<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:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HONDO OIL & GAS COMPANY
- --------------------------------------------------------------------------------
(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:
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Notes:
<PAGE>
HONDO OIL & GAS COMPANY
410 EAST COLLEGE BOULEVARD, ROSWELL, NM 88201
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 23, 1995
----------------
TO THE SHAREHOLDERS OF HONDO OIL & GAS COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the shareholders of Hondo
Oil & Gas Company will be held in the Board of Governors' Room, American Stock
Exchange, 86 Trinity Place, New York, New York, on Thursday, February 23, 1995
at 10:00 o'clock A.M., for the following purposes:
(1) To elect a board of nine directors;
(2) To approve the appointment of Ernst & Young LLP as independent
auditors for fiscal year 1995; and
(3) To transact such other business as may properly come before the
meeting, or any adjournment thereof.
The Board of Directors has fixed January 3, 1995 as the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
Accordingly, only shareholders of record at the close of business on that date
are entitled to vote at the meeting, or any adjournment thereof. Any
shareholder who wishes to examine a list of the shareholders entitled to vote
at the meeting may do so at the offices of Parker Chapin Flattau & Klimpl, LLP,
1211 Avenue of the Americas, 18th Floor, New York, New York, on and after
February 13, 1995.
Shareholders are cordially invited to attend the Annual Meeting. Regardless
of whether you expect to attend the meeting in person, we urge you to read the
attached Proxy Statement and sign, date and mail the accompanying proxy card in
the enclosed postage-prepaid envelope. It is important that your shares be
represented at the meeting, and your promptness will assist us in making
necessary preparations for the meeting. If you receive more than one proxy card
because your shares are registered in different names or addresses, each card
should be completed and returned to assure that all your shares are voted.
A copy of the Company's 1994 Annual Report is enclosed herewith. Please take
time to read the report.
By Order of the Board of Directors,
C. B. McDaniel
Secretary
Roswell, New Mexico
January 30, 1995
<PAGE>
HONDO OIL & GAS COMPANY
410 EAST COLLEGE BOULEVARD
ROSWELL, NEW MEXICO 88201
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 23, 1995
This proxy statement is furnished to shareholders of Hondo Oil & Gas Company
(the "Company") in connection with the solicitation by the Board of Directors
of the Company of proxies to be voted at the 1995 Annual Meeting of
Shareholders (the "Annual Meeting") at the time and place set forth in the
attached Notice of Annual Meeting. This Proxy Statement was first mailed to
shareholders on or about January 30, 1995. All costs of soliciting proxies will
be borne by the Company.
At the Annual Meeting, the Company's shareholders will be asked to consider
and vote upon (1) the election of the nine nominees for directors named below
and (2) the approval of the appointment of Ernst & Young LLP as independent
auditors for fiscal year 1995.
Any shareholder present at the Annual Meeting may withdraw his or her proxy
and vote in person on each matter brought before the Annual Meeting. The
accompanying proxy is also subject to revocation at any time before it is
exercised by filing with the Secretary of the Company an instrument revoking
the proxy or a duly executed proxy bearing a later date. All shares represented
by each properly signed and returned proxy in the accompanying form, unless
revoked, will be voted at the Annual Meeting, or at any adjournment thereof, in
accordance with the instructions thereon. If no instructions are specified, the
shares will be voted in favor of the election of the nominees for directors and
approval of the appointment of Ernst & Young LLP as independent auditors for
fiscal year 1995. If any other matters are properly presented at the Annual
Meeting, or any adjournment thereof, the persons voting the proxies will vote
them in accordance with their best judgment.
Votes cast by proxy or in person at the Annual Meeting will be counted by the
persons appointed by the Company to act as election inspectors for the meeting.
The election inspectors will treat shares represented by proxies that reflect
abstentions as shares that are present and entitled to vote, for purposes of
determining the presence of a quorum and for purposes of determining the
outcome of any matter submitted to the shareholders for a vote. Abstentions,
however, do not constitute a vote "for" or "against" any matter and thus will
be disregarded in the calculation of a plurality of "votes cast."
The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or persons entitled to vote that the
broker or nominee does not have discretionary power to vote on a particular
matter) as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. However, for purposes of determining the
outcome of any matter as to which the broker has physically indicated on the
proxy that it does not have discretionary authority to vote, those shares will
be treated as not present and not entitled to vote with respect to that matter
(even though those shares are considered entitled to vote for quorum purposes
and may be entitled to vote on other matters).
<PAGE>
In the election of directors, shares present but not voting will be
disregarded (except for quorum purposes) and the candidates for election
receiving the highest number of affirmative votes of the shares entitled to be
voted for them, up to the number of directors to be elected by those shares,
will be elected and votes cast against a candidate or votes withheld will have
no legal effect.
Only holders of shares of the Company's common stock of record at the close
of business on January 3, 1995 are entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof. On that date, there were 13,039,776
shares of common stock outstanding and entitled to one vote per share.
ADDITIONAL MATERIALS
Enclosed with this Proxy Statement is a copy of the Company's 1994 Annual
Report which is not to be regarded as proxy soliciting material or as a
communication by means of which solicitation is made with respect to the Annual
Meeting. Financial statements for the fiscal year ended September 30, 1994 are
not made part of this Proxy Statement.
