<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MAXUS ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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 fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 3, 1995
---------------------
To the Stockholders of
MAXUS ENERGY CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Maxus Energy Corporation, a Delaware corporation (the "Company"),
will be held on August 3, 1995, at 10:00 a.m., Dallas time, at The Harvey Hotel,
400 North Olive Street, Dallas, Texas for the following purposes:
1. To elect seven nominees as directors, each for a one-year term ending in
1996;
2. To consider and vote upon amendments to the Company's Restated
Certificate of Incorporation;
3. To ratify the appointment of Arthur Andersen & Co. as independent
accountants for 1995; and
4. To transact such other business as may be properly brought before the
Annual Meeting or any adjournments thereof.
Information regarding the matters to be acted upon at the Annual Meeting is
contained in the Proxy Statement attached to this notice.
Only holders of record of the Company's common stock, par value $1.00 per
share, and the Company's $4.00 Cumulative Convertible Preferred Stock, par value
$1.00 per share, as of the close of business on June 14, 1995 are entitled to
vote on the matters to be presented at such meeting or any adjournment(s)
thereof. The holder of the $9.75 Cumulative Convertible Preferred Stock is, by
its terms, entitled to elect one director, but is not entitled to vote on the
matters presented to the stockholders for a vote at the Annual Meeting. The
holders of the $2.50 Cumulative Preferred Stock, par value $1.00 per share, are
not entitled to vote at the Annual Meeting.
YPF Sociedad Anonima, a sociedad anonima organized under the laws of the
Republic of Argentina, owns a sufficient number of shares to elect the seven
nominees for directors, to approve the amendments to the Restated Certificate of
Incorporation and to ratify the appointment of the independent accountants
notwithstanding the vote of any other stockholder, and intends to vote its
shares in favor of the nominees, the amendments to the Restated Certificate of
Incorporation and the appointment of the independent accountants.
By Order of the Board of Directors,
H. R. SMITH
SECRETARY
Dallas, Texas
July 3, 1995
<PAGE>
MAXUS ENERGY CORPORATION
717 NORTH HARWOOD STREET
DALLAS, TEXAS 75201
TELEPHONE: (214) 953-2000
------------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 3, 1995
INTRODUCTION
GENERAL
This Proxy Statement is being furnished by Maxus Energy Corporation, a
Delaware corporation (the "Company"), in connection with the annual meeting of
stockholders to be held on August 3, 1995 at 10:00 a.m., Dallas time, at The
Harvey Hotel, 400 North Olive Street, Dallas, Texas and any and all adjournments
thereof (the "Annual Meeting").
In accordance with the Delaware General Corporation Law (the "DGCL"), this
Proxy Statement and related form of proxy are being mailed to all Stockholders
(as hereinafter defined) of record of the Company as of June 14, 1995 (the
"Record Date") and is first being sent to such stockholders on or about July 3,
1995. ONLY HOLDERS (THE "STOCKHOLDERS") OF THE COMMON STOCK, PAR VALUE $1.00 PER
SHARE (THE "SHARES") OR THE $4.00 CUMULATIVE CONVERTIBLE PREFERRED STOCK, PAR
VALUE $1.00 PER SHARE (THE "$4.00 PREFERRED STOCK" AND TOGETHER WITH THE SHARES,
THE "VOTING SHARES"), OF RECORD ON THE RECORD DATE ARE ENTITLED TO VOTE ON ALL
MATTERS PRESENTED AT THE ANNUAL MEETING. As the holder of all of the outstanding
shares of the $9.75 Cumulative Convertible Preferred Stock, par value $1.00 per
share (the "$9.75 Preferred Stock"), The Prudential Insurance Company of America
("Prudential") is entitled, voting as a class, to elect one director separately
from the Company's other directors. Holders of the Company's $2.50 Cumulative
Preferred Stock, par value $1.00 per share (the "$2.50 Preferred Stock"), as
such, are not entitled to vote with respect to the matters to be acted upon at
the Annual Meeting.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
Stockholders on the Record Date are entitled to notice of and to vote at the
Annual Meeting and will be asked to consider and vote upon:
(i) the election of seven nominees (the "Nominees") as directors, each for a
one-year term expiring in 1996;
(ii) the adoption of amendments (the "Certificate Amendments") to the
Company's Restated Certificate of Incorporation (the "Certificate") to
(a) allow stockholder action to be taken by written consent; (b)
eliminate cumulative voting rights; and (c) eliminate the supermajority
vote requirement for the removal of a director; and
(iii) the ratification of the appointment of Arthur Andersen & Co. ("Arthur
Andersen") as independent accountants for 1995.
VOTING AT THE ANNUAL MEETING
June 14, 1995 has been fixed as the Record Date for determining Stockholders
entitled to notice of the Annual Meeting. Only holders of record of Voting
Shares on the books of the Company on the Record Date will be entitled to vote
at the Annual Meeting. On the Record Date, there were 135,609,772 Shares
outstanding, all of which were held of record by one person, YPF Sociedad
Anonima, a sociedad anonima organized under the laws of the Republic of
Argentina ("YPF"), and 4,356,958 shares of $4.00 Preferred Stock outstanding,
which were held of record by approximately 1,284 persons.
<PAGE>
The Shares and the $4.00 Preferred Stock are the only classes of voting
securities of the Company outstanding entitled to vote on the matters to be
presented at the Annual Meeting. Each holder of record of Voting Shares will be
entitled to one vote per Voting Share on each matter submitted to a vote of the
Stockholders at the Annual Meeting or any and all adjournments thereof. Under
Article Eighth of the Certificate, cumulative voting is permitted in the
election for directors. Each Stockholder may cumulate the voting power
represented by his or her Voting Shares and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of votes
to which such Voting Shares are entitled or distribute such votes among as many
candidates for election as the Stockholder desires. Under the DGCL and the
Certificate, a majority of the Voting Shares entitled to vote, represented in
person or by proxy, will constitute a quorum at the Annual Meeting.
Prudential has notified the Company that it intends to elect Mr. R.A. Walker
to the Board of Directors of the Company (the "Board"). Information regarding
Mr. Walker is provided following the information herein regarding the Nominees.
Stockholders are not, as such, entitled to vote on the election of Mr. Walker.
The holder of the $9.75 Preferred Stock is not, as such, entitled to vote on the
matters to come before the Annual Meeting. The Company is not required to
solicit, and is not by this Proxy Statement soliciting, a proxy from the holder
of the $9.75 Preferred Stock, as such.
Under the DGCL and the Certificate, the seven nominees for directors
receiving the most votes will be elected as directors. The affirmative vote of a
majority of the votes cast is required to ratify the appointment of the
independent accountants. Under the Certificate, the affirmative vote of the
holders of at least 80% of the Voting Shares, voting together as a single class,
is required to adopt the Certificate Amendments. YPF currently owns
approximately 96.9% of the outstanding Voting Shares. YPF has informed the
Company that it intends to vote its Shares in favor of the Nominees, the
Certificate Amendments and the ratification of the appointment of the
independent accountants. YPF owns a sufficient number of Shares to elect the
Nominees, to approve the Certificate Amendments and to ratify the appointment of
the independent accountants, notwithstanding the vote of any other Stockholder.
