<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
MAPCO INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[MAPCO INC. LOGO]
1800 South Baltimore Avenue
Tulsa, Oklahoma 74119
April 15, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
the Company which will be held at 9:00 a.m., Central Daylight Time, Wednesday,
May 28, 1997 at the offices of the Company, 1800 South Baltimore Avenue, Tulsa,
Oklahoma 74119.
The formal Notice of the Annual Meeting of Stockholders and Proxy Statement
accompanying this letter provide detailed information concerning matters to be
considered and acted upon at the meeting.
Whether or not you plan to attend the Annual Meeting, please execute and
return the enclosed proxy at your earliest convenience. Your shares will then be
represented at the meeting and the Company will avoid the expense of further
solicitation to assure a quorum and a representative vote. If you later attend
the meeting and wish to vote in person, you may withdraw your proxy and so vote
at that time.
Very truly yours,
/s/ JAMES E. BARNES
JAMES E. BARNES
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
MAPCO INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of MAPCO Inc., a Delaware corporation,
will be held on Wednesday, May 28, 1997 at 9:00 a.m., Central Daylight Time, at
the offices of the Company, 1800 South Baltimore Avenue, Tulsa, Oklahoma 74119,
for the following purposes:
1. To elect four nominees for Director to Class III Directorships;
2. To ratify the appointment of Deloitte & Touche, LLP as the
Company's independent auditors for the year ending December 31, 1997;
3. To consider and act upon a proposal to approve an amendment to the
Restated Certificate of Incorporation of the Company to increase the
authorized capital stock of the Company;
4. To consider and act upon a proposal to approve an amendment to the
1989 Stock Incentive Plan;
5. To consider and act upon a proposal to ratify the Company's 1997
Employee Stock Purchase Plan; and
6. To transact any other business which may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on March 24, 1997 will be
entitled to notice of and to vote at the Annual Meeting. The transfer books will
not be closed and will be maintained at Harris Trust Company of New York, 311
West Monroe, Chicago, IL 60690.
Mailing of this Notice, the Proxy Statement and the 1996 Annual Report to
Stockholders is expected to begin on or about April 15, 1997.
By Order of the Board of Directors
DAVID W. BOWMAN
Senior Vice President, General
Counsel
and Secretary
Tulsa, Oklahoma
April 15, 1997
You are cordially invited to attend the meeting. Whether or not you plan to
do so, please sign and date the accompanying proxy and mail it at once in the
enclosed envelope, which requires no postage if mailed in the United States.
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
LOGO MAPCO INC.
1800 SOUTH BALTIMORE AVENUE
TULSA, OKLAHOMA 74119
</TABLE>
PROXY STATEMENT
This statement is furnished in connection with the Annual Meeting of
Stockholders of MAPCO Inc. (the "Company") to be held at 9:00 a.m., Central
Daylight Time, May 28, 1997 at the offices of the Company, 1800 South Baltimore
Avenue, Tulsa, Oklahoma.
Stockholders of record at the close of business on March 24, 1997 will be
entitled to vote at the meeting.
SOLICITATION OF PROXIES
Execution and return of the enclosed proxy, which may be revoked at any
time prior to the meeting, is being solicited by and on behalf of the Board of
Directors of the Company for the purposes set forth in the foregoing notice of
meeting.
Solicitation other than by mail may be made personally, by telephone or by
telegraph, by regularly employed officers and employees of the Company who will
not be additionally compensated therefor. The Company will request persons, such
as brokers, nominees and fiduciaries, holding stock in their names for others,
or holding stock for others who have the right to give voting instructions, to
forward proxy material to their principals and request authority for the
execution of the proxy and will reimburse such persons for their expenses in so
doing. D. F. King & Co., Inc. has been retained to assist in the solicitation of
proxies at a cost not expected to exceed $15,000. The total cost of soliciting
proxies will be borne by the Company. All shares represented by valid proxies
will be voted, absent contrary instructions.
VOTING SECURITIES
Each Stockholder is entitled to one vote for each share of Common Stock,
$1.00 par value ("Common Stock"), registered in his or her name on the Company's
books at the close of business on March 24, 1997. The Company has no other
voting securities outstanding. Stockholders do not have cumulative voting rights
in the election of Directors. Other than the election of Directors and the
proposal to amend the Company's Restated Certificate of Incorporation, the
approval of each proposal that is being submitted to the Stockholders requires
the affirmative vote of a majority of the votes cast at the meeting. Directors
are elected by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
Directors. Although abstentions and broker non-votes will be included in the
calculation of the number of shares that are considered present at the Annual
Meeting, they will not be counted as votes cast. As of March 24, 1997, the
record date for voting, there were 54,751,504 shares of Common Stock of the
Company outstanding and entitled to vote.
PRINCIPAL HOLDERS OF VOTING SECURITIES
According to information from Schedule 13G filings as of March 1, 1997, the
following table lists the Stockholders known to the Company to be beneficial
holders of more than five percent of the outstanding Common Stock of the
Company:
<TABLE>
<CAPTION>
NAME & ADDRESS OF AMOUNT & NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
----------------- --------------------- --------
<S> <C> <C>
Sanford C. Bernstein & Co. Inc. 5,396,321(1) 9.6%
767 Fifth Avenue
New York, NY 10153
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
NAME & ADDRESS OF AMOUNT & NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
----------------- --------------------- --------
<S> <C> <C>
Mackay Shields 4,166,800(2) 7.4%
Financial Corporation
9 West 57th Street
New York, NY 10019
Bankers Trust New York 567,466(4) 1%
Corporation.....................
and its wholly-owned subsidiary,
Bankers Trust Company, as Trustee
for various trusts and employee
benefit plans and as an investment
advisor(3)
280 Park Avenue
New York, NY 10017
</TABLE>
- ---------------
(1) Schedule 13-G filed by Sanford C. Bernstein & Co., showing beneficial
ownership as of December 31, 1996; sole power to vote or direct the vote of
2,966,962 shares and shared power to vote or to direct the vote of 614,727
shares; sole dispositive power of 5,396,321 shares and no shared dispositive
power.
(2) Beneficial ownership as of December 31, 1996; no sole power to vote or to
direct the vote of shares but shared power to vote or to direct the vote of
4,166,800 shares; shared power to dispose of or to direct the disposition of
4,166,800 shares and no sole dispositive power.
(3) Schedule 13-G filed on behalf of Bankers Trust New York Corporation as
parent holding company pursuant to the provisions of Rule 13d-1(b)(ii)G and
on behalf of Bankers Trust Company as a Bank as defined in Section 3(a)(6)
of the Securities Exchange Act of 1934. Bankers Trust Company (the "Bank"),
as Trustee of the MAPCO Inc. and Subsidiaries Profit Sharing and Savings
Plan, was also record owner of 2,383,502 shares, or 4.2% of the Issuer's
outstanding Common Stock, with respect to which the Bank and Bankers Trust
New York Corporation disclaim beneficial ownership.
(4) Beneficial ownership as of December 31, 1996; sole power to vote or to
direct the vote of 163,346 shares and no shared voting power; sole power to
dispose of or to direct the disposition of 560,556 shares; and shared power
to dispose of or to direct the disposition of 6,900 shares.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes with the term of
office of the Directors of each class ending in different years. After the
Annual Meeting of Stockholders for which this Proxy Statement has been prepared,
the Class I, II and III Directors are to serve until the Annual Meeting of
Stockholders in 1998, 1999 and 2000, respectively, or until their successors are
elected.
Class III nominees for election as director were considered at the
Governance Committee meetings held on January 27, 1997 and March 24, 1997. It
was unanimously approved that Malcolm T. Hopkins, Donald Paul Hodel, Frank A.
McPherson and John L. Whitmire be nominated for election as Class III Directors
at this Annual Meeting of Stockholders. All of the nominees except for Mr.
McPherson and Mr. Whitmire are currently serving as Directors. Each of the
nominees has consented to nomination and will serve as a Director if elected. If
any of the nominees should be unable to serve, which is not anticipated, proxies
will either be voted for the election of a substitute nominee or the number of
Directors will be accordingly reduced by action of the Board of Directors.
During 1996, the Company decreased Board membership by one member due to the
retirement of Wayne K. Goettsche as a Class I Director. Mr. Herman J. Schmidt
plans to retire but will remain on the Board until the Annual Meeting. There are
currently no vacancies on the Board of Directors.
COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following tabulation provides information as to each person nominated
for election as a Director and each of the other Directors whose term of office
will continue after the meeting. The table also shows
2
<PAGE> 6
information concerning beneficial ownership of the Company's Common Stock by all
Directors and nominees and by the Company's Chief Executive Officer, each of the
Company's four other most highly compensated executive officers for 1996 (the
"named Executive Officers") and all Directors and Executive Officers as a group.
In 1994, the Board reviewed the policy-making functions of the Company's
officers and redefined which officers would be included as Executive Officers
(those officers with reporting responsibilities under Section 16 of the
Securities and Exchange Act of 1934, as amended). As a result of this and
subsequent reviews, the Board has specifically designated the Chairman, all
Executive Vice Presidents, all Senior Vice Presidents, the Vice President,
Controller and Tax Counsel, the Vice President, Treasurer and Investor Relations
and the Vice President -- Strategic Planning (currently vacant) of the Company
as Executive Officers. The persons named below have sole voting and investment
power with respect to all shares of Common Stock owned by them, unless otherwise
noted. In addition, unless otherwise indicated, such persons have held their
respective principal occupations stated therein for more than five years.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
OR INDIRECTLY
DIRECTOR, NOMINEE OR DIRECTOR ON MARCH 24, PERCENT
NAMED EXECUTIVE OFFICER CLASS 1997 OF CLASS
----------------------- -------- -------------- --------
<S> <C> <C> <C>
Donald L. Mellish-Age 69 I 45,000(3) (1)
Anchorage, Alaska. Director since
June 1981. Chairman of the Executive
Committee since 1985 and a Director
of National Bancorp of Alaska, Inc.
since 1964.
Robert L. Parker-Age 73 I 30,800(3) (1)
Tulsa, Oklahoma. Director since May
1986. Chairman of the Board of Parker
Drilling Company, an international
oil and gas drilling company.
Presently, a Director of Bank of
Oklahoma Financial Corporation,
Clayton Williams Energy, Inc.,
Norwest Bank of Texas (Kerrville),
Southern Methodist University, St.
Francis Hospital (Chairman) and the
Development Board of Texas
University.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
OR INDIRECTLY
DIRECTOR, NOMINEE OR DIRECTOR ON MARCH 24, PERCENT
NAMED EXECUTIVE OFFICER CLASS 1997 OF CLASS
----------------------- -------- -------------- --------
<S> <C> <C> <C>
James E. Barnes-Age 63 II 854,745(2) 1.6%
Tulsa, Oklahoma. Director, Chairman
of the Board, President and Chief
Executive Officer of the Company
since September, 1995. Director,
Chairman of the Board and Chief
Executive Officer of the Company from
December 1991 to September 1995.
Director, Chairman of the Board,
President and Chief Executive Officer
of the Company from May 1986 to
December 1991. Director, President
and Chief Executive Officer of the
Company from February 1984 to May
1986. Advisory, non-voting Director,
Senior Executive Vice President and
Chief Operating Officer of the
Company from June 1983 to February
1984. Presently a Director of Bank of
Oklahoma Financial Corporation, SBC
Communications Inc. and Kansas City
Southern Industries, Inc.
Harry A. Fischer, Jr.-Age 70 II 30,000(3) (1)
Glenview, Illinois. Director since
May 1986. Chairman since January
1988, Chairman, President and Chief
Executive Officer from November 1985
to January 1988, and President and
Chief Executive Officer from November
1980 to November 1985 of Daubert
Industries, Inc., a manufacturer of
chemically treated papers, coatings,
rust and corrosion prevention
chemicals, adhesives, sealants and
masking tape products. Formerly a
Director of Lee Enterprises,
Incorporated.
Frank T. MacInnis-Age 50 II 3,000(3) (1)
Norwalk, Connecticut. Director since
May 1996. Chairman of the Board,
President and Chief Executive Officer
of EMCOR Group, Inc., one of the
world's largest electrical and
mechanical construction groups.
Formerly Chairman of the Board,
President and Chief Executive Officer
of Comstock Group, Inc., a nationwide
electrical contracting company
(1989 -- 1994). Presently Chairman of
the Board of ComNet Communications,
Inc. and a Director of PORTEC, Inc.
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
OR INDIRECTLY
DIRECTOR, NOMINEE OR DIRECTOR ON MARCH 24, PERCENT
NAMED EXECUTIVE OFFICER CLASS 1997 OF CLASS
----------------------- -------- -------------- --------
<S> <C> <C> <C>
Samuel F. Segnar-Age 69 II 28,000(3) (1)
Houston, Texas. Director since
September, 1989. Retired Chairman and
Chief Executive Officer of ENRON
Corporation; Formerly Chairman of the
Board of Collecting Bank, N.A.,
Houston and Vista Chemical Co.
(1986-1988). Presently a Director of
Textron, Inc., Seagull Energy
Corporation, Gulf States Utilities
Company and serves on the Advisory
Board of Pilko & Associates and the
National Advisory Board of First
Commercial Bank; Owner, Sam F. Segnar
Interests, a company involved in
construction, development and heavy
equipment businesses.
Herman J. Schmidt-Age 80 III.. 31,854(3) (1)
Greenwich, Connecticut. Director
since May 1979. Retired October 1978
as Vice Chairman of Mobil Oil
Corporation, an international oil
company. Presently a Director of H.
J. Heinz Company and HON Industries,
Inc.
Malcolm T. Hopkins-Age 69 III 33,457(3) (1)
Asheville, North Carolina. Director
since May 1986. Retired October 1984
as Vice Chairman and Chief Financial
Officer, St. Regis Corporation, a
diversified, multi-national forest
products company, that also had
insurance, oil and gas and chemical
operations. Presently a private
investor and a Director of The
Columbia Gas System, Inc.,
Metropolitan Series Fund, Inc.,
various State Street Research Mutual
Funds, EMCOR Group Inc., Phar-Mor,
Inc. and U.S. Home Corporation.
