<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
FOREST OIL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
FOREST OIL CORPORATION
1600 BROADWAY, SUITE 2200
DENVER, CO 80202
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 12, 1999
------------------------
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 1600 Broadway, Suite
590, Denver, Colorado, on Wednesday, May 12, 1999, at 10:00 a.m., M.D.T., for
the following purposes:
1. To elect three (3) Class I Directors;
2. To approve the 1999 Employee Stock Purchase Plan;
3. To consider and vote upon the ratification of the appointment of KPMG
LLP as independent auditors for the Company for the fiscal year ending
December 31, 1999; and
4. To transact such other business as may be properly brought before the
meeting and any adjournments thereof.
Shareholders of the Company of record at the close of business on March 26,
1999 are entitled to vote at the meeting 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 A
QUORUM IS NOT PRESENT AT THE MEETING, A VOTE FOR ADJOURNMENT WILL BE TAKEN AMONG
THE SHAREHOLDERS PRESENT OR REPRESENTED BY PROXY. IF A MAJORITY OF THE
SHAREHOLDERS PRESENT OR REPRESENTED BY PROXY VOTE FOR ADJOURNMENT, IT IS THE
COMPANY'S INTENTION TO ADJOURN THE MEETING UNTIL A LATER DATE AND TO VOTE
PROXIES RECEIVED AT SUCH ADJOURNED MEETING(S).
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
[LOGO]
JOAN C. SONNEN
SECRETARY
March 31, 1999
<PAGE>
PROXY STATEMENT
OF
FOREST OIL CORPORATION
1600 BROADWAY, SUITE 2200
DENVER, COLORADO 80202
March 31, 1999
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Forest Oil Corporation (the "Board of Directors") of
proxies to be voted at the Annual Meeting of Shareholders (the "Annual Meeting")
to be held on Wednesday, May 12, 1999, at 1600 Broadway, Suite 590, 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 26, 1999 of shares of the Company's
Common Stock, Par Value $.10 Per Share (the "Common Stock"), will be entitled to
one vote for each share so held. As of March 19, 1999, there were 44,647,295
shares of Common Stock issued and outstanding.
Shares represented by properly executed proxy cards received by the Company
at or prior to the Annual 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)
election of the nominees for directors, (ii) approval of the 1999 Employee Stock
Purchase Plan, and (iii) ratification of the appointment of KPMG LLP as the
Company's independent auditors for the fiscal year ending December 31, 1999. 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 1600 Broadway, Suite 2200, Denver, Colorado 80202, or by written
or oral notice to the Secretary at the Annual Meeting at any time prior to being
voted. This Proxy Statement and the Proxy Card enclosed herewith are expected to
be first sent to shareholders of the Company on or about March 31, 1999.
If a quorum is not present at the meeting, a vote for adjournment will be
taken among the shareholders present or represented by proxy. If a majority of
the shareholders present or represented by proxy vote for adjournment, it is the
Company's intention to adjourn the meeting until a later date and to vote
proxies received at such adjourned meeting(s).
Under the law of New York, the Company's state of incorporation, "votes
cast" at a meeting of shareholders by the holders of shares entitled to vote are
determinative of the outcome of the matter subject to vote. Abstentions will be
considered "votes cast" and broker non-votes will not be considered "votes cast"
based on the Company's understanding of state law and New York Stock Exchange
requirements. 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.
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 whose terms of
office expire at different times in annual succession. Currently the number of
directors is fixed at ten.
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 II Directors
with the exception of Cannon Y. Harvey were elected at the 1996 Annual Meeting.
The Class III Directors were elected at the 1997 Annual Meeting. The Class IV
Directors were elected at the 1998 Annual Meeting. Cannon Y. Harvey was
appointed as a Class II Director on February 10, 1999.
A majority of the votes represented at the Annual Meeting by shares of
Common Stock entitled to vote is required to elect a director.
1
<PAGE>
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>
AGE AND PRINCIPAL OCCUPATION,
YEARS OF POSITIONS WITH COMPANY
SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
- ------------------------------ --------------- -------------------------------------------------------- -----------
<S> <C> <C> <C>
CLASS I NOMINEES--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1999
William L. Dorn 50 - 27 Chairman of the Board and Chairman of the Executive 1982
Committee. Chief Executive Officer until December 1995.
President until November 1993. Chairman of the
Nominating Committee.
James H. Lee 50 - 8 Managing Partner, Lee, Hite & Wisda Ltd., a private oil 1991
and gas consulting firm. Member of the Executive
Committee. Chairman of the Audit Committee.
Philip F. Anschutz 59 - 4 Director and Chairman of the Board of The Anschutz 1995
Corporation and its corporate parent, Anschutz Company,
for more than five years, and President of The Anschutz
Corporation and Anschutz Company until December 1996.
Director and Chairman of the Board of Qwest
Communications International Inc. since February 1997
and Director and Chairman of the Board of Qwest
Communications Corporation from November 1993 until
September 1997. Director and Vice Chairman of Union
Pacific Corporation since September 1996. Director and
Chairman of Southern Pacific Rail Corporation ("SPRC")
from 1988 to September 1996, and President and Chief
Executive Officer of SPRC from 1988 to 1993. Member of
the Nominating Committee.
CLASS II DIRECTORS--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 2000
Robert S. Boswell 49 - 13 President since November 1993 and Chief Executive 1985
Officer since December 1995. Vice President until
November 1993. Chief Financial Officer until December
1995. Member of the Executive Committee. Director of
C.E. Franklin Ltd.
Cannon Y. Harvey 58 - 0 Director, President and Chief Operating Officer of The 1999
Anschutz Corporation and Anschutz Company. Director of
Qwest Communications International Inc. Executive Vice
President-- Finance and Law of SPRC from February 1995
until September 1996; Senior Vice President and General
Counsel of SPRC from September 1993 to February 1995;
Vice President-- Finance and Law and General Counsel of
SPRC from May 1993 to September 1993.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AGE AND PRINCIPAL OCCUPATION,
YEARS OF POSITIONS WITH COMPANY
SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
- ------------------------------ --------------- -------------------------------------------------------- -----------
<S> <C> <C> <C>
William L. Britton 64 - 3 Partner in the law firm of Bennett Jones. Director of 1996
Akita Drilling Ltd., ATCO Ltd., Canadian Western
Natural Gas Ltd., Canadian Utilities Limited,
CanUtilities Holdings Ltd. and Northwestern Utilities
Limited. Member of the Audit Committee.
CLASS III DIRECTORS--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 2001
J. J. Simmons, III 74 - 2 President of The Simmons Company, a consulting firm. 1997
Vice Chairman of the Surface Transportation Board from
1995 to 1996 and prior thereto Commissioner--Vice
Chairman of the U.S. Interstate Commerce Commission.
Member of the Audit Committee.
Michael B. Yanney 65 - 7 Chairman and Chief Executive Officer of the America 1992
First Companies, L.L.C. Director of Burlington Northern
Santa Fe Corporation, Level 3 Communications, Inc. and
RCN Corporation. Chairman of the Compensation
Committee. Member of the Nominating Committee.
CLASS IV DIRECTORS--TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 2002
Craig D. Slater 42 - 4 President of Anschutz Investment Company since August 1995
1997. Vice President of Acquisitions and Investments of
both The Anschutz Corporation and Anschutz Company
since 1995. Corporate Secretary of The Anschutz
Corporation and Anschutz Company from 1991 to 1996, and
other positions with The Anschutz Corporation and
Anschutz Company from 1988 to 1995. Director of Qwest
Communications International Inc. since February 1997
and Director of Qwest Communications Corporation since
November 1996. Director of Internet Communications
Corporation since September 1996. Member of the
Executive Committee and the Compensation Committee.
Cortlandt S. Dietler 77 - 2 Chairman and Chief Executive Officer of TransMontaigne 1996
Inc. since April 1995. Prior thereto founder, Chairman
and Chief Executive Officer of Associated Natural Gas
Corporation prior to its 1994 merger with Panhandle
Eastern Corporation. Advisory Director of PanEnergy
Corporation. Director of TransMontaigne Inc., Hallador
Petroleum Company, Key Production Company, Inc. and
Grease Monkey Holding Corporation. Member of the
Compensation Committee.
</TABLE>
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of March 19, 1999, 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.
<TABLE>
<CAPTION>
COMMON STOCK(1)
---------------------------
NAME OF INDIVIDUAL OR NUMBER OF PERCENT
NUMBER IN GROUP SHARES OF CLASS(2)
- ------------------------------------------------------------ ---------- -----------
<S> <C> <C>
Philip F. Anschutz.......................................... 17,951,586(3) 40.2%
Robert S. Boswell........................................... 188,400(4) *
William L. Britton.......................................... 3,464 *
Cortlandt S. Dietler........................................ 3,964 *
William L. Dorn............................................. 178,117(5) *
Forest D. Dorn.............................................. 90,065(6) *
Cannon Y. Harvey............................................ 4,000(7) *
David H. Keyte.............................................. 93,527(8) *
James H. Lee................................................ 7,332 *
J. J. Simmons III........................................... 1,087 *
Craig D. Slater............................................. 8,798(7) *
Neal A. Stanley............................................. 31,093(9) *
Michael B. Yanney........................................... 3,298(10) *
All directors and executive officers as a group (15 persons,
including the 13 named above)............................. 18,603,732(11) 41.2%
</TABLE>
- ------------------------
* The percentage of shares beneficially owned does not exceed one percent of
the outstanding shares of the class.
