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
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 Commisson Only
(as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
XCL LTD.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
-----------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing ee is calculated and state
how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
PRELIMINARY COPY
XCL LTD.
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting
of Shareholders of XCL Ltd. to be held at 10:00 a.m.,
Central Daylight Savings Time, on Wednesday, June 26, 1996,
in the Offshore Room of the Petroleum Club of Lafayette, located
at 111 Heymann Boulevard, Lafayette, Louisiana 70503.
The attached materials include the Notice of Annual
Meeting of Shareholders and the Proxy Statement, which contains
information concerning the meeting, the nominees for election as
members of the Board of Directors, and other relevant matters.
Management will report on the Company's activities
and future plans and prospects of the Company during the last
fiscal year and future plans and prospects of the
Company, and shareholders will have an opportunity to ask
questions about its operations and prospects.
Shareholder interest in the affairs of the Company
is welcomed and encouraged, and it is requested that you
please complete, sign, date, and promptly return your proxy
in the enclosed envelope. Such action will not limit your right
to vote in person if you attend the meeting in person, but will
assure your representation if you cannot attend.
Sincerely,
MARSDEN W. MILLER, JR.
Chairman of the Board
and Chief Executive Officer
May [13], 1996
<PAGE>
XCL LTD.
(a Delaware corporation)
110 Rue Jean Lafitte
Lafayette, Louisiana 70508
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On June 26, 1996
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders (the "Meeting") of XCL
Ltd. (the "Company") will be held in the Offshore Room of the
Petroleum Club of Lafayette, located at 111 Heymann Boulevard,
Lafayette, Louisiana 70503, on June 26, 1996 at 10:00 a.m.,
Central Daylight Savings Time, to consider and take action on
the following matters:
1. The election of three Class III directors for three-
year terms, each to hold office until the 1999
Annual Meeting of Shareholders or until a successor
shall have been elected and shall have qualified;
2. To amend the Company's Certificate ofIncorporation
to increase the number of authorized shares of
Common Stock, par value $.01 per share, from
350,000,000 shares to 500,000,000 shares; and
3. The transaction of such other business as may
properly come before the Meeting or any adjournments
thereof.
Only shareholders of record at the close of business on Friday,
May 3, 1996 are entitled to notice of and to vote at the Meeting.
YOUR PROXY IS IMPORTANT TO ASSURE A QUORUM
AT THE MEETING. WHETHER OR NOT YOU EXPECT TO BE PERSONALLY
PRESENT AT THE MEETING, PLEASE BE SURE THAT THE ENCLOSED
PROXY IS PROPERLY COMPLETED, DATED, SIGNED AND RETURNED WITHOUT
DELAY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD
OF DIRECTORS,
DAVID A. MELMAN
Secretary
May [13], 1996
<PAGE>
This document is important and requires your
immediate attention. If you are in any doubt as to the action
you should take, you should consult your stockbroker, bank
manager, solicitor, accountant or other professional advisor immediately.
If you have sold all of your shares of XCL Ltd. after
May 3, 1996, the record date of the Meeting, you should
hand this document and accompanying form of proxy to the
purchaser or to the agent through whom the sale was effected
for transmission to the purchaser.
XCL LTD.
(Incorporated with limited liability in the United States of America
under the laws of the State of Delaware)
June 26, 1996
Directors: Principal
Executive Office:
M.W. Miller, Jr.* (Chairman 110 Rue Jean Lafitte
and Chief Executive Officer) Lafayette, Louisiana 70508
J.T. Chandler* USA
D.A. Melman*
E. McIlhenny, Jr.*
F. Hofheinz*
A.W. Hummel, Jr.*
M. Palliser
F.J. Reinhardt, Jr.*
* U.S. Citizen
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
Solicitation and Voting of Proxies
- ----------------------------------
This Proxy Statement is furnished in connection with
the solicitation of proxies on behalf of the Board of Directors
of XCL Ltd. (the "Company") to be voted at the Annual Meeting
of Shareholders (the "Meeting") to be held in the Offshore Room
of the Petroleum Club of Lafayette, located at 111 Heymann
Boulevard, Lafayette, Louisiana, on Wednesday, June 26, 1996, at
10:00 a.m., Central Daylight Savings Time, and at any adjournment
thereof. The approximate date on which this Proxy Statement and
the enclosed form of proxies are first being sent or given to
shareholders of record is May [13], 1996.
The Board of Directors of the Company has fixed the close of
business on May 3, 1996 as the record date for the determination
of holders of shares of outstanding capital stock entitled to
notice of and to vote at the Meeting. On May 3, 1996, there were
outstanding: [266,040,305] shares of common stock, $.01 par value
("Common Stock"), the holders of which will be entitled to cast
one vote per share on each matter submitted to a vote at the
Meeting; [599,244] shares of Series A, Cumulative Convertible
Preferred Stock, $1.00 par value ("Series A Preferred Stock"),
the holders of which will be entitled to twenty-one (21) votes
per share on each matter submitted to a vote at the Meeting; and
[44,128] shares of Series B, Cumulative Preferred Stock, $1.00
par value ("Series B Preferred Stock"), the holders of which will
be entitled to fifty (50) votes per share on each matter
submitted to a vote at the Meeting. The presence, in person or
by proxy, of the holders of issued and outstanding shares of
capital stock entitled to cast an aggregate of [140,415,415]
votes at the Meeting will constitute a quorum for the transaction
of business.
Proxies in the accompanying forms which are
properly completed, signed, dated and returned to the Company
and not revoked will be voted in accordance with instructions
contained therein. Shareholders are urged to specify their
choices by marking the appropriate boxes on the enclosed proxy
card; if no choice has been specified, the shares will
be voted as recommended by the Board of Directors. Accordingly,
proxies will be voted "FOR" Proposals 1 and 2 set forth in the
accompanying forms of proxy.
Shareholders have 3 choices as to their vote on
Proposal 2 to be voted upon at the Meeting in addition to the
election of directors. Shareholders may vote "FOR" such
Proposal or vote "AGAINST" such Proposal or "ABSTAIN" from
voting by checking the appropriate box. Abstentions on Proposal
2 will have the effect of a negative vote since the
amendment of the Certificate of Incorporation requires the
approval of a majority of the outstanding shares of Common Stock.
Abstentions and broker non votes (matters of a non-routine nature
as to which brokers holding shares in street name have received no
instructions from their clients and, accordingly, do not vote) are
counted for purposes of determining the presence or absence of a quorum
for the transaction of business. Abstentions are counted in
tabulations of the votes cast on proposals presented to
shareholders, whereas broker non-votes are not counted for
purposes of determining whether a proposal has been approved. The
Board of Directors hopes that shareholders will exercise their
right to vote rather than abstaining from voting. It is necessary
that proxies be completed, signed, dated and returned for all
such shares to be voted at the Meeting.
Each shareholder who executes the enclosed proxy may
revoke it at any time prior to its being exercised by delivering
written notice to the Secretary of the Company. Mere attendance
at the Meeting will not revoke the proxy, but a shareholder
present at the Meeting, upon notice to the Secretary, may
revoke such proxy and vote in person.
Expenses of Solicitation
- ------------------------
The cost of soliciting proxies will be borne by the Company,
including expenses incurred in connection with the preparation
and mailing of this Proxy Statement and all documents which now
accompany or may hereafter supplement it. The solicitations will
be made in person and by mail. The Company will supply brokers or
persons holding shares of record in their names or in the names
of their nominees for other persons, as beneficial owners, with
such additional copies of proxies and Proxy Statements as may
reasonably be requested in order for such record holders to send
one copy to each beneficial owner, and will, upon request of such
record holders, reimburse them for their reasonable expenses in
mailing such materials.
The Company has retained the services of [Chemical
Mellon Shareholder Services] to solicit proxies on behalf
of the Company. Services to be performed under the
agreement will include consultation with respect to planning and
organizing the Meeting, search and distribution of materials,
and solicitation of proxies from brokers, banks, nominees and
other institutional holders. The fee for this solicitation
service is [$4,500] and will be paid by the Company, as well as
reimbursement of out-ofpocket expenses.
Further, certain directors, officers and employees of
the Company and its financial advisors, not especially employed
for this purpose, may solicit proxies, without additional
remuneration therefor, by mail, telephone, telegraph or personal
interview.
Security Ownership of Management
- --------------------------------
The following table sets forth information concerning
the shares of the Company's Common Stock owned beneficially by
each director and nominee for director of the Company and
all directors and officers as a group as of March 30, 1996. As
of that date there were 264,240,305 shares of Common Stock
issued and outstanding. The mailing address for all such
individuals is XCL Ltd., 110 Rue Jean Lafitte, Lafayette,
Louisiana 70508.
