<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
PLAINS RESOURCES INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] 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 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 Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
PLAINS RESOURCES INC.
1600 SMITH STREET
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 1995
TO THE STOCKHOLDERS OF PLAINS RESOURCES INC.:
The 1995 Annual Meeting of Stockholders (the "Meeting") of Plains Resources
Inc. (the "Company") will be held in the Highland Room of the Four Seasons
Hotel, 1300 Lamar Street, Houston, Texas at 10:00 a.m. local time, on Wednesday,
May 24, 1995. At the Meeting, the following matters will be submitted to the
holders of each class of stock as set forth below:
1. Holders of common stock, $.10 par value, of the Company ("Common Stock")
will be asked to:
(i) Elect eight members of the Company's Board of Directors; and
(ii) Transact such other business as may properly come before the
Meeting and any adjournment or postponement thereof.
2. Holders of Series C Cumulative Convertible Preferred Stock, $1.00 par
value, of the Company ("Series C Preferred Stock") will be asked to elect one
member of the Company's Board of Directors.
Only holders of Common Stock and Series C Preferred Stock of record as of the
close of business on March 29, 1995, are entitled to notice of and to vote at
the Meeting and any adjournment or postponement thereof.
By Order of the Board of Directors,
Michael R. Patterson
Vice President, General Counsel & Secretary
April 10, 1995
YOU ARE RESPECTFULLY REQUESTED TO PROMPTLY SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED RETURN ENVELOPE.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PLAINS RESOURCES INC.
1600 SMITH STREET
HOUSTON, TEXAS 77002
PROXY STATEMENT
1995 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board") of Plains Resources Inc. (the "Company") of the
enclosed proxy to be used at the 1995 Annual Meeting of Stockholders of the
Company (the "Meeting") to be held in the Highland Room of the Four Seasons
Hotel, 1300 Lamar Street, Houston, Texas at 10:00 a.m. local time, on Wednesday,
May 24, 1995, and at any adjournment or postponement of such Meeting. You are
respectfully requested to sign, date, and return the enclosed Proxy Card in the
enclosed return envelope as soon as possible.
This Proxy Statement and the enclosed proxy were first sent or given to
Company stockholders on or about April 10, 1995. The Company's Annual Report to
Stockholders for the fiscal year ended December 31, 1994, including consolidated
financial statements, which accompanies this Proxy Statement, is not a part of
the proxy soliciting material.
The close of business on March 29, 1995 (the "Record Date"), was fixed as the
record date for determination of stockholders of the Company entitled to notice
of and to vote at the Meeting and any adjournment or postponement thereof. As
of said Record Date the outstanding stock of the Company entitled to vote at the
Meeting consisted of 11,593,457 shares of common stock, par value $.10 per share
("Common Stock") and 209,370 shares of Series C Cumulative Convertible Preferred
Stock, par value $1.00 per share ("Series C Preferred Stock").
Holders of Common Stock on the Record Date are entitled to cast one vote per
share, either in person or by proxy, on all questions properly before the
stockholders at the Meeting, except that holders of Common Stock are not
entitled to vote in the election of one director who is to be elected by the
holders of Series C Preferred Stock. All properly executed proxies returned by
holders of Common Stock that are not revoked will be voted (or withheld from
voting) according to the directions, if any, specified thereon. However, if
proxies of holders of Common Stock are returned properly signed but without
voting instructions, such proxies will be voted for the election of the nominees
listed under "Election of Directors - Nominees for Election by Holders of Common
Stock". Except as set forth herein, the Board is not aware of any other matters
that are to be brought before the Meeting. However, if any other matters
properly come before the Meeting, the persons named in the enclosed form of
proxy, or their substitutes, will vote the proxy in accordance with their
judgment on such matters.
Holders of Series C Preferred Stock on the Record Date are entitled to cast
one vote per share, either in person or by proxy, for the election of one
director to represent such class. No other proposal requires the vote of the
holders of Series C Preferred Stock. All properly executed proxies returned by
holders of Series C Preferred Stock that are not revoked will be voted (or
withheld from voting) according to the directions, if any, specified thereon.
However, if proxies of holders of Series C Preferred Stock are returned properly
signed but without voting instructions, such proxies will be voted for the
election of the nominee listed under "Election of Directors - Nominee for
Election by Holders of Series C Preferred Stock".