Under the Certificate, the By-Laws of the Company (the "By-Laws") and the
DGCL, a proxy returned without instructions will be counted for purposes of
determining whether a quorum is present at the Annual Meeting and will have the
effect of a vote against the Certificate Amendments. Abstentions and broker
non-votes will also have the effect of a vote against the Certificate
Amendments. Any proxy given may be revoked either by a written notice duly
signed and delivered to the Secretary of the Company prior to the exercise of
the proxy, by execution of a subsequent proxy or by voting in person at the
Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS OF MAXUS ENERGY CORPORATION
GENERAL
The By-Laws provide that the number of directors shall be fixed by the Board
and shall be no fewer than three nor more than fifteen. The Board has currently
fixed the number of directors at eight. Under the Certificate and By-Laws, as
amended in June 1995, each director will serve a one year term.
The persons noted under "Nominees" below, excluding Mr. Walker, have been
nominated by the Board for election as directors to serve until the next annual
meeting of the stockholders and until their successors have been elected and
shall qualify as directors. YPF has indicated that it intends to vote its Shares
equally in favor of the Nominees.
2
<PAGE>
INFORMATION REGARDING NOMINEES FOR DIRECTORS,
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
THE NOMINEES. The name, age, present principal occupation or employment and
the material occupations, positions, offices or employments for the past five
years of each Nominee and Mr. Walker are set forth below. Unless otherwise
indicated, each such person has held the principal occupation or employment
listed opposite his name for at least the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND MATERIAL POSITIONS
NAME AGE HELD DURING THE PAST FIVE YEARS
- ------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
Nells Leon 68 Mr. Leon has been a director of the Company since June 1995. He
has been a director of YPF since 1991, and he was elected
President of YPF in May 1995. He has been associated with YPF
since 1990, serving as Executive Vice President. He was Vice
President of Operations of Sol Petroleo S.A. from 1987 to 1990.
Peter Gaffney 60 Mr. Gaffney has been President, Chief Executive Officer and a
director of the Company since April 1995. Previously, Mr.
Gaffney was a Senior Partner of Gaffney, Cline & Associates,
Inc. ("Gaffney, Cline"), a firm engaged in petroleum management
consulting. He had been involved with such firm since 1962,
being one of the founders.
Cedric Bridger 59 Mr. Bridger has been a director of the Company since April 1995.
He has been Vice President, Finance and Corporate Development of
YPF since 1992. From 1989 to 1992, he was employed by CVB
Industrias Mecanicas in Brazil, last serving as Marketing
Manager. Previously, he was associated with Hughes Tool Company
from 1964 to 1989.
James R. Lesch 73 Mr. Lesch has been a director of the Company since April 1995.
Mr. Lesch has been a Director of YPF since 1993. He is currently
retired, having retired from Hughes Tool Company in 1986. He was
Chief Executive Officer (1979-1986) and Chairman of the Board
(1981-1986) of Hughes Tool Company and also served as
Commissioner, State of Texas Department of Commerce (1988-1992).
Previously, he served as Director of the American Petroleum
Institute.
P. Dexter Peacock 53 Mr. Peacock has been a director of the Company since April 1995.
He has been a partner of Andrews & Kurth L.L.P. since 1975. He
is a member of the firm's Management Committee. He currently
serves as a director of Texas Commerce Bank National Association
and as an alternate Director of YPF.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND MATERIAL POSITIONS
NAME AGE HELD DURING THE PAST FIVE YEARS
- ------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
Charles L. Blackburn 66 Mr. Blackburn has been a director of the Company since 1986. For
more than five years prior to his retirement in to April 1995,
he was also the Chairman, President and Chief Executive Officer
of the Company. He is currently an international consultant for
YPF. Mr. Blackburn also serves as a Director of Lone Star
Technologies, Inc. and Landmark Graphics Corporation.
George L. Jackson 66 Mr. Jackson has been a director of the Company since 1987. Mr.
Jackson has been an oil field service consultant for more than
five years.
R.A. Walker 38 Mr. Walker has been a director of the Company since 1994. He is
the Managing Director of Prudential Capital Group and a Vice
President of The Prudential Insurance Company of America. Mr.
Walker has held similar positions with Prudential Capital Group
for the past five years. He was elected to the Board by
Prudential pursuant to the terms of the $9.75 Preferred Stock.
</TABLE>
THE COMMITTEES OF THE BOARD OF DIRECTORS; COMMITTEE MEETINGS. The Board
held a total of eight meetings in 1994. 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%. The Board has
established three committees to assist in the discharge of its responsibilities.
The membership of each committee is provided below with the description of each
committee.
EXECUTIVE COMMITTEE. The members of the Executive Committee are Messrs.
Leon, Gaffney and Peacock. The Executive Committee may exercise any of the
powers of the Board in the management of the business and affairs of the Company
in the intervals between meetings of the Board. Although the Committee has very
broad powers, prior to 1995 it has met only when it would have been impractical
to call a meeting of the Board. This Committee did not meet in 1994.
AUDIT REVIEW COMMITTEE. The members of the Audit Review Committee are
Messrs. Peacock, Jackson and Walker. The Audit Review Committee reviews the
professional services provided by the Company's independent accountants and the
independence of such accountants from management of the Company. This Committee
also reviews the scope of the audit coverage, the annual financial statements of
the Company and such other matters with respect to the accounting, auditing and
financial reporting practices and procedures of the Company as it may find
appropriate or as have been brought to its attention. This Committee met five
times in 1994.
COMPENSATION COMMITTEE. The members of the Compensation Committee are
Messrs. Leon, Bridger and Lesch. The Compensation Committee reviews and approves
executive salaries and administers bonus, stock option and incentive
compensation plans of the Company. The Committee advises and consults with
management regarding significant employee benefit policies and practices and
significant compensation policies and practices of the Company. This Committee
met seven times in 1994.
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 Company 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 Company by mail, press
release or otherwise more than 90 days prior to the
4
<PAGE>
meeting, notice by the stockholder to be timely must be delivered to the
Secretary of the Company 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
Company if so elected. The chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with these requirements.
DIRECTORS' COMPENSATION. The Company pays each director who is not an
employee of the Company or YPF (other than Mr. Blackburn) an annual retainer of
$20,000 and a fee of $1,000 for each meeting of the Board attended and for each
committee meeting attended. Under a deferred compensation plan, such accounts
may be deferred in whole or in part at the election of the director.
Compensation so deferred is denominated in dollars and 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 1995 is 5.34%. For
so long as Mr. Blackburn is an international consultant to YPF, he will not be
entitled to such compensation paid to other non-employee directors. See "CERTAIN
TRANSACTIONS AND RELATIONSHIPS" below.
CERTAIN TRANSACTIONS AND RELATIONSHIPS. The Company 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 Company's voting securities. Mr. Walker, an officer of
Prudential, has been nominated as a director of the Company by Prudential as
holder of all of the $9.75 Preferred Stock and pursuant to the terms thereof.
During 1994, the Company 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 Company. Further in 1994, Prudential provided the Company certain
software-related services. The Company has paid or will pay Prudential
approximately $377,000 for these services. The Company and Prudential have
agreed that Prudential will continue to perform such services during 1995 and
anticipate that the fees for the year will be somewhat higher.
