of being a
Co-Trustee, but does not include the remaining 310,428 shares held by the ESOT,
as to which he has no voting powers, but does have shared investment powers.
See Note (8) below.
(5) 87,000 shares are pledged on a bank loan.
(6) Includes 160 shares owned by the wife of Mr. Seward. Mr. Seward disclaims
beneficial ownership of these shares.
(7) Information in the table relating to Mr. James is based on a Schedule 13D
filed by Mr. James.
(8) Pursuant to the terms of the ESOT, the Trustees have investment powers
related to the Common Stock of Prima held by the ESOT.
(9) Includes 34,000 shares purchasable under the Prima Energy Corporation 1993
Stock Incentive Plan and 103,153 shares allocated to the ESOT accounts of
individuals who are directors or officers of Prima.
ELECTION OF CLASS I DIRECTOR
(PROPOSAL 1 OF PROXY CARD)
The Company's Certificate of Incorporation and Bylaws provide that the number
of members of the Board of Directors shall be fixed by resolution of the Board.
The size of the Board is currently set at five. The Company's Certificate of
Incorporation also provides for the classification of the Board of Directors
into three classes, as nearly equal in number as possible; each of which
classes will serve for three years with one class being elected each year.
Currently the number of directors in each of the three classes is one in
Class I, two in Class II and two in Class III. The term of the Class I
director expires at the Meeting, the Class II directors at the 1996 Annual
Meeting of Stockholders and the Class III directors at the 1997 Annual Meeting
of Stockholders. The Board of Directors intends to submit one nominee
(George L. Seward) at the Meeting as the Class I director.
The Company has no nominating or similar committee of its Board of Directors;
therefore, it is the recommendation of the Board of Directors that the Board
for the coming year, and until their successors have been duly elected and
qualified, shall consist of a total of five (5) members. Unless authority is
withheld, it is intended that the shares represented by your Proxy will be
voted for the election of the nominee (George L. Seward) as the Class I
director. If the nominee is unable to serve for any reason, your Proxy will
be voted for such person as shall be designated by the Board of Directors to
replace such nominee. The Board of Directors has no reason to expect that
the nominee will be unable to serve.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEE FOR CLASS I DIRECTOR, GEORGE L. SEWARD.
Certain information concerning such nominee, as well as the other current
directors, is set forth below:
Period of Service
Positions with as Director Class of
Name Age the Company or Officer Director
Richard H. Lewis.... 45 Chairman of the Board, Since April 1980 III (1)
Chief Executive Officer,
President, Treasurer
Robert E. Childress. 47 Director Since October 1988 II (2)
Douglas J. Guion.... 46 Director Since October 1988 II (2)
John P. Lockridge... 64 Director Since May 1980 III (1)
George L. Seward.... 44 Director Since April 1980 I (3)
(1) Current term expires in 1997
(2) Current term expires in 1996
(3) Current term expires in 1995
The following includes additional information concerning the Class I nominee
for director and each of the director's business experience:
Mr. Lewis founded Prima in April 1980 and has served as its Chairman of the
Board, Chief Executive Officer and Chief Financial Officer since that time.
Prior to forming Prima and since his graduation from the University of Colorado
in 1971 with a B.S. degree in Finance and Accounting, Mr. Lewis was employed as
a certified public accountant with Arthur Andersen LLP, an international public
accounting firm, serving as an audit manager since 1976.
Mr. Childress has been a director of Prima since 1988. He served as Prima's
Executive Vice President from October 1988 to April 1993, at which time he
resigned as Executive Vice President to devote more time to volunteer
activities. Mr. Childress holds a B.S. degree in Geophysical Engineering
from the Colorado School of Mines. He worked for Cities Service Oil Company
from 1970 to 1981 in various positions, including Regional Geophysical
Manager in Houston and Manager of Planning for Worldwide Operations for the
company's Energy Resource Group in Tulsa. Mr. Childress joined Golden Buckeye
Petroleum Corporation ("GBPC") in 1981 and served as its President until that
company merged with Prima in October 1988.
Mr. Guion has been a director of Prima since October 1988. In 1987, Mr. Guion
founded Colorado Energy Minerals, Inc., a privately held oil and gas company
owned by Mr. Guion and his family. He co-founded GBPC in 1980 and served as
its Chairman of the Board until the merger with Prima in 1988. Prior to
1980, Mr. Guion spent 10 years as a co-owner and manager for various geological
and geophysical consulting firms and in various other business enterprises,
including home building and real estate. Mr. Guion holds a B.S. degree in
Geophysical Engineering from the Colorado School of Mines. He is a
Registered Professional Engineer, Registered Geophysicist and Certified
Petroleum Geologist.
