<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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
FOREST OIL CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
DANIEL L. MCNAMARA
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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).
/ / $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:(1)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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>
FOREST OIL CORPORATION
950 SEVENTEENTH STREET
1500 COLORADO NATIONAL BUILDING
DENVER, CO 80202
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 11, 1994
------------------------
To the Shareholders of
FOREST OIL CORPORATION:
As a shareholder of Forest Oil Corporation, a New York corporation (the
"Company"), you are invited to be present in person or to be represented by
proxy at the Annual Meeting of Shareholders, to be held at the Howard Johnson's
Motor Lodge, 100 Davis Street South, Bradford, Pennsylvania, on Wednesday, May
11, 1994, at 10:00 a.m., E.D.T., for the following purposes:
1. To elect three (3) Class IV Directors and one (1) Class I Director;
2. To consider and vote upon the ratification of the appointment of
KPMG Peat Marwick as independent auditors for the Company for the fiscal
year ended December 31,1994; and
3. To transact such other business as may be properly brought before
the meeting and any adjournments thereof.
Shareholders of the Company of record at the close of business on March 23,
1994 are entitled to vote at the Annual Meeting of Shareholders and all
adjournments thereof.
A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY MUST BE
REPRESENTED AT THE MEETING TO CONSTITUTE A QUORUM. THEREFORE, ALL SHAREHOLDERS
ARE URGED EITHER TO ATTEND THE MEETING OR TO BE REPRESENTED BY PROXY.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED BUSINESS REPLY
ENVELOPE. If you later find that you can be present or for any other reason
desire to revoke your proxy, you may do so at any time before the voting.
By order of the Board of Directors
DANIEL L. McNAMARA
SECRETARY
April 4, 1994
<PAGE>
PROXY STATEMENT
OF
FOREST OIL CORPORATION
950 SEVENTEENTH STREET
1500 COLORADO NATIONAL BUILDING
DENVER, COLORADO 80202
April 4, 1994
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Forest Oil Corporation (the "Company") of proxies to be
voted at the Annual Meeting of Shareholders to be held on Wednesday, May 11,
1994, at the Howard Johnson's Motor Lodge, 100 Davis Street South, Bradford,
Pennsylvania, at 10:00 a.m., E.D.T., and at any adjournment thereof. Each holder
of record at the close of business on March 23, 1994 of shares of the Company's
Common Stock, Par Value $.10 Per Share, will be entitled to one vote for each
share so held. As of January 31, 1994 there were 27,923,515 shares of Common
Stock issued and outstanding.
Shares represented by properly executed proxy cards received by the Company
at or prior to the meeting will be voted according to the instructions indicated
on the proxy card. Unless contrary instructions are given, the persons named on
the proxy card intend to vote the shares so represented for (i) the election of
the nominees for directors and (ii) the ratification of the appointment of KPMG
Peat Marwick as the Company's independent auditors for the fiscal year ended
December 31, 1994. As to any other business which may properly come before the
meeting, the persons named on the proxy card will vote according to their
judgment. The enclosed proxy may be revoked prior to the meeting by written
notice to the Secretary of the Company at 78 Main Street, Bradford, PA 16701, or
by written or oral notice to the Secretary at the meeting at any time prior to
being voted.
Under New York law, there is a statutory presumption that a proposal passes
if it receives a majority of votes cast for or against a proposal, so long as a
quorum is present at the meeting. The Company's By-laws contain similar
provisions. Abstentions and "broker non-votes" have no effect on the outcome of
the vote on any of the matters to be considered at the Annual Meeting. A broker
non-vote occurs if a broker or other nominee does not have discretionary
authority and has not received instructions with respect to a particular item.
Shareholders may not cumulate their votes.
UPON REQUEST OF ANY SHAREHOLDER, THE COMPANY'S ANNUAL REPORT FOR THE YEAR
ENDED DECEMBER 31, 1993 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"SEC") ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND THE SCHEDULES THERETO,
WILL BE SENT TO THE SHAREHOLDER WITHOUT CHARGE BY FIRST CLASS MAIL WITHIN ONE
BUSINESS DAY OF SUCH REQUEST. ALL REQUESTS SHOULD BE ADDRESSED TO THE SECRETARY
OF THE COMPANY AT 78 MAIN STREET, BRADFORD, PA 16701 OR BY TELEPHONE TO (814)
368-7171.
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors shall be divided
into four classes as nearly equal in number as possible, with each class having
not less than three members, whose terms of office expire at different times in
annual succession. Currently the number of directors is fixed at 12. Austin M.
Beutner was elected as a Class IV Director on September 14, 1993. On March 18,
1993, Donald H. Anderson was elected as a Class III Director and Richard J.
Callahan was elected as a Class IV Director.
The Board of Directors, effective at the 1994 Annual Meeting, has
reapportioned the number of Directors to 3 in each class. Jack D. Riggs,
previously a Class IV Director, was reclassified as a Class I Director with a
term expiring at the 1995 Annual Meeting. The term of office of Mr. Beutner and
Mr. Callahan, and the remaining Class IV Director who was elected at the 1990
Annual Meeting of Shareholders, will expire at the Annual Meeting of
Shareholders to be held on May 11, 1994. The Class IV nominees, including Mr.
Beutner and Mr. Callahan, will be nominated for election as Class IV
1
<PAGE>
Directors at the 1994 Annual Meeting to serve until the 1998 Annual Meeting.
Each class of directors is elected for a term expiring at the Annual Meeting to
be held four years after the date of their election. The Class I Directors,
except for Mr. Riggs, were elected at the 1991 Annual Meeting, the Class II
Directors were elected at the 1992 Annual Meeting and the Class III Directors
were elected at the 1993 Annual Meeting.
A plurality of the voting power of the outstanding shares of Common Stock is
required to elect a director.
The persons named as proxies in the enclosed proxy, who have been so
designated by the Board of Directors, intend to vote for the election of the
Class IV nominees and the Class I nominee referred to below as directors unless
otherwise instructed in the proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THESE NOMINEES. Certain
information concerning such nominees, as well as the other current directors, is
set forth below:
<TABLE>
<CAPTION>
AGE AND PRINCIPAL OCCUPATION, SERVED
YEARS OF POSITIONS WITH COMPANY AS A
SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
- - ------------------------------ ------------ -------------------------------------------------- --------
<S> <C> <C> <C>
CLASS IV NOMINEES--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1998
John C. Dorn.................. 66-44 Chairman of the Contributions Committee. Retired 1956
as Regional Vice President in December 1990.
Richard J. Callahan........... 52-1 Executive Vice President of U S WEST, Inc. since 1993
January 1988 and President of U S WEST
International and Business Development Group since
October 1991. Prior thereto Group Vice President,
Diversified Group of U S WEST, Inc. since 1986.
Austin M. Beutner............. 33-1 President, Chief Executive Officer and Director of 1993
the Fund for Large Enterprises in Russia since
March 1994. Prior thereto General Partner of The
Blackstone Group since 1991. Prior thereto a Vice
President of Blackstone.
CLASS I NOMINEE--TERM EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1995
Jack D. Riggs................. 69-40 Chairman of the Audit Committee. Member of the 1977
Compensation Committee. Retired as Vice President
in January 1987; currently engaged in private
investments.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AGE AND PRINCIPAL OCCUPATION, SERVED
YEARS OF POSITIONS WITH COMPANY AS A
SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
- - ------------------------------ ------------ -------------------------------------------------- --------
<S> <C> <C> <C>
CLASS I DIRECTORS--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1995
William L. Dorn............... 45-22 Chairman of the Board and Chairman of the 1982
Executive Committee since July 1991 and Chief
Executive Officer since February 1990. Member of
the Executive Committee since August 1988.
President from February 1990 until November 1993.
Executive Vice President from August 1989 until
February 1990, and prior thereto Vice President.
Member of the Royalty Bonus Committee since August
1991.
James H. Lee.................. 45-3 Managing Partner, Lee, Hite & Wisda Ltd. Member of 1991
the Executive Committee since February 1994.
CLASS II DIRECTORS--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1996
Dale F. Dorn.................. 51-27 Resigned as a Vice President in September 1989; 1977
currently engaged in private investments.
