PETROLEUM DEVELOPMENT CORPORATION
103 East Main Street
Bridgeport, West Virginia 26330
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
August 25, 1995
To the Stockholders of
PETROLEUM DEVELOPMENT CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders of
Petroleum Development Corporation (the "Company") will be held at the office of
the Company at 103 East Main Street, Bridgeport, West Virginia 26330, on August
25, 1995 at 10:00 A.M., West Virginia time, for the following purposes,
all as more fully described in the accompanying Proxy Statement:
(1) To elect two directors to serve a term of three years or until
their successors shall be elected and shall qualify;
(2) To ratify and approve the selection of independent public
accountants for the Company for the fiscal year ending December 31, 1995.
(3) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on June 30,
1995 as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. The presence in person or by
proxy of the holders of a majority of the outstanding shares of the Company's
Common Stock is required to constitute a quorum.
EACH STOCKHOLDER IS CORDIALLY INVITED TO BE PRESENT AND TO VOTE AT
THIS MEETING IN PERSON. STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND ARE
REQUESTED TO SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED POSTPAID ENVELOPE.
By Order of the Board of Directors,
James N. Ryan
Chairman
Bridgeport, West Virginia
July 7, 1995
<PAGE>
PETROLEUM DEVELOPMENT CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
August 25, 1995
INTRODUCTORY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of proxies for use at the Annual Meeting of Stockholders of
Petroleum Development Corporation (the "Company") to be held on August 25,
1995, notice of which is attached, and at any adjournment thereof.
Any stockholder giving the accompanying proxy has the power to revoke it
prior to its exercise by filing with the Secretary of the Company a written
notice of revocation or a duly executed proxy bearing a later date. Giving
the accompanying proxy will not affect your right to vote in person should
you find it convenient to attend the Annual Meeting. Shares represented by
proxy will be voted by the proxy holders in accordance with your instructions
unless you revoke your proxy or attend the meeting and elect to vote in
person. This Proxy Statement and the proxy were first mailed to
stockholders on July 7, 1995. The mailing address of the principal
executive offices of the Company is Petroleum Development Corporation,
P.O. Box 26, Bridgeport, West Virginia 26330.
The Annual Report to stockholders for 1994, containing certified financial
and other information about the Company, accompanies this Proxy Statement.
VOTING SECURITIES
The outstanding voting securities of the Company as of June 30, 1995,
consisted of 11,040,627 shares of $0.01 par value common stock ("Common Stock").
Stockholders of record as of the close of business on June 30, 1995 are
entitled to vote. Each stockholder is entitled to one vote for each share of
Common Stock held of record on this date. The proposals submitted for vote
at the Annual Meeting require a majority of the votes cast for approval.
ELECTION OF DIRECTORS
The Board of Directors, consisting of six directors is divided into three
classes, each of which is composed of two directors. At each Annual Meeting
of Stockholders, one class of directors is elected for a three-year term and
until their respective successors are duly elected and qualified. Votes
pursuant to the enclosed proxy will be cast, unless authority is withheld,
for the election of the two persons named under "Directors of the Company"
below, both of whom are members of the present Board and both of whom are
expected to be able to serve on the Board to be elected at this meeting. If
any of such persons is unwilling or unable to act in such capacity, an event
which is not now anticipated, the enclosed proxy will be voted for such
person or persons as the Board of Directors may designate. During 1994, the
Board of Directors held six meetings. No director attended fewer than 75%
of the aggregate of all meetings of the Board and the committees, if any,
upon which such director served.
