<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
KCS Energy, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
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(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
KCS ENERGY, INC.
PRINCIPAL EXECUTIVE OFFICE:
379 THORNALL STREET
EDISON, NEW JERSEY 08837
(908) 632-1770
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The Annual Meeting of Stockholders of KCS Energy, Inc. (the "Meeting") will
be held on May 16, 1996, in the ballroom of the Sheraton at Woodbridge Place,
515 Route 1 South, Iselin, New Jersey at 10:00 a.m. local time for the following
purposes:
1. To elect three directors to serve until the Annual Meeting of
Stockholders in 1999;
2. To take action upon any other business as may properly come before
the Meeting, or any adjournment thereof.
The Board of Directors has fixed the close of business on April 1, 1996, as
the record date for the determination of the stockholders entitled to notice of
and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors
HENRY A. JURAND
Secretary
April 8, 1996
------------------------
IMPORTANT
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE TO ENSURE ITS ARRIVAL IN
TIME FOR THE MEETING. PLEASE USE THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
<PAGE> 3
KCS ENERGY, INC.
379 THORNALL STREET
EDISON, NEW JERSEY 08837
(908) 632-1770
PROXY STATEMENT
The Proxy Statement and the accompanying Proxy Card are being mailed to
stockholders, commencing April 1, 1996, in connection with the solicitation by
the Board of Directors of KCS Energy, Inc. (hereinafter called the "Corporation"
or "KCS") of proxies to be used at the Annual Meeting (the "Meeting") of the
stockholders of the Corporation to be held on May 16, 1996, at the hour and
place set forth in the Notice of Annual Meeting accompanying this Proxy
Statement.
PERSONS MAKING THE SOLICITATION
This solicitation is made on behalf of the Board of Directors of the
Corporation. The cost of soliciting these proxies will be borne by the
Corporation, including reimbursement paid to brokerage firms and other
custodians, nominees and fiduciaries for reasonable costs incurred in forwarding
the proxy materials to and solicitation of proxies from the beneficial owners of
shares held by such persons. The solicitation will be initially by mail and it
may later be decided to make further solicitations by mail, telephone, telex,
facsimile or personal call by directors, officers and employees of the
Corporation and its subsidiaries, or by use of an independent proxy solicitor.
VOTING SECURITIES AND OWNERSHIP THEREOF BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
As of March 1, 1996, there were outstanding 11,522,487 shares of the
Corporation's Common Stock, which is the only class of capital stock entitled to
vote at the Meeting. These shares were held by 1,383 holders of record. Each
holder of Common Stock is entitled to one vote for each share held. As stated in
the Notice of Annual Meeting, holders of record of the Common Stock at the close
of business on April 1, 1996, will be entitled to vote at the Meeting or any
adjournment thereof.
(a) Under the rules of the Securities and Exchange Commission, for the
purpose of the following table, a beneficial owner of a security includes any
person who, directly or indirectly, has or shares voting power and/or investment
power with respect to such security. To the knowledge of the Corporation, the
following persons owned beneficially more than 5% of the outstanding Common
Stock of the Corporation as of March 1, 1996:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NO. OF SHARES OF % OF CLASS
BENEFICIAL OWNER COMMON STOCK OUTSTANDING
-------------------------------------------------------- ---------------- -----------
<S> <C> <C>
Stewart B. Kean......................................... 690,336(1)(3) 5.99%
P.O. Box 1
Elizabeth, NJ 07207
Stewart B. Kean, John Kean and M.A. Raynolds
as co-trustees........................................ 1,061,472(2) 9.21%
One Elizabethtown Plaza
Union, NJ 07083
Kennedy Capital Management, Inc......................... 653,075(1) 5.67%
425 North New Ballas Road
St. Louis, MO 63141
</TABLE>
<PAGE> 4
- ---------------
(1) Beneficial owner indicated has sole voting and investment power with respect
to these shares.
(2) Beneficial owners indicated share voting and investment power with respect
to these shares. Includes 58,392 shares held by Stewart B. Kean, a director
of the Corporation, and John Kean, as sole co-trustees under certain trusts
and 40,620 shares held by Stewart B. Kean and John Kean, Jr., as sole
co-trustees under certain trusts.
(3) Includes shares that are allocated to the beneficial owner's account under
401(k) plans.
(b) The following information pertains to KCS Common Stock beneficially
owned, directly or indirectly, by each director and executive officer and by all
directors and executive officers of KCS as a group as of March 1, 1996:
<TABLE>
<CAPTION>
NUMBER OF % OF
NAME OF BENEFICIAL OWNER SHARES(1) CLASS(6)
--------------------------------------------------------- ----------- ---------
<S> <C> <C>
Stewart B. Kean.......................................... 690,336(3) 5.81%
1,061,472(2) 8.94%
James W. Christmas....................................... 567,312(3)(5) 4.78%
C. R. Devine............................................. 94,716(3) *
Joel D. Siegel........................................... 89,992(3)(4) *
Henry A. Jurand.......................................... 64,056(3) *
Christopher A. Viggiano.................................. 36,492(3) *
Harry Lee Stout.......................................... 34,378(3) *
James E. Murphy, Jr...................................... 14,740(3) *
G. Stanton Geary......................................... 5,625(3) *
Robert G. Raynolds....................................... 527 *
12 Directors and Officers as a group..................... 2,659,646 22.40%
</TABLE>
- ---------------
* Less than 1%
(1) Beneficial owner indicated has sole voting and investment power with respect
to these shares.
