BERRY PETROLEUM COMPANY
28700 Hovey Hills Road
P.O. Bin X
Taft, California 93268
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 19, 2000
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 19, 2000 at 10:00
a.m. for the following purposes:
1. To elect a board of nine directors to serve until the next
Annual Meeting of Shareholders and until their successors are
elected and qualified; and
2. 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
13, 2000 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
Kenneth A. Olson
Corporate Secretary/Treasurer
April 3, 2000
Taft, California
<PAGE> 1
BERRY PETROLEUM COMPANY
28700 Hovey Hills Road
P.O. Bin X
Taft, California 93268
PROXY STATEMENT
April 3, 2000
_______________
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 19, 2000, 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, 2000.
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 nine director nominees
listed below. 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 13, 2000 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 16,
2000 there were 21,113,383 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.
1
<PAGE> 2
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Berry's Capital Stock as of February 16, 2000
by (i) each of its directors who own Berry Capital Stock, and (ii) all
directors and officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial
Name and Address Ownership (1) (2)
of Beneficial Owner* Position Shares Percent
- ------------------- --------------------- ----------- --------
<S> <C> <C> <C>
Jerry V. Hoffman Chairman of the Board, 198,105(3) **
President and Chief
Executive Officer
William F. Berry Director 1,713,623(4) 7.8%
Ralph B. Busch, III Director 334,873(5) 1.5%
William E. Bush, Jr. Director 527,700(6) 2.4%
J. Herbert Gaul, Jr. Director 5,000(7) **
John A. Hagg Director 34,000(8) **
Thomas J. Jamieson Director 34,100(9) **
Roger G. Martin Director 27,000(10) **
Martin H. Young, Jr. Director 15,000(11) **
All Directors and
Officers as a group
(15 persons) 3,240,772(12) 14.3%
</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 and percent calculations
are based on total shares of Capital Stock outstanding,
including the 898,892 shares of Class B Stock outstanding which can be
converted, at the request of the shareholder, to Class A Common Stock.
(3) Includes 38,105 shares held directly and 160,000 shares which Mr.
Hoffman has the right to acquire under the Company's 1994 Stock Option
Plan.
(4) Includes 1,654,901 shares held directly and 34,722 shares held in
the Berry Children's Trust as to which Mr. Berry has voting and
investment power and 24,000 shares which Mr. Berry has the right to
acquire under the Company's 1994 Stock Option Plan.
2
<PAGE> 3
(5) Includes 82,868 shares held directly, 76,505 shares held in the B
Group Trust at Union Bank 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 18,000 shares which Mr.
Busch has the right to acquire under the Company's 1994 Stock Option
Plan.
(6) Includes 179,700 shares held directly and 330,000 shares held in
the William E. Bush Trust as to which Mr. Bush shares voting power
with other trustees and 18,000 shares which Mr. Bush has the right to
acquire under the Company's 1994 Stock Option Plan.
(7) Includes 5,000 shares which Mr. Gaul has the right to acquire
under the Company's 1994 Stock Option Plan.
(8) Includes 10,000 shares held directly and 24,000 shares which Mr.
Hagg has the right to acquire under the Company's 1994 Stock Option
Plan.
(9) Includes 10,100 shares held indirectly by Mr. Jamieson through
Jaco Oil Company, a corporation, and 24,000 shares which Mr. Jamieson
has the right to acquire under the Company's 1994 Stock Option Plan.
(10) Includes 3,000 shares held directly and 24,000 shares which Mr.
Martin has the right to acquire under the Company's 1994 Stock Option
Plan.
(11) Includes 10,000 shares held directly and 5,000 shares which Mr.
Young has the right to acquire under the Company's 1994 Stock Option
Plan.
(12) Includes 27,503 shares held directly, 6,804 shares held
indirectly by the Officers in the Company's 401(k) Thrift Plan and
317,064 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.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of December 31, 1999,
information regarding the voting securities of the Company owned
"beneficially," within the meaning of the rules of the Securities and
Exchange Commission, by persons known by the Company to own
beneficially more than 5% of the indicated class:
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
- -------------- ------------------- ----------------------- --------
<S> <C> <C> <C>
Class A Common C. J. Bennett 1,200,397(1) 5.7%
Stock c/o Berry Petroleum Company
P. O. Bin X
Taft, CA 93268
Class A Common Goldman Sachs Asset 1,095,400(2) 5.2%
Stock Management
A Division of Goldman,
Sachs & Co.