Common Stock (1)
-------------------------------
Number Percent
Name of Beneficial Owner of Shares of Class
- ------------------------ --------- --------
Marsden W. Miller, Jr. 10,107,132 (2)(3)(4) 3.73
John T. Chandler 3,167,510 (2)(3)(4) 1.19
David A. Melman 2,221,075 (3)(4) 0.83
Edmund McIlhenny, Jr. 1,335,707 (3)(5) 0.50
Fred Hofheinz 100,000 (3) 0.04
Arthur W. Hummel, Jr. 100,000 (3) 0.04
Sir Michael Palliser 100,000 (3) 0.04
Francis J. Reinhardt, Jr. 652,017 (3)(6) 0.25
All directors and officers of the 19,165,047 (2)(3)(4) 6.88
Company as a group (11 persons)
__________
(1) This table includes shares of Common Stock issuable upon
conversion of the shares of Series A, Cumulative Convertible
Preferred Stock ("Series A Preferred Stock"). Each share of
Series A Preferred Stock is convertible into approximately
21 shares of Common Stock, subject to adjustment. Each share
of Series A Preferred Stock is entitled to cast 21 votes at
the Meeting.
(2) Includes 200,000 shares which are subject to an option
granted under agreement dated October 1, 1985 in favor of
John T. Chandler. Such shares are also included in Mr.
Chandler's holding inasmuch as the option is presently
exercisable. For purposes of the total holdings of the
group, the shares are included solely in Mr. Miller's share
holdings.
(3) Includes shares of Common Stock which may be acquired
pursuant to options which are exercisable within 60 days.
(4) Includes shares of Common Stock which may be acquired
pursuant to stock purchase warrants exercisable within 60
days.
(5) Includes options to acquire 360,000 shares of Common Stock
which expire on April 30, 1996, and warrants to acquire
521,400 shares of Common Stock owned by Pamela McIlhenny,
wife of Edmund McIlhenny, Jr. Mr. McIlhenny
disclaims beneficial ownership of such shares.
(6) Includes 100,000 shares of Common Stock owned by Carl H.
Pforzheimer & Co. of which Mr. Reinhardt is a general
partner and 200,000 shares owned by Petroleum and Trading
Corporation of which Mr. Reinhardt is an officer and
director. Mr. Reinhardt disclaims beneficial ownership of
the shares owned by Petroleum and Trading Corporation.
Security Ownership of Certain Beneficial Owners
- -----------------------------------------------
The following table sets forth as of March 30, 1996, the
individuals or entities known to the Company to own more
than 3 percent of the Company's outstanding shares of voting
securities. As of that date there were 264,240,305 shares of
Common Stock issued and outstanding. Except as otherwise
indicated, all shares are owned both of record and
beneficially.
<TABLE>
<CAPTION>
Series A Series B
Common Stock (1) Preferred Stock (2) Preferred Stock (3)
---------------------- -------------------- -------------------
Name and Address Number Percent Number Percent Number Percent
of Beneficial Owner of Shares of Class of Shares of Class of Shares of Class
- --------------------------- ---------- --------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
China Investment & 11,130,344 (4) 4.0 -- -- 44,954 100
Development Co., Ltd.
16th Floor, No. 563
Chung Hsiao E. Road, Sec. 4
Taipei, Taiwan
Brown Brothers Harriman & Co. 985,411 (5) 0.37 21,200 3.54 -- --
59 Wall Street
New York, New York 10005-2818
Barclays Nominees Gracehurch 514,500 (6) 0.19 24,500 4.09 -- --
Gracechurch Limited A/C 6275B
P.O. Box 1043
Willow Grove House
Windsor Road
Trowbridge, Wilts BA14 0YT
United Kingdom
Broca Nominees M&G Group Ltd. 391,671 (6) 0.15 18,651 3.11 -- --
New London Bridge House
25 London Bridge Street
London SET 9SG
United Kingdom
Cumberland Associates 5,049,043 (7) 1.89 120,691 20.14 -- --
1114 Avenue of the Americas
New York, New York 10036
Egger & Co. 603,771 (6) 0.23 28,751 4.80 -- --
c/o The Chase Manhattan Bank N.A.
P.O. Box 1508
Church Street Station
New York, New York 10008
Hanover Nominees Limited A/C U64 420,000 (6) 0.16 20,000 3.34 -- --
1 Gerry Raffles Square
Stratford
London E15 1XG
United Kingdom
Kayne Anderson Investment 5,755,246 (8) 2.14 124,093 20.71 -- --
Management, Inc.
1800 Avenue of the Stars
2nd Floor
Los Angeles, CA 90067
Marsden W. Miller, Jr. 10,107,132 (9) 3.73 -- -- -- --
110 Rue Jean Lafitte
Lafayette, Louisiana 70508
Phildrew Nominees Limited 686,469 (6) 0.26 32,689 5.46 -- --
Triton Court
14 Finsbury Square
London EC2A 1PD
United Kingdom
Royal Bank of Scotland Edinburgh 972,636 (6) 0.37 47,457 7.92 -- --
Nominees Limited
31 St. Andrews Square
Edinburgh EH2 2PS
Scotland
Sigler & Co. 513,261 (6) 0.19 24,441 4.08 -- --
c/o Chemical Bank
P.O. Box 50000
Newark, New Jersey 07101
T. Rowe Price & Associates, Inc. 1,499,543 (10) 0.57 45,000 7.51 -- --
100 East Pratt Street, 9th Floor
Baltimore, Maryland 21202
</TABLE>
___________
(1) This table includes shares of Common Stock issuable upon
conversion of the shares of Series A Preferred Stock.
Each share of Series A Preferred Stock is convertible
into approximately 21 shares of Common Stock, subject to
adjustment.
(2) In light of the fact that the Company is more than six
months in arrears with respect to the payment of the
dividend payable June 30, 1995 on the Series A Preferred
Stock, pursuant to the terms of the stock, the holders
thereof are eligible to cast 21 votes for each share of
Series A Preferred Stock held at any meeting of
shareholders called until the arrearage is paid.
(3) Each share of Series B Preferred Stock is entitled to
cast 50 votes per share.
(4) Includes 3,325,000 shares of Common Stock which are
issuable upon exercise of outstanding Class B Warrants,
3,910,100 shares issued and held by a broker for sale
pursuant to a notice of redemption and 3,940,244 shares
reserved for redemption, which may be issued to or sold on
behalf of the holder.
(5) Includes 445,200 shares issuable upon conversion of
Series A Preferred Stock.
(6) Represents shares issuable upon conversion of Series A
Preferred Stock.
(7) Includes 2,534,511 shares issuable upon conversion of
Series A Preferred Stock and 533,333 shares issuable upon
exercise of stock purchase warrants exercisable within 60
days.
(8) Includes 2,605,953 shares issuable upon conversion of
Series A Preferred Stock and 1,933,332 shares issuable
upon exercise of stock purchase warrants exercisable
within 60 days. These shares are held by four limited
partnerships, of which Kayne Anderson Investment
Management is General Partner.
(9) Includes 200,000 shares which are subject to an option
granted under agreement dated October 1, 1985 in favor of
John T. Chandler. Includes 4,483,333 shares issuable upon
exercise of options and 2,400,000 shares issuable upon
exercise of stock purchase warrants exercisable within 60
days.
(10) Includes 945,000 shares issuable upon conversion of
Series A Preferred Stock.
PROPOSAL 1 - ELECTION OF DIRECTORS
Board of Directors and Committees
- ---------------------------------
Under the Certificate of Incorporation, as amended,
and the Amended and Restated Bylaws of the Company, the Board
of Directors is divided into three classes of directors serving
staggered three-year terms, with one class of directors to be
elected at each annual meeting of shareholders and to hold
office until the end of their term or until their successors
have been elected and qualified. The current Class III
directors, whose terms of office expire at the Meeting are
Messrs. John T. Chandler and Fred Hofheinz; the current Class I
directors are Messrs. David A. Melman, Sir Michael Palliser and
Arthur W. Hummel, Jr. and the current Class II Messrs. Marsden
W. Miller, Jr., Edmund McIlhenny, Jr. and Francis J. Reinhardt, Jr.
The Board held four meetings in 1995. The average
attendance by directors at these meetings was 86 percent, and all
directors attended 95 percent of the Board and Committee meetings
they were scheduled to attend.
