<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
Sharon Energy Ltd.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
SHARON ENERGY LTD.
INFORMATION CIRCULAR & PROXY STATEMENT
- ------------------------------------------------------------------------------
SOLICITATION OF PROXIES
This Information Circular/Proxy Statement is provided in connection with the
solicitation of proxies by the management of Sharon Energy Ltd. (the "Company").
The form of proxy which accompanies this circular/statement (the "Proxy") is for
use at the annual general meeting of the shareholders of the Company to be held
on September 11, 1997 (the "Meeting"), at the time and place set out in the
accompanying notice of meeting. The Company will bear the cost of this
solicitation. The solicitation will be made by mail, but may also be made by
telephone.
APPOINTMENT AND REVOCATION OF PROXY
The persons named in the Proxy are directors and officers of the Company. A
shareholder desiring to appoint some other person to represent him at the
Meeting may do so by striking out the printed names and inserting the desired
person's name in the blank space provided. The completed Proxy should be
delivered to Montreal Trust Company of Canada at 510 Burrard Street, Vancouver,
British Columbia, V6C 3B9 by the close of business on the 9th day of September,
1997, or to the presiding officer of the Meeting before the start of the
Meeting.
A Proxy may be revoked by:
(a) signing a Proxy with a later date and delivering it at the place and
within the time aforesaid;
(b) signing and dating a written notice of revocation and delivering it at
the time and place noted above; or
(c) attending the Meeting or any adjournment of the Meeting and
registering with the scrutineer as a shareholder present in person.
PROVISIONS RELATING TO VOTING OF PROXIES
- --------------------------------------------------------------------------------
THE SHARES REPRESENTED BY PROXY IN THE ENCLOSED FORM WILL BE VOTED BY THE
DESIGNATED HOLDER IN ACCORDANCE WITH THE DIRECTION OF THE SHAREHOLDER APPOINTING
HIM. IF THERE IS NO DIRECTION BY THE SHAREHOLDER, THOSE SHARES WILL BE VOTED IN
THE AFFIRMATIVE FOR ALL PROPOSALS SET OUT IN THE PROXY AND FOR THE ELECTION OF
DIRECTORS AND THE APPOINTMENT OF THE AUDITOR AS SET OUT IN THIS
CIRCULAR/STATEMENT.
- --------------------------------------------------------------------------------
The Proxy gives the person named in it the discretion to vote as he sees fit on
any amendments or variations to matters identified in the notice of meeting or
any other matters which may properly come before the Meeting. At the time of
printing this Circular/Statement, the management of the Company knows of no
other matters which may come before the Meeting other than those referred to in
the notice of meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES
On the date of the accompanying notice of meeting, the Company had 5,863,800
common shares outstanding. All shares in the capital of the Company are of the
same class and each carries the right to one vote.
Shareholders registered on or before August 1, 1997 are entitled to attend and
vote at the Meeting. Shareholders who wish to be represented by proxy at the
Meeting must, to entitle the person appointed by the Proxy to attend and vote,
deliver their proxies at the place and within the time set forth in the notes to
the Proxy.
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Sharon Energy Ltd. Information Circular & Proxy Statement
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The following table sets forth the persons who beneficially own more than 5% of
the common shares of the Company as of July 14, 1997, and the number of shares
held by all officers and directors of the Company as a group:
BENEFICIAL OWNERS OF MORE THAN 5% OF COMMON SHARES
------------------------------------------------------------------------
NAME NUMBER OF SHARES(2) % OF CLASS(2)
------------------------------------------------------------------------
David L. Bennington, Director 371,500 6.3%
John W. Steinhauser(1), Consultant 486,000 8.3%
Welcome Opportunities Ltd. 300,000 5.1%
All Directors and Officers as a Group 808,800 13.8%
------------------------------------------------------------------------
(1) Of this amount 72,000 shares are owned by Pearson Energy Corporation, a
private company owned by John W. Steinhauser and his family. This amount
does not include 120,000 shares which are owned by Mr. Steinhauser's wife
as to which shares he disclaims beneficial ownership.
(2) Not including shares that may be acquired upon the exercise of common stock
options and warrants. If all the Company's outstanding common stock
options and warrants are exercised, Messrs. David L. Bennington and John W.
Steinhauser will beneficially own 804,000 shares and 656,000 common shares,
respectively, representing 8.9% and 7.2% of the shares then outstanding.
All Directors and Officers as a group (6 persons) will beneficially own
1,913,800 common shares representing 21% of the shares then outstanding.
Welcome Opportunities will own 600,000 common shares representing 6.6% of
the shares then outstanding.
ELECTION OF DIRECTORS
The directors of the Company are elected annually and hold office until the next
annual general meeting of the shareholders or until their successors are
elected. The management of the Company proposes to nominate the persons listed
below for election as directors of the Company to serve until their successors
are elected or appointed. In the absence of instructions to the contrary,
proxies given pursuant to the solicitation by the management of the Company will
be voted by the nominees listed in this Circular/Statement.
MANAGEMENT DOES NOT CONTEMPLATE THAT ANY OF THE NOMINEES WILL BE UNABLE TO SERVE
AS A DIRECTOR. IF ANY VACANCIES OCCUR IN THE SLATE OF NOMINEES LISTED BELOW
BEFORE THE MEETING, MANAGEMENT WILL EXERCISE DISCRETION TO VOTE THE PROXY FOR
THE ELECTION OF ANY OTHER PERSON OR PERSONS AS DIRECTORS.
