<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A No. 1
(Mark One)
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934 (NO FEE REQUIRED)
Commission File Number 1-8094
SEAGULL ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Texas 74-1764876
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1001 Fannin, Suite 1700
Houston, Texas 77002-6714
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 951-4700
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange on
Title of each class which registered
<S> <C>
Common Stock, par value $.10 per share New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES x NO .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-K or any
amendment to this Form 10-K. ( )
As of March 11, 1994, the aggregate market value of the outstanding
shares of Common Stock of the Company held by non- affiliates (based on the
closing price of these shares on the New York Stock Exchange) was approximately
$876,067,940.
Indicate the number of shares outstanding of each of the registrant's
classes of Common Stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at March 11, 1994
<S> <C>
Common Stock, par value $.10 per share 36,064,649
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
Document
(1) Annual Report to Shareholders for Part of Form 10-K
year ended December 31, 1993 PARTS I and II
<PAGE> 2
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Annual Report on Form
10-K for the year ended December 31, 1993 as set forth in the pages attached
hereto:
Part III, Item 10. Directors and Executive Officers
of the Registrant, Item 11. Executive Compensation,
Item 12. Security Ownership of Certain Beneficial
Owners and Management, and Item 13. Certain Rela-
tionships and Related Transactions, are hereby
amended to read in their entirety as set forth in
the attached page hereto.
Part IV, Item 14.Exhibits, Financial Statement
Schedules and Reports on Form 8-K:
(a) 3. Exhibits:
*99.2 Portions of Schedule 14A - Information
Required in Proxy Statement
Incorporated by Reference into the 1993
Seagull Energy Corporation Annual
Report on Form 10-K
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 2, 1994
SEAGULL ENERGY CORPORATION
By: /s/ Rodney W. Bridges
Rodney W. Bridges
Vice President and Controller
(Principal Accounting Officer)
<PAGE> 3
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference to "Proposal 1 - Election of
Directors" included as part of Exhibit 99.2, Portions of Schedule 14A -
Information Required in Proxy Statement, attached hereto. See also "Executive
Officers of the Company" included in Part I of this Annual Report on Form 10-K,
which is incorporated by reference herein.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to "Proposal 1 - Election of
Directors --Executive Compensation--Summary Compensation Table",
"--Compensation Arrangements," "--Option Exercises and Fiscal Year-End Values,"
"--Option Grants," "--Executive Supplemental Retirement Plan," and "--ENSTAR
Natural Gas Company Retirement Plan"; and "Election of Directors-Compensation
of Directors" included as part of Exhibit 99.2, Portions of Schedule 14A -
Information Required in Proxy Statement, attached hereto.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Incorporated herein by reference to "Principal Shareholders" and
"Proposal 1 - Election of Directors--Security Ownership of Directors and
Management" included as part of Exhibit 99.2, Portions of Schedule 14A -
Information Required in Proxy Statement, attached hereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to "Proposal 1 - Election of
Directors--Certain Transactions and Other Matters" included as part of
Exhibit 99.2, Portions of Schedule 14A - Information Required in Proxy
Statement, attached hereto.
<PAGE> 1
EXHIBIT 99.2
PORTIONS OF SCHEDULE 14A -- INFORMATION REQUIRED IN PROXY STATEMENT
INCORPORATED BY REFERENCE INTO THE 1993 SEAGULL ENERGY CORPORATION
ANNUAL REPORT ON FORM 10-K
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PRINCIPAL SHAREHOLDERS............................................................... 22
PROPOSAL 1 -- ELECTION OF DIRECTORS.................................................. 23
Security Ownership of Directors and Management..................................... 25
Directors' Meetings and Committees of the Board of Directors....................... 26
Compensation of Directors.......................................................... 26
Certain Transactions and Other Matters............................................. 27
EXECUTIVE COMPENSATION............................................................... 29
Summary Compensation Table......................................................... 29
Compensation Arrangements.......................................................... 29
Option Exercises and Fiscal Year-End Values........................................ 30
Option Grants...................................................................... 30
Executive Supplemental Retirement Plan............................................. 34
ENSTAR Natural Gas Company Retirement Plan......................................... 35
</TABLE>
<PAGE> 2
PRINCIPAL SHAREHOLDERS
To the knowledge of the management of the Company and based upon filings
with the Securities and Exchange Commission (the "SEC"), the only persons who
may be deemed to own beneficially more than 5% of the outstanding Seagull Common
Stock (including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), as of
February 28, 1994, are named in the following table:
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER PERCENT
OF BENEFICIAL OWNER OF SHARES OF CLASS
------------------- --------- --------
<S> <C> <C>
The Equitable Companies Incorporated(1)................. 3,399,600 9.4%
787 Seventh Avenue
New York, NY 10019
FMR Corp.(2)............................................ 2,891,574 8.0%
82 Devonshire Street
Boston, MA 02109
RCM Capital Management(3)............................... 2,442,800 6.7%
Four Embarcadero Center, Suite 2900
San Francisco, CA 94111
</TABLE>
- - ---------------
(1) According to information provided to the Company by The Equitable Companies
Incorporated, The Equitable Companies Incorporated and their subsidiaries
and certain affiliates (collectively, the "Equitable Entities")
beneficially own in the aggregate the shares of Seagull Common Stock
indicated above. Except as described below the Equitable Entity holding
such shares has sole voting and disposition power with respect to the
shares respectively owned by such entity. Alliance Capital Management, L.P.
has sole dispositive power with respect to the 3,369,300 shares that it
beneficially owns, but has sole voting power with respect to only 2,794,000
shares, shared voting power with respect to 53,800 shares and no voting
power with respect to the remaining 521,500 shares.
