<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
------------------------------------
CHIEFTAIN INTERNATIONAL INC.
(Name of Registrant as specified in its Charter)
--------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
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<PAGE> 2
[LOGO] CHIEFTAIN
INTERNATIONAL, INC.
1201 TD Tower
10088 - 102 Avenue
Edmonton, Alberta, Canada
T5J 2Z1
Telephone (780) 425-1950
Facsimile (780) 429-4681
Notice of Annual Meeting of Shareholders
to be held on Thursday, May 13, 1999
The annual meeting of the shareholders of Chieftain International, Inc. ("the
Company") will be held in the Marlboro Room of The Westin Hotel, 10135 - 100
Street, Edmonton, Alberta, Canada on Thursday, May 13, 1999 at 10:30 a.m.
(Edmonton time) to receive and consider the annual report for the year ended
December 31, 1998, the financial statements as at and for the year ended
December 31, 1998, and the report of the auditors on the financial statements,
and in addition for the following purposes:
1. to elect three directors;
2. to appoint auditors of the Company until the close of the next annual
meeting;
3. to reconfirm the Shareholder Rights Plan; and
4. to transact all such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on the 24th day of March,
1999 as the record date for the determination of shareholders who are entitled
to notice of and to vote at the annual meeting. The share transfer books will
not be closed.
If you are unable to attend the meeting in person, please complete, date and
sign the enclosed form of proxy and mail it promptly in the enclosed
postage-paid envelope.
By order of the Board of Directors
/s/ Esther S. Ondrack
---------------------------------
Esther S. Ondrack
Senior Vice President and
March 11, 1999 Secretary
2
<PAGE> 3
[LOGO] CHIEFTAIN
INTERNATIONAL, INC.
1201 TD Tower
10088 - 102 Avenue
Edmonton, Alberta, Canada
T5J 2Z1
Telephone (780) 425-1950
Facsimile (780) 429-4681
INFORMATION CIRCULAR
SOLICITATION OF PROXIES
This Information Circular and the accompanying Notice of Meeting and form of
proxy are being mailed to shareholders on or about March 29, 1999 in connection
with the solicitation of proxies by the management of Chieftain International,
Inc. (hereinafter called the "Company") to be voted at the annual meeting of
shareholders (the "meeting") to be held at 10:30 a.m., Edmonton time, in the
Marlboro Room of The Westin Hotel, 10135 - 100 Street, Edmonton, Alberta, Canada
on Thursday, May 13, 1999. The Directors have fixed the close of business on
March 24, 1999 as the record date for the determination of shareholders who are
entitled to notice of and to vote at the meeting.
The solicitation will be primarily by mail and electronic means and the cost
will be borne by the Company. In addition, the Company will reimburse banks,
brokerage houses and other custodians, nominees or fiduciaries for reasonable
expenses incurred by them in forwarding proxy material to their principals to
obtain authorization for the execution of proxies.
All shares represented by proxy will be voted, provided that instruments of
proxy are received by CIBC Mellon Trust Company, registrar and transfer agent,
at its office at 600, 333 - 7th Avenue S.W., Calgary, Alberta, Canada, T2P 2Z1,
or by the Company at its principal office at 1201 TD Tower, 10088 - 102 Avenue,
Edmonton, Alberta, Canada, T5J 2Z1, no later than 10:30 a.m., May 12, 1999.
The Company's accounts are maintained, and all dollar amounts herein are stated,
in United States dollars. The average rates of exchange for Canadian dollars per
US$1.00 during 1997, 1998 and during the period January 1 to February 26, 1999,
were $1.384, $1.4831 and $1.5083, respectively. The rates on December 31, 1997,
December 31, 1998, and February 26, 1999 were $1.4291, $1.5305 and $1.5074,
respectively.
APPOINTMENT AND REVOCATION OF PROXIES
THE ENCLOSED PROXY IS SOLICITED BY AND ON BEHALF OF THE MANAGEMENT OF THE
COMPANY. THE PERSONS DESIGNATED IN THE ACCOMPANYING FORM OF PROXY ARE DIRECTORS
AND OFFICERS OF THE COMPANY. A SHAREHOLDER HAS THE RIGHT TO APPOINT SOME OTHER
PERSON, WHO NEED NOT BE A SHAREHOLDER, TO REPRESENT HIM OR HER AT THE MEETING
AND HE OR SHE MAY EXERCISE THIS RIGHT BY INSERTING SUCH OTHER PERSON'S NAME IN
THE BLANK SPACE PROVIDED IN THE FORM OF PROXY.
