<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant / /
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
Evergreen 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)(1)
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:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
EVERGREEN RESOURCES, INC.
1401 17th Street, Suite 1200
Denver, Colorado 80202
303-298-8100
____________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 11, 1999
TO THE SHAREHOLDERS OF EVERGREEN RESOURCES, INC.:
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders (the "Meeting")
of Evergreen Resources, Inc., a Colorado corporation (the "Company"), will be
held at The Westin in the Tabor Auditorium, 1672 Lawrence Street, Denver,
Colorado 80202-0210, on May 11, 1999, at 2:30 p.m., Mountain Daylight Time, and
at any adjournment thereof, for the purpose of considering and acting upon the
following matters:
1. To elect two directors of the Company.
2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
This Proxy Statement and the accompanying proxy will be mailed to the
shareholders of the Company on or about April 15, 1999.
Only holders of record of the Company's common stock at the close of business
on April 9, 1999 are entitled to notice of and to vote at the Meeting or at
any adjournment thereof.
All shareholders, whether or not they expect to attend the Meeting in person,
are urged to sign and date the enclosed proxy and return it promptly in the
enclosed postage-paid envelope, which requires no additional postage if
mailed in the United States. The giving of a proxy will not affect your
right to vote in person if you attend the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS.
J. KEITHER MARTIN
SECRETARY
Denver, Colorado
April 12, 1999
<PAGE>
EVERGREEN RESOURCES, INC.
____________________________________
PROXY STATEMENT
1999 ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of the Board of Directors of
Evergreen Resources, Inc., a Colorado corporation (the "Company" or
"Evergreen"), for use at the Company's Annual Meeting of Shareholders (the
"Meeting") to be held at The Westin in the Tabor Auditorium, 1672 Lawrence
Street, Denver, Colorado, on May 11, 1999 at 2:30 p.m., Mountain Daylight
Time, and at any adjournment thereof. This Proxy Statement and the
accompanying proxy will be mailed to the shareholders of the Company on or
about April 15, 1999.
Any person signing and returning the enclosed proxy may revoke it at any time
before it is voted by giving written notice of such revocation to the Company
or by voting in person at the Meeting. Any written notice revoking a proxy
should be sent to: Evergreen Resources, Inc., P.O. Box 660, Denver, Colorado
80201-0660. The expense of soliciting proxies, including the cost of
preparing, assembling and mailing these proxy materials, will be borne by the
Company. It is anticipated that solicitations of proxies for the Meeting
will be made only by use of the mails; however, the Company may use the
services of its directors, officers and employees to solicit proxies
personally or by telephone without additional salary or compensation to them.
Brokerage houses, custodians, nominees and fiduciaries will be requested to
forward the proxy soliciting materials to the beneficial owners of the
Company's shares held of record by such persons, and the Company will
reimburse such persons for their reasonable out-of-pocket expenses incurred
by them in that connection.
All shares represented by valid proxies will be voted in accordance therewith
at the Meeting. Shares not voting as a result of a proxy marked "abstain"
will be counted as part of total shares voting in order to determine whether
or not a quorum has been achieved at the Meeting. Shares will not be counted
as part of the vote on any business at the Meeting on which the shareholder
has abstained.
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1998 is being mailed along with these proxy materials to the
Company's shareholders and contains financial information constituting a part
of these proxy materials. See "Financial Information."
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's no
par value common stock (the "Common Stock"), with each share entitled to one
vote. Only shareholders of record at the close of business on April 9, 1999
are entitled to notice of and to vote at the Meeting or any adjournment
thereof. On April 9, 1999, the Company had 11,211,477 shares of Common Stock
outstanding, each of which is entitled to one vote on all matters to be voted
upon at the Meeting, including the election of directors. No fractional
shares are presently outstanding.