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
OR INDIRECTLY
DIRECTOR, NOMINEE OR DIRECTOR ON MARCH 24, PERCENT
NAMED EXECUTIVE OFFICER CLASS 1997 OF CLASS
----------------------- -------- -------------- --------
<S> <C> <C> <C>
Donald Paul Hodel-Age 61 III 22,200(3)(4) (1)
Silverthorne, Colorado. Director
since September, 1990. Presently
Managing Director of Summit Group
International, Ltd., an energy and
natural resources consulting firm;
Director of The Columbia Gas System
Inc.; Director of Taylor Energy
Company, a privately-held independent
oil and gas company; Vice-Chairman,
Texon Corporation; Director of Hart
Publications Inc. and Eagle
Publishing, Inc.; From 1985 to 1989,
Secretary, U.S. Department of the
Interior. Secretary, U.S. Department
of Energy 1982-1985. Under Secretary,
U.S. Department of the Interior
1981-1982.
Frank A. McPherson-Age 63 III 0 (1)
Oklahoma City, Oklahoma. Nominee for
Class III Director. Chairman of the
Board and Chief Executive Officer of
Kerr-McGee Corporation from May 1983
to February 1997; Presently Director
of Kimberly-Clark Corporation, Bank
of Oklahoma, N.A., Tri-Continental
Corporation, Seligman Select
Municipal Fund, Inc., Seligman
Quality Municipal Fund, Inc. and each
of the Seligman Group of Mutual
Funds; Previously Director of the
Federal Reserve Bank of Kansas City
and the American Petroleum Institute.
John L. Whitmire-Age 56 III 0 (1)
Houston, Texas. Nominee for Class III
Director. Chairman of the Board and
Chief Executive Officer of Union
Texas Petroleum Holdings, Inc. since
January 1996; Executive Vice
President -- Worldwide Exploration
and Production from January 1994 to
January 1996 and Senior Vice
President -- Worldwide Exploration
and Production from December 1991 to
January 1994 for Phillips Petroleum
Company; Presently Director of the
American Petroleum Institute and the
National Audubon Society.
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED DIRECTLY
OR INDIRECTLY
DIRECTOR, NOMINEE OR DIRECTOR ON MARCH 24, PERCENT
NAMED EXECUTIVE OFFICER CLASS 1997 OF CLASS
----------------------- -------- -------------- --------
<S> <C> <C> <C>
Robert G. Sachse 53,809(2) (1)
Philip W. Baxter 56,304(2) (1)
David W. Bowman 141,056(2) (1)
Jack D. Maynard(5) 83,492(2) (1)
All Directors and Executive Officers 1,459,784(2)(3) 2.7%
as a group (18 persons)
</TABLE>
- ---------------
(1) Does not exceed one percent.
(2) Includes options for the Company's Common Stock that may be exercised within
60 days by Messrs. Barnes (460,228), Sachse (36,564), Baxter (18,333),
Bowman (94,760), Maynard (46,954) and by all Executive Officers and
Directors as a group (878,803). Also includes shares of the Company's Common
Stock that are allocated as of December 31, 1996 under the MAPCO Inc. &
Subsidiaries Profit Sharing and Savings Plan ("PSSP") (Mr. Barnes 4,345
shares, Mr. Sachse 3,674 shares, Mr. Baxter 7,317 shares, Mr. Bowman 9,232
shares and Mr. Maynard 3,837 shares). Shares held in the MAPCO Inc. and
subsidiaries Employee Stock Ownership Plan ("PAYSOP") were either
distributed to participants, transferred to the PSSP or cashed out upon
termination of the PAYSOP, effective December 31, 1996.
(3) Includes options for the Company's Common Stock that may be exercised within
60 days by all non-employee Directors under the 1989 Outside Directors Stock
Option Plan and includes shares held in the dividend reinvestment plan of
MAPCO Inc. Fractional shares held in the dividend reinvestment plan have
been rounded.
(4) Includes 200 shares held by spouse.
(5) Mr. Maynard, 53, served the Company as Senior Vice President from May 1990
until February 1997, at which time he became President of a new Company
subsidiary and Vice President of the Company.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During 1996, Mr. Wayne K. Goettsche, an outside Director for the Company
for a portion of the year, was employed through Quoin Financial Corporation as a
consultant for the Company to explore opportunities in mining and coal sales in
foreign markets. Mr. Goettsche is Chairman of the Board of Quoin and he and
members of his family are beneficiaries of a trust which owns the common stock
of Quoin. Mr. Goettsche was paid $402,146 for consulting services to the Company
and expenses incurred from January 1, 1996 through July 26, 1996, when he
resigned from the Company's Board of Directors. He continued to provide
consulting services following his resignation from the Board.
MEETINGS, COMMITTEES AND COMPENSATION OF THE BOARD
During 1996, nine meetings of the Board of Directors were held and all
Directors attended 100% of all Board and Committee meetings. The Board has
established five committees to assist it in the discharge of its
responsibilities. The principal functions of each committee are described in the
succeeding paragraphs.
EXECUTIVE COMMITTEE
The Executive Committee has and may exercise all the powers of the Board of
Directors except to (1) elect Directors, (2) alter, amend or repeal the
Company's By-laws, (3) declare any dividend or make any other distribution to
the Stockholders of the Company, (4) appoint any member of any Board Committee
or
7
<PAGE> 11
(5) authorize any merger or consolidation, or sale, lease or encumbrance of all
or substantially all the assets of the Company, or any acquisition by the
Company of all or substantially all of the business or assets of any other
corporation or entity. The Committee did not meet in 1996. The Committee members
are James E. Barnes (Chairman), Malcolm T. Hopkins, Robert L. Parker and Frank
T. MacInnis. Mr. Schmidt is also a member of the Committee and plans to retire
but will remain on the Board until after this Annual Meeting.
AUDIT COMMITTEE
The Audit Committee's functions are (1) to recommend to the Board of
Directors, subject to stockholder approval, the selection of the Company's
independent auditors, (2) on behalf of the Board of Directors, to oversee the
Company's financial reporting process, (3) to review and discuss with the
internal auditor and the independent auditors the overall scope and specific
plans for their respective audits, (4) to review and discuss with the internal
auditor and independent auditors the results of their examinations, their
evaluations of the Company's internal controls, and their assessments of the
overall quality of the Company's financial reporting, and (5) such additional
duties as may be assigned by the Board of Directors. This Committee had five
meetings during 1996. The Committee members are Malcolm T. Hopkins (Chairman),
Harry A. Fischer, Jr. and Frank T. MacInnis.
COMPENSATION COMMITTEE
The Compensation Committee's functions are to (1) determine appropriate
total compensation level and the elements of compensation for the Chief
Executive Officer ("CEO"), (2) review the CEO's recommendation for, and approve,
the total compensation level and elements of compensation for the remaining
Executive Officers (those officers with reporting obligations under Section 16
of the Securities Exchange Act of 1934, as amended), (3) review recommendations
and approve for all Executive Officers incentive plan performance goals and
targets and the overall level of incentive awards, monitor the effectiveness and
appropriateness of the incentive plans in which Executive Officers participate
and determine when goals have been achieved, (4) monitor the appropriateness and
consistency of the Company's compensation practices and the Company's overall
compensation goals, policies and philosophies, (5) review from time to time
surveys and other data prepared by third party consultants to gauge the
competitiveness and appropriateness of levels and elements of compensation and
benefits, including perquisites provided to executives of the Company, (6)
review from time to time the level and composition of compensation, benefits and
perquisites provided to non-employee members of the Board of Directors, (7)
amend and oversee the administration of health plans and qualified and
non-qualified benefit plans, including approving all discretionary or
supplemental contributions to profit sharing plans, and delegate to the
management of the Company limited authority to amend benefit plans, (8) evaluate
the performance of the CEO and other Executive Officers and counsel the CEO and
Senior Vice President -- Human Resources in management development and
performance evaluation matters, (9) assure that effective succession planning is
conducted for the CEO and other Executive Officers, (10) review and approve
compensation and benefit information to be included in the Company's annual
proxy statement and prepare, over the names of the Committee members, the
"Compensation Committee Report on Executive Compensation" on an annual basis for
the Company's proxy statement, (11) review the Company's policies and practices
with respect to workforce diversity, (12) recommend to the Board of Directors
for final approval: the adoption of health plans and qualified and non-qualified
benefit plans and the adoption and amendment of executive incentive compensation
and stock-based plans, the adoption and amendment of compensation and benefit
plans and programs for non-employee members of the Board of Directors and
employment continuation agreements or similar agreements proposed to be entered
into with any executive. This Committee had eight meetings during 1996. The
Committee members are Samuel F. Segnar (Chairman), Donald Paul Hodel, Donald L.
Mellish and Robert L. Parker. Mr. Schmidt is also a member of the Committee and
plans to retire but will remain on the Committee until after this Annual
Meeting.
GOVERNANCE COMMITTEE
The Governance Committee's functions are to recommend candidates for
membership on the Board of Directors and to recommend the duties and makeup of
the committees of the Board of Directors. To be
8
<PAGE> 12
considered for inclusion in the slate of nominees proposed by the Board of
Directors at the next annual meeting, such recommendations, including the
nominees' qualifications and consent, should be sent to the Committee in care of
the Secretary of the Company and received no later than December 31, 1997. The
Committee had six meetings in 1996. The current Committee members are Donald L.
Mellish (Chairman), Donald Paul Hodel, Robert L. Parker and Samuel F. Segnar.
Mr. Schmidt is also a member of the Committee and plans to retire but will
remain on the Committee until this Annual Meeting.
Under the Governance Policy adopted by the Board in 1996, Board membership
is to consist of executives having a diversity of experience, gender, race and
age with a current affiliation which affords exposure for the Company to
contemporary business issues. The Policy also requires that Board membership be
comprised overwhelmingly in favor of independent, Outside Directors. In
addition, consideration is to be given to rotation of Director Committee
memberships to broaden a Director's contribution and impact on the Board. The
Policy encourages Board members to own the Company's Common Stock and to
volunteer to resign when responsibilities change from that held when elected to
the Board or upon reaching age 70.
The Governance Committee is charged with the overall responsibility for
identifying, screening and recommending prospective Board members and current
Directors who are eligible to stand for re-election. The Committee is also to
review the Governance Policy on a periodic basis to ensure the Policy receives
scrutiny by the Board and that the stated guidelines remain current.
FINANCE COMMITTEE
The Company, in January of 1997, filed a $500 million shelf registration
statement with the Securities and Exchange Commission. In anticipation of the
shelf and debt offerings thereunder, the Board of Directors, at its November 26,
1996 meeting, established a Finance Committee to review, approve and recommend
to the full Board the issuance of debt securities offerings from time to time by
the Company. The Committee is also authorized to approve rates, maturity dates,
offering prices and similar varying terms of such offerings, as well as to
approve the principal amount of securities to be offered from time to time in
one or more series and the timing of any such issue with total aggregate
principal amounts approved in advance by the entire Board.
Although originally intended to be a temporary ad hoc committee of the
Board and an adjunct to the Audit Committee, the Finance Committee has now
become a standing Committee of the Board of Directors.
The Committee held one meeting in 1996. Members of the Committee are
Malcolm T. Hopkins, Harry A. Fischer, Jr. and Frank T. MacInnis (Chairman).
COMPENSATION OF THE BOARD
Employee directors are not compensated for services as a director.
Non-employee directors ("Outside Directors") receive an annual retainer of
$25,000 and, with the exception of director Donald L. Mellish, a fee of $1,000
for attendance at each Board or Committee meeting. Because Mr. Mellish routinely
travels to Board or Committee meetings from outside the contiguous 48 states, he
receives double the Board or Committee meeting attendance fee of $1,000;
provided, however, if the Board and Committee meetings are held jointly, only
his Board attendance fee is doubled. The Audit and Compensation Committee
Chairmen receive additional annual compensation of $4,000 and the Governance and
Finance Committee Chairmen receive annual compensation of $3,000 in addition to
Committee attendance fees. The Company also reimburses its Directors for travel,
lodging and related expenses incurred in attending Board and Committee meetings
and provides each Outside Director with $100,000 in life insurance benefits and
$250,000 in accidental death and dismemberment insurance benefits.
Outside Directors whose service began prior to January 1, 1996 are eligible
to participate in the 1986 Retirement Plan for Non-Employee Directors (the
"Director Retirement Plan"). Under the Director Retirement Plan, an Outside
Director who has completed at least five years of service as a member of the
Board of Directors and retires from the Board after attaining age 70 will
receive a benefit for life equal to the annual retainer fee payable to an
Outside Director at the time of his retirement. An Outside Director who has not
attained age 70 at the time he leaves the Board, but who has completed at least
five years of service as a
9
<PAGE> 13
member of the Board, will generally receive a benefit equal to the annual
retainer fee then payable to an Outside Director for the lesser of (i) the
number of years during which the Outside Director served as a member of the
Board or (ii) ten years. Upon the occurrence of a Change in Control (as defined
in the Employment Continuation Agreements for executive officers described
below), all Outside Directors will be entitled to receive a benefit under such
plan, regardless of the length of Board membership. Such benefit will be equal
to the annual retainer fee then payable to an Outside Director during his
lifetime for a period equal to the greater of (i) the number of years during
which the Outside Director served as a member of the Board or (ii) ten years.
1989 OUTSIDE DIRECTOR STOCK OPTION PLAN
In 1989, the Company, with the approval of the Stockholders, adopted the
1989 Outside Director Stock Option Plan (the "Director Plan"). All Outside
Directors are eligible to participate in the Director Plan. Including the two
nominees for election at this Annual Meeting and Mr. Schmidt, who will retire
following this Annual Meeting, there are currently ten Outside Directors.
The maximum number of shares of the Company's Common Stock that may be
issued under the Director Plan is 400,000(1). In the event of a stock split or a
stock dividend or other relevant change affecting the Company's Common Stock,
appropriate adjustments may be made in the number of shares that could be issued
in the future and in the number of shares and price of all outstanding options
granted before such event. If an option is canceled or expires without the
issuance of shares, the shares subject to such option will be available for
future grants under the Director Plan.
Annual Grants. In each calendar year during the term of the Director Plan,
each Outside Director will receive an immediately exercisable option having a
ten-year term to purchase 2,000 shares(1) of the Company's Common Stock. Each
such annual award shall be made on the later of the first business day following
the annual meeting of the Company's Stockholders or June 1 and shall have an
option price equal to the fair market value of a share of the Company's Common
Stock on the date of grant.