The following table sets out the names of the nominees for election as
directors, the offices they hold within the Company, their age, their
occupations, the length of the time they have served as directors of the
Company, the members of the Board of Director's Executive Committee, the Audit
Committee, and the Compensation Committee, and the number of shares of the
Company and its subsidiaries which each beneficially owns directly or indirectly
or over which control or direction is exercised as of the date of the notice of
meeting:
Page 2 of 12
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Sharon Energy Ltd. Information Circular & Proxy Statement
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NOMINEES FOR ELECTION AS DIRECTOR
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
NO. SECURITIES
NAME, COUNTRY OF OVER WHICH % OF
RESIDENCE & AGE PRINCIPAL OCCUPATION DIRECTOR CONTROL OR CLASS
OFFICE HELD SINCE DIRECTION (4)
EXERCISED (4)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(1) (2) 39 President & CEO of Sharon Sept 8 163,000 2.78
John (Jack) S. Steinhauser Energy Ltd. & Chairman, 1995
9700 Villasur Court CEO and Director of
Parker Colorado Sharon Resources, Inc.
USA
President & Director
- -----------------------------------------------------------------------------------------------------------------------
(1)(2)(3) 56 Management, Accountant July 19 371,500 6.3
David L. Bennington & Consultant 1989
P. O. Box 2179
Sechelt, B.C. CAN
Director
- -----------------------------------------------------------------------------------------------------------------------
(1)(2)(3) 61 President, CEO Penadrian Sept 8 15,000 .2
R. Gary Kuster Enterprises, Ltd; 1995
1195 Pintail Drive President & Chairman of
Qualicum Beach,B.C. the Board Serrex S.A.
CAN
Director
- -----------------------------------------------------------------------------------------------------------------------
All Nominees as a Group 549,500 9.37
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Members of the Audit Committee.
(2) Members of the Board of Director's Executive Committee.
(3) Members of the Compensation Committee, Messrs. Bennington & Kuster are not
employees of the Company
(4) Not including shares that may be acquired upon the exercise of common stock
options and warrants. If all the company's outstanding common stock
options and warrants are exercised, Messrs. Jack S. Steinhauser, David L.
Bennington and R. Gary Kuster will beneficially own 395,500, 804,000 and
92,000 respectively, representing 4.4%, 8.9% and 1.0% of the shares then
outstanding. All nominees as a group will beneficially own 1,291,500
common shares representing 14.2% of the shares then outstanding.
Note: The information as to shares beneficially owned has been provided by the
directors themselves.
BUSINESS BACKGROUND OF NOMINEES FOR ELECTION AND EXECUTIVE OFFICERS OF THE
COMPANY
JOHN (JACK) S. STEINHAUSER
Jack S. Steinhauser, President of Sharon Energy Ltd. and Chairman and Chief
Executive Officer of Sharon Resources, Inc., received a Bachelor's Degree in
Economics from Claremont McKenna College and a Masters of International
Management Degree from the University of Denver. He was formerly a financial
analyst with Martin Marietta Aerospace Corporation and an analyst with the
United Nations in 1980-81. Mr. Steinhauser was a consultant to Sharon from 1980
to 1982. He has since been employed by Sharon on a full time basis holding
successive positions of Assistant to the President, Land Manager, Executive
Director, Executive Vice-President of Operations, President and Chief Executive
Officer. He is a member of the Executive Board of the Independent Petroleum
Association of Mountain States.
DAVID L. BENNINGTON
David L. Bennington, Director, obtained his accounting degree in 1960 and has
been actively involved in accounting and management for the resource industries
in British Columbia since 1963. He has been the proprietor of an accounting and
management consultant practice in both Vancouver, B.C. and Sechelt, B.C. since
1971. He has
Page 3 of 12
<PAGE>
Sharon Energy Ltd. Information Circular & Proxy Statement
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been on the Board of Directors of Sharon Energy since 1989. He has been a
resident of the Vancouver area since 1971.
R. GARY KUSTER
R. Gary Kuster was educated in Switzerland and holds a degree in business
administration. Mr. Kuster's varied experience includes 30 years as manager and
officer with DuPont De Nemours, the chemical corporation, both in Europe and in
the Far East. Mr. Kuster has held positions in large project management,
distribution center management, supply logistics and customer service, business
analysis, governmental affairs and worldwide transportation. For 25 years Mr.
Kuster has been President and Chairman of the Board of Serrex S.A. a high
precision extrusion company in Switzerland. For the past five years Mr. Kuster
has been President and CEO of Pendarian Enterprises Ltd., a Canadian development
and trading company.
J. CHRIS STEINHAUSER
J. Chris Steinhauser, Executive Vice President of Sharon Energy Ltd. and
President of Sharon Resources, Inc., is a graduate of the University of Southern
California School of Business and is a Certified Public Accountant. From 1981
to 1984 he was with Peat, Marwick, Mitchell & Co. as a staff auditor
specializing in petroleum companies and subsequently as a senior tax specialist.