(2) Beneficial owner indicated shares voting and investment power with respect
to these shares.
(3) Includes shares that (i) may be purchased as a result of options granted to
Messrs. Christmas, Devine, Jurand and Stout that are exercisable within 60
days as of March 1, 1996 for 240,000; 18,200; 55,100 and 26,850 shares,
respectively and for 2,000 shares to each of Messrs. Kean, Siegel, Viggiano,
Murphy and Geary or (ii) are allocated to the beneficial owner's account
under the Corporation's 401(k) plan.
(4) Includes 8,000 shares the beneficial ownership of which is disclaimed.
(5) Includes 9,000 shares the beneficial ownership of which is disclaimed.
(6) Class includes 350,150 shares issuable upon the exercise of options granted
that were exercisable within 60 days as of March 1, 1996.
In December 1994, the Board of Directors adopted a policy requiring minimum
levels of ownership of the Corporation's common stock by its directors and the
officers of the Corporation and its subsidiaries. Within a four-year period,
officers and directors are required to be beneficial owners of common stock with
a market value equivalent as follows: directors -- four times their annual
retainer; president and chief executive officer -- four times his annual base
pay; vice presidents of the parent and subsidiary presidents -- two and one-half
times their annual base pay; and subsidiary vice presidents -- one-half of their
annual base pay.
(c) The Corporation has not issued nor has outstanding any Preferred Stock.
ELECTION OF DIRECTORS
The By-Laws of the Corporation provide that the Board of Directors shall
consist of a minimum of three and a maximum of twelve directors. Pursuant to
action taken by the Board of Directors on July 27, 1995, the number of directors
of the Corporation was increased from six to seven and Robert G. Raynolds was
elected to
2
<PAGE> 5
serve on the Board of Directors, both effective August 15, 1995. The
Corporation's By-Laws also provide that the Board of Directors shall be divided
into three classes with directors in each class serving three-year terms.
It is the intention of the persons named in the enclosed proxy, in the
absence of a contrary direction, to vote for James W. Christmas, Joel D. Siegel
and Christopher A. Viggiano as directors of the Corporation for three-year terms
expiring at the 1999 Annual Meeting of Stockholders or until their successors
are elected or appointed. All of the foregoing persons are presently serving as
directors of the Corporation.
Should any nominee become unable or refuse to accept nomination or
election, it is intended that the persons named as proxies will vote for the
election of such other persons for such office as the Board of Directors may
recommend in the place of such nominee. The Board of Directors knows of no
reason why any of the nominees might be unable or refuse to accept nomination or
election. Information is set forth below regarding the principal occupation of
each nominee and each of the other directors of the Corporation who will
continue in office after the Meeting.
<TABLE>
<CAPTION>
NAME, AGE PRINCIPAL OCCUPATION
AND POSITION DURING LAST FIVE YEARS
- ---------------------------- ---------------------------------------------------------------
<S> <C>
James W. Christmas, 48...... Served as director, president and chief executive officer of
Member, Executive the Corporation since 1988. Term expires in 1996.
Committee
Joel D. Siegel, 54.......... Served as director since 1988. Attorney-at-law and president,
Member, Executive and Orloff, Lowenbach, Stifelman & Siegel, P.A.*, Roseland, NJ,
Compensation Committees since 1975. Served as president and chief executive officer of
Constellation Bancorp*, Elizabeth, NJ, and Constellation Bank*,
Elizabeth, NJ, for the period April 26, 1991 to December 6,
1991. Term expires in 1996.
Christopher A. Viggiano, 42.. Served as director since 1988. He is president, majority owner
Member, Audit and and chairman of the board of O'Bryan Glass Corp.*, Queens, NY,
Compensation Committees and served as vice president, majority owner and chairman of
the board from 1985 to December 1, 1991. He is a Certified
Public Accountant. Term expires in 1996.
Stewart B. Kean, 61......... Served as Chairman of the Board of Directors since 1988. Served
Chairman, Member, as president of Utility Propane Company, a former subsidiary,
Executive Committee from 1965 to 1989. He is past president of the National LP Gas
Association and past president of the World LP Gas Forum. He
currently serves as a member of the Council of the World LP Gas
Forum. Term expires in 1997.
James E. Murphy, Jr., 39.... Served as director since 1988. Heads a political and
Member, Compensation governmental relations consulting firm offering strategic
Committee planning and management consulting services to Republican
candidates nationwide, with extensive experience at the
presidential, state and congressional levels. Based in
Gaithersburg, Maryland, he also advises corporations and
industry groups on strategic planning, governmental relations
and grassroots lobbying projects. Term expires in 1997.
G. Stanton Geary, 61........ Served as director since 1988. He is proprietor of Gemini
Member, Compensation Associates*, Pomfret, CT, a venture capital consulting firm,
Committee and is business manager of the Rectory School*, Pomfret, CT.
Term expires in 1998.