AVAILABILITY OF FORM 10-K
SHAREHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1994, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, BY WRITING TO THE SECRETARY, HONDO OIL &
GAS COMPANY, P.O. BOX 2208, ROSWELL, NEW MEXICO 88202.
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Proxy Statement and for consideration
at the Annual Meeting, shareholder proposals must be submitted on a timely
basis. Proposals for the 1996 Annual Meeting of Shareholders must be received
by the Company no later than October 2, 1995. Any such proposals, as well as
any questions related thereto, should be directed to the Secretary of the
Company.
ELECTION OF DIRECTORS
INFORMATION REGARDING THE NOMINEES
All of the members of the Board of Directors listed below, except Messrs.
Bock and Steer, were elected at the 1994 Annual Meeting of Shareholders held on
February 24, 1994. One current director, Ms. Deborah J. Gudgeon, will not be
standing for reelection.
At the Annual Meeting nine directors are to be elected, each director to hold
office until the next Annual Meeting. In the absence of contrary instructions,
it is the intention of the persons named in the accompanying proxy to vote for
the nominees listed below, all of whom are members of the current Board of
Directors. A majority of the votes cast at the Annual Meeting shall be
sufficient to elect a director. The Board of Directors recommends that
shareholders vote FOR each of the nominees. In the event that any of the
nominees should become unavailable for any reason, which the Board of Directors
does not anticipate, it is intended that proxies will be voted for the election
of those persons, if any, as shall be designated by the Board of Directors.
Robert O. Anderson: Mr. Anderson, 77, has been a director and Chairman of the
Board of the Company since January 19, 1988. He was President and Chief
Executive Officer of the Company until December 1,
2
<PAGE>
1993. He is also a director of Hondo Magdalena Oil & Gas Limited and Mackenzie
Porcupine Pipeline Company, and the President and Co-Chairman of the Board of
Directors of The Hondo Company. He served as Chief Executive Officer of
Atlantic Richfield Company from 1963 until 1982, as Chairman of the Board of
Directors from 1965 until January 1986, and as a director until September 1986.
Dieter Bock: Mr. Bock, 55, became a director of the Company on November 10,
1994. He joined Lonrho Plc in February 1993 as Joint Managing Director and
Chief Executive and in January 1995 became Managing Director and Chief
Executive. Mr. Bock is also Chairman of the Supervisory Board of Advanta
Management AG, a property development company based in Germany. He qualified as
a lawyer at Marberg University and as an accountant at Munich University.
John J. Hoey: Mr. Hoey, 55, became a director on June 2, 1993 and became
President and Chief Executive Officer of the Company on December 1, 1993. He is
a director and President or Managing Director of each of the Company's
subsidiaries. He is also President and sole shareholder of Beneficial Capital
Corp. of New York, an investment company with ownership in a number of public
and private companies. From 1985 to 1992, he was associated with Atlantic
Petroleum Corp. of Pennsylvania, including serving as President of Atlantic
Refining and Marketing Corporation until its sale to Sun Co. in November 1988.
From 1972 to 1984, Mr. Hoey held various executive positions in international
banking and investment companies. From 1967 to 1971 he served in the U.S.
Department of State in Saigon, South Vietnam. He is a director of GVC Corp., a
publicly-held corporation.
C. B. McDaniel: Mr. McDaniel, 50, became a director of the Company on
November 15, 1993. He joined the Company as Counsel in June 1988 and became
Secretary of the Company on November 30, 1988. He is also Secretary or
Assistant Secretary and director (except Hondo Magdalena Oil & Gas Limited) of
each of the Company's subsidiaries. From 1980 to 1988, he was employed as an
attorney for Atlantic Richfield Company in Houston and Dallas, Texas, and from
1975 to 1980, he was in private practice of law in El Paso, Texas.
Douglas G. McNair: Mr. McNair, 66, has been a director of the Company since
February 25, 1993. He is an independent consultant for international
transactions, marketing and negotiations. From 1985 to 1986 he was Vice
President and Assistant to the Chairman and Chief Executive Officer of Atlantic
Richfield Company. From 1977 to 1985, he was Vice President of Atlantic
Richfield Company and worked with that company's subsidiary, Anaconda, in
connection with international operations. From 1972 to 1977, he was Vice
President of Atlantic Richfield Company in charge of international marketing.
From 1970 to 1972, he was President and Chief Executive Officer of Atlantic
Richfield Company's Brazilian marketing subsidiary.
John F. Price: Mr. Price, 53, became a director of the Company on November
16, 1992 and is a director of Hondo Magdalena Oil & Gas Limited. He is also a
director of The Hondo Company. He has been President of Princess Hotels
International, Inc. and Lonrho Inc. and Executive Vice President of Princess
Properties International Limited since March 1983. He was appointed an
Associate Director of Lonrho Plc in 1991. He is a Chartered Accountant and
joined the Lonrho group in 1969. He was appointed Managing Director of Lonrho
(Zambia) Ltd. in 1974 and was Managing Director of Lonrho (Zimbabwe) Ltd. from
1979 to 1983.