Harold D. Hammar.............. 70-9 Member of the Audit Committee and Compensation 1985
Committee. Financial Consultant.
Robert S. Boswell............. 44-9 President since November 1993. Vice President from 1985
May 1991 until November 1993. Chief Financial
Officer since May 1991. Financial Vice President
from September 1989 until May 1991. Member of the
Executive Committee since July 1991 and the
Royalty Bonus Committee since August 1991. Chief
Financial Officer of Bovaird Supply Company, Inc.,
from January 1988 until September 1989. Director
of Franklin Supply Company Ltd.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
AGE AND PRINCIPAL OCCUPATION, SERVED
YEARS OF POSITIONS WITH COMPANY AS A
SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
- - ------------------------------ ------------ -------------------------------------------------- --------
<S> <C> <C> <C>
CLASS III DIRECTORS--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1997
Jeffrey W. Miller............. 42-6 Independent Biologist. 1988
Michael B. Yanney............. 60-2 Chairman and Chief Executive Officer of the 1992
America First Companies and a director of
Burlington Northern Inc., Lozier Corporation, MFS
Communications Company, Inc. and America First
REIT Inc. Chairman of the Compensation Committee.
Donald H. Anderson............ 45-1 President and Director of Associated Natural Gas 1993
Corporation since September 1989 and January 1989,
respectively and Chief Operating Officer and
Director of its principal operating subsidiary,
Associated Natural Gas, Inc. since January 1989
and December 1986, respectively. Director of Banc
One Denver, N.A. Member of the Audit Committee.
</TABLE>
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of January 31, 1994, the number of shares of
the Company's Common Stock beneficially owned by each director and nominee, each
of the executive officers named in the Summary Compensation Table set forth
under the caption "Executive Compensation" below, and all directors and
executive officers as a group. Unless otherwise indicated, each of the persons
has sole voting power and sole investment power with respect to the shares
beneficially owned by such person.
On January 31, 1994, there were 27,923,515 outstanding shares of Common
Stock. For purposes of this table, such amounts include 872,780 shares of Common
Stock which are subject to options, or conversion privileges applicable to the
Company's $.75 Convertible Preferred Stock, exercisable within 60 days.
<TABLE>
<CAPTION>
COMMON STOCK(2)
-------------------------
PERCENT
NAME OF INDIVIDUAL OR OF
NUMBER IN GROUP(1) NUMBER OF SHARES CLASS
---------------------- ---------------- ------
<S> <C> <C>
Donald H. Anderson................................ 10,000 *
Bulent A. Berilgen................................ 62,042(3) *
Austin M. Beutner................................. -- --
Robert S. Boswell................................. 126,615(4) *
Richard J. Callahan............................... 2,000 *
Dale F. Dorn...................................... 158,257(5) *
Forest D. Dorn.................................... 220,451(6) *
John C. Dorn...................................... 257,509(7) *
John F. Dorn...................................... 550,621(8) 1.97
William L. Dorn................................... 349,851(9) 1.25
Harold D. Hammar.................................. 2,500 *
David H. Keyte.................................... 74,689(10) *
James H. Lee...................................... 1,000 *
Jeffrey W. Miller................................. 313,220(11) 1.12
Jack D. Riggs..................................... 8,315(12) *
Michael B. Yanney................................. -- --
All directors and executive officers as a group
(19 persons, including the 16 named above)....... 2,276,707(13) 8.15%
<FN>
- - ------------------------
* The percentage of shares beneficially owned does not exceed one percent of
the outstanding shares of the class.
(1) William L. Dorn and Forest D. Dorn are brothers; John F. Dorn and Dale F.
Dorn are brothers; and they all are nephews of John C. Dorn. See
"Principal Holders of Securities".
(2) Amounts reported also include shares held for the benefit of certain
directors and executive officers by the trustee of the Company's
Retirement Savings Plan Trust as of December 31, 1993.
(3) Includes 60,000 Common shares that Bulent A. Berilgen has the vested right
to purchase pursuant to the terms of the 1992 Stock Option Plan.
(4) Includes 105,000 Common shares that Robert S. Boswell has the vested right
to purchase pursuant to the terms of the 1992 Stock Option Plan. Does not
include 225 Common shares held by Robert S. Boswell's wife or 1,060 shares
held by his children, of which shares Mr. Boswell disclaims beneficial
ownership.
(5) Includes 17,496 Common shares held of record by Dale F. Dorn as trustee of
a trust for the benefit of his immediate family. Dale F. Dorn has
disclaimed beneficial ownership of these shares. Also includes 12,250
Common shares that Dale F. Dorn has the right to acquire upon the
conversion of 3,500 shares of the Company's $.75 Convertible Preferred
Stock.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
(6) Includes 60,000 Common shares that Forest D. Dorn has the vested right to
purchase pursuant to the terms of the 1992 Stock Option Plan. Also
includes 62,483 Common shares held of record by Forest D. Dorn as
co-trustee of a trust for the benefit of his mother (see Footnote 9), of
which shares Mr. Dorn disclaims beneficial ownership. Does not include
7,449 Common shares held by Forest D. Dorn's wife or 20,767 shares held by
his children, of which shares Mr. Dorn disclaims beneficial ownership.
(7) Includes 43,685 Common shares held of record by John C. Dorn as trustee of
trusts for the benefit of related parties. Does not include (i) 287,676
Common shares held of record by The Glendorn Foundation of which John C.
Dorn is one of the seven trustees, or (ii) 72,547 Common shares held by
John C. Dorn's wife. Mr. Dorn disclaims beneficial ownership of all of
these shares.
(8) Includes 350,000 Common shares that John F. Dorn has the vested right to
purchase pursuant to the terms of the 1992 Stock Option Plan. Also
includes (i) 30,382 Common shares held of record by John F. Dorn as
trustee of a trust for the benefit of his immediate family and (ii) three
Common shares held of record by John F. Dorn as custodian for one of his
minor children, of which shares Mr. Dorn disclaims beneficial ownership.
Does not include 495 Common shares held by his children, of which shares
Mr. Dorn also disclaims beneficial ownership.
(9) Includes 105,000 Common shares that William L. Dorn has the vested right
to purchase pursuant to the terms of the 1992 Stock Option Plan. Also
includes (i) 62,483 Common shares held of record by William L. Dorn as
co-trustee of a trust for the benefit of his mother (see Footnote 6), and
(ii) 56,023 Common shares held of record by William L. Dorn as trustee of
trusts for the benefit of related parties, of which shares Mr. Dorn
disclaims beneficial ownership. Does not include 12,390 Common shares held
by William L. Dorn's wife or 30,797 shares held by his children, of which
shares Mr. Dorn disclaims beneficial ownership.
(10) Includes 60,000 Common shares that David H. Keyte has the vested right to
purchase pursuant to the terms of the 1992 Stock Option Plan. Also
includes 3,850 Common shares that David H. Keyte has the right to acquire
upon the conversion of 1,100 shares of the Company's $.75 Convertible
Preferred Stock.
(11) Includes 81,825 Common shares held of record by Jeffrey W. Miller as
custodian for his minor children, of which shares Mr. Miller disclaims
beneficial ownership.
(12) Includes 1,680 Common shares Jack D. Riggs has the right to acquire upon
the conversion of 480 shares of the Company's $.75 Convertible Preferred
Stock.
(13) Includes 855,000 Common shares held by various executive officers and John
F. Dorn who have the vested right to purchase such shares pursuant to the
terms of the 1992 Stock Option Plan and 17,780 Common shares that two
executive officers and Dale F. Dorn have the right to acquire upon the
conversion of 5,080 shares of the Company's $.75 Convertible Preferred
Stock.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
During 1993, the Board of Directors of the Company met on 11 occasions. The
Board has appointed four committees, the Executive Committee, the Audit
Committee, the Compensation Committee and the Royalty Bonus Committee, which are
designed to permit action to be taken expeditiously. Only two members of each
committee are necessary to constitute a quorum. During 1993, the Executive
Committee met 11 times. In February 1994, James H. Lee joined William L. Dorn
and Robert S. Boswell as members of the Executive Committee. The members of the
Royalty Bonus Committee, which met two times and acted by consent 18 times
during the year, are Robert S. Boswell and William L. Dorn. Members of the
Royalty Bonus Committee are eligible to participate in royalty bonuses granted
by the Royalty Bonus Committee.