Under Delaware law and the Amended and Restated
Bylaws, incumbent directors have the power to fill any
vacancies on the Board of Directors, however occurring,
whether by an increase in the number of directors, death,
resignation, retirement, disqualification, removal from
office or otherwise. Any director elected by the Board to
fill a vacancy would hold office for the unexpired term of
the director whose place has been filled; except that a director
elected to fill a newly created directorship resulting from an
increase in the number of directors, whether elected by the
Board or shareholders, would hold office for the remainder of
the full term of the class of directors in which the new
directorship was created or the vacancy occurred or until his
successor is elected and qualified. If the size of the Board is
increased, the additional directors would be apportioned among
the three classes to make all classes as nearly equal as
possible.
Pursuant to the terms of an agreement dated April 17,
1992 between the Company and China Investment & Development
Co., Ltd. ("CIDC"), the Company granted to CIDC the right to
appoint a nonvoting observer to the Company's Board of
Directors so long as CIDC owns at least 16,667 shares of
Series B Preferred Stock or their equivalent in Common Stock on
an as converted basis. To date CIDC has not exercised this
right.
There are no arrangements or understandings with any
directors pursuant to which he has been elected a director nor
are there any family relationships among any directors or
executive officers.
The Company has an Executive Committee, whose present
members include Messrs. Miller, Chandler and Melman. The
Committee met four times during 1995 and, subject to certain
statutory limitations on its authority, has all of the powers of
the Board of Directors while the Board is not in session, except
the power to declare dividends, make and alter Bylaws, fill
vacancies on the Board or the Executive Committee, or change
the membership of the Executive Committee. The Company also has
a Compensation Committee whose present members are Messrs.
Palliser, Hofheinz and Hummel. The Compensation Committee
met once in 1995. It is charged with the responsibility of
administering and interpreting the Company's stock option plans;
it also recommends to the Board the compensation of employee-
directors, approves the compensation of other executives and
recommends policies dealing with compensation and personnel
engagements. The Company also has an Audit Committee whose present
members are Messrs. Hofheinz, Hummel and Palliser. The Audit
Committee met once in 1995. It reviews with the independent auditors
the general scope of audit coverage. Such review includes consideration
of the Company's accounting practices, procedures and system of
internal accounting controls. The Audit Committee also recommends
to the Board the appointment of the Company's independent
auditors engaged by the Company. The Company has no standing
nominating committee, the functions customarily attributable to
such committee being performed by the Board of Directors as a whole.
Nominees for Directors and Recommendation of the Board
- ------------------------------------------------------
Messrs. John T. Chandler and Fred Hofheinz have been
nominated by the Board for election as Class III directors, to
hold office for three-year terms expiring at the 1999 annual
meeting of shareholders, or in all cases until their
successors are elected and qualified. Unless authority to vote
for election of directors (or for one or all nominees) shall
have been withheld in the manner provided in the accompanying
proxies, the votes represented by such proxies will be cast
for the election of the nominees set forth herein, or for one or
more substitute nominees recommended by the Board of
Directors in the event that, by reason of contingencies not
presently known to the Board of Directors, one or all nominees
should become unavailable for election. The affirmative vote of
a plurality of the votes cast at the Meeting by shareholders
present in person or by proxy, a quorum being present, is
required for the election of such directors. The Board of
Directors recommends that shareholders vote FOR the nominees
for election as Class III directors.
Biographical Information
- ------------------------
Set forth below is a brief biographical summary of the
nominees for election as directors, each of whom presently
serves as a director.
JOHN T. CHANDLER, sixty-three years old, is President of the
Company and Chairman and Chief Executive Officer of XCL-China
Ltd., a wholly owned subsidiary of the Company responsible for
the Company's operations in the PRC. He joined the Company in
June 1982, becoming a director in May 1983. From 1976 until
he joined the Company, he was the Managing Partner of the Oil
and Gas Group of GSA Equity, Inc., New York and director of
Executive Monetary Management, Inc., the parent company of GSA
Equity, Inc. From 1972 to 1976, he was director and Vice President
of Exploration and Production of Westrans Petroleum, Inc. and a
director of a number of its subsidiaries. During 1971 and 1972,
he was a petroleum consultant and manager of the oil department
of Den Norske Creditbank in Oslo, Norway. Mr. Chandler was Vice
President and Manager of the Petroleum Department of the
Deposit Guaranty National Bank in Jackson, Mississippi from 1969 to
August 1971 and, from 1967 to February 1969, was a petroleum
engineer first for First National City Bank and then The Bank of
New York. From March 1963 to July 1967, he was employed by
Ashland Oil and Refining Company as a petroleum engineer. From
1959 to 1963, he held the same position with United Producing
Company, Inc., which was acquired by Ashland Oil.
Mr. Chandler graduated from the Colorado School of Mines
with a Professional degree in petroleum engineering and is a
Registered Professional Engineer in the States of Colorado and
Texas, a member of the Society of Petroleum Evaluation
Engineers and a member of AIME.
FRED HOFHEINZ, fifty-eight years old, is an attorney at law
in Houston, Texas. From 1984 to 1987, he served as
President of Energy Assets International Corporation, a fund
management company, now a subsidiary of Torch Energy Advisors,
then served as a consultant to Torch Energy Advisors until
1989. Mr. Hofheinz also served as the Mayor of Houston, Texas
from 1974 to 1978. He, along with his family, developed the
Astrodome in Houston, and owned the Houston Astros baseball
team until 1974. He is founder and director of United Kiev
Resources, Inc., an oil and gas production company operating in
the Republic of the Ukraine in the name of its wholly owned
subsidiary, Carpatsky Petroleum Company. Mr. Hofheinz earned a
Ph.D. degree in Economics from the University of Texas and his
law degree from the University of Houston. He was appointed as a
director by the Board at a meeting held March 21, 1991.
The following pages contain biographical information
concerning the directors whose terms of office will expire
after the Meeting.
MARSDEN W. MILLER, JR., fifty-four years old, is the
Chairman and Chief Executive Officer of the Company, as well as
a director, and has held the positions of Chief Executive
Officer and director since its incorporation. Prior to 1981,
from 1964, Mr. Miller engaged in the oil business as an
independent, was an officer in various oil companies,
principally Westrans Industries, Inc. from 1970 to 1973,
Meridian Minerals, Inc. from 1973 to 1976, and Miller Coal
Services, Inc. and its subsidiaries from 1979 to 1981, and
practiced law.
DAVID A. MELMAN, fifty-three years old, is Executive Vice
President, General Counsel and Secretary of the Company and,
since September 14, 1987, a director of the Company. Prior to
joining the Company in December of 1983, he held senior
management positions with an oil and gas venture capital
partnership sponsored by Citibank N.A. (since May 1981) and
with Energy Assets International Corporation from September
1978 to May 1981. His professional experience includes the
practice of law with Burke & Burke (1969-1971) and of
accountancy with Coopers & Lybrand (1968-1969). He is a member of
the New York State Bar and is a director of Sheffield
Exploration Company, Inc., an American Stock Exchange listed
company. Mr. Melman holds a B.S. degree in economics and J.D.
and LL.M (taxation) law degrees.
EDMUND McILHENNY, JR., fifty years old, joined
the Company in August 1991, as President of XCL Land, Ltd.,
a wholly owned subsidiary of the Company. From 1972 to 1974,
he was involved in the practice of law in New Orleans,
Louisiana. From 1975, Mr. McIlhenny held various administrative
positions with E. McIlhenny's Son Corporation, and subsidiaries,
involved primarily in the manufacture of TABASCO (registered
trademark), including Vice President, Secretary and a director, as
well as a member of its Executive Committee. From 1984 to the
present, he has been a director, member of the Executive
Committee and Land Management Committee, and in 1988 was
elected Vice President and Secretary, of Vermilion Corporation,
a land holding company located in Abbeville, Louisiana.
Mr. McIlhenny is a graduate of the University of North Carolina
at Chapel Hill with a B.A. degree and the Tulane University
School of Law with a J.D. degree. Mr. McIlhenny was elected
a director in June 1990. Effective February 1, 1996, Mr. McIlhenny
resigned as President of XCL Land, Ltd.
ARTHUR W. HUMMEL, JR., seventy-five years old, a director
since April 1994, has been active in consulting with firms
doing business in East Asia, and participating in academic and
scholarly conferences in the U.S. and in the East Asia region
since his retirement, after thirty five years of service, from
the State Department in 1985. He is a member and trustee of
many academic, business, and philanthropic organizations
involved in international affairs.
Mr. Hummel was born in China. After education in
the U.S. he returned to China prior to Pearl Harbor.
After internment by the Japanese he escaped and fought with
Chinese guerrillas behind the Japanese lines in north China until
the end of the war.