A proxy given pursuant to this solicitation may be revoked by a stockholder
at any time before it is voted by delivering to the Company a duly executed
instrument of revocation or a proxy bearing a later date or by voting the shares
relating thereto in person at the Meeting. Attendance at the Meeting will not
in and of itself constitute revocation of a proxy. Other than the election of
directors, which requires a plurality of the votes cast, each matter submitted
to the stockholders requires the affirmative vote of a majority of the shares
present
1
<PAGE>
or represented by proxy and entitled to vote on such matter at the Meeting; and
in accordance with Delaware law, abstentions will, and broker non-votes will
not, be counted as being present for this purpose.
This solicitation is being made by mail. After the initial solicitation,
further solicitations of proxies may be made by telephone or oral communications
by officers or employees of the Company who will receive no extra compensation
therefor. The Company will bear the entire cost of this solicitation, which
will include reimbursement to brokerage houses, banks, and other fiduciaries for
their reasonable expenses in forwarding soliciting materials to their
principals.
ELECTION OF DIRECTORS
In accordance with the Company's By-laws, the Board has fixed the number of
directors constituting the Board at nine. Eight directors are to be elected by
the holders of Common Stock. One additional director is to be elected by the
holders of Series C Preferred Stock, voting as a separate class. All nine
directors are to be elected at the Meeting, and will serve until the next Annual
Meeting of Stockholders or until their respective successors are elected and
qualified.
The nominees for election as directors are identified below. Although all
nominees currently intend to serve on the Board, if any nominee is unable or
unwilling to serve, the Board may (a) nominate another person in substitution
for such nominee, and the proxies will be voted for the election of such
substitute nominee for director or (b) reduce the size of the Board accordingly.
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
GREG L. ARMSTRONG, age 36 Officer Since 1981 and Director Since 1992
Mr. Armstrong has been President and Chief Executive Officer of the Company
since December 1992. He was President and Chief Operating Officer from October
to December 1992, and Executive Vice President and Chief Financial Officer from
June to October 1992. He was Senior Vice President and Chief Financial Officer
from 1991 to June 1992, Vice President and Chief Financial Officer from 1984 to
1991, Corporate Secretary from 1981 to 1988 and Treasurer from 1984 to 1987.
ROBERT A. BEZUCH, age 51 Director Since 1990
Mr. Bezuch has been President of Sarisky Associates, Inc. (a venture capital
firm specializing in oil and gas investments) since 1993. He was President of
The Revenue Companies (a venture capital and consulting firm specializing in oil
and gas investments) from 1985 to 1993.
TOM H. DELIMITROS, age 54 Director Since 1988
Mr. Delimitros has been General Partner of AMT Venture Partners, Ltd. (a venture
capital firm) since 1989. He was a General Partner of Sunwestern Investment
Funds I and II and Senior Vice President of Sunwestern Management, Inc. (an
investment management firm) from 1983 to 1988. He is also a director of Tetra
Technologies, Inc. (a specialty chemical and chemical process company).
WILLIAM M. HITCHCOCK, age 55 Director Since 1977
Mr. Hitchcock has been President of Plains Resources International Inc. (a
wholly owned subsidiary of the Company) since January 1992. He was Chairman of
the Board of the Company from August 1981 to October 1992, except for the period
from April 1987 to October 1987 when he served as Vice Chairman. He was a
consultant to the Company from 1982 to 1992. He is a director of International
Colin Energy Inc. (a Canadian oil and gas company).
2
<PAGE>
DAN M. KRAUSSE, age 69 Director Since 1987
Mr. Krausse has been Chairman of the Board of the Company since December 1992.
He has also been President of The Krausse Company (a private investment firm)
since 1981, and was Chairman of the Board and Chief Executive Officer of
Sunwestern Investment Group (a venture capital firm) from 1983 to 1987. He also
is a director of Springs Industries, Inc. (a textile manufacturing company), and
Chairman of the Board of Axis Gas Corporation (a private gas gathering and
processing firm).
D. IRVING OBROW, age 78 Director Since 1977
Mr. Obrow was a consultant for Johnston Industries, Inc. (a diversified
industrial firm) from October 1991 to February 1994, after serving as Chairman
of the Executive Committee of the Board of Directors of that company from 1990
to October 1991, and as President and Chief Executive Officer from 1987 to 1990.
From 1985 to 1987, he was Chairman of the Board, President and Chief Executive
Officer of The Johnston Group, Inc., an affiliated company of Johnston
Industries.
GERALD F. ROME, age 69 Director Since 1991
Mr. Rome has been a consultant for Oil and Gas Rental Services Inc. since 1990.
He was Vice President of Texaco Inc. from 1979 to 1990, Executive Vice President
of Texaco U.S.A. from 1987 to 1990 and Senior Vice President of Texaco U.S.A.
from 1985 to 1987. Mr. Rome has served as a director of the Company since 1991,
except for the period from December 1992 to May 1993.