R. W. Rowland: Mr. Rowland, 77, has been a director of the Company since
January 19, 1988 and is a director of Hondo Magdalena Oil & Gas Limited. Until
January 1, 1995, he was Joint Managing Director and Chief Executive of Lonrho
Plc, and presently serves as a director. He is Co-Chairman of the Board of
Directors of The Hondo Company. He was appointed a director and Joint Managing
Director of Lonrho Plc
3
<PAGE>
in September 1961 and Chief Executive in April 1972. He is also a director of
approximately 200 of the more than 800 companies comprising the Lonrho group
worldwide, including Princess Hotels International, Inc. in the United States,
of which he is Chairman of the Board.
Robert K. Steer: Mr. Steer, 64, became a director of the Company on November
10, 1994. He has been an independent consulting geologist since 1987. He
retired in 1986 from Exxon Corporation where he served as Executive Vice
President of Esso Exploration, Inc. from 1982 to 1986. From 1978 to 1981, he
was Exploration Department Manager for Exxon Corporation, and from 1974 to
1978, he was President and Managing Director of Exxon Malaysia Inc.
R. E. Whitten: Mr. Whitten, 54, has been a director of the Company since
January 19, 1988. He has been an Executive Director of Lonrho Plc since July
1981 and became Finance Director on January 1, 1995. He joined the Lonrho group
in 1978. He is also a director of some 50 other companies in the Lonrho group,
including Princess Hotels International, Inc. and The Hondo Company.
EXECUTIVE OFFICERS
The following is a list of the executive officers of the Company and their
positions:
<TABLE>
<CAPTION>
OFFICER POSITION
------- --------
<S> <C>
John J. Hoey President, Chief Executive Officer
S. J. Urquhart Vice President and Controller
C. B. McDaniel Secretary and Counsel
</TABLE>
S. J. Urquhart: Mr. Urquhart, 32, joined the Company on May 15, 1988 as a
Financial Analyst and became Controller of the Company on August 1, 1992. He
was appointed Vice President and Controller on May 3, 1994. He is also a
director and Vice President of each of the Company's subsidiaries except Hondo
Magdalena Oil & Gas Limited. Mr. Urquhart is a Certified Public Accountant and
was employed by Ernst & Whinney (now Ernst & Young LLP) from 1984 to 1988.
For descriptions of the other executive officers of the Company, see
"Information Regarding the Nominees."
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS OF THE COMPANY
The following table sets forth certain information concerning the beneficial
ownership of the Company's common stock as of January 3, 1995, by (i) each
person who is known by the Company to own beneficially more than five percent
of the Company's common stock, (ii) each nominee for director, (iii) each of
the Company's directors and executive officers and (iv) all directors and
executive officers of the Company as a group. Under Securities and Exchange
Commission rules, several persons may be deemed to be the beneficial owners of
the same shares. As a result, readers are urged to read the footnotes to the
following table.
<TABLE>
<CAPTION>
COMMON STOCK PERCENTAGE OF
BENEFICIALLY OWNED COMMON STOCK
------------------ -------------
<S> <C> <C>
The Hondo Company 10,150,200(1)(2) 78%
Lonrho Plc 10,150,200(1)(2) 78%
Lonrho, Inc. 10,150,200(1) 78%
Scottsdale Princess, Inc. 10,150,200(1) 78%
Robert O. Anderson 10,150,200(1)(4) 78%
Phelps Anderson 10,150,200(1)(4) 78%
Robert B. Anderson 10,150,200(1)(4) 78%
Dieter Bock 0(3) --
Deborah J. Gudgeon 0(3) --
John J. Hoey 50,000 *
C. B. McDaniel 10,000 *
Douglas G. McNair 7,500 *
John F. Price 0(3) --
R.W. Rowland 0(3) --
Robert K. Steer 0 --
S. J. Urquhart 0 --
R. E. Whitten 0(3) --
All directors and executive offi-
cers as a group 10,217,700(1)(2)(3)(4) 78%
</TABLE>
- --------
* less than 1%
(1) These 10,150,200 shares are owned by The Hondo Company. The shareholders of
The Hondo Company and their respective percentages of ownership of The
Hondo Company as of the above date are set forth below:
<TABLE>
<CAPTION>
PERCENTAGE OF
THE HONDO COMPANY
THE HONDO COMPANY SHAREHOLDER COMMON STOCK
----------------------------- -----------------
<S> <C>
Robert O. Anderson 39.990%
Phelps Anderson, son of Robert O. Anderson 5.005%
Robert B. Anderson, son of Robert O. Anderson 5.005%
Lonrho, Inc. 50.000%
</TABLE>
Due to their shareholdings of The Hondo Company and a Shareholders'
Agreement, Robert O. Anderson, Phelps Anderson, Robert B. Anderson and
Lonrho, Inc. may be deemed, subject to the pledge arrangement described in
Note (2), below, to have shared voting and investment power as to the shares
owned by The Hondo Company. Robert O. Anderson, Phelps Anderson and Robert
B. Anderson (the "Anderson Family"), Lonrho, Inc. and The Hondo Company are
parties to a Shareholders' Agreement
5
<PAGE>
dated October 17, 1986 (the "Shareholders' Agreement") covering all of the
outstanding shares of capital stock of The Hondo Company and relating to the
rights of the shareholders of The Hondo Company to vote and dispose of the
shares of The Hondo Company owned by them. The Shareholders' Agreement does
not directly relate to the shares of the Company's common stock owned by The
Hondo Company. Among other things, the Shareholders' Agreement provides that
the Anderson Family, on the one hand, and Lonrho, Inc., on the other hand,
shall each vote for an equal number of designees of the other to serve as
the Board of Directors of The Hondo Company. Since the management of The
Hondo Company is vested in its Board of Directors (which may make
determinations with respect to the voting, including with respect to the
election of directors of the Company, and disposition of the Company's
shares that The Hondo Company may have the right to vote and dispose of),
the ability of the parties to the Shareholders' Agreement to elect the
management of The Hondo Company gives them effective control over the voting
and disposition of the shares of the Company's common stock owned by The
Hondo Company. Due to its indirect ownership of 100% of the stock of Lonrho,
Inc., Lonrho Plc may also be deemed to beneficially own such shares. The
business addresses of the above-mentioned persons are as follows:
Robert O. Anderson Lonrho, Inc. Lonrho Plc
Phelps Anderson 805 3rd Avenue Cheapside House
Robert B. Anderson New York, NY 10022 138 Cheapside
The Hondo Company London EC2V 6BL
410 East College Blvd. England
Roswell, New Mexico 88201
Lonrho Plc has informed the Company that on July 6, 1993, Robert O.