(1) 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, 1998.
(2) Based on the number of shares outstanding as of March 19, 1999.
(3) Includes 17,949,288 shares owned of record by The Anschutz Corporation and
certain of its subsidiaries, of which Mr. Anschutz is the Chairman of the
Board and a Director. Mr. Anschutz may be deemed to beneficially own such
shares based on his affiliation with The Anschutz Corporation.
(4) Includes 170,000 shares that Robert S. Boswell has the vested right to
purchase pursuant to options granted under the Stock Incentive Plan, and
4,133 shares (net of shares surrendered for tax withholding) of restricted
stock also awarded under the Stock Incentive Plan. Does not include 45
shares held by Robert S. Boswell's wife or 766 shares held by his children,
of which shares Mr. Boswell disclaims beneficial ownership.
(5) Includes 125,000 shares that William L. Dorn has the vested right to
purchase pursuant to options granted under the Stock Incentive Plan, and
1,495 shares (net of shares surrendered for tax withholding) of restricted
stock also awarded under the Stock Incentive Plan. Also includes (i) 5,160
shares held of record by William L. Dorn as co-trustee of a trust for the
benefit of himself and his three siblings, and (ii) 14,840 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 2,998 shares held by William L. Dorn's wife or 7,199 shares held by
his children, of which shares Mr. Dorn disclaims beneficial ownership.
(6) Includes 70,000 shares that Forest D. Dorn has the vested right to purchase
pursuant to options granted under the Stock Incentive Plan, and 2,678 shares
(net of shares surrendered for tax
4
<PAGE>
withholding) of restricted stock also awarded under the Stock Incentive
Plan. Also includes (i) 5,160 shares held of record by Forest D. Dorn as
co-trustee of a trust for the benefit of himself and his three siblings, and
(ii) 33 shares held of record by Forest D. Dorn as custodian for the benefit
of one of his minor children, of which shares Mr. Dorn disclaims beneficial
ownership. Does not include 1,725 shares held by Forest D. Dorn's wife or
5,192 shares held by his children, of which shares Mr. Dorn disclaims
beneficial ownership.
(7) Does not include 17,949,288 shares owned of record by The Anschutz
Corporation and certain of its subsidiaries. Mr. Harvey and Mr. Slater are
both officers of The Anschutz Corporation.
(8) Includes 85,100 shares that David H. Keyte has the vested right to purchase
pursuant to options granted under the Stock Incentive Plan, and 4,517 shares
(net of shares surrendered for tax withholding) of restricted stock also
awarded under the Stock Incentive Plan. Does not include 1,000 shares held
by one of his children, of which shares Mr. Keyte disclaims beneficial
ownership.
(9) Includes 28,000 shares that Neal A. Stanley has the vested right to purchase
pursuant to options granted under the Stock Incentive Plan, and 1,093 shares
(net of shares surrendered for tax withholding) of restricted stock also
awarded under the Stock Incentive Plan.
(10) Does not include 3,400 shares held by Michael B. Yanney's wife in her
retirement savings trust, or 3,000 shares held by Torrey Lake Charitable
Remainder Trust, of which shares Mr. Yanney disclaims beneficial ownership.
(11) Includes 40,200 shares held by two executive officers (other than those
named in the table) who have the vested right to purchase such shares
pursuant to options granted under the Stock Incentive Plan, and 1,465 shares
(net of shares surrendered for tax withholding) of restricted stock awarded
to these executive officers under the Stock Incentive Plan.
BOARD OF DIRECTORS AND COMMITTEES
During 1998, the Board of Directors met on seven occasions. The Board of
Directors has appointed four committees: The Executive Committee, the Audit
Committee, the Compensation Committee and the Nominating Committee. Only two
members of each committee are necessary to constitute a quorum. During 1998, the
Executive Committee met formally three times and acted by written consent four
times. The Executive Committee meets informally on a monthly basis. Robert S.
Boswell, William L. Dorn, James H. Lee and Craig D. Slater are the members of
the Executive Committee.
The Compensation Committee determines executive compensation, including the
selection of individual employees to be granted awards from among those eligible
under the Stock Incentive Plan, establishes the amount of such awards, and
reports its actions to the Board of Directors. The Compensation Committee met
formally one time and acted by written consent five times during 1998. Its
members are Cortlandt S. Dietler, Craig D. Slater and Michael B. Yanney. A
Report of the Compensation Committee on Executive Compensation is set forth
below.
The Audit Committee oversees and monitors 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. The Audit Committee met four times during 1998.
Its members are James H. Lee, William L. Britton and J.J. Simmons III.
The Nominating Committee is responsible for, among other things, review of
qualifications and recommendations for replacement and/or additional nominees to
the Board of Directors, and recommendation to the Board of policies regarding
directors. The Nominating Committee will not consider nominees recommended by
security holders, and has not established any procedures for such
recommendations. The members of the Nominating Committee are Philip F. Anschutz,
William L. Dorn and Michael B. Yanney.
5
<PAGE>
During 1998, each incumbent director of the Company, except Philip F.
Anschutz, attended at least 75% of the aggregate number of meetings of the Board
of Directors and the committees of the Board of Directors on which they served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Cortlandt
S. Dietler, Craig D. Slater and Michael B. Yanney. The Executive Committee
members are Robert S. Boswell, William L. Dorn, James H. Lee and Craig D.
Slater. William L. Dorn is Chairman of the Board and Robert S. Boswell is
President and Chief Executive Officer. During 1998 there were no compensation
committee interlocks between the Company and any other entity. For a description
of transactions with William L. Dorn and Robert S. Boswell, see "Transactions
with Management and Others--Executive Severance Agreements".
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 of Directors. The Stock Incentive Plan provides for, among other things,
the payment of a portion of directors' fees in stock. Half of the $20,000 annual
amount is paid at each annual meeting of the shareholders of the Company in
shares of Common Stock, determined by dividing $10,000 by the average of the
fair market values of a share of Common Stock on the 20 consecutive trading days
immediately preceding the date that is three trading days prior to the date of
such meeting.
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 nonemployee directors
and the amounts and shares of Common Stock each received during 1998 as
directors were: Philip F. Anschutz received $30,000, $10,000 of which was paid
in the form of 711 shares for his services as a director. William L. Britton
received $30,000, $10,000 of which was paid in the form of 711 shares for his
services as a director. Cortlandt S. Dietler received $30,000, 10,000 of which
was paid in the form of 711 shares for his services as a director. James H. Lee
received $30,000, $10,000 of which was paid in the form of 711 shares for his
services as a director. J. J. Simmons, III received $27,500, $10,000 of which
was paid in the form of 711 shares for his services as a director. Craig D.
Slater received $30,000, $10,000 of which was paid in the form of 711 shares for
his services as a director. Michael B. Yanney received $27,500, $10,000 of which
was paid in the form of 711 shares for his services as a director. The payment
of fees to directors for attendance at committee meetings was discontinued in
February 1996, except that Mr. Lee receives $50,000 per year for his service on
the Executive Committee, $25,000 of which was paid in the form of 2,292 shares
in 1998. Mr. Lee's service consists of attendance at monthly meetings and his
reviews of certain oil and gas exploration and development prospects.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers (collectively, the "Named Executive Officers"),
based on salary and bonus earned in 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
------------------------------------- -------------------------------------
OTHER ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPENSATION STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS($)(2) OPTIONS(#) ($)(3)
- --------------------------- --------- --------- --------- --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
William L. Dorn............ 1998 $ 325,008 $ -0- $ -0- $ -0- -0- $ 19,028
Chairman of the Board 1997 306,261 32,500 -0- 32,500 -0- 17,935
1996 300,012 100,000 -0- -0- 175,000 17,434
Robert S. Boswell.......... 1998 350,004 -0- -0- -0- -0- 20,047
President and Chief 1997 303,402 57,500 -0- 57,500 -0- 17,535
Executive Officer 1996 287,868 177,000 -0- 24,500 250,000 16,605
David H. Keyte............. 1998 225,000 -0- -0- -0- -0- 11,250
Executive Vice President 1997 206,253 37,500 -0- 37,500 -0- 10,313
and Chief Financial
Officer 1996 200,004 62,500 -0- 46,403 127,000 10,000
Forest D. Dorn............. 1998 180,000 -0- -0- -0- -0- 10,154
Senior Vice President-- 1997 171,670 25,000 -0- 25,000 40,000 9,950
Gulf Coast Region 1996 170,004 35,000 -0- 25,982 90,000 9,468
Neal A. Stanley(4)......... 1998 168,000 -0- -0- -0- -0- 8,400
Senior Vice President 1997 153,000 25,000 -0- 25,000 40,000 7,650
Western Region 1996 62,500 10,000 -0- -0- 20,000 1,875
</TABLE>
- ------------------------
(1) 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.
(2) In 1998, the following Named Executive Officers received conditional grants
of restricted stock in the following respective share amounts: William L.