Termination of Board Membership. In the event that an Outside Director's
board membership terminates by reason of retirement after attaining age 70,
long-term disability or death, such Director's options may thereafter be
exercised in full in the case of retirement for a period of three years and in
the case of death or disability for a period of one year, subject in each case
to the stated term of the option. In the event an Outside Director's Board
membership terminates for any other reason, such Director's options will expire.
Other Information. The Board may terminate or suspend the Director Plan at
any time but such termination or suspension shall not affect any options then
outstanding. Unless sooner terminated by action of the Board, the Director Plan
will terminate on March 29, 1999, but options outstanding on such date shall
continue to be outstanding until the expiration of their terms. The Board may
also amend the Director Plan as it deems advisable, but unless the Stockholders
approve, no such amendment may materially increase the benefits to Outside
Directors. In addition, no such amendment shall adversely affect any option
theretofore granted under the Director Plan without the holder's consent.
OUTSIDE DIRECTOR PHANTOM STOCK PLAN
In January of 1996, the Company adopted the MAPCO Inc. Outside Director
Phantom Stock Plan (the "Phantom Plan"), effective as of January 1, 1996. All
Outside Directors are eligible to participate in the Phantom Plan.
Under the Phantom Plan, on June 1 of each year, each Outside Director of
the Company will receive "phantom" shares of the Company's common stock
("Phantom Stock") equal to one-half of the amount of the then current Annual
Retainer. In addition, an Outside Director may elect to have all or a part of
the Annual Retainer Fee payable by the Company converted to Phantom Stock. The
shares held as Phantom
- ---------------
(1) after giving effect to the Company's two-for-one stock split effected in
the form of a stock dividend to stockholders of record as of September 16, 1996.
10
<PAGE> 14
Stock are adjusted for cash dividends, stock dividends, stock splits, mergers
and other changes in capitalization of the Company.
The Phantom Plan is a cash-only plan which was intended to qualify for the
exemption available under Rule 16b-3 of the Securities Exchange Act of 1934
("Rule 16b-3") with respect to awards made pursuant to a formula set forth in
the Plan and is to be administered so as to comply with Rule 16b-3. Although the
Rule 16b-3 rules were changed in 1996 regarding "cash only" plans, Directors who
were in the Phantom Plan prior to August 15, 1996 will continue to receive the
benefit of the prior exemption from both liability and from the reporting
obligations of Rule 16(a). Transactions in the Phantom Plan by Directors who
join the Board after August 15, 1996 will be exempt from liability but not from
the reporting obligations of Rule 16(a). Directors have no rights as
shareholders of the Company with respect to Phantom Stock granted under the
Phantom Plan. The Phantom Plan is administered by the Compensation Committee of
the Board of Directors and will terminate on the date of the Annual Meeting of
Stockholders in 2006. The Phantom Plan may be amended, modified or terminated by
the Board of Directors.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued by
the Company for services provided during the fiscal years ended December 31,
1996, 1995 and 1994 to the Chief Executive Officer and the four other most
highly compensated executive officers (the "named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------
SECURITIES ALL OTHER
NAME AND UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS(#)(1) ($)(2)
------------------ ---- ---------- --------- ------------- ------------
<S> <C> <C> <C> <C> <C>
James E. Barnes 1996 795,000 1,590,000 200,000 48,605
Chairman of the Board, 1995 795,000 0 280,000 48,154
President & CEO 1994 720,000 0 178,838 34,886
Robert G. Sachse 1996 260,917 500,000 127,812 18,605
Executive Vice President, 1995 233,000 0 68,000 11,429
COO 1994 207,000 0 35,510 15,336
Philip W. Baxter 1996 236,666 450,000 150,119 17,308
Executive Vice President, 1995 188,000 0 54,918 9,901
CFO 1994 168,500 0 49,972 11,251
David W. Bowman 1996 249,200 350,000 64,618 17,685
Senior Vice President, 1995 249,000 0 60,000 17,011
General Counsel & Secretary 1994 239,000 0 49,370 12,132
Jack D. Maynard 1996 226,750 300,000 64,767 17,068
Senior Vice President, 1995 209,333 0 52,000 14,695
HR & Administration(3) 1994 195,000 0 51,376 15,025
</TABLE>
- ---------------
(1) Under the 1989 Stock Incentive Plan, MAPCO has a replacement option feature
providing for additional options to restore the potential future
appreciation of any outstanding shares actually used to exercise an option,
as well as shares forfeited for tax withholding ("Replacement Option").
Replacement Options are granted only in connection with stock-for-stock
exchanges where an optionee exercises vested stock options with already
owned stock of the Company. The Replacement Option which is received by the
optionee is equal to the number of shares used to exercise the original
options plus those shares forfeited for tax withholding. Replacement Options
have terms substantially similar to the original option, including the same
expiration date, except they have an exercise price per share equal to the
fair market
11
<PAGE> 15
value of a share of common stock on the date the Replacement Option is
granted. Replacement Options are not exercisable for at least six months
from the date of grant for those granted prior to January 22, 1992 and
twelve months for those granted on and after January 22, 1992. By
recapturing the potential for future appreciation through the Replacement
Options, key management is provided with the incentive to acquire shares
rather than hold options until the end of the exercise period. Replacement
Options are granted only to the extent existing shares held by the employee
are exchanged to exercise options and accordingly, the total number of
options granted never exceeds shareholder approved limits under the stock
option plans. The CEO has set stock ownership targets for each key member of
management including the named Executive Officers. The Replacement Option
program has encouraged stock option exercises and helped to increase stock
ownership of key management. The Replacement Option feature is also
discussed below in the Compensation Committee Report on Executive
Compensation.
(2) All Other Compensation includes Company matching contributions to the MAPCO
Inc. & Subsidiaries Profit Sharing and Savings Plan (PSSP) and compensation
paid to or on behalf of the named Executive Officers participating in a
nonqualified defined contribution plan. Company matching contributions to
the PSSP for 1996 on behalf of Messrs. Barnes, Sachse, Baxter, Bowman and
Maynard were $11,547, $12,412, $11,908, $12,263 and $12,825 respectively.
Compensation was paid to or on behalf of Messrs. Barnes, Sachse, Baxter,
Bowman and Maynard of $37,058, $6,193, $5,400, $5,422 and $4,243
respectively for participation in a non-qualified defined contribution plan.
(3) Effective February 15, 1997 Mr. Maynard became President of a Company
subsidiary and Vice President of MAPCO Inc.
12
<PAGE> 16
The following table contains information concerning the grant of stock
options during fiscal year 1996 to the named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
% OF GRANT DATE
NUMBER OF TOTAL VALUE
SECURITIES OPTIONS -------------
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#)(1) IN 1996 ($/SHARE) DATE(3) ($)(4)
---- ------------- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
James E. Barnes..................200,000 14.5% 27.5000 01/22/06 2,240,458
Robert G. Sachse................. 50,000 3.6% 27.5000 01/22/06 560,114
70,000(2) 5.1% 28.3750 09/11/06 817,981
2,505 0.2% 34,0000 01/23/01 22,712
1,691 0.1% 34.0000 12/11/97 15,332
778 0.1% 34.0000 12/11/97 7,054
601 0.0% 34.0000 12/11/97 5,449
1,833 0.1% 34.0000 12/11/97 16,619
404 0.0% 34.0000 12/11/97 3,663
Philip W. Baxter................. 50,000 3.6% 27.5000 01/22/06 560,114
70,000(2) 5.1% 28.3750 09/11/06 817,981
2,645 0.2% 33.0000 01/23/01 23,486
3,105 0.2% 33.0000 01/22/02 27,571
5,148 0.4% 33.0000 01/23/01 45,712
3,595 0.3% 33.0000 01/30/00 31,922
5,132 0.4% 33.0000 02/24/99 45,570
330 0.0% 33.0000 12/11/97 2,930
370 0.0% 33.0000 02/24/99 3,285
1,639 0.1% 33.0000 01/30/00 14,554
1,824 0.1% 33.0000 12/11/97 16,196
1,328 0.1% 33.0000 12/11/97 11,792
David W. Bowman.................. 40,000 2.9% 27.5000 01/22/06 448,091
7,396 0.5% 33.5000 01/23/01 67,266
6,073 0.4% 33.5000 12/11/97 55,234
2,487 0.2% 33.5000 12/11/97 22,619
2,966 0.2% 33.5000 12/11/97 26,976
5,696 0.4% 33.5000 12/11/97 51,805
Jack D. Maynard.................. 40,000 2.9% 27.5000 01/22/06 448,091
5,965 0.4% 32.5000 01/23/01 52,211
7,585 0.5% 32.5000 01/22/02 66,390
2,461 0.2% 32.5000 12/11/97 21,541
5,512 0.4% 32.5000 02/24/99 48,246
1,966 0.1% 32.5000 01/30/00 17,208
</TABLE>
- ---------------
(1) The first line of the Options Granted column for each named Executive
Officer denotes original grants made by the Compensation Committee which
become exercisable in one-third increments over years four, five and six of
the option.
(2) The second line of the Options Granted column for Robert G. Sachse and
Philip W. Baxter denotes an original grant made by the Compensation
Committee which become exercisable in one-third increments
13
<PAGE> 17
over years two, three and four of the option. Messrs. Sachse and Baxter
received additional stock option grants in 1996 in connection with their
promotions to Executive Vice-President of the Company. These awards were
granted early in lieu of a normal grant in January of 1997.
(3) Original grants made by the Compensation Committee expire ten (10) years
from the grant date. Replacement Options have the same expiration date as
the original options they have replaced. Replacement Options are denoted by
indented lines in the chart. See Footnote 1 under the Summary Compensation
Table for additional information regarding Replacement Options.
(4) In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. The Company's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. All stock option valuation methods, including the
Black-Scholes model, require a prediction about the future movement of the
stock price. The following assumptions were made for purposes of calculating
the Grant Date Present Value for all original grants: the option term is
assumed to be two years after vesting, interest rates of 5.60% and 6.69%,
volatility of 17.29% calculated by using daily stock prices for the calendar
year 1996, and a dividend yield of 3.27% and 3.17% per share. The following
assumptions were made for purposes of calculating the Grant Date Present
Value for all Replacement Options: the option term is assumed to be three
years after vesting, interest rates between 5.79% and 6.44%, volatility of
17.29% calculated by using daily stock prices for the calendar year 1996,
and a dividend yield between 2.65% and 3.10% per share. The real value of
the options in this table depends upon the actual performance of the
Company's stock during the applicable period.
The following table contains information concerning aggregated stock option
exercises during 1996 by the named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SECURITIES OPTIONS AT OPTIONS AT
UNDERLYING FY-END(#) FY-END($)(3)
OPTIONS VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISED(#)(1) REALIZED($)(2) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
James E. Barnes...................... 58,820 66,642 501,062/ 2,929,886/
678,000 4,337,500
Robert G. Sachse..................... 8,766 65,987 136,360/ 163,321/
230,478 1,387,870
Philip W. Baxter..................... 31,637 93,028 12,039/ 21,068/
231,116 1,298,116
David W. Bowman...................... 27,666 196,252 84,760/ 470,311/
174,618 973,559
Jack D. Maynard...................... 27,048 151,022 45,888/ 101,890/
154,155 876,229
</TABLE>
- ---------------
(1) Includes shares forfeited for the named Executive Officers' state and
federal tax withholding obligations and shares tendered in payment of the
option exercise prices.
(2) Includes value of shares forfeited by the named Executive Officer for state
and federal tax withholding obligations.
(3) The value of the unexercised in-the-money options was calculated using the
composite NYSE closing price on December 31, 1996 of $34.00.
14
<PAGE> 18
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
comprised entirely of Non-Employee Directors within the meaning of Rule 16b-3 of
the Securities and Exchange Act of 1934, as amended. The Committee is
responsible for establishing and administering the Company's executive
compensation programs.
COMPENSATION PHILOSOPHY
The Committee's compensation philosophy is designed to support the
Company's primary objective of creating value for shareholders. The Committee
believes that the following compensation strategies for its Executive Officers
achieve this objective:
- Attract and retain talented executives -- The Company provides core
compensation in the form of base salary and benefit programs that are
comparable to those of peer companies (described below) and
similarly-sized domestic general industry companies. The base salary
target is generally established at the 50th percentile of peer company
and general industry survey results. For higher levels of responsibility,
the base salary component is a diminishing portion of the executive's
potential total compensation.
- Emphasize pay for performance -- The Incentive Compensation Plan ("ICP")
described below establishes a significant relationship between current
Company performance and incentive compensation, on a sliding scale basis
with substantial rewards possible for exceptional results and no reward
for poor results.
- Encourage management stock ownership -- The Committee firmly believes
that long-term shareholder value will be significantly enhanced by
management stock ownership. As a result, the Company's stock option
program strongly encourages stock ownership by Executive Officers.
Section 162(m) of the Internal Revenue Code ("Section 162(m)")imposes a
limitation on the deduction for certain Executive Officers' compensation unless
certain requirements are met. The Committee has carefully considered the impact
of this tax law and has taken certain actions intended to preserve the Company's
tax deduction with respect to any affected compensation. The Company's ICP,
which was approved by stockholders at the Company's 1995 Annual Meeting, and in
which all named Executive Officers participated in 1996, is designed to qualify
incentive compensation payments for tax deductibility under Section 162(m). The
ICP includes a long-term and short-term component, providing potential incentive
compensation for participants on an annual (short-term) basis or over a three
year period (long-term). In prior years, under Section 162(m) transition rules,
the Company's 1989 Stock Incentive Plan ("1989 Plan") qualified for tax
deductibility. With the finalization of Section 162(m), the Company has adopted,
subject to shareholder approval at the May, 1997 Annual Meeting, amendments to
the 1989 Plan to qualify future stock option grants and awards for tax
deductibility. The 1989 Plan amendments are discussed in more detail below.
The following are descriptions of the Company compensation programs for
Executive Officers including the Chief Executive Officer ("CEO").
BASE SALARY
The Company generally establishes base salary ranges by considering peer
company and general industry information. The base salary targets are typically
set at the 50th percentile.
Peer companies, for compensation purposes, have been identified by the
Company, with the assistance of outside consultants, as fourteen (14) companies
with fairly comparable size and business activities to that of the Company.