(2) According to information furnished by FMR Corp., 2,891,574 shares (8.0%)
are beneficially owned by Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp. and an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940. Beneficial
ownership by Fidelity Management & Research Company arises as a result of
its acting as investment adviser to the Fidelity Magellan Fund, an
investment company registered under Section 8 of the Investment Company Act
of 1940 (the "Fund"). The Fund had beneficial ownership of all 2,891,574
shares. Edward C. Johnson 3d, Chairman of FMR Corp., owns 34.0% of the
outstanding voting common stock of FMR Corp. Various Johnson family members
and trusts for the benefit of Johnson family members own FMR Corp. voting
common stock. These Johnson family members, through their ownership of
voting common stock, form a controlling group with respect to FMR Corp. FMR
Corp., through its control of Fidelity Management & Research Company, and
the Fund each has sole power to dispose of the 2,891,574 shares. Neither FMR
Corp. nor Edward C. Johnson 3d has the sole power to vote or direct the
voting of the shares owned directly by the Fund, which power resides with
the Fund's Board of Trustees. Fidelity Management & Research Company carries
out the voting of the shares under written guidelines established by the
Fund's Board of Trustees.
(3) According to information furnished by RCM Capital Management
("RCM"), RCM is an investment adviser and in such capacity may have
discretionary authority to dispose of or to vote securities that are under
its management, and as a result may be deemed to have beneficial ownership
of such securities. RCM Limited L.P. ("RCM Limited") is the General Partner
of RCM and RCM General Corporation ("RCM General") is the General Partner of
RCM Limited. RCM General and RCM Limited may be deemed to have beneficial
ownership of shares as to which RCM is deemed to have beneficial ownership.
RCM had sole dispositive power with respect to 2,402,800 of the shares set
forth above, shared dispositive power with respect to 40,000 of the shares
set forth above, sole voting power with respect to 1,914,450 of such shares
and no voting power with respect to 528,350 of such shares. RCM serves as
investment manager for the RCM Growth Equity Fund and the RCM Small Cap
Fund, two series of the RCM Capital Funds, Inc. (the "RCM Funds"). As of
December 31, 1993, the RCM Funds held 601,500 shares of Seagull Common Stock
(which shares are included in the shares as to which RCM is deemed to have
beneficial ownership). All of these shares were held by the RCM Growth
Equity Fund.
22
<PAGE> 3
PROPOSAL 1 -- ELECTION OF DIRECTORS
Four directors are to be elected at the Annual Meeting. The Company's
Bylaws provide for a classified Board of Directors. Thus, the Board of Directors
is divided into Classes I, II and III, the terms of office of which are
currently scheduled to expire, respectively, on the dates of the Company's
Annual Meetings of Shareholders in 1996, 1994 and 1995. Peter J. Fluor, Barry J.
Galt, Dean P. Guerin and Robert W. Shower have been nominated to serve in Class
II and, if elected, will serve until the Company's 1997 Annual Meeting of
Shareholders and until their respective successors shall have been elected and
qualified. Each of the nominees for director currently serves as a director of
the Company. The remaining eight directors named below will not be required to
stand for election at the Annual Meeting because their present terms expire in
either 1995 or 1996. A plurality of the votes cast in person or by proxy by the
holders of Seagull Common Stock is required to elect a director. Accordingly,
under Texas law and the Company's Articles of Incorporation and Bylaws,
abstentions and broker non-votes would have no effect on the election of
directors. Shareholders may not cumulate their votes in the election of
directors.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted FOR the election of the nominees listed below.
Although the Board of Directors does not contemplate that any of the nominees
will be unable to serve, if such a situation arises prior to the Annual Meeting,
the persons named in the enclosed proxy will vote for the election of such other
person(s) as may be nominated by the Board of Directors.
The following table sets forth information regarding the names, ages and
principal occupations of the nominees and directors, other directorships in
certain companies held by them and the length of continuous service as a
director of the Company:
<TABLE>
<CAPTION>
NOMINEES DIRECTOR
AND DIRECTORS PRINCIPAL OCCUPATION AND DIRECTORSHIPS AGE SINCE
------------- -------------------------------------- --- --------
<S> <C> <C> <C>
CLASS II NOMINEES
Peter J. Fluor President, Texas Crude Energy, Inc. (independent oil 46 1980
and gas company); Director, Fluor Corporation
Barry J. Galt Chairman of the Board, President and Chief Executive 60 1983
Officer of the Company; Director, Standard Insurance
Company and Trinity Industries, Inc.
Dean P. Guerin Chairman, President and Chief Executive Officer, 72 1982
Berry-Barnett Food Distribution Co., Inc. (wholesale
grocery); Director, Lone Star Technologies and Trinity
Industries, Inc.