Anderson granted an option in favor of Scottsdale Princess, Inc., a
subsidiary of Lonrho, Inc. to acquire up to 25% of the shares of The Hondo
Company out of his holdings. The option may be exercised at any time on or
before July 5, 1996. The exercise of the option is subject to prior
commitments and pledges to lenders made by Robert O. Anderson with respect
to the shares subject thereto. Robert O. Anderson has informed the Company
that he considers the option to be null and void. The business address of
Scottsdale Princess, Inc. is 7575 East Princess Drive, Scottsdale, Arizona
85255.
(2) On October 3, 1994, Lonrho Plc purchased from Union Bank for $40,000,000,
and received an assignment of, all of Union Bank's rights and obligations
under a Revolving Credit Agreement between the bank and The Hondo Company
(the "Revolving Credit Agreement"), and the related Promissory Note (the
"Note"), the guarantees of Lonrho Plc and Robert O. Anderson and a Pledge
Agreement under which The Hondo Company's obligations under the Revolving
Credit Agreement, the Note and the Pledge Agreement are secured by a pledge
of all shares of common stock of the Company then or thereafter owned by
The Hondo Company (the "Pledge Agreement").
An Event of Default now exists under the Revolving Credit Agreement and,
therefore, Lonrho Plc is entitled to, among other things, exercise its
rights and remedies provided under the Pledge Agreement, including voting
the pledged shares and selling the pledged shares from time to time and
applying the proceeds received therefrom to the payment of all obligations
of The Hondo Company under the Revolving Credit Agreement, Note and Pledge
Agreement. Lonrho Plc has advised both The Hondo Company and the Company
that The Hondo Company's right to vote the shares in the Company held by
The Hondo Company have ceased and that such rights have become vested in
Lonrho Plc. Under the Pledge Agreement, the Anderson Family has a first
refusal right with respect to any sale by Lonrho Plc of the pledged shares.
6
<PAGE>
(3) Dieter Bock is Managing Director and Chief Executive, and owns
approximately 18.5% of the outstanding shares, of Lonrho Plc. Deborah J.
Gudgeon is an executive of Lonrho Plc. John F. Price is an Associate
Director of Lonrho Plc, President and a director of Lonrho, Inc. Scottsdale
Princess, Inc., and The Hondo Company. R. W. Rowland is Co-Chairman and
director of The Hondo Company and a director of Lonrho Plc and Lonrho, Inc.
R. E. Whitten is Finance Director of Lonrho Plc and a director of Lonrho,
Inc. and Scottsdale Princess, Inc. See Notes (1) and (2), above,
"Information Regarding the Nominees" and "Compensation Committee Interlocks
and Insider Participation in Compensation Decisions." None of these
directors of the Company hold shares of the Company's common stock
individually.
(4) Robert O. Anderson is Co-Chairman, President and director, and Phelps
Anderson and Robert B. Anderson are each Vice President and director, of
The Hondo Company.
COMMITTEES, ATTENDANCE AND COMPENSATION OF DIRECTORS
The Company's Board of Directors has created and delegated certain of its
authority to an Audit Committee and a Compensation and Benefits Committee. The
Company does not have a standing Nominating Committee. The Bylaws authorize the
establishment of an Executive Committee which possesses and may exercise all of
the powers of the Board of Directors. No Executive Committee was appointed by
the Board during the fiscal year.
The Audit Committee currently consists of Messrs. McNair, Price and Steer.
The Audit Committee performs numerous functions, including making a review of
management's selection of an independent accounting firm, meeting with the
independent accounting firm to review the scope and conduct of the annual
audit, reviewing the selection of acceptable accounting principles and making
inquiries about and reviewing the Company's policies and procedures with
respect to principles of business conduct, financial and accounting controls,
areas of special concern and other related matters. During fiscal year 1994,
the Audit Committee met on two occasions.
The Compensation and Benefits Committee consists of Messrs. McNair, Price,
Steer and Whitten. The primary functions of the Compensation and Benefits
Committee are to review and determine salaries of officers, to review and
approve officers' employment contracts, to review and establish Company policy
with respect to compensation of all employees, and to administer the Company's
1993 Stock Incentive Plan. During fiscal year 1994, the Compensation and
Benefits Committee met on eight occasions.
During fiscal year 1994, there were six meetings of the Board of Directors.
