<PAGE>
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange
Act of 1934
(Amendment No. _____)
Filed by the Registrant X
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Filed by a Party other than the Registrant
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Check the appropriate box:
Preliminary Proxy Statement
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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 240.14a-11(c) or 240.14a-12
- -----
MAGNUM HUNTER RESOURCES, INC.
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(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 is required
- ----
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
- ----
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(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:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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Fee paid previously with preliminary materials.
- ----
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
Magnum Hunter Resources, Inc.
600 East Las Colinas Boulevard
Suite 1200
Irving, Texas 75039
Notice of Annual Meeting of Shareholders
on May 28, 1998
Dear Shareholder:
The Annual Meeting of Shareholders (the "Meeting") of Magnum Hunter
Resources, Inc. will be held at the Omni Park West Hotel located at 1590 LBJ
Freeway, Dallas Texas, 75234 on Thursday, May 28, 1998, at 2:00 P.M., Central
Daylight Savings Time, for the following purposes:
(1) The election of six (6) Directors to serve until the 1999 Annual
Meeting or until their respective successors are duly elected and
qualified;
(2) To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors to examine the accounts of the
Company for the fiscal year ending December 31, 1998; and
(3) Transacting such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed April 9, 1998, as the record date (the
"Record Date") for the determination of stockholders entitled to notice of, and
to vote at, the Meeting and any adjournment or postponement thereof. Only
holders of record of Magnum Hunter Resources, Inc. (the "Company") Common Stock,
par value $.002 per share, and holders of record of the Company's 1996 Series A
Convertible Preferred Stock at the close of business on the Record Date are
entitled to vote on all matters coming before the Meeting or any adjournment or
postponement thereof. A complete list of stockholders entitled to vote at the
Meeting will be maintained in the Company's offices at 600 East Las Colinas
Boulevard, Suite 1200, Irving, Texas, for ten days prior to the Meeting.
The Annual Report to shareholders for the year ended December 31, 1997
in which financial statements of the Company are included, was mailed with this
Proxy Statement to each shareholder of record as of the close of business on
April 9, 1998. Other than as specifically incorporated by reference herein, the
Annual Report does not form any part of the material for solicitation of
proxies.
Your vote is important. The voting stock of the Company should be
represented as fully as possible at the Annual Meeting. The enclosed proxy is
solicited by the Board of Directors of the Company. Whether or not you plan to
attend the meeting in person, please mark, execute, date and return the enclosed
proxy in the envelope provided, which requires no postage if mailed within the
United States. The return of the enclosed proxy will not affect your right to
vote in person if you do attend the meeting.
By Order of the Board of Directors
Irving, Texas Morgan F. Johnston
May 1, 1998 Secretary
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING, YOU ARE URGED TO SIGN,
DATE AND MAIL THE ENCLOSED PROXY CARD PROMPTLY. IF YOU ATTEND THE MEETING, YOU
CAN VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE>
Magnum Hunter Resources, Inc.
600 East Las Colinas Boulevard, Suite 1200
Irving, Texas 75039
PROXY STATEMENT
The proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Company's Annual
Meeting of Shareholders which will be held on Thursday, May 28, 1998, at 2:00
P.M., Central Daylight Savings Time at the Omni Park West Hotel located at 1590
LBJ Freeway, Dallas, Texas 75234. This proxy statement, the foregoing notice and
the enclosed proxy are being sent to shareholders on or about May 1, 1998.
The Board of Directors does not intend to bring any matter before the
Meeting except as specifically indicated in the notice and does not know of
anyone else who intends to do so. If any other matters properly come before the
Meeting, however, the persons named in the enclosed proxy, or their duly
constituted substitutes acting at the meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment in such matters. If the
enclosed proxy is properly executed and returned prior to voting at the Meeting,
the shares represented thereby will be voted in accordance with the instructions
marked thereon. In the absence of instructions, the shares will be voted "FOR"
the nominees of the Board of Directors in the election of six directors and
"FOR" the remaining proposal(s).
Any proxy may be revoked at any time prior to its exercise by notifying
the Secretary of the Company in writing, by delivering a duly executed proxy
bearing a later date or by attending the Meeting and voting in person.
