<PAGE> 1
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 240.14a-11(c) or 240.14a-12
BERRY PETROLEUM 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] No fee required.
[ ] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
BERRY PETROLEUM COMPANY
28700 HOVEY HILLS ROAD
P.O. BIN X
TAFT, CALIFORNIA 93268
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1998
To the Shareholders of Berry Petroleum Company:
The Annual Meeting of Shareholders of Berry Petroleum Company (the
"Company"), will be held at the Company's corporate headquarters at 28700 Hovey
Hills Road, Taft, California on May 15, 1998 at 10:00 a.m. for the following
purposes:
1. To elect a board of ten directors to serve until the next Annual Meeting
of Shareholders and until their successors are elected and qualified;
2. To approve the Company's Amended and Restated 1994 Stock Option Plan;
3. To approve the Non-Employee Director Deferred Stock and Compensation
Plan; and
4. To transact such other business as may be properly brought before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 16, 1998 as
the record date for determination of shareholders entitled to notice of and to
vote at the Annual Meeting or any adjournment thereof.
YOU ARE INVITED TO ATTEND THIS MEETING IN PERSON. WHETHER OR NOT YOU PLAN
TO ATTEND, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, YOU ARE URGED TO PROMPTLY SIGN AND RETURN THE ACCOMPANYING PROXY CARD
IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE BY GIVING
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY. IF YOU RETURN AN EXECUTED PROXY
AND THEN ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
ATTENDANCE AT THE MEETING WILL NOT BY ITSELF REVOKE A PROXY.
By Order of the Board of Directors
/s/ KENNETH A. OLSON
-----------------------------
Kenneth A. Olson
Corporate Secretary/Treasurer
April 3, 1998
Taft, California
<PAGE> 3
BERRY PETROLEUM COMPANY
28700 HOVEY HILLS ROAD
P.O. BIN X
TAFT, CALIFORNIA 93268
PROXY STATEMENT
APRIL 3, 1998
------------------------
This Proxy Statement is furnished by the Board of Directors of Berry
Petroleum Company (respectively the "Board" and the "Company" or "Berry") in
connection with the solicitation of proxies for use at the Annual Meeting of
Shareholders to be held on May 15, 1998, or at any adjournment thereof (the
"Annual Meeting" or "Meeting") pursuant to the Notice of said Meeting. This
Proxy Statement and the proxies solicited hereby are being first mailed to
shareholders of the Company on or about April 3, 1998.
SHAREHOLDERS ARE URGED, WHETHER OR NOT THEY EXPECT TO ATTEND THE ANNUAL
MEETING, TO COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE. You may revoke your proxy at any time prior
to its exercise by giving written notice to the Secretary of the Company. If you
return an executed proxy and then attend the Annual Meeting, you may revoke your
Proxy and vote in person. Attendance at the Annual Meeting will not by itself
revoke a proxy.
Unless otherwise directed in the accompanying Proxy, persons named therein
will vote FOR the election of the ten director nominees listed below, FOR the
changes amending the 1994 Stock Option Plan and FOR the Deferred Stock and
Compensation Plan for the Board of Directors. As to any other business that may
properly come before the Meeting, the proxy holders will vote in accordance with
the recommendation of the Board of Directors.
VOTING SECURITIES
March 16, 1998 has been fixed as the record date for determination of
shareholders entitled to notice of, and to vote at, the Annual Meeting or any
adjournment thereof. As of February 20, 1998 there were 21,101,720 and 898,892
shares, respectively, of Class A Common Stock ("Common Stock") and Class B Stock
("Class B Stock"), par value $.01 per share, issued and outstanding, referred to
collectively as the "Capital Stock".
Berry's Certificate of Incorporation provides that, except for proposed
amendments to Berry's Certificate of Incorporation adversely affecting the
rights of a particular class (which must be approved by the affected class
voting separately), the Common Stock and the Class B Stock will vote as a single
class on all matters upon which the Capital Stock is entitled to vote. Each
share of Common Stock is entitled to one vote and each share of Class B Stock is
entitled to 95% of one vote. The Certificate of Incorporation also provides for
certain adjustments to the Capital Stock in the event a separate class vote is
imposed by applicable law. Holders of the Capital Stock are entitled to
cumulative voting rights for election of directors. Cumulative voting rights
entitle a shareholder to cast as many votes as is equal to the number of
directors to be elected multiplied by the number of shares owned by such
shareholder. A shareholder may cast all of such shareholder's votes as
calculated above for one candidate or may distribute the votes among two or more
candidates. Unless otherwise instructed, the shares represented by proxies will
be voted in the discretion of the proxy holders so as to elect the maximum
number of management nominees which may be elected by cumulative voting.
<PAGE> 4
PRINCIPAL SHAREHOLDERS AND OWNERSHIP BY MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Berry's Capital Stock as of February 20, 1998 by (i) each of its
directors who own Berry Capital Stock, (ii) all directors and officers as a
group, and (iii) each shareholder who beneficially owns more than 5% of Berry's
outstanding Capital Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)(2)
NAME AND ADDRESS --------------------------
OF BENEFICIAL OWNER* POSITION SHARES PERCENT
-------------------- -------- ---------- ---------
<S> <C> <C> <C>
Jerry V. Hoffman Chairman of the Board,
President and Chief
Executive Officer 97,475(3) **
William F. Berry Director 1,715,661(4) 7.8%
Gerry A. Biller Director 31,000(5) **
Ralph B. Busch, III Director 335,573(6) 1.5%
William E. Bush, Jr. Director 537,595(7) 2.4%
Richard F. Downs Director 22,000(8) **
John A. Hagg Director 22,000(9) **
Thomas J. Jamieson Director 12,100(10) **
Roger G. Martin Director 15,000(11) **
James A. Middleton Director 1,000(12) **
All Directors and Officers
as a group (16 persons) 2,861,202(13) 12.9%
C.J. Bennett 1,323,397(14) 6.0%
Winifred Lowell 1,987,112(15) 9.0%
Union Bank of California 1,973,331(16) 9.0%
</TABLE>
- ---------------
* All directors and beneficial owners listed above can be contacted at Berry
Petroleum Company, P.O. Bin X, Taft, CA 93268.
** Represents beneficial ownership of less than 1% of the Company's
outstanding Capital Stock.
(1) Unless otherwise indicated, shares shown as beneficially owned are those as
to which the named person possesses sole voting and investment power.
(2) All shares indicated are Common Stock, except 898,892 shares beneficially
owned by Winifred Lowell, which are Class B Stock. Percent calculations are
based on total shares of Capital Stock outstanding.
(3) Includes 38,105 shares held directly and 29,370 shares held by the
Company's 401(k) Thrift Plan which Mr. Hoffman votes as Chief Executive
Officer of Berry. Also includes 30,000 shares which Mr. Hoffman has the
right to acquire under the Company's 1994 Stock Option Plan.
(4) Includes 1,668,939 shares held directly and 34,722 shares held in the Berry
Children's Trust as to which William F. Berry has voting and investment
power and 12,000 shares which Mr. Berry has the right to acquire under the
Company's 1994 Stock Option Plan.
(5) Includes 21,000 shares held directly, 4,000 shares held in the Michael J.
Basso Trust for which Mr. Biller shares voting and investment power with
the Trustors and 6,000 shares which Mr. Biller has the right to acquire
under the Company's 1994 Stock Option Plan.
(6) Includes 95,568 shares held directly, 76,505 shares held in the B Group
Trust at Bank of California which Mr. Busch votes and 157,500 shares held
in a family trust for which Mr. Busch shares voting and investment power as
co-trustee. Also includes 6,000 shares which Mr. Busch has the right to
acquire under the Company's 1994 Stock Option Plan.
(7) Includes 201,495 shares held directly, 100 shares held by Mr. Bush's wife
as Trustee for one of their children and 330,000 shares held in the William
E. Bush Trust as to which Mr. Bush shares voting
2
<PAGE> 5
power with other trustees and 6,000 shares which Mr. Bush has the right to
acquire under the Company's 1994 Stock Option Plan.
(8) Includes 10,000 shares held directly and 12,000 shares which Mr. Downs has
the right to acquire under the Company's 1994 Stock Option Plan.
(9) Includes 10,000 shares held directly and 12,000 shares which Mr. Hagg has
the right to acquire under the Company's 1994 Stock Option Plan.
(10) Includes 100 shares held indirectly by Mr. Jamieson through Jaco Oil
Company, a corporation and 12,000 shares which Mr. Jamieson has the right
to acquire under the Company's 1994 Stock Option Plan.
(11) Includes 3,000 shares held directly and 12,000 shares which Mr. Martin has
the right to acquire under the Company's 1994 Stock Option Plan.
(12) Includes 1,000 shares held directly by Mr. Middleton.
(13) Includes 42,064 shares which the Company's Officers have the right to
acquire upon the exercise of options granted under the Company's 1994 Stock
Option Plan.
(14) Includes 1,083,516 shares held directly by the C.J. Bennett Trust of 1987
and 239,881 shares held in three trusts for the benefit of his son, nephew
and niece. C.J. Bennett shares voting and investment power under the
aforementioned trusts with two other trustees.
(15) Held of record by Winberta Holdings, Ltd.; 898,892 shares are Class B Stock
and 1,088,220 shares are Common Stock.
(16) Bank of California is the trustee of certain trusts to which the trustors
retain the voting power.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 and related Securities
and Exchange Commission rules require that directors, executive officers and
beneficial owners of 10% or more of any class of equity securities report to the
Securities and Exchange Commission changes in their beneficial ownership of
Berry stock, and that any late filings be disclosed. Based solely on a review of
the copies of such forms furnished to the Company, or written representations
that no Form 5 was required, the Company believes there has been compliance with
all Section 16(a) filing requirements, except that one report for gifted shares
was filed late by Mr. William F. Berry.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
The Company's directors are elected at each Annual Meeting of Shareholders.
At the Annual Meeting, ten directors, constituting the authorized number of
directors, will be elected to serve until the next Annual Meeting of
Shareholders and until their successors are elected and qualified. Effective
with the retirement of Mr. Bejach and Mr. Charles on March 20, 1998, the Board
of Directors reduced the number of authorized directors from twelve to ten, as
permitted by the Company's Bylaws. The nominees receiving the greatest numbers
of votes at the Annual Meeting up to the number of authorized directors will be
elected.