Robert G. Raynolds, 44...... Served as director since 1995. He has been an independent
consulting geologist for several major and independent oil and
gas companies from 1992 until the present and was a geologist
with Amoco Production Company from 1983 until 1992. Term
expires in 1998.
</TABLE>
RELATIONSHIPS: Mr. Raynolds is Mr. Kean's nephew. During 1995, the
Corporation retained the firm of Orloff, Lowenbach, Stifelman & Siegel, P.A. for
legal counsel of which Joel D. Siegel, a KCS director, is a member. It is the
opinion of management that the professional fees charged are comparable to the
fees of other law firms of similar size and expertise.
- ---------------
<TABLE>
<S> <C>
* Non-affiliate of KCS
</TABLE>
3
<PAGE> 6
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES
The Board of Directors held a total of 9 meetings during 1995. Each
director, following his election, attended at least 75% of the meetings of the
Board of Directors and all meetings of the committees of which he is a member,
except for Mr. Murphy who was absent at one meeting of the Compensation
Committee.
The Board of Directors has an Executive Committee composed of Mr. Kean, Mr.
Christmas and Mr. Siegel, an Audit Committee composed of Mr. Geary, Mr. Murphy
and Mr. Viggiano and a Compensation Committee composed of Mr. Murphy, Mr. Siegel
and Mr. Viggiano. The Executive Committee performs the duties of the Board of
Directors during intervals between regular Board meetings. The Audit Committee
recommends the appointment of independent auditors, reviews the results of audit
engagements and fees, and reviews the adequacy of internal controls. The
Compensation Committee makes recommendations as to the compensation and certain
benefits to be paid to officers and key employees of the Corporation. The
Corporation has no nominating committee.
The Audit and Compensation Committees each met two times during 1995. The
Executive Committee met once during 1995.
CHANGE IN FISCAL YEAR
In December 1995, the Board of Directors approved a change of the
Corporation's fiscal year end from September 30 to December 31 in order to
enhance comparability of the Corporation's results of operations with those of
its peers in the energy industry. Financial statements have been recast to
reflect calendar years.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors is
composed of three non-employee directors of the Corporation. The Committee is
charged with the determination of compensation for the senior executives of KCS
and its subsidiaries, including the granting of awards to such executives under
the various incentive compensation programs maintained by the Corporation. The
Committee reviews individual performance and the performance of the Corporation
and each operating subsidiary.
COMPENSATION PHILOSOPHY AND POLICIES
The objective of the KCS executive compensation program is to motivate and
reward senior executives who are responsible for realizing financial and
strategic objectives which are integral to the Corporation's success and the
resultant enhancement of stockholder value. The Corporation's program is
intended to enable the Corporation to attract, retain, motivate and reward
executive talent of the highest caliber. The program is also intended to be
competitive with companies which are competitors of KCS.
The Corporation intentionally pays annual base salaries to senior
executives which are at or slightly below the competitive market. The base
salaries are supplemented by an annual cash incentive bonus plan (described
below), which is based upon performance. The Corporation's philosophy is to have
a major portion of total compensation based upon long-term results, emphasizing
increased stockholder value. To this end, the Corporation utilizes stock
options, stock grants and performance units. The Committee establishes targets
for earning incentive-based compensation which the Committee believes are
difficult to achieve, and will be achieved only 50% of the time.
The Committee relies upon compensation comparisons with other companies in
the industry in order to determine the competitiveness of its executive
compensation program. Most of the competing companies surveyed are included in
the industry performance graph comparing Five-Year Cumulative Stockholder Total
Return (see page 12 of this proxy statement). From time to time, the Committee
engages independent compensation experts to assist the Committee in its
information gathering and compensation package design functions.
4
<PAGE> 7
Once the competitiveness and effectiveness of the Corporation's programs
are evaluated, and the results of operations for the prior year are available,
the Committee establishes base pay and annual and long-term incentive
compensation targets. In determining salary adjustments and incentive payments
for the executives (other than Mr. Christmas), the Committee also considers
recommendations made by Mr. Christmas.
BASE PAY
Effective January 1, 1995, the Company granted base salary increases to its
entire senior executive group of approximately 4.5%. This included a base pay
increase to Mr. Christmas of $13,000 (4.6%), increasing his base pay to
$298,000. The base pay increases, while subjectively determined, were primarily
related to cost of living increases. However, the individual's current
performance, experience, scope of responsibilities and the competitive
environment for comparable positions within the industry were also considered.
Prior to 1994, annual base pay for each executive generally was not
increased except to take into account cost of living increases. However in 1994,
as a result of the significant growth of the Corporation in recent years and the
changing market environment over that time, the Committee engaged an independent
compensation expert to assist it in both an overall review of the components of
the compensation program and an evaluation of the Corporation's executive base
salaries and incentive award levels in comparison to the market and its peer
companies.
The results of the independent compensation expert's study indicated that
while KCS has a well conceived executive compensation program designed to pay
for performance, in a number of instances base pay and to a lesser extent
incentive opportunities were significantly below market. Considering the results
of that study, while adhering to its underlying compensation philosophy of
paying base salaries at or slightly below market, the Corporation granted base
salary increases in 1994 designed to bring executive base salaries closer to,
but still below, market based on the report of the independent compensation
expert.