1 New York Plaza
New York, NY 10004
Class A Common Kennedy Capital Management, 1,423,100(3) 6.7%
Stock Inc.
10829 Olive Blvd.
St. Louis, MO 63141
3
<PAGE> 4
Class A Common Union Bank of California 1,751,871(4) 8.3%
Stock 445 South Figueroa St.,
Third Floor
Los Angeles, CA 90017
Class A Common Winberta Holdings, Ltd. 1,088,220(5) 5.2%
Stock c/o Berry Petroleum Company
P. O. Bin X
Taft, CA 93268
Class B Stock Winberta Holdings, Ltd. 898,892(5) 100%
c/o Berry Petroleum Company
P. O. Bin X
Taft, CA 93268
</TABLE>
(1) As reflected in the Schedule 13G dated January 26, 2000 and filed
with the Securities and Exchange Commission. According to the
Schedule 13G, Mr. Bennett has sole dispositive and voting power on
960,516 shares and shared dispositive and voting power on 239,881 of
the shares indicated.
(2) As reflected in the Schedule 13G dated February 14, 2000 and
filed with the Securities and Exchange Commission. According to the
Schedule 13G, Goldman Sachs Asset Management has sole voting power on
842,800 shares and sole dispositive power on 1,095,400 shares.
(3) As reflected in the Schedule 13G dated February 9, 2000 and filed
with the Securities and Exchange Commission. According to the
Schedule 13G, Kennedy Capital Management, Inc. has sole voting power
on 1,343,700 shares and sole dispositive power on 1,423,100 shares.
(4) As reflected in the Schedule 13G dated January 31, 2000 and filed
with the Securities and Exchange Commission by UnionBanCal Corporation
("Union Bank"). According to the Schedule 13G, Union Bank is the
trustee of certain trusts to which the trustors retain voting and
investment power and Union Bank has shared dispositive power on the
shares indicated.
(5) As reflected in the Schedule 13G dated January 19, 2000 and filed
with the Securities and Exchange Commission. According to the
Schedule 13G, Winberta Holdings, Ltd. has sole dispositive and voting
power on all of the shares indicated. The shares of Class B Stock are
convertible into Class A Common Stock at the request of Winberta
Holdings, Ltd. The Class A Common Stock and Class B Stock are voted
as a single class, as noted on Page 1 of this Proxy Statement.
Winberta Holdings, Ltd. combined shares comprise 9% of the total
Capital Stock outstanding for the Company.
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 the Company's Capital 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.
4
<PAGE> 5
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, nine 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. The nominees receiving the greatest number of
votes at the Annual Meeting up to the number of authorized directors
will be elected.
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 1999 Annual Meeting of Shareholders. 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 50 Chairman of the Board, President 1992
and Chief Executive Officer
William F. Berry 59 Director 1985
Ralph B. Busch, III 40 Director 1996
William E. Bush, Jr. 53 Director 1986
J. Herbert Gaul, Jr. 56 Director 1999
John A. Hagg 52 Director 1994
Thomas J. Jamieson 57 Director 1993
Roger G. Martin 62 Director 1985
Martin H. Young, Jr. 47 Director 1999
</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 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. Busch 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 1985 to 1996. Mr. Busch
is a cousin to William F. Berry and William E. Bush, Jr.
5
<PAGE> 6
Mr. Bush is Chairman of the Compensation Committee. Mr. Bush is
the Plant Manager of California Planting Cotton Seed Distributors.
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 was a Director of Eagle Creek
Mining & Drilling from 1985 to 1998. Mr. Bush is a cousin to William
F. Berry and Ralph B. Busch, III.
Mr. Gaul is a member of the Audit Committee. Mr. Gaul is
currently a private investor. Mr. Gaul's previous experience
includes; Chief Financial Officer for Gentek Building Products from
1995 to 1997, 4 years as the Treasurer for Natomas Company, 11 years
of experience in senior treasury or finance positions with various
companies and 10 years of experience with Morgan Guaranty Trust
Company with responsibility for financial consulting for the energy
industry.
Mr. Hagg is Chairman of the Nominating and Corporate Governance
Committee. Mr. Hagg is currently the Chairman of the Board for
Northstar Energy Corporation ("Northstar"). Northstar is a Canadian
oil and gas producer, based in Calgary, Alberta which effective
December 11, 1998 became a subsidiary of Devon Energy Corp., an
Oklahoma based company listed on the AMEX. Mr. Hagg also became a
director for Devon Energy Corp. in December 1998.
