<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 [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
KCS Energy, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
KCS ENERGY, INC.
PRINCIPAL EXECUTIVE OFFICE:
5555 SAN FELIPE
HOUSTON, TEXAS 77056
(713) 877-8006
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 25, 2000, at the Marathon Oil Tower, 5555 San Felipe Road,
Houston, Texas, at 9:00 a.m. local time for the following purposes:
1. To elect two directors to serve until the Annual Meeting of
Stockholders in 2003;
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 March 30, 2000,
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
FREDERICK DWYER
Secretary
April 14, 2000
------------------------
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.
5555 SAN FELIPE
HOUSTON, TEXAS 77056
(713) 877-8006
PROXY STATEMENT
The Proxy Statement and the accompanying Proxy Card are being mailed to
stockholders, commencing April 18, 2000, in connection with the solicitation by
the Board of Directors of KCS Energy, Inc. (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 25, 2000, 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 30, 2000, there were outstanding 29,268,310 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 1,068 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 March 30, 2000, 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 30, 2000:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NO. OF SHARES OF % OF CLASS
BENEFICIAL OWNER COMMON STOCK OUTSTANDING
- ------------------- ---------------- -----------
<S> <C> <C>
State Street Research & Management Company............ 3,018,600 10.31%
One Financial Center
Boston, MA 02111
Stewart B. Kean....................................... 2,772,595(1)(2) 9.47%
P.O. Box 1
Elizabeth, NJ 07207
Dimensional Fund Advisors............................. 1,544,166 5.28%
1299 Ocean Avenue
Santa Monica, CA 90401
</TABLE>
- ---------------
(1) Includes shares that are allocated to the beneficial owner's account under
401(k) plans.
(2) Includes 1,025,648 shares held under certain family trusts as to which Mr.
Kean shares voting and investment power.
<PAGE> 4
(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 30, 2000:
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY(1) PERCENT OF CLASS
--------------- ----------------
<S> <C> <C>
Stewart B. Kean..................................... 2,782,595(2)(3) 9.50%
James W. Christmas.................................. 1,181,549(2)(4) 3.95%
Joel D. Siegel...................................... 200,248(2)(5) *
Harry Lee Stout..................................... 154,510(2) *
William N. Hahne.................................... 64,406(2) *
Christopher A. Viggiano............................. 52,248(2) *
James E. Murphy, Jr. ............................... 35,844(2) *
J. Chris Jacobsen................................... 29,693(2) *
Robert G. Raynolds.................................. 25,797(2)(6) *
Frederick Dwyer..................................... 20,988(2) *
G. Stanton Geary.................................... 13,114(2) *
11 Directors and Officers as a group................ 4,560,992(2) 15.14%
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise indicated, beneficial owner has sole voting and investment
power.
(2) Includes shares that (i) may be purchased as a result of options granted
that are exercisable within 60 days of March 30, 2000 of 645,000 for Mr.
Christmas, 77,500 for Mr. Stout, 45,000 for Mr. Hahne, 20,250 for Mr.
Jacobsen, 10,000 shares to each of Messrs. Kean, Siegel, Viggiano and
Murphy, 7,075 shares for Mr. Dwyer, 7,080 shares for Mr. Geary and 6,000
shares for Mr. Raynolds and (ii) are allocated to the beneficial owner's
account under the Corporation's 401(k) plan.
(3) Includes 1,025,648 shares held under certain family trusts, as to which Mr.
Kean shares voting and investment power.
(4) Includes 36,000 shares held in trusts established for the benefit of Mr.
Christmas' children, the beneficial ownership of which is disclaimed.
(5) Includes 16,000 shares held in trusts established for the benefit of Mr.
Siegel's children, the beneficial ownership of which is disclaimed.
(6) Includes 3,504 shares held in trusts established for the benefit of Mr.
Raynolds' children, the beneficial ownership of which is disclaimed.
(c) The Corporation has not issued nor has outstanding any Preferred Stock.
2
<PAGE> 5
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. The Board of
Directors has fixed at seven the number of directors of the Corporation. 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 Stewart B. Kean and James E.