ANNUAL INCENTIVE AWARDS
The Corporation's annual cash incentive bonus program is designed to reward
executives for the achievement of annual performance objectives. Each subsidiary
and the Corporation as a whole are given performance targets. The bonus of each
executive is expressed as a percentage of calendar year base pay, usually
between 30% and 45%, depending on the executive's position. For results in
excess of the target, the annual cash incentive award increases, up to maximum
levels which are set at from 50% to 80% of calendar year base pay, depending on
the executive's position. For fiscal year ended September 30, 1995, Mr.
Christmas was entitled to 45% of base pay if the Corporation achieved its
target, and a maximum of 80% of base pay depending upon results in excess of the
target. As discussed below, Mr. Christmas was paid a bonus of approximately
16.8% of calendar year base pay.
The target established for each executive is related primarily to results
of operations for that executive's direct employer. That is, an executive
employed by a subsidiary is given an incentive target related to that
subsidiary's performance. Executives employed by KCS Energy, Inc., the parent
corporation, are given a target based upon total company performance.
Performance criteria are chosen for their potential contribution to the creation
of stockholder value, and include in addition to earnings per share, growth in
cash flow per share and growth in oil and gas reserves.
LONG-TERM INCENTIVE
The Corporation uses stock options, restricted stock and performance units
to reward executives, based upon the long-term performance of the Corporation or
the subsidiary by which the executive is employed, as the case may be. For
performance units, three-year targets are set. The target award level for each
executive is based on the scope and complexity of that executive's position in
the organization. The value of each performance unit ranges from $0 to $175,
depending on the results of operations as compared to the targeted results. If
the targeted results are reached, the value of each performance unit is $100.
5
<PAGE> 8
For executives of the Corporation itself, the performance unit plan is
targeted based on cumulative growth in earnings per share, cash flow per share
and proved oil and gas reserves for the three years ended December 31, 1998. If
that target is reached, the performance units will have a value of $100 each.
Performance criteria for executives employed by subsidiaries are established
based upon appropriate targets relevant to each subsidiary. In this way, the
performance unit program rewards executives of subsidiaries for their
contribution to the long-term success of the Corporation, based upon the
performance of their direct employer.
In November 1995, the Corporation granted 1,000 performance units to Mr.
Christmas and 500 units to the other three highest paid executives. This number
was determined subjectively, and did not result from the application of any
formula or other mathematical process.
Under the Corporation's 1992 Stock Plan, officers and key employees of the
Corporation are eligible to receive grants of stock options, restricted stock
and bonus stock. Restricted stock and bonus stock are used primarily in
rewarding and motivating employees below the executive level for their
contribution to the long-term success of the Corporation; however, grants may
also be made to executives, in the Committee's discretion.
The Corporation uses annual grants of stock options to closely align
executives' financial interests with those of stockholders. In 1995, the number
of options was determined subjectively, not by the application of any formula or
other mathematical process. The Committee considered individual and overall
Corporation or subsidiary performance in determining the final number of options
granted. All options granted to date have been non-qualified stock options at
fair market value as of the date of grant, and generally vest either one-third
or one-fourth per year beginning one year after the grant.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Committee applies the same philosophy in determining the compensation
of the chief executive officer, Mr. Christmas, as it does with the rest of the
executive officer group. That is, to maintain base salary at or slightly below
market, with emphasis placed on incentive compensation.
In keeping with the policy to limit normal base salary increases to account
primarily for increases in the cost of living, Mr. Christmas received a base pay
increase of 4.6%, to $298,000 maintaining Mr. Christmas' base salary in line
with, but still below, the indicated salary based on peer group comparisons.
Mr. Christmas was paid a $50,000 annual incentive bonus, representing 16.8%
of calendar year base pay. While earnings per share of $1.94 for the fiscal year
ended September 30, 1995 were below the target level of performance the
Committee established for 1995, the Committee considered several other factors,
including the completion of two major oil and gas property acquisitions, and the
associated financing, which significantly expanded and diversified the
Corporation's asset base.
In November 1995, the Committee granted Mr. Christmas 40,000 stock options.
The Committee also granted Mr. Christmas 1,000 units under the Corporation's
performance unit plan, which ties into the achievement of long-term strategic
initiatives. The targeted goal under the performance unit plan for Mr. Christmas
is based on cumulative growth in earnings per share, cash flow per share and
proved oil and gas reserves for the three years ended December 31, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
Joel D. Siegel, Chair of the Committee, is a member of the law firm of
Orloff, Lowenbach, Stifelman & Siegel, P.A., legal counsel to the Corporation.
COMPENSATION COMMITTEE MEMBERS
Joel D. Siegel, Chair
James E. Murphy, Jr.