Mr. Jamieson is the Chairman of the Audit Committee and 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 also involved in real estate,
oil and gas properties and insurance.
Mr. Martin is 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, Kern County, California.
Mr. Young is a member of the Nominating and Corporate Governance
Committee. Mr. Young has been the Senior Vice President and Chief
Financial Officer of Falcon Seaboard Holdings, L.P. and its
predecessor Falcon Seaboard Resources, Inc. ("Falcon") since 1992.
Falcon is a private energy company involved in power production, power
demand management, natural gas exploration and production, real estate
and private investments. Mr. Young is also the Chairman of the Board
of the Texas Workers' Compensation Insurance Fund, the largest
provider of workers' compensation insurance in the State of Texas.
Mr. Young has 13 years of banking experience, the last 10 working for
a major California bank as the Vice President/Area Manager for the
corporate banking group from 1981 to 1991.
6
<PAGE> 7
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 consists of Messrs.
Jamieson, Gaul 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 consists of
Messrs. Bush, 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 ("Bonus Plan"). In
addition, the Committee is charged with the full responsibility of
administering the Company's 1994 Stock Option Plan.
The Nominating and Corporate Governance Committee of the Board of
Directors consists of Messrs. Berry, Busch, Hagg, Hoffman and Young.
The Nominating and Corporate Governance Committee is responsible for
the development of governance guidelines and practices for the
effective operation of the Board in fulfilling its responsibilities;
the review and assessment of the performance of the Board; and to
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 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 1999, the Board of Directors met four times, the Audit
Committee met twice, the Compensation Committee met twice and the
Nominating and Corporate Governance Committee met once. All of the
nominees holding office attended at least 75% of the board meetings
and meetings of committees of which they were members.
Effective January 1, 1998, non-employee directors were to be paid
a quarterly fee of $4,375, 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. Due to the extremely low crude oil price
environment in early 1998, the Board of Directors reduced the
quarterly fee to the previous level of $3,750 and the meeting fees to
$400, from March 20, 1998 until August 1999, at which time the
quarterly fees were restored to $4,375 and meeting fees to $500.
The Company's 1994 Stock Option Plan provides for a "formula"
grant of 5,000 options annually to each non-employee director holding
office on December 2nd of each year. 5,000 options were issued on
December 2, 1999 at $14.0625, 5,000 options were issued on December 2,
1998 at $12.625 and 5,000 options were issued effective December 2,
1997 at $18.9375 to each of the non-employee directors holding office
on those dates. The exercise price of the options is the closing price
of Berry Petroleum Company Class A Common Stock as reported by the New
York Stock Exchange for the date of grant. The maximum option
exercise period is ten years from the date of the grant. The options
issued to the directors vest immediately.
7
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table discloses compensation for the three fiscal
years ended December 31, 1999 received by the Company's Chairman,
President and Chief Executive Officer and each of the Company's four
other most highly compensated executive officers:
<TABLE>
<CAPTION>
Long-Term
Compensation
# of Shares
Name and Annual Underlying All Other
Principal Compensation(1)(2) Options Compensation
Position Year Salary($) Bonus ($) Granted ($) (3)
- ---------------- ----- -------- ------- -------- --------
<S> <S> <S> <S> <S> <S>
Jerry V. Hoffman 1999 292,000 75,000 - 15,939
Chairman, 1998 242,400 - 80,000 10,668
President and 1997 285,400 45,000 50,000 10,576
Chief Executive
Officer
Ralph J.Goehring 1999 167,666 55,000 - 11,481
Senior Vice 1998 144,500 - - 9,076
President and 1997 160,500 35,000 35,000 11,240
Chief Financial
Officer
Michael R. Starzer 1999 136,333 55,000 - 9,277
Vice President of 1998 120,000 - 60,000 7,340
Corporate 1997 126,000 30,000 35,000 11,240
Development
Brian L. Rehkopf 1999 128,333 35,000 - 8,941
Vice President 1998 115,000 - 40,000 7,135
of Engineering 1997 67,083 - 60,000 833
George T. Crawford 1997 106,666 15,000 30,000 (4) 4,108
Production Manager 1998 - - - -
1997 - - - -
</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) As a cost cutting measure in dealing with historically low oil
prices, the Company's employees took an across-the-board 10% salary
reduction in March 1998 with certain members of Management taking a
larger reduction. These reductions were restored in January 1999.