J. TAFT SYMONDS, age 55 Director Since 1987
Mr. Symonds has been Chairman of the Board of Symonds Trust Co. Ltd. (an
investment firm), and Chairman of the Board of Maurice Pincoffs Company, Inc.
(an international marketing firm) since 1978. He is also Chairman of the Board
and Director of Tetra Technologies, Inc. (a specialty chemical and chemical
process company).
NOMINEE FOR ELECTION BY HOLDERS OF SERIES C PREFERRED STOCK
Under the terms of the Certificate of Designation, Preferences and Rights
of Series C Preferred Stock, so long as at least 10,000 shares of Series C
Preferred Stock remain outstanding, the holders of Series C Preferred Stock have
the right to elect one director. As 209,370 shares of Series C Preferred Stock
are currently outstanding, the holders of Series C Preferred Stock are presently
entitled to elect one director. Pursuant to the terms of that certain Stock
Purchase Agreement dated as of July 14, 1994, under which the Series C Preferred
Stock was issued by the Company, Mr. Robert V. Sinnott was designated by the
holders of a majority of the Series C Preferred Stock to hold the directorship
reserved for the holders of Series C Preferred Stock. In accordance with such
designation, Mr. Sinnott was appointed a director on August 4, 1994.
ROBERT V. SINNOTT, age 45 Director since 1994
Mr. Sinnott has been Senior Vice President of Kayne Anderson Investment
Management, Inc. (an investment firm) since 1992. He was Vice President and
Senior Securities Officer of the Investment Banking Division of Citibank from
1986 to 1992. He is also a director of Glacier Water Services, Inc. (a vended
water company), KA Industries (a privately held bakery), and National Energy
Group, Inc. (an oil and gas company).
3
<PAGE>
BOARD ORGANIZATION AND MEETINGS
During 1994, the Board held seven Board meetings and the committees of the
Board held a total of five meetings. No director attended fewer than 75% of the
total number of meetings of the Board and the committees of which he was a
member. The committees of the Board consist of the Audit, Compensation,
Finance, and Nominating Committees. The Audit Committee, consisting of Messrs.
Obrow, Bezuch, and Symonds, held two meetings in 1994. The Audit Committee's
function is to consult with the Company's independent auditors jointly with, and
independently of, the management of the Company with respect to the scope and
results of their audit of the Company's financial statements and to review the
Company's financial reporting and accounting principles, policies and practices
and its internal audit objectives, accounting and control policies and
procedures. The Compensation Committee, consisting of Messrs. Bezuch,
Delimitros, and Rome, held two meetings in 1994. The function of the
Compensation Committee is to recommend salaries, bonuses, deferred compensation,
retirement plans and any other remuneration for the officers of the Company to
the Board for its approval, and to administer the Company's stock option plans.
The Finance Committee, consisting of Messrs. Armstrong, Sinnott, and Symonds
held one meeting during 1994. The Finance Committee's function is to advise and
assist the Company's management on financial matters and recommend to the Board
all major financing undertaken, both debt and equity. The Nominating Committee,
consisting of Messrs. Armstrong, Hitchcock, Krausse, and Symonds, did not meet
in 1994. The Nominating Committee's function is to recommend candidates to fill
vacancies on the Board, to review the structure and composition of the Board and
to consider the requisite qualifications for Board service. The Nominating
Committee will also consider nominees recommended by stockholders. Stockholders
desiring to make such recommendations for the 1996 Annual Meeting of
Stockholders should submit, by December 13, 1995, the candidate's name, together
with biographical information to: Chairman, Nominating Committee of the Board of
Directors of Plains Resources Inc., 1600 Smith Street, Suite 1500, Houston,
Texas 77002.
COMPENSATION OF DIRECTORS
Each director who is not otherwise compensated by the Company ("Nonemployee
Director") receives (i) an attendance fee of $2,000 for each Board meeting
attended (excluding telephonic meetings) plus reimbursement for related
expenses, (ii) an attendance fee of $500 for each committee meeting or
telephonic Board meeting attended, and (iii) in accordance with the terms and
provisions of the 1992 Stock Incentive Plan, an annual grant of 2,000 shares of
Common Stock to be awarded on the next business day following his election or
reelection to the Board, provided that such plan is in effect on that day.
Messrs. Armstrong and Hitchcock, as employees, are otherwise compensated for
their services to the Company and therefore receive no separate compensation for
their services on the Board. In lieu of the compensation set forth above for
Nonemployee Directors, Mr. Krausse, as Chairman of the Board, receives an annual
retainer of $60,000, payable in equal monthly installments.