Messrs. Rowland and Whitten attended fewer than 75% of these meetings. Outside
directors and Robert O. Anderson, Chairman of the Board of the Company are paid
$15,000 per year. Mr. McNair was paid $15,000 for services as an outside
director during fiscal year 1994, and Mr. Anderson was paid $11,250. Mr. Steer
joined the Board of Directors after the end of the fiscal year.
7
<PAGE>
EXECUTIVE COMPENSATION
The following tables set forth, for the fiscal year ended September 30, 1994,
certain information concerning compensation paid to or accrued for the Chief
Executive Officer and all other executive officers who were serving as
executive officers on September 30, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION(1) OPTIONS/SARS COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- --------------------------- ---- ------- ----- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert O. Anderson...... 1994 55,000 -- -- -- --
Chief Executive Offi-
cer(3) 1993 268,750 -- -- -- --
1992 350,000 -- -- -- --
John J. Hoey............ 1994 150,000 -- -- 100,000 1,875
Chief Executive Offi-
cer(4) 1993 24,663 -- -- -- --
1992 -- -- -- -- --
I. P. Brownlow.......... 1994 170,000 -- -- 15,000 --
Chief Financial Offi-
cer(5) 1993 170,000 -- -- -- --
1992 175,000 -- -- -- --
S. J. Urquhart.......... 1994 58,750 -- -- 15,000 588
Vice President 1993 48,750 -- -- -- 131
1992 47,500 5,000 -- -- 1,286
Charles B. McDaniel..... 1994 130,500 -- -- 20,000 6,525
Secretary 1993 131,127 -- -- -- 6,359
1992 133,507 7,500 -- -- 6,954
</TABLE>
- --------
(1) Includes perquisites and other personal benefits, securities or property
only if the aggregate amount of such compensation is greater than the
lesser of either $50,000 or 10% of the total of annual salary and bonus
reported for the named executive officer.
(2) The amounts in this column are the matching contributions made by the
Company under its profit sharing plan described below.
(3) Robert O. Anderson served as Chief Executive Officer until December 1,
1993. The salary reported includes $11,250 paid to Mr. Anderson from
January through September 1994 for services as Chairman and director.
(4) John J. Hoey became Chief Executive Officer on December 1, 1993.
(5) I. P. Brownlow resigned as an officer of the Company on September 30, 1994.
8
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS(1) FOR OPTION TERM(2)
- -------------------------------------------------------------------------------- --------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE
NAME GRANTED (#) FISCAL YEAR ($/SH) EXPIRATION DATE 5% ($) 10% ($)
---- ------------ ------------ ----------- ----------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
John J. Hoey............ 100,000 58.5 7.50 November 15, 1998 79,583 296,832
I. P. Brownlow.......... 15,000 8.8 7.50 November 15, 1998 11,937 44,525
S. J. Urquhart.......... 15,000 8.8 7.50 February 25, 1999 28,689 65,663
C. B. McDaniel.......... 15,000 8.8 7.50 November 15, 1998 11,937 44,525
5,000 2.9 7.50 March 9, 1999 5,575 16,855
</TABLE>
- --------
(1) The options to Messrs. Hoey, Brownlow and McDaniel (on 15,000 shares) were
granted on November 15, 1993 under the Company's 1993 Stock Incentive Plan
(the "Plan") that was approved by shareholders at the 1994 Annual Meeting.
The option to Mr. Urquhart was granted on February 25, 1994, and the option
on 5,000 shares to Mr. McDaniel was granted on March 9, 1994, each under
the Plan. Each option became exercisable as to 50% of the total shares
granted six months after the date of grant; the remaining 50% will become
exercisable 18 months after the date of grant. In each case, the options
were granted at an exercise price greater than the fair market value of the
shares (as defined in the Plan) on the date of grant. Upon a recipient's
termination of employment, options that are not yet exercisable will
terminate; options that are exercisable will terminate three months after
the termination of employment (one year in the case of death, retirement or
total disability). Each option will terminate in all events not later than
the expiration date of the option. The Compensation and Benefits Committee
administers the Plan and may modify and amend previous options granted,
subject to the terms of the Plan.
(2) These columns present hypothetical future values of the stock obtainable
upon exercise of the options net of the option's exercise price, assuming
that the market price of the Company's common stock appreciates at a five
and ten percent compound annual rate over the five year term of the
options. The five and ten percent rates of stock price appreciation are
presented as examples pursuant to the proxy rules and do not necessarily
reflect management's assessment of the Company's future stock price
performance.
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
LONRHO PLC(1) HONDO OIL & GAS
------------------ ------------------
VALUE OF
NUMBER OF NUMBER OF UNEXERCISED
UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT OPTIONS/SARS AT
SEPTEMBER 30, 1994 SEPTEMBER 30, 1994 SEPTEMBER 30, 1994(2)
(#) (#) ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ ------------------ ------------------ ---------------------
<S> <C> <C> <C> <C> <C>
Robert O. Anderson...... -- -- 150,711/0 -- 0/0
John J. Hoey............ 15,384 159,609 0/50,000 34,616/50,000 268,274/387,500
I. P. Brownlow.......... 7,500 77,813 15,050/30,048 0/7,500 0/75,202
S. J. Urquhart.......... -- -- -- 7,500/7,500 58,125/58,125
C. B. McDaniel.......... 3,000 20,250 19,832/5,000 10,000/10,000 77,500/77,776
</TABLE>
- --------
(1) The Board of Directors of Lonrho Plc grants options to employees of
companies in which Lonrho Plc owns an interest. See "Security Ownership of
Management and Certain Beneficial Owners of the Company." The options are
granted under plans adopted and administered by Lonrho Plc.