(3) Includes Company contributions under the 401(k) Thrift Plan of
$15,396, $10,152 and $10,080 for Mr. Hoffman, $11,227, $8,896 and
$11,063 for Mr. Goehring, $9,147, $7,200 and $8,650 for Mr. Starzer,
$8,600, $6,818 and $833 for Mr. Rehkopf and $3,983, $0 and $0 for Mr.
Crawford, respectively, for 1999, 1998 and 1997. Also includes split
dollar life insurance compensation of $543, $516 and $496 for Mr.
Hoffman, $254, $180 and $177 for Mr. Goehring, $130, $140 and $99 for
Mr. Starzer, $341, $317 and $0 for Mr. Rehkopf and $125, $0 and $0 for
Mr. Crawford, respectively for 1999, 1998 and 1997.
(4) Although Mr. Crawford's employment with the Company commenced on
January 1, 1999, during his employment negotiations in December 1998,
the Compensation Committee and the Board of Directors approved the
grant of 30,000 options to him effective on his hire date. The
options were granted at the NYSE closing price on December 4, 1998 of
$12.50. The options vest 25% per year during the first four years and
expire on December 4, 2008.
8
<PAGE> 9
AGGREGATED OPTION EXERCISES IN 1999
AND DECEMBER 31, 1999 OPTION VALUES
<TABLE>
<CAPTION>
Shares
Acquired Number of Securities Value of Unexercised In-the-
on Value Underlying Unexercised Money Options at
Exercise Realized Options at 12-31-99 12-31-99 (A) (Dollars)
Name (Number) (Dollars) Exercisable Unexercisable Exercisable Unexercisable
- ------ ------- ------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mr.
Hoffman - $ - 160,000 115,000 $263,125 $191,250
Mr.
Goehring - $ - 105,037 82,500 $161,724 $140,625
Mr.
Starzer - $ - 72,500 82,500 $ 84,375 $140,625
Mr.
Rehkopf - $ - 40,000 60,000 $ 26,250 $105,000
Mr.
Crawford - $ - 7,500 22,500 $ 19,688 $ 59,063
</TABLE>
(A) The December 31, 1999 New York Stock Exchange closing price of
$15.125 was used to value options.
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 1999 the
Committee was composed of three non-employee Directors. The Committee
is committed to a strong, positive link between business performance,
strategic goals, and compensation and benefit programs.
Report of Compensation Committee on Executive Compensation Policy
The Company's compensation policy is designed to support the
overall objective of maximizing the return to our shareholders by:
- Attracting, developing, rewarding, and retaining highly
qualified and productive individuals.
- Directly aligning 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 the Company's shareholders.
The following is a description of the elements of executive
compensation and how each relates to the objectives and policy
outlined above.
9
<PAGE> 10
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. Due to the extremely low oil
prices, the Company instituted an across-the-board 10% reduction in
pay for all employees in March 1998 with certain members of Management
taking a larger reduction. All salaries were restored on January 1,
1999, and the Company adjusted base salaries to reflect promotions,
changes of responsibilities and cost of living increases in September
1999. We believe maximum performance for management can be encouraged
through the use of appropriate incentive programs, which includes:
Annual Incentives
Annual incentive awards, primarily cash bonuses, are made to
executives to recognize and reward corporate and individual
performance. The Bonus Plan provides an incentive fund of up to 3% of
the Company's net income for executives and other employees involved
in decision making roles which affect the Company's capital
investment, 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. Even though the Company
experienced record net income, cash flow and production in 1997, no
cash bonuses were made in 1998 due to the collapse of oil prices in
early 1998. Therefore, upon the rapid rise in oil prices beginning in
the second quarter of 1999 and due to the belief such prices were
sustainable, the Company awarded $465,000 in cash bonuses in September
1999 under the Bonus Plan, primarily for 1997 and 1998 performance.
Cash bonuses paid in 1998 were $0, and in 1997 were $330,000.
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 programs for individual executives.
