<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Maxus Energy Corporation
(Name of Registrant as Specified in its Charter)
Maxus Energy Corporation
(Name of Person(s) Filing Proxy Statement)
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(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] 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.
<PAGE>
MAXUS
NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of the Corporation will be held at the
Plaza of the Americas Hotel, 650 North Pearl Street, Dallas, Texas, on
Wednesday, May 11, 1994 at 10:00 a.m., Dallas Time. The list of stockholders
entitled to vote at the meeting will be open to the examination of any
stockholder during ordinary business hours for a period of ten days prior to
the meeting at the Corporation's offices located at 717 North Harwood Street,
Dallas, Texas. Such list will also be produced at the time and place of the
meeting and be kept open during the meeting for the inspection by any
stockholder who may be present. The purposes for which the meeting is to be
held are as follows:
1. To elect four directors to serve for three-year terms expiring in
1997;
2. To ratify the appointment of Price Waterhouse as independent
accountants for 1994;
3. To act upon a stockholder proposal requesting that the Corporation
prepare a report regarding the CERES Principles;
4. To transact such other business as may properly come before the Annual
Meeting.
Holders of record of the Corporation's Common Stock and $4.00 Cumulative
Convertible Preferred Stock at the close of business on March 14, 1994 are
entitled to notice of and to vote at the Annual Meeting.
March 22, 1994
BY ORDER OF THE BOARD OF DIRECTORS
H. R. SMITH
Secretary
MAXUS ENERGY CORPORATION
717 North Harwood Street, Dallas, Texas 75201
Telephone: 214/953-2000
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE DATE AND SIGN
THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED. ANY PERSON GIVING A
PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS EXERCISE AND, IF
PRESENT AT THE ANNUAL MEETING, MAY WITHDRAW IT AND VOTE IN PERSON. ATTENDANCE
AT THE ANNUAL MEETING IS LIMITED TO STOCKHOLDERS, THEIR PROXIES AND INVITED
GUESTS OF THE CORPORATION. STOCKHOLDERS WHOSE SHARES ARE HELD IN STREET NAME
MUST PRESENT A LETTER FROM THEIR BROKERS OR NOMINEES OR BRING COPIES OF ACCOUNT
STATEMENTS VERIFYING THEIR OWNERSHIP OF THE CORPORATION'S VOTING STOCK AT THE
CLOSE OF BUSINESS ON MARCH 14, 1994.
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PROXY STATEMENT
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INTRODUCTION
The Board of Directors of Maxus Energy Corporation (the "Corporation") is
soliciting proxies to be voted at the Annual Meeting of Stockholders to be held
in Dallas, Texas on May 11, 1994 and at any adjournment thereof. This Proxy
Statement and the enclosed proxy are first being mailed to stockholders on or
about March 22, 1994 in connection with this solicitation.
VOTING
This proxy solicitation is intended to afford holders of the Common Stock,
$1.00 par value (the "Common Stock") and holders of the $4.00 Cumulative
Convertible Preferred Stock (the "$4.00 Preferred Stock") of the Corporation
("stockholders") the opportunity to vote on the election of directors nominated
by the Corporation's Board of Directors (the "Board"), on certain other matters
described in this Proxy Statement and in respect of such other matters, if any,
as may properly come before the Annual Meeting.
At the close of business on March 14, 1994, the record date for determining
stockholders entitled to notice of and to vote at the Annual Meeting, the
Corporation had outstanding 134,372,471 shares of Common Stock and 4,358,658
shares of $4.00 Preferred Stock, each share of which is entitled to one vote at
the Annual Meeting. A majority of such outstanding shares of Common Stock and
$4.00 Preferred Stock is necessary to provide a quorum at the Annual Meeting.
Each proxy provides space for a stockholder to withhold voting for any or all
of the Board's nominees or to abstain from voting for any proposal if the
stockholder chooses to do so. Other than the election of directors, which
requires a plurality of the votes cast, each matter to be submitted to the
stockholders requires the affirmative vote of a majority of the votes cast at
the meeting. Under the By-Laws of the Corporation (the "By-Laws") and Delaware
law, for purposes of determining the number of votes cast with respect to any
voting matter, only those cast "for" or "against" are included. Abstentions and
broker non-votes are counted only for purposes of determining whether a quorum
is present at the meeting.
Any proxy given may be revoked either by a written notice duly signed and
delivered to the Secretary of the Corporation prior to the exercise of the
proxy, by execution of a subsequent proxy or by voting in person at the Annual
Meeting. Where a stockholder's proxy specifies a choice with respect to a
voting matter, the shares will be voted accordingly. If no such specification
is made, the shares will be voted for the Board's nominees for director
identified herein, for ratification of the appointment of the Corporation's
independent accountants and against the approval of the stockholder proposal
requesting that the Corporation prepare a report regarding the CERES
Principles.
ITEM 1--ELECTION OF DIRECTORS
Except for any director elected by the holders of the Corporation's $9.75
Cumulative Convertible Preferred Stock (the "$9.75 Preferred Stock") as
hereinafter described, the By-Laws provide that the directors be classified
into three classes. The directors of each class serve for terms of three years
and until their successors are elected and qualified.
Upon election of directors at the 1994 Annual Meeting, Darrell L. Black,
whose current term expires at the Annual Meeting, will retire as a director of
the Corporation pursuant to the Board's retirement policy that a director shall
not be nominated or stand for reelection to the Board after age 70.
George L. Jackson, John T. Kimbell, Richard W. Murphy and Jose Maria Perez
Arteta have been nominated for election at the 1994 Annual Meeting of
Stockholders to the class of directors whose terms expire at the 1997 Annual
Meeting. Information regarding the nominees and the other directors of the
Corporation whose terms expire after the 1994 Annual Meeting is provided
herein. The persons named in
1
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PROXY STATEMENT
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the proxy will vote for these nominees except where authority has been
withheld as to a particular nominee or as to all nominees. Other than Dr.
Perez, each of such nominees is presently serving as a director and has served
as a director of the Corporation or its predecessor for the period indicated
in his biography. Each nominee has consented to being named in this Proxy
Statement and to serve if elected. If any nominee should for any reason become
unavailable for election, proxies may be voted with discretionary authority by
the persons named therein for any substitute designated by the Board.
As the holder of all of the outstanding shares of the $9.75 Preferred Stock,
The Prudential Insurance Company of America ("Prudential") is entitled to
elect one director separately from any of the Corporation's three classes of
directors. Prudential has notified the Corporation that it intends at the
Annual Meeting to elect R. A. Walker to the Board. Information regarding Mr.
Walker is provided following the information provided herein regarding the
directors whose terms expire after the 1994 Annual Meeting. Holders of Common
Stock or $4.00 Preferred Stock are not, as such, entitled to vote on the
election of Mr. Walker. The holder of $9.75 Preferred Stock is not, as such,
entitled to vote on any other matter to come before the Annual Meeting. The
Corporation is not required to solicit, and is not by this Proxy Statement
soliciting, a proxy from the holder of the $9.75 Preferred Stock.
Nominees for Election at Annual Meeting:
George L. Jackson
George L. Jackson: 65, oilfield service consultant, Kerrville, Texas. B.S.,
Southern Methodist University. Mr. Jackson has been a director of the Corpora-
tion since 1987 and is a nominee for election to the class of directors whose
terms expire in 1997.
Committees: Compensation Committee and Board Organization Committee.
John T. Kimbell
John T. Kimbell: 68, president, John Kimbell Associates, Boston, Massachu-
setts, business consulting firm. B.S., University of Southern California. Mr.
