<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
/ / Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
FOREST OIL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Daniel L. McNamara
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PRELIMINARY COPY
FOREST OIL CORPORATION
950 Seventeenth Street
1500 Colorado National Building
Denver, CO 80202
-------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 10, 1995
-------------------------------
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 Petroleum Club of
Denver, 555 17th Street, Suite 3700, Denver, Colorado, on Wednesday, May 10,
1995, at 10:00 a.m., M.D.T., for the following purposes:
1. Amend the Company's By-laws to decrease the minimum number of
Directors in each class from three (3) to two (2);
2. Elect two (2) Class I Directors;
3. Consider and vote upon the ratification of the appointment of
KPMG Peat Marwick LLP as independent auditors for the Company for the fiscal
year ended December 31, 1995;
4. Approve the Company's 1995 Non-Employee Directors' Stock Plan;
and
5. 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 22, 1995 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
April , 1995 SECRETARY
<PAGE>
PROXY STATEMENT
of
FOREST OIL CORPORATION
950 Seventeenth Street
1500 Colorado National Building
Denver, Colorado 80202
April ___, 1995
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 10,
1995, at the Petroleum Club of Denver, 555 17th Street, Suite 3700, Denver,
Colorado, at 10:00 a.m., M.D.T., and at any adjournment thereof. Each holder of
record at the close of business on March 22, 1995 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, 1995, there were 28,212,435 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 amendment of
the Company's By-laws to decrease the minimum number of Directors in each class
from three to two, (ii) the election of the nominees for directors, (iii) the
ratification of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ended December 31, 1995, and (iv) the
approval of the Company's 1995 Non-Employee Directors' Stock Plan. 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, 1994 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 RECEIPT 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.
1
<PAGE>
AMENDMENT OF BY-LAWS TO REDUCE MINIMUM NUMBER
OF DIRECTORS IN EACH CLASS
At the Annual Meeting, the shareholders will be asked to take action which
would reduce the minimum number of directors in each class from three to two
members.
It is therefore proposed that the second sentence of Article III, Section 3
of the Company's By-laws be amended so as to read as follows:
"ARTICLE III - Section 3....All classes shall be as nearly
equal in number as possible, and no class shall include less
than two (2) directors."
The purpose of the proposal is to enable the Company, over time, to reduce
the minimum size of its Board of Directors from twelve to eight directors. This
will allow more flexibility in establishing the most efficient size board at any
given point in time.
Adoption of this amendment requires the affirmative vote of the holders of
TWO-THIRDS of the outstanding shares of Common Stock entitled to vote. The
shares represented by proxies solicited by the Board of Directors will be voted
as directed on the form of proxy or, if no direction is indicated, will be voted
for approval of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL TO ADOPT
1995 NON-EMPLOYEE DIRECTORS' STOCK PLAN
There will be presented at the Annual Meeting a proposal to approve the
Company's 1995 Non-Employee Directors' Stock Plan (the "Directors' Stock Plan").
The Board of Directors believes that by providing non-employee directors with an
opportunity to acquire a proprietary interest in the Company, the Directors'
Stock Plan will give such persons a stronger incentive to work for the continued
success of the Company. The Board of Directors also believes that the
Directors' Stock Plan will be helpful to the Company in attracting and retaining
outstanding non-employee directors.
Shareholder approval of the Directors' Stock Plan is being sought for the
limited purpose of satisfying the requirements of shareholder approval under
Regulation 16b-3 of the Securities Exchange Act of 1934, as amended (the "1934
Act"), which would exempt grants of options and the issuance of shares of Common
Stock in lieu of cash directors' fees under the Directors' Stock Plan from the
short swing profit prohibitions of Section 16 of the 1934 Act. The following
summary description of the Directors' Stock Plan is qualified in its entirety by
reference to the full text of the Directors' Stock Plan, a copy of which is
attached to this Proxy Statement as Exhibit A.
Directors of the Company who are not employees of the Company or any of its
subsidiaries ("Non-Employee Directors") are eligible to receive nonqualified
stock options under the Directors' Stock Plan. Each Non-Employee Director who
serves in such capacity or is elected to the Board of Directors at the 1995
Annual Meeting will receive, as of such date, an option to purchase 10,000
shares of Common Stock. An option for 10,000 shares of Common Stock (subject to
adjustment for stock dividends, stock splits or other relevant recapitalization
changes as provided in the Directors' Stock Plan) will
2
<PAGE>
automatically be granted as of the date of each subsequent annual meeting of
shareholders of the Company to each Non-Employee Director who serves in such
capacity or is elected to the Board of Directors on the applicable date of
grant. The purchase price of Common Stock issued under each option granted under
the Directors' Stock Plan will be equal to the fair market value of the Common
Stock subject to the option on the date of grant.
Options to purchase a total of 900,000 shares of Common Stock may be issued
under the Directors' Stock Plan, subject to adjustment for stock dividends,
stock splits or other relevant recapitalization changes as provided in such
plan. Each option granted under the Directors' Stock Plan (i) will expire no
later than ten years after the date the option is granted, (ii) is not
transferable by the Non-Employee Director except by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order,
and (iii) is exercisable during the Non-Employee Director's lifetime only by the
Non-Employee Director or his or her guardian or legal representative.
The options to be granted on the date of the 1995 Annual Meeting will be
fully vested and immediately exercisable. Except as provided below, options
granted on the date of a subsequent annual meeting of the shareholders of the
Company will be immediately exercisable with respect to 20% of the shares
covered thereby and will vest in additional 20% increments after each full year
of service as a director following the date of grant. Options granted under the
Directors' Stock Plan may be exercised only while the Non-Employee Director
remains a member of the Board of Directors or, except in the event of death or
disability, within three months after he or she ceases to serve as a director of
the Company. If a Non-Employee Director dies or becomes disabled while a member
of the Board of Directors, the option will become fully vested and is
exercisable for a one-year period thereafter.
Upon a "Corporate Change," all options outstanding under the Directors'
Stock Plan will become fully vested and shall thereafter be exercisable for the
number and class of securities or property that the option holder would have
been entitled to had the option already been exercised. The Directors' Stock
Plan provides that a "Corporate Change" occurs (i) if the Company is dissolved
and liquidated, (ii) if the Company is not the surviving entity in any merger or
consolidation (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company), (iii) if the Company sells,
leases or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any person or entity (other than a wholly-owned subsidiary
of the Company), (iv) if any person, entity or group acquires or gains ownership
or control of more than 50% of the outstanding shares of Common Stock or (v) if
after a contested election of directors, the persons who were directors of the
Company before such election cease to constitute a majority of the Board of
Directors.
3
<PAGE>
Pursuant to the Directors' Stock Plan, the Company will issue shares of
Common Stock in lieu of the cash payment of directors' fees. Each Non-Employee
Director shall be issued shares of Common Stock with a value of $20,000 annually
on the date of the Company's Annual Meeting of Shareholders and shares of Common
Stock with a value of $2,500 for attendance in person at each meeting or series
of meetings of the Board of Directors. Each member of the Compensation and
Audit Committees shall be issued shares of Common Stock with a value of $1,000
for attendance in person at each meeting of such committees up to a maximum of
shares of Common Stock with a value of $4,000 per year per committee. Any Non-
Employee Director serving on the Executive Committee shall be issued shares of
Common Stock with a value of $50,000 annually. The value of shares issued
annually will be determined as of the date of the Company's Annual Meeting of
Shareholders. The value of shares of Common Stock issued for attendance at
Board meetings or meetings of the Audit or Compensation Committees will be
determined as of the date of such meetings.
