SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
(Name of Registrant as Specified in Its Charter)
TESORO PETROLEUM CORPORATION
(Name of Person(s) Filing Proxy Statement)
TESORO PETROLEUM CORPORATION
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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
registrations statement number, or the form or schedule and the date
of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
TESORO PETROLEUM CORPORATION
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
MAY 26, 1994
The 1994 Annual Meeting of Stockholders of Tesoro Petroleum Corporation will
be held at the RIHGA Royal Hotel, 151 West 54th Street, New York, New York, at
10:00 A.M. Eastern time on Thursday, May 26, 1994, for the following purposes:
1. To elect 13 directors of the Company;
2. To ratify the appointment of Deloitte & Touche as the Company's
independent auditors for the fiscal year 1994; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Holders of Common Stock and $2.20 Cumulative Convertible Preferred Stock of
record at the close of business on April 18, 1994, are entitled to notice of and
to vote at the annual meeting.
By Order of the Board of Directors,
JAMES C. REED, JR.
SECRETARY
April 26, 1994
San Antonio, Texas
YOUR VOTE IS IMPORTANT. IF YOU DO NOT EXPECT TO ATTEND THE ANNUAL MEETING,
OR IF YOU DO PLAN TO ATTEND BUT WISH TO VOTE BY PROXY, PLEASE DATE, SIGN AND
MAIL PROMPTLY THE ENCLOSED PROXY. A RETURN ENVELOPE IS PROVIDED FOR THIS
PURPOSE.
<PAGE>
TESORO PETROLEUM CORPORATION
PROXY STATEMENT
1994 ANNUAL MEETING OF STOCKHOLDERS
MAY 26, 1994
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (sometimes referred to herein as the 'Board') of Tesoro
Petroleum Corporation ('Tesoro' or the 'Company') of proxies to be voted at the
1994 Annual Meeting of Stockholders to be held on Thursday, May 26, 1994, and at
any adjournment thereof.
Each proxy will be voted as specified thereon by the stockholder. Any duly
executed proxy not specifying the contrary will be voted for (i) the directors
nominated for election at the meeting, and (ii) the ratification of the
appointment of Deloitte & Touche as the Company's independent auditors for the
fiscal year 1994. A stockholder giving a proxy may revoke it by written notice
to the Secretary of the Company at any time before it is voted.
At the close of business on April 18, 1994, the record date for the 1994
annual meeting, there were outstanding and entitled to vote 22,456,968 shares of
Common Stock and 2,875,000 shares of $2.20 Cumulative Convertible Preferred
Stock of the Company. The holders of Common Stock and $2.20 Cumulative
Convertible Preferred Stock are entitled to one vote for each share held by
them, and all such holders shall vote together as one class on all matters
submitted to them. The Company has no other voting securities outstanding.
A copy of the Annual Report of the Company, including financial statements
and a description of the Company's operations for the fiscal year 1993, has been
sent to all stockholders. Such Annual Report is not incorporated herein by
reference.
The principal executive offices of the Company are located at 8700 Tesoro
Drive, San Antonio, Texas 78217. This Proxy Statement and accompanying form of
Proxy are being mailed to stockholders on or about April 26, 1994.
1. ELECTION OF DIRECTORS
At the 1993 Annual Meeting of Stockholders held on February 9, 1994, the
Company's stockholders approved an amendment to the Company's Certificate of
Incorporation which eliminated the provisions relating to the division of the
Board of Directors into three classes. Immediately following the 1993 Annual
Meeting of Stockholders, each director whose term was scheduled to extend beyond
the 1994 Annual Meeting of Stockholders resigned and was appointed by the
remaining directors to a term ending with the 1994 Annual Meeting of
Stockholders. In addition, at its first meeting following the 1993 Annual
Meeting of Stockholders, the Board of Directors elected three new directors to
serve until the 1994 Annual Meeting of Stockholders, bringing the total
1
number of directors to 16. The new directors elected were Mr. Fred Manocherian,
Mr. James Q. Riordan and Mr. William S. Sneath. On February 14, 1994, and April
12, 1994, Mr. Manocherian and Mr. M. Richard Stewart, respectively, resigned as
directors of the Company. Mr. Riordan has elected not to stand for reelection,
and the Nominating Committee has nominated, and the Board has approved the
nomination by the Nominating Committee of, all of the other current directors.
The Board also reached an understanding that, if the MetLife Louisiana Option
(see page 4 herein) has not been exercised in full by June 30, 1994, the Board
on such date will be expanded by one, such vacancy to be filled by a person
satisfactory to the Board who is to be selected from a list, to be proposed by
MetLife Security Insurance Company of Louisiana ('MetLife Louisiana') and
Oakville N.V., of persons associated with or recommended by major stockholders.
Therefore, at the 1994 annual meeting, the stockholders are requested to elect
13 directors to hold office until the 1995 Annual Meeting of Stockholders or
until their successors are elected and qualified. Unless otherwise specified,
all duly executed proxies received on a timely basis will be voted for the
nominees set forth below. Each of such nominees has indicated his willingness to
serve as a director, if elected, and the Company has no reason to believe that
any nominee will be unable to serve. The persons designated as proxies, however,
reserve full discretion to cast votes for other persons in the event that any
one or more of the nominees are unable to serve.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
Certain information as to each nominee for director is set forth in the
table below and in the following paragraphs. The information appearing in the
table and the notes thereto regarding beneficial ownership of securities has
been furnished to the Company by the respective nominees.
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR OF
AGE AT THE COMPANY OTHER POSITIONS
APRIL 18, OR PREDECESSOR AND OFFICES
NAME 1994 COMPANIES FROM WITH THE COMPANY
<S> <C> <C> <C>
Ray C. Adam(1)----------------------- 74 1992 (2)(3)
Michael D. Burke--------------------- 50 1992 President and Chief
Executive
Officer(3)(4)
Robert J. Caverly-------------------- 75 1992 (2)(3)
Peter M. Detwiler-------------------- 65 1967 (2)(4)(5)
Steven H. Grapstein------------------ 36 1992 (3)(4)
Charles F. Luce---------------------- 76 1988 (3)(4)
Raymond K. Mason, Sr.---------------- 67 1983 (2)
John J. McKetta, Jr.----------------- 78 1980 (2)(5)
Stewart G. Nagler-------------------- 51 1991 (5)
William S. Sneath-------------------- 68 1994 None
Arthur Spitzer----------------------- 81 1992(6) (4)(5)
Murray L. Weidenbaum----------------- 67 1992 (2)(5)
Charles Wohlstetter------------------ 84 1978(7) Chairman of the Board
of Directors(3)(4)
(1) Elected by the Board in August 1992 after the request (later withdrawn) of
MetLife Louisiana, which owns the securities of the Company shown opposite
MetLife Louisiana's name in the
2
table on page 8, for a special meeting of the preferred stockholders to
elect Mr. Adam and one other director.
(2) Member of the Compensation Committee (Mr. Detwiler, Chairman).
(3) Member of the Executive Committee (Mr. Burke, Chairman).
(4) Member of the Nominating Committee (Mr. Wohlstetter, Chairman).
(5) Member of the Audit Committee (Mr. Nagler, Chairman).
(6) Mr. Spitzer previously served as director of the Company from 1978 to
1984.
(7) Mr. Wohlstetter previously served as director of the Company from 1968 to
1975.
</TABLE>
Ray C. Adam was Chairman of the Board of Directors and Chief Executive
Officer of NL Industries, Inc., from 1974 until his retirement in 1983. Mr. Adam
is also a director of Mueller Industries, Inc., and is a member of the Business
Council.
Michael D. Burke was elected President and Chief Executive Officer of the
Company effective July 27, 1992. Prior to joining the Company, Mr. Burke was
Group Vice President of Texas Eastern Corporation from 1986 to 1992. Mr. Burke
was President and Chief Executive Officer of T.E. Products Pipeline Company,
L.P., an affiliate of Texas Eastern Corporation, from 1990 to 1992, and he was
President of Texas Eastern Products Pipeline Company from 1986 to 1990.
