<PAGE>
================================================================================
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 Section 240.14a-11(c) or Section 240.14a-12
Oryx Energy Company
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(Name of Registrant as Specified In Its Charter)
Oryx Energy Company
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF ORYX ENERGY COMPANY APPEARS HERE]
ORYX ENERGY COMPANY
13155 NOEL ROAD
DALLAS, TEXAS 75240-5067
NOTICE OF ANNUAL MEETING
March 26, 1997
The 1997 Annual Meeting of Stockholders of Oryx Energy Company will be held
in the Turtle Creek Room I of Cityplace Conference Center, 2711 North Haskell,
Dallas, Texas, on Thursday, May 1, 1997, at 9:00 a.m., for the following
purposes:
1. Election of four directors to Class III of the Company's Board of
Directors;
2. Approval of the appointment of independent accountants for 1997;
3. Approval of the 1997 Long-Term Incentive Plan;
4. Approval of an amendment to the 1992 Long-Term Incentive Plan;
5. Reapproval of the Executive Variable Incentive Plan; and
6. Transaction of such other business as may properly come before the
Annual Meeting, including acting upon a stockholder proposal.
Only stockholders of record at the close of business on March 10, 1997, will
be entitled to vote at the Annual Meeting or any adjournments thereof. A
complete list of such stockholders will be available for examination at the
offices of the Company in Dallas, Texas, during ordinary business hours for a
period of 10 days prior to the meeting.
PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED. ADMISSION TICKETS WILL BE REQUIRED. IF YOU PLAN TO ATTEND THE
MEETING, PLEASE MARK YOUR CARD IN THE SPACE PROVIDED. AN ADMISSION
TICKET IS ATTACHED TO THE LOWER PORTION OF THE PROXY CARD.
By Order of the Board of Directors
William C. Lemmer
Vice President, General Counsel and
Secretary
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CONTENTS PAGE
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<S> <C>
Proxy Statement 1
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Voting Securities 1
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Voting Procedures 1
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Voting Tabulation 1
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Security Ownership of Certain Beneficial Owners 2
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Election of Directors
. Item Number 1 on Proxy Card 3
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Information Concerning the Board of Directors 6
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Security Ownership of Management 8
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Executive Compensation 9
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Approval of Independent Accountants
. Item Number 2 on Proxy Card 20
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Approval of 1997 Long-Term Incentive Plan
. Item Number 3 on Proxy Card 20
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Approval of Amendment to 1992 Long-Term Incentive Plan
. Item Number 4 on Proxy Card 27
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Reapproval of Executive Variable Incentive Plan
. Item Number 5 on Proxy Card 28
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Proposal of Stockholder
. Item Number 6 on Proxy Card 31
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Other Business 33
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Section 16(a) Beneficial Ownership Reporting Compliance 33
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Stockholder Nominations and Proposals for the 1998 Annual Meeting 33
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Solicitation of Proxies 34
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1997 Long-Term Incentive Plan A-1
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Executive Variable Incentive Plan B-1
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</TABLE>
. Items scheduled to be voted on at the Annual Meeting.
<PAGE>
PROXY STATEMENT----------------------------------------------------------------
This Proxy Statement and the accompanying proxy/voting instruction card (the
"proxy card") are being furnished to stockholders of Oryx Energy Company
("Company") in connection with the solicitation by the Company's Board of
Directors ("Board") of proxies to be used at the 1997 Annual Meeting of
Stockholders, scheduled to be held on May 1, 1997, or any adjournments thereof
("Meeting"). The approximate date of mailing of this Proxy Statement and
accompanying proxy card is March 21, 1997.
VOTING SECURITIES--------------------------------------------------------------
The only outstanding voting security of the Company is common stock, $1 par
value ("Common Stock"). On March 10, 1997, the record date for the Meeting,
there were 105,312,881 shares of Common Stock outstanding and entitled to be
voted at the Meeting. Each such share of Common Stock is entitled to one vote.
In addition, there were 3,001,876 outstanding shares of Common Stock held by a
subsidiary of the Company which shares, under Delaware law, are not entitled
to be voted at the Meeting. A majority of the shares of Common Stock
outstanding and entitled to be voted at the Meeting, present in person or
represented by proxy, is necessary to constitute a quorum.
VOTING PROCEDURES--------------------------------------------------------------
The accompanying proxy card serves to appoint proxies for record holders of
Common Stock or to give voting instructions to the trustees of the Oryx Energy
Company Capital Accumulation Plan ("CAP") by plan participants.
If a properly signed proxy card is returned by a record holder which
specifies how the shares of Common Stock represented thereby are to be voted
with respect to any of the items thereon ("Items"), the shares will be voted
in accordance with these specifications. If a properly signed proxy card is
returned by a record holder which does not specify how the shares are to be
voted on any Item, the shares will be voted as recommended by the Board with
respect to that Item.
If a properly signed proxy card is returned by a plan participant which
specifies how shares of Common Stock in CAP are to be voted with respect to
any Item, the shares will be voted in accordance with those specifications. If
a properly signed proxy card is returned by a plan participant which does not
specify how the shares are to be voted on any Item, the trustees will vote
those shares, in accordance with the terms of CAP, in the same proportion as
the shares for which instructions have been received from other participants
in the same fund. UNALLOCATED SHARES OF COMMON STOCK IN FUND L OF CAP WILL BE
VOTED IN THE SAME PROPORTION AS THE ALLOCATED SHARES. IF A PLAN PARTICIPANT
DOES NOT WISH TO ASSUME THE RESPONSIBILITY OF GIVING VOTING INSTRUCTIONS WITH
RESPECT TO UNALLOCATED SHARES, SUCH PARTICIPANT MAY AVOID THIS RESPONSIBILITY
BY NOT SIGNING AND RETURNING A PROXY CARD.
VOTING TABULATION--------------------------------------------------------------
The Company has a confidential voting policy which provides that all votes
will be kept confidential and will not be disclosed to the Company, its
affiliates, directors, officers or employees except when disclosure is
expressly requested by a stockholder (whether by written comment on proxy
cards or otherwise), in the case of a contested proxy solicitation or in the
event disclosure is required by law. As part of the policy, the Company will
employ an independent tabulator to receive and tabulate the proxies and will
appoint one or more independent inspectors of election to act at the Meeting
and to make a written report thereof.
Prior to the Meeting, the tabulator and inspectors will sign an oath to
perform their duties in an impartial manner and according to the best of their
ability. The inspectors will ascertain the number of shares outstanding and
the voting power of each, determine the shares represented at the Meeting and
the validity of proxies and ballots, count all votes and ballots and perform
certain other duties as required by law.
Stockholders who return properly signed proxy cards will have the number of
shares of Common Stock represented by such proxy cards counted as "present"
for purposes of establishing a quorum and determining the number of votes
needed for approval of all Items before the Meeting other than
1
<PAGE>
election of directors. Any stockholder who returns the proxy-card but who does
not desire to vote and wishes to record this fact may abstain from voting by
marking the appropriate space on the proxy card. However, proxy cards marked
as abstaining and proxy cards containing broker non-votes will be counted as
present for both the purpose of establishing a quorum and the purpose
determining the number of votes needed for approval of all Items before the
Meeting other than the election of directors.
With respect to the election of directors, under Delaware law directors are
elected by a plurality of the votes of shares of Common Stock cast, provided a
quorum is present. Votes withheld and shares not voted will have no effect on
the vote. With regard to the other Items to be voted on, under Delaware law
and the Company's Bylaws, approval requires the affirmative vote of the
majority of the shares present in person or represented by proxy at the
Meeting. Abstentions on these Items will have the effect of a negative vote
since they require the affirmative vote of a majority of shares present in
person or represented by proxy at the Meeting in order to be approved. Under
the rules of the New York Stock Exchange, brokers who hold shares in street
name have discretionary authority to vote on certain items when they have not
received instructions from beneficial owners. Brokers who do not receive
instructions are therefore entitled to vote on the election of directors, the
appointment of independent accountants, the approval of the 1997 Long-Term
Incentive Plan, the approval of an amendment to the 1992 Long-Term Incentive
Plan and the reapproval of the Executive Variable Incentive Plan. With respect
to the stockholder proposals, however, brokers may not vote shares held for
customers without specific instructions from the customer. Any resulting
broker non-vote will have the effect of a negative vote since such proposal
requires the affirmative vote of a majority of the shares present in person or
represented by proxy at the Meeting in order to be approved.
Any stockholder giving a proxy may revoke it at any time before it is voted
by communicating such revocation in writing to the Secretary of the Company or
by executing and delivering a later-dated proxy. Attendance at the Meeting
will not be effective to revoke the proxy unless written notice of revocation
also has been given to the Secretary of the Meeting before the voting of the
proxy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS--------------------------------
The following stockholders are the only stockholders known by the Company to
have been the beneficial owners of more than five percent of the Common Stock
outstanding and entitled to be voted at the Meeting as of December 31, 1996:
<TABLE>
<CAPTION>
Shares of Percent of
Common Common
Name and Address Stock Stock
- - -------------------------------------------------------------------------------
<S> <C> <C>
The Prudential Insurance Company of America (1)......... 7,393,159 7.04
Prudential Plaza
Newark, New Jersey 70102-3777
Travelers Group Inc. (2)................................ 5,764,641 5.5
388 Greenwich Street
New York, New York 10013
</TABLE>
(1) The information relating to The Prudential Insurance Company of America
("Prudential") was obtained from Schedule 13G dated January 27, 1997 filed
by that company with respect to its ownership of Company securities as of
December 31, 1996. Prudential holds 180,100 shares of Common Stock for the
benefit of its general account. In addition, Prudential may have direct or
indirect voting and/or investment discretion over 7,213,059 shares which
are held for the benefit of its clients by its separate accounts,
externally managed accounts, registered investment companies, subsidiaries
and/or other affiliates. This amount includes convertible bonds
convertible into 124,113 shares of Common Stock. Prudential's voting and
dispositive power consist of the following: 1,810,796 shares with sole and
5,340,449 shares with shared voting power, and 1,810,796 shares with sole
and 5,458,249 shares with shared dispositive power.
(2) The information relating to Travelers Group, Inc. ("Travelers") was
obtained from Schedule 13G dated February 11, 1997 filed by that company
with respect to ownership of Company securities as of December 31, 1996 by
Travelers and its wholly-owned subsidiary Smith Barney Holdings Inc. ("SB
Holdings"). SB Holdings beneficially owns 5,693,933 shares, including
convertible securities, for which it has shared voting and dispositive
power. Travelers beneficially owns 5,764,641 shares, including those
beneficially owned by SB Holdings, for which it has shared voting and
dispositive power.
2
<PAGE>
ELECTION OF DIRECTORS----------------------------------------------------------
ITEM NUMBER 1 ON PROXY CARD
The Company's Certificate of Incorporation has established three classes of
directors, so that approximately one-third of the Board is elected each year.
The terms of the Class III directors expire at the Meeting. The four current
Class III directors are: Jerry W. Box, William E. Bradford, Sylvia A. Earle
and Edward W. Moneypenny.
The Board has nominated Mr. Box, Mr. Bradford, Dr. Earle and Mr. Moneypenny
for re-election as Class III directors. The terms of these Class III
directors, if elected, will expire on the date of the Annual Meeting of
Stockholders in 2000, or at such time as their successors are elected and
qualified.
If any of the nominees is not elected or is unable to serve (although such a
contingency is not expected), the remaining Board members may elect a
substitute or, alternatively, may reduce the size of the Board, all in
accordance with the Company's Bylaws. All current directors are described
below, in order of their classification.
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CLASS III -- TERM EXPIRES 2000 (IF ELECTED)
- - -------------------------------------------------------------------------------
[PICTURE OF JERRY W. BOX (Director since 1994) Executive Vice President
JERRY W. and Chief Operating Officer since December 1995. Age 58. Mr.
BOX Box was the Executive Vice President, Exploration and
APPEARS HERE] Production from December 1994 to November 1995. From January
1992 through November 1994, he was Senior Vice President,
Exploration and Production, and was Vice President,
Exploration from January 1987 through December 1991.
- - -------------------------------------------------------------------------------
[PICTURE OF WILLIAM E. BRADFORD (Director since 1993) Chairman and Chief
WILLIAM E. Executive Officer of Dresser Industries, Inc., since December
BRADFORD 1996. Age 62. Mr. Bradford served as President and Chief
APPEARS HERE] Executive Officer from November 1995 to December 1996 and as
President and Chief Operating Officer of Dresser Industries,
Inc. from March 1992 to November 1995. He has been a director
of Dresser Industries, Inc. since March 1992. From February
1988 to March 1992 he was President and Chief Executive
Officer of Dresser-Rand Company and from March 1982 to March
1992 he was Senior Vice President of Operations of Dresser
Industries, Inc. Mr. Bradford is a director of
Ultramar/Diamond Shamrock, Inc.
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[PICTURE OF SYLVIA A. EARLE (Director since 1996) President of Deep Ocean
SYLVIA A. Exploration and Research, Inc., a consulting firm, since 1992.
EARLE Age 61. From 1993 to 1995 Dr. Earle was Chairman of the Sea
APPEARS HERE] Change Trust and Caribbean Marine Research Center, a non-
profit scientific research organization. From 1992 to 1993 she
was an Advisor to the Administrator and from 1990 to 1992 she
was Chief Scientist of the National Oceanic and Atmospheric
Administration. Dr. Earle is the founder and a director of
Deep Ocean Engineering, Inc., a designer and manufacturer of
underwater equipment and from 1988 to 1990 was its President,
Chief Executive Officer and Chairman. Dr. Earle is also a
member of the board of directors of Dresser Industries, Inc.
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[PICTURE OF EDWARD W. MONEYPENNY (Director since 1994) Executive Vice
EDWARD W. President, Finance, and Chief Financial Officer since December
MONEYPENNY 1, 1994. Age 55. Mr. Moneypenny was the Senior Vice President,
APPEARS HERE] Finance, and Chief Financial Officer from January 1992 through
November 1994 and Vice President, Finance and Chief Financial
Officer from November 1988 through December 1991.
Mr. Moneypenny serves on the Board of MESBIC Ventures Holding
Company and is a member of the Business Advisory Council,
College of Commerce and Business Administration, University of
Illinois.
3
<PAGE>
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CLASS I -- TERM EXPIRES 1998
- - -------------------------------------------------------------------------------
[PICTURE OF DAVID C. GENEVER-WATLING (Director since 1996) President and
DAVID C. Chief Executive Officer of General Electric ("GE") Industrial
GENEVER-WATLING and Power Systems Business until his retirement in June 1995.
APPEARS HERE] Age 51. From September 1990 to July 1992 he was Senior Vice
President of GE Industrial and Power Systems. Prior to that he
served as Vice President and General Manager of GE Power
Generation and before that as Vice President and General
Manager of GE Motors. Mr. Genever-Watling also served at GE's
Corporate Offices as Vice President and Deputy to the Vice
Chairman. He joined GE directly from school in England and
spent 15 years at the Aircraft Engine Business culminating in
his position as General Manager of Military Engines and
Product Support.
- - -------------------------------------------------------------------------------
[PICTURE OF ROBERT B. GILL (Director since 1989) Vice Chairman of the
ROBERT B. Board of J. C. Penney Company, Inc. from 1982 and Chief
GILL Operating Officer of J. C. Penney Stores and Catalog from
APPEARS HERE] March 1, 1990 until his retirement on July 1, 1992. Age 65.
Prior to his retirement from J. C. Penney, Mr. Gill served as
Chairman of the Board of the J. C. Penney National Bank and
the J. C. Penney Insurance Company. He was a director of the
National Junior Achievement, Chairman of the Board of Trustees
of the National 4-H Council and a member of the board
of directors of the U.S. Chamber of Commerce. Mr. Gill
currently is a Trustee of Pace University and a member of the
Business Advisory Committee at Lehigh University.
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[PICTURE OF DAVID S. HOLLINGSWORTH (Director since 1988) Chairman of the
DAVID S. Board and Chief Executive Officer of Hercules Incorporated
HOLLINGSWORTH from 1987 until his retirement on December 31, 1990. Age 68.
APPEARS HERE] From 1986 to 1987, Mr. Hollingsworth was Vice Chairman of the
same company. Previously, he was Vice President with various
responsibilities, including corporate planning and marketing.
Prior to his retirement, Mr. Hollingsworth was a member of the
board of directors of the U.S. Chamber of Commerce. He was
also a member of the board and the executive committee of both
the Chemical Manufacturers Association and the Medical Center
of Delaware and a member of the Delaware Business Roundtable.
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[PICTURE OF CHARLES H. PISTOR, JR. (Director since 1988) Former Vice Chair
CHARLES H. of Southern Methodist University from October 1991 to
PISTOR, JR. September 1995. Age 66. Mr. Pistor was Chairman of the Board
APPEARS HERE] and Chief Executive Officer of NorthPark National Bank from
1988 to June 1990. He retired as Vice Chairman of First
RepublicBank Corporation, and Chairman and Chief Executive
Officer of First RepublicBank Dallas, N.A. in April 1988.
Before that time, he was Chairman of the Board and Chief
Executive Officer of RepublicBank Dallas, N.A. Mr. Pistor is a
past-president of the American Bankers Association. Mr. Pistor
also serves as a director of AMR Corporation, American Brands,
Inc. and Centex Corporation. Mr. Pistor is a member of the
Executive Board of the Cox School of Business at Southern
Methodist University.
4
<PAGE>
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CLASS II -- TERM EXPIRES 1999
- - -------------------------------------------------------------------------------
[PICTURE OF ROBERT L. KEISER (Director since 1991) Chairman of the Board,
ROBERT L. Chief Executive Officer and President since December 1, 1994.
KEISER Age 54. Mr. Keiser was President and Chief Operating Officer
APPEARS HERE] of the Company from January 1, 1992 until November 30, 1994,
and was President and Chief Executive Officer of Oryx U.K.
Energy Company from January 1, 1990 through December 1991. He
was also Vice President, International Exploration and
Production for the Company from January 1990 until August 1990
and from April 1991 through December 1991.
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[PICTURE OF PAUL R. SEEGERS (Director since 1990) President of Seegers
PAUL R. Enterprises. Age 67. Chairman of the Board of Centex
SEEGERS Corporation from July 1988 until his retirement in July 1991.
APPEARS HERE] From July 1985 to July 1988, he was also its Chief Executive
Officer, and from July 1978 to July 1985 its Vice Chairman and
Co-Chief Executive Officer. Mr. Seegers is a member of the
board of directors of Centex Corporation and Chairman of its
Executive Committee and is a member of the board of directors
of RAC Financial Group, Inc. Mr. Seegers is a member of the
Board of Methodist Hospitals of Dallas and a trustee of
Southwestern Medical Foundation.
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[PICTURE OF IAN L. WHITE-THOMSON (Director since 1993) President and Chief
IAN L. Executive Officer of U.S. Borax Inc. since 1988 and Chief
WHITE-THOMSON Executive of the global RTZ Borax Group since April 1, 1995.
APPEARS HERE] Age 60. From 1986 to 1988 Mr. White-Thomson was Vice
President, Marketing and then Executive Vice President of the
same company. He has been a director of U.S. Borax Inc. since
1973. During 1985 and 1986 he was Group Executive of
Pennsylvania Glass Sand Corporation and Ottawa Silica Company,
then newly acquired subsidiaries of U.S. Borax Inc., and
organized their combination as U.S. Silica, of which company
he was Group Executive in 1987. Mr. White-Thomson has been a
director of the American Mining Congress since 1989 and he has
previously served as a director and held several positions,
including Chairman, of the Chemical Industry Council of
California. He is a director of KCET Community Television of
Southern California.
5
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS----------------------------------
BOARD MEETINGS AND COMMITTEES
The Board held 8 meetings in 1996. The permanent committees of the Board,
number of meetings held in 1996, current composition and functions are:
AUDIT COMMITTEE (THREE MEETINGS) -- Paul R. Seegers, Chairman; William E.
Bradford; Sylvia A. Earle; Robert B. Gill; and Ian L. White-Thomson --
examines the Company's accounting processes, financial controls and reporting
systems; and assesses the performance and recommends the appointment of
independent accountants.
BOARD POLICY AND NOMINATING COMMITTEE (THREE MEETINGS) -- Charles H. Pistor,
Jr., Chairman; William E. Bradford; Sylvia A. Earle; David S. Hollingsworth;
and Paul R. Seegers -- responsible for corporate governance processes and
Board practices; reviews the role, composition and structure of the Board and
its committees; recommends nominees for election to the Board; initiates the
Board's review of Board performance and the Board's evaluation of the
performance of the Chairman and Chief Executive Officer; and oversees planning
for the succession to senior executive positions.
COMPENSATION COMMITTEE (THREE MEETINGS) -- David S. Hollingsworth, Chairman;
David C. Genever-Watling; Robert B. Gill; Charles H. Pistor, Jr.; and Ian L.
White-Thomson -- supervises and administers the compensation and benefit
policies, practices and plans of the Company.
EXECUTIVE COMMITTEE (ONE MEETING) -- Robert L. Keiser, Chairman; Jerry W.
Box; William E. Bradford; Edward W. Moneypenny; and Charles H. Pistor, Jr. --
exercises the authority of the Board during the intervals between meetings of
the Board.
MLP COMMITTEE (FOUR MEETINGS) -- Jerry W. Box; Robert L. Keiser; and Edward
W. Moneypenny-- determines the frequency and amount of funding of Sun Energy
Partners, L.P.; and determines the frequency and amount of cash distributions
to be made by Sun Energy Partners, L.P. and the record dates of such
distributions.
During 1996 the directors attended 100 percent of Board and Committee
meetings.
STOCK OWNERSHIP GUIDELINES FOR DIRECTORS
The Company established stock ownership guidelines for its non-employee
directors in 1995. These voluntary guidelines were established to further
enhance the "stakeholder" interest of the directors in the Company and thus
more closely align their interests with those of stockholders. Under the
guidelines, non-employee directors are encouraged to own within a three-year
period Common Stock having an aggregate market value equal to at least three
times their annual retainer.
DIRECTORS' COMPENSATION
Directors (other than executive officers of the Company) are paid an annual
retainer of $24,000 plus $4,000 per year for each committee of which they are
chairman or $2,500 per year for each committee of which they are members.
These directors also receive an attendance fee of $1,000 for each Board
meeting, committee meeting or management meeting. Except as set forth in this
section, these directors do not receive remuneration from the Company.
Executive officers of the Company are not paid additional remuneration for
their services as directors.
Under the terms of the Equity and Deferred Compensation Plan for Non-
Employee Directors (the "Directors' Equity Plan"), effective July 1, 1996,
non-employee directors are paid one-half of their annual retainer in Common
Stock and are permitted to elect to apply up to 100 percent of the balance of
such retainer and all committee and meeting fees to the purchase of Common
Stock. Non-employee directors may elect to receive stock compensation in the
form of restricted Common Stock or Common Stock subject only to a six month
restriction on transfer. The restricted Common Stock will vest over a
specified period of time coincident with the director's term of office. Non-
employee directors have the right to extend the vesting period to the next
succeeding term of office.