For purposes of payment of directors' fees under the Directors' Stock Plan,
the value of a share of Common Stock on a particular date will be based upon the
arithmetic average of the last reported sales price of the Common Stock for the
10 consecutive trading days ending on the tenth calendar day prior to such date.
The "last reported sales price" of the Common Stock on any date means the last
reported sales price (or if no such price is reported, the closing bid price) on
such date as reported in the composite transactions for the NASDAQ/NMS, or if
the Common Stock is not listed on the NASDAQ/NMS, the principal United States
securities exchange on which the Common Stock is traded or, if the Common Stock
is not listed on the NASDAQ/NMS or a United States national or regional stock
exchange, as reported by NASDAQ or the National Quotation Bureau Incorporated,
or if the Common Stock is not so listed or if such last reported sale price and
closing bid are not reported by NASDAQ or the National Quotation Bureau
Incorporated, then such price shall be determined by the Board of Directors in
good faith, such determination to be conclusive. "NASDAQ" means the National
Association of Securities Dealers, Inc. Automated Quotation System.
"NASDAQ/NMS" means the National Market System of the NASDAQ.
The Board of Directors may amend the Directors' Stock Plan as it deems
advisable, except that it may not, without further approval of the shareholders
of the Company, materially increase the benefits accruing to the participants,
increase the number of shares subject to the Directors' Stock Plan, extend the
maximum period during which options may be granted, or modify the requirements
as to the eligibility for participation in the Directors' Stock Plan.
The Directors' Stock Plan will become effective on the date of the Annual
Meeting if it is approved by the shareholders of the Company at such meeting.
The Board of Directors may terminate the Directors' Stock Plan at any time.
Termination of the Directors' Stock Plan will not affect the rights of optionees
or their successors under any options outstanding and not exercised in full on
the date of termination. Unless earlier terminated by the Board of Directors,
the Directors' Stock Plan will terminate on May 9, 2005.
4
<PAGE>
The options granted under the Directors' Stock Plan will not constitute
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and thus will be nonqualified stock options.
As a general rule, no federal income tax is imposed on the optionee upon the
grant of a nonqualified stock option and the Company is not entitled to a tax
deduction by reason of such a grant. Except as described in the following
paragraph, upon the exercise of a nonqualified stock option, the optionee will
be treated as receiving compensation taxable as ordinary income in the year of
exercise in an amount equal to the excess of the fair market value of the shares
on the date of exercise over the option price paid for such shares. Upon a
subsequent disposition of the shares received upon exercise of a nonqualified
stock option, any difference between the fair market value of the shares at the
time of exercise and the amount realized on the disposition would be treated as
long-term or short-term capital gain or loss, depending on the holding period of
the shares. Upon the exercise of a nonqualified stock option, the Company may
claim a deduction for compensation paid at the same time and in the same amount
as compensation income is recognized to the optionee assuming any federal income
tax withholding requirements are satisfied.
If other shares of Common Stock have been purchased by an optionee within
six months of the exercise of a nonqualified stock option, recognition of the
compensation attributable to such exercise may under certain circumstances be
postponed for a period of up to six months from the date of purchase of such
other shares of Common Stock due to liability to suit under Section 16(b) of the
1934 Act. If applicable, one effect of any such postponement would be to
measure the amount of compensation taxable to the optionee as ordinary income by
reference to the fair market value of such shares at the time such liability to
suit under Section 16(b) of the 1934 Act no longer exists (rather than at the
earlier date of exercise of the nonqualified stock option). Similarly, the fair
market value of such shares at such time would become the optionee's basis in
the shares for purposes of computing gain or loss upon a subsequent disposition,
and the optionee's holding period for the shares would date from that time.
However, an optionee may elect with respect to such shares to recognize the
compensation attributable to such exercise at the time of such exercise, in
which case his or her tax treatment would be as described in the preceding
paragraph.
Except as described above, there are no federal income tax effects to the
Company upon the issuance of shares of Common Stock pursuant to the exercise of
options granted under the Directors' Stock Plan or the disposition of shares
acquired pursuant to such exercise.
A majority of the votes represented at the meeting by shares of Common Stock
entitled to vote is required for approval of the Directors' Stock Plan. The
shares represented by proxies solicited by the Board of Directors will be voted
as directed on the form of proxy or, if no direction is indicated, will be voted
for approval of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
DIRECTORS' STOCK PLAN.
5
<PAGE>
ELECTION OF DIRECTORS
The Company's By-laws currently 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. As described above, the Company is proposing to
reduce the minimum number of Directors in each class from three to two members.
Currently the number of directors is fixed at 12. After the election of
Directors at the 1995 Annual Meeting, the size of the Board will be reduced to
11 members.
The Board of Directors, effective at the 1994 Annual Meeting, reapportioned
the number of Directors to three 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. Mr. Riggs, a Class I Director, is not standing for
reelection. 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 Nominees 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. The Class IV Directors were elected at the 1994
Annual Meeting.
A majority of the votes represented at the meeting by shares of Common Stock
entitled to vote 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 I Nominees 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>
PRINCIPAL OCCUPATION, SERVED
AGE AND POSITIONS WITH COMPANY AS A
YEARS OF SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
---- ---------------- ----------------------- --------
<C> <C> <S> <C>
CLASS I NOMINEES--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1999
William L. Dorn..... 46 - 23 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.
Chairman of the Royalty Bonus Committee
since August 1991.
James H. Lee........ 46 - 4 Managing Partner, Lee, Hite & Wisda Ltd. 1991
Member of the Executive Committee
since February 1994.
6
<PAGE>
PRINCIPAL OCCUPATION, SERVED
AGE AND POSITIONS WITH COMPANY AS A
YEARS OF SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
---- ---------------- ----------------------- --------
CLASS II DIRECTORS--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1996
Dale F. Dorn........ 52 - 28 Resigned as a Vice President 1977
in September 1989; currently
engaged in private investments.
Harold D. Hammar.... 71 - 10 Member of the Audit Committee and 1985
Compensation Committee.
Financial Consultant.
Robert S. Boswell... 45 - 10 President since November 1993. 1985
Vice President from 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. Director of
Franklin Supply Company Ltd.
CLASS III DIRECTORS--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1997
Jeffrey W. Miller... 43 - 7 Independent Biologist. 1988
Michael B. Yanney... 61 - 3 Chairman and Chief Executive Officer of 1992
the America First Companies, L.L.C. and a
director of Burlington Northern Inc., Lozier
Corporation, MFS Communications Company,
Inc. and America First REITs Inc. Chairman
of the Compensation Committee.