Kimbell has been a director of the Corporation since 1974 and is a nominee for
election to the class of directors whose terms expire in 1997.
Committees: Executive Committee and Audit Review Committee.
2
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PROXY STATEMENT
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Nominees for Election at Annual Meeting (continued):
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Richard W. Murphy
Richard W. Murphy: 64, Senior Fellow for the Middle East, Council on Foreign
Relations, New York City, New York; consultant, Kissinger Associates, New York
City, New York; and member, Board of Advisors, Naval War College. Chairman,
Chatham House Foundation (U.S.); Chairman, Middle East Institute. From 1955 to
1989, United States Department of State, last serving as Assistant Secretary
of State for Near Eastern and South Asian Affairs, with the rank of Career Am-
bassador. B.A., Harvard University; A.B., Emmanuel College, Cambridge Univer-
sity; Doctor of Law (Hon.), New England College and Baltimore Hebrew Universi-
ty. Mr. Murphy has been a director of the Corporation since 1990 and is a nom-
inee for election to the class of directors whose terms expire in 1997.
Committees: Compensation Committee.
Jose Maria Perez Arteta
Jose Maria Perez Arteta: 59, partner in the law firm of Perez, Bustamante y
Perez, Quito, Ecuador. Master of Laws, Southern Methodist University. Attended
the Ecole National d'Administration, Paris, France. License in Public and So-
cial Sciences and Doctor at Law, Catholic University of Quito. From 1960 to
1969, Professor of Economic Law and Development at Catholic University. From
1961 to 1963, Head, Legal Department, Ministry of Public Works. Member, Quito
Bar Association and International Bar Association. Dr. Perez is a nominee for
election to the class of directors whose terms expire in 1997.
Committees: Not Applicable.
3
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PROXY STATEMENT
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Present Directors Whose Terms Continue After Annual Meeting:
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J. David Barnes
J. David Barnes: 64, chairman emeritus of Mellon Bank Corporation and Mellon
Bank, N.A., Pittsburgh, Pennsylvania. B.A., Allegheny College; LL.B., Harvard
Law School. Mr. Barnes has been a director of the Corporation since 1971 and
his current term will expire in 1996.
Committees: Compensation Committee and Board Organization Committee.
Charles L. Blackburn
Charles L. Blackburn: 66, chairman, president and chief executive officer of
the Corporation. Director of Lone Star Technologies, Inc. and Landmark Graph-
ics Corporation. B.S., University of Oklahoma. Member of the Society of Petro-
leum Engineers, the American Association of Petroleum Geologists, and the Ex-
ecutive and Budget Committees of the Mid-Continent Oil and Gas Association.
Mr. Blackburn has been a director of the Corporation since 1986 and his cur-
rent term will expire in 1996.
Committees: Executive Committee and Board Organization Committee.
B. Clark Burchfiel
B. Clark Burchfiel: 59, Schlumberger Professor of Geology, Massachusetts In-
stitute of Technology. B.S. and M.S., Stanford University; Ph.D., Yale Univer-
sity. Member of the National Academy of Sciences and the American Association
of Petroleum Geologists. Fellow of the American Academy of Arts and Sciences,
the Geological Society of America and the American Geophysical Union. Dr.
Burchfiel has been a director of the Corporation since 1989 and his current
term will expire in 1995.
Committees: Compensation Committee.
Bruce B. Dice
Bruce B. Dice: 67, oil and gas consultant and president of Dice Exploration
Company, Inc., Houston, Texas, engaged in the business of oil and gas consult-
ing. Former president of Transco Exploration Company, Houston, Texas. B.S.,
University of Michigan; M.S., Michigan State University. Mr. Dice has been a
director of the Corporation since 1987 and his current term will expire in
1995.
Committees: Audit Review Committee and Board Organization Committee.
4
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PROXY STATEMENT
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Present Directors Whose Terms Continue After Annual Meeting (continued):
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Michael C. Forrest
Michael C. Forrest: 60, vice chairman and chief operating officer of the Cor-
poration. Prior to joining the Corporation in 1992, with Shell U.S.A. for more
than five years, last serving as president of its subsidiary, Pecten Interna-
tional Company. B.S., St. Louis University. Member of the Society of Explora-
tion Geophysicists, American Association of Petroleum Geologists, Society of
Petroleum Engineers, Association of International Petroleum Negotiators. Di-
rector of Amigos de Las Americas, Board of Trustees of Institute of Earth and
Man at Southern Methodist University. Mr. Forrest has been a director of the
Corporation since 1992 and his current term will expire in 1996.
Committees: Executive Committee
Charles W. Hall
Charles W. Hall: 63, senior partner in the law firm of Fulbright & Jaworski,
Houston, Texas. B.A., University of the South; J.D. and LL.M., Southern Meth-
odist University. Director of Texas Medical Center and Friedman Industries,
Inc., Houston; trustee of Southwestern Legal Foundation, M.D. Anderson Founda-
tion, Southwest Research Institute, Sarah Campbell Blaffer Foundation and In-
stitute of Religion. Mr. Hall has been a director of the Corporation since
1991 and his current term will expire in 1995.
Committees: Compensation Committee and Board Organization Committee.
Raymond A. Hay
Raymond A. Hay: 65, chairman of Aberdeen Associates, investments; former chief
executive officer of The LTV Corporation, Dallas, Texas, engaged in the steel,
aerospace, defense and energy business. B.S. (Economics), Long Island Univer-
sity. Director of National Medical Enterprises, Inc. Mr. Hay has been a direc-
tor of the Corporation since 1979 and his current term will expire in 1995.
Committees: Audit Review Committee.
W. Thomas York
W. Thomas York: 60, former chairman of the board and chief executive officer
of AMF Incorporated, White Plains, New York, manufacturer of leisure and in-
dustrial products. B.S. and M.B.A., University of North Carolina. Mr. York has
been a director of the Corporation since 1978 and his current term will expire
in 1996.
Committees: Audit Review Committee.
5
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PROXY STATEMENT
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Director Proposed By Prudential:
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R. A. Walker
R. A. Walker: 37, Managing Director, Prudential Capital Group and Vice Presi-
dent, The Prudential Insurance Company of America. B.S.B.A. and M.B.A., Univer-
sity of Tulsa. Mr. Walker has held similar positions with Prudential Capital
Group for the past five years. He is being nominated to the Board by Prudential
pursuant to the terms of the $9.75 Preferred Stock.
Committees: Not Applicable.
6
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PROXY STATEMENT
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BOARD AND COMMITTEE MEETINGS; COMMITTEES OF THE BOARD
The Board held a total of six meetings in 1993. The percentage of meetings
attended by each director out of the total number of meetings of the Board and
of committees of the Board on which such director served exceeded 75%, except
in the cases of Dr. Burchfiel and Mr. Murphy, both of whom attended
approximately 67% of such meetings.
The Board has established four committees to assist in the discharge of its
responsibilities. The committee membership of each director is included with
his biography.
Executive Committee. The Executive Committee may exercise many of the powers
of the Board in the management of the business and affairs of the Corporation
in the intervals between meetings of the Board. Although the Committee has very
broad powers, in practice it meets only when it would be impractical to call a
meeting of the Board. This Committee did not meet in 1993.