The instrument appointing a proxy shall be in writing and signed by the
shareholder or the shareholder's attorney authorized in writing. If the
shareholder is a corporation, the document must carry the signature of a duly
authorized officer or attorney thereof.
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<PAGE> 4
A registered shareholder who has deposited a proxy has the power to revoke it. A
proxy may be revoked by instrument in writing executed by the shareholder or by
his or her attorney authorized in writing or, if the shareholder is a
corporation, by a duly authorized officer or attorney thereof, and deposited
either at the head office of the Company at any time up to and including the
last business day preceding the day of the meeting, or any adjournment thereof,
at which the proxy is to be used, or with the chairman of such meeting on the
day of the meeting or adjournment thereof, and upon either of such deposits the
proxy is revoked. In addition, a proxy may be revoked in any other manner
permitted by law.
EXERCISE OF DISCRETION BY PROXY
The person named in the enclosed proxy will vote the shares in respect of which
he or she is appointed in accordance with the direction of the shareholder
appointing him or her. In the absence of specific direction, such shares will be
voted in favor of the election of the directors and the appointment of the
auditors named in this information circular and in favor of the resolution to
reconfirm the Shareholder Rights Plan. If any amendments or variations in the
matters identified in the notice of meeting or if any other matters properly
come before the meeting or any adjournment or adjournments thereof, the proxy
confers discretionary authority upon the shareholder's nominee to vote on such
amendments or variations or such other matters in accordance with his or her
best judgment. Proxies will not be voted with respect to any material amendment
or any material variation of the matters which come before the meeting. At the
date of the notice of meeting, management knows of no such amendment or
variation or other matter to come before the meeting.
VOTING SHARES
The registered holders of the outstanding common shares of the Company of record
at the close of business on March 24, 1999 are entitled to notice of and to vote
at the meeting. The number of common shares outstanding on December 31, 1998 and
on February 26, 1999 was 13,355,891. Each common share entitles the registered
holder thereof to one vote, which may be given in person or by proxy. Approval
of each matter to come before the meeting requires an affirmative vote by the
holders of a majority of the shares voted at the meeting, whether in person or
by proxy. The quorum for the meeting is two persons present and holding or
representing by proxy at least one-third of the issued shares of the Company for
the time being having voting rights.
SHARE OWNERSHIP
The following table describes those shareholders which, to the knowledge of the
Company, own beneficially, as at February 26, 1999, more than 5 percent of the
outstanding common shares of the Company:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial
Name and Address Ownership of Common
Of Beneficial Owner Shares Percent of Class
------------------- ------ ----------------
<S> <C> <C>
Warburg Pincus Asset Management, Inc.
466 Lexington Avenue 985,500(1) 7.3
New York, N.Y. 10017
OppenheimerFunds Inc.
Two World Trade Center, Suite 3400 919,600(2) 6.9
New York, New York 10048-0203
Stanley A. Milner
President and Chief Executive Officer of the Company 739,618(3) 5.5
1201 TD Tower, 10088 - 102 Avenue
Edmonton, Alberta, Canada T5J 2Z1
Strong Capital Management, Inc.
100 Heritage Reserve 681,900(4) 5.1
Menomonee Falls, Wisconsin 53051
</TABLE>
(1) The information is based on filings with the Securities and Exchange
Commission on Schedule 13-G according to which the beneficial owner has
sole dispositive power with respect to 985,500 common shares, sole voting
power with respect to 584,000 shares and shared voting power with respect
to 370,400 shares.
(2) The information is based on filings with the Securities and Exchange
Commission on Schedule 13-G according to which the beneficial owner has
shared dispositive power with respect to 919,600 shares.
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<PAGE> 5
(3) Includes 143,333 shares issuable upon exercise of options exercisable
within 60 days and 48,750 shares issuable upon conversion of Chieftain
International Funding Corp. $1.8125 Convertible Redeemable Preferred
shares.
(4) The information is based on filings with the Securities and Exchange
Commission on Schedule 13-G according to which the beneficial owner has
sole dispositive power with respect to 681,900 common shares and sole
voting power with respect to 212,100 shares.
The table below indicates the number of the Company's common shares and the
Chieftain International Funding Corp. $1.8125 Convertible Redeemable Preferred
Shares (the "preferred shares") owned by (i) the directors (including those
nominated for election); (ii) the Named Executive Officers as defined on page 5;
and (iii) all directors and officers as a group. The common shares shown as
issuable upon exercise of options are issuable within 60 days. Each preferred
share is convertible into 1.25 common shares of the Company.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED AS AT FEBRUARY 26, 1999
Percent of Class
Common Shares (1) Preferred Shares Percent of Class
------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Stephen C. Hurley 86,323(2) - - -
Hugh J. Kelly 32,666(3) - 10,000 -
John E. Maybin 32,666(4) - - -
Stanley A. Milner 690,868(5) 5.1 39,000 1.4
David E. Mitchell 41,666(3) - - -
Louis G. Munin 35,666(3) - 2,000 -
Esther S. Ondrack 109,703(6) - - -
Stuart T. Peeler 14,466(7) - 30,000 1.1
Edward L. Hahn(8) 39,263(9) - - -
Ronald J. Stefure(10) 37,647(11) - - -
All directors and officers as a group 1,197,806(12) 8.4 81,000 3.0
</TABLE>
<TABLE>
<S> <C>
(1) Percentages of less than one are omitted. (8) E.L. Hahn is Senior Vice President, Finance and
Treasurer of the Company.
(2) Includes 83,333 shares issuable upon exercise of options.
(9) Includes 30,833 shares issuable upon exercise of
(3) Includes 31,666 shares issuable upon exercise of options. options.
(4) Includes 31,166 shares issuable upon exercise of options. (10) R. J. Stefure is Vice President and Controller of the
Company.
(5) Includes 143,333 shares issuable upon exercise of options.
(11) Includes 36,666 shares issuable upon exercise of
(6) Includes 87,500 shares issuable upon exercise of options. options.
(7) Shares issuable upon exercise of options. (12) Includes 558,961 shares issuable upon exercise of
options.
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four regularly scheduled meetings during the year
ended December 31, 1998. Each member of the Board of Directors including those
nominated for election attended all of the meetings of the Board of Directors
and of the committees on which he or she served during 1998. The Company has
standing Audit, Nominating and Corporate Governance, Compensation and Pension
Committees of the Board of Directors. The members of the committees are
appointed by the full Board upon recommendation of the Nominating and Corporate
Governance Committee.
AUDIT COMMITTEE
The Audit Committee, which during 1998 consisted of L.G. Munin as Chairman and
J.E. Maybin, D.E. Mitchell and S.T. Peeler, all non-employee directors, held
four meetings during 1998. The primary function of the Audit Committee is to
assist the Board of Directors in providing corporate oversight in the areas of
financial reporting, internal control and the audit process. In connection with
these reviews it meets alone with Company personnel and with the independent
auditors who have access to the Committee at any time. The Committee recommends
to the Board for its approval the annual appointment of external auditors.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee is comprised of J.E. Maybin as
Chairman and D.E. Mitchell, L.G. Munin and S.T. Peeler. This Committee assists
the Board by reviewing corporate governance and Board nomination matters and
making recommendations to the Board as appropriate. The Committee met once
during 1998
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<PAGE> 6
to consider the size and composition of the Board of Directors, nominees for the
election of directors at the 1998 annual meeting and corporate governance
practices.
COMPENSATION COMMITTEE
The Compensation Committee is comprised of S.T. Peeler as Chairman and H.J.
Kelly, J.E. Maybin and D.E. Mitchell, none of whom are officers of the Company,
with the exception of D. E. Mitchell, who is the non-executive Chairman of the
Board. The primary function of the Compensation Committee is to assist the Board
of Directors by reviewing compensation matters and making recommendations to the
Board with respect to compensation arrangements and benefit plans for officers
of the Company and with respect to the Company's Share Option Plan and by
reviewing and approving compensation budgets, benefits plans and policies,
salaries of certain non-officer employees and succession planning. The
Compensation Committee met twice in 1998.
PENSION COMMITTEE
The Pension Committee is comprised of H.J. Kelly as Chairman, E.L. Hahn, J.E.
Maybin, D.E. Mitchell and S.T. Peeler. This Committee reviews generally and
makes recommendations to the Board of Directors with regard to the Company's
retirement plans, related agreements and the appointment and performance of
retirement fund investment managers. This committee met twice during 1998.
ELECTION OF DIRECTORS
The Articles of the Company provide that directors are elected and retire in
rotation. Directors are elected to hold office until the close of the third
ensuing annual meeting and at each annual meeting approximately one-third of the
board is elected. Effective upon the termination of the forthcoming annual
meeting, the terms of Hugh J. Kelly, Louis G. Munin and Stuart T. Peeler will
expire. It is proposed that three directors be elected for the ensuing three
years. Management will place before the annual meeting as nominees Hugh J.
Kelly, Louis G. Munin and Stuart T. Peeler and PROXIES GIVEN PURSUANT TO THIS
SOLICITATION BY MANAGEMENT WILL BE VOTED FOR THE ELECTION OF SAID NOMINEES
UNLESS INDICATED OTHERWISE. While management knows of no reason why the said
nominees will be unable or unwilling to serve as directors, if for any reason
they shall be unable or unwilling to serve, it is intended that proxies given
pursuant to this solicitation by management will be voted for substitute
nominees selected by management.
Information is given below with respect to the nominees and the directors whose
terms of office as directors will continue after the meeting.
<TABLE>
<CAPTION>
SERVED AS TERM
NAME AND PRINCIPAL OCCUPATION DIRECTOR SINCE EXPIRES
----------------------------- -------------- -------
<S> <C> <C>
STEPHEN C. HURLEY, Dallas, Texas
Senior Vice President and Chief Operating Officer of the 1997 2000
Company(1)
HUGH J. KELLY, Mandeville, Louisiana
Corporate Director and Consultant(2) 1989 2002(3)
JOHN E. MAYBIN, Calgary, Alberta
Corporate Director 1991 2000
STANLEY A. MILNER, A.O.E., LL.D., Edmonton, Alberta
President and Chief Executive Officer of the Company(4) 1988 2001
DAVID E. MITCHELL, O.C., Calgary, Alberta
Chairman of Alberta Energy Company Ltd.(5) 1989 2001
LOUIS G. MUNIN, Dallas, Texas
Corporate Director and Financial Consultant(6) 1989 2002(3)
ESTHER S. ONDRACK, Spruce Grove, Alberta
Senior Vice President and Secretary of the Company(7) 1988 2000
STUART T. PEELER, Tucson, Arizona
Corporate Director and Petroleum Industry Consultant(8) 1989 2002(3)
</TABLE>
(1) S.C. Hurley joined the Company as Senior Vice President and Chief Operating
Officer in September, 1995. From 1987 until 1991 he was Vice President,
Exploration of Ocean Drilling & Exploration Company and from 1991 to 1995
he was Vice President, Exploration of Murphy Exploration and Production
Company.
(2) H.J. Kelly is a director of Gulf Island Fabrication Inc. and Tidewater Inc.
(3) Date when proposed term of office will expire.
4
<PAGE> 7
(4) S. A. Milner is a director of Alberta Energy Company Ltd. and Canadian
Pacific Limited.
(5) D. E. Mitchell is a director of Alberta Energy Company Ltd. and Air Canada.
(6) L. G. Munin is a director of Lafarge Canada Inc. and Walden Residential
Properties, Inc.
(7) E. S. Ondrack was Vice President and Secretary of the Company until June,
1995.
(8) S. T. Peeler is a director of Homestake Mining Company.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the compensation
paid, during each of the Company's three most recently completed fiscal years,
to the Chief Executive Officer and the Company's next four most highly
compensated executive officers (collectively "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
(U.S. $)
- ------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long - Term Compensation
--------------------------------- ------------------------------
Awards Payouts
---------------------- -------
Securities Restricted
Under Shares
Other Options or
Name and Annual and SARs Restricted LTIP All Other
Principal Salary Bonus Compensation Granted Share Units Payouts Compensation
Position Year ($) ($) ($) (#) ($) ($) (1)($)
-------- ---- ------- ------- ------------ --------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stanley A. Milner 1998 355,000 100,000 (2) 5,000 - - 88,561
President and 1997 320,273 250,000 (2) 25,000 - - 83,568
Chief Executive Officer 1996 293,592 150,000 (2) - - - 76,475
Stephen C. Hurley 1998 283,875 70,000 (2) 30,000 - - 64,085
Senior Vice President and 1997 245,946 185,000 (2) 25,000 - - 52,317
Chief Operating Officer 1996 226,689 100,000 (2) - - - 45,414
Edward L. Hahn 1998 142,655 21,500 (2) - - - 44,258
Senior Vice President, 1997 136,176 40,000 (2) 10,000 - - 34,755
Finance and Treasurer 1996 130,078 35,000 (2) - - - 33,102
Esther S. Ondrack 1998 129,231 19,500 (2) 5,000 - - 40,142
Senior Vice President 1997 122,157 40,000 (2) 15,000 - - 30,517
and Secretary 1996 116,246 35,000 (2) - - - 28,979
Ronald J. Stefure 1998 95,790 14,500 (2) - - - 25,364
Vice President 1997 95,570 35,000 (2) 9,000(3) - - 21,063
and Controller 1996 78,293 20,000 (2) - - - 13,619
</TABLE>
(1) The amounts in this column represent Company contributions to the defined
contribution retirement plans, the savings plan and the life insurance plan
in which plans the Named Executive Officers participate on the same basis
as all other employees. Such amounts do not include directors fees paid to
S.A. Milner ($30,000 in 1996, $24,000 in 1997 and $25,000 in 1998), E.S.
Ondrack ($30,000 in 1996, $24,000 in 1997, and $25,000 in 1998), and S.C.
Hurley ($9,423 in 1997 and $25,000 in 1998) or a relocation allowance of
$358,100 paid to S.C. Hurley in 1996.
(2) The value of perquisites and benefits for each of the Named Executive
Officers is not greater than the lesser of Cdn. $50,000 and 10% of total
annual salary and bonus.
(3) Includes 4,000 Share Appreciation Rights ("SARs") and 5,000 share options.
The following table sets forth information regarding grants of share options to
the Named Executive Officers during the financial year ended December 31, 1998.
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1998
----------------------------------------------------------------------------------------
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Number of Shares % of Total Options Appreciation for Option Term
Under Options Granted Exercise ------------------------------------- Expiration
Name Granted in 1998 Price(1) 5% 10% Date
---- ---------------- ------------------- --------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Stanley A. Milner 5,000 7.7 $23.00 $72,325 $183,280 May 13, 2008
Stephen C. Hurley 5,000 7.7 23.00 72,325 183,280 May 13, 2008
25,000 38.5 18.00 283,000 717,175 Sept. 21, 2008
Esther S. Ondrack 5,000 7.7 23.00 72,325 183,280 May 13, 2008
</TABLE>
(1) Market value of shares underlying options on the date of grant.
5
<PAGE> 8
The options are exercisable as to one-third of the granted amount on and after
each of the first three anniversaries of the date of grant. Exercisability of
options accelerates in certain events, including death, disability, retirement
and a change in control of the Company. The exercisability of options is
contingent upon continued service except that options exercisable on the date of
termination of employment may be exercised thereafter under certain conditions.
No options were exercised by the Named Executive Officers in 1998. The following
table shows the value, on December 31, 1998, of the unexercised options held by
the Named Executive Officers.
SHARE OPTION EXERCISES IN 1998 AND YEAR-END 1998 SHARE OPTION VALUES
<TABLE>
<CAPTION>
Unexercised Options held on Value of Unexercised in-the-Money
Securities December 31, 1998 Options on December 31, 1998
Acquired Aggregate Value ----------------------------- ---------------------------------
Name on Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley A. Milner - - 143,333 21,667 $80,200 -
Stephen C. Hurley - - 83,333 46,667 - -
Edward L. Hahn - - 30,833 6,667 9,700 -
Esther S. Ondrack - - 87,500 15,000 39,200 -
Ronald J. Stefure - - 36,666 3,334 7,500 -
</TABLE>
CHANGE IN CONTROL AGREEMENTS
The Company has agreements with certain employees, including the Named Executive
Officers, that require that if, under certain circumstances, following a change
in control of the Company, employment is terminated, the employee will receive a
severance payment equal to two times the employee's average annual base salary
during the previous three years and certain benefits for a two year period
following termination of employment.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is responsible for
reviewing compensation policies and practices of the Company, both generally and
in specific relation to the appointment and compensation of the officers and
certain members of senior management. The Compensation Committee makes
recommendations to the Board of Directors with respect thereto and with respect
to benefit plans including the Share Option Plan and grants thereunder.
Compensation of the Company's employees, including officers and senior
management, is comprised of salary, periodic bonuses for outstanding effort and
results, various benefit plans, including a retirement plan and a savings plan
and stock options. Compensation plans are designed to provide competitive levels
of compensation which will attract and retain competent, motivated personnel who
will perform to their potential to increase the value of the Company for the
benefit of the shareholders.
Salaries are reviewed annually in relation to the achievement of both corporate
and individual performance objectives and with a view to achieving and
maintaining external competitiveness and internal equity. Grants are made under
the Share Option Plan in the discretion of the Board of Directors on the advice
of the Compensation Committee and vary as to timing and amount with the
responsibilities and performance of the individual.
The compensation of the President and Chief Executive Officer of the Company,
Mr. Stanley A. Milner, is comprised of the same components and is determined in
the same manner as that of the other executive officers.
<TABLE>
<S> <C> <C>
Submitted on behalf of the Compensation Committee: Stuart T. Peeler, Chairman John E. Maybin
Hugh J. Kelly David E. Mitchell
</TABLE>
The Board of Directors has accepted all recommendations of the Compensation
Committee.
6
<PAGE> 9
PERFORMANCE GRAPHS(1)
The graphs which follow assume that C$100 was invested on April 30, 1989, when
the Company commenced operations, in the Company's common shares and in The
Toronto Stock Exchange (TSE) Oil and Gas Producers Index; and on December 31,
1993 in the Company's common shares, the TSE Oil and Gas Producers Index and the
TSE 300 Composite Index.
Cumulative Value of C$100 Invested on April 30, 1989
[GRAPH]
<TABLE>
<CAPTION>
Apr. 30 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
1989 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CII Cdn.$ 100 144 137 101 137 135 91 149 224 189 143
TSE O&GP 100 113 102 87 93 129 117 136 187 167 117
</TABLE>
Cumulative Value of C$100 Invested on December 31, 1993
[GRAPH]
<TABLE>
<CAPTION>
Dec. 31, 1993 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1998
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
CII Cdn. $ 100 67 110 166 140 106
TSE O&GP 100 91 105 145 130 90
TSE 300 100 100 114 147 169 166
</TABLE>
(1) Reinvestment of dividends is assumed in all cases. The graphs were plotted
using the data shown below each graph.
7
<PAGE> 10
The following graphs assume that US$100 was invested on April 30, 1989, when the
Company commenced operations, in the Company's common shares and in the American
Stock Exchange ("AMEX") Natural Resources Index and on December 31, 1993 in the
Company's common shares, the AMEX Natural Resources Index and the AMEX Market
Value Index. The AMEX Natural Resources Index was reconfigured effective
December 31, 1995.
Cumulative Value of US$100 Invested on April 30, 1989
[GRAPH]
<TABLE>
<CAPTION>
Apr. 30 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31
1989 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CII US$ 100 150 140 105 129 122 75 131 193 157 106
AMEX Nat. Res 100 115 96 84 73 91 90 100 123 132 86
</TABLE>
Cumulative Value of US$100 Invested on December 31, 1993
[GRAPH]
<TABLE>
<CAPTION>
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1993 1994 1995 1996 1997 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CIIUS$ 00 61 108 158 129 87
AMEX Nat. Res. 100 99 100 123 132 86
Market Value Index 100 91 115 120 143 144
</TABLE>
8
<PAGE> 11
COMPENSATION OF DIRECTORS
With effect from January 1, 1998, each Director receives an annual retainer of
$25,000, which is paid in quarterly installments. Each non-executive Director is
also paid at the rate of $1,000 for each Board meeting and committee meeting
attended. In addition, the Chairman of the Board and the Chairman of each
committee receives a chairman's retainer in the amount of $4,000 per year, paid
in quarterly installments. Directors receive no compensation for the time
required to prepare for or travel to or from Board or committee meetings. The
Company reimburses reasonable out-of-pocket expenses incurred by Directors. On
May 14, 1998, each of the Directors was granted an option on 5,000 common shares
at the exercise price of $23.00 per share and on March 11, 1999, each of the
Directors was granted an option on 5,000 common shares at the exercise price of
$11.43 per share.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Company supports and complies with the corporate governance guidelines of
The Toronto Stock Exchange. The Company's Board of Directors participates
actively in strategic planning and in the identification and management of
business risks confronting the Company. Corporate objectives, budgets and
corporate authorities are reviewed and approved regularly. The Company's Board
and Board Committees have ongoing involvement in succession planning,
shareholder communications, internal control matters and management information
systems. The Board has a non-executive Chairman and is comprised of eight
members, five of whom are unrelated directors as defined by The Toronto Stock
Exchange.
APPOINTMENT OF AUDITORS
As set forth in the notice, action will be taken at the meeting to provide for
the appointment of auditors until the close of the next annual meeting. THE
PROXIES HEREBY SOLICITED WILL BE EXERCISED IN FAVOR OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP which firm and its predecessor, Price Waterhouse,
have been the Company's auditors since the Company's inception. A representative
of PricewaterhouseCoopers LLP is expected to be present at the meeting.
SHAREHOLDER RIGHTS PLAN
Shareholders are being asked to reconfirm the Shareholder Rights Plan (the
"Rights Plan") which was adopted by the Board of Directors and became effective
on February 23, 1994 and was confirmed by the shareholders on May 26, 1994.
Reconfirmation by the shareholders requires that a majority of the votes cast be
in favor thereof. THE PROXIES HEREBY SOLICITED WILL BE EXERCISED IN FAVOR OF THE
RECONFIRMATION OF THE SHAREHOLDER RIGHTS PLAN. The full text of the Rights Plan
is on the public record and, in addition, any shareholder may obtain a copy by
contacting the Secretary of the Company at its Edmonton office.
The following is a general summary of the terms of the Rights Plan. The summary
is qualified in its entirety by reference to the text of the Rights Plan.
The Rights Plan is designed to ensure that any individual or group seeking to
acquire control of Chieftain will do so in a manner which will allow the
shareholders and the Board of Directors sufficient time to assess the offer. THE
RIGHTS PLAN REQUIRES THAT ALL SHAREHOLDERS BE TREATED EQUITABLY, I.E. THAT ALL
SHAREHOLDERS BE OFFERED THE SAME CONSIDERATION FOR THEIR SHARES.
To comply with the Rights Plan:
(a) a bid must be made in writing for all shares to all shareholders;
(b) a bid must be open for at least 90 days;
(c) the bidder must not own more than 10% of the shares when it starts the bid
process;
(d) at least 50% of the shares held by shareholders independent of the bidder
must be deposited with the bidder before the bidder can purchase any of
such shares; and
(e) if the minimum number of shares, as in (d) above, are deposited, the bidder
must announce this and then leave the bid open for at least 10 more days.
9
<PAGE> 12
If an individual or group acquires 25% or more of the shares other than by
complying with the Rights Plan, it becomes an "acquiring person" and the
shareholder rights are triggered. The Rights Plan gives shareholders rights to
buy shares if a bid is made that does not comply with the required bidding
procedures. Rights held by an "acquiring person" are not exercisable. Shares
owned by an investment manager or trust company in the normal course of its
business would not trigger the Plan.
A competing bid submitted during the term of the first bid will be required to
be outstanding only for the remaining part of the original 90-day period
(subject to the current statutory minimum of 21 days).
Securities laws require that the Board of Directors deliver to shareholders
within 10 days of a bid a written assessment of the bid. The shareholders
determine if a bid is acceptable by deciding whether or not to tender their
shares.
The Plan ensures that holders of convertible preferred shares will receive
rights as though they had converted their preferred shares into common shares.
The Plan will expire on February 22, 2004, 10 years after its effective date.
OTHER MATTERS
To the knowledge of the directors and management of the Company, there is no
business to be presented for action by the shareholders at the meeting to which
this Information Circular relates other than that mentioned herein or in the
Notice of Meeting.
The date by which shareholder proposals must be received by the Company for
inclusion in the information circular and proxy form relating to the 2000 annual
meeting is December 1, 1999.
ADDITIONAL INFORMATION
Copies of the Company's latest Annual Information Form and any documents
incorporated therein by reference; the Company's latest Annual Report on Form
10-K and any documents incorporated therein by reference; the Company's audited
Consolidated Financial Statements for the year ended December 31, 1998 and any
interim financial statements issued subsequent thereto, and this Information
Circular may be obtained from the Secretary of the Company at 1201 TD Tower,
10088 - 102 Avenue, Edmonton, Alberta, Canada, T5J 2Z1.
CERTIFICATE
The foregoing contains no untrue statement of a material fact and does not omit
to state a material fact that is required to be stated or that is necessary to
make a statement not misleading in light of the circumstances in which it was
made.
/s/ S. A. Milner /s/ E. L. Hahn
- ---------------------------------- ------------------------------------
S.A. Milner, A.O.E., LL.D. E.L. Hahn
President and Senior Vice President, Finance and
Chief Executive Officer Treasurer, Chief Financial Officer
Edmonton, Alberta
March 11, 1999
10
<PAGE> 13
CHIEFTAIN INTERNATIONAL, INC.
1201 TD TOWER, 10088 - 102 AVENUE
EDMONTON, ALBERTA T5J 2Z1
CANADA
TELEPHONE: (780) 425-1950
FACSIMILE: (780) 429-4681
INSTRUMENT OF PROXY
PROXY SOLICITED ON BEHALF OF MANAGEMENT FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON MAY 13, 1999
The undersigned shareholder of CHIEFTAIN INTERNATIONAL, INC. (the "Company"),
revoking any proxy heretofore given, hereby nominates, constitutes and appoints
STANLEY A. MILNER, President and Chief Executive Officer, or failing him, ESTHER
S. ONDRACK, Senior Vice President and Secretary, or, instead of either of them,
___________________________________________________________________ as proxy of
the undersigned, with full power of substitution, to attend the annual meeting
of shareholders of the Company to be held on the 13th day of May, 1999, and any
and all adjournments thereof and to vote and otherwise act thereat for and on
behalf of and in the name of the undersigned, as indicated below:
1. to vote FOR [ ] or WITHHOLD vote on [ ] the election as directors of the
nominees named in the Information Circular dated March 11, 1999, to hold
office until the annual meeting of shareholders in the year 2002, such
nominees being Hugh J. Kelly; Louis G. Munin and Stuart T. Peeler;
2. to vote FOR [ ] or WITHHOLD vote on [ ] the appointment of
PricewaterhouseCoopers LLP as auditors of the Company;
3. to vote FOR [ ] or AGAINST [ ] reconfirmation of the Shareholder Rights Plan
referred to in the Information Circular dated March 11, 1999;
4. to vote in his or her discretion upon any amendments and/or variations to
the matters identified in the notice of meeting and upon such other business
as may properly come before the meeting or any and all adjournments thereof;
the undersigned hereby ratifying and confirming all that the said proxy may do
by virtue hereof.
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT WHICH RECOMMENDS VOTING FOR ALL
ITEMS. THIS PROXY WILL BE VOTED AS SPECIFIED AND IF NOT SPECIFIED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR ALL ITEMS.
_______________________________________
(Date)
_______________________________________
(Signature of Shareholder)
The instrument appointing a proxy shall be in writing and shall be executed by
the shareholder or his or her attorney authorized in writing. If the shareholder
is a corporation, the instrument must be signed by a duly authorized officer or
attorney.
A shareholder who has given a proxy in the above form has the power to revoke
it. Procedures for revocation are described in the Information Circular.
THE PERSONS DESIGNATED IN THE ABOVE FORM OF PROXY ARE OFFICERS AND DIRECTORS OF
THE COMPANY. A SHAREHOLDER HAS THE RIGHT TO APPOINT SOME OTHER PERSON, WHO NEED
NOT BE A SHAREHOLDER, TO REPRESENT HIM OR HER AT THE MEETING, AND HE OR SHE MAY
EXERCISE THIS RIGHT BY INSERTING SUCH OTHER PERSON'S NAME IN THE BLANK SPACE
PROVIDED IN THE FORM OF PROXY.
PLEASE FILL OUT, DATE, SIGN AND RETURN THE PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE, TO CIBC MELLON TRUST COMPANY.