4
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table provides information on ownership of the Company's Common
Stock by the directors, nominees, the Chief Executive Officer and the four other
most highly compensated executive officers of the Company (the "Named Executive
Officers") and all directors, nominees and executive officers of the Company as
a group. The following table also sets forth, as of the Record Date, all
persons who are known by the Company to be the beneficial owners of more than 5%
of the outstanding shares of the Company's Common Stock.
<TABLE>
<CAPTION>
Shares of Stock
Beneficially Owned
Name As of the Record Date (1) Percent of Class
- - ------------------------------------- ---------------------------- -----------------
<S> <C> <C>
Greg L. Armstrong 180,322 (1)(2) 1.5%
Robert A. Bezuch 10,467 (3) (4)
Tom H. Delimitros 8,492 (4)
William M. Hitchcock 425,004 (1)(2) 3.6%
Dan M. Krausse 49,420 (1) (4)
D. Irving Obrow 44,590 (4)
Gerald F. Rome 8,000 (4)
Robert V. Sinnott 4,616 (2)(5) (4)
J. Taft Symonds 27,628 (2) (4)
William C. Egg, Jr. 154,750 (1) 1.3%
Michael R. Patterson 104,437 (1) (4)
Harry N. Pefanis 72,270 (1) (4)
Herbert D. Schroeder 103,526 (1) (4)
Directors, and all executive 1,521,963 12.1%
officers as a group (15 Persons)
Richard A. Kayne & 2,280,952 (6) 17.1%
Kayne Anderson Investment Management, INC.
Inc.
1800 Avenue of the Stars, Suite 1425
Los Angeles, CA 90067
Legacy Resources Co., L.P. 750,000 (7) 6.1%
2780 Waterfront Parkway East Drive
Indianapolis, Indiana 46214
Merrill Lynch & Co., Inc. 919,325 (8) 7.6%
P. O. Box 9011
Princeton, NJ 08543-9011
Metropolitan Life Insurance Company 1,694,350 (9) 14.2%
One Madison Avenue
New York, NY 10010-3690
Spears, Benzak, Salomon & Farrell, Inc. 784,175 (10) 6.8%
45 Rockefeller Plaza
New York, NY 10111
</TABLE>
(1) Beneficial ownership includes both outstanding shares of Common Stock and
shares of Common Stock such person has the right to acquire within 60 days
after the Record Date, by exercise of outstanding stock options or warrants
or conversion of preferred stock. Shares subject to exercisable stock
options include 138,000 shares for Mr.
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<PAGE>
Armstrong; 123,000 shares for Mr. Egg; 60,000 shares for Mr. Hitchcock;
40,000 shares for Mr. Krausse; 99,000 shares for Mr. Patterson, 72,000
shares for Mr. Pefanis and 97,000 shares for Mr. Schroeder.
(2) Includes shares of Common Stock that the following persons would be
entitled to receive upon conversion of Series C Preferred Stock: Messrs.
Armstrong, 5,234 shares; Hitchcock, 35,051 shares; Symonds, 17,448 shares;
and Mr. Sinnott, 1,727 shares.
(3) Includes 267 shares issuable upon conversion of 300 shares of the Company's
$1.30 Cumulative Convertible Preferred Stock (less than 1% of the
outstanding $1.30 Preferred Stock).
(4) This individual beneficially owns less than 1% of the outstanding Common
Stock.
(5) Mr. Sinnott is Senior Vice President of Kayne Anderson Investment
Management, Inc. See the following Note (6) for holdings of Kayne Anderson.
Beneficial ownership of Mr. Sinnott does not include the holdings of Kayne
Anderson as Mr. Sinnott disclaims beneficial ownership of the shares
beneficially owned by Kayne Anderson.
(6) Information regarding beneficial ownership was derived from Schedule 13D
Amendment No. 1 dated August 3, 1994, filed jointly by Kayne Anderson
Investment Management, Inc. ("Kayne Anderson"), and Mr. Richard A. Kayne,
Director, President and Chief Executive Officer of Kayne Anderson. Taking
into account stock dividends on Series C Preferred Stock issued in January
1995, Mr. Kayne has shared dispositive power and shared voting power with
Kayne Anderson of 2,275,952 shares. Beneficial ownership for Kayne Anderson
includes 1,727,302 shares of Common Stock issuable upon conversion of
103,638 shares of Series C Preferred Stock. Mr. Kayne also has sole
dispositive and voting power over 5,000 shares owned by him.