Robert J. Caverly is a consultant and investor. For the last five years he
has performed interim management assignments for various real estate development
projects and has been a consultant on real estate matters to financial
institutions and law firms. Mr. Caverly was a director of Contel Corporation
from 1975 to March 1991. Mr. Caverly is Chairman of the Board of Directors of
Moscom Business Centers Inc., a subsidiary of Americom International
Corporation.
Peter M. Detwiler is Chairman of the Board of Detwiler & Company, Inc., a
consulting company. He is the former Vice Chairman of the Board of Directors of
E.F. Hutton & Company Inc. and the E.F. Hutton Group, New York, New York, a
major financial firm, with which he had been associated since 1961.
Steven H. Grapstein has been a Vice President of Kuo Investment Company and
subsidiaries, an international investment group, since September 1985. He is a
director of several of the Kuo companies and a board member of several unrelated
real estate development companies. Mr. Grapstein has been a Vice President of
Oakville N.V. since 1989. See 'Security Ownership of Certain Beneficial Owners'
for information regarding the securities of the Company owned by Oakville N.V.
Charles F. Luce has been Special Counsel to Metropolitan Life Insurance
Company ('MetLife') since March 1987. MetLife Louisiana is a wholly-owned
subsidiary of MetLife. See 'Security Ownership of Certain Beneficial Owners' for
information regarding the securities of the Company owned by MetLife Louisiana.
Mr. Luce has been a consultant to Consolidated Edison Company of New York, Inc.,
since September 1, 1982.
Raymond K. Mason, Sr., has been Chairman of the Board of Directors of
American Banks of Florida, Inc., since 1978. Mr. Mason has served as Chairman of
the Board of Directors of American Security Life Assurance Company of North
Carolina ('ASLNC') and its parent, American Security Life Assurance Company of
Florida ('ASLF'). During December 1990, ASLNC and ASLF voluntarily consented to
administrative rehabilitation. Pursuant to rehabilitation, Mr. Mason's authority
as Chairman of the Board of Directors of ASLNC and ASLF was automatically
suspended. Both of these companies are presently in liquidation. In connection
with the liquidation of ASLNC, a lawsuit has
3
been filed alleging violations of Federal and state RICO statutes, common law
fraud, and unfair and deceptive trade practices. Mr. Mason has been named as a
co-defendant in the lawsuit.
John J. McKetta, Jr., is Professor Emeritus of Chemical Engineering at The
University of Texas at Austin. Dr. McKetta has been associated with The
University of Texas since 1946. Dr. McKetta is a director of Howell Corporation.
Stewart G. Nagler has been Senior Executive Vice-President of MetLife since
1986 and Chief Financial Officer of MetLife since April 1, 1993. See 'Security
Ownership of Certain Beneficial Owners' for information regarding the securities
of the Company owned by MetLife Louisiana.
William S. Sneath was President and Chief Operating Officer of Union Carbide
Corporation from 1971 to 1976 and Chairman of the Board and Chief Executive
Officer from 1977 to 1981. Mr. Sneath is a director of Union Carbide
Corporation, MetLife and Rockwell International.
Arthur Spitzer is engaged in personal investments and has been the owner of
Spitzer Investments since 1984. He is on the board of Pepperdine University and
the board of the Founders of the Music Center in Los Angeles, and he is a
founder and trustee of the Caribbean Central American Action Group.
Murray L. Weidenbaum is an economist and educator and holds the Mallinckrodt
Distinguished University Professorship at Washington University in St. Louis,
Missouri, where he also serves as Director of the University Center for the
Study of American Business. He has been a faculty member at Washington
University since 1964. Dr. Weidenbaum is a director of May Department Stores
Company, Medicine Shoppe International and Harbour Group, Ltd.
Charles Wohlstetter was elected Chairman of the Board of Directors of the
Company effective July 1, 1992. Mr. Wohlstetter has been Vice Chairman of the
Board of Directors of GTE Corporation since March 14, 1991, the date on which
Contel Corporation merged into GTE Corporation. Mr. Wohlstetter was Chairman of
the Board of Directors of Contel Corporation from 1961 to March 14, 1991. Mr.
Wohlstetter is also a director of Contel Cellular Corporation and Fifth
Dimension, Inc.
No director of the Company has a family relationship with any other director
or executive officer of the Company.
In connection with a recapitalization plan (the 'Recapitalization') which
the Company completed in February 1994, the Company entered into an agreement
with MetLife Louisiana (the 'Amended MetLife Memorandum'), pursuant to which
MetLife Louisiana, the sole holder of the outstanding shares of the Company's
$2.20 Cumulative Convertible Preferred Stock ('$2.20 Preferred Stock'), agreed,
among other things, to waive the annual $2.20 Preferred Stock mandatory
redemption requirements, to consider all accrued and unpaid dividends on the
$2.20 Preferred Stock as of the effective date of the Recapitalization
(aggregating approximately $21.2 million) to have been paid, to allow the
Company to pay future dividends on the $2.20 Preferred Stock in Common Stock in
lieu of cash, to waive or refrain from the exercise of other rights under the
$2.20 Preferred Stock, and to grant the Company a three-year option (the
'MetLife Louisiana Option') to purchase all shares of $2.20 Preferred Stock and
Common Stock held by MetLife Louisiana as of the effective date of the
Recapitalization for an aggregate option price which was approximately $54.5
million as of March 31, 1994. The unpaid option price is subject to certain
adjustments and will be increased by 3 percent on the last day of each calendar
quarter through December 31, 1995, and by 3 1/2 percent of
4
the unpaid option price on the last day of each quarter thereafter. Pursuant to
the Amended MetLife Memorandum, the Company issued MetLife Louisiana 1,900,075
shares of Common Stock.
Currently, four of the Company's 14 directors (Messrs. Adam, Luce, Nagler
and Sneath) are current or former directors or officers of MetLife. Under the
terms of the Amended MetLife Memorandum, MetLife Louisiana has agreed to request
that Messrs. Adam, Luce, Nagler and Sneath resign in the event the MetLife
Louisiana Option is exercised in full. The Company believes that if the MetLife
Louisiana Option is exercised in full those directors will resign. The Company
is not aware at this time of any person who is under consideration by the
Nominating Committee of the Board of Directors or the Board of Directors to fill
any vacancy that would be created by such resignations.
In March 1994, the Board of Directors authorized management of the Company
to investigate the feasibility of a future equity offering of additional shares
of the Company's Common Stock together with a future public debt offering. The
proceeds of these offerings, if undertaken, would be used, in part, to exercise
the MetLife Louisiana Option. Management of the Company has initiated
preliminary steps to undertake such equity and public debt offerings.
The Board of Directors met seven times during fiscal year 1993. Each member
of the Board of Directors attended at least 75 percent of the meetings of the
Board and committees on which such directors served during the fiscal year 1993.
The Board of Directors has an Executive Committee and the following standing
committees: Audit Committee, Compensation Committee, and Nominating Committee.
The Executive Committee's primary functions are (i) to consider and make
recommendations to the Board of Directors regarding management proposals on
long-term strategies, major asset sales and acquisitions, profit plans and
capital budgets, finance, dividend policies, and related matters; (ii) to
provide communication, as necessary, between the Board of Directors and
management; and (iii) to act on behalf of the Board of Directors, subject to
certain limitations, in the event circumstances exist which require immediate
action by the Board of Directors and a quorum of its members cannot be readily
assembled in person or by telephone. The Executive Committee did not hold a
meeting during the fiscal year 1993.
The Audit Committee's primary functions are (i) to aid the individual
directors of the Board of Directors as a whole in performing and fulfilling
their oversight responsibilities for financial reporting to the public; (ii) to
aid in maintaining the corporate image and credibility as it relates to
financial reporting; (iii) to recommend and support, with management and/or the
Board of Directors as appropriate, efforts to improve and maintain standards and
procedures for financial control and quality financial reporting; (iv) to
provide communication, as necessary, between the Board of Directors and control
and accounting, legal, internal auditing and the external auditors; and (v) to
recommend and support, with management and/or the Board of Directors, as
appropriate, efforts to assure the Company's compliance with the requirements of
the Foreign Corrupt Practices Act of 1977, as amended. The Audit Committee met
four times during the fiscal year 1993.