3
<PAGE> 6
The nominees for election as directors at the Annual Meeting set forth in
the table below are all incumbent directors who were elected at the May 1997
Annual Meeting of Shareholders except for Mr. Middleton, who was appointed to
the Board in December 1997. Each of the nominees has consented to serve as a
director if elected. Unless authority to vote for any director is withheld in a
proxy, it is intended that each proxy will be voted FOR such nominees. In the
event that any of the nominees for director should before the Meeting become
unable to serve, it is intended that shares represented by proxies which are
executed and returned will be voted for such substitute nominees as may be
recommended by the Company's existing Board of Directors, unless other
directions are given in the proxies. To the best of the Company's knowledge, all
the nominees will be available to serve.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE AGE POSITION SINCE
------- --- -------- --------
<S> <C> <C> <C>
Jerry V. Hoffman 48 Chairman of the Board, President and
Chief Executive Officer 1992
William F. Berry 57 Director 1985
Gerry A. Biller 65 Director 1989
Ralph B. Busch, III 38 Director 1996
William E. Bush, Jr. 51 Director 1986
Richard F. Downs 66 Director 1985
John A. Hagg 50 Director 1994
Thomas J. Jamieson 55 Director 1993
Roger G. Martin 60 Director 1985
James A. Middleton 61 Director 1997
</TABLE>
Set forth below is information concerning each of the nominee Directors of
Berry.
Mr. Hoffman has been the Chairman of the Board of Directors since March
1997 and has been the President and Chief Executive Officer since May 1994. Mr.
Hoffman was President and Chief Operating Officer from March 1992 to May 1994
and was the Senior Vice President and Chief Financial Officer of the Company
from 1985 until March 1992. Mr. Hoffman, a CPA, is a member of the Nominating
and Corporate Governance Committee.
Mr. Berry is a member of the Nominating and Corporate Governance Committee.
Mr. Berry is currently a private investor and was involved in investment banking
for a major California bank for over 20 years. Mr. Berry is a cousin to William
E. Bush, Jr., and Ralph B. Busch, III.
Mr. Biller is a member of the Audit Committee. Mr. Biller is a consultant
and retired senior partner of Vance, Thrift & Biller, a CPA firm in Ventura,
California.
Mr. Ralph B. Busch, III is a member of the Nominating and Corporate
Governance Committee. Mr. Busch is currently Executive Vice President and Chief
Operating Officer for Aon Risk Services of Central California. Prior to his
position with Aon Risk Services, Mr. Busch was President of Central Coast
Financial from 1986 to 1993. Mr. Busch was a Director of Eagle Creek Mining &
Drilling Company from July 1985 to May 1996 and President from 1990 to 1992. Mr.
Busch is a cousin to William F. Berry and William E. Bush, Jr.
Mr. Bush is a member of the Compensation Committee. Mr. Bush is the General
Manager of Acala Seeds Ltd. Prior to May 1987, Mr. Bush was the Area
Manager/Technical Representative of Gustafson, Inc. (a division of Uniroyal) for
Arizona and California for nine years. Mr. Bush is also a Director of Eagle
Creek Mining & Drilling, Inc. Mr. Bush is a cousin to William F. Berry and Ralph
B. Busch, III.
Mr. Downs is Chairman of the Audit Committee. Mr. Downs has been the
President of Lyndow Financial, a privately held financial services company,
since February 1991. Mr. Downs was Chief Financial Officer of Duncan
Enterprises, a manufacturer and marketer of hobby ceramic products, from 1973 to
July 1990.
4
<PAGE> 7
Mr. Hagg is a member of the Nominating and Corporate Governance Committee.
Mr. Hagg has been the President and Chief Executive Officer of Northstar Energy
Corporation ("Northstar") since 1985. Northstar is a Canadian oil and gas
producer, based in Calgary, Alberta with its common shares listed on The Toronto
Stock Exchange. Mr. Hagg is also a director of Safe Harbor Capital Corporation.
Mr. Jamieson is a member of the Compensation Committee. Mr. Jamieson is the
Chief Executive Officer, President and founder of Jaco Oil Company and the
majority owner and founder of Wholesale Fuels, Inc. which was started in 1983.
Founded in 1970, Jaco Oil Company, based in Bakersfield, California, has become
one of the largest independent gasoline marketers in the western United States.
Mr. Jamieson is a Director of Superior National Insurance Company and is also
involved in real estate, oil and gas properties and insurance.
Mr. Martin is the Chairman of the Nominating and Corporate Governance
Committee and a member of the Audit and Compensation Committees. Mr. Martin is
an independent oil and gas consultant. Mr. Martin retired in 1996 as the Manager
of Special Projects at the Wilmington Field for the city of Long Beach,
California. From 1975 to 1981, Mr. Martin was the officer in charge of the Elk
Hills Naval Petroleum Reserve.
Mr. Middleton has been the Chairman and Chief Executive Officer of Crown
Energy Corp. since February 1996. Mr. Middleton was an Executive Vice President
and Director of Atlantic Richfield Co. from October 1987 to September 1994 and
is presently a Director of ARCO Chemical Co. and Texas Utilities Co.
RETIREMENT
Mr. Benton Bejach and Mr. William B. Charles announced their retirement
from the Board of Directors effective with the March 20, 1998 Board meeting.
Both Mr. Bejach and Mr. Charles were appointed to the Board of Directors of
Berry Oil Company (a predecessor of Berry) in 1966 and to Berry Holding Company
in 1980. We wish to thank Mr. Bejach and Mr. Charles for their leadership and 32
years of service to the shareholders and management of the Berry companies and
wish them well in the future.
COMMITTEES AND MEETINGS
The Board of Directors has an Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee.
The Audit Committee of the Board of Directors currently consists of Messrs.
Biller, Downs and Martin. The Audit Committee reviews, acts on and reports to
the Board of Directors with respect to auditing performance and practices, risk
management, financial and credit risks and accounting and tax matters. The
Committee reviews the selection of the Company's independent accountants, the
scope of the annual audit, the nature of non-audit services, the fees to be paid
to the independent accountants, the performance of the Company's independent
accountants and the accounting practices of the Company.
The Compensation Committee of the Board of Directors currently consists of
Messrs. William E. Bush, Jr., Jamieson and Martin. The Compensation Committee is
responsible for recommending total compensation for executive officers and board
members of Berry to the Board of Directors, for reviewing general plans of
compensation for employees and for reviewing and approving awards under Berry's
Bonus Plan. In addition, the Committee is charged with the full responsibility
of administering the Company's 1994 Stock Option Plan. Mr. Bejach resigned from
the Compensation Committee effective with his resignation from the Board on
March 20, 1998.
The Nominating and Corporate Governance Committee of the Board of Directors
currently consists of Messrs. Berry, Busch, Hoffman, Hagg and Martin. The
Nominating and Corporate Governance Committee was formulated in 1996 to develop
governance guidelines and practices for the effective operation of the Board in
fulfilling its responsibilities; review and assess the performance of the Board;
and nominate prospective directors for the Company's Board of Directors and
board committee membership. The Committee will consider nominees recommended by
shareholders. If a shareholder wishes to recommend a nominee for the Board of
Directors, the shareholder should write to the Corporate Secretary of the
Company specifying the
5
<PAGE> 8
name of the nominee and the qualifications of such nominee for membership on the
Board of Directors. All such recommendations will be brought to the attention of
the Nominating and Corporate Governance Committee.
During 1997, the Board of Directors met six times, the Audit Committee met
twice, the Compensation Committee met twice and the Nominating and Corporate
Governance Committee met twice. All of the nominees holding office attended at
least 75% of the board meetings and meetings of committees of which they were
members, except for Mr. Middleton who joined the Board of Directors in December
1997.
Effective January 1, 1998, non-employee directors are paid a quarterly fee
of $4,250, plus $500 for each board meeting and $500 for each committee meeting
attended which is not held on the same day as the board meeting. Prior to 1998,
these fees were $3,750, $400 and $400, respectively. Due to the current
extremely low crude price environment, the Board of Directors has temporarily
reduced the quarterly fee back to $3,750 and the meeting fees back to $400,
effective April 1, 1998.
The Company's 1994 Option Plan provides for a "formula" grant of 3,000
options annually to each non-employee director holding office on December 2nd of
each year. 3,000 options were issued on December 2, 1997, 1996 and 1995 to each
of the non-employee directors holding office on those dates. The options were
issued at the closing prices of $18.9375, $13.75 and $10.625 at December 2,
1997, 1996 and 1995, respectively. The exercise price of the options is the
closing price of Berry Petroleum Company Class A Common Stock as reported by the
New York Stock Exchange for the date of grant. The maximum option exercise
period is ten years from the date of the grant. The options issued to the
directors vest immediately. The Board of Directors revised the formula grant,
subject to shareholder approval of Proposal Number 2, to an annual grant of
5,000 options per year to each of the non-employee directors. Should Proposal
Number 2 be approved, each of the eleven non-employee directors on December 2,
1997 would receive an additional 2,000 options and Mr. Middleton, who was
appointed to the Board on December 5, 1997, would receive a total of 5,000
options at the December 2, 1997 price of $18.9375.
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<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table discloses compensation for the three fiscal years ended
December 31, 1997 received by the Company's Chairman, President and Chief
Executive Officer and the Company's executive officers who received in excess of
$100,000 in compensation in 1997.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION(1) NO. OF SHARES ALL OTHER
NAME AND --------------------- UNDERLYING OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) GRANTED ($)(2)
------------------ ---- --------- -------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Jerry V. Hoffman 1997 285,400 45,000 50,000 10,576
Chairman, President and 1996 245,850 30,000 120,000 10,896
Chief Executive Officer 1995 225,000 -- -- 10,108
Ralph J. Goehring 1997 160,500 35,000 35,000 11,240
Senior Vice President and 1996 123,750 20,000 80,000 10,465
Chief Financial Officer 1995 98,750 -- -- 6,905
Michael R. Starzer 1997 126,000 30,000 35,000 8,749
Vice President of 1996 104,850 12,000 80,000 8,835
Corporate Development 1995 64,160 -- -- 1,272
Steven J. Thomas(3) 1997 109,423 20,000 10,000 7,724
Production Manager 1996 97,000 4,000 50,000 8,211
1995 91,500 -- -- 6,427
Donald A. Dale 1997 95,000 10,000 10,000 6,924
Controller 1996 91,050 8,000 20,000 7,895
1995 87,150 -- -- 6,299
</TABLE>
- ---------------
(1) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such compensation, if any, does not exceed
the lesser of $50,000 or 10 percent of the total amount of annual salary and
bonus for any named individual.