Long-Term Incentive Plans Compensation
Non-Statutory Stock Option Plan ("Stock Option Plan")
The purpose of this plan is to provide additional incentives to
employees to stay focused on the long term goal of maximizing
shareholder value and to encourage management to own and hold the
Company's stock and tie their long-term economic interests directly to
those of the Company's shareholders. The Stock Option Plan generally
utilizes vesting periods to encourage key employees to continue in the
employ of the Company and grants options which have an exercise price
at market value on the date of grant. The Compensation Committee is
charged with responsibility for administering and granting non-
statutory stock options. No options were granted in 1999. At
December 31, 1999, an aggregate of 666,800 options are available for
issuance from the 1994 Stock Option Plan.
Chief Executive Officer
The Committee believes Mr. Hoffman has done an excellent job of
leading and managing the Company during a very difficult period for
the oil industry and has positioned the Company favorably for
continued growth. Mr. Hoffman, as Chief Executive Officer, has also
demonstrated a keen ability in redirecting the Company's resources to
higher profitability projects and growth opportunities. Mr. Hoffman's
compensation incentives are primarily derived 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
March 10, 2000 William E. Bush Thomas J. Jamieson Roger G. Martin
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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, including Mr.
Rehkopf and Mr. Crawford, 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, $446,000 for Mr. Goehring, $360,000 for Mr.
Starzer, $337,500 for Mr. Rehkopf and $262,500 for Mr. Crawford.
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.
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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, 1994 in shares
of Berry Petroleum Company, the Dow Jones Secondary Oil Company Index
(which includes 12 companies), the Russell 2000 and the Standard &
Poors 500 Index ("S&P 500") assuming reinvestment of dividends for
each measurement period. Over the five-year measurement period, the
Company returned 86%, versus 25% for the peer group, 102% for the
Russell 2000 and 251% for the S&P 500. The Company added the Russell
2000 as a major market index to its proxy graph this year. The
Company believes the Russell 2000 is a good comparison index for the
Company's proxy graph based on the smaller market capitalization and
broader base of companies in the Russell 2000. The information shown
is historical and is not necessarily indicative of future performance.
Total Return Analysis
<TABLE>
<CAPTION>
Measurement
Period 12/31/94 12/30/95 12/29/96 12/31/97 12/31/98 12/31/99
(Fiscal Year) -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Berry Petroleum $100.00 $110.96 $163.02 $202.25 $169.40 $186.11
Company
Dow Jones $100.00 $115.70 $142.58 $151.45 $110.63 $125.06
Secondary Oil
Co.
Russell 2000 $100.00 $126.21 $144.84 $174.56 $168.54 $201.61
S&P 500 $100.00 $137.53 $169.09 $225.48 $289.91 $350.93
</TABLE>
Source: Carl Thompson Associates, www.ctaonline.com, Louisville, CO
(303) 665-4200.
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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, Berry Holding Company, 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 ("S&D"), a California
partnership. S&D, a retail distributor of oilfield parts and
supplies, is now a division of Eagle Creek. The five-year contract
whereby the Company purchased oilfield parts and supplies from S&D at
competitive prices expired November 30, 1999. The Company is
reviewing the S&D contract but, as of February 16, 2000, has not
renewed the contract with S&D. The amounts paid to S&D under this
contract in 1999, 1998 and 1997 were $785,000, $502,000 and $825,000,
respectively. Mr. Ralph B. Busch, III 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 ("BHC"), Victory Oil Company
("Victory"), a California partnership, 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 BHC 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 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 distributions related to the stock that 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 distributions 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 applicable distribution (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. The "B" Group survivor is a significant shareholder of
Berry. Typically, the Maxwell "B" Group Payments have contributed
to a portion or all of the Trust Payment. Pursuant to the Settlement
Agreement, Berry paid $154,550 to the Victory Settlement Trust in 1999.
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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 18,
2001, must be received at the office of the Secretary of the Company
by December 2, 2000, 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 1999 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 February 28, 2000, the Company filed its Annual Report on Form
10-K with the Securities and Exchange Commission. 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 PricewaterhouseCoopers
LLP. PricewaterhouseCoopers LLP or its predecessors have 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 anticipates that it
will use PricewaterhouseCoopers LLP to audit the Company's financial
statements for the year ending December 31, 2000 but has not yet
executed the engagement letter.
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 on the Form of Proxy will vote on
said matters in accordance with the recommendations of the Board of
Directors.
The above Notice, Proxy Statement and Form of Proxy are sent by
Order of the Board of Directors.
KENNETH A. OLSON
Corporate Secretary
April 3, 2000
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