Donald H. Anderson.. 46 - 2 President, Chief Executive Officer and 1993
Director of Associated Natural Gas
Corporation, a wholly owned subsidiary
of Panhandle Eastern Corporation, since
September 1989 and January 1989, respectively
and Chief Operating Officer and Chairman of
Associated Natural Gas, Inc., a wholly owned
subsidiary of Panhandle Eastern Corporation,
since December 1994 and December 1986,
respectively. Director of Banc One Denver,
N.A. Member of the Audit Committee.
7
<PAGE>
PRINCIPAL OCCUPATION, SERVED
AGE AND POSITIONS WITH COMPANY AS A
YEARS OF SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
---- ---------------- ----------------------- --------
CLASS IV DIRECTORS--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1998
John C. Dorn........ 67 - 45 Retired as Regional Vice President 1956
in December 1990.
Richard J. Callahan. 53 - 2 Executive Vice President of U S WEST, Inc. 1993
since January 1988 and President of
U S WEST International and Business
Development Group since October 1991.
Member of the Compensation Committee.
Austin M. Beutner.. 34 - 2 President, Chief Executive Officer and 1993
Director of 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. Member of the Compensation
Committee.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of January 31, 1995, 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.
8
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK (2)
-------------------------
NAME OF INDIVIDUAL OR NUMBER PERCENT
NUMBER IN GROUP (1) OF SHARES OF CLASS
--------------------- ----------- ---------
<S> <C> <C>
Donald H. Anderson 10,000 *
Bulent A. Berilgen 101,081(3) *
Austin M. Beutner - -
Robert S. Boswell 210,673(4) *
Richard J. Callahan 2,000 *
Dale F. Dorn 116,156(5) *
Forest D. Dorn 219,714(6) *
John C. Dorn 250,485(7) *
William L. Dorn 409,532(8) 1.45
Harold D. Hammar 2,500 *
David H. Keyte 116,222(9) *
James H. Lee 1,000 *
Jeffrey W. Miller 331,220(10) 1.17
Jack D. Riggs 6,635 *
Michael B. Yanney 5,000 *
All directors and executive
officers as a group (19
persons, including the 15
named above) 2,007,826(11) 7.12%
<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, and they and Dale F. Dorn
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, 1994.
(3) Includes 100,000 Common shares that Bulent A. Berilgen has the vested right
to purchase pursuant to the terms of the 1992 Stock Option Plan.
(4) Includes 175,000 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 830 shares
held by his children, of which shares Mr. Boswell disclaims beneficial
ownership.
(5) Includes 14,699 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.
9
<PAGE>
(6) Includes 100,000 Common shares that Forest D. Dorn has the vested right to
purchase pursuant to the terms of the 1992 Stock Option Plan. Also
includes 25,800 Common shares held of record by Forest D. Dorn as co-
trustee of a trust for the benefit of his mother (see Footnote 8), of which
shares Mr. Dorn disclaims beneficial ownership. Does not include 8,628
Common shares held by Forest D. Dorn's wife or 25,967 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) 265,676
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 175,000 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) 25,800 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)
74,223 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 14,990 Common shares held by
William L. Dorn's wife or 35,997 shares held by his children, of which
shares Mr. Dorn disclaims beneficial ownership.
(9) Includes 100,000 Common shares that David H. Keyte has the vested right to
purchase pursuant to the terms of the 1992 Stock Option Plan. Also
includes 7,000 Common shares that David H. Keyte has the right to acquire
upon the conversion of 2,000 shares of the Company's $.75 Convertible
Preferred Stock.
(10) Includes 99,825 Common shares held of record by Jeffrey W. Miller as
custodian for his minor children, of which shares Mr. Miller disclaims
beneficial ownership.
(11) Includes 867,000 Common shares held by various executive officers who have
the vested right to purchase such shares pursuant to the terms of the 1992
Stock Option Plan and 21,350 Common shares that three executive officers
have the right to acquire upon the conversion of 6,100 shares of the
Company's $.75 Convertible Preferred Stock.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
During 1994, the Board of Directors of the Company met on six 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 1994, the Executive
Committee met 15 times. William L. Dorn, Robert S. Boswell and James H. Lee are
the members of the Executive Committee. The members of the Royalty Bonus
Committee, which met once and acted by consent nine times during the year, were
William L. Dorn, Robert S. Boswell and Jack D. Riggs. Members of the Royalty
Bonus Committee are eligible to participate in royalty bonuses granted by the
Royalty Bonus Committee.
10
<PAGE>
The Compensation Committee met six times during 1994. This committee makes
recommendations to the Board of Directors in the area of executive compensation,
including the selection of individuals to be granted options from among those
eligible 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. The members of the
Compensation Committee are Austin M. Beutner, Richard J. Callahan, Harold D.
Hammar, Jack D. Riggs and Michael B. Yanney. 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
Donald H. Anderson, Harold D. Hammar and Jack D. Riggs.
The Board of Directors does not have a standing nominating or similar
committee.
During 1994, each incumbent director of the Company, except Austin M.
Beutner and Richard J. Callahan, 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.
Beutner, Callahan, Hammar, Riggs and Yanney. Mr. Riggs retired as a Vice
President of the Company in 1987 and is not standing for reelection as a
director. 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, Robert S. Boswell and Jack D. Riggs. William L. Dorn is
Chairman of the Board and Chief Executive Officer and Robert S. Boswell is
President. During 1994 there were no compensation committee interlocks between
the Company and any other entity.
A real estate complex (the "Complex") owned by members of the Dorn and
Miller families, located near Bradford, Pennsylvania, had been historically used
by the Company for business purposes. In 1994, the Company notified the owners
of the Complex that it intended to terminate its annual usage after 1994.
In 1994, and in connection with the Company's termination of usage the
Company paid $662,000 on account of the business use of such property, and an
additional $300,000 as a partial reimbursement of deferred maintenance costs.
Members of the Dorn and Miller families who were directors and/or executive
officers of the Company (and their immediate families) who owned a direct or
indirect interest in such Complex during 1994 were 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.
For further information with respect to other transactions with management
and others see "Transactions with Management and Others".
11
<PAGE>
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 1994 as directors were: John C.
Dorn, Dale F. Dorn, Harold D. Hammar, Jeffrey W. Miller, Jack D. Riggs and
Michael B. Yanney - $30,000; Donald H. Anderson - $27,500; Austin M. Beutner and
Richard J. Callahan - $25,000. James H. Lee received $30,000 for his services
as a director, $2,000 for attendance at meetings of the Audit and Compensation
Committees and $41,666.68 as payment for his service on the Executive Committee,
which began March 1, 1994. Messrs. Hammar and Riggs each received an additional
$8,000 for attending meetings of the Audit and Compensation Committees. Mr.
Yanney received an additional $3,000 for attending meetings of the Compensation
Committee and Mr. Anderson was paid an additional $4,000 for attending meetings
of the Audit Committee.
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 which he attends 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 which he attends up to a maximum of $4,000 per year for
service on that committee, and (iii) Mr. Lee will be paid $50,000 per year for
service on the Executive Committee.
Shareholders are being asked to approve a Directors' Stock Plan for Non-
Employee Directors--see "Proposal to Adopt 1995 Non-Employee Directors' Stock
Plan". The Directors' Stock Plan will provide for both options and in lieu of
cash fees, payment of future compensation of the directors in shares of the
Company's Common Stock.