(2) Includes Company contributions under the 401(k) Thrift Plan of $10,080,
$10,400 and $9,650 for Mr. Hoffman, $11,063, $10,300 and $6,800 for Mr.
Goehring, $8,650, $8,700 and $1,272 for Mr. Starzer, $7,520, $8,018, $6,273
for Mr. Thomas, and $6,560, $7,527 and $5,964 for Mr. Dale, respectively,
for 1997, 1996 and 1995. Also includes split dollar life insurance
compensation of $496, $496 and $458 for Mr. Hoffman, $177, $165 and $105 for
Mr. Goehring, $99, $135, $0 for Mr. Starzer, $204, $193, $154 for Mr. Thomas
and $364, $368 and $335 for Mr. Dale, respectively for 1997, 1996 and 1995.
(3) Mr. Thomas passed away on February 21, 1998.
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL RATES
NUMBER TOTAL OF STOCK PRICE APPRECIATION
OF SECURITIES OPTIONS FOR OPTION TERM(1)
UNDERLYING GRANTED TO EXERCISE ---------------------------
OPTIONS EMPLOYEES PRICE EXPIRATION (DOLLARS)(3)
NAME GRANTED(1) IN 1997 ($/SHARE)(2) DATE 5% 10%
---- ------------- ---------- ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Hoffman............... 50,000 21% $19.375 Dec. 5, 2007 $609,242 $1,543,938
Mr. Goehring.............. 35,000 15% $19.375 Dec. 5, 2007 $426,469 $1,080,757
Mr. Starzer............... 35,000 15% $19.375 Dec. 5, 2007 $426,469 $1,080,757
Mr. Thomas(4)............. 10,000 4% $19.375 Dec. 5, 2007 $121,848 $ 308,788
Mr. Dale.................. 10,000 4% $19.375 Dec. 5, 2007 $121,848 $ 308,788
</TABLE>
7
<PAGE> 10
<TABLE>
<CAPTION>
ASSUMED PRICE APPRECIATION
----------------------------
5% 10%
------------ ------------
<S> <C> <C>
Assumed price per share on Dec. 5, 2007..................... $ 30.51 $ 48.58
Gain on one share valued at $19.375 on Dec. 5, 1997......... $ 11.78 $ 29.85
Gain on all shares (based on 21,998,861 shares outstanding
at Dec. 31, 1997)......................................... $259,117,376 $656,654,301
Gain for all 1997 optionees (based on 240,000 options)...... $ 2,826,881 $ 7,163,872
Optionee gain as a percentage of total shareholder gain..... 1.09% 1.09%
</TABLE>
- ---------------
(1) Option holders vest in the granted options at the rate of 25% per year,
commencing on the first anniversary of the grant date.
(2) All options were granted at the Company's Class A Common Stock fair market
value on the date of grant.
(3) 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 ten year term of the options.
The five and ten percent rates of stock price appreciation are presented as
examples pursuant to the Securities and Exchange Commission Rules and do not
necessarily reflect management's assessment of the Company's future stock
price performance. The potential realizable values presented are NOT
intended to indicate the value of the options.
(4) At Mr. Thomas' death, none of his options were vested and as such expired
pursuant to the terms of the 1994 Stock Option Plan.
AGGREGATED OPTION/SAR EXERCISES IN 1997
AND DECEMBER 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT 12-31-97 AT 12-31-97(A)(DOLLARS)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (NUMBER) (DOLLARS) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Hoffman............. 8,980 $181,250 55,000 165,000 $270,313 $476,563
Mr. Goehring............ 9,507 $249,232 20,037 107,500 $ 68,997 $289,844
Mr. Starzer............. 3,466 $105,000 0 95,000 $ -- $206,250
Mr. Thomas(B)........... 5,674 $171,875 0 60,000 $ -- $212,500
Mr. Dale................ 2,553 $101,160 21,799 30,000 $134,090 $ 85,000
</TABLE>
- ---------------
(A) The price of $17.4375 which was the closing price of Berry Class A Common
Stock as reported in the New York Stock Exchange quotations on December 31,
1997, was used to value options.
(B) At Mr. Thomas' death, none of his options were vested and as such expired
pursuant to the terms of the 1994 Stock Option Plan.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following report shall not be incorporated by reference
into any such filings.
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. During 1997 the Committee was
composed of four non-employee Directors. The Committee is committed to a strong,
positive link between business performance, strategic goals, and compensation
and benefit programs.
8
<PAGE> 11
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION POLICY
The Company's compensation policy is designed to support the overall
objective of enhancing value for our shareholders by:
-- Attracting, developing, rewarding, and retaining highly qualified and
productive individuals.
-- Directly relating compensation to both Company and individual
performance.
-- Ensuring compensation levels that are externally competitive and
internally equitable.
-- Encouraging executive stock ownership to enhance a mutuality of
interest with other shareholders.
The following is a description of the elements of executive compensation
and how each relates to the objectives and policy outlined above.
BASE SALARY
The Committee reviews each executive officer and certain other management
employees' salaries annually. In determining appropriate salary levels, we
consider the level and scope of responsibility, experience, Company and
individual performance, internal equity, as well as pay practices of other
companies relating to executives of similar responsibility. By design, we strive
to set executives' salaries at competitive market levels.
We believe maximum performance can be encouraged through the use of
appropriate incentive programs. Incentive programs for executives are as
follows:
ANNUAL INCENTIVES
Annual incentive awards are made to executives to recognize and reward
corporate and individual performance. The plan in effect provides an incentive
fund of up to 3% of net earnings after taxes for executives and other employees
involved in decision making roles which effect the Company's growth and
profitability goals. A portion of the available bonus is reserved for
discretionary performance awards by the Chief Executive Officer for other
employees whose efforts and performance are judged to be exceptional. The cash
bonuses paid in 1997, based on 1996 results were $330,000 and the cash bonuses
paid in 1996, based on 1995 results were $188,500. Even though in 1997, the
Company experienced record production levels, operating cash flow and operating
income, due to the current extremely low crude price environment, it is unlikely
that cash bonuses will be paid in 1998 based on these record results.
The amount individual executives may earn is directly dependent upon the
individual's position, responsibility, and ability to impact the Company's
financial success. External market data is reviewed periodically to determine
the competitiveness of the Company's incentive opportunities for individual
executives.
LONG-TERM INCENTIVES
NON-STATUTORY STOCK OPTION ("NSO") PLAN
The purpose of this plan is to provide additional incentives to employees
to work to maximize shareholder value. The NSO plan generally utilizes vesting
periods to encourage key employees to continue in the employ of the Company. The
Compensation Committee is charged with responsibility for administering and
granting non-statutory stock options. At December 31, 1997, an aggregate of
60,800 options are available for issuance from the 1994 Stock Option Plan.
Shareholder approval of Proposal Number 2 will provide an aggregate of 1,060,800
options available for issuance.
CHIEF EXECUTIVE OFFICER
The Committee believes Mr. Hoffman has done an effective job of managing
the Company and redirecting the Company's resources to higher profitability
projects and growth opportunities as Chief Executive Officer of Berry Petroleum
Company. Mr. Hoffman's compensation incentives are primarily derived
9
<PAGE> 12
from the Bonus Plan and the Stock Option Plan. The value of the Options are
directly related to the Company's stock performance.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
<TABLE>
<S> <C> <C>
March 20, 1998 Benton Bejach William E. Bush
Roger G. Martin Thomas J. Jamieson
</TABLE>
SEVERANCE AGREEMENTS
The Company has entered into salary continuation agreements with Mr.
Hoffman, Mr. Goehring and Mr. Starzer which guarantees their salary, as defined,
plus an amount equal to the average cash bonus received by the employee for the
prior two years will be paid in one lump sum for two years for Mr. Hoffman and
one year for Mr. Goehring and Mr. Starzer, following a sale of all or
substantially all of the oil producing properties of Berry or a merger or other
reorganization between Berry and a non-affiliate which results in a change of
ownership or operating control (a "Change of Control"). Salary continuation
agreements for certain other executives provide for the payment of six months'
salary, upon a termination of employment in connection with a Change of Control.
LIFE INSURANCE COVERAGE
The Company provides certain individuals who are officers or other
high-level executives with life insurance coverage in addition to that available
to employees under the Company's group-term life insurance plan. The amount of
this life insurance coverage is $500,000 for Mr. Hoffman, $410,000 for Mr.
Goehring, $330,000 for Mr. Starzer, $287,500 for Mr. Thomas and $240,000 for Mr.
Dale. Depending on certain variables, an executive or beneficiary may be
entitled to insurance benefits exceeding the amount of term insurance that could
otherwise have been purchased with the portion of the premium payments that are
imputed to the executive as taxable income.
10
<PAGE> 13
PERFORMANCE GRAPH
The following Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
Total returns assume $100 invested on December 31, 1992 in shares of Berry
Petroleum Company, the Standard & Poors ("S&P") 500 Index and the Dow Jones
Secondary Oil Company Index (which includes 13 companies) assuming reinvestment
of dividends for each measurement period. During 1997, the Company outperformed
the peer group by 17% and underperformed the S&P 500 Index by 9%. The
information shown is historical and is not necessarily indicative of future
performance.
TOTAL RETURN ANALYSIS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD BERRY PETROLEUM DOW JONES
(FISCAL YEAR COVERED) COMPANY SECONDARY OIL COS. S&P 500 INDEX
<S> <C> <C> <C>
12/31/92 100 100 100
12/31/93 84 111 110
12/31/94 84 107 111
12/31/95 94 124 153
12/31/96 138 153 189
12/31/97 171 163 251
</TABLE>
Source: Carl Thompson Associates, www.ctaonline.com, Boulder, CO (303) 494-5472
- ---------------
* Data provided by Bloomberg Financial Markets
(1) Berry Petroleum Company
(2) Dow Jones Secondary Oil Cos.
(3) S&P 500 Index
11
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EAGLE CREEK MINING & DRILLING, INC.