Mr. Lockridge has been a director of Prima since May 1980. He has been engaged
in oil, gas and mineral exploration activities since graduation from the
Colorado School of Mines with a degree in Geological Engineering in 1952.
From 1952 to 1968, Mr. Lockridge was employed by Mobil Oil Corporation in
various capacities of increasing responsibility, including Rocky Mountain
Exploration Manager. From 1968 to 1970, Mr. Lockridge was a Vice President
for Koch Exploration Company. Since 1970, Mr. Lockridge has been an
independent operator and is the Vice President of Mountain Petroleum
Corporation, a privately held oil and gas company. Mr. Lockridge has been
involved in many professional industry organizations, including past president
of the Rocky Mountain Association of Geologists and past vice president of the
American Association of Petroleum Geologists. He is a recipient of several
awards and is an Honorary Member of both the RMAG and the AAPG.
Mr. Seward has been a director of Prima since April 1980. He has been engaged
in the farming and ranching business since his graduation from Colorado State
University with a B.A. degree in 1972. Since 1975, Mr. Seward has owned and
operated Seward Land and Cattle Company, a privately held company, as its
majority stockholder and president.
OTHER EXECUTIVE OFFICERS
The following paragraphs set forth certain information concerning executive
officers who are not also directors of the Company:
John D. Longwell, age 40, has been Senior Vice President of Operations since
June 1993. He was Vice President of Operations from March 1990 to June 1993.
Mr. Longwell served as Operations Manager for GBPC and subsequently for
Prima from 1984 to March 1990. Previously, Mr. Longwell worked in various
engineering capacities for Texaco, Superior Oil and Dome Petroleum. Mr.
Longwell has also served as President of Action Oilfield Services, Inc.
(a wholly owned subsidiary) since 1986. Mr. Longwell has been a director
of the Colorado Oil and Gas Association since 1985, was Vice President for
1994 and is serving as Association President for 1995. Mr. Longwell is a
19 year veteran in the oil and gas industry and received a B.S. degree in
Mechanical Engineering from Syracuse University in 1976.
John H. Carpenter, age 39, has been Vice President of Marketing since April
1994. Mr. Carpenter has 15 years experience in the oil and gas industry,
primarily in the marketing, sales and trading of natural gas. Prior to joining
Prima, Mr. Carpenter was the Vice President of Barrett Fuels Corporation, a
natural gas trading subsidiary of Barrett Resources Corporation, for four
years. He also assisted in the initiation of natural gas trading activities
for the Public Service Company of Colorado in its wholly owned subsidiary,
Fuel Resources Development Co., where he worked for eight years and was its
Manager of Marketing. Mr. Carpenter is a former Director of the Rocky Mountain
Natural Gas Association. He received a B.A. degree in Journalism and Master of
Science in Administration degree from the University of Denver.
Michael K. Decker, age 40, has been Vice President of Exploitation since June
1993. Mr. Decker joined Prima in 1990 as Exploitation Manager, responsible for
geological engineering and reservoir engineering operations. Mr. Decker spent
the first eleven years of his career with Tenneco Oil Exploration and Production
Company, working both onshore and offshore domestic properties. Upon the
sale of Tenneco, Mr. Decker joined Bonneville Fuels Corporation and was
responsible for evaluating acquisitions and prospects in the United States
and Canada. Mr. Decker is also an active member of the Potential Gas
Committee. He is currently on the PGC Board of Directors and is the Rocky
Mountain Area Chairman. Mr. Decker received a B.S. degree in Geological
Engineering from the Colorado School of Mines in 1977.
Sandra J. Irlando, age 43, has been Vice President of Accounting since June
1993 and Corporate Secretary since June 1994. Ms. Irlando has been Controller
of Prima since 1988. She joined GBPC in 1985 as Tax Manager and became its
Controller in 1987. Prior to joining GBPC, Ms. Irlando worked as a certified
public accountant for nine years. She received a B.S.B.A. degree in
Accounting from the University of Denver in 1975.