A majority of the Company's outstanding Common Stock represented in person or
by proxy will constitute a quorum at the Meeting. The two nominees for
director receiving the most votes for their election will be elected
director, providing a quorum is present. Abstentions and broker non-votes
will have no effect on the election of directors.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the identity of beneficial owners known to the
Company to own five percent or more of the Company's Common Stock as of April
9, 1999. This information is based upon filings made by such persons with the
Securities and Exchange Commission (the "SEC") and upon information provided
to the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- ---------------------------- --------------------- --------------------
<S> <C> <C>
Advisory Research, Inc. 1,165,065 (1) 9.66%
David B. Heller
Two Prudential Plaza
180 N. Stetson, Suite 5780
Chicago, IL 60601
Gerald R. Forsythe 1,377,716 (2) 11.42%
1075 Noel Avenue
Wheeling, IL 60090
John Hancock Mutual Life Ins. 2,283,376 (3) 18.93%
Co.
200 Claredon Street
Boston, MA 02117
</TABLE>
(1) David B. Heller is President and the controlling shareholder of Advisory
Research, Inc.
(2) Consists of shared voting and dispositive power over 276,866 shares and
14,452 shares issuable under stock purchase warrants currently exercisable
held by Energy Investors Fund I ("Fund I") and 900,849 shares and 185,548
shares issuable under stock purchase warrants currently held by Energy
Investors Fund II ("Fund II"). Fund I is controlled by its general partner
Energy Investors Partners, L.P. ("Partners I"). Fund II is controlled by
its general partner Energy Investors Partners II, L.P. ("Partners II").
Partners I and Partners II are each 50%-owned by John Hancock Energy
Resources Management, Inc. ("JHERM"), an indirect, wholly-owned subsidiary
of John Hancock Mutual Life Insurance Co. ("John Hancock") and by EIF
Investors, Inc. ("Investors"). Investors is 100%-owned by EIF
Acquisition, L.L.C., which in turn is 99%-owned by Indeck Capital, Inc.,
which in turn is 80%-owned by Gerald R. Forsythe. North American Funding,
L.L.C. owns the other 1% of Investors.
(3) Consists of 905,660 shares held directly and 1,377,716 shares over which
voting and dispositive power is held by JHERM as described in note (2)
above. JHERM is a wholly-owned subsidiary of John Hancock Subsidiaries,
Inc., which in turn is a wholly-owned subsidiary of John Hancock.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table provides information as of April 9, 1999, regarding the
Company's Common Stock beneficially owned by each director, nominee for
director, each executive officer named in the summary compensation table below
(the "Named Executive Officers") and all directors and executive officers as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF CLASS
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING
- --------------------- -------------------- -----------------
<S> <C> <C>
Alain G. Blanchard 60,230 (1) *
Dennis R. Carlton 137,866 (2) 1.14%
Kevin R. Collins 69,300 (3) *
Larry D. Estridge 25,310 (4) *
John J. Ryan III 518,770 (5) 4.30%
Mark S. Sexton 661,694 (6) 5.48%
Scott D. Sheffield 24,620 (7) *
All Directors and Executive 1,497,790 (8) 12.41%
Officers
As a Group (7 Persons)
</TABLE>
* Less than 1%
(1) Includes 22,540 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(2) Includes 91,500 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(3) Includes 59,000 shares of Common Stock issuable pursuant presently
exercisable stock options.
(4) Includes 23,540 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(5) Includes 33,080 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(6) Includes 128,000 shares of Common Stock issuable pursuant to presently
exercisable stock options. Also includes 450,000 shares of Common Stock
held by CIS Oil and Gas, Inc. over which Mr. Sexton holds voting power by
proxy; Mr. Sexton has no power to sell or otherwise dispose of these shares
and disclaims any beneficial ownership of the shares.
(7) Includes 23,080 shares of Common Stock issuable pursuant to presently
exercisable stock options.
(8) Includes 380,740 shares of Common Stock issuable pursuant to presently
exercisable stock options.
3
<PAGE>
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY)
The Company's articles of incorporation provide that the members of the Board
of Directors shall be divided into three classes, as nearly equal in number
as possible, each of which is to serve for three years, with one class being
elected each year.