Eagle Creek Mining & Drilling, Inc. ("Eagle Creek"), a California
corporation, was a wholly-owned subsidiary of the Company's predecessor until it
was spun off to the majority shareholders of the predecessor. On November 30,
1989, Eagle Creek purchased the assets of S&D Supply Company, a California
partnership. S&D Supply Company, a retail distributor of oilfield parts and
supplies ("S&D"), is now a division of Eagle Creek. The Company renewed its five
year contract in 1994 with S&D, whereby the Company will purchase oilfield parts
and supplies from S&D at competitive prices through November 30, 1999. The
amounts paid to S&D under this contract in 1997, 1996 and 1995 were $825,000,
$398,000 and $240,000, respectively.
Mr. William E. Bush, Jr. is a Director of Eagle Creek. Also, Mr. Busch and
his immediate family are significant beneficial owners of the stock of Eagle
Creek.
VICTORY SETTLEMENT TRUST
In connection with the reorganization of the Company in 1985, a shareholder
of Berry Holding Company, Victory Oil Company, a California partnership
("Victory"), brought suit against Berry Holding Company (one of Berry's
predecessor companies prior to the reorganization in 1985) and all of its
directors and officers and certain significant shareholders seeking to enjoin
the reorganization. As a result of the reorganization, Victory's shares of Berry
Holding Company stock were converted into shares of Berry Common Stock
representing approximately 9.7% of the shares of Berry Common Stock outstanding
immediately subsequent to the reorganization. In 1986, Berry and Victory,
together with certain of its affiliates, entered into the Instrument for
Settlement of Claims and Mutual Release (the "Settlement Agreement").
The Settlement Agreement provided for the exchange (and retirement) of all
shares of Common Stock of Berry held by Victory and certain of its affiliates
for certain assets (the "Settlement Assets") conveyed by Berry to Victory. The
Settlement Assets consisted of (i) a 5% overriding royalty interest in the
production removed or sold from certain real property situated in the
Midway-Sunset field which is referred to as the Maxwell property ("Maxwell
Royalty") and (ii) a parcel of real property in Napa, California.
The shares of Berry Holding Company (BHC) originally acquired by Victory
and the shares of Berry Stock issued to Victory in exchange for the BHC Stock in
the reorganization (the "Victory Shares") were acquired subject to a legend
provision designed to carry out certain provisions of the Will of Clarence J.
Berry, the founder of Berry's predecessor companies. The legend enforces an
Equitable Charge (the "Equitable Charge") which requires that 37.5% of the
dividends declared and paid on such shares from time to time be distributed to a
group of lifetime income beneficiaries (the "B" Group).
As a result of the Settlement Agreement, the "B" Group was deprived of the
dividend income they would have received on the Victory Shares under the
Equitable Charge. In order to adequately protect the interests of the "B" Group,
Berry executed a Declaration of Trust (the "Victory Settlement Trust"). In
recognition of the obligations of Berry and Victory with respect to the
Equitable Charge, Victory agreed in the Settlement Agreement to pay to Berry in
its capacity as trustee under the Victory Settlement Trust, 20% of the 5%
Maxwell Royalty ("Maxwell "B" Group Payments"). The Maxwell "B" Group Payments
will continue until the death of the last surviving member of the "B" Group, at
which time the payments will cease and the Victory Settlement Trust will
terminate. There is one surviving member of the "B" Group.
Under the Settlement Agreement, Berry agreed to guarantee that the "B"
Group will receive the same income under the Equitable Charge that they would
have received had the Victory shares remained as issued and outstanding shares.
Accordingly, when Berry declares and pays dividends on its capital stock, it is
obligated to calculate separately the amount of dividends that would have been
paid to the "B" Group had the Victory Shares not been retired (the "Trust
Payment"). Berry will make payments from the Victory Settlement Trust to the
surviving member of the "B" Group which may constitute all or a part of the
Trust Payment in March and September of each year. Such payments will be made to
the surviving member of the "B" Group for the remainder of his life.
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<PAGE> 15
Typically, the Maxwell "B" Group Payments have contributed to a portion or
all of the payment of the Trust Payments. Pursuant to the Settlement Agreement,
Berry agreed to make up any deficiency in such Trust Payments. The Company paid
$20,200 in 1997 to meet its obligations under the Settlement Agreement to the B
Group survivor. The B Group survivor is a significant shareholder of Berry.
PROPOSAL NO. 2 -- 1994 AMENDED AND RESTATED STOCK OPTION PLAN
INTRODUCTION
The Board of Directors has approved, subject to shareholder approval, the
amended and restated 1994 Stock Option Plan (the "1994 Plan"). A complete copy
of the 1994 Plan, reflecting the proposed amendment and restatement, is set
forth as Exhibit A to this Proxy Statement. The following summary of the
proposed amendments to the 1994 Plan is qualified in its entirety by reference
to the complete text of the 1994 Plan.
DESCRIPTION OF PROPOSED AMENDMENTS
Increase in Shares Available for Issuance. The current 1994 Plan provides
that the maximum number of shares of Common Stock which may be issued under the
1994 Plan is 1,000,000. The amendment would increase this amount to 2,000,000.
Upon shareholder approval of the amendment, a total of 1,033,800 shares of
Common Stock will be available for issuance under the 1994 Plan, after allowing
for the additional 27,000 shares to be granted to the Board effective December
2, 1997. As of February 20, 1998, options to purchase 896,564 shares are
outstanding and options to purchase 224,130 shares are exercisable.
Increase in Annual Formula Grants. The 1994 Plan currently provides that on
each December 2 during the term of the 1994 Plan, each non-employee Director
shall automatically receive an option to purchase 3,000 shares of Common Stock.
The amendment would increase the number of options granted annually to 5,000,
effective retroactively to December 2, 1997. Mr. Middleton, who was appointed to
the Board on December 5, 1997, will receive a total of 5,000 options if this
amendment is approved.
Unless otherwise amended herein, the terms and conditions of the 1994 Plan
shall remain in full force and effect.
The Common Stock and the Class B Stock shall vote as a single class on the
Plan. Each share of Common Stock is entitled to one vote and each share of Class
B Stock is entitled to 95% of one vote. Approval of the amended and restated
1994 Plan requires a majority of the eligible votes cast in person or by proxy
at the Annual Meeting. The Board of Directors recommends that you vote FOR
Proposal No. 2. Proxies solicited hereby will be voted for approval of the
amended and restated 1994 Plan unless a vote against the proposal or abstention
is specifically indicated.
PROPOSAL NO. 3 -- NON-EMPLOYEE DIRECTOR DEFERRED STOCK
AND COMPENSATION PLAN
INTRODUCTION
The Non-Employee Director Deferred Stock and Compensation Plan (the "Plan")
was adopted by the Board of Directors of the Company effective December 5, 1997.
The Plan permits non-employee directors to defer some or all of their
compensation in the form of stock or cash. The Plan is being submitted to the
shareholders of the Company for their approval at this Annual Meeting of
Shareholders.
The following is a summary of the principal features of the Plan. The
summary, however, is subject in all respects to the express provisions of the
Plan, a copy of which is attached hereto as Exhibit B.
PURPOSE, ADMINISTRATION AND ELIGIBILITY
The purpose of the Plan is to attract, retain and motivate qualified
directors and to enhance the long-term mutuality of interest between the
directors and shareholders of the Company by permitting Directors to elect
13
<PAGE> 16
to defer some or all of their cash compensation into a stock unit deferral
account which tracks the value of the Company's Common Stock or an interest
account. The Plan is administered by the Compensation Committee of the Board, or
its successor (the "Committee"), which determines the terms and conditions, not
inconsistent with the provisions of the Plan. The Board has the authority,
subject in all cases to the express provisions of the Plan, to adopt rules and
regulations relating to the Plan. In general, any non-employee director of the
Company, or of any parent corporation or subsidiary company, is eligible to
defer some or all of their compensation under the Plan.
TERMS AND CONDITIONS
The Plan permits non-employee Directors, by written election on or before
December 31 of each calendar year, to defer receipt of all or a portion of their
compensation otherwise payable in cash and to have such amounts credited to a
stock unit account (which tracks the value of the Company's Common Stock as
reported by the New York Stock Exchange) and/or an interest account (which
accrues interest at the rate of five percent (5%) compounded annually).
The written election shall also state when the distribution of the deferred
compensation shall commence and whether such distribution shall be in one lump
sum payment or up to ten annual installments.
A Director may revoke or modify his election in writing to be effective as
of the end of the calendar year in which such written notice is given and only
with respect to compensation payable for services rendered thereafter. A
Director who has revoked an election to participate in the Plan may file a new
election to defer compensation payable for services to be rendered in the
calendar year following the year in which such revocation is filed.
SECURITIES SUBJECT TO PLAN
The maximum aggregate number of shares of Common Stock which may be issued
under the Plan is 250,000 shares of Common Stock. Such limitation is subject to
adjustment in the event of a reorganization, capitalization, reclassification,
stock dividend, stock split or reverse split.
AMENDMENT OR TERMINATION
The Plan provides that the Board of Directors may amend the Plan at any
time; provided, however, that unless required by applicable law, the Board shall
not amend the Plan more than once every six months. The Plan will terminate on
May 31, 2008.
COMPANY DEDUCTIONS, WITHHOLDINGS AND INFORMATION REPORTS
The Company will generally be entitled to a deduction in an amount equal to
the ordinary compensation income recognized by a director when distributions are
made. Typically, the Company is not required to make applicable federal payroll
withholdings with respect to such deferred compensation income. Whether or not
such withholdings are required, the Company will make such information reports
to the IRS as may be required with respect to any income of a director
attributable to transactions involving the deferral of income.
The Common Stock and the Class B Stock shall vote as a single class on the
Plan. Each share of Common Stock is entitled to one vote and each share of Class
B Stock is entitled to 95% of one vote. Approval of the Plan requires a majority
of the eligible votes cast in person or by proxy at the Annual Meeting. The
Board of Directors recommends that you vote FOR Proposal No. 3. Proxies
solicited hereby will be voted for approval of the Plan unless a vote against
the proposal or abstention is specifically indicated.
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the next Annual
Meeting of Shareholders, expected to be held on May 21, 1999, must be received
at the office of the Secretary of the Company by
14
<PAGE> 17
December 4, 1998, if such proposal is to be considered for inclusion in the
Company's proxy statement and form of proxy relating to that meeting.