<PAGE>
DIRECTORS OF THE COMPANY
NOMINEES FOR TERMS EXPIRING 1998
The following persons both of whom are currently serving as directors,
have been nominated to serve as directors:
<TABLE>
<S> <S> <S>
Name and Principal Year First
Occupation Past Five Years Elected
and Other Directorships Age Director
JAMES N. RYAN, Chairman and Chief Executive Officer of the Company since
March, 1983. Mr. Ryan previously served as President of the Company since 1969. 63 1969
VINCENT F. D'ANNUNZIO has for the past five years served as president of
Beverage Distributors, Inc., located in Clarksburg West Virginia. Mr. D'Annunzio
is a director of West Union Bank, West Union, West Virginia. 42 1989
CONTINUING DIRECTORS
TERMS EXPIRING IN 1996
DALE G. RETTINGER, Executive Vice President and Treasurer of the Company
since 1983. Mr. Rettinger previously served as Vice President and Treasurer
of the Company since 1980. Prior to 1980, he was a partner with Main Hurdman,
Certified Public Accountants, having served in that capacity since 1976. 50 1985
JEFFREY C. SWOVELAND, has been Director of Finance with Equitable Resources
since September, 1994. Prior thereto he was a lending officer with Mellon
Bank N.A. since July, 1989. Mr. Swoveland was Senior Planning
Analyst with Consolidated Natural Gas in 1988 and 1989. Mr. Swoveland received
a MS degree in finance from Carnegie Mellon University. 40 1991
TERMS EXPIRING IN 1997
STEVEN R. WILLIAMS, President of the Company since March, 1983. Prior to
joining the Company, Mr. Williams was employed by Exxon and Texas Oil & Gas Company. 44 1983
ROGER J. MORGAN, a member of the law firm of Young, Morgan & Cann,
Clarksburg, West Virginia, for more than the past five years. Mr. Morgan is not
active in the day-to-day business of the Company, but his law firm provides legal
services to the Company. 68 1969
</TABLE>
<PAGE>
Committees of the Board
The Company has three standing committees of the Board of Directors: the
Audit Committee; the Executive Committee; and the Stock Option and Executive
Compensation Committee. The Audit Committee is comprised of Messrs.
D'Annunzio, Ryan, and Swoveland. The Executive Committee is comprised of
Messrs. Ryan, Williams, and Rettinger. The Stock Option and Executive
Compensation Committee is comprised of Messrs. Ryan, D'Annunzio, and Morgan.
The Company does not have a formal Nominating Committee, as the full board
handles these responsibilities. Directors of the Company receive an annual
fee of $6,400 and $600 per board meeting as compensation for serving in that
capacity.
The Executive Committee held six meetings during 1994. The functions
performed by the Executive Committee include handling important Board matters
that arise between Board meetings, serving as a liaison between the Board and
senior management on important matters requiring Board attention, and
recommending to the Board nominations for election of new and existing Board
members.
The Audit Committee met twice during 1994. The functions performed by
the Audit Committee include recommending the selection of independent
accountants, reviewing with the Company's independent accountants the
results of audits performed by them, and overseeing and reviewing monthly and
quarterly unaudited financial statements. These reviews include the adequacy
of cash flow and the status of credit arrangements of the Company.
The Stock Option and Executive Compensation Committee held two meetings
in 1994. The functions performed by this committee include recommending to
the Board compensation levels of senior management and directing and
recommending levels of corporate stock options and other benefit plans of the
Company. In this regard, the committee monitors trends to insure the
Company's compensation levels are competitive in the oil and gas industry.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth in summary form the compensation received
during each of the Company's last three fiscal years by the Chief Executive
Officer and by the other executive officers of the Company whose salary and
bonus exceeded $100,000 in 1994.
Summary Compensation Table
<TABLE>
<S> <S> <S> <S> <S> <S> <S>
Annual Compensation
Long term
Name and Other Annual Awards Stock All Other
Principal Position Year Salary($)(1) Bonus ($) Compensation($)(3) Options Compensation($)(3)
James N. Ryan 1994 154,078 77,500 10,000 34,086(5)(6)
Chairman and Chief 1993 146,358 60,000 10,000 36,000(4) 20,789 (5)
Executive Officer 1992 141,745 200,000(2) 10,000 21,291 (5)
Steven R. Williams 1994 115,678 77,500 10,000 34,017(5)(6)
President 1993 107,968 60,000 10,000 36,000(4) 17,668 (5)
and Director 1992 103,345 200,000(2) 10,000 21,335 (5)
Dale G. Rettinger 1994 115,678 77,500 10,000 34,017(5)(6)
Executive Vice 1993 107,968 60,000 10,000 36,000(4) 17,668 (5)
President, Treasurer, 1992 103,345 200,000(2) 10,000 21,335 (5)
and Director
</TABLE>
(1) The Company is party to employment agreements with Messrs. Ryan, Williams,
and Rettinger dated March 1, 1991 and terminating June 30, 1998. The
employment agreements provide for a base salary as indicated in the table
above as well as an annual merit bonus based upon company performance.
(2) During 1992, Messrs. Ryan, Williams and Rettinger were authorized by the
Board of Directors to withdraw previously earned but unpaid performance
bonus compensation of $150,000 each to purchase common stock of the
company by exercising stock options held by them in the aggregate
purchase price of $266,975. All of the options exercised had previously
been issued at the then current market price, pursuant to various
Employee Stock Option Plans. The three officers utilized the remaining
funds to pay income taxes relating to the transaction.