6
<PAGE>
A director may elect to defer all or a portion of such director's cash
compensation into interest bearing accounts by filing a written election. All
deferred payments commence no earlier than the first day of any year which is
at least one year after the year in which compensation is earned and no later
than the third calendar year following retirement from the Board. Deferrals
are credited quarterly with interest equal to the rate of return from the
Company's CAP Stable Value Fund.
Directors serving at the time the Directors' Equity Plan became effective
received a one-time grant of 5,500 shares of Common Stock and newly-elected
directors receive a one-time grant of 5,000 shares of Common Stock upon
election. In addition, each person who is a non-employee director on the date
of and immediately following an annual meeting of stockholders receives an
annual grant of 500 shares of Common Stock.
Under the terms of the Directors' Equity Plan, benefits accrued under the
Non-Employee Directors' Retirement Plan ("Retirement Plan") were "frozen"
effective as of July 1, 1996. The Retirement Plan had provided for a
retirement benefit to directors who were not officers, present employees or
former employees of the Company or any of its affiliates and who had served on
the Board for at least five years. All current non-employee directors having
accrued benefits under the Retirement Plan elected to exchange their frozen
retirement benefits for shares of Common Stock. Following discharge of all
accrued benefits, the Retirement Plan was terminated.
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT-----------------------------------------------
The following table sets forth, as of December 31, 1996, the number of
shares of Common Stock beneficially owned (as defined by the Securities and
Exchange Commission ("SEC")) by each current director, by each executive
officer named in the Summary Compensation Table included herein who is not
also a director and by all directors and executive officers as a group. All
directors and executive officers as a group beneficially owned at such date
less than one percent of the outstanding Common Stock. For information
regarding guidelines on stock ownership of directors and executive officers
adopted by the Company in 1995, see "Information Concerning the Board of
Directors -- Stock Ownership Guidelines for Directors" and "Executive
Compensation -- Compensation Committee Report on Executive Compensation --
Stock Ownership Guidelines". No director or executive officer beneficially
owns any of the Company's 7 1/2% Convertible Subordinated Debentures Due 2014
or any depository units of Sun Energy Partners, L.P. ("Partnership Units") for
which the Company acts as Managing General Partner other than Paul R. Seegers
who owns 20,000 Partnership Units acquired in February, 1997.
<TABLE>
<CAPTION>
Shares of
Common
Stock
Beneficially
Name Owned (1)
- - -------------------------------------------------------------------------------
<S> <C>
Directors:
Jerry W. Box (2)(3)............................................. 157,809
William E. Bradford............................................. 15,079
Sylvia A. Earle................................................. 5,000
David C. Genever-Watling........................................ 5,000
Robert B. Gill.................................................. 15,008
David S. Hollingsworth.......................................... 21,654
Robert L. Keiser (2)(3)......................................... 399,303
Edward W. Moneypenny (2)(3)..................................... 168,902
Charles H. Pistor, Jr........................................... 12,293
Paul R. Seegers................................................. 23,547
Ian L. White-Thomson............................................ 10,220
Executive Officers Named in the Summary Compensation Table Other Than Those
Listed Above:
Frances G. Heartwell (2)(3)..................................... 38,013
William C. Lemmer (2)(3)........................................ 46,428
All directors and executive officers as a group
(16 persons including those named above) (2)(3)................ 970,940
</TABLE>
(1) As defined by the SEC, securities beneficially owned include: securities
that the above persons have the right to acquire at any time within 60
days after December 31, 1996, such as through the exercise of any option
or right or pursuant to an incentive award; securities directly or
indirectly held by the above persons or by certain members of their
families for which the above persons have sole or shared voting or
investment power; and shares of Common Stock held on behalf of the above
persons in the Company's CAP.
(2) The amounts shown include shares of Common Stock which the following
persons had the right to acquire within 60 days after December 31, 1996
through the exercise of options or pursuant to incentive awards under the
Company's long-term incentive plans: J.W. Box -- 138,107 shares; F. G.
Heartwell -- 29,270 shares; R.L. Keiser -- 254,280 shares; W.C. Lemmer --
31,850 shares; E.W. Moneypenny -- 154,374 shares; and all directors and
executive officers of the Company as a group -- 650,506 shares.
(3) Includes the following number of shares of restricted stock acquired
effective January 2, 1997 under the terms of the Company's executive bonus
plan: J.W. Box -- 3,832 shares; F.G. Heartwell-- 1,417 shares; R.L.
Keiser -- 21,771 shares; W.C. Lemmer -- 1,693 shares; E.W. Moneypenny --
3,628 shares; and all directors and executive officers of the Company as a
group -- 32,341 shares.
8
<PAGE>
EXECUTIVE COMPENSATION---------------------------------------------------------
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
To the Stockholders
Oryx Energy Company:
COMPENSATION PHILOSOPHY
The Company's philosophy is that total compensation for its Chief Executive
Officer ("Chairman/CEO"), and other executives, should be established by the
same process used for its other salaried employees, except that: (1)
executives should have a greater portion of their compensation at risk than
other employees, (2) a large portion of executive compensation should be tied
directly to the performance of the business and (3) executives should share in
the same risks and rewards as do stockholders of the Company.
The Company also believes that executive compensation should be subject to
objective review. This review is conducted by the Compensation Committee of
the Board of Directors ("Committee"). The Committee is comprised of five
directors, all of whom qualify as both a "non-employee director" and an
"outside director" under applicable regulatory definitions. Operating within
the framework of a mission statement approved by the Board of Directors, the
Committee's role is to assure that: (1) the compensation strategy of the
Company is aligned with the interests of the stockholders, (2) the Company's
compensation structure allows for fair and reasonable base salary levels and
(3) senior executives have the opportunity to earn short-term and long-term
compensation that reflects both Company and individual performance as well as
industry practice. The Committee utilizes the expertise of independent
compensation consultants in discharging its responsibilities.
STOCK OWNERSHIP GUIDELINES
To further support a key objective of the Company's stated compensation
philosophy, namely that of aligning the interests of executives with those of
stockholders, the Company established voluntary stock ownership guidelines for
its executive officers at the level of Vice President and senior in 1995.
Under these guidelines, the Chairman/CEO is expected to own within a five-year
period Common Stock having an aggregate market value equal to at least three
times his annual base salary and Vice Presidents are expected to own Common
Stock having an aggregate market value equal to at least their respective
annual base salaries. These stock ownership guidelines complement those
adopted for non-employee directors, as described on page 6 of this Proxy
Statement.
COMPENSATION PROGRAMS AND POLICIES
The Company's executive compensation programs are designed to attract,
motivate, reward and retain executives who are successful in helping the
Company achieve its business objectives. The Company operates in a mature
industry characterized by large capital investments, increasingly demanding
technology, government regulation, highly competitive global operating
environments and long-term investment cycles. Executive compensation programs
of the Company are designed to address these considerations and consist of
three major components:
BASE SALARY: For the Chairman/CEO and other executive officers, base
salary is determined by the level of job responsibility, the
competitiveness of the executives' salaries to the external marketplace and
the degree to which established objectives have been achieved. These three
general factors are not weighted.
It is the Company's practice to set base salary targets for each
executive at levels equivalent to the median (50th percentile) of
comparable oil and gas producers and general industry companies of similar
size, as measured by annual revenues. The Company participated in
one industry-specific survey of 29 companies and two general-industry
surveys of 436 and
9
<PAGE>
438 companies. The number of participants in each survey may vary from year
to year as companies change their focus, merge or are acquired. The results
of each survey are weighted equally.
Because of the lack of common performance criteria and the anonymity of
the data gathered, it is not possible to make a meaningful comparison on
the basis of performance of the surveyed companies. Therefore, the
Committee did not consider the performance of the surveyed companies used
to benchmark salaries.
It should be noted that the Company-selected peer group presented in the
performance graphs of cumulative total stockholder return on pages 18 and
19 of this Proxy Statement is a much smaller group than the one considered
appropriate by the Committee for determining compensation and recruiting
executive talent. However, except for four companies, each of the companies
named in footnote 3 to the performance graph on page 18 of this Proxy
Statement is included in the industry-specific survey discussed above.
Once the salary target is established for each executive position, the
Committee sets the actual salary based on its subjective appraisal of the
executives' performance with respect to the goals approved by the Committee
for each individual's area of responsibility. Adjustments to base salaries
of executive officers are customarily made prior to the commencement of the
year in which such adjustments take effect, and are based on the
Committee's assessment of performance and competitive factors at that time.
Decisions regarding annual incentives, discussed below, are made at the end
of the performance period.
ANNUAL INCENTIVES: Annual incentives for executive officers, if earned,
are paid under the terms of either the Executive Variable Incentive Plan
("Executive VIP") or Variable Incentive Plan ("VIP"). The Executive VIP
provides participants with the option of taking all or a portion of their
annual incentive awards in restricted Common Stock. All of the executive
officers listed in the Summary Compensation Table participated in the
Executive VIP in 1996. Both the Executive VIP and VIP are intended to
highlight crucial business objectives and promote the achievement of these
objectives through individual and team contributions at all levels of the
Company.
The Executive VIP and VIP goals and targeted performance levels for each
goal are established by the Committee and recommended to the full Board for
final approval at the beginning of the fiscal year in support of the
Company's annual strategic plan. Recent performance levels of the Company
and expected conditions within the oil and gas industry are taken into
account when goals and target levels are established. The goals for 1996,
which included both operational and financial measures, were as follows:
discretionary cash flow, operating income, cash expenses, production
volumes and proved reserve additions. In addition to these goals, certain
senior executives, including all the executive officers listed in the
Summary Compensation Table, had an additional goal of increasing
stockholder value as reflected by the share price of the Common Stock. Each
of these goals was weighted to provide balance appropriate for the year.
Executive VIP/VIP payments are made only upon the achievement of targeted
objectives and no payments are made if minimum thresholds are not met.
Annual target incentives for executive officers listed in the Summary
Compensation Table range from 35 to 60 percent of annual base salary. The
Committee has discretion under the Executive VIP to reduce payment, and
under the VIP to vary payments, around targeted amounts, or to forego
payments in full, based upon its subjective evaluation of the performance
of each executive officer and the Company.
The Company is seeking reapproval by stockholders of the Executive VIP,
as described on page 28 of this Proxy Statement. The Executive VIP was
approved by stockholders at the 1996 annual meeting by a 93 percent
affirmative vote. Reapproval by stockholders is being sought to comply with
the requirements of Internal Revenue Code Section 162(m) for "performance-
based compensation". In its final regulations, the Internal Revenue Service
required plans with salary-based formulas to disclose the actual dollar
amount of the maximum payout under the plan, and the only change made to
the plan as approved in 1996 is the addition of this actual dollar
limitation.
10
<PAGE>
LONG-TERM INCENTIVES: Long-term incentive awards are designed to more
closely align the interests of executives with those of stockholders. The
current long-term incentive plan was approved by stockholders in 1991 and
authorizes the use of a variety of stock-based forms of compensation. In
1996, long-term incentive awards consisted of nonqualified stock options
exclusively. The grant level to each participant, including the officers
listed in the Summary Compensation Table, was based on survey data provided
by a nationally-recognized consulting firm. The level of grant was targeted
at the 60th percentile of the general industry group which is composed of
376 companies, 15,290 participating individuals and 589 long-term incentive
plans. The group of 376 companies consists principally of Fortune 1000
entities which represent a broad cross-section of industries. Due to the
lack of common performance criteria and the anonymity of the data, no
consideration was given to relative company performance of the surveyed
companies in determining long-term incentive grants.
Stock options represent the right to purchase shares of Common Stock at
the fair market price of Common Stock on the date of grant. Unlike cash,
the value of a stock option award will not be immediately realized and will
depend on the market value of the Common Stock over time. The option value
ultimately realized will depend on the continued success of the Company and
serves to provide the executive an incentive for years after it has been
awarded.
The Company is seeking approval by stockholders of the 1997 Long-Term
Incentive Plan, as described on page 20 of this Proxy Statement, to replace
the current long-term incentive plan.
COMPANY PERFORMANCE AND CHAIRMAN/CEO COMPENSATION
Mr. Keiser was elected Chairman/CEO and President effective December 1,
1994, and his base salary was set at $475,000 and it remained unchanged
throughout 1995. Mr. Keiser informed the Committee that he would forgo any
increase in base salary the Committee might determine appropriate for 1996 in
favor of restricted Common Stock. The Committee concluded that Mr. Keiser
would have been entitled to an increase in base salary of $25,000. This
determination was made in accordance with the process discussed above under
"Base Salary" and the factors considered in making this determination were a
subjective evaluation of the scope of his responsibilities, Company
performance in 1995 and competitive pay practices. The number of shares
granted reflected adjustments for the impact of the loss of future earnings
resulting from having received no base salary increase, the impact on non-cash
compensation under other Company benefit plans and present value
considerations.
The Chairman/CEO's annual incentive award under the Executive VIP is based
on the Committee's assessment of the Company's performance in the goal areas
as described above in the discussion on annual incentives. The Committee
determined that Company performance in the five operational and financial goal
areas described above, in the aggregate, exceeded the target. The Committee
also determined that overall performance with respect to the operational,
financial and share price appreciation goals exceeded target levels for 1996.
The Committee determined Mr. Keiser's annual Executive VIP award for 1996
based on the excellent performance by the Company in the operational and
financial measures and the stock price performance, which is shown on page 19
of this Proxy Statement.
The long-term incentive awards for 1996 granted to Mr. Keiser consisted of
stock options exclusively. The level of award was determined to be competitive
at approximately the 60th percentile of general industry based on long-term
incentive expected value tables compiled by a nationally-recognized consulting
firm. The Committee used data from the consulting firm survey to determine the
appropriate prospective expected value of the stock options as a multiple of
salary for the position. The award was made on the same terms as described
above under "Long-Term Incentives."
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Company desires to preserve the tax deductibility of all compensation
paid to its executive officers and believes that all compensation paid to its
executive officers for the year 1996 is fully
11
<PAGE>
deductible. The long-term incentives granted by the Committee in 1996 qualify
as "performance-based compensation" under Internal Revenue Code Section
162(m). The Committee will make every effort to preserve the tax deductibility
of all executive compensation, consistent with the interests of the Company.
As described above, the Company is seeking reapproval by stockholders of the
Executive VIP, which is intended to qualify compensation paid thereunder as
performance-based compensation. In addition, the Company is seeking
stockholder approval of an amendment to the 1992 Long-Term Incentive Plan to
bring it into compliance with the requirements of Internal Revenue Code
Section 162(m).
SUMMARY
We, the members of the Committee, believe that the Company's compensation
policies have been successful in attracting, motivating, rewarding and
retaining qualified executives and in tying compensation to long-term
performance for stockholders. We will continue to monitor the effectiveness
and appropriateness of each of the components to reflect changes in the
business environment.
David S. Hollingsworth, Chairman
David C. Genever-Watling
Robert B. Gill
Charles H. Pistor, Jr.
Ian L. White-Thomson
12
<PAGE>
The following table sets forth certain summary information concerning the
compensation awarded to, earned by or paid to the Chairman/CEO of the Company
during 1996 and each of the four most highly compensated executive officers of
the Company during 1996 other than the Chairman/CEO (collectively, the "named
executive officers") for the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------ -------------------------------
Awards Payouts
----------------------- -------
Securities
Underlying All
Restricted Options/SARs Other
Name and Bonus Other Annual Stock (number of LTIP Compen-
Principal Position Year Salary (1) Compensation Awards (1) shares) (2) Payouts sation
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L. Keiser 1996(3) $473,720(4) $135,391 $28,503 $676,447 110,000 $ 0 $39,169
Chairman, Chief 1995 $473,720 $ 0(5) $75,278 $370,494 78,000 $ 0 $34,004
Executive Officer 1994 $358,712 $ 0 $20,844 $ 0 72,000 $ 0 $18,814
and President
Jerry W. Box 1996(6) $300,196 $214,470 $ 9,802 $ 92,926 50,000 $ 0 $26,098
Executive Vice 1995 $272,324 $102,466 $ 9,802 $ 44,375 42,000 $ 0 $19,261
President and 1994 $251,368 $ 0 $ 9,913 $ 0 41,500 $ 0 $11,642
Chief Operating Officer
Edward W. 1996(7) $284,232 $203,077 $11,514 $ 87,979 50,000 $ 0 $24,956
Moneypenny 1995 $264,264 $ 99,373 $10,010 $ 43,065 42,000 $ 0 $18,383
Executive Vice 1994 $244,400 $ 0 $10,088 $ 0 37,500 $ 0 $11,229
President, Finance, and
Chief Financial Officer
William C. Lemmer 1996(8) $189,488 $ 94,771 $14,333 $ 41,055 20,000 $ 0 $15,754
Vice President, 1995 $175,552 $ 46,200 $12,992 $ 20,021 11,000 $ 0 $10,570
General Counsel 1994 $162,964 $ 0 $ 7,440 $ 0 6,000 $ 0 $ 4,608
and Secretary
Frances G. 1996(9) $158,548 $ 79,303 $ 7,157 $ 34,362 15,000 $ 0 $13,508
Heartwell 1995 $142,836 $ 41,785 $ 268 $ 18,090 8,000 $ 0 $ 8,670
Vice President,
Human Resources and
Administration
</TABLE>
(1) The amounts shown in the Bonus column for 1996 represent the cash amounts
awarded under the Executive VIP, the Company's executive bonus plan. All
named executive officers elected to receive part of their bonus for 1996
in restricted Common Stock rather than cash. The restricted Common Stock
was acquired under the terms of the Executive VIP and included a 30
percent premium in recognition of the election to forego cash
compensation. The restrictions on the restricted Common Stock require
continued employment (absent a permitted acceleration event) for a three-
year period after which time the restrictions lapse. For all named
executive officers other than Mr. Keiser, the amounts shown in the
Restricted Stock Awards column represent the market value as of January 2,
1997 of the restricted Common Stock taken in lieu of their cash bonuses.
The amount shown for Mr. Keiser represents the market value as of January
2, 1997 of the restricted Common Stock taken in lieu of his cash bonus
plus an amount reflecting shares received in lieu of a cash base salary
increase (see footnote 4 below).
(2) Options represent the right to purchase shares of Common Stock at a fixed
price per share and were granted with an equal number of limited rights.
Limited rights are rights that become immediately and fully exercisable
upon a "change in control" of the Company and entitle the recipient to
receive a cash payment equal to the excess of the then market price of the
Common
13
<PAGE>
Stock over the exercise price of the related option. See footnote 2 to the
Option/SAR Grants in 1996 table included elsewhere herein for additional
information on option terms. Options granted in 1994 were also granted with
a "reload" feature which permits the recipient to tender shares of Common
Stock at then current market value in payment of the option exercise price
and receive, in addition to the shares of Common Stock purchased upon
exercise of the option, a new option to purchase a number of shares of
Common Stock equal to the number of shares of Common Stock so tendered at
the then current market price per share. A stock appreciation right ("SAR")
is a right attached to a stock option which allows the holder of the option
to be paid, in cash or shares of Common Stock depending upon when the right
is exercised, an amount equal to the appreciation of the underlying Common
Stock in lieu of exercising the option. No SAR's were granted during any of
the years presented.
(3) The amount shown as All Other Compensation for Mr. Keiser for 1996
consists of Company contributions to defined contribution plans of $30,414
($16,186 in cash and an allocation of 574.87 shares of Common Stock valued
at $14,228 using the December 31, 1996 closing price) and term life
insurance premiums of $8,755.
(4) The Committee determined Mr. Keiser was entitled to receive a cash base
salary increase of $25,000 for 1996. Acting on the request of Mr. Keiser,
the Committee did not increase his base salary but in lieu thereof awarded
him a number of shares of restricted Common Stock based on this amount and
adjustments for the impact of the loss of future earnings resulting from
having received no base salary increase, the impact on non-cash
compensation under other Company benefit plans and present value
considerations. He received 11,000 shares on January 2, 1996 which had a
market value as of that date of $13.50 per share.
(5) Mr. Keiser elected to receive 100 percent of his bonus for 1995 in
restricted Common Stock.
(6) The amount shown as All Other Compensation for Mr. Box for 1996 consists
of Company contributions to defined contribution plans of $20,897 ($7,510
in cash and an allocation of 540.89 shares of Common Stock valued at
$13,387 using the December 31, 1996 closing price) and term life insurance
premiums of $5,201.
(7) The amount shown as All Other Compensation for Mr. Moneypenny for 1996
consists of Company contributions to defined contribution plans of $20,031
($6,712 in cash and an allocation of 538.14 shares of Common Stock valued
at $13,319 using the December 31, 1996 closing price) and term life
insurance premiums of $4,925.
(8) Mr. Lemmer became an executive officer June 1, 1994. The amount shown as
All Other Compensation for 1996 consists of Company contributions to
defined contribution plans of $14,660 ($1,974 in cash and an allocation of
512.55 shares of Common Stock valued at $12,686 using the December 31,
1996 closing price) and term life insurance premiums of $1,094.
(9) Ms. Heartwell became an executive officer December 7, 1995. The amount
shown as All Other Compensation for 1996 consists of Company contributions
to defined contribution plans of $12,592 ($427 in cash and an allocation
of 491.52 shares of Common Stock valued at $12,165 using the December 31,
1996 closing price) and term life insurance premiums of $916.
14
<PAGE>
The following table sets forth certain information with respect to options
to purchase Common Stock and SARs granted during the year ended December 31,
1996 to each of the named executive officers.
OPTION/SAR GRANTS IN 1996 (1)
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------
Number of
Securities Percent of Potential Realizable Value at
Underlying Total Assumed Annual Rates of Stock
Options/SARs Options Price Appreciation for Option
Granted Granted to Exercise or Term (3)
Name (number of Employees Base Price Expiration ------------------------------
shares) (2) in 1996 Per Share Date (2) 5 Percent (4) 10 Percent (5)
- - ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. Keiser 110,000 24.8 $13.50 12/31/2005 $ 933,909 $ 2,366,708
Jerry W. Box 50,000 11.3 $13.50 12/31/2005 $ 424,504 $ 1,075,776
Edward W. Moneypenny 50,000 11.3 $13.50 12/31/2005 $ 424,504 $ 1,075,776
William C. Lemmer 20,000 4.5 $13.50 12/31/2005 $ 169,802 $ 430,310
Frances G. Heartwell 15,000 3.4 $13.50 12/31/2005 $ 127,351 $ 322,733
</TABLE>
(1) No SAR grants were made in 1996.