The Compensation Committee met six times during 1993. This committee makes
recommendations to the Board of Directors in the area of overall compensation of
the Company's executive officers and employees, including the selection of
individuals to be granted options from among those eligible
6
<PAGE>
under the stock option plan and establishes the number of shares issued under
each option. Members of the Compensation Committee are not eligible to
participate in the Company's 1992 Stock Option Plan. In May 1993, the
Compensation Committee assumed the duties of the Stock Option Committee. During
1993, the members of the Compensation Committee were James H. Lee, Harold D.
Hammar, Jack D. Riggs and Michael B. Yanney. Upon appointment to the Executive
Committee in February 1994, Mr. Lee resigned from the Compensation Committee. A
Report of the Compensation Committee on Executive Compensation is set forth
below.
The Audit Committee is appointed for the purpose of overseeing and
monitoring the Company's independent audit process and discharges its duties,
responsibilities and functions according to a plan designed to provide assurance
to the Board of Directors that the resources allocated to that process are
adequate and utilized effectively. It is also charged with the responsibility
for reviewing all related party transactions for potential conflicts of
interest. This committee met three times during the year, and its members were
Jack D. Riggs, Donald H. Anderson, Harold D. Hammar and James H. Lee. Upon
appointment to the Executive Committee in February 1994, Mr. Lee resigned from
the Audit Committee.
The Board of Directors does not have a standing nominating or similar
committee.
During 1993, each incumbent director of the Company, except Austin M.
Beutner, John C. Dorn, Jack D. Riggs and Michael B. Yanney, attended at least
75% of the aggregate number of meetings of the Board and the Board committees on
which he served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Messrs.
Hammar, Riggs and Yanney. Mr. Riggs retired as a Vice President of the Company
in 1987. The Executive Committee members are William L. Dorn, Robert S. Boswell
and James H. Lee. The members of the Royalty Bonus Committee are William L. Dorn
and Robert S. Boswell. William L. Dorn is Chairman of the Board and Chief
Executive Officer and Robert S. Boswell is President. During 1993 there were no
compensation committee interlocks between the Company and any other entity.
A real estate complex (the "Complex") consisting of cottages, guest houses
and meeting and recreational facilities owned by members of the Dorn and Miller
families, located near Bradford, Pennsylvania, has been historically used by the
Company for business meetings, Company sponsored seminars, the accommodation of
business guests, the housing of key personnel attending corporate meetings and
for other business purposes.
The Company anticipates limiting its use in 1994 to functions and housing
associated with shareholders' meetings and other special meetings. In 1993 the
Company paid $635,000 on account of the business use of such property. The
Company anticipates that its cost for 1994 will be approximately the same as
1993. Members of the Dorn and Miller families who are directors and/or executive
officers of the Company (and their immediate families) who own a direct or
indirect interest in such Complex are Dale F. Dorn, his brother and his two
sisters; William L. Dorn and Forest D. Dorn and their father and two sisters;
John C. Dorn and his four children; and Jeffrey W. Miller, his father and two
sisters.
The Company has notified the owners of the Complex that it intends to
terminate its annual usage after 1994, and it will pay $300,000 as a partial
reimbursement of deferred maintenance costs.
During 1993, the Company participated with a 25% working interest in the
drilling of an exploratory prospect in south Texas pursuant to an agreement with
Triana Exploration Company ("Triana"). The initial well on the prospect was
plugged and abandoned in February 1994. Triana is a joint venture managed by
Lee, Hite & Wisda Ltd. ("LHW"), and in which LHW has an economic interest. James
H. Lee, a director of the Company, is the managing partner of LHW. The Company
paid $122,500 for front-end costs, principally leasehold costs, to Triana for
its interest in this prospect. The
7
<PAGE>
Company participated in the front-end costs and the drilling of the well on the
prospect upon the same terms as other unrelated industry participants. For
further information with respect to other transactions with management and
others see "Transactions with Management and Others".
DIRECTOR COMPENSATION
Each director who is not an employee of the Company is compensated for
services at the rate of $20,000 annually, and in addition, is paid a fee of
$2,500 for attendance in person at each meeting or series of meetings of the
Board. All directors, whether employees or not, are reimbursed for all costs
incurred by them in their capacities as directors, including the costs of
attending directors' meetings and committee meetings. The non-employee directors
and the amounts each was paid during 1993 as directors were: John C. Dorn and
Jack D. Riggs -- $27,500; Dale F. Dorn, Harold D. Hammar, James H. Lee, Jeffrey
W. Miller and Michael B. Yanney -- $30,000. Donald H. Anderson and Richard J.
Callahan, who were elected as directors in March 1993, were each paid $23,253.
Austin M. Beutner, who was elected a director in September 1993, was paid
$8,473. William F. Higie, who resigned as a director in March 1993 was paid
$7,500. Messrs. Hammar and Lee each received an additional $7,000 for attending
meetings of the Audit and Compensation Committees. Mr. Riggs received an
additional $5,000 for attending meetings of the Audit and Compensation
Committees. Mr. Yanney received an additional $2,000 for attending meetings of
the Compensation Committee and Mr. Anderson was paid an additional $1,000 for
attending a meeting of the Audit Committee. Additionally, John C. Dorn and
William F. Higie received additional amounts pursuant to retirement agreements
with the Company. See "Transactions with Management and Others -- Retirement
Benefits for Executives and Directors" below.
No additional amounts are paid for committee participation or special
assignments, except that (i) each member of the Compensation Committee is paid
$1,000 per meeting up to a maximum of $4,000 per year for service on that
committee, (ii) each member of the Audit Committee is paid $1,000 per meeting up
to a maximum of $4,000 per year for service on that committee, and (iii) Mr. Lee
will be paid $50,000 per year for service on the Executive Committee.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
Chief Executive Officer, each of the Company's four other most highly
compensated executive officers and by John F. Dorn, who resigned as an executive
officer during 1993 (collectively, the "Named Executive Officers"), based on
salary and bonus earned in 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION
---------------------------------------- AWARDS(6)
OTHER ------------- ALL
ANNUAL SECURITIES OTHER
NAME AND COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION(1) YEAR SALARY($) BONUS($)(2)(3) ($)(4)(5) OPTIONS(#) ($)(4)(7)
- - --------------------------------- --------- --------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William L. Dorn, 1993 $ 250,008 $ 100,159 $ 665 175,000 $ 32,640
Chairman of the Board and 1992 250,008 75,618 624 175,000 10,618
Chief Executive Officer 1991 250,008 8,810 -0-
Robert S. Boswell, 1993 234,000 88,239 607 175,000 30,503
President 1992 234,000 94,017 567 175,000 10,445
1991 234,000 8,370 -0-
Bulent A. Berilgen, 1993 137,850 53,336 -0- 100,000 16,458
Vice President of Operations 1992 131,932 41,456 -0- 100,000 6,234
1991
Forest D. Dorn, 1993 160,650 22,013 324 100,000 20,342
Vice President and 1992 156,250 35,219 316 100,000 8,769
General Business Manager 1991 148,307 6,009 -0-
David H. Keyte, 1993 139,494 36,433 18,192 100,000 16,517
Vice President and 1992 131,618 58,419 -0- 100,000 6,234
Chief Accounting Officer 1991 114,708 3,810 -0-
John F. Dorn, 1993 200,004 54,284 461 175,000 539,287(8)
Resigned during 1993 1992 196,671 60,276 431 175,000 5,671
1991 160,008 6,335 -0-
<FN>
- - ------------------------------
(1) Bulent A. Berilgen was not an executive officer in 1991 and therefore no
information is provided for such year. John F. Dorn resigned as a
Director, Vice President and Chief Operating Officer in November 1993.