(2) The value of unexercised in-the-money options was determined by multiplying
the value of the underlying shares at September 30, 1994 ($2.07 per share
for Lonrho Plc and $15.25 per share for Hondo Oil & Gas Company) less the
amount per share payable by the option holder upon exercise, times the
number of shares subject to the option.
There were no awards made to the named executive officers in the fiscal year
ended September 30, 1994, under any long-term incentive plan.
The Company's defined benefit retirement plan was terminated on December 31,
1989. No other defined benefit or actuarial plan exists with respect to the
named executive officers. The Company has made available to all full-time
administrative employees who have completed at least one year of service a
defined contribution profit sharing plan ("401(k) Plan"). Qualifying employees
may contribute up to 10% of their annual earnings, but not in excess of the
maximum allowed by Internal Revenue Service regulations, and the Company will
match employee contributions up to a maximum of 5% of an employee's annual
earnings. Matching contributions made by the Company under the 401(k) plan for
the benefit of the named executive officers are included in the "Summary
Compensation Table."
The Company has no employment contracts and currently no termination of
employment and change-in-control arrangements with the named executive
officers. See "Compensation and Benefits Committee Report." During the fiscal
year ended September 30, 1994, no adjustments or amendments of the exercise
price of stock options or SARs previously awarded to the named executive
officers were made.
10
<PAGE>
Compensation and Benefits Committee Report
To: The Board of Directors
As members of the Compensation and Benefits Committee, it is our duty to
review and approve officers' employment contracts, to review and establish
Company policy with respect to compensation of all employees, and to
administer the Company's stock option plan.
Fiscal 1994 was a year of challenge and progress for the Company. John
Hoey became CEO in December 1993. As discussed in the report of this
Committee in the Proxy Statement for the last Annual Meeting, Mr. Hoey was
charged with taking whatever actions are required to control expenses,
keeping these to a minimum and commensurate with the Company's cash flow.
Also Mr. Hoey was to manage the Company's Colombian venture and to dispose
of the Company's remaining real estate assets. Much of this was
accomplished by Mr. Hoey during the past fiscal year.
Expenses have been further reduced. The Company now has five employees,
down from 14 employees a year ago. A number of other expenses and
liabilities have been reduced or eliminated. Mr. Hoey successfully
negotiated a relinquishment of the Company's interest in the THUMS property
in Long Beach, California, substantially reducing the cash flow drain on
the Company. The Company has made good progress in the Opon Association
Contract in Colombia where a successful exploratory well was completed and
where further work is programmed during the coming fiscal year. Progress
was made in disposing of real estate assets--a purchase contract for one of
the remaining properties was signed during the year. Lastly Hondo's debt to
Lonrho was restructured greatly reducing immediate cash outflow.
It is against the above difficult and unique background that the
following decisions have been approved:
SALARIES: Effective December 1, 1994, salaries for the three remaining
executive officers (Messrs. Hoey, McDaniel and Urquhart) have been
increased from $150,000, $130,500, and $65,000 respectively to $175,000,
$145,000 and $75,000 annually.
OPTIONS: At the 1994 Annual Meeting, the shareholders approved the
Company's 1994 Stock Option Plan. Initial grants of options were made in
November 1993 to Mr. Hoey of 100,000 shares and to Mr. McDaniel of
15,000 shares. Thereafter the Committee made a grant to Mr. Urquhart of
15,000 shares and to Mr. McDaniel of 5,000 shares. After the end of
fiscal year 1994, Mr. Hoey was awarded an option on a further 50,000
shares with awards being made to Messrs. McDaniel and Urquhart of 20,000
and 15,000 shares respectively.
It is the Compensation Committees view that the above salary treatment
and option awards are necessary to keep and motivate Hondo's three key
employees, all of whom are under constant pressure given the extraordinary
and difficult circumstances Hondo faces. Further, the present level of
salaries continues to be below that existing two years ago. This viewpoint
has also lead the Committee to recommend to the Board termination benefits
for Messrs. McDaniel and Urquhart. These arrangements are yet to be
finalized.
It should be noted that no compensation comparisons with other companies
have been made. Hondo's circumstances are, in the eyes of the Committee,
unique making, therefore, such comparisons of little real value.
11
<PAGE>
An annual fee of $15,000 is paid to outside directors (Messrs. McNair and
Steer), and also to Robert O. Anderson, Chairman (who receives no other
compensation from the Company). In November 1994, Robert K. Steer joined
the Board of Directors as an outside director and became a member of this
Committee. Under the 1993 Stock Incentive Plan, Mr. Steer received an
automatic award of a stock option of 15,000 shares.
Compensation and Benefits Committee
Douglas G. McNair, Chairman, John F.