(2) Options represent the right to purchase shares of Common Stock at a fixed
price per share and were granted with limited rights and have a ten year
term. The options vest at the rate of 25 percent per year commencing on
the first anniversary of the grant date, except in the case of retirement
or permanent disability in which case the options fully vest and are
exercisable for a period of up to 36 months after such retirement or
disability. Option vesting is accelerated with respect to 50 percent of
the options granted if the fair market value of the Common Stock is at
least $18.50 per share on each of 30 consecutive trading days and option
vesting is accelerated with respect to 100 percent of the options granted
if the fair market value of the Common Stock is at least $23.50 per share
on each of 30 consecutive trading days. On November 22, 1996, 50 percent
of the options granted in 1996 became exercisable.
(3) The values shown are based on the indicated assumed annual rates of
appreciation compounded annually. Actual gains realized, if any, on stock
option exercises and Common Stock holdings are dependent on the future
performance of the Common Stock and overall stock market conditions. Any
benefit to named executive officers resulting from the appreciation of the
market price of the Common Stock will benefit all stockholders of the
Company commensurately. There can be no assurance that the values shown in
this table will be achieved.
(4) Represents an assumed market price per share of Common Stock of $21.99
calculated by multiplying the exercise price of $13.50 by the growth
assumption of 5 percent.
(5) Represents an assumed market price per share of Common Stock of $35.02
calculated by multiplying the exercise price of $13.50 by the growth
assumption of 10 percent.
15
<PAGE>
The following table shows information with respect to the exercise of
options to purchase Common Stock and SARs during the year ended December 31,
1996 and the unexercised options held at December 31, 1996 and the value
thereof, by each of the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN 1996
AND 12/31/96 OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Acquired Options/SARs at 12/31/96 Options/SARs at
on Exercise (shares) (1) 12/31/96 (1)
(number of Value ------------------------- -------------------------
Name shares) Realized Exercisable Unexercisable Exercisable Unexercisable
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Keiser 0 $ 0 205,082 161,198 $1,278,523 $1,658,407
Jerry W. Box 35,000 $304,719 111,464 83,018 $ 232,037 $ 849,270
Edward W. Moneypenny 10,500 $ 84,656 128,731 81,018 $ 492,397 $ 835,150
William C. Lemmer 2,750 $ 23,547 26,334 22,516 $ 149,676 $ 242,024
Frances G. Heartwell 0 $ 0 24,454 17,866 $ 148,257 $ 186,683
</TABLE>
(1) Options represent the right to purchase shares of Common Stock at a fixed
price per share.
DEFINED BENEFIT PLANS
The defined benefit plans of the Company that cover the named executive
officers provide the benefits shown below. The estimates assume that benefits
are received in the form of a single life annuity with 50 percent continuing
after the death of the employee for the life of his or her spouse. The
following table sets forth the benefit amounts at December 31, 1996.
<TABLE>
<CAPTION>
Estimated Annual Benefits Upon Retirement at
Age 65
After Completion of the Following Years of
Service
--------------------------------------------
35 Years
Final Average Compensation (1) 15 Years 20 Years 25 Years 30 Years or More
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 100,000...................... $ 37,500 $ 45,000 $ 52,500 $ 60,000 $ 65,000
$ 200,000...................... $ 75,000 $ 90,000 $105,000 $120,000 $130,000
$ 300,000...................... $112,500 $135,000 $157,500 $180,000 $195,000
$ 400,000...................... $150,000 $180,000 $210,000 $240,000 $260,000
$ 550,000...................... $206,250 $247,500 $288,750 $330,000 $357,500
$ 700,000...................... $262,500 $315,000 $367,500 $420,000 $455,000
$ 800,000...................... $300,000 $360,000 $420,000 $480,000 $520,000
$1,000,000..................... $375,000 $450,000 $525,000 $600,000 $650,000
</TABLE>
(1) Benefit amounts under the Company's Executive Retirement Plan are based
exclusively on base salary and guideline bonus amounts. Final Average
Compensation is the average of the base salary plus guideline bonus
amounts in the highest three consecutive years during the last 10 years of
service. The amounts reported in the Summary Compensation Table under
Salary and Bonus reflect total cash compensation for the years indicated.
The 1996 considered compensation for the named executive officers is as
follows: R.L. Keiser -- $759,992; J.W. Box -- $451,506; E.W. Moneypenny --
$427,496; W.C. Lemmer -- $256,497; and F.G. Heartwell -- $214,616.
Retirement benefits shown above are amounts calculated before any Social
Security offset. The Social Security offset is equal to 1 percent of primary
Social Security benefits for each year of participation in the Company's
Retirement Plan up to 30 years, or a maximum offset of 30 percent of primary
Social Security benefits.
16
<PAGE>
Credited years of service for the named executive officers are as follows:
R.L. Keiser -- 31; J.W. Box -- 28; E.W. Moneypenny -- 20; W.C. Lemmer -- 18;
and F.G. Heartwell -- 23.
SEVERANCE PLANS AND ARRANGEMENTS
The Special Executive Severance Plan provides severance benefits to the
named executive officers in the event of their "termination of employment"
within two years of a "corporate change" (as such terms are defined in the
Special Executive Severance Plan). A "corporate change" is defined to include
for example, a merger, sale of all or substantially all of the assets or a
change in control of the Company. The Compensation Committee has the authority
to designate, or delegate to the Company's Chief Executive Officer the
authority to designate, other officers to participate in the Special Executive
Severance Plan. Benefits under the Special Executive Severance Plan are set
forth in individual Executive Severance Agreements, the form of which is the
same for each participant.
All Executive Severance Agreements have a term of two years, with automatic
extensions for successive two-year periods unless terminated by the Company.
Severance benefits include payment of an amount up to three times the
participant's final annual compensation upon a termination of employment
following a "corporate change" of the Company. The terms of the Special
Executive Severance Plan also provide that if any payments made to the
executive officer, whether or not made under the Special Executive Severance
Plan, would cause the executive officer to be subject to an excise tax because
the payment is a "parachute payment" (as defined in the Internal Revenue Code)
then the Company will pay the executive officer an Excise Tax Premium (as
defined in the Special Executive Severance Plan) in a sufficient amount to
make the executive officer whole with respect to any additional tax that would
not have been payable except due to a payment on a corporate change.
As of December 31, 1996, payments under the Special Executive Severance Plan
to the named executive officers would have been as follows: R.L. Keiser --
$2,279,976; J.W. Box -- $1,354,518; E.W. Moneypenny -- $1,282,487; W.C.
Lemmer -- $769,492; and F.G. Heartwell -- $643,849 (without regard to the
Excise Tax Premiums).
These individuals would also be entitled to supplemental benefits such as
the continuation of insurance, the cost of which would not be significant in
relation to the aggregate payments. In addition, these individuals would be
entitled to the payment of counsel fees reasonably necessary to enforce the
Executive Severance Agreement, the value of which cannot be estimated at this
time.
In addition to the Special Executive Severance Plan, which is operational
only in the event of a "corporate change", the Company has an employee
severance plan applicable to specified terminations. Severance pay under this
plan could exceed $100,000 where applicable to certain long-service, higher-
paid employees.
17
<PAGE>
PERFORMANCE GRAPHS
The following graph sets forth the cumulative total stockholder return for
Common Stock, the S&P 500 Index and a Company-selected peer group index as
prescribed by the SEC's rules. The companies included in the peer group index
are publicly traded exploration and production companies having large oil and
gas reserves.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN (1)
AMONG ORYX ENERGY COMPANY, S&P 500 INDEX AND PEER GROUP INDEX (2)
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- - ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 $100 $108 $118 $120 $165 $203
Peer Group (3) $100 $115 $153 $131 $171 $245
Oryx Energy Company $100 $ 79 $ 71 $ 49 $ 55 $102
- - ---------------------------------------------------------------------
</TABLE>
(1) Assumes $100 invested on January 1, 1992 at December 31, 1991 closing
price in Common Stock, the S&P 500 Index and a Company-selected peer group
index. Total return assumes reinvestment of dividends.
(2) Fiscal year ending December 31.
(3) In accordance with the SEC's rules, the Company elected to select peer
group companies on an industry basis for comparison purposes. The peer
group is composed of 13 industry participants: Anadarko Petroleum
Corporation, Apache Corporation, Burlington Resources Inc., Enron Oil &
Gas Company, Louisiana Land and Exploration Company, Noble Affiliates,
Inc., Oryx Energy Company, Parker & Parsley Petroleum Company, Santa Fe
Energy Resources, Inc., Seagull Energy Corporation, Union Pacific
Resources Group Inc., Union Texas Petroleum Holdings, Inc. and Vastar
Resources, Inc. On June 30, 1992, Burlington Resources Inc. spun-off its
ownership of El Paso Natural Gas Company to its stockholders and, due to
this transaction, Burlington Resources Inc. has been included only for the
period of time subsequent to the date of this transaction. In addition,
Santa Fe Energy Resources, Inc., Union Pacific Resources Group Inc. and
Vastar Resources, Inc. have been included only for the period of time
during which their stock has been publicly traded. Total return
calculations were weighted according to the respective company's market
capitalization at the beginning of each period for which a return was
calculated. The initial period returns of Burlington Resources Inc., Santa
Fe Energy Resources, Inc., Union Pacific Resources Group Inc. and Vastar
Resources, Inc. were weighted using market capitalizations calculated with
the first available quarter-end data closest to their inclusion in the
peer group.
18
<PAGE>
The second graph has been voluntarily included to show total stockholder
return by quarter since January 1995 when the Company named a new Chairman/CEO
and announced its new corporate direction which included a plan to refocus its
strategic direction, reduce debt, reposition assets and restore profitability
by lowering costs at all levels. The peer group companies selected by the
Company for this graph are the same as those selected for the above graph
prescribed by the SEC's rules.
[GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE TOTAL RETURN (1)
AMONG ORYX ENERGY COMPANY, S&P 500 INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Dec-94 Mar-95 Jun-95 Sep-95 Dec-95 Mar-96 Jun-96 Sep-96 Dec-96
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
S&P 500 $100 $110 $120 $130 $137 $145 $151 $156 $169
Peer Group (3) $100 $114 $111 $111 $122 $127 $144 $141 $166
Oryx Energy
Company $100 $106 $116 $109 $113 $117 $137 $149 $208
- - --------------------------------------------------------------------------------
</TABLE>
(1) Assumes $100 invested on January 1, 1995 at December 30, 1994 closing
price in Common Stock, the S&P 500 Index and a Company-selected peer group
index. Total return assumes reinvestment of dividends.
19
<PAGE>
APPROVAL OF INDEPENDENT ACCOUNTANTS--------------------------------------------
ITEM NUMBER 2 ON PROXY CARD
Coopers & Lybrand L.L.P. has served for many years as independent
accountants for the Company and for Sun Energy Partners, L.P. The Audit
Committee has recommended and the Board has approved the appointment of
Coopers & Lybrand L.L.P. as independent accountants for the Company for fiscal
year 1997, subject to the approval of stockholders.
At the Meeting, a vote will be taken on a proposal to approve such
appointment. While there is no legal requirement that this proposal be
submitted to stockholders, the Board believes that the selection of
independent accountants to audit the financial statements of the Company is of
sufficient importance to seek stockholder approval. In the event a majority of
the shares of Common Stock present in person or represented by proxy vote at
the Meeting is not voted in favor of the approval of Coopers & Lybrand L.L.P.,
the Board will reconsider its appointment of independent accountants of the
Company.
It is expected that representatives of Coopers & Lybrand L.L.P. will be
present at the Meeting with the opportunity to make a statement if they desire
and will be available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS APPOINTMENT.
APPROVAL OF 1997 LONG-TERM INCENTIVE PLAN--------------------------------------
ITEM NUMBER 3 ON PROXY CARD
INTRODUCTION
On February 6, 1997, the Board adopted, subject to the approval of the
stockholders of the Company, the Oryx Energy Company 1997 Long-Term Incentive
Plan (the "Plan"). If approved by the stockholders, the Plan will replace the
Company's 1992 Long-Term Incentive Plan (the "1992 LTIP"). The Plan is similar
to the 1992 LTIP in that it provides for the granting of incentive and
nonqualified stock options, limited rights, restricted stock and dividend
equivalents. The Board believes that the Company's long-term incentive plans
provide an important means of attracting, retaining and motivating key
personnel and recommends that stockholders approve the Plan. Because directors
and executive officers of the Company are eligible to receive awards under the
Plan, each of them has a personal interest in the adoption of this proposal.
SUMMARY OF THE PLAN
A copy of the Plan is attached to this Proxy Statement as Exhibit A. The
following summary of the Plan is qualified in its entirety by reference
thereto.
Purposes. The purposes of the Plan are to attract able persons to enter the
employ of the Company, to encourage employees to remain in the employ of the
Company and to provide motivation to employees to put forth maximum efforts
toward the continued growth, profitability and success of the Company, by
providing incentives to such persons through the ownership and performance of
the Common Stock. A further purpose of the Plan is to provide a means through
which the Company may attract able persons to become directors of the Company
and to provide directors with additional incentive and reward opportunities
designed to strengthen their concern for the welfare of the Company and its
stockholders.
Administration. The Plan provides for administration by the Compensation
Committee of the Board (the "Committee"), provided that each member of the
Committee must be both a "non-employee director" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act") and an
"outside director" within the meaning of Treasury Regulation Section 1.162-
27(e)(3) interpreting Section 162(m) of the Internal Revenue Code of 1986 (the
"Code"). Among the powers granted to the Committee are the authority to
interpret the Plan, establish rules and regulations for its operation, select
eligible persons to receive awards under the Plan and determine
20
<PAGE>
the form and amount and other terms and conditions of such awards.
Notwithstanding the authority delegated to the Committee to administer the
Plan, the Board is given exclusive authority, subject to the express
provisions of the Plan, to grant awards under the Plan to non-employee
directors of the Company and to determine the amount, terms and conditions of
such awards. However, the Board has no authority under the Plan to select and
grant awards to employees of the Company, and such authority is vested
exclusively in the Committee. The Plan authorizes the Committee to delegate
its authority under the Plan in certain circumstances; provided, however, that
only the Committee may select and grant awards to employees who are subject to
Section 16 of the Exchange Act or who are "covered employees", as defined in
Section 162(m) of the Code.
Eligibility for Participation. All employees of the Company and its
subsidiaries (other than persons employed on a temporary or seasonal basis
while in a temporary or seasonal status) and all non-employee directors of the
Company are eligible to be selected to participate in the Plan. The selection
of employees is within the discretion of the Committee, and the selection of
non-employee directors is within the discretion of the Board. In making this
selection, the Committee and the Board may give consideration to the functions
and responsibilities of the participant, his or her past, present and
potential contributions to the growth and success of the Company and such
other factors deemed relevant by the Committee or the Board. No employee is
entitled to receive an award unless selected by the Committee, and no non-
employee director is entitled to receive an award unless selected by the
Board.
Types of Awards. The Plan provides for the grant of any or all of the
following types of awards: (i) stock options, including incentive stock
options; (ii) limited rights; (iii) restricted stock; (iv) dividend
equivalents; and (v) other incentive awards. Such awards may be granted
singly, in combination or in tandem as determined by the Committee or the
Board. All awards shall be subject to the terms, conditions, restrictions and
limitations of the Plan, except that the Committee or the Board may, in its
sole judgment, subject any award to such other terms, conditions, restrictions
and limitations as it deems appropriate, provided they are not inconsistent
with the terms of the Plan.
Available Shares. The maximum number of shares of Common Stock that shall be
available for grant of awards under the Plan shall not exceed 5,000,000,
subject to adjustment in accordance with the provisions of the Plan. Shares of
Common Stock issued pursuant to the Plan may be shares of original issuance or
treasury shares or a combination thereof.
The Committee shall have full discretion to determine the manner in which
shares of Common Stock available for grant of awards under the Plan are
counted. In the absence of Committee action, the Plan sets forth certain rules
applicable for this purpose. For example, in general, unless otherwise
determined by the Committee, shares of Common Stock related to awards which
terminate by expiration, forfeiture or cancellation without the issuance of
shares shall again be available for grant under the Plan. In addition, if
shares of Common Stock are delivered or withheld to pay the exercise price of
an award or to pay withholding taxes payable upon exercise, vesting or payment
of an award, the number of shares available for grant of awards other than
incentive stock options under the Plan shall be increased by the number of
shares delivered or withheld as payment of such exercise price or withholding
taxes.
If the Company shall effect a subdivision or a consolidation of shares of
Common Stock or the payment of a stock dividend on Common Stock without
receipt of consideration by the Company, the number of shares of Common Stock
with respect to which outstanding awards granted under the Plan may thereafter
be exercised or satisfied, and the exercise prices thereof, shall be
proportionately adjusted. In the event of changes in the outstanding Common
Stock by reason of recapitalizations, reorganizations, mergers,
consolidations, combinations, separations (including a spin-off or other
distribution of stock or property), exchanges or other relevant changes in
capitalization, outstanding awards under the Plan shall be subject to
adjustment by the Committee at its discretion as to the number, price and kind
of shares or other consideration subject to, and other terms of, such awards
to reflect such changes in the outstanding Common Stock. Also, in the event of
any such changes in the outstanding Common Stock, the aggregate number of
shares available for grant of awards under the Plan may be equitably adjusted
by the Committee.
21
<PAGE>
The maximum number of shares of Common Stock for which stock options and
limited rights may be granted under the Plan to any one employee during a
calendar year is 500,000.
As of March 21, 1997, the closing sales price of the Common Stock as
reported on the New York Stock Exchange composite tape was $19 3/8 per share.
Stock Options. Awards may be granted under the Plan in the form of options
to purchase shares of Common Stock. These options may be nonqualified stock
options or incentive stock options, or a combination of both; provided,
however, that no incentive stock options shall be granted later than ten years
from the date of adoption of the Plan by the Board and only employees shall be
eligible to receive incentive stock options. The Committee or the Board will,
with regard to each stock option, determine the number of shares subject to
the option, the manner and time of the option's exercise and the exercise
price per share of Common Stock subject to the option. In no event, however,
may the exercise price of a stock option be less than 100% of the fair market
value of the Common Stock on the effective date of the option's grant. The
term of each option shall be as specified by the Committee or the Board,
provided that, unless otherwise designated by the Committee or the Board, no
option shall be exercisable later than ten years from the effective date of
the option's grant. Options granted in the form of incentive stock options are
designed to comply with Section 422(b) of the Code. Upon exercise of an
option, the exercise price may be paid by a participant in cash or an
equivalent acceptable to the Committee or by delivering previously acquired
shares of Common Stock or, in the case of nonqualified stock options, by
withholding shares which otherwise would be acquired on exercise. In addition,
any grant of a nonqualified stock option under the Plan may provide that
payment of the exercise price of such option may also be made in whole or in
part in the form of shares of Common Stock subject to risk of forfeiture or
other restrictions on transfer.
Limited Rights. Limited rights may be granted under the Plan to any
participant who is granted an option under the Plan. A limited right may be
exercised only during the 30-day period beginning on the date of a change in
control (as defined in the Plan) of the Company and, in the case of limited
rights related to an incentive stock option, only when the fair market value
of the Common Stock (determined as of the date of exercise of the limited
right) exceeds the exercise price of the related option. Upon the exercise of
a limited right related to a nonqualified stock option, the holder shall
receive cash equal to the excess over the exercise price of the related option
of the higher of (i) the highest gross price paid or to be paid for a share of
Common Stock involved in the change in control or (ii) the highest reporting
closing sales price of a share of Common Stock on the New York Stock Exchange,
in each case during the 60-day period before the date on which the limited
right is exercised, multiplied by the number of shares of Common Stock with
respect to which the limited right is exercised. Upon the exercise of a
limited right related to an incentive stock option, the holder shall receive
cash equal to the excess of the fair market value of a share of Common Stock
on the date of exercise of the limited right over the exercise price of the
related option, multiplied by the number of shares of Common Stock with
respect to which the limited right is exercised. Each limited right shall be
exercisable only to the same extent that the related option is exercisable,
and in no event after termination of the related option. Upon the exercise of
limited rights, the related option shall be deemed to have terminated to the
extent of the number of shares of Common Stock with respect to which such
limited rights are exercised. Upon the exercise or termination of the related
option, the limited rights with respect to such related option shall be deemed
to have terminated to the extent of the number of shares of Common Stock with
respect to which the related option was exercised or terminated.
Restricted Stock. Awards may be granted under the Plan in the form of shares
of restricted stock. The Committee or the Board will determine the nature and
extent of the restrictions on such shares, the duration of such restrictions
and any circumstances under which such shares will be forfeited. Subject to
the Committee's or the Board's discretion, during any such period of
restriction, holders of shares of restricted stock will have the right to
receive dividends on and to vote such shares. At the time of an award of
restricted stock, the Committee or the Board will determine the effect on such
restricted stock of any termination of employment or service of the holder of
such restricted stock prior to the lapse of the applicable restrictions.
22
<PAGE>
Dividend Equivalents. Dividend equivalents may be granted to participants
under the Plan, either as a component of another award or as a separate award.
In general, and subject to such terms, conditions, restrictions and
limitations as the Committee or the Board may establish, an award of dividend
equivalents shall confer upon the participant a right to receive, in the event
of a cash or stock dividend or other distribution paid or made on the Common
Stock, an amount equal to the dividend or other distribution that would have
been received by the participant had the shares of Common Stock covered by the
award been issued and outstanding on the record date established for such
dividend or other distribution. Dividend equivalents may be paid in cash,
shares of Common Stock, other awards under the Plan or other property, or a
combination thereof, in a single payment or in installments, and at such time
or times as the Committee or the Board shall determine.
Other Incentive Awards. The Committee or the Board may grant other incentive
awards under the Plan based upon, payable in or otherwise related to, in whole
or in part, shares of Common Stock if the Committee or the Board determines
that such other incentive awards are consistent with the purposes of the Plan.
Payment of other incentive awards shall be made at such times and in such
forms, which may be cash, shares of Common Stock or other property, as
established by the Committee or the Board.
Corporate Change. The Plan provides that, in the event of a corporate change
(defined in the Plan to include the dissolution or liquidation of the Company,
certain reorganizations, mergers or consolidations of the Company, the sale of
all or substantially all the assets of the Company or the occurrence of a
change in control of the Company), unless otherwise provided in the related
award agreement, (i) each option then outstanding under the Plan shall become
exercisable in full, (ii) all restrictions (other than restrictions imposed by
law) and conditions of all restricted stock, dividend equivalents and other
incentive awards then outstanding under the Plan shall be deemed satisfied and
(iii) all other criteria and objectives the attainment of which are a pre-
condition to exercise, vesting, payment or settlement of all dividend
equivalents and other incentive awards then outstanding under the Plan shall
be deemed fully satisfied at the maximum criteria levels.