The functions of the Compensation Committee are (i) to review the
compensation of the corporate and non-corporate officers of the Company and to
recommend to the Board of Directors reasonable compensation therefor; and (ii)
to review management proposals concerning retirement matters, to consider
amendments to the Company's retirement plans, and to make recommendations to the
Board of Directors in respect to such amendments and proposals. The Compensation
Committee met six times during the fiscal year 1993.
5
The Nominating Committee considers and recommends to the Board of Directors
from time to time suitable candidates for membership on the Board of Directors.
The Nominating Committee will consider nominees recommended by stockholders.
Stockholders wishing to submit a recommendation should write to the Nominating
Committee. The Nominating Committee met one time during fiscal year 1993.
COMPENSATION OF DIRECTORS
Each member of the Board of Directors who is not an officer of the Company
receives compensation at the rate of $18,000 per year, and an additional $2,000
for each meeting of the Board of Directors or any committee thereof attended in
person, and $1,000 for each telephone meeting, including committee meetings held
on the same day as a meeting of the Board of Directors. Mr. Wohlstetter also
receives $100,000 per year for his services as Chairman of the Board of
Directors. In addition, the Chairman of the Audit Committee and the Chairman of
the Compensation Committee each receive $5,000 per year for their service in
such positions. The Company provides group life insurance benefits in the amount
of $100,000 and accidental death and dismemberment insurance up to a maximum of
$100,000 for each of the members of the Board of Directors who are not employees
of the Company. The premium for such insurance ranged from $324 to $4,260 for
each of these directors during fiscal year 1993. The Company currently provides
health insurance to non-employee members of the Board of Directors, who are not
otherwise eligible for employee-provided health benefit insurance, on the same
basis as for active employees, with the director paying his pro rata share of
health insurance premiums. Mr. Detwiler is the only non-employee director
provided health insurance by the Company. During the fiscal year 1993, the
Company paid $46,269 to Mr. Detwiler or to the providers of medical services as
reimbursement for medical expenses for Mr. Detwiler and his spouse.
STOCK OWNERSHIP
The following table shows the beneficial ownership of Common Stock reported
to the Company as of April 18, 1994, including shares as to which a right to
acquire ownership exists (for example, through the exercise of stock options or
through the conversion of securities) within the meaning of Rule 13d-3(d)(1)
under the Securities Exchange Act of 1934, as amended ('Exchange Act'), for each
director and nominee, the Chief Executive Officer, the other four most highly
compensated officers of the Company during the fiscal year 1993 and, as a group,
such persons and other executive officers. Unless otherwise indicated, each
person or member of the group listed has sole voting and investment power with
respect to the shares of Common Stock listed.
BENEFICIAL OWNERSHIP ON
APRIL 18, 1994 OF
COMMON STOCK
SHARES PERCENT OF CLASS
Ray C. Adam-------------------------- -- --
Michael D. Burke--------------------- 293,334(1) 1.297
Robert J. Caverly-------------------- 3,000 0.013
Peter M. Detwiler-------------------- 8,715 0.039
Steven H. Grapstein------------------ 1,581,500(2) 7.042
Charles F. Luce---------------------- -- --
Raymond K. Mason, Sr.---------------- 3,528 0.016
John J. McKetta, Jr.----------------- 1,565 0.007
6
Stewart G. Nagler-------------------- -- --
James Q. Riordan--------------------- -- --
William S. Sneath-------------------- -- --
Arthur Spitzer----------------------- 207,630 0.925
Murray L. Weidenbaum----------------- 100 --
Charles Wohlstetter------------------ 3,106 0.014
Gaylon H. Simmons-------------------- 30,000(3) 0.133
Bruce A. Smith----------------------- 20,471(4) 0.091
James W. Queen----------------------- 16,720(5) 0.074
William M. Sims---------------------- 677(6) 0.003
All directors and executive officers
as a group (22 individuals)-------- 2,213,871(7) 9.750
(1) The shares shown include 60,000 shares which Mr. Burke has the right to
purchase, all of which shares are subject to substantial restrictions and
conditions of forfeiture over a remaining three-year period and 334 shares
credited to the account of Mr. Burke under the Company's Thrift Plan. In
addition, the shares shown include 100,000 shares which Mr. Burke had the
right to acquire through the exercise of options which were exercisable on
April 18, 1994, or within 60 days thereafter.
(2) Mr. Grapstein is an officer of Oakville N.V., which owns 1,571,500 shares
of the Company's Common Stock. Mr. Grapstein, as an officer, shares voting
and investment power with respect to such shares.
(3) The shares shown represent 30,000 shares which Mr. Simmons had the right
to acquire through the exercise of options which were exercisable on April
18, 1994, or within 60 days thereafter.
(4) The shares shown include 471 shares credited to Mr. Smith's account under
the Company's Thrift Plan and 20,000 shares which Mr. Smith had the right
to acquire through the exercise of options which were exercisable on April
18, 1994, or within 60 days thereafter.
(5) The shares shown include 88 shares credited to Mr. Queen's account under
the Company's Employee Stock Ownership Plan and 13,972 shares which Mr.
Queen had the right to acquire through the exercise of stock options or
stock awards on April 18, 1994, or within 60 days thereafter.
(6) The shares shown include 60 shares credited to Mr. Sims' account under the
Company's Employee Stock Ownership Plan. Mr. Sims terminated employment
with the Company effective March 18, 1994.
(7) The shares shown include 3,637 shares and 412 shares credited to the
accounts of officers and directors under the Company's Thrift Plan and
Employee Stock Ownership Plan, respectively, and 249,908 shares which
directors and executive officers had the right to acquire through the
exercise of options or awards which were exercisable on April 18, 1994, or
within 60 days thereafter. The shares shown also include 3,000 shares
acquired in the name of an executive officer's mother with respect to
which such executive officer has voting and investment power.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information, to the best of the Company's
knowledge, as to each person or group who on April 18, 1994, beneficially owned
more than 5 percent of the outstanding shares of any class of the voting
securities of the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
NAME AND ADDRESS NUMBER PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF SHARES OF CLASS
<S> <C> <C> <C>
Common Stock------------------------- FMR Corp.(2) 1,419,400 6.321
c/o Edward C. Johnson 3d
82 Devonshire Street
Boston, MA 02109
Common Stock------------------------- MetLife Security Insurance 4,084,160 18.187
Company of Louisiana
72 Eagle Rock Avenue
East Hanover, NJ 07936
Common Stock------------------------- Oakville N.V.(3) 1,581,500 7.042
c/o Kuo Investment Company
33rd Floor
767 Third Avenue
New York, NY 10017
$2.20 Cumulative Convertible
Preferred Stock(4)------------------- MetLife Security Insurance 2,875,000 100.0
Company of Louisiana
72 Eagle Rock Avenue
East Hanover, NJ 07936
(1) Except as indicated below, to the best of the Company's knowledge, the
beneficial owners indicated above possess sole voting and investment power
with respect to the shares shown to be owned by them.
(2) Fidelity Management & Research Company ('Fidelity'), a wholly-owned
subsidiary of FMR Corp., is the beneficial owner of the shares shown as a
result of acting as investment adviser to several investment companies
registered under Section 8 of the Investment Company Act of 1940. Neither
FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp., has the sole
power to vote or direct the voting of the shares owned directly by
Fidelity Funds, which power resides with the Funds' Board of Trustees.
Edward C. Johnson 3d, FMR Corp. (through its control of Fidelity), and the
Funds each have sole power to dispose of the shares.
