<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 Section 240.14a-11(c) or Section 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] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by 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.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PLAINS RESOURCES INC.
1600 SMITH STREET
HOUSTON, TEXAS 77002
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
TO THE STOCKHOLDERS OF PLAINS RESOURCES INC.:
The 1997 Annual Meeting of Stockholders of Plains Resources Inc. (the
"Company") will be held in the Granger B Room at the Doubletree Hotel at Allen
Center, 400 Dallas Street, Houston, Texas at 10:00 a.m., local time, on
Thursday, May 22, 1997, for the following purposes:
1. To elect eight directors; and
2. To transact any other business properly brought before the meeting and
any adjournment thereof.
Only stockholders of record at the close of business on March 26, 1997, will
receive notice of and be entitled to vote at the meeting and any adjournment
thereof.
By Order of the Board of Directors,
Michael R. Patterson
Vice President, General Counsel & Secretary
April 11, 1997
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
1997 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 1997 Annual Meeting of Stockholders of the
Company (the "Meeting") to be held in the Granger B Room at the Doubletree Hotel
at Allen Center, 400 Dallas Street, Houston, Texas at 10:00 a.m., local time, on
Thursday, May 22, 1997, and at any adjournment 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 11, 1997. The Company's Annual Report to
Stockholders for the fiscal year ended December 31, 1996, including consolidated
financial statements, which accompanies this Proxy Statement, is not a part of
the proxy soliciting material.
The close of business on March 26, 1997 (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 thereof. On the Record Date,
the outstanding stock of the Company entitled to vote at the Meeting consisted
of 16,538,649 shares of common stock, par value $.10 per share ("Common 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. 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 to the Board of Directors".
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.
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 or represented by proxy and entitled to vote at the Meeting; and
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.
<PAGE>
ELECTION OF DIRECTORS
The Board consists of eight members who are elected annually to 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. All nominees except Mr. Dees are incumbent directors.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
- -------------------------------------------------------------------------------
GREG L. ARMSTRONG, age 38 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 1992, Vice President and Chief Financial Officer from 1984 to 1991,
Corporate Secretary from 1981 to 1988 and Treasurer from 1984 to 1987.
- -------------------------------------------------------------------------------
JERRY L. DEES, age 57 New Nominee
Mr. Dees retired in 1996 as Senior Vice President, Exploration and Land, for
Vastar Resources, Inc. (previously ARCO Oil and Gas Company), a position he had
held since 1991. From 1987 to 1991, he was Vice President of Exploration and
Land for ARCO Alaska, Inc., and from 1985 to 1987 held various positions as
Exploration Manager of ARCO. From 1980 to 1985, he was Manager of Exploration
Geophysics for Cox Oil and Gas Producers.
- -------------------------------------------------------------------------------
TOM H. DELIMITROS, age 56 Director since 1988
Mr. Delimitros has been General Partner of AMT Venture Funds (a venture capital
firm) since 1989. He was a General Partner of Sunwestern Investment Funds 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 57 Director since 1977
Mr. Hitchcock has been President of Avalon Financial, Inc. (a private investment
company) since December 1996. He was employed as President of Plains Resources
International Inc. (a wholly owned subsidiary of the Company) from 1992 to 1995.
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 also a
director of Thoratec Laboratories Corporation (a medical device company).
- -------------------------------------------------------------------------------
DAN M. KRAUSSE, age 71 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 Chairman of the Board of Axis Gas Corporation (a private gas gathering and
processing firm).
- -------------------------------------------------------------------------------
JOHN H. LOLLAR, age 58 Director since 1996
Mr. Lollar has been the Managing Partner of Newgulf Exploration L. P. since
December 1996. He was Chairman of the Board, President and Chief Executive
Officer of Cabot Oil & Gas Corporation from 1992 to 1995. He was President and
Chief Operating Officer of Transco Exploration Company from 1982 to 1992. He is
also a director of Inspectorate PLC (a private independent inspection services
company).
- -------------------------------------------------------------------------------
-2-
<PAGE>
- -------------------------------------------------------------------------------
ROBERT V. SINNOTT, AGE 47 Director since 1994
Mr. Sinnott has been Senior Vice President of Kayne Anderson Investment
Management, Inc. (an investment management 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) and National Energy Group, Inc. (an oil and
natural gas company).
- -------------------------------------------------------------------------------
J. TAFT SYMONDS, age 57 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
of Tetra Technologies, Inc. (a specialty chemical and chemical process company).