From 1984-1986 he was engaged in the investment banking industry and held Series
7, 22, 39 and 63 securities licenses. Mr. Steinhauser joined Sharon in March
1986 as Controller-Treasurer. In 1991 he became Executive Vice President and in
1995 became President for the Company's wholly owned subsidiary, Sharon
Resources, Inc. He is a member of the American Institute of CPA's.
JO BETH MCFADDEN
Jo Beth McFadden, Vice-President, Secretary and Treasurer has been employed by
Sharon since 1984. She has over twenty-five years experience in the oil and gas
industry in land, geology, production and finance areas. She was formerly
employed by Union Oil Company of California, Al-Aquitaine Oil and Gas Ltd., and
Canterra Petroleum. She received her Bachelor of Science Degree in Business
Administration with a minor in Economics from Regis University, Denver,
Colorado. In 1984 she was Assistant Secretary and Office Manager for Sharon and
in 1987 she became Secretary and Assistant Treasurer. In 1991 she became
Secretary and Treasurer for Sharon and Vice President of the Company and the
Company's wholly owned subsidiary, Sharon Resources, Inc. in 1994.
CLIFFORD C. CLARK
Clifford C. Clark completed his M.S. in Geology/Geophysics at Northern Illinois
University in 1972 and worked for Chevron as a geophysicist and geologist in the
Gulf Coast until he joined Getty Oil Company in 1975. Mr. Clark joined Ensource
in 1981 and worked as a Division Geophysicist and later Exploration Manager
until 1986. Since 1986 Mr. Clark was a geological/geophysical consultant for
numerous companies and joined Sharon in the Fall of 1994. He became Vice
President Exploration in 1995.
ADVANCE NOTICE OF MEETING
Advance Notice of the Meeting was published in the Vancouver Sun newspaper on
July 10, 1997 in accordance with Section 111 of the COMPANY ACT. No nominations
for directors have been received from the shareholders of the Company.
COMMITTEES AND MEETINGS
During fiscal 1997, there was an Audit Committee, Executive Committee, and a
Compensation Committee of the Board of Directors. There is no nominating or
other committee performing similar functions.
The Audit Committee's functions include recommending to the Board of Directors
the engagement of the Company's independent public accountants and reviewing
with such accountants the plans for and the results and scope of their auditing
engagement and certain other matters relating to their services provided the
Company,
Page 4 of 12
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Sharon Energy Ltd. Information Circular & Proxy Statement
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including the independence of such accountants. Members of the Audit
Committee are John S. (Jack) Steinhauser, David L. Bennington and R. Gary
Kuster. The Audit Committee met one time in fiscal 1997.
In 1982, the Shareholders of the Company approved an Incentive Award Plan
authorizing the Board of Directors of the Company to grant incentive awards to
eligible corporate officers and key employees of the Company and its
wholly-owned subsidiary. The Compensation Committee of the Board of
Directors is responsible for determining such incentive awards. In addition,
the Compensation Committee will review on behalf of, and make recommendations
to, the Board of Directors with respect to all forms of compensation for
directors, executive officers and key employees. Members of the Compensation
Committee are David L. Bennington and R. Gary Kuster. The Compensation
Committee met once in fiscal 1997.
The Board of Directors met thirteen times either by meeting in person, by phone
conference, and/or written consent during the past fiscal year. Each director
participated in more than 75 percent of the meetings, including the written
consents, that were held during the period he was a director.
COMPENSATION OF DIRECTORS
Members of the Board of Directors do not receive meeting fees but are reimbursed
for out-of-pocket expenses to attend Board of Directors' Meetings. Shareholders
have approved five-year stock options for the directors as outlined in this
circular/statement.
EXECUTIVE COMPENSATION
There are presently four Executive Officers of the Company. The term "Executive
Officer" means the president, any vice-president in charge of a principal
business unit such as sales, finance or production, any officer of the Company
or a subsidiary who performs a policy-making function for the Company whether or
not that person is also a director of the Company or the subsidiary, and the
chairman and any vice-chairman of the Board of Directors of the Company if that
person performs the functions of that office on a full-time basis. The
following table sets forth for the fiscal year ended March 31, 1997, certain
information concerning compensation paid or accrued for the President and Chief
Executive Officer ("CEO") and the three remaining Executive Officers who were
serving as Executive Officers on March 31, 1997.
Page 5 of 12
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Sharon Energy Ltd. Information Circular & Proxy Statement
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SUMMARY COMPENSATION TABLE
(All amounts expressed in U.S. dollars unless otherwise indicated)
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
NAME FISCAL STOCK ALL OTHER
AND YEAR ANNUAL COMPENSATION OPTION COMPENSATION(4)
PRINCIPAL POSITION -------------------------------------- GRANTS ($)
SALARY BONUS OTHER(3)
FEES(1) (2) ($) (NUMBER)
($) ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JACK S. STEINHAUSER(5) 1997 64,800 -0- -0- 73,500 -0-
- --------------------------------------------------------------------------------------------------------------------
President & 1996 64,800 2,700 3,279 44,000 -0-
- --------------------------------------------------------------------------------------------------------------------
Chief Exec. Officer 1995 64,800 5,400 8,491 44,000 -0-
- --------------------------------------------------------------------------------------------------------------------
J. CHRIS STEINHAUSER(5) 1997 33,600 -0- -0- 45,000 -0-
- --------------------------------------------------------------------------------------------------------------------
Exec. Vice President 1996 33,600 1,400 2,561 41,000 -0-
- --------------------------------------------------------------------------------------------------------------------
& CFO 1995 33.600 2,800 6,985 39,000 -0-
- --------------------------------------------------------------------------------------------------------------------
JO BETH MCFADDEN 1997 36,600 -0- -0- 38,500 -0-
- --------------------------------------------------------------------------------------------------------------------
Vice President & 1996 36,600 1,525 2,561 38,000 -0-
- --------------------------------------------------------------------------------------------------------------------
Corporate Sec/Treas 1995 36,600 3,050 6,985 36,000 -0-
- --------------------------------------------------------------------------------------------------------------------
CLIFFORD C. CLARK 1997 60,000 -0- -0- 24,500 -0-
- --------------------------------------------------------------------------------------------------------------------
Vice President of 1996 60,000 2,500 -0- 35,000 -0-
- --------------------------------------------------------------------------------------------------------------------
Exploration 1995 57,998 2,000 -0- -0- -0-
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The dollar value of base salary and/or management fees (cash and
non-cash) received.