VOTING SECURITIES AND SECURITY OWNERSHIP
Voting Securities
At the close of business on April 9, 1998, the record date fixed for
the determination of shareholders entitled to notice of and to vote at the
Meeting, there were outstanding 21,738,320 shares of the Company's Common Stock,
$.002 par value (the "Common Stock"). At the close of business on the record
date, holders of the Company's Common Stock will be entitled to one vote per
share on all proper business brought before the Meeting. In addition, the
holders of the Company's 1996 Series A Convertible Preferred Stock are entitled,
on all matters submitted for a vote of the holders of shares of Common Stock, to
a number of votes per share equal to the number of shares of Common Stock
issuable upon conversion of one share of the 1996 Series A Convertible Preferred
Stock on the date of such vote. As of May 1, 1998, there are currently 1,000,000
shares of 1996 Series A Convertible Preferred Stock issued and outstanding which
is convertible into 1,702,127 shares of Common Stock. The presence at the
Meeting, in person or by proxy, of the holders of a majority of such outstanding
shares will constitute a quorum. All matters brought before the Meeting will be
decided by a majority of the shares represented in person or by proxy.
Shareholders do not have cumulative voting rights in the election of directors.
Abstentions will have the effect of a vote against a proposal. Non-votes will
have no effect on the voting of any of the proposals.
1
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of March 15,
1998, regarding the share ownership of the Company by (i) each person known to
the Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock of the Company, (ii) each director, (iii) the Company's Chief
Executive Officer and the two other most highly compensated executive officers
of the Company, and (iv) all directors and executive officers of the Company, as
a group. None of the directors or executive officers named below owned, as of
March 15, 1998, any shares of the Company's 1996 Series A Convertible Preferred
Stock. The business address of each officer and director listed below is: c/o
Magnum Hunter Resources, Inc., 600 East Las Colinas Blvd., Suite 1200, Irving,
Texas 75039.
<TABLE>
<CAPTION>
<S> <C> <C>
Common Stock Beneficially Owned
Number of Percent
Name Shares of Class (8)
Directors and Executive Officers
Gary C. Evans ......................................... 2,178,226 (1) 10.0%
Matthew C. Lutz........................................ 672,411 (2) 3.0%
Gerald W. Bolfing...................................... 359,558 (3) 1.6%
Oscar C. Lindemann..................................... 37,160 (3) *
John H. Trescot, Jr.................................... 60,154 (4) *
James E. Upfield....................................... 64,704 (3) *
Richard R. Frazier..................................... 248,623 (5) 1.1%
Chris Tong............................................. 53,300 (6) *
All directors and executive officers as a group (8 persons) 3,507,033 15.0%
Beneficial owners of 5 percent or more (excluding persons named
above)
TCW Group, Inc.
865 South Figueroa Street
Los Angeles, CA 90017................................. 1,702,127 (7) 7.8%
Janus Capital Corporation
100 Fillmore St. , Suite 300
Denver, CO. 80206..................................... 1,474,900 6.8%
</TABLE>
(1) Includes 17,024 shares held in the name of Jacquelyn Evelyn
Enterprises, Inc., a corporation whose sole shareholder is Mr.
Evans' wife. Mr. Evans disclaims any ownership in such securities
other than those in which he has an economic interest. Also
includes currently exercisable options to acquire 739,377 shares
of Common Stock.
(2) Includes currently exercisable options to acquire 526,073 shares
of Common Stock.
(3) Includes currently exercisable options to acquire 35,536 shares of
Common Stock.
(4) Includes currently exercisable options to acquire 35,000 shares of
Common Stock.
(5) Includes currently exercisable options to acquire 200,000 shares
of Common Stock.
(6) Includes currently exercisable options to acquire 50,000 shares of
Common Stock.
(7) Consists of shares attributable to shares of Common Stock issuable
upon conversion of 1,000,000 shares of the Company's 1996 Series A
Convertible Preferred Stock.
(8) Percentage is calculated on the number of shares outstanding plus
those shares deemed outstanding under Rule 13d- 3(d)(1) under the
Exchange Act.