Robert W. Shower Executive Vice President and Chief Financial Officer 56 1992
of the Company; Director, Lear Seating Corporation
CLASS I DIRECTORS
John B. Brock Chief Executive Officer, President and Director, 61 1980
United Meridian Corporation (oil and gas exploration
and production); Director, Southwest Bank of Texas
John W. Elias Executive Vice President of the Company 53 1993
Sam F. Segnar Retired Chairman of the Board and Chief Executive 66 1986
Officer, Enron Corp.; Director, MAPCO, Inc., Hartmarx
Corporation, Textron, Inc. and Gulf States Utilities
Company
George M. Sullivan Retired Chairman of the Board, Alaska Railroad 72 1989
Corporation
CLASS III DIRECTORS
J. Evans Attwell Attorney, Vinson & Elkins L.L.P.; Director, American 63 1974
General Corporation, First City Bancorporation of
Texas, Inc. and Galveston-Houston Company
</TABLE>
(Table continued on following page)
23
<PAGE> 4
<TABLE>
<CAPTION>
NOMINEES DIRECTOR
AND DIRECTORS PRINCIPAL OCCUPATION AND DIRECTORSHIPS AGE SINCE
------------- -------------------------------------- --- --------
<S> <C> <C> <C>
William R. Grant Chairman, Galen Associates (venture capital health 69 1986
care); Director, Allergan, Inc., Fluor Corporation,
New York Life Insurance Company, SmithKline Beecham,
p.l.c. and Witco Corporation
Richard M. Morrow Retired Chairman of the Board and Chief Executive 68 1992
Officer, Amoco Corporation; Director, First Chicago
Corporation, The First National Bank of Chicago, R.R.
Donnelley and Sons Company, Potlatch Corporation,
Westinghouse Electric Corporation and Marsh & McLennan
Companies, Inc.
Dee S. Osborne President, Finial Investment Corporation 63 1983
(investments); Director, General Atlantic Resources,
Inc. and EOTT Energy Corp. (the general partner of
EOTT Energy Partners, L.P.); and Chairman and
Director, People's Choice TV of Houston, Inc.
</TABLE>
Each of the nominees and directors named above has been engaged in the
principal occupation set forth opposite his name for the past five years except
as follows:
Mr. Guerin served as Chairman of the Board of Eppler, Guerin & Turner, Inc.
(an investment banking firm) from 1951 until his retirement in December 1987. He
was named to his present position in June 1990.
Mr. Shower served for 22 years with the Williams Companies, most recently
as Executive Vice President, Finance and Administration and a director until
1986. He served as a Managing Director, Corporate Finance, for Lehman Brothers
Inc. (formerly Shearson Lehman Hutton) from 1986 to 1990. He served as Vice
President and Chief Financial Officer with AmeriServ Food Company from 1990 to
1991. He served as Senior Vice President, Corporate Development for Albert
Fisher, Inc. from 1991 to 1992. Mr. Shower joined the Company as Senior Vice
President and Chief Financial Officer in March 1992. He was named to his present
position in December 1993.
Mr. Brock served as Chief Executive Officer, President and a director of
Ensource Inc. from January 1986 to October 1989, at which time Ensource, Inc.
was merged into its parent company, United Meridian Corporation. He served as
President, Chief Operating Officer and a director from October 1989 to February
1992. Mr. Brock was named to his present position in February 1992.
Mr. Elias served for 30 years with Amoco Production Company and its parent,
Amoco Corporation, in a variety of operational and management positions. Most
recently, he served as Group Vice President of Worldwide Natural Gas for Amoco
Production from November 1988 to January 1993. Mr. Elias was elected to his
present position with the Company in March 1993.
Mr. Segnar served as Chairman of the Board and Chief Executive Officer of
HNG/InterNorth, Inc. (now Enron Corp.) from 1984 until his retirement in early
1986. He served as Chairman of the Board of Vista Chemical, Inc. from October
1986 to October 1988 and as Chairman of the Board of Collecting Bank, National
Association from April 1988 to February 1993.
Mr. Sullivan served as legislative liaison for the Governor of Alaska
during 1987 and as Chairman of the Board, Alaska Railroad Corporation from
August 1988 until his retirement in January 1991.
Mr. Grant served as Chairman of New York Life International Investment,
Inc. from August 1987 to April 1989. Mr. Grant was named to his present position
in May 1989.
Mr. Morrow served as Chairman of the Board and Chief Executive Officer of
Amoco Corporation from September 1983 until his retirement in February 1991.
24
<PAGE> 5
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
<TABLE>
<CAPTION>
SEAGULL COMMON STOCK
BENEFICIALLY OWNED(1)
-------------------------
PERCENT
NUMBER OF
OF SHARES CLASS
--------- - ---
<S> <C> <C>
NONEMPLOYEE DIRECTORS
J. Evans Attwell................................................. 31,200(2) *
John B. Brock.................................................... 76,572(2)(3) *
Peter J. Fluor................................................... 27,198(2)(4) *
William R. Grant................................................. 2,800(2) *
Dean P. Guerin................................................... 41,200(2) *
Richard M. Morrow................................................ 7,200(2) *
Dee S. Osborne................................................... 48,000(2) *
Sam F. Segnar.................................................... 2,600(2) *
George M. Sullivan............................................... 2,200(2) *
EXECUTIVE OFFICERS
Barry J. Galt.................................................... 548,321(2)(5)(6) 1.6%
John W. Elias.................................................... 7,112(2)(6) *
Robert W. Shower................................................. 38,460(2)(5)(6) *
Richard F. Barnes................................................ 45,820(2) *
Thomas P. McConn................................................. 64,635(2)(5)(6) *
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (18 PERSONS)........... 1,042,151(7) 2.8
</TABLE>
- - ---------------
* Less than 1%.