(2) The dollar value of a year-end bonus equivalent to one-half month's
salary in fiscal 1996 was paid to all employees or consultants at the sole
discretion of the Board of Directors. A year-end bonus equivalent to one
month's salary was paid to all employees or consultants in fiscal 1995 but
none was paid in fiscal 1997.
(3) Compensation received pursuant to the Employee Royalty Pool.
Subsequent to FY '95 the Company phased out the Employee Royalty Pool and
royalties are assigned directly to officers and key employees.
(4) Includes compensation received pursuant to the Incentive Award Plan.
Amounts paid under this Plan are based on profits achieved in the preceding
fiscal year. No compensation has been paid during the last three fiscal
years pursuant to the Incentive Award Plan.
(5) Messrs. Jack S. Steinhauser and J. Chris Steinhauser are brothers.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and Directors and stockholders who own more than 10%
of the outstanding shares of a registered class of the Company's equity
securities, to file reports of ownership and changes of ownership with the
Securities and Exchange Commission, copies of which filed reports are
required to be furnished to the company. Based solely on its review of any
forms received by it, the company believes that during the year ended March
31, 1997, all filing requirements applicable to the Company's officers,
Directors and greater than 10% stockholders were met.
Page 6 of 12
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Sharon Energy Ltd. Information Circular & Proxy Statement
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COMPENSATION PURSUANT TO PLANS
STOCK OPTION PLAN
The Company received shareholder approval to implement an incentive share
option plan (the "Plan") for directors, officers, and full and part-time
employees and consultants of the Company and its controlled and subsidiary
companies in an Extraordinary General Meeting held May 8, 1997. Pursuant to the
Plan, the Company has authorized the reservation of 1,172,600 common shares for
the grant of options from time to time.
Under the Plan, the Board may from time to time grant to directors, officers and
full and part-time employees and consultants of the Company and its controlled
and subsidiary companies, as the Board shall designate, options to purchase from
the Company such number of its common shares as the Board may designate.
Options may be granted on authorized but unissued common shares up to but not
exceeding 1,172,760 common shares of the Company under this Plan, provided that
the total number of common shares to be reserved for issuance at any one time
for any one optionee shall not exceed 5% of the issued common shares of the
Company at the time of grant. In the event the optionee is a consultant or a
director employed in an investor relations capacity or an employee employed in
an investor relations capacity, then the grant of options shall not exceed 2% of
the issued common shares of the Company at the time of the grant. The purchase
price per common share for any option granted under the Plan shall not be less
than the ten-day average of the closing prices of the Company's common shares on
the Vancouver Stock Exchange (the "VSE") prior to date of grant.
Pursuant to the Plan, options shall be granted pursuant to an option agreement
in a form that complies with the rules and policies of the VSE.
The Plan also provides for the granting of share appreciation rights ("SARs").
SARs would permit a holder to receive at no cost to the holder common shares,
which, when multiplied by the fair market value on the day immediately prior to
the date of the exercise of the SARs, have a total value equal to the product of
the number of common shares subject to the SARs times the difference between the
fair market value on the day immediately prior to the exercise of the SARs and
the exercise price. The Board has not activated this part of the Plan and no
SARs have been granted.
INCENTIVE AWARD PLAN
The Shareholders of Sharon Energy Ltd. approved an Incentive Award Plan in 1982
authorizing the Board of Directors of Sharon Energy Ltd. to grant incentive
awards to eligible corporate officers and key employees of Sharon Energy Ltd.
and Sharon Resources, Inc. For this purpose the Board of Directors has
established a Compensation Committee of the Board. The total amount of
incentive awards to be granted may, at the discretion of the Board of Directors,
be up to 12% of the consolidated before-tax annual profit of Sharon Energy, Ltd.
and its wholly-owned subsidiary Sharon Resources, Inc. The amount of annual
profit shall be for each fiscal year ended, as audited by the Company's
independent auditors.
Incentive awards to eligible officers and key employees are solely at the
discretion of the Board of Directors, both as to selection of participants and
amount of individual awards, and shall be made on an annual basis to eligible
participants following the release of the final audited, fiscal year-end
financial statements by the Company's independent auditors.