(2) The 1992 and 1993 amounts include the following awards made in March 1993
and March 1994, respectively, under the Forest Oil Corporation Incentive
Plan (the "Incentive Plan"):
</TABLE>
<TABLE>
<CAPTION>
1992 1993
--------- ---------
<S> <C> <C>
William L. Dorn........................................ $ 68,126 $ 30,500
Robert S. Boswell...................................... 61,965 29,020
Bulent A. Berilgen..................................... 37,565 18,135
Forest D. Dorn......................................... 31,328 14,819
David H. Keyte......................................... 34,542 16,185
John F. Dorn........................................... 54,259 6,000
<FN>
Distributions are made pursuant to the Incentive Plan over a three-year
period. One-third of the 1992 awards was paid in 1993, and the remainder
will be paid in equal amounts in 1994 and 1995. One-third of the 1993
awards will be paid in 1994, and the remainder will be paid in equal
amounts in 1995 and 1996. As part of John F. Dorn's severance arrangements
with the Company,
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
he received $42,173 in 1994, which amount is equivalent to amounts he would
have received as
deferred payments under the Incentive Plan with respect to awards for 1992
and 1993. See "Report of the Compensation Committee on Executive
Compensation -- Incentive Plan Awards".
(3) During 1993, the Company assigned to certain of its executive officers and
other key personnel, as additional compensation, certain bonuses of
undivided interests in overriding royalty interests in the gross production
from certain exploratory oil and gas prospects in which the Company had an
interest. The cost to the Company at the time of the assignment of such
royalty interests was $2,784 each for William L. Dorn, Robert S. Boswell,
Forest D. Dorn and John F. Dorn, $1,422 for Bulent A. Berilgen and $1,423
for David H. Keyte. During 1993 interests in 18 exploratory oil and gas
prospects were so awarded by the Royalty Bonus Committee.
(4) Only 1993 and 1992 data is provided, since SEC rules allow a three-year
phase-in for this category.
(5) Does not include perquisites and other personal benefits because the value
of these items did not exceed the lesser of $50,000 or 10% of reported
salary and bonus of any of the Named Executive Officers, except for David
H. Keyte, whose 1993 total includes a cash auto allowance of $13,800.
(6) No stock appreciation rights ("SARs") or restricted stock awards were
granted to any of the Named Executive Officers during any of the last three
fiscal years.
(7) The 1993 totals include (i) the fair market value of the Company's matching
contribution of Common Stock to the Retirement Savings Plan in the
following amounts: William L. Dorn -- $6,703; Robert S. Boswell -- $6,703;
Bulent A. Berilgen -- $6,893; Forest D. Dorn -- $8,033; David H. Keyte --
$6,975 and John F. Dorn -- $4,497; (ii) the fair market value of the
Company's profit sharing bonus contribution of Common Stock to the
Retirement Savings Plan in the following amounts: William L. Dorn --
$16,592; Robert S. Boswell -- $16,592; Bulent A. Berilgen -- $9,565; Forest
D. Dorn -- $11,328; David H. Keyte -- $9,542 and John F. Dorn -- $14,259;
(iii) the Company's matching contribution pursuant to deferred compensation
agreements in the following amounts: William L. Dorn -- $5,797; Robert S.
Boswell -- $4,997; and John F. Dorn -- $5,503; and (iv) the Company's
profit sharing bonus contribution pursuant to deferred compensation
agreements in the following amounts: William L. Dorn -- $1,533 and Robert
S. Boswell -- $373. The 1993 totals also include the following amounts
attributable to the term life portion of premiums paid by the Company
pursuant to a split dollar insurance arrangement: William L. Dorn --
$2,015; Robert S. Boswell -- $1,838; Forest D. Dorn -- $981; and John F.
Dorn -- $1,398. The remainder of the premium is not included and does not
benefit the Named Executive Officers because the Company has the right to
the cash surrender value of the policy.
(8) In March 1994 as part of Mr. Dorn's severance arrangements, the Company
agreed to pay John F. Dorn his salary at the time of his termination of
employment for 30 months and other benefits. In addition to the amounts
described in Footnotes 2, 3 and 7, includes the following amounts which are
the estimated amounts paid and payable pursuant to such severance
arrangements: $500,010 to be paid in 30 equal monthly installments; $25,000
-- the value of his Company automobile; $13,077 -- paid for accrued
vacation time and $1,200 -- the value of his office furnishings. See
"Transactions with Management and Others -- Transactions with Former
Executive Officers".
</TABLE>
10
<PAGE>
STOCK OPTION GRANTS DURING 1993 AND YEAR END OPTION VALUES
The following table provides details regarding stock options granted to the
Named Executive Officers in 1993. In addition, in accordance with rules of the
SEC, there are shown the hypothetical gains or "option spreads" that would exist
for the respective options. These gains are based on assumed rates of annual
compound stock price appreciation of 5% and 10% from the date the options were
granted over the full option term. The Company does not have any outstanding
SARs.
STOCK OPTION GRANTS IN 1993
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- - ---------------------------------------------------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
NUMBER OF OPTIONS APPRECIATION FOR
SECURITIES GRANTED TO OPTION TERM(3)
UNDERLYING OPTIONS EMPLOYEES EXERCISE EXPIRATION --------------------------
NAME GRANTED(#)(1) IN 1993 PRICE($/SH)(2) DATE 5% ($) 10% ($)
- - -------------------------- ------------------ ------------- --------------- -------------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William L. Dorn........... 175,000 11.5 $ 5.00 October 13, 2003 $ 336,000 $ 1,053,500
Robert S. Boswell......... 175,000 11.5 5.00 October 13, 2003 336,000 1,053,500
Bulent A. Berilgen........ 100,000 6.6 5.00 October 13, 2003 192,000 602,000
Forest D. Dorn............ 100,000 6.6 5.00 October 13, 2003 192,000 602,000
David H. Keyte............ 100,000 6.6 5.00 October 13, 2003 192,000 602,000
John F. Dorn (4).......... 175,000 11.5 5.00 October 13, 2003 336,000 1,053,500
<FN>
- - ------------------------
(1) The options are subject to a four-year vesting schedule with 20% being
currently exercisable. An additional 20% becomes exercisable on each of
October 14, 1994, 1995, 1996 and 1997. If the Company recapitalizes or
otherwise changes its capital structure, thereafter upon any exercise of
an option the optionee will be entitled to purchase, in lieu of the number
and class of shares of Common Stock as to which such option will then be
exercisable, the number and class of shares of stock and securities to
which the optionee would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to such recapitalization, the
optionee had been the holder of record of the number of shares of Common
Stock as to which such option is then exercisable. If there is a Corporate
Change, as defined in the plan, then the Compensation Committee, acting in
its sole discretion has the following alternatives, which may vary among
individual optionees: (1) accelerate the time at which options then
outstanding may be exercised, (2) require the surrender to the Company by
selected optionees of some or all of the outstanding options held by such
optionees, in which event the Committee will thereupon cancel such options
and pay to each optionee a certain amount of cash or (3) make such
adjustments to options then outstanding as the Committee deems appropriate
to reflect such Corporate Change. Any adjustment provided for pursuant to
this paragraph will be subject to any required shareholder action.
(2) The Company may in its discretion grant optionees a cash bonus upon the
exercise of each option in order to facilitate the payment of a portion of
the exercise price of such options. The option exercise price may be paid
in shares of Common Stock owned by the executive officer or in cash, or in
any combination thereof. On October 14, 1993, the date of grant of the
options, the last reported sales price per share of the Common Stock as
quoted on the NASDAQ/NMS was $4 1/4.
(3) These amounts represent certain assumed rates of appreciation based on
actual option term and annual compounding from the date of grant. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall stock
market conditions. There can be no assurance that the amounts reflected in
this table will be achieved. These numbers do not take into account
provisions of the options providing for termination of the option
following termination of employment, nontransferability or vesting.
(4) As part of Mr. Dorn's severance arrangements with the Company, all of Mr.
Dorn's stock options are fully vested, are not subject to early
termination and will expire in accordance with their original terms. See
"Transactions with Management and Others -- Transactions with Former
Executive Officers".