12
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
Chief Executive Officer, each of the Company's four other most highly
compensated executive officers (collectively, the "Named Executive Officers"),
based on salary and bonus earned in 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------
Long Term
Compensation
Awards(4)
---------
Name and All Other
Prinicpal Position Other Annual Securities Compen-
- ------------------ Compen- Underlying sation
Year Salary ($) Bonus ($)(1)(2) sation ($)(3) Options(#) ($)(5)
---- ---------- --------------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
William L. Dorn, 1994 $300,012 -0- $2,795 -0- $22,942
Chairman of the Board 1993 250,008 100,159 665 175,000 32,640
and Chief Executive Officer 1992 250,008 75,618 624 175,000 10,618
Robert S. Boswell, 1994 284,004 -0- 2,515 -0- 21,559
President 1993 234,000 88,239 607 175,000 30,503
1992 234,000 94,017 567 175,000 10,445
Bulent A. Berilgen, 1994 166,512 -0- -0- -0- 11,507
Vice President of 1993 137,850 53,336 -0- 100,000 16,458
Operations 1992 131,932 41,456 -0- 100,000 6,234
David H. Keyte, 1994 165,000 -0- 21,945 -0- 11,469
Vice President and Chief 1993 139,494 36,433 18,192 100,000 16,517
Accounting Officer 1992 131,618 58,419 -0- 100,000 6,234
Forest D. Dorn, 1994 163,800 -0- 18,335 -0- 12,910
Vice President and General 1993 160,650 22,013 324 100,000 20,342
Business Manager 1992 156,250 35,219 316 100,000 8,769
- -----------------------
13
<PAGE>
<FN>
(1) The following amounts indicate the awards made with respect to the
years indicated, under the Forest Oil Corporation Incentive Plan (the
"Incentive Plan"):
1992 1993 1994
William L. Dorn $68,126 $30,500 -0-
Robert S. Boswell 61,965 29,020 -0-
Bulent A. Berilgen 37,565 18,135 -0-
David H. Keyte 34,542 16,185 -0-
Forest D. Dorn 31,328 14,819 -0-
Distributions of awards are made pursuant to the Incentive Plan in equal
installments over a three-year period. Pursuant to the Incentive Plan if a
participant's employment is terminated prior to the vesting of awards, the
remainder of such awards is reallocated to other participants. Amounts
reallocated in 1994 for the years 1992 and 1993 were as follows: William
L. Dorn - $3,445; Robert S. Boswell - $3,224; Bulent A. Berilgen - $1,836;
David H. Keyte - $1,838; and Forest D. Dorn - $2,167. See "Report of the
Compensation Committee on Executive Compensation--Incentive Plan Awards".
(2) During 1994, 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 $3,599 each for William L. Dorn, Robert S. Boswell
and Forest D. Dorn, $2,061 for Bulent A. Berilgen and $2,041 for David H.
Keyte. During 1994 interests in nine exploratory oil and gas prospects were
so awarded by the Royalty Bonus Committee.
(3) 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 and Forest D. Dorn, each of whose 1994 total includes a
cash auto allowance of $15,000.
(4) 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.
(5) The 1994 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 - $7,500; Robert S. Boswell - $7,500;
Bulent A. Berilgen - $7,500; David H. Keyte - $7,500; and Forest D. Dorn -
$7,500; (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 - $5,448; Robert S. Boswell - $5,400;
Bulent A. Berilgen - $3,181; David H. Keyte - $3,219; and Forest D. Dorn -
$3,707; (iii) the Company's matching contribution pursuant to deferred
compensation agreements in the following amounts: William L. Dorn -
$7,501; Robert S. Boswell - $6,700; Bulent A. Berilgen - $826; David H.
Keyte - $750; and Forest D. Dorn - $690; and (iv) the Company's profit
sharing bonus contribution of $322 pursuant to the deferred compensation
agreement of William L. Dorn. The 1994 totals also include the following
amounts attributable to the term life portion of premiums paid by the
Company pursuant to a split dollar
14
<PAGE>
insurance arrangement: William L. Dorn - $2,171; Robert S. Boswell -
$1,959; and Forest D. Dorn - $1,013. The remainder of the premium is
not included and does not benefit the Named Executive Officers because
the Company has the right to the cash surrender value of the policy.
</TABLE>
YEAR END STOCK OPTION VALUES
No stock options were granted to the Named Executive Officers in 1994.
There were no stock option exercises by any Named Executive Officers during
1994. The following table shows the number of shares covered by both exercisable
and non-exercisable stock options as of December 31, 1994 and their values at
such date:
OUTSTANDING STOCK OPTION VALUES AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
Number of Securities Underlying Value of
Unexercised Options Unexercised In-the-Money
at Fiscal Year End (#) Options at Fiscal Year End ($)(1)
-------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
William L. Dorn . . . 175,000 175,000 $0 $0
Robert S. Boswell . . 175,000 175,000 0 0
Bulent A. Berilgen . 100,000 100,000 0 0
David H. Keyte . . . 100,000 100,000 0 0
Forest D. Dorn . . . 100,000 100,000 0 0
<FN>
- --------------
(1) On December 31, 1994, the last reported sales price of the Common Stock as
quoted on the NASDAQ/NMS was $2.25 per share. 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. Since the last reported sales
price at December 31, 1994 was lower than the option price for the options
granted in 1992 and 1993, no value is ascribed to those options in the
above table.
</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, 1994 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 1989
and that dividends were reinvested. The companies in the peer index were
selected based on the following criteria: (i) total assets ranging from
approximately $125 million to $1.1 billion, (ii) total revenue ranging from
approximately $40 million to $300 million and (iii) oil and gas revenue
comprising at least 54% 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.
15
<PAGE>
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.
Comparison of Five-Year Cumulative Total Returns:
1989 1990 1991 1992 1993 1994
Forest Oil Corporation 100.0 39.2 11.3 24.1 33.0 17.0
Peer Index 100.0 79.3 70.8 82.0 117.5 111.3
Dow Jones Oil Secondary 100.0 83.2 81.7 82.3 91.3 86.4
S&P 500 100.0 96.9 126.4 136.1 149.8 151.8
[Graph]
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee's duties include the annual review and approval
of the compensation of the Chairman and President, 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 determining the terms and awards under the
Company's 1992 Stock Option Plan. During 1994, the Compensation Committee, with
the assistance of its compensation consultant, developed a compensation program
for annual cash incentive bonuses and stock option grants. Although the program
was not finalized until November 1994, it established the 1994 performance goals
based on senior management's recommendations. See "Cash Bonuses" below. In
1994, 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 salaries for all
officers except the Chairman and the President.
The Compensation Committee has studied 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
16
<PAGE>
compensation that results in such limitation. The Compensation Committee may
authorize compensation in the future that results in amounts above the limit 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.
In March 1995, the Compensation Committee renewed the Executive Severance
Agreements and extended their term to December 1997. In addition, the
definition of "change of control" was modified. See "Transactions with
Management and Others - Executive Severance Agreements."
BASE SALARIES. The Company's compensation policy for base salaries is to
set compensation within a competitive range. The competitive range for base
salaries is determined by reviewing competitive pay practices of similarly
positioned energy companies, including those companies which are considered for
comparison purposes in the Company's Five-Year Cumulative Total Returns graph.