Audit Review Committee. The Audit Review Committee reviews the professional
services provided by the Corporation's independent accountants and the
independence of such accountants from management of the Corporation. This
Committee also reviews the scope of the audit coverage, the annual financial
statements of the Corporation and such other matters with respect to the
accounting, auditing and financial reporting practices and procedures of the
Corporation as it may find appropriate or as have been brought to its
attention. This Committee met six times in 1993.
Compensation Committee. The Compensation Committee reviews and approves
executive salaries and administers bonus, stock option and incentive
compensation plans of the Corporation. This Committee advises and consults with
management regarding significant employee benefit policies and practices and
significant compensation policies and practices of the Corporation. This
Committee met six times in 1993.
Board Organization Committee. The Board Organization Committee considers and
recommends criteria for the selection of nominees for election as directors and
selects for presentation to the Board recommended candidates for director. This
Committee also considers on a continuing basis the composition, structure and
functioning of the Board and its committees, reviews succession plans for the
Chairman and Chief Executive Officer of the Corporation and considers
nominations for corporate officer positions. This Committee met two times in
1993.
The By-Laws provide that nominations of candidates for director will be made
by the Board or a committee appointed by the Board or by any stockholder
entitled to vote in the election of directors generally. The By-Laws require
that stockholders intending to nominate candidates for election as directors
deliver written notice thereof to the Secretary of the Corporation not later
than 80 days in advance of the meeting of stockholders; provided, however, in
the event the date of the meeting is not publicly announced by the Corporation
by mail, press release or otherwise more than 90 days prior to the meeting,
notice by the stockholder to be timely must be delivered to the Secretary of
the Corporation not later than the close of business on the tenth day following
the day on which such announcement of the date of the meeting was communicated
to stockholders. The By-Laws further require that the notice set forth certain
information concerning such stockholder and his nominees, including their names
and addresses, a representation that the stockholder is entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, a description of all
arrangements or understandings between the stockholder and each nominee, such
other information as would be required to be included in a proxy statement
soliciting proxies for the election of the nominees of such stockholder and the
consent of each nominee to serve as a director of the Corporation if so
elected. The chairman of the meeting may refuse to acknowledge the nomination
of any person not made in compliance with these requirements.
7
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PROXY STATEMENT
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DIRECTOR COMPENSATION
Directors who are not employees of the Corporation receive an annual retainer
of $20,000 and a fee of $1,000 for each Board meeting attended and for Board
committee meetings attended on days other than those on which the Board meets.
Under a deferred compensation plan, such amounts may be deferred in whole or in
part at the election of the director. Compensation so deferred may be
denominated in dollars or in shares of Common Stock determined by reference to
the market price on the business day immediately preceding the date of credit.
Share-denominated accounts will be credited with dividends, if any, and dollar
amounts will bear interest at a rate indexed to an investment fund selected
from time to time by the plan's administrator. The annual rate of such interest
accruals for 1994 is 5.34%. The non-employee directors also participate in the
1992 Director Stock Option Plan (the "1992 Director Plan"). Under the 1992
Director Plan, non-employee directors receive grants of options to purchase
10,000 shares of Common Stock each when first elected and when re-elected as a
director. Such options generally are not exercisable for 6 months, are for a
10-year term, have an exercise price equal to the closing market price on the
day preceding the grant date and are not transferable except by will or the
laws of descent and distribution. The directors may participate in the
Corporation's health insurance program available to all employees.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Corporation has business transactions and relationships in the ordinary
course of business with unaffiliated corporations and institutions of which
certain of its directors, executive officers and substantial stockholders are
affiliated, including the transactions discussed below. All such transactions
are conducted on an arm's length basis.
Prudential is the record or beneficial owner of more than 5% of one or more
of the classes of the Corporation's voting securities. Mr. Walker, an officer
of Prudential, has been nominated for election as a director of the Corporation
by Prudential as holder of all of the $9.75 Preferred Stock and pursuant to the
terms thereof. During 1993, the Corporation offered its employees the
opportunity to participate in medical programs administered by Prudential. In
addition, during such year, Prudential provided services and coverages relating
to pension and life insurance plans for retired employees of Gateway Coal
Company, a partnership owned by the Corporation. Further in 1993, Prudential
provided the Corporation certain software-related services. The Corporation has
paid or will pay Prudential approximately $376,000 for these services. The
Corporation and Prudential have agreed that Prudential will continue to perform
such services during 1994 and anticipate that the fees for the year will be
somewhat higher.
In 1993, the Corporation paid approximately $245,000 to the law firm of
Perez, Bustamante y Perez for legal services rendered in connection with
various matters. Dr. Perez, nominee for election as director of the
Corporation, is a partner in Perez, Bustamante y Perez. It is expected that
this law firm will continue to provide legal services to the Corporation in
1994.
Mr. Blackburn is a director of Landmark Graphics Corporation ("Landmark"), a
supplier of geoscience software applications, systems and services for oil and
gas exploration. In 1993, the Corporation paid approximately $603,000 to
Landmark for computer software and hardware and related services. Landmark is
expected to continue to render similar services to the Corporation in 1994, but
at a lesser level than during 1993.
8
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PROXY STATEMENT
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EXECUTIVE OFFICER COMPENSATION
The following tables set forth compensation awarded to, earned by or paid to
the executive officers named below in 1991, 1992 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards
-------------------- -------------------------
Securities
Restricted Underlying All
Name and Stock Options/ Other
Principal Position Year Salary($) Bonus($) Award(s)($)(1) SARs(#) Compensation
------------------ ---- ---------- --------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
C. L. Blackburn......... 1993 512,496 100,000 0(2) 0 30,750(6)
Chairman, President and 1992 482,496 500,000 0 65,600 28,950(6)
Chief Executive Officer 1991 452,496 245,000 427,860 0 N/A
M. C. Forrest........... 1993 298,020 75,000 0 0 17,881(6)
Vice Chairman and Chief 1992 213,345 85,000 0 50,000 91,508(7)
Operating Officer 1991 N/A N/A N/A N/A N/A
S. G. Crowell........... 1993 222,669 60,000 0(3) 0 13,360(6)
Sr. Vice President 1992 212,547 95,000 0 20,400 12,753(6)
1991 198,798 85,000 140,850 0 N/A
N. D. Rietman........... 1993 209,097 55,000 0(4) 0 12,546(6)
Sr. Vice President 1992 197,499 100,000 0 20,400 11,850(6)
1991 183,750 85,000 112,680 0 N/A
M. A. Schuepbach........ 1993 212,709 45,000 0(5) 0 12,763(6)
Sr. Vice President 1992 202,587 95,000 0 20,400 12,155(6)
1991 188,838 90,000 140,850 0 N/A
</TABLE>
- --------
(1) All restricted stock reported vests over a four-year period from the
original grant date as follows: 20% of the original award vests on each of
the 1st, 2nd and 3rd anniversaries of the grant date and the remaining 40%
vests on the 4th anniversary. The grantees are entitled to receive
dividends, if any, paid with respect to said restricted stock; however, the
Company currently pays no dividend on its Common Stock.
(2) As of 12/31/93, Mr. Blackburn owned 28,524 shares of restricted stock
having an aggregate market value of $156,882.
(3) As of 12/31/93, Mr. Crowell owned 9,390 shares of restricted stock having
an aggregate market value of $51,645.
(4) As of 12/31/93, Mr. Rietman owned 7,512 shares of restricted stock having
aggregate market value of $41,316.
(5) As of 12/31/93, Mr. Schuepbach owned 9,390 shares of restricted stock
having an aggregate market value of $51,645.
(6) These payments represent the Corporation's matching contributions to the
qualified and non-qualified saving plans accounts of the named executive
officers.