(1) Unless otherwise indicated, beneficial owners have sole voting and
investment power with respect to the shares listed. Amounts shown are as
of April 4, 1994, except for amounts held by the trustee of the Company's
Thrift Plan and Employee Stock Ownership Plan, which are as of
December 31, 1993.
(2) Includes 517,020 shares that the nonemployee directors and the above named
executive officers have a right to purchase within 60 days pursuant to
stock options ("Options") granted under the Company's stock option plans as
follows: each nonemployee director -- 1,200, Mr. Galt -- 380,400, Mr.
Elias -- 6,666, Mr. Shower -- 36,000, Mr. Barnes -- 35,820 and Mr.
McConn -- 54,000. Prior to exercising these Options, the officers will have
no voting or investment power with respect to said shares.
(3) Includes 51,372 shares held directly by family members for which Mr. Brock
disclaims any power to vote or dispose of or have direct disposition.
(4) Includes 8,000 shares held by certain trusts with respect to which
Mr. Fluor is the sole trustee but for which he disclaims any beneficial
ownership.
(5) Includes 19,786 shares held by the trustee of the Company's Thrift Plan for
which the above named executive officers have sole voting power and no
investment power. Shares held are as follows: Mr. Galt -- 12,395, Mr.
Shower -- 1,164 and Mr. McConn -- 6,227.
(6) Includes 11,676 shares held by the trustee of the Company's Employee Stock
Ownership Plan for which the above named executive officers have sole
voting power and no investment power. Shares held are as follows: Mr.
Galt -- 5,526, Mr. Elias -- 446, Mr. Shower -- 1,296 and Mr.
McConn -- 4,408.
(7) Includes 58,135 shares held for directors and executive officers as a group
in the Company's Thrift Plan and Employee Stock Ownership Plan for which
such persons have sole voting power and no investment power. Also, includes
594,046 shares for directors and executive officers as a group that said
persons have the right to purchase within 60 days pursuant to Options
granted under the Company's stock option plans. Prior to exercising these
Options, said persons will have no voting or investment power with respect
to said shares.
25
<PAGE> 6
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held 14 meetings during 1993. Each director attended
at least 75% of the aggregate total meetings of the Board of Directors and any
committee on which such director served.
The Company has the following standing committees:
Audit Committee. The Audit Committee, which currently consists of
Messrs. Grant, Guerin, Morrow and Segnar, met three times during 1993. Its
principal functions are to confirm the existence of effective accounting
and internal control systems and to oversee the entire audit function, both
independent and internal.
Compensation Committee. The Compensation Committee, which currently
consists of Messrs. Brock, Fluor and Osborne, met nine times during 1993.
Its principal functions are to study, advise and consult with the Company's
management respecting the compensation of officers and other key employees
of the Company. Members of the Compensation Committee are not eligible to
participate in any of the plans or programs they administer.
Executive Committee. The Executive Committee, which currently consists
of Messrs. Attwell, Brock, Galt, Osborne and Segnar, met two times during
1993. Its principal function is to aid and assist the Company's management
in the day-to-day operation of the Company.
Nominating Committee. The Nominating Committee, which currently
consists of Messrs. Attwell, Grant, Morrow and Sullivan, met two times
during 1993. Its principal function is to make proposals to the full Board
of Directors for candidates to be nominated by the Board to fill vacancies
or for new directorship positions, if any, which may be created from time
to time. The Nominating Committee will consider suggestions from any
source, including shareholders, regarding possible candidates for director.
No procedure has yet been established for the consideration of nominees
recommended by shareholders.
COMPENSATION OF DIRECTORS
During 1993, each director of the Company who is not a full-time employee
was paid an annual director's fee of $20,000 per year plus $1,000 for each
meeting of the Board of Directors attended. Audit, Executive, Compensation and
Nominating Committee outside members are paid $750 for each committee meeting
attended. Each outside committee chairman receives an additional $1,000 per
year. In addition, a nonemployee director who attends a meeting of a committee
of which he is not a member is entitled to an attendance fee of $750.
Stock Options. The Company has a Nonemployee Directors Stock Option Plan
(the "Directors Option Plan") which was approved at the 1993 annual meeting of
shareholders (the "1993 Annual Meeting"). The Company utilizes stock options in
order to award and retain highly-qualified independent directors, and to allow
them to develop a sense of proprietorship and personal involvement in the
development and financial success of the Company.