- --------------------------------------------------------------------------------
BOARD ORGANIZATION AND MEETINGS
During 1996, the Board held four Board meetings and the committees of the
Board held a total of ten 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 Corporate Governance Committees. The Audit Committee, consisting
of Messrs. Delimitros, Symonds and Robert A. Bezuch (a current director who has
chosen not to stand for re-election), held two meetings in 1996. 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.
Delimitros, Hitchcock and Lollar, held three meetings in 1996. 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, Lollar,
Sinnott, and Symonds, held three meetings during 1996. 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 Corporate Governance Committee, consisting of Messrs. Armstrong, Hitchcock,
Krausse, and Symonds, held two meetings in 1996. The Corporate Governance
Committee's function is to review and evaluate all matters relating to Board
process and effectiveness and to consider the requisite qualifications for Board
service. The Corporate Governance Committee will also consider nominees
recommended by stockholders. Stockholders desiring to make such recommendations
for the 1998 Annual Meeting of Stockholders should submit, by December 12, 1997,
the candidate's name, together with biographical information to: Chairman,
Corporate Governance 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 ("Non-
employee Director") receives an attendance fee of $2,000 for each Board meeting
attended (excluding telephonic meetings) plus reimbursement for related
expenses, and an attendance fee of $500 for each committee meeting or telephonic
Board meeting attended. A Non-employee Director may elect to receive a grant of
shares of Common Stock in lieu of attendance fees for regular Board meetings,
with the number of shares granted being determined by dividing the amount of the
attendance fee earned by the per share market price of the Common Stock on the
date of the meeting. In addition, each Non-employee Director will receive
annually a stock option to purchase 10,000 shares of Common Stock at an exercise
price equal to the market price of the Common Stock on the grant date. Such
options are exercisable not earlier than 6 months after the grant date and not
later than 5 years after the grant date. Mr. Armstrong, as an employee, is
otherwise compensated for his services to the Company and therefore receives no
separate compensation for his services on the Board. In lieu of the
compensation set forth above for Non-employee Directors, Mr. Krausse, as
Chairman of the Board, receives an annual retainer of $60,000, payable in equal
monthly installments. In addition, on January 25, 1996, Mr. Krausse was granted
a stock option under the Company's 1992 Stock Incentive Plan for the purchase of
40,000 shares of Common Stock at an exercise price of $7.56 per share, the
market value of the Common Stock on the grant date. Such option is currently
exercisable for 50% of the shares covered thereby with the remainder vesting in
equal installments of 25% on each of the second and third anniversaries of the
grant date.
-3-
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth as of the Record Date certain information
concerning the Common Stock beneficially owned by (i) the directors and
nominees, (ii) the Chief Executive Officer and the four other most highly
compensated executive officers of the Company (the "Named Executive Officers"),
(iii) the directors, nominees and all executive officers as a group and (iv) all
persons who are known by the Company to be the beneficial owners of more than 5%
of the outstanding shares of the Common Stock.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED (1) OF CLASS
- ---------------- -------------- ---------
<S> <C> <C>
Greg L. Armstrong......................... 228,775 1.4%
Jerry L. Dees............................. -0- -0-
Tom H. Delimitros......................... 20,492 (2)
William M. Hitchcock...................... 388,734 2.3%
Dan M. Krausse............................ 69,420 (2)
John H. Lollar............................ 12,000 (2)
Robert V. Sinnott......................... 14,000(3) (2)
J. Taft Symonds........................... 40,320 (2)
William C. Egg, Jr........................ 180,523 1.1%
Phillip D. Kramer......................... 104,621 (2)
Michael R. Patterson...................... 115,543 (2)
Harry N. Pefanis.......................... 104,572 (2)
Directors and Executive Officers
as a group (15 persons)................ 1,490,336 8.5%
KAIM Non-Traditional, L.P.
1800 Avenue of the Stars, Suite 1425
Los Angeles, CA 90067..................... 2,936,461(4) 17.8%
George D. Bjurman & Associates
10100 Santa Monica Blvd., Suite 1200
Los Angeles, CA 90067..................... 1,465,750(5) 8.9%
Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010-3690................... 1,802,326(6) 10.9%
Strome Susskind Investment
Management, L.P.