(7) $81,708 of the amount shown for Mr. Forrest in the "All Other Compensation"
column for 1992 are associated with his relocation from Houston to Dallas
upon his initial employment. The remainder, $9,800, represents the
Corporation's matching contribution to the qualified and non-qualified
saving plans accounts of Mr. Forrest for that year.
9
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PROXY STATEMENT
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AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Option/SARs Options/SARs
Shares at FY-End(#) at FY-End($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
---- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
C. L. BLACKBURN 0 N/A 271,933/0 0/0
M. C. FORREST 0 N/A 50,000/0 0/0
S. G. CROWELL 0 N/A 85,214/0 0/0
N. D. RIETMAN 0 N/A 103,843/0 0/0
M. A. SCHUEPBACH 0 N/A 58,400/0 0/0
</TABLE>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Performance
Number of or Other
Shares, Units Period Until
or Other Maturation or
Name Rights(#) Payout
---- ------------- -------------
<S> <C> <C>
C. L. BLACKBURN 83,750* 3 Years*
M. C. FORREST 50,250* 3 Years*
S. G. CROWELL 27,640* 3 Years*
N. D. RIETMAN 27,640* 3 Years*
M. A. SCHUEPBACH 27,640* 3 Years*
</TABLE>
- --------
* The named executive officers were granted the stated number of performance
units on May 1, 1993 under the Corporation's 1992 Long-Term Incentive Plan.
These performance units will vest, if at all, on May 1, 1996. A performance
unit may entitle the grantee to the value of a share of Common Stock
contingent upon the performance of the Corporation compared to a selected
group of peer companies. The performance comparison is based on total
shareholder return over a three year period. Total shareholder return is
calculated based on the difference between an average price of a share of
Common Stock during the three calendar months immediately preceding the grant
date and an average price for a share of Common Stock during the three
calendar months immediately preceding the vesting date, and is adjusted for
dividends. The total shareholder returns for the Corporation and the selected
group of peer companies is then ranked to determine the quartile performance
of the Common Stock. If the Corporation's shareholder return is in the lowest
or fourth quartile (0-25%) of peer performance, the performance unit expires
with no value. If the Corporation's shareholder return ranks in the third
quartile (26%-50%) of peer performance, a performance unit vests with a value
equal the value of one-half ( 1/2) share of Common Stock as of the vesting
date. If the Corporation's shareholder return ranks in the second quartile
(51%-75%) of peer performance, a performance unit vests with a value equal to
the value of one (1) share of Common Stock as of the vesting date. If the
Corporation's shareholder return ranks in the highest or first quartile (76%-
100%) of peer performance, a performance unit vests with a value equal to the
value of one and one-half (1 1/2) shares of Common Stock as of the vesting
date. The calculated value of performance units will be paid to the grantee
70% in Common Stock and 30% in cash.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
Change in Control Agreements. The Corporation has entered into agreements
with Mr. Blackburn and each of the other named executive officers which were
binding upon execution but become operative only upon the occurrence of a
change in control of the Corporation as defined therein.
10
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PROXY STATEMENT
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Under these agreements, in the event of a change in control the executive
officer will be entitled to continue in the employ of the Corporation until the
earlier of the expiration of the third anniversary of the occurrence of a
change in control or the executive's death at an annual base salary of not less
than the rate in effect upon the occurrence of a change in control plus an
incentive award of not less than the highest such award received by the
executive for any year in the three calendar years immediately preceding the
change in control. In the event the Corporation terminates the executive's
employment during such term without cause, the executive will be entitled to
receive as severance compensation a lump-sum payment equal to the present value
of the cash compensation payable under the agreement in the absence of such
termination, not to exceed 299% of his "base amount" as defined in the Internal
Revenue Code of 1986, as amended (the "Code"), without any reduction for
subsequent earnings.
Under these agreements, continuation of benefits under employee benefit plans
of the Corporation is provided after termination during the remainder of the
original term of employment. The agreements include provisions which limit the
amounts payable under them in certain circumstances in which the net after-tax
amount received by the officer would be reduced as a result of the
applicability of the 20% excise tax imposed in respect of certain change in
control payments under the Code. The Corporation has assumed the obligation to
pay certain fees and expenses of counsel incurred by the executive officers if
legal action is required to enforce their rights under the agreements and has
secured such obligation by obtaining a letter of credit issued by a commercial
bank.
Separation Pay Plan. Under the Separation Pay Plan, most employees (other
than non-resident aliens), including Mr. Blackburn and the other named
executive officers, are eligible for separation pay if their employment is
terminated for any reason other than death, voluntary termination of
employment, voluntary retirement or discharge for reasons of criminal activity,
willful misconduct, gross negligence in the performance of duties or violation
of Corporation policy. The payment to be received under the plan by a
particular employee depends on his job classification and length of service and
whether termination occurs after the elimination of the employee's position or
a change in control of the Corporation (as defined in the plan). In the case of
the named executive officers, the plan provides in most cases for separation
pay in an amount equal to two-weeks' base pay for each year of service with the
Corporation, plus three months' base pay, not to exceed a maximum of twelve
months base pay; and, in the case of a change in control of the Corporation,
separation pay in an amount equal to one month's base pay for each year of
service with the Corporation, plus three months' base pay, but not less than
twelve months' base pay nor more than twenty-four months' base pay. The plan
requires that employees sign releases as a condition of receiving separation
pay. Executive officers are not entitled to separation pay under the plan to
the extent they receive severance payments under the change in control
agreements discussed above.
RETIREMENT PROGRAM
In January 1987, the Board of Directors authorized a new retirement income
plan (the "New Retirement Income Plan") applicable to most of its employees to
replace the Corporation's former retirement income plans under which such
employees ceased to accrue benefits on January 31, 1987. Under the New
Retirement Income Plan, a covered employee acquires a right upon retirement to
a yearly amount equal to 2% of the employee's earnings during each year from
February 1, 1987 forward (rather than on final compensation or average final
compensation) without offset for social security benefits. Benefits under the
New Retirement Income Plan become vested after five years of service, giving
effect to service under the prior retirement income plans. Benefits may be paid
in equal monthly installments, starting on the date of retirement and
continuing until death, or any employee may select any one of a number of
optional forms of payment having equal actuarial value as provided in the plan.
The benefits payable under the New Retirement Income Plan are subject to
maximum limitations under the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and the Code. If benefits at the time of retirement
exceed the then permissible limits of
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such statutes, the excess would be paid by the Corporation from an Excess
Benefits Plan which the Corporation maintains to provide employees (other than
participants in the "SERP" described below) benefits that would otherwise be
payable but for the limitations imposed by ERISA and the Code.
In addition, an unfunded Supplemental Executive Retirement Plan (the "SERP")
effective March 1, 1990 provides additional benefits to the Corporation's
highest ranking officer (Mr. Blackburn), the other named executives and to
certain other officers and executive employees designated by said highest
ranking officer. Under the SERP, a participant acquires the right upon
retirement to a lump sum amount which is the actuarial equivalent of a straight
life or, if married, a 50% joint and survivor annuity payable monthly in an
amount equal to (A) the sum of (1) 1.6% of the participant's average monthly
compensation in 1986 times his years of service through January 31, 1987, plus
(2) 2% of the participant's average monthly compensation after January 31, 1987
times his years of service after January 31, 1987 plus an additional five years
less (B) the amount of the benefits calculated for such participant under the
Corporation's other retirement plans. The maximum benefit payable is 60% of the
participant's high three-year average pay. The amounts calculated under the
SERP are not subject to any reduction for Social Security and are not
determined primarily by final compensation or average final compensation and
years of service. If a participant dies while still employed by the Corporation
and is survived by an eligible spouse, his surviving spouse will receive a
lump-sum payment equal to the present value of one-half of the benefit which
would have been payable to the participant at his normal retirement age under
the SERP assuming he had terminated employment with the Corporation at the time
of his death with a vested interest under the SERP and that he survived to his
normal retirement age. In the case of retirement after age 55 but before age
60, the supplemental retirement benefits generally will be reduced by 5% for
each year that the employee's actual retirement date precedes age 60. The
benefits provided under the plan will vest upon completion of five years of
service or attainment of age 55.