</TABLE>
11
<PAGE>
OUTSTANDING STOCK OPTION VALUES AS OF DECEMBER 31, 1993
There were no stock option exercises by any Named Executive Officers during
1993. The following table shows the number of shares covered by both exercisable
and non-exercisable stock options as of December 31, 1993 and their values at
such date:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR OPTIONS AT FISCAL YEAR
END(#) END($)(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William L. Dorn................................. 105,000 245,000 $ 96,250 $ 144,375
Robert S. Boswell............................... 105,000 245,000 96,250 144,375
Bulent A. Berilgen.............................. 60,000 140,000 55,000 82,500
Forest D. Dorn.................................. 60,000 140,000 55,000 82,500
David H. Keyte.................................. 60,000 140,000 55,000 82,500
John F. Dorn (2)................................ 350,000 -0- 240,625 -0-
<FN>
- - ------------------------
(1) On December 31, 1993, the last reported sales price of the Common Stock as
quoted on the NASDAQ/NMS was $4 3/8 per share. Value is calculated on the
basis of the difference between the option price and $4 3/8 multiplied by
the number of shares of Common Stock granted at that option price. The
option price for the options granted in 1992 is $3.00 per share and the
option price for the options granted in 1993 is $5.00 per share. At
December 31, 1993, the last reported sales price was lower than the option
price for the options granted in 1993, and, therefore, no value is
ascribed to those options in the above table.
(2) As part of Mr. Dorn's severance arrangements with the Company, all of Mr.
Dorn's stock options are fully vested, are not subject to early
termination and will expire in accordance with their original terms. See
"Transactions with Management and Others -- Transactions with Former
Executive Officers".
</TABLE>
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the five years
ended December 31, 1993 with the cumulative return on the S & P 500 Index, the
Dow Jones Oil, Secondary Index and an index of peer companies. The graph assumes
that $100 was invested in each category on the last trading day of 1988 and that
dividends were reinvested. The companies in the peer index were selected based
on the following criteria: (i) total assets ranging from approximately $100
million to $625 million, (ii) total revenue ranging from approximately $40
million to $300 million and (iii) oil and gas revenue comprising at least 64% of
total revenue. The companies included in the peer index were American
Exploration Co., DEKALB Energy Company, Devon Energy Corporation, Noble
Affiliates, Inc., Plains Petroleum Company, Pogo Producing Company, Presidio Oil
Company, Snyder Oil Corporation and The Wiser Oil Company.
The Company significantly changed the composition of management as well as
its operating strategy during the five-year period. In December 1990 seven
executive officers and directors retired from the Company. In July 1991, William
L. Dorn was elected Chairman of the Board.
12
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
[GRAPHIC]
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee's duties include the annual review and approval
of the Company's management compensation strategy, review and determination of
individual elements of compensation for the Company's executive officers, review
of the administration of the Company's Incentive Plan and other long-term
incentive plans for management and fixing the terms and awards under the
Company's 1992 Stock Option Plan. During 1993, the Compensation Committee did
not establish specific compensation policies for executive officers. In 1993,
the Compensation Committee held six meetings.
The Royalty Bonus Committee is responsible for granting bonuses of undivided
overriding royalty interests pursuant to the Company's royalty bonus program.
The Executive Committee is responsible for determining the amount of
year-end bonuses and whether certain payments of executive compensation are to
be made in cash or Common Stock.
In February 1993, the Compensation Committee, based on an analysis of an
independent consultant, approved executive severance agreements with the
Company's executive officers. See "Transactions with Management and Others --
Executive Severance Agreements".
The Compensation Committee is currently studying the limitation on the
deductibility of compensation for federal income tax purposes pursuant to
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Compensation Committee does not currently intend to award levels of
compensation that would result in such a limitation. The Compensation Committee
may authorize compensation that results in such limitation in the future if it
determines that such compensation is in the best interests of the Company. In
addition, the limitation may affect the future grant of stock options.
BASE SALARIES. As described below under "Peer Group Study," the Compensation
Committee has concluded that the Company's compensation structure is consistent
with those of a studied peer group (the "Peer Group"). The Compensation
Committee's policy with respect to executive officers' base salaries in 1993 was
to not recommend any increases, except for those executive officers who were
promoted or in other limited cases. It is the Compensation Committee's policy to
set total executive
13
<PAGE>
compensation, including base salaries, within a competitive range. The
Compensation Committee has placed a particular emphasis on incentive
compensation as a component of total compensation. Once generally established,
base salaries are adjusted within the competitive range on an individual basis
based on past performance.
CASH BONUSES. The Compensation Committee granted cash bonuses of $150,000 in
the aggregate to three executive officers in June 1993, including $60,000 to
William L. Dorn, the Company's Chairman and Chief Executive Officer, for their
performance with respect to the Company's 1991 debt restructuring, the 1992 sale
of Canadian assets, the 1992 settlement of the ONEOK lawsuit and the 1993 equity
offering and debt refinancing, all of which, in the opinion of the Committee,
enhanced the long-term business and financial prospects of the Company. The size
of the bonuses was determined based upon the Compensation Committee's assessment
of the contribution of each executive officer. In addition, the Compensation
Committee considered comparable bonuses paid to executives of companies in the
Peer Group described below in "Peer Group Study". The primary factor considered
by the Compensation Committee with respect to the bonus paid to William L. Dorn
was his role in the 1992 settlement of the ONEOK lawsuit. The other factors
considered in determining the size of the bonus paid to William L. Dorn were
primarily the fact that he has not received any increase in base salary since
1989 and, to a lesser extent, the relation of his total compensation, including
the bonus, to compensation paid to the chief executive officers of the companies
in the Peer Group.
The Company has traditionally granted year-end bonuses to all employees,
including executive officers. The 1993 year-end bonuses were an amount equal to
3% of the first eleven months base salary for each individual, and were
determined by the Executive Committee. William L. Dorn received such a year-end
bonus of $6,875.
STOCK OPTIONS. In 1993, the Compensation Committee also granted stock
options to the Company's executive officers and certain key employees for a
total of 1,525,000 shares of Common Stock at an exercise price of $5.00 per
share. The option exercise price was set above the market price on the date of
grant to match the public offering price of the Company's Common Stock in June
1993. The Compensation Committee took into consideration the number of options
already held by such persons in making such awards. Both the size of such grants
and the proportion relative to the total number of option shares granted
generally increased as a function of the recipient's higher level of
responsibility within the Company and individual performance. The rationale for
the grants of options (in order of importance), including the grant to William
L. Dorn, included superior executive performance, competitive practice and
potential negative changes in stock option accounting. William L. Dorn received
options for 175,000 shares of Common Stock in 1993. The Compensation Committee
based the number of options granted to William L. Dorn on the number it felt was
appropriate based on his base salary and responsibilities. In March 1994 as part
of John F. Dorn's severance arrangement, the Compensation Committee approved the
full vesting of his stock options. See "Stock Option Grants During 1993 and Year
End Option Values".
INCENTIVE PLAN AWARDS. The Incentive Plan, which became effective January 1,
1992, permits participating employees to earn awards payable in cash, in whole
shares of the Company's Common Stock, or in any combination of cash and whole
shares of Common Stock. The Executive Committee determines whether awards are
payable in cash or stock. The Incentive Plan operates through an incentive pool
for each fiscal year that is contingent upon the Company attaining certain
targeted levels of performance. Unless otherwise determined by the Executive
Committee, the incentive pool is funded based upon the average return on
invested capital achieved by the Company. The amount contributed to the
incentive pool is a scheduled percentage of base salary that starts at a minimum
return and increases based on average return on invested capital. The incentive
pool is divided in half. One half of the pool is awarded to all participants as
a performance distribution. A participant's percentage interest in the
performance distribution is based upon the proportion his base salary bears to
the aggregate of the base salaries of all participants. The other half of the
incentive pool is divided among participants on an individual basis at the
discretion of the Compensation Committee.
14
<PAGE>
The Incentive Plan is structured to consider the Company's performance over
a three-year period. Performance is currently measured under the Incentive Plan
based on average return on invested capital. The computations for return on
invested capital in 1992 and 1993 did not take into account a three-year period.
For 1992 and 1993, certain transitional rules applied to the computation of
return on invested capital.
In 1993, the Compensation Committee approved grants under the Company's
Incentive Plan with respect to amounts earned for 1992. Total awards of $865,101
were made pursuant to the Incentive Plan to be paid out over a three-year
period, including an award in 1993 of $68,126 to William L. Dorn. Awards were
made from the discretionary pool to individual plan participants (including
William L. Dorn) based upon the following factors (in order of importance):
level of responsibility, performance of the individual during the period, base
salary, and a comparison to Peer Group compensation of executives. The
Compensation Committee received recommendations with respect to discretionary
pool awards from the Executive Committee.
