PRIMA ENERGY CORPORATION
1801 Broadway, Suite 500
Denver, Colorado 80202
(303) 297-2100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held June 12, 1996
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 Wednesday, June 12, 1996, in the Forum Room,
Norwest Bank Colorado, N.A., 1740 Broadway, Denver, Colorado, for the
following purposes:
1. To elect two directors, as the Class II directors, for the term
expiring in 1999 or until their successors 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 1996;
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 6, 1996, 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 8, 1996
<PAGE>
PROXY STATEMENT
PRIMA ENERGY CORPORATION
1801 Broadway, Suite 500
Denver, Colorado 80202
(303) 297-2100
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 12, 1996
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 Wednesday, June 12, 1996, 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 8, 1996.
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 6, 1996,
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.
<PAGE>
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 nominees for
election as Class II directors who receive 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 II directors. 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 1996. In the election of the Class II directors, 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 1994 and 1995 Annual Meeting
of Stockholders, approximately 86% and 89% 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 March 31, 1996, 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 nominees as Class II 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 nominees 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.................. 590,376 (3) 15.05%
1801 Broadway, Suite 500
Denver, Colorado 80202
Robert E. Childress............... 160,832 (4) 4.14
1801 Broadway, Suite 500
Denver, Colorado 80202
Douglas J. Guion.................. 91,418 2.36
1801 Broadway, Suite 500
Denver, Colorado 80202
John P. Lockridge................. 232,730 (5) 6.00
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
<PAGE>
Employee Stock Ownership Trust.... 241,024 (8) 6.21
with Robert E. Childress and
Sandra J. Irlando as Trustees
1801 Broadway, Suite 500
Denver, Colorado 80202
KPM Investment Management, Inc.... 417,985 (9) 10.77
10250 Regency Circle
Omaha, Nebraska 68114
All directors and executive
officers as a group (10 persons).. 1,366,776 (10) 34.49
- - - - -------------------------------
(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 42,000 shares purchasable under the Prima Energy
Corporation 1993 Stock Incentive Plan, 22,976 shares allocated to
Mr. Lewis' account in the ESOT as a participant in the ESOP and
71,000 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 116 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 240,908 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) The number of shares and nature of beneficial ownership is based on
information contained in Schedule 13D and Form 4 filed with the
Securities and Exchange Commission.
(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) The number of shares and nature of beneficial ownership is based on
information contained in Schedule 13G filed with the Securities and
Exchange Commission with respect to 388,860 shares and is based on
information supplied by KPM Investment Management Inc. with respect to
the remaining 29,125 shares. KPM Investment Management, Inc.
reported sole voting power and sole dispositive power with respect
to all shares.
(10) Includes 83,000 shares purchasable under the Prima Energy Corporation
1993 Stock Incentive Plan and 93,904 shares allocated to the ESOT
accounts of individuals who are directors or officers of Prima.
<PAGE>
ELECTION OF CLASS II DIRECTORS
(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
II directors expires at the Meeting, the Class III directors at the 1997
Annual Meeting of Stockholders and the Class I director at the 1998 Annual
Meeting of Stockholders. The Board of Directors intends to submit two
nominees (Robert E. Childress and Douglas J. Guion) at the Meeting as the
Class II directors.
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 nominees (Robert E. Childress and
Douglas J. Guion) as the Class II directors. If these nominees are unable to
serve for any reason, your Proxy will be voted for such persons as shall be
designated by the Board of Directors to replace such nominees. The Board of
Directors has no reason to expect that the nominees will be unable to serve.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE NOMINEES FOR CLASS II DIRECTORS, ROBERT E. CHILDRESS AND DOUGLAS J.
GUION.
Certain information concerning such nominees, 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.... 46 Chairman of the Board, Since April 1980 III (1)
Chief Executive Officer,
President, Treasurer
Robert E. Childress. 48 Director Since October 1988 II (2)
Douglas J. Guion.... 47 Director Since October 1988 II (2)
John P. Lockridge... 65 Director Since May 1980 III (1)
George L. Seward.... 45 Director Since April 1980 I (3)
- - - - ------------------------
(1) Current term expires in 1997
(2) Current term expires in 1996
(3) Current term expires in 1998
<PAGE>
The following includes additional information concerning the Class II
nominees 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. Mr. Lewis graduated 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, from 1971 until 1980, serving as an audit manager since
1976. Mr. Lewis serves on the Advisory Council to the School of Business at
the University of Colorado and is active in various civic and industry
organizations.