Dorn--200,000; Robert S. Boswell--400,000; David H. Keyte--250,000. Certain
average closing prices of the Company's Common Stock had to be achieved in
order for the shares to be issued. These prices were not achieved and the
grants expired on January 1, 1999.
(3) The 1998 totals include (i) the Company's matching contribution to the
Retirement Savings Plan in the following amounts: William L. Dorn--$8,000;
Robert S. Boswell--$8,000; David H. Keyte-- $6,250; Forest D. Dorn--$8,000;
Neal A. Stanley $5,000, and (ii) the Company's matching contribution
pursuant to deferred compensation agreements in the following amounts:
William L. Dorn-- $8,250; Robert S. Boswell--$9,500; David H. Keyte--$5,000;
Forest D. Dorn--$1,000; Neal A. Stanley--$3,400. The 1998 totals also
include the following amounts attributable to the term life portion of
premiums paid by the Company pursuant to a split dollar insurance
arrangement: William L. Dorn--$2,236; Robert S. Boswell--$2,050 and Forest
D. Dorn--$929. The remainder of the premium is not included and does not
benefit the Named Executive Officers, because the Company has the right to
the cash surrender value of the policy.
(4) Neal A. Stanley became an officer of the Company on August 20, 1996.
7
<PAGE>
STOCK OPTION GRANTS DURING 1998
There were no stock options granted to the Named Executive Officers in 1998.
YEAR-END STOCK OPTION VALUES
The following table shows options exercised and value realized, and the
number of shares covered by both exercisable and non-exercisable stock options
as of December 31, 1998 and their values at such date.
OUTSTANDING STOCK OPTION VALUES AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/98 (#) AT 12/31/98 ($)
------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
William L. Dorn................ 105,000 70,000 -0- -0-
Robert S. Boswell.............. 150,000 100,000 -0- -0-
David H. Keyte................. 73,700 50,800 -0- -0-
Forest D. Dorn................. 62,000 60,000 -0- -0-
Neal A. Stanley................ 28,000 32,000 -0- -0-
</TABLE>
8
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Common Stock during the five years ended
December 31, 1998 with the cumulative return on the S & P 500 Index and the Dow
Jones Oil--Secondary Index. 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. The graph assumes
that $100 was invested in each category on the last trading day of 1993 and that
dividends were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG FOREST OIL CORPORATION, THE S & P 500 INDEX
AND THE DOW JONES OIL -- SECONDARY INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FOREST OIL CORPORATION S & P 500 DOW JONES OIL - SECONDARY
<S> <C> <C> <C> <C>
12/93 100 100 100
12/94 51 101 97
12/95 64 139 112
12/96 81 171 138
12/97 75 229 147
12/98 39 294 107
</TABLE>
In mid-1995, the Company received significant additional capitalization
through its transactions with The Anschutz Corporation and Joint Energy
Development Investments Limited Partnership, a Delaware limited partnership the
general partner of which is an affiliate of Enron Corp. These transactions
provided the Company with the capital necessary to fund and execute its
operating strategy. The Company believes, therefore, that a review of the
Company's performance relative to the S&P 500 and the Dow Jones Oil-- Secondary
indices from mid-1995 to the present is relevant. This graph assumes that $100
was invested in each category on the last trading day of June 1995 and that
dividends were re-invested.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG FOREST OIL CORPORATION, THE S & P 500 INDEX
AND THE DOW JONES OIL -- SECONDARY INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FOREST OIL CORPORATION S & P 500 DOW JONES OIL - SECONDARY
<S> <C> <C> <C>
6/99 $100.00 $100.00 $100.00
12/99 $173.00 $114.00 $105.00
6/00 $168.00 $126.00 $116.00
12/00 $217.00 $141.00 $129.00
6/01 $181.00 $170.00 $126.00
12/01 $203.00 $188.00 $137.00
6/02 $176.00 $221.00 $128.00
12/02 $105.00 $241.00 $100.00
</TABLE>
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The goal of the Compensation Committee is to design the Company's executive
compensation program to enable the Company to attract, retain and motivate
executive personnel deemed necessary to maximize return to shareholders. The
fundamental concept of the program is to align the amount of total compensation
with an executive's contribution to the success of the Company in creating
shareholder value. The program has the following components:
BASE SALARIES. The Compensation Committee believes that the Company should
offer base salaries sufficient to enable it to attract, motivate and retain
capable executives. The Compensation Committee has in the past determined
levels of base compensation using published compensation surveys for energy
and similar sized companies and information obtained from compensation
consultants. The Compensation Committee may or may not use such surveys or
other information to determine levels of base compensation in the future.
SHORT-TERM INCENTIVES. The Compensation Committee believes that the Company
should offer short-term incentive compensation annually to reward the
Company's executives for achieving certain predetermined corporate and
individual performance objectives. The incentives may be rewarded in the
form of cash bonuses, restricted stock and stock options, or a combination
of the foregoing.
LONG-TERM INCENTIVES. The Compensation Committee believes that long-term
compensation should comprise a substantial portion of each executive
officer's total compensation. Long-term compensation provides incentives
that encourage the executive officers to own and hold the Company's stock
and tie their long-term economic interests directly to those of the
Company's shareholders. Long-term compensation can be provided in the form
of restricted stock or stock options.
The Compensation Committee's duties include the annual review and approval
of the compensation of the Chairman, the President and Chief Executive Officer,
and the Executive Vice President and Chief Financial Officer; review and
determination of individual elements of compensation for the Company's executive
officers; review of the administration of long-term incentive plans for
management and other employees; and determining the terms and awards under the
Stock Incentive Plan. The Executive Committee is responsible for determining the
salaries for all officers except the Chairman, the President and Chief Executive
Officer, and the Executive Vice President and Chief Financial Officer.
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"). Compensation
previously awarded to management does not exceed such limitation. However, 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.
BASE SALARIES. In 1998, the Company adjusted base salaries of certain
officers to reflect promotions, changes of responsibilities, and cost of living
increases.
SHORT-TERM INCENTIVES. In 1998, the Compensation Committee established a
Business Unit Annual Incentive Plan to provide incentive compensation to its
managers, including William L. Dorn, Robert S. Boswell and David H. Keyte, and
certain key personnel. Awards under the plan are based upon the success of
business units of the Company in achieving goals for profitability, asset growth
and production increases set at the beginning of the year. There were no awards
earned pursuant to this plan. The Compensation Committee has continued the plan
with revised goals for 1999.
LONG-TERM INCENTIVES. During 1998, the Compensation Committee granted
options aggregating 92,500 shares to employees of the Company. The option price
in each case was equal to or closely approximated the closing price of the
Common Stock on the New York Stock Exchange on the effective
10
<PAGE>
date of the grant. No options were granted to William L. Dorn, Robert S. Boswell
or David H. Keyte in 1998.
Date: March 19, 1999.
<TABLE>
<CAPTION>
EXECUTIVE COMMITTEE COMPENSATION COMMITTEE
- ---------------------------------------------- ----------------------------------------------
<S> <C>
William L. Dorn, Chairman Michael B. Yanney, Chairman
Robert S. Boswell Cortlandt S. Dietler
James H. Lee Craig D. Slater
Craig D. Slater
</TABLE>
PENSION PLAN
The Company's Pension Plan is a qualified, non-contributory defined benefit
plan. On May 8, 1991, the Board of Directors suspended benefit accruals under
the Pension Plan effective as of May 31, 1991.
The following table shows the estimated maximum annual benefits payable upon
retirement at age 65 as a straight life annuity to participants in the Pension
Plan for the indicated levels of average annual compensation and various periods
of service, assuming no future changes in such plan:
<TABLE>
<CAPTION>
ESTIMATED MAXIMUM ANNUAL
PENSION BENEFITS (2)
-------------------------------
YEARS OF SERVICE
-------------------------------
REMUNERATION (1) 10 20 30
- --------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
$100,000................................................. $ 36,846 48,060 53,400
200,000................................................. 73,692 96,120 106,800
300,000................................................. 79,282 103,412 114,902
400,000................................................. 79,282 103,412 114,902
</TABLE>
- ------------------------
(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.
(2) Normal retirement benefits attributable to the Company's contributions are
limited under certain provisions of the Code to $130,000 in 1999, as
increased annually thereafter for cost of living adjustments.
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 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.
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; David H. Keyte--4; Forest D.
Dorn--14; and Neal A. Stanley--0. The estimated annual accrued benefit payable,
based on a life annuity benefit, upon normal retirement for each of such persons
is: William L. Dorn--$50,429; Robert S. Boswell--$4,616; David H. Keyte--$5,097;
and Forest D. Dorn-- $17,823. Neal A. Stanley has no benefits under this plan
because his employment commenced after benefit accruals were suspended.
11
<PAGE>
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 Pension Plan. The
additional annual accrued benefit payable, based on a life annuity benefit, upon
normal retirement for each of such persons is: William L. Dorn--$3,788; Robert
S. Boswell--$463.
PRINCIPAL HOLDERS OF SECURITIES
The Company currently has one class of voting securities outstanding. On
March 19, 1999, there were 44,647,295 shares of Common Stock outstanding, with
each such share being entitled to one vote.