PROFIT SHARING CONTRIBUTIONS. The Company's Retirement Savings Plan and
deferred compensation agreements with certain executive officers, including
William L. Dorn, give the Company discretion to make profit sharing
contributions in cash or stock for the account of the Company's officers and
employees. In 1993, the Compensation Committee approved profit sharing
contributions of Common Stock with a fair market value of $16,592 to the
Company's Retirement Savings Plan and $1,533 pursuant to a deferred compensation
agreement for the account of William L. Dorn. The Compensation Committee
established the amount of the contribution for each person based on the same
percentage of base salary. The percentage was determined based on a schedule set
forth in the Incentive Plan, which is a sliding scale of targets based on
average return on invested capital.
ROYALTY BONUSES. During 1993, the Company assigned to certain of its
executive officers, other key personnel and certain retirees, as additional
compensation, certain bonuses of undivided interests in overriding royalty
interests equal to approximately 6% of the Company's net interest in the gross
production of all oil, gas and other minerals produced, saved and sold from
certain oil and gas prospects in which the Company had an interest. The
prospects, the quantum of interest and the participants in such bonuses are
determined from time to time by the Royalty Bonus Committee of the Board of
Directors and such committee's powers with respect thereto may be terminated at
any time by the Board. The interest of each officer and key employee in such
bonuses varies according to his salary. The interest of William L. Dorn was
established based upon his responsibilities as a director and officer, and on
his salary. By the terms of the issuing documents, such interests were to
terminate, revert to and revest in the Company on December 31, 1993 unless on
such date certain conditions with respect to production or drilling operations
on the properties subject to the royalties were fulfilled. Certain royalty
interests awarded in 1992 and 1993 (5 in number) terminated, reverted to and
revested in the Company during 1993.
PEER GROUP STUDY. During 1993, the Compensation Committee engaged its
independent consultant to prepare a study of the operational performance of the
Company relative to a peer group of companies established by the independent
consultant. The objectives of the study were to (a) provide the Company with an
objective analysis of competitive top management compensation levels and
practices for its industry and size and (b) review current trends in short and
long-term incentive plans offered by peer group companies. The independent
consultant did not analyze the Company's royalty bonus program in the review.
The Compensation Committee concluded that the Company's compensation structure
was consistent with, and generally in the median range of, those of the study's
Peer Group. The Peer Group included the same companies used in the "peer group"
index in the "Stock Performance Graph" above and the "Comparison of Semi-Annual
Cumulative Total Return" graph provided below, as well as eight other companies
with revenues in a competitive range with the Company's. In addition, the
Compensation Committee has asked the independent consultant to take the specific
goals of management for 1994 and integrate them into a plan with specific
targets and specific bonus compensation for achieving the targets.
15
<PAGE>
The Compensation Committee believes that the graph depicting Five Year
Cumulative Total Return, included under the caption "Stock Performance Graph",
should be considered with the following graph. The following graph has been
prepared on the same basis as the preceding graph, except that it shows stock
performance over the period from July 31, 1991 to December 31, 1993. In 1991,
William L. Dorn was elected Chairman of the Board. Since July 1991, the Company
has had several significant developments, including those that were the basis
for the cash bonuses described above. The Company believes that the Dow Jones
Oil, Secondary Index is meaningful because it is an independent, objective view
of the performance of other similarly sized energy companies.
COMPARISON OF SEMI-ANNUAL CUMULATIVE TOTAL RETURN
[GRAPHIC]
COMPENSATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER. Other than the
matters and the study described above, no review was made of the compensation of
William L. Dorn. William L. Dorn's compensation, with the exception of cash
bonuses and stock option grants, has not changed materially since 1989.
Date: April 4, 1994
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE
-----------------------------------
<S> <C> <C>
Michael B. Yanney, Chairman
Harold D. Hammar
Jack D. Riggs
<CAPTION>
EXECUTIVE COMMITTEE ROYALTY BONUS COMMITTEE
- - --------------------- -----------------------
<S> <C> <C>
William L. Dorn William L. Dorn
Robert S. Boswell Robert S. Boswell
James H. Lee
</TABLE>
16
<PAGE>
PENSION PLAN
The Company's Pension Plan is a qualified, non-contributory defined benefit
plan. On May 8, 1991, the Company's Board of Directors suspended benefit
accruals under the Pension Plan effective as of May 31, 1991.
The following table shows the estimated maximum annual benefits payable upon
retirement at age 65 as a straight life annuity to participants in the Pension
Plan for the indicated levels of average annual compensation and various periods
of service, assuming no future changes in such plan:
<TABLE>
<CAPTION>
ESTIMATED MAXIMUM ANNUAL
PENSION BENEFITS(2)
-------------------------
YEARS OF SERVICE
-------------------------
REMUNERATION(1) 10 20 30
- - ---------------- ------- ------- -------
<S> <C> <C> <C>
$100,000........ 36,846 48,060 53,400
200,000........ 73,692 96,120 106,800
300,000........ 79,282 103,412 114,902
400,000........ 79,282 103,412 114,902
<FN>
- - ------------------------
(1) For each Named Executive Officer, the level of compensation used to
determine benefits payable under the Pension Plan is such officer's base
salary for 1991, as set forth in the Summary Compensation Table above.
(2) Normal retirement benefits attributable to the Company's contributions are
limited under certain provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), to $118,800 in 1994, as increased annually
thereafter for cost of living adjustments.
</TABLE>
The amount of the Company's contribution, payment or accrual in respect to
any specified person in the Pension Plan is not and cannot readily be separately
or individually calculated by the Pension Plan actuaries. Annual benefits at
normal retirement are approximately 24% of average annual earnings (excluding
bonuses) for any consecutive 60-month period in the last 15 years prior to
retirement, up to May 31, 1991, when benefit accruals ceased, which produces the
highest amount, plus 21% of such earnings prorated over 20 years of credited
service, and 1/2 of 1% of such earnings for each year of credited service in
excess of 20, subject to certain adjustments for lack of plan participation.
There is no Social Security offset. Such benefits are payable for life with a 10
year certain period, or the actuarial equivalent of such benefit.
As a result of the suspension of benefit accruals under the Pension Plan and
the substitution of profit sharing contributions to the Retirement Savings Plan,
the following amounts are the estimated increases (decreases) in the annual
combined benefit payments to the Named Executive Officers under the Pension Plan
and the Retirement Savings Plan (whether combined benefits increased or
decreased is a function of the combination of length of service and salary
levels):
<TABLE>
<CAPTION>
ESTIMATED
INCREASE/(DECREASE)
IN ANNUAL PAYMENTS
------------------
<S> <C>
William L. Dorn................. $ (33,928)
Robert S. Boswell............... (127,141)
Bulent A. Berilgen.............. (35,472)
Forest D. Dorn.................. 21,104
David H. Keyte.................. (34,661)
John F. Dorn.................... 14,617
</TABLE>
Because benefit accruals under the Pension Plan were suspended effective May
31, 1991, the years of credited service for the Named Executive Officers are as
follows: William L. Dorn -- 20; Robert S. Boswell -- 2; Bulent A. Berilgen -- 9;
Forest D. Dorn -- 14; David H. Keyte -- 4 and John F. Dorn -- 18. The estimated
annual accrued benefit payable, based on a life annuity benefit, upon normal
retirement for each of such persons is: William L. Dorn -- $45,994; Bulent A.
Berilgen --
17
<PAGE>
$11,832; Forest D. Dorn -- $18,886; David H. Keyte -- $5,401 and John F. Dorn --
$31,249. Robert S. Boswell's accrued annual benefit is $4,436 but he has not yet
become vested in such benefit pursuant to the provisions of the Pension Plan.
Certain participants in the Pension Plan have been prevented by the limits
of the Code from receiving the full amount of pension benefits to which they
would otherwise have been entitled. Such persons have had benefits credited to
them under a Supplemental Retirement Plan, which together with the benefits
payable under the Pension Plan, equaled the benefit to which they would have
been entitled under the Pension Plan but for such Code limits. The Supplemental
Retirement Plans for each participant were unfunded, non-qualified,
non-contributory benefit plans. Benefits payable vest to the same extent as the
Pension Plan benefits and are unsecured general obligations of the Company.