The two nominees for director receiving the most votes for their election
will be elected director. Abstentions and broker non-votes have no effect on
the election of directors. Shareholders do not have the right to cumulate
their votes for directors. The persons named in the enclosed form of proxy,
unless otherwise directed therein, intend to vote such proxy FOR the election
of the nominee named below as director for the term specified. If a nominee
becomes unavailable for any reason, the persons named in the proxy are
expected to consult with management of the Company in voting the shares
represented by them or to reduce the number of directors to be elected at the
Meeting by the number of persons unable to serve (subject to the requirement
of the Company's articles of incorporation that the number of directors in
each of the three classes be as equal in number as possible). Management has
no reason to believe that the nominees will be unavailable or unwilling to
serve if elected to office. To the knowledge of management, the nominees
intend to serve the terms for which election is sought.
The Board of Directors has nominated two persons for election as director at
the Meeting to serve for three-year terms. The nominees are currently
serving as directors and have consented to serve for the new terms.
PRESENT DIRECTORS NOMINATED FOR RE-ELECTION
<TABLE>
<CAPTION>
Director Term to
Name Age Position Since Expire
---- --- -------- -------- ---------
<S> <C> <C> <C> <C>
Larry D. Estridge 55 Director 1989 2002
John J. Ryan III 71 Director 1989 2002
</TABLE>
CONTINUING DIRECTORS WHOSE TERMS ARE NOT EXPIRING
<TABLE>
<CAPTION>
Director Term
Name Age Position Since Expires
---- --- -------- -------- -------
<S> <C> <C> <C> <C>
Alain G. Blanchard 57 Director 1989 2000
Dennis R. Carlton 47 Sr. Vice President and 1995 2001
Director
Mark S. Sexton 43 President, CEO, Chairman and 1995 2001
Director
Scott D. Sheffield 46 Director 1996 2000
</TABLE>
There is no family relationship between any director, executive officer or
person nominated or chosen by Evergreen to become a director or executive
officer.
Additional information regarding the nominees for election as directors and
the continuing directors of the Company is as follows:
4
<PAGE>
NOMINEES
LARRY D. ESTRIDGE DIRECTOR
Mr. Estridge was named a director of Evergreen in May 1989. He received an
A.B. degree from Furman University in 1966 and a J.D. from Harvard University
School of Law in 1969. He resides in Greenville, South Carolina, and is a
partner in the law firm Womble Carlyle Sandridge and Rice, PLLC. Mr.
Estridge joined Womble Carlyle in January 1999. Prior to January 1999, he
was a partner with Wyche, Burgess, Freeman & Parham, P.A. from July 1972
through December 31, 1998. He has represented Evergreen and a number of
affiliated companies for over 13 years.
JOHN J. RYAN III DIRECTOR
CHAIRMAN - EVERGREEN RESOURCES (U.K.) LTD.
Mr. Ryan was named a director of Evergreen in May 1989. Since 1982 he has
been engaged in international tax and investment activities through Corporate
Investment Services, of which he is a principal. Mr. Ryan, a resident of
Geneva, Switzerland, is also Chairman of Evergreen Resources (U.K.) Ltd., a
wholly owned subsidiary of the Company. Mr. Ryan serves as a director of
Vail Resorts, Inc., and Converse, Inc.
CONTINUING DIRECTORS
ALAIN BLANCHARD DIRECTOR
Mr. Blanchard was named director of Evergreen in May 1989. From 1983 until
1988 Mr. Blanchard was an associate and shareholder of the investment firm
Laidlaw Adams and Peck. A resident of Cannes, France, he has managed
discretionary funds for private and institutional clients for over 20 years
and continues to do so. Mr. Blanchard graduated from the University of Paris
with a doctorate in economics and a degree in political science.
DENNIS R. CARLTON SENIOR VICE PRESIDENT - EXPLORATION AND OPERATIONS AND
DIRECTOR PRESIDENT - EVERGREEN OPERATING CORPORATION ("EOC")
Mr. Carlton joined Evergreen in 1981 and was named a director in March 1995.
