<PAGE>
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14(a)-11(c) or
Section 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.:
- -------------------------------------------------------------------------------
(3) Filing Party:
- -------------------------------------------------------------------------------
(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.
1
<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............................. 116,427 2.01
P. O. Box 394
Evergreen, Colorado 80439
John P. Lockridge............................ 340,095 (5) 5.87
1265 Libson Lane
Pebble Beach, California 93953
George L. Seward............................. 184,293 (6) 3.18
2710 County Rd. No. 39
Yuma, Colorado 80759
2
<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)............. 2,655,173 (11) 44.34
___________________
(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
3
<PAGE>
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.
(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.
4
<PAGE>
Certain information concerning such nominees, as well as the other current
directors, is set forth below:
<TABLE>
Period of Service
Positions with as Director Class of
Name Age the Company or Officer Director
- --------------------------- --- ------------------------ ----------------- --------
<S> <C> <C> <C> <C>
Richard H. Lewis........... 47 Chairman of the Board, Since April 1980 III (1)
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)
</TABLE>
(1) Current term expires in 1997
(2) Current term expires in 1999
(3) Current term expires in 1998
The 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.
5
<PAGE>
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 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 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 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. 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
6
<PAGE>
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.
7
<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
<TABLE>
Long-term
Annual Compensation Compensation All Other
Name and -------------------- ------------ Compensation
Principal Position Year Salary Bonus Options(#) (1)
- -------------------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Richard H. Lewis.............. 12/31/96 $188,754 $100,000 none $ 7,500
Chief Executive 12/31/95 178,754 50,000 50,000 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 President 12/31/95 92,467 7,500 10,000 5,318
of Operations 12/31/94 87,667 15,000 none 5,294
</TABLE>
(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.
8
<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
<TABLE>
Value of Unexercised
Number of Unexercised In-The-Money Options at
Shares Value Options at Year End(#)(2) Year-End ($)(3)
Acquired on Realized -------------------------- --------------------------
Name Exercise (#)(1) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
(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.
9
<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.
[GRAPH]
<TABLE>
As of December 31,
--------------------------------------------------------------
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
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
</TABLE>
10
<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.
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
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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.
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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 Common Stock except to the extent
otherwise required by the Company's Certificate of Incorporation, by law or
by the NASDAQ National Market
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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.
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.
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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
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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.
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<S> <C>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Prima Energy Corporation The undersigned hereby appoints Richard H. Lewis, Sandra J. Irlando and G. Walter Lunsford as Proxies,
1801 Broadway, Suite 500 or any one of them, each with the power to appoint his or her substitute, and hereby authorizes them
Denver, Colorado 80202 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 Class III Director / / WITHHOLD AUTHORITY to vote for Richard H. Lewis, nominee as
Class III Director.
/ / FOR John P. Lockridge, nominee as Class III Director / / WITHHOLD AUTHORITY to vote for 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.
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
_______________________________________ _______________________________________
PLEASE MARK, SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
_______________________________________ _______________________________________
Signature, if held jointly
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