G. Walter Lunsford, age 43, has been Vice President of Land since June 1993.
He served as Secretary from October 1988 to June 1994 and was Land Manager of
Prima from October 1988 to June 1993. He served as Secretary and Land
Manager for GBPC from 1982 until the merger with Prima in 1988. Mr. Lunsford
received a B.S. degree from Indiana University and is a Registered
Professional Landman and member of the American Association of Professional
Landmen.
No family relationship exists between the nominee for Class I director or any of
the directors and executive officers of the Company with the exception of Mr.
Lunsford, who is the brother-in-law of Mr. Guion. In addition, neither the
nominee for Class I director nor any of the directors is a director of any
company with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or subject to the requirements of Section
15(d) of that Act.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held 11 meetings during the year ended December 31,
1994. Each director attended at least 75 percent of the aggregate of the total
number of meetings of the Board of Directors and the meetings of the
Committees described below of which each respective director is a member.
The Company's officers have made a practice of keeping its directors informed
of corporate activities by frequent personal meetings and telephone
discussions, and the directors ratify or authorize certain Company actions
through unanimous written consent actions.
The audit committee of the Board of Directors consists of Messrs. Lockridge and
Seward. Its functions include recommending to the Board of Directors the
independent auditors to be employed, discussing the scope of the independent
auditors' examinations, reviewing the financial statements and independents
auditors' report, soliciting recommendations from the independent auditors
regarding internal controls and other matters, establishing guidelines for the
Board of Directors review of related party transactions for potential
conflicts of interest, making recommendations to the Board of Directors and
other related tasks as requested by the Board of Directors. During the year
ended December 31, 1994, the committee met formally one time and the meeting
was attended by all of the committee.
The compensation committee of the Board of Directors consists of Messrs.
Childress, Guion, Lockridge and Seward. The committee has the authority to
establish policies concerning compensation and employee benefits for all
employees of the Company. The committee reviews and makes recommendations
concerning the Company's compensation policies and the implementation of those
policies and determines compensation and benefits for certain executive
officers. During the year ended December 31, 1994, the committee met
formally one time and the meeting was attended by all of the committee.
At present, the Company has no nominating, executive or similar committees.
DIRECTOR COMPENSATION
No director of Prima has been compensated for any services provided as a
director under any standard arrangement or otherwise. The Company has
compensated two of its directors for consulting services rendered to the
Company. See "Executive Compensation - Consulting Fees" below.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation paid
or accrued during each of the Company's last three fiscal years and for the six
month transition period ended December 31, 1992, to its Chief Executive Officer,
the only executive officer whose salary and bonus exceeded $100,000 for the last
fiscal year for services in his capacity as such.
SUMMARY COMPENSATION TABLE
Name and Long-term All Other
Principal Annual Compensation Compensation Compensation
Position Year Salary Bonus Options (#) (1) (4)
Richard H. Lewis... 12/31/94 $165,334 $ - (3) none $11,136
Chief Executive 12/31/93 138,666 60,000 80,000 9,108
Officer, President 12/31/92 (2) 63,333 50,000 n/a 7,574
Treasurer 6/30/92 (5) 121,986 27,000 n/a -
(1) In order to facilitate the adoption of new disclosure rules of the
Securities and Exchange Commission ("SEC") regarding executive compensation,
the SEC does not require that this column include information for fiscal
years ended before December 15, 1992.
(2) Six month transition period.
(3) A bonus for the year will be paid to employees of Prima, including Mr.
Lewis. However, the amount of the bonus to be paid to the various individuals
has not been determined.
(4) Amounts consist of allocations during each of the years and the six month
transition period indicated for the benefit of Mr. Lewis under Prima's Employee
Stock Ownership Plan ("Plan"). The Plan is qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended, and is for the benefit of all
eligible employees of the Company. Allocations to participants are made
annually as of the last day of the Plan year, September 30, and are allocated
among the participants in proportion to their compensation for the Plan year.
Contributions to the Plan are payable at a minimum rate of 5% of eligible
salaries (consisting of salary, bonus, and, in the case of certain non-officer
employees, overtime). Through the Plan year ended September 30, 1993, the Plan
provided for contributions to be made quarterly and to be used to purchase
Prima Common Stock on the open market. Effective October 1, 1993, the Plan was
amended to allow fully vested employees the option to direct the Plan Trustees
to diversify a portion of their Plan investments by selling a limited percent
of Prima Common Stock each year and investing the proceeds in various
investment options. Plan participants become fully vested in the Plan after
six years of service to the Company. Mr. Lewis is fully vested in the Plan.