The Directors Option Plan provides for the grant of options to acquire
Seagull Common Stock to each director who is not and never has been an employee
of the Company (an "Eligible Director"). On the date of the 1993 Annual Meeting,
each Eligible Director received an option to purchase 6,000 shares of Seagull
Common Stock at an exercise price equal to the fair market value of the Seagull
Common Stock on the date of grant. In addition, each Eligible Director who is
elected or appointed to the Board of Directors for the first time will receive
on the date of such director's election or appointment an option to purchase
6,000 shares of Seagull Common Stock at an exercise price equal to the fair
market value of the Seagull Common Stock on the date of grant.
On the date of any Annual Meeting of Shareholders prior to the termination
of the Directors Option Plan, each Eligible Director who is continuing in office
will automatically receive an option to purchase an additional 6,000 shares of
Seagull Common Stock at an exercise price equal to the fair market value of the
Seagull Common Stock on the date of grant. All outstanding options have terms of
ten years and vest 20% per year over the initial five years of their terms.
26
<PAGE> 7
Deferred Fee Plan. The Company has an Outside Directors Deferred Fee Plan
(the "Deferred Fee Plan"), a non-qualified plan, which was amended and restated
effective May 1, 1991. The Deferred Fee Plan requires the automatic deferral of
one-half of the annual retainer fee for all directors who are not employees of
the Company ("Outside Directors"). In addition, Outside Directors may elect to
defer all or a portion of their remaining directors' fees under the Deferred Fee
Plan. Amounts automatically deferred under the Deferred Fee Plan are credited
based upon "phantom stock" units, which have the same value as Seagull Common
Stock, which increase or decrease in value to the full extent of any increase or
decrease in the value of Seagull Common Stock and which receive credit for any
cash or stock dividends paid with respect to Seagull Common Stock. With respect
to fees deferred by Outside Directors prior to January 1, 1991, or fees deferred
in excess of the one-half automatic deferral, Outside Directors are permitted to
make quarterly elections regarding the method of income crediting for these
deferrals, which may be credited either based upon "phantom stock" units or with
interest equivalents based upon the prime rate of interest as published in The
Wall Street Journal on the last day of the quarter, plus a bonus rate of
interest of up to 2% depending on the number of years the Outside Director has
served on the Board. All "phantom stock" units credited to Outside Directors'
accounts must remain so credited until distribution or, if distribution is to be
in a form other than lump sum, the effective date of a final income crediting
election made after Board of Directors membership has ceased. Subject to certain
restrictions, Outside Directors may elect the timing and mode of their
distributions from the Deferred Fee Plan, except on the occurrence of events
such as death, plan termination or change of control. Distributions under the
Deferred Fee Plan can be made only in cash. Benefits under the Deferred Fee Plan
constitute unfunded, unsecured obligations of the Company. As of April 4, 1994
all Outside Directors were participants in the Deferred Fee Plan. If the ENSTAR
Alaska Stock Proposal is approved by the shareholders and implemented, the
Company currently intends to amend the Deferred Fee Plan to allow Outside
Directors to elect to have a portion of their deferred fees credited based on
"phantom stock" units, which will be designed to have the same value and the
same dividend and liquidation characteristics as the ENSTAR Alaska Stock.
The following table sets forth Seagull Common Stock "phantom stock" units
credited to each participant's account during 1993 and total units credited as
of April 4, 1994:
<TABLE>
<CAPTION>
SEAGULL COMMON STOCK
PHANTOM STOCK UNITS
CREDITED
---------------------------
IN FISCAL AS OF APRIL
1993 4, 1994
--------- -------------
<S> <C> <C>
J. Evans Attwell....................................... 1,652 24,509
John B. Brock.......................................... 1,583 14,577
Peter J. Fluor......................................... 1,613 21,677
William R. Grant....................................... 1,404 15,993
Dean P. Guerin......................................... 1,510 17,206
Richard M. Morrow...................................... 1,434 3,529
Dee S. Osborne......................................... 1,568 20,762
Sam F. Segnar.......................................... 382 1,732
George M. Sullivan..................................... 747 2,170
</TABLE>
CERTAIN TRANSACTIONS AND OTHER MATTERS
The Company's Thrift Plan invests in three different mutual funds (the
"Fidelity Funds") affiliated with FMR Corp. (a beneficial owner of more than 5%
of the outstanding Seagull Common Stock; see "Principal Shareholders"). However,
the amount of money invested in those Fidelity Funds depends upon elections made
by the Company's employee participants in the Thrift Plan. The Company believes
that the Thrift Plan invests on the same basis in terms of rates and fees as are
offered generally to similar employee investment vehicles. As of January 31,
1994, the aggregate amount of funds invested by the Thrift Plan in these funds
was $9.2 million.
27
<PAGE> 8
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), an Equitable
Entity has acted as an underwriter for various equity and debt offerings
conducted by the Company. In February 1993, DLJ acted as an underwriter in the
Company's public offering of 10,120,000 shares of Seagull Common Stock, in
consideration for underwriting discounts and commissions of $839,602, together
with reimbursements for certain out-of-pocket expenses. In July 1993, DLJ acted
as an underwriter in the Company's public offering of an aggregate of $250
million of senior and senior subordinated debentures, in consideration for
underwriting discounts and commissions of $900,000, together with reimbursements
for certain out-of-pocket expenses. The consideration paid to DLJ in these
securities offerings was comparable to the commissions and discounts for the
other investment banking firms in these transactions that were not affiliated
with the Equitable Entities. See "Principal Shareholders."