Mr. Carlton was named Executive Vice President of EOC, Evergreen's operating
subsidiary, in 1989, and was named President of EOC in 1995. He received a
B.S. in Geology in 1972 and a Masters of Science Degree in Geology in 1975
from Wichita State University. He resides in Littleton, Colorado. Mr.
Carlton was also a director of Evergreen from 1985 to 1989.
MARK S. SEXTON PRESIDENT, CEO, CHAIRMAN AND DIRECTOR
CEO - EOC
Mr. Sexton joined Evergreen in 1989, and initially managed the daily
operating activities of EOC, Evergreen's operating subsidiary. Mr. Sexton is
a registered professional engineer in Colorado. In 1978 he was awarded a
B.S. degree in Mechanical Engineering from Stanford University. He was
previously employed in various technical, financial, and management positions
with Amoco, Norwest Bank, and Sound Energy Development Company. He resides
in Evergreen, Colorado. He has been a director of Evergreen since March 1995.
SCOTT D. SHEFFIELD DIRECTOR
Mr. Sheffield was named a director of Evergreen in September 1996. Since
April 1985, Mr. Sheffield has served as President and Chief Executive Officer
of Pioneer Natural Resources Company, an energy company traded on the New
York Stock Exchange, and its predecessor company, Parker & Parsley Petroleum
Company. From 1979 to April 1985 he was employed by Parker & Parsley in
various engineering positions, including serving from 1981-1985 as Vice
President of Engineering. Mr. Sheffield obtained a Bachelor of Science
Degree in Petroleum Engineering from the University of Texas in 1975. He
resides in Dallas, Texas.
5
<PAGE>
MEETINGS OF DIRECTORS AND COMMITTEES
The Company's Board of Directors held four meetings during the year ended
December 31, 1998. No incumbent director attended fewer than 75% of such
meetings.
The Audit Committee is presently composed of Alain Blanchard, Larry D.
Estridge, and John J. Ryan, III. This committee recommends to the Board the
firm to be employed as the Company's independent auditors and consults with
and reviews the reports of the Company's independent auditors and the
Company's internal financial staff. One meeting was held during the year
ended December 31, 1998, and all members were present.
The Compensation Committee is presently composed of Alain Blanchard, Larry D.
Estridge and Scott D. Sheffield. The Compensation Committee assists the
Board in establishing compensation for key employees. Four meetings was held
during the year ended December 31, 1998, at which all members were present.
The Nominating Committee, formed in February 1999, is presently composed of
Alain Blanchard, Mark S. Sexton and Scott D. Sheffield. This committee
recommends to the Board and shareholders nominees to serve as directors. If
made, the committee would consider a shareholder nomination for director; for
information on procedures by which nominations may be made, see "Date for
Receipt of Shareholder Proposals."
BUSINESS EXPERIENCE OF OTHER EXECUTIVE OFFICERS
The following provides certain information concerning the executive officer
of the Company who is not also a director:
KEVIN R. COLLINS VICE PRESIDENT - FINANCE, CHIEF FINANCIAL OFFICER AND
TREASURER
Mr. Collins, age 42, joined Evergreen as Vice President and Treasurer in June
1995. He has over 13 years of public accounting experience. Mr. Collins
received a B.S. in Business Administration and Accounting from the University
of Arizona in 1980, and, before working with Evergreen, was employed by BDO
Seidman, LLP, where he was a senior manager. He resides in Littleton,
Colorado.
Each officer of the Company holds office until his successor is duly elected
and qualified or until his death, resignation or removal, if earlier. Any
officer elected or appointed by the Board of Directors may be removed by the
Board of Directors whenever in its judgment the best interests of the Company
will be served thereby.
There is no compensatory plan or arrangement with respect to any executive
officer of the Company which results or will result from the resignation,
retirement or any other termination of employment with the Company, or from a
change in the control of the Company.