The award to each participant will be in the form of a percentage of the total
funds in the Incentive Award Plan to be distributed at the end of the fiscal
year. Awards are only for one fiscal year and there is no vesting of any
interest to a participant other than the percentage awarded to the participant
while the participant remains an officer or key employee in good standing and,
in any event, for only one fiscal year for which the award is made. Any
year-end bonuses paid to recipients for the same fiscal year are deducted from
such incentive awards.
Page 7 of 12
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Sharon Energy Ltd. Information Circular & Proxy Statement
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OFFICERS AND KEY EMPLOYEE OVERRIDES
Beginning fiscal 1995, in certain oil and gas exploration projects generated by
the Company, the Company has been able to arrange and reserve an overriding
royalty on production that resulted from such projects which the Board of
Directors, at their discretion, allocated and assigned permanently as incentive
awards to certain officers and key employees for their exemplary performance.
YEAR-END BONUS
In early December of each year, the Compensation Committee evaluates the state
of the Company's business and financial condition. If found to be satisfactory
in the opinion of Management, the Compensation Committee may, at its sole
discretion, grant each officer, employee or consultant, as designated by
Management, a maximum of one month's salary or consultant fee, as the case may
be, for services rendered during the year. A year-end bonus equal to one
month's salary was awarded during fiscal 1995 and one-half month in fiscal 1996
and none in fiscal 1997.
In order to qualify for the bonus, an employee or designated consultant must
have been an employee or designated consultant of the Company on or before
November 1 of the bonus year, and the bonus will be calculated on the percent of
the year the employee or designated consultant worked for the Company by
dividing the number of months worked by 12.
OPTION GRANTS TABLE
The following table sets forth information concerning individual grants of stock
options to the Company's President and each other executive officer of the
Company.
OPTION GRANTS FOR FISCAL YEAR ENDED MARCH 31, 1997
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term(1)
- --------------------------------------------------------------------------------------------------------------------------------
% of Total
Options
Granted to Exercise
Options Employees or Base Expiration 5% 10%
Name Granted in Fiscal Price Date (Cdn. $) (Cdn. $)
(#) Year(2) ($/Sh) (3) (4)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jack S. Steinhauser 48,500 $.69 Jan 7, 2002 $1,673.25 $3,346.50
25,000 28.4% $.90 Feb 14, 2002 $1,125.00 $2,250.00
- --------------------------------------------------------------------------------------------------------------------------------
J. Chris Steinhauser 23,000 $.69 Jan 7, 2002 $793.50 $1,587.00
22,000 17.4% $.90 Feb 14, 2002 $990.00 $1,980.00
- --------------------------------------------------------------------------------------------------------------------------------
JoBeth McFadden 19,500 $.69 Jan 7, 2002 $672.75 $1,345.00
19,000 14.9% $.90 Feb 14, 2002 $855.00 $1,710.00
- --------------------------------------------------------------------------------------------------------------------------------
Clifford C Clark 7,500 $.69 Jan 7, 2002 $258.75 $517.50
17,000 9.5% $.90 Feb 14, 2002 $765.00 $1,530.00
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) These amounts represent certain assumed rates of appreciation only in
accordance with rates specified in applicable federal securities
regulations. Actual gains, if any, on stock option exercises and Common
Stock holdings are dependent on the future performance of the Common Stock
and over-all stock market conditions. There can be no assurances that the
amounts reflected in this table will be achieved.
(2) The Company granted options representing 340,500 shares to all employees or
consultants in fiscal 1997.
(3) The potential realizable value, in Canadian dollars, of each grant of
options assuming that the market price of shares of Common Stock underlying
the options appreciates in value from the date of grant to the end of the
option term at the annual rate of five percent.
(4) The potential realizable value, in Canadian dollars, of each grant of
options assuming that the market price of shares of Common Stock underlying
the options appreciates in value from the date of grant to the end of the
option term at the annual rate of ten percent.
Page 8 of 12
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Sharon Energy Ltd. Information Circular & Proxy Statement
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AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information concerning each exercise of stock
options during the fiscal year ended March 31, 1997 by the Company's President
and Chief Executive Officer and each other executive officer of the Company and
the fiscal year-end value of unexercised options held by these persons.
AGGREGATED OPTION EXERCISES FOR FISCAL YEAR ENDED
MARCH 31, 1997 AND YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------
Name Shares Value Number of Value of Unexercised
Acquired Realized Unexercised In-the-Money Options
on (Cdn.$)(2) Options at at Fiscal Year-End
Exercise Fiscal Year- (Cdn. $)(4)
(#)(1) End (#)(3) Exercisable/
Exercisable/ Unexercisable
Unexercisable
- --------------------------------------------------------------------------------
Jack S. Steinhauser 30,000 $13,500 87,500 $32,410 Exercisable
- --------------------------------------------------------------------------------
J. Chris Steinhauser 9,000 $4,050 77,000 $37,180 Exercisable
- --------------------------------------------------------------------------------
Jo Beth McFadden 10,000 $4,500 66,500 $32,270 Exercisable
- --------------------------------------------------------------------------------
Clifford C Clark None -0- 59,500 $32,250 Exercisable
- --------------------------------------------------------------------------------
(1) The number of shares received upon exercise of options during the fiscal
year ended March 31, 1997.