During 1993, the Company retained the law firm of Moyers, Martin, Santee,
Imel & Tetrick ("Moyers, Martin"), of Tulsa, Oklahoma, with respect to matters
of Oklahoma law. Moyers, Martin has been retained to perform similar services
with respect to matters of Oklahoma law in 1994. Mr. D. Stanley Tacker, Mr.
Galt's son-in-law, is a partner in Moyers, Martin. Mr. Galt is Chairman,
President and Chief Executive Officer of the Company.
Pursuant to the requirements of Section 16(a) of the Exchange Act, Janice
K. Hartrick, Chief Counsel and Vice President, Environmental Affairs of the
Company, filed a report of change in beneficial ownership on Form 4 with the SEC
during February 1994. However, because the sale to which the Form 4 related
occurred during September 1993, Ms. Hartrick's filing was not timely made. Ms.
Hartrick has advised the Company that she has made all other Section 16(a)
filings during 1993 on a timely basis.
Compensation Committee Interlocks and Insider Participation
J. Evans Attwell, a director of the Company, served as a member of the
Compensation Committee during 1993 until May 11, 1993, the date of the 1993
Annual Meeting of Shareholders, at which time his term expired. During 1993, the
Company retained the law firm of Vinson & Elkins L.L.P., of which Mr. Attwell is
an attorney, to perform various legal services for the Company. Vinson & Elkins
L.L.P. has been retained to perform similar services in 1994.
During August 1993, the Company sold a 50% interest in Brazos Block 514 to
UMC Petroleum Corporation, a subsidiary of United Meridan Corporation ("UMC"),
for $96,768, which was equal to 50% of the $176,256 bonus and rental payment
made by the Company for its original 100% interest. The foregoing transaction
was on terms consistent with general industry terms. John B. Brock, a director
of the Company and a member of the Compensation Committee, is Chief Executive
Officer, President and Director of UMC.
28
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth annual and long-term compensation for
services in all capacities to the Company for the fiscal years ended December
31, 1991, 1992 and 1993, of those persons who were, at December 31, 1993, the
Chief Executive Officer and the other four most highly compensated executive
officers of the Company (the "Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
AWARDS
ANNUAL COMPENSATION --------------
------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME & PRINCIPAL COMPENSATION OPTIONS/(SARS) COMPENSATION
POSITION YEAR SALARY($) BONUS($)(1) ($)(2)(3) (SHS.)(4) ($)(2)(5)
---------------- ---- --------- ----------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Barry J. Galt............................. 1993 $ 465,000 $ 298,000 $ 0 100,000 $ 31,155
Chairman of the Board, President 1992 $ 440,000 $ 440,000 $ 0 150,000 $ 75,913
and Chief Executive Officer 1991 $ 410,000 $ 140,000 0
John W. Elias............................. 1993 $ 187,500(6) $ 80,000 $110,431(7) 100,000 $ 11,250
Executive Vice President
Robert W. Shower.......................... 1993 $ 204,000 $ 86,000 $ 0 30,000 $ 12,240
Executive Vice President 1992 $ 149,205(8) $ 95,730 $ 85,637(9) 90,000 $ 23,951
and Chief Financial Officer
Richard F. Barnes......................... 1993 $ 222,000 $ 17,500 $ 0 16,000 $ 13,413
President, ENSTAR 1992 $ 210,000 $ 30,000 $ 0 25,000 $ 13,800
Natural Gas Company 1991 $ 185,000 $ 20,000 0
Thomas P. McConn.......................... 1993 $ 204,000 $ 84,000 $ 0 24,000 $ 12,240
President, Seagull 1992 $ 184,000 $ 107,560 $ 0 40,000 $ 30,381
Energy E&P Inc. 1991 $ 168,000 $ 32,000 0
</TABLE>
- - ---------------
(1) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred under the Executive
Incentive Plan for the respective fiscal years.
(2) The rules of the SEC permit a phase in, beginning in 1992, for the
disclosures under the headings "Other Annual Compensation" and "All Other
Compensation."
(3) No amounts are included for perquisites and personal benefits unless they
exceed the lesser of $50,000 or 10% of annual salary and bonus.
(4) No grants of stock appreciation rights have been made.
(5) Amounts reported under "All Other Compensation" represent contributions by
the Company to defined contribution plans.
(6) Mr. Elias joined the Company as an employee on March 8, 1993.
(7) Includes a one-time payment of $100,000 given at the time of Mr. Elias's
employment in lieu of reimbursement for relocation expenses.
(8) Mr. Shower joined the Company as an employee on March 9, 1992.
(9) Includes a one-time payment of $75,000 given at the time of Mr. Shower's
employment in lieu of reimbursement for relocation expenses.
COMPENSATION ARRANGEMENTS
Mr. Galt has an employment agreement which had an initial term of three
years. This term is extended an additional year on December 31 of each year that
Mr. Galt remains an employee of the Company, with the result that the remaining
term of the employment agreement is not less than two years nor more than three
years at any given time. If, however, the Company terminates Mr. Galt's
employment because of gross negligence or willful misconduct in the performance
of his duties, the employment agreement will terminate immediately. Similarly,
if Mr. Galt terminates his employment voluntarily other than in connection with
a "change in control" of the Company or other than because he is not re-elected
to his current positions (including as a director) or is assigned materially
inconsistent duties, the employment agreement will terminate. Mr. Galt's current
annual salary under his employment agreement is $496,000.