6
<PAGE>
EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE
The following information is furnished for the years ended December 31, 1998
and 1997, and for the nine month fiscal period ended December 31, 1996, for
the Company's Chief Executive Officer and the two other executive officers of
the Company whose salary and bonus exceeded $100,000 during 1998.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------
ANNUAL COMPENSATION AWARDS ALL OTHER COMPENSATION ($)
----------------------------------- --------------------------- --------------------------
RESTRICTED SECURITIES
FISCAL OTHER ANNUAL STOCK UNDERLYING DEFERRED
NAME AND YEAR/ SALARY BONUS COMPENSATION AWARDS OPTIONS ESOP COMPENSATION
PRINCIPAL POSITION PERIOD ($)(1) ($) ($) ($)(2) (#) (3) (4)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mark S. Sexton 12/31/98 163,200 -- -- -- 64,000 -- 20,000
President and CEO 12/31/97 118,300 -- -- 32,900 -- -- 20,000
12/31/96 60,000 -- -- 23,963 110,000 3,534 10,000
- ----------------------------------------------------------------------------------------------------------------------------------
Dennis R. Carlton 12/31/98 163,200 -- -- -- 64,000 -- 20,000
Sr. Vice President 12/31/97 118,905 -- -- 32,900 -- -- 20,000
12/31/96 60,000 -- -- 23,963 100,000 3,466 10,000
- ----------------------------------------------------------------------------------------------------------------------------------
Kevin R. Collins 12/31/98 106,500 -- -- -- 64,000 -- --
Vice President, CFO 12/31/97 86,673 -- -- 32,900 -- -- --
and Treasurer 12/31/96 53,333 -- -- 12,780 50,000 980 --
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
_____________
(1) The amounts shown in this column include salaries and contributions which
have been deferred pursuant to the Company's 401(k) plan. The Company's
Named Executive Officers received no annual bonuses for the years included
in the table, and for each of the Named Executive Officers, the aggregate
amount of perquisites and other personal benefits did not exceed the lesser
of $50,000 or 10% of such officer's total annual salary and bonus reported
above.
(2) The restricted shares indicated were issued pursuant to the Company's Key
Employee Equity Plan. None of such shares currently carry any
restrictions.
(3) Represents the dollar value of contributions made by the Company for the
Named Executive Officers to the Company's employee stock ownership plan for
the periods shown.
(4) Represents premiums and contributions made to split dollar life insurance
policies of which the Named Executive Officers or their estates are the
beneficiaries.
7
<PAGE>
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Unexercised Options In-the-Money Options
Valued at December 31, 1998 (#) at December 31, 1998 ($)(2)
Shares Acquired Realized ----------------------------- -----------------------------
Name on Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark S. Sexton 0 0 115,500 50,000 1,291,000 237,500
President and CEO
Dennis R. Carlton 30,000 299,236 79,000 50,000 908,625 237,500
Senior Vice President
Kevin R. Collins 0 0 46,500 50,000 559,250 237,500
Vice President, CFO and
Treasurer
</TABLE>
_____________
(1) Based on the difference between the closing price of the Common Stock on
the date of exercise and the option exercise price.
(2) Based on the difference between the closing price of the Common Stock on
December 31, 1998 and the option exercise price.
8
<PAGE>
The following table sets forth information concerning options to purchase
Common Stock granted to the Named Executive Officers in the last fiscal year.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
----------------------------------------------------------------
Potential Realizable
Value at Assumed
Number of Annual Rates of Stock Price
Securities Percent of Total Appreciation for
Underlying Options Granted Exercise Option Term (1)
Options to Employees in Price Per Expiration ----------------------------
Name Granted Fiscal 1998 Share Date 5% 10%
---- ------------ ---------------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mark S. Sexton 50,000 (2) $13.00 1/2/08 $408,782 $1,035,933
President and CEO 14,000 (3) 28.6% $7.00 5/11/03 $238,141 $326,168
Dennis R. Carlton 50,000 (2) $13.00 1/2/08 $408,782 $1,035,933
Senior Vice President 14,000 (3) 28.6% $7.00 5/11/03 $238,141 $326,168
Kevin R. Collins 50,000 (2) $13.00 1/2/08 $408,782 $1,035,933
Vice President, CFO
and Treasurer 14,000 (3) 28.6% $7.00 5/11/03 $238,141 $326,168
</TABLE>
_____________
(1) The potential realizable value is calculated based on the term of the
option at its time of grant and is calculated by assuming that the stock
price on the date of grant as determined by the Board of Directors
appreciates at the indicated annual rate compounded annually for the entire
term of the option and that the option is exercised and sold on the last
day of its term for the appreciated price. The 5% and 10% assumed rates of
appreciation are derived from the rules of the SEC and do not represent the
Company's estimate or projection of the future Common Stock price.