Mr. Blackburn, formerly the Chairman, President and Chief Executive Officer
of the Company, has become an international consultant to YPF, the holder of all
of the outstanding Shares, and remains a director of the Company. Under a
two-year contract, Mr. Blackburn will be available to render consulting services
for a minimum of 60 days per year and be paid a retainer of $180,000 per year.
Mr. Blackburn will be paid $3,000 per day for each day of consulting provided in
excess of 60 days per year. He will also be provided offices in Dallas and
Buenos Aires.
Mr. Peacock, a director, is a partner in the law firm of Andrews & Kurth
L.L.P. It is anticipated that Andrews & Kurth L.L.P. will provide certain legal
services to the Company in 1995 and it is anticipated that the fees for such
services will exceed $75,000.
In 1994, the Company paid approximately $218,000 to D. L. Black, a former
director, for services rendered in connection with the sale of the Company's
geothermal business for approximately $66 million. Mr. Black retired as director
of the Company in May 1994. It is not expected that Mr. Black will continue to
provide services to the Company in 1995.
Gaffney, Cline provided oil and gas technical and management consulting
services to the Company in 1994. Mr. Gaffney, a Director and interim President
and Chief Executive Officer of the
5
<PAGE>
Company, formerly was a Senior Partner of Gaffney, Cline. The Company paid
Gaffney, Cline approximately $144,300 in 1994 for these services. The Company
and Gaffney, Cline have agreed that Gaffney, Cline will continue to provide such
services during 1995 and anticipate that the fees for such services will be
approximately the same as in 1994. Under an agreement, in consideration of
Gaffney, Cline granting Mr. Gaffney a leave of absence for such period as Mr.
Gaffney serves as President and Chief Executive Officer of the Company, the
Company has paid Gaffney, Cline $500,000 upon execution of the agreement with
Mr. Gaffney and will pay an additional $500,000 if the period of Mr. Gaffney's
service is extended.
EXECUTIVE OFFICERS
Officers are elected annually by the Board and may be removed at any time by
the Board. There are no family relationships among the executive officers
listed. Each of the officers named below has been employed by the Company during
the last five years with responsibilities of the general nature indicated by his
title, except as set forth below. All officers, except Mr. Gaffney, generally
are elected for terms of one year from the meeting of the Board following the
Annual Meeting of the Stockholders. Pursuant to an agreement, Mr. Gaffney will
serve as President and Chief Executive Officer of the Company for an initial
period of six months from April 1995 at a rate of $50,000 per month, plus
certain benefits including reimbursement of housing, travel and relocation
costs. Except as aforesaid, no arrangements or understandings exist between any
executive officers of the Company and any other persons pursuant to which such
executive officers were selected as executive officers.
The name, age, present principal occupation or employment and the material
occupations, positions, offices or employments for the past five years of the
executive officers of the Company are set forth below. Unless otherwise
indicated, each such person has held the principal occupation listed opposite
his name for at least the past five years.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- -------------------- --- --------------------------------------------------------------------------------
<S> <C> <C>
P. Gaffney 60 President and Chief Executive Officer. See "THE NOMINEES" above.
M.C. Forrest 61 Senior Vice President, Business Development and Technology since June 1995. Mr.
Forrest joined the Company in 1992 as special assistant to the Chairman. Since
that time he has served in various positions including Vice Chairman and Chief
Operating Officer. Prior to 1992, he was with Shell U.S.A. for more than five
years, last serving as President of its subsidiary, Pecten International
Company.
*S.G. Crowell 47 Senior Vice President, Operations. Mr. Crowell joined the Company in 1976 as a
geophysicist. Since such time, he has held various positions with the Company,
including Senior Vice President, North American Exploration and Production, and
Vice President, Administration. Mr. Crowell was named Senior Vice President,
Operations, in 1992.
G. W. Pasley 44 Senior Vice President, Asian Pacific Regional Development since June 1995. Mr.
Pasley joined the Company in 1984 as Assistant Director or Investor Relations.
Since such time, he has held various positions with the Company, including
Senior Vice President, International, Senior Vice President, Operations and
Senior Vice President, Finance and Administration and Chief Financial Officer.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
- -------------------- --- --------------------------------------------------------------------------------
<S> <C> <C>
*M.J. Barron 45 Vice President and Treasurer since 1994. Mr. Barron was elected Vice President,
Treasurer and Chief Financial Officer of the Company in 1991. Mr. Barron joined
Natomas Company, a subsidiary of the Company, in 1982 as a Project Manager. Mr.
Barron has held various positions with the Company, including Director of
Strategic Planning and Assistant Treasurer, since such time.
G.R. Brown 52 Vice President and Controller since 1989.
M.J. Gentry 43 Vice President, Finance and Administration and Chief Financial Officer since
June 1995. Mr. Gentry was elected Vice President, Human Resources and General
Services, in 1991. Mr. Gentry joined the Company in 1975 and has held various
positions with the Company, including Associate Director of Management
Information Systems Operations, Assistant Treasurer and General Manager of
Human Resources, since such time.
*M. Middlebrook 59 Vice President and General Counsel since 1990.
W. M. Miller 41 Vice President, Operations and Planning since June 1995. Mr. Miller joined the
Company in 1981 as a Senior Tax Specialist and has held various positions with
the Company, including General Manager, Maxus Southeast Sumatra, Inc. and
General Manager, Special Projects, since such time.
D.A. Wadsworth 46 Vice President, Legal since June 1995. Mr. Wadsworth joined Natomas Company, a
subsidiary of the Company, in 1979. He has served in various positions with the
Company including Associate General Counsel and Corporate Secretary.
<FN>
- ------------------------
* Messrs. Barron, Crowell and Middlebrook have announced their resignations as
officers of the Company as of June 30, 1995.
</TABLE>
A former Vice President of the Company, L.E. Ardila, filed a Form 3 dated
November 8, 1993 that erroneously reported the number of Shares beneficially
owned by him. After becoming aware of such error, Mr. Ardila filed an amended
Form 3 dated January 13, 1995.
EXECUTIVE OFFICER COMPENSATION
The following tables set forth all plan and non-plan compensation awarded
to, earned by or paid to the Chief Executive Officer and the four most highly
compensated executive officers of the Company in 1994, other than the Chief
Executive Officer (the "Named Executive Officers").
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
AWARDS
ANNUAL COMPENSATION SECURITIES
-------------------- RESTRICTED STOCK UNDERLYING
SALARY AWARD(S) OPTIONS/SARS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($) ($) (#) COMPENSATION ($)
- ------------------------------------- --------- --------- --------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
C.L. Blackburn ...................... 1994 519,996 200,000 0(1) 185,000 31,200(5)
Chairman, President and 1993 512,496 100,000 0 0 30,750(5)
Chief Executive Officer 1992 482,496 500,000 0 65,600 28,950(5)
M.C. Forrest ........................ 1994 304,020 100,000 0 65,000 18,241(5)
Sr. Vice President 1993 298,020 60,000 0 0 17,881(5)
1992 213,345 95,000 0 50,000 91,508(6)
S.G. Crowell ........................ 1994 236,544 100,000 0(2) 75,000 14,193(5)
Sr. Vice President 1993 222,669 60,000 0 0 13,360(5)
1992 212,547 95,000 0 20,400 12,753(5)
G.W. Pasley ......................... 1994 208,440 100,000 0(3) 65,000 12,506(5)
Sr. Vice President 1993 197,640 45,000 0 0 11,930(5)
1992 183,540 82,500 0 24,500 11,012(5)
M. Middlebrook ...................... 1994 186,270 65,000 0(4) 28,000 11,176(5)
Vice President 1993 182,520 30,000 0 0 10,951(5)
and General Counsel 1992 176,895 75,000 0 12,000 10,614(5)
<FN>
- ------------------------
(1) As of 12/31/94, Mr. Blackburn owned 19,016 shares of restricted Shares
having an aggregate market value of $64,179.