(3) The respective individuals receive fees as directors of the company $6,400
annually plus $600 per board meeting attended.
(4) As part of the Employee Stock Option Plan, approved by the stockholders,
options to purchase 128,500 shares were issued at market price in 1993 to
key employees of the Company.
(5) This amount includes contributions made by the company under the Petroleum
Development Corporation Employee Profit Sharing and 401-K retirement plans.
The company reacquired common stock in 1993 and 1992 and contributed
92,308 shares in 1993 and 181,250 shares in 1992 to the Employee Profit
Sharing Plan. The three respective officers had 9,728 shares, 7,734
shares, and 7,734 shares credited to their account in 1993 and 14,973
shares, 15,032 shares, and 15,032 shares credited to their account in 1992.
The company has matched 401-K contributions at a rate of 50% of the
employee contribution. Of the total company match of $66,972, $63,200
and $59,107 in 1994, 1993 and 1992, the three respective officers were
credited with matching contributions of $4,086, $4,017 and $4,017 in 1994;
$4,373, $4,470; and $4,470 in 1993 and $4,354, $4,332, and $4,332, in 1992.
(6) During 1994 the Board of Directors approved a deferred compensation
arrangement for three executive officers of the company. Under the
arrangement, each executive deferred $30,000 of their bonus compensation
until retirement or separation from the company.
<PAGE>
Compensation Committee Report
The Compensation Committee is composed of two outside directors and the
CEO of the company. The committee's responsibility is to develop the
company's compensation policy to enable the company to hire, retain and
motivate high performing employees. The committee also administers the
Company's Savings and Protection Plan (the "401(K) Plan"), various
Employee Stock Option Plans, and the Company's Profit Sharing Plan. The
committee reviews the performance and compensation of the Chief Executive
Officer, and the two executive officers of the company. Final approval of all
contracts with company executives is reserved to the full Board of Directors.
Compensation paid to the CEO, Mr. Ryan, and to the executive officers of
the corporation is based on several factors, including the terms of their
employment contracts, the earnings of the company, the evaluation of the
Board of the performance of the employees, as well as compensation paid to
similarly situated employees with other similar firms.
As CEO, Mr. Ryan received a salary of $154,078 in 1994, which reflected
cost of living increases from his salary in 1993. Also during 1994 Mr. Ryan
earned a cash bonus of $77,500 based on company earnings. Both the salary
increase and the bonus were based on provisions in Mr. Ryan's employment
contract.
The company also contributed $4,086 to Mr. Ryan's 401(K) account in
accordance with the plan's matching provisions.
The compensation of the two executive officers of the company is also
comprised of a salary and a performance based cash bonus. Salaries of both
were increased by a cost of living adjustment and bonuses were paid based on
the company's earnings, both as provided in the executive's employment
agreements. Both executives also received a share of company matching
contributions to the Company 401(K) plan.
During 1994 the company reviewed the employment contracts of the CEO and
the executive officers of the corporation, and determined that no changes were
required. The compensation committee believes the company has made
substantial progress over the past several years despite adverse industry and
economic conditions, and that the progress is attributable in large measure
to the efforts of the CEO and the executive officers.
Compensation Committee
James N. Ryan, Chair
Roger J. Morgan
Vincent F. D'Annunzio
<PAGE>
Transactions with Management
The Company is party to a stock redemption agreement with the Chairman,
President and Executive Vice President of the Company. The agreement, as
amended, requires the Company to maintain life insurance on each of them in
the amount of $1,000,000. The agreement provides that, at the election
of the executive's estate or heirs, the Company shall utilize the proceeds
from such insurance to purchase from his estate or heirs all or a portion of
his shares of the Company's stock. The purchase price for the outstanding
Common Stock is to be based upon the average closing asked price for the
Company's stock as quoted by NASDAQ during a specified period. The Company
is not required to purchase any shares in excess of the amount provided
therefore by such insurance.
The Company has retained Young, Morgan & Cann to provide various legal
services for the Company, Mr. Morgan, who is secretary and a director of
the Company is a senior partner of this law firm. For the year ended
December 31, 1994, the Company paid Young, Morgan & Cann a total of $127,840
for legal services rendered on behalf of the Company.