Benefit accruals under these plans were suspended effective May 31, 1991 in
conjunction with the suspension of benefit accruals under the Company's Pension
Plan.
PRINCIPAL HOLDERS OF SECURITIES
The Company currently has one class of voting securities outstanding. At the
1993 Annual Meeting of Shareholders, each share of Class B Stock was
reclassified into 1.1 shares of Common Stock. On January 31, 1994, there were
27,923,515 shares of Common Stock outstanding, with each such share being
entitled to one vote. On January 31, 1994 members of the Dorn and Miller
families, descendants of the founders of the Company, owned 3,966,849 shares of
Common Stock, constituting approximately 14.21% of the voting power of the
Company.
As of January 31, 1994, to the knowledge of the Company's Board of Directors
the only shareholder who owned beneficially more than 5% of the outstanding
shares of the Company's Common Stock was:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- - ---------------------------------------- ----------------------------- -------------------- -----------
<S> <C> <C> <C>
Common Stock (1) State Street Research & 1,810,000 (2) 6.48%
Management Company
<FN>
- - ------------------------
(1) Based on Schedules 13D and 13G and amendments thereto filed with the SEC
and the Company by the reporting persons through April 1, 1994 and the
amount of Common Stock outstanding on January 31, 1994.
(2) These shares are also deemed as beneficially owned by Metropolitan Life
Insurance Company, the parent holding company of State Street Research &
Management Company.
</TABLE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
RETIREMENT BENEFITS FOR EXECUTIVES AND DIRECTORS. In December 1990, the
Company entered into retirement agreements with seven executives and directors
("Retirees") pursuant to which the Retirees will receive supplemental retirement
payments in addition to the amounts to which they are entitled under the
Company's retirement plan. In addition, the Retirees and their spouses are
entitled to lifetime coverage under the Company's group medical and dental
plans, tax and other financial services and payments by the Company in
connection with certain club membership dues. The Retirees will also continue to
participate in the Company's royalty bonus program until December 31, 1995. The
Company has also agreed to maintain certain life insurance policies in effect at
December 1990, for the benefit of each of the Retirees.
Six of the Retirees have subsequently resigned as directors. One of the
Retirees continues to serve as a director and will be paid the customary
non-employee director's fee. Pursuant to the terms of the retirement agreements,
the former directors and any other Retiree who ceases to be a director (or his
spouse) will be paid $2,500 a month until December 2000.
The Company's obligation to one Retiree under a revised retirement agreement
is payable in Common Stock or cash, at the Company's option, in May of each year
from 1994 through 1996 at approximately $190,000 per year with the balance
($149,000) payable in May 1997. The retirement
18
<PAGE>
agreements for the other six Retirees, one of whom received in 1991 the payments
scheduled to be made in 1999 and 2000, provide for supplemental retirement
payments totaling approximately $938,400 per year through 1998 and approximately
$740,400 per year in 1999 and 2000.
EXECUTIVE SEVERANCE AGREEMENTS. The Company has entered into executive
severance agreements (the "Executive Severance Agreements") with certain
executive officers, including the Named Executive Officers. The Executive
Severance Agreements provide for severance benefits for termination without
cause and for termination following a "change of control" of the Company. The
Executive Severance Agreements provide that if an executive's employment is
terminated either (a) by the Company for reasons other than cause or other than
as a consequence of death, disability, or retirement, or (b) by the executive
for reasons of diminution of responsibilities, compensation, or benefits or, in
the case of change of control, a significant change in the executive's principal
place of employment, the executive will receive certain payments and benefits.
The Executive Severance Agreements have an initial term of two years, subject to
renewal.
In the case of termination of an executive's employment which does not occur
within two years of a change of control, these severance benefits include (a)
payment of the executive's base salary for a term of months equal to the whole
number of times that the executive's base salary can be divided by $10,000,
limited to 30 months (such amounts payable will be reduced by 50% if the
executive obtains new employment during the term of payment) and (b) continued
coverage of the executive and any of his or her dependents under the Company's
medical and dental benefit plans throughout the payment term without any cost to
the executive.
If an executive's employment by the Company is terminated under the
circumstances described above within two years after the date upon which a
change of control occurs, the Company would be obligated to take the following
actions after the last day of the executive's employment:
(a) the Company will pay to the executive an amount equal to 2.5 times
the executive's base salary;
(b) the Company will permit the executive and those of his dependents
who are covered under the Company's medical and dental benefit plans to be
covered by such plans without any cost to the executive for a two-year
period of time;
(c) the Company will cause any and all outstanding options to purchase
stock of the Company held by the executive to become immediately exercisable
in full and cause the executive's accrued benefits under any non-qualified
deferred compensation plans to become immediately non-forfeitable; and
(d) if any payment or distribution to the executive, whether or not
pursuant to such agreement, is subject to the federal excise tax on "excess
parachute payments", the Company will be obligated to pay to the executive
such additional amount as may be necessary so that the executive realizes,
after the payment of any income or excise tax on such additional amount, an
amount sufficient to pay all such excise taxes.
The Executive Severance Agreements also provide that the Company will pay
legal fees and expenses incurred by an executive to enforce rights or benefits
under such agreements. Under the Executive Severance Agreements, a "change of
control" of the Company would be deemed to occur if (i) the Company is not the
surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company); (ii) the Company sells, leases or exchanges all or
substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary of the Company); (iii) the Company is dissolved and
liquidated; (iv) any person or entity, including a "group" as contemplated by
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or
gains ownership or control (including, without limitation, power to vote) of
more than 30% of the outstanding shares of the Company's voting stock (based
upon voting power); or (v) as a result of or in connection with a contested
election of directors, the persons who were directors of the Company before such
election cease to constitute a majority of the Company's Board of Directors.
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OTHER TRANSACTIONS. For a description of other transactions with management
and others see "Compensation Committee Interlocks and Insider Participation".
In 1993, the Company engaged The Blackstone Group to perform certain
investment banking services. Austin Beutner, a director of the Company, was,
until March 1994, a General Partner of The Blackstone Group, which is also
providing investment banking services in 1994.
TRANSACTIONS WITH FORMER EXECUTIVE OFFICERS. John F. Dorn resigned as an
executive officer and director of the Company in 1993. John F. Dorn is the
brother of Dale F. Dorn, a director of the Company. Kenneth W. Smith resigned as
an executive officer in March 1994. The Company had previously entered into
severance agreements with the former executive officers and the Company's other
executive officers as described above under "Executive Severance Agreements". In
lieu of the severance payments due under their severance agreements, the Company
has agreed to pay John F. Dorn and Kenneth W. Smith for 30 months and 24 months,
respectively, their salaries at the time of the termination of their employment.
In addition, the Company has agreed with the former executive officers with
respect to the following matters: (a) their stock options will be fully vested
and will not be subject to early termination; (b) they will receive payments
from the Company equivalent to amounts they would have received as deferred
payments under the Incentive Plan with respect to 1992 and 1993; (c) John F.
Dorn will receive full vesting with respect to split dollar life insurance at
the Company's expense; (d) they will continue to participate in the Company's
Executive Overriding Royalty Bonus Plan until April 1, 1994; (e) they were given
their Company automobiles and office furnishings and the Company will pay for
the cost of relocating their offices; (f) the Company will provide John F. Dorn
with certain accounting, financial and estate planning services for a limited
period of time; and (g) until March 31, 1996, if John F. Dorn decides to
relocate from Colorado, the Company will pay his moving expenses and purchase
his home, in accordance with the Company's employee relocation policy.
In March 1994, the Company sold certain non-strategic oil and gas properties
for $4,400,000 to an entity controlled by John F. Dorn and Kenneth W. Smith. The
properties included in this transaction contained approximately 70 wells. Five
of the principal properties sold represent 78% of the total value. These
properties are located in the Gulf of Mexico in federal or state waters. The
remaining properties are located throughout various areas in the United States,
including Texas, the Midcontinent, the Southeastern, and the Rocky Mountain
regions. All of the properties are non-operated working interests or overriding
royalty interests. The Company established the sales price based upon an opinion
from an independent third party. The purchaser financed 100% of the purchase
price with a loan. The loan bears interest at the rate of prime plus 1% and is
secured by a mortgage on the properties and John F. Dorn's and Kenneth W.