1250 4th Street, Suite 420
Santa Monica, CA 90401.................... 1,521,100(7) 9.2%
</TABLE>
- ------------------
(1) 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. Shares subject to exercisable
stock options include 225,500 for Mr. Armstrong; 75,000 for Mr. Hitchcock;
60,000 for Mr. Krausse; 176,000 for Mr. Egg; 100,000 for Mr. Kramer;
115,000 for Mr. Patterson; 103,500 for Mr. Pefanis; and 10,000 each for
Messrs. Delimitros, Lollar, Sinnott and Symonds.
(2) Less than 1%.
(3) Mr. Sinnott is Sr. Vice President of Kayne Anderson Investment Management,
Inc., the general partner of KAIM Non-Traditional, L.P. Mr. Sinnott
disclaims beneficial ownership of the 2,936,461 shares held by KAIM.
(4) Based on data provided by KAIM.
(5) Based on Schedule 13G dated January 10, 1997, filed by George D. Bjurman &
Associates.
(6) Based on Schedule 13G, Amendment No. 5, dated February 12, 1997, filed by
Metropolitan Life Insurance Company. In addition, State Street Research &
Management Company , One Financial Center, 30th Floor, Boston, MA 02111-
2690, a wholly-owned subsidiary of Metropolitan, filed a Schedule 13G,
Amendment No. 5, dated February 12, 1997, for 1,428,713 of the same shares
reported on Metropolitan's Schedule 13G. State Street advised that all such
shares are owned by various clients and State Street disclaims any
beneficial ownership in such shares.
(7) Based on Schedule 13G, Amendment No. 2, dated February 13, 1997, filed by
Strome Susskind Investment Management L. P.
-4-
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is composed of three independent, Non-
employee 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 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 mid-point range 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
10. 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.
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
-5-
<PAGE>
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. Stock options are
generally granted annually to executive officers. The size of the option grant
to an executive officer is generally determined by dividing the total cash
compensation paid to the officer for the prior year (salary plus annual
incentive payment) by an average market price of the Common Stock during the
prior year. 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
the stockholders.
In 1996, the Board approved the grant of special performance options to
Messrs. Armstrong and Egg for the purchase of 300,000 and 200,000 shares of
Common Stock, respectively. The purpose of these performance options is to
recognize the key leadership roles of Messrs. Armstrong and Egg in the
attainment of the Company's future goals and objectives and to reward these
individuals if a significant appreciation in the market value of the Common
Stock is achieved during the five year term of the options. These options
provide for an exercise price of $13.50 per share, become exercisable if the
market price of the Common Stock equals or exceeds $24 per share for 20 out of
30 consecutive trading days prior to August 27, 2001 (the expiration date of the
options), upon the optionee's death or disability, or the occurrence of certain
events related to a change in control of the Company or termination of the
optionee's employment.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation of Mr. Armstrong for 1996 was determined in accordance with
the executive compensation practices for all executive officers as discussed
above. Following a review of compensation paid by industry competitors, Mr.
Armstrong's annual base salary was increased to $275,000 in September 1996. In
its annual review of the Company's performance in 1996 relative to its 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 20% increase in proved oil and gas reserve volumes, a
33% increase in oil and gas production, a 450% reserve replacement ratio, a 123%
increase in cash flow, an 84% increase in earnings before interest, taxes,
depreciation and amortization, and a 524% increase in net income (after giving
effect to non-recurring items) as compared to correlative results for 1995. In
recognition of Mr. Armstrong's exemplary leadership in the Company's significant
progress in 1996, Mr. Armstrong was awarded an annual incentive payment of
$300,000. Mr. Armstrong also received the option grants described under "Option
Grants in 1996".