Seven (7) of these peer companies are also included in the S&P Energy Composite
Index which is used in the Five Year Total Return Graph shown below. The
principal reason the Company utilizes peer companies for compensation
comparisons and the S & P Energy Composite Index for performance comparisons is
that the 14 companies chosen by the Company for compensation comparisons more
accurately reflect the Company's competition for executive talent.
15
<PAGE> 19
The base salary and performance of each Executive Officer is reviewed
periodically (at least annually) by his or her immediate supervisor (or the
Committee, in the case of the CEO) resulting in salary actions as appropriate.
An Executive Officer's level of responsibility is the primary factor used in
determining base salary. Individual performance, peer company and general
industry information are also considered in determining any salary adjustment.
As compared to peer companies, the actual 1996 base salary of the CEO was above
the 50th percentile and the actual 1996 base salaries of all other Executive
Officers were slightly below the 50th percentile. The Committee reviews and
approves all Executive Officer salary adjustments as recommended by the CEO. The
Committee reviews the performance of the CEO and establishes his base salary.
INCENTIVE AWARDS
Named Executive Officers are eligible for an annual (short-term component)
bonus under the ICP. For 1996, the performance measure selected by the Committee
for the ICP was earnings per share. In the event the Company's earnings per
share for 1996 met or exceeded a certain targeted level, all participants in the
ICP, including the named Executive Officers, could receive an incentive award
for 1996. Such awards are based upon salary level, the Committee's determination
of the individual's position and level of responsibility and the Committee's
assessment of the individual's impact upon the Company's financial success. The
Committee has absolute discretion in reducing or eliminating the amount of an
award for any individual included in the ICP. Because actual 1996 earnings per
share significantly exceeded the target level set by the Committee and since the
Committee determined that the performance of each named Executive Officer
substantially contributed to the Company's overall financial success, all named
Executive Officers received awards under the ICP.
In 1996, the Company established an Executive Office, comprised of the CEO,
the Executive Vice-President and Chief Operating Officer and the Executive
Vice-President and Chief Financial Officer. The Executive Office was established
to provide leadership and guidance for the Company's new strategic directions.
Due to exceptional performance of their expanded responsibilities as members of
the Executive Office, the Committee granted Mr. Sachse and Mr. Baxter a separate
bonus in addition to their awards under the ICP. All incentive compensation
received by the named Executive Officers is reflected in the "Bonus" column of
the Summary Compensation Table above. (No incentive awards were paid to named
Executive Officers in 1994 or 1995 because Company performance failed to achieve
financial targets in those years.) Other Executive Officers were eligible for an
annual bonus under other incentive plans provided for by the Company. For 1996,
the financial performance measure selected by the Committee for these incentive
plans was operating profit. In addition, each plan had non-financial performance
measures (key indicators) which could impact bonus amounts up to 50%. As with
the named Executive Officers, due to record operating profit for the Company for
1996, all other Executive Officers received an incentive award for 1996
(adjusted for non-financial performance measures) based upon salary level,
position, level of responsibility and the supervisor's assessment of the
individual's impact upon the Company's financial success.
STOCK OPTION PROGRAM
The Company's current stock option program is designed to align management
interests with those of shareholders. In furtherance of this objective,
nonqualified stock options were granted in 1996, with the exercise price equal
to the market price on the date of grant. Regular stock options only have value
if the price of the Company's stock has appreciated in value from the date the
stock options were granted.
The level of stock option grants for Executive Officers (other than the
CEO, which is discussed below) is determined by the Committee each year in
consultation with the CEO. Awards for all employees (including all Executive
Officers) are determined by giving equal consideration to base salary, level of
responsibility and peer company long-term compensation information. In order to
encourage increased Company performance in the future, the Company's 1996 award
levels were slightly higher than option awards granted by peer companies.
One-third of the options granted to Executive Officers in January 1996 will vest
in the year 2000. The remaining two-thirds will vest equally in 2001 and 2002.
Options granted to Executive Officers in September of 1996 will vest one-third
in each of the years 1998, 1999 and 2000.
16
<PAGE> 20
The Company's stock option program is designed to encourage early exercise
of options and retention of the issued stock, by including a reload option
feature ("replacement option"). The Company also emphasizes stock retention by
establishing target levels of stock ownership set by the CEO for each Executive
Officer and other key employees. The replacement option provides for a new
option for each share of Company stock tendered to satisfy an option exercise.
The replacement option, granted at an exercise price equal to the then current
market price, is for the number of shares exchanged to exercise the original
options, plus shares withheld for taxes, and is exercisable for the remainder of
the original option term. As a result of this design, early exercise and
retention of stock is encouraged but stock option recipients can never obtain
more shares of stock than represented by the original option grants. In
addition, the Company is required to purchase shares in the open market
equivalent to the number of shares issued under the stock option program.
Since institution of the replacement option program and stock ownership
targets in 1990, current Executive Officer stock ownership has increased by 307%
to a total of 663,077 shares.
CEO COMPENSATION
Mr. Barnes' compensation for 1996 consisted of the same three components
described above for all Executive Officers: base salary, incentive compensation
and stock option awards (in addition to participation in Company benefit
programs). Because of his position in the salary range, Mr. Barnes did not
receive a base salary increase in 1996.
Mr. Barnes' incentive award for 1996 was determined in the same manner as
with other named Executive Officers. Because actual 1996 earnings per share
significantly exceeded the target level and the Committee determined that his
performance substantially contributed to the Company's overall financial success
(and to shareholder return), Mr. Barnes received a substantial award under the
ICP for 1996. (Mr. Barnes did not receive an incentive award in 1994 or 1995 due
to the Company's failure to achieve financial targets during those years.)
Mr. Barnes was granted 200,000 (adjusted for the 1996 stock split)
non-qualified stock options in 1996 under the Company's 1989 Plan. His award of
stock options was slightly higher than that awarded to peer Company CEOs because
the Committee continues to believe that long-term shareholder value will be
enhanced through management stock ownership.
Samuel F. Segnar, Chairman
Donald P. Hodel
Donald L. Mellish
Robert L. Parker
Herman J. Schmidt
17
<PAGE> 21
PERFORMANCE GRAPH
The following performance graph reflects yearly percentage changes in the
Company's cumulative total stockholder return on Common Stock for the five
fiscal years ended December 31, 1996, as compared with the cumulative total
return of the S&P 500 Stock Index and the S&P Energy Composite Index. The graph
assumes that $100 was invested on January 1, 1991 in the Company's Common Stock
and in each of the referenced indices and assumes reinvestment of dividends.
The Company's stock did not provide a higher cumulative total return over
the five-year period depicted in the graph; however, for 1996, MAPCO's total
return of 27.78% exceeded not only that of the S&P 500 (22.68%) but also the S&P
Energy Composite (25.1%).
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
MAPCO, S&P 500 and S&P Energy Composite
<TABLE>
<S> <C> <C> <C> <C>
S&P Energy
Year (end of year) MAPCO Inc S&P 500 Composite
1991 100 100 100
1992 92 102 107
1993 107 118 118
1994 111 123 120
1995 103 160 164
1996 131 200 201
</TABLE>
18
<PAGE> 22
PENSION PLAN
The pension plan, in which all eligible employees, including Executive
Officers, participate, does not require or permit employees to make
contributions. Contributions to the pension plan in respect of any person are
not and cannot be separately or individually calculated.
PENSION TABLE -- ANNUAL BENEFIT PAYABLE AT NORMAL RETIREMENT AGE
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
ANNUAL -------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- ------------ -------- -------- -------- -------- ---------- ----------
<C> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 17,708 $ 26,561 $ 35,415 $ 44,269 $ 53,123 $ 61,976
$ 250,000 46,958 70,436 93,915 117,394 140,873 164,351
$ 500,000 95,708 143,561 191,415 239,269 287,123 334,976
$1,000,000 193,208 289,811 386,415 483,019 579,623 676,226
$1,250,000 241,958 362,936 483,915 604,894 725,873 846,851
$1,500,000 290,708 436,061 581,415 726,769 872,123 1,017,476
$1,750,000 339,458 509,186 678,915 848,644 1,018,373 1,188,101
$2,000,000 388,208 582,311 776,415 970,519 1,164,623 1,358,726
</TABLE>
The Pension Table above shows approximate total retirement benefits
(expressed as an annual straight-life annuity) based on employment with the
Company for an employee covered by the qualified and non-qualified retirement
plans. "Average annual compensation" is determined with reference to the base
salary and bonus compensation of the named Executive Officers disclosed in the
Summary Compensation Table above, except as described below for Mr. Barnes.
Average annual compensation levels are the average base salary and bonus
compensation for the three highest consecutive years of the 10 years immediately
before retirement date. The normal retirement date is at age 65, 66 or 67,
depending upon the participant's birth year. The benefit amounts listed in the
table are not subject to reduction for Social Security benefits or on any other
basis except as noted below.
At December 31, 1996, Messrs. Barnes, Sachse, Baxter, Bowman and Maynard,
were credited with 13.58, 14.93, 17.18, 9.72 and 15.83 years of service,
respectively. In addition, Mr. Barnes is, pursuant to a separate retirement
agreement, credited with additional service equal to service earned with his
prior employer (26 years). Such service is applied with reference to a modified
base salary and bonus compensation at the Company which reflects only 50% of his
promotion pay increases and bonus compensation. This additional retirement
benefit is reduced by the retirement benefit earned by Mr. Barnes at his prior
employer.
EMPLOYMENT CONTINUATION AGREEMENTS
The Company has entered into Employment Continuation Agreements (the
"Agreements") with six (6) of its Executive Officers (the "Officers"), including
Messrs. Barnes, Sachse, Baxter, Bowman and Maynard.
The Agreements with the Officers replaced similar agreements which expired
on December 31, 1989. The Agreements were automatically extended on January 1,
1997, and will continue to automatically extend each January 1 thereafter
unless, not later than October 1 of the preceding year, the Company shall have
given notice that it does not wish to extend the Agreement and provided that if
a Change in Control (as defined below) occurs, the Agreements shall
automatically continue for twenty-four months beyond the month in which such
Change in Control occurred. Under each Agreement, the Officer is obligated to
remain in the Company's employ for the earliest of (a) nine months following the
occurrence of a Potential Change in Control, (b) the date of a Change in
Control, (c) the date the Officer terminates his employment by reason of Death,
Disability or Retirement, or (d) the termination by the Company of the Officer's
employment.
For purposes of the Agreements, a "Change in Control" shall be deemed to
have occurred if (i) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or any corporation owned, directly or
indirectly, by the
19
<PAGE> 23
stockholders of the Company in substantially the same proportion as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities eligible to vote; or (ii) during
any period of two consecutive years (not including any period prior to the
execution of the Agreement), individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (ii) or (iv) of this Paragraph) whose
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds ( 2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved (hereinafter
referred to as "Continuing Directors"), cease for any reason to constitute at
least a majority thereof; or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which 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
surviving entity) in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, more
than 75% of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; provided, however, that a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company's then outstanding securities shall not constitute a Change
in Control of the Company; or (iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets
(or any transaction having a similar effect).
For purposes of the Agreements, a "Potential Change in Control" shall be
deemed to have occurred if (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) any person (including the Company) publicly announces an intention to take
or to consider taking actions which if consummated would constitute a Change in
Control; or (iii) any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company (or a corporation
owned, directly or indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of stock of the Company),
who is or becomes the beneficial owner, directly or indirectly, of securities of
the corporation representing 10% or more of the combined voting power of the
Company's then outstanding securities, increases such person's beneficial
ownership of such securities by 5% or more over the percentage so owned by such
person on the date hereof; or (iv) the Board of Directors of the Company adopts
a resolution to the effect that, for purposes of the Agreement, a Potential
Change in Control has occurred.
If, within two (2) years following a Change in Control, an Officer's
employment is terminated by the Company (other than for cause, as defined in the
Agreements, or on account of the Officer's Death, or Disability) or by the
Officer for other than Good Reason as defined in the Agreement, the Company will
pay the Officer the following amounts (the "Severance Payment"):
(a) A single sum payment equal to the product of three (3) times the
sum of (i) the Officer's then current annual salary, plus (ii) the highest
annual incentive compensation payment for the current calendar year or any
of the last three (3) years, plus (iii) awards paid under the Company's
Performance Bonus Plan or any successor thereto.
(b) A single sum cash payment equal to the product of (x) and (y)
where (x) equals the difference between (1) the closing price per share of
the Company's Common Stock on the New York Stock Exchange Consolidated Tape
(the "NYSECT") on the day immediately prior to the Change in Control of the
Company and (2) the lowest closing price per share of the Company's Common
Stock on the NYSECT on any day during the 60-day calendar day period
immediately preceding the Change in Control of the Company and where (y)
equals three (3) times the highest number of shares of the Company's Common
Stock subject to any stock option granted to the Officer within 24 months
of the Change in Control of the Company.
20
<PAGE> 24
(c) All reasonable and appropriate legal fees and expenses incurred by
the Officer as a result of such termination (including all such fees and
expenses, if any, reasonably incurred in contesting or disputing by
arbitration or otherwise, any such termination or in seeking to obtain or
enforce any right or benefit provided by the Agreement or in connection
with any tax audit or proceeding to the extent attributable to the
application of Section 4999 of the Internal Revenue Code of 1986, as
amended, (the "Code"), to any payment or benefit provided under the
Agreement); and
(d) For a thirty-six (36) month period after the Date of Termination,
the Company shall provide the Officer with benefits substantially similar
to those which the Officer was receiving or entitled to receive under the
Company's life, disability, accident and group health insurance plans or
any similar plans in which the Officer was participating immediately prior
to the Date of Termination at a cost to the Officer which is no greater
than that cost to the Officer in effect at the Date of Termination.
