Notice of Annual Meeting of Shareholders
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of Mallon Resources Corporation (the "Company") will be held in
the Crystal Ballroom of the Embassy Suites Downtown Denver Hotel, 1881 Curtis
Street, Denver, Colorado, at 9:00 a.m. local time, on Tuesday, July 18, 2000,
for the following purposes:
(I) To elect Directors of the Company; and
(II) To transact such other business as may properly come before the
Meeting.
Only holders of common stock of record at the close of business on June 2,
2000, are entitled to notice of and to vote at the Meeting.
By Order of the Board of Directors,
Roy K. Ross
Corporate Secretary
All shareholders are cordially invited to attend the Meeting. All
shareholders, whether or not they expect to attend the Meeting in person, are
requested to complete, date, sign and return the enclosed Proxy Card in the
enclosed envelope. Should you attend the Meeting, you may, if you choose to,
vote in person, even though you may have previously submitted a Proxy Card.
<PAGE>
Mallon Resources Corporation
999 18th Street, Suite 1700
Denver, Colorado 80202
_______________
Proxy Statement
for
Annual Meeting of Shareholders
To Be Held
Tuesday, July 18, 2000
General Information
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Mallon Resources Corporation (the "Company") to
be used at the Company's Annual Meeting of Shareholders (the "Meeting") to be
held in the Crystal Ballroom of the Embassy Suites Downtown Denver Hotel, 1881
Curtis Street, Denver, Colorado, on Tuesday, July 18, 2000, at 9:00 a.m., for
the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. This statement was sent to shareholders on or about June 7, 2000.
The shares covered by the enclosed Proxy, if such is properly executed and
received by the Board of Directors prior to the Meeting, will be voted in favor
of the proposals to be considered at the Meeting, unless such Proxy specifies
otherwise or the authority to vote on the election of directors has been
withheld. A Proxy may be revoked at any time before it is exercised by giving
written notice to the Secretary of the Company or by executing a Proxy bearing
a later date. Shareholders may vote their shares in person if they attend the
meeting, even if they have previously executed and returned a Proxy.
The only matter planned to be brought before the Meeting is the election of
directors to serve for the ensuing year.
Only shareholders of record at the close of business on June 2, 2000, will
be entitled to vote at the Meeting. On that date, there were issued and
outstanding 7,840,700 shares of the Company's $0.01 par value common stock
("Common Stock"), entitled to one vote per share. Cumulative voting is not
allowed in the election of directors or for any other purpose. One-third of the
outstanding Common Stock will constitute a quorum for the transaction of
business at the Meeting. The vote of a majority of a quorum is needed to pass a
proposal.
At the Meeting, members of senior management will speak and there will be a
general discussion period during which shareholders will have an opportunity to
ask questions about the business of the Company. Management knows of no other
matters to be brought before the Meeting. If other matters properly come before
the Meeting, it is the intention of the persons named in the solicited Proxy to
vote such Proxy in accordance with their judgment. No compensation will be paid
to any person in connection with solicitation of Proxies. Brokers and others
will be reimbursed for out-of-pocket and reasonable clerical expenses incurred
in forwarding solicitation materials to beneficial owners of the Common Stock.
Special solicitation of Proxies may in certain instances be made personally or
by telephone by officers and employees of the Company and by regular employees
of certain banking and brokerage houses. All expenses in connection with this
solicitation will be borne by the Company.
<PAGE>
Proposal I: Election of Directors
General
The Company's Bylaws provide that the size of the Board of Directors can be
as few as three or as many as fifteen. The number of directors may be changed
from time to time by resolution of the Board of Directors or the shareholders.
The size of the Board of Directors is presently seven members. Accordingly,
management will nominate seven persons for election to the Board. Directors are
elected annually for one-year terms.
It is the recommendation of management that the seven nominees named below
be elected to the Board of Directors for the coming year, and until their
successors have been duly elected and qualified. Unless authority is withheld,
the shares represented by your Proxy will be voted for their election. No Proxy
will be voted for more than seven nominees. Unless your Proxy withholds
authority to do so, if any nominee elects not to serve or is unable to serve
for any reason, your Proxy will be voted for an alternative nominee to be
designated by management to replace such nominee. The Board of Directors has no
reason to expect that any nominee will be unable to serve. There is no
arrangement between any of the nominees or officers and any other person or
persons pursuant to which he was or is to be selected as a director, nominee or
officer, nor is there any family relationship between or among any nominees or
officers. To the best knowledge of the Company, none of the nominees have been
involved in any material legal proceedings during the past five years.