2
<PAGE>
I. ELECTION OF DIRECTORS
Identification of the Directors to be Elected
At the Meeting, the shareholders will elect six directors to hold
office until the next annual meeting of shareholders and until their successors
are duly elected and qualified. Unless contrary instructions are given, the
shares represented by the enclosed proxy will be voted "FOR" the election of the
Board of Directors' nominees listed below.
The Board of Directors believe that the nominees are willing to serve
as directors. If a nominee at the time of his election is unable or unwilling to
serve or is otherwise unavailable for election, and as a result another nominee
is designated, the persons named in the enclosed proxy or their substitute(s)
will have discretion and authority to vote or to refrain from voting for the
nominee in accordance with their judgment.
The nominees for election as directors, together with certain
information about them, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Positions
Name Age Term Served With Company
Gary C. Evans.................... 40 Dec. 1995 Director, President and Chief Executive
Officer
Matthew C. Lutz.................. 63 Dec. 1995 Chairman and Executive Vice President of
Exploration and Business Development
Gerald W. Bolfing................ 69 Dec. 1995 Director
Oscar C. Lindemann............... 75 Dec. 1995 Director
John H. Trescot, Jr. . . . . . 72 June 1997 Director
James E. Upfield................. 77 Dec. 1995 Director
</TABLE>
See "Security Ownership of Certain Beneficial Owners and Management"
for information regarding security ownership of the nominees for director.
Principal Occupations of Nominees for Director
Gary C. Evans has served as President, Chief Executive Officer and a
director of the Company since December, 1995 and Chairman and Chief Executive
Officer of all of the Hunter Subsidiaries since their formation or acquisition.
He also served as Chief Financial Officer from January 1997 to August 1997. He
acted as Chairman, President and Chief Executive Officer of Hunter from
September 1992 until October 1996. Previously, he was President and Chief
Operating Officer of Hunter from December 1990 to September 1992. From 1985 to
1990, Mr. Evans was Chairman, President and Chief Executive Officer of Sunbelt
Energy, Inc. and its subsidiaries, which were merged with Hunter. From 1981 to
1985, Mr. Evans was associated with the Mercantile Bank of Canada where he held
various positions including Vice President and Manager of the Energy Division of
the Southwestern United States. From 1978 to 1981, he served in various
capacities with National Bank of Commerce (now BancTexas, N.A.) including Credit
Manager and Credit Officer. Mr. Evans serves on the Board of Directors of Karts
International Incorporated, a Nasdaq-listed company.
Matthew C. Lutz has served as Chairman since March, 1997 after having
served as Vice Chairman of the Company since December, 1995. Mr. Lutz has also
served as Executive Vice President of Exploration and Business Development since
December, 1995. Mr. Lutz held similar positions with Hunter from September 1993
until October 1996. From 1984 through 1992, Mr. Lutz was Senior Vice President
of Exploration and
3
<PAGE>
on the Board of Directors of Enserch Exploration, Inc. with responsibility for
such company's worldwide oil and gas exploration and development program. Prior
to joining Enserch, Mr. Lutz spent 28 years with Getty Oil Company. He advanced
through several technical, supervisory and managerial positions which gave him
various responsibilities including exploration, production, lease acquisition,
administration and financial planning.
Gerald W. Bolfing has been a director of the Company since December, 1995.
Mr. Bolfing was appointed a director of Hunter in August 1993. He is an investor
in the oil and gas business and a past officer of one of Hunter's former
subsidiaries. From 1962 to 1980, Mr. Bolfing was a partner in Bolfing Food
Stores in Waco, Texas. During this time, he also joined American Service Company
in Atlanta, Georgia from 1964 to 1965, and was active with Cable Advertising
Systems, Inc. of Kerrville, Texas from 1978 to 1981. He joined a Hunter
subsidiary in the well servicing business in 1981 where he remained active until
its divestiture in 1992. Mr. Bolfing is on the board of directors of Capital
Marketing Corporation of Hurst, Texas.