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.
<PAGE>
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 41, 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 served 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 40, 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 41, 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 ("PGC"). 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 44, 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 44, 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.
<PAGE>
No family relationship exists between the nominees for Class II 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 nominees for Class II 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 12 meetings during the year ended December
31, 1995. 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 independent 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, 1995, 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, 1995, the committee met
formally four times.
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.
<PAGE>
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, 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
Long-term All Other
Name and Annual Compensation Compensation Compensation
Principal Position Year Salary Bonus Options (#) (1)
- - - - ------------------- -------- ---------- -------- ------------ ------------
Richard H. Lewis... 12/31/95 $178,754 $50,000 50,000 $ 7,500
Chief Executive 12/31/94 165,334 100,000 none 11,136
Officer, President, 12/31/93 138,666 60,000 80,000 9,108
and Treasurer
(1) Amounts consist of allocations during each of the years 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.
OPTION GRANTS IN 1995
The table below shows information regarding the grant of non-qualified
stock options made to the named executive officer under the Prima Energy
Corporation 1993 Stock Incentive Plan ("Stock Incentive Plan"). The amounts
shown for the named executive officer as potential realizable values are
based on arbitrary assumed annualized rates of stock price appreciation of
five percent and ten percent over the full ten year term of the options,
which would result in stock prices of approximately $24.23 and $38.58,
respectively. The amounts shown as potential realizable values for all
stockholders represent the corresponding increases in the market value of the
3,880,396 shares outstanding on the day these options were granted, which
would total approximately $36,300,000 and $91,992,000 respectively. No gain
to the optionees is possible without an increase in stock price which will
benefit all stockholders proportionately. These potential realizable values
are based solely on arbitrarily assumed rates of appreciation required by
applicable SEC regulations. There can be no assurance that the potential
realizable values shown in this table will be achieved.
<PAGE>
Individual Grants (1) Potential Realizable
------------------------------------------ Value at Assumed
Percent of Annual Rates of Stock
Total Options Price Appreciation
Granted to Exercise For Option Term
Options Employees Price -------------------
Granted in Fiscal Per Expiration If Stock If Stock
(#) 1995 Share Date at 5% at 10%
------- ----------- -------- ---------- -------- ---------
Richard H.
Lewis..... 50,000 66.67% $14.875 5/22/05 $467,740 $1,185,346
(1) All options were granted at an exercise price equal to the closing
price of the Common Stock on the date of grant and vest at a rate of
20% per year beginning May 22, 1996. Upon a Change of Control
of the Company, as defined in the Stock Incentive Plan, all options
previously granted under the Plan would become exercisable in full.
Options granted are non-transferable except by will or the laws of
descent and distribution, may be exercised during the grantee's
lifetime only by the grantee and must be exercised no later than ten
years from the date of grant. The options expire if not exercised,
in most cases, within twelve months of the grantees death or total
and permanent disability, on the effective date of termination
of employment or, with the discretion of the Compensation Committee,
within three months after normal or early retirement and are subject
to certain conditions.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information concerning each exercise of
stock options during the year ended December 31, 1995 by the Company's
Chief Executive Officer and the fiscal year-end value of unexercised options
held by him.
AGGREGATED OPTION/SAR EXERCISES
FOR YEAR ENDED DECEMBER 31, 1995
AND YEAR-END OPTION/SAR VALUES
Share Number of Value of Unexercised
Acquired Unexercised Options In-The-Money Options at
on Value at Year End (#)(2) Year-End ($)(3)
Exercise Realized Exercis- Unexercis- Exercis- Unexercis-
Name (#)(1) ($)(1) able able able able
- - - - ------ -------- -------- ----------- ----------- ----------- -----------
Richard
H. Lewis 0 0 32,000 98,000 0 0
(1) No options were exercised during the year ended December 31, 1995.
(2) The total number of unexercised options held as of December 31, 1995,
separated between those options that were exercisable and those
options that were not exercisable.