29
<PAGE> 10
During the term of his employment, Mr. Galt will also receive the use of an
automobile, various club memberships and certain other personal and business
related benefits. Mr. Galt also had an outstanding loan from the Company made in
connection with his purchase of his principal residence in Houston, Texas.
During 1993, the highest balance on the loan, which accrued interest at 6% per
annum, was $200,000. Mr. Galt made a regularly scheduled principal payment of
$25,000 during 1993, and the remaining principal balance of $175,000 was paid in
full on August 27, 1993.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following is information with respect to the unexercised options to
purchase Seagull Common Stock under the Company's stock option plans granted to
the Named Officers and held by them at December 31, 1993.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
SHARES AT DECEMBER 31, 1993(SHS.) AT DECEMBER 31, 1993($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE (SHS.) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Barry J. Galt.................. 173,740 $4,436,229 350,400 289,600 $5,658,525 $ 2,405,100
John W. Elias.................. 0 $ 0 0 100,000 $ 0 $ 0
Robert W. Shower............... 0 $ 0 18,000 102,000 $ 241,875 $ 967,500
Richard F. Barnes.............. 0 $ 0 40,820 45,200 $ 641,994 $ 385,950
Thomas P. McConn............... 0 $ 0 46,000 71,000 $ 647,250 $ 606,813
</TABLE>
- - ---------------
(1) Value based on the closing price on the NYSE Composite Tape for the Seagull
Common Stock on December 31, 1993 ($25.375).
OPTION GRANTS
The following is information with respect to grants of Options in fiscal
1993 pursuant to the Company's stock option plans to the Named Officers
reflected in the Summary Compensation Table on page 29. No stock appreciation
rights were granted under those plans in fiscal 1993.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------- ANNUAL RATE OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION ------------------------
NAME GRANTED (SHS.)(1) FISCAL 1993 PRICE ($/SH.) DATE 5% 10%
---- ----------------- ----------------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Barry J. Galt................ 100,000 18% $26.375 5/11/2003 $1,658,710 $4,203,496
John W. Elias................ 100,000 18% $26.375 5/11/2003 $1,658,710 $4,203,496
Robert W. Shower............. 30,000 5% $26.375 5/11/2003 $ 497,613 $1,261,049
Richard F. Barnes............ 16,000 3% $26.375 5/11/2003 $ 265,394 $ 672,559
Thomas P. McConn............. 24,000 4% $26.375 5/11/2003 $ 398,090 $1,008,839
</TABLE>
- - ---------------
(1) Options were granted to the Named Officers on May 11, 1993. The exercise
price per share is equal to the closing price of the Seagull Common Stock
on the NYSE Composite Tape on the date of grant. Options granted vest
incrementally in three years beginning three years from the date of grant
and will not begin to become exercisable until May 11, 1996, except for
options granted to Mr. Elias, which vest at a rate of 20% per year
beginning one year from the date of grant. If a "change of control" were to
occur, vesting of all outstanding Options is subject to acceleration by the
Compensation Committee, so that such Options could be exercisable for a
period of time determined by the Compensation Committee of the Board of
Directors.
(2) The dollar amounts under these columns represent the potential realizable
value of each grant of Options assuming that the market price of the
Seagull Common Stock appreciates in value from the date of grant at the 5%
and 10% annual rates of return prescribed by the SEC. These calculations
are not intended to forecast possible future appreciation, if any, of the
price of Seagull Common Stock.
30
<PAGE> 11
SEAGULL ENERGY CORPORATION
COMPARATIVE TOTAL RETURNS
DECEMBER 1988 -- DECEMBER 1993
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG SEAGULL ENERGY CORPORATION, S&P 500 INDEX AND PEER GROUP**
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) SEAGULL CORP. S&P 500 PEER GROUP
<S> <C> <C> <C>
12/31/88 100.00 100.00 100.00
12/31/89 148.00 132.00 153.00
12/31/90 196.00 127.00 126.00
12/31/91 161.00 166.00 114.00
12/31/92 202.00 179.00 132.00
12/31/93 330.00 197.00 158.00
</TABLE>
<TABLE>
<CAPTION>
12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
Seagull Energy Corporation $ 100 $ 148 $ 196 $ 161 $ 202 $ 330
S&P 500 Index $ 100 $ 132 $ 127 $ 166 $ 179 $ 197
Peer Group $ 100 $ 153 $ 126 $ 114 $ 132 $ 158
</TABLE>
Assumes $100 invested on December 31, 1988 in Seagull Common Stock, S&P 500
Index and the Peer Group.
* Total Return assumes the reinvestment of dividends.
** Fiscal year ending December 31.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
The Company has an Executive Supplemental Retirement Plan (the "Retirement
Plan") in which Barry J. Galt is the only current participant. The Retirement
Plan was established to provide supplemental retirement benefits for those
employees who are designated by the Board of Directors as members and who
complete the required period of employment with the Company. Benefits under the
Retirement Plan constitute unfunded, unsecured obligations of the Company. The
Retirement Plan provides a benefit for the surviving spouse of a participant who
dies before retirement with a vested benefit.