(2) Such option vests and becomes exercisable in four equal installments on
January 3 of each of 1999, 2000, 2001 and 2002, provided the optionee
remains an employee of the Company.
(3) Such option vested and became exercisable when granted.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The goal of the Compensation Committee is to ensure that the Company employs
qualified, experienced executives whose financial interest is aligned with
that of the shareholders. The Committee considers general industry practice,
tax effects and other factors in structuring executive compensation.
Base salaries for each of the Company's executives are determined by taking
into consideration performance, length of tenure with the Company and
compensation by industry competitors for comparable positions. In order to
determine comparable salary levels paid within the industry, the Committee
reviews various surveys and publicly filed information of its competitors.
Performance by executives is measured by several criteria which are
considered important to the Company's success. These criteria are not
specifically weighted in the determination of salary increases and bonuses,
since the relative importance of such criteria may change from year to year
and the relative responsibilities of each executive in the achievement of the
objectives may differ. Examples of criteria considered are: (i) quantity of
oil and gas reserves and
9
<PAGE>
increases in such reserves; (ii) increases in production and cash flow; (iii)
finding costs of oil and gas reserves; (iv) controls exerted over lifting
costs and resulting stabilization or reduction of lifting costs; (v)
discovery and investigation of prospective new projects; and (vi) overall
financial management. Of particular importance in determining 1998
compensation increases were substantial improvements in proved reserves,
production and cash flow. Though the Board did not establish specific
numeric formulas for converting these increases into salary adjustments, they
were important factors in the Board's compensation decisions because the
Board believed that the experience, skill, good judgment and management
practices of the executives contributed substantially to these increases.
The Company also utilizes restricted stock and/or stock options as incentives
for executives. In determining the number of shares and/or share options to
be given to each executive, the Board considers the individual performance of
each executive, his level of responsibility, his base salary, and the number
of restricted shares and options already owned by the executives as a group,
relative to the total number of outstanding shares and stock options owned by
all shareholders. In addition to the stock options reflected in the table
titled Option Grants in Last Fiscal Year, certain options vested in the
executives during 1998 pursuant to an incentive stock option program adopted
by the Board in September 1996. The executives were entitled to be vested in
these options because the Company met and exceeded in fiscal year 1997 all
three of the goals established in its initial formulation of the plan: (i)
20% increase in proved developed reserves; (ii) 20% increase in total
production, and (iii) 20% increase in cash flow. Under the initial plan, the
total number of options vested in the three executives were as follows: Mark
S. Sexton -- 19,250; Dennis R. Carlton -- 17,500; and Kevin R. Collins --
8,750. Because the actual percentage increases in these three categories of
measurement were significantly greater than the target levels, the Board
granted to each of those individuals 14,000 additional stock options from a
pool of stock options previously approved by the Board for incentive purposes
and ratified by shareholders in the 1998 meeting. The Board also granted
each of these individuals incentive stock options to purchase 50,000 shares
of Common Stock under the Company's Initial Stock Option Plan, which the
Company's shareholders approved at the 1998 annual meeting.