The estimated annual benefits payable upon retirement at normal retirement
age (or January 1, 1994 in those cases where the participant's age on that date
was greater than normal retirement age) under the Corporation's retirement
plans as supplemented by the SERP based on service and compensation through
December 31, 1993 for the executive officers named in the compensation table
are as follows: Mr. Blackburn--$165,930, Mr. Forrest--$51,671, Mr. Crowell--
$88,519, Mr. Rietman--$145,433 and Mr. Schuepbach--$57,879.
Whether any amounts actually become payable in whole or in part depends on
the contingencies and conditions governing the applicable retirement plan.
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth the beneficial ownership (as defined in the
rules of the Securities and Exchange Commission) as of February 1, 1994 of the
Corporation's equity securities and of depositary units ("Depositary Units")
representing limited partnership interests in Diamond Shamrock Offshore
Partners Limited Partnership, a limited partnership of which the Corporation is
a general partner and with respect to which 86.98% of the Depositary Units are
owned by the Corporation, of the directors and nominees, the named executive
officers and all directors and nominees and executive officers as a group. At
such date, all directors and nominees and executive officers as a group
beneficially owned less than 1% of each of the $4.00 Preferred Stock and the
Depositary Units outstanding, and no director, nominee or named executive
officer individually owned as much as 1% of the Common Stock. At such date, the
directors and executive officers as a group owned about 1.1% of the Common
Stock. None of the directors or nominees or named executive officers
beneficially owned any $4.00 Preferred Stock and none of the directors or
nominees or executive officers beneficially owned any $9.75 Preferred Stock or
the Corporation's $2.50 Cumulative Preferred Stock.
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PROXY STATEMENT
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount and
Nature of
Securities
Beneficially
Name of Beneficial Owner Title of Security Owned(1)
- ------------------------ --------------------- ------------
<S> <C> <C>
J. David Barnes Common Stock 22,500
Depositary Units 32
Darrell L. Black Common Stock 121,000
Depositary Units 0
C. L. Blackburn Common Stock 373,857(2)
Depositary Units 0
B. Clark Burchfiel Common Stock 10,000
Depositary Units 0
S. G. Crowell Common Stock 129,847(2)
Depositary Units 0
Bruce B. Dice Common Stock 10,500
Depositary Units 0
Michael C. Forrest Common Stock 54,031(3)
Depositary Units 0
Charles W. Hall Common Stock 11,000
Depositary Units 0
Raymond A. Hay Common Stock 10,319
Depositary Units 0
George L. Jackson Common Stock 10,000
Depositary Units 0
John T. Kimbell Common Stock 11,023
Depositary Units 21
Richard W. Murphy Common Stock 11,000
Depositary Units 0
Jose Maria Perez Arteta Common Stock 0
Depositary Units 0
N. D. Rietman Common Stock 141,893(2)
Depositary Units 0
M. A. Schuepbach Common Stock 99,021(2)
Depositary Units 0
R. A. Walker Common Stock 0(4)
Depositary Units 0
W. Thomas York Common Stock 20,200
Depositary Units 10,008
---------
Directors and executive officers as
a group Common Stock 1,485,622(2)(5)
---------
$4.00 Preferred Stock 483
---------
Depositary Units 10,061
---------
</TABLE>
- --------
(1) These amounts include shares of Common Stock covered by options exercisable
within 60 days, as follows: Mr. Barnes, 20,000; Mr. Black, 90,000; Mr.
Blackburn, 271,933; Dr. Burchfiel, 10,000; Mr. Crowell, 85,214; Mr. Dice,
10,000; Mr. Forrest, 50,000; Mr. Hall, 10,000; Mr. Hay, 10,000; Mr.
Jackson, 10,000; Mr. Kimbell, 10,000; Mr. Murphy, 10,000; Mr. Rietman,
103,843; Mr. Schuepbach, 58,400; Mr. York, 20,000; and all directors and
executive officers as a group, 1,023,362.
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PROXY STATEMENT
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(2) These amounts include shares of "restricted stock," or Common Stock subject
to restriction for a period of years, as to which the holders have sole
voting power, but no investment power, during the restricted period, as
follows: Mr. Blackburn, 28,524; Mr. Crowell, 9,390; Mr. Rietman, 7,512; Mr.
Schuepbach, 9,390 and all directors and executive officers as a group,
105,346.
(3) Includes 2,839 shares of Common Stock held pursuant to the Savings Plan for
the account of Mr. Forrest as to which his rights are not fully vested.
(4) Does not include shares owned by Prudential, as to which Mr. Walker
disclaims beneficial ownership.
(5) Includes 5,952 shares of Common Stock held pursuant to the Savings Plan as
to which the ownership is not fully vested.
To the knowledge of the Corporation, as of February 2, 1994, no person
beneficially owned more than 5% of any class of the Corporation's voting
securities except as set forth below.
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address Shares Percent
of Beneficial Title of Beneficially of
Owner Class Owned Class
- ---------------- --------------- ------------ -------
<S> <C> <C> <C>
The Prudential Insurance Common Stock 11,972,000(1) 8.19%
Company of America
Prudential Plaza
Newark, New Jersey 07102-3777
The Prudential Insurance $9.75 Preferred 1,875,000 100.00%
Company of America Stock
Prudential Plaza
Newark, New Jersey 07102-3777
Brinson Holdings, Inc. Common Stock 10,903,500(2) 8.12%
209 South LaSalle
Chicago, Illinois 60604-1295
Kidder, Peabody Group Inc. Common Stock 8,000,000(3) 5.62%
10 Hanover Square
New York, New York 10005
State Treasurer Common Stock 8,801,575(4) 6.50%
State of Michigan
Director of Investments
P. O. Box 15128
Lansing, Michigan 48901
</TABLE>
- --------
(1) The Prudential Insurance Company of America ("Prudential") reported on
Amendment No. 5 to Schedule 13G dated January 31, 1994, in connection with
beneficial ownership at December 31, 1993, that it had sole dispositive and
voting power with respect to 54,300 shares of the Common Stock indicated
above as beneficially owned by it, shared voting power with respect to
26,900 of such shares and shared dispositive power with respect to 52,700
of such shares. Prudential indicated that it held 107,000 shares of such
Common Stock for the benefit of its clients by separate accounts,
externally managed accounts, registered investment companies, subsidiaries
and/or other affiliates. It also indicated that the remainder of shares
reported by it resulted from the assumed conversion of 1,750,000 shares of
$9.75 Preferred Stock. On February 1, 1994, the Corporation redeemed
625,000 shares of $9.75 Preferred Stock, 437,500 of which were convertible,
reducing the number of convertible shares to 1,312,500. The information in
this Proxy Statement regarding such shares is included in reliance on such
Amendment No. 5, except that an adjustment has been made as a result of
such redemption and the percent of class and the number of shares of Common
Stock into which the $9.75 Preferred Stock may be converted are based upon
the Corporation's calculations.