Subject to specified vesting requirements, a participant is entitled to
receive when his or her employment is terminated or at his or her normal
retirement date, whichever is later, a pension equal to the applicable
percentage of average monthly compensation less 50% of his social security
benefit. Compensation covered by the Retirement Plan includes base salary only.
Mr. Galt is fully vested under the Retirement Plan.
34
<PAGE> 12
For Mr. Galt, the applicable percentage is 50% and his average monthly base
compensation (which does not include bonuses) is determined based on his last
three consecutive calendar years of employment with the Company. Based on Mr.
Galt's current annual salary, the estimated annual benefit for Mr. Galt,
assuming retirement at age 65, is $277,734 with such payment continuing to the
survivor for life upon the death of either Mr. Galt or his spouse.
ENSTAR NATURAL GAS COMPANY RETIREMENT PLAN
Richard F. Barnes is the only Named Officer eligible to participate in the
ENSTAR Natural Gas Company Retirement Plan (the "ENSTAR Retirement Plan").
The salaried employees of ENSTAR Natural Gas Company, a division of the
Company, are eligible to participate in the ENSTAR Retirement Plan. Under the
non-contributory plan, a participant who retires at or after the age of 65 with
four years of plan participation is eligible for a monthly retirement benefit
equal to 2% of a participant's average monthly compensation multiplied by his or
her years of benefit service not to exceed ten full years, added to an amount
equal to 1% of the participant's average monthly compensation multiplied by his
or her benefit service exceeding ten full years. Benefits under the ENSTAR
Retirement Plan are not subject to reduction because of Social Security benefits
but are reduced by benefits payable under another defined benefit plan to the
extent that there is a duplication of benefits for the same period of service.
The ENSTAR Retirement Plan provides that a participant's benefit will be
determined pursuant to the above formula as of the date of termination of
employment, but also provides that such benefit will be at least equal to the
participant's accrued benefit as of December 31, 1988.
A participant (or his or her beneficiary) may also be entitled to the
foregoing benefit under the ENSTAR Retirement Plan if the participant terminates
employment by reason of early retirement (i.e., after the participant has
attained the age of 55 and completed five years of vesting service), by reason
of total and permanent disability, by reason of death or if the participant
terminates employment after the participant has attained a "vested percentage"
in his or her ENSTAR Retirement Plan benefit based on his or her years of
vesting service under the following schedule:
<TABLE>
<CAPTION>
YEARS OF VESTED
SERVICE PERCENTAGE
-------- ----------
<S> <C>
Less than 5........................................................ 0%
5 or more.......................................................... 100%
</TABLE>
The following table shows estimated annual benefits payable upon normal
retirement at age 65 based on certain salary assumptions and years of service.
PENSION PLAN TABLE*
<TABLE>
<CAPTION>
YEARS OF SERVICE
RANGE OF -------------------------------------------------------
COMPENSATION 15 20 25 30 35
- - ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 50,000.................................... $12,500 $15,000 $17,500 $20,000 $22,500
$ 75,000.................................... $18,750 $22,500 $26,250 $30,000 $33,750
$100,000.................................... $25,000 $30,000 $35,000 $40,000 $45,000
$125,000.................................... $31,250 $37,500 $43,750 $50,000 $56,250
$150,000.................................... $37,500 $45,000 $52,500 $60,000 $67,500
</TABLE>
- - ---------------
* For purposes of determining the benefits shown above, plan compensation for
all years of service has been limited to $150,000 in accordance with the
limits on qualified plan compensation under Section 401(a)(17) of the Code,
without regard to any future adjustments for changes in the cost of living,
and benefits accrued prior to January 1, 1994 with respect to plan
compensation in excess of $150,000 have been disregarded.
35
<PAGE> 13
The following table sets forth the estimated annual benefits payable under
normal retirement at age 65, assuming current remuneration levels and
participation until normal retirement at age 65, with respect to Mr. Barnes
under the provisions of the ENSTAR Retirement Plan:
<TABLE>
<CAPTION>
ESTIMATED
CREDITED
CURRENT YEARS CURRENT ESTIMATED
CREDITED OF SERVICE COMPENSATION CURRENT COMPENSATION ANNUAL
YEARS OF AT COVERED BY ADJUSTED FOR PLAN BENEFIT PAYABLE
SERVICE AGE 65 PLAN COMPENSATION LIMITS UPON RETIREMENT
-------- ------------ ------------ -------------------- ---------------
<S> <C> <C> <C> <C> <C>
Richard F. Barnes 21 36 $249,500 $150,000 $ 60,700*
</TABLE>
- - ---------------
* This benefit assumes the current limitation on plan compensation, $150,000,
will remain at $150,000 (with no inflationary adjustments). Mr. Barnes'
service from 1967 through 1980 has been recognized under this plan and another
retirement plan. Accordingly, his benefit under the ENSTAR Retirement Plan
formula has been reduced by $7,896 per year, which is his accrued benefit
under the other plan.
36