Murphy, Jr. as directors of the Corporation for three-year terms expiring at the
Annual Meeting of Stockholders in the year 2003 or until their successors are
elected or appointed. Messrs. Kean and Murphy are presently serving as directors
of the Corporation.
Should any nominee become unable or refuse to accept nomination or election
as a director, it is intended that the persons named as proxies will vote for
the election of such other person 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 either 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>
STEWART B. KEAN, 65............... Mr. Kean has served as Chairman of the Board of Directors
Chairman, Member, since 1988. Mr. Kean served as President of Utility Propane
Executive Committee Company, a former subsidiary, 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
President of the Liberty Hall Foundation. Mr. Kean's term
expires in 2000 and if re-elected, his new term will expire
in 2003.
JAMES E. MURPHY, JR., 43.......... Mr. Murphy has served as director since 1988. He leads his
Member, Compensation Committee own political and governmental relations consulting firm
offering strategic planning and management consulting
services to Republican candidates nationwide, with extensive
experience at the presidential, state and congressional
levels. Based in Potomac, Maryland, he also advises
corporations and industry groups on strategic planning,
governmental relations and grassroots lobbying projects. Mr.
Murphy's term expires in 2000 and if re-elected, his new
term will expire in 2003.
G. STANTON GEARY, 65.............. Mr. Geary has served as director since 1988. He is
Member, Audit Committee proprietor of Gemini Associates, Pomfret, CT, a venture
capital consulting firm, and was business manager of the
Rectory School, Pomfret, CT from 1987 through 1997. Mr.
Geary's term expires in 2001.
ROBERT G. RAYNOLDS, 48............ Mr. Raynolds has served as director since 1995. He has been
Member, Audit Committee 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. Mr. Raynolds' term expires in 2001.
JAMES W. CHRISTMAS, 52............ Mr. Christmas has served as director, President and Chief
Member, Executive Committee Executive Officer of the Corporation since 1988. Mr
Christmas' term expires in 2002.
JOEL D. SIEGEL, 58................ Mr. Siegel has served as director since 1988. He is an
Member, Executive and attorney-at-law and has been president of the law firm of
Compensation Committees Orloff, Lowenbach, Stifelman & Siegel, P.A., Roseland, NJ,
since 1975. Mr. Siegel's term expires in 2002.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME, AGE PRINCIPAL OCCUPATION
AND POSITION DURING LAST FIVE YEARS
------------ ----------------------
<S> <C>
CHRISTOPHER A. VIGGIANO, 46....... Mr. Viggiano has served as director since 1988. He has been
Member, Audit and Compensation President, Chairman of the Board and majority owner of
Committees O'Bryan Glass Corp., Queens, NY since December 1991, and
served as Vice President and a member of the board of
directors of O'Bryan Glass Corp. from 1985 to December 1991.
He is a Certified Public Accountant. Mr. Viggiano's term
expires in 2002.
</TABLE>
RELATIONSHIPS: Mr. Raynolds is Mr. Kean's nephew. During 1999, the
Corporation retained as outside general counsel the law firm of Orloff,
Lowenbach, Stifelman & Siegel, P.A., 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.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES
The Board of Directors held a total of 18 meetings during 1999. Messrs.
Kean, Murphy, Christmas, Siegel, and Viggiano attended each of the meetings, Mr.
Geary attended 17 of the meetings and Mr. Raynolds attended 15 of the meetings.
Each director attended all of the meetings of the committees of which he is a
member.
The Board of Directors has the following committees; (i) an Executive
Committee composed of Messrs. Kean, Christmas and Siegel; (ii) an Audit
Committee composed of Messrs. Geary, Raynolds and Viggiano; and (iii) a
Compensation Committee composed of Messrs. Murphy, Siegel and 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 twice during 1999.
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 determining the compensation for the senior executives of KCS and
its subsidiaries (approximately seven persons), 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 business unit.
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 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
4
<PAGE> 7
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 incentive-based compensation which the Committee believes are difficult to
achieve.
The Committee relies upon compensation comparisons with other companies in
the industry in order to determine the competitiveness of its executive
compensation program. From time to time, the Committee engages independent
compensation experts to assist the Committee in its information gathering and
compensation package design functions.