He obtained an M.A. (Phi Beta Kappa) in Chinese
studies from the University of Chicago in 1949, and joined the
State Department in 1950. His early foreign assignments
include Hong Kong, Japan and Burma. He was Deputy Director of
the Voice of America in 1961-1963; Deputy Chief of Mission of
the American Embassy in Taiwan, 1965-1968; Ambassador to
Burma, 1968-1970; Ambassador to Ethiopia, 1975-1976; Ambassador
to Pakistan, 1977-1981; and Ambassador to the People's Republic
of China, 1981-1985. He was Assistant Secretary of State for
East Asia 1976-1977. He has received numerous professional
awards from within and outside the Government.
SIR MICHAEL PALLISER, seventy-three years old, a director
since April 1994, was until his retirement in March 1996, Vice
Chairman of Samuel Montagu & Co. Limited, the merchant bank
which was owned by Midland Bank, of which he was Deputy
Chairman from 1987 to 1991, and which is now part of the Hong
Kong & Shanghai Banking Corporation. He was Chairman of
Samuel Montagu from 1984 to 1993. In 1947, he joined the
British Diplomatic Service and served in a variety of overseas
and Foreign Office posts before becoming head of the Planning
Staff in 1964-1966, Private Secretary to the Prime Minister,
1966-1969, Minister in the British Embassy in Paris, 1969
1971, and the British Ambassador and Permanent Representative to
the European Communities in Brussels from 1971-1975. He
was, from 1975 until his retirement in 1982, Permanent Under
Secretary of State in the Foreign and Commonwealth Office, and
Head of the Diplomatic Service. From April to July 1982, he
was a special adviser to the Prime Minister in the Cabinet
Office during the Falklands War. He was appointed a Member of
the Privy Council in 1983. Effective December 31, 1995, Mr.
Palliser resigned as President of the China-Britain Trade
Group and a director of the UK-Japan 2000 Group, and effective
February 29, 1996, he resigned as Deputy Chairman of British
Invisibles. Mr. Palliser currently is a member of the
Trilateral Commission, a director of the Royal National
Theatre, and Chairman of the Major Projects Association,
designed to assist in and for the handling of major industrial
projects. He is a former Director of BAT Industries, Bookers,
Eagle Star, Shell and United Biscuits.
Sir Michael Palliser was educated at Wellington
College and Merton College, Oxford. He saw wartime service in
the British Army with the Coldstream Guards.
FRANCIS J. REINHARDT, JR., sixty-six years old, is
a partner in the New York investment banking firm of Carl H.
Pforzheimer & Co. Mr. Reinhardt has been a partner in the firm
for 30 years and has held various positions, specializing in
independent oil and gas securities, mergers and acquisitions,
placements participation and institutional sales since 1956.
Mr. Reinhardt holds a B.S. degree from Seton Hall University
and received his M.B.A. from New York University. Mr.
Reinhardt is a member of the New York Society of Security
Analysts, is a member of and has previously served as
president of the Oil Analysts Group of New York, is a member
and past president of the National Association of Petroleum
Investment Analysts and is a member of the Petroleum
Exploration Society of New York. Mr. Reinhardt also serves as a
director of Mallon Resources Corporation, a NASDAQ traded
petroleum and mining company, as well as several privately
held companies. Mr. Reinhardt was appointed as a director of
the Company by the Board at a meeting held December 11, 1992.
Compliance with Section 16(a) Filing Requirements
- -------------------------------------------------
To the Company's knowledge, instances of failure to
file reports with respect to reportable transactions during
the year ended December 31, 1995, as required by Section 16(a)
of the Exchange Act are as follows:
Known
Reports Number of Failure to Number of
Reporting Person Filed Late Transactions File Form Transactions
- ---------------------- ---------- ------------ ---------- ------------
R. Thomas Fetters, Jr. Form 4 1 Form 4 1 (b)
E. McIlhenny, Jr. - - Form 4 1 (b)
Pamela G. Shanks (a) - - Form 4 1 (b)
Roy Chase - - Form 4 1 (b)
M. W. Miller, Jr. Form 4 1 - -
___________
(a) A former officer of the Company and wife of Edmund McIlhenny, Jr.,
a director of the Company.
(b) Did not file upon resignation as an officer of the Company.
All other reporting persons who are officers or directors of
the Company have provided the Company with written representations
that no Form 5 filing was required in that all reportable transactions
were timely filed on the appropriate forms.
Executive Compensation
- ----------------------
The following table sets forth information regarding the total
compensation of the Chief Executive Officer and each of the four
most highly compensated executive officers of the Company at the
end of 1995, as well as the total compensation paid to each such
individual for the Company's two previous fiscal years. Each of
the named individuals has held his/her respective office throughout
the entire fiscal year.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
--------------------- ------------------ ----------------
(1) (2) (3) (4) (5) (6)
Other Restricted
Name and Annual Stock Options/ LTIP All Other
Principal Salary Bonus Compen- Awards SARs Payout Compen-
Position Year ($) ($) sation ($) (#) ($) sation ($)
- ------------------------ ---- ------ ----- ------ --------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
M.W. Miller, Jr. 1995 150,000 -- -- -- -- -- --
Chairman and 1994 150,000 -- -- -- 1,625,000 -- --
Chief Executive Officer 1,875,000
525,000
1993 168,750 -- -- -- -- -- --
John T. Chandler(7)(8) 1995 150,000 -- -- -- 120,000 -- --
President; Chairman and 1994 150,000 -- -- -- 470,000 -- --
Chief Executive Officer 1,025,000 0
of XCL-China, Ltd. 100,000
1993 168,750 -- -- -- -- -- --
David A. Melman (9) 1995 150,000 -- -- -- 300,000 -- --
Executive Vice President 1994 150,000 -- -- -- 470,000 -- --
General Counsel and 1,025,000 0
Secretary 100,000
1993 168,750 -- -- -- -- -- --
Pamela G. Shanks (10) 1995 128,600 -- -- -- -- -- --
Vice President-Finance 1994 128,600 -- -- -- -- -- --
Chief Financial Officer 500,000
and Treasurer 21,400
1993 144,050 -- -- -- -- -- --
Danny M. Dobbs 1995 116,250 -- -- -- -- -- --
Executive Vice President 1994 110,000 -- -- -- 148,000 -- --
and Chief Operations 1993 106,083 -- -- -- -- -- --
Officer
</TABLE>
- ------------
(1) Prior to April 1, 1994, each executive was employed under
an agreement with the Company which provided that if
his/her employment was terminated prior to the
agreement's termination under certain circumstances
he/she would receive compensation for thirty months. Such
employment agreements were surrendered, effective April 1,
1994, in exchange for stock purchase warrants (see "Employment
Agreements" below).
(2) Effective March 30, 1994, the Management Incentive Plan
was terminated.
(3) Excludes the cost to the Company of other compensation
that, with respect to any above named individual, does
not exceed the lesser of $50,000 or 10 percent of such
individual's salary and bonus.
(4) Although the Company's Long Term Stock Incentive Plan permits
grants of restricted stock and stock appreciation rights, no
grants of those incentive awards have been made.
(5) The first amount represents awards of stock options
granted under the Company's Long Term Stock Incentive
Plan. The second amount represents the number of five-year
stock purchase warrants, received upon surrender of an
employment agreement with the Company, determined based
upon a formula whereby each of the individuals were to be
offered a warrant, based upon the length of time of
employment with the Company, for a maximum of two shares of
Common Stock for each dollar of compensation remaining to
be paid to such individual under his or her agreement (based
upon the product of his or her highest monthly
base salary and the number of months remaining under his or
her contract), at an exercise price of $1.25 per share.
The third number represents five-year stock purchase
warrants, received for each dollar of salary reduction
for the fifteen-month period commencing January 1, 1993
through March 31, 1994, determined based on the same
formula and at the same exercise price used in the granting
of warrants upon surrender of the employment agreements.
(See "Employment Agreements" below.)
(6) No payments have been made in respect of the Company's
Shareholder Value Performance Plan. The measurement
period for compensation under such plan ended on December
31, 1993, and the Plan was terminated pursuant to its terms.
(7) XCL-China Ltd. is a wholly owned subsidiary of the Company
which manages the Company's operations in the PRC.
(8) Mr. Chandler was granted 120,000 options to replace
options granted in 1984 which expired unexercised in
December 1994.
(9) Mr. Melman was granted 120,000 options to replace options
granted in 1984 which expired unexercised in December
1994, and 180,000 options to replace options granted in
1985 which expired unexercised in March 1995.
(10) Ms. Shanks commenced employment on October 8, 1992.