(e) In addition to the retirement benefits to which the Officer is
entitled under the Supplemental Executive Retirement Plan ("SERP") and the
Long-Term Incentive Plan ("LIP") or any successor plan thereto, the Company
shall pay a single sum amount, in cash, equal to the actuarial equivalent
of the excess of (x) over (y) where (x) is the amount of the retirement
pension (determined as a straight-life annuity commencing at Normal
Retirement Age as defined in the MAPCO Pension Plan) which the Officer
would have accrued under the terms of the SERP (without regard to any
amendment to the SERP made subsequent to a Change in Control and on or
prior to the Date of Termination, which amendment adversely affects in any
manner the computation of retirement benefits thereunder), determined as if
the Officer were fully vested thereunder and had accumulated (after the
Date of Termination) thirty-six (36) additional months of service credit
thereunder at the Officer's highest annual rate of compensation during the
twelve (12) months immediately preceding the Date of Termination, and where
(y) is the amount of any vested retirement pension (determined as a
straight-life annuity commencing at Normal Retirement Age) which the
Officer had then accrued pursuant to the provisions of the SERP.
(f) In addition to the retirement benefit the Officer is entitled to
under the MAPCO Inc. and Subsidiaries Profit Sharing and Savings Plan, the
Company shall pay the Officer a single sum amount, in cash, equal to
eighteen percent (18%) times the Officer's highest annual rate of
compensation during the twelve (12) months immediately preceding the
Officer's Date of Termination.
The Company has also agreed to pay the Officer an additional amount
("Gross-Up Payment") such that the net amount retained by the Officer upon the
payments provided under the Agreement, after deduction of federal, state and
local income tax and any tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (up to 20%), shall be equal to the Severance Payment.
On January 31, 1990, the Board of Directors of the Company approved
amendments to the Employment Continuation Agreements to provide that in the
event of termination following a Change in Control, the benefits under the
Company's SERP shall be determined as of the earliest possible retirement date
using actuarial equivalents as defined in the Amendments.
In addition to this change, an Amendment to the Employment Continuation
Agreement of Mr. Barnes clarifies that in the event of termination following a
Change in Control (1) retirement benefits, including that payable under the
Supplemental Retirement Agreement ("SRA"), are calculated based upon the
earliest permitted retirement date and (2) SRA benefits are payable in a single
sum based upon actuarial equivalents, as defined in the Amendment. An additional
amendment to the Employment Continuation Agreement of Mr. Barnes was entered
into in 1991 to coordinate changes made in his supplemental retirement agreement
as discussed above.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has,
by resolution, selected Deloitte & Touche LLP independent auditors to audit the
books, records and accounts of the Company and its
21
<PAGE> 25
subsidiaries for the fiscal year ending December 31, 1997. Accordingly, this
selection is being presented to the Stockholders for ratification at this Annual
Meeting.
The firm of Deloitte & Touche LLP has audited the Company's books annually
since 1969, has offices in or convenient to the localities where the Company or
its subsidiaries operate and is considered to be well qualified. If the
Stockholders do not approve the selection of Deloitte & Touche LLP, the
selection of independent auditors will be reconsidered by the Board of
Directors.
Audit services performed by Deloitte & Touche LLP during 1996 included
examinations of the Consolidated Financial Statements of the Company and its
subsidiaries, limited reviews of interim financial information, services related
to filings with the Securities and Exchange Commission and consultations on
matters related to accounting, financial reporting, taxation and general
business advice.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting of Stockholders at which time they will have an opportunity to make a
statement and will be available to respond to any appropriate questions from the
floor.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION
OF DELOITTE & TOUCHE LLP TO AUDIT THE COMPANY'S BOOKS.
PROPOSAL TO APPROVE AMENDMENT TO
RESTATED CERTIFICATE OF INCORPORATION
INTRODUCTION
The Board of Directors of the Company has approved and unanimously
recommends adoption of a proposal to amend the Company's Restated Certificate of
Incorporation to increase the authorized capital stock of the Company from
76,000,000 shares to 116,000,000 shares. A copy of the Certificate of Amendment
is attached as Exhibit "A" (the "Amendment"). The Board believes that the best
interests of the Company and its stockholders will be served by the adoption of
the Amendment.
If approved by the stockholders at the Annual Meeting by the affirmative
vote of a majority of the outstanding shares, the Amendment will become
effective upon filing with the Secretary of State of the state of Delaware.
EXPLANATION OF THE PROPOSED AMENDMENT
The Company's Restated Certificate of Incorporation currently provides for
75,000,000 authorized shares of Common and 1,000,000 shares of Preferred Stock.
If the Amendment is adopted, the Company will be authorized to issue an
additional 40,000,000 shares of Common Stock. The authorized Preferred Stock
will remain the same.
As of March 24, 1997, there were 54,751,504 shares of the Company's Common
Stock issued and outstanding and 8,380,304 treasury shares. In addition,
approximately 3,345,411 shares are reserved for stock option exercises and
awards and restrictive stock awards under the Company's stock option plans. As
of March 24, 1997, there remained 8,522,781 shares of authorized Common Stock
which were neither issued nor subject to reservation. After the proposed
increase in the number of authorized shares of Common Stock, on the basis of the
shares issued and reserved for issuance as of March 24, 1997, a total of
48,522,781 shares will be authorized but not issued or subject to reservation.
The Company has no current plans to issue common equity. The additional
Common Stock to be authorized by the Amendment would be available for issuance
from time to time without further action on the part of the stockholders for any
proper corporate purpose and further authorization for the issuance of such
additional Common Stock by a vote of the stockholders will not be solicited
prior to such issuance. Such purposes might include, without limitation,
issuances of Common Stock in public or private sales for cash as a means of
obtaining capital for use in the Company's business or as all or part of the
consideration to be paid by the Company for the acquisition of other business
properties and the issuance of Common Stock in connection
22
<PAGE> 26
with stock splits or dividends and under the Company's plans. The Board does not
intend to issue any Common Stock except on terms which it deems to be in the
best interests of the Company and its stockholders. Depending on the
circumstances, any issuance of additional shares of Common Stock could
effectively dilute the currently issued and outstanding shares of Common Stock.
The proposal to increase the number of authorized shares is not intended as an
anti-takeover measure, but the unissued shares would be available for issuance
as an appropriate response to an actual or threatened attempt to acquire control
of the Company or as a strategic measure to deal with potential takeover
activity. The Company has no agreement or commitment concerning the issuance of
any additional stock other than under the plans as specified above.
VOTE REQUIRED FOR THE PROPOSAL
Approval of the proposed Amendment will require the affirmative vote of
holders of at least a majority of the outstanding shares of the Company's Common
Stock. Abstentions and broker non-votes will have the effect of votes against
the proposed Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION.
PROPOSAL TO APPROVE AMENDMENT TO
THE COMPANY'S 1989 STOCK INCENTIVE PLAN
On March 25, 1997, the Board of Directors unanimously approved, subject to
approval by the Company's stockholders, an amendment to the Company's 1989 Stock
Incentive Plan, as amended and restated effective June 1, 1992 (the "1989
Plan"), to assure that any stock options granted and any restricted stock or
deferred stock awards made to the Company's Executive Officers which will vest,
if at all, upon the attainment of performance objectives ("Performance Awards")
will continue to qualify as "other performance-based compensation" under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Under Section 162(m) of the Code, no deduction is allowed in any taxable
year of the Company for compensation in excess of $1 million paid to each of its
chief executive officer and its four most highly paid other executive officers
who are serving in such capacities as of the last day of such taxable year. An
exception to this rule applies to certain performance-based compensation that is
paid pursuant to a plan or program approved by the Company's stockholders and
that specifies the performance objectives to be obtained, the class of employees
eligible to receive awards and the maximum amount that can be paid to eligible
employees under such plan or program. Stock options are inherently
performance-based, since they provide value to employees only if the stock price
appreciates. For other equity awards to qualify for the exception available for
performance-based compensation, stockholders must approve the performance
objectives to which such awards relate. While Section 162(m) generally became
effective with respect to compensation payable after 1993, a special rule stated
that options or Performance Awards granted under the 1989 Plan prior to the 1997
Annual Meeting of Stockholders would be treated as performance-based
compensation without stockholder approval of the otherwise required per person
award limits or the performance objectives.
Specifically, the proposed amendment limits the maximum number of shares of
the Company's Common Stock that may be awarded to any single participant in any
twelve month period to 350,000 shares, in the case of stock options and 100,000
shares in the case of Performance Awards. The amendment also specifies the
performance criteria for Performance Awards as any one or more of the following
performance criteria: (A) return on equity, (B) total return to stockholders,
(C) operating revenues, (D) net income, before or after taxes, (E) earnings per
share and (F) changes in the value of the Company's Common Stock (the
"Performance Objectives"), and states that whether the Performance Objectives
are achieved may be determined based upon the performance of the Company, any of
its subsidiaries or affiliates or any business unit or division of any of the
foregoing or by reference to the performance of any of the Company, any
subsidiary or any affiliate relative to other companies.
To be approved, the proposed amendment requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote
23
<PAGE> 27
thereon. Abstentions from voting on this proposal (including broker non-votes)
will have the effect of votes against this proposal. If not otherwise specified,
properly executed proxies will be voted in favor of the proposal. If
stockholders do not approve the amendment to the 1989 Plan, no option grants or
Performance Awards will be made to the Company's Executive Officers under the
1989 Plan following the 1997 Annual Meeting of Stockholders.
On March 24, 1997, the closing price of the Company's stock on the New York
Stock Exchange was $31.50 per share.
The Board of Directors unanimously recommends that stockholders vote "FOR"
approval of the amendment to the 1989 Plan.
The following is a summary of the material terms of the 1989 Plan, as
amended by the proposed amendment.
GENERAL INFORMATION REGARDING THE 1989 PLAN
The 1989 Plan is administered by the Compensation Committee (the
"Committee"), which is authorized to grant stock options, stock appreciation
rights, restricted and deferred stock grants and stock purchase rights to
employees of the Company and its subsidiaries. While the number of grantees will
vary from year to year, in 1996, 204 employees, including officers, received
awards under the 1989 Plan.
The maximum number of shares of the Company's Common Stock that may be
issued under the 1989 Plan is 4,000,000.(2) If shares under a grant are not
issued, those shares will again be available for inclusion in future grants.
Additionally, there is available for issuance under the 1989 Plan any shares
subject to options under certain prior plans which are canceled, terminated or
otherwise settled without the issuance of shares of the Company's Common Stock
or a direct payment in cash. Payment of cash in lieu of shares will not be
considered an issuance of shares of Common Stock under the 1989 Plan. In order
to maintain stockholder value in the Company's shares, shares must be purchased
by the Company from time to time in the open market equivalent to the shares
issued or expected to be issued under the 1989 Plan. If there is a stock split,
stock dividend, recapitalization, or other relevant change affecting the
Company's shares, appropriate adjustments would be made in the number of shares
that could be issued in the future and in the number of shares and price under
all outstanding grants made before the event.
GRANTS UNDER THE 1989 PLAN
Because of the replacement option feature of the 1989 Plan, it is not
possible to estimate the number of options that may be granted in the future
under the Plan to particular individuals. The option grants made to each of the
named Executive Officers under the 1989 Plan in 1996 are listed in the Option
Grant Table set forth above.
Stock Options. The Committee may grant nonqualified options and options
qualifying as incentive stock options under the Code. The option price of any
option must be at least equal to the fair market value of a share of the
Company's Common Stock on the date of grant. The term of each option is fixed by
the Committee but may not exceed ten years from the date of grant. The Committee
determines the time or times at which each option may be exercised. Options may
be made exercisable in installments and the exercisability of options may be
accelerated by the Committee. Subject to the per person limit described above,
the Committee has the discretion to determine the number of shares to be awarded
to each participant.
Stock Appreciation Rights. The Committee may grant SARs that entitle the
grantee to receive an amount equal to the excess of the then fair market value
of the shares with respect to which the SAR is being exercised over the price
fixed by the Committee at the time the SAR was granted. Payment is made in cash,
in
- ---------------
(2) After giving effect to the Company's two-for-one stock split effected
in the form of a stock dividend to stockholders of record as of September 16,
1996; Does not include a small number of shares which were left over under the
Company's 1986 Stock Option Plan and were added into the 1989 Plan.
24
<PAGE> 28
shares, or a combination of the two as the Committee determines. If an SAR is
exercised, the right under any related option would terminate. If any related
stock option is exercised, any SAR related to the shares purchased would
terminate. The Committee will determine the time or times at which a SAR may be
exercised.
Restricted Stock Grants. The Committee may also issue or transfer shares of
Common Stock under a restricted stock grant. The grant would set forth a
restriction period (including a period related to the attainment of performance
goals) during which the shares of restricted stock granted would remain subject
to forfeiture. Under the amendment, if the Committee determines to grant any
restricted stock award to an Executive Officer of the Company with a vesting
schedule that relates to the attainment of specified performance criteria (as
opposed to the mere passage of time), any such award must be based on the
Performance Objectives outlined above and be for a number of shares that does
not exceed the per participant limit outlined above. The grantee may not dispose
of the shares prior to the expiration of the restriction period. During this
period, the grantee would generally have all the rights of a stockholder,
including the right to vote the shares and receive dividends.
Deferred Stock Grants. The Committee may also make deferred stock awards
under the 1989 Plan. These are non-transferable awards entitling the recipient
to receive shares of the Company's Common Stock without any payment in cash or
property in one or more installments at a future date or dates, as determined by
the Committee. Receipt of deferred stock may be conditioned on such matters as
the Committee shall determine, including continued employment or attainment of
performance goals. Under the amendment, if the Committee determines to grant any
deferred stock award to an Executive Officer of the Company with a vesting
schedule that relates to the attainment of specified performance criteria (as
opposed to the mere passage of time), any such award must be based on the
Performance Objectives outlined above and be for a number of shares that does
not exceed the per participant limit outlined above. The Committee may permit
participants to further defer receipt of a deferred stock award.
Purchases of Common Stock. The Committee may also award eligible employees
the right to purchase Common Stock at not less than its fair market value on the
date of grant. Purchase rights may be granted separately from other awards under
the 1989 Plan or the exercise of stock purchase rights may be required as a
condition to the receipt of another award under the 1989 Plan. In connection
with stock purchase rights, the Committee may authorize loans from the Company
to the grantee for up to 90% of the purchase price. Loans may be with or without
recourse against the participant in the event of default. Each loan shall be
subject to such terms and conditions and shall bear such rate of interest as the
Committee shall determine.