Price, Robert K. Steer, R. E. Whitten
Date: January 28, 1995
The above report of the Compensation and Benefits Committee will not be
deemed to be incorporated by reference into any filing by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates same by reference.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Messrs. Price and Whitten, members of the Compensation and Benefits
Committee, are directors of The Hondo Company and also Associate Director and
Finance Director, respectively, of Lonrho Plc. Messrs. Rowland and Bock (who
are not members of the Compensation and Benefits Committee) are also Director
and Managing Director and Chief Executive, respectively, of Lonrho Plc, and Mr.
Rowland is a director of The Hondo Company. Ms. Gudgeon is an executive of
Lonrho Plc. See "Security Ownership of Management and Certain Beneficial Owners
of the Company." The Company has entered into loan and certain other
transactions with The Hondo Company and Lonrho Plc and its affiliates.
The Company provided services (principally by Mr. Brownlow) to The Hondo
Company. For the fiscal year ended September 30, 1994, the Company made a
charge to The Hondo Company of $91,646 for these services. The Company believes
that there is no incremental cost to the Company in excess of that charged for
these services.
On November 30, 1988, the Company made a private placement of a $75,000,000
13.5% Senior Subordinated Note to Thamesedge Ltd., a wholly owned subsidiary of
Lonrho Plc. The terms of the transaction were approved by the Board of
Directors upon the recommendation of a special committee of the Board appointed
to review the transaction. Messrs. Rowland, Spicer and Whitten took no part in
these considerations. The terms are substantially the same as those which were
under discussion and negotiation with an underwriter for a public offering of a
similar debt instrument and were no less favorable to the Company than could be
obtained with non-affiliated parties.
During calendar year 1991, the Company entered into and amended a loan
agreement with Lonrho Plc pursuant to which it borrowed the sum of $32,000,000.
At the time the loans were made, the interest rates thereon were similar to
that in the Company's former working capital loan with a bank for its refining
and marketing operations. The terms of the loan, and all amendments thereto,
were approved by all of the disinterested directors of the Company and were no
less favorable to the Company than could be obtained with non-affiliated
parties.
12
<PAGE>
On December 18, 1992, the Company entered into an agreement with Lonrho Plc
and Thamesedge Ltd. to defer interest and principal payments on the loans
described above. As consideration for the deferral of interest and principal
payments, the Company granted Lonrho Plc a 5% share of the Company's net
profits, as defined, under the Opon Contract. On April 30, 1993, Lonrho Plc
loaned the Company an additional $3,000,000, and as security the Company
granted to Lonrho Plc a mortgage on certain real property. On June 25, 1993,
Lonrho Plc loaned the Company an additional $4,000,000, and as security the
Company granted to Lonrho Plc a mortgage on certain other real property. The
interest rate of the new loans was the same as that for other loans from Lonrho
Plc. The terms of the agreement to defer interest and principal payments and
the terms of the new loans were approved by all of the disinterested directors
of the Company and were no less favorable to the Company than could be obtained
with non-affiliated parties.
On December 17, 1993, Thamesedge and Lonrho Plc agreed to add interest
accrued at September 30, 1993 to principal, to reduce the annual interest rate
on each of the foregoing loans to the Company to 6% effective September 30,
1993, and to defer principal payments on the loans. Lonrho Plc and the Company
have further agreed that, if the Company does not have sufficient cash
resources to pay interest on any of the foregoing indebtedness of the Company
when due, the Company may offer to pay such interest in shares of its common
stock valued at their market price on the day the interest is due. Thereupon
Lonrho Plc may either accept such offer or add the amount of interest then due
to the remaining outstanding principal balance of the applicable obligation.
From September 30, 1993 through December 15, 1994, interest of approximately
$10,609,000 has been added to principal of debts to Thamesedge and Lonrho Plc.
The terms of these agreements were approved by all of the disinterested
directors of the Company and were no less favorable to the Company than could
be obtained with non-affiliated parties.
On October 18, 1994, the Company paid to Lonrho Plc $5,000,000 to repay a
portion of the loans made in calendar 1991. At the same time, Lonrho Plc
provided a $5,000,000 loan facility to the Company. On November 10, 1994,
Thamesedge and Lonrho Plc agreed to extend the maturities of all of the above
debts to not earlier than October 1, 1996. The terms of the loan facility and
the agreement to extend debt maturities were approved by all of the
disinterested directors of the Company and were no less favorable to the
Company than could be obtained with non-affiliated parties.
F. E. Wright, a subsidiary of Lonrho Plc, acts as insurance broker for
certain of the Company's policies of insurance. The insurance companies who
provide the policies are those from whom coverage could be obtained by the use
of other independent insurance brokers. The terms of these policies are
identical to the ones which could be obtained through any independent broker.
Management believes that F. E. Wright is able to obtain more favorable premiums
for certain of the Company's insurance coverage by virtue of inclusion in the
larger, group-wide "Lonrho Global Program" and that the terms and cost of the
insurance coverage are no less favorable to the Company than could be obtained
with non-affiliated parties. During the fiscal year ended September 30, 1994,
F. E. Wright received commissions of $59,250 in respect of policies issued to
the Company.