Amendment. The Board may at any time suspend, terminate, amend or modify the
Plan, provided that no amendment or modification shall become effective
without the approval of such amendment or modification by the stockholders of
the Company if the Company determines that such stockholder approval is
necessary or desirable. No suspension, termination, amendment or modification
of the Plan shall adversely affect in any material way any award previously
granted under the Plan, without the consent of the participant holding such
award (except that such consent shall not be required in the case of an
amendment or modification required following a change in law or interpretation
thereof to cause options and limited rights under the Plan to continue to
qualify as "performance-based compensation" within the meaning of Section
162(m) of the Code).
Effectiveness. The Plan will become effective on the date it is approved by
the stockholders of the Company. The Plan has no fixed expiration date. Upon
approval of the Plan by the stockholders of the Company, no further awards
shall be granted under the 1992 LTIP except to the extent required pursuant to
the terms of any awards outstanding under the 1992 LTIP on the date of such
approval and except for any grants of restricted stock authorized prior to the
date of such approval by the committee administering the 1992 LTIP.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is based upon an analysis of the Internal Revenue Code
as currently in effect (the "Code"), existing laws, judicial decisions,
administrative rulings, regulations and proposed regulations, all of which are
subject to change. Moreover, the following is only a summary of federal income
tax consequences and the federal income tax consequences to participants may
be either more or less favorable than those described below depending on their
particular circumstances.
Incentive Stock Options. No income will be recognized by an optionee for
federal income tax purposes upon the grant or exercise of an incentive stock
option. The basis of shares transferred to an optionee pursuant to the
exercise of an incentive stock option is the price paid for the shares. If the
23
<PAGE>
optionee holds the shares for at least one year after transfer of the shares
to the optionee and two years after the grant of the option, the optionee will
recognize capital gain or loss upon sale of the shares received upon the
exercise equal to the difference between the amount realized on the sale and
the basis of the stock. Generally, if the shares are not held for that period,
the optionee will recognize ordinary income upon disposition in an amount
equal to the excess of the fair market value of the shares on the date of
exercise over the amount paid for such shares, or if less (and if the
disposition is a transaction in which loss, if any, will be recognized), the
gain on disposition. Any additional gain realized by the optionee upon such
disposition will be a capital gain.
The excess of the fair market value of shares received upon the exercise of
an incentive stock option over the option price for the shares is an item of
adjustment for the optionee for purposes of the alternative minimum tax.
The Company is not entitled to a deduction upon the exercise of an incentive
stock option by an optionee. If the optionee disposes of the shares received
pursuant to such exercise prior to the expiration of one year following
transfer of the shares to the optionee or two years after grant of the option,
however, the Company may, subject to the deduction limitations described
below, deduct an amount equal to the ordinary income recognized by the
optionee upon disposition of the shares at the time such income is recognized
by the optionee.
If an optionee uses already owned shares of Common Stock to pay the exercise
price for shares under an incentive stock option, the resulting tax
consequences will depend upon whether the already owned shares of Common Stock
are "statutory option stock", and, if so, whether such statutory option stock
has been held by the optionee for the applicable holding period referred to in
Section 424(c)(3)(A) of the Code. In general, "statutory option stock" (as
defined in Section 424(c)(3)(B) of the Code) is any stock acquired through the
exercise of an incentive stock option, a qualified stock option, an option
granted pursuant to an employee stock purchase plan or a restricted stock
option, but not stock acquired through the exercise of a non-statutory option.
If the stock is statutory option stock with respect to which the applicable
holding period has been satisfied, no income will be recognized by the
optionee upon the transfer of such stock in payment of the exercise price of
an incentive stock option. If the stock is not statutory option stock, no
income will be recognized by the optionee upon the transfer of the stock
unless the stock is not substantially vested within the meaning of the
regulations under Section 83 of the Code (in which event it appears that the
optionee will recognize ordinary income upon the transfer equal to the amount
by which the fair market value of the transferred shares exceeds their basis).
If the stock used to pay the exercise price of an incentive stock option is
statutory option stock with respect to which the applicable holding period has
not been satisfied, the transfer of such stock will be a disqualifying
disposition described in Section 421(b) of the Code which will result in the
recognition of ordinary income by the optionee in an amount equal to the
excess of the fair market value of the statutory option stock at the time the
incentive stock option covering such stock was exercised over the amount paid
for such stock. Under the present provisions of the Code, it is not clear
whether all shares received upon the exercise of an incentive stock option
with already-owned shares will be statutory option stock or how the optionee's
basis will be allocated among such shares.
Nonqualified Stock Options. No income will be recognized by an optionee for
federal income tax purposes upon the grant of a nonqualified stock option.
Upon exercise of a nonqualified stock option, the optionee will recognize
ordinary income in an amount equal to the excess of the fair market value of
the shares on the date of exercise over the amount paid for such shares.
Income recognized upon the exercise of nonqualified stock options will be
considered compensation subject to withholding at the time the income is
recognized, and, therefore, the Company must make the necessary arrangements
with the optionee to ensure that the amount of the tax required to be withheld
is available for payment. Nonqualified stock options are designed to provide
the Company with a deduction equal to the amount of ordinary income recognized
by the optionee at the time of such recognition by the optionee, subject to
the deduction limitations described below.
The basis of shares transferred to an optionee pursuant to exercise of a
nonqualified stock option is the price paid for such shares plus an amount
equal to any income recognized by the optionee as a result of the exercise of
the option. If an optionee thereafter sells shares acquired upon exercise of a
24
<PAGE>
nonqualified stock option, any amount realized over the basis of the shares
will constitute capital gain to the optionee for federal income tax purposes.
If an optionee uses already owned shares of Common Stock to pay the exercise
price for shares under a nonqualified stock option, the number of shares
received pursuant to the nonqualified stock option which is equal to the
number of shares delivered in payment of the exercise price will be considered
received in a nontaxable exchange, and the fair market value of the remaining
shares received by the optionee upon the exercise will be taxable to the
optionee as ordinary income. If the already owned shares of Common Stock are
not "statutory option stock" or the statutory option stock with respect to
which the applicable holding period referred to in Section 424(c)(3)(A) of the
Code has been satisfied, the shares received pursuant to the exercise of the
nonqualified stock option will not be statutory option stock and the
optionee's basis in the number of shares received in exchange for the stock
delivered in payment of the exercise price will be equal to the basis of the
shares delivered in payment. The basis of the remaining shares received upon
the exercise will be equal to the fair market value of the shares. However, if
the already owned shares of Common Stock are statutory option stock with
respect to which the applicable holding period has not been satisfied, it is
not presently clear whether the exercise will be considered a disqualifying
disposition of the statutory option stock, whether the shares received upon
such exercise will be statutory option stock, or how the optionee's basis will
be allocated among the shares received.
Limited Rights. There will be no federal income tax consequences to either
the participant or the Company upon the grant of limited rights. Generally,
the participant will recognize ordinary income subject to withholding upon the
receipt of payment pursuant to limited rights in an amount equal to the
aggregate amount of cash received. Subject to the deduction limitations
described below, the Company generally will be entitled to a corresponding tax
deduction equal to the amount includable in the participant's income.
Restricted Stock. If the restrictions on an award of restricted stock are of
a nature that such shares are both subject to a substantial risk of forfeiture
and are not freely transferable within the meaning of Section 83 of the Code,
the participant will not recognize income for federal income tax purposes at
the time of the award unless such participant affirmatively elects to include
the fair market value of the shares of restricted stock on the date of the
award, less any amount paid therefor, in gross income for the year of the
award pursuant to Section 83(b) of the Code. In the absence of such an
election, the participant will be required to include in income for federal
income tax purposes in the year in which occurs the date the shares either
become freely transferable or are no longer subject to a substantial risk of
forfeiture within the meaning of Section 83 of the Code, the fair market value
of the shares of restricted stock on such date, less any amount paid therefor.
The Company will be entitled to a deduction at the time of income recognition
to the participant in an amount equal to the amount the participant is
required to include in income with respect to the shares, subject to the
deduction limitations described below. If a Section 83(b) election is made
within 30 days after the date the restricted stock is received, the
participant will recognize ordinary income at the time of the receipt of the
restricted stock and the Company will be entitled to a corresponding deduction
equal to the fair market value (determined without regard to applicable
restrictions) of the shares at such time less the amount paid, if any, by the
participant for the restricted stock. If a Section 83(b) election is made, no
additional income will be recognized by the participant upon the lapse of
restrictions on the restricted stock, but, if the restricted stock is
subsequently forfeited, the participant may not deduct the income that was
recognized pursuant to the Section 83(b) election at the time of the receipt
of the restricted stock. Dividends paid to a participant holding restricted
stock before the expiration of the restriction period will be additional
compensation taxable as ordinary income to the participant, unless the
participant made an election under Section 83(b). Subject to the deduction
limitations described below, the Company generally will be entitled to a
corresponding tax deduction equal to the dividends includable in the
participant's income as compensation. If the participant has made a Section
83(b) election, the dividends will be dividend income, rather than additional
compensation, to the participant.
If the restrictions on an award of restricted stock are not of a nature that
such shares are both subject to a substantial risk of forfeiture and not
freely transferable, within the meaning of Section 83
25
<PAGE>
of the Code, the participant will recognize ordinary income for federal income
tax purposes at the time of the award in an amount equal to the fair market
value of the shares of restricted stock on the date of the award, less any
amount paid therefor. The Company will be entitled to a deduction at such time
in an amount equal to the amount the participant is required to include in
income with respect to the shares, subject to the deduction limitations
described below.
Dividend Equivalents. There will be no federal income tax consequences to
either the participant or the Company upon the grant of dividend equivalents.
Generally, unless dividend equivalents are restricted in a manner that they
are both subject to a substantial risk of forfeiture and are not freely
transferable, the participant will recognize ordinary income upon the receipt
of payment pursuant to dividend equivalents in an amount equal to the fair
market value of the Common Stock and the aggregate amount of cash received.
Subject to the deduction limitations described below, the Company generally
will be entitled to a corresponding tax deduction equal to the amount
includable in the participant's income. If dividend equivalents are restricted
in a manner that they are both subject to a substantial risk of forfeiture and
are not freely transferable, the participant's and the Company's tax
consequences will be similar to the rules described above for restricted
stock.
Limitations on the Company's Compensation Deduction. Section 162(m) of the
Code limits the deduction which the Company may take for otherwise deductible
compensation payable to certain executive officers of the Company to the
extent that compensation paid to such officers for such year exceeds $1
million, unless such compensation is performance-based, is approved by the
Company's stockholders, and meets certain other criteria. Compensation
attributable to a stock option or a stock appreciation right is deemed to
satisfy the requirements for performance-based compensation if (i) the grant
or award is made by the compensation committee; (ii) the plan under which the
option or right is granted states the maximum number of shares with respect to
which options or rights may be granted during a specified period to any
employee; and (iii) under the terms of the option or right, the amount of
compensation the employee could receive is based solely on an increase in the
value of the stock after the date of the grant or award. The Plan has been
designed to enable awards of options and limited rights granted by the
compensation committee to qualify as performance-based compensation for
purposes of Section 162(m) of the Code.
In addition, Section 280G of the Code limits the deduction which the Company
may take for otherwise deductible compensation payable to certain individuals
if such compensation constitutes an "excess parachute payment". Very
generally, excess parachute payments arise from certain payments made to
disqualified individuals which are in the nature of compensation and are
contingent on certain changes in ownership or control of the Company.
Disqualified individuals for this purpose include certain employees and
independent contractors who are officers, shareholders or highly-compensated
individuals. Accelerated vesting or payment of awards under the Plan upon a
change in ownership or control of the Company could result in excess parachute
payments. In addition to the deduction limitation applicable to the Company, a
disqualified individual receiving an excess parachute payment is subject to a
20 percent excise tax on the amount thereof.
Tax Withholding. To satisfy applicable withholding tax requirements, the
Committee may require payment from an employee, may withhold from payments
made under the Plan, or may withhold from other compensation payable to the
employee.
RECOMMENDATION
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE PLAN.
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APPROVAL OF AMENDMENT TO 1992 LONG-TERM INCENTIVE PLAN
-----
ITEM NUMBER 4 ON PROXY CARD
GENERAL
The 1992 LTIP was adopted by the Board on February 7, 1991, approved by
stockholders at the 1991 annual meeting of stockholders and became effective
for awards on January 1, 1992. The 1992 LTIP will be replaced by the 1997
Long-Term Incentive Plan if the 1997 Plan is approved by stockholders at the
Meeting. See "Approval of 1997 Long-Term Incentive Plan -- Introduction" and
"Approval of 1997 Long-Term Incentive Plan -- Summary of the Plan --
Effectiveness."
At a meeting of the Board on February 6, 1997, the Board amended the 1992
LTIP (the "1992 LTIP Amendment") and recommended that the 1992 LTIP Amendment
be submitted to stockholders. Although neither Delaware law nor the provisions
of the 1992 LTIP or of the Company's Certificate of Incorporation or Bylaws
require that the 1992 LTIP Amendment be submitted to stockholders, it must be
approved by stockholders for purposes of Code Section 162(m).
THE 1992 LTIP AMENDMENT
Pursuant to Section 162(m) of the Code, the amount of compensation payments
to certain highly compensated officers that employers may deduct from income
for federal income tax purposes is limited to $1 million per person per year.
Compensation recognized by employees in connection with the exercise of stock
options and stock appreciation rights ("SARs") granted under the 1992 LTIP
may, however, continue to be exempt from the $1 million limitation as
"qualified performance-based compensation" if certain requirements are
satisfied, including the requirement that the 1992 LTIP state the maximum
number of shares for which options or SARs may be granted during a specified
period to any employee.
As originally adopted, the 1992 LTIP did not limit the total number of
shares of Common Stock for which stock options and SARs could be granted to a
person under the 1992 LTIP. Accordingly, the Board adopted the 1992 LTIP
Amendment, which added the following new Section 5.4 to the 1992 LTIP:
"5.4 Maximum Grants. Notwithstanding any provision contained in this Plan
to the contrary, the maximum number of shares of Common Stock for which
Incentive Stock Options, Nonqualified Stock Options, and Stock Appreciation
Rights may be granted under the Plan to any one Employee for any calendar
year is 500,000."
The inclusion in the 1992 LTIP of a maximum number of shares of Common Stock
that may be so granted to any one employee in any calendar year effectively
represents a limitation on the benefits available to persons eligible to
participate in the 1992 LTIP.
SUMMARY OF MATERIAL FEATURES OF 1992 LTIP
Copies of the 1992 LTIP and of the 1992 LTIP Amendment have been filed by
the Company with the SEC and the New York Stock Exchange. The following
summary of material features of the 1992 LTIP is qualified in its entirety by
reference thereto. The expressed purpose of the 1992 LTIP is to strengthen the
ability of the Company to attract, motivate and retain employees of superior
capability and to more closely align the interests of management with those of
stockholders of the Company by relating capital accumulation to increases in
stockholder value.
Under the 1992 LTIP, a maximum of 3,000,000 shares of Common Stock may be
issued or transferred to participants pursuant to incentive awards, subject to
adjustment in the case of certain changes in capital structure. The 1992 LTIP
has several components: stock options, SARs, restricted stock, performance
units, performance shares and dividend equivalents. The 1992 LTIP also
provides for the grant of other stock-based awards, the form of which may be
determined by the Compensation Committee of the Board which administers the
1992 LTIP. No incentive award granted thereunder (other than Common Stock any
restrictions on which have lapsed) is transferable otherwise than by will or
pursuant to the laws of descent and distribution or a qualified domestic
relations order.
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Participants in the 1992 LTIP are selected from key employees of the Company
and its subsidiaries. In no event may any member of the Board who is not an
officer or employee of the Company or a subsidiary of the Company be granted
an incentive award under the 1992 LTIP. It is impractical to estimate the
total number of employees who would be considered by the Committee as key
employees eligible to receive grants under the 1992 LTIP.
The 1992 LTIP contains antidilution provisions providing for adjustment in
the number of shares available for issuance or transfer pursuant to incentive
awards and the number of shares or units and the prices thereof subject to
then outstanding incentive awards. In addition, in the case of a dissolution
or liquidation of the Company, a merger or consolidation in which the Company
is not the surviving corporation, the sale of all or substantially all the
assets of the Company or a change in control (as defined) of the Company, the
Compensation Committee may, subject to the terms of the agreements evidencing
outstanding incentive awards, make such adjustments to outstanding incentive
awards as it determines are appropriate and take certain other actions,
including the acceleration of the exercise dates of outstanding incentive
awards, the acceleration of the restriction periods of outstanding restricted
stock and the payment of cash to holders of outstanding stock options in
exchange for the cancellation of such options.
The Board may at any time amend, suspend (and if suspended, may reinstate)
or terminate the 1992 LTIP, provided that the Board may not, without approval
of the stockholders, amend the 1992 LTIP so as to (i) increase the number of
shares of Common Stock subject to the 1992 LTIP or (ii) reduce the option
price for shares of Common Stock covered by stock options granted thereunder
below the option price provided by the 1992 LTIP.
RECOMMENDATION
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE 1992 LTIP
AMENDMENT.
REAPPROVAL OF EXECUTIVE VARIABLE INCENTIVE PLAN--------------------------------
ITEM NUMBER 5 ON PROXY CARD
INTRODUCTION
As of January 1, 1996, the Board adopted the Oryx Energy Company Executive
Variable Incentive Plan (the "Executive VIP") as a replacement of the
Company's Variable Incentive Plan with respect to those executive employees
designated to participate in the Executive VIP. The Executive VIP was approved
at the 1996 Annual Meeting of stockholders of the Company. Effective as of
January 1, 1997, the Compensation Committee of the Board approved an amendment
(the "Amendment") to the Executive VIP which further limits the annual amount
of an award that may be made pursuant to the Executive VIP, as described more
fully below, and subjects the continuation of the Executive VIP, as amended,
for plan years beginning on and after January 1, 1997 to the reapproval of the
stockholders of the Company.
THE AMENDMENT
As originally adopted and approved by stockholders of the Company in 1996,
the Executive VIP limited the incentive compensation award determined pursuant
to the formula described below to 200 percent of a participant's annualized
weekly base salary in effect as of the first pay period ending during the plan
year to which the award relates. The Amendment further limits the incentive
compensation award so determined with respect to a plan year beginning on or
after January 1, 1997 to the lesser of the amount described in the preceding
sentence or $1,500,000. This limitation has been added to allow awards made
pursuant to the Executive VIP to be exempt from certain tax deduction
limitations prescribed by Section 162(m) of the Internal Revenue Code of 1986,
as amended.
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SUMMARY OF THE AMENDED EXECUTIVE VIP
A composite copy of the Executive VIP reflecting the Amendment is attached
to this Proxy Statement as Exhibit B. The following summary of the Executive
VIP is qualified in its entirety by reference thereto.
Purpose. The purpose of the Executive VIP is to provide incentive
compensation opportunities for certain executive employees of the Company and
to reinforce three significant Company values, consisting of teamwork, sharing
success, and the rewarding of individual performance. It also is designed to
assist in the attraction, motivation and retention of superior employees and
to link employees to the Company's strategic objectives and interests of
stockholders.
Plan Year. The Executive VIP is maintained on the basis of a "plan year",
which is the calendar year.
Eligibility. Only those employees of the Company or a subsidiary thereof who
are "officers" of the Company, as defined in Rule 16a-1(f) promulgated by the
SEC under Section 16 of the Securities Exchange Act of 1934, as amended, who
are designated by the Compensation Committee, in its sole discretion, as of
the beginning of a plan year are eligible to participate in the Executive VIP
for such plan year. During 1996 only five of the eight employees of the
Company and its subsidiaries who potentially were eligible for participation
in the Executive VIP were so designated by the Compensation Committee. Of the
eight employees who potentially are eligible for participation currently, five
have again been designated for participation in 1997.
Once designated by the Compensation Committee, an executive employee must be
on the regular payroll of the Company or any of its subsidiaries as of
December 31 of the plan year and have at least 26 completed weeks of active
service during the plan year in order to be eligible to receive an award under
the Executive VIP for such year. Any employee with fewer than 52 completed
weeks of active service during the plan year will have his or her award pro
rated. There are exceptions from the above requirements for circumstances
involving family and medical leave, disability leave, retirement or death.
Executive VIP Administration. The Compensation Committee has the right and
authority to prescribe rules and regulations with respect to the
administration of the Executive VIP, to construe the Executive VIP, to make
determinations necessary or advisable for administering the Executive VIP and
generally to exercise all powers conferred on the Compensation Committee under
the Executive VIP. The Compensation Committee also has the authority to amend,
modify, suspend or terminate the Executive VIP at any time provided that,
generally, no such amendment, modification, suspension or termination may
adversely affect the right of any participant to receive any amount to which
the participant has already become entitled.
Calculation of Award. The awards granted pursuant to the Executive VIP are
determined according to a formula based on several factors, which include
threshold and target performance goals, individual target award levels and the
employee's base salary. For this purpose, base salary is defined as the
annualized weekly base salary in effect as of the last pay period ending
during the plan year. At the beginning of each plan year the Compensation
Committee establishes the performance goals and the respective threshold and
target levels of performance associated with each. The performance goals
established by the Compensation Committee for a plan year may consider one or
more of the following factors: stock price, cash flows, net income, operating
income, expense levels, debt balance, debt ratings, total shareholder return,
return on investment, return on equity, economic value added, production
volumes, reserve additions, profit or cost per equivalent barrel, earnings per
share, net asset value per share, or such other goals as the Compensation
Committee may determine appropriate for a plan year. The performance goals may
be based on the performance of the Company generally, in the absolute or in
relation to the performance of its peers, or the performance of a particular
employee, division, department, branch, subsidiary or other unit to which a
particular employee is assigned. Different performance goals may be
established for different participants or groups of participants. Each
performance goal will be weighted to reflect its relative performance to the
Company's strategic business plans for the year. The sum of the weightings of
the target performance goals for a participant or a group of participants for
the year will equal 100 percent.
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The Compensation Committee will establish at the beginning of the plan year
individual target award levels expressed as a percentage of a participant's
base salary for the year.
As of the end of each plan year, the Compensation Committee will calculate
each participant's incentive compensation award by multiplying the
participant's base salary by the participant's individual target award level
for the plan year. The result will then be multiplied by the performance score
applicable to the participant. The performance score will be determined by the
Compensation Committee based upon actual performance compared to the threshold
and target performance goal levels. The Compensation Committee will certify
the degree of achievement of each performance goal based upon the actual
performance results for the year. Once the above calculations are completed,
the Compensation Committee will have the discretion to reduce (but not
increase) any participant's award for the year based upon such factors as the
Committee may determine to be relevant, including individual performance.
As described above with respect to the Amendment, the amended Executive VIP
limits the incentive compensation award determined pursuant to the above
calculation to the lesser of $1,500,000 or 200 percent of a participant's
annualized weekly base salary in effect as of the first pay period ending
during the plan year to which the award relates.