(3) For all unexercised options held as of December 31, 1995, 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,
1995, the closing sale price of the Common Stock was $13.25 per share.
The exercise price is $13.25 per share for 80,000 shares, of which
32,000 were exercisable and $14.875 for 50,000 shares, none of which
were exercisable. The values are shown separately for those options
which are exercisable, and those options that were not yet exercisable.
<PAGE>
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 188
companies. The year end values of each investment are based on share price
appreciation and assume that $100 was invested December 31, 1990 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,
----------------------------------------------------
1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- -------
Prima Energy
Corporation.......... $100.00 $122.45 $326.53 $465.31 $375.51 $432.65
Peer Group Index..... 100.00 104.41 99.14 118.12 123.79 136.14
NASDAQ Market Index.. 100.00 128.38 129.64 155.50 163.26 211.77
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Childress, Guion, Lockridge and Seward served as members of
the Compensation Committee during calendar 1995. Messrs. Childress, Guion
and Seward were not officers of the Company during 1995, but were officers
of the Company prior to 1994. Mr. Guion is the brother-in-law of Mr.
Lunsford, Vice President of Land for the Company.
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 1995
fiscal year, in March of 1996 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.
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
<PAGE>
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. Options totalling 75,000 were granted in 1995.
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, 1995, the base salary of the Chief Executive Officer of
the Company, Richard H. Lewis, increased approximately 8.1 percent to
$178,754 from $165,334. A cash bonus award for 1995 of $50,000 was paid
in March of 1996. Stock options for 50,000 shares were granted to the
Chief Executive Officer in 1995.
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, 1995. 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 is believed to have been
on terms no less favorable to the Company than it could have obtained from
non-affiliated participants. Such participations create interests that may
conflict with those of the Company. 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 1995, the Company and Mr. Lockridge, a director, jointly
participated in the acquisition of undeveloped acreage in Colorado and
Wyoming. The leases were acquired at competitive federal lease sales.
Such participations were at cost. The Company's share of the costs of
jointly acquired leasehold interests totaled $243,000.
<PAGE>
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
Company or written representations that no Form 5's were required for those
persons, the Company believes that, during the year ended December 31,
1995, its officers, directors, and greater than 10% beneficial owners
complied with all applicable filing requirements except as noted below.
Mr. Richard H. Lewis, a director and officer of Prima, failed to
timely file one Form 5 reporting transactions for his account in the Prima
Energy Corporation Employee Stock Ownership Plan ("ESOP") for the plan year
ended September 30, 1995. The Form 5 was due February 15, 1996 and was
filed April 10, 1996. The following officers of Prima were subject to the
same Form 5 filing requirements for their participations in Prima's ESOP
and filed the Form 5's on April 10, 1996: John D. Longwell, John H.
Carpenter, Michael K. Decker, Sandra J. Irlando and G. Walter Lunsford.
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, 1995.
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, 1996.
<PAGE>
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, 1997
Any proposal by a stockholder to be presented at the Company's Annual
Meeting of Stockholders scheduled to be held in June, 1997, must be
received at the offices of the Company, Suite 500, 1801 Broadway, Denver,
Colorado 80202, no later than January 9, 1997 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, 1995,
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 8, 1996
<PAGE>
APPENDIX I
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
Denver, CO 80202 Proxies, 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 6, 1996, at the Annual Meeting
of Stockholders to be held on June 12, 1996 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 II DIRECTORS:
___ FOR Robert E. Childress, nominee ___ WITHHOLD AUTHORITY to vote for
as Class II Director Robert E. Childress, nominee
as Class II director.
___ FOR Douglas J. Guion, nominee ___ WITHHOLD AUTHORITY to vote for
as Class II Director Douglas J. Guion, nominee as
Class II director.
2. PROPOSAL TO RATIFY THE SELECTION OF DELOITTE & TOUCHE AS INDEPENDENT
AUDITORS OF PRIMA ENERGY CORPORATION FOR FISCAL 1996.
___ 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 NOMINEES 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 __________________________________________, 1996
<PAGE>
_____________________________________ ________________________________
PLEASE MARK, SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
_____________________________________ ________________________________
Signature, if held jointly