Information with Respect to Stock Options, Warrants and Rights
OPTION EXERCISES AND YEAR-END VALUE TABLE
The Company has granted options to purchase shares of common stock to
officers, directors, and other key employees under its Employee Stock Option
Plans.
The following table provides certain information with respect to options
exercised during 1994 by the persons named under the Company's various Stock
Option Plans. The table also represents information as to the number of
options outstanding as of December 31, 1994, with respect to options
granted pursuant to the Company's Employee Stock Option Plans.
<PAGE>
<TABLE>
<S> <S> <S> <S> <S>
Value of unexercised
Number of Value Number of Unexercised in-the-money options
Shares Exercised Realized ($) Options at year-end at year-end (1)($)
James N. Ryan - - 331,000 82,750
Steven R. Williams - - 321,000 80,250
Dale G. Rettinger - - 321,000 80,250
</TABLE>
(1) For all unexercised options held as of December 31, 1994, the aggregate
dollar value of excess of the market value of the stock underlying those
options over the exercise price of those unexercised options. On
December 31, 1994, the closing sales price of the Common Stock was
$1.1875 per share. These values are shown separately for those options
that were exercisable and those options that were not yet exercisable on
December 31, 1994.
Compensation Committee Interlocks
James N. Ryan, Chairman and Chief Executive Officer is a member of the
Stock Option and Executive Compensation Committee.
Employee 401K and Profit Sharing Plan
In May, 1987 the Company established a retirement plan qualified under
Section 401(K) of the Internal Revenue Code. The plan is funded by employee
contributions and a company matching contribution. Administrative costs of the
plan are borne by the Company. The employees choose from four investment
programs and, therefore, the amount of an individual's plan assets depends on
the amount of their contributions and the performance by their chosen
investments.
In 1992, the company began a Profit Sharing Retirement plan to supplement
the 401K Plan. Contributions are dependent on corporate profitability and are
at the discretion of the Board of Directors of the company. The Company
filed and qualified the plan with the Internal Revenue Service.
Stockholder Performance Graph
The following graph illustrates the performance of Petroleum Development
Corporation common stock over a five year period compared to the performance
of the NASDAQ Index and a peer group index. The peer group index consists of
200 Crude Petroleum and Natural Gas Companies. The table includes the
cumulative shareholder return assuming the reinvestment of dividends.
<TABLE>
<S> <S> <S> <S> <S> <S> <S>
Petroleum Development Corporation
Stock Performance Graph
250.0
200.0
150.0
100.0
50.0
0.0
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
Petroleum
Development
Corporation 100.0 75.0 95.8 150.0 225.0 158.3
NASDAQ Market
Index 100.0 81.1 104.1 105.2 126.1 132.4
Peer Group
Index 100.0 86.5 90.3 85.7 102.2 107.1
</TABLE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND DIRECTORS AND OFFICERS
Security Ownership
The following table sets forth information as of June 30, 1995, with respect
to the common stock of PDC owned by each person who owns beneficially 5% or
more of the outstanding voting common stock, by all directors and nominees
individually and by all directors and officers as a group.
<TABLE>
<S> <S> <S>
Amount Percent
Name and Address Beneficially Owned (1) of Class
Pittsburgh National Bank 1,200,000 (2) 10.9
James N. Ryan 1,012,382 (3) 8.9
Fidelity Management 932,500 8.4
Steven R. Williams 571,794 (4) 5.0
Dale G. Rettinger 525,834 (4) 4.8
Roger J. Morgan 217,554 (5) 1.9
Vincent F. D'Annunzio 140,250 (6) 1.3
Jeffrey C. Swoveland 30,250 (7) 0.3
All Directors and Officers as a Group (7 persons) 2,747,741 (8) 21.8
</TABLE>
(1) The nature of the beneficial ownership for all the shares is sole voting
and investment power.
(2) Petroleum Development Corporation has an option to reacquire 1,200,000
shares at prices approximating market expiring on April 30, 1997.
(3) Includes options to purchase 331,000 shares exercisable within 60 days.
(4) Includes options to purchase 321,000 shares exercisable within 60 days.
(5) Includes options to purchase 187,500 shares exercisable with 60 days.
(6) Includes options to purchase 130,250 shares exercisable within 60 days.
(7) Includes options to purchase 30,250 shares exercisable within 60 days.
(8) Includes options to purchase 1,556,000 shares exercisable within 60 days.
Until exercised, these options cannot be voted. All directors and
officers as a group own in the aggregate a total of 1,191,741 shares or
approximately 10.8% of the total of 11,040,627 shares of common stock
issued and outstanding.