As of March 19, 1999 to the knowledge of the Board of Directors the only
shareholders who owned beneficially more than 5% of the outstanding shares of
Common Stock were:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNERS BENEFICIAL OWNERSHIP CLASS
- -------------------- ------------------------------------ -------------------- -----------
<S> <C> <C> <C>
Common Stock(1) The Anschutz Corporation 17,951,586(2) 40.2%
2400 Qwest Tower
555 17th Street
Denver, Colorado 80202
Joint Energy Development 3,680,000(3) 8.2%
Investments Limited Partnership
P.O. Box 1188
Houston, Texas 77251-1188
Crabbe Huson Group 3,356,700 7.5%
121 S.W. Morrison, Suite 1400
Portland, Oregon 97204
</TABLE>
- ------------------------
(1) Based on Schedules 13D and 13G and amendments thereto filed with the SEC and
the Company by the reporting person through March 19, 1999 and the amount of
Common Stock outstanding on such date.
(2) The shares indicated as beneficially owned by The Anschutz Corporation
include 2,298 shares owned by Philip F. Anschutz.
(3) Joint Energy Development Investments Limited Partnership has agreed to not
transfer 840,000 of its shares, except in limited circumstances, until after
July 31, 1999.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In June 1998, Forest issued 5,950,000 shares of common stock to The Anschutz
Corporation in exchange for certain oil and gas assets. The oil and gas assets
acquired included an interest in the Anschutz Ranch East Field located in Utah
and Wyoming. The acquisition also included certain of Anschutz's international
oil and gas assets comprised of 13 international projects encompassing
approximately 18 million net acres of undeveloped land.
During 1998, Anschutz Exploration Corporation ("AEC"), an affiliate of The
Anschutz Corporation, participated with Forest in the drilling of a deep
exploratory prospect on Eugene Island Block 43 in the
12
<PAGE>
Gulf of Mexico. The lease had been previously acquired and the prospect
developed by Forest. AEC reimbursed Forest $2,027,500 for one-half of costs
incurred by Forest for lease rentals and technical data, including seismic and
administrative costs. In addition, AEC paid approximately $5,400,000,
representing two-thirds of drilling costs, to earn a one-half interest in the
well. AEC's participation was on terms similar to those Forest typically
negotiates with other, unrelated industry partners. The well did not contain
hydrocarbons in commercial quantities, and was abandoned.
OTHER TRANSACTIONS. The Company engaged the law firm of Bennett Jones for
legal services in 1998. William L. Britton, a Director of the Company, is a
partner in such firm.
RETIREMENT BENEFITS FOR FORMER EXECUTIVES AND DIRECTORS. In December 1990,
in consideration of their many years of service, the Company entered into
retirement agreements with the following seven executives and directors: Clayton
G. Dorn, David F. Dorn, Richard B. Dorn, John C. Dorn, Martha Dorn Bird, Herbert
J. Warner and William F. Higie, collectively "the Retirees", pursuant to which
the Retirees or their estates 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 Company has also agreed to maintain certain life
insurance policies in effect at December 1990 for the benefit of each of the
Retirees. All of the Retirees have subsequently resigned as directors. Pursuant
to the terms of the retirement agreements, a Retiree who ceases to be a director
(or his spouse) will be paid $2,500 a month until December 2000.
The balance of the Company's obligation ($149,000) to Richard B. Dorn under
a revised retirement agreement was paid in May 1997. In addition, David F. Dorn
received in 1991 the payments scheduled to be made in 1999 and 2000. The
retirement agreements for the other five Retirees provide for supplemental
retirement payments totaling approximately $770,000 per year in 1999 and 2000.
EXECUTIVE SEVERANCE AGREEMENTS. The Company has entered into executive
severance agreements (the "Executive Severance Agreements") with the following
executive officers, in addition to the Named Executive Officers: Joan C. Sonnen
and Donald H. Stevens. 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 a change of
control, a significant change in the executive's principal place of employment,
the executive will receive certain payments and benefits. In January 1998, the
term of the Executive Severance Agreements was extended automatically until
January 2000.
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;
13
<PAGE>
(b) the Company will permit the executive and those of his dependents who
are covered under the Company's medical and dental benefit plans to be
covered by such plans without any cost to the executive for a two-year
period of time;
(c) the Company will cause any and all outstanding options to purchase stock
of the Company held by the executive to become immediately exercisable in
full and cause the executive's accrued benefits under any non-qualified
deferred compensation plans to become immediately non-forfeitable; and
(d) if any payment or distribution to the executive, whether or not pursuant
to such agreement, is subject to the federal excise tax on "excess
parachute payments," the Company will be obligated to pay to the
executive such additional amount as may be necessary so that the
executive realizes, after the payment of any income or excise tax on such
additional amount, an amount sufficient to pay all such excise taxes.
The Executive Severance Agreements also provide that the Company will pay
legal fees and expenses incurred by an executive to enforce rights or benefits
under such agreements. Under the Executive Severance Agreements, a "change of
control" of the Company would be deemed to occur if, (i) the Company is not the
surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company); (ii) the Company sells, leases or exchanges all or
substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary of the Company); (iii) the Company is dissolved and
liquidated; (iv) any person or entity, including a "group" as contemplated by
Section 13(d)(3) of the Exchange Act (except The Anschutz Corporation) 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 Board of Directors.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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 New York Stock Exchange. 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, 1998 to February 15, 1999, its officers, directors, and greater than
10% beneficial owners complied with all applicable filing requirements, except
that Michael B. Yanney was late in filing one monthly report relating to one
transaction, and James H. Lee was late in reporting shares acquired pursuant to
a directors stock award due to an inadvertent omission of such transaction on a
Form 4 otherwise timely filed by the Company on his behalf.
14
<PAGE>
PROPOSAL TO APPROVE THE 1999 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
The Compensation Committee has adopted the Forest Oil Corporation 1999
Employee Stock Purchase Plan (the "Purchase Plan"), subject to approval by the
shareholders of the Company. The purpose of the Purchase Plan is to provide an
incentive to employees of the Company and certain of its subsidiaries to acquire
or increase an ownership interest in the Company through the purchase of shares
of Common Stock. A majority of the vote represented at the Annual Meeting by
shares of Common Stock entitled to vote is required to approve the Purchase
Plan.
SUMMARY OF PURCHASE PLAN
The following general description of certain features of the Purchase Plan
is qualified in its entirety by reference to the Purchase Plan, which is
attached as Annex A.
SHARES AVAILABLE UNDER THE PURCHASE PLAN; ADJUSTMENTS. Subject to
adjustment as provided in the Purchase Plan, the number of shares of Common
Stock that may be purchased by participating employees under the Purchase Plan
will not in the aggregate exceed 250,000 shares, which may be originally issued
or reacquired shares, including shares bought in the market or otherwise for
purposes of the Purchase Plan. Such number of shares is subject to adjustment in
the event of a change in the Common Stock by reason of a stock dividend or by
reason of a subdivision, stock split, reverse stock split, recapitalization,
reorganization, combination, reclassification of shares or other similar change.
Upon any such event, the maximum number of shares that may be subject to any
option, and the number and purchase price of shares subject to options
outstanding under the Purchase Plan, will also be adjusted accordingly.
ELIGIBILITY. Options under the Purchase Plan will be granted on July 1,
1999, and, thereafter through March 31, 2009, on the first day of each
successive October, January, April and July (each such date being referred to
herein as a "Date of Grant"). Each employee of the Company or any present or
future parent or subsidiary corporation of the Company that has been designated
as a "Participating Company" from time to time by the Plan administrative
committee as of a Date of Grant is eligible to participate in the Purchase Plan
as of such Date of Grant if such employee is regularly scheduled to work more
than 20 hours per week and more than five calendar months in any calendar year.
However, an eligible employee may not participate if such employee would own
(directly or indirectly) 5% or more of the total combined voting power of all
classes of stock of the Company or a subsidiary, taking into account options to
purchase stock and stock that may be purchased under the Purchase Plan. At the
present time, no employee of the Company or a Participating Company would be
prevented from participating by reason of this limitation. Approximately 274
employees would have been eligible to participate in the Purchase Plan as of
March 26, 1999.
PARTICIPATION. An eligible employee may elect to participate in the
Purchase Plan for any calendar quarter during the period from July 1, 1999 to
March 31, 2009, by designating a specified whole dollar amount or an integral
percentage of such employee's eligible compensation to be deducted for each pay
period and paid into the Purchase Plan for such employee's account. The
designated percentage may not be less than 1% nor more than 15%. An eligible
employee may participate in the Purchase Plan only by means of payroll
deduction. No employee will be granted an option under the Purchase Plan that
permits such employee's rights to purchase Common Stock to accrue at a rate that
exceeds $25,000 of fair market value of such stock (determined at the time such
option is granted) for the calendar year in which such option is outstanding.
Unless an employee's payroll deductions are withdrawn (as described below), the
aggregate payroll deductions credited to the employee's account will be used to
purchase shares of Common Stock at the end of the three-month period beginning
on a Date of Grant (the "Option Period"); provided, however, that the maximum
number of shares of Common Stock that may be purchased by a participant under
any quarterly option may not exceed 5,000 (subject to adjustment in the event of
a
15
<PAGE>
change in the Common Stock). The per share purchase price of the Common Stock
will be 85% of the lesser of the fair market value of the Common Stock on the
Date of Grant or on the last day of the Option Period (the "Date of Exercise").