(2) As of 12/31/94, Mr. Crowell owned 6,260 shares of restricted Shares having
an aggregate market value of $21,128.
(3) As of 12/31/94, Mr. Pasley owned a 3,756 shares of restricted Shares having
aggregate market value of $12,677.
(4) As of 12/31/94, Mr. Middlebrook owned 2,712 shares of restricted Shares
having an aggregate market value of $9,153.
(5) These payments represent the Company's matching contributions to the
qualified and non-qualified saving plans' accounts of the Named Executive
Officers.
(6) $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, $9,800, represents the
Company's matching contribution to the qualified and non-qualified savings
plans' accounts of Mr. Forrest for that year.
</TABLE>
8
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) FISCAL YEAR ($/SH) DATE $(2)
- ----------------------------------------------- ------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
C.L. Blackburn................................. 185,000 34.37% 5.00 6/17/04 555,000
M.C. Forrest................................... 65,000 12.43% 5.00 6/17/04 226,850
S.G. Crowell................................... 75,000 14.34% 5.00 6/17/04 268,500
G.W. Pasley.................................... 65,000 12.43% 5.00 6/17/04 232,700
M. Middlebrook................................. 28,000 5.35% 5.00 6/17/04 100,240
<FN>
- ------------------------
(1) The Named Executive Officers were granted the stated number of options and
a like number of SARs in tandem with the options which were to become
exercisable on June 16, 1997.
(2) The grant date present value was determined using a variation of the
Black-Sholes option pricing model. In determining such value, the expected
volatility of the Shares was assumed to be 50%, the risk-free rate of
return was based on zero-coupon Treasury yields as listed in "The Wall
Street Journal" on June 16, 1994 for trading activity on June 15, 1994
(range from 5.09% to 7.31%), no dividend yield was assumed since dividends
are not currently paid on Common Stock, and the time of exercise was
assumed to be immediately before expiration of the options. No adjustments
were made for non-transferability or risk of forfeiture, except that an
adjustment was made to reflect the probability of retirement based on
actuarial estimates and retirement no later than age 70.
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/ SARS
SHARES ACQUIRED REALIZED OPTION/SARS AT FY-END (#) AT FY-END ($)
NAME ON EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------- ----------------- ----------- ------------------------- ---------------------------
<S> <C> <C> <C> <C>
C.L. Blackburn....................... 0 N/A 271,933/185,000 0/0
M.C. Forrest......................... 0 N/A 50,000/65,000 0/0
S.G. Crowell......................... 0 N/A 85,214/75,000 0/0
G.W. Pasley.......................... 0 N/A 43,608/65,000 0/0
M. Middlebrook....................... 0 N/A 38,583/28,000 0/0
</TABLE>
PAYMENTS FOR RESTRICTED SHARES AND OPTIONS
On May 1, 1995 the restrictions on restricted Shares previously awarded to,
and held by, the Named Executive Officers lapsed in accordance with their terms,
and pursuant to an Agreement of Merger ("Merger Agreement") dated February 28,
1995 among the Company, YPF and YPF Acquisition Corp. ("YPF Corp."), on June 8,
1995 each such Share was converted into the right to receive $5.50 in cash. As a
result of the conversion, the Named Executive Officers have received or are
expected to receive the following amounts: Mr. Blackburn -- $104,588, Mr.
Forrest -- $0, Mr. Crowell -- $34,430, Mr. Pasley -- $20,658, Mr. Middlebrook --
$14,916.
It is believed that, pursuant to the Merger Agreement, the Named Executive
Officers will surrender all options and SARs held by them in exchange for
payments not to exceed the following amounts: Mr. Blackburn -- $1,100,000; Mr.
Forrest -- $385,000; Mr. Crowell -- $390,000; Mr. Pasley -- $335,000; Mr.
Middlebrook -- $160,000. In addition, pursuant to the Merger Agreement,
9
<PAGE>
Messrs. Jackson and Walker have elected to surrender options previously granted
under the now terminated 1992 Director Stock Option Plan and are expected to
receive $65,000 and $37,500, respectively, in exchange therefor.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
CHANGE-IN-CONTROL AGREEMENTS. Prior to entering into the Merger Agreement,
the Company entered into agreements with Mr. Blackburn and each of the other
Named Executive Officers which were binding upon execution but became operative
when YPF acquired control of the Company.
Under these agreements, the executive officer is entitled to continue in the
employ of the Company 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 Company 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 Company 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 Company 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.
On April 7, 1995, all of the Company's executive officers gave notice of
their intent to resign under circumstances in which they had the right to
receive severance payments under the change in control agreements. In order to
facilitate the transition following the acquisition by YPF, the Company and the
eight executive officers who are parties to such agreements agreed that the
executive officers would continue to work for the Company in their present
positions at their then-current level of compensation until June 30, 1995 or
such date as otherwise mutually agreed. The Company also agreed to pay the
executive officers such severance payments no later than April 15, 1995. Mr.
Blackburn resigned as Chairman, Chief Executive Officer and Chairman of the
Company on April 21, 1995 and retired as an employee of the Company on April 30,
1995. Messrs. Barron, Crowell and Middlebrook have announced that they will be
resigning or, in the case of Mr. Middlebrook, retiring on June 30, 1995.
Pursuant to said agreement and the change in control agreements, the Named
Executive Officers and all of the executive officers as a group have received or
are entitled to receive the following amounts: Mr. Blackburn -- $2.7 million;
Mr. Forrest -- $1.0 million; Mr. Crowell -- $1.0 million; Mr. Pasley -- $0.9
million; Mr. Middlebrook -- $0.8 million; and the executive officers as a group,
$8.2 million.
SEPARATION PAY PLAN. Under the Company's Separation Pay Plan, most
employees (other than non-resident aliens), including the 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 Company 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
Company (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 Company, plus three months'
base pay, not to exceed a maximum of twelve months base pay; and,
10
<PAGE>
in the case of a change in control of the Company, separation pay in an amount
equal to one month's base pay for each year of service with the Company, 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
Effective February 1, 1987, the Company adopted a new retirement income plan
(the "New Retirement Income Plan") applicable to most of its employees to
replace the Company'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. Benefits may be paid in
equal monthly installments, starting on the date of retirement and continuing
until death, or employees may select 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. In the case of the Named Executive Officers, if benefits at the
time of retirement exceed the then permissible limits of such statutes, the
excess would be paid by the Company from the "SERP" described below.
In addition, an unfunded Supplemental Executive Retirement Plan (the "SERP")
effective March 1, 1990 provides additional benefits to the Named Executive
Officers and to certain other officers and executive employees designated by the
Company's highest ranking officer. No decision has been made concerning Mr.