During 1994, adjustments were made to base salaries to reflect promotions and
changes of responsibilities of certain officers. The Chief Executive Officer
and President were each given an increase of $50,000 per year based on the
Committee's assessment of their performance in reducing the Company's debt, the
restructuring of the organization, and the fact that they had not had an
increase in base salary for several years. In addition, the Compensation
Committee concluded that the increased levels of their base salaries were
comparable to those of executive officers with companies in the Company's peer
group.
CASH BONUSES. During 1994, the Committee worked with its compensation
consultant to develop a new performance based annual cash incentive bonus
program. The program provides for cash bonuses to be paid to executive officers
based on the achievement of predetermined performance criteria. Each
performance criteria is selected for its strategic importance and weighted to
reflect the relative importance to the Company's annual initiatives. For the
Chief Executive Officer the threshold is zero, the target award level is 40% of
base salary and the maximum is 100% of base salary. The Committee worked with
senior management to identify the performance criteria to be used in the program
for 1994 and 1995. The criteria are: 1) Profitability (which is (i) defined
generally as net income after taxes, extraordinary items and accounting changes
and (ii) weighted 40% of the formula), 2) Value Added Index (which is (i)
defined generally as changes in oil and gas reserves divided by capital
expenditures multiplied by reserve replacement ratio and (ii) weighted 30% of
the formula), 3) Return on Invested Capital (which is (i) defined generally as
interest expense and pretax income divided by total assets less non-interest
liabilities and (ii) weighted 10% of the formula), 4) Operating Efficiency
Against Peer Companies (which is (i) defined as the Company's performance in
terms of oil and gas exploration and production costs with respect to both
revenue and production volume as compared to its peer group of companies and
(ii) weighted 10% of the formula), and 5) Strategic Initiatives (which (i)
include achieving a targeted debt to equity ratio for the Company, the
development of a strategic investment alternative, and organization development
and (ii) is weighted 10% of the formula). No discretionary cash bonuses were
paid to the executive officers for 1994.
The Company has traditionally granted year-end Christmas bonuses to all
employees, including executive officers. The 1994 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 $8,250.
STOCK OPTIONS. In 1994, the Compensation Committee granted stock options
to V. Bruce Thompson, Vice President and General Counsel for 100,000 shares of
Common Stock and to Joan C. Sonnen, Controller for 45,000 shares of Common
Stock, both at an exercise price of $5.00 per share.
17
<PAGE>
For 1995, as part of the Company's newly-developed executive compensation
program, guidelines were established for granting stock options to executive
officers based on the achievement of predetermined performance goals, mentioned
above under "Cash Bonuses".
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.
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 1994, the Compensation Committee approved grants under the Company's
Incentive Plan with respect to amounts earned for 1993. Total awards of
$364,729 were made pursuant to the Incentive Plan to be paid out over a three-
year period, including an award in 1994 of $30,500 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 1994, the Compensation Committee approved profit sharing
contributions of Common Stock with a fair market value of $5,448 to the
Company's Retirement Savings Plan and $322 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 1994, 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 all oil,
gas and other minerals produced, saved and sold from certain oil and gas
prospects in which the Company had an
18
<PAGE>
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,
1994 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 1993 (6 in number) terminated, reverted
to and revested in the Company during 1994.
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, 1994. In 1991,
William L. Dorn was elected Chairman of the Board. 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:
<TABLE>
<CAPTION>
7/31/91 12/31/91 6/30/92 12/31/92 6/30/93 12/31/93 6/30/94 12/31/94
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Forest Oil 100 95 79 201 363 276 268 142
Peer Index 100 91 92 106 157 151 171 143
DJ, Oil Secondary 100 90 86 91 107 101 105 96
S&P 500 100 109 108 117 123 129 125 131
</TABLE>
[Graph]
19
<PAGE>
Date: April _____, 1995 Compensation Committee
-----------------------
Michael B. Yanney, Chairman
Austin M. Beutner
Richard J. Callahan
Harold D. Hammar
Jack D. Riggs
Executive Committee Royalty Bonus Committee
------------------- -----------------------
William L. Dorn, Chairman William L. Dorn, Chairman
Robert S. Boswell Robert S. Boswell
James H. Lee Jack D. Riggs
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>
$100,00 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 above in the Summary Compensation Table.
(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 $120,000 in 1995, 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, which produces the highest amount,
in the last 15 years prior to retirement, up to May 31, 1991, when benefit
accruals ceased 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
20
<PAGE>
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)
</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 and David H. Keyte - 4. 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; Robert S. Boswell - $4,436;
Bulent A. Berilgen - $11,832; David H. Keyte - $5,401; and Forest D. Dorn -
$18,886. Neither Robert S. Boswell nor David H. Keyte is 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. On
January 31, 1995, there were 28,212,435 shares of Common Stock outstanding, with
each such share being entitled to one vote. On January 31, 1995 members of the
Dorn and Miller families, descendants of the founders of the Company, owned
3,494,491 shares of Common Stock, constituting approximately 12.39% of the
voting power of the Company.
21
<PAGE>
As of January 31, 1995, to the knowledge of the Company's Board of Directors
the only shareholders who owned beneficially more than 5% of the outstanding
shares of the Company's Common Stock were:
<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) R.B. Haave Associates, Inc. 2,598,900 (2) 8.92%
270 Madison Avenue
New York, NY 10016
Metropolitan Life 1,855,000 (3) 6.58%
Insurance Company
One Madison Avenue
New York, NY 10010
Smith Barney Inc. 2,270,277 (4)(5) 8.05%
1345 Avenue of the Americas
New York, NY 10115
<FN>
(1) Based on Schedules 13D and 13G and amendments thereto filed with
the SEC and the Company by the reporting person through April 1, 1995 and
the amount of Common Stock outstanding on January 31, 1995.
(2) Includes 949,900 shares of Common Stock that the reporting person has the
right to acquire upon the conversion of 271,400 shares of the Company's $.75
Convertible Preferred Stock.
(3) These shares are beneficially owned by State Street Research and Management
Company, a subsidiary of Metropolitan Life Insurance Company, which
disclaims beneficial ownership of these securities.
(4) Smith Barney Holdings Inc. is the sole common stockholder of Smith Barney
Inc., and The Travelers Inc. is the sole stockholder of Smith Barney
Holdings Inc. Smith Barney Holdings Inc. and The Travelers Inc. disclaim
beneficial ownership of these securities.
(5) Includes 1,750 and 45 shares of Common Stock that the reporting person has
the right to acquire upon the conversion of 500 shares of the Company's $.75
Convertible Preferred Stock and the exercise of Warrants to purchase shares
of Common Stock, respectively.
</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
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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 1995 and
1996 at approximately $190,000 per year with the balance ($149,000) payable in
May 1997. The retirement 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.
In March 1995, the Compensation Committee renewed the Executive Severance
Agreements and extended their term to December 1997. In addition, the
definition of "change of control" was modified.
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;
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(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, as modified in March, 1995,
(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 40% 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.
OTHER TRANSACTIONS. For a description of other transactions with
management and others see "Compensation Committee Interlocks and Insider
Participation".