COMPENSATION COMMITTEE
Tom H. Delimitros, Chairman
William M. Hitchcock
John H. Lollar
-6-
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows certain compensation information for the Company's
Chief Executive Officer and the other Named Executive Officers for services
rendered in all capacities during the fiscal years ended December 31, 1996, 1995
and 1994.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation ------------------------ All Other
-------------------------- Number of Securities Compensation
Name and Principal Position Year Salary ($) Bonus ($) Underlying Option Awards ($)(1)
- --------------------------- ---- ------------ --------- ------------------------ -------------
<S> <C> <C> <C> <C> <C>
Greg L. Armstrong 1996 241,666 300,000 345,000 9,500
President and Chief 1995 225,000 140,000 50,000 8,812
Executive Officer 1994 225,000 117,000 -0- 7,403
- ---------------------------------------------------------------------------------------------------------------------------
William C. Egg, Jr. 1996 193,333 210,000 236,000 9,500
Senior Vice President- 1995 185,000 100,000 35,000 8,779
Exploration and Production 1994 185,000 55,000 -0- 7,381
- ---------------------------------------------------------------------------------------------------------------------------
Phillip D. Kramer 1996 150,000 150,000 26,000 9,500
Vice President, Chief Financial 1995 150,000 55,000 20,000 7,508
Officer and Treasurer 1994 150,000 25,000 -0- 6,518
- ---------------------------------------------------------------------------------------------------------------------------
Michael R. Patterson 1996 150,000 40,000 22,000 9,500
Vice President, 1995 150,000 27,000 20,000 8,379
General Counsel and Secretary 1994 150,000 35,000 -0- 7,062
- ---------------------------------------------------------------------------------------------------------------------------
Harry N. Pefanis 1996 185,000 185,000 33,000 9,500
Senior Vice President and 1995 150,000 115,000 30,000 7,477
President of Plains Marketing 1994 150,000 45,000 -0- 6,502
& Transportation Inc.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company matches 100% of an employee's contribution to the Company's
401(k) Plan (subject to certain limitations in the plan), with such
matching contribution being made 50% in cash and 50% in Common Stock (the
number of shares for the stock match being based on the market value of the
Common Stock at the time the shares are granted).
-7-
<PAGE>
OPTION GRANTS IN 1996
The following table provides information regarding stock options that were
granted to the Named Executive Officers during 1996. The amounts shown as
potential realizable values are based on assumed annualized rates of stock price
appreciation of 5% and 10% over the term of the options as required by the
regulations of the Securities and Exchange Commission ("SEC"). No gain to the
optionees is possible without an increase in stock price which will benefit all
stockholders proportionately. For comparative purposes, also shown are the
total gains that could be realized over a five-year period (the term of the
options) by the Company's stockholders based on the same assumptions. There can
be no assurance that the potential realizable values shown in this table will be
achieved.
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of % of Total Assumed Annual Rates of
Securities Options Stock Price Appreciation
Underlying Granted to Exercise for Option Term
Options Employees Price Expiration ------------------------------
Name Granted in 1996 $/Share Date 5% ($) 10% ($)
- ------ ------- ------- ------- ----- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Greg L. Armstrong 45,000 (1) 4.7% 7.8125 2/14/2001 97,088 (3) 214,538 (4)
300,000 (2) 31.3% 13.50 8/27/2001 -0- (5) -0- (5)
- ------------------------------------------------------------------------------------------------------------------------------------
William C. Egg, Jr. 36,000 (1) 3.8% 7.8125 2/14/2001 77,670 (3) 171,630 (4)
200,000 (2) 20.8% 13.50 8/27/2001 -0- (5) -0- (5)
- ------------------------------------------------------------------------------------------------------------------------------------
Phillip D. Kramer 26,000 (1) 2.7% 7.8125 2/14/2001 56,095 (3) 123,955 (4)
- ------------------------------------------------------------------------------------------------------------------------------------
Michael R. Patterson 22,000 (1) 2.3% 7.8125 2/14/2001 47,465 (3) 104,885 (4)
- ------------------------------------------------------------------------------------------------------------------------------------
Harry N. Pefanis 33,000 (1) 3.4% 7.8125 2/14/2001 71,198 (3) 157,328 (4)
- ------------------------------------------------------------------------------------------------------------------------------------
All Stockholders N/A N/A N/A N/A 35,682,135 (3) 78,848,009 (4)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) These options were granted on February 14, 1996 under the Company's 1996
Stock Incentive Plan, and became exercisable on May 23, 1996, for 25% of
the shares covered thereby. The right to purchase the remaining 75% of such
shares vests in equal installments on the first, second and third
anniversaries of the grant date. 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 in a transaction approved by the Board or 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 descent and distribution.
(2) These performance options were granted on August 27, 1996 and become
exercisable if the market price for the Common Stock equals or exceeds
$24.00 per share ("Vesting Price") for 20 out of 30 consecutive trading days
prior to August 27, 2001 (the expiration date of such options), upon the
death or disability of the optionee, or the occurrence of certain events
related to a change in control of the Company or termination of employment.
(3) The 5% rate of appreciation would result in a per share price of $9.97.
(4) The 10% rate of appreciation would result in a per share price of $12.58.
(5) The 5% and 10% rates of appreciation would result in per share prices of
$17.23 and $21.74, respectively. At these rates of appreciation, these
options would have no value since the Vesting Price of $24.00 per share
would not be reached prior to the expiration date of such options.