Termination of Employment. In the event of termination of employment by
reason of retirement, long term disability or death, any restrictions on shares
of restricted or deferred stock shall lapse. Additionally, any option or SAR may
thereafter be exercised in full for a period of up to 3 years, in the case of
retirement and for a period of up to one year in the case of disability or
death, subject in each case to the stated term of the option. In the event of
termination of employment for any reason other than retirement, disability or
death, any options and SARs will be canceled (unless otherwise determined by the
Committee) and any shares of restricted or deferred stock then outstanding as to
which the period of restriction has not lapsed will be forfeited (unless
otherwise determined by the Committee).
Change in Control Provisions. The 1989 Plan provides that, except as
provided below, in the event of a "Change in Control" (as defined in the 1989
Plan), (i) all SARs will become immediately exercisable; (ii) the restrictions
and deferral limitations applicable to outstanding restricted stock awards and
deferred stock awards will lapse and the shares in question will fully vest; and
(iii) each option shall be canceled in exchange for cash in an amount equal to
the excess of the highest price paid (or offered) during the preceding 60 day
period over the exercise price for such option. Notwithstanding the foregoing,
if the Committee determines that the grantee of such award will receive a new
award (or have his prior award honored) in a manner which preserves its value
and eliminates the risk that the value of the award will be forfeited due to
involuntary termination, no acceleration of exercisability or vesting, lapse of
restriction or deferral limitations, or cash settlement would occur as a result
of a Change in Control.
25
<PAGE> 29
FEDERAL INCOME TAX CONSEQUENCES
Stock Options. The grant of an incentive stock option or a nonqualified
stock option would not result in income for the grantee or in a deduction for
the Company.
The exercise of a nonqualified stock option generally would result in
ordinary income for the grantee and a deduction for the Company measured by the
difference between the fair market value of the shares received at the time of
exercise and the option price.
The exercise of an incentive stock option would not result in ordinary
income for the grantee if the grantee (i) does not dispose of the shares within
two years after the date of grant or one year after the transfer of shares upon
exercise, and (ii) is an employee of the Company or a subsidiary of the Company
from the date of grant until three months before the exercise date. If these
requirements are met, the grantee's basis in the shares upon later disposition
would be the option price. Any gain would be taxed to the grantee as long term
capital gain, and the Company would not be entitled to a deduction. The excess
of the market value on the exercise date over the option price is considered as
income for purposes of the alternative minimum tax; therefore, a grantee is
potentially subject to the minimum tax on the excess of the market value of the
shares purchased over option price as a result of exercise.
If the grantee disposes of the incentive stock option shares prior to the
expiration of either of the holding periods described above, the grantee would
recognize ordinary income, and the Company would be entitled to a deduction,
equal to the lesser of the fair market value of the shares on the exercise date
minus the option price or the amount realized on disposition minus the option
price. Any gain in excess of this amount would be treated as long term or short
term capital gain, depending on whether the shares are held for the requisite
holding period. Under current federal income tax law, net capital gains (the
excess of net long term capital gains over any net short term capital losses)
are taxed at the same rate as ordinary income.
SAR and Deferred Stock Award. The grant of an SAR or deferred stock Award
would not result in income for the grantee or in a deduction for the Company.
Upon the exercise of an SAR and the receipt of shares or cash under a deferred
stock Award, the grantee would recognize ordinary income and the Company would
be entitled to a deduction measured by the fair market value of the shares plus
any cash received.
Restricted Stock Grant. The grant of restricted stock will not result in
income for the grantee or in a deduction for the Company for federal income tax
purposes, unless the recipient timely elects to have income recognized at the
time of the grant. Absent such election, dividends paid while the stock remains
subject to such restrictions would be taxable to the recipient and deductible by
the Company as compensation for the federal income tax purposes. At the time the
restrictions lapse, the grantee would recognize ordinary income, and the Company
would be entitled to a deduction, measured by the fair market value of the
shares at the time of lapse.
Stock Purchases. Purchases of unrestricted stock under the 1989 Plan at
current fair market value generally will not result in compensation income to
the purchasing employee or any deduction to the Company.
Recourse loans made for the purchase of stock will not result in taxable
income to the recipient or in a deduction to the Company, provided that any such
loan will be made at a rate of interest sufficient to avoid the imputation of
the payment of additional interest and receipt of an equivalent amount of
additional compensation income by the employee under the Code. The Company will
have income equal to the amount of interest accrued on any such loan.
Forgiveness of all or a portion of a loan will also result in income to the
borrower and a deduction for his employer.
The foregoing is a summary of the principal federal income tax consequences
of transactions under the 1989 Plan. It does not describe all federal tax
consequences under the 1989 Plan nor does it describe state or local tax
consequences.
26
<PAGE> 30
OTHER INFORMATION
The Board may terminate or suspend the 1989 Plan at any time but such
termination or suspension shall not affect any stock options, SARs, restricted
stock awards, deferred stock awards or stock purchase rights then outstanding
under the 1989 Plan. Unless terminated by action of the Board, the 1989 Plan
will continue in effect until March 29, 1999, but awards granted prior to such
date shall continue in effect until they expire in accordance with their terms.
The Board may also amend the 1989 Plan as it deems advisable. The Committee may
amend the term of any award or option theretofore granted, retroactively or
prospectively, but no such amendment shall adversely affect any such award or
option without the holder's consent.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE 1989 STOCK INCENTIVE PLAN
PROPOSAL TO APPROVE THE 1997 EMPLOYEE STOCK PURCHASE PLAN
INTRODUCTION
The Board of Directors believes it is in the best interests of the Company
to encourage employee stock ownership. Accordingly, on March 25, 1997, the Board
adopted, subject to stockholder approval, the 1997 MAPCO Inc. Employee Stock
Purchase Plan (the "ESPP" or the "Plan").
An aggregate of 1,500,000 shares of Common Stock may be sold pursuant to
the ESPP; however, IN ORDER THAT THE ESPP NOT BE DILUTIVE TO STOCKHOLDERS'
INTERESTS, THE COMPANY HAS AGREED TO REPURCHASE THE SAME NUMBER OF SHARES ISSUED
UNDER THE ESPP IN THE OPEN MARKET. The text of the ESPP is attached as Exhibit
"B" to this Proxy Statement. The following is a summary of the material
provisions of the Plan. The summary does not purport to be complete and is
subject to and qualified in its entirety by reference to the text of the ESPP.
Because the benefits conveyed under the Plan are contingent on the amount
of contributions each employee makes on a voluntary basis, it is impossible to
predict what benefits each employee will receive under the Plan.
ADMINISTRATION AND ELIGIBILITY
The ESPP is to be administered by the Compensation Committee of the Board
of Directors (the "Committee"). The Committee has the authority to make rules
and regulations governing the administration of the ESPP.
All employees of the Company are eligible to participate in the ESPP except
for: (i) employees whose customary employment is not more than 20 hours per
week; (ii) employees whose customary employment is for not more than five months
during any calendar year; and (iii) employees who have been employed for less
than six months. As of March 18, 1997, approximately 3,872 employees were
eligible to participate in the ESPP.
PARTICIPATION AND TERMS
An Eligible Employee may elect to participate in the ESPP by executing and
filing with the Company on or before the fifteenth (15th) of the month preceding
the next Offering Date a Purchase Agreement in such form as the Committee shall
approve. The Purchase Agreement will indicate the amount to be deducted from the
Eligible Employee's salary and applied to the purchase of Common Stock on the
Exercise Date. In addition to payroll deduction contributions which must be
within limits set by the Committee, each Eligible Employee may contribute up to
$5000 in a single sum contribution to such employee's Stock Purchase Account. On
the last day of each offering period (the "Exercise Date"), the amount credited
to each participating employee's Stock Purchase Account is applied to purchase
as many whole shares of Common Stock as may be purchased with such amount at the
applicable purchase price.
27
<PAGE> 31
The purchase price for the Common Stock is equal to the lower of 85% of the
closing price of shares of the Common Stock as reported on the New York Stock
Exchange on the Offering Date or on the Exercise Date.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may amend the ESPP at any time,
provided that no such amendment shall be effective unless approved by
stockholders if (i) such amendment materially increases benefits to Participants
under the Plan, (ii) such amendment materially increases the number of
securities which may be issued under the Plan, (iii) such amendment materially
modifies the requirements as to eligibility for participation in the Plan or
(iv) the failure to obtain such approval would adversely affect compliance of
the Plan with the requirements of Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, or with the requirements of any other applicable law, rule
or regulation.
The ESPP may be terminated by the Board of Directors at any time.
FEDERAL INCOME TAX CONSEQUENCES
The ESPP is intended to be an "employee stock purchase plan" as defined in
Section 423 of the Code. As a result, an employee participant will pay no
federal income tax upon enrolling in the ESPP or upon purchase of the Common
Stock. A participant may recognize income and/or gain or loss upon the sale or
other disposition of Common Stock purchased under the Plan, the amount and
character of which will depend on whether the Common Stock is held for two years
from the first day of the offering period.
If the participant sells or otherwise disposes of the Common Stock within
that two-year period, the participant will recognize ordinary income at the time
of disposition in an amount equal to the excess of the market price of the
Common Stock on the date of purchase over the purchase price and the Company
will be entitled to a tax deduction for the same amount.
If the participant sells or otherwise disposes of the Common Stock after
holding the Common Stock for the two-year period, the participant will recognize
ordinary income at the time of the disposition in an amount equal to the lesser
of (i) the excess of the market price of the Common Stock on the first day of
the offering period over the Option Price on such date, or (ii) the excess of
the market price of the Common Stock at the time of disposition over the
purchase price. The Company will not be entitled to any tax deduction with
respect to Common Stock purchased under the Plan if the Common Stock are held
for the requisite two-year period.
The employee may also be required to recognize capital gain or loss at the
time of disposition of the Common Stock, either short-term or long-term,
depending on the holding period for the Common Stock.
OTHER INFORMATION
The ESPP is intended to go into effect on June 1, 1997. As of March 24,
1997, the closing price of the Common Stock on the New York Stock Exchange was
$31.50.
The affirmative vote of holders of a majority of the shares of Common Stock
represented and entitled to vote at the meeting is required for approval of the
ESPP. Abstentions from voting on this proposal (including broker non-votes) will
have the effect of votes against this proposal. If not otherwise specified,
properly executed proxies will be voted in favor of the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
1997 EMPLOYEE STOCK PURCHASE PLAN
28
<PAGE> 32
PROPOSALS OF STOCKHOLDERS
Proposals of Stockholders intended to be presented at the Company's 1998
Annual Meeting of Stockholders, which is anticipated to be held on May 27, 1998,
must be received at the principal executive offices of the Company, 1800 South
Baltimore Avenue, Tulsa, Oklahoma 74119, on or before December 15, 1997 to be
considered for inclusion in the Company's Proxy Statement and form of proxy
relating to that meeting.
OTHER BUSINESS
As of the time of preparation of this Proxy Statement, the Company has not
been informed of any business to be presented by or on behalf of the Company or
its management for action at the meeting other than those listed in the Notice
of Annual Meeting. If any other business properly comes before the meeting or
any adjournment thereof, it is intended that the proxies will be voted in
respect thereof in accordance with the best judgment of the person or persons
voting the proxies.
By Order of the Board of Directors
DAVID W. BOWMAN
Senior Vice President, General
Counsel and
Secretary
April 15, 1997
Tulsa, Oklahoma
A COPY OF THE COMPANY'S 1996 FORM 10-K REPORT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION AS WELL AS OTHER REPORTS FILED BY THE COMPANY WITH THE
COMMISSION SUBSEQUENT TO THE DATE HEREOF AND PRIOR TO THE MEETING, WHICH ARE
HEREBY INCORPORATED BY REFERENCE HEREIN, IS AVAILABLE TO STOCKHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO: VICE PRESIDENT, TREASURER AND INVESTOR
RELATIONS, MAPCO INC., P. 0. BOX 645, TULSA, OKLAHOMA 74101-0645. STOCKHOLDERS
ARE ALSO ENCOURAGED TO ACCESS COMPANY INFORMATION THROUGH THE COMPANY'S HOME
PAGE AT HTTP://WWW.MAPCOINC.COM ON THE INTERNET.
29
<PAGE> 33
EXHIBIT "A"
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
MAPCO INC.
MAPCO Inc., a corporation organized and existing under and by virtue of the
General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That at a regular meeting of the Board of Directors of MAPCO Inc.
held on March 25, 1997, resolutions were duly adopted setting forth a proposed
amendment to the Restated Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and calling the Annual Meeting of
Stockholders of said corporation on May 28, 1997 for consideration of the
proposed amendment and other matters. The resolution relating to the proposed
amendment is as follows:
RESOLVED, that in the judgment of the Board of Directors of the
Company, it is deemed advisable to amend the first paragraph of Article
Fourth of the Restated Certificate of Incorporation of the Company so it
will be and read in its entirety as follows:
FOURTH: The total number of shares of capital stock of all classes
which the Corporation is authorized to issue is 116,000,000 shares of
capital stock, which shall consist of 1,000,000 shares of Preferred
Stock, without par value, and 115,000,000 shares of Common Stock, $1 par
value.
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the Annual Meeting of Stockholders of said corporation was duly called and held,
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware at which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation will not be reduced under or
by reason of said amendment.
<PAGE> 34
IN WITNESS WHEREOF, said MAPCO Inc. has caused this certificate to be
signed by James E. Barnes, its Chairman of the Board, President and Chief
Executive Officer, and attested by James N. Cundiff, its Assistant Secretary,
this day of May, 1997.
MAPCO Inc.