For all purposes under the Purchase Plan, the fair market value of a share of
Common Stock on a particular date shall be equal to the closing price of such
stock on the New York Stock Exchange on that date (or, if no shares of Common
Stock have been traded on that date, on the next regular business date on which
shares of the Common Stock are so traded). Payroll deductions will be included
in the general funds of the Company, free of any trust or other arrangement and
may be used for any corporate purpose. No interest will be paid or credited to
any participant.
CHANGES IN AND WITHDRAWAL OF PAYROLL DEDUCTIONS. A participant may not
change the rate of his or her payroll deductions during an Option Period.
However, a participant may withdraw in whole from the Purchase Plan, but not in
part, at any time prior to the Date of Exercise relating to a particular Option
Period by timely delivering to the Company a notice of withdrawal in the manner
specified by the Company. The Company promptly will refund to the participant
the amount of the participant's payroll deductions under the Purchase Plan that
have not been otherwise returned or used upon exercise of options, and
thereafter the participant's payroll deduction authorization and interest in
unexercised options under the Purchase Plan will terminate.
DELIVERY OF SHARES; RESTRICTIONS ON TRANSFER. As soon as practicable after
each Date of Exercise, the Company will deliver to a custodian one or more
certificates representing (or shall otherwise cause to be credited to the
account of such custodian) the total number of whole shares of Common Stock
respecting options exercised on such Date of Exercise in the aggregate (for both
whole and fractional shares) of all of the participating employees under the
Purchase Plan. Any remaining amount representing a fractional share will not be
certificated (or otherwise so credited) and such remaining amount will be paid
in cash to the custodian. Such custodian will keep accurate records of the
beneficial interests of each participant in such shares by means of participant
accounts under the Purchase Plan, and will provide each participant with
quarterly or such other periodic statements with respect thereto as the
administrative committee under the Purchase Plan may specify. A participant may
not generally transfer or otherwise dispose of the shares for a period of six
months from the Date of Exercise (or for such other period as may be specified
from time to time by the administrative committee under the Purchase Plan).
During this period, the custodian will retain custody of the shares.
TERMINATION OF EMPLOYMENT; LEAVES OF ABSENCE. Except as described below, if
the employment of a participant terminates for any reason, then the
participant's participation in the Purchase Plan ceases and the Company will
refund the amount of such participant's payroll deductions under the Purchase
Plan that have not yet been otherwise returned or used upon exercise of options.
If the employment of a participant terminates after such participant has
attained age 65 or due to death or disability, the participant, or the
participant's personal representative, as applicable, may elect either to (i)
withdraw all of the accumulated unused payroll deductions credited to the
participant's account or (ii) exercise the participant's option for the purchase
of Common Stock at the end of the Option Period. If no such election is timely
received by the Company, the participant or personal representative will
automatically be deemed to have elected the second alternative.
During a paid leave of absence approved by the Company and meeting Internal
Revenue Service regulations, a participant's elected payroll deductions will
continue. A participant may not contribute to the Purchase Plan during an unpaid
leave of absence. If a participant takes an unpaid leave of absence that is
approved by the Company and meets Internal Revenue Service regulations, then
such participant's payroll deductions for such Option Period that were made
prior to such leave may remain in the Purchase Plan and be used to purchase
Common Stock on the Date of Exercise relating to such Option Period. If a
participant takes a leave of absence not described above, then the participant
will be considered to have withdrawn from the Purchase Plan.
16
<PAGE>
RESTRICTION UPON ASSIGNMENT OF OPTION. An option granted under the Purchase
Plan may not be transferred other than by will or the laws of descent and
distribution. Subject to certain limited exceptions, each option is exercisable,
during the employee's lifetime, only by the employee to whom granted.
ADMINISTRATION, AMENDMENTS AND TERMINATION. The Purchase Plan is to be
administered by the Forest Oil Corporation Employee Benefits Committee, which is
a committee appointed from time to time by the Board. In connection with its
administration of the Purchase Plan, the committee is authorized to interpret
the Purchase Plan.
The Purchase Plan may be amended from time to time by the Board; provided,
however, that no change in any option theretofore granted may be made that would
impair the rights of a participant without the consent of such participant. The
Board may in its discretion terminate the Purchase Plan at any time with respect
to any Common Stock for which options have not theretofore been granted.
The benefits and amounts to be received by any participant under the
Purchase Plan are not currently determinable.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN OF THE U.S. FEDERAL INCOME TAX
CONSEQUENCES OF CERTAIN TRANSACTIONS UNDER THE PURCHASE PLAN BASED ON FEDERAL
INCOME TAX LAWS CURRENTLY IN EFFECT. THIS SUMMARY APPLIES TO THE PURCHASE PLAN
AS NORMALLY OPERATED AND IS NOT INTENDED TO PROVIDE OR SUPPLEMENT TAX ADVICE TO
ELIGIBLE EMPLOYEES. THE SUMMARY CONTAINS GENERAL STATEMENTS BASED ON CURRENT
U.S. FEDERAL INCOME TAX STATUTES, REGULATIONS AND CURRENTLY AVAILABLE
INTERPRETATIONS THEREOF. THIS SUMMARY IS NOT INTENDED TO BE EXHAUSTIVE AND DOES
NOT DESCRIBE STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OR THE EFFECT, IF ANY, OF
GIFT, ESTATE AND INHERITANCE TAXES. THE PURCHASE PLAN IS NOT QUALIFIED UNDER
SECTION 401(A) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
TAX CONSEQUENCES TO PARTICIPANTS. A participant's payroll deductions to
purchase Common Stock are made on an after-tax basis. There is no tax liability
to the participant when shares of Common Stock are purchased pursuant to the
Purchase Plan. However, the participant may incur tax liability upon disposition
(including by way of gift) of the shares acquired under the Purchase Plan. The
participant's U.S. federal income tax liability will depend on whether the
disposition is a qualifying disposition or a disqualifying disposition as
described below.
If a qualifying disposition of the shares is made by the participant (i.e.,
a disposition that occurs more than two years after the first day of the Option
Period in which the shares were purchased), or in the event of death (whenever
occurring) while owning the shares, the participant will recognize in the year
of disposition (or, if earlier, the year of the participant's death) ordinary
income in an amount equal to the lesser of (i) the excess of the fair market
value of the shares at the time of disposition (or death) over the amount paid
for the shares under the option or (ii) 15% of the fair market value of the
shares at the Date of Grant (the beginning of the Option Period). Upon the sale
of the shares, any amount realized in excess of the ordinary income recognized
by the participant will be taxed to the participant as a long-term capital gain.
If the shares are sold at less than the purchase price under the option, then
there will be no ordinary income. Instead, the participant will have a capital
loss equal to the difference between the sales price and the purchase price paid
under the option.
If a disqualifying disposition of the shares is made (i.e., a disposition
(other than by reason of death) within two years after the first day of the
Option Period in which the shares were purchased), the participant generally
will recognize ordinary income in the year of disposition in an amount equal to
any excess of the fair market value of the shares at the Date of Exercise over
the purchase price paid for the shares under the option (even if no gain is
realized on the sale or if a gratuitous transfer is made). Any further gain (or
loss) realized by the participant generally will be taxed as short-term or
long-term capital gain (or loss) depending on the holding period.
17
<PAGE>
TAX CONSEQUENCES TO THE COMPANY OR PARTICIPATING COMPANY. The Company, or
the Participating Company for which a participant performs services, will be
entitled to a deduction only if the participant makes a disqualifying
disposition of any shares purchased under the Purchase Plan. In such case, the
Company or such Participating Company can deduct as a compensation expense the
amount that is ordinary income to the participant provided that, among other
things, (i) the amount meets the test of reasonableness, is an ordinary and
necessary business expense and is not an "excess parachute payment" within the
meaning of Section 280G of the Code, (ii) any applicable reporting obligations
are satisfied and (iii) the one million dollar limitation of Section 162(m) of
the Code is not exceeded.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1999 EMPLOYEE
STOCK PURCHASE PLAN, AS DESCRIBED ABOVE AND AS SET FORTH IN ANNEX A, WHICH IS
DESIGNATED AS PROPOSAL NO. 2 ON THE ENCLOSED PROXY.
18
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APPOINTMENT OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders of the Company, the Board has
designated the firm of KPMG LLP, Suite 2300, 707 Seventeenth Street, Denver,
Colorado 80202 as independent auditors to examine and audit the Company's
financial statements for the year 1999. This firm has audited the Company's
financial statements for approximately 49 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 Annual Meeting by shares of
Common Stock entitled to vote is required to ratify the appointment of KPMG LLP.
A representative of KPMG 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
ADJOURNMENT OF THE ANNUAL MEETING
Approval of proposals regarding the election of directors, the 1999 Stock
Purchase Plan and the appointment of independent auditors require the
affirmative vote of at least a majority of the votes represented at the Annual
Meeting by shares of Common Stock entitled to vote. In the event there is an
insufficient number of shares of Common Stock present in person or by proxy at
the Annual Meeting to approve such proposals, the Board of Directors requests
approval to adjourn the Annual Meeting to a later date. The place and date to
which the Annual Meeting would be adjourned would be announced at the Annual
Meeting, but would in no event be more than 30 days after the date of the Annual
Meeting.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be included in the Board of Directors'
solicitation of proxies for the 2000 Annual Meeting of Shareholders must be
received by Joan C. Sonnen, Secretary, at 1600 Broadway, Suite 2200, Denver, CO
80202, no later than December 1, 1999.