(3) According to Schedule 13Ds on file with the Securities and Exchange
Commission (the 'Commission'), Oakville N.V., a Netherlands Antilles
corporation ('Oakville'), is a wholly-owned subsidiary of Kuo Investment
Limited, a Cayman Islands corporation ('Kuo'). According to a Schedule 13D
filed by Oakville in 1987, the following persons are its directors and
executive officers: (a) Peter Yun Siak Fu, President and Director of
Oakville; Director and officer of Kuo; (b) Peter Chong Cheng Fu, Director
and Secretary of Oakville; Director and officer of Kuo; (c) Ong Beng Seng,
Vice President and Director of Oakville; Director and officer of Kuo; (d)
David Song Long Ban, Treasurer and Director of Oakville; Director and
officer of Kuo; and (e) Holland Intertrust (Curacao) N.V., a Netherlands
Antilles corporation, a Director of Oakville. Oakville N.V. reports that
it has sole voting and dispositive power over its voting securities.
(4) Each share of $2.20 Cumulative Convertible Preferred Stock is convertible
into 0.8696 shares of Common Stock and votes with the Common Stock on all
matters on which the Common Stock is eligible to vote. Pursuant to the
Amended MetLife Memorandum, MetLife Louisiana has agreed not to convert
the $2.20 Cumulative Convertible Preferred Stock into Common Stock.
</TABLE>
8
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10 percent of the Company's voting
stock to file with the Commission initial reports of ownership and reports of
changes in ownership of Common Stock or other equity securities of the Company.
The Company believes that during the fiscal year ended December 31, 1993, its
directors, executive officers and holders of more than 10 percent of the
Company's voting stock complied with all Section 16(a) filing requirements.
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table contains information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended December 31, 1993, December 31, 1992, and September 30, 1991, and the
three months ended December 31, 1991, of those persons who were on December 31,
1993, (i) the Chief Executive Officer and (ii) the other four most highly
compensated officers of the Company (the 'named executive officers').
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
OTHER RESTRICTED
ANNUAL STOCK STOCK
SALARY BONUS COMPENSA- AWARD(S) OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) TION($)(2) ($)(3) (SHARES)
<S> <C> <C> <C> <C> <C> <C>
Michael D.
Burke, 1991 -- -- -- -- --
President Three Months Ended
and Chief December 31, 1991 -- -- -- -- --
Executive 1992 188,655 77,706 6,666 458,333 500,000
Officer 1993 450,002 157,500 21,911 -- --
Gaylon H.
Simmons 1991 -- -- -- -- --
Executive Three Months Ended
Vice December 31, 1991 -- -- -- -- --
President 1992 -- -- -- -- --
1993 244,231 87,500 8,438 -- 150,000
Bruce A.
Smith 1991 -- -- -- -- --
Executive Three Months Ended
Vice December 31, 1991 -- -- -- -- --
President 1992 56,923 20,846 -- -- 100,000
and Chief 1993 200,504 70,000 50,248 -- --
Financial
Officer
James W.
Queen 1991 160,000 12,800 -- -- --
Senior Three Months Ended
Vice December 31, 1991 36,923 -- -- -- --
President 1992 166,154 -- -- -- --
1993 169,231 22,836 -- -- 13,335
William M.
Sims 1991 124,000 16,380 -- -- --
Vice Three Months Ended
President December 31, 1991 30,000 -- -- -- --
1992 135,000 -- -- -- --
1993 138,378 -- -- -- --
<CAPTION>
ALL OTHER
COMPENSA-
TION($)(1)
<S> <C>
Michael D.
Burke, --
President
and Chief --
Executive 34,162
Officer 195,190
Gaylon H.
Simmons --
Executive
Vice --
President --
32,308
Bruce A.
Smith --
Executive
Vice --
President 10,523
and Chief 3,719
Financial
Officer
James W.
Queen --
Senior
Vice --
President 28,090
70,516
William M.
Sims --
Vice
President --
43,481
75,480
</TABLE>
9
(1) In accordance with the transitional provisions applicable to the revised
rules on executive compensation disclosure adopted by the Securities and
Exchange Commission (the 'Commission'), amounts of All Other Compensation
are excluded for fiscal year 1991 and the three months ended December 31,
1991. All Other Compensation for 1993 includes relocation expenses of
$36,421 and $16,500 for Mr. Burke and Mr. Simmons, respectively; amounts
contributed by the Company and earnings on the respective executive
officer's account in the Funded Executive Security Plan of $153,057,
$15,808, $2,104, $65,439, and $75,480 for Mr. Burke, Mr. Simmons, Mr.
Smith, Mr. Queen and Mr. Sims, respectively; and amounts contributed to
the Company's Thrift Plan of $5,712, $1,615 and $5,077 for Mr. Burke, Mr.
Smith and Mr. Queen, respectively. All Other Compensation for 1992
includes relocation expenses of $23,717 for Mr. Burke; amounts contributed
by the Company and earnings on the respective executive officer's account
in the Funded Executive Security Plan of $10,445, $10,523, $25,136 and
$43,481 for Mr. Burke, Mr. Smith, Mr. Queen and Mr. Sims, respectively;
and amounts contributed to the Company's Thrift Plan of $2,954 for Mr.
Queen.
(2) In accordance with the transitional provisions applicable to the revised
rules on executive compensation disclosure adopted by the Commission,
amounts of Other Annual Compensation are excluded for fiscal year 1991 and
the three months ended December 31, 1991. Other Annual Compensation for
1993 includes income tax reimbursements of $21,911, $8,438 and $17,800 for
Mr. Burke, Mr. Simmons and Mr. Smith, respectively, and $32,448 of
perquisites and other personal benefits for Mr. Smith. The aggregate
amount of perquisites and other personal benefits was less than either
$50,000 or 10 percent of the total annual salary and bonus reported for
the other named executive officers.
(3) At December 31, 1993, Mr. Burke had not yet received certificates
representing 60,000 shares of Common Stock under the terms of a stock
award dated July 27, 1992, pending payment by Mr. Burke of the par value
of such shares. Mr. Burke's right to sell these 60,000 shares accrues in
three equal installments of 20,000 shares each on the second, third and
fourth anniversaries of the date of the grant. At December 31, 1993, the
value of restricted stock which Mr. Burke had the right to purchase was
$320,000, representing the difference between the closing stock price on
December 31, 1993, and the purchase price of the shares to Mr. Burke. No
other named officer owned or had the right to acquire restricted stock at
December 31, 1993.
10
<PAGE>
OPTION GRANTS AND EXERCISES
The following table sets forth information concerning individual grants of
stock options pursuant to the Company's Amended Incentive Stock Plan of 1982
(the '1982 Plan') during the year ended December 31, 1993, to the named
executive officers. No stock appreciation rights were granted under the 1982
Plan during 1993.
<TABLE>
OPTION GRANTS IN 1993
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS OPTIONS GRANTED EXERCISE OR PRICE APPRECIATION
GRANTED TO EMPLOYEES BASE PRICE EXPIRATION FOR OPTION TERM
NAME (#) IN 1993 ($/SHARE) DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Michael D. Burke--------------------- -- -- $-- -- $ -- $ --
Gaylon H. Simmons-------------------- 150,000(1) 42.9 2.93(2) 01/03/03 275,928 699,254
Bruce A. Smith----------------------- -- -- -- -- -- --
James W. Queen----------------------- 13,335(1) 3.8 5.25 12/08/03 44,029 111,576
William M. Sims---------------------- -- -- -- -- -- --
</TABLE>
(1) The options granted to Mr. Simmons and Mr. Queen are exercisable in five
equal installments beginning one year from the dates of the grants;
however, Mr. Simmons' right to exercise his option may be accelerated to
no fewer than three equal installments of 50,000 shares each beginning one
year from the date of grant. Such acceleration is based on the passage of
time and on the Company's achievement of specified per share price
objectives for the first, second and third anniversaries of the dates of
grant of $7.00, $9.00 and $11.00, respectively, based on the average
closing price of the Common Stock at the end of the 30 trading days
immediately preceding the respective anniversary date. If any such
installment fails to become exercisable because the per share price
objective was not achieved, such installment will become exercisable if
the targeted average per share price for such installment is achieved on
any subsequent anniversary of the date of grant.