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 increases to base pay levels, incentive compensation
awards 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
A salary freeze was in place for senior management for 1999. Effective
February 1, 2000, the Company granted base salary increases to its senior
executive group of approximately 5.9%. The Committee, based on Mr. Christmas'
recommendation and the current financial status of the Company, deferred action
on a base pay increase for Mr. Christmas. The base pay increases, while
subjectively determined, considered increases in the cost of living as well as
the individual's current performance, experience, scope of responsibilities and
the competitive environment for comparable positions within the industry.
ANNUAL INCENTIVE AWARDS
The Corporation's annual cash incentive bonus program is designed to reward
executives for the achievement of annual performance objectives. Each business
unit and the Corporation as a whole are given performance targets. The target
bonus of each executive is expressed as a percentage of annual base pay, usually
between 20% and 45%, depending on the executive's position. For performance
results in excess of the target, the annual cash incentive award increases, up
to maximum levels which are set at 30% to 80% of annual base pay, depending on
the executive's position. The performance objectives for each executive are
related both to results of operations for that executive's direct employer and
overall corporate results. That is, an executive responsible for a certain
business unit will have both business unit and overall corporate objectives to
meet. Executives employed by KCS Energy, Inc. (corporate level) are given
objectives based on overall corporate performance. Performance criteria are
chosen for their potential contribution to the creation of stockholder value,
and include such measures as finding and development costs, earnings, cash flow
and increase in PV-10 value of oil and gas reserves. Incentive compensation
based upon 1997 performance was paid in 1998. With the exception of the
Mid-Continent division, no incentive compensation was paid to the executive
officers in 1999 as 1998 performance objectives in other business units and at
the corporate level were not achieved. For 1998, 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. Because the 1998
performance objectives were not achieved, Mr. Christmas was not paid a bonus in
1999. The Company made incentive compensation payments in April 1999 to each
executive officer except Mr. Christmas whose 1999 incentive compensation payment
has been deferred.
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.
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. The Corporation uses grants of stock options to closely align
executives' financial interests with those of stockholders. The Committee
considers individual and overall Corporation or business unit performance in
determining the final number of options
5
<PAGE> 8
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. 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. No stock options, restricted stock or bonus stock grants were issued
in 1999 and grants in 2000 have been deferred.
Under the Performance Unit Plan, 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. The Performance Unit Plan is based primarily on the
same criteria as the annual incentive plan, but reflecting three-year cumulative
performance objectives. No grants were made under the Performance Unit Plan in
1999 and the grant of performance units for 2000 has been deferred.
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 applies to other
executives; that is, to maintain base salary at or slightly below market, with
emphasis placed on incentive compensation.
In keeping with the 1999 salary freeze for senior management which was
implemented as part of the Corporation's cost reduction initiative program Mr.
Christmas did not receive a base pay increase in 1999. Action on Mr. Christmas'
base pay increase for 2000 has been deferred.
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., general legal counsel to the
Corporation.
COMPENSATION COMMITTEE MEMBERS
Joel D. Siegel, Chair
James E. Murphy, Jr.
Christopher A. Viggiano
EXECUTIVE OFFICERS
In addition to Mr. Christmas who is also a director of the Corporation, the
following persons served as executive officers of the Corporation, at the
discretion of the Board of Directors, during 1999:
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
William N. Hahne................... Senior Vice President and Chief 48
Operating Officer of KCS
Harry Lee Stout.................... President, KCS Energy Services, 52
Inc. and KCS Energy Marketing,
Inc., the Corporation's
volumetric production payment
subsidiaries
J. Chris Jacobsen.................. Vice President, Engineering and 44
Portfolio Development
Kathryn M. Kinnamon................ Vice President and Treasurer 35
Frederick Dwyer.................... Vice President, Controller and 40
Secretary
</TABLE>
6
<PAGE> 9
William N. Hahne has served as Senior Vice President and Chief Operating
Officer of KCS since April 1998. He is a Registered Petroleum Engineer and has
27 years experience with various major independent exploration and production
companies including Unocal Corporation, Union Texas Petroleum Corporation,
NERCO, The Louisiana Land and Exploration Company ("LL&E") and Burlington
Resources Inc. Prior to joining KCS, Mr. Hahne was employed by LL&E from October
1993 to October 1997 where he held a number of positions including Worldwide
Operations Vice President. From October 1997 to April 1998, Mr. Hahne served as
Vice President of International & Onshore for Burlington Resources Inc.