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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 Annual 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 Annual 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 Annual Meeting, the Board of Directors has
eliminated that directorship by reducing the size of the Board of Directors. The
Board of Directors is not aware that any nominee named herein will be unwilling
or unable to serve as a director.
On July 25, 1998, 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 1998 renewal was for a three-year
period. Primary insurance of $10,000,000 was secured with Executive Risk
Indemnity, Inc. and the excess insurance coverage of $15,000,000 was secured
with Reliance National Insurance Company for a total coverage of $25,000,000.
Aggregate premiums for the 36-month period ending July 25, 2001 were $506,712.
No claims have been filed and no payments have been made to the Company or its
subsidiaries or to any of their directors or officers under this coverage.
The Restated Certificate of Incorporation of the Company limits the personal
liability of the Company's directors to the fullest extent permitted by the New
York Business Corporation Law ("BCL"), as currently formulated or as it might be
revised in the future. The Restated Certificate of Incorporation provides that a
director will not be liable for damages for any breach of duty unless it is
finally established that (a) the director's acts or omissions were in bad faith
or involved intentional misconduct or a knowing violation of law; or (b) the
director personally gained a financial profit or 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.
INCORPORATION BY REFERENCE. All documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Proxy Statement shall be deemed to be incorporated by reference herein and
to be a part hereof from the date of filing thereof. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Proxy Statement to
the extent that a statement contained herein, or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement.
AVAILABLE INFORMATION. UPON REQUEST OF ANY SHAREHOLDER, THE COMPANY'S
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING FINANCIAL STATEMENTS, THE
SCHEDULES AND ANY AMENDMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY REFERENCE
THEREIN WILL BE SENT TO THE SHAREHOLDER WITHOUT CHARGE BY FIRST CLASS MAIL
WITHIN ONE
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BUSINESS DAY OF RECEIPT OF SUCH REQUEST. ALL REQUESTS SHOULD BE ADDRESSED TO THE
SECRETARY OF THE COMPANY AT 1600 BROADWAY, SUITE 2200, DENVER, COLORADO 80202 OR
BY TELEPHONE TO (303) 812-1400.
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 Annual
Meeting, as we hope you will, you may vote your shares in person.
By order of the Board of Directors
[LOGO]
JOAN C. SONNEN
SECRETARY
March 31, 1999
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ANNEX A
FOREST OIL CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The FOREST OIL CORPORATION 1999 EMPLOYEE STOCK PURCHASE PLAN
(the "Plan") is intended to provide an incentive for employees of FOREST OIL
CORPORATION (the "Company") and certain of its subsidiaries to acquire or
increase a proprietary interest in the Company through the purchase of shares of
the Company's common stock. The Plan is intended to qualify as an "employee
stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). The provisions of the Plan shall be construed in a manner
consistent with the requirements of that section of the Code.
2. DEFINITIONS. Where the following words and phrases are used in the
Plan, they shall have the respective meanings set forth below, unless the
context clearly indicates to the contrary:
(a) "Board" means the Board of Directors of the Company or a duly authorized
committee thereof.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the Forest Oil Corporation Employee Benefits
Committee.
(d) "Company" means Forest Oil Corporation, a New York corporation.
(e) "Date of Exercise" means the last day of each Option Period.
(f) "Date of Grant" means July 1, 1999, and, thereafter, the first day of
each successive October, January, April, and July.
(g) "Eligible Compensation" means regular straight-time earnings or base
salary, determined before giving effect to any salary reduction
agreement pursuant to (i) a qualified cash or deferred arrangement
(within the meaning of Section 401(k) of the Code) or (ii) a cafeteria
plan (within the meaning of Section 125 of the Code). Eligible
Compensation shall not include overtime, bonuses, commissions, severance
pay, incentive pay, shift premium differentials, pay in lieu of
vacation, reimbursements, or any other special or incentive payments
excluded by the Committee in its discretion (applied in a uniform
basis).
(h) "Eligible Employee" means, with respect to each Date of Grant, each
employee of the Company or a Participating Company who, as of such Date
of Grant, is regularly scheduled to work more than 20 hours per week and
more than five months in any calendar year.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(j) "Option Period" means the three month period beginning on each Date of
Grant.
(k) "Option Price" shall have the meaning assigned to such term in paragraph
8(b).
(l) "Participating Company" means any present or future parent or subsidiary
corporation of the Company that participates in the Plan pursuant to
paragraph 4.
(m) "Plan" means this Forest Oil Corporation 1999 Employee Stock Purchase
Plan, as amended from time to time.
(n) "Restriction Period" means the period of time during which shares of
Stock acquired by a participant in the Plan may not be sold, assigned,
pledged, exchanged, hypothecated or otherwise transferred, encumbered or
disposed of by such participant as provided in paragraph 8(d).
(o) "Stock" means the shares of the Company's common stock, par value $.10
per share.
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3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee. Subject to the provisions of the Plan, the Committee shall interpret
the Plan and all options granted under the Plan, make such rules as it deems
necessary for the proper administration of the Plan, and make all other
determinations necessary or advisable for the administration of the Plan. In
addition, the Committee shall correct any defect or supply any omission or
reconcile any inconsistency in the Plan, or in any option granted under the
Plan, in the manner and to the extent that the Committee deems desirable to
carry the Plan or any option into effect. The Committee shall, in its sole
discretion, make such decisions or determinations and take such actions, and all
such decisions, determinations and actions taken or made by the Committee
pursuant to this and the other paragraphs of the Plan shall be conclusive on all
parties. The Committee shall not be liable for any decision, determination or
action taken in good faith in connection with the administration of the Plan.
The Committee shall have the authority to delegate routine day-to-day
administration of the Plan to such officers and employees of the Company as the
Committee deems appropriate.
4. PARTICIPATING COMPANIES. The Committee may designate any present or
future parent or subsidiary corporation of the Company that is eligible by law
to participate in the Plan as a Participating Company by written instrument
delivered to the designated Participating Company. Such written instrument shall
specify the effective date of such designation and shall become, as to such
designated Participating Company and persons in its employment, a part of the
Plan. The terms of the Plan may be modified as applied to the Participating
Company only to the extent permitted under Section 423 of the Code. Transfer of
employment among the Company and Participating Companies (and among any other
parent or subsidiary corporation of the Company) shall not be considered a
termination of employment hereunder. Any Participating Company may, by
appropriate action of its Board of Directors, terminate its participation in the
Plan. Moreover, the Committee may, in its discretion, terminate a Participating
Company's Plan participation at any time.
5. ELIGIBILITY. Subject to the provisions hereof, all Eligible Employees
as of a Date of Grant shall be eligible to participate in the Plan with respect
to options granted under the Plan as of such date.
6. STOCK SUBJECT TO THE PLAN. Subject to the provisions of paragraph 13,
the aggregate number of shares which may be sold pursuant to options granted
under the Plan shall not exceed 250,000 shares of the authorized Stock, which
shares may be unissued shares or reacquired shares, including shares bought in
the market or otherwise for purposes of the Plan. Should any option granted
under the Plan 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. Any shares that are not subject to outstanding options upon the
termination of the Plan shall cease to be subject to the Plan.
7. GRANT OF OPTIONS.
(a) IN GENERAL. Commencing on July 1, 1999, and continuing while the
Plan remains in force, the Company shall, on each Date of Grant, grant an
option under the Plan to purchase shares of Stock to each Eligible Employee
as of such Date of Grant who elects to participate in the Plan; provided,
however, that no option shall be granted to an Eligible Employee if such
individual, immediately after the option is granted, owns stock possessing
five percent or more of the total combined voting power or value of all
classes of stock of the Company or of its parent or subsidiary corporations
(within the meaning of Sections 423(b)(3) and 424(d) of the Code). Except as
provided in paragraph 13, the term of each option shall be for three months,
which shall begin on a Date of Grant and end on the last day of such
three-month period. Subject to subparagraph 7(d), the number of shares of
Stock subject to an option for a participant shall be equal to the quotient
of (i) the aggregate payroll deductions withheld on behalf of such
participant during the Option Period in accordance with subparagraph 7(b),
divided by (ii) the Option Price of the Stock applicable to the Option
Period, including fractions; provided, however, that the maximum number of
shares of Stock that may be subject to any option for a participant may not
exceed 5,000 (subject to adjustment as provided in paragraph 13).
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(b) ELECTION TO PARTICIPATE; PAYROLL DEDUCTION AUTHORIZATION. An
Eligible Employee may participate in the Plan only by means of payroll
deduction. Except as provided in subparagraph 7(f), each Eligible Employee
who elects to participate in the Plan shall deliver to the Company, within
the time period prescribed by the Committee, a written payroll deduction
authorization in a form prepared by the Company whereby he gives notice of
his election to participate in the Plan as of the next following Date of
Grant, and whereby he designates a specified whole dollar amount or an
integral percentage of his Eligible Compensation to be deducted from his
compensation for each pay period and paid into the Plan for his account. The
designated percentage may not be less than 1% nor exceed 15%.