(2) The exercise price per share of this option is the average of the closing
price of the Common Stock for the ten trading days immediately preceding
the date of grant.
AGGREGATED OPTION/SAR EXERCISES IN 1993 AND OPTION/SAR VALUES AT DECEMBER 31,
1993
The following table reflects unexercised options to purchase shares of the
Common Stock and unexercised SARs granted to the named executive officers during
fiscal year 1993 and prior years under the 1982 Plan. None of the named
executive officers exercised any stock options or SARs during 1993.
11
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED ON VALUE DECEMBER 31, 1993(#) DECEMBER 31, 1993($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Michael D. Burke--------------------- -- -- 100,000 400,000 $ 66,000 $ 264,000
Gaylon H. Simmons-------------------- -- -- -- 150,000 -- 386,250
Bruce A. Smith----------------------- -- -- 20,000 80,000 31,500 126,000
James W. Queen----------------------- -- -- 33,871 13,335 -- 3,334
William M. Sims---------------------- -- -- 10,884 -- -- --
</TABLE>
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee is comprised entirely of non-employee directors
and is chaired by Peter M. Detwiler. The other members of the Compensation
Committee are Ray C. Adam, Robert J. Caverly, Raymond K. Mason, Sr., John J.
McKetta, Jr., and Murray L. Weidenbaum. The Compensation Committee is
responsible for reviewing all elements of executive compensation and making
recommendations to the Board of Directors. The Board of Directors is ultimately
responsible for approving the Company's overall compensation programs. The
Compensation Committee has the responsibility for assuring stockholders that
total compensation programs are effective, responsible and competitive when
compared to other energy companies. This Committee Report documents the basis on
which 1993 compensation determinations were made and further describes the
components of officer compensation programs of the Company, particularly the
President and Chief Executive Officer and the other officers named in the
Summary Compensation Table.
COMPENSATION PHILOSOPHY AND OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAMS
It is the philosophy of the Compensation Committee to link executive
compensation programs directly to performance. In particular, the Compensation
Committee encourages officers to acquire and retain appropriate levels of stock
ownership so that these executives are focused on managing the Company from the
perspective of a stockholder. From time to time, the Compensation Committee
works with executive compensation consultants who assist with the design,
implementation and communication of various compensation plans.
In 1992 and early 1993, the Board of Directors hired three key executives:
Michael D. Burke as President and Chief Executive Officer; Gaylon H. Simmons as
Senior Vice President, Refining, Marketing and Crude Supply; and Bruce A. Smith
as Vice President and Chief Financial Officer. In September 1993, Mr. Simmons
was promoted to Executive Vice President and Mr. Smith was promoted to Executive
Vice President and Chief Financial Officer.
The Board of Directors and the Compensation Committee believe it is
paramount to have an executive compensation program that motivates and rewards
these executives for their contributions to restoring profitability to the
Company and increasing stockholder value. As a result, the Compensation
Committee, with the assistance of its compensation consultants, has extensively
reviewed the Company's executive compensation program and established criteria
to reward performance.
The Compensation Committee has developed the following compensation
guidelines as the principles upon which compensation decisions are made.
* Provide a competitive total compensation package that enables the
Company to attract and retain key executives.
12
* Integrate all compensation components with the Company's annual and
long-term business objectives and strategy and motivate executives to
perform in a manner consistent with those objectives.
* Provide variable (at-risk) compensation opportunities that are linked
with the financial performance of the Company or strategic objectives
judged to be critical to achieving increased stockholder value.
* Provide incentives to improve corporate performance and stockholder
value.
With the assistance of its compensation consultants, the Compensation
Committee relates total compensation levels for the Company's executive officers
to compensation paid to executives of a peer group of companies. This peer group
is comprised of companies that tend to have comparable business operations and
sales volumes, market capitalization, employment levels and lines of business as
the Company. The peer group used for compensation comparison purposes generally
is not the same group of companies which comprise the peer group of companies
used in the Performance Graph included in this proxy statement because the
Compensation Committee believes that the Company's most direct competitors for
executive talent are not necessarily the same companies that would be
appropriate for comparing shareholder returns.
EXECUTIVE COMPENSATION PROGRAM COMPONENTS
The Company's executive compensation program is comprised of the following
components:
* Base salary
* Annual performance-related incentives
* Performance-based stock options
* Other stock options and restricted stock awards
The compensation program components, which are overseen by the Compensation
Committee, are further explained below.
BASE SALARIES
The Compensation Committee believes a competitive base salary is vital to
support the philosophy of management development and career orientation of
executives and, therefore, base salaries for executive officers are reviewed on
an annual basis. The Compensation Committee examines independent survey data
reflecting the compensation of executives at other companies who hold positions
of similar responsibility. While there is no specific weighting of individual
factors, competitive positioning is the primary consideration in setting the
executives' salaries. Base salaries for the Company's executive officers,
including the named executive officers, are generally at or near the average of
the surveyed data given the Company's size and complexity relative to the
surveyed companies. Effective February 4, 1994, Mr. Simmons and Mr. Smith each
received an increase in their base salaries. Mr. Simmons' salary was increased
from $250,000 to $300,000 annually, and Mr. Smith's salary was increased from
$200,000 to $300,000 annually. In considering the appropriateness of the annual
base salary of Mr. Burke, the Compensation Committee concluded that Mr. Burke's
current base salary is appropriate in comparison to the other companies included
in the executive compensation survey. Mr. Sims, who resigned from the Company in
March 1994, and Mr. Queen last received a salary increase in January 1993 in
connection with a general salary increase for substantially all of the Company's
employees.
13
ANNUAL INCENTIVE COMPENSATION
Pursuant to their employment contracts, Messrs. Burke, Simmons and Smith
have a significant portion of their total compensation at risk through annual
incentive opportunities that are linked to key financial and operational
objectives for the Company on a consolidated basis. This part of the overall
compensation policy is designed to deliver competitive levels of compensation to
attain the short-term objectives which the Compensation Committee believes are
essential to achieving increased stockholder value over time. The Compensation
Committee from time to time uses an independent compensation consultant to
assist in determining target annual bonus levels that are competitive among the
energy industry. Bonuses are recommended by the Compensation Committee to the
Board of Directors at the end of the year and are generally paid in cash. The
amounts of such bonuses are determined by the Board of Directors and are paid
upon the achievement of performance objectives established by the Board of
Directors during each year pursuant to discussions conducted in good faith with
the executives. The employment contract target awards are 40 percent, 37 1/2
percent and 35 percent for Messrs. Burke, Simmons and Smith, respectively. Mr.
Burke and Mr. Smith were each paid a cash bonus in 1993 for their performance
during 1992 equal to the maximum percentage permitted by their employment
contracts. In March 1994, the Board of Directors approved the Compensation
Committee's recommendation of cash bonuses for 1993 performance of $157,500,
$87,500 and $70,000 for Messrs. Burke, Simmons and Smith, respectively,
representing 35 percent of each executive officer's base salary. The percentage
awards for Mr. Burke and Mr. Simmons are slightly below the maximum bonus
percentages permitted by the employment contracts of these executives. In
addition, Mr. Queen was awarded a bonus in December 1993 in the form of a stock
award. This bonus was valued at $22,836, the excess of the closing market price
of the Company's Common Stock on the date of the award over the par value of the
stock, the amount which Mr. Queen will be required to pay to receive the stock
after the shares have been registered with the Securities and Exchange
Commission.
LONG-TERM INCENTIVE COMPENSATION
The Compensation Committee supports increased stock ownership by key
executives and believes that stock-based long-term incentives retain executive
management and focus the attention of the executives on managing the Company
from a long-term investor's perspective. Therefore, executives are eligible to
receive stock options, stock appreciation rights, awards of restricted stock and
performance share and performance unit awards from time to time, giving them the
right to purchase shares of stock or to receive shares or cash at specified
future dates and/or when performance goals have been met. The size of awards
under these plans is based on competitive practices, with the value of any stock
options estimated using the Black-Scholes option valuation model. During 1993,
no stock options were granted to the named executive officers as part of the
ongoing executive compensation program. Grants were awarded to Mr. Burke and Mr.