Christopher A. Viggiano
6
<PAGE> 9
EXECUTIVE OFFICERS
In addition to Mr. Christmas who is also a director of the Corporation, the
following persons are executive officers of the Corporation, each of whom serves
at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME POSITION AGE
---------------------------------- ---------------------------------------------- ---
<S> <C> <C>
C. R. Devine...................... Vice President, Oil and Gas Operations of KCS 49
and President, KCS Resources, Inc., oil and
gas subsidiary
Harry Lee Stout................... President, KCS Energy Marketing, Inc., KCS 48
Michigan Resources, Inc. and KCS Pipeline
Systems, Inc., marketing and transportation
subsidiaries
Henry A. Jurand................... Vice President, Chief Financial Officer and 46
Secretary of KCS
</TABLE>
C. R. Devine was named vice president, oil and gas operations of KCS in
December 1992 and president of KCS Resources, Inc., the KCS subsidiary engaged
in oil and gas exploration and production, in December 1993. He has served as
principal operating officer of KCS' oil and gas operations since 1988. He has
been employed by KCS and its predecessor companies since 1974.
Harry Lee Stout has served as president of KCS Energy Marketing, Inc., and
KCS Pipeline Systems, Inc., the KCS subsidiaries engaged in natural gas
marketing and transportation, since joining KCS in August 1991. He was named
president, KCS Michigan Resources, Inc., in November 1995. From 1990 to 1991, he
was vice president of Minerex Corporation, Houston, Texas. From 1978 to 1990 he
was employed by Enron Corp., holding management positions including senior vice
president of Houston Pipe Line Company and executive vice president, Enron Gas
Marketing Company, both subsidiaries of Enron Corp.
Henry A. Jurand has served as vice president of KCS since September 1990,
as Chief Financial Officer since January 1996, as treasurer from March 1991 to
December 1995 and as secretary since February, 1992. From 1988 to 1990, he was a
senior vice president of Private Capital Partners, Inc., New York, N.Y. From
1977 to 1988, he was employed by Baltimore Gas and Electric Company, holding
management positions including vice president and chief financial officer of
Constellation Holdings, Inc., a subsidiary.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following tables and discussion, based on December 31 fiscal year-end
periods, summarize the compensation of the chief executive officer of the
Corporation and each executive officer of the Corporation whose total annual
salary and bonus is greater than $100,000 for 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G) (H) (I)
LONG TERM COMPENSATION AWARDS
------------------------------------
RESTRICTED OPTIONS/ PERFORMANCE
CALENDAR PERFORMANCE OTHER ANNUAL STOCK & CASH SARS UNIT PLAN ALL OTHER
NAME AND POSITION YEAR SALARY($) AWARD($) COMPENSATION($) AWARDS($) AWARDS(#) AWARDS($) COMPENSATION($)
- ----------------------- -------- --------- ----------- --------------- ------------ --------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James W. Christmas..... 1995 298,000 50,000 40,000 87,500 11,169
President and Chief 1994 285,600 67,300 -- -- 40,000 87,500 13,296
Executive Officer 1993 188,900 147,300 -- -- 40,000 87,500 16,611
C.R. Devine............ 1995 183,000 20,000 48,500 15,000 43,750 11,169
Vice President, Oil 1994 175,000 32,600 -- 50,950 20,000 43,750 13,609
and
Gas Operations, 1993 127,000 63,500 -- 76,150 20,000 43,750 11,459
and President,
KCS Resources, Inc.
Harry Lee Stout........ 1995 156,700 10,000 15,000 8,000 11,169
President, KCS Energy 1994 150,000 9,125 -- -- 15,000 4,950 12,111
Marketing, Inc., 1993 131,000 39,200 -- -- 15,000 -- 10,703
KCS Pipeline Systems,
Inc. and KCS Michigan
Resources, Inc.
Henry A. Jurand........ 1995 149,800 50,000 15,000 43,750 11,154
Vice President, Chief 1994 143,300 23,950 -- -- 10,000 43,750 12,702
Financial Officer and 1993 138,300 69,150 -- -- 10,000 43,750 12,479
Secretary
</TABLE>
- ---------------
(1) The amounts set forth in column (c) for Mr. Christmas include directors fees
of $600 and $4,800 paid in 1994 and 1993, respectively.
(2) The amounts set forth in column (d) represent performance awards which are
paid in December each year for performance during the previous fiscal years
ended September 30. Awards were paid to all recipients based on attainment
of specific goals including profitablity and growth of the Corporation and
its various operating segments.
(3) The amount set forth in column (f) for Mr. Devine reflects a restricted cash
award of $30,000 and 8,400 shares of restricted stock, both vesting
one-third each year on December 2, 1993, 1994 and 1995.
(4) The amounts set forth in column (g) represent the number of stock options
granted in the year under the KCS Energy, Inc. 1992 Stock Plan. See the
notes to the table entitled "Option/SAR Grants in Last Fiscal Year."
(5) The Performance Unit Plan award amounts set forth in column (h) are awarded
pursuant to the KCS Performance Unit Plan in December for performance during
the previous three fiscal years ended September 30. See the notes to the
table entitled "Long-Term Incentive Plan -- Awards in Last Fiscal Year."
(6) Amounts shown in column (i) represent amounts contributed by the Corporation
as 50% matching contributions for up to the first 6% of base salary
contributed by the named individual to the KCS Savings and Investment Plan
and the pro rata share of the Corporation's discretionary profit sharing
contribution made on behalf of the named individual to the KCS Savings and
Investment Plan.