Smith's personal guarantees. The Company participated as a lender in the loan in
the amount of approximately $800,000. In addition, the Company agreed to
subordinate to the other lender its right of payment of principal on default.
John F. Dorn and Kenneth W. Smith have separately agreed with the Company that
their stock options will be cancelled to the extent that the Company's
participation in the loan is not repaid in full. The number of stock options
cancelled will be based upon a Black-Scholes valuation. Collectively, they have
options to purchase 275,000 shares of the Company's Common Stock at $3.00 per
share and 275,000 shares at $5.00 per share.
SECTION 16 REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the National Association of
Security Dealers, Inc. Officers, directors, and greater than 10% shareholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of copies of such forms received by it and
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 1, 1993 to March 31, 1994, its officers, directors, and greater than 10%
beneficial owners complied with all applicable filing requirements.
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APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders of the Company, the Board has
designated the firm of KPMG Peat Marwick, 2300 Arco Tower, Denver, Colorado
80202 as independent auditors to examine and audit the Company's financial
statements for the year 1994. This firm has examined the Company's financial
statements for approximately 44 years and is considered to be well qualified.
The designation of such firm as auditors is being submitted for ratification or
rejection at the Annual Meeting. Action by shareholders is not required under
the law for the appointment of independent auditors, but the ratification of
their appointment is submitted by the Board in order to give the shareholders of
the Company the final choice in the designation of auditors. The Board will be
governed by the decision of a majority of the votes entitled to be cast. A
plurality of the voting power of the outstanding shares of Common Stock is
required to ratify the appointment of KPMG Peat Marwick.
A representative of KPMG Peat Marwick will be present at the Annual Meeting
with the opportunity to make a statement if he desires to do so and will also be
available to respond to appropriate questions. A representative of the firm was
present at the last Annual Meeting for the same purpose.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be included in the Board of Directors'
solicitation of proxies for the 1995 Annual Meeting of Shareholders must be
received by Daniel L. McNamara, Secretary, at 78 Main Street, Bradford,
Pennsylvania 16701, no later than December 1, 1994.
GENERAL AND OTHER MATTERS
The Board of Directors knows of no matter, other than those referred to in
this Proxy Statement, which will be presented at the meeting. However, if any
other matters are properly brought before the meeting or any of its
adjournments, the person or persons voting the proxies will vote them in
accordance with their judgment on such matters. Should any nominee for director
be unwilling or unable to serve at the time of the meeting, or any adjournment
thereof, the persons named in the proxy will vote it for the election of such
other person for such directorship as the Board of Directors may recommend
unless, prior to the meeting, the Board has eliminated that directorship by
reducing the size of the Board. The Board is not aware that any nominee named
herein will be unwilling or unable to serve as a director.
On May 24, 1993, the Company renewed Directors and Officers Liability
Coverages designed to indemnify the directors and officers of the Company and
its subsidiaries against certain liabilities incurred by them in the performance
of their duties and also providing for reimbursement in certain cases to the
Company and its subsidiaries for sums paid by them to directors and officers as
indemnification for similar liability. This type of coverage was originally
purchased by the Company on May 24, 1978. The 1993 renewal was for a one-year
period. Primary insurance of $10,000,000 was renewed with National Union Fire
Insurance Company and the excess insurance coverage of $10,000,000 was renewed
with Reliance Insurance Company and CIGNA Insurance Company for a total coverage
of $20,000,000. Aggregate premiums for the 12-month period ending May 24, 1994
are $456,093. No claims have been filed and no payments have been made to the
Company or its subsidiaries or to any of their directors or officers under this
coverage.
The Restated Certificate of Incorporation of the Company limits the personal
liability of the Company's directors to the fullest extent permitted by the New
York Business Corporation Law ("BCL"), as currently formulated or as it might be
revised in the future. The Restated Certificate of Incorporation provides that a
director will not be liable for damages for any breach of duty unless it is
finally established that (a) the director's acts or omissions were in bad faith
or involved intentional misconduct or a knowing violation of law; or (b) the
director personally gained a financial profit or
21
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other advantages to which he was not legally entitled; or (c) the director's
acts violated Section 719 of the BCL which provides that directors who vote for,
or concur in, certain types of corporate action proscribed by the BCL will be
jointly and severally liable for any injury resulting from such action.
The cost of preparing, assembling, and mailing this Proxy Statement, the
enclosed proxy card and the Notice of Annual Meeting will be paid by the
Company. Additional solicitation by mail, telephone, telegraph or personal
solicitation may be done by directors, officers, and regular employees of the
Company. Such persons will receive no additional compensation for such services.
Brokerage houses, banks and other nominees, fiduciaries and custodians nominally
holding shares of Common Stock of record will be requested to forward proxy
soliciting material to the beneficial owners of such shares, and will be
reimbursed by the Company for their reasonable expenses. The Company has
retained Morrow & Co., Inc. to assist in such solicitation and has agreed to pay
reasonable and customary fees for its services and to reimburse it for
reasonable out-of-pocket expenses in connection therewith.
The Company hereby incorporates by reference into this Proxy Statement the
following information from its Annual Report on Form 10-K which is included in
the Forest Oil Corporation 1993 Annual Report being delivered herewith: Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Item 8. Financial Statements and Supplementary Data.
You are urged to complete, sign, date and return your proxy promptly. You
may revoke your proxy at any time before it is voted. If you attend the meeting,
as we hope you will, you may vote your shares in person.
By order of the Board of Directors
DANIEL L. McNAMARA
SECRETARY
April 4, 1994
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FOREST OIL CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHARE HOLDERS
The undersigned shareholder of Forest Oil Corporation, a New York
corporation (the Company), hereby appoints William L. Dorn, Daniel L. McNamara
and Linda M. Trulick, or any one of them, attorneys, agents and proxies of the
undersigned, with full power of substitution to each of them, to vote all the
shares of Common Stock, Par Value $.10 Per Share, of the Company which are
entitled to 1 vote per share and which the undersigned may be entitled to vote
at the Annual Meeting of Shareholders of the Company to be held at the Howard
Johnson's Motor Lodge, 100 Davis Street South, Bradford, Pennsylvania, on
Wednesday, May 11, 1994, at 10:00 A.M., E.D.T., and at any adjournment of such
meeting, with all powers which the undersigned would possess if personally
present:
1. To elect three (3) Class IV Directors and one (1) Class I
Director;
2. To ratify the appointment by the Board of Directors of KPMG Peat
Marwick as independent auditors of the Company for the fiscal year ended
December 31, 1994; and
3. To vote upon such other matters as may be properly brought before
the meeting or any adjournment thereof hereby revoking all previous proxies
and ratifying all that any of said proxies, their substitutes, or any of
them, may lawfully do by virtue hereof.
IF NO DIRECTIONS ARE GIVEN, THE INDIVIDUALS DESIGNATED ABOVE WILL VOTE FOR
THE ABOVE PROPOSALS AND, AT THEIR DISCRETION, ON ANY OTHER MATTER THAT MAY COME
BEFORE THE MEETING.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement of the Company.
(CONTINUED AND TO BE VOTED, DATED AND SIGNED ON REVERSE SIDE)
<PAGE>
FOREST OIL CORPORATION
Common Stock Proxy One (1) Vote Per Share
PLEASE MARK VOTES or
The Board of Directors recommends a Vote FOR the following Proposals:
No. 1. Election of Directors.
Nominees are John C. Dorn, Richard J. Callahan, Austin M. Beutner and
Jack D. Riggs.
(To withhold authority to vote for all nominees check the block marked
"Withheld".
To withhold authority to vote for any individual nominee write that nominee's
name on the space provided below.)
/ / FOR / / WITHHELD
No. 2. Ratification of the Appointment of Independent Auditors.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
(Signature(s) should agree with names on Stock Certificates
as shown herein. Attorneys, executors, administrators, trust-
ees, guardians or custodians should give full title as such.)
Please complete, date and sign this proxy and return it prompt-
ly in the enclosed envelope whether or not you plan to attend
No postage is required.
Dated: ___________________________, 1994
_________________________________________
_________________________________________
_________________________________________
Signature of Shareholder(s)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