In 1994, the Company engaged The Blackstone Group to perform certain
investment banking services. Austin M. 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 1995.
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 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 are
fully vested and are not subject to early termination; (b) they received
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 received full vesting with respect to split dollar life insurance
at the Company's expense; (d) they continued 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 paid for the
cost of relocating their offices; (f) the Company will provide John F. Dorn with
certain accounting, financial and estate planning
24
<PAGE>
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 interests in
approximately 70 wells. All of the properties were 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 canceled to the extent that
the Company's participation in the loan is not repaid in full. The number of
stock options canceled 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. In 1994,
the Company paid approximately $234,500 to the entity that purchased the
properties to settle title disputes.
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, 1994 to March 31, 1995, its officers, directors, and greater than 10%
beneficial owners complied with all applicable filing requirements, except that
Dale F. Dorn, John C. Dorn and Michael B. Yanney each failed to file a monthly
report of one transaction, but such transactions were reported in their year-end
reports on Form 5, which were timely filed.
APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders of the Company, the Board has
designated the firm of KPMG Peat Marwick LLP, Suite 2300, 707 Seventeenth
Street, Denver, Colorado 80202 as independent auditors to examine and audit the
Company's financial statements for the year 1995. This firm has audited the
Company's financial statements for approximately 45 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 majority of the vote represented at the meeting by shares of
Common Stock entitled to vote is required to ratify the appointment of KPMG Peat
Marwick LLP.
25
<PAGE>
A representative of KPMG Peat Marwick LLP 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.
A majority of the votes represented at the meeting by shares of Common Stock
entitled to vote is required for approval of the Directors' Stock Plan. The
shares represented by proxies solicited by the Board of Directors will be voted
as directed on the form of proxy or, if no direction is indicated, will be voted
for approval of this proposal.
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 1996 Annual Meeting of Shareholders must be
received by Daniel L. McNamara, Secretary, at 1500 Colorado National Building,
950 - 17th Street, Denver, CO 80202, no later than December 2, 1995.
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, 1994, 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 1994 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 National Union Fire Insurance Company for a
total coverage of $20,000,000. Aggregate premiums for the 12-month period
ending May 24, 1995 are $510,122. 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
26
<PAGE>
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 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 1994 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 _____, 1995
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<PAGE>
EXHIBIT A
FOREST OIL CORPORATION
1995 NONEMPLOYEE DIRECTORS' STOCK PLAN
I. PURPOSE OF THE PLAN
The FOREST OIL CORPORATION 1995 NONEMPLOYEE DIRECTORS' STOCK PLAN (the
"Plan") is intended to promote the interests of FOREST OIL CORPORATION, a New
York corporation (the "Company"), and its shareholders by helping to award and
retain highly-qualified independent directors, and allowing them to develop a
sense of proprietorship and personal involvement in the development and
financial success of the Company. Accordingly, the Company shall grant to
directors of the Company who are not employees of the Company or any of its
subsidiaries ("Nonemployee Directors") the option ("Option") to purchase shares
of the common stock of the Company ("Stock"), as hereinafter set forth. Options
granted under the Plan shall be options which do not constitute incentive stock
options, within the meaning of section 422(b) of the Internal Revenue Code of
1986, as amended. In addition, as hereinafter set forth, the Company shall
award to Nonemployee Directors shares of Stock in lieu of the payment of
directors' fees.
II. OPTION AGREEMENTS
Each Option shall be evidenced by a written agreement in the form attached
to the Plan.
III. ELIGIBILITY OF OPTIONEE
Options may be granted only to individuals who are Nonemployee Directors of
the Company. Each Nonemployee Director who serves in such capacity or is
elected to the Board of Directors of the Company (the "Board") on the effective
date of the Plan shall receive, as of such date and without the exercise of the
discretion of any person or persons, an Option exercisable for 10,000 shares of
Stock. As of the date of the annual meeting of the shareholders of the Company
in each year after the effective date of the Plan that the Plan is in effect as
provided in Paragraph VI hereof, each Nonemployee Director then in office or
elected to the Board on such date shall receive, as of such date and without the
exercise of the discretion of any person or persons, an Option exercisable for
10,000 shares of Stock (subject to adjustment in the same manner as provided in
Paragraph VII hereof with respect to shares of Stock subject to Options then
outstanding). If, as of any date that the Plan is in effect, there are not
sufficient shares of Stock available under the Plan to allow for the grant to
each Nonemployee Director of an Option for the number of shares provided herein
(determined after the award of shares of Stock as of such date pursuant to
Paragraph VI hereof), each Nonemployee Director shall receive an Option for his
or her pro-rata share of the total number of shares of Stock then available
under the Plan.
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All Options granted under the Plan shall be at the Option price
set forth in Paragraph V hereof and shall be subject to adjustment as provided
in Paragraph VIII hereof.
IV. SHARES SUBJECT TO THE PLAN
The aggregate number of shares which may be issued under Options granted
under the Plan and awarded pursuant to Paragraph VI hereof shall not exceed
900,000 shares of Stock. Such shares may consist of authorized but unissued
shares of Stock or previously issued shares of Stock reacquired by the Company.
Any of such shares which remain unissued and which are not subject to
outstanding Options at the termination of the Plan shall cease to be subject to
the Plan, but, until termination of the Plan, the Company shall at all times
make available a sufficient number of shares to meet the requirements of the
Plan. Should any Option hereunder expire or terminate prior to its exercise in
full, the shares theretofore subject to such Option may again be subject to an
Option granted under the Plan to the extent permitted under Rule 16b-3, as
currently in effect or hereafter modified or amended ("Rule 16b-3"), promulgated
under the Securities Exchange Act of 1934, as amended (the "1934 Act"). The
aggregate number of shares which may be issued under the Plan shall be subject
to adjustment in the same manner as provided in Paragraph VIII hereof with
respect to shares of Stock subject to Options then outstanding. Exercise of an
Option shall result in a decrease in the number of shares of Stock which may
thereafter be available, both for purposes of the Plan and for sale to any one
individual, by the number of shares as to which the Option is exercised.
V. OPTION PRICE
The purchase price of Stock issued under each Option shall be the fair
market value of Stock subject to the Option as of the date the Option is
granted. For all purposes under the Plan, the fair market value of a share of
Stock on a particular date shall be equal to the mean of the high and low sales
prices of the Stock (i) reported by the National Market System of NASDAQ on that
date or (ii) if the Stock is listed on a national stock exchange, reported on
the stock exchange composite tape on that date; or, in either case, if no prices
are reported on that date, on the last preceding date on which such prices of
the Stock are so reported. If the Stock is traded over the counter at the time
a determination of its fair market value is required to be made hereunder, its
fair market value shall be deemed to be equal to the average between the
reported high and low or closing bid and asked prices of Stock on the most
recent date on which Stock was publicly traded. In the event Stock is not
publicly traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the Board
in such manner as it deems appropriate.