During the fiscal year ended December 31, 1998, Mark S. Sexton, President and
CEO, received compensation of $163,200 for his services. This includes a
salary of $150,000 and deferred compensation pursuant to the Company's 401(k)
plan in the amount of $13,200. In setting the salary for Mr. Sexton for 1998,
the Board considered all of the criteria referenced above in this Report,
along with information indicating that his previous salary was in the mid to
low range of CEOs of comparable companies. Because the performance of the
Company in the key areas of measurement referenced above, along with its
earnings for 1997 as compared to previous years, substantially exceeded the
performance of most peer companies, the Board believed that a substantial
increase in Mr. Sexton's salary was justified.
SUBMITTED BY THE COMPENSATION COMMITTEE
COMPENSATION COMMITTEE INTERLOCKS,
INSIDER PARTICIPATION AND TRANSACTIONS WITH MANAGEMENT
During the last fiscal year, the Compensation Committee of the Board
consisted of Mark S. Sexton, President and CEO of the Company, and Larry D.
Estridge, a non-executive director of the Company. Mr. Estridge was a member
of the law firm of Wyche, Burgess, Freeman & Parham, P.A. of Greenville,
South Carolina through December 31, 1998, which provided legal services to
the Company from time to time through December 31, 1998 at customary rates.
COMPENSATION OF DIRECTORS
Directors of the Company receive fees of $100 per meeting for their
attendance at meetings of the Company's Board of Directors and have currently
waived these fees. All directors are reimbursed for reasonable out-of-pocket
expenses incurred in connection with attending Board and shareholder
meetings. Directors who are not officers or are not salaried employees of
the Company ("Non-Executive Directors") receive $30,000 per year.
Non-Executive Directors will receive their $30,000 annual retainer fee as a
combination of cash, Company Common Stock or Common Stock purchase options.
Such options vest fully at the time of grant. Non-Executive Directors also
agreed to waive compensation for participation in 1998 on Nominating, Audit
and Compensation Committees.
10
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, during the fiscal period ended December 31, 1998,
the Company's 10% shareholders, officers and directors complied with all
applicable Section 16(a) filing requirements, except that Scott D. Sheffield
was late in filing one required report with respect to a sale of shares of
Common Stock. This statement is based solely on a review of the copies of
such reports furnished to the Company by such reporting persons and their
written representations that such reports accurately reflect all reportable
transactions.
11
<PAGE>
PERFORMANCE GRAPH
The following performance graph reflects yearly percentage change in (i) the
Company's cumulative, five year total stockholder return on Common Stock as
compared with the cumulative, five year total return of (ii) the National
Securities Dealers Automated Quotation System ("NASDAQ") Stock Market Index
of U.S. Companies and (iii) a peer group index. The NASDAQ index and the
peer group index were supplied by the Center for Research in Security Prices
(CRSP), an independent third-party source. The peer group index is composed
of approximately 155 companies categorized under the Standard Industrial
Classification Number 13 (Oil and Gas Extraction) applicable to the Company.
All cumulative returns are calculated on a fiscal year basis ending on
December 31 of each year.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
LEGEND
Symbol CRSP Total Returns Index for: 12/1993 12/1994 12/1995 12/1996 12/1997 12/1998
- ------ ----------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
/ / EVERGREEN RESOURCES, INC. 100.0 75.0 71.4 117.9 221.4 253.6
- Nasdaq Stock Market (US Companies) 100.0 97.8 138.3 170.0 208.6 293.2
TRIANGLE NASDAQ Stocks (SIC 1300-1399 US Companies) Oil and
Gas Extraction 100.0 93.4 115.6 189.1 204.6 94.1
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/93.
12
<PAGE>
INDEPENDENT AUDITORS
BDO Seidman, LLP, currently serves the Company as independent auditors.
Representatives of BDO Seidman, LLP, will be present at the Meeting, will
have an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions from shareholders.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not
aware of any other matter to be presented at the Meeting other than as set
forth herein. However, if any other matters are properly brought before the
Meeting, the shares represented by valid proxies will be voted with respect
to such matters in accordance with the judgment of the persons voting them.
