<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
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
[CHIEFTAIN INTERNATIONAL, INC. LETTERHEAD]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, MAY 25, 2000
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 25, 2000 at 10:30 a.m.
(Edmonton time) to receive and consider the annual report for the year ended
December 31, 1999, the financial statements as at and for the year ended
December 31, 1999, 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 approve an amendment to the Share Option 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 27th day of March,
2000 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 Secretary
March 15, 2000
<PAGE> 3
[CHIEFTAIN INTERNATIONAL, INC. LETTERHEAD]
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 30, 2000 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 25, 2000. The Directors have fixed the close of business on
March 27, 2000 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, T2P 2Z1, Canada,
or by the Company at its principal office at 1201 TD Tower, 10088 - 102 Avenue,
Edmonton, Alberta, T5J 2Z1, Canada, no later than 10:30 a.m., May 24, 2000.
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
U.S.$1.00 during 1998, 1999 and during the period January 1 to February 29,
2000, were $1.4831, $1.4860 and $1.4500, respectively. The rates on December 31,
1998, December 31, 1999, and February 29, 2000 were $1.5305, $1.4433 and
$1.4488, 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.
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.
1
<PAGE> 4
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
AMEND THE SHARE OPTION 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 27, 2000 are entitled to notice of and
to vote at the meeting. The number of common shares outstanding on December 31,
1999 and on February 29, 2000 was 16,224,059. 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, to the knowledge of the Company, shareholders
owning beneficially, as at February 29, 2000, more than five percent of the
outstanding common shares of the Company.
<TABLE>
<CAPTION>
===================================================================================================
Amount and Nature of
Name and Address Beneficial Ownership of
of Beneficial Owner Common Shares Percent of Class
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
OppenheimerFunds Inc.
Two World Trade Center, Suite 3400 1,515,200(1) 9.3
New York, New York 10048-0203
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T. Rowe Price Associates, Inc.
100 East Pratt Street 1,471,300(2) 9.1
Baltimore, Maryland 21202
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Scudder Kemper Investments, Inc.
345 Park Avenue 952,000(3) 5.9
New York, New York 10154
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Strong Capital Management, Inc.
100 Heritage Reserve 885,200(4) 5.5
Menomonee Falls, Wisconsin 53051
===================================================================================================
</TABLE>
(1) The information is based on filings with the Securities and Exchange
Commission ("SEC") on Schedule 13-G according to which the beneficial owner
has sole voting power and shared dispositive power with respect to 1,515,200
shares.
(2) These securities are owned by various individual and institutional
investors which T. Rowe Price Associates, Inc. ("Price Associates") serves
as investment advisor with power to direct investments and/or sole power to
vote securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities. The
information is based on filings with the SEC on Schedule 13-G and results of
the Company's inquiries according to which Price Associates has sole voting
power with respect to 407,500 shares and sole dispositive power with respect
to 1,417,800 shares.
(3) The information is based on filings with the SEC on Schedule 13-G and
results of the Company's inquiries according to which Scudder Kemper
Investments, Inc. ("Scudder Kemper") has sole voting power with respect to
674,500 shares, shared voting power with respect to 15,100 shares and sole
dispositive power with respect to 952,000 shares. Although these shares are
attributable to Scudder Kemper pursuant to SEC regulations, Scudder Kemper
disclaims "beneficial ownership".
(4) The information is based on filings with the SEC on Schedule 13-G
according to which the beneficial owner has sole voting power with respect
to 294,800 shares and sole dispositive power with respect to 885,200 shares.
2
<PAGE> 5
The table below indicates the number of the Company's common shares and the
number of 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 29, 2000
<S> <C> <C> <C> <C>
Common Shares Percent of Class(1) Preferred Shares Percent of Class(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stephen C. Hurley 107,221(2) - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Hugh J. Kelly 37,666(3) - 10,000 -
- ------------------------------------------------------------------------------------------------------------------------------------
John E. Maybin 37,666(4) - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Stanley A. Milner 676,991(5) 4.1 39,000 1.4
- ------------------------------------------------------------------------------------------------------------------------------------
David E. Mitchell 46,666(3) - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Louis G. Munin 40,666(3) - 2,000 -
- ------------------------------------------------------------------------------------------------------------------------------------
Esther S. Ondrack 100,110(6) - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Stuart T. Peeler 19,466(7) - 30,000 1.1
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Edward L. Hahn(8) 46,286(9) - - -
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Ronald J. Stefure(10) 24,618(11) - - -
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All directors and
officers as a group 1,206,243 (12) 7.2 81,000 3.0
====================================================================================================================================
</TABLE>
(1) Percentages of less than one are omitted.
(2) Includes 103,331 shares issuable upon exercise of options.
(3) Includes 36,666 shares issuable upon exercise of options.
(4) Includes 36,166 shares issuable upon exercise of options.
(5) Includes 128,332 shares issuable upon exercise of options.
In addition an associate of S.A. Milner owns 3,000 shares.
(6) Includes 77,498 shares issuable upon exercise of options.
In addition an associate of E.S. Ondrack owns 500 shares.
(7) Shares issuable upon exercise of options.
(8) E.L. Hahn retired as Senior Vice President, Finance and Treasurer of the
Company effective December 31, 1999.
(9) Includes 37,500 shares issuable upon exercise of options.
(10) R.J. Stefure is Vice President and Controller of the Company.
(11) Includes 23,334 shares issuable upon exercise of options.
(12) Includes 563,960 shares issuable upon exercise of options.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four regularly scheduled and six additional meetings
during the year ended December 31, 1999. With the exception of one director's
unavoidable absence from one meeting held by telephone, each member of the Board
of Directors including those nominated for election attended all of the meetings
of the Board of Directors and all of the meetings of the committees on which the
member served during 1999. The Company has standing Audit, Compensation,
Nominating and Corporate Governance, Pension and Reserve 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. All of the
members of all of the committees are independent unrelated directors. Mr.
Mitchell serves as non-executive Chairman of the Board.
AUDIT COMMITTEE
The Audit Committee, which during 1999 consisted of L.G. Munin as Chairman and
J.E. Maybin, D.E. Mitchell and S.T. Peeler, held five meetings during 1999. 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. The Committee regularly meets alone with Company
personnel and with the independent auditors. The independent auditors have
access to the Committee at any time. The Committee recommends to the Board for
its approval the financial statements and the annual appointment of external
auditors.
COMPENSATION COMMITTEE
The Compensation Committee is comprised of S.T. Peeler as Chairman and H.J.
Kelly, J.E. Maybin, and D.E. Mitchell. The primary function of the Compensation
Committee is to assist the Board of Directors in carrying out its
responsibilities by reviewing compensation matters and making recommendations to
the Board. This Committee considers and recommends to the Board for approval
directors compensation, appointment and remuneration of officers and
transactions under the Company's share option plan. It also reviews compensation
and benefits budgets, plans and policies, salaries of certain non-officer
employees and succession planning. The Compensation Committee met twice in 1999.
3
<PAGE> 6
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 1999 to consider the size and composition of the Board of Directors,
nominees for the election of directors at the 1999 annual meeting and corporate
governance practices.
PENSION COMMITTEE
The Pension Committee is comprised of H.J. Kelly as Chairman, J.E. Maybin, D.E.
Mitchell and S.T. Peeler. E.L. Hahn was a member of the Committee until his
retirement at year-end. 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 once during 1999.
RESERVE COMMITTEE
The Reserve Committee is comprised of D.E. Mitchell as Chairman, H.J. Kelly,
J.E. Maybin and S.T. Peeler. The committee acts in an advisory capacity to the
Board. Its primary function is to review the externally disclosed oil and gas
reserve estimates of the Company. The committee reviews the reports of the
independent engineers charged with evaluating the Company's reserves and also
reviews the selection of the independent engineers and the scope of their work.
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. At each annual meeting approximately one-third of the
board is elected. Effective upon the termination of the forthcoming annual
meeting, the terms of Stephen C. Hurley, John E. Maybin and Esther S. Ondrack
will expire. It is proposed that three directors be elected for the ensuing
three years. Management will place before the annual meeting as nominees Stephen
C. Hurley, John E. Maybin and Esther S. Ondrack 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>
=================================================================================================================
NAME AND PRINCIPAL OCCUPATION SERVED AS DIRECTOR SINCE TERM EXPIRES
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STEPHEN C. HURLEY, Dallas, Texas
Senior Vice President and Chief Operating Officer of the Company(1) 1997 2003(2)
- -----------------------------------------------------------------------------------------------------------------
HUGH J. KELLY, Mandeville, Louisiana
Corporate Director and Consultant(3) 1989 2002
- -----------------------------------------------------------------------------------------------------------------
JOHN E. MAYBIN, Calgary, Alberta
Corporate Director 1991 2003(2)
- -----------------------------------------------------------------------------------------------------------------
STANLEY A. MILNER, A.O.E., L.L.D., Edmonton, Alberta
President and Chief Executive Officer of the Company(4) 1988 2001
- -----------------------------------------------------------------------------------------------------------------
DAVID E. MITCHELL, O.C., Calgary, Alberta
Chairman Emeritus of Alberta Energy Company Ltd. 1989 2001
- -----------------------------------------------------------------------------------------------------------------
LOUIS G. MUNIN, Dallas, Texas
Corporate Director and Financial Consultant(5) 1989 2002
- -----------------------------------------------------------------------------------------------------------------
ESTHER S. ONDRACK, Spruce Grove, Alberta
Senior Vice President and Secretary of the Company(6) 1988 2003(2)
- -----------------------------------------------------------------------------------------------------------------
STUART T. PEELER, Tucson, Arizona
Corporate Director and Petroleum Industry Consultant(7) 1989 2002
=================================================================================================================
</TABLE>
(1) S.C. Hurley joined the Company as Senior Vice President and Chief Operating
Officer in September, 1995. From 1991 to 1995 he was Vice President
Exploration of Murphy Exploration and Production Company.
(2) Date when proposed term of office will expire.
(3) H.J. Kelly is a director of Gulf Island Fabrication Inc. and Tidewater Inc.
(4) S.A. Milner is Chairman of the Board of Alberta Energy Company Ltd.
(5) L.G. Munin is a director of Lafarge Canada Inc. and Walden Residential
Properties, Inc.
(6) E.S. Ondrack was Vice President and Secretary of the Company until June,
1995.
(7) S.T. Peeler is a director of Homestake Mining Company.
4
<PAGE> 7
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
-------------------------
Securities Restricted
Under Shares Payouts
Name and Other Options or -------
Principal Annual and SARs Restricted LTIP All Other
Position Year Salary Bonus Compensation Granted Share Units Payouts Compensation(1)
($) ($) ($) (#) ($) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stanley A. Milner 1999 365,803 375,000 (2) 45,000 - - 95,073
President and 1998 355,000 100,000 (2) 5,000 - - 88,561
Chief Executive Officer 1997 320,273 250,000 (2) 25,000 - - 83,568
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen C. Hurley 1999 293,124 275,000 (2) 5,000 - - 67,765
Senior Vice President and 1998 283,875 70,000 (2) 30,000 - - 64,085
Chief Operating Officer 1997 245,946 185,000 (2) 25,000 - - 52,317
- ------------------------------------------------------------------------------------------------------------------------------------
Edward L. Hahn(3) 1999 110,325 76,000 (2) 2,500 - - 36,191
Senior Vice President 1998 142,655 21,500 (2) - - - 44,258
Finance and Treasurer 1997 136,176 40,000 (2) 10,000 - - 34,755
- ------------------------------------------------------------------------------------------------------------------------------------
Esther S. Ondrack 1999 133,166 66,000 (2) 32,500 - - 42,233
Senior Vice President 1998 129,231 19,500 (2) 5,000 - - 40,142
and Secretary 1997 122,157 40,000 (2) 15,000 - - 30,517
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald J. Stefure 1999 98,708 43,000 (2) 15,000 - - 62,034
Vice President 1998 95,790 14,500 (2) - - - 25,364
and Controller 1997 95,570 35,000 (2) 9,000(4) - - 21,063
====================================================================================================================================
</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 each
of S.A. Milner and E.S. Ondrack, ($24,000 in 1997 and $25,000 in 1998 and
1999), and S.C. Hurley ($9,423 in 1997 and $25,000 in each of 1998 and
1999).
(2) The value of perquisites and benefits for each of the Named Executive
Officers is not greater than the lesser of C$50,000 and 10% of total
annual salary and bonus.
(3) E.L. Hahn served on a part-time basis for a portion of the year and retired
on December 31, 1999.
(4) 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, 1999.
<TABLE>
<CAPTION>
OPTION GRANTS DURING 1999
====================================================================================================================================
Number of Shares % of Total Options Exercise Grant Date
Name Under Options Granted Granted in 1999 Price(1) Present Value(2) Expiration Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stanley A. Milner 5,000 2.8 $11.43 $ 29,650 Mar. 10, 2009
40,000(3) 22.2 13.50 284,400 Apr. 12, 2009
Stephen C. Hurley 5,000 2.8 11.43 29,650 Mar. 10, 2009
Edward L. Hahn 2,500(3) 1.4 13.50 17,775 Apr. 12, 2009
Esther S. Ondrack 5,000 2.8 11.43 29,650 Mar. 10, 2009
27,500(3) 15.3 13.50 195,525 Apr. 12, 2009
Ronald J. Stefure 15,000(3) 8.3 18.31 153,000 Nov. 9, 2009
====================================================================================================================================
</TABLE>
(1) Not less than closing market value of shares underlying options on trading
day prior to date of grant.
(2) The grant date present values were calculated using the Black-Scholes option
pricing model using an expected volatility of 28%, a risk free rate of
5.81%, no dividend yields and ten year option lives, all on a weighted
average basis.
(3) Option granted following the expiry of unexercised option granted in 1989 on
the same number of shares.
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.
5
<PAGE> 8
No options were exercised by the Named Executive Officers in 1999. The
following table shows the value, on December 31, 1999, of the unexercised
options held by the Named Executive Officers.
<TABLE>
<CAPTION>
====================================================================================================================================
SHARE OPTION EXERCISES IN 1999 AND YEAR-END 1999 SHARE OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------------
Unexercised Options held on Value of Unexercised in-the-Money
December 31, 1999 Options on December 31, 1999
Securities Acquired Aggregate Value ----------------------------- --------------------------------
Name on Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ------------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley A. Milner -- -- 113,332 56,668 $ 263,950 $ 179,100
Stephen C. Hurley -- -- 100,165 33,335 150,000 29,100
Edward L. Hahn -- -- 31,666 5,834 64,250 9,375
Esther S. Ondrack -- -- 66,666 40,834 119,150 132,225
Ronald J. Stefure -- -- 23,334 16,666 54,900 --
====================================================================================================================================
</TABLE>
CHANGE IN CONTROL AGREEMENTS
The Company has agreements with certain employees, including the Named
Executive Officers, requiring 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, as described under "Committees and
Meetings of the Board of Directors."
Compensation of the Company's employees, including officers and senior
management is comprised of salary, performance bonuses, 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.
Submitted on behalf of the Compensation Committee: Stuart T. Peeler, Chairman
Hugh J. Kelly
John E. Maybin
David E. Mitchell
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 (A) on April 30, 1989,
when the Company ("CII") commenced operations, in the Company's common shares
and in The Toronto Stock Exchange ("TSE") Oil and Gas Producers Index, and (B)
on December 31, 1994 in the Company's common shares, the TSE Oil and Gas
Producers Index and the TSE 300 Composite Index.
(A) CUMULATIVE VALUE OF C$100 INVESTED ON APRIL 30, 1989
[GRAPH]
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Apr. 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1989 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CII C$ 100 144 137 101 137 135 91 149 224 189 143 155
- ----------------------------------------------------------------------------------------------------------------------------
TSE C&GP 100 113 102 87 93 129 117 136 187 167 117 143
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(B) CUMULATIVE VALUE OF C$100 INVESTED ON DECEMBER 31, 1994
[GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1999
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CII C$ 100 164 246 208 158 171
- --------------------------------------------------------------------------------------------------------------------------------
TSE O&GP 100 116 160 143 100 122
- --------------------------------------------------------------------------------------------------------------------------------
TSE 300 100 115 147 169 166 219
- --------------------------------------------------------------------------------------------------------------------------------
</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 U.S.$100 was invested (C) on April 30, 1989,
when the Company ("CII") commenced operations, in the Company's common shares
and in the American Stock Exchange ("AMEX") Natural Resources Index and (D) on
December 31, 1994 in the Company's common shares, the AMEX Natural Resources
Index and the AMEX Total Return Index. The AMEX Natural Resources Index was
reconfigured effective December 31, 1995.
(C) CUMULATIVE VALUE OF U.S.$100 INVESTED ON APRIL 30, 1989
[GRAPH]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Apr. 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1989 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CII U.S.$ 100 150 140 105 129 122 75 131 193 157 106 128
- ------------------------------------------------------------------------------------------------------------------------------------
AMEX Nat. Res. 100 115 96 84 73 91 90 100 123 132 86 116
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(D) CUMULATIVE VALUE OF U.S.$100 INVESTED ON DECEMBER 31, 1994
[GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1997 Dec. 31, 1998 Dec. 31, 1999
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CII U.S.$ 100 175 257 210 142 170
- --------------------------------------------------------------------------------------------------------------------------------
AMEX Nat. Res. 100 101 124 133 87 117
- --------------------------------------------------------------------------------------------------------------------------------
AMEX Total Return 100 129 131 163 175 224
- --------------------------------------------------------------------------------------------------------------------------------
</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
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.
