SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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 240.14(a)-11(c) or 240.14a-12
PRIMA ENERGY CORPORATION
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
X No Fee Required
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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 the 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 No.:
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(4) Date Filed:
<PAGE>
PRIMA ENERGY CORPORATION
1801 Broadway, Suite 500
Denver, Colorado 80202
(303) 297-2100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 16, 1997
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 Friday, May 16, 1997, in the Hershner Room,
Norwest Bank Colorado, N.A., 1740 Broadway, Denver, Colorado, for the
following purposes:
1. To elect two directors, as the Class III directors, for the term
expiring in 2000 or until their successors shall be elected and
qualified;
2. To amend Article V of the Certificate of Incorporation to increase
the number of authorized shares of common stock;
3. To ratify the selection of Deloitte & Touche LLP to serve as
independent auditors of Prima Energy Corporation, for fiscal 1997;
and
4. 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 April 8, 1997,
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
April 11, 1997
<PAGE>
PROXY STATEMENT
PRIMA ENERGY CORPORATION
1801 Broadway, Suite 500
Denver, Colorado 80202
(303) 297-2100
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 16, 1997
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 Hershner Room, Norwest Bank Colorado, N.A., 1740 Broadway, Denver,
Colorado, on Friday, May 16, 1997, 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
April 11, 1997.
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 April 8, 1997,
will be entitled to vote at the Meeting. On that date, there were issued and
outstanding 5,790,556 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. All Common Stock information in the Proxy Statement has
been restated to reflect the three for two Common Stock split distributed on
March 4, 1997.
<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 III 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 III directors. The affirmative vote by
the holders of a majority of the shares of Common Stock outstanding is
required to adopt the amendment to Article V of the Certificate of
Incorporation. 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
1997. In the election of the Class III directors, any action other than a
vote for a nominee will have the practical effect of voting against the
nominee. Abstention from voting on Proposals 2 or 3 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 1995 and 1996 Annual Meeting of Stockholders,
approximately 89% and 90% 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 21, 1997, 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 III director and each of the
directors of Prima, (iii) the executive officers 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................. 878,969 (3) 14.92%
1801 Broadway, Suite 500
Denver, Colorado 80202
Robert E. Childress.............. 188,715 (4) 3.26
7505 Margarita Place
Colorado Springs, Colorado 80202
Douglas J. Guion................. 114,777 1.98
P. O. Box 394
Evergreen, Colorado 80439
John P. Lockridge................ 340,095 (5) 5.87
1265 Lisbon Lane
Pebble Beach, California 93953
George L. Seward................. 184,293 (6) 3.18
2710 County Rd. No. 39
Yuma, Colorado 80759
<PAGE>
John D. Longwell................. 110,699 (7) 1.90
1801 Broadway, Suite 500
Denver, Colorado 80202
Robert G. James.................. 636,000 (8) 10.98
80 Ludlow Drive
Chappaqua, New York 10514
Employee Stock Ownership Trust... 336,606 (9) 5.81
with Robert E. Childress and
Sandra J. Irlando as Trustees
1801 Broadway, Suite 500
Denver, Colorado 80202
KPM Investment Management, Inc... 688,553 (10) 11.89
10250 Regency Circle
Omaha, Nebraska 68114
All directors and executive
officers as a group
(10 persons)..................... 2,653,523 (11) 44.31
- ----------------------------
(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 102,000 shares purchasable under stock options granted pursuant
to the Prima Energy Corporation 1993 Stock Incentive Plan, 31,619 shares
allocated to Mr. Lewis' account in the ESOT as a participant in the ESOP
and 99,750 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 141 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 336,606 shares held by
the ESOT, as to which he has no voting powers, but does have shared
investment powers. See Note (9) below.
(5) 130,500 shares are pledged on a bank loan.
(6) Includes 240 shares owned by the wife of Mr. Seward. Mr. Seward
disclaims beneficial ownership of these shares.
(7) Includes 33,000 shares purchasable under stock options granted pursuant
to the Prima Energy Corporation 1993 Stock Incentive Plan, 29,846 shares
allocated to Mr. Longwell's account in the ESOT as a participant in the
ESOP and 4,998 shares owned by the children of Mr. Longwell. Mr.
Longwell disclaims beneficial interest of the shares owned by his children.
<PAGE>
(8) 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.
(9) Pursuant to the terms of the ESOT, the Trustees have investment powers
related to the Common Stock of Prima held by the ESOT.
(10) The number of shares and nature of beneficial ownership is based on
information contained in Schedule 13G filed with the Securities and
Exchange Commission as of December 31, 1996. KPM Investment Management,
Inc. reported sole voting power and sole dispositive power with respect
to all shares.