By:
----------------------------------
James E. Barnes
Chairman of the Board, President
and
Chief Executive Officer
ATTEST:
By:
--------------------------------
James N. Cundiff,
Assistant Secretary
A-2
<PAGE> 35
EXHIBIT B
MAPCO INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
Effective June 1, 1997
<PAGE> 36
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
1. INTRODUCTION...................................................... 1
1.1 Statement of Purpose........................................ 1
1.2 Internal Revenue Code Considerations........................ 1
2. DEFINITIONS....................................................... 1
2.1 Board of Directors.......................................... 1
2.2 Code........................................................ 1
2.3 Committee................................................... 1
2.4 Company..................................................... 1
2.5 Continuous Service.......................................... 1
2.6 Effective Date.............................................. 1
2.7 Eligible Employee........................................... 1
2.7.1 Employee............................................. 1
2.7.2 Length of Service.................................... 1
2.8 Employee.................................................... 1
2.9 Employer.................................................... 1
2.10 Exchange Act................................................ 1
2.11 Excused Absence............................................. 2
2.12 Exercise Date............................................... 2
2.13 Offering.................................................... 2
2.14 Offering Date............................................... 2
2.15 Participant................................................. 2
2.16 Plan........................................................ 2
2.17 Plan Year................................................... 2
2.18 Purchase Agreement.......................................... 2
2.19 Purchase Period............................................. 2
2.20 Purchase Price.............................................. 2
2.21 Stock....................................................... 2
2.22 Stock Purchase Account...................................... 2
2.23 Subsidiaries................................................ 2
3. ADMISSION TO PARTICIPATION........................................ 2
3.1 Initial Participation....................................... 2
3.2 Discontinuance of Participation............................. 3
3.3 Involuntary Withdrawal; Termination of Eligible Employee
Status.................................................... 3
3.4 Readmission to Participation................................ 3
3.5 Restrictions on Participation............................... 3
4. STOCK PURCHASE.................................................... 3
4.1 Maximum Shares.............................................. 3
4.2 Shares Available for Purchase............................... 3
4.3 Purchase Price of Shares.................................... 4
4.4 Exercise of Purchase Privilege.............................. 4
4.5 Establishment of Stock Purchase Account..................... 4
4.5.1 Payroll Deductions................................... 4
4.5.2 Additional Contribution.............................. 5
4.6 Payment for Stock........................................... 5
4.7 Share Ownership; Issuance of Stock; Dividend reinvestment... 5
4.7.1 Rights as Stockholder................................ 5
4.7.2 Issuance of Shares................................... 5
4.7.3 Fractional Shares.................................... 5
4.7.4 Dividend Reinvestment................................ 5
</TABLE>
i
<PAGE> 37
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
5. SPECIAL ADJUSTMENTS............................................... 5
5.1 Shares Unavailable.......................................... 5
5.2 Adjustment Upon Change of Status............................ 5
5.3 Effect of Certain Transactions.............................. 6
6. MISCELLANEOUS..................................................... 6
6.1 Nonalienation............................................... 6
6.2 Administrative Costs........................................ 6
6.3 Employee Stock Purchase Plan Administration................. 6
6.4 Amendments to the Plan...................................... 6
6.5 Expiration and Termination of the Plan...................... 7
6.6 Repurchase of Stock......................................... 7
6.7 Notice...................................................... 7
6.8 Government Regulation....................................... 7
6.9 Headings, Captions, Gender.................................. 7
6.10 Severability of Provisions; Prevailing Law.................. 7
6.11 Implementation of the Plan.................................. 7
6.12 Investment Representations.................................. 7
6.13 Additional Incentive Arrangements........................... 7
6.14 No Right of Employment...................................... 7
6.15 Conflicts................................................... 7
6.16 Indemnification of Committee................................ 8
</TABLE>
ii
<PAGE> 38
MAPCO INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1.
INTRODUCTION
1.1 Statement of Purpose. The purpose of the MAPCO Inc. 1997 Employee
Stock Purchase Plan is to provide eligible employees of the Company and its
Subsidiaries, who wish to become stockholders, an opportunity to purchase Stock
of the Company. The Board of Directors of the Company believes that employee
participation in ownership will be to the mutual benefit of the employees and to
the Company and its Subsidiaries.
1.2 Internal Revenue Code Considerations. The Plan is intended to
constitute an "employee stock purchase plan" within the meaning of Section 423
of the Internal Revenue Code of 1986, as amended.
ARTICLE 2.
DEFINITIONS
2.1 Board of Directors. The term "Board of Directors" means the Board of
Directors of the Company.
2.2 Code. The term "Code" means the Internal Revenue Code of 1986, as
amended to the Effective Date hereof, as the same may thereafter be amended, and
any successor statute of similar nature. References to specific sections of the
Code shall be taken to be references to corresponding sections of any successor
statute.
2.3 Committee. The term "Committee" means the Compensation Committee of
the Board of Directors which shall administer the Plan.
2.4 Company. The term "Company" means MAPCO Inc., a Delaware corporation,
or any successor thereto.
2.5 Continuous Service. The term "Continuous Service" means the period of
time immediately preceding the Offering Date during which the Employee has been
employed by the Employer or a predecessor business acquired by the Employer or a
predecessor company merged or consolidated with or into the Employer and during
which there has been no interruption of Employee's employment by the Employer or
such predecessor employer. For this purpose, periods of Excused Absence shall
not be considered to be interruptions of Continuous Service.
2.6 Effective Date. The term "Effective Date" means June 1, 1997, if
within twelve (12) months of that date, the Plan is, or has been, approved at a
meeting of the stockholders of the Company by the affirmative vote of the
holders of a majority of the outstanding shares of Stock of the Company present,
by person or by proxy, and entitled to vote on the approval of the Plan.
2.7 Eligible Employee. The term "Eligible Employee" means each person who,
on an Offering Date, meets all of the following requirements:
2.7.1 Employee. The person is an Employee of the Employer; and
2.7.2 Length of Service. The person has completed at least six (6)
months of Continuous Service.
2.8 Employee. The term "Employee" means each person customarily employed
by the Company on the Offering Date, except for those whose customary employment
is for either (a) not more than twenty (20) hours per week, or (b) not more than
five (5) months during any calendar year.
2.9 Employer. The term "Employer" means the Company and each Subsidiary of
the Company that adopts the Plan.
2.10 Exchange Act. The term "Exchange Act" means the Securities Exchange
Act of 1934, as amended, and as the same may hereafter be amended.
1
<PAGE> 39
2.11 Excused Absence. The term "Excused Absence" means absence pursuant to
a leave of absence granted by an Employer, such as absence due to disability or
illness, absence by reason of a layoff, or absence by reason of active duty in
the armed forces of the United States. In no event may an Excused Absence exceed
ninety (90) days in length (or, if longer and if applicable, the period that the
individual's reemployment with an Employer is guaranteed either by statute or
contract, including but not limited to military leave).
2.12 Exercise Date. The term "Exercise Date" means the last day of each
Purchase Period.
2.13 Offering. The term "Offering" means the offering made by the Company
in accordance with the terms and conditions of the Plan permitting Eligible
Employees to purchase Stock from the Company under the Plan. The Committee shall
have the power to change the duration and/or the frequency of Offerings with
respect to future offerings without shareholder approval if such change is
announced at least fifteen (15) days prior to the scheduled beginning of the
first Offering to be affected. Eligible Employees may not participate in more
than one Offering at a time.
2.14 Offering Date. The term "Offering Date" means the first day of
September 1997 (or such earlier date selected by the Committee) and the first
day of each January and July thereafter during which the Plan is in effect
(unless the Committee selects other dates pursuant to Section 6.4).
2.15 Participant. The term "Participant" means each Eligible Employee who,
pursuant to Article 3 hereof, elects to participate in the Plan, and has not
withdrawn or been terminated from participation under the Plan.
2.16 Plan. The term "Plan" means this MAPCO Inc. 1997 Employee Stock
Purchase Plan, as the same may be amended, modified or supplemented from time to
time.
2.17 Plan Year. The term "Plan Year" means the calendar year.
2.18 Purchase Agreement. The term "Purchase Agreement" means the document
prescribed by the Committee from time to time pursuant to which an Eligible
Employee has enrolled to be a Participant.
2.19 Purchase Period. The term "Purchase Period" means the period
beginning on an Offering Date and ending on the last day of the sixth (6th)
month following the Offering Date (unless the Committee selects other dates
pursuant to Section 6.4).
2.20 Purchase Price. The term "Purchase Price" means such term as it is
defined in Section 4.3 hereof.
2.21 Stock. The term "Stock" means the common stock, par value $1.00 per
share, of MAPCO Inc.
2.22 Stock Purchase Account. The term "Stock Purchase Account" means a
noninterest bearing account consisting of all amounts withheld from an
Employee's compensation (or otherwise paid into the Plan) for the purpose of
purchasing shares of Stock for such Employee under the Plan, increased by any
amounts contributed by such Employee pursuant to Section 4.5.2 hereof, and
reduced by all amounts applied to the purchase of Stock for such Employee under
the Plan, provided, such account may be monitored as an accounting entry on the
books and records of the Company, and no actual physical segregation of amounts
credited to such account, from the assets of the Company, shall be required.
2.23 Subsidiaries. The term "Subsidiaries" means any corporation more than
fifty percent (50%) of whose outstanding voting securities are owned by the
Company or by one or more of the Company's other Subsidiaries, whether or not
such corporation now exists or is hereafter organized or acquired by the Company
or a Subsidiary.
ARTICLE 3.
ADMISSION TO PARTICIPATION
3.1 Initial Participation. Any Eligible Employee may elect to be a
Participant and may become a Participant by executing and filing with the
Company on or before the fifteenth (15th) of the month preceding the next
Offering Date a Purchase Agreement prepared in such form as the Committee shall
approve from
2
<PAGE> 40
time to time. The effective date of an Eligible Employee's participation shall
be the Offering Date next following the date on which the Company receives from
the Eligible Employee a properly executed and timely filed Purchase Agreement.
3.2 Discontinuance of Participation. Any Participant may voluntarily
withdraw from the Plan by filing a Notice of Withdrawal with the Company prior
to the first (1st) business day of the last month in a Purchase Period. Upon
such withdrawal, there shall be paid to the Participant the amount, if any,
standing to the Participant's credit in the Participant's Stock Purchase
Account.
3.3 Involuntary Withdrawal; Termination of Eligible Employee Status. If a
Participant's Continuous Service terminates for any reason, or if a Participant
ceases to be an Eligible Employee, the entire amount standing to the
Participant's credit in the Participant's Stock Purchase Account on the
effective date of such occurrence shall be paid to the Participant.
3.4 Readmission to Participation. Any Eligible Employee who has previously
been a Participant, who has discontinued participation (whether by interruption
of Continuous Service or otherwise), and who wishes to be reinstated as a
Participant may again become a Participant by executing and filing with the
Company, not later than the fifteenth (15th) of the month preceding the Offering
Date of any succeeding Purchase Period, a new Purchase Agreement on forms
prepared in such form as the Committee shall approve from time to time.
Reinstatement to Participant status shall be effective as of the Offering Date
next following the date on which the Company receives from the Eligible Employee
the properly executed and timely filed Purchase Agreement. Notwithstanding the
foregoing terms of this Section 3.4, any executive officer of the Company (as
determined under Section 16 of the Exchange Act) who has discontinued
participation in the Plan may not again become a Participant in the Plan for at
least six (6) months from the date such officer discontinued participation in
the Plan.
3.5 Restrictions on Participation. Notwithstanding any provisions of the
Plan to the contrary, no Employee shall be granted an option to participate in
the Plan:
(a) if, immediately after the grant, such Employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of
the total combined voting power or value of all classes of stock of the
Company or any of the Subsidiaries (for purposes of this paragraph, the
rules of sec.424(d) of the Code shall apply in determining stock ownership
of any Employee); or
(b) which permits the rights of a Participant to purchase stock under
all Code Section 423 employee stock purchase plans of the Company and the
Subsidiaries to accrue at a rate which exceeds $25,000 in fair market value
of the stock (determined at the time such option is granted) for each
calendar year in which such option is outstanding.
ARTICLE 4.
STOCK PURCHASE
4.1 Maximum Shares. The maximum number of shares of the Company's Stock
which shall be made available for sale under the Plan shall be one and one-half
million (1,500,000) shares, subject to adjustment upon changes in capitalization
of the Company as provided in Sections 5.2 and 5.3.
4.2 Shares Available for Purchase. Subject to the limits set forth in this
Section 4.2 and in Section 3.5 (which prohibits the stock purchase rights of a
Participant from accruing at a rate in excess of $25,000 per calendar year),
each Participant shall have the right to purchase on each Offering Date the
number of shares of Stock determined by dividing twenty-five thousand dollars
($25,000) by the fair market value of the Company's Stock on such Offering Date.
Such fair market value shall be based on the closing price on the New York Stock
Exchange of the Stock on such Offering Date (or the nearest prior business day
on which trading occurred). If the Stock of the Company is not admitted to
trading on any of the aforesaid dates for which closing prices of the stock are
to be determined, then reference shall be made to the fair market value of the
Stock on that date, as determined on such basis as shall be established or
specified for the purpose by the Committee. The maximum number of shares of
Stock that may be purchased for each Participant on an
3
<PAGE> 41
Exercise Date is the lesser of (a) the number of shares of Stock that can be
purchased by applying the full balance of the Participant's Stock Purchase
Account to such purchase of shares at the Purchase Price (as hereinafter
determined), or (b) the Participant's proportionate part of the aggregate number
of such shares of Stock available within the limitation established by the
maximum aggregate number of such shares reserved for the Plan, as stated in
Section 4.1 hereof. Notwithstanding the foregoing, if any person entitled to
purchase shares pursuant to any offering hereunder would be deemed for the
purposes of Section 423(b)(3) of the Code to own Stock (including any number of
shares that such person would be entitled to purchase hereunder) possessing five
percent (5%) or more of the total combined voting power or value of all classes
of stock of the Company, the maximum number of shares that such person shall be
entitled to purchase pursuant to the Plan shall be reduced to that number which,
when added to the number of shares of Stock that such person is so deemed to own
(excluding any number of shares that such person would be entitled to purchase
hereunder) is one less than such five percent (5%). Any portion of a
Participant's Stock Purchase Account that cannot be applied by reason of the
limitations set forth in this Section 4.2 shall remain in the Participant's
Stock Purchase Account for application to the purchase of Stock on the next
Offering Date (unless withdrawn by the Participant before that Offering Date).
4.3 Purchase Price of Shares. The Purchase Price per share of the Stock
sold to Participants pursuant to any Offering under this Plan shall be the
lesser of: (a) eighty-five percent (85%) of the closing price on the New York
Stock Exchange of each such share on the Offering Date for such Offering (or the
nearest prior business day on which trading occurred); or (b) eighty-five
percent (85%) of the closing price on the New York Stock Exchange of each such
share on the Exercise Date for such Offering (or the nearest prior business day
on which trading occurred). If the Stock of the Company is not admitted to
trading on any of the aforesaid dates for which closing prices of the stock are
to be determined, then reference shall be made to the fair market value of the
Stock on that date, as determined on such basis as shall be established or
specified for the purpose by the Committee. In addition, the Participant shall
be required to pay transfer, excise and similar taxes, if any, imposed on the
transaction pursuant to which such share of Stock is purchased. If the Exercise
Date with respect to the purchase of Stock is a day on which the stock is
selling ex-dividend on or before the record date of such dividend, then for Plan
purposes the Purchase Price per share will be increased by an amount equal to
the dividend per share. In no event shall the Purchase Price per share be less
than the par value per share of the Stock.