(c) CHANGES IN PAYROLL AUTHORIZATION. The payroll deduction
authorization referred to in subparagraph 7(b) may not be changed during the
Option Period. However, a participant may withdraw from the Plan as provided
in paragraph 9.
(d) $25,000 LIMITATION. No employee shall be granted an option under the
Plan which permits his rights to purchase Stock under the Plan and under all
other employee stock purchase plans of the Company and its parent and
subsidiary corporations to accrue at a rate which exceeds $25,000 of fair
market value of Stock (determined at the time such option is granted) for
each calendar year in which such option is outstanding at any time (within
the meaning of Section 423(b)(8) of the Code). Any payroll deductions in
excess of the amount specified in the foregoing sentence shall be returned
to the participant as soon as administratively feasible after the next
following Date of Exercise.
(e) LEAVES OF ABSENCE. During a paid leave of absence approved by the
Company and meeting the requirements of Treasury Regulation
Section1.421-7(h)(2), a participant's elected payroll deductions shall
continue. A participant may not contribute to the Plan during an unpaid
leave of absence. If a participant takes an unpaid leave of absence that is
approved by the Company and meets the requirements of Treasury Regulation
Section1.421-7(h)(2), then such participant's payroll deductions for such
Option Period that were made prior to such leave may remain in the Plan and
be used to purchase Stock under the Plan on the Date of Exercise relating to
such Option Period. If a participant takes a leave of absence that is not
described in the first or third sentence of this subparagraph 7(e), then he
shall be considered to have terminated his employment and withdrawn from the
Plan pursuant to the provisions of paragraph 9 hereof. Further,
notwithstanding the preceding provisions of this subparagraph 7(e), if a
participant takes a leave of absence that is described in the first or third
sentence of this subparagraph 7(e) and such leave of absence exceeds 90
days, then he shall be considered to have withdrawn from the Plan pursuant
to the provisions of paragraph 9 hereof and terminated his employment for
purposes of the Plan on the 91st day of such leave of absence.
(f) CONTINUING ELECTION. Subject to the limitation set forth in
subparagraph 7(d), a participant (i) who has elected to participate in the
Plan pursuant to subparagraph 7(b) as of a Date of Grant and (ii) who takes
no action to change or revoke such election as of the next following Date of
Grant and/or as of any subsequent Date of Grant prior to any such respective
Date of Grant shall be deemed to have made the same election, including the
same attendant payroll deduction authorization, for such next following
and/or subsequent Date(s) of Grant as was in effect immediately prior to
such respective Date of Grant. Payroll deductions that are limited by
subparagraph 7(d) shall recommence at the rate provided in such
participant's payroll deduction authorization at the beginning of the first
Option Period that is scheduled to end in the following calendar year,
unless the participant changes the amount of his payroll deduction
authorization pursuant to paragraph 7, withdraws from the Plan as provided
in paragraph 9, or is terminated from participation in the Plan as provided
in paragraph 10.
8. EXERCISE OF OPTIONS.
(a) GENERAL STATEMENT. Subject to the limitation set forth in
subparagraph 7(d), each participant in the Plan automatically and without
any act on his part shall be deemed to have exercised his option
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on each Date of Exercise to the extent of his unused payroll deductions
under the Plan and to the extent the issuance of Stock to such participant
upon such exercise is lawful.
(b) "OPTION PRICE" DEFINED. The term "Option Price" shall mean the per
share price of Stock to be paid by each participant on each exercise of his
option, which price shall be equal to 85% of the fair market value of the
Stock on the Date of Exercise or on the Date of Grant, whichever amount is
less. For all purposes under the Plan, the fair market value of a share of
Stock on a particular date shall be equal to the closing price of the Stock
on the New York Stock Exchange, Inc. on that date (or, if no shares of Stock
have been traded on that date, on the next regular business date on which
shares of the Stock are so traded).
(c) DELIVERY OF SHARE CERTIFICATES. As soon as practicable after each
Date of Exercise, the Company shall deliver to a custodian selected by the
Committee one or more certificates representing (or shall otherwise cause to
be credited to the account of such custodian) the total number of whole
shares of Stock respecting options exercised on such Date of Exercise in the
aggregate (for both whole and fractional shares) of all of the participating
employees hereunder. Any remaining amount representing a fractional share
shall not be certificated (or otherwise so credited) and such remaining
amount shall be paid in cash to the custodian. Such custodian shall keep
accurate records of the beneficial interests of each participating employee
in such shares by means of participant accounts under the Plan, and shall
provide each participating employee with quarterly or such other periodic
statements with respect thereto as may be directed by the Committee. If the
Company is required to obtain from any U.S. commission or agency authority
to issue any such shares, the Company shall seek to obtain such authority.
Inability of the Company to obtain from any commission or agency (whether
U.S. or foreign) authority which counsel for the Company deems necessary for
the lawful issuance of any such shares shall relieve the Company from
liability to any participant in the Plan except to return to him the amount
of his payroll deductions under the Plan which would have otherwise been
used upon exercise of the relevant option.
(d) RESTRICTIONS ON TRANSFER. The Committee may from time to time
specify with respect to a particular grant of options the Restriction Period
that shall apply to the shares of Stock acquired pursuant to such options.
Unless otherwise specified by the Committee, the Restriction Period
applicable to shares of Stock acquired under the Plan shall be a period of
six months after the Date of Exercise of the options pursuant to which such
shares were acquired. Except as hereinafter provided, during the Restriction
Period applicable to shares of Stock acquired under the Plan, such shares
may not be sold, assigned, pledged, exchanged, hypothecated or otherwise
transferred, encumbered or disposed of by the participant who has purchased
such shares; provided, however, that such restriction shall not apply to the
transfer, exchange or conversion of such shares of Stock pursuant to a
merger, consolidation or other plan of reorganization of the Company, but
the stock, securities or other property (other than cash) received upon any
such transfer, exchange or conversion shall also become subject to the same
transfer restrictions applicable to the original shares of Stock, and shall
be held by the custodian, pursuant to the provisions hereof. Upon the
expiration of such Restriction Period, the transfer restrictions set forth
in this subparagraph 8(d) shall cease to apply and the optionee may,
pursuant to procedures established by the Committee and the custodian,
direct the sale or distribution of some or all of the whole shares of Stock
in his Company stock account that are not then subject to transfer
restrictions and, in the event of a sale, request payment of the net
proceeds from such sale. At the time of distribution of such shares, any
fractional share in such Company stock account shall be converted to cash
based on the fair market value of the Stock on the date of distribution and
such cash shall be paid to the participant. The Committee may cause the
Stock issued in connection with the exercise of options under the Plan to
bear such legends or other appropriate restrictions, and the Committee may
take such other actions, as it deems appropriate in order to reflect the
transfer restrictions set forth in this subparagraph 8(d) and to assure
compliance with applicable laws.
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9. WITHDRAWAL FROM THE PLAN.
(a) GENERAL STATEMENT. Any participant may withdraw in whole from the
Plan at any time prior to the Date of Exercise relating to a particular
Option Period. Partial withdrawals shall not be permitted. A participant who
wishes to withdraw from the Plan must timely deliver to the Company a notice
of withdrawal in a form prepared by the Company. The Company, promptly
following the time when the notice of withdrawal is delivered, shall refund
to the participant the amount of his payroll deductions under the Plan which
have not yet been otherwise returned to him or used upon exercise of
options; and thereupon, automatically and without any further act on his
part, his payroll deduction authorization and his interest in unexercised
options under the Plan shall terminate.
(b) ELIGIBILITY FOLLOWING WITHDRAWAL. A participant who withdraws from
the Plan shall be eligible to participate again in the Plan upon expiration
of the Option Period during which he withdrew (provided that he is otherwise
eligible to participate in the Plan at such time).
10. TERMINATION OF EMPLOYMENT.
(a) GENERAL STATEMENT. Except as provided in subparagraph 10(b), if the
employment of a participant terminates for any reason whatsoever, then his
participation in the Plan automatically and without any act on his part
shall terminate as of the date of the termination of his employment. The
Company shall promptly refund to him the amount of his payroll deductions
under the Plan which have not yet been otherwise returned to him or used
upon exercise of options, and thereupon his interest in unexercised options
under the Plan shall terminate.
(b) TERMINATION BY RETIREMENT, DEATH OR DISABILITY. If the employment of
a participant terminates after such participant has attained age 65 or due
to such participant's death or permanent and total disability (within the
meaning of Section 22(e)(3) of the Code), then such participant, or such
participant's personal representative, as applicable, shall have the right
to elect either to:
(1) withdraw all of such participant's accumulated unused payroll
deductions under the Plan; or
(2) exercise such participant's option for the purchase of Stock on the
last day of the Option Period during which termination of employment occurs
for the purchase of the number of shares of Stock, including fractions,
which the accumulated payroll deductions at the date of such participant's
termination of employment will purchase at the applicable Option Price
(subject to subparagraph 7(d)).