(7) Information regarding beneficial ownership was derived from Schedule 13D
Amendment No. 2 dated September 20, 1994, filed by Legacy Resources Co.,
L.P. ("Legacy"). In connection with the purchase of certain oil and gas
properties by a wholly-owned subsidiary of the Company from Legacy, the
Company issued to Legacy a warrant to purchase 750,000 shares of Common
Stock with an exercise price of $6.00 per share and a term of 5 years from
date of issuance.
(8) Information regarding beneficial ownership was derived from Schedule 13G
dated January 19, 1995, filed by Merrill Lynch & Co., Inc. ("Merrill
Lynch") on behalf of certain of its subsidiaries. Taking into account stock
dividends on Series C Preferred Stock issued in January 1995, Merrill Lynch
has shared voting and dispositive power for 919,325 shares. Beneficial
ownership includes 523,425 shares of Common Stock issuable upon conversion
of 31,406 shares of Series C Preferred Stock.
(9) Information regarding beneficial ownership was derived from Schedule 13G
Amendment No. 3 dated February 9, 1995, filed by Metropolitan Life
Insurance Company ("Metropolitan"). Taking into account stock dividends on
Series C Preferred Stock issued in January 1995, Metropolitan has sole
voting power for 1,360,550 shares and sole dispositive power for 1,694,350
shares. Beneficial ownership includes 348,950 shares of Common Stock
issuable upon conversion of 20,937 shares of Series C Preferred Stock. In
addition, State Street Research & Management Company, One Financial Center,
38th Floor, Boston, Massachusetts 02111-2690 ("State Street Research"), a
wholly-owned subsidiary of Metropolitan, filed a Schedule 13G dated
February 13, 1995, for the same shares (other than 14,000 shares in which
State Street Research has no interest) reported on Metropolitan's Schedule
13G. State Street Research advised the Company that all securities reported
in its Schedule 13G are owned by certain of its clients and State Street
Research expressly disclaims beneficial ownership of the shares reported
therein.
(10) Information regarding beneficial ownership was derived from Schedule 13G
Amendment No. 1 dated February 6, 1995, filed by Spear, Benzak, Salomon &
Farrell, Inc. ("Spears, Benzak"). Spears, Benzak reported that, unless
otherwise required by law or contract, it has no power to vote or direct
the vote of the shares, and that it shares dispositive power for such
shares with its customers, who retain the ultimate dispositive power.
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<PAGE>
The following table sets forth as of the Record Date, all persons who are
known by the Company to be the beneficial owners of more than 5% of the
outstanding shares of Series C Preferred Stock, the number of shares of Series C
Preferred Stock and the corresponding percentage of Series C Preferred Stock
owned as of such date.
<TABLE>
<CAPTION>
Shares of Series C
Name and Address Preferred Stock Beneficially
of Beneficial Owners Owned as of March 15, 1995 Percent of Class
- - ------------------------------------------------ ---------------------------- -----------------
<S> <C> <C>
Arbco Associates L.P. 20,937.00 10.0%
1800 Avenue of the Stars, #1425
Los Angeles, CA 90067
Eos Partners, L.P. 20,937.00 10.0%
520 Madison Avenue, 42nd Floor
New York, NY 10022
Foremost Insurance Company 20,937.00 10.0%
5230 33rd St. S.E.
Grand Rapids, MI 49512
Kayne Anderson Nontraditional Investments L.P. 15,702.75 7.5%
1800 Avenue of the Stars, #1425
Los Angeles, CA 90067
Loral Systems Group 10,468.50 5.0%
Pension Plan for Hourly Employees
600 Third Avenue
New York, NY 10016
Merrill Lynch Global Allocation Fund, Inc. 13,609.05 6.5%
800 Scuddermill Road
Plainsboro, NJ 08536
Merrill Lynch Special Value Fund, Inc. 17,796.45 8.5%
800 Scuddermill Road
Plainsboro, NJ 08536
Metropolitan Separate Account EN 20,937.00 10.0%
One Financial Center
Boston, MA 02111-2690
Offense Group Associates L.P. 13,085.63 6.25%
1800 Avenue of the Stars, #1425
Los Angeles, CA 90067
Primerica Life Insurance Company 20,937.00 10.0%
65 East 55th Street, 35th Floor
New York, NY 10022
Topa Insurance Company 10,468.50 5.0%
1800 Avenue of the Stars, 2nd Floor
Los Angeles, CA 90067
</TABLE>
7
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee, which is composed of three independent,
nonemployee Directors, makes determinations and recommendations to the Board
concerning the compensation of the Company's executive officers, except for
grants under the Company's stock option plans, which plans are independently
administered by the Committee. In order to make such determinations and
recommendations, at the end of each year the Committee evaluates (i) the
Company's performance relative to its annual objectives, (ii) the Company's
performance relative to changes in the industry (i.e., performance relative to
the opportunities available), and (iii) each executive officer's contribution to
the Company's achievements during the year.