No director or officer is the beneficial owner of any securities of any
of the Company's subsidiaries.
<PAGE>
Compliance with Section 16 of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a Company's equity securities,
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and holders of more than 10% of the
Common Stock are required by regulations promulgated by the Commission
pursuant to the Exchange Act to furnish the Company with copies of all
Section 16(a) forms they file. The Company assists officers and directors,
and will assist beneficial owners, if any, of more than 10% of the Common
Stock, in complying with the reporting requirements of Section 16(a) of the
Exchange Act.
Based solely on its review of the copies of such forms received by it,
the Company believes that since January 1, 1994, all Section 16(a) filing
requirements applicable to its directors, officers and greater than 10%
beneficial owners were met.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
At the Meeting, the Stockholders of the Corporation will be asked to
ratify the Board of Directors' selection of KPMG Peat Marwick as the
Corporation's certified public accountants for the fiscal year ended December
31, 1995. KPMG Peat Marwick conducted the audit for the fiscal year ended
December 31, 1994. A representative of KPMG Peat Marwick will be present at
the Meeting, will have an opportunity to make statements if he so desires,
and will be available to respond to appropriate questions.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company is not
aware of any matters to be brought before the Annual Meeting other than the
matters set forth in this Proxy Statement. However, if other matters
properly come before the meeting, it is the intention of the proxy holders
named in the enclosed form of proxy to vote in accordance with their
discretion on such matters pursuant to such proxy.
General
The enclosed Proxy is solicited by the Company's Board of Directors.
The Company expects to solicit proxies primarily by mail, but solicitation may
also be made personally, by telephone or by telegraph, by regularly employed
officers and employees of the Company who will receive no extra compensation
for doing so.
The Company will request brokers and other custodians, nominees and
fiduciaries to forward proxy soliciting material to, and obtain instructions
from, the beneficial owners of shares held by record by such persons and will
reimburse reasonable out-of-pocket expenses. The Company will bear all costs of
proxy solicitation.
Stockholder Proposals for 1996 Annual Meeting
Stockholder proposals must be received by the Company at its principal
executive office on or prior to March 1, 1996 in order to be included in the
Company's proxy statement for the 1996 annual meeting of stockholders.
By Order Of The Board of Directors
James N. Ryan
Chairman
Dated: July 7, 1995
<PAGE>
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON WHO IS A
RECORD OR BENEFICIAL HOLDER OF COMMON STOCK OF THE COMPANY, ON WRITTEN
REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-
K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES THERETO, WHICH THE COMPANY FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. COPIES MAY BE OBTAINED BY WRITING TO
CORPORATE COMMUNICATIONS DEPARTMENT, PETROLEUM DEVELOPMENT
CORPORATION, P.O. BOX 26, BRIDGEPORT, WEST VIRGINIA 26330.
<PAGE>
Petroleum Development Corporation
Proxy Solicited by the Board of Directors For Annual Meeting of
Stockholders
The undersigned hereby appoints JAMES N. RYAN and DALE G. RETTINGER or
either of them, proxies, each with full power to act without the other
and with full power of substitution for and in the name of the
undersigned at the Annual Meeting of Stockholders of Petroleum
Development Corporation (the "Company") to be held on August 25, 1995
at 10:00 A.M. and at any adjournment thereof to vote all shares of the
Common Stock of the Company, held by the undersigned with respect to the
following questions and on such other matters as may properly come
before the meeting.
(1) ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary
below)
WITHHOLD AUTHORITY to vote for all nominees listed below
James N. Ryan, Vincent F. D'Annunzio
(INSTRUCTION: To withhold authority to vote for any nominee, circle that
nominee's name above.
(2) To ratify and approve the selection of independent public accountants
for the Company for
the fiscal year ending December 31, 1995.
FOR AGAINST ABSTAIN
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement for such meeting dated August
25, 1995 and a copy of the Company's 1994 Annual Report.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THIS PROXY, WHEN PROPERLY EXECUTED AND
RETURNED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS INDICATED, IT WILL BE VOTED FOR
PROPOSALS 1, AND 2.
, 1995
(Please sign EXACTLY as your name appears
hereon) when signing as a representative
capacity, please give full title.
IMPORTANT INFORMATION IS CONTAINED ON OTHER SIDE OF THIS CARD, PLEASE
READ BOTH SIDES OF THIS CARD, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE.