8
<PAGE> 11
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
POTENTIAL REALIZABLE VALUE
@ ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
FOR OPTION TERM
-------------------------------
IF STOCK PRICE IF STOCK PRICE
AT $21.18 AT $33.72
OPTIONS/ % OF TOTAL IN 2005 IN 2005
SARS GRANTED EXERCISE EXPIRATION -------------- --------------
NAME AND POSITION GRANTED IN FY 95 PRICE DATE 5% 10%
- -------------------------------- ------- ---------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
All Stockholders' Stock
Appreciation.................. N/A N/A N/A N/A $ 94,203,592 $238,730,398
James W. Christmas.............. 40,000 38% $13.00 11/29/05 $ 327,025 $ 828,746
President and Chief Executive
Officer
C.R. Devine..................... 15,000 14% $13.00 11/29/05 $ 122,634 $ 310,780
Vice President, Oil and Gas
Operations, and President, KCS
Resources, Inc.
Harry Lee Stout................. 15,000 14% $13.00 11/29/05 $ 122,634 $ 310,780
President, KCS Energy
Marketing, Inc., KCS Pipeline
Systems, Inc. and KCS Michigan
Resources, Inc.
Henry A. Jurand................. 15,000 14% $13.00 11/29/05 $ 122,634 $ 310,780
Vice President, Chief
Financial Officer and
Secretary
</TABLE>
- ---------------
(1) All options were granted under the KCS Energy, Inc. 1992 Stock Plan.
(2) The exercise price for all options granted during fiscal 1995 is equal to
the fair market value of the Common Stock on the date of the grant, November
29, 1995. The options granted become exercisable in one-fourth increments at
the end of each year following the date of the grant. Exercise rights and
expiration dates may be affected by the death, retirement, termination of
employment or disability of an optionee.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES TABLE
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS @ IN-THE-MONEY OPTIONS/
SARS @ FY-END 95($)(3)
SHARES FY-END 95(#)
ACQUIRED VALUE ----------------------------- --------------------------
NAME AND POSITION ON EXERCISE REALIZED(1) EXERCISABLE(2) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- --------------- ----------- -------------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
James W. Christmas............. 0 $ 0 240,000 90,000 $2,614,700 $95,000
President and Chief Executive
Officer
C.R. Devine.................... 0 $ 0 18,200 40,000 $ 30,500 $37,500
Vice President, Oil and Gas
Operations, and President,
KCS Resources, Inc.
Harry Lee Stout................ 10,000 $ 173,750 33,850 33,750 $ 261,375 $35,625
President, KCS Energy
Marketing, Inc., KCS Pipeline
Systems, Inc. and KCS
Michigan Resources, Inc.
Henry A. Jurand................ 5,000 $ 67,293 55,100 27,500 $ 584,510 $33,750
Vice President, Chief
Financial Officer and
Secretary
</TABLE>
- ---------------
(1) Market Value of underlying securities at exercise minus the exercise price.
(2) Options granted to these executives under the KCS Energy, Inc. 1988 Stock
Plan and the KCS Energy, Inc. 1992 Stock Plan become exercisable in equal
installments over a period of either three or four years from the date of
grant.
(3) Market value of underlying securities at December 31, 1995 ($15.00 per
share), minus the exercise price.
9
<PAGE> 12
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE -----------------------------
NAME AND POSITION PERFORMANCE UNITS PERIOD THRESHOLD TARGET MAXIMUM
- ------------------------------------- ----------------- ----------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
James W. Christmas................... 1,000 FY 96-98 $25,000 $100,000 $175,000
President and Chief Executive
Officer
C.R. Devine.......................... 500 FY 96-98 12,500 50,000 87,500
Vice President, Oil and Gas
Operations, and President, KCS
Resources, Inc.
Harry Lee Stout...................... 500 FY 96-98 12,500 50,000 87,500
President, KCS Energy Marketing,
Inc., KCS Pipeline Systems, Inc.
and KCS Michigan Resources, Inc.
Henry A. Jurand...................... 500 FY 96-98 12,500 50,000 87,500
Vice President, Chief Financial
Officer and Secretary
</TABLE>
- ---------------
(1) The KCS Performance Unit Plan is designed to promote the profitable growth
of the Corporation through awards of performance units which become cash
awards at the end of a period of years, currently three years. The
Compensation Committee of the Board of Directors establishes separate
performance criteria for each executive. Performance criteria consider
attainment of certain financial goals and are based on reasonable accounting
measures, including but not limited to, growth in earnings per share for
corporate executives and growth in subsidiary operating income for
subsidiary executives. The value of each performance unit could range from
$25 to $175 depending on the attainment of performance criteria.
(2) The awards described above provide for the payments indicated in column (e)
if targeted three-year cumulative goals are achieved. The potential payments
indicated in column (d) are the awards payable if the minimum approved
three-year goals are achieved. The potential payments indicated in column
(f) are the maximum awards payable if three-year cumulative goals
significantly exceed the target amount.
EMPLOYEE'S RETIREMENT PLAN OF KCS
On September 26, 1991, the Corporation's Board of Directors amended the
Employee's Retirement Plan of KCS (the "Retirement Plan") to freeze the accrual
of future benefits effective October 31, 1991. The Board of Directors then took
action to terminate the Plan effective September 30, 1995. The Company has filed
all required standard termination applications with both the Internal Revenue
Service and the Pension Benefit Guaranty Corporation. A complete settlement of
the Plan's projected benefit obligations is expected to occur during 1996.