-8-
<PAGE>
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END OPTION VALUES
The following table sets forth information for each of the Named Executive
Officers concerning the exercise of options during 1996 and the aggregate dollar
value of in-the-money, unexercised options held at December 31, 1996. (SEC
Regulations define options as "in-the-money" if the fair market value of the
underlying security on such date exceeds the exercise price of the option.)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Number of Options At Year-End At Year-End (2)
Shares Acquired Value Realized --------------------------- ---------------------------
Name on Exercise ($) (1) Exercisable Unexercisable Exercisable Unexercisable
- ----- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Greg L. Armstrong -0- -0- 189,250 358,750 1,750,391 1,135,547
- ------------------------------------------------------------------------------------------------------------------------------------
William C. Egg, Jr. -0- -0- 149,500 244,500 1,396,250 800,000
- ------------------------------------------------------------------------------------------------------------------------------------
Phillip D. Kramer 10,000 79,250 83,500 29,500 770,156 246,094
- ------------------------------------------------------------------------------------------------------------------------------------
Michael R. Patterson 15,000 121,875 99,500 26,500 924,844 222,656
- ------------------------------------------------------------------------------------------------------------------------------------
Harry N. Pefanis 10,000 83,750 80,250 39,750 733,203 333,984
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Value Realized is determined by multiplying the number of shares acquired on
exercise of the options by the spread between the exercise price and the
price received for the sale of such shares.
(2) Year-end Value is determined by multiplying the number of shares underlying
the options by the spread between the exercise price of such options and the
year-end market price of the Common Stock.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has an employment agreement with Mr. Armstrong which expires on
March 1, 2000 (unless extended pursuant to the terms thereof) and provides for a
current base salary of $275,000 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 the aggregate of his base salary and bonus, 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 the 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. The
Board has also authorized an employment agreement with Mr. Egg for an initial
term of five years providing for a current base salary of $210,000, subject to
annual review. As authorized, Mr. Egg's employment agreement will have
termination and change in control provisions substantially similar to those in
Mr. Armstrong's agreement described above.
As described in footnotes (1) and (2) to the table entitled "Option Grants
in 1996", 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. If the exercisability of options granted
under the Company's 1992 and 1996 Stock Incentive Plans is accelerated, the
option holders are afforded the right to surrender the option for a lump sum
cash payment.
OFFICERS' RETIREMENT PLAN
In 1996, the Board authorized the implementation of a retirement plan for
executive officers. 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 salary on May 23, 1996. It is anticipated that
this retirement plan will be implemented within the next twelve months.
-9-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return of the Media General
Industry Group Index No. 353, "Oil, Natural Gas Exploration" ("MG Group Index")
and AMEX Market Value Index for five years ended December 31, 1996. The graph
assumes that the value of an investment in the Company's Common Stock and each
index was $100 at December 31, 1991, 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.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG PLAINS RESOURCES INC.,
MG GROUP INDEX AND AMEX MARKET INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Plains Resources Inc. 100.00 66.07 46.43 38.39 64.29 111.61
MG Group Index 100.00 87.67 104.82 105.95 123.94 169.18
AMEX Market Index 100.00 101.37 120.44 106.39 137.13 144.70
</TABLE>
-10-
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16 of the Securities and Exchange Act of 1934 requires directors,
executive officers and persons, if any, owning more than ten percent of a class
of the Company's equity securities to file with the SEC and the American Stock
Exchange initial reports of ownership and reports of changes in ownership of the
Company's equity and derivative securities. Based solely upon a review of the
copies of the forms furnished to the Company, or written representations from
certain reporting persons that no Form 5 were required, the Company believes
that during the fiscal 1996 year all filing requirements applicable to its
officers and directors were met, except for one report on Form 4 of Mr. Egg
reflecting the sale of 3,000 shares of Common Stock which was inadvertently
filed late.
AUDITORS
The Board has selected Price Waterhouse as the Company's independent
accountants for 1997. 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 1998 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's 1998
Annual Meeting must be received by the Company's Secretary on or before December
12, 1997, 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 11, 1997
-11-
<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 Granger B Room of the
Doubletree Hotel at Allen Center, Houston, Texas, on May 22, 1997, 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, JERRY L. DEES, TOM H. DELIMITROS, WILLIAM M. HITCHCOCK,
DAN M. KRAUSSE, JOHN H. LOLLAR, ROBERT V. SINNOTT 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:_________________________________1997.
-------------------------------------------
-------------------------------------------
Signature(s) of Stockholder(s)
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF THE COMPANY.