ANNUAL REPORT
The Company's 1997 Annual Report to Shareholders has been mailed to
shareholders concurrently herewith, but such report is not incorporated in this
Proxy Statement and is not deemed to be a part of this proxy solicitation
material.
On March 11, 1998, the Company filed with the Securities and Exchange
Commission its Annual Report on Form 10-K. This Report contains detailed
information concerning the Company and its operations and supplementary
financial information which, except for exhibits, are included in the Annual
Report to Shareholders. A COPY OF THE EXHIBITS WILL BE FURNISHED TO SHAREHOLDERS
WITHOUT CHARGE UPON WRITTEN REQUEST TO: INVESTOR RELATIONS, BERRY PETROLEUM
COMPANY, 28700 HOVEY HILLS ROAD, P.O. BIN X, TAFT, CA 93268.
EXPENSES OF SOLICITATION
The total cost of this solicitation will be borne by the Company. In
addition to use of the mails, certain officers, directors and regular employees
of the Company, without receiving additional compensation, may solicit proxies
personally by telephone or facsimile. The Company may reimburse persons holding
shares in their own names or in the names of their nominees for expenses they
incur in obtaining instructions from beneficial owners of such shares.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent accountants are Coopers & Lybrand L.L.P. Coopers
& Lybrand L.L.P. has audited the Company's books since 1991, and is expected to
have a representative at the Annual Meeting who will have the opportunity to
make a statement if they desire to do so and be available at that time to
respond to appropriate questions.
The Company has not yet formally engaged an accountant to audit the
Company's financial statements for the year ended December 31, 1998.
OTHER MATTERS
Management knows of no other business to be presented at the Meeting, but
if other matters do properly come before the Meeting, it is intended that the
persons named in the proxy will vote on said matters in accordance with their
best judgment.
The above Notice, Proxy Statement and Form of Proxy are sent by Order of
the Board of Directors.
/s/ KENNETH A. OLSON
KENNETH A. OLSON
Corporate Secretary
April 3, 1998
15
<PAGE> 18
EXHIBIT A
BERRY PETROLEUM COMPANY
RESTATED AND AMENDED
1994 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF PLAN
The purpose of this Plan is to promote the growth and profitability of the
Company and other Participating Companies by providing, through the ownership of
Options, incentives to attract and retain highly talented persons to provide
managerial, administrative and other specialized services to the Company and
other Participating Companies and to motivate such persons to use their best
efforts on behalf of the Company and other Participating Companies.
ARTICLE II
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings set
forth in this Article II:
2.1 Accrued installment. The term "Accrued installment" shall mean any
vested installment of an Option.
2.2 Board. The term "Board" shall mean the Board of Directors of the
Company.
2.3 Committee. The term "Committee" shall mean the Compensation Committee,
or a successor committee, appointed by the Board and constituting not less than
two members of the Board, each of whom is a Disinterested Person.
2.4 Company. The term "Company" shall mean Berry Petroleum Company, a
Delaware corporation, or any successor thereof.
2.5 Director. The term "Director" shall mean a member of the Board, or a
member of the board of directors of any Participating Company.
2.6 Disinterested Person. The term "Disinterested Person" shall mean any
person defined as a Disinterested Person in Rule 16b-3 of the Securities and
Exchange Commission as amended from time to time and as promulgated under the
Exchange Act.
2.7 Elective Date. The term "Effective Date" shall mean December 2, 1994.
2.8 Eligible Person. The term "Eligible Person" shall mean, except as
provided in Section 3.1, any full-time or part-time employee, officer or
Director of any Participating Company.
2.9 Exchange Act. The term "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
2.10 Fair Market Value. The term "Fair Market Value" shall mean the
closing sale price on the trading day in question of the Shares on the Composite
Tape for New York Stock Exchange Listed Stocks, or, if the Shares are not quoted
on the Composite Tape, on the New York Stock Exchange, or, if the Shares are not
listed on such Exchange, on the principal United States securities exchange on
which the Shares are listed, or, if the Shares are not listed on any such
exchange, the closing bid quotation with respect to the Shares on the trading
day in question on the National Association of Securities Dealers, Inc.
Automated Quotations Systems or any similar system then in use, or if no such
quotation is available, the fair market value on the date in question of the
Shares as determined in good faith by the Committee. If the day in question is
not a trading day, the determination of Fair Market Value shall be made as of
the nearest preceding trading day.
2.11 Option. The term "Option" shall mean a nonstatutory option to acquire
Shares granted under this
A-1
<PAGE> 19
Plan.
2.12 Optionee. The term "Optionee" shall mean an Eligible Person who has
been granted an Option.
2.13 Parent Corporation. The term "Parent Corporation" shall mean a
corporation as defined in Internal Revenue Code Section 424(e) or any successor
thereto.
2.14 Participating Company. The term "Participating Company" shall mean
the Company and any Parent Corporation or Subsidiary Corporation of the Company.
2.15 Plan. The term "Plan" shall refer to the Company's 1994 Stock Option
Plan.
2.16 Shares. The term "Shares" shall mean shares of the Company's Class A
Common Stock, $.01 par value, and may be unissued shares or treasury shares or
shares purchased for purposes of this Plan.
2.17 Subsidiary Corporation. The term "Subsidiary Corporation" shall mean
a corporation as defined in Internal Revenue Code Section 424(f) or any
successor thereto.
2.18 Terminating Transaction. The term "Terminating Transaction" shall
mean any of the following events: (a) the dissolution or liquidation of the
Company; (b) a reorganization, merger or consolidation of the Company with one
or more other corporations as a result of which the Company goes out of
existence or becomes a subsidiary of another corporation (which shall be deemed
to have occurred if another corporation shall own, directly or indirectly, over
eighty percent (80%) of the aggregate voting power of all outstanding equity
securities of the Company); (c) a sale of all or substantially all of the
Company's assets; or (d) a sale of the equity securities of the Company
representing more than eighty percent (80%) of the aggregate voting power of all
outstanding equity securities of the Company to any person or entity, or any
group of persons and entities acting in concert.
2.19 Termination Date. The term "Termination Date" shall mean December 2,
2004.
2.20 Total Disability. The term "Total Disability" shall mean a permanent
and total disability as that term is defined in Internal Revenue Code Section
22(e)(3) or any successor thereto.
ARTICLE III
ADMINISTRATION OF PLAN; GRANT TO DIRECTORS
3.1 Administration by the Committee. This Plan shall be administered by
the Compensation Committee of the Board, or its successor (the "Committee").
Subject to the provisions of this Plan document, the Committee shall have full
and absolute power and authority in its sole discretion to (i) determine which
Eligible Persons shall receive Options, (ii) determine the time when Options
shall be granted, (iii) determine the terms and conditions, not inconsistent
with the provisions of this Plan, of any Option granted hereunder, (iv)
determine the number of shares subject to or covered by each Option, and (v)
interpret the provisions of this Plan and of any Option granted under this Plan.
A member of the Committee shall not be an Eligible Person, and shall not have
been an Eligible Person at any time within one (1) year prior to appointment to
the Committee. Except as otherwise provided herein or otherwise permitted by
Rule 16b-3(c)(3) of the Exchange Act, during said one (1) year prior to such
appointment, no member of the Committee shall have been eligible to acquire
stock, stock options or stock appreciation rights under any plan of the Company.
3.2 Grant to Non-employee Directors. All non-employee Directors of the
Company holding office on December 5, 1997, shall receive a grant of 5,000
Options at $18.9375, (3,000 of which have been granted to the 12 directors on
that date except for Mr. Middleton) conditioned upon the receipt of Shareholder
Approval at the May 15, 1998 Annual Meeting of Shareholders. For the duration of
the 1994 Plan, each non-employee Director holding office on December 2nd of each
year shall automatically receive a grant of 5,000 Options.
The above referenced Options to non-employee Directors shall be granted
upon the following terms and conditions:
(a) The exercise price of the Options shall be Fair Market Value on
the date of grant.
A-2
<PAGE> 20
(b) The Options shall vest immediately upon grant.
(c) This "formula" grant to non-employee Directors shall not be
amended more than once every (6) six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement income
Security Act or the rules thereunder.
3.3 Rules and Regulations. The Committee may adopt such rules and
regulations as the Committee may deem necessary or appropriate to carry out the
purposes of this Plan and shall have authority to take all action necessary or
appropriate to administer this Plan.
3.4 Binding Authority. All decisions, determinations, interpretations, or
other actions by the Committee shall be final, conclusive, and binding on all
Eligible Persons, Optionees, Participating Companies and any
successors-in-interest to such parties.
ARTICLE IV
NUMBER OF SHARES AVAILABLE UNDER THIS PLAN
The maximum aggregate number of Shares which may be optioned and sold under
this Plan is 2,000,000 Shares. In the event that Options granted under this Plan
shall for any reason terminate, lapse, be forfeited, or expire without being
exercised, the Shares subject to such unexercised Options may again be subjected
to Options under this Plan. In any event, however, no Option may be granted
hereunder if the sum of Shares subject to such Option and the number of Shares
subject to unexpired Options previously granted hereunder (or subject to
unexercised options or stock appreciation rights under any other stock option or
stock appreciation right plan of the Company) would exceed twenty percent (20%)
of the total shares of voting stock outstanding at such time.
ARTICLE V
TERM OF PLAN
This Plan shall be effective as of the Effective Date and shall terminate
on the Termination Date. No Option may be granted hereunder after the
Termination Date.
ARTICLE VI
OPTION TERMS
6.1 Form of Option Agreement. Any option granted under this Plan shall be
evidenced by an agreement ("Option Agreement") in such form as the Committee, in
its discretion, may from time to time approve. Any Option Agreement shall
contain such terms and conditions as the Committee may deem, in its sole
discretion, necessary or appropriate and which are not inconsistent with the
provisions of this Plan.