The Plan, established October 1, 1988, which is funded entirely by the
Corporation, provides that a participant retiring at or after age 65 will
receive an annual retirement benefit equal in amount (when calculated as a life
annuity with two years certain) to 1 1/2% of the participant's final average
compensation (the average of the highest five consecutive calendar year's base
earnings) multiplied by the number of years of credited service. Base earnings
covered under the Retirement Plan include base wages only; directors who are not
also officers or employees do not participate. The following table shows annual
pension benefits payable to participants upon normal retirement at age 65 for
various levels of final average compensation and years of service, assuming the
election of a retirement allowance payable as a life annuity with two years
certain:
<TABLE>
<CAPTION>
HIGHEST AVERAGE
ANNUAL FIVE
CONSECUTIVE YEARS ANNUAL BENEFITS FOR YEARS OF SERVICE INDICATED
----------------- -----------------------------------------------
BASE SALARY 10 YEARS 20 YEARS 30 YEARS 40 YEARS
----------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 50,000 $ 7,500 $ 15,000 $ 22,500 $ 30,000
100,000 15,000 30,000 45,000 60,000
150,000 22,500 45,000 67,500 90,000
</TABLE>
10
<PAGE> 13
The benefit amounts shown in the above table are not subject to any
deduction for Social Security benefits or other offset amounts. The number of
years of service now credited under the Retirement Plan for the following
executive officers, including prior service with NUI Corporation, is: James W.
Christmas, 13 years; Henry A. Jurand, 1 year; C. R. Devine, 15 years and Harry
Lee Stout, 0 years.
COMPENSATION OF DIRECTORS
Directors who are not executive officers of KCS were paid an annual
retainer of $20,000 (paid one-half in cash and one-half in Common Stock) in
1995. Directors who are not executive officers were paid $1,500 for each meeting
of the Board of Directors and $1,000 for each committee meeting attended during
1995. KCS also reimburses directors for expenses they incur in attending board
and committee meetings.
There was no compensation, not covered above, paid or distributed in 1995
to any of the directors who are not executive officers of KCS, except for a
non-preferential discount of $4,500 on the purchase of 3,000 shares of KCS
Common Stock through the KCS Employee Stock Purchase Program by Mr. Kean and a
for a non-preferential discount of $2,776 on the purchase of 1,633 shares of KCS
Common Stock through the KCS Employee Stock Purchase Program by Mr. Geary.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen, LLP, 1345 Avenue of the Americas, New York, NY 10105,
independent certified public accountants, have been auditors of the Corporation
since its inception on June 1, 1988, and prior to that time, were auditors of
NUI Corporation, the former parent company of the Corporation's subsidiaries.
They have been selected by the Board of Directors, upon recommendation of its
Audit Committee, to serve as independent public accountants for the Corporation
and its subsidiaries for 1996.
It is expected that representatives of Arthur Andersen, LLP will be present
at the Meeting with the opportunity to make a statement if they desire to do so
and also will be available to respond to appropriate questions raised at the
meeting or submitted in writing before the Meeting.
11
<PAGE> 14
PERFORMANCE GRAPH
The following performance graph compares the performance of the
Corporation's Common Stock to the New York Stock Exchange ("NYSE") Market Value
Index and to a Peer Group (which includes the Corporation, American Exploration
Company, Apache Corporation, Arch Petroleum Inc., Burlington Resources Inc.,
Cabot Oil & Gas Corporation, Devon Energy Corporation, Forest Oil Corp., Gerrity
Oil & Gas Co., Helmerich & Payne, Inc., Kelley Oil & Gas Corporation, Louisiana
Land & Exploration Company, Mesa Inc., Mitchell Energy & Development Corp.,
Noble Affiliates, Inc., Nuevo Energy Company, Parker & Parsely Petroleum
Company, Plains Resources, Inc., Pogo Producing Company, Presidio Oil Company,
Snyder Oil Corporation, Wainoco Oil Corporation and Wiser Oil Company) for the
last five fiscal years. Dekalb Energy Corporation (acquired by Apache
Corporation in May 1995), Maxus Energy Corporation (acquired by YPF Sociedad
Anonima in June 1995) and Plains Petroleum Company (acquired by Barrett
Resources in July 1995) were deleted from the Peer Group. In February 1995,
Kelley Oil Corporation merged with Kelley Partners to form Kelley Oil & Gas
Corporation. The graph assumes that the value of the investment in the
Corporation's Common Stock and each index was $100 at January 1, 1991 and that
all dividends were reinvested.
FIVE-YEAR CUMULATIVE STOCKHOLDER TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD KCS
(FISCAL YEAR COVERED) ENERGY, INC PEER GROUP NYSE
<S> <C> <C> <C>
1990 100 100 100
1991 113.04 91.57 129.41
1992 558.18 108.00 135.50
1993 1408.31 130.13 153.85
1994 858.68 113.45 150.86
1995 798.48 130.33 195.61
</TABLE>
ANNUAL REPORT
Included with this Proxy Statement is the Annual Report for the fiscal year
ended December 31, 1995. Stockholders are referred to this report for financial
and other information about the activities of the Corporation. Management's
Discussion and Analysis of Financial Condition and Results of Operations on
pages 18 through 24 and the consolidated financial statements of the Corporation
on pages 26 through 44 of the Annual Report are incorporated herein by
reference. The rest of the Annual Report is not to be considered a part of this
Proxy Statement.