(11) Includes 198,000 shares purchasable under stock options granted
pursuant to the Prima Energy Corporation 1993 Stock Incentive Plan and
124,256 shares allocated to the ESOT accounts of individuals who are
directors or officers of Prima.
ELECTION OF CLASS III 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
III directors expires at the Meeting, the Class I director at the 1998 Annual
Meeting of Stockholders and the Class II directors at the 1999 Annual
Meeting of Stockholders. The Board of Directors intends to submit two
nominees (Richard H. Lewis and John P. Lockridge) at the Meeting as the Class
III 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 (Richard H. Lewis and
John P. Lockridge) as the Class III 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 III DIRECTORS, RICHARD H. LEWIS AND JOHN P.
LOCKRIDGE.
<PAGE>
Certain information concerning such nominees, as well as the other
current directors, is set forth below:
Period of
Positions Service
with as Director Class of
Name Age the Company or Officer Director
- --------------------- --- ----------------- ----------------- ---------
Richard H. Lewis..... 47 Chairman of the Since April 1980 III (1)
Board, Chief
Executive Officer,
President,
Treasurer
Robert E. Childress.. 49 Director Since October 1988 II (2)
Douglas J. Guion..... 48 Director Since October 1988 II (2)
John P. Lockridge.... 66 Director Since May 1980 III (1)
George L. Seward..... 46 Director Since April 1980 I (3)
- -----------------------------------
(1) Current term expires in 1997
(2) Current term expires in 1999
(3) Current term expires in 1998
Following includes additional information concerning the Class III
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 October 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.
<PAGE>
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 served as
Corporate Secretary from 1980 until 1988. 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 42, 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 20 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 41, has been Vice President of Marketing since
April 1994. Mr. Carpenter has 16 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 and volunteer in the
Mile High United Way Executive Loan Program. He received a B.A. degree in
Journalism and Master of Science in Administration degree from the University
of Denver.
Michael K. Decker, age 42, 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.
<PAGE>
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, is Secretary for the Board 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 45, 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 45, 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 nominees for Class III
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 III 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 9 meetings during the year ended December
31, 1996. 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 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, 1996, 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, 1996, the committee met
formally three times and the meetings were attended by all of the committee.
At present, the Company has no nominating, executive or similar
committees.
<PAGE>
DIRECTOR COMPENSATION
No director of Prima has been compensated for any services provided as
a director under any standard arrangement or otherwise.
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 and Senior Vice President of Operations, the only
two executive officers whose salary and bonus exceeded $100,000 for the last
fiscal year for services in their capacity as such.
SUMMARY COMPENSATION TABLE
Annual
Compensation Long-term All Other
Name and ------------------- Compensation Compensation
Principal Position Year Salary Bonus Options (#) (1)
- ---------------------- -------- -------- -------- ------------ ------------
Richard H. Lewis..... 12/31/96 $188,754 $100,000 none $ 7,500
Chief Executive 12/31/95 178,754 50,000 75,000 7,500
Officer, President, 12/31/94 165,334 100,000 none 11,136
and Treasurer
John D. Longwell..... 12/31/96 $ 96,932 $25,000 none $ 5,200
Senior Vice 12/31/95 92,467 7,500 15,000 5,318
President of 12/31/94 87,667 15,000 none 5,294
Operations
(1) Amounts consist of allocations during each of the years 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 and Mr. Longwell are
fully vested in the Plan.
<PAGE>
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, 1996 by the Company's Chief
Executive Officer and Senior Vice President of Operations and the fiscal
year-end value of unexercised options held by each of them.
AGGREGATED OPTION/SAR EXERCISES
FOR YEAR ENDED DECEMBER 31, 1996
AND YEAR-END OPTION/SAR VALUES
Value of
Number of Unexercised
Unexercised In-The-Money
Shares Options at Options at
Acquired Year End (#)(2) Year End ($)(3)
on Value ---------------- -----------------
Exercise Realized Exer- Unexer- Exer- Unexer-
Name (#)(1) ($)(2) cisable cisable cisable cisable
- ------------------- --------- -------- ------- ------- -------- --------
Richard H. Lewis... 0 0 87,000 108,000 $520,440 $600,960
John D. Longwell... 0 0 30,000 30,000 $181,830 $172,020
(1) No options were exercised during the year ended December 31, 1996.
(2) The total number of unexercised options held as of December 31, 1996,
separated between those options that were exercisable and those options
that were not exercisable.