6.2 Vesting and Exercisability of Options. Subject to the limitations set
forth herein and/or in any applicable Option Agreement entered into hereunder,
Options granted under this Plan shall vest and be exercisable in accordance with
the rules set forth in this Section 6.2.
a. General. Subject to the other provisions of this Section 6.2,
Options shall vest and become exercisable at such times and in such
installments as the Committee shall provide in each individual Option
Agreement. Notwithstanding the foregoing, the Committee may in its sole
discretion accelerate the time at which an Option or installment thereof
may be exercised. Unless otherwise provided in this Section 6.2 or in the
Option Agreement pursuant to which an Option is granted, an Option may be
exercised when Accrued Installments accrue as provided in such Option
Agreement and at any time thereafter until, and including, the Option
Termination Date (as defined below).
A-3
<PAGE> 21
b. Termination of Options. All installments and Options shall expire
and terminate on such date as the Committee shall determine ("Option
Termination Date"), which in no event shall be later than ten (10) years
from the date on which such Option was granted.
c. Termination of Eligible Person Status Other Than by Reason of Death
or Disability. In the event that the employment of an Eligible Person with
a Participating Company is terminated for any reason (other than by reason
of death or Total Disability), any installments under an Option held by
such Eligible Person which have not accrued as of such termination date
shall expire and become unexercisable as of such termination date. Except
as otherwise provided herein, in the event that an Eligible Person who is a
Director terminates his directorship or otherwise ceases to be a Director
for any reason (other than by reason of death or Total Disability), any
installments under an Option held by such Eligible Person which have not
accrued as of the directorship termination date shall expire and become
unexercisable as of the directorship termination date. All Accrued
installments as of the employment termination date and/or the directorship
termination date shall remain exercisable only within such period of time
as the Committee may determine, but in no event shall any Accrued
installments remain exercisable for a period in excess of three (3) months
following such termination date or for a period in excess of the original
Option Termination Date, whichever is earlier. For purposes of this Plan,
an Eligible Person who is an employee or Director of any Participating
Company shall not be deemed to have incurred a termination of his
employment or his directorship (whichever may be applicable) so long as
such Eligible Person is an employee or Director (whichever may be
applicable) of any Participating Company.
d. Leave of Absence. In the case of any employee on an approved leave
of absence, the Committee may make such provision respecting continuance of
any Options held by the employee as the Committee deems appropriate in its
sole discretion, except in no event shall an Option be exercisable after
the original Option Termination Date.
e. Death or Total Disability of Eligible Person. In the event that the
employment or directorship of an Eligible Person with a Participating
Company is terminated by reason of death or Total Disability, any
unexercised Accrued installments of Options granted hereunder to such
Eligible Person shall expire and become unexercisable as of the earlier of:
(1) The applicable Option Termination Date, or
(2) The first anniversary of the date of termination of the
employment or directorship of such Eligible Person by reason of the
Eligible Person's death or Total Disability. Any such Accrued
Installments of a deceased Eligible Person may be exercised prior to
their expiration only by the person or persons to whom the Eligible
Person's Option rights pass by will or the laws of descent and
distribution. Any Option installments under such a deceased or disabled
Eligible Person's Option that have not accrued as of the date of the
termination of employment, or directorship due to death or Total
Disability shall expire and become unexercisable as of such termination
date.
f. Termination of Affiliation of Participating Company.
Notwithstanding the foregoing provisions of this section, in the case of an
Eligible Person who is an employee or Director of a Participating Company
other than the Company, upon an Affiliation Termination (as defined herein)
of such Participating Company such Eligible Person shall be deemed (for all
purposes of this Plan) to have incurred a termination of his employment or
directorship with such Participating Company for reasons other than death
or Total Disability, with such termination to be deemed effective as of the
effective date of said Affiliation Termination. As used herein the term
"Affiliation Termination" shall mean, with respect to a Participating
Company, the termination of such Participating Company's status as a
Participating Company (as defined herein) with respect to the Company.
6.3 Options Not Transferable. Options granted under this Plan may not be
sold, pledged, hypothecated, assigned, encumbered, gifted or otherwise
transferred or alienated in any manner, either voluntarily or involuntarily or
by operation of law, other than by will or the laws of descent and distribution,
and (except as
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specifically provided to the contrary in Section 6.2(e) hereof) may be exercised
during the lifetime of an Optionee only by such Optionee.
6.4 Restrictions on Issuance of Shares.
a. No Shares shall be issued or delivered upon exercise of an Option unless
and until there shall have been compliance with all applicable requirements of
the Securities Act of 1933, all applicable listing requirements of any market or
securities exchange on which the Company's Common Stock is then listed, and any
other requirements of law or of any regulatory body having jurisdiction over
such issuance and delivery. The inability of the Company to obtain any required
permits, authorizations or approvals necessary for the lawful issuance and sale
of any Shares hereunder on terms deemed reasonable by the Committee shall
relieve the Company, the Board, and the Committee of any liability in respect of
the nonissuance or sale of such Shares as to which such requisite permits,
authorizations or approvals shall not have been obtained.
b. As a condition to the granting or exercise of any Option, the Committee
may require the person receiving or exercising such Option to make any
representations and warranties to the Company as may be required or appropriate
under any applicable law or regulation, including, but not limited to, a
representation that the Option or Shares are being acquired only for investment
and without any present intention to sell or distribute such Option or Shares,
if such a representation is required under the Securities Act of 1933 or any
other applicable law, rule or regulation.
c. The exercise of any Option under this Plan is conditioned on approval of
this Plan, within twelve (12) months of the adoption of this Plan by the Board,
by (i) the vote of the holders of a majority of the outstanding securities of
the Company present, or represented, and entitled to vote at a meeting duly held
in accordance with applicable law, or (ii) the written consent of the holders of
a majority of the securities of the Company entitled to vote if the requirements
of Rule 16b-3(b)(2) promulgated under the Exchange Act are otherwise satisfied.
In the event such shareholder approval is not obtained within such time period,
any Options granted hereunder shall be void.
6.5 Option Adjustments.
a. If the outstanding Shares are increased, decreased, changed into or
exchanged for a different number or kind of shares of the Company through
reorganization, recapitalization, reclassification, stock dividend, stock split
or reverse stock split, an appropriate and proportionate adjustment shall be
made in the number or kind of shares, and the per-share Option price thereof
which may be issued in the aggregate and to any individual Optionee under this
Plan upon exercise of Options granted under this Plan; provided, however, that
no such adjustment need be made if, upon the advice of counsel, the Committee
determines that such adjustment may result in the receipt of federally taxable
income to holders of Options granted hereunder or the holders of Shares or other
classes of the Company's securities.
b. Upon the occurrence of a Terminating Transaction (as defined in Article
II hereof), as of the effective date of such Terminating Transaction, this Plan
and any then outstanding Options (whether or not vested) shall terminate unless
(i) provision is made in writing in connection with such transaction for the
continuance of this Plan and for the assumption of such Options, or for the
substitution of such Options of new options covering the securities of the
successor or surviving corporation in the Terminating Transaction or an
affiliate thereof, with appropriate adjustments as to the number and kind of
securities and prices, in which event this Plan and such outstanding Options
shall continue or be replaced, as the case may be, in the manner and under the
terms so provided; or (ii) the Committee otherwise shall provide in writing for
such adjustments as it deems appropriate in the terms and conditions of the then
outstanding Options (whether or not vested), including without limitation (A)
accelerating the vesting of outstanding Options, and/or (B) providing for the
cancellation of Options and their automatic conversion into the right to receive
the securities or other properties which a holder of the Shares underlying such
Options would have been entitled to receive upon consummation of such
Terminating Transaction had such Shares been issued and outstanding (net of the
appropriate option exercise prices). If this Plan or the Options shall terminate
pursuant to the foregoing provisions of this paragraph (b) because neither (i)
nor (ii) is satisfied, any Optionee holding outstanding Options shall have the
right, at such time immediately prior to the consummation of the
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Terminating Transaction as the Company shall designate, to exercise his or her
Options to the full extent not theretofore exercised, including any installments
which have not yet become Accrued installments.
c. In all cases, the nature and extent of adjustments under this Section
6.5 shall be determined by the Committee in its sole discretion, and any such
determination as to what adjustments shall he made, and the extent thereof,
shall be final, binding and conclusive. No fractional shares of stock shall be
issued under this Plan pursuant to any such adjustment.
6.6 Taxes. The Committee shall make such provisions and take such steps as
it deems necessary or appropriate for the withholding of any federal, state,
local and other tax required by law to be withheld with respect to the grant or
exercise of an Option under this Plan, including, but without limitation, the
withholding of the number of Shares at the time of the grant or exercise of an
Option the Fair Market Value of which would satisfy any withholding tax on said
exercise or grant, the deduction of the amount of any such withholding tax from
any compensation or other amounts payable to an Optionee by any member of the
Participating Companies, or requiring an Optionee (or the Optionee's beneficiary
or legal representative) as a condition of granting or exercising an Option to
pay to any member of the Participating Companies any amount required to be
withheld, or to execute such other documents as the Committee deems necessary or
appropriate in connection with the satisfaction of any applicable withholding
obligation.
6.7 Legends. Each Option Agreement and each certificate representing
Shares acquired upon exercise of an Option shall be endorsed with all legends,
if any, required by applicable federal and state securities laws to be placed
thereon. The determination of which legends, if any, shall be placed upon Option
Agreements and/or said Share certificates shall be made by the Committee in its
sole discretion and such decision shall be final, binding and conclusive.
ARTICLE VII
SPECIAL OPTION TERMS UNDER THIS PLAN
7.1 Option Exercise Price. The Option exercise price for Shares to be
issued under this Plan shall be determined by the Committee in its sole
discretion, but shall not be less than eighty percent (80%) of the Fair Market
Value of the Shares on the date of grant. The date of grant shall be deemed to
be the date on which the Committee authorizes the grant of the Option, unless a
subsequent date is specified in such authorization.
7.2 Exercise of Options. An Option may be exercised in accordance with
this Section 7.2 as to all or any portion of the Shares covered by an Accrued
installment of the Option from time to time during the applicable Option period,
except that an Option shall not be exercisable with respect to fractions of a
Share. Options may be exercised, in whole or in part, by giving written notice
of exercise to the Company, which notice shall specify the number of Shares to
be purchased and shall be accompanied by payment in full of the purchase price
in accordance with Section 7.3. An Option shall be deemed exercised when such
written notice of exercise and payment has been received by the Company. No
Shares shall be issued until full payment has been made and the Optionee has
satisfied such other conditions as may be required by this Plan, as may be
required by applicable law, rules, or regulations, or as may be adopted or
imposed by the Committee. Until the stock certificates have been issued, no
right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to optioned Shares notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or other rights for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 6.5.