The basic objectives of the executive compensation program are to:
.Enable the Company to attract, retain, motivate and reward high caliber
executive officers who are among the most skilled, talented and persistent
individuals available in a very competitive marketplace;
.Inspire executive officers to work together as a team to innovatively and
aggressively pursue Company goals;
.Foster a general corporate atmosphere that promotes an entrepreneurial
style of leadership in order to enable the Company to act quickly and
flexibly to implement its plans and pursue opportunities as they arise;
.Emphasize "pay for performance" by having a significant portion of the
executive officers' total compensation "at risk" in the form of incentive
compensation; and
.Align the long term interests of the executive officers with those of the
Company's stockholders through the use of stock options as a portion of
compensation and thereby encourage the achievement of performance
objectives that enhance stockholder value on a continuing basis.
The Committee monitors general industry conditions, changes in regulations and
tax laws and other developments which may, from time to time, require
modifications of the executive compensation program in order to ensure the
program is properly structured to achieve its objectives. The Company's
executive compensation program currently is comprised of three major components;
base salary, annual incentive compensation and longer term incentives through
stock options.
BASE SALARIES
Base salaries for each of the Company's executive officers are determined on
an individual basis, taking into consideration the performance of the individual
and his or her contributions to the Company's performance, the length of service
of the individual with the Company, compensation by industry competitors for
comparable positions, internal equities among positions and general economic
conditions. Although no specific weight is assigned to these factors, the
Committee generally targets the third quartile of salary levels paid within the
industry as a primary consideration in setting base salaries. In order to
determine salary levels paid within the industry, the Committee reviews various
industry surveys, proxy information of its competitors and also, from time to
time, consults with independent compensation consulting firms. The Committee
reviews the compensation practices of the companies which are most comparable to
the Company in terms of asset value and which are included in the Media General
Index - Oil and Natural Gas Exploration used in the Performance Graph on Page
12. The Committee believes that maintaining a competitive base salary structure
is vital to attract and retain talented executives and that optimal performance
is encouraged through the use of incentive programs, such as annual incentive
compensation and stock option plans, furthering the goal of having "at risk"
compensation as an important component of the executive compensation program.
8
<PAGE>
ANNUAL INCENTIVE COMPENSATION
In addition to their base salaries, the Company's executive officers may earn
an annual incentive payment, depending on Company performance relative to
certain objectives set forth in an annual business plan. Such annual objectives
are a combination of operating, financial and strategic goals (such as oil and
gas production levels, oil and gas reserve additions, achievement of income
and/or cash flow targets and successful completion of major projects) that are
considered to be critical to the Company's success. These objectives are not
specifically weighted in the determination of whether to award annual incentive
payments to executive officers since the relative importance of such objectives
may change from year to year and the relative responsibilities of each executive
officer in the achievement of each of the objectives may differ. After a year-
end review of the Company's performance relative to the annual business plan,
the Committee determines the amount of the annual incentive payment, if any,
which will be awarded to an executive officer based on its subjective evaluation
of factors which include the extent to which the objectives of the annual
business plan were achieved, his or her contribution to the achievement of those
objectives and general economic and industry conditions.
STOCK OPTIONS
The Company for many years has used stock options as its long-term incentive
program for executive officers. Stock options are used in order to relate the
benefits received by the executive officers to the amount of appreciation
realized by the stockholders over comparable periods. The decision to award a
stock option to an executive officer, as well as the size of the award, is not
specifically formula-driven nor based on any specific corporate performance
factors. The size of any grants are based on subjective factors such as
individual performance, level of responsibility and an officer's potential to
contribute to the long-term success of the Company. Stock options are granted
at exercise prices not less than the market value of the stock on the date of
the grant and are not transferable. Therefore, such options have no realizable
value unless the Company's stock appreciates in value. Stock options provide
the executive officers the opportunity to acquire and build a meaningful
ownership interest in the Company and, therefore, closely align the executive
officers' interests with those of our stockholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation of Mr. Armstrong, the Company's President and Chief
Executive Officer, for 1994 was determined in accordance with the executive
compensation practices for all executive officers as discussed above. In its
annual review of the Company's performance in 1994 relative to the business
plan, the Committee determined that substantially all of the material objectives
of what the Board considered an aggressive business plan were met. Significant
achievements included a 49% increase in proved oil and gas reserve volumes, an
11% increase in base level oil and gas production, a 619% reserve replacement
ratio, and a 15% increase in earnings before interest, taxes, depreciation and
amortization, as compared to correlative results for 1993. In recognition of
Mr. Armstrong's exemplary leadership in the Company's significant progress in
1994, Mr. Armstrong was awarded an annual incentive payment of $117,000 (52% of
his annual base salary). In addition, in February 1995, Mr. Armstrong was
granted an option to purchase 50,000 shares of Common Stock under the Company's
1992 Stock Incentive Plan at an exercise price of $6.25 (the market price on the
date of the grant). This option becomes exercisable in equal installments on
the first two anniversary dates of the grant.