(3) For all unexercised options held as of December 31, 1996, 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, 1996, the closing sale price of the Common Stock was $15.00
per share. The exercise price is $8.83 per share for 120,000 shares, of
which 72,000 were exercisable and $9.92 for 75,000 shares, of which 15,000
were exercisable, for Mr. Lewis. For Mr. Longwell, the exercise price is
$8.83 per share for 45,000 shares, of which 27,000 were exercisable and
$9.92 for 15,000 shares, of which 3,000 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 182
companies. The year end values of each investment are based on share
price appreciation and assume that $100 was invested December 31, 1991 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,
-----------------------------------------------
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -------
Prima Energy Corporation $100.00 $266.67 $380.00 $306.67 $353.33 $609.30
Peer Group Index........ 100.00 94.95 113.13 118.56 130.39 173.38
NASDAQ Market Index..... 100.00 100.98 121.13 127.17 164.96 204.98
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Childress, Guion, Lockridge and Seward served as members of
the Compensation Committee during calendar 1996. None of the committee
members were officers or employees of the Company during 1996. Messrs.
Childress, Guion and Seward were officers of the Company at various times
prior to 1996. Mr. Guion is the brother-in-law of Mr. Lunsford, Vice
President of Land for the Company. During 1996, Mr. Guion participated in
oil and gas properties in which the Company had an interest. See
"Transactions With Management and Others" below.
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 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 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 1996 fiscal year, in February of 1997 the Committee
determined that cash bonuses should be awarded, set a total dollar limit
for the bonus pool and awarded cash bonuses to the Company's Chief
Executive Officer and Senior Vice President of Operations, based upon
contribution to the Company's performance during the year.
<PAGE>
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 1996.
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, 1996, the base salary
of the Chief Executive Officer of the Company, Richard H. Lewis, increased
approximately 5.6 percent to $188,754 from $178,754. A cash bonus award
for 1996 of $100,000 was paid in March of 1997.
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 owns 22 acres of undeveloped land in Phoenix, Arizona.
The land was acquired in 1987 and is held by the partnership for investment
and capital appreciation. The Company has invested $256,668 in the
partnership from inception. No funds have been invested since 1991.
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 of Directors.
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 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 1996, the only officer or director of the Company who
participated in oil and gas properties or prospects in transactions that
exceeded $60,000 was Mr. Guion. Mr. Guion participated in the drilling or
recompletion of seven wells (0.50 net). Total estimated costs were
$117,346, of which $100,463 had been billed through December 31, 1996.
Such participations were approved by the disinterested members of the
Board of Directors.
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.
<PAGE>
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, 1996, 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 1,000 shares of Prima stock. The Form 4 was
due April 10, 1996 and was filed February 12, 1997.
PROPOSED AMENDMENT TO ARTICLE V OF THE
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK
(Proposal 2 on Proxy Card)
The Board of Directors has adopted a resolution to amend Article V of
the Company's Certificate of Incorporation to increase the number of
authorized shares of the Company's Common Stock from eight million
(8,000,000) shares having a par value of $0.015 per share to twelve
million (12,000,000) shares with a par value of $0.015 per share and to
submit the proposed amendment to a vote at this Meeting. Article V, as
proposed to be amended, is set forth in its entirety as Exhibit "A" to
this Proxy Statement, and the summary contained herein is qualified in its
entirety by reference to Exhibit "A."
Article V of the Company's Certificate of Incorporation currently
provides for authorized Preferred Stock of two million (2,000,000) shares
having a par value of $0.001 per share and Common Stock of eight million
(8,000,000) shares having a par value of $0.015 per share. As of March
14, 1997, 5,820,556 shares of Common Stock were issued and 600,000 were
reserved for stock option grants and exercise of stock options pursuant to
the 1993 Stock Incentive Plan, leaving 1,579,444 shares of Common Stock
available for issuance. No shares of Preferred Stock have been issued.
The Board of Directors of the Company believes that the increase in
the number of authorized shares of Common Stock is in the best interests
of the Company and its stockholders. The additional Common Stock
will increase the number of authorized shares that are available for
corporate purposes, including, for example, the declaration and payment of
stock dividends to the Company's stockholders; stock splits; use in the
financing of expansion or future acquisitions; issuance pursuant to the
terms of stock option plans and other employee benefit plans, including
the Company's existing stock option plan, as well as for use in other
possible future transactions of a currently undetermined nature.