(5) Fiscal year
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information concerning each exercise of stock
options during the year ended December 31, 1994 by the Company's Chief
Executive Officer and the fiscal year-end value of unexercised options held
by him.
AGGREGATED OPTION/SAR EXERCISES
FOR YEAR ENDED DECEMBER 31, 1994
AND YEAR-END OPTION/SAR VALUES
Value of
Number of Unexercised
Unexercised In-The-Money
Options at Options at
Shares Value Year End(#)(2) Year End($)(3)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#)(1) ($)(1) Unexercisable Unexercisable
Richard H. Lewis... 0 0 16,000/ 0/
64,000 0
(1) No options were exercised during the year ended December 31, 1994.
(2) The total number of unexercised options held as of December 31, 1994,
separated between those options that were exercisable and those options that
were not exercisable.
(3) For all unexercised options held as of December 31, 1994, the aggregate
dollar value of the excess of the market value of the stock underlying the
options over the exercise price of those options. On December 31, 1994, the
closing sale price of the Common Stock was $11.50 per share. The exercise
price is $13.25 per share. The values are shown separately for those options
which are exercisable, and those options that were not yet exercisable.
CONSULTING FEES
Messrs. Childress and Guion both provided limited consulting services to
the Company during the year ended December 31, 1994. Mr. Childress served as
a consultant in the areas of gas marketing and gas contract administration from
January to April 1994, and was paid a total of $14,906 for services rendered.
Mr. Guion provided various geological consulting and mapping services for which
he was paid $33,697 in fees during the year ended December 31, 1994.
PERFORMANCE GRAPH
The following graph shows the changes over the past five year period in the
value of $100 invested in: (1) Prima Energy Corporation Common Stock; (2) the
NASDAQ Market Index; and (3) a peer group consisting of all the crude petroleum
and natural gas companies with stock trading on the NASDAQ Market within
SIC code 1311, consisting of approximately 195 companies. The year end values
of each investment are based on share price appreciation and assume that
$100 was invested December 31, 1989 and that all dividends are reinvested.
Calculations exclude trading commissions and taxes. The comparison in the
graph is required by the SEC and, therefore, is not intended to forecast or be
indicative of possible future performance of the Company's Common Stock.
As of December 31,
1989 1990 1991 1992 1993 1994
Prima Energy Corporation. $100.00 $158.06 $193.55 $516.13 $735.48 $593.55
Peer Group Index....... 100.00 86.49 90.30 85.74 102.16 107.06
NASDAQ Market Index.... 100.00 81.12 104.14 105.16 126.14 132.44
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Childress, Guion, Lockridge and Seward served as members of the
Compensation Committee during calendar 1994. None of these individuals was an
employee or officer of the Company during that year. Messrs. Childress, Guion
and Seward were officers of the Company prior to 1994. See "Consulting Fees"
above for information concerning consulting fees paid to Messrs. Childress and
Guion during 1994.
COMPENSATION COMMITTEE REPORT
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain information regarding the compensation
of its Chief Executive Officer and other executive officers whose salary and
bonus exceed $100,000 per year. Disclosure requirements include a report
explaining the rationale and considerations that lead to fundamental executive
compensation decisions. The following report has been prepared to fulfill this
requirement.
The Compensation Committee ("Committee") of the Board of Directors sets and
administers the policies that govern the annual compensation and long-term
compensation of executive officers of the Company. The Committee consists of
Messrs. Childress, Guion, Lockridge and Seward, none of whom is currently an
employee of the Company. The Committee makes all decisions concerning
compensation of executive officers who receive salary and bonus in excess of
$100,000 annually, determine the total amount of bonuses to be paid annually and
grant all awards of stock options under the Company's Stock Incentive Plan. The
Committee's policy is to offer executive officers competitive compensation
packages that will permit the Company to attract and retain highly qualified
individuals and to motivate and reward such individuals on the basis of the
Company's performance.
At present, the executive compensation package consists of base salary,
cash bonus awards and long-term incentive opportunities in the form of stock
options, stock appreciation rights and an employee stock ownership plan.