4.4 Exercise of Purchase Privilege. Subject to the provisions of Section
4.2 and Section 3.5, if on the date of the last paycheck of a Participant issued
prior to any Exercise Date of any Offering there is a credit balance in the
Participant's Stock Purchase Account, there shall be purchased from the
Company's authorized and unissued or treasury shares of Stock for the
Participant at the Purchase Price for the Purchase Period that expires on such
Exercise Date the largest number of whole shares of Stock as can be purchased
with the entire amount in the Participant's Stock Purchase Account on such
paycheck issue date. No fractional shares shall be purchased. Each such purchase
shall be deemed to have occurred on the Exercise Date occurring at the close of
the Offering for which the purchase was made. Any credit balance in a
Participant's Stock Purchase Account following a purchase of Stock for such
Participant on an Exercise Date shall be carried over to the next Purchase
Period.
4.5 Establishment of Stock Purchase Account.
4.5.1 Payroll Deductions. In the Purchase Agreement, each Participant
shall authorize payroll deductions and each Participant shall be permitted
to make one (1) lump sum payment pursuant to Section 4.5.2 hereof for the
purposes of funding the Participant's Stock Purchase Account (effective for
payroll periods beginning on or after September 1, 1997 (or such earlier
date selected by the Committee)). The number of shares of Stock that may be
purchased from a Participant's Stock Purchase Account shall be subject to
the limitations of Section 4.2. Subject to the provisions of Section 3.2, a
Participant may not change the Participant's payroll deduction rate during
any Purchase Period. However, a Participant may change the deduction to any
permissible level for any subsequent Offering by filing notice thereof on
or before the fifteenth (15th) of the month preceding the Offering Date on
which such subsequent Offering commences.
4
<PAGE> 42
4.5.2 Additional Contribution. The Purchase Agreement shall permit
each Participant, who has agreed to payroll deductions, to make one lump
sum payment per Purchase Period for the purpose of funding their
respective Stock Purchase Accounts, subject to the following rules:
4.5.2.1 All such additional contributions shall be made with
respect to any Offering no later than the first business day of the last
month in the Purchase Period;
4.5.2.2 Only one such additional contribution shall be accepted
from any Participant in any Purchase Period; and
4.5.2.3 Such additional contributions shall be in the amount of
twenty-five dollars ($25.00), or any multiple thereof, to a maximum of
five thousand dollars ($5,000), but in no event in excess of the limits
of Section 3.5.
4.6 Payment for Stock. The Purchase Price for all shares of Stock
purchased by a Participant under the Plan shall be paid out of the Participant's
Stock Purchase Account. As of each Exercise Date, the entire amount standing to
the credit of each Participant in the Participant's Stock Purchase Account on
the date of the last paycheck issued to the Participant prior to such Exercise
Date in the Purchase Period that expires on such Exercise Date shall be charged
with the aggregate Purchase Price of the shares of Stock purchased by such
Participant on the Exercise Date. No interest shall be paid or payable with
respect to any amount held in the Participant's Stock Purchase Account.
4.7 Share Ownership; Issuance of Stock; Dividend reinvestment.
4.7.1 Rights as Stockholder. The shares of Stock purchased by a
Participant on an Exercise Date shall, for all purposes, be deemed to have
been issued and/or sold to the Participant on such Exercise Date. Prior to
that time, none of the rights or privileges of a stockholder of the Company
shall inure to the Participant with respect to such shares.
4.7.2 Issuance of Shares. The shares of Stock purchased by a
Participant shall be issued by the Company by using book entry systems that
reflect the issuance of such shares. A Participant shall have the right,
upon written request, to have the shares purchased by such Participant
issued in the form of a certificate.
4.7.3 Fractional Shares. No fractional shares shall be issued under
the Plan.
4.7.4 Dividend Reinvestment. Dividends on all shares issued pursuant
to the book entry systems shall be reinvested in Stock unless the
Participant provides written notice that such Participant does not desire
to participate in the dividend reinvestment program.
ARTICLE 5.
SPECIAL ADJUSTMENTS
5.1 Shares Unavailable. If, on any Exercise Date, the aggregate funds
available for the purchase of Stock would purchase a number of shares in excess
of the number of shares then available for purchase under the Plan, the
following events shall occur: (i) the number of shares that would otherwise be
purchased by each Participant shall be proportionately reduced on the Exercise
Date in order to eliminate such excess; (ii) the Plan shall automatically
terminate immediately after the Exercise Date as of which the supply of
available shares of Stock is exhausted, and (iii) any amount remaining in the
Stock Purchase Account of each of the Participants shall be repaid to such
Participants.
5.2 Adjustment Upon Change of Status. Subject to any required action by
the shareholders of the Company, the number of shares of Stock reserved for
purchase under the Plan, as hereinabove provided, and the calculation of the
Purchase Price per share may be appropriately adjusted to reflect any increase
or decrease in the number of issued shares of Stock resulting from a subdivision
or consolidation of such shares or the payment of a stock dividend (but only on
the Stock) or any other increase or decrease in the number of outstanding shares
of Stock effected without receipt of consideration by the Company. To the extent
that the
5
<PAGE> 43
foregoing adjustments relate to the shares of the Company issued under the Plan,
such adjustments shall be made by the Committee. Except as hereinbefore
expressly provided in this Section 5.2, the terms of the Plan shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
5.3 Effect of Certain Transactions. Subject to any required action by the
stockholders, if the Company shall be the surviving or resulting corporation in
any merger or consolidation, or if the Company shall be merged for the purpose
of changing the jurisdiction of its incorporation, any Offering hereunder shall
pertain and apply to the shares of stock of the Company or the survivor. In the
event of a dissolution or liquidation of the Company, or of a merger or
consolidation in which the Company is not the surviving or resulting
corporation, the Plan shall terminate upon the effective date of such
dissolution, liquidation, merger or consolidation; however, the Purchase Period
for the Offering in effect shall be shortened to a date prior to such effective
date, as selected by the Committee, to permit the purchase of Stock with amounts
held in the Stock Purchase Accounts.
ARTICLE 6.
MISCELLANEOUS
6.1 Nonalienation. The right to purchase shares of Stock under the Plan is
personal to the Participant, is exercisable only by the Participant during the
Participant's lifetime, except as hereinafter set forth, and may not be assigned
or otherwise transferred by the Participant, other than by will or the laws of
descent and distribution. There shall be delivered to the executor,
administrator or other personal representative of a deceased Participant such
shares of Stock and such residual balance as may remain in the Participant's
Stock Purchase Account as of the Exercise Date occurring at the close of the
period in which the Participant's death occurs, including shares of Stock
purchased as of that date, or prior thereto, with monies deposited by the
Participant and/or withheld from the Participant's Compensation.
6.2 Administrative Costs. The Company shall pay all administrative
expenses associated with the operation of the Plan. No administrative charges
shall be levied against the Stock Purchase Accounts of the Participants.
6.3 Employee Stock Purchase Plan Administration. The Committee shall
administer the Employee Stock Purchase Plan and shall make, adopt, construe, and
enforce rules and regulations not inconsistent with the provisions of the Plan.
The Committee shall adopt and prescribe the contents of all forms required in
connection with the administration of the Plan, including, but not limited to,
the Purchase Agreement, payroll withholding authorizations, withdrawal
documents, and all other notices required hereunder. The Committee shall have
the fullest discretion permissible under law in the discharge of its duties. The
Committee's interpretations and decisions in respect of the Plan, the rules and
regulations pursuant to which it is operated, and the rights of Participants
hereunder shall be final and conclusive.
6.4 Amendments to the Plan. The Board of Directors may amend or modify,
from time to time, any of the provisions of the Plan; provided, however, that no
such amendment shall be effective unless and until it has been duly approved by
the shareholders of the out-standing shares of Common Stock if (i) such
amendment materially increases the benefits accruing to Participants under the
Plan; (ii) such amendment materially increases the number of securities which
may be issued under the Plan; (iii) such amendment materially modifies the
requirements as to eligibility for participation in the Plan; or, (iv) the
failure to obtain such approval would adversely affect the compliance of the
Plan with the requirements of Rule 16b-3 under the Exchange Act, or with the
requirements of any other applicable law, rule or regulation. Without
shareholder consent and without regard to whether any Participant rights may be
considered to have been adversely affected, the Committee shall be entitled to
change the number of Offerings, the Offering Dates, the Offering Periods and the
Purchase Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering, permit payroll withholding in excess of the amount
designated by a Participant in order to adjust for delays or mistakes in the
Company's processing of properly completed withholding elections,
6
<PAGE> 44
establish reasonable waiting and adjustment periods and/or accounting and
crediting procedures to ensure that amounts applied toward the purchase of Stock
for each Participant properly correspond with amounts withheld from the
participant's compensation, and establish such other limitations or procedures
as the Committee determines in its sole discretion advisable which are
consistent with the Plan.
6.5 Expiration and Termination of the Plan. The Plan shall continue in
effect until all shares of Stock reserved for issuance under the Plan have been
purchased, unless terminated prior thereto pursuant to the provisions of the
Plan or pursuant to action by the Board of Directors, which shall have the right
to terminate or suspend the Plan at any time without prior notice to any
Participant and without liability to any Participant. Upon the expiration,
suspension or termination of the Plan, the balance, if any, then standing to the
credit of each Participant in the Participant's Stock Purchase Account shall be
refunded to the Participant.
6.6 Repurchase of Stock. The Company shall not be required to purchase or
repurchase from any Participant any of the shares of Stock that the Participant
acquired under the Plan.
6.7 Notice. A Purchase Agreement and any notice that a Participant files
pursuant to the Plan shall be on the form prescribed by the Committee and shall
be effective when received by the Committee. Delivery of such forms may be made
by hand or by certified mail, sent postage prepaid, to MAPCO Inc., 1717 South
Boulder, Tulsa, OK 74119, Regarding: Employee Stock Purchase Plan. Delivery by
any other mechanism shall be deemed effective at the option and discretion of
the Committee.
6.8 Government Regulation. The Company's obligation to sell and to deliver
the Stock under the Plan is at all times subject to all approvals of any
governmental authority required in connection with the authorization, issuance,
sale or delivery of such Stock.
6.9 Headings, Captions, Gender. The headings and captions herein are for
convenience of reference only and shall not be considered as part of the text.
The masculine shall include the feminine, and vice versa.
6.10 Severability of Provisions; Prevailing Law. The provisions of the
Plan shall be deemed severable. In the event any such provision is determined to
be unlawful or unenforceable by a court of competent jurisdiction or by reason
of a change in an applicable statute, the Plan shall continue to exist as though
such provision had never been included therein (or, in the case of a change in
an applicable statute, had been deleted as of the date of such change). The Plan
shall be governed by the laws of the State of Delaware, to the extent such laws
are not in conflict with, or superseded by, federal law.
6.11 Implementation of the Plan. The Board of Directors may implement the
Plan at any time within twelve (12) months of the date of approval of the Plan
at a meeting of stockholders by the affirmative vote of the holders of shares of
Stock of the Company present, by person or by proxy, and entitled to vote on the
approval of the Plan.
6.12 Investment Representations. The Board of Directors may require each
person acquiring shares of Common Stock pursuant to an award under the Plan to
represent to and agree with the Company in writing that the holder is acquiring
the shares for investment without a view to distribution thereof.
6.13 Additional Incentive Arrangements. Nothing contained in the Plan shall
prevent the Board of Directors from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of stock options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.
6.14 No Right of Employment. Nothing contained in the Plan or in any
Offering hereunder shall be deemed to confer upon any employee of the Company or
any Subsidiary any right to continued employment with the Company or any
Subsidiary, nor shall it interfere in any way with the right of the Company or
any Subsidiary to terminate the employment of any of its employees at any time.
6.15 Conflicts. If any of the terms or provisions of the Plan conflict
with the requirements of Rule 16b-3 under the Exchange Act, or with the
requirements of any other applicable law, rule or regulation, then such terms or
provisions shall be deemed inoperative to the extent they so conflict with the
requirements of said Rule 16b-3.
7
<PAGE> 45
6.16 Indemnification of Committee. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any award granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the Company
the opportunity, at its own expense, to handle and defend the same.
8
<PAGE> 46
[MAPCO INC. LOGO]
1800 South Baltimore Avenue
Tulsa, Oklahoma 74119
<PAGE> 47
MAPCO INC.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, MAY 28, 1997
The undersigned hereby appoints James E. Barnes, David W. Bowman and James N.
Cundiff, and each of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote, as
designated on the reverse side, all the shares of Common Stock of MAPCO Inc.
held on record by the undersigned on March 24, 1997, at the Annual Meeting of
Stockholders to be held on May 28, 1997, or any adjournment thereof.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE
REVERSE SIDE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED ON THE REVERSE SIDE AND FOR PROPOSALS 2, 3, 4, AND 5.
<PAGE> 48
MAPCO INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS For Withheld 2. Ratify the selection of Deloitte & For Against Abstain
Nominees: Touche LLP as Independent Auditors
Malcolm T. Hopkins John L. Whitmire
Donald Paul Hodel Frank A. McPherson
To withhold auathority to vote for one or more individual nominees, write the nominee name(s) on the line below.
- ----------------------------------------------------------------------------------------------------------------------------------
3. Approve amendment to the Restated For Against Abstain 4. Approve an amendment to the 1989 For Against Abstain
Certificate of Incorporation to increase Stock Incentive Plan
authorized capital stock of the Company
5. Ratify the Company's 1997 Employee For Against Abstain
Stock Purchase Plan
6. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5.
Dated _________________________________, 1997
Please Sign Here and Return Promptly
---------------------------------------------
---------------------------------------------
Please sign exactly as your name or names
appear above. For joint accounts, each owner
should sign. When signing as executor,
administrator, attorney, trustee or guardian,
etc., please give your full title.
</TABLE>