In addition to the incentive compensation awards based upon attainment of
performance goals as set forth above, the Compensation Committee may, in its
sole discretion, grant ad hoc incentive compensation awards to any participant
or group of participants in such amount or amounts as it determines to be
appropriate based upon such factors as it deems to be relevant whether or not
targeted goals are achieved. Any such ad hoc incentive compensation awards
must be determined and granted by the Compensation Committee after the plan
year to which the award relates but prior to April 30 following the end of
such plan year.
Payment of Awards. Incentive compensation awards under the Executive VIP may
be paid in cash or shares of Common Stock or any combination thereof as
determined by the Compensation Committee. Awards normally will be paid by
April 30 following the completion of the plan year. Participants eligible to
participate in the Company's Executive Deferred Compensation Plan may elect to
defer their cash incentive compensation awards payable pursuant to the
Executive VIP if such election is made prior to the beginning of a plan year.
Election to Receive Restricted Stock. Certain participants (as designated by
the Compensation Committee by February 15 of the plan year) also may elect to
have up to 100 percent of their cash incentive compensation award for a plan
year paid to them in shares of Restricted Stock. Such election must be made
before March 1 of the plan year with respect to which the award is being
earned. Once made, the election is irrevocable, although the Compensation
Committee retains the discretion to cause the Company to settle all or any
part of the Company's obligation under a participant's election to receive
Restricted Stock by the payment of the cash incentive compensation award in
lieu of the Restricted Stock. In order to receive Restricted Stock, the
participant must remain an employee of the Company or a subsidiary until the
date that the shares of Restricted Stock are issued.
The number of shares of Restricted Stock issuable to each participant for a
plan year will be determined by dividing (i) the product obtained by
multiplying the amount of the participant's cash incentive compensation award
for such year times the portion of such award that the participant elected to
have paid in Restricted Stock (the "Subject Amount"), by (ii) the fair market
value of the Common Stock on the first business day following the completion
of the plan year. In addition, the Compensation Committee may in its
discretion increase the value of a participant's Subject Amount by multiplying
it by a factor, which shall not be greater than 150 percent. The factor will
be established by the Compensation Committee by February 15 of the plan year
and shall be the rate which the Compensation Committee determines to be
appropriate to reflect the participant's election to forego cash compensation
in exchange for Restricted Stock.
Restrictions on Restricted Stock. All Restricted Stock issued to a
participant pursuant to the Executive VIP is subject to a restricted period
the length of which is determined by the Compensation Committee by February 15
of the plan year. The Executive VIP gives the Compensation Committee authority
to grant to participants to whom Restricted Stock has been issued the right to
extend the
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restricted period applicable to such stock for an additional period of time or
until the occurrence of a specified event. Restricted Stock issued to an
employee is forfeited to the Company at no cost to the Company if the
employee's service as an employee of the Company terminates prior to the
expiration or termination of the restricted period applicable to the shares;
provided that the Restricted Stock will become fully vested and the restricted
period shall terminate upon (i) the employee's termination of service as an
employee of the Company during the restricted period due to death, disability
(as defined in the Executive VIP) or retirement (as defined in the Executive
VIP), (ii) the involuntary termination of the employee's service as an
employee of the Company for reasons other than "Just Cause" as defined in the
Executive VIP, or (iii) the occurrence of a corporate change (as defined in
the Executive VIP) during the restricted period. Until the Restricted Stock is
delivered to an employee upon vesting, the Restricted Stock may not be sold,
assigned, transferred, or otherwise encumbered or disposed of by the employee
in any manner. The Company will retain custody of the stock certificates
representing the Restricted Stock during the restricted period. An employee
will have all rights of a stockholder, including voting and dividend rights,
with respect to his or her Restricted Stock, subject to the forfeiture and
other restrictions of the Executive VIP. Under the Executive VIP, the
Compensation Committee has the right to cancel all or any portion of any
outstanding restrictions prior to the expiration or termination of such
restrictions with respect to any or all shares of Restricted Stock on such
terms and conditions as it may deem appropriate.
Stock Subject to Plan. A total of 300,000 shares of Common Stock are
available to be issued under the Executive VIP. In the event the Company
effects a split of the Common Stock or a dividend payable in Common Stock, or
in the event the outstanding Common Stock is combined into a smaller number of
shares, the maximum number of shares that may be issued or awarded under the
Executive VIP will be increased or decreased proportionately. Shares that have
been previously delivered to the participant as Restricted Stock that have
since been forfeited will be available for further issuance or award under the
Executive VIP. Shares of Common Stock issued pursuant to the Executive VIP may
be shares of original issuance or treasury shares or a combination of both, as
the Compensation Committee determines.
RECOMMENDATION
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL TO REAPPROVE
THE EXECUTIVE VIP AS AMENDED FOR PLAN YEARS BEGINNING ON AND AFTER JANUARY 1,
1997.
PROPOSAL OF STOCKHOLDER--------------------------------------------------------
ITEM NUMBER 6 ON PROXY CARD
The American Baptist Home Mission Society, P.O. Box 851, Valley Forge,
Pennsylvania 19482-0851, owner of 100 shares of Common Stock, has advised the
Company that it intends to offer the following proposal and supporting
statement for action at the Meeting:
"WHEREAS WE BELIEVE:
Responsible implementation of a sound, credible environmental policy
increases long-term shareholder value by raising efficiency, decreasing
clean-up costs, reducing litigation, and enhancing public image and
product attractiveness;
Adherence to public standards for environmental performance gives a
company greater public credibility than standards created by industry
alone. For maximum credibility and usefulness, such standards should
specifically meet the concerns of investors and other stakeholders;
Companies are increasingly being expected by investors to do
meaningful, regular, comprehensive and impartial environmental reports.
Standardized environmental reports enable investors to compare
performance over time. They also attract investment from investors
seeking companies which are environmentally responsible and which
minimize risk of environmental liability.
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WHEREAS:
The Coalition for Environmentally Responsible Economics (CERES) --
which includes shareholders of this Company; public interest
representatives, and environmental experts -- consulted with
corporations to produce the CERES Principles as comprehensive public
standards for both environmental performance and reporting. Fifty-four
companies, including Sun (Sunoco), General Motors, H.B. Fuller,
Polaroid, and Bethlehem Steel, have endorsed these principles to
demonstrate their commitment to public environmental accountability.
Fortune 500 endorsers say that benefits of working with CERES are
public credibility; "value-added' for the company's environmental
initiatives;
In endorsing the CERES Principles, a company commits to work toward:
1.Protection of the Biosphere 6.Safe products and services
2.Sustainable natural resource use 7.Environmental restoration
3.Waste reduction and disposal 8.Informing the public
4.Energy conservation 9.Management commitment
5.Risk reduction 10.Audits and reports
(Full text of the CERES Principles and accompanying CERES Report Form
obtainable from CERES, 711 Atlantic Avenue, Boston MA 02110, tel: (617)
451-0927).
CERES is distinguished from other initiatives for corporate
environmental responsibility, in being (1) a successful model of
shareholder relations; (2) a leader in public accountability through
standardized environmental reporting; and (3) a catalyst for
significant and measurable environmental improvement within firms.
RESOLVED: Shareholders request the Company to endorse the CERES
Principles, as a part of its commitment to be publicly
accountable for its environmental impact."
STOCKHOLDER'S STATEMENT IN SUPPORT OF THE STOCKHOLDER PROPOSAL
"Many investors support this resolution. Those supporting similar
resolutions at various companies have portfolios totaling $75 billion.
The number of public pension funds and foundations supporting this
resolution increases every year. The objectives are: standards for
environmental performance and disclosure; methods for measuring
progress toward these goals; and a format for public reporting of
progress. We believe this is comparable to the European Community
regulations for voluntary participation in verified and publicly-
reported eco-management and auditing, and fully compatible with ISO
14000 certification.
Your vote FOR this resolution will encourage scrutiny of our
Company's environmental policies and reports and adherence to standards
upheld by management and stakeholders alike."
STATEMENT OF BOARD OF DIRECTORS RECOMMENDING A VOTE AGAINST THE STOCKHOLDER
PROPOSAL
The Company has a strong commitment to environmental responsibility and is
dedicated to sound natural resource management practices that assure a clean
and safe environment. It is the Company's position that an effective, credible
environmental policy is essential to protect shareholder value. Further, the
Company recognizes that it has many shareholders, employees and neighbors
living and working in proximity to the Company's operations and believes
environmental responsibility is a key component of its overall commitment to
the community.
The environmental programs of both the Company and CERES have been derived
from similar sources and concerns, but whereas the CERES Principles were
drafted to apply to all industries and businesses, the Company's programs have
been individually tailored specifically to the operations and practices of an
oil and gas exploration and production company. While the proponent's
intentions and efforts are commendable, the Company has concluded that its
existing environmental policy and programs are better suited to its specific
circumstances and that endorsement of the CERES Principles would not result in
an improvement to its environmental efforts or results.
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One of the principal features of the CERES Principles is the annual
publication of an environmental report in a CERES prescribed format. This
format, like the Principles, is not specific to the Company's operations, but
is generic. The Company believes that this report is unnecessary. The Company
is already subject to stringent and extensive environmental regulation by
national, state, regional and local governments and files voluminous, detailed
reports with each entity. Reworking the data, and generating new data not
called for by any of these other reports, in order to comply with the CERES
format would necessitate the expenditure of additional time and resources
without providing any greater environmental protection than currently exists.
The Company believes its time and resources are better spent integrating
environmental concerns into its day-to-day operations.
The Board believes adoption of the CERES Principles is NOT in the best
interests of the Company. Unlike their generic approach to environmental
protection, the Company has in place a more targeted, cost efficient and
industry-specific commitment to the environment that the Board believes is
most effective in meeting the Company's overall responsibilities.
RECOMMENDATION
THE BOARD THEREFORE RECOMMENDS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL.
OTHER BUSINESS-----------------------------------------------------------------
The Board does not know of any business to come before the Meeting other
than that set forth in the Notice of Annual Meeting of Stockholders. However,
if any other business shall properly come before the Meeting, it is the
intention of the proxy holders to vote upon such business in accordance with
their judgment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE------------------------
Section 16(a) of the Exchange Act requires directors and officers of the
Company, and persons who own more than ten percent of a registered class of
equity securities of the Company, to file with the SEC and the New York Stock
Exchange initial reports of beneficial ownership of the Common Stock and other
equity securities of the Company on Form 3 and changes in such ownership on
Forms 4 and 5.
To the Company's knowledge, all Forms 3, 4 and 5 required to be filed by
Section 16(a) of the Exchange Act during the year ended December 31, 1996,
were timely filed, except for the initial statement of ownership on Form 3
which was filed on February 7, 1997 for Steven J. Flowers who was elected
Treasurer on November 8, 1996.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR THE 1998 ANNUAL
MEETING------------------------------------------------------------------------
Subject to certain requirements contained in the Company's Bylaws, a
stockholder of record may nominate someone for director or may propose other
action to be voted on at an annual meeting. Article V of the Company's Bylaws
provides in pertinent part as follows:
"SECTION 1. ANNUAL MEETINGS. The annual meeting of the stockholders for the
election of Directors and for the transaction of such other business as may be
properly brought before the meeting, shall be held each year on such day, at
such time and place, either within or without the state of incorporation, as
shall be determined in advance by the Board of Directors.
"At an annual meeting of stockholders, the only business to be voted on by
stockholders shall be business specified in the notice of the meeting, or
business otherwise specified by the Board of Directors, or business properly
brought before the meeting by a stockholder eligible to vote at the meeting.
"To be properly brought before the meeting by a stockholder, the business
must be legally proper and written notice thereof must have been filed with
the Secretary of the Corporation at least sixty
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days but not more than ninety days prior to the first anniversary of the most
recent annual meeting, and containing the following information as applicable:
"(a) All notices by a stockholder hereunder shall contain (i) the
stockholder's name as it appears in the Corporation's records, (ii) the
stockholder's business address and residence address, and (iii) the class
and number of shares of stock of the Corporation which are directly or
indirectly beneficially owned by the stockholder.
"(b) Notices in which a stockholder proposes the nomination of a person
for election as Director shall also contain (i) the proposed nominee's
name, age, business address and residence address, (ii) the proposed
nominee's principal occupation currently and for the previous five years,
(iii) the class and number of shares of stock of the Corporation which are
directly or indirectly beneficially owned by the proposed nominee, and (iv)
any other information about the proposed nominee which is required to be
disclosed in proxy solicitation pursuant to regulations under the
Securities Exchange Act of 1934 as amended, including but not limited to
the proposed nominee's consent to the nomination.
"(c) Notices in which a stockholder proposes a matter other than a
nomination for Director shall also contain a clear and concise statement of
the proposal and the stockholder's reasons for supporting it.
"The filing of a stockholder notice as required above shall not, in and of
itself, constitute the making of the nomination or proposal described therein.
Nothing in these Bylaws shall affect the right of a stockholder to request
inclusion of a proposal in the Corporation's proxy statement pursuant to
regulations under the Securities Exchange Act of 1934 as amended.
"If the person presiding at the meeting determines that any proposed
business has not been properly brought before the meeting, he shall declare
such business out of order and such business shall not be conducted at the
meeting."
Applicable SEC rules and regulations provide that the Company is not
required to include a stockholder proposal in its proxy materials unless it is
received by a specified date. In order for a stockholder proposal to be
considered for inclusion in the Company's 1998 proxy materials, the proposal
must be received by the Secretary of the Company on or before its close of
business on November 26, 1997.
SOLICITATION OF PROXIES--------------------------------------------------------
The Company has provided proxy materials to brokers, banks, custodians,
nominees and fiduciaries and requested that such materials be promptly
forwarded to the beneficial owners of Common Stock registered in the name of
such brokers, banks, custodians, nominees and fiduciaries. In addition,
solicitation of proxies may be made by directors, officers or employees of the
Company by personal interview, mail, telephone, telegraph or facsimile
telecommunication. Chase Mellon Shareholder Services, LLC has been retained to
assist in the distribution to and solicitation of proxies from stockholders,
brokers, banks and nominees for a base fee of $6,000 plus reasonable out-of-
pocket expenses. The cost of soliciting proxies and related services will be
borne by the Company.
By Order of the Board of Directors
William C. Lemmer
Vice President, General Counsel and
Secretary
13155 Noel Road
Dallas, Texas 75240-5067
March 26, 1997
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EXHIBIT A
ORYX ENERGY COMPANY
1997 LONG-TERM INCENTIVE PLAN
ARTICLE 1.
ESTABLISHMENT AND PURPOSE
1.1 Establishment. Oryx Energy Company, a Delaware corporation, hereby
establishes the Oryx Energy Company 1997 Long-Term Incentive Plan, as set
forth in this document.
1.2 Purpose. The purposes of the Plan are to attract able persons to enter
the employ of the Company, to encourage Employees to remain in the employ
of the Company and to provide motivation to Employees to put forth
maximum efforts toward the continued growth, profitability and success of
the Company, by providing incentives to such persons through the
ownership and performance of the Common Stock of Oryx. A further purpose
of the Plan is to provide a means through which Oryx may attract able
persons to become directors of Oryx and to provide directors of Oryx with
additional incentive and reward opportunities designed to strengthen
their concern for the welfare of Oryx and its stockholders. Toward these
objectives, Awards may be granted under the Plan to Employees and Outside
Directors on the terms and subject to the conditions set forth in the
Plan.
1.3 Effectiveness. The Plan shall become effective as of the date of its
approval by the stockholders of Oryx at the 1997 Annual Meeting of
Stockholders. No Awards shall be made before the Plan becomes effective.
ARTICLE 2.
DEFINITIONS
2.1 Award. "Award" means any Option, Limited Rights, Restricted Stock,
Dividend Equivalents or Other Incentive Award granted under the Plan,
whether singly, in combination or in tandem, to a Participant by the
Committee or the Board.
2.2 Award Agreement. "Award Agreement" means a written agreement between Oryx
and a Participant that sets forth the terms, conditions, restrictions
and/or limitations applicable to an Award.
2.3 Board. "Board" means the Board of Directors of Oryx.
2.4 Code. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions
and regulations thereto.
2.5 Committee. "Committee" means the Compensation Committee of the Board, or
such other committee of the Board as may be designated by the Board to
administer the Plan; provided that the Committee shall consist of three
or more directors of Oryx, all of whom are both a "Non-Employee Director"
within the meaning of Rule 16b-3 under the Exchange Act and an "outside
director" within the meaning of the definition of such term as contained
in Treasury Regulation Section 1.162-27(e)(3) interpreting Section 162(m)
of the Code, or any successor definitions adopted. The members of the
Committee shall be appointed from time to time by, and shall serve at the
discretion of, the Board.
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2.6 Common Stock. "Common Stock" means the Common Stock, $1.00 par value per
share, of Oryx, or any stock or other securities of Oryx hereafter issued
or issuable in substitution or exchange for the Common Stock.
2.7 Company. "Company" means Oryx and its Subsidiaries.
2.8 Corporate Change. A "Corporate Change" shall be deemed to have occurred
for purposes of the Plan upon (a) the dissolution or liquidation of Oryx;
(b) a reorganization, merger or consolidation of Oryx with one or more
corporations (other than a merger or consolidation effecting a
reincorporation of Oryx in another state or any other merger or
consolidation in which the shareholders of the surviving corporation and
their proportionate interests therein immediately after the merger or
consolidation are substantially identical to the shareholders of Oryx and
their proportionate interests therein immediately prior to the merger or
consolidation); (c) the sale of all or substantially all of the assets of
Oryx; or (d) the occurrence of a Change in Control. A "Change in Control"
shall be deemed to have occurred for purposes of the Plan if (a)
individuals who were directors of Oryx immediately prior to a Control
Transaction shall cease, within two years of such Control Transaction, to
constitute a majority of the Board (or of the Board of Directors of any
successor to Oryx or to a company which has acquired all or substantially
all its assets) or (b) any entity, person or Group acquires shares of
Oryx in a transaction or series of transactions that result in such
entity, person or Group directly or indirectly owning beneficially 50% or
more of the outstanding shares of Common Stock. As used herein, "Control
Transaction" means (a) any tender offer for or acquisition of capital
stock of Oryx, (b) any merger or consolidation of Oryx, (c) any contested
election of directors of Oryx or (d) any combination of the foregoing,
any one of which results in a change in voting power sufficient to elect
a majority of the Board. As used herein, "Group" means persons who act
"in concert" as described in Sections 13(d)(3) and/or 14(d)(2) of the
Exchange Act.
2.9 Disability. "Disability" means a condition of an Employee that entitles
the Employee to benefits under the Oryx Energy Company Long-Term
Disability Plan, as amended from time to time (or any successor plan).
2.10 Dividend Equivalents. "Dividend Equivalents" means an Award granted to a
Participant pursuant to Article 10.
2.11 Effective Date. "Effective Date" means the date an Award is determined to
be effective by the Committee or the Board upon its grant of such Award.
2.12 Employee. "Employee" means any person treated as an employee by Oryx or a
Subsidiary, other than a person employed on a temporary or seasonal basis
while in a temporary or seasonal status. "Employee" shall not include any
person treated by Oryx or a Subsidiary as an independent contractor.
2.13 Exchange Act. "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and successor
provisions and rules thereto.
2.14 Fair Market Value. "Fair Market Value" means, as of any specified date,
the closing sales price of the Common Stock on the New York Stock
Exchange (or, if the Common Stock is not listed on such exchange, such
other national stock exchange or stock market on which the Common Stock
is then listed) on that date, or if no such prices of the Common Stock
are reported on that date, on the last preceding date on which such
prices of the Common Stock are so reported, all as reported in the New
York Stock Exchange Composite Transactions listings published in The Wall
Street Journal, or in a similar report selected by the Committee. If the
Common Stock is not publicly traded at the time a determination of its
value is required to be made under the Plan,
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the determination of its Fair Market Value shall be made by the Committee
in such manner as it deems appropriate.
2.15 Incentive Stock Option. "Incentive Stock Option" means an option to
purchase shares of Common Stock that is intended to meet the requirements
of Section 422(b) of the Code.
2.16 Limited Rights. "Limited Rights" means an Award granted to a Participant
pursuant to Article 8.
2.17 Nonqualified Stock Option. "Nonqualified Stock Option" means an option to
purchase shares of Common Stock that is not intended to meet the
requirements of Section 422(b) of the Code.
2.18 Option. "Option" means an option to purchase shares of Common Stock
granted to a Participant pursuant to Article 7, and includes both
Incentive Stock Options and Nonqualified Stock Options.
2.19 Oryx. "Oryx" means Oryx Energy Company, a Delaware corporation, and any
successor thereto.
2.20 Other Incentive Award. "Other Incentive Award" means an Award granted to
a Participant pursuant to Article 11.
2.21 Outside Director. "Outside Director" means an individual duly elected or
chosen as a director of Oryx who is not also an Employee.
2.22 Participant. "Participant" means any Employee or Outside Director to whom
an Award has been granted under the Plan.
2.23 Plan. "Plan" means this Oryx Energy Company 1997 Long-Term Incentive
Plan.
2.24 Restricted Stock. "Restricted Stock" means an Award of shares of Common
Stock granted to a Participant pursuant to, and with such restrictions as
are imposed under, Article 9. Restricted Stock shall constitute issued
and outstanding shares of Common Stock for all corporate purposes.
2.25 Retirement. "Retirement" means the termination of an Employee's
employment with the Company which entitles the Employee to an immediate
"early retirement" or "normal retirement" benefit under the Oryx Energy
Company Retirement Plan, as amended from time to time (or any successor
plan).
2.26 Subsidiary. "Subsidiary" means a "subsidiary corporation" of Oryx, as
that term is defined in Section 424(f) of the Code.
ARTICLE 3.
PLAN ADMINISTRATION
3.1 Responsibility of Committee. Subject to the terms and provisions of the
Plan, including, without limitation, Section 3.6, the Committee shall have
total and exclusive responsibility to control, operate, manage and
administer the Plan in accordance with its terms.
3.2 Authority of Committee. The Committee shall have all the authority that
may be necessary or helpful to enable it to discharge its responsibilities
with respect to the Plan. Without limiting the generality of the preceding
sentence, the Committee shall have the exclusive right, subject
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to the provisions of Section 3.6, to: (a) interpret the Plan and the Award
Agreements executed hereunder; (b) determine eligibility for participation
in the Plan; (c) decide all questions concerning eligibility for, and the
amount of, Awards payable under the Plan; (d) construe any ambiguous
provision of the Plan or any Award Agreement; (e) prescribe the form of
the Award Agreements embodying Awards granted under the Plan; (f) correct
any defect, supply any omission or reconcile any inconsistency in the Plan
or any Award Agreement; (g) issue administrative guidelines as an aid to
administer the Plan and make changes in such guidelines as it from time to
time deems proper; (h) make regulations for carrying out the Plan and make
changes in such regulations as it from time to time deems proper; (i)
determine whether Awards should be granted singly, in combination or in
tandem; (j) to the extent permitted under the Plan, grant waivers of Plan
terms, conditions, restrictions and limitations; (k) accelerate the
exercise, vesting or payment of an Award when such action or actions would
be in the best interests of the Company; (l) grant Awards in replacement
of Awards previously granted under the Plan or any other employee benefit
plan of the Company; and (m) take any and all other actions it deems
necessary or advisable for the proper operation or administration of the
Plan.