13
<PAGE>
Performance Graph
The following graph compares the yearly change in the Company's cumulative
total shareholder return on its common stock to that of the American Stock
Exchange Market Index and MG Industry Group 36, an industry index of companies
engaged in oil and gas exploration and production.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
HONDO OIL & GAS CO, AMERICAN STOCK EXCHANGE AND MG INDUSTRY GROUP 36
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
AMERICAN
Measurement Period HONDO OIL STOCK MG INDUSTRY
(Fiscal Year Covered) & GAS CO EXCHANGE GROUP 36
- ------------------- --------- --------- ---------
<S> <C> <C> <C>
Measurement Pt-10/01/1988 $100.00 $100.00 $100.00
FYE 09/30/1989 $100.00 $100.00 $100.00
FYE 09/30/1990 $101.11 $ 81.92 $101.90
FYE 09/30/1991 $120.00 $ 98.23 $113.68
FYE 09/30/1992 $ 66.67 $102.52 $ 99.26
FYE 09/30/1993 $ 63.33 $120.35 $121.50
FYE 09/30/1994 $135.56 $122.65 $131.56
</TABLE>
ASSUMES $100 INVESTED ON OCT. 1, 1988
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING SEP. 30, 1994
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance. The Performance Graph will not be
deemed to be incorporated by reference in any filing by the Company under the
Securities Act of 1933 or the Securities Exchange Act 1934, except to the
extent that the Company specifically incorporates same by reference.
REPORTS UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 and the rules thereunder
require the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and the American Stock Exchange and to furnish the Company with
copies.
14
<PAGE>
Based on its review of the copies of such forms received by it, or written
representations from certain reporting persons, the Company believes that, from
October 1, 1993 to September 30, 1994, all filing requirements applicable to
its officers, directors, and greater than ten-percent beneficial owners were
complied with except that Ms. Gudgeon's initial report of election as a
director (reporting no ownership or transactions) was not filed timely as a
result of an oversight of the Company's counsel.
OTHER MATTERS
The Board of Directors knows of no matters which are likely to be brought
before the Annual Meeting other than those listed in the attached Notice of
Annual Meeting. If any other matters should properly come before the Annual
Meeting or any adjournment thereof, the persons named on the enclosed proxy
card will vote all proxies given to them in accordance with their best judgment
on such matters.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company engaged Ernst & Young LLP as principal independent public
accountants for the audit of the Company's financial statements for the fiscal
year ended September 30, 1994. Ernst & Young LLP has acted in this capacity
since 1988. From time to time, Ernst & Young LLP also performs consulting work
for the Company. The firm has no other relationship with the Company except the
existing professional relationships of Certified Public Accountants. The Board
of Directors has appointed Ernst & Young LLP to audit the financial statements
of the Company for the fiscal year 1995. At the Annual Meeting, the
shareholders will be asked to approve the appointment.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions. The proposal will be
approved if it receives the affirmative vote of holders of a majority of the
shares of common stock present or represented and entitled to vote at the
Annual Meeting. The Board of Directors recommends that shareholders vote FOR
the proposal to approve the appointment of Ernst & Young LLP as the Company's
independent auditors for fiscal year 1995.
SOLICITATION OF PROXIES
Solicitation of proxies is to be conducted primarily by mail, although
officers and other employees of the Company, without receiving additional
compensation therefor, may also solicit proxies by telephone, telegraph or
personal interview. Arrangement may be made with brokerage houses and with the
Company's transfer agent, Chemical Trust Company of California, Los Angeles,
California, to send notices, proxy statements, proxies and other materials to
shareholders. The cost for these services is estimated to be nominal. All costs
of soliciting proxies will be borne by the Company.
By Order of the Board of Directors,
C. B. McDaniel
Secretary
January 30, 1995
15
<PAGE>
PROXY
HONDO OIL & GAS COMPANY
Annual Meeting of Shareholders, February 23, 1995
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints John J. Hoey and C.B. McDaniel, or either of
them, attorneys and proxies to represent the undersigned, with power of
substitution, to appear and to vote all of the shares of stock of HONDO OIL &
GAS COMPANY (the "Company") which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders of the Company to be
held in the Board of Governors' Room, American Stock Exchange, 86 Trinity Place,
New York, New York on Thursday, February 23, 1995 at 10:00 A.M., or any
adjournment thereof.
(Continued and To Be Signed on Reverse Side)
[X] Please mark
your votes
this way
----------
COMMON
1. Election of Directors
FOR all nominees WITHHOLD
listed at the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed at right
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name on the list below.
ROBERT O. ANDERSON, DIETER BOCK, JOHN J. HOEY, C.B. McDANIEL,
DOUGLAS G. McNAIR, JOHN F. PRICE, R.W. ROWLAND,
ROBERT K. STEER AND R.E. WHITTEN
2. Approval of Ernst & Young LLP as independent auditors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Upon such other business as may properly come before
said meeting, or any adjournment thereof.
++++++++++
+
+
+
+
UNMARKED PROXIES SHALL BE VOTED IN FAVOR OF EACH OF THE FOREGOING MATTERS UNLESS
SPECIFIED TO THE CONTRARY.
Receipt of copies of the Proxy Statement dated January 30, 1995 and the 1994
Annual Report is hereby acknowledged.
Annual Meeting - February 23, 1995
Please date and sign exactly as name appears on this proxy. Joint owners should
each sign. If one signer is a corporation, please sign full corporate name by
duly authorized officer. Executors, trustees, etc. should give full title as
such.
Dated:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Signature of Shareholder)
- --------------------------------------------------------------------------------
(Signature of Shareholder)
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Please return this proxy promptly in the enclosed envelope which requires no
postage if mailed in the U.S.A.