As part of her employment package she was awarded 360,000
options. Effective February 1, 1996, Ms. Shanks resigned as
an officer of the Company.
Stock Options
- -------------
The Company currently maintains seven stock option
plans which were adopted by shareholders at various times
commencing in 1985. All of the plans are administered by the
Compensation Committee and provide for the granting of options to
purchase shares of Common Stock to key employees and
directors of the Company, and certain other persons who are
not employees of the Company but who from time to time provide
substantial advice or other assistance or services to the
Company.
The most recent stock option plan was adopted on June
2, 1992, by shareholders who approved the Long Term Stock
Incentive Plan ("LTSIP"). The LTSIP was adopted with the view of
conforming the Company's plans to certain regulatory
changes adopted by the SEC and affording holders of previously
granted options the opportunity to exchange their options for
equivalent options under the LTSIP.
The LTSIP authorizes the Compensation Committee to
grant stock options intended to qualify as "incentive stock
options" under Section 422 of the Internal Revenue Code of
1986 as amended ("ISOs"), options which do not qualify under
such tax provision ("NSOs"), "ROs" (i.e., the granting of
additional options, where an employee exercises an option with
previously owned stock, covering the number of shares tendered as
part of the exercise price), "RSAs" (i.e., stock awarded
to an employee that is subject to forfeiture in the event
of a premature termination of employment, failure of the Company
to meet certain performance objectives or other conditions),
"PUs" (i.e., share-denominated units credited to the
employee's account for delivery or cash-out at some future
date based upon performance criteria to be determined by the
Compensation Committee) and "tax withholding" (i.e., where the
employee has the option of having the Company withhold shares on
exercise of an award to satisfy tax withholding
requirements).
The LTSIP also formally incorporates resolutions
previously adopted by the Board regarding one-time grants of
NSOs covering 100,000 shares to each new non-employee director
upon his taking office.
The Compensation Committee develops administration
guidelines from time to time which define specific eligibility
criteria, the types of awards to be employed, and the value of
such awards. Specific terms of each award, including minimum
performance criteria which must be met to receive payment, are
provided in individual award agreements granted each award
recipient. Key employees and other individuals who the
Committee deems may provide a valuable contribution to the
success of the Company and its affiliates will be eligible to
participate under the Plan. Award agreements generally
contain change-in-control provisions.
Under the LTSIP, the Compensation Committee
determines the option price of all NSOs and ISOs; provided,
however, in the case of ISOs, the option price shall not be
less than the fair market value of the Common Stock on the date
of grant. Such "fair market value" is the average of the high
and low prices of a share of Common Stock traded on the relevant
date, as reported on the American Stock Exchange, or other national
securities exchange or an automated quotation system.
On July 1, 1994, the shareholders approved amendments
to the LTSIP to increase the number of shares reserved for
issuance under the Plan by an additional 1,500,000 shares to an
aggregate of 16.5 million and corresponding amendment to the
Plan increasing the limitation on the total number of shares
subject to options that can be granted to directors to 13,200,000
of which 3,300,000 shares may be granted to non-employee directors.
The closing price of the Company's Common Stock on
the American Stock Exchange on April 10, 1996 was $.3125
per share.
The following tables set forth, for those persons
named in the "Summary Compensation Table" information on
stock options granted during 1995 and all stock options
outstanding as of December 31, 1995.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Potential Realizable Value
at Assumed Annual Rates
Individual Grants of Stock Price Appreciation
---------------------------------------------- ----------------------------
(a) (b) (c) (d) (e) (f) (g )
% of Total
Options/
SARs
Granted to
Options/ Employees in Exercise or
SARs Fiscal Base Price Expiration
Name Granted(#) Year (3) ($/Share) Date 0%($) 5%($) 10%($)
- ---------------------- ---------- ------------ ----------- ----------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Marsden W. Miller, Jr. -- 0% -- -- -- -- --
John T. Chandler 120,000 (1) 18% 1.25 03/31/99 (52,500) 8,817 936,324
David A. Melman 120,000 (2) 44% 1.25 03/31/99 (52,500) 8,817 936,324
180,000 (2) 1.25 06/13/05 (157,500) (115,050) (49,922)
Pamela G. Shanks ($) -- 0% -- -- -- -- --
Danny M. Dobbs -- 0% -- -- -- --
</TABLE>
_________________
(1) Mr. Chandler was granted 120,000 options to replace
options granted in 1984 which expired unexercised in
December 1994.
(2) Mr. Melman was granted 120,000 options to replace options
granted in 1984 which expired unexercised in December
1994, and 180,000 options to replace options granted in
1985 which expired unexercised in March 1995.
(3) Represents the percentage of all options and warrants
granted to employees in the fiscal year.
(4) Effective February 1, 1996, Ms. Shanks resigned as an
officer of the Company.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises In Last Fiscal Year and
Fiscal Year-End Option/SAR Values
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Shares Underlying Unexercised in-the-Money
Acquired Options/SARs at Options/SARs at
on Value Fiscal Year-End(#) Fiscal Year-End($)(3)
Exercise Realized -------------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Marsden W. Miller, Jr. -- -- 4,483,333(1) 541,667 -- --
-- -- 2,400,000(2) -- -- --
John T. Chandler -- -- 973,333(1) 156,667 -- --
-- -- 1,125,000(2) -- -- --
David A. Melman -- -- 973,333(1) 156,667 -- --
-- -- 1,125,000(2) -- -- --
Pamela G. Shanks (4) -- -- 360,000(1) -- -- --
-- -- 521,400(2) -- -- --
Danny M. Dobbs -- -- 261,666(1) 49,334 -- --
-- -- 582,000(2) -- -- --
</TABLE>
___________
(1) Represents options exercisable under the Company's Long
Term Stock Incentive Plan at December 31, 1995.
(2) Represents the aggregate number of five-year stock
purchase warrants, received (a) upon surrender of an
employment agreement with the Company, determined based
upon a formula whereby each of the individuals were to be
offered a warrant, based upon the length of time of
employment the Company, for a maximum of two shares of
Common Stock for each dollar of compensation remaining to be
paid to such individual under his or her agreement (based
upon the product of his or her highest monthly
base salary and the number of months remaining under his or
her contract), at an exercise price of $1.25 per share,
and (b) for each dollar of salary reduction for the
fifteen-month period commencing January 1, 1993 through
March 31, 1994, determined based on the same formula
and at the same exercise price used in the granting of
warrants upon surrender of the employment agreements. (See
"Employment Agreements" below.)
(3) At December 31, 1995, the Company's Common Stock price
was lower than the option exercise prices.
(4) Effective February 1, 1996, Ms. Shanks resigned as an
officer of the Company.
These options were all awarded under the Company's Stock
Option Plans described above.
Section 401(k) Plan
- -------------------
In 1989, the Company adopted an employee benefit plan
under Section 401(k) of the Internal Revenue Code for the
benefit of employees meeting certain eligibility requirements.
The Company has obtained a favorable determination from the
Internal Revenue Service regarding the tax favored status of
the 401(k) plan. Employees can contribute up to 10 percent of
their compensation. The Company, at its discretion and subject to
certain limitations, may contribute up to 75 percent of the
contributions of each participant.
Compensation of Directors and Other Arrangements
- ------------------------------------------------
The Company reimburses its directors for their travel and
lodging expenses incurred in attending meetings of the Board of
Directors. Effective January 1, 1990, directors (other than
Messrs. Hummel and Palliser and those directors who are
officers of the Company) were paid an annual retainer of
$18,000 plus a fee of $1,000 for each Board meeting attended. In
addition, such directors were paid a fee of $1,000 for each
committee meeting attended.
In April 1994, the Company entered into separate
consulting agreements with two directors of the Company, upon
their becoming directors. Each of the agreements is
terminable by each of the parties thereto upon written notice
and provides that the individuals will render consulting
services to the Company in their respective areas of
expertise. Pursuant to the terms of the agreements, each of
the directors will be entitled to receive compensation at the
rate of $50,000 per annum, which includes the compensation
they would otherwise be entitled to receive as directors and
for attending meetings of the Board. In addition, pursuant to
the terms of the LTSIP, each were granted stock options for
100,000 shares of Common Stock exercisable at $1.25 per share.
During 1995 all regular employees were provided
health insurance, a portion of the premium for which is paid by
the Company, and life and disability insurance based upon a
factor of the employee's base salary.