Compensation Committee
Tom H. Delimitros, Chairman
Robert A. Bezuch
Gerald F. Rome
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows certain compensation information for the Company's
Chief Executive Officer and the other Named Executive Officers for services
rendered in all capacities during the fiscal years ended December 31, 1994, 1993
and 1992.
<TABLE>
<CAPTION>
Long Term
Compensation
--------------
Annual Compensation Awards
------------------- --------------
Securities
Underlying All Other Compensation (1)
Name and Principal Position Year Salary ($) Bonus ($) Options (#) ($)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Greg L. Armstrong 1994 225,000 117,000 0 7,403
President and Chief 1993 225,000 78,750 53,000 7,504
Executive Officer 1992 198,125 0 0 7,603
William C. Egg, Jr. 1994 185,000 55,000 0 7,381
Senior Vice President- 1993 185,000 37,000 23,000 7,476
Exploration and Production 1992 185,000 0 0 7,593
Michael R. Patterson 1994 150,000 35,000 0 7,062
Vice President, 1993 150,000 30,000 19,000 6,912
General Counsel & Secretary 1992 150,000 0 0 7,030
Harry N. Pefanis 1994 150,000 45,000 0 6,502
Vice President-Products 1993 140,000 30,000 17,000 5,877
Marketing 1992 125,000 0 0 5,955
Herbert D. Schroeder 1994 150,000 30,000 0 6,750
Vice President-Operations 1993 150,000 30,000 17,000 6,360
1992 139,375 0 0 6,448
- - ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes contributions of $4,500 to each Named Executive Officer's account
to match 50% of the officer's contributions under the Company's Employee
401(K) Plan. Also includes amounts received by the officer under the
Company's 1984 Employee Overriding Royalty Plan which for 1994 were as
follows: Mr. Armstrong, $2,903; Mr. Egg, $2,881; Mr. Patterson, $2,562; Mr.
Pefanis, $2,002; and Mr. Schroeder, $2,250. In December 1993, the 1984
Employee Overriding Royalty Plan was terminated with respect to the
Company's future drilling activities.
10
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information for each of the Named Executive
Officers concerning the exercise of options during 1994 and the number of shares
of Common Stock underlying unexercised options held on December 31, 1994. As of
December 31, 1994, none of the options held by the Named Executive Officers were
in-the-money (SEC Regulations define options as "in-the-money" if the fair
market value of the underlying security on such date exceeds the exercise price
of the option). No options were granted to the Named Executive Officers in 1994.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares Acquired Value Realized At Year End (#) (2) At Year End
Name on Exercise (#) ($) (1) ----------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Greg L. Armstrong 3,000 6,750 132,250 20,750 0 0
- - ----------------------------------------------------------------------------------------------------------------------------------
William C. Egg, Jr. 4,000 9,000 117,250 5,750 0 0
- - ----------------------------------------------------------------------------------------------------------------------------------
Michael R. Patterson 2,000 4,250 94,250 4,750 0 0
- - ----------------------------------------------------------------------------------------------------------------------------------
Harry N. Pefanis 0 0 67,750 4,250 0 0
- - ----------------------------------------------------------------------------------------------------------------------------------
Herbert D. Schroeder 2,000 4,250 92,750 4,250 0 0
- - ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Market value of Common stock at the time of exercise, minus the exercise
price, multiplied by the number of shares underlying the options exercised.
(2) To the extent not already exercisable, these options generally become
exercisable upon a change of control of the Company resulting from (i) a
change in the composition of the Board of Directors pursuant to which
persons who were directors in April, 1992, (or were approved by a majority
of those directors still remaining) cease to constitute at least two-thirds
of the Board, (ii) dissolution or liquidation of the Company, (iii) a
merger or consolidation in which the Company does not survive, or (iv) the
transfer of 20% or more of the voting power of the Company's stock (except
as a result of a merger or consolidation in which the Company is the
surviving corporation). In addition, in the event of such a change in
control, the holders of the option may elect to surrender for a cash
payment equal to the difference between the exercise price and the market
price of the Company's common stock on the date of such event. These
options are not transferable except by will or the laws of dissent and
distribution.