Smith in 1992 and to Mr. Simmons in 1993 in conjunction with their initial
employment as follows:
COMMON STOCK
NAME STOCK OPTIONS RESTRICTED STOCK AWARD
Michael D. Burke--------------------- 500,000 100,000
Gaylon H. Simmons-------------------- 150,000 --
Bruce A. Smith----------------------- 100,000 --
The Compensation Committee believes that a long-term incentive plan is
important as a means of retaining senior management over the long term. The
executive compensation program is reviewed
14
annually to ensure an appropriate mix of base salary, annual bonus and long-term
rewards within the philosophy of providing competitive total direct compensation
opportunities.
OTHER EXECUTIVE PROGRAMS
The Company also provides certain executive benefits and perquisites that
are considered necessary to offer fully competitive opportunities to its
officers. These include, but are not limited to, supplemental retirement
arrangements, employment agreements and change-in-control contracts.
DISCUSSION OF 1993 COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
For fiscal year 1993, the Compensation Committee made the following
determinations regarding the compensation for Mr. Burke:
BASE SALARY. Base salary was set at $450,000 on Mr. Burke's employment
date of July 27, 1992. During 1993, the Committee again reviewed Mr. Burke's
base salary and determined that his base salary was currently competitive
relative to industry standards and no adjustment to Mr. Burke's base salary
was considered appropriate during 1993.
ANNUAL INCENTIVE AWARD. Under the terms of his employment agreement,
Mr. Burke can earn up to 40 percent of his base salary as an annual cash
incentive award. Following the recommendation of the Compensation Committee,
the Board of Directors approved a cash bonus of $157,500, or 35 percent of
Mr. Burke's base salary, which was paid to Mr. Burke in March 1994 for his
outstanding performance during 1993 in returning the Company to
profitability and financial stability.
STOCK OPTIONS. In connection with his employment, a stock option grant
of 500,000 shares with an exercise price of $4.84 per share was made to Mr.
Burke on July 27, 1992, which is exercisable on the eighth anniversary of
the date of grant; however, the right to exercise the option may be
accelerated to not fewer than five equal installments of 100,000 shares each
beginning one year from the date of grant. Such acceleration is based on the
passage of time and, except for the first installment for which no minimum
share price is required, on the achievement of specified per share share
price objectives for the second, third, fourth and fifth anniversaries of
$7.00, $9.00, $11.00 and $13.00, respectively. No additional stock options
were granted to Mr. Burke during 1993.
POLICY WITH RESPECT TO THE $1 MILLION DEDUCTION LIMIT
Recently enacted Section 162(m) of the Internal Revenue Code generally
limits the Company's annual deduction for compensation paid to individual
executive officers to $1 million, unless certain requirements are met. The
Compensation Committee will carefully consider the impact of this new tax code
provision. At this time, the Compensation Committee intends to modify, to
whatever extent is necessary, its compensation programs for the executive
officers subject to the deduction limit so that the Company's tax deduction is
preserved on all compensation paid.
SUMMARY
The Compensation Committee, in making its recommendations to the Board of
Directors, has the responsibility for ensuring that the Company's compensation
program is in the best interest of its stockholders. The Compensation Committee
believes the program is competitive when compared to other companies in its
industry. Targeted awards under the annual incentive bonus and stock-based
long-term incentives are based on energy industry competitive (average)
practices. Actual payouts
15
under these two components are contingent upon the attainment of performance
goals and/or stock appreciation. In addition, the Compensation Committee
believes the executive compensation programs emphasize compensation that is
sensitive to operational, financial and stock performance, industry standards
and comparisons, and that decisions made by the Compensation Committee in 1993
are consistent with its stated compensation philosophy.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Peter M. Detwiler, Chairman
Ray C. Adam
Robert J. Caverly
Raymond K. Mason, Sr.
John J. McKetta, Jr.
Murray L. Weidenbaum
16
<PAGE>
PERFORMANCE GRAPH
The Stock Price Performance Graph below compares the cumulative total return
of the Common Stock to the cumulative total return of the S&P 500 Composite
Index and a composite Peer Group which the Company considers representative of
companies with operations comparable to the Company. Companies in this Peer
Group are as follows: Ashland Oil, Inc.; Diamond Shamrock Corporation; Getty
Petroleum Corporation; Holly Corporation; Kerr-McGee Corporation; Maxus Energy
Corporation; Murphy Oil Corporation; Oryx Energy; Pennzoil Company; Quaker State
Corporation; Sun Company, Inc.; Tosco Corporation; Total Petroleum (North
America) Ltd.; Union Texas Petroleum Holdings, Inc.; and Valero Energy
Corporation. (This line graph is for the period of five fiscal years commencing
September 30, 1988, and ended December 31, 1993, and includes the transitional
period from October 1, 1991, through December 31, 1991.)
[LINEAR GRAPH PLOTTED FROM POINTS IN TABLE BELOW]
<TABLE>
<CAPTION>
9/30/88 9/30/89 9/30/90 9/30/91 12/31/91 12/31/92 12/31/93
<S> <C> <C> <C> <C> <C> <C> <C>
Tesoro Petro. Corp. 100 79 62 54 36 24 44
S&P 500 Index 100 133 121 158 171 184 203
Industry Peer Group 100 136 136 128 120 113 125
</TABLE>
* Assumes that the value of the investment in Common Stock and each index was
$100 on September 30, 1988, and that all dividends were reinvested. Investment
is weighted on the basis of market capitalization.
NOTE: The stock price performance shown on the graph is not necessarily
indicative of future price performance.
17
OTHER BENEFITS
The Company maintains a noncontributory qualified Retirement Plan which
covers officers and other salaried employees. Benefits under the plan are
payable on a straight life annuity basis and are based on the average monthly
earnings and years of service of participating employees. Average monthly
earnings used in calculating retirement benefits are primarily salary and bonus
received by the participating employee during the 36 consecutive months of the
last 120 months of service which produces the highest average monthly rate of
earnings.
In addition, the Company maintains an unfunded executive security plan, the
Amended Executive Security Plan ('Amended Plan'), for executive officers and
other key personnel selected by the Chief Executive Officer. The Amended Plan
provides for a monthly retirement income payment during retirement equal to a
percentage of a participant's Earnings. 'Earnings' is defined under the Amended
Plan to mean a participant's average monthly rate of total compensation,
primarily salary and bonus earned, for the 36 consecutive calendar months which
produce the highest average monthly rate of compensation for the participant.
The monthly retirement benefit percentage is defined as the sum of 4 percent of
Earnings for each of the first ten years of employment, plus 2 percent of
Earnings for each of the next ten years of employment, plus 1 percent of
Earnings for each of the next ten years of employment. The maximum percentage is
70 percent. The Amended Plan provides for the payment of the difference, if any,
between (a) the total retirement income payment calculated above and (b) the sum
of retirement income payments from the Company's Retirement Plan and Social
Security benefits.
The Company also maintains the Funded Executive Security Plan ('Funded
Plan') which covers only persons who participate in the Amended Plan and
provides participants with substantially the same after-tax benefits as the
Amended Plan. Advance payments are made to the extent a participant is expected
to incur a pre-retirement tax liability as a result of his participation in the
Funded Plan. The Funded Plan is funded separately for each participant on an
actuarially determined basis through a bank trust whose primary asset is an
insurance contract providing for a guaranteed rate of return for certain
periods. Amounts payable to participants from the Funded Plan reduce amounts
otherwise payable under the Amended Plan.
18
<PAGE>
The following table shows the estimated annual benefits payable upon
retirement under the Company's Retirement Plan, Amended Plan and the Funded Plan
for employees in specified compensation and years of benefit service
classifications without reference to any amount payable upon retirement under
the Social Security law or any amount advanced before retirement. The estimated
annual benefits shown are based upon the assumption that the plans continue in
effect and that the participant receives payment for life. As of January 1,
1994, the federal tax law generally limits maximum annual retirement benefits
payable by the Retirement Plan to any employee to $118,800, adjusted annually to
reflect increases in the cost of living and adjusted actuarially for retirement.