Employment Agreements; Termination of Employment and Change-in-
- ---------------------------------------------------------------
Control Arrangements
--------------------
Effective April 1, 1994, Messrs. M.W. Miller, Jr.,
J.T. Chandler, D.A. Melman, D.M. Dobbs, R.T. Fetters, Jr.,
R.C. Cline, P.L. Dragon, and Ms. P.G. Shanks, in their
capacities as executive and administrative officers of the
Company and its various subsidiaries agreed to surrender their
employment agreements in consideration of the issuance of
five year warrants to purchase Common Stock at an exercise
price of $1.25 per share, subject to customary anti-dilution
adjustments. The number of warrants issued to such
individuals was determined based upon a formula whereby each of
the individuals was offered a warrant to purchase, based upon
the length of time of employment with the Company, a maximum
of two shares of Common Stock for each dollar of compensation
remaining to be paid to such individual under his or her agreement
(based upon the product of his or her highest monthly base salary
and the number of months remaining under his or her agreement).
Accordingly, Mr. Miller received warrants to purchase 1,875,000
shares; Mr. Chandler, 1,025,000 shares; Mr. Melman, 1,025,000 shares;
Mr. Fetters, 875,000 shares; Mr. Dobbs, 575,000 shares; Mr. Dragon,
315,000 shares; Mr. Cline, 250,000 shares; and Ms. Shanks, 500,000 shares.
Effective January 1, 1989, the Company adopted a
policy addressing severance upon separation from the Company.
Under this policy benefits due upon a "change-in-control" as
therein defined, range from three months salary for employees
with less than one year of service to twenty-four months salary
for employees with more than ten years of service.
Report on Repricing of Options/SARs
- ------------------------------------
During the fiscal year ended December 31, 1995,
there were no repricings of stock options awarded to any of
the named executive officers.
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
For the year ended December 31, 1995, the
following nonexecutive directors of the Company, served as
members of the Compensation Committee of the Board of Directors:
Messrs. M. Palliser (Chairman), A.W. Hummel, Jr., F. Hofheinz and
F.J. Reinhardt, Jr. None of the members of the Compensation
Committee were formerly, nor are any members currently,
officers or employees of the Company or any of its subsidiaries.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of
Directors ("Committee") establishes the general compensation
policies of the Company, establishes the compensation plans and
specific compensation levels for executive officers and certain
other managers, and administers the Stock Option Plans and Long
Term Stock Incentive Plan. The Committee currently consists of four
independent, non-employee directors: Messrs. M. Palliser, who
serves as Chairman, Fred Hofheinz, Arthur W. Hummel, Jr. and
Francis J. Reinhardt, Jr.
Compensation Policies and Philosophy
- ------------------------------------
The Committee has determined that the compensation
program of the Company should not only be adequate to attract,
motivate and retain executives, key employees and other
individuals who the Company believes may make significant
contribution to the Company's results, but should also be
linked to the value delivered to shareholders as reflected in
the price of the Company's Common Stock.
The Committee believes that the cash compensation
of executive officers, as well as other key employees, should be
competitive with other similarly situated companies while,
within the Company, being fair and discriminating on the basis of
personal performance. In general, in establishing total cash
compensation for its executives, the Committee has taken into
account the median cash compensation of executives employed
by competitors including some of the companies reflected
in the peer group identified in the Performance Graph found
on page 84, which the Committee believes represent the Company's
most direct competition for executive talent. The Committee
receives recommendations from management as to executive
compensation and, in light of the Company's performance
and the economic conditions facing the Company, determines
appropriate compensation levels for recommendation to the Board
of Directors. The Committee does not assign relative weights
to individual factors and criteria used in determining
executive compensation and does not use quantifiable targets in
determining compensation. For 1995, the Company did not retain
the services of a compensation consulting firm.
Awards of stock options are intended both to
retain executives, key employees and other individuals who
the Company believes may make significant contributions to
the Company's results and to motivate them to improve long-
term stock market performance. Options are granted at or above
the prevailing market price and will have value only if the
price of the Company's Common Stock increases. Generally,
options have a term of ten years and vest one-third six months
after grant, one-third one year after grant and the remaining
onethird two years after grant.
Effective January 1, 1994, Section 162(m) of the Internal
Revenue Code of 1986 (the "Code") generally denies a tax
deduction to any publicly-held corporation for compensation
that exceeds $1 million paid to certain senior executives in a
taxable year, subject to an exception for "performance-based
compensation" as defined in the Code and subject to certain
transition provisions. Gains on the exercise of non-qualified
stock options granted through December 31, 1994, will be tax
deductible under the transition rules. Restricted stock
awards by definition granted after February 17, 1993, are not
deductible. At present the Committee does not intend to
recommend amendment to the Stock Option Plans to meet the
restrictive requirements of the Code.
The Committee believes that annual incentive
awards should be commensurate with performance. It further
believes that in order to meet this objective it needs to
have the ability to exercise its judgment or discretion to
evaluate performance against qualitative criteria. It is the
Committee's opinion that the benefits to the Company of the
use of a qualitative approach to the compensation of senior
executives such as the Chairman outweigh the non-material loss of
a portion of the deductions associated with that compensation.
On March 21, 1996, the Committee reviewed the Company's
1995 financial results and 1995 non-financial goals. The
Committee acknowledged that while financial goals were
negatively impacted by U.S. property write-downs, the non
financial goals, (consisting of development of the Zhao Dong
Block by drilling two successful wells and positioning the
Company to expand its participation in the Chinese energy
industry resulting from the July 17, 1995 agreement to
participate in a lubricating oil joint venture and the
December 14, 1995 letter agreement to participate in a coalbed
methane joint venture) had been met and exceeded.
Company Performance and Chief Executive Officer Compensation
- -------------------------------------------------------------
The Committee, in connection with determining the
appropriate compensation for Marsden W. Miller, Jr. as Chief
Executive Officer ("CEO"), took into account the financial
condition of the Company,including its liquidity requirements.
It determined that the CEO had been instrumental in causing the
Company to secure the lube oil joint venture and initial
agreements with the Coal Ministry to create the coalbed methane
joint venture. Taking into consideration the current cash
position and near-term requirements, the Committee determined
that cash was unavailable for either salary increase or bonus.
Compensation of Other Executive Officers
- ----------------------------------------
The Committee, in consultation with the CEO, applied the
information and other factors outlined above in reviewing and
approving the compensation of the Company's other executive
officers.
March 21, 1996 COMPENSATION COMMITTEE
Michael Palliser, Chairman
Arthur W. Hummel
Fred Hofheinz
Francis J. Reinhardt, Jr.
Shareholder Return Performance Presentation
- -------------------------------------------
Set forth below is a line graph comparing the percentage
change in the cumulative total shareholder return on the
Company's Common Stock against the AMEX Market Value Index for
the years 1991 through 1995, with a peer group selected by the
Company for the past five fiscal years. The peer group
consists of the same independent oil and gas exploration and
production companies used in last year's comparison, with the
exception of DeKalb Energy Company which was acquired by
Apache Corporation, namely: Alta Energy Corporation; Amerac
Energy Corporation (formerly Wolverine Exploration Company);
American Exploration Company; Bellwether Exploration Company;
Brock Exploration Corporation; Tom Brown, Inc.; Caspen Oil,
Inc.; Cobb Resources Corporation; Coda Energy, Inc.; Comstock
Resources, Inc.; Crystal Oil Company; Edisto Resources
Company; Energen Corporation; First Mississippi Corporation;
Forest Oil Corporation; Geodyne Resources, Inc.; Global
Natural Resources, Inc.; Goodrich Petroleum Corporation
(formerly Patrick Petroleum Company); Hallador Pete Company;
Hondo Oil & Gas Company; Kelley Oil & Gas Partners; Magellan
Petroleum Corporation; Maynard Oil Company; McFarland Energy,
Inc.; MSR Exploration Limited; Numac Energy, Inc.; Pacific
Enterprises; Penn Virginia Corporation; Plains Resources,
Inc.; Presidio Oil; Wainoco Oil Corporation; Wichita River
Oil; and Wiser Oil Company. The relevant information with
respect to the peer group was furnished by Standard & Poors
Compustat Service. The graph assumes that the value of the
investment in the Company's Common Stock and the peer group
stocks was $100 on January 1, 1990 and that all dividends were
reinvested.
[GRAPH]
1991 1992 1993 1994 1995
Return Return Return Return Return
------ ------ ------ ------ ------
XCL 34.62 69.23 34.62 50.00 25.00
Peer Group 79.34 63.77 77.72 77.47 97.86
AMEX 128.21 129.57 154.86 140.83 178.45
Certain Relationships and Related Transactions
- ----------------------------------------------
During 1994, the Company was sued in an action
entitled Kathy M. McIlhenny vs. The Exploration Company of
Louisiana, Inc. (15th Judicial District Court, Parish of
Lafayette, Louisiana, Docket No. 941845). Kathy McIlhenny,
former wife of a director of the Company, has asserted a
claim in the aggregate amount of approximately $.5 million in
respect of compensation for certain services alleged to
have been performed on behalf of the Company and under an alleged
verbal employment agreement and, by amendment, asserted a claim
for payments arising from purported rights to mineral interests.