FINANCIAL INFORMATION
The Company's 1998 Annual Report to Shareholders is enclosed. The Company
will provide without charge to any shareholder of record as of April 9, 1999
who requests in writing, a copy of the Company's 1998 Annual Report to
Shareholders or the 1998 Annual Report on Form 10-K (without exhibits),
including financial statements and financial statement schedules, filed with
the SEC. Any such request should be directed to Evergreen Resources, Inc.
P.O. Box 660, Denver, CO 80201-0660, Attention: John Kelso, Manager of
Investor Relations.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Any proposal by a shareholder intended to be included in the Company's proxy
materials for the Company's 2000 annual meeting must be received at the
offices of the Company, P.O. Box 660, Denver, Colorado 80201-0660, no later
than December 16, 1999. Pursuant to the Company's bylaws, shareholder
proposals (other than director nominations) which are not intended to be
included in the proxy materials for the Company's 2000 annual meeting must be
submitted to the Company no earlier than February 10, 2000 and no later than
March 12, 2000 and must be made in accordance with established procedures.
Shareholder nominations for director which are not intended to be included in
the proxy materials for the Company's 2000 annual meeting should be received
by the Company no earlier than March 1, 2000 and no later than March 31, 2000
and must be made in accordance with established procedures.
J. KEITHER MARTIN
SECRETARY
Denver, Colorado
April 12, 1999
13
<PAGE>
PROXY PROXY
EVERGREEN RESOURCES, INC.
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF THE SHAREHOLDERS TO BE HELD ON MAY 11, 1999
The undersigned hereby constitutes and appoints Mark S. Sexton and Kevin R.
Collins, and each of them, the true and lawful attorneys and proxies of the
undersigned, with full power of substitution and appointment, for and in the
name, place and stead of the undersigned, to act for and vote all of the
undersigned's shares of no par value common stock of Evergreen Resources,
Inc., a Colorado corporation, at the Annual Meeting of Shareholders to be
held at The Westin, 1672 Lawrence Street, Denver, Colorado, at 2:30 p.m.,
Mountain Daylight Time, on May 11, 1999, and any and all adjournments thereof
(the "Meeting"), for the purposes of considering and acting upon the
following matters proposed by Evergreen Resources, Inc.:
<TABLE>
<CAPTION>
For all nominees listed Withhold authority
(except as marked to the to vote for all
contrary below) nominees
<C> <S> <C> <C>
1. The election of two (2) Directors of the Company.
Nominees: Larry D. Estridge / / / /
John J. Ryan, III
</TABLE>
(Instructions: to withhold authority to vote for any individual nominee,
write that nominee's name in the following space):_______________________
2. To transact such other business as properly may come before the Annual
Meeting.
APPROVAL OF EACH MATTER LISTED ABOVE IS NOT CONTINGENT UPON THE APPROVAL OF
ANY OTHER MATTER LISTED ABOVE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ABOVE AND IN THE
DISCRETION OF THE PROXY HOLDERS NAMED HEREIN WITH RESPECT TO OTHER MATTERS
THAT PROPERLY COME BEFORE THE MEETING.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE SHAREHOLDER'S SPECIFICATION ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY WITH RESPECT TO MATTERS NOT KNOWN TO THE BOARD OF DIRECTORS OR
DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF
SHAREHOLDERS TO THE UNDERSIGNED AND WITH RESPECT TO MATTERS INCIDENT TO THE
CONDUCT OF THE ANNUAL MEETING.
(Continued on other side)
<PAGE>
The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting of Shareholders, Proxy
Statement and Annual Report to Shareholders
furnished therewith.
Dated:_______________________, 1999
_________________________________________________
_________________________________________________
Signature(s) should agree with the name(s) hereon.
Executors, administrators, trustees, guardians and
attorneys should indicate when signing. Attorneys
should submit power of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF EVERGREEN
RESOURCES, INC. PLEASE SIGN AND RETURN THIS PROXY TO EVERGREEN RESOURCES,
INC., PO BOX 660, DENVER, COLORADO 80201-0660. THE GIVING OF A PROXY WILL
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