3.3 Discretionary Authority. The Committee shall have full discretionary
authority in all matters related to the discharge of its responsibilities
and the exercise of its authority under the Plan, including, without
limitation, its construction of the terms of the Plan and its
determination of eligibility for participation and Awards under the Plan.
The decisions of the Committee and its actions with respect to the Plan
shall be final, conclusive and binding on all persons having or claiming
to have any right or interest in or under the Plan, including Participants
and their respective estates, beneficiaries and legal representatives.
3.4 Action by the Committee. The Committee may act only by a majority of its
members. Any determination of the Committee may be made, without a
meeting, by a writing or writings signed by all of the members of the
Committee. In addition, the Committee may authorize any one or more of its
members to execute and deliver documents on behalf of the Committee.
3.5 Delegation of Authority. Notwithstanding anything contained in the Plan to
the contrary, the Committee may, in its discretion, delegate some or all
of its authority under the Plan to any person or persons; provided,
however, that any such delegation shall be in writing; and provided
further that only the Committee may select and grant Awards to Employees
who are subject to Section 16 of the Exchange Act or who are "covered
employees" within the meaning of Section 162(m) of the Code.
3.6 Board Authority. Notwithstanding the authority hereby delegated to the
Committee to administer the Plan, the Board shall have sole and exclusive
authority, subject to the express provisions of the Plan, to grant Awards
to Outside Directors under the Plan, to determine the terms, conditions,
restrictions and/or limitations applicable to such Awards and to make all
other determinations and take any and all other actions it deems necessary
or advisable with respect to such Awards. The Board shall have no
authority under the Plan to select and grant Awards to Employees, and such
authority is vested exclusively in the Committee.
3.7 Liability; Indemnification. No member of the Committee or the Board nor
any person to whom authority has been delegated by the Committee, shall be
personally liable for any action, interpretation or determination made in
good faith with respect to the Plan or Awards granted hereunder, and each
member of the Committee and the Board shall be fully indemnified and
protected by Oryx with respect to any liability he or she may incur with
respect to any such action, interpretation or determination, to the extent
permitted by applicable law and to the extent provided in the Certificate
of Incorporation and Bylaws of Oryx, as amended from time to time, or
under any agreement between any such member and Oryx.
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ARTICLE 4.
ELIGIBILITY
All Employees and Outside Directors are eligible to participate in the Plan.
The Committee shall select, from time to time, Participants from those
Employees, and the Board shall select, from time to time, Participants from
those Outside Directors, who, in the opinion of the Committee or the Board,
can further the Plan's purposes. In making this selection, the Committee and
the Board may give consideration to the functions and responsibilities of the
Participant, his or her past, present and potential contributions to the
growth and success of the Company and such other factors deemed relevant by
the Committee or the Board. Once a Participant is so selected, the Committee
or the Board shall determine the type and size of Award to be granted to the
Participant and shall establish in the related Award Agreement the terms,
conditions, restrictions and/or limitations applicable to the Award, in
addition to those set forth in the Plan and the administrative rules and
regulations, if any, established by the Committee. No Employee is entitled to
receive an Award unless selected by the Committee, and no Outside Director is
entitled to receive an Award unless selected by the Board.
ARTICLE 5.
FORM OF AWARDS
Awards may, at the Committee's or the Board's sole discretion, be granted
under the Plan in the form of Options pursuant to Article 7, Limited Rights
pursuant to Article 8, Restricted Stock pursuant to Article 9, Dividend
Equivalents pursuant to Article 10, Other Incentive Awards pursuant to
Article 11 or a combination thereof. All Awards shall be subject to the terms,
conditions, restrictions and limitations of the Plan. The Committee or the
Board may, in its sole judgment, subject any Award to such other terms,
conditions, restrictions and/or limitations (including, but not limited to,
the time and conditions of exercise, vesting or payment of an Award and
restrictions on transferability of any shares of Common Stock issued or
delivered pursuant to an Award), provided they are not inconsistent with the
terms of the Plan. Awards under a particular Article of the Plan need not be
uniform, and Awards under two or more Articles of the Plan may be combined
into a single Award Agreement. Any combination of Awards may be granted at one
time and on more than one occasion to the same Participant.
ARTICLE 6.
SHARES SUBJECT TO THE PLAN
6.1 Available Shares. The maximum number of shares of Common Stock that shall
be available for grant of Awards under the Plan shall not exceed
5,000,000, subject to adjustment as provided in Sections 6.2 and 6.3.
Shares of Common Stock issued pursuant to the Plan may be shares of
original issuance or treasury shares or a combination of the foregoing,
as the Board, in its discretion, shall from time to time determine.
6.2 Adjustments for Recapitalizations and Reorganizations.
(a) The shares with respect to which Awards may be granted under the Plan
are shares of Common Stock as presently constituted, but if, and
whenever, prior to the expiration or satisfaction of an Award
theretofore granted, Oryx shall effect a subdivision or consolidation
of shares of Common Stock or the payment of a stock dividend on
Common Stock without receipt of consideration by Oryx, the number of
shares of Common Stock with respect to which such Award may
thereafter be exercised or satisfied, as applicable, (i) in the event
of an increase in the number of outstanding shares shall be
proportionately increased, and the exercise price per share shall be
proportionately
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reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the exercise
price per share shall be proportionately increased.
(b) If Oryx recapitalizes or otherwise changes its capital structure,
thereafter upon any exercise or satisfaction, as applicable, of an
Award theretofore granted the Participant shall be entitled to (or
entitled to purchase, if applicable) under such Award, in lieu of the
number of shares of Common Stock then covered by such Award, the
number and class of shares of stock or other securities to which the
Participant would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to such recapitalization, the
Participant had been the holder of record of the number of shares of
Common Stock then covered by such Award.
(c) In the event of changes in the outstanding Common Stock by reason of
recapitalizations, reorganizations, mergers, consolidations,
combinations, separations (including a spin-off or other distribution
of stock or property), exchanges or other relevant changes in
capitalization occurring after the date of grant of any Award and not
otherwise provided for by this Section 6.2, any outstanding Awards
and any Award Agreements evidencing such Awards shall be subject to
adjustment by the Committee at its discretion as to the number, price
and kind of shares or other consideration subject to, and other terms
of, such Awards to reflect such changes in the outstanding Common
Stock.
(d) In the event of any changes in the outstanding Common Stock provided
for in this Section 6.2, the aggregate number of shares available for
grant of Awards under the Plan may be equitably adjusted by the
Committee, whose determination shall be conclusive. Any adjustment
provided for in this Section 6.2 shall be subject to any required
stockholder action.
6.3 Adjustments for Awards. The Committee shall have full discretion to
determine the manner in which shares of Common Stock available for grant
of Awards under the Plan are counted. Without limiting the discretion of
the Committee under this Section 6.3, unless otherwise determined by the
Committee, the following rules shall apply for the purpose of determining
the number of shares of Common Stock available for grant of Awards under
the Plan:
(a) Options and Restricted Stock. The grant of an Option or Restricted
Stock shall reduce the number of shares available for grant of Awards
under the Plan by the number of shares subject to such Award.
(b) Limited Rights. The grant of Limited Rights shall not affect the
number of shares available for grant of Awards under the Plan.
(c) Dividend Equivalents. The grant of Dividend Equivalents shall not
affect the number of shares available for grant of Awards under the
Plan, but such number of shares shall be reduced by any shares issued
in payment or settlement of Dividend Equivalents.
(d) Other Incentive Awards. The grant of an Other Incentive Award in the
form of Common Stock or that may be paid or settled only in Common
Stock shall reduce the number of shares available for grant of Awards
under the Plan by the number of shares subject to such Award. The
grant of an Other Incentive Award that may be paid or settled only
for cash shall not affect the number of shares available for grant of
Awards under the Plan. The grant of an Other Incentive Award that may
be paid or settled in either Common Stock or cash shall reduce the
number of shares available for grant of Awards under the Plan by the
number of shares subject to such Award.
(e) Termination. If any Award referred to in paragraphs (a) and (d) above
(other than an Other Incentive Award that may be paid or settled only
for cash) is canceled or forfeited, or terminates, expires or lapses,
for any reason (other than the termination of a Related
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Option (as defined in Section 8.1) upon exercise of its corresponding
Limited Rights), the shares then subject to such Award shall again be
available for grant of Awards under the Plan.
(f) Payment of Exercise Price and Withholding Taxes. If previously
acquired shares of Common Stock are used to pay the exercise price of
an Award, or shares of Common Stock that would be acquired upon
exercise of an Award are withheld to pay the exercise price of such
Award, the number of shares available for grant of Awards under the
Plan other than Incentive Stock Options shall be increased by the
number of shares delivered or withheld as payment of such exercise
price. If previously acquired shares of Common Stock are used to pay
withholding taxes payable upon exercise, vesting or payment of an
Award, or shares of Common Stock that would be acquired upon
exercise, vesting or payment of an Award are withheld to pay
withholding taxes payable upon exercise, vesting or payment of such
Award, the number of shares available for grant of Awards under the
Plan other than Incentive Stock Options shall be increased by the
number of shares delivered or withheld as payment of such withholding
taxes.
ARTICLE 7.
OPTIONS
7.1 General. Awards may be granted to Employees and Outside Directors in the
form of Options. These Options may be Incentive Stock Options or
Nonqualified Stock Options, or a combination of both; provided, however,
that (i) no Incentive Stock Options shall be granted later than 10 years
from the date of adoption of the Plan by the Board and (ii) only
Employees shall be eligible to receive Incentive Stock Options.
7.2 Terms and Conditions of Options. An Option shall be exercisable in whole
or in such installments and at such times as may be determined by the
Committee or the Board. The price at which a share of Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee
or the Board, but such exercise price shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the Effective Date of the
Option's grant. The term of each Option shall be as specified by the
Committee or the Board, provided, however, that, unless otherwise
designated by the Committee or the Board, no Options shall be exercisable
later than 10 years from the Effective Date of the Option's grant.
7.3 Restrictions Relating to Incentive Stock Options. Options granted in the
form of Incentive Stock Options shall, in addition to being subject to
the terms and conditions of Section 7.2, comply with Section 422(b) of
the Code. Accordingly, to the extent that the aggregate Fair Market Value
(determined at the time the respective Incentive Stock Option is granted)
of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an individual during any calendar year
under all incentive stock option plans of Oryx and its parent corporation
and Subsidiaries exceeds $100,000, such excess Incentive Stock Options
shall be treated as options which do not constitute Incentive Stock
Options. The Committee shall determine, in accordance with applicable
provisions of the Code, which of an optionee's Incentive Stock Options
will not constitute Incentive Stock Options because of such limitation
and shall notify the optionee of such determination as soon as
practicable after such determination. No Incentive Stock Option shall be
granted to an Employee under the Plan if, at the time such Option is
granted, such Employee owns stock possessing more than 10% of the total
combined voting power of all classes of stock of Oryx or its parent
corporation or a Subsidiary, within the meaning of Section 422(b)(6) of
the Code, unless (a) on the Effective Date of grant of such Option, the
exercise price of such Option is at least 110% of the Fair Market
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Value of the Common Stock subject to the Option and (b) such Option by its
terms is not exercisable after the expiration of five years from the
Effective Date of the Option's grant.
7.4 Additional Terms and Conditions. The Committee or the Board may subject
any Award of an Option to such other terms, conditions, restrictions
and/or limitations as it determines are necessary or appropriate, provided
they are not inconsistent with the Plan.
7.5 Exercise of Options. Subject to the terms and conditions of the Plan,
Options shall be exercised by the delivery of a written notice of exercise
to Oryx, setting forth the number of shares of Common Stock with respect
to which the Option is to be exercised, accompanied by full payment for
such shares.
Upon exercise of an Option, the exercise price of the Option shall be
payable to Oryx in full either: (a) in cash or an equivalent acceptable to the
Committee or (b) in accordance with any applicable administrative guidelines
established by the Committee, by (i) tendering previously acquired
nonforfeitable, unrestricted shares of Common Stock having an aggregate Fair
Market Value at the time of exercise equal to the total exercise price
(including an actual or deemed multiple series of exchanges of such shares),
(ii) with respect to Nonqualified Stock Options only, withholding shares which
otherwise would be acquired on exercise having an aggregate Fair Market Value
at the time of exercise equal to the total exercise price or (iii) a
combination of the forms of payment specified in clauses (a), (b)(i) or
(b)(ii) above.
In addition, any grant of a Nonqualified Stock Option under the Plan may
provide that payment of the exercise price of the Nonqualified Stock Option
may also be made in whole or in part in the form of shares of Restricted Stock
or other shares of Common Stock that are subject to risk of forfeiture or
restrictions on transfer. Unless otherwise determined by the Committee or the
Board at the time of grant of such Nonqualified Stock Option, whenever the
exercise price of such Nonqualified Stock Option is paid in whole or in part
by means of the form of consideration specified in the immediately preceding
sentence, the shares of Common Stock received by the Participant upon the
exercise of such Option shall be subject to the same risk of forfeiture and
restrictions on transfer as those that applied to the consideration
surrendered by the Participant. However, the risk of forfeiture and
restrictions on transfer shall apply only to the same number of shares of
Common Stock received by the Participant upon exercise as applied to the
forfeitable or restricted Common Stock surrendered by the Participant in
payment of the exercise price.
Payment of the exercise price of an Option may also be made, in the
discretion of the Committee, by delivery to Oryx or its designated agent of an
executed irrevocable option exercise form together with irrevocable
instructions to a broker-dealer to sell or margin a sufficient portion of the
shares with respect to which the Option is exercised and deliver the sale or
margin loan proceeds directly to Oryx to pay for the exercise price and any
required withholding taxes.
As soon as reasonably practicable after receipt of written notification of
exercise of an Option and full payment of the exercise price and any required
withholding taxes, Oryx shall deliver to the Participant, in the Participant's
name, a stock certificate or certificates in an appropriate amount based upon
the number of shares of Common Stock purchased under the Option.
7.6 Termination of Service. Each Award Agreement embodying the Award of an
Option shall set forth the extent to which the Participant shall have the
right to exercise the Option following termination of the Participant's
employment or service with the Company. Such provisions shall be
determined in the sole discretion of the Committee or the Board, need not
be uniform among all Options granted under the Plan and may reflect
distinctions based on the reasons for
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termination of employment or service. Subject to Section 6.2, Section 14.2
and Article 12, in the event that an Employee's Award Agreement embodying
the Award of an Option does not set forth such termination provisions, the
following termination provisions shall apply with respect to such Award:
(a) Death, Disability or Retirement. If the employment of a Participant
shall terminate by reason of death, Disability or Retirement, all
outstanding Options held by the Participant shall immediately vest as
of the date of termination of employment and may be exercised, if at
all, no more than three years from the date of termination of
employment, unless the Options, by their terms, expire earlier;
provided that (i) in the case of Retirement, to the extent Incentive
Stock Options are exercised by the Participant more than three months
from the date of termination of employment, such Options will no
longer qualify for the tax treatment specified in Section 421(a) of
the Code, and (ii) in the case of Disability, if the Disability does
not fall within the definition of "disability" set forth in Section
22(e)(3) of the Code, Incentive Stock Options exercised by the
Participant more than three months from the date of termination of
employment will no longer qualify for the tax treatment specified in
Section 421(a) of the Code.
(b) Other Termination. If the employment of a Participant shall terminate
for any reason other than the reasons set forth in paragraph (a)
above, whether on a voluntary or involuntary basis, all outstanding
Options held by the Participant shall immediately be forfeited to the
Company and no additional exercise period shall be allowed, regardless
of the vested status of the Options.
7.7 Maximum Option Grants. Notwithstanding any provision contained in the Plan
to the contrary, the maximum number of shares of Common Stock for which
Options and Limited Rights may be granted under the Plan to any one
Employee during a calendar year is 500,000.
7.8 Options in Substitution for Options Granted by Other Corporations. Options
may be granted under the Plan from time to time in substitution for stock
options held by employees of corporations who become, or who became prior
to the effective date of the Plan, Employees as a result of a merger or
consolidation of the employing corporation with Oryx or a Subsidiary, or
the acquisition by Oryx or a Subsidiary of all or a portion of the assets
of the employing corporation, or the acquisition by Oryx or a Subsidiary
of stock of the employing corporation, with the result that such employing
corporation becomes a Subsidiary.
ARTICLE 8.
LIMITED RIGHTS
8.1 General. Limited Rights may be granted under the Plan to any Participant
who is granted an Option under the Plan (a "Related Option") with respect
to all or a portion of the shares of Common Stock subject to the Related
Option. The Committee or the Board may grant Limited Rights to a
Participant only at the time of grant of the Related Option to the
Participant. A Limited Right may be exercised only during the period
beginning on the date of a Change in Control (as defined in Section 2.8)
and ending on (but including) the thirtieth day following such date. Each
Limited Right shall be exercisable only to the same extent that the
Related Option is exercisable, and in no event after the termination of
the Related Option. Limited Rights related to Incentive Stock Options
shall be exercisable only when the Fair Market Value (determined as of the
date of exercise of the Limited Rights) of each share of Common Stock with
respect to which the Limited Rights are to be exercised shall exceed the
exercise price per share of Common Stock subject to the related Incentive
Stock Option.
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8.2 Termination. Upon the exercise of Limited Rights, the Related Option
shall be deemed to have been terminated to the extent of the number of
shares of Common Stock with respect to which such Limited Rights are
exercised. Upon the exercise or termination of the Related Option, the
Limited Rights with respect to such Related Option shall be deemed to
have been terminated to the extent of the number of shares of Common
Stock with respect to which the Related Option was so exercised or
terminated.
8.3 Payment.
(a) Upon the exercise of Limited Rights related to Nonqualified Stock
Options, the holder thereof shall receive from Oryx or the
appropriate Subsidiary in cash an amount equal to the product
computed by multiplying (i) the excess of (A) the higher of (x) the
Minimum Price Per Share (as hereinafter defined) or (y) the highest
reported closing sales price of a share of Common Stock on the New
York Stock Exchange at any time during the period beginning on the
sixtieth day prior to the date on which such Limited Rights are
exercised and ending on the date on which such Limited Rights are
exercised, over (B) the exercise price per share of Common Stock
subject to the related Nonqualified Stock Option, times (ii) the
number of shares of Common Stock with respect to which such Limited
Rights are being exercised.
(b) Upon the exercise of Limited Rights related to Incentive Stock
Options, the holder thereof shall receive from Oryx or the
appropriate Subsidiary in cash an amount equal to the product
computed by multiplying (i) the excess of (A) the Fair Market Value
of a share of Common Stock on the date of exercise of the Limited
Rights over (B) the exercise price per share of Common Stock subject
to the related Incentive Stock Option times (ii) the number of shares
of Common Stock with respect to which such Limited Rights are being
exercised.
8.4 Minimum Price Per Share. For purposes of this Article 8, the term
"Minimum Price Per Share" shall mean the highest gross price (before
brokerage commissions and soliciting dealers' fees) paid or to be paid
for a share of Common Stock (whether by way of exchange, conversion,
distribution upon liquidation or otherwise) in any Change in Control
which is in effect at any time during the period beginning on the
sixtieth day prior to the date on which such Limited Rights are exercised
and ending on the date on which such Limited Rights are exercised. For
purposes of this definition, if the consideration paid or to be paid in
any such Change in Control shall consist, in whole or in part, of
consideration other than cash, the Board shall take such action, as in
its judgment it deems appropriate, to establish the cash value of such
consideration.
ARTICLE 9.
RESTRICTED STOCK
9.1 General. Awards may be granted to Employees and Outside Directors in the
form of Restricted Stock. Restricted Stock shall be awarded in such
numbers and at such times as the Committee or the Board shall determine.
9.2 Restriction Period. At the time an Award of Restricted Stock is granted,
the Committee or the Board shall establish a period of time (the
"Restriction Period") applicable to such Restricted Stock. Each Award of
Restricted Stock may have a different Restriction Period, in the
discretion of the Committee or the Board. The Restriction Period
applicable to a particular Award of Restricted Stock shall not be changed
except as permitted by Section 6.2, Section 9.3 or Article 12.
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9.3 Other Terms and Conditions. Restricted Stock awarded to a Participant
under the Plan shall be represented by a stock certificate registered in
the name of the Participant or, at the option of Oryx, in the name of a
nominee of Oryx. Subject to the terms and conditions of the Award
Agreement, a Participant to whom Restricted Stock has been awarded shall
have the right to receive dividends thereon during the Restriction
Period, to vote the Restricted Stock and to enjoy all other stockholder
rights with respect thereto, except that (a) the Participant shall not be
entitled to possession of the stock certificate representing the
Restricted Stock until the Restriction Period shall have expired, (b)
Oryx shall retain custody of the Restricted Stock during the Restriction
Period, (c) the Participant may not sell, transfer, pledge, exchange,
hypothecate or otherwise dispose of the Restricted Stock during the
Restriction Period and (d) a breach of the terms and conditions
established by the Committee or the Board pursuant to the Award of the
Restricted Stock shall cause a forfeiture of the Restricted Stock. At the
time of an Award of Restricted Stock, the Committee or the Board may, in
its sole discretion, prescribe additional terms, conditions, restrictions
and/or limitations applicable to the Restricted Stock, including, but not
limited to, rules pertaining to the termination of employment or service
(by death, Disability, Retirement or otherwise) of a Participant prior to
expiration of the Restriction Period.
9.4 Payment for Restricted Stock. A Participant shall not be required to make
any payment for Restricted Stock awarded to the Participant, except to
the extent otherwise required by the Committee or the Board or by
applicable law.
9.5 Miscellaneous. Nothing in this Article 9 shall prohibit the exchange of
shares of Restricted Stock issued under the Plan pursuant to a plan of
reorganization for stock or securities of Oryx or another corporation a
party to the reorganization, but the stock or securities so received for
shares of Restricted Stock shall, except as provided in Section 6.2 or
Article 12, become subject to the restrictions applicable to the Award of
such Restricted Stock. Any shares of stock received as a result of a
stock split or stock dividend with respect to shares of Restricted Stock
shall also become subject to the restrictions applicable to the Award of
such Restricted Stock.
ARTICLE 10.