The Company believes that such claim is without merit and
rejects the existence of any such alleged agreement.
As a matter of policy the Company approves
all transactions involving insiders through the majority vote
of disinterested directors.
PROPOSAL 2 -APPROVAL OF
AMENDMENT TO ARTICLE FOURTH OF THE CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF THE COMPANY
On March 21, 1996, the Company's Board of Directors
unanimously adopted a resolution recommending that the
Company's shareholders adopt an amendment to the Company's
Certificate of Incorporation to increase the authorized Common
Stock of the Company from 350,000,000 shares to 500,000,000
shares, par value $.01 per share, and increase the authorized
Preferred Stock of the Company from 1,200,000 shares to
2,400,000 shares, par value $1.00 per share.
The proposed amendment will be submitted to the
shareholders for approval at the Meeting in substantially the
following form:
"That Article FOURTH of the Certificate
of Incorporation of the Corporation be and the same
hereby is amended to provide that the total number
of shares and the par value, if any, of each class of
stock which the Corporation is authorized to issue shall
be 2,400,000 shares of Preferred Stock, par value $1.00 per
share, and 500,000,000 shares of Common Stock, par value of
$0.01 per share, and that the Board if Directors be and
hereby is authorized to issue all or any part of the
unissued shares of Preferred Stock and Common Stock thus
authorized without further action by the stockholders,
unless such action is required by law or by the rules of
any stock exchange on which the Corporation's securities
are then listed."
As of April 10, 1996, there were reserved an aggregate of
(i) 14,875,334 shares of Common Stock subject to outstanding
options; (ii) 12,584,124 shares issuable upon conversion of
the Company's outstanding Series A Preferred Stock; (iii)
34,848,229 shares issuable upon exercise of the Company's
outstanding warrants; (iv) 3,940,244 shares issuable upon
redemption of the Company's outstanding Series B Preferred
Stock; and (v) 18,036,764 shares issuable in connection with
contractual obligations. Under the terms of certain outstanding
securities and warrants, which are not respectively convertible
or exercisable until after November 30, 1996, the Company is
required to reserve a sufficient number of shares of Common
Stock to enable such securities to be so converted and exercised.
Currently, the Company has an insufficient number of shares
available to satisfy these obligations. If the Company fails
to have such shares duly authorized or otherwise available for
issuance, the Company will be subject to certain penalties.
The proposed amendment would increase the number
of authorized shares of Preferred Stock of the Company by
1,200,000 to 2,400,000 shares, however, would not affect the
right of the Board of Directors to issue Preferred Stock in
one or more series having such designations, preferences, and
relative rights, qualifications and limitations as it may fix by
resolution at the time of issuance. The Company is seeking to
increase its authorized Preferred Stock in order to among the
other reasons discussed below, to facilitate the payment of
dividend on the Series A and E Preferred Stock in kind as
permitted under such Stock in lieu of cash dividends. The
shareholders have previously authorized the Board to issue all of
the presently authorized but unissued shares of Common Stock
and Preferred Stock of the Corporation, and it is proposed
that such authorization be extended to include the additional
shares of Common Stock and Preferred Stock proposed to be
authorized.
The Board of Directors believes that it would
be desirable to have additional shares of Common and Preferred
Stock that would be authorized by the proposed amendment
available for issuance in connection with possible future
stock dividends or splits, financing transactions,
acquisitions of other companies or business properties,
employee benefit plans and other proper corporate purposes.
Having such additional authorized shares available will give
the Company greater flexibility by permitting such shares to be
issued without the expense or delay of a special meeting of the
shareholders. Such delay might deprive the Company of the
flexibility the Board views as important in effectively using
the Company's shares. These additional shares of Common and
Preferred Stock will be available without further action by
the shareholders, unless such action is required by applicable
law or the rules of the American Stock Exchange or The London
Stock Exchange Limited (the "London Stock Exchange"). Such
rules require stockholder approval as a prerequisite to the
listing of shares in several instances, including for certain
stock option plans, and under the rules of the American Stock
Exchange, for acquisition transactions where the present or
potential issuance of shares could result in an increase in
the number of shares of Common Stock outstanding of 20 percent or
more.
The Board currently has no agreements or arrangements for
the future issuance of additional shares of Common Stock,
other than the issuance of shares pursuant to the exercise of
employee stock options or other stock-related employee benefit
plans or upon the conversion or exercise of outstanding
convertible and redeemable securities, options and warrants.
The additional shares of Common Stock for which
authorization is sought would become part of the existing
class of Common Stock and, when issued, would have the same
rights and privileges as the shares of Common Stock presently
outstanding. The holders of Common Stock do not have
preemptive rights to subscribe for any of the Company's
securities and will not have any such rights to subscribe for
the additional Common Stock proposed to be authorized. If the
proposed amendment is adopted by the shareholders, each
certificate representing shares of Common Stock, par value
$.01 per share, issued and outstanding or held in the treasury of
the Company will represent the same number of shares of Common
Stock having a par value of $0.01 per share.
Certificates representing outstanding shares of Common Stock
should be retained by the holder and should not be forwarded to
the Company or its transfer agent.
The increase in the number of authorized shares of Common or
Preferred Stock is not designed to deter or prevent a change
in control of the Company. However, under certain
circumstances the issuance of additional shares of Common or
Preferred Stock could be used to make a change in control more
difficult if the Board caused such shares to be issued to
holders who might side with the Board in opposing a takeover
bid that the Board determines is not in the best interests of
the Company and its stockholders. In addition, the
availability of the additional shares might theoretically
discourage an attempt by another person or entity to acquire
control of the Company through the acquisition of a
substantial number of shares of Common or Preferred Stock,
since the issuance of such shares could dilute the stock
ownership of such person or entity. Pursuant to the rules of
the London Stock Exchange, no issue of shares of Common Stock
will be made which would effectively alter the control of the
Company without prior approval of the shareholders in general
meeting. Pursuant to the rules of the American Stock Exchange
the sale or issuance of Common Stock (or securities
convertible into Common Stock) including securities reserved
for issuance upon exercise of certain options to management,
will require shareholder approval in certain cases as a
prerequisite to listing such securities on such Exchange.
Wholly apart from this proposed amendment, the
Board could issue a series of Preferred Stock with
rights and preferences that might similarly impede or
discourage proposed mergers, tender offers, or attempts
to gain control of the Company. In addition, the Certificate
of Incorporation contains a so-called "fair price" provision and
provides for a classified Board each of which could be viewed as
discouraging some attempts to obtain control of the Company.
Under the "fair price" provision, an affirmative vote of 67 percent
or more of the Company's voting stock is required for business
combinations between the Company and an "interested
stockholder" unless the business combination is approved by
the Board of Directors or a minimum price is received by all
stockholders and certain other conditions are met.
The Board has no present intention of issuing additional
shares of Common or Preferred Stock for any of the purposes
described in the two immediately preceding paragraphs.
The Board of Directors recommends that shareholders vote FOR
Proposal 2. The affirmative vote of the holders of a
majority of the shares of Common, Series A Preferred Stock,
and Series B Preferred Stock outstanding and entitled to vote at
the Meeting, voting together as a single class, is required to
approve this proposal. Consequently, any shares not voted
(whether by abstention or broker non-votes) have the same
effect as votes against Proposal 2. Unless otherwise
instructed the proxies will be voted "FOR" approval of the
proposal.
INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the
recommendation of the Audit Committee, appointed the firm of
Coopers & Lybrand to serve as independent accountants of the
Company for the fiscal year ending December 31, 1996. Coopers &
Lybrand has served as independent accountants of the Company
since its inception and is considered by management of the
Company to be well qualified. The Company has been advised by
that firm that neither it nor any member thereof has any
financial interest, direct or indirect, in the Company or any of
its subsidiaries in any capacity.
One or more representatives of Coopers & Lybrand will be
present at the Meeting, will have an opportunity to make a
statement if he or she desires to do so and will be available to
respond to appropriate questions.
SHAREHOLDERS' PROPOSALS FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
Pursuant to Rule 14a-8(a)(3)(i) promulgated by the U.S.