(2) With respect to options, if exercised, during the Company's fiscal year
ended March 31, 1997, the dollar value of the difference between the option
exercise price ($.25 CAN & $.185 US) and the market value of the option
shares ($.70CAN & $.52U.S.) purchased on the date of the exercise of the
options.
(3) The total number of unexercised options held as of March 31, 1997,
separated between those options that were exercisable and those options
that were not exercisable.
(4) For all unexercised options held as of March 31, 1997, the aggregate dollar
value of the excess of the market value of the stock underlying those
options over the exercise price of those unexercised options. On March 31,
1997, the closing sale price of the Common Stock was $1.05CAN($.77 US) per
share. These values are shown separately for those options that were
exercisable and those options that were not yet exercisable on March 31,
1997. As required, the price used to calculate these figures was the
latest closing sale price of the Common Stock prior to March 31, 1997.
EMPLOYEE RETIREMENT, LONG-TERM INCENTIVE AND PENSION PLANS
No defined benefit or actuarial or pension plans exist with respect to the five
named executive officers or full-time employees. Excluding the Company's stock
option plan, the Company has no long-term incentive plan intended to serve as
incentive for performance to occur over a period longer than one fiscal year.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company does not have any written employment contracts with respect to any
of its executive officers. In addition, the Company has no compensatory plan or
arrangement that results or will result from the resignation, retirement, or any
other termination of an executive officer's employment with the Company and its
subsidiaries or from a change in control of the Company or a change in an
executive officer's responsibilities following a change in control.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
None of the directors or senior officers of the Company has more than "routine
indebtedness" to the Company.
Page 9 of 12
<PAGE>
Sharon Energy Ltd. Information Circular & Proxy Statement
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CERTAIN TRANSACTIONS WITH MANAGEMENT AND PRINCIPAL SHAREHOLDERS
None of the persons who were directors or officers of the Company at any time
during the Company's last financial year, the proposed nominees for election to
the Board of Directors of the Company, the insiders of the Company, or the
associates or affiliates of those persons, has any material interest, direct or
indirect, by way of beneficial ownership of securities or otherwise, in:
(a) any matter to be acted upon at the meeting other than the election of
directors, the approval of incentive stock options or the appointment of
the auditor;
(b) any transaction since the start of the Company's last financial year; or
(c) any transaction or proposed transaction which has materially affected or
would materially affect the Company or any of its subsidiaries; other than:
(i) the Company subleases office space to Pearson Energy Corporation,
a company owned by John W. Steinhauser, a consultant of the Company, and
his family, which currently provides for minimum annual rentals to the
Company of U.S. $20,939.52.
(ii) during fiscal years 1986 through 1997 the Company entered into
Joint Venture Agreements with Pearson Energy Corporation on the same terms
the Company sold to arms-length participants which are independent oil
companies, whereby Pearson Energy Corporation acquired a working interest
and participated in the drilling of oil or gas wells on certain prospects
of the Company.
REPORT OF THE COMPENSATION COMMITTEE
Under rules established by the U.S. Securities and Exchange Commission (the
"SEC"), the Company is required to provide certain data in regard to the
compensation and benefits provided to the Company's Chairman and Chief Executive
Officer and the other executive officers. The disclosure requirements for these
individuals include a report explaining the rationale and considerations that
led to fundamental executive compensation decisions affecting those individuals.
In fulfillment of this requirement, the Compensation Committee at the direction
of the Board of Directors has prepared the following report for inclusion in
this Information Circular.
The Compensation Committee of the Board of Directors consists of Messrs. David
L. Bennington and R. Gary Kuster neither of whom is an employee of the Company.
The Compensation Committee sets and administers the policies that govern the
annual compensation and long-term compensation of executive officers of the
Company. The Compensation Committee makes all decisions concerning compensation
of executive officers and awards of stock options under the Company's stock
option plans.
The Compensation Committee considers on an annual basis whether to pay cash
bonuses or grant stock options to some or all of the Company's employees,
including the Company's executive officers in accordance with the terms of the
Company's Year-end Bonus Plan and/or Incentive Award Plan. Cash bonuses and
stock options are based on the Company's performance as well as the perceived
contributions of individual employees to the Company's performance.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The Compensation Committee's executive compensation policies are designed to
provide competitive levels of compensation that relate compensation with the
Company's annual and long-term performance goals, reward above average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. The Compensation
Committee attempts to achieve these objectives through a combination of base
salary, incentive stock options, and cash bonus awards.
BASE SALARY
As a small company, the Company offers its executives and key employees
competitive base salaries. Positions are defined carefully in terms of scope,
responsibility, experience required and other factors. The
Page 10 of 12
<PAGE>
Sharon Energy Ltd. Information Circular & Proxy Statement
- --------------------------------------------------------------------------------
Compensation Committee agrees upon salaries, taking into account performance
and achievement of pre-stated objectives for the year. Other exponents of
performance are also taken into consideration. Salaries are reviewed annually
and adjusted, if possible, according to the Company's performance. The last
salary increases were in 1991.
INCENTIVE STOCK OPTIONS
The Incentive Share Option Plan (the "Plan") was approved by shareholders in May
1997 as explained in detail previously. The Compensation Committee may grant
stock options to executive officers, directors, employees, and certain
consultants in adherence with the provisions of the Plan. The Compensation
Committee believes that stock options encourage increased performance by the
Company's employees, including its officers, and align the interests of the
Company's employees with the interest of the Company's shareholders. Decisions
concerning the granting of stock options are made on the same basis as decisions
concerning base salary as discussed in the previous paragraph.