DIVIDEND EQUIVALENTS
Dividend Equivalents may be granted under the Plan to Employees and Outside
Directors, either as a component of another Award or as a separate Award,
subject to such terms, conditions, restrictions and/or limitations as the
Committee or the Board may establish. In general, and subject to such terms,
conditions, restrictions and/or limitations as the Committee or the Board may
establish, an Award of Dividend Equivalents shall confer upon the Participant
a right to receive, in the event of a cash or stock dividend or other
distribution paid or made on the outstanding shares of Common Stock, an amount
equal to the dividend or other distribution that would have been received by
the Participant had the shares of Common Stock covered by the Award been
issued and outstanding on the record date established for such dividend or
other distribution. Dividend Equivalents may be paid currently or may be
deemed to be reinvested in additional shares of Common Stock (which may
thereafter accrue additional Dividend Equivalents). Any such reinvestment
shall be at the Fair Market Value of the Common Stock at the time thereof.
Dividend Equivalents may be paid in cash, shares of Common Stock, other Awards
or other property, or a combination thereof, in a single payment or in
installments, and at such time or times as the Committee or the Board shall
determine. Dividend Equivalents granted as a component of another Award may
provide that such Dividend Equivalents shall be paid upon exercise, payment or
settlement of or lapse of restrictions on such other Award, and that such
Dividend Equivalents shall expire or be forfeited under the same conditions as
such other Award. Dividend Equivalents granted as a component of another Award
may also contain terms and conditions different from such other Award.
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ARTICLE 11.
OTHER INCENTIVE AWARDS
Other Incentive Awards may be granted under the Plan to Employees and
Outside Directors based upon, payable in or otherwise related to, in whole or
in part, shares of Common Stock if the Committee or the Board, in its sole
discretion, determines that such Other Incentive Awards are consistent with
the purposes of the Plan. Subject to the terms and provisions of the Plan,
Other Incentive Awards may be granted to Employees and Outside Directors in
such amount, upon such terms and at any time and from time to time as shall be
determined by the Committee or the Board. Each grant of an Other Incentive
Award shall be evidenced by an Award Agreement that shall specify the amount
of the Other Incentive Award and the terms, conditions, restrictions and/or
limitations applicable to such Award. Payment of Other Incentive Awards shall
be made at such times and in such form, which may be cash, shares of Common
Stock or other property (or a combination thereof), as established by the
Committee or the Board, subject to the terms of the Plan.
ARTICLE 12.
CORPORATE CHANGE
Notwithstanding anything contained in the Plan to the contrary, in the event
of a Corporate Change, unless otherwise provided in the related Award
Agreement: (a) each Option then outstanding shall become exercisable in full;
(b) all restrictions (other than restrictions imposed by law) and conditions
of all Restricted Stock, Dividend Equivalents and Other Incentive Awards then
outstanding shall be deemed satisfied; and (c) all other criteria and
objectives the attainment of which are a pre-condition to exercise, vesting,
payment or settlement of all Dividend Equivalents and Other Incentive Awards
then outstanding shall be deemed fully satisfied at the maximum criteria
levels.
ARTICLE 13.
AMENDMENT AND TERMINATION
The Board may at any time suspend, terminate, amend or modify the Plan, in
whole or in part; provided, however, that no amendment or modification of the
Plan shall become effective without the approval of such amendment or
modification by the stockholders of Oryx if Oryx, on the advice of counsel,
determines that such stockholder approval is necessary or desirable. Upon
termination of the Plan, the terms and provisions of the Plan shall,
notwithstanding such termination, continue to apply to Awards granted prior to
such termination. No suspension, termination, amendment or modification of the
Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the consent of the Participant holding such Award
(except that such consent shall not be required in the case of an amendment or
modification required following a change in law or interpretation thereof to
cause Options and Limited Rights under the Plan to continue to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code).
ARTICLE 14.
MISCELLANEOUS
14.1 Award Agreements. After the Committee or the Board grants an Award under
the Plan to a Participant, Oryx and the Participant shall enter into an
Award Agreement setting forth the terms, conditions, restrictions and/or
limitations applicable to the Award and such other matters as the
Committee or the Board may determine to be appropriate. The terms and
provisions of the respective Award Agreements need not be identical. In
the event of any conflict between an Award Agreement and the Plan, the
terms of the Plan shall govern.
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14.2 Noncompetition. Notwithstanding anything contained in the Plan to the
contrary, prior to a Change in Control, in the event the Committee or the
Board determines, in its sole discretion, that a Participant is engaging
or has engaged, directly or indirectly, in any manner or capacity,
whether as principal, agent, partner, director, officer, employee,
consultant, stockholder or otherwise, in any Competitive Activity (as
hereinafter defined), during the term of his or her employment or service
with the Company or at any time during the three-year period following
the termination of his or her employment or service, the Committee or the
Board may cancel, in whole or in part, any and all Awards granted to such
Participant under the Plan, whether or not then exercisable (other than
shares of Restricted Stock that have vested). For purposes of this
Section 14.2, "Competitive Activity" shall mean the exploration,
development or production of oil or gas, or activities related thereto,
in the same geographical market where substantially similar activities
are being carried on, directly or indirectly, by Oryx or any Subsidiary.
The determination of whether a Participant is engaging or has engaged in
Competitive Activity with the Company shall be made by the Committee or
the Board in good faith and in its sole discretion.
14.3 Nonassignability. Except as otherwise provided in a Participant's Award
Agreement, no Award granted under the Plan may be sold, transferred,
pledged, exchanged, hypothecated or otherwise disposed of, other than by
will or pursuant to the applicable laws of descent and distribution.
Further, no such Award shall be subject to execution, attachment or
similar process. Any attempted sale, transfer, pledge, exchange,
hypothecation or other disposition of an Award not specifically permitted
by the Plan or the Award Agreement shall be null and void and without
effect. All Awards granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by such Participant or, in
the event of the Participant's legal incapacity, by his or her guardian
or legal representative.
14.4 No Fractional Shares. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Award granted hereunder,
and no payment or other adjustment shall be made in respect of any such
fractional share.
14.5 Withholding Taxes. The Company shall be entitled to deduct from any
payment made under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment taxes required by law to
be withheld with respect to such payment, may require the Participant to
pay to the Company such withholding taxes prior to and as a condition of
the making of any payment or the issuance or delivery of any shares of
Common Stock under the Plan and shall be entitled to deduct from any
other compensation payable to the Participant any withholding obligations
with respect to Awards under the Plan. In accordance with any applicable
administrative guidelines it establishes, the Committee may allow a
Participant to pay the amount of taxes required by law to be withheld
from or with respect to an Award by (a) withholding shares of Common
Stock from any payment of Common Stock due as a result of such Award or
(b) permitting the Participant to deliver to the Company previously
acquired shares of Common Stock, in each case having a Fair Market Value
equal to the amount of such required withholding taxes.
14.6 Regulatory Approvals and Listings. Notwithstanding anything contained in
the Plan to the contrary, Oryx shall have no obligation to issue or
deliver shares of Common Stock under the Plan prior to (a) the obtaining
of any approval from any governmental agency which Oryx shall, in its
sole discretion, determine to be necessary or advisable, (b) the
admission of such shares to listing on the stock exchange or stock market
on which the Common Stock may be listed and (c) the completion of any
registration or other qualification of such shares under any Federal or
state law or ruling of any governmental body which Oryx shall, in its
sole discretion, determine to be necessary or advisable.
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14.7 No Right to Continued Employment or Grants. Participation in the Plan
shall not give any Employee any right to remain in the employ of Oryx or
any Subsidiary, and Oryx and its Subsidiaries reserve the right to
terminate the employment of any Employee at any time. Further,
participation in the Plan shall not give any Outside Director any right
to continue as a director of Oryx. The adoption of the Plan shall not be
deemed to give any Employee, Outside Director or other individual any
right to be selected as a Participant or to be granted an Award.
14.8 Binding Effect. The obligations of Oryx under the Plan shall be binding
upon any successor corporation or organization resulting from the merger,
consolidation or other reorganization of Oryx, or upon any successor
corporation or organization succeeding to all or substantially all of the
assets and business of Oryx. The terms and conditions of the Plan shall
be binding upon each Participant and his or her heirs, legatees,
distributees and legal representatives.
14.9 Severability. If any provision of the Plan or any Award Agreement is held
to be illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining provisions of the Plan or such agreement,
as the case may be, but such provision shall be fully severable and the
Plan or such agreement, as the case may be, shall be construed and
enforced as if the illegal or invalid provision had never been included
herein or therein.
14.10 No Restriction of Corporate Action. Nothing contained in the Plan shall
be construed to prevent Oryx or any Subsidiary from taking any corporate
action (including any corporate action to suspend, terminate, amend or
modify the Plan) that is deemed by Oryx or such Subsidiary to be
appropriate or in its best interest, whether or not such action would
have an adverse effect on the Plan or any Awards made or to be made
under the Plan. No Participant or other person shall have any claim
against Oryx or any Subsidiary as a result of such action.
14.11 Notices. All notices required or permitted to be given or made under the
Plan or any Award Agreement shall be in writing and shall be deemed to
have been duly given or made if (a) delivered personally, (b)
transmitted by first class registered or certified United States mail,
postage prepaid, return receipt requested, (c) sent by prepaid overnight
courier service or (d) sent by telecopy or facsimile transmission,
answer back requested, to the person who is to receive it at the address
that such person has theretofore specified by written notice delivered
in accordance herewith. Such notices shall be effective (a) if delivered
personally or sent by courier service, upon actual receipt by the
intended recipient, (b) if mailed, upon the earlier of five days after
deposit in the mail or the date of delivery as shown by the return
receipt therefor or (c) if sent by telecopy or facsimile transmission,
when the answer back is received. Oryx or a Participant may change, at
any time and from time to time, by written notice to the other, the
address that it or such Participant had theretofore specified for
receiving notices. Until such address is changed in accordance herewith,
notices hereunder or under an Award Agreement shall be delivered or sent
(a) to a Participant at his or her address as set forth in the records
of the Company or (b) to Oryx at the principal executive offices of Oryx
clearly marked "Attention: LTIP Administration".
14.12 Governing Law. The Plan shall be governed by and construed in accordance
with the laws of the State of Texas, except as superseded by applicable
Federal law.
14.13 No Right, Title or Interest in Company Assets. No Participant shall have
any rights as a stockholder of Oryx as a result of participation in the
Plan until the date of issuance of a stock certificate in his or her
name and, in the case of Restricted Stock, unless and until such rights
are granted to the Participant under the Plan. To the extent any person
acquires a right to receive payments from the Company under the Plan,
such rights shall be no greater than the rights of an unsecured creditor
of the Company, and such person shall not have any rights in
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or against any specific assets of the Company. All of the Awards granted
under the Plan shall be unfunded.
14.14 Risk of Participation. Nothing contained in the Plan shall be construed
either as a guarantee by Oryx or its Subsidiaries, or their respective
stockholders, directors, officers or employees, of the value of any
assets of the Plan or as an agreement by Oryx or its Subsidiaries, or
their respective stockholders, directors, officers or employees, to
indemnify anyone for any losses, damages, costs or expenses resulting
from participation in the Plan.
14.15 No Guarantee of Tax Consequences. No person connected with the Plan in
any capacity, including, but not limited to, Oryx and the Subsidiaries
and their respective directors, officers, agents and employees, makes
any representation, commitment or guarantee that any tax treatment,
including, but not limited to, Federal, state and local income, estate
and gift tax treatment, will be applicable with respect to any Awards or
payments thereunder made to or for the benefit of a Participant under
the Plan or that such tax treatment will apply to or be available to a
Participant on account of participation in the Plan.
14.16 Other Benefits. No Award granted under the Plan shall be considered
compensation for purposes of computing benefits or contributions under
any retirement plan of Oryx or any Subsidiary, nor affect any benefits
or compensation under any other benefit or compensation plan of Oryx or
any Subsidiary now or subsequently in effect.
14.17 Predecessor Plan. Upon approval of the Plan by the stockholders of Oryx
at the 1997 Annual Meeting of Stockholders, no further awards shall be
granted under the Oryx Energy Company 1992 Long-Term Incentive Plan (the
"Predecessor Plan"), except to the extent required pursuant to the terms
of any awards outstanding under the Predecessor Plan on the date of such
approval and except for any grants of restricted stock authorized prior
to the date of such approval by the committee administering the
Predecessor Plan; provided, however, that nothing in this Section 14.17
shall prevent the committee administering the Predecessor Plan from
taking any action permitted under Article XIII of the Predecessor Plan.
14.18 Miscellaneous. Headings are given to the articles and sections of the
Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction
of the Plan or any provisions hereof. The use of the masculine gender
shall also include within its meaning the feminine. Wherever the context
of the Plan dictates, the use of the singular shall also include within
its meaning the plural, and vice versa.
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EXHIBIT B
ORYX ENERGY COMPANY
EXECUTIVE VARIABLE INCENTIVE PLAN ("EXECUTIVE VIP")
[Composite reflecting the provisions of Amendment No. 1 effective
January 1, 1997. Additions are shown in boldface, underscored type.]
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this Executive Variable Incentive Plan (hereinafter referred
to as the "Plan") for Oryx Energy Company is to provide incentive compensation
opportunities for certain executive employees of the Company and to provide
certain participants the option of taking all or a portion of their annual
incentive compensation awards in restricted common stock of the Company. The
Plan seeks to reinforce three significant Company values: teamwork, sharing
success, and the rewarding of individual performance. It is also designed to
assist in the attraction, motivation, and retention of superior employees and
to link employees to the Company's strategic objectives and the interests of
stockholders. Each year, Participants in the Plan will have the opportunity to
earn incentive compensation awards based upon the attainment of specific
Performance Goals established at the beginning of each Plan Year by the
Compensation Committee of the Board of Directors.
ARTICLE II
DEFINITIONS
When used in the Plan, the following terms shall have the following
meanings:
2.1 Base Salary means the annualized weekly base salary in effect as of the
last pay period ending during the Plan Year as reflected in the personnel
records of the Company.
2.2 Board of Directors means the Board of Directors of the Company.
2.3 Common Stock means the common stock, par value $1.00 per share, of the
Company or any stock or other securities of the Company hereafter issued
or issuable in substitution or exchange for the Common Stock.
2.4 Company means Oryx Energy Company.
2.5 Compensation Committee means the Compensation Committee of the Board of
Directors, which will have the overall responsibility for administering
the Plan.
2.6 Corporate Change: A "Corporate Change" shall be deemed to have occurred
for the purposes of Article IX hereof upon (i) the dissolution or
liquidation of the Company; (ii) a reorganization, merger, or
consolidation of the Company with one or more corporations (other than a
merger or consolidation effecting a reincorporation of the Company in
another state or any other merger or consolidation in which the
shareholders of the surviving corporation and their proportionate
interests therein immediately after the merger or consolidation are
substantially identical to the shareholders of the Company and their
proportionate interests therein immediately prior to the merger or
consolidation); (iii) the sale of all or substantially all of the assets
of the Company; or (iv) the occurrence of a Change in Control. A "Change
in Control"
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shall be deemed to have occurred for purposes of Article IX hereof if (a)
individuals who were directors of the Company immediately prior to a
Control Transaction shall cease, within two years of such Control
Transaction, to constitute a majority of the Board of Directors of the
Company (or of the Board of Directors of any successor to the Company or
to a company which has acquired all or substantially all of its assets) or
(b) any entity, person, or Group acquires shares of the Company in a
transaction or series of transactions that result in such entity, person,
or Group directly or indirectly owning beneficially 50% or more of the
outstanding shares of Common Stock of the Company. As used herein,
"Control Transaction" shall be (a) any tender offer for or acquisition of
capital stock of the Company, (b) any merger or consolidation of the
Company, (c) any contested election of directors of the Company, or (d)
any combination of the foregoing, any one of which results in a change in
voting power sufficient to elect a majority of the Board of Directors of
the Company. As used herein, "Group" shall mean persons who act "in
concert" as described in Sections 13(d)(3) and/or 14(d)(2) of the
Securities Exchange Act of 1934, as amended.
2.7 Disability: For purposes of Articles III and IX hereof, the "Disability"
of a Participant shall be deemed to have occurred if, in the good faith
judgment of the Compensation Committee, the Participant shall become
unable to continue the proper performance of his or her duties as an
employee of the Company or a subsidiary thereof on a full-time basis as a
result of his or her physical or mental incapacity.
2.8 Executive Deferred Compensation Plan means the nonqualified deferred
compensation plan of the Company in which certain executive employees of
the Company may voluntarily elect to participate by deferring their cash
awards earned pursuant to the Plan as set forth in Article VIII hereof.
2.9 Fair Market Value means the average of the reported high and low sales
prices of the Common Stock (rounded up to the nearest one-eighth of a
dollar) on the date Fair Market Value is to be determined (or if there was
no reported sale on such date, the next preceding date on which any
reported sale occurred) on the New York Stock Exchange (or, if the Common
Stock is not then listed or admitted to trading on such exchange, on the
principal exchange or in such other principal market on which the Common
Stock is then listed or admitted to trading).
2.10 Just Cause means willful misconduct or dishonesty by the Participant,
conviction of the Participant for a felony or failure by the Participant
to contest prosecution for a felony, or excessive absenteeism on the part
of the Participant not related to illness.
2.11 Participant means any employee of the Company or any subsidiary thereof
who is described as eligible to participate in the Plan as set forth in
Article III hereof.
2.12 Performance Goals mean the performance goals established each year
pursuant to the Plan upon which performance will be measured.
2.13 Plan means the Executive Variable Incentive Plan of Oryx Energy Company,
effective as of January 1, 1996, as described herein.
2.14 Plan Year means the performance period of the Plan, commencing on January
1 and ending December 31 each year, commensurate with the Company's
fiscal year.
2.15 Restricted Stock means Common Stock issued pursuant to, and with such
restrictions as are imposed by, Article IX hereof.
2.16 Retirement: For purposes of Articles III and IX hereof, the term
"Retirement" shall mean a termination of employment with the Company or a
subsidiary thereof by reason of retirement
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either (i) on a voluntary basis by a Participant who is at least 60 years
of age or (ii) with the written consent of the Compensation Committee in
its sole discretion (in the case of the retirement of the Chief Executive
Officer of the Company) or with the written consent of the Chief Executive
Officer of the Company in his sole discretion (in the case of the
retirement of any other Participant). The preceding provisions of this
Section to the contrary notwithstanding, at any time prior to one year
preceding the date on which a Participant attains age 60, a Participant
may make a written irrevocable election to defer his or her voluntary
retirement age set forth in clause (i) to age 61 or such later age the
Participant may designate in such election. In addition, any Participant
who makes such an election may make a subsequent written irrevocable
election to further defer his or her voluntary retirement age to any age
at least one year older than the age previously designated provided that
such election must be made at least one year prior to the attainment of
the previously elected voluntary retirement age.
2.17 Target means the level of performance that is judged to be acceptable or
standard for which 100% of the award will be paid for attainment of that
performance objective.
2.18 Target Award Level means the percentage of Base Salary that may be earned
by each Participant based upon the attainment of the Target (100%) level
of performance.
2.19 Threshold means the level of performance that is judged to be the minimum
acceptable for which some percentage, less than 100%, of the award will
be paid for attainment of that performance objective.
ARTICLE III
ELIGIBILITY
3.1 Subject to the provisions of this Article III, only those employees of the
Company or a subsidiary thereof who are "officers" of the Company as
defined in Rule 16a-1(f) promulgated by the Securities and Exchange
Commission under Section 16 of the Securities Exchange Act of 1934, as
amended, are eligible to participate in this Plan and only those so
eligible who are designated by the Compensation Committee as
"Participants" in the Plan for any Plan Year will participate in the Plan
for such Plan Year.
3.2 An employee must be on the regular payroll (including approved annual
vacation leave) as of December 31 of the Plan Year and have at least 26
completed weeks of active service during the Plan Year in order to be
eligible to receive an award pursuant to the Plan for such Plan Year. Any
employee who satisfies the criteria for receiving an award pursuant to the
Plan for a Plan Year but who had fewer than 52 completed weeks of active
service during the Plan Year shall have his or her award pro-rated based
on his or her number of completed weeks of active service during the Plan
Year. An employee whose employment terminates during the Plan Year for any
reason other than those reasons set forth in Section 3.4 hereof is not
eligible to receive an award pursuant to the Plan for such Plan Year.
3.3 Any provision of the Plan to the contrary notwithstanding: (i) for
purposes of determining an employee's completed weeks of active service
during a Plan Year under this Article III, any period of approved annual
vacation leave, and any period of a leave of absence (whether paid or
unpaid) to which the employee is entitled pursuant to the Family and
Medical Leave Act, shall be included as active service for such Plan Year;
(ii) for purposes of determining whether an employee is on the regular
payroll as of December 31 of a Plan Year under this Article III, an
employee on a leave of absence as of December 31 of a Plan Year (whether
paid or unpaid) to which the employee is entitled pursuant to the Family
and Medical Leave Act shall be deemed
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to be on the regular payroll as of such date; and (iii) for purposes of
determining whether an employee is on the regular payroll as of December
31 of a Plan Year under this Article III, an employee receiving benefits
pursuant to the Company's Short-Term Disability Program or Long-Term
Disability Plan shall be deemed to be on the regular payroll as of such
date if such employee had at least 26 completed weeks of active service
during the Plan Year.
3.4 Any Participant whose employment terminates during a Plan Year (but prior
to December 31 of such Plan Year) due to Disability, Retirement or death
shall be eligible for a pro rata award for the Plan Year based on the
number of his or her completed weeks of active service during the Plan
Year, provided such Participant has accumulated at least 26 completed
weeks of active service in the Plan Year. In the event of an employee's
death, the designated beneficiary of the employee under the Plan shall be
the same as his or her designated beneficiary under the Company's Death
Benefit Plan.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.1 The Plan shall be administered by the Compensation Committee. Subject to
the express provisions of the Plan, the Compensation Committee shall have
the right and authority, in its sole and absolute discretion, (a) to
adopt, amend, or rescind administrative and interpretive rules and
regulations relating to the Plan; (b) to construe the Plan; (c) to make
all other determinations necessary or advisable for administering the
Plan; (d) to determine the terms and provisions of the respective
agreements (which need not be identical) relating to the award of shares
of Restricted Stock pursuant to Article IX hereof; (e) to construe such
agreements; and (f) to exercise the powers conferred on the Compensation
Committee under the Plan. The Compensation Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan
in the manner and to the extent it shall deem expedient to carry it into
effect, and it shall be the sole and final judge of such expediency. The
determinations of the Compensation Committee on the matters referred to in
this Section 4.1 shall be final and conclusive.
4.2 Subject to the express provisions of the Plan, the Compensation Committee
shall have the exclusive authority to amend, modify, suspend, or terminate
the Plan at any time; provided, however, that no amendment, modification,
suspension or termination of the Plan shall in any manner adversely affect
the right of any Participant to receive any amount to which such
Participant has become entitled prior to such amendment, modification,
suspension or termination.