7.3 Payment of Option Exercise Price.
a. Except as otherwise provided in Section 7.3(b), the entire Option
exercise price shall be paid in cash at the time the Option is exercised.
b. In the discretion of the Committee, an Optionee may elect to pay for all
or some of the Optionee's Shares with Common Stock of the Company previously
acquired and owned at the time of exercise by the Optionee, subject to all
restrictions and limitations of applicable laws, rules and regulations, and
subject to the satisfaction of any conditions the Committee may impose,
including, but not limited to, the making of such
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<PAGE> 24
representations and warranties and the providing of such other assurances that
the Committee may require with respect to the Optionee's title to the Company's
Common Stock used for payment of the exercise price. Such payment shall be made
by delivery of certificates representing the Company's Common Stock, duly
endorsed or with duly signed stock power attached, such Common Stock to be
valued at its Fair Market Value on the date notice of exercise is received by
the Company.
ARTICLE VIII
AMENDMENT OR TERMINATION OF PLAN
8.1 Board Authority. The Board may amend, alter, and/or terminate this
Plan at any time; provided, however, that unless required by applicable law,
rule, or regulation or unless no longer required to satisfy the requirements of
Rule 16b-3 promulgated under the Exchange Act, the Board shall not amend this
Plan without the approval of stockholders (as obtained in accordance with the
provisions of Section 6.4(c) hereof) if the amendment would (A) materially
increase the benefits accruing to participants under this Plan, (B) materially
increase the number of securities which may be issued under this Plan, or (C)
materially modify the requirements as to eligibility for participation in this
Plan. In determining whether a given amendment is within the scope of (A), (B)
or (C), the Company may rely, without limitation, upon the regulations
promulgated and the advice provided by the Securities and Exchange Commission
with respect to Rule 16b-3. No amendment of this Plan or of any Option Agreement
shall affect in a material and adverse manner Options granted prior to the date
of any such amendment without the consent of any Optionee holding any such
affected Options.
8.2 Contingent Grants Based on Amendments. Options may be granted in
reliance on and consistent with any amendment adopted by the Board alone which
is necessary to enable such Options to be granted under this Plan, even though
such amendment requires future stockholder approval; provided, however, that any
such contingent Option by its terms may not be exercised prior to stockholder
approval of such amendment and provided, further, that in the event stockholder
approval is not obtained within twelve (12) months of the date of grant of such
contingent Option, then such contingent Option shall be deemed canceled and no
longer outstanding.
ARTICLE IX
GENERAL PROVISIONS
9.1 Availability of Plan. A copy of this Plan shall be delivered to the
Secretary and Assistant Secretary of the Company and shall be shown by the
Secretary or Assistant Secretary to any Eligible Person making reasonable
inquiry concerning this Plan.
9.2 Notice. Any notice or other communication required or permitted to be
given pursuant to this Plan or under any Option Agreement must be in writing and
shall be deemed to have been given when delivered to and actually received by
the party to whom addressed. Notice shall be given to Optionees at their most
recent addresses shown in the Company's records. Notice to the Company shall be
addressed to the Company at the address of the Company's principal executive
offices, to the attention of the Secretary of the Company.
9.3 Titles and Headings. Titles and headings of sections of this Plan are
for convenience of reference only and shall not affect the construction of any
provision of this Plan.
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EXHIBIT B
BERRY PETROLEUM COMPANY
NON-EMPLOYEE DIRECTOR
DEFERRED STOCK AND COMPENSATION PLAN
SECTION 1. Establishment of Plan; Purpose. The Berry Petroleum Company
Non-Employee Director Deferred Stock and Compensation Plan (the "Plan") is
hereby established to permit Eligible Directors, in recognition of their
contributions to the Company, to receive Shares in lieu of Compensation and to
defer recognition of their Compensation in the manner described below. The Plan
is intended to enable the Company to attract, retain and motivate qualified
directors and to enhance the long-term mutuality of interest between Directors
and stockholders of the Company.
SECTION 2. Definitions. When used in this Plan, the following terms shall
have the definitions set forth in this Section:
2.1 "Accounts" shall mean an Eligible Director's Stock Unit Account and
Interest Account.
2.2 "Board of Directors" shall mean the Board of Directors of the
Company.
2.3 "Committee" shall mean the Compensation Committee of the Board of
Directors or such other committee of the Board as the Board shall designate from
time to time.
2.4 "Company" shall mean Berry Petroleum Company, a Delaware
corporation.
2.5 "Compensation" shall mean the annual retainer fees earned by an
Eligible Director for service as a Director; the annual retainer fee, if any,
earned by an Eligible Director for service as a member of a committee of the
Board of Directors; and any fees earned by an Eligible Director for attendance
at meetings of the Board of Directors and any of its committees.
2.6 "Director" shall mean any member of the Board of Directors, whether
or not such member is an Eligible Director.
2.7 "Disability" shall mean an illness or injury that lasts at least
six (6) months, is expected to be permanent, and renders a Director unable to
carry out his duties.
2.8 "Effective Date" shall mean the date on which the Plan is approved
by the stockholders of the Company.
2.9 "Eligible Director" shall mean a member of the Board of Directors
who is not an employee of the Company.
2.10 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2.11 "Fair Market Value" shall mean the closing price of a Share as
reported by the Consolidated Tape of New York Stock Exchange Listed Shares on
the date which is the nearest day preceding the date on which such value is to
be determined.
2.12 "Interest Account" shall mean the bookkeeping account established
to record the interests of an Eligible Director with respect to deferred
Compensation that is not deemed invested in Units.
2.13 "Shares" shall mean shares of Stock.
2.14 "Stock" shall mean the Class A Common Stock of the Company.
2.15 "Stock Unit Account" shall mean, with respect to an Eligible
Director who has elected to have deferred amounts deemed invested in Units, a
bookkeeping account established to record such Eligible Director's interest
under the Plan related to such Units.
2.16 "Unit" shall mean a contractual obligation of the Company to
deliver a Share or pay cash based on the Fair Market Value of a Share to an
Eligible Director or the beneficiary or estate of such Eligible Director as
provided herein.
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SECTION 3. Administration. The Plan shall be administered by the Committee;
provided, however, that the Plan shall be administered such that any Director
participating in the Plan shall continue to be deemed to be a "disinterested
person" under Rule 16b-3 of the Securities and Exchange Commission under the
Exchange Act ("Rule 16b-3"), as such Rule is in effect on the Effective Date of
the Plan and as it may be subsequently amended, for purposes of such Director's
ability to serve on any committee charged with administering any of the
Company's stock-based incentive plans for executive officers intended to qualify
for the exemptive relief available under Rule 16b-3.
SECTION 4. Shares Authorized for Issuance.
4.1 Maximum Number of Shares. The aggregate number of Shares which may
be issued to Eligible Directors under the Plan shall not exceed Two Hundred and
Fifty Thousand (250,000) Shares, subject to adjustment as provided in Section
4.2 below. If any Unit is settled in cash or is forfeited without a distribution
of Shares, the Shares otherwise subject to such Unit shall again be available
hereunder.
4.2 Adjustment for Corporate Transactions. If the outstanding Stock is
increased, decreased, changed into or exchanged for a different number or kind
of shares of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split, an
appropriate and proportionate adjustment shall be made in the number or kind of
shares which may be issued in the aggregate under this Plan and the number of
Units that have been, or may be, issued under this Plan; provided, however, that
no such adjustment need be made if, upon the advice of counsel, the Committee
determines that such adjustment may result in the receipt of federally taxable
income to holders of Stock or other classes of the Company's equity securities.
The nature and extent of such adjustments shall be determined by the Committee
in its sole discretion, and any such determination as to what adjustments shall
be made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under this Plan pursuant to any such
adjustment.
SECTION 5. Deferred Compensation Program.
5.1 Election to Defer. On or before December 31 of any calendar year,
an Eligible Director may elect to defer receipt of all or any part of any
Compensation payable in respect of the calendar year following the year in which
such election is made, and to have such amounts credited, in whole or in part,
to a Stock Unit Account or an Interest Account. Any person who shall become an
Eligible Director during any calendar year may elect, not later than the 30th
day after his term as a Director begins, to defer payment of all or any part of
his Compensation payable for the portion of such calendar year following such
election. In the year in which this Plan is first implemented, any Eligible
Director may elect, not later than the 30th day after the Effective Date, to
defer payment of all or any part of his Compensation payable for the portion of
such calendar year following the Effective Date.
5.2 Method of Election. A deferral election shall be made by written
notice filed with the Corporate Secretary of the Company. Such election shall
continue in effect (including with respect to Compensation payable for
subsequent calendar years) unless and until the Eligible Director revokes or
modifies such election by written notice filed with the Corporate Secretary. Any
such revocation or modification of a deferral election shall become effective as
of the end of the calendar year in which such notice is given and only with
respect to Compensation payable for services rendered thereafter; provided that
if the effect of such revocation or modification of a deferral election is to
change the amount of deferred compensation that would otherwise have been
credited to the Stock Unit Account it shall in no event become effective earlier
than six (6) months after it is received by the Corporate Secretary. Amounts
credited to the Eligible Director's Stock Unit Account prior to the effective
date of any such revocation or modification of a deferral election shall not be
affected by such revocation or modification and shall be distributed only in
accordance with the otherwise applicable terms of the Plan. An Eligible Director
who has revoked an election to participate in the Plan may file a new election
to defer Compensation payable for services to be rendered in the calendar year
following the year in which such election is filed.
5.3 Investment Election. At the time an Eligible Director elects to
defer receipt of Compensation pursuant to Section 5.1, the Eligible Director
shall designate in writing the portion of such Compensation,
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stated as a whole percentage, to be credited to the Interest Account and the
portion to be credited to the Stock Unit Account. If an Eligible Director fails
to notify the Corporate Secretary as to how to allocate any Compensation between
the two Accounts, 100% of such Compensation shall be credited to the Interest
Account. By written notice to the Corporate Secretary, an Eligible Director may
change the manner in which Compensation payable with respect to services to be
rendered after the end of such calendar year are allocated among the Accounts,
provided that any such election shall only be effective with respect to
Compensation payable six (6) months after such election is received by the
Corporate Secretary.