Under Delaware law, the Board of Directors generally may issue
authorized but unissued shares of Common Stock without stockholder
approval. The Board of Directors does not currently intend to seek
stockholder approval prior to any future issuance of additional shares of
<PAGE>
Common Stock except to the extent otherwise required by the Company's
Certificate of Incorporation, by law or by the NASDAQ National Market or
any securities exchange on which the Common Stock may be listed at the
time. The authorization of additional shares of Common Stock will enable
the Company, as the need may arise, to take timely advantage of market
conditions and the availability of favorable opportunities without the
delay and expense associated with the holding of a special meeting of its
stockholders or of waiting for the regularly scheduled Annual Meeting of
Stockholders in order to increase the authorized capital. It is the
belief of the Board of Directors that the delay necessary for stockholder
approval of a specific issuance could be to the detriment of the Company
and its stockholders. The Board of Directors does not intend to issue any
shares of Common Stock except on terms which the Board deems to be in the
best interest of the Company and its stockholders. Existing stockholders of
the Company will have no pre-emptive rights to purchase any shares of
Common Stock issued in the future. Depending on the terms thereof, the
issuance of the shares of Common Stock may or may not have a dilutive
effect on the Company's then existing stockholders. Other than the shares
of Common Stock which may be issued pursuant to the Company's 1993 Stock
Incentive Plan, the Company currently has no plans, agreements or
understandings to issue any shares of its authorized but unissued
Common Stock.
The additional shares of Common Stock to be authorized by adoption of
the amendment would have identical rights to the currently outstanding
shares of Common Stock of the Company. Adoption of the proposed amendment
and issuance of the shares of Common Stock would not affect the rights of
the holders of the currently outstanding Common Stock of the Company,
except for the effects incidental to increasing the number of shares of
the Company's Common Stock outstanding.
Although the increase in authorized but unissued shares of Common
Stock could, under certain circumstances, have the effect of deterring
attempts to acquire control of the Company, the Company believes that the
increase in the number of authorized shares is essential to the achievement
of corporate objectives. The proposed amendment is not being
presented as, nor is it part of, a plan to adopt a series of anti-takeover
measures. The management of the Company is not presently aware of any
pending or proposed takeover attempt.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT TO ARTICLE V OF THE
COMPANY'S CERTIFICATE OF INCORPORATION.
PROPOSAL TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS AUDITORS
(Proposal 3 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, 1996.
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.
<PAGE>
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, 1997.
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 MAY, 1998
Any proposal by a stockholder to be presented at the Company's Annual
Meeting of Stockholders scheduled to be held in May 1998, must be received
at the offices of the Company, Suite 500, 1801 Broadway, Denver, Colorado
80202, no later than December 12, 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, 1996, 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
April 11, 1997
<PAGE>
EXHIBIT "A"
PROPOSED AMENDMENT TO ARTICLE V
OF THE CERTIFICATE OF INCORPORATION
OF PRIMA ENERGY CORPORATION
ARTICLE V
Authorized Capital Stock
The Corporation shall be authorized to issue two classes of shares of
stock to be designated, respectively, "Preferred Stock" and "Common
Stock"; the total number of shares which the corporation shall have
authority to issue is Fourteen million (14,000,000); the total number of
shares of Preferred Stock shall be Two Million (2,000,000) and each such
share shall have a par value of $.001; and the total number of authorized
shares of Common Stock shall be Twelve Million (12,000,000) and each such
share shall have a par value of $.015.
The shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby vested with authority to fix
by resolution or resolutions the designations and the powers, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations, or restrictions thereof, including without
limitation the rights with respect to dividends, conversion rights,
redemption price and liquidation preference, of any series of shares of
Preferred Stock, and to fix the number of shares constituting any such
series, and to increase or decrease the number of shares of any such
series (but not below the number of shares thereof then outstanding). In
case the number of shares of any such series shall be so decreased, the
shares constituting such decrease shall resume the status which they had
prior to the adoption of the resolution or resolutions originally fixing
the number of shares of such series.
<PAGE>
PROXY THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
Prima Energy Corporation The undersigned hereby appoints Richard H.
1801 Broadway, Suite 500 Lewis, Sandra J. Irlando and G. Walter Lunsford
Denver, Colorado 80202 as 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 April 8, 1997,
at the Annual Meeting of Stockholders to be
held on May 16, 1997, 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 III DIRECTORS:
FOR Richard H. Lewis, nominee as WITHHOLD AUTHORITY to vote for
Class III Director Richard H. Lewis, nominee as
Class III Director.
FOR John P. Lockridge, nominee as WITHHOLD AUTHORITY to vote for
Class III Director John P. Lockridge, nominee as
Class III Director.
2. PROPOSED AMENDMENT TO ARTICLE V OF THE CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
FOR AGAINST ABSTAIN
3. PROPOSAL TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS OF PRIMA ENERGY CORPORATION FOR FISCAL 1997.
FOR AGAINST ABSTAIN
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
<PAGE>
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 PROPOSALS 2
AND 3.
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 _____________________ 1997
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PLEASE MARK, SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
- ---------------------------------- -------------------------------------
Signature, if held jointly