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PROXY STATEMENT
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(2) Brinson Holdings, Inc. ("Brinson"), together with its wholly owned
subsidiaries Brinson Partners, Inc. ("BPI") and Brinson Trust Company
("BTC"), reported on Schedule 13G dated February 11, 1994, in connection
with beneficial ownership at December 31, 1993, that BPI had sole voting
and dispositive power with respect to 8,281,400 shares shown above as
beneficially owned by Brinson and that BTC had sole voting and dispositive
power with respect to the remaining 2,622,100 of such shares. The
information in this Proxy Statement regarding such shares assumes that
Brinson's ownership had not changed as of February 2, 1994 and is included
in reliance on such Schedule, except that the percent of class is based
upon the Corporation's calculations made in reliance upon the information
regarding such shares contained in such Schedule.
(3) Kidder, Peabody Group Inc. ("Kidder") reported on Schedule 13D dated
October 10, 1992 that it owns 8,000,000 warrants, each representing the
right to purchase from the Corporation at any time prior to 5:00 p.m. on
October 10, 1997 one share of Common Stock at a price of $13.00 per share.
The 8,000,000 shares of Common Stock reported as owned by Kidder result
from the assumed exercise of all 8,000,000 of such warrants. According to
said Schedule 13D, General Electric Company is the indirect parent of
Kidder. The information in this Proxy Statement regarding such shares
assumes that Kidder's ownership thereof had not changed as of February 2,
1994 and is included in reliance on such Schedule, except that the percent
of class is based upon the Corporation's calculations made in reliance upon
the information regarding such shares contained in such Schedule.
(4) Ownership as of February 2, 1994, according to oral advice given by an
employee of the State of Michigan to a representative of the Corporation in
February 1994. The State Treasurer is the investment fiduciary for certain
retirement systems sponsored by the State of Michigan.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
General
The Compensation Committee of the Board of Directors (the "Committee") is
composed of five directors who are not current or former officers or employees
of the Corporation. The Committee is responsible for reviewing and approving
the compensation paid to executive officers of the Corporation, including
salaries, bonuses, stock options and other incentive awards. Following review
and approval by the Committee, material actions pertaining to executive
compensation are reported to the full Board of Directors.
Compensation Policy for Executive Officers
The Committee's policy regarding executive pay is generally the same as the
Corporation's policy with respect to all other management level employees. That
policy has the following objectives:
. To enhance the Corporation's competitiveness by attracting and retaining
quality talent
. To link employees' long-term earnings to the long-term success of the
Corporation
. To reward individual performance as well as team accomplishments
. To target each component of total compensation at the 50th percentile
range for similar jobs, as determined by reference to a survey or surveys
of selected oil and gas companies(1)
- --------
(1) The Committee reviewed survey information for 19 U.S. based independent oil
and gas companies to determine the 50th percentile of total compensation
for comparable executive positions, including all of the U.S. based
companies included in the performance graph. These 19 companies were
selected because they participated in compensation surveys performed by an
independent consultant and reviewed by the Committee (the "Compensation
Survey"). The performance of these companies was not considered in
determining our executives' compensation. The non-U.S. based companies
included in the performance graph were not included because they did not
participate in the Compensation Survey and the Committee believes there are
significant differences between compensation practices of U.S. based and
non-U.S. based oil and gas companies.
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PROXY STATEMENT
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During 1993, the Committee retained an independent outside consultant to
review the Corporation's executive compensation policies and practices. The
purpose of the review was to obtain an independent assessment of the
reasonableness and competitiveness of the Corporation's compensation program
and to ensure that the program is adequately designed to attract, motivate and
retain talented executives, and also to have linkage between executive
compensation and Common Stock value. The independent consultant concluded that
(i) the Corporation's executive compensation policy is consistent with the
objectives identified above, (ii) the methodology used to gather competitive
information for the Committee deliberations is sound, and (iii) the findings
supported by this information are appropriate. The consultant agreed that the
changes implemented in the long-term compensation for executives (discussed
under Components of Compensation) implemented by the Committee are consistent
with the goal of linking compensation more closely with the long term success
of the Corporation as measured by shareholder return.
The Corporation does not believe it will pay any employee remuneration in
1994 that will cause it to exceed the $1 million deduction limit under Section
162(m) of the Internal Revenue Code of 1986, as amended.
Components of Compensation
Base Salary--The Committee annually reviews the Chief Executive Officer's and
the other executive officers' salaries. In determining an appropriate salary
adjustment, consideration is given to level of responsibility, experience of
the individual, the degree to which planned objectives were achieved and
competitiveness of the executive's compensation. As stated above, the
Corporation targets total compensation at the 50th percentile range for similar
jobs at other U.S. based independent oil and gas companies. Based on the
Compensation Survey, the average of the Corporation's executive officers' base
salaries is at the 43rd percentile, or on average seven percentage points below
the targeted levels.
Mr. Blackburn (the "CEO") has been the Chairman, President and Chief
Executive Officer of the Corporation since 1987. In April 1993, his base salary
was increased 6.1%. The Committee approved the increase after considering the
Compensation Survey information for similar positions and the Corporation's
achievements during 1992 and the preceding four years with respect to (i)
replacing reserves, (ii) finding and development costs, (iii) reducing net
debt, (iv) net cash from operations, (v) discretionary cash flow, (vi) earnings
before interest, taxes and depreciation and (vii) production volume. With this
increase, the CEO's base salary is at the 46th percentile for similar positions
in the Compensation Survey, or four percentage points below the targeted level.
Annual Incentives--The CEO and other executive officers are considered for
annual bonus incentive awards to reward individual performance against
established objectives. The total award pool for all eligible employees is
first calculated as the sum of a percentage of base salary for each eligible
position. The target percentage for each position is established by reviewing
the Compensation Survey information. The percentage of base salary targeted for
annual bonus increases with the level of responsibility. This award pool can be
adjusted 50% up or down based on actual performance of the Corporation as
measured against the targets for cash flow and return on capital employed as
established in the annual plan of the Corporation. Further adjustments may be
made for unusual events or events outside the control of the Corporation's
management, such as variances due to the price of oil and gas. Individual
amounts are awarded to the CEO and each executive officer on a discretionary
basis after reviewing the officer's performance against various factors,
including established objectives that vary by executive, internal equity with
any other officers with similar responsibilities and the established target
award for the position being considered. The bonus pool for executive officers
for 1993 was below the $1,375,000 targeted amount with $633,000 being awarded
to 15 individuals within this group. The reasons the executive officers were
awarded less than the targeted amount were that the Corporation did not meet
its 1993 objectives with respect to cash flow and return on capital employed.
Based on the Corporation's performance with respect to these objectives, the
1993 bonus pool for
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PROXY STATEMENT
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the 15 executive officers should have been 89% of the targeted amount (or
$1,223,750); however, the Committee made the subjective determination to reduce
the award amount further due to the performance of the Common Stock in 1993 and
general conditions in the oil and gas industry.
The CEO was granted a bonus of $100,000 in December 1993 (or approximately
20% of his base salary). The Committee awarded this amount based upon its
evaluation of Mr. Blackburn's performance in helping the Corporation meet
certain objectives established for 1993. The performance objectives which were
achieved were (i) meeting reserve addition goals, (ii) revising the long-term
compensation program, (iii) bringing production in Bolivia on-stream and (iv)
positioning the Corporation to be prepared to meet its mandatory redemption
obligation with respect to a portion of the $9.75 Preferred Stock in February
1994.