INCENTIVE AWARD PLAN (CASH BONUS AWARDS)
The shareholders of the Company approved an Incentive Award Plan in 1982
authorizing the Compensation Committee of the Board of Directors to consider, on
an annual basis, whether to pay cash bonuses to some or all of the Company's
eligible corporate officers and key employees of Sharon Energy Ltd. and Sharon
Resources, Inc. Cash bonuses are based on the Company's performance was well as
the perceived contributions of individual employees to the Company's
performance. The total amount of incentive awards to be granted are limited to
12% of the consolidated before tax annual profit for each fiscal year-end, as
audited by the Company's independent auditors. The criteria used by the
Compensation Committee for determining incentive awards to eligible executive
officers and key employees are 1) the participant's compensation in relation to
other eligible employees; 2) the level of participant's position in relation to
other eligible employees; and, 3) the evaluation of the employee's performance
and contribution to the success of the Company. With respect to cash bonus
awards for the fiscal year ended March 31, 1997, no awards were granted based
upon an insufficient profit level from continuing operations for the fiscal
period.
YEAR-END BONUS
The Compensation Committee considers on an annual basis whether to pay year-end
bonuses to all of the Company's employees, including the Company's executive
officers. The Compensation Committee may, based upon the financial condition
and prospects of the Company, grant a maximum of one month's salary as a
year-end bonus. In December, 1996 no bonus was paid.
EMPLOYEE ROYALTY POOL
In certain oil and gas exploration projects generated by the Company, the
Company is able to reserve and assign an overriding royalty on production that
results from such prospects to disperse in the form of discretionary incentive
awards to certain executive officers and key employees for exemplary
performance. All of such Company overriding royalty awards are granted solely
at the discretion of the Compensation Committee.
PRESIDENT AND CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of the Company's President and Chief Executive Officer is
determined in the same manner as the compensation for other officers and
employees of the Company as described above. As a result, other than with
respect to base salary, the compensation of the Company's Chief Executive
Officer's long-term compensation from stock options also is largely dependent
upon Company performance. During the past fiscal year, the Chief Executive
Officer's base salary did not increase, nor was the Chief Executive officer paid
a cash bonus for the fiscal year ended March 31, 1996.
Compensation Committee of The Board of Directors:
David L. Bennington
R. Gary Kuster
Page 11 of 12
<PAGE>
Sharon Energy Ltd. Information Circular & Proxy Statement
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OTHER MATTERS TO BE ACTED UPON
APPOINTMENT OF AUDITOR
Arthur Andersen & Co. has been the auditor of the Company since February 18,
1980. The management of the Company intends to nominate that firm for
re-appointment. Forms of Proxy given pursuant to the solicitation of the
management of the Company, will, on any poll, be voted as directed and if there
is no direction, for the re-appointment of Arthur Andersen & Co. at a
remuneration to be fixed by the directors.
RATIFICATION OF PROCEEDINGS
Shareholders will be asked to approve a resolution to ratify, confirm and
approve all acts, deeds and things done by the proceedings of directors and
officers of the Company on its behalf since the last annual general meeting of
the Company as referred to in the Annual Report and the financial statements to
be presented to the Meeting which accompany this Information Circular/Proxy
Statement, and the section of this Information Circular/Proxy Statement headed
"Interest of Insiders in Material Transactions and Matters to be Acted Upon".
It is not known whether any other matters will come before the Meeting other
than set forth above and in the notice of meeting, but if any other matters do
arise, the persons named in the Proxy intend to vote on any poll, in accordance
with their best judgment, exercising discretionary authority with respect to
amendments or variations of matters raised in the Notice of Meeting and other
matters which may properly come before the meeting or any adjournment.
DATED AUGUST 7, 1997.
BY THE MANAGEMENT OF SHARON ENERGY LTD.
/S/ JOHN S. STEINHAUSER
- ------------------------------
JOHN S. STEINHAUSER, PRESIDENT
Page 12 of 12
<PAGE>
SHARON ENERGY LTD.
NOTICE OF ANNUAL GENERAL MEETING
TAKE NOTICE that the Board of Directors of Sharon Energy Ltd. (the "Company")
has called the 1997 annual general meeting of the shareholders of the Company
for Thursday, September 11, 1997 at 2:00 P.M., 10th Floor, Room 1000 - 840 Howe
Street, Vancouver, British Columbia.
At the meeting the shareholders will consider resolutions to:
(a) approve the report of the directors, the financial statements of the
Company for the year ended March 31, 1997, and the auditor's report
on those statements;
(b) appoint an auditor for the coming year and authorize the directors to
fix the auditor's remuneration;
(c) elect directors for the coming year;
(d) ratify, confirm and approve all acts, deeds and things done by the
proceedings of directors and officers of the Company on its behalf
since the last annual general meeting of the Company as referred to in
the Annual Report and the financial statements to be presented to the
meeting which accompany this Notice, and the section of the
information circular/proxy statement headed "Certain Transactions with
Management and Principal Shareholders".
The shareholders may also transact any other business properly brought before
the meeting.