Harry Lee Stout has served as President of KCS Energy Marketing, Inc. since
August 1991. He was named President of KCS Energy Services, Inc. in September
1996. He also served as President of the Company's natural gas marketing and
transportation subsidiaries from August 1991 until the discontinuation of these
operations in 1997.
J. Chris Jacobsen has served as Vice President, Engineering and Portfolio
Development since May 1998 and Senior Vice President, Exploration, Development
and Reserves of KCS Medallion Resources, Inc. since 1994. From 1982 to 1994, Mr.
Jacobsen was employed by Netherland, Sewell & Associates where he served in
various positions, with his last position being Senior Vice President. From 1977
to 1982 he was employed by Exxon Company U.S.A. holding various engineering and
supervisory positions.
Kathryn M. Kinnamon served as Vice President and Treasurer of the Company
from March 1997 until November 1999. She served as Treasurer since January 1996,
as Assistant Vice President from May 1996 to March 1997 and as Assistant
Treasurer from May 1991 to December 1995. She joined the Company upon its
formation in 1988, holding various management and supervisory positions. Ms.
Kinnamon left the Company in November 1999 after a transition period following
the closing of the New Jersey corporate office.
Frederick Dwyer has served as Vice President and Controller of the Company
since March 1997 and Secretary of the Company since May 1998. He served as
Assistant Vice President and Controller from May 1996 to March 1997. Mr. Dwyer
joined the Company upon its formation in 1988, holding various management and
supervisory positions. He is a certified public accountant and began his career
with Peat, Marwick, Mitchell & Co.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following tables and discussion, based on December 31 year-end periods,
summarize the compensation of the chief executive officer of the Corporation and
each Executive Officer of the Corporation (as defined by Securities and Exchange
Commission regulations) whose total annual salary and bonus is greater than
$100,000 for 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G) (H)
LONG TERM COMPENSATION AWARDS
-------------------------------------
RESTRICTED OPTIONS/
STOCK & SARS PERFORMANCE
CALENDAR BONUS OTHER ANNUAL CASH AWARDS (# UNIT PLAN
NAME AND POSITION YEAR SALARY($) AWARD($) COMPENSATION($) AWARDS($) SHARES) AWARDS($)
- ----------------- -------- --------- -------- --------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
James W. Christmas.............. 1999 338,000 -- -- -- -- --
President and Chief 1998 338,000 -- -- -- 50,000 --
Executive Officer 1997 325,000 86,775 -- -- 80,000 --
William N. Hahne................ 1999 230,000 -- -- -- -- --
Senior Vice President and 1998 159,200 -- -- -- 140,000 --
Chief Operating Officer
Harry Lee Stout................. 1999 170,000 -- -- -- -- --
President, KCS Energy 1998 165,000 -- -- -- 60,000 --
Marketing, Inc. 1997 156,700 35,000 -- -- 20,000 --
and KCS Energy Services, Inc.
J. Chris Jacobsen............... 1999 145,000 21,750 -- -- -- --
Vice President, 1998 140,985 5,000 -- -- 57,500 --
Engineering and 1997 131,365 -- -- -- 4,000 --
Portfolio Development
Kathyrn M. Kinnamon............. 1999 124,615 -- -- 250 -- --
Vice President and 1998 98,404 12,500 -- 1,819 12,500 --
Treasurer 1997 82,481 20,000 -- 6,227 5,000 --
Frederick Dwyer................. 1999 104,231 -- -- 250 -- --
Vice President, Controller 1998 93,846 12,500 -- 1,700 10,000 --
and Secretary 1997 82,481 20,000 -- 6,227 5,000 --
<CAPTION>
(A) (I)
ALL OTHER
NAME AND POSITION COMPENSATION($)
- ----------------- ---------------
<S> <C>
James W. Christmas.............. 5,000
President and Chief 9,652
Executive Officer 9,327
William N. Hahne................ 5,000
Senior Vice President and 1,062
Chief Operating Officer
Harry Lee Stout................. 5,000
President, KCS Energy 9,643
Marketing, Inc. 9,261
and KCS Energy Services, Inc.