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VI. STOCK AWARDS
In lieu of the cash payment of directors' fees by the Company to
Nonemployee Directors during the term of the Plan, as soon as administratively
feasible (a) each Non-Employee Director shall be issued shares of Stock with a
value of $20,000 annually on the date of the Company's Annual Meeting of
Shareholders and shares of Stock with a value of $2,500 for attendance in person
at each meeting or series of meetings of the Board of Directors, (b) each member
of the Compensation and Audit Committees shall be issued shares of Stock with a
value of $1,000 for attendance in person at each meeting of such committees up
to a maximum of shares of Stock with a value of $4,000 per year per committee,
(c) any Non-Employee Director serving on the Executive Committee shall be issued
shares of Stock with a value of $50,000 annually. The value of shares issued
annually will be determined as of the date of the Company's Annual Meeting of
Shareholders. The value of shares of Stock issued for attendance at Board
meetings or meetings of the Audit or Compensation Committees will be determined
as of the date of such meetings.
For purposes of payment of directors' fees under the Plan, the value of a
share of Stock on a particular date will be based upon the arithmetic average
of the last reported sales price of the Stock for the 10 consecutive trading
days ending on the tenth calendar day prior to such date. The "last reported
sales price" of the Stock on any date means the last reported sales price (or
if no such price is reported, the closing bid price) on such date as reported in
the composite transactions for the NASDAQ/NMS, or if the Stock is not listed on
the NASDAQ/NMS, the principal United States securities exchange on which the
Stock is traded or, if the Stock is not listed on the NASDAQ/NMS or a United
States national or regional stock exchange, as reported by NASDAQ or the
National Quotation Bureau Incorporated, or if the Stock is not so listed or if
such last reported sale price and closing bid are not reported by NASDAQ or the
National Quotation Bureau Incorporated, then such price shall be determined by
the Board of Directors in good faith, such determination to be conclusive.
"NASDAQ" means the National Association of Securities Dealers, Inc. Automated
Quotation System. "NASDAQ/NMS" means the National Market System of the NASDAQ.
VII. TERM OF PLAN
The Plan shall be effective on the date the Plan is approved by the
shareholders of the Company. Except with respect to Options then outstanding,
if not sooner terminated under the provisions of Paragraph IX, the Plan shall
terminate upon and no further Options or awards pursuant to Paragraph VI hereof
shall be granted after the expiration of ten years from the date of its adoption
by the shareholders of the Company.
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VIII. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Options granted hereunder shall
not affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities, the
dissolution or liquidation of the Company or any sale, lease, exchange or other
disposition of all or any part of its assets or business or any other corporate
act or proceeding.
(b) The shares with respect to which Options may be granted are
shares of Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by the Company, the number of
shares of Stock with respect to which such Option may thereafter be exercised
(i) in the event of an increase in the number of outstanding shares shall be
proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased.
(c) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover 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 the
recapitalization, the optionee had been the holder of record of the number of
shares of Stock then covered by such Option.
(d) Any adjustment provided for in Subparagraphs (b) or (c) above
shall be subject to any required shareholder action.
(e) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares of
stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Stock subject to Options theretofore granted or the purchase
price per share.
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IX. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Options or awards pursuant to Paragraph VI hereof have
not theretofore been granted. The Board shall have the right to alter or amend
the Plan or any part thereof from time to time; provided, that no change in any
Option theretofore granted may be made which would impair the rights of the
optionee without the consent of such optionee; and provided, further, that the
Board may not make any alteration or amendment which would materially increase
the benefits accruing to participants under the Plan, increase the aggregate
number of shares which may be issued pursuant to the provisions of the Plan,
change the class of individuals eligible to receive Options or awards pursuant
to Paragraph VI hereof or extend the term of the Plan, without the approval of
the shareholders of the Company. Without limiting the scope of the preceding
provisions of this Paragraph IX, the Board may at any time terminate the
granting of Options under the Plan while permitting awards pursuant to Paragraph
VI hereof to continue or the Board may at any time terminate awards pursuant to
Paragraph VI hereof while permitting the granting of Options to continue.
Notwithstanding the preceding provisions of this Paragraph IX, the Board may not
amend the Plan during the six-month period beginning on the effective date of
the Plan, and, thereafter, the Board may not amend the Plan more than once in
any six-month period.
X. SECURITIES LAWS
(a) The Company shall not be obligated to issue any Stock pursuant to
Paragraph VI hereof or pursuant to any Option granted under the Plan at any time
when the offering of such shares has not been registered under the Securities
Act of 1933, as amended, and such other state and federal laws, rules or
regulations as the Company deems applicable and, in the opinion of legal counsel
for the Company, there is no exemption from the registration requirements of
such laws, rules or regulations available for the offering and sale of such
shares.
(b) It is intended that the Plan and any grant of an Option or awards
pursuant to Paragraph VI hereof made to a person subject to Section 16 of the
1934 Act meet all of the requirements of Rule 16b-3. If any provision of the
Plan or any such Option or award would disqualify the Plan or such Option or
award under, or would otherwise not comply with, Rule 16b-3, such provision or
Option or award shall be construed or deemed amended to conform to Rule 16b-3.
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NONEMPLOYEE DIRECTOR'S STOCK OPTION AGREEMENT
AGREEMENT made as of the ______ day of ________________, 19___, between
FOREST OIL CORPORATION, a New York corporation (the "Company"), and
("Director").
To carry out the purposes of the FOREST OIL CORPORATION 1995 NONEMPLOYEE
DIRECTORS' STOCK PLAN (the "Plan"), a copy of which is attached hereto as
Exhibit A, by affording Director the opportunity to purchase shares of common
stock of the Company ("Stock"), and in consideration of the mutual agreements
and other matters set forth herein and in the Plan, the Company and Director
hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to
Director the right and option ("Option") to purchase all or any part of an
aggregate of ______ shares of Stock, on the terms and conditions set forth
herein and in the Plan, which Plan is incorporated herein by reference as a part
of this Agreement. This Option shall not be treated as an incentive stock
option within the meaning of section 422(b) of the Internal Revenue Code of
1986, as amended (the "Code").
2. PURCHASE PRICE. The purchase price of Stock purchased pursuant
to the exercise of this Option shall be $_______ per share, which has been
determined to be not less than the fair market value of the Stock at the date of
grant of this Option. For all purposes of this Agreement, fair market value of
Stock shall be determined in accordance with the provisions of the Plan.
3. EXERCISE OF OPTION. [FOR OPTIONS GRANTED ON THE DATE OF THE 1995
ANNUAL MEETING OF THE COMPANY'S SHAREHOLDERS: Subject to the earlier expiration
of this Option as herein provided, this Option may be exercised, by written
notice to the Company at its principal executive office addressed to the
attention of its Chief Executive Officer, at any time and from time to time
after the date of grant hereof.] [FOR OPTIONS GRANTED ON THE DATE OF A
SUBSEQUENT ANNUAL MEETING OF THE COMPANY'S SHAREHOLDERS: Subject to the earlier
expiration of this Option as herein provided, this Option may be exercised, by
written notice to the Company at its principal executive office addressed to the
attention of its Chief Executive Officer, at any time and from time to time
after the date of grant hereof, but, except as otherwise provided below, this
Option shall not be exercisable for more than a percentage of the aggregate
number of shares offered by this Option determined by the number of full years
from the date of grant hereof to the date of such exercise, in accordance with
the following schedule:
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
NUMBER OF FULL YEARS THAT MAY BE PURCHASED
-------------------- -----------------------
<S> <C>
Less than 1 year 20%
1 year 40%
2 years 60%
3 years 80%
4 years or more 100%
</TABLE>
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<PAGE>
Notwithstanding the foregoing, if (i) the Company shall not be the
surviving entity in any merger or consolidation (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 or agrees to sell, lease
or exchange 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 to
be 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,
acquires or gains ownership or control (including, without limitation, power to
vote) of more than 50% of the outstanding shares of Stock, 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 shall cease to constitute a
majority of the Board of Directors of the Company (each such event is referred
to herein as a "Corporate Change"), then effective as of the earlier of (1) the
date of approval by the shareholders of the Company of such merger,
consolidation, sale, lease or exchange of assets or dissolution or such election
of directors or (2) the date of such Corporate Change, this Option shall be
exercisable in full.]