All registered shareholders are entitled to attend and vote at the meeting in
person or by proxy. The Board of Directors requests all shareholders who will
not be attending the meeting in person to read, date and sign the accompanying
proxy and deliver it to Montreal Trust Company of Canada at 510 Burrard Street,
Vancouver, British Columbia, V6C 3B9. If a shareholder does not deliver a proxy
to Montreal Trust Company of Canada before the close of business on September 9,
1997, or to the presiding officer of the annual general meeting before the
commencement of the meeting, then the shareholder will not be entitled to vote
at the meeting by proxy.
An Information Circular/Proxy Statement and a form of proxy accompany this
notice.
DATED ON AUGUST 4, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN S. STEINHAUSER
PRESIDENT & DIRECTOR
<PAGE>
SHARON ENERGY LTD.
FORM OF PROXY FOR USE AT THE
ANNUAL GENERAL MEETING TO BE HELD ON SEPTEMBER 11, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT OF THE COMPANY.
I am the registered owner of common shares of the capital of Sharon Energy Ltd.
("the Company") and I appoint John S. Steinhauser or, in this person's absence,
David L. Bennington or:
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(You may fill in the name of another person you wish to act for you; see note
(a) at the end of this form.)
as my proxy to attend and act for me in respect of all the common shares
registered in my name at the 1997 annual general meeting of the Company to be
held on September 11, 1997, and at any and all adjournments of that meeting.
Without limiting the general powers conferred by this proxy, I direct my
proxy to vote as follows:
(a) VOTE FOR ( )
VOTE AGAINST ( )
a resolution that the shareholders of the Company approve the report of the
directors, the financial statements of the Company for the year ended
March 31, 1997, and the auditor's report on those statements;
(b) VOTE FOR ( )
WITHHOLD FROM VOTING FOR ( )
a resolution that the Company appoints Arthur Andersen & Co. as the
Company's auditor to hold office until the close of the next annual general
meeting and authorizes the directors to fix the remuneration paid to the
auditor;
(c) to vote on the election of directors as follows:
VOTE FOR ( ) WITHHOLD FROM VOTING FOR ( )
JOHN S. ("JACK") STEINHAUSER
VOTE FOR ( ) WITHHOLD FROM VOTING FOR ( )
DAVID L. BENNINGTON
VOTE FOR ( ) WITHHOLD FROM VOTING FOR ( )
R. GARY KUSTER
<PAGE>
(d) VOTE FOR ( )
VOTE AGAINST ( )
a resolution to ratify, confirm and approve all acts, deeds and things done
by the proceedings of directors and officers of the Company on its behalf
since the last annual general meeting of the Company as referred to in the
Annual Report and the financial statements to be presented to the meeting.
IF I HAVE NOT SPECIFIED THAT MY PROXY VOTE IN A PARTICULAR WAY, THEN I DIRECT MY
PROXY TO VOTE IN FAVOUR OF EACH RESOLUTION AND TO VOTE FOR THE NAMED AUDITOR AND
THE NOMINATED DIRECTORS.
I AUTHORIZE MY PROXY TO ACT FOR ME AND TO VOTE AS HE OR SHE SEES FIT ON ANY
MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING.
I revoke any proxy previously given by me for use at the annual general meeting
of the Company.
Date:
-------------------------------------
Signature:
--------------------------------
PLEASE PRINT:
Name:
-------------------------------------
Address:
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NOTES TO SHAREHOLDER COMPLETING THIS FORM:
(a) YOU HAVE THE RIGHT TO APPOINT ANY PERSON(WHO NEED NOT BE A SHAREHOLDER)
OTHER THAN THE PERSON DESIGNATED IN THIS FORM TO ATTEND AND ACT FOR YOU AT
THE MEETING. IF YOU WISH TO EXERCISE THIS RIGHT, YOU SHOULD STRIKE OUT THE
NAMES PRINTED ON THIS PROXY AND INSERT THE NAME OF THE PERSON YOU WISH TO
ACT FOR YOU AT THE MEETING.
(b) IF YOU GIVE A PROXY AND THE INSTRUCTIONS IN IT ARE CERTAIN, THEN THE SHARES
REPRESENTED BY THE PROXY WILL BE VOTED ON ANY POLL, AND WHERE YOU SPECIFY A
CHOICE WITH RESPECT TO ANY MATTER TO BE ACTED ON, THE SHARES WILL BE VOTED
ON ANY POLL ACCORDINGLY.
(c) YOU OR YOUR ATTORNEY AUTHORIZED IN WRITING MUST DATE AND SIGN THIS PROXY.
(d) IF YOU ARE A CORPORATION, YOU MUST EXECUTE THIS PROXY UNDER SEAL OR BY AN
OFFICER OR ATTORNEY AUTHORIZED IN WRITING.
(e) THIS PROXY IS VALID FOR ONE YEAR FROM ITS DATE.
(f) YOU MUST DEPOSIT THIS PROXY WITH MONTREAL TRUST COMPANY OF CANADA AT 510
BURRARD STREET, VANCOUVER, BRITISH COLUMBIA, V6C 3B9 BEFORE THE CLOSE OF
BUSINESS ON SEPTEMBER 9, 1997 OR WITH THE PRESIDING OFFICER OF THE ANNUAL
GENERAL MEETING BEFORE THE COMMENCEMENT OF THE MEETING.