J. Chris Jacobsen............... 4,350
Vice President, 7,975
Engineering and 3,946
Portfolio Development
Kathyrn M. Kinnamon............. 178,893
Vice President and 5,482
Treasurer 6,523
Frederick Dwyer................. 59,232
Vice President, Controller 5,363
and Secretary 6,574
</TABLE>
- ---------------
NOTES:
(1) The amount set forth in column (d) for 1999 to Mr. Jacobsen was for
performance during 1998. The amounts paid to Messrs. Jacobsen and Dwyer and
Ms. Kinnamon in 1998 were for performance during 1997. The amounts paid in
1997 were for performance during 1996. The performance awards were based on
attainment of specific goals including profitability and growth of the
Corporation as well as individual performance.
(2) 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. Options
granted become exercisable in equal installments over a period of four years
from the date of grant.
(3) No awards were paid under the Performance Unit Plan in 1999, 1998 or 1997.
(4) Amounts shown in column (i) include 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 for each fiscal year made on behalf of the named individual to
the KCS Savings and Investment Plan. In addition, the amount reflected in
column (i) for Ms. Kinnamon in 1999 includes transition period retention and
severance payments totaling $175,000. The amount reflected in column (i) for
Mr. Dwyer reflect a retention payment of $55,000.
(5) Mr. Hahne's 1998 salary is for a partial year as he joined the Company in
April of that year.
8
<PAGE> 11
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTIONS/SAR VALUES TABLE
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/
SHARES @ FY 99-END(#) SARS @ FY 99-END($)(3)
ACQUIRED VALUE ------------------------------ ---------------------------
NAME AND POSITION ON EXERCISE REALIZED(1) EXERCISABLE(2) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------- ----------- ----------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James W. Christmas....... -- -- 645,000 25,000 -- --
President and Chief
Executive Officer
William N. Hahne......... -- -- 45,000 95,000 -- --
Senior Vice President
and Chief Operating
Officer
Harry Lee Stout.......... -- -- 77,500 47,500 -- --
President, KCS Energy
Marketing, Inc. and KCS
Energy Services, Inc.
J. Chris Jacobsen........ -- -- 20,250 41,250 -- --
Vice President,
Engineering and
Portfolio Development
Kathyrn M. Kinnamon...... -- -- -- -- -- --
Vice President and
Treasurer
Frederick Dwyer.......... -- -- 7,075 8,125 -- --
Vice President,
Controller and
Secretary
</TABLE>
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NOTES:
(1) Market Value of underlying securities at exercise minus the exercise price.
(2) Options granted to these executives under the Corporation's stock plan
become exercisable in equal installments over a period of four years from
the date of grant.
(3) Market value of underlying securities at December 31, 1999 ($0.8125 per
share), minus the exercise price.
CHANGE OF CONTROL AGREEMENTS AND RETENTION AGREEMENTS
Each of Messrs. Hahne, Stout, Jacobsen and Dwyer is a party to a change in
control agreement with KCS (the "Change in Control Agreements"). Pursuant to the
terms of each Change in Control Agreement, if a change in control occurs on or
before August 1, 2001 (or, in the case of Mr. Hahne, at any time during his
employment), and within two years following the change in control, the
executives' employment is terminated other than for cause (as defined therein)
or by the executive for good reason (as defined therein), the executive is
entitled, among other things, to be paid an amount equal to his annual base
salary (times two in the case of Mr. Stout and times three in the case of Mr.
Hahne) and an amount equal to any cash bonus (times two in the case of Mr. Stout
and times three in the case of Mr. Hahne) payable to the executive for such
year.
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<PAGE> 12
Each of Messrs. Stout and Jacobsen is a party to a retention agreement with
KCS (the "Retention Agreements"). Pursuant to the terms of each Retention
Agreement, a bonus was paid to the executive in April 2000 and is payable in
September 2000 if the executive remains employed by KCS through September 1,
2000 in the following amounts: Mr. Stout, $25,500 and Mr. Jacobsen, $21,750.