4.3 At the beginning of the Plan Year, the Chief Executive Officer of the
Company shall make recommendations to the Compensation Committee regarding
Performance Goals and the respective Threshold and Target levels of
performance associated with each. Within the first 90 days of the Plan
Year the Compensation Committee will review the recommendations of the
Chief Executive Officer and approve or modify the recommendations as
presented. In addition, as provided in more detail in Articles V and VI
hereof, at the completion of the Plan Year, the Compensation Committee
shall review and certify the Plan award levels based upon actual
performance during the Plan Year, and may exercise discretion in approving
the award for any Participant such that the Compensation Committee may
reduce (but may not increase) any or all of a Participant's award
otherwise determined in accordance with the formula set forth in this Plan
and the performance results for such Plan Year. The Compensation Committee
may, in its discretion, design the award levels and performance goals for
any Plan Year for any
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individual or group of individuals in a manner which will except any
compensation paid to any such individual or group from the deduction
limitations of Section 162(m) of the Internal Revenue Code of 1986, but
the Compensation Committee is not obligated to do so.
ARTICLE V
TARGET AWARD LEVELS
5.1 Participants in the Plan shall have Target Award Levels expressed as a
percentage, not to exceed 100%, of their respective Base Salaries during
the Plan Year. The Target Award Levels for a Plan Year will be established
for each Participant by the Compensation Committee within the first 90
days of the Plan Year.
ARTICLE VI
DETERMINATION OF PERFORMANCE GOALS AND AMOUNT OF AWARDS
6.1 Within the first 90 days of each Plan Year, the Compensation Committee
shall establish the Performance Goals which shall provide the basis for
calculating the annual incentive compensation award for Participants for
such Plan Year. The Performance Goals established by the Compensation
Committee for a Plan Year may be based on stock price, cash flows, net
income, operating income, expense levels, debt balance, debt ratings,
total shareholder return, return on investment, return on equity, economic
value added, production volumes, reserve additions, profit or cost per
equivalent barrel, earnings per share, net asset value per share, or such
other goals as the Compensation Committee may determine appropriate for a
Plan Year. The Performance Goals may be based on the performance of the
Company generally, in the absolute or in relation to its peers, or the
performance of a particular employee, division, department, branch,
subsidiary or other unit to which a particular employee is assigned. In
establishing the Performance Goals for the applicable Plan Year, the
Compensation Committee may establish different Performance Goals for
individual Participants or groups of Participants. Each Performance Goal
will be weighted to reflect its relative performance to the Company's
strategic business plans for the Plan Year. The sum of the weightings of
the Performance Goals at the Target level for particular Participants or
groups of Participants will equal 100% for the Plan Year. Each Performance
Goal will have stated Threshold and Target levels of performance which
will provide a range of award possibilities.
6.2 As of the end of each Plan Year, a performance score will be determined by
the Compensation Committee for each Performance Goal wherein achievement
will be based upon actual performance compared to the Threshold and Target
levels of performance. The Compensation Committee shall certify the degree
of achievement of each Performance Goal based upon the actual performance
results for the Plan Year. The results of the Performance Goals will be
summed to determine the basis for the annual incentive compensation award
for the Participant or group of Participants to which they apply, which
sum may exceed 100%.
6.3 As of the end of the Plan Year, a Participant's incentive compensation
award based upon attainment of Performance Goals for the Plan Year shall
be calculated by multiplying such Participant's Base Salary by the
Participant's Target Award Level for such Plan Year. The result shall then
be multiplied by the performance score applicable to such Participant as
determined by the Compensation Committee for such Plan Year in accordance
with Section 6.2 hereof. After such amount is determined, the Compensation
Committee may, in its sole discretion, reduce or eliminate (but may not
increase) the amount of the award for a particular Participant based upon
such factors as the Compensation Committee may determine to be relevant,
including but
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not limited to such Participant's individual performance, but also shall
take into consideration reliance placed on the Plan by the Participant in
rendering performance during the Plan Year. Any provision of this Plan to
the contrary notwithstanding, the maximum incentive compensation award
based upon attainment of Performance Goals that may be payable to any
Participant for a Plan Year calculated as described above shall be 200% of
his or her annualized weekly base salary in effect as of the first pay
period ending during the Plan Year to which the award relates; PROVIDED,
HOWEVER, THAT WITH RESPECT TO PLAN YEARS BEGINNING AFTER DECEMBER 31, 1996,
THE MAXIMUM INCENTIVE COMPENSATION AWARD BASED UPON ATTAINMENT OF
PERFORMANCE GOALS THAT MAY BE PAYABLE TO ANY PARTICIPANT FOR A PLAN YEAR
CALCULATED AS DESCRIBED ABOVE SHALL BE THE LESSER OF (I) 200% OF HIS OR HER
ANNUALIZED WEEKLY BASE SALARY IN EFFECT AS OF THE FIRST PAY PERIOD ENDING
DURING THE PLAN YEAR TO WHICH THE AWARD RELATES, OR (II) $1,500,000.
6.4 In addition to the incentive compensation awards based upon attainment of
Performance Goals as set forth above, the Compensation Committee may, in
its sole discretion, grant ad hoc incentive compensation awards to any
Participant or group of Participants in such amount or amounts as it shall
determine to be appropriate based upon such factors as it shall deem to be
relevant. Any such ad hoc incentive compensation awards shall be determined
and granted by the Compensation Committee after the Plan Year to which the
award relates but prior to April 30 following the end of such Plan Year.
ARTICLE VII
FORM AND TIMING OF AWARDS
7.1 Incentive compensation awards under the Plan may be paid in cash or shares
of Common Stock, or in any combination thereof, at the discretion of the
Compensation Committee. Awards so paid in Common Stock shall be valued
based on the Fair Market Value of the Common Stock as of the first business
day following the completion of the Plan Year. The manner of payment will
be at the discretion of the Compensation Committee. Awards shall be paid by
April 30 following the completion of the Plan Year. Awards shall be subject
to the normal rules and regulations regarding the withholding for taxes and
other deductions, if any, as may be in effect from time to time.
7.2 Certain Participants may elect to have their cash incentive compensation
awards earned under the Plan (a) deferred in accordance with the provisions
of Article VIII hereof or (b) paid to them in shares of Restricted Stock in
accordance with the provisions of Article IX hereof.
ARTICLE VIII
VOLUNTARY ELECTION TO DEFER
8.1 Participants eligible to participate in the Executive Deferred Compensation
Plan may elect to defer their cash incentive compensation awards pursuant
to the Plan by their voluntary election to participate in the Executive
Deferred Compensation Plan. Based upon the terms and provisions of the
Executive Deferred Compensation Plan, certain Participants may irrevocably
elect to defer the receipt of all or a portion of their earned cash
incentive compensation awards to a specified future date such as
retirement. The election to participate in the Executive Deferred
Compensation Plan must be made in writing and submitted to the Company's
Human Resources Department before the commencement of the Plan Year.
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ARTICLE IX
VOLUNTARY ELECTION TO RECEIVE RESTRICTED STOCK
9.1 Subject to the provisions of this Article IX, eligible Participants may
elect to have their cash incentive compensation awards earned under the
Plan for any Plan Year paid to them in shares of Restricted Stock. An
election made by an eligible Participant pursuant to this Article IX (a)
may be made only as to increments of 25%, 50%, 75%, or 100% of the
Participant's cash incentive compensation award, (b) must be made in
writing on a form approved for this purpose by the Compensation Committee
and submitted to the Company's Human Resources Department on or before
March 1 of the Plan Year in respect of which the award is earned (or on
or before such later date as the Compensation Committee may approve), and
(c) shall be irrevocable. The elections provided for under this Article
IX are hereinafter referred to as "Restricted Stock Elections". The
payment of shares of Restricted Stock pursuant to this Article IX shall
be subject to the approval of the Compensation Committee, which shall
have the discretion to cause the Company to settle all or any part of the
Company's payment obligation under a Restricted Stock Election by the
payment to the Participant of his or her cash incentive compensation
award in lieu of the shares of Restricted Stock the Company would
otherwise be obligated to deliver.
9.2 Prior to February 15 of each Plan Year, the Compensation Committee shall
designate the Participants or class or classes of Participants (if any)
who shall be eligible to make Restricted Stock Elections with respect to
awards earned under the Plan for such Plan Year. Such determinations
shall be in the sole discretion of the Compensation Committee.
A Participant who has made a Restricted Stock Election shall be eligible
to receive shares of Restricted Stock pursuant thereto only if such
Participant is an employee of the Company or a subsidiary thereof on the
date that such shares are issued. If the Participant is not so employed,
then the Participant's prior election to receive shares of Restricted
Stock in lieu of all or part of his or her cash incentive compensation
award for such Plan Year shall be void.
9.3 The total number of shares of Restricted Stock to be paid to a
Participant who has made a Restricted Stock Election shall be determined
by dividing
(x) the product obtained (the "Subject Amount") by multiplying (i) the
amount of the Participant's cash incentive compensation award earned
under the Plan for the Plan Year times (ii) the percentage of such
amount that the Participant elected to have paid in shares of
Restricted Stock pursuant to his or her Restricted Stock Election,
by
(y) the Fair Market Value of the Common Stock as of the first business
day following the completion of the Plan Year.
In determining the number of shares of Restricted Stock to be paid to a
Participant, the Compensation Committee may, in its discretion, increase the
value of such Participant's Subject Amount by multiplying it by a factor,
which shall not be greater than 150%, as determined by the Compensation
Committee. The factor shall be established by the Compensation Committee prior
to February 15 of the Plan Year and shall be that rate which the Compensation
Committee, in its sole discretion, determines to be appropriate for such Plan
Year to reflect the Participant's election to forego cash compensation in
exchange for shares of Restricted Stock. No fractional shares of Common Stock
shall be issued pursuant to this Section 9.3; instead, the Company shall pay
to the Participant the amount of his or her cash incentive compensation award
not converted into whole shares of Restricted Stock pursuant to this Section
9.3.
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9.4 All shares of Restricted Stock issued to Participants pursuant to this
Article IX with respect to a Plan Year shall be subject to a restricted
period (the "Restricted Period"), the duration of which shall be
determined by the Compensation Committee in its sole discretion prior to
February 15 of such Plan Year. The Restricted Period for shares of
Restricted Stock issued to a Participant shall commence on the first
business day following completion of the Plan Year. Shares of Restricted
Stock issued to a Participant pursuant to this Article IX shall be
forfeited to the Company at no cost to the Company if the Participant's
employment with the Company or a subsidiary of the Company terminates
prior to the expiration or termination of the Restricted Period
applicable to such shares; provided, however, that the shares of
Restricted Stock shall become fully vested and the Restricted Period
shall terminate upon (a) the Participant's termination of employment
during the Restricted Period due to death, Disability, or Retirement, (b)
the involuntary termination of the Participant's employment with the
Company and its subsidiaries by action of the Company (or its subsidiary,
with respect to a Participant employed by a subsidiary of the Company)
during the Restricted Period for reasons other than Just Cause, or (c)
the occurrence of a Corporate Change during the Restricted Period. Unless
and until shares of Restricted Stock are delivered to the Participant
upon vesting, the shares of Restricted Stock shall not be sold, assigned,
transferred, discounted, exchanged, pledged, or otherwise encumbered or
disposed of by the Participant in any manner. The Compensation Committee
may from time to time, in its discretion, and subject to such terms and
conditions as the Compensation Committee may prescribe, grant to
Participants to whom shares of Restricted Stock have been issued pursuant
to this Article IX the right to extend the Restricted Period applicable
to such shares for an additional period of time or until the occurrence
of a specified event or events, in which case such shares shall remain
subject to the restrictions of this Article IX for the period of such
extension.
9.5 The Company shall issue, in the name of each Participant to whom shares
of Restricted Stock have become payable pursuant to this Article IX (or,
at the option of the Company, in the name of a nominee of the Company),
stock certificates representing the total number of shares of Restricted
Stock to be paid to the Participant with respect to a Plan Year, as soon
as reasonably practicable after the date on which the Compensation
Committee approves, certifies and announces the awards for such Plan
Year. The Company or its agent, at the direction of the Compensation
Committee, shall hold such certificates, together with stock powers and
any other instrument of transfer reasonably requested by the Company duly
endorsed in blank, for the Participant's benefit until such time as the
shares of Restricted Stock represented by such certificates are forfeited
to the Company or the restrictions thereon terminate.
9.6 Upon the issuance of a certificate representing shares of Restricted
Stock to a Participant, the Participant shall become the owner thereof
for all purposes and shall have all rights as a stockholder, including
voting rights and the right to receive dividends and distributions, with
respect to such shares, subject to the provisions of this Article IX. If
the Company shall pay or declare a dividend or make a distribution of any
kind, whether due to a reorganization, recapitalization, or otherwise,
with respect to the shares of Common Stock constituting the shares of
Restricted Stock, then the Company shall pay or make such dividend or
other distribution with respect to the shares of Restricted Stock;
provided, however, that the cash, stock or other securities and other
property constituting such dividend or other distribution shall be held
by the Company subject to the restrictions applicable to the shares of
Restricted Stock until the shares with respect to which such dividend or
other distribution was paid or made are either vested or forfeited. If
any shares of Restricted Stock with respect to which such dividend or
distribution was paid or made do not vest but instead are forfeited
pursuant to the provisions hereof, then the Participant shall not be
entitled to receive such dividend or distribution with respect to such
forfeited shares and such dividend or distribution with respect to such
forfeited shares shall likewise be forfeited and automatically
transferred to and
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reacquired by the Company. If any shares of Restricted Stock with respect
to which such dividend or distribution was paid or made become vested
pursuant to the provisions hereof, then the Participant shall be entitled
to receive such dividend or distribution with respect to such vested
shares, without interest, and such dividend or distribution with respect to
such vested shares shall likewise be delivered to the Participant.
9.7 If any of the following events shall occur at any time while shares of
Restricted Stock are outstanding and prior to the vesting or forfeiture
thereof, the following adjustments shall be made in the number of shares of
Common Stock then constituting such shares of Restricted Stock, as
appropriate:
(a) If the Company pays a dividend on its outstanding shares of Common
Stock in shares of Common Stock or subdivides its outstanding shares
of Common Stock into a greater number of shares of Common Stock, the
number of shares of Common Stock then constituting the shares of
Restricted Stock shall be proportionately increased. Conversely, if
the outstanding shares of Common Stock are combined into a smaller
number of shares of Common Stock, the number of shares of Common Stock
then constituting the shares of Restricted Stock shall be
proportionately reduced. An adjustment made pursuant to this Section
9.7(a) shall become effective as of the record date in the case of a
dividend and shall become effective immediately after the effective
date in the case of a subdivision or combination.
(b) In case of any recapitalization or reclassification of the Common
Stock, or any merger or consolidation of the Company with or into one
or more other corporations, or any sale of all or substantially all
the assets of the Company, as a result of which the holders of Common
Stock receive other stock, securities, or property in lieu of or in
addition to, but on account of, their shares of Common Stock, (A) such
other stock, securities, or property allocable (as provided in clause
(B) below) to the shares of Common Stock then constituting the shares
of Restricted Stock shall be paid and delivered with respect to such
shares of Restricted Stock, subject to the same restrictions
applicable to such Restricted Stock, and (B) the Company shall make or
cause to be made lawful and adequate provision whereby, upon the
vesting of the shares of Restricted Stock after the record date for
the determination of the holders of Common Stock entitled to receive
such other stock, securities, or property, the Participant shall
receive, in lieu of or in addition to the shares of Restricted Stock
that have vested, as the case may be, the shares of stock, securities,
or property that would have been allocable to such shares of
Restricted Stock had such shares vested immediately prior to such
record date. The subdivision or combination of shares of Common Stock
at any time outstanding into a greater or smaller number of shares of
Common Stock shall not be deemed to be a recapitalization or
reclassification of the Common Stock for the purposes of this Section
9.7(b).
9.8 Upon the expiration or termination of the Restricted Period applicable to
shares of Restricted Stock, the restrictions applicable to the shares of
Restricted Stock that have not theretofore been forfeited shall terminate,
and as soon as practicable thereafter a stock certificate for the number of
shares of Restricted Stock with respect to which the restrictions have
terminated, together with any dividends or other distributions with respect
to such shares then being held by the Company pursuant to the provisions of
this Article IX, shall be delivered, free of all such restrictions, to the
Participant or the Participant's beneficiary or estate, as the case may be.
9.9 Each recipient of shares of Restricted Stock pursuant to this Article IX
shall, as a condition precedent to the issuance of such shares to or on
behalf of such person, enter into an agreement with the Company, in such
form as the Compensation Committee shall prescribe and which is consistent
with the provisions of the Plan, setting forth or incorporating the
restrictions, terms,
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<PAGE>
and conditions of the award of Restricted Stock. An agreement may contain
such provisions as the Compensation Committee deems appropriate to enable
the Company or its appropriate affiliate to satisfy its federal and any
applicable state and local tax withholding obligations, including
provisions permitting the Company, upon the vesting of shares of
Restricted Stock, to withhold delivery of shares of Restricted Stock or
accept delivery of other shares of Common Stock owned by the Participant
to satisfy such tax withholding obligations. In the event of any
inconsistency between the provisions of the Plan and any such agreement,
the provisions of the Plan shall govern.
9.10 Notwithstanding anything contained in the Plan to the contrary, the
Compensation Committee shall have the right to cancel all or any portion
of any outstanding restrictions prior to the expiration or termination of
such restrictions with respect to any or all shares of Restricted Stock
on such terms and conditions as the Compensation Committee may, in
writing, deem appropriate.
ARTICLE X
NO RIGHT OF EMPLOYMENT
10.1 Nothing in the Plan, including the employee's eligibility for
participation in the Plan, will infer any right of employment by the
Company or any subsidiary thereof to such employee.
ARTICLE XI
MISCELLANEOUS
11.1 The total number of shares of Common Stock that may be issued,
transferred, or awarded pursuant to Section 7.1 or Article IX of the Plan
shall not exceed a maximum of 300,000 in the aggregate. In the event the
Company shall effect a split of the Common Stock or a dividend payable in
Common Stock, or in the event the outstanding Common Stock shall be
combined into a smaller number of shares, the maximum number of shares
that may be issued or awarded under the Plan shall be increased or
decreased proportionately. Shares that have been previously delivered to
a Participant as Restricted Stock that have since been forfeited shall be
available for further issuance or award under the Plan. Shares of Common
Stock issued pursuant to the Plan may be shares of original issuance or
treasury shares or a combination of the foregoing, as the Compensation
Committee, in its discretion, shall from time to time determine.
11.2 Subject to the provisions of Article IX hereof, a Participant shall not
have the right to anticipate, alienate, sell, transfer, assign, pledge,
or encumber his or her right to receive any award made under the Plan.
11.3 No Participant shall have any lien on any assets of the Company or any
subsidiary thereof by reason of any rights to any award made under the
Plan.
11.4 No member of the Compensation Committee shall be liable for any act,
omission, or determination taken or made in good faith with respect to
the Plan or any awards made hereunder; and the members of the
Compensation Committee shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage, or
expenses (including counsel fees) arising therefrom to the full extent
permitted by law and under any directors' and officers' liability or
similar insurance coverage that may be in effect from time to time.
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11.5 The adoption of the Plan or any modification or amendment hereof does not
imply any commitment to continue or adopt the same plan, or any
modification hereof, or any other plan for incentive compensation for any
succeeding year, provided that no termination, modification or amendment
of the Plan shall adversely affect the right of any Participant to
receive any amount to which such Participant has become entitled prior to
such termination, modification, or amendment.
11.6 The laws of the State of Texas shall govern the Plan.
11.7 The Plan shall be binding on the successors of the Company.
11.8 The Plan shall be deemed adopted by the Board of Directors as of January
1, 1996. The Plan shall be deemed effective as of the date of its
adoption by the Board of Directors, provided it is duly approved by the
holders of a majority of the shares of Common Stock present, or
represented, and entitled to vote at the 1996 annual meeting of
stockholders of the Company. If the Plan is not approved by the
stockholders AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS, the Plan shall
terminate and all actions taken hereunder shall be null and void. WITH
RESPECT TO PLAN YEARS BEGINNING AFTER DECEMBER 31, 1996, THE PLAN, AS
AMENDED BY AMENDMENT NO. 1, SHALL BE SUBJECT TO AND CONTINGENT UPON
APPROVAL BY THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK
PRESENT, OR REPRESENTED, AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS OF
THE COMPANY. IF THE PLAN, AS AMENDED, IS NOT SO APPROVED BY THE
STOCKHOLDERS AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS, THE PLAN SHALL
TERMINATE EFFECTIVE FOR PLAN YEARS BEGINNING AFTER DECEMBER 31, 1996 AND
ALL ACTIONS TAKEN HEREUNDER WITH RESPECT TO SUCH PLAN YEARS SHALL BE NULL
AND VOID.
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ORYX ENERGY COMPANY
The undersigned hereby appoints Robert L. Keiser, William C. Lemmer and Ed-
ward W. Moneypenny, and each of them, with power to act without the other and
with power of substitution, as proxies and attorneys-in-fact and hereby autho-
rizes them to represent and vote, as provided on the other side, all the
shares of Oryx Energy Company Common Stock which the undersigned is entitled
to vote, and in their discretion, to vote upon such other business as may
properly come before the Annual Meeting of Stockholders of the Company to be
held May 1, 1997 or any adjournment thereof, with all powers which the under-
signed would possess if present at the Meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
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FOLD AND DETACH HERE
<PAGE>
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This Proxy when properly executed will be voted by the Please mark
Proxies in the manner designated below. If this Proxy your vote
is returned signed but without a clear voting designation, like this
the Proxies will vote FOR Items 1, 2, 3, 4 and 5 and X
AGAINST Item 6.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3, 4 AND 5
WITHHELD
Item 1--ELECTION OF CLASS III DIRECTORS FOR FOR ALL
Nominees: [_] [_]
Jerry W. Box
William E. Bradford
Sylvia A. Earle
Edward W. Moneypenny
WITHHELD FOR: (Write that nominee's name
in the space provided below).
________________________________________
FOR AGAINST ABSTAIN
ITEM 2--APPOINTMENT OF INDEPENDENT ACCOUNTANTS [_] [_] [_]
ITEM 3--APPROVAL OF 1997 LONG-TERM INCENTIVE PLAN [_] [_] [_]
ITEM 4--APPROVAL OF AMENDMENT TO 1992 LONG-TERM
INCENTIVE PLAN [_] [_] [_]
ITEM 5--REAPPROVAL OF EXECUTIVE VARIABLE INCENTIVE PLAN [_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 6
FOR AGAINST ABSTAIN
ITEM 6--STOCKHOLDERPROPOSAL-CERES PRINCIPLES [_] [_] [_]
WILL
ATTEND
If you plan to attend the
Annual Meeting, please mark [_]
the WILL ATTEND block.
Signature(s) ___________________________ Date _______________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
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FOLD AND DETACH HERE