This Option and all rights granted hereunder are not transferable by
Director other than by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder, and shall be exercisable during Director's lifetime only by Director
or Director's guardian or legal representative. This Option may be exercised
only while Director remains a member of the Board of Directors of the Company
(the "Board") and will terminate and cease to be exercisable upon Director's
termination of membership on the Board, except that:
(a) If Director's membership on the Board terminates by
reason of disability, this Option may be exercised in full by Director
(or Director's estate or the person who acquires this Option by will
or the laws of descent and distribution or otherwise by reason of the
death of Director) at any time during the period of one year following
such termination.
(b) If Director dies while a member of the Board,
Director's estate, or the person who acquires this Option by will or
the laws of descent and distribution or otherwise by reason of the
death of Director, may exercise this Option in full at any time during
the period of one year following the date of Director's death.
(c) If Director's membership on the Board terminates for
any reason other than as described in (a) or (b) above, this Option
may be exercised by Director at any time during the period of three
months following such termination, or by Director's estate (or the
person who acquires this Option by will or the laws of descent and
distribution or otherwise by reason of the death of Director) during a
period of one year following Director's death if Director dies during
such three-month period, but in each case only as to the number of
shares Director was entitled to purchase hereunder upon exercise of
this Option as of the date Director's membership on the Board so
terminates.
This Option shall not be exercisable in any event after the expiration of ten
years from the date of grant hereof. The purchase price of shares as to which
this Option is exercised shall be paid in full at the time of exercise (A) in
cash (including check, bank draft or money order payable to the order of the
Company), (B) by delivering to the Company shares of Stock having a fair market
value equal to the
2
<PAGE>
purchase price, or (C) any combination of cash or Stock. No
fraction of a share of Stock shall be issued by the Company upon exercise of an
Option or accepted by the Company in payment of the purchase price thereof;
rather, Director shall provide a cash payment for such amount as is necessary to
effect the issuance and acceptance of only whole shares of Stock. Unless and
until a certificate or certificates representing such shares shall have been
issued by the Company to Director, Director (or the person permitted to exercise
this Option in the event of Director's death) shall not be or have any of the
rights or privileges of a shareholder of the Company with respect to shares
acquirable upon an exercise of this Option.
4. WITHHOLDING OF TAX. To the extent that the exercise of this
Option or the disposition of shares of Stock acquired by exercise of this Option
results in compensation income to Director for federal or state income tax
purposes, Director shall deliver to the Company at the time of such exercise or
disposition such amount of money or shares of Stock as the Company may require
to meet its obligation under applicable tax laws or regulations, and, if
Director fails to do so, the Company is authorized to withhold from any cash or
Stock remuneration then or thereafter payable to Director any tax required to be
withheld by reason of such resulting compensation income. Upon an exercise of
this Option, the Company is further authorized in its discretion to satisfy any
such withholding requirement out of any cash or shares of Stock distributable to
Director upon such exercise.
5. STATUS OF STOCK. The Company intends to register for issuance
under the Securities Act of 1933, as amended (the "Act"), the shares of Stock
acquirable upon exercise of this Option, and to keep such registration effective
throughout the period this Option is exercisable. In the absence of such
effective registration or an available exemption from registration under the
Act, issuance of shares of Stock acquirable upon exercise of this Option will
be delayed until registration of such shares is effective or an exemption from
registration under the Act is available. The Company intends to use its best
efforts to ensure that no such delay will occur. In the event exemption from
registration under the Act is available upon an exercise of this Option,
Director (or the person permitted to exercise this Option in the event of
Director's death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Director agrees that the shares of Stock which Director may acquire by
exercising this Option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable federal or state securities
laws. Director also agrees (i) that the certificates representing the shares of
Stock purchased under this Option may bear such legend or legends as the Company
deems appropriate in order to assure compliance with applicable securities laws,
(ii) that the Company may refuse to register the transfer of the shares of Stock
purchased under this Option on the stock transfer records of the Company if such
proposed transfer would in the opinion of counsel satisfactory to the Company
constitute a violation of any applicable securities law and (iii) that the
Company may give related instructions to its transfer agent, if any, to stop
registration of the transfer of the shares of Stock purchased under this Option.
6. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under Director.
3
<PAGE>
7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Director has executed
this Agreement, all as of the day and year first above written.
FOREST OIL CORPORATION
By:
---------------------------
----------------------------
Director
4
<PAGE>
FOREST OIL CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS
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 one 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 Petroleum Club of Denver, 555 17th Street, Suite 3700,
Denver, Colorado, on Wednesday, May 10, 1995, at 10:00 A.M., M.D.T., and at
any adjournment of such meeting, with all powers which the undersigned would
possess if personally present:
1. Amend the Company's By-laws to decrease the minimum number of
Directors in each class from three (3) to two (2);
2. Elect two (2) Class I Directors;
3. Consider and vote upon the ratification of the appointment of KPMG
Peat Marwick LLP as independent auditors for the Company for the fiscal
year ended December 31, 1995;
4. Approve Stock Plan for Non-Employee Directors; and
5. 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 /X/
The Board of Directors recommends a Vote FOR the following Proposals:
SPECIAL NOTES
I PLAN TO ATTEND THE MEETING / /
No. 1. Amend By-Laws to decrease the number
of Directors in each class from three to two.
FOR AGAINST ABSTAIN
/ / / / / /
No. 2. Election of Directors.
Nominees are William L. Dorn and James H. Lee.
FOR WITHHELD (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.)
-------------------------------------------------------------
No. 3. Ratification of the Appointment
of Independent Auditors.
FOR AGAINST ABSTAIN
/ / / / / /
No. 4. Approve Stock Option Plan
for non-employee Directors.
FOR AGAINST ABSTAIN
/ / / / / /
(Signature(s) should agree with names on Stock Certificates
as shown herein. Attorneys, executors, administrators, trustees,
guardians or custodians should give full title as such.) Please
complete, date and sign this proxy and return it promptly in
the enclosed envelope whether or not you plan to attend
the meeting. No postage is required.
Dated: , 1995
-------------------------
- -------------------------------------
- -------------------------------------
Signature of Shareholder(s)
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
- --------------------------
IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF SHAREHOLDERS, PLEASE MARK THE
APPROPRIATE BOX IN THE SPECIAL NOTES SECTION OF THE PROXY CARD ABOVE.