Long-Term Incentives--The Corporation's shareholders have approved the
Corporation's virtually identical 1986 and 1992 Long-Term Incentive Plans (the
"Plans"). The Plans permit granting officers and other key employees of the
Corporation stock options, stock appreciation rights ("SARs"), performance
units and awards of Common Stock (including restricted stock) or other
securities of the Corporation on terms and conditions determined by the
Committee. The Committee believes that these equity based awards are an
integral part of the Corporation's overall compensation program for the CEO and
other executive officers. Through these grants, the actual amount of such
officers' long-term compensation is dependent on future increases in
shareholder value.
During 1993, in keeping with established practice, the Corporation granted to
two individuals who first became executive officers during the year SARs equal
in number to the number of shares covered by stock options then held by them to
run in tandem with their stock options. Otherwise, no stock options or SARs
were granted and no awards of restricted stock were made to the CEO or other
executive officers in 1993.
In 1993, the Corporation implemented a performance unit long-term incentive
program to replace the restricted stock program that had previously been
utilized for the CEO and other executive officers. For this group of employees
the Committee presently intends to consider granting performance units every
other year and awarding stock options in the years during which performance
units are not awarded.
A performance unit may entitle the grantee to the value of a share of the
Corporation's Common Stock contingent upon the performance of the Corporation
compared to a selected group of peer companies. The performance comparison is
based on total shareholder return over a three-year period. Total shareholder
return is calculated based on the difference between an average price of a
share of Common Stock during the three calendar months immediately preceding
the grant date and an average price for a share of Common Stock during the
three calendar months immediately preceding the vesting date, and is adjusted
for dividends. The total shareholder returns for the Corporation and the
selected group of peer companies is then ranked to determine the quartile
performance of the Common Stock. If the Corporation's shareholder return is in
the lowest or fourth quartile (0-25%) of peer performance, the performance unit
expires with no value. If the Corporation's shareholder return ranks in the
third quartile (26%-50%) of peer performance, a performance unit vests with a
value equal the value of one-half ( 1/2) share of Common Stock as of the
vesting date. If the Corporation's shareholder return ranks in the second
quartile (51%-75%) of peer performance, a performance unit vests with a value
equal to the value of one (1) share of Common Stock as of the vesting date. If
the Corporation's shareholder return ranks in the highest or first quartile
(76%--100%) of peer performance, a performance unit vests with a value equal to
the value of one and one-half (1 1/2) shares of Common Stock as of the vesting
date.
The calculated value of performance units will be paid to the grantee 70% in
Common Stock and 30% in cash. With respect to the 1993 grant of performance
units, May 1, 1993 is the grant date and May 1, 1996 is the vesting date.
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PROXY STATEMENT
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The number of performance units granted to the CEO and other executive
officers is determined by reviewing the Compensation Survey information to
determine the median value of stock or stock-based compensation granted to
individuals in similar positions at the companies responding to the
Compensation Survey. The value of the performance units granted is targeted to
approximate the survey median value assuming the Corporation's performance
ranks in the second quartile as compared to the Performance Unit Peers. The
value of a performance unit at the time of grant is established by multiplying
(i) the price of the Common Stock as of the grant date times (ii) the
probability of the Common Stock performance ranking in each of the four
quartiles of shareholder performance times (iii) a calculated probability that
the grantee will remain employed by the Corporation through the three-year
measurement period. Using the described criteria, the CEO was granted 83,750
performance units in 1993.
The Committee believes the use of performance units aligns the compensation
of the executive officers with the interest of the shareholders while providing
incentives for these officers to outperform the Corporation's competitors.
Members of the Compensation Committee
J. David Barnes, Chairman
B. Clark Burchfiel
Charles W. Hall
George L. Jackson
Richard W. Murphy
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PROXY STATEMENT
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PERFORMANCE GRAPH
The following graph shows a comparison of five-year cumulative returns
(assuming reinvestment of any dividends), among the Corporation, the Standard &
Poor's 500 Stock Index and a peer group selected by the Corporation.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE CORPORATION, S&P 500
INDEX & A PEER GROUP INDEX.
<TABLE>
<CAPTION>
Year-End
Data 1988 1989 1990 1991 1992 1993
-------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Maxus $100 $154 $119 $ 96 $ 93 $ 79
S&P 500 100 132 128 166 179 197
Peer Group 100 145 122 112 116 143
</TABLE>
Assumes $100 invested on December 30, 1988 in the Corporation, the S & P 500
Stock Index and the peer group. Investments in the peer group have been
weighted according to the respective issuer's stock market capitalization at
the beginning of each period for which a return is indicated.
The peer group is composed of twelve peer companies (named below) whose
primary business, like that of the Corporation, is exploring for and producing
oil and gas. The companies were selected to represent a composite similar to
the Corporation in size and mix of domestic and international business. The
group consists of large independent exploration and production companies whose
market equity exceeded five hundred million dollars in 1989 or in the year in
which data for the company became available. The primary business of seven
companies is domestic while five companies are primarily international. The
performance index is based upon data beginning with 1989 except for four of the
companies. Each of these four companies is included in the index for the year
in which complete data for the year are available. The year is shown in
parenthesis after the names of the four companies. The twelve companies are:
Anadarko Petroleum Corporation, Bow Valley Industries Ltd., Burlington
Resources Inc., Canadian Occidental Petroleum Ltd.,
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PROXY STATEMENT
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Enron Oil & Gas Company (1990), Enterprise Oil plc (1990), Lasmo plc (1992),
Louisiana Land & Exploration Company, Noble Affiliates Inc., Oryx Energy
Company, Santa Fe Energy Resources, Inc. (1990), and Union Texas Petroleum
Holdings, Inc.
In the index used for the immediately preceding fiscal year, the peer group
included the same 12 companies plus Mitchell Energy and Development Corp.
("Mitchell"). Mitchell was eliminated from the peer group because a significant
portion of its assets are not oil and gas assets; however, if a line
representing the same group of companies plus Mitchell were superimposed on the
above graph, it would be indistinguishable from the line on the above graph
representing the 12 companies now included in the group. The plot points for
the line representing a group including Mitchell would be as follows for the
year-ends indicated: 1989--$147; 1990--$123; 1991--$113; 1992--$117; 1993 --
$144.
ITEM 2--RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board, upon the recommendation of its Audit Review Committee, has
appointed Price Waterhouse as independent accountants to examine the
consolidated financial statements of the Corporation for 1994. Stockholders are
being asked to ratify this appointment. Price Waterhouse has served the
Corporation or its affiliated or predecessor entities in this capacity since
1932. The Corporation has been informed that neither Price Waterhouse nor any
of its partners has any direct financial interest or any material indirect
financial interest in the Corporation or has had any connection during the past
three years with the Corporation in the capacity of promoter, underwriter,
voting trustee, director, officer or employee.
Representatives of Price Waterhouse are expected to be present at the Annual
Meeting, with the opportunity to make a statement, if they desire to do so, and
to be available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR SUCH RATIFICATION. PROXIES
SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY IN THEIR
PROXIES A CONTRARY CHOICE.