5.4 Dividend Equivalents. An Eligible Director shall have no rights as
a stockholder of the Company with respect to any Units until Shares are
delivered to the Eligible Director; provided that each Eligible Director shall
have the right to receive an amount equal to the dividend per Share for the
applicable dividend payment date (which, in the case of any dividend
distributable in property other than Shares, shall be the per Share value of
such dividend, as determined by the Company for purposes of income tax
reporting) times the number of Units held by such Eligible Director on the
record date for the payment of such dividend (a "Dividend Equivalent"). Each
Eligible Director may elect, prior to any calendar year, whether the Dividend
Equivalent is: (i) payable in cash, on or as soon as practicable after each date
on which dividends are paid to stockholders with respect to Shares; (ii) treated
as reinvested in an additional number of Units determined by dividing (A) the
cash amount of any such dividend by (B) the Fair Market Value on the related
dividend payment date; or (iii) deferred and credited to the Eligible Director's
Interest Account.
5.5 Interest Account. Any Compensation allocated to the Interest
Account shall be credited to the Interest Account as of the date such
Compensation would have been paid to the Eligible Director. Any amounts credited
to the Interest Account shall be credited with interest at the rate of five
percent (5%) per annum, compounded annually.
5.6 Stock Unit Account. An Eligible Director's aggregate Compensation,
for each fiscal quarter, that is allocated to the Stock Unit Account shall be
deemed to be invested in a number of Units equal to the quotient of (i) such
Compensation divided by (ii) the Fair Market Value on the first trading day of
such fiscal quarter. Fractional Units shall be credited, but shall be rounded to
the nearest hundredth percentile, with amounts equal to or greater than .005
rounded up and amounts less than .005 rounded down. Unless otherwise instructed
by the Eligible Director in writing, whenever a dividend other than a dividend
payable in the form of Shares is declared with respect to the Shares, the number
of Units in the Eligible Director's Stock Unit Account shall be increased by the
number of Units determined by dividing (i) the product of (A) the number of
Units in the Eligible Director's Stock Unit Account on the related dividend
record date, and (B) the amount of any cash dividend declared by the Company on
a Share (or, in the case of any dividend distributable in property other than
Shares, the per share value of such dividend, as determined by the Company for
purposes of income tax reporting), by (ii) the Fair Market Value on the first
trading day of the fiscal quarter in which the dividend is paid. In the case of
any dividend declared on Shares which is payable in Shares, the Eligible
Director's Stock Unit Account shall be increased by the number of Units equal to
the product of (i) the number of Units credited to the Eligible Director's Stock
Unit Account on the related dividend record date, and (ii) the number of Shares
(including any fraction thereof) distributable as a dividend on a Share. In the
event of any stock split, stock dividend, recapitalization, reorganization or
other corporate transaction affecting the capital structure of the Company, the
Committee shall make such adjustments to the number of Units credited to each
Eligible Director's Stock Unit Account as the Committee shall deem necessary or
appropriate to prevent the dilution or enlargement of such Eligible Director's
rights.
5.7 Distribution Election. At the time an Eligible Director makes a
deferral election pursuant to Section 5.1, the Eligible Director shall also file
with the Corporate Secretary a written election (a "Distribution Election") with
respect to whether:
(i) the aggregate amount, if any, credited to the Interest Account at
any time and the value of any Units credited to the Stock Unit Account
shall be distributed in cash, in Shares or in a combination thereof,
provided that any election to receive a distribution of all or any portion
of the value of an Eligible Director's Interest Account in Shares must be
made on an irrevocable basis at least six (6) months in advance of such
distribution;
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(ii) such distribution shall commence, at the election of the Eligible
Director, as soon as practicable following the first business day of the
calendar month following the date the Eligible Director ceases to be a
Director or on the first business day of any calendar year following the
calendar year in which the Eligible Director ceases to be a Director,
and
(iii) such distribution shall be in one lump sum payment or in such number
of annual installments (not to exceed ten (10)) as the Eligible Director
may designate.
The amount of any installment payment shall be determined by multiplying the
amount credited to the Accounts of an Eligible Director immediately prior to the
distribution by a fraction, the numerator of which is one and the denominator of
which is the number of installments (including the current installment)
remaining to be paid. An Eligible Director may at any time prior to the time at
which the Eligible Director ceases to be a Director, and from time to time,
change any Distribution Election applicable to his Accounts, provided that no
election to change the timing of any final distribution shall be effective
unless it is made in writing and received by the Corporate Secretary at least
one (1) year prior to the time at which the Eligible Director ceases to be a
director.
5.8 Financial Hardship Withdrawal. Any Eligible Director may, after
submission of a written request to the Corporate Secretary and such written
evidence of the Eligible Director's financial condition as the Committee may
reasonably request, withdraw from his Interest Account (but not from his Stock
Unit Account) up to such amount as the Committee shall determine to be necessary
to alleviate the Eligible Director's financial hardship.
5.9 Timing and Form of Distributions. Any distribution to be made
hereunder, whether in the form of a lump sum payment or installments, following
the termination of an Eligible Director's service as a Director shall commence
in accordance with the Distribution Election made by the Eligible Director
pursuant to Section 5.7. If an Eligible Director fails to specify a form of
payment for a distribution in accordance with Section 5.7, the distribution from
the Interest Account shall be made in cash and the distribution from the Stock
Unit Account shall be made in Shares. If an Eligible Director fails to specify
in accordance with Section 5.7 a commencement date for a distribution or whether
such distribution shall be made in a lump sum payment or a number of
installments, such distribution shall be made in a lump sum payment and commence
on the first business day of the month immediately following the date on which
the Eligible Director ceases to be a Director. In the case of any distribution
being made in annual installments, each installment after the first installment
shall be paid on the first business day of each subsequent calendar year, or as
soon as practical thereafter, until the entire amount subject to such
Distribution Election shall have been paid.
SECTION 6. Unfunded Status. The Company shall be under no obligation to
establish a fund or reserve in order to pay the benefits under the Plan. A Unit
represents a contractual obligation of the Company to deliver Shares or pay cash
to an Eligible Director as provided herein. The Company has not segregated or
earmarked any Shares or any of the Company's assets for the benefit of an
Eligible Director or his beneficiary or estate, and the Plan does not, and shall
not be construed to, require the Company to do so. The Eligible Director and his
beneficiary or estate shall have only an unsecured, contractual right against
the Company with respect to any Units granted or amounts credited to an Eligible
Director's Accounts hereunder, and such right shall not be deemed superior to
the right of any other creditor. Units shall not be deemed to constitute options
or rights to purchase Stock.
SECTION 7. Amendment and Termination. The Plan may be amended at any time
by the Committee or the Board of Directors. Any modification of any of the terms
and provisions of the Plan, including this Section, shall not be made more than
once every six (6) months. The Plan shall terminate on May 31, 2008. Unless the
Board otherwise specifies at the time of such termination, the termination of
the Plan will not result in the premature distribution of the amounts credited
to an Eligible Director's Accounts.
SECTION 8. General Provisions.
8.1 No Right to Serve as a Director. This Plan shall not impose any
obligations on the Company to retain any Eligible Director as a Director nor
shall it impose any obligation on the part of any Eligible Director to remain as
a Director of the Company.
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8.2 Construction of the Plan. The validity, construction,
interpretation, administration and effect of the Plan and the rights relating to
the Plan, shall be determined solely in accordance with the laws of the State of
Delaware.
8.3 No Right to Particular Assets. Nothing contained in this Plan and
no action taken pursuant to this Plan shall create or be construed to create a
trust of any kind or any fiduciary relationship between the Company and any
Eligible Director, the executor, administrator or other personal representative
or designated beneficiary of such Eligible Director, or any other persons. Any
reserves that may be established by the Company in connection with Units granted
under this Plan shall continue to be treated as the assets of the Company for
federal income tax purposes and remain subject to the claims of the Company's
creditors. To the extent that any Eligible Director or the executor,
administrator, or other personal representative of such Eligible Director,
acquires a right to receive any payment from the Company pursuant to this Plan,
such right shall be no greater than the right of an unsecured general creditor
of the Company.
8.4 Severability of Provisions. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provision had not been included.
8.5 Incapacity. Any benefit payable to or for the benefit of a minor,
an incompetent person or other person incapable of receipting therefor shall be
deemed paid when paid to such person's guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge any liability or obligation of the Board of Directors, the
Company and all other parties with respect thereto.
8.6 Headings and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
this Plan, and shall not be employed in the construction of this Plan.
B-5
<PAGE> 30
PROXY
BERRY PETROLEUM COMPANY
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Berry Petroleum Company, a Delaware
Corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement and hereby appoints Jerry V. Hoffman and Ralph
J. Goehring as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of the Common Stock or Class B Stock of Berry Petroleum Company held of
record by the undersigned on March 16, 1998 at the Annual Meeting of
Shareholders to be held May 15, 1998 or any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
FOLD AND DETACH HERE
<PAGE> 31
Board of Directors Recommends a Vote FOR Proposals 1, 2 and 3. Mark
your votes
as indicated [ X ]
in this
example
FOR WITHHOLD
nominees listed AUTHORITY
(except as marked) TO VOTE FOR all
to the contrary below) nominees listed below
[ ] [ ]
ELECTION OF DIRECTORS
Nominees: W. Berry G. Biller
R. Busch III W. Bush
R. Downs J. Hagg
J. Hoffman T. Jamieson
R. Martin J. Middleton
(Instruction: To withhold authority to vote for
any nominee, strike a line through that nominee's
name in the list above).
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE THE AMENDED AND
RESTATED 1994 STOCK OPTION PLAN [ ] [ ] [ ]
3. PROPOSAL TO APPROVE THE NON-EMPLOYEE FOR AGAINST ABSTAIN
DIRECTOR DEFERRED STOCK AND COMPENSA-
TION PLAN [ ] [ ] [ ]
4. The Proxies are authorized to vote upon such other business as
may properly come before the meeting.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction
is made, this proxy will be voted FOR Proposals 1, 2 and 3 and in
accordance with the recommendations of the Board of Directors on
any other matters that may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Signature(s) Dated: , 1998
------------------------------------------ ------------
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person. If a limited
liability company, please sign in limited liability company name by authorized
person.
* FOLD AND DETACH HERE *