The participant or, if applicable, such personal representative, must make such
election by giving written notice to the Committee at such time and in such
manner as the Committee prescribes. In the event that no such written notice of
election is timely received by the Committee, the participant or personal
representative will automatically be deemed to have elected as set forth in
clause (2) above.
11. RESTRICTION UPON ASSIGNMENT OF OPTION. An option granted under the
Plan shall not be transferable otherwise than by will or the laws of descent and
distribution. Each option shall be exercisable, during his lifetime, only by the
employee to whom granted. The Company shall not recognize and shall be under no
duty to recognize any assignment or purported assignment by an employee of his
option or of any rights under his option or under the Plan.
12. NO RIGHTS OF SHAREHOLDER UNTIL EXERCISE OF OPTION. With respect to
shares of Stock subject to an option, an optionee shall not be deemed to be a
shareholder, and he shall not have any of the rights or privileges of a
shareholder, until such option has been exercised. With respect to an
individual's Stock held by the custodian pursuant to subparagraph 8(d), the
custodian shall, as soon as practicable, pay the individual any cash dividends
attributable thereto or credit such dividends to such individual's account (as
directed by the Committee in its discretion applied in a uniform manner) and
shall, in accordance with procedures adopted by the custodian, facilitate the
individual's voting rights attributable thereto.
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13. CHANGES IN STOCK; ADJUSTMENTS. Whenever any change is made in the
Stock, by reason of a stock dividend or by reason of subdivision, stock split,
reverse stock split, recapitalization, reorganization, combination,
reclassification of shares or other similar change, appropriate action will be
taken by the Committee to adjust accordingly the number of shares subject to the
Plan, the maximum number of shares that may be subject to any option, and the
number and Option Price of shares subject to options outstanding under the Plan.
If the Company shall not be the surviving corporation in any merger or
consolidation (or survives only as a subsidiary of another entity), or if the
Company is to be dissolved or liquidated, then, unless a surviving corporation
assumes or substitutes new options (within the meaning of Section 424(a) of the
Code) for all options then outstanding, (i) the Date of Exercise for all options
then outstanding shall be accelerated to a date fixed by the Committee prior to
the effective date of such merger or consolidation or such dissolution or
liquidation and (ii) upon such effective date any unexercised options shall
expire and the Company promptly shall refund to each participant the amount of
such participant's payroll deductions under the Plan which have not yet been
otherwise returned to him or used upon exercise of options.
14. USE OF FUNDS; NO INTEREST PAID. All funds received or held by the
Company under the Plan shall be included in the general funds of the Company
free of any trust or other restriction, and may be used for any corporate
purpose. No interest shall be paid to any participant.
15. TERM OF THE PLAN. The Plan shall be effective upon the date of its
adoption by the Board, provided the Plan is approved by the shareholders of the
Company within 12 months thereafter. Notwithstanding any provision in the Plan,
no option granted under the Plan shall be exercisable prior to such shareholder
approval, and, if the shareholders of the Company do not approve the Plan by the
Date of Exercise of the first option granted hereunder, then the Plan shall
automatically terminate, no options may be exercised hereunder, and the Company
promptly shall refund to each participant the amount of such participant's
payroll deductions under the Plan; and thereupon, automatically and without any
further act on his part, his payroll deduction authorization and his interest in
unexercised options under the Plan shall terminate. Except with respect to
options then outstanding, if not sooner terminated under the provisions of
paragraph 16, the Plan shall terminate upon and no further payroll deductions
shall be made and no further options shall be granted after March 31, 2009.
16. AMENDMENT OR TERMINATION OF THE PLAN. The Board in its discretion may
terminate the Plan at any time with respect to any Stock for which options 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, however, that no
change in any option theretofore granted may be made that would impair the
rights of the optionee without the consent of such optionee.
17. SECURITIES LAWS. The Company shall not be obligated to issue any Stock
pursuant to any option granted under the Plan at any time when the offer,
issuance or sale of shares covered by such option has not been registered under
the Securities Act of 1933, as amended, or does not comply with such other
state, federal or foreign laws, rules or regulations, or the requirements of any
stock exchange upon which the Stock may then be listed, as the Company or the
Committee deems applicable and, in the opinion of legal counsel for the Company,
there is no exemption from the requirements of such laws, rules, regulations or
requirements available for the offer, issuance and sale of such shares. Further,
all Stock acquired pursuant to the Plan shall be subject to the Company's
policies concerning compliance with securities laws and regulations, as such
policies may be amended from time to time. The terms and conditions of options
granted hereunder to, and the purchase of shares by, persons subject to Section
16 of the Exchange Act shall comply with any applicable provisions of Rule
16b-3. As to such persons, the Plan shall be deemed to contain, and such options
shall contain, and the shares issued upon exercise thereof shall be subject to,
such additional conditions and restrictions as may be required from time to time
by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the
Exchange Act with respect to Plan transactions.
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18. NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent the Company or any subsidiary from taking any
corporate action that is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any option granted under the Plan. No employee,
beneficiary or other person shall have any claim against the Company or any
subsidiary as a result of any such action.
19. MISCELLANEOUS PROVISIONS.
(a) PARENT AND SUBSIDIARY CORPORATIONS. For all purposes of the Plan, a
corporation shall be considered to be a parent or subsidiary corporation of
the Company only if such corporation is a parent or subsidiary corporation
of the Company within the meaning of Sections 424(e) and (f) of the Code.
(b) NUMBER AND GENDER. Wherever appropriate herein, words used in the
singular shall be considered to include the plural and words used in the
plural shall be considered to include the singular. The masculine gender,
where appearing in the Plan, shall be deemed to include the feminine gender.
(c) HEADINGS. The headings and subheadings in the Plan are included
solely for convenience, and if there is any conflict between such headings
or subheadings and the text of the Plan, the text shall control.
(d) NOT A CONTRACT OF EMPLOYMENT. The adoption and maintenance of the
Plan shall not be deemed to be a contract between the Company or any
Participating Company and any person or to be consideration for the
employment of any person. Participation in the Plan at any given time shall
not be deemed to create the right to participate in the Plan, or any other
arrangement permitting an employee of the Company or any Participating
Company to purchase Stock at a discount, in the future. The rights and
obligations under any participant's terms of employment with the Company or
any Participating Company shall not be affected by participation in the
Plan. Nothing herein contained shall be deemed to give any person the right
to be retained in the employ of the Company or any Participating Company or
to restrict the right of the Company or any Participating Company to
discharge any person at any time, nor shall the Plan be deemed to give the
Company or any Participating Company the right to require any person to
remain in the employ of the Company or such Participating Company or to
restrict any person's right to terminate his employment at any time. The
Plan shall not afford any participant any additional right to compensation
as a result of the termination of such participant's employment for any
reason whatsoever.
(e) COMPLIANCE WITH APPLICABLE LAWS. The Company's obligation to offer,
issue, sell or deliver Stock under the Plan is at all times subject to all
approvals of and compliance with any governmental authorities (whether
domestic or foreign) required in connection with the authorization, offer,
issuance, sale or delivery of Stock as well as all federal, state, local and
foreign laws. Without limiting the scope of the preceding sentence, and
notwithstanding any other provision in the Plan, the Company shall not be
obligated to grant options or to offer, issue, sell or deliver Stock under
the Plan to any employee who is a citizen or resident of a jurisdiction the
laws of which, for reasons of its public policy, prohibit the Company from
taking any such action with respect to such employee.
(f) SEVERABILITY. If any provision of the Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof; instead, each provision shall be fully
severable and the Plan shall be construed and enforced as if said illegal or
invalid provision had never been included herein.
(g) GOVERNING LAW. All provisions of the Plan shall be construed in
accordance with the laws of NewYork except to the extent preempted by
federal law.
A-7
<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 and Robert S.
Boswell, or either 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
1600 Broadway, Suite 590, Denver, Colorado, on Wednesday, May 12, 1999, 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. To elect three (3) Class 1 Directors;
2. To approve the 1999 Employee Stock Purchase Plan;
3. To consider and vote upon the ratification of the appointment of KPMG
LLP as independent auditors for the Company for the fiscal year ended
December 31, 1999; and
4. To vote upon such other matters as may be properly brought before the
meeting or any adjournment thereof hereby revoking all previous proxies
and ratifying all that any of said proxies, their substitutes, or any
of them, may lawfully do by virtue hereof.
If no directions are given, the individuals designated above will vote
for the above proposals and, at their discretion, on any other matter that
may come before the meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement of the Company.
(CONTINUED AND TO BE VOTED, DATED AND SIGNED ON REVERSE SIDE)
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FOLD AND DETACH HERE
<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:
No. 1. Election of Directors.
Nominees are William L. Dorn, James H. Lee and Phillip F. Anschutz
FOR WITHHELD (To withhold authority to vote for all nominees
check the block market "Withheld". To withhold
/ / / / authority to vote for any individual nominee write
that nominee's name on the space provided below.)
--------------------------------------------------
No. 2. Approval of the 1999 Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
/ / / / / /
No. 3. Ratification of the Appointment of independent Auditors.
FOR AGAINST ABSTAIN
/ / / / / /
SPECIAL NOTES
I PLAN TO ATTEND THE MEETING / /
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SIGNATURE SIGNATURE DATE
----------------------- ----------------------- ----------
(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.
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FOLD AND DETACH HERE