ITEM 3--PROPOSAL REQUESTING THAT THE CORPORATION PREPARE A REPORT REGARDING THE
CERES PRINCIPLES
The Domestic and Foreign Missionary Society of the Protestant Episcopal
Church in the United States of America, 815 Second Avenue, New York, New York
10017-4594, the beneficial owner of 141,100 shares of Common Stock, has given
notice that it intends to present a proposal at the Annual Meeting. The
proposal is as follows:
"WHEREAS, we believe:
The responsible implementation of sound environmental policy increases
long-term shareholder value by increasing efficiency, decreasing clean-
up costs, reducing litigation, and enhancing public image and product
attractiveness;
Adherence to public standards for environmental performance gives a
company greater public credibility than is achieved by following
standards created by industry alone. In order to maximize public
credibility and usefulness, such standards also need to reflect what
investors and other stock holders want to know about the environmental
records of their companies;
Standardized environmental reports will provide shareholders with
useful information which allows comparisons of performance against
uniform standards and comparisons of progress over time. Companies can
also attract new capital from investors seeking investments that are
environmentally responsible, responsive progressive, and which minimize
the risk of environmental liability.
"and WHEREAS:
The Coalition of Environmentally Responsible Economies (CERES), which
comprises large institutional investors with $150 billion in
stockholdings (including shareholders in this Company), public interest
representatives, and environmental experts--consulted with dozens of
corporations and produced comprehensive public standards for both
environmental performance and reporting.
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PROXY STATEMENT
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Over 50 companies have endorsed the CERES Principles--including the Sun
Company, a Fortune-500 company--to demonstrate their commitment to
public environmental accountability.
In endorsing the CERES Principles, a company commits to work toward:
1. Protection of the biosphere 6. Safe products and services
2. Sustainable use of natural 7. Environmental restoration
resources 8. Informing the public
3. Waste reduction & disposal 9. Management commitment
4. Energy conservation 10. Audits and reports
5. Risk reduction
The full text of the CERES Principles and the accompanying CERES Report
Form are available from CERES, Atlantic Avenue, Boston, MA 02110, tel:
617/451-0927.
Concerned investors are asking the Company to be publicly accountable
for its environmental impact, including collaboration with this
corporate, environmental, investor, and community coalition to develop
(a) standards for environmental performance and disclosure; (b)
appropriate goals relative to these standards; (c) evaluation methods
and tools for measurement of progress toward these goals; and (d) a
formate for public reporting of this progress.
We believe this request is consistent with regulation adopted by the
European Community for companies' voluntary participation in verified
and publicly-reported eco-management and auditing.
"RESOLVED, Shareholders request the company to prepare a report at
reasonable cost and omitting proprietary information, describing
company programs, progress and future plans relative to these
Principles, and using the standard CERES Report Form as a guide."
The statement submitted by the proponent in support of the proposal is as
follows:
"We believe that investors and customers are expecting comprehensive
and impartial environmental reports by business, as a sign of corporate
commitment to environmental excellence. Without this public scrutiny,
corporate environmental policies and reports lack the critical
component of adherence to standards set not only by management but also
by other stake holders. Shareholders are invited to support this
resolution, to encourage our Company to demonstrate environmental
leadership and account for its environmental impact."
MANAGEMENT'S STATEMENT
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.
The Corporation has not adopted the CERES Principles. It has accepted the
Environmental Mission and Guiding Principles of the American Petroleum
Institute (the "API Principles"). The API Principles consist of eleven
principles that address the issues of developing and using natural resources in
an environmentally sound manner, protecting the health and safety of both the
Corporation's employees and the public, and economically developing energy
resources. Management believes the API Principles have greater relevance to the
oil and gas business than the CERES Principles.
Management also believes that the report contemplated by this proposal would
be of limited usefulness. It is uncertain how the Corporation can meaningfully
report on its programs, progress and future plans with respect to a set of
principles it has not adopted. Consequently, management believes the
preparation of the requested report would not constitute an effective or
efficient use of its assets.
* * * * * * * * * * *
21
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PROXY STATEMENT
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SUBMISSION OF PROPOSALS BY STOCKHOLDERS
In order to be eligible for inclusion in the Corporation's proxy statement
for the 1995 Annual Meeting of Stockholders, any proposal of a stockholder must
be received by the Corporation at its principal executive offices in Dallas,
Texas by November 22, 1994.
PROXY SOLICITATION
In addition to soliciting proxies by mail, directors, executive officers and
employees of the Corporation, without receiving additional compensation, may
solicit proxies by telephone, by letter, by telegram or in person. Arrangements
will also be made with brokerage firms and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of
shares of the Common Stock and $4.00 Preferred Stock, and the Corporation will
reimburse such brokerage firms and other custodians, nominees and fiduciaries
for reasonable out-of-pocket expenses incurred by them in connection with
forwarding such materials. The Corporation has retained Morrow & Co., Inc. to
aid in the solicitation of proxies. The fee of such firm is estimated to be
$8,000, plus reimbursement for out-of-pocket costs and expenses.
OTHER BUSINESS
The Board does not know of any business to be presented for consideration at
the Annual Meeting other than as stated in the Notice. It is intended, however,
that the persons authorized under proxies may, in the absence of instructions
to the contrary, vote or act in accordance with their judgment with respect to
any other proposal properly presented for action at such meeting.
BY ORDER OF THE BOARD OF DIRECTORS
H. R. Smith
Secretary
Dallas, Texas
March 22, 1994
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1993, EXCLUDING CERTAIN OF THE EXHIBITS THERETO, MAY BE OBTAINED
WITHOUT CHARGE BY WRITING TO MAXUS ENERGY CORPORATION, P. DALLAS, INVESTOR
RELATIONS, 717 NORTH HARWOOD STREET, DALLAS, TEXAS 75201.
22
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P R O X Y
MAXUS ENERGY CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles L. Blackburn and Michael C. Forrest,
and either of them, each with full power of substitution and resubstitution, as
proxies to represent and to vote all shares which the undersigned may be enti-
tled to vote as of the record date at the Annual Meeting of Stockholders to be
held May 11, 1994, and any adjournment thereof. The undersigned directs said
proxies to vote as specified upon the items shown on the reverse side, which
are referred to in the Notice of Annual Meeting and described in the Proxy
Statement. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED,
SUCH SHARES WILL BE VOTED "FOR" ITEMS 1 AND 2 AND "AGAINST" ITEM 3.
Election of Directors, Nominees:
George L. Jackson, John T. Kimbell,
Richard W. Murphy and Jose Maria Perez
Arteta
(change of address)
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SEE REVERSE
SIDE
PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
X
SHARES IN YOUR NAME REINVESTMENT SHARES
1. Election of Directors (see reverse).
FOR WITHHELD
2. Ratification of appointment of Price Waterhouse as independent accountants.
FOR AGAINST ABSTAIN
3. Stockholder proposal requesting that the Corporation prepare a report
regarding the CERES Principles.
FOR AGAINST ABSTAIN
For, except vote withheld from the following nominee(s):
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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 AND 2 AND AGAINST ITEM 3.
SIGNATURE(S) ________________________ DATE ____________________________________
SIGNATURE(S) ________________________ DATE ____________________________________
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH
SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF THE SIGNOR IS A CORPORATION,
PLEASE SIGN THE FULL CORPORATE NAME, BY DULY AUTHORIZED OFFICER.
<PAGE>
Appendix
Omitted Graphic Material
Material Description
Omitted and Location
- -------- ------------
13 images pictures of directors and nominees for director
whose biographies are included on pages
2 through 6.
performance chart comparison of five year cumulative total return
among the Corporation, S&P 500 Index and a peer
group index-page 19 (separately submitted in
paper form under cover of Form SE pursuant to
Rule 304 of Regulation S-T).