Executive salaries are reviewed by the Committee on an annual basis and are set
for individual executive officers based on subjective evaluations of each
individual's performance, the Company's performance and a comparison to salary
ranges for executives of other companies in the oil and gas industry with
characteristics similar to those of the Company. This allows the Committee to
set salaries in a manner that is both competitive and reasonable within the
Company's industry.
Cash bonuses may be awarded on an annual basis for exceptional effort and
performance. The use of a specific formula to evaluate management performance
is not employed because it is difficult to define an appropriate formula and it
restricts the flexibility of the Committee. The Committee considers the
achievements of the Company, specifically including earnings for the year,
return on stockholders' equity and growth in proved oil and natural gas
reserves, in determining appropriate levels for bonus awards. Following a
review of the Company's performance after the close of the 1993 fiscal year, in
May of 1994 the Committee determined that cash bonuses should be awarded, set
a total dollar limit for the bonus pool and awarded a cash bonus to the
Company's Chief Executive Officer, based upon his contribution to the Company's
performance during the year. The Committee has not met and evaluated results
for the year ended December 31, 1994; therefore, bonuses for 1994 have not yet
been determined.
Incentive stock options may be granted to key employees, including
executive officers of the Company. Such stock based awards continue to be an
important element of the executive compensation package because they aid in the
objective of aligning the key employees' interests with those of the
stockholders by giving key employees a direct stake in the performance of the
Company. Decisions concerning the granting of stock options are made on the
same basis as decisions concerning base salary and cash bonus awards as
discussed above. No options were granted in 1994.
The compensation of the Chief Executive Officer of the Company is
determined in the same manner as the compensation for other executive officers
as described above. As a result, the compensation of the Chief Executive
Officer is largely dependent upon the overall performance of the Company as well
as a comparison to compensation being paid by other comparable peer companies
to their chief executive officers. For the year ended December 31, 1994, the
base salary of the Chief Executive Officer of the Company, Richard H. Lewis,
increased approximately 19.2 percent to $165,334 from $138,666. A cash bonus
award for 1994 has not been determined as of the date of this Proxy Statement.
The Chief Executive Officer's long-term compensation from stock options is also
largely dependent upon Company performance. No stock options were granted to
the Chief Executive Officer in 1994.
Compensation Committee of the Board of Directors:
Robert E. Childress
Douglas J. Guion
John P. Lockridge
George L. Seward
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Company is a 6% limited partner in a real estate limited partnership
which acquired approximately 54 acres of undeveloped land in Phoenix, Arizona
for investment and capital appreciation. The Company has invested $256,668 in
the partnership from inception. No funds were invested for the year ended
December 31, 1994. During fiscal 1991, 32 acres of the land were returned to
the noteholders in exchange for forgiveness of the remaining debt. The
partnership owns the remaining 22 acres of land free and clear. One of the
general partners of the partnership is a company controlled by the brother of
the Company's president. The Company participated on the same basis as the
other limited partners. This transaction was approved by the disinterested
members of the Board.
Certain of the Company's directors and executive officers have participated,
either individually or through entities which they control, in oil
and gas prospects or properties in which the Company has an interest. These
participations, which have been on a working interest basis, have been in
prospects or properties originated or acquired by the Company. In substantially
every instance, there has also been one or more non-affiliated participants who
participated on the same basis as the officers and directors. In some cases,
the interests sold to affiliated and non-affiliated participants were sold on
a promoted basis requiring these participants to pay a portion of the Company's
costs. Each of the participations by directors and executive officers has been
on terms no less favorable to the Company than it could have obtained from
non-affiliated participants. It is expected that joint participations with the
Company will occur from time to time in the future. All participations by the
officers and directors have and will continue to be approved by the
disinterested members of the Board of Directors and are subject to standard
industry operating agreements.
During 1994, the Company and certain other entities acquired leasehold
interests in 197.25 acres in the Wind River Basin in central Wyoming. The
Company's interest in this acreage is 50%. Mr. Lockridge, a director of the
Company, owns 38.3% and certain non-affiliated third parties own the remaining
11.7%. The leasehold interest was acquired for total consideration of $903,803,
of which each participant paid his proportionate share. Each of the
participants has owned jointly-held acreage in this prospect area since 1987.
During 1994, Mr. Guion, a director of Prima, participated in the drilling or
recompleting of six wells (.57 net), in which the Company is the operator and a
working interest owner, for a total investment of $150,273.
At any point in time, there are receivables and payables with officers and
directors that arise in the ordinary course of business resulting from their
participations in Company oil and gas properties or prospects. These amounts
are not significant.