EMPLOYMENT CONTRACT AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has an employment agreement with Mr. Armstrong for an initial
term of five years, expiring March 1, 1998, which provides for an initial base
salary of $225,000 per year, subject to annual review. If Mr. Armstrong's
employment is terminated (i) without cause, he will be entitled to receive an
amount equal to two times his base salary or (ii) as a result of a change in
control of the Company, he will be entitled to receive an amount equal to three
times his base salary, and in either event, will be entitled to receive medical
benefits for two years following the date of such termination. Under such
agreement, change in control of the Company is defined as a change occurring
(i) through he acquisition of 25% or more of the voting power of the Company,
or (ii) at such time as the Directors in office on the date of the agreement
cease to constitute a majority of the Board.
As described in footnote (2) to the table entitled "Aggregated Option
Exercises in Last Fiscal Year and Fiscal Year-End Option Values", in the event
of certain corporate transactions, changes in control and changes in the
composition of the Board of Directors under certain circumstances, the
exercisability of certain options granted to the Named Executive Officers is
accelerated and the option holder is afforded the right to surrender the option
for a lump sum cash payment.
11
<PAGE>
OFFICERS' RETIREMENT PLAN
In 1990, the Board authorized the implementation of a retirement plan for
certain officers at the level of Vice President and above. The basic terms of
such authorization provide that an officer with at least fifteen years of
service to the Company will be entitled to receive retirement income for a
fifteen-year period, commencing at age 60, in an amount equal to 50% of his
average salary for a five-year period preceding his retirement. To date the
retirement plan has not been implemented.
STOCKHOLDER RETURN COMPARISON
The following graph compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return of the AMEX Market Value
Index and the Media General Industry Group Index No. 353, "Oil, Natural Gas
Exploration" for five years ended December 31, 1994. The graph assumes that the
value of an investment in the Company's Common Stock and each index was $100 at
December 31, 1989, and that any dividends were reinvested. Numerical values
used for the year-end plot points in the graph are set forth in the table under
the graph.
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Plains Resources Inc. 100.00 103.16 235.79 155.79 109.47 90.53
AMEX Market Value Index 100.00 84.80 104.45 105.88 125.79 111.12
Media General Index - Oil, 100.00 85.38 81.56 71.50 85.49 86.41
Natural Gas Exploration
</TABLE>
12
<PAGE>
AUDITORS
The Board has selected Price Waterhouse as the Company's independent
accountants for 1995. Price Waterhouse is an international accounting firm and
has audited the Company's financial statements since 1977.
A representative of Price Waterhouse will be present at the Meeting, will
have an opportunity to make a statement if he desires to do so, and will be
available to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 1996
Annual Meeting must be received by the Company's Secretary on or before December
13, 1995, to be considered for inclusion in the Company's proxy statement and
form of proxy for such meeting.
By Order of The Board of Directors,
Michael R. Patterson
Vice President, General Counsel & Secretary
April 10, 1995
13
<PAGE>
PROXY PLAINS RESOURCES INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Phillip D. Kramer and Michael R. Patterson, and
each of them, as Proxies with full power of substitution, and hereby authorizes
them to represent and to vote, as designated below, all of the shares of Common
Stock of Plains Resources Inc. which the undersigned may be entitled to vote at
the Annual Meeting of Stockholders to be held in the Highland Room of the Four
Seasons Hotel, Houston, Texas, on May 24, 1995, at 10:00 a.m. local time, and
any adjournment or postponement thereof.
1. ELECTION OF DIRECTORS [ ] FOR ALL NOMINEES LISTED BELOW (EXCEPT AS
MARKED TO THE CONTRARY BELOW)
[ ] WITHHOLD FOR ALL NOMINEES LISTED BELOW
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE FOLLOWING
LIST:
GREG L. ARMSTRONG, ROBERT A. BEZUCH, TOM H. DELIMITROS, WILLIAM M. HITCHCOCK,
DAN M. KRAUSSE, D. IRVING OBROW, GERALD F. ROME AND J. TAFT SYMONDS
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Continued and to be signed on the other side)
(Continued from the other side)
In his discretion, the Proxy is 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 PROPOSAL 1.
Please sign exactly as your name appears on
the left. If signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such; if signing for
corporation, sign in full corporate name by
authorized officer; and if signing for a
partnership, sign in the partnership name by
authorized person. When shares are in the
names of more than one person, each should
sign.
Date: , 1995.
--------------------------------
-------------------------------------------
-------------------------------------------
Signature(s) of Stockholder(s)
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY.