Securities and Exchange Commission, proposals of shareholders
intended to be presented at the 1997 Annual Meeting of
Shareholders must be received by the Company a reasonable time
prior to the solicitation of proxies for such meeting to be
eligible for inclusion in the Company's proxy statement and
proxy relating to that meeting. Assuming the 1997 annual
meeting of shareholders is held on May 20, 1997, as provided in
the Bylaws, proposals of shareholders intended to be
presented at that meeting should be received by the Company
prior to January 21, 1997.
OTHER BUSINESS
The Board of Directors of the Company knows of no other
matters to come before the Meeting, other than those set forth
herein and in the accompanying Notice of Annual Meeting of
Shareholders. However, if any other matters should properly
come before the Meeting, it is the intention of the persons
named in the accompanying proxies to vote such proxies as in
their discretion they may deem advisable.
ANNUAL REPORT
The Annual Report of the Company for the fiscal
year ended December 31, 1995, has been mailed to shareholders on
or about May [13], 1996. The Annual Report does not form any
part of the material for solicitation of proxies.
ADDITIONAL INFORMATION
The form of proxy and Proxy Statement have been
approved by the Board of Directors and are being mailed and
delivered to shareholders by its authority.
Yours sincerely,
MARSDEN W. MILLER, JR. Chairman
and Chief Executive Officer
May [13], 1996
<PAGE>
XCL LTD.
(a Delaware corporation)
COMMON STOCK PROXY
FOR THE ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD JUNE 26, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Marsden W. Miller, Jr.
and David A. Melman, and either of them, attorneys and proxies,
with full power of substitution, and authorizes them to vote
all shares of Common Stock of XCL Ltd. (the "Company") held of
record by the undersigned on May 3, 1996, at the Annual
Meeting of Shareholders to be held in the Offshore Room of
the Petroleum Club of Lafayette, located at 111 Heymann
Boulevard, Lafayette, Louisiana Wednesday, June 26, 1996 at
10:00 AM, Central Daylight Savings Time, and any adjournments
thereof, on the matters set forth on the reverse side.
THE MATTERS TO BE VOTED UPON, THE INSTRUCTIONS AND
A SPACE FOR YOUR VOTE AND SIGNATURE ARE SET FORTH
ON THE REVERSE SIDE.
PLEASE VOTE, SIGN AND RETURN PROMPTLY.
If this proxy is properly executed, the shares of Common Stock
represented thereby will be voted for items 1 and 2 in accordance
with the instructions on this proxy. If no instructions are
given, such shares will be voted FOR the election of all nominees
for director, FOR approval of the amendment to the Company's
Certificate of Incorporation and in the discretion of the proxies
upon any other matter which may properly come before the meeting.
Proposal 1. The election of two (2) directors to be designated as
Class III directors to serve a three-year term until
the 1999 Annual Meeting of Shareholders, to wit:
John T. Chandler and Fred Hofheinz.
[ ] FOR ALL NOMINEES
[ ] WITHHOLD FOR ALL NOMINEES
TO WITHHOLD VOTE on any nominee write the nominee's name
in the space below.
______________________________________________________________
Proposal 2. The approval of the amendment to Article FOURTH of the
Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 350,000,000
to 500,000,000 shares, and to increase the number of
authorized shares of Preferred Stock from 1,200,000 to
2,400,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. In their discretion, to vote upon such other business as
may properly come before the meeting.
Receipt is acknowledged of the Proxy Statement dated May [13], 1996.
THIS PROXY MUST BE SIGNED AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give full title as such.
If the signer is a corporation, please sign full corporate name
by a duly authorized officer.
___________________________________
DATE
___________________________________
SIGNATURE
___________________________________
SIGNATURE
I plan to attend the Annual Meeting of Shareholders: Yes [ ] No [ ]
<PAGE>
XCL LTD.
(a Delaware corporation)
SERIES A PREFERRED
STOCK PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Marsden W. Miller, Jr.
and David A. Melman, and either of them, attorneys and proxies,
with full power of substitution, and authorizes them to vote all
shares of Series A Preferred Stock of XCL Ltd. (the "Company")
held of record by the undersigned on May 3, 1996, at the Annual
Meeting of Shareholders to be held in the Offshore Room of the
Petroleum Club of Lafayette, located at 111 Heymann Boulevard,
Lafayette, Louisiana Wednesday, June 26, 1996 at 10:00 AM,
Central Daylight Savings Time, and any adjournments thereof, on
the matters set forth on the reverse side.
THE MATTERS TO BE VOTED UPON, THE INSTRUCTIONS AND
A SPACE FOR YOUR VOTE AND SIGNATURE ARE SET FORTH
ON THE REVERSE SIDE.
PLEASE VOTE, SIGN AND RETURN PROMPTLY.
If this proxy is properly executed, the shares of Series A
Preferred Stock represented thereby will be voted for items 1
and 2 in accordance with the instructions on this proxy. If no
instructions are given, such shares will be voted FOR the
election of all nominees for director, FOR approval of the
amendment to the Company's Certificate of Incorporation and in
the discretion of the proxies upon any other matter which may
properly come before the meeting.
Proposal 1. The election of two (2) directors to be designated
as Class III directors to serve a three-year terms
until the 1999 Annual Meeting of Shareholders, to wit:
John T. Chandler and Fred Hofheinz.
[ ] FOR ALL NOMINEES
[ ] WITHHOLD FOR ALL NOMINEES
TO WITHHOLD VOTE on any nominee write the nominee's name
in the space below.
________________________________________________________
Proposal 2. The approval of the amendment to Article FOURTH of
the Company's Certificate of Incorporation to increase
the number of authorized shares of Common Stock from
350,000,000 to 500,000,000 shares, and to increase the
number of authorized shares of Preferred Stock from
1,200,000 to 2,400,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. In their discretion, to vote upon such other business as
may properly come before the meeting.
Receipt is acknowledged of the Proxy Statement dated May [13], 1996.
THIS PROXY MUST BE SIGNED AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give full title as such.
If the signer is a corporation, please sign full corporate name
by a duly authorized officer.
___________________________________
DATE
___________________________________
SIGNATURE
___________________________________
SIGNATURE
I plan to attend the Annual Meeting of Shareholders: Yes [ ] No [ ]
<PAGE>
XCL LTD.
(a Delaware corporation)
SERIES B PREFERRED
STOCK PROXY
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 26, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Marsden W. Miller, Jr.
and David A. Melman, and either of them, attorneys and proxies,
with full power of substitution, and authorizes them to vote all
shares of Series B Preferred Stock of XCL Ltd. (the "Company")
held of record by the undersigned on May 3, 1996, at the Annual
Meeting of Shareholders to be held in the Offshore Room of the
Petroleum Club of Lafayette, located at 111 Heymann Boulevard,
Lafayette, Louisiana Wednesday, June 26, 1996 at 10:00 AM,
Central Daylight Savings Time, and any adjournments thereof, on
the matters set forth on the reverse side.
THE MATTERS TO BE VOTED UPON, THE INSTRUCTIONS AND
A SPACE FOR YOUR VOTE AND SIGNATURE ARE SET FORTH
ON THE REVERSE SIDE.
PLEASE VOTE, SIGN AND RETURN PROMPTLY.
If this proxy is properly executed, the shares of Series B Preferred Stock
represented thereby will be voted for items 1 and 2 in accordance with the
instructions on this proxy. If no instructions are given, such shares
will be voted FOR the election of all nominees for director, FOR
approval of the amendment to the Company's Certificate of Incorporation
and in the discretion of the proxies upon any other matter which may
properly come before the meeting.
Proposal 1. The election of two (2) directors to be designated
as Class III directors to serve a three-year terms
until the 1999 Annual Meeting of Shareholders, to wit:
John T. Chandler and Fred Hofheinz.
[ ] FOR ALL NOMINEES
[ ] WITHHOLD FOR ALL NOMINEES
TO WITHHOLD VOTE on any nominee write the nominee's name in
the space below.
_____________________________________________________________
Proposal 2. The approval of the amendment to Article FOURTH of
the Company's Certificate of Incorporation to increase
the number of authorized shares of Common Stock from
350,000,000 to 500,000,000 shares, and to increase the
number of authorized shares of Preferred Stock from
1,200,000 to 2,400,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. In their discretion, to vote upon such other business as
may properly come before the meeting.
Receipt is acknowledged of the Proxy Statement dated May [13], 1996.
THIS PROXY MUST BE SIGNED AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give full title as such.
If the signer is a corporation, please sign full corporate name
by a duly authorized officer.
___________________________________
DATE
___________________________________
SIGNATURE
___________________________________
SIGNATURE
I plan to attend the Annual Meeting of Shareholders: Yes [ ] No [ ]