SECTION 16 REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the National Association of
Securities Dealers, Inc. Officers, directors, and greater than 10% stockholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) filings.
Based solely on its review of copies of such forms received by the Comapny
or written representations that no Form 5's were required for those persons, the
Company believes that, during the year ended December 31, 1994, its officers,
directors, and greater than 10% beneficial owners complied with all applicable
filing requirements except as noted below.
Mr. George L. Seward, a director of Prima, failed to timely file one Form
4 reporting the sale of 2,000 shares of Prima's Common Stock. The sale occurred
in April 1994. The Form 4 was due May 10, 1994 and was filed June 9, 1994.
PROPOSAL TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS AUDITORS
(PROPOSAL 2 ON PROXY CARD)
The independent certified public accounting firm of Deloitte & Touche LLP
has been engaged by the Company to audit the accounts and financial statements
of the Company annually for the periods from its inception, April 11, 1980
through December 31, 1994.
Although ratification by stockholders of the appointment of Deloitte &
Touche LLP is not required by Delaware corporate law or the Company's
Certificate of Incorporation or Bylaws, management feels a decision of this
nature should be made with the consideration of the Company's stockholders. If
stockholder approval is not received, management will reconsider the
appointment.
It is expected that a representative of Deloitte & Touche LLP will be
present at the Meeting and will be given the opportunity to make a statement if
he so desires. It is also expected that the representative will be available
to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF
THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE YEAR ENDING DECEMBER 31, 1995.
OTHER BUSINESS
The Board of Directors of the Company is not aware of any other matters
that are to be presented at the Meeting, and it has not been advised that any
other person will present any other matters for consideration at the Meeting.
Nevertheless, if other matters should properly come before the Meeting, the
stockholders present, or the person, if any, authorized by a valid Proxy to vote
on their behalf, shall vote on such matters in accordance with their judgment.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR
ANNUAL MEETING SCHEDULED TO BE HELD IN JUNE, 1996
Any proposal by a stockholder to be presented at the Company's Annual
Meeting of Stockholders scheduled to be held in June, 1996, must be received at
the offices of the Company, Suite 500, 1801 Broadway, Denver, Colorado 80202,
no later than January 5, 1996 in order to be considered for inclusion in the
Company's Proxy Statement and form of Proxy for that meeting.
ANNUAL REPORTS AND CONSOLIDATED FINANCIAL STATEMENTS
You are referred to the Company's annual report, including consolidated
financial statements, for the year ended December 31, 1994, enclosed herein for
your information. The annual report is not incorporated in this Proxy Statement
and is not to be considered part of the soliciting material.
BY ORDER OF THE BOARD OF DIRECTORS
SANDRA J. IRLANDO
Secretary
Denver, Colorado
May 5, 1995
APPENDIX 1
PROXY CARD
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
Prima Energy Corporation The undersigned hereby appoints Richard H. Lewis,
1801 Broadway,Suite 500 Sandra J. Irlando and G. Walter Lunsford as Proxies,
Denver, Colorado 80202 or any one of them, each with the power to appoint
his or her substitute, and hereby authorizes them to
represent and to vote, as directed below, all the
shares of common stock of Prima Energy Corporation
held of record by the undersigned on May 3, 1995, at
the Annual Meeting of Stockholders to be held on
June 8, 1995 or any adjournment thereof, hereby
ratifying and confirming all that said Proxies may
do or cause to be done by virtue thereof.
1. ELECTION OF CLASS I DIRECTOR:
___ FOR George L. Seward, nominee as ___ WITHHOLD AUTHORITY to vote for
Class I Director George L. Seward, nominee as
Class I director
2. PROPOSAL TO RATIFY THE SELECTION OF DELOITTE & TOUCHE AS INDEPENDENT
AUDITORS OF PRIMA ENERGY CORPORATION FOR FISCAL 1995.
___ FOR ___ AGAINST ___ ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEE SET FORTH IN PROPOSAL 1 AND FOR PROPOSAL 2.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as
executor, administrator, trustee, or guardian, please give
full title as such. If a corporation, please sign in
full corporate name by President or other authorized
officer. If a partnership please sign in partnership name
by authorized person.
DATED_______________________, 1995
__________________________________ _____________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
__________________________________ _____________________________________
Signature, if held jointly