Gaffney's participation in the SERP. Under the SERP, a participant acquires the
right upon retirement to a lump sum amount which is the actuarial equivalent to
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 Company'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 Company 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 Company 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, 1995 in those cases where the participant's age on that date
was greater than normal retirement age) under the Company's retirement plans as
supplemented by the SERP based on service and compensation through December 31,
1994 for the Named Executive Officers are as follows: Mr. Blackburn -- $180,699,
Mr. Forrest -- $60,200, Mr. Crowell -- $96,224, Mr. Pasley -- $54,227 and Mr.
Middlebrook -- $63,380. Whether any amounts actually become payable in whole or
in part depends on the contingencies and conditions governing the applicable
retirement plan. (Mr. Blackburn retired as of April 30, 1995 and received a
total payment of $1.94 million from the Company's retirement plans.)
11
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
Except as noted below, the following table sets forth the beneficial
ownership (as defined in the rules of the Securities and Exchange Commission
(the "Commission")) as of June 14, 1995 of the Company's and YPF's equity
securities of the directors, the Named Executive Officers and all directors and
executive officers as a group. At such date, all directors and executive
officers as a group beneficially owned less than 1% of the $4.00 Preferred Stock
and YPF Class D shares ("YPF 'D' ") outstanding. None of the directors or
executive officers beneficially owned any $9.75 Preferred Stock, $2.50 Preferred
Stock or YPF Class A, B or C shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF SECURITIES
BENEFICIALLY
NAME OF BENEFICIAL OWNER TITLE OF SECURITY OWNED
- ----------------------------- ---------------------------------------------- -------------------
<S> <C> <C>
Charles L. Blackburn......... Common Stock.................................. 456,933(1)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... -0-
Cedric Bridger............... Common Stock.................................. -0-(2)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... 3,922
Steven G. Crowell............ Common Stock.................................. 160,214(1)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... -0-
Michael C. Forrest........... Common Stock.................................. 115,000(1)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... 3,000
Peter Gaffney................ Common Stock.................................. -0-(2)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... -0-
George L. Jackson............ Common Stock.................................. 20,000(1)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... -0-
Nells Leon................... Common Stock.................................. -0-(2)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... -0-
James R. Lesch............... Common Stock.................................. -0-(2)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... 2,000
McCarter Middlebrook......... Common Stock.................................. 66,583(1)
$4.00 Preferred Stock......................... 183
YPF "D"....................................... -0-
George W. Pasley............. Common Stock.................................. 108,608(1)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... -0-
P. Dexter Peacock............ Common Stock.................................. -0-(1)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... 3,000
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF SECURITIES
BENEFICIALLY
NAME OF BENEFICIAL OWNER TITLE OF SECURITY OWNED
- ----------------------------- ---------------------------------------------- -------------------
<S> <C> <C>
R.A. Walker.................. Common Stock.................................. 10,000(1)(3)
$4.00 Preferred Stock......................... -0-
YPF "D"....................................... -0-
--------
Directors and executive -0-(1)(2)(3)
officers as a group......... Common Stock.................................. 183
$4.00 Preferred Stock......................... 11,922
YPF "D".......................................
--------
--------
<FN>
- ------------------------
(1) Includes Shares as to which the directors and Named Executive Officers, and
the directors and executive officers as a group, have the right to acquire
within 60 days upon the exercise of options granted under the Company's
discontinued or suspended long-term incentive or stock option plans as
follows: Mr. Blackburn, 456,933 Shares; Mr. Crowell, 160,214 Shares; Mr.
Forrest, 115,000 Shares; Mr. Jackson, 20,000 Shares; Mr. Middlebrook,
115,000 Shares; Mr. Pasley, 108,608 Shares; Mr. Walker, 10,000 Shares; and
all directors and executive officers as a group, 1,156,909 Shares. All of
the directors and executive officers have elected or are expected to elect
to surrender such options pursuant to the Merger Agreement.
(2) Does not include Shares owned by YPF, as to which each of Messrs. Bridger,
Gaffney, Leon, Lesch and Peacock disclaims beneficial ownership.
(3) Does not include any securities owned by Prudential, as to which Mr. Walker
disclaims beneficial ownership.
</TABLE>
A change in control of the Company occurred on April 5, 1995 when YPF Corp.,
a wholly owned subsidiary of YPF, acquired 120,000,613 Shares representing at
that time approximately 88.5% of the Shares of the Company pursuant to a tender
offer (the "Offer") commenced on March 6, 1995 for all the outstanding Shares at
$5.50 per share. On June 8, 1995, the Stockholders approved the Merger Agreement
and YPF Corp. was merged into the Company on such date (the "Merger"). As a
result of the Merger, each outstanding Share (other than shares held by YPF
Corp., YPF or any of their subsidiaries, or in the treasury of the Company, all
of which were cancelled, and Shares of holders who perfected their appraisal
rights under Section 262 of the DGCL) were converted into the right to receive
$5.50 per Share, and YPF became the sole holder of the then-outstanding Shares.
YPF currently owns approximately 96.9% of the outstanding Voting Shares.
The total amount of funds used by YPF and YPF Corp. to acquire the entire
common equity interest in the Company, including the purchase of Shares pursuant
to the Offer and the payment for Shares converted into the right to receive cash
pursuant to the Merger, and to pay related fees and expenses, was approximately
$800 million. YPF Corp. and YPF entered into a Credit Agreement (the "Credit
Agreement") with Chase Manhattan Bank (National Association) ("Chase") as agent
for the lenders thereunder pursuant to which a $550 million credit facility (the
"Purchaser Facility") was extended to YPF Corp. and YPF. On April 5, 1995, YPF
Corp. borrowed $442.2 million under the Purchaser Facility and received a
capital contribution of $250 million from YPF. YPF Corp. used such borrowings
under the Purchaser Facility and the funds contributed to it from YPF to
purchase the 120,000,613 Shares pursuant to the Offer. The amounts to be paid to
the holders of Shares that were converted into the right to receive cash
pursuant to the Merger are being made from available cash. In addition, Chase
has provided two additional credit facilities aggregating up to $425 million:
(i) a credit facility of up to $250 million to be extended to Midgard Energy
Company ("Midgard"), a wholly owned subsidiary of the Company (the "Midgard
Facility"), and (ii) a credit facility of up to $175 million to be extended to
Maxus Indonesia, Inc., a wholly owned subsidiary of the Company (the "Holdings
Facility"). The proceeds of the Midgard Facility, the Holdings Facility and
available cash were used to repay the Purchaser Facility.
13
<PAGE>
To the knowledge of the Company, as of June 14, 1995, no person beneficially
owned more than 5% of any class of the Company's voting securities except as set
forth below:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF CLASS OWNED CLASS
- -------------------------------------------- -------------------------- ------------------ ------------
<S> <C> <C> <C>
YPF Sociedad Anonima ....................... Common Stock 135,609,772 100.0%
Avenida Pte. Roque
Saenz Pena 777
1364 Buenos Aires
Argentina
The Prudential Insurance Company of $9.75 Preferred Stock 1,250,000(1) 100.0%
America ...................................