Mr. Dwyer and KCS have entered into a Stay Package Agreement ( the "Stay
Agreement") pursuant to which Mr. Dwyer was paid a bonus in May 1999 in the
amount of $55,000 in consideration of his relocation to Houston, Texas and his
continued employment with the Company. Pursuant to the Stay Agreement, Mr. Dwyer
is entitled, among other things, to a severance payment in an amount equal to
approximately six months base salary upon termination of his employment.
COMPENSATION OF DIRECTORS
Directors who are not executive officers of KCS are usually paid an annual
retainer of $20,000 (paid one-half in cash and one-half in Common Stock). The
Board of Directors waived this retainer in 1999. Directors who are not executive
officers were paid $1,500 for each meeting of the Board of Directors attended in
person ($500 if participation was via telephone) and $1,000 for each committee
meeting attended during 1999. 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 1999
to any of the directors who are not executive officers of KCS, except for a
non-preferential discount of $1,469 to Mr. Raynolds on the purchase of 5,000
shares of KCS common stock through the KCS Employee Stock Purchase Program.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen, LLP have been auditors of the Corporation since its
inception in 1988. 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 2000.
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.
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<PAGE> 13
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, Apache Corporation, Burlington
Resources Inc., Cabot Oil & Gas Corporation, Devon Energy Corporation, Forest
Oil Corp., Helmerich & Payne, Inc., Mitchell Energy & Development Corp., Noble
Affiliates, Inc., Nuevo Energy Company, Patina Oil and Gas, Plains Resources,
Inc., Pogo Producing Company, Tom Brown, Inc. and Wiser Oil Company) for the
last five fiscal years. Kelley Oil & Gas Corporation (who experienced
significant asset divestitures and changes to it capital structure in 1999),
Snyder Oil Corporation (merged with Santa Fe Corporation in May 1999) , American
Exploration Company (merged with Louis Dreyfus in October 1997), Arch Petroleum
(merged with Pogo Producing Company in August 1998), Louisiana Land and
Exploration Company (merged with Burlington Resources, Inc. in October 1997) and
Wainoco Oil Corporation (divested its oil and gas properties in 1997) were
deleted from the Peer Group. The graph assumes that the value of the investment
in the Corporation's Common Stock and each index was $100 at January 1, 1995 and
that all dividends were reinvested.
[PERFORMANCE GRAPH]
11
<PAGE> 14
ANNUAL REPORT
Included with this Proxy Statement is the Annual Report for 1999.
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 17 through 24 and the
consolidated financial statements of the Corporation on pages 27 through 48 of
the Annual Report are incorporated herein by reference. The remainder of the
Annual Report is not to be considered a part of this Proxy Statement.
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 2001 Annual
Meeting, it must be received by the Secretary of the Corporation at 5555 San
Felipe, Suite 1200, Houston Texas 77056, by not later than December 19, 2000, 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 2001 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, as amended, 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, with the exception of Mr. Kean who
filed his 1999 Form 5 within two weeks of its due date, 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
1997, 1998 and 1999.
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<PAGE> 15
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
FREDERICK DWYER
Secretary
Houston, Texas
April 14, 2000
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<PAGE> 16
KCS ENERGY, INC.
Annual Meeting of Stockholders -- May 25, 2000
[ ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James W. Christmas and Frederick Dwyer, 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 25, 2000 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:
Please be sure to sign and date this Proxy in the box below.
Date
----------------------------------
- --------------------------------------
Stockholder sign above
- --------------------------------------
Co-holder (if any) sign above
FOR WITHHOLD EXCEPT
[ ] [ ] [ ]
1. Election of the Board's nominees for Director Stewart B. Kean and James E.
Murphy, Jr.
INSTRUCTION: To withhold authority to vote for an individual nominee, check the
box labeled "Except" and write that nominee's name in the space
provided below. (the Board of Directors recommends a vote "FOR")
- --------------------------------------------------------------------------------
2. To take action upon any other business as may properly come before the
meeting.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [ ]
UNLESS OTHERWISE SPECIFIED IN THE SQUARES OR SPACE PROVIDED IN THIS PROXY, THIS
PROXY WILL BE VOTED FOR THE BOARD'S NOMINEES.
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. 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 ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