THE CORPORATION WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION (FORM 10-K) TO A
BENEFICIAL OWNER OF ITS SHARES UPON RECEIPT OF A WRITTEN REQUEST FROM SUCH
PERSON. PLEASE WRITE TO HENRY A. JURAND, SECRETARY, KCS ENERGY, INC., 379
THORNALL STREET, EDISON, NJ 08837.
12
<PAGE> 15
REVOCABILITY OF PROXY
The form of proxy enclosed is for use at the Meeting if a stockholder will
be unable to attend in person. The proxy may be revoked by a stockholder at any
time before it is exercised. All shares represented by valid proxies received
prior to the Meeting, pursuant to this solicitation and not revoked before they
are exercised, will be voted. Pursuant to Delaware statutes, the presence at any
Meeting of any stockholder who has given a proxy shall not revoke such proxy
unless the stockholder shall file written notice of such revocation with the
secretary of the Meeting prior to the voting of such proxy.
VOTE REQUIRED
The number of affirmative votes necessary for the election of directors is
a plurality of the shares of the Corporation's Common Stock present or
represented by proxy and voted at the Meeting.
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission. Should a stockholder intend to present a proposal at the 1997 Annual
Meeting, it must be received by the Secretary of the Corporation at 379 Thornall
Street, Edison, NJ 08837, by not later than December 8, 1996, in order to be
eligible for inclusion in the Corporation's proxy statement and form of proxy
relating to that meeting. Such proposals must meet all of the requirements of
the Securities and Exchange Commission to be eligible for inclusion in the
Corporation's 1997 Proxy materials. Among such requirements, at the time of
submission of the proposal, the submitting stockholder must be the record or
beneficial owner of 1% or $1,000 in market value of the Corporation's Common
Stock for at least one year.
SECURITIES EXCHANGE ACT COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers and directors and persons who own more than ten
percent of a registered class of the Corporation's equity securities to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission and the New York Stock Exchange. Executive
officers, directors and greater than ten percent stockholders are required by
Securities and Exchange Commission regulation to furnish the Corporation with
copies of all Forms 3, 4 and 5 they file.
Based solely on the Corporation's review of the copies of such Forms it has
received, the Corporation believes that all its executive officers, directors
and greater than ten percent beneficial owners complied with all filing
requirements applicable to them with respect to transactions during 1993, 1994
and 1995, except that on July 16, 1993, while traveling overseas, Mr. Geary, a
director, sold 1,000 shares of Common Stock in a limit transaction and
inadvertantly reported the sale late on Form 4 on September 8, 1993.
OTHER BUSINESS
Management does not intend to present and does not have any reason to
believe that others will present at the Meeting any item of business other than
those set forth herein. However, if other matters are properly presented for a
vote, the proxies will be voted upon such matters in accordance with the
judgment of the person acting under the proxy.
By Order of the Board of Directors
Henry A. Jurand
Secretary
Edison, New Jersey
April 8, 1996
13
<PAGE> 16
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE KCS ENERGY, INC.
<TABLE>
<S> <C>
ANNUAL MEETING OF STOCKHOLDERS The undersigned hereby appoints James W. Christmas and
MAY 16, 1996 Henry A. Jurand, and each of them, attorneys and proxies, with
power of substitution in each of them, to vote for and on behalf of
the undersigned at the Annual Meeting of Stockholders of the
Corporation to be held on May 16, 1996 and at any adjournment
thereof, upon matters properly coming before the meeting, as set
forth in the related Notice of Meeting and Proxy Statement, both of
which have been received by the undersigned. The proxies are
instructed to vote as follows:
1. Election of the Board's nominees With-
for Director For hold
James W. Christmas / / / /
Joel D. Siegal / / / /
Christopher A. Viggiano / / / /
(the Board of Directors recommends a vote "FOR")
2. To take action upon any other business as may properly come
---------------------- before the meeting.
Please be sure to sign and date Date
this Proxy in the box below. Yes No
- -------------------------------------------------------
DO YOU INTEND TO ATTEND THIS MEETING? / / / /
- ------------------------------------------------------- UNLESS OTHERWISE SPECIFIED IN THE SQUARES OR
Stockholder sign above Co-holder (if any) sign above SPACE PROVIDED IN THIS PROXY, THIS PROXY WILL BE
VOTED FOR THE BOARD'S NOMINEES.
</TABLE>
- Detach above card, sign, date and mail in postage paid envelope provided. -
KCS ENERGY, INC.
- --------------------------------------------------------------------------------
Please sign this proxy and return it promptly whether or not you expect to
attend the meeting. You may nevertheless vote in person if you attend.
Please sign exactly as your name appears herein. Give full title if an
Attorney, Executor, Administrator, Trustee, Guardian, etc.
For an account in the name of two or more persons, each should sign, or if one
signs, he should attach evidence of his authority.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- --------------------------------------------------------------------------------