However, since the Amended Plan and the Funded Plan are not qualified under
Section 401 of the Internal Revenue Code, it is possible for certain retirees to
receive annual benefits in excess of this tax limitation.
<TABLE>
<CAPTION>
HIGHEST AVERAGE
ANNUAL RATE NUMBER OF YEARS OF BENEFIT SERVICE
OF COMPENSATION 10 15 20 25 30
<S> <C> <C> <C> <C> <C>
$ 50,000----------------------------- $ 20,000 25,000 30,000 32,500 35,000
$100,000----------------------------- $ 40,000 50,000 60,000 65,000 70,000
$150,000----------------------------- $ 60,000 75,000 90,000 97,500 105,000
$200,000----------------------------- $ 80,000 100,000 120,000 130,000 140,000
$250,000----------------------------- $ 100,000 125,000 150,000 162,500 175,000
$300,000----------------------------- $ 120,000 150,000 180,000 195,000 210,000
$350,000----------------------------- $ 140,000 175,000 210,000 227,500 245,000
$400,000----------------------------- $ 160,000 200,000 240,000 260,000 280,000
$450,000----------------------------- $ 180,000 225,000 270,000 292,500 315,000
$500,000----------------------------- $ 200,000 250,000 300,000 325,000 350,000
$550,000----------------------------- $ 220,000 275,000 330,000 357,500 385,000
</TABLE>
The years of benefit service as of December 31, 1993, for the named
executive officers were as follows: Mr. Burke, 1 year; Mr. Simmons, none; Mr.
Smith, 1 year; Mr. Queen, 24 years; and Mr. Sims, 9 years.
In addition to the retirement benefits described above, the Amended Plan
provides for a pre-retirement death benefit payable over eight years of four
times a participant's annual base pay as of December 1 preceding a participant's
date of death, less the amount payable from the Funded Plan at the date of
death. The amount payable from the Funded Plan at death is based on the
actuarial value of the participant's vested accrued benefit, payable in 96
monthly installments or as a life annuity if a surviving spouse is the
designated beneficiary.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
Under an employment agreement dated July 27, 1992, Mr. Burke is employed
until July 27, 1995, at an annual base salary of not less than $450,000. In
addition to his annual base salary, the agreement provides that Mr. Burke shall
have the opportunity to earn an annual cash bonus of up to 40 percent of his
base salary earned during the year. The amount of such bonus is to be based on
Mr. Burke's performance as determined by the Board of Directors according to
objectives established by the Board of Directors each year pursuant to
discussions conducted in good faith with Mr. Burke.
Under an employment agreement dated January 4, 1993, Mr. Simmons is employed
until January 4, 1996, at an annual base salary of not less than $300,000. In
addition to his annual base
19
<PAGE>
salary, the agreement provides that Mr. Simmons shall have the opportunity to
earn an annual cash bonus of up to 37 1/2 percent of his base salary earned
during the year. The amount of such bonus is to be based on Mr. Simmons'
performance as determined by the Board of Directors according to objectives
established by the Board of Directors each year pursuant to discussions
conducted in good faith with Mr. Simmons.
Under an employment agreement dated September 14, 1992, Mr. Smith is
employed until September 24, 1995, at an annual base salary of not less than
$300,000. In addition to his annual base salary, the agreement provides that Mr.
Smith shall have the opportunity to earn an annual cash bonus of up to 35
percent of his base salary earned during the year. The amount of such bonus is
to be based on Mr. Smith's performance as determined by the Board of Directors
according to objectives established by the Board of Directors each year pursuant
to discussions conducted in good faith with Mr. Smith.
Each of the employment agreements with Mr. Burke, Mr. Simmons and Mr. Smith
provides that in the event the Company should terminate such executive officer's
employment without cause or if he should resign his employment for 'good reason'
(as 'good reason' is defined in the employment agreements), he will be paid the
greater of (i) a lump sum payment equal to his base salary at the then-current
rate for the remaining months under the original term of the employment
agreement and (ii) a lump sum equal to one year of his base salary under the
employment agreement at the then-current base salary rate. Each employment
agreement further provides that in the event such executive officer's employment
is terminated within two years of a change of control, he shall be paid within
ten days of such termination a lump sum equal to three years' base salary at the
then-current rate. A change of control shall be deemed to have occurred if (i)
(a) more than 30 percent of the combined voting power of the Company's then
outstanding securities is acquired, directly or indirectly, and (b) at any time
during the 24-month period thereafter, at least a majority of the Board of
Directors shall cease to consist of directors of the Company who either were
directors at the beginning of such 24-month period or who subsequently became
directors and whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period, or (ii)
the stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the Company or such surviving entity) at
least 60 percent of the total voting power represented by the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, or the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for sale or disposition by
the Company of all or substantially all of the Company's assets. Base salary for
purposes of this payment is defined to include the greatest annual amount paid
to such executive officer during each of the two years prior to the date of such
termination under all bonus and incentive compensation plans of the Company. The
agreements further provide that should such termination payments to such
executive officer exceed the permitted 'parachute' payment limits described in
Section 280G of the Code, so that an excise tax is imposed on such executive
officer under Section 4999 of the Code, then such termination payments to such
executive officer shall also include a 'gross-up' payment to make such executive
officer whole for the tax liability resulting from such termination and other
payments.
The Company has an Executive Agreement (the 'Executive Agreement') with Mr.
Queen. The Executive Agreement is only operative in the event of a change of
control of the Company. A change
20
of control occurs for purposes of the Executive Agreement if more than 25
percent of the Company's outstanding securities entitled to vote in elections of
directors are acquired, or if the persons who were directors of the Company
immediately prior to a tender offer, merger, consolidation, sale of assets or
contested election, cease to constitute a majority of the Board of Directors as
a result of such transaction. The Executive Agreement provides that, within six
months of a change of control, Mr. Queen may, in his sole discretion, elect to
terminate his employment with the Company. Upon such a termination, Mr. Queen is
entitled to receive under his Executive Agreement a lump sum payment equal to
two times his average annual compensation. Average annual compensation includes,
among other items, payments under the Company's Incentive Compensation Plan
received by Mr. Queen from the Company for the five taxable years prior to the
change of control. If a change of control occurred on April 18, 1994, and, at
any time within six months thereof, Mr. Queen elected to terminate his
employment, he would be entitled to receive a lump sum payment of approximately
$355,000 under his Executive Agreement. This payment would be in addition to any
other compensation due to Mr. Queen from the Company.
2. APPOINTMENT OF AUDITORS
The Board of Directors considers it desirable that its appointment of the
firm of Deloitte & Touche as independent auditors for the Company and its
subsidiaries for the fiscal year 1994 be ratified by the stockholders.
Representatives of Deloitte & Touche are expected to be present at the 1994
Annual Meeting of Stockholders and to be available to respond to appropriate
questions. Such representatives will have the opportunity to make a statement at
the annual meeting if they desire to do so.
The Board of Directors recommends a vote FOR the ratification of the
appointment of the firm of Deloitte & Touche as independent auditors for the
Company and its subsidiaries for 1994.
3. EXPENSES OF SOLICITATION
The Company expects to solicit proxies primarily by mail, but directors,
officers and regular employees of the Company may also solicit in person, by
telephone or telegram. All expenses in connection with the solicitation of
proxies will be borne by the Company. Arrangements will be made by the Company
for the forwarding, at the Company's expense, of soliciting materials by
brokers, nominees, fiduciaries and other custodians to their principals. The
Company has retained a professional proxy soliciting organization, Georgeson &
Company Inc. of New York, New York, to aid in the solicitation of proxies from
brokers, bank nominees and other institutional owners, and possibly individual
holders of record of 1,000 shares or more, by personal interview, telephone,
telegram or mail. The Company will pay such organization its customary fees,
estimated not to exceed $9,000, and will reimburse such organization for certain
expenses.