Nominees
Nominees for the Board of Directors are:
<TABLE>
<CAPTION>
Period of Service
Name Age Title(s) as Director
<S> <C> <C> <C>
George O. Mallon, Jr. 55 Director, Chairman of the Board,President and
Chief Executive Officer Since 1988
Kevin M. Fitzgerald 45 Director, Executive Vice President and Chief Operating Officer Since 1988
Roy K. Ross 49 Director, Executive Vice President, General Counsel, and
Secretary Since 1992
Frank Douglass 66 Director Since 1988
Roger R. Mitchell 67 Director Since 1990
Francis J. Reinhardt, Jr. 70 Director Since 1994
Peter H. Blum 42 Director Since 1998
</TABLE>
Principal Occupations
A brief description of the business experience of each nominee for re-
election as a director is set forth in the Company's 1999 Annual Report to
Shareholders, a copy of which has been enclosed with this Proxy Statement.
<PAGE>
Meetings and Committees of the Board; Board Compensation
The business and affairs of the Company are under the direction of the
Board of Directors. For the period April 1999 through March 2000, the Board of
Directors held four formal meetings and acted by written consent on numerous
occasions. Each director who is standing for re-election attended all of the
meetings, either in person or by means of a telephone conference connection,
and all directors participated in all of the written consents. Directors who
are not also members of management are paid $2,000 for each meeting they
attend. Board members are also reimbursed for reasonable out-of-pocket expenses
incurred in connection with attending meetings of the Board. In January 2000,
the current non-management members of the Board were each granted options to
purchase 4,000 shares of Common Stock at an exercise price of $0.01 per share.
These options vest in increments in 2000, 2001 and 2002.
The Company's Board of Directors has three committees, the Audit Committee,
the Compensation Committee, and the Nominating Committee. The Board has
assigned certain advisory authority to each committee, but the decision-making
and management responsibilities of the Company remain with the full Board. The
Audit Committee of the Board, which held one meeting during the last year, is
comprised of Messrs. Douglass, Mitchell and Reinhardt. The Audit Committee's
purpose is to oversee the Company's accounting and financial reporting policies
and practices and to assist the Board of Directors in fulfilling its fiduciary
and corporate accountability responsibilities. The Company's independent
auditors have unrestricted direct access to the Audit Committee members. The
Compensation Committee of the Board, which held one formal meeting and acted by
unanimous written consent on several occasions during the last year, is
currently comprised of Messrs. Douglass, Reinhardt and Blum. The Compensation
Committee has submitted the report that appears below. The Nominating
Committee, which considers nominees for election to the Board, is comprised of
Messrs. Mallon and Reinhardt.
Compensation Committee Report
The Company's Board of Directors established the Compensation Committee
(the "Committee") to propose, subject to Board ratification, equity and cash
compensation of executive officers and equity compensation for all employees.
The Committee's philosophy is that, in light of the Company's relatively small
size, employee compensation (including salary, bonus and equity-based
compensation) should be somewhat below the mid-point of industry standards. The
Committee believes that equity compensation -- in the form of stock options -
can be an appropriate incentive for selected employees, including executive
officers, and can serve to align the interests of the employees, executive
officers and shareholders. In 1997, the Company engaged the services of an
expert in compensation matters to conduct a survey of compensation practices in
the oil and gas industry and to advise the Company with respect thereto.
Cash Compensation. The Committee's cash compensation objective is to
establish an acceptable pay scale for employees. The executive officers of the
Company are considered in this planning in the same manner as all other
employees. Each year, all employees, including the executive officers, are
evaluated by their managers (or in the case of the Chief Executive Officer, by
the Committee) and may receive salary adjustments based upon their performance.
Equity Compensation. Historically, the Company has not used equity
compensation as a component of employee compensation packages as widely as is
common in the industry. After the Company's 1997 Equity Participation Plan (the
"Plan") was ratified by the shareholders at 1997's annual meeting, the
<PAGE>
Committee made limited equity compensation awards as part of its compensation
decisions. All employees are eligible for awards under the Plan. The Plan was
designed to provide: (a) a method to both attract and retain high caliber
talent over the long term, (b) an opportunity for selected employees to share
in the long term success of the Company, (c) an ownership interest in the
Company's success, and (d) recognition of individual contributions.
Bonus Compensation. The Company maintains a "Bonus Pool" comprised of an
amount of cash equal to 1.3% of the Company's gross revenue, as adjusted.
Quarterly, the money accumulated in the pool is paid out as cash bonuses to the
employees of the Company. The Chief Executive Officer proposes the amounts to
be paid to each employee, including himself, based upon his judgment of their
relative contributions to the success of the Company over the quarter for which
the bonus is being paid. His determinations are subject to review by the
Committee.
Chief Executive Officer. Mr. Mallon's compensation arrangements with the
Company are contained in an employment contract entered into in January 2000.
That contract is for a 36 month period, which, until December 31, 2002, will be
automatically extended each month for an additional month, unless the Company
earlier elects not to extend the contract. The contract establishes Mr.