Prudential Plaza
Newark, New Jersey 07102-3777
Kidder, Peabody Group Inc. ................. Common Stock 8,000,000(2) 5.6%
10 Hanover Square
New York, New York 10005
<FN>
- ------------------------
(1) On February 28, 1995, the Company and Prudential entered into an agreement
pursuant to which Prudential waived certain rights, including conversion
rights and registration rights, for the $9.75 Preferred Stock.
(2) 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 Company at any time prior to 5:00 p.m. on
October 10, 1997, one Share at a price of $13.00 per Share. The 8,000,000
Shares reported as beneficially owned by Kidder result from the assumed
exercise of all 8,000,000 of such warrants. According to said Schedule 13D,
General Electric Company ("GE") is the indirect parent of Kidder. The
information herein regarding such Shares assumes that Kidder's beneficial
ownership thereof had not changed as of June 14, 1995, and that GE
continues to be the indirect parent of Kidder, and is included herein in
reliance on such filing, except that the percent of class is based upon the
Company's calculations made in reliance upon the information regarding such
Shares contained in such filing.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Through April 21, 1995, the Compensation Committee of the Board of Directors
consisted of J. David Barnes, Chairman, B. Clark Burchfiel, Charles W. Hall,
George L. Jackson and Richard W. Murphy. Since April 21, 1995, the Compensation
Committee has consisted of Messrs. Leon, Bridger and Lesch. Dr. Burchfiel,
Schlumberger Professor of Geology at the Massachusetts Institute of Technology
("MIT"), from time to time has served the Company by conducting training
workshops and seminars, performing geological research and furnishing
consultation with respect to selected potential exploration projects. As
consideration for these services in 1994, approximately $32,600 was paid to Dr.
Burchfiel individually and approximately $147,000 was paid to MIT.
The Compensation Committee's Report on Executive Compensation for the fiscal
year ended December 31, 1994, which was prepared by the Compensation Committee
as composed prior to April 21, 1995, follows. Consequently, the Report should be
read with the understanding that it does not reflect the Merger, Mr. Blackburn's
resignation as Chairman, President and Chief Executive Officer on April 21,
1995, or Mr. Gaffney's election as President and Chief Executive Officer.
14
<PAGE>
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 Company. The Committee is responsible for reviewing
and approving the compensation paid to executive officers of the Company,
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 Company's policy with
respect to all other management level employees. That policy has the following
objectives:
- To enhance the Company's competitiveness by attracting and retaining
quality talent.
- To link employee's long-term earnings to the long-term success of the
Company.
- 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)
The Committee continuously attempts to assess the reasonableness and
competitiveness of the Company'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 Committee's practice has been to retain an independent outside
consultant, at intervals of approximately five years, to assist it in this
regard by making an independent assessment. The last such independent assessment
was conducted in 1993.
The Company does not believe it will pay any employee compensation in 1995
that will cause it to exceed the $1 million deduction limit under Section 162(m)
of the Internal Revenue Code of 1986, as amended. If it appears that employee
compensation will exceed the deduction limit in the future, the Company
presently intends to comply with Section 162(m) as circumstances allow, unless
the Committee determines that required changes would not be in the Company's
best interest.
COMPONENTS OF COMPENSATION
BASE SALARY -- The Committee annually reviews the Chief Executive Officer's
and the other executive officers' base 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 Company
targets total compensation at the 50th percentile range for similar positions at
other U.S. based independent oil and gas companies. Based on the Compensation
Survey, the average of the Company's executive officers' base salaries as of
April 1994 was on average seven percentage points below the targeted levels.
- ------------------------
(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 were not considered in determining the
Company's 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.
15
<PAGE>
Mr. Blackburn (the "CEO") has been the Chairman, President and Chief
Executive Officer of the Company since 1987. His base salary did not increase in
1994. The Committee determined not to increase the CEO's base salary in 1994
since his monthly base rate (after giving effect to his 6.1% salary increase in
April 1993) approached the targeted level. The CEO's base salary as of April
1994 was two percentage points below the median level for similar positions in
the Compensation Survey.
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 Company as measured
against the targets for cash flow and return on capital employed as established
in the annual plan of the Company. Further adjustments may be made for unusual
events or events outside the control of the Company'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 1994 was below the
$831,000 targeted amount with $727,000 being award to eight individuals within
this group. The reasons the executive officers were awarded less than the
targeted amount were that the Company did not meet its 1994 objectives with
respect to cash flow and return on capital employed. Based on the Company's
performance with respect to these objectives, the 1994 bonus pool for the eight
executive officers should have been 97.3% of the targeted amount (or $808,000);
however, the Committee made the subjective determination to reduce the award
amount further due to the performance of the Common Stock in 1994.
The CEO was granted a bonus of $200,000 in December 1994 (or approximately
38% of his base salary). The Committee awarded this amount based upon its
evaluation of the CEO's performance in connection with restructuring activities
during 1994. The restructuring activities have led to an estimated reduction in
overhead of approximately $8 million per year, the successful sale of the
Company's gulf coast properties, the refocusing on certain core areas of
operations and the development of various funding options to support the
Company's future operations.
LONG-TERM INCENTIVES -- The Company's stockholders have approved the
Company's virtually identical 1986 and 1992 Long-Term Incentive Plans (the
"Plans"). The Plans permit granting officers and other key employees of the
Company stock options, stock appreciation rights ("SARs"), performance units and
awards of Common Stock (including restricted stock) or other securities of the
Company on terms and conditions determined by the Committee. The Committee
believes that these equity based awards are an integral part of the Company'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 stockholder value.
During 1994, the Company granted options and tandem SARs to the CEO and
other executive officers. As previously reported, the Committee presently
intends (assuming the proposed merger with YPF Acquisition Corp. is not
consummated) to consider granting this group of employees options/SARs every
other year and performance units in years in which options/SARs are not awarded.
Various factors may be taken into account in considering the number of options
an individual is granted, including performance in achieving the Company's
strategic plan objectives, level of responsibility and survey information
reflecting the value of awards to similar positions at other oil and gas
companies. The CEO and executive officers are granted SARs in tandem with the
stock options. SARs entitle the holder, upon exercise and contemporaneous
surrender and cancellation of the related options, to receive cash or stock, or
a combination of both, in an amount equal to the difference between the market
value of the Common Stock (calculated as specified in the Plans on the date of
exercise) and the exercise price of the SARs.
16
<PAGE>
For purposes of stock options grants and comparisons of competitive awards,
options are valued according to a variation of the Black-Scholes option pricing
model. This type of pricing model is used to value options traded in public
markets. The option exercise price is set at the closing market price of the
Common Stock preceding the day of the grant and the Company does not adjust the
exercise price for drops in the price of the Common Stock.
In June 1994, the CEO was granted the option to purchase 185,000 shares of
Common Stock at a price of $5.00 per share. SARs were also issued in tandem with
these options. The grant was based on survey data reflecting the value of awards
to similar positions at other oil and gas companies. The Committee believes
that, like the use of performance units, the use of options serves to help align
the compensation of the CEO and other executive officers with interest of the
stockholders. Specifically, the options will only have value if the market value
of the Common Stock increases after the date of grant.
MEMBERS OF THE COMPENSATION COMMITTEE:
J. David Barnes, Chairman
B. Clark Burchfiel
Charles W. Hall
George L. Jackson
Richard W. Murphy
17
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of five-year cumulative returns
(assuming reinvestment of any dividends), among the Company, the Standard &
Poor's 500 Stock Index and a peer group selected by the Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL
RETURN AMONG THE COMPANY, S&P 500 INDEX
AND A PEER GROUP INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MAXUS S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 $100 $100 $100
1990 82.9 97.0 86.6
1991 67.1 126.5 82.4
1992 62.2 137.5 85.4
1993 54.9 149.8 101.3
1994 32.9 151.8 87.5
</TABLE>
<TABLE>
<CAPTION>
YEAR END
DATA 1989 1990 1991 1992 1993 1994
- ----------- ---- ----- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Maxus $100 $82.9 $ 67.1 $ 62.2 $ 54.9 $ 32.9
S&P 500 100 97.0 126.5 137.5 149.8 151.8
Peer Group 100 86.6 82.4 85.4 101.3 87.5
</TABLE>
The stock performance graph assumes $100 was invested on December 29, 1989
in the Shares, 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 14 peer companies (named below) whose primary
business, like that of the Company, is exploring for and producing oil and gas.
The companies were selected to represent a composite similar to the Company in
size and mix of domestic and international business. The group consists of large
independent exploration and production companies whose market equity exceeded
$500 million in 1990 or in the year in which data for the company became
available. The primary business of eight companies is domestic, and six
companies are primarily international. The performance index is based upon data
beginning with 1990 except for Lasmo plc which is included in the index starting
in 1992 when complete data for the year became available. Also, the performance
index does not include Bow Valley Industries Ltd. for 1994 because it was
acquired by another company in that year. The 14 companies are: Anadarko
Petroleum Corporation, Apache Corporation, Bow Valley Industries Ltd.,
Burlington Resources Inc., Canadian Occidental Petroleum Ltd., Enron
18
<PAGE>
Oil & Gas Company, Enterprise Oil plc, Lasmo plc, Louisiana Land & Exploration
Company, Noble Affiliates Inc., Oryx Energy Company, Ranger Oil Limited, Santa
Fe Energy Resources, Inc. and Union Texas Petroleum Holdings, Inc.
In the index used for the immediately preceding fiscal year, the peer group
did not include Apache Corporation or Ranger Oil Limited because the market
equity of each was less than $500 million; however, if a line representing the
same group of companies without Apache and Ranger were superimposed on the above
graph, it would be indistinguishable from the line on the above graph
representing the fourteen companies now included in the group. The plot points
for the line representing a group without Apache and Ranger would be as follows
for the year-ends indicated: 1990 -- $85.8; 1991 -- $80.8; 1992 -- $84.4; 1993
- -- $100.2; 1994 -- $84.8.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE NOMINEES.
PROPOSAL 2
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
On June 7, 1995 the Board approved the Certificate Amendments and voted to
recommend that the Stockholders consider and approve the Certificate Amendments.
These Certificate Amendments will (i) permit the Stockholders to take action by
written consent as well as at a stockholders' meeting, (ii) eliminate cumulative
voting, (iii) eliminate the requirement of a supermajority vote to remove a
director and (iv) eliminate a supermajority vote requirement to amend provisions
in Articles Seventh and Eighth of the Certificate. The general purpose of these
amendments is to make the operation of the Company more efficient and convenient
given the acquisition of all of the Shares by YPF.
The Certificate Amendments and their general effect are discussed below. A
copy of the proposed Certificate Amendments is attached as Exhibit A hereto, and
the description of the Certificate Amendments herein is qualified in its
entirety by reference to Exhibit A.
ARTICLE SEVENTH -- STOCKHOLDER ACTION BY WRITTEN CONSENT. The DGCL provides
that unless a corporation's certificate of incorporation provides otherwise,
stockholders may take action without a meeting if the holders of stock having
the minimum number of votes necessary to authorize such action sign a written
consent. The Certificate currently provides in Article Seventh that stockholders
may only take action at an annual or special meeting and specifically forbids
stockholder action by written consent. The proposed new Article Seventh would
remove this restriction on stockholder action and allow stockholder actions to
be taken by written consent. The effect of this amendment would be to allow YPF
to take stockholder action by written action without calling a meeting of
stockholders. As YPF holds all of the outstanding Shares and thus owns a
sufficient percentage of the Voting Shares to approve or disapprove most actions
requiring approval of the Voting Shares, allowing stockholder action to be taken
by written consent will avoid holding unnecessary stockholder meetings and save
the Company the concomitant costs and delays associated with such meetings.
The amendments to Article Seventh also remove the supermajority requirement
for amending that article. Such supermajority requirement no longer serves any
practical function as the requisite number of Shares necessary to amend the
article is now owned by YPF. The Certificate Amendments will allow Article
Seventh to be amended in the future by a simple majority of the Voting Shares.
ARTICLE EIGHTH -- CUMULATIVE VOTING, REMOVAL OF DIRECTORS. Under the DGCL,
cumulative voting for directors by the stockholders is permitted but is not
required. Article Eighth, Section 4 currently provides for cumulative voting if
any stockholder holds 30% or more of the outstanding Voting Shares. YPF holds
more than 30% of the outstanding Voting Shares, and thus cumulative voting is
permitted in connection with the election of directors, including the election
to be held at the Annual Meeting.
Given the limits on the size of the Board, the number of outstanding Voting
Shares and YPF's ownership of approximately 96.9% of the outstanding Voting
Shares, the remaining Stockholders do
19
<PAGE>
not own a sufficient number of shares to elect a director even with cumulative
voting. Thus, the Company is of the view this provision no longer serves any
meaningful purpose, and the Board has recommended that it be deleted from the
Certificate.
The proposed amendments to Article Eighth also delete the requirements that
any amendment thereto be approved by a vote of 80% of the Voting Shares and
that, subject to the rights of holders ("Preferred Holders") of any class or
series of stock having a preference over the Shares as to dividends or upon
liquidation, a director may be removed by a vote of 80% of the Voting Shares.
Again, in view of YPF's ownership of approximately 96.9% of the Voting Shares,
the Company believes such provisions no longer serve any useful function. The
Certificate Amendments will allow Article Eighth to be amended and, subject to
said rights of Preferred Holders, to remove directors in the future by a simple
majority of the Voting Shares.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL 2.
PROPOSAL 3
INDEPENDENT ACCOUNTANTS
Price Waterhouse L.L.P. ("Price Waterhouse") was the Company's independent
accountants for 1994. The Board has selected Arthur Andersen to act as the
Company's independent accountants for 1995. Arthur Andersen will have
representatives at the Annual Meeting who will have the opportunity to make a
statement, if the representatives desire to do so, and will be available to
respond to appropriate questions. Price Waterhouse will not have a
representative at the Annual Meeting.
On April 21, 1995 Price Waterhouse, the Company's previous independent
accountants, was dismissed, and Arthur Andersen was engaged as the Company's
independent accountants. Arthur Andersen has acted as YPF's independent
accountants since 1991, and the decision to retain Arthur Andersen as the
Company's independent accountants was based on the desire to make the audits of
the Company, as a Company now closely related to YPF, more convenient and
efficient. None of Price Waterhouse's reports on the financial statements for
the past two fiscal years contained an adverse opinion or a disclaimer of
opinion, or was qualified or modified as to uncertainty, audit scope or
accounting principles. During the past two fiscal years the Company did not have
any disagreements with Price Waterhouse on a matter of principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to their satisfaction, would have caused it to
make reference to the subject matter of the disagreement in connection with
their report.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL 3.