4. STOCKHOLDERS' PROPOSALS
Proposals of stockholders to be presented at the annual meeting to be held
in 1995 must be received for inclusion in the Company's proxy statement and form
of proxy by January 26, 1995.
21
5. OTHER MATTERS
As of the date of this Proxy Statement, the management of the Company has no
knowledge of any matters to be presented for consideration at the meeting other
than those referred to above. If any other matters properly come before the
meeting, the persons named in the accompanying form of proxy intend to vote such
proxy to the extent entitled in accordance with their best judgment.
By Order of the Board of Directors,
JAMES C. REED, JR.
SECRETARY
April 26, 1994
22
<PAGE>
[FRONT]
TESORO PETROLEUM CORPORATION
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- MAY 26, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE MARK, SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE.
The undersigned hereby appoints BRUCE A. SMITH and JAMES C.
REED, JR., and each of them, as proxies of the undersigned, each
with full power to act without the other and with full power of
substitution, to vote all the shares of Common Stock and $2.20
Cumulative Convertible Preferred Stock of Tesoro Petroleum
Corporation held in the name of the undersigned at the close of
business on April 18, 1994, at the Annual Meeting of Stockholders to
be held at the RIHGA Royal Hotel, 151 West 54th Street, New York,
New York, on Thursday, May 26, 1994, at 10:00 A.M. Eastern time, and
at any adjournment thereof, with all the powers the undersigned
would have if personally present, upon the matters set forth in the
Notice of such meeting and as indicated in the following sentence.
Said proxies are authorized to vote in accordance with the Proxy
Statement for the election of the persons nominated pursuant thereto
as directors (unless authority is withheld as provided below), as
indicated below on the ratification of the appointment of Deloitte &
Touche as the Company's independent auditors for 1994, and in their
discretion upon such other matters as may properly come before the
meeting.
(Continued and to be signed on the reverse side)
<PAGE>
[BACK]
PLEASE MARK YOUR CHOICE LIKE THIS X IN BLUE OR BLACK INK /X/
COMMON
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE 'FOR' ITEMS 1 AND 2
ITEM 1--Election of 13 directors (all nominated as directors to serve for the
terms indicated in the Proxy Statement).
Nominees: Ray C. Adam; Michael D. Burke; Robert J. Caverly;
Peter M. Detwiler; Steven H. Grapstein; Charles F. Luce;
Raymond K. Mason, Sr.; John J. McKetta, Jr.; Stewart G. Nagler;
William S. Sneath; Arthur Spitzer; Murray L. Weidenbaum;
and Charles Wohlstetter
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, DRAW A
LINE THROUGH OR STRIKE OUT THAT NOMINEE'S NAME AS SET FORTH ABOVE.
FOR all nominees / /
WITHHELD for all nominees / /
ITEM 2--Ratification of the appointment of Deloitte & Touche as the Company's
independent auditors for the fiscal year 1994.
FOR / /
AGAINST / /
ABSTAIN / /
ITEM 3--To transact such other business as may properly come before the meeting
or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR ITEMS 1 AND 2.
Dated: , 1994
Signature:
Signature:
PLEASE SIGN EXACTLY AS NAME APPEARS ABOVE. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATION NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
<PAGE>
[FRONT]
TESORO PETROLEUM CORPORATION
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- MAY 26, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE MARK, SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE.
The undersigned hereby appoints BRUCE A. SMITH and JAMES C.
REED, JR., and each of them, as proxies of the undersigned, each
with full power to act without the other and with full power of
substitution, to vote all the shares of Common Stock and $2.20
Cumulative Convertible Preferred Stock of Tesoro Petroleum
Corporation held in the name of the undersigned at the close of
business on April 18, 1994, at the Annual Meeting of Stockholders to
be held at the RIHGA Royal Hotel, 151 West 54th Street, New York,
New York, on Thursday, May 26, 1994, at 10:00 A.M. Eastern time, and
at any adjournment thereof, with all the powers the undersigned
would have if personally present, upon the matters set forth in the
Notice of such meeting and as indicated in the following sentence.
Said proxies are authorized to vote in accordance with the Proxy
Statement for the election of the persons nominated pursuant thereto
as directors (unless authority is withheld as provided below), as
indicated below on the ratification of the appointment of Deloitte &
Touche as the Company's independent auditors for 1994, and in their
discretion upon such other matters as may properly come before the
meeting.
(Continued and to be signed on the reverse side)
<PAGE>
[BACK]
PLEASE MARK YOUR CHOICE LIKE THIS X IN BLUE OR BLACK INK /X/
PREFERRED
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE 'FOR' ITEMS 1 AND 2
ITEM 1--Election of 13 directors (all nominated as directors to serve for the
terms indicated in the Proxy Statement).
Nominees: Ray C. Adam; Michael D. Burke; Robert J. Caverly;
Peter M. Detwiler; Steven H. Grapstein; Charles F. Luce;
Raymond K. Mason, Sr.; John J. McKetta, Jr.; Stewart G. Nagler;
William S. Sneath; Arthur Spitzer; Murray L. Weidenbaum;
and Charles Wohlstetter
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, DRAW A
LINE THROUGH OR STRIKE OUT THAT NOMINEE'S NAME AS SET FORTH ABOVE.
FOR all nominees / /
WITHHELD for all nominees / /
ITEM 2--Ratification of the appointment of Deloitte & Touche as the Company's
independent auditors for the fiscal year 1994.
FOR / /
AGAINST / /
ABSTAIN / /
ITEM 3--To transact such other business as may properly come before the meeting
or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR ITEMS 1 AND 2.
Dated: , 1994
Signature:
Signature:
PLEASE SIGN EXACTLY AS NAME APPEARS ABOVE. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN IN FULL CORPORATION NAME BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
<PAGE>
[FRONT]
TESORO PETROLEUM CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
THRIFT PLAN
Annual Meeting of Stockholders, May 26, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned participant in the TESORO PETROLEUM
CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN and/or the
TESORO PETROLEUM CORPORATION THRIFT PLAN (the 'Plan(s)')
hereby acknowledges receipt of the Notice of the Annual
Meeting of Stockholders to be held at the RIHGA Royal
Hotel, 151 West 54th Street, New York, New York, on
Thursday, May 26, 1994, at 10:00 A.M. Eastern time, and
directs the Frost National Bank, Trustee, to vote (or
cause to be voted) all shares of Tesoro Common Stock
allocated to the undersigned's account under the Plan(s)
and held in the Trustee's name on April 18, 1994, at said
meeting and at any adjournment thereof. Said Trustee is
authorized to vote in accordance with the Proxy Statement
for the election of the persons nominated pursuant thereto
as directors (unless authority is withheld as provided
below), as indicated below on the ratification of the
appointment of Deloitte & Touche as the Company's
independent auditors for 1994, and in their discretion
upon such other matters as may properly come before the
meeting.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
[BACK]
PLEASE MARK YOUR CHOICE LIKE THIS X IN BLUE OR BLACK INK /X/
ESOP THRIFT
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE 'FOR' ITEMS 1 AND 2
ITEM 1--Election of 13 directors (all nominated as directors to serve for the
terms indicated in the Proxy Statement).
Nominees: Ray C. Adam; Michael D. Burke; Robert J. Caverly;
Peter M. Detwiler; Steven H. Grapstein; Charles F. Luce;
Raymond K. Mason, Sr.; John J. McKetta, Jr.; Stewart G. Nagler;
William S. Sneath; Arthur Spitzer; Murray L. Weidenbaum;
and Charles Wohlstetter
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, DRAW A
LINE THROUGH OR STRIKE OUT THAT NOMINEE'S NAME AS SET FORTH ABOVE.
FOR all nominees / /
WITHHELD for all nominees / /
ITEM 2--Ratification of the appointment of Deloitte & Touche as the Company's
independent auditors for the fiscal year 1994.
FOR / /
AGAINST / /
ABSTAIN / /
ITEM 3--To transact such other business as may properly come before the meeting
or any adjournment thereof.
Dated: , 1994
Signature:
Signature:
PLEASE SIGN EXACTLY AS NAME APPEARS ABOVE. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