Mallon's annual base salary at $175,000. Mr. Mallon has also been granted
options under the Plan to purchase shares of Common Stock. Mr. Mallon's
performance as Chief Executive Officer and President is subject to review by
the Committee annually, which review may result in adjustments to his
compensation package.
* The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Act of 1934, except to the extent that the Company specifically
incorporates this report by reference.
Executive Compensation
Certain information regarding compensation awarded to, earned by or paid by
the Company for services rendered for the year ended December 31, 1999 to the
Company's chief executive officer and the four other most highly compensated
individuals whose total compensation, exceeded $100,000 for such year is set
forth in the Company's 1999 Annual Report to Shareholders, a copy of which has
been enclosed with this Proxy Statement.
Certain Relationships and Related Transactions
Information regarding certain relationships and transactions involving the
Company certain of the officers and directors of the Company is set forth in
the Company's 1999 Annual Report to Shareholders, a copy of which has been
enclosed with this Proxy Statement.
Stock Ownership
Information concerning the beneficial ownership of the Company's Common
Stock by (i) each shareholder known by the Company to own of record or
beneficially more than 5% of the Company's outstanding Common Stock; (ii) the
Company's chief executive officer (Mr. Mallon); (iii) each of the Company's
Directors and nominees, and (iv) all Directors and Officers as a group is set
forth in the Company's 1999 Annual Report to Shareholders, a copy of which has
been enclosed with this Proxy Statement.
<PAGE>
Annual Report and Financial Statements
You are referred to the Company's 1999 Annual Report to Shareholders, a
copy of which has been enclosed herewith. The Annual Report is not incorporated
in the Proxy Statement and is not to be considered part of the soliciting
material.
Comparative Performance Graph
The following line graph reflects the performance of (i) the Company's
Common Stock, (ii) the Nasdaq Market Index, and (iii) the Standard Industrial
Classification ("SIC") Index for SIC Code 131 (which includes crude petroleum
and natural gas companies). The graph assumes $100 was invested on December 31,
1994 in the Company's Common Stock and in each of the other indices. The graph
also assumes the reinvestment of all dividends. Stock price performance shown
on the graph is not necessarily indicative of future price performance
<TABLE>
<CAPTION>
Mallon Resources Corporation
Comparison of Cumulative Total Return
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Mallon Resources Corporation 100 75 112.5 103.13 85.94 74.22
SIC Code Index 100 109.98 146.24 148.22 118.73 145.03
Nasdaq Market Index 100 129.71 161.18 197.16 278.08 490.46
</TABLE>
Submission of Shareholder Proposals
Proposals intended for inclusion in next year's Proxy Statement should be
sent to the Secretary of the Company at 999 18th Street, Suite 1700, Denver,
Colorado 80202, and must be received by March 1, 2001.
Compliance with Securities Transaction Reporting Requirements
Pursuant to Section 16(a) of the Securities Exchange Act 1934, certain
individuals and entities are required to periodically file reports with the
Securities and Exchange Commission in which they disclose information
concerning their transactions involving the Company's securities. To the
Company's knowledge, based solely on review of copies of such reports submitted
to the Company, during the year ended December 31, 1999, no individual or
entity known to the Company to be subject to the reporting requirements of
Section 16(a) failed to satisfy those requirements in a timely fashion.
By Order of the Board of Directors,
/s/ Roy K. Ross
Roy K. Ross
Corporate Secretary
Dated: June 7, 2000
PROXY CARD
Annual Meeting of Shareholders - July 18, 2000
The undersigned shareholder of Mallon Resources Corporation (the
"Company") acknowledges receipt of notice of the Company's Annual
Meeting of Shareholders to be held in Denver, Colorado, on
Tuesday, July 18, 2000, and hereby appoints Alfonso R. Lopez and
Carol Naranjo, or either of them, with the power of substitution,
as attorneys and proxies to represent and vote, as designated
below, all the shares of the Company's Common Stock held of record
by the undersigned on June 2, 2000, at the Annual Meeting, or any
adjournment thereof, as follows:
I. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES LISTED BELOW
(Except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees below
George O. Mallon, Jr. Kevin M. Fitzgerald
Roy K. Ross Roger R. Mitchell
Frank Douglass Frances J. Reinhardt, Jr.
Peter H. Blum
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, draw a line through that nominee's name).
II. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting.
This Proxy when properly executed and delivered will be voted in
the manner directed herein by the undersigned shareholder. If no
direction is given, this proxy will be voted FOR all proposals.
Dated __________________, 2000
Please sign below exactly as your name appears on the stock
certificate(s). When shares are held as joint tenants, both should
sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such. If a corporation,
please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
_________________________________
Signature
_________________________________
Signature (if held jointly)
_________________________________
Printed name, as it appears on stock certificate(s)
_________________________________
Printed name of joint tenant, as it appears on stock certificate(s)
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE