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.
APPROVAL OF AMENDMENT TO SHARE OPTION PLAN
DESCRIPTION OF THE PLAN
The Share Option Plan (the "Plan") provides for the granting of share options
to such employees and directors of and consultants to the Company and its
subsidiaries as are designated by the Board of Directors upon the advice of
the Compensation Committee. All employees (including officers), consultants
and directors are eligible.
The amount of any option granted is determined by the Board of Directors upon
the advice of the Compensation Committee. There are no limitations as to the
number of shares with respect to which an option may be granted to any one
optionee except that no optionee is permitted to hold options to purchase more
than 5% of the issued and outstanding common shares of the Company. Shares in
respect of which options have terminated without exercise are available for the
granting of options.
Options granted under the Plan expire no later than the tenth anniversary of
the date of grant and are cumulatively exercisable as to one-third of the
shares subject thereto on and after each of the first three anniversary dates
of the date of grant. The exercise price must be no less than the market price,
as defined in the Plan, at the time the option is granted.
The exercise of an option is contingent upon continued employment with
exceptions in certain events including death, disability or retirement and in
any such event the option is fully exercisable. The exercisability of options
is also accelerated in the event an offer is made which would, if successful,
result, in the opinion of the Board, in a change of control of the Company; or
in any event which, in the opinion of the Board, warrants acceleration. Options
are not transferable.
Note 4 of the Notes to Financial Statements of the Company for the year ended
December 31, 1999 contains information on activity in the Plan.
PROPOSED PLAN AMENDMENT
On March 15, 2000, the Board of Directors approved an amendment to the
Company's Share Option Plan, subject to approval of the shareholders, fixing
the number of shares reserved for issuance under the Plan at 1,500,000. The
number of shares reserved for issuance under the Plan was last fixed at
1,300,000 in 1996.
The Plan requires that the number of shares reserved for issuance shall not
exceed 10% of the total number of issued and outstanding shares of the Company.
The following table shows the number of Common Shares reserved for the Plan,
before and after the proposed amendment, as at February 29, 2000, as of which
date the number of Common Shares issued and outstanding was 16,224,059.
9
<PAGE> 12
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON SHARES RESERVED COMMON SHARES RESERVED FOR MAXIMUM COMMON SHARES
FOR OUTSTANDING OPTIONS FUTURE EVENTS OF OPTIONS RESERVED FOR OPTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Currently approved 1,119,189 11,018 1,130,207
- -----------------------------------------------------------------------------------------------------------------------------------
Proposed Increase - 369,793 369,793
- -----------------------------------------------------------------------------------------------------------------------------------
Total 1,119,189 380,811 1,500,000
- -----------------------------------------------------------------------------------------------------------------------------------
% of Outstanding Common Shares 6.9% 2.3% 9.2%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Board of Directors believes it is in the interest of the Company to provide
incentives to the employees, consultants and directors in the form of options on
Common Shares of the Company. The Board recommends that the shareholders approve
the following resolution:
RESOLVED THAT:
1. An amendment to the Chieftain International, Inc. Share Option Plan
(the "Plan"), as described in the Information Circular dated March 15,
2000, be and is hereby approved; and
2. Any offer of the Company be and is hereby authorized, for and on
behalf of the Company, to execute and deliver such documents and
instruments and to take such actions as such officer may determine to
be necessary or advisable to implement this resolution and the matters
authorized hereby, such determination to be conclusively evidenced by
the execution and delivery of any such document or instrument and the
taking of any such action.
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 2001 annual
meeting is December 1, 2000.
ADDITIONAL INFORMATION
Shareholders may obtain 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, 1999 and any interim financial statements issued subsequent thereto, and
this Information Circular from the Secretary of the Company at 1201 TD Tower,
10088-102 Avenue, Edmonton, Alberta, T5J 2Z1, Canada.
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.A. Milner, A.O.E., LL.D.
President and Chief Executive Officer
and Chief Financial Officer
Edmonton, Alberta
March 15, 2000
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 25, 2000
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 25th day of May, 2000, 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 15, 2000, to hold
office until the annual meeting of shareholders in the year 2003, such
nominees being Stephen C. Hurley; John E. Maybin and Esther S. Ondrack;
2. to vote FOR [ ] or WITHHOLD vote on [ ] the appointment of
PricewaterhouseCoopers LLP as auditors of the Company;
3. to vote FOR [ ] or AGAINST [ ] approval of the amendment of the Share Option
Plan referred to in the Information Circular dated March 15, 2000;
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.