PROXY SOLICITATION
In addition to soliciting proxies by mail, directors, executive officers and
employees of the Company, 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 the Shares and
$4.00 Preferred Stock, and the Company 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 Company has
retained Morrow & Co., Inc. to aid in the solicitation of proxies. The fee of
such firm is estimated to be $2,000, plus reimbursement for out-of-pocket costs
and expenses.
OTHER BUSINESS
The Board does not know of any other business to be presented for
consideration at the Annual Meeting. If, however, any other business properly
comes before the Annual Meeting, it is the intention of the persons named in the
proxy to vote on such matters in accordance with their best judgment.
20
<PAGE>
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's Proxy Statement relating to
the 1996 Annual Meeting of Stockholders, a stockholder proposal must be received
in proper form at the Company's principal executive office no later than March
2, 1996, and must otherwise comply with the requirements of Rule 14a-8 under the
Securities Exchange Act of 1934.
By Order of the Board of Directors
H. R. SMITH
SECRETARY
Dallas, Texas
July 3, 1995
A copy of the Company's Annual Report of Form 10-K for the year ended
December 31, 1994, excluding certain exhibits thereto, may be obtained without
charge by sending a written request to: Maxus Energy Corporation, Investor
Relations, 717 Harwood Street, Dallas, Texas 75201.
21
<PAGE>
EXHIBIT A
AMENDMENTS TO MAXUS ENERGY CORPORATION'S
RESTATED CERTIFICATE OF INCORPORATION
ARTICLE SEVENTH
SEVENTH. Subject to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect additional Directors under specific circumstances,
(a)_Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at an annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing of such stockholders; and
(b) Special meetings of stockholders of the Corporation may be called only
by the Chairman of the Board of Directors and shall be promptly called by
the Chairman or the Secretary at the written request of a majority of the
Board of Directors, or the holders of a majority of the outstanding
Common Stock upon not fewer than ten nor more than 60 days' written
notice.
Notwithstanding anything contained in this Certificate of Incorporation to
the contrary, the affirmative vote of the holders of at least 80% of the
combined voting power of all shares of the Corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to alter, change, amend, repeal, or adopt any provision inconsistent
with, this Article Seventh.
ARTICLE EIGHTH
SECTION 4.__CUMULATIVE VOTING IN CERTAIN CIRCUMSTANCES.__In any election of
Directors of the Corporation on or after the date on which the Corporation
becomes aware than any 30% Stockholder (as defined below) has become a 30%
Stockholder, there shall be cumulative voting for election of Directors so that
any holder of shares of Voting Stock may cumulate the voting power represented
by his shares and give one candidate a number of votes equal to the number of
Directors to be elected multiplied by the number of votes to which such shares
are entitled, or distribute such votes on the same principle among as many
candidates for election as such holder of shares determines. For the purposes of
this Section 4 of Article Eighth, a "30% Stockholder" shall mean any person
(other than the Corporation and any other corporation of which a majority of the
voting power of the capital stock entitled to vote generally in the election of
directors is owned, directly or indirectly, by the Corporation) who or which is
the beneficial owner, directly or indirectly, of 30% or more of the outstanding
Voting Stock.
SECTION 4. REMOVAL. Subject to the rights of the holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation to elect additional Directors under specified circumstances,
any Director may be removed from office only by the affirmative vote of the
holders of at least 50% 80% of the combined voting power of the outstanding
shares of Voting Stock, voting together as a single class.; provided, that
notwithstanding the foregoing provisions of this Section 5 of this Article
Eighth, if at any time when cumulative voting is permitted pursuant to Section 4
of this Article Eighth less than the entire Board of Directors is to be removed,
no Director may be removed from office if the votes cast against his removal
would be sufficient to elect him as a Director if then cumulatively voted for
him at an election of the class of Directors of which he is a part.
SECTION 6.__AMENDMENT, REPEAL OR ALTERATION.__Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the affirmative
vote of the holders of at least 80% of the combined voting power of the
outstanding shares of the Voting Stock, voting together as a single class, shall
be required to alter, change, amend, repeal, or adopt any provision inconsistent
with, this Article Eighth.
A-1
<PAGE>
SECTION 7.__CERTAIN DEFINITIONS.__For the purpose of this Article Eighth:
(a)_A "person" shall mean any individual, firm, corporation or other entity.
(b)_"Voting Stock" shall mean the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of Directors. In
any vote required by or provided for in this Article Eighth, each share
of Voting Stock shall have the number of votes granted to it generally in
the election of Directors.
(c)_A person shall be a "beneficial owner" of any shares of Voting Stock:
(i)_which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owned, directly or indirectly; or
(ii)_which such person or any of its Affiliates or Associates has (a)
the right to acquire (whether such right is exercisable immediately
or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (b)
the right to vote pursuant to any agreement, arrangement or
understanding; or
(iii)_which is beneficially owned, directly or indirectly, by any other
person with which such person or any of its Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any voting Stock;
provided, however, that no person shall be deemed to be a "beneficial
owner" of any shares of Voting Stock solely by reason of such person's
right to vote or to acquire such Voting Stock pursuant to any agreement
or instrument approved by a majority of the Board of Directors.
(d)_In determining whether a person is a 30% Stockholder pursuant to Section
4 of this Article Eighth, any class of Voting Stock outstanding shall be
deemed to include any Voting Stock deemed owned through application of
paragraph(c) of this Section 7 but shall not include any other securities
of such class which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(e)_"Affiliate" or "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on January 1, 1985.
A-2
<PAGE>
MAXUS ENERGY CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
P The undersigned hereby appoints Michael C. Forrest and Mark J. Gentry,
and either of them, each with full power of substitution and
R resubstitution, as proxies to represent and to vote all shares which
the undersigned may be entitled to vote as of the record date at the
O Annual Meeting of Stockholders to be held August 3, 1995, and any
adjournment thereof. The undersigned directs said proxies to vote as
X 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.
Y IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED, SUCH
SHARES WILL BE VOTED "FOR" ITEMS 1, 2 AND 3.
Election of Directors, Nominees: (change of address)
Charles L. Blackburn, Cedric Bridger, ___________________________
Peter Gaffney, George L. Jackson, ___________________________
J.R. Lesch, P. Dexter Peacock and ___________________________
Nells Leon ___________________________
------------------
SEE REVERSE SIDE
------------------
<PAGE>
/X/ Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Election of / / / / 2. Ratification of / / / / / / 3. Adoption of amendments / / / / / /
Directors appointment of (the "Certificate
(see reverse) Arthur Andersen Amendments") to the
For, except vote withheld as independent Company's Restated Certificate of Incorporation (the
from the following nominee(s): accountants. "Certificate") to (a) allow stockholder action to be
taken by written consent; (b) eliminate cumulative
_____________________________ voting rights; (c) eliminate the supermajority
vote requirement for the removal of a director;
and (d) eliminate the supermajority vote requirement
to amend certain provisions of the certificate.
In their discretion, the proxies are authorized to
vote upon such other business as may properly come
before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ITEMS 1, 2 AND 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.
</TABLE>