Oscar C. Lindemann has served as a director of the Company since December,
1995. Mr. Lindemann was previously a director of Hunter, having been appointed
in November 1995. Mr. Lindemann has over 40 years experience in the financial
industry. Mr. Lindemann began his banking career with the Texas Bank and Trust
in Dallas, Texas in 1951. He served the bank until 1977 in many capacities,
including Chief Executive Officer and Chairman of the Board. Since leaving Texas
Bank and Trust, he has served as Vice Chairman of both the United National Bank
and the National Bank of Commerce, also in Dallas. Mr. Lindemann has also served
as a consultant to the banking industry. He retired from commercial banking in
1987. Mr. Lindemann is a former President of the Texas Bankers Association, and
a former state representative to the American Bankers Association. He was a
Founding Director and Board Member of VISA, and a member of the Reserve City
Bankers Association. He has served as an instructor at both the Southwestern
Graduate School of Banking at Southern Methodist University and the School of
Banking of the South at Louisiana State University.
John H. Trescot, Jr. has served as a director of the Company since June,
1997. For the last five years, Mr. Trescot has been a principal of AWA
Management Corporation, a professional consulting firm specializing in oil,
timber, pulp and paper, and financial management. Early in his career, Mr.
Trescot held various positions in woodlands, and pulp and paper, advancing to
the position of Senior Vice President, Southern Operations at Hudson Pulp &
Paper Corp. (now part of Georgia Pacific Corp.). Later Mr. Trescot became Vice
President of The Charter Company, a corporation with operations in oil,
communications and insurance. In 1979, Mr. Trescot became the Chief Executive
Officer of "Jari" Florestal e Agropecuaria, Ltda.,a pulp, timber, rice and
kaolin operation in the Amazon Basin of Brazil owned by D.K. Ludwig. In 1981,
Mr. Trescot became the Chief Executive Officer of TOT Drilling Corp., a contract
drilling company with operations in west Texas and New Mexico.
James E. Upfield has served as a director of the Company since December,
1995. Mr. Upfield was appointed a director of Hunter in August 1992. Mr. Upfield
is Chairman of Temtex Industries, Inc. based in Dallas, Texas, a public company
that produces consumer hard goods and building materials. In 1969, Mr. Upfield
served on a select Presidential Committee serving postal operations of the
United States of America. He later accepted the responsibility for the Dallas
region, which encompassed Texas and Louisiana. From 1959 to 1967, Mr. Upfield
was President of Baifield Industries, Inc. ("Baifield") and its predecessor, a
company he founded in 1949 which merged with Baifield in 1963. Baifield was
engaged in prime government contracts for military systems and sub-systems in
the production of high-strength, light-weight metal products.
4
<PAGE>
Meetings of the Board of Directors
The full Board of Directors met or unanimously voted on resolutions six
times during fiscal year 1997. Each of the directors attended or acted upon at
least seventy-five percent of the aggregate number of Board of Director
meetings, consents, and Board of Director Committee meetings or consents held or
acted upon during fiscal year 1997.
Committees of the Board of Directors
The Board of Directors has two committees, an Audit Committee and a
Compensation Committee, each composed of at least two independent directors. The
Audit Committee, composed of Gerald W. Bolfing, Gary C. Evans and Oscar C.
Lindemann, recommends the annual appointment of the Company's auditors, with
whom the Audit Committee will review the scope of audit and non-audit
assignments and related fees, accounting principals used by the Company in
financial reporting, internal auditing procedures and the adequacy of the
Company's internal control procedures. The Compensation Committee, composed of
John H. Trescot, Jr., Gary C. Evans and James E. Upfield, will administer the
Company's Stock Option Plan and make recommendations to the Board of Directors
regarding compensation for the Company's executive officers. Each committee met
one time during fiscal year 1997.
Compensation of Directors
The Company has six individuals who serve as directors, four of which
are independent. Two of these directors receive compensation with respect to
their services and in their capacities as executive officers of the Company and
no additional compensation has historically been paid for their services to the
Company as directors. The other four directors of the Company are not employees
of the Company and receive no compensation for their services as directors other
than as stated below. For the first six months of 1997, independent directors
received $500 per meeting as compensation for their services. Beginning July 1,
1997, independent directors receive $1,000 per meeting. In addition, once a year
each independent director will be granted an option to acquire 10,000 shares of
the Company's common stock at an exercise price equal to the market price of the
Company's common stock on the date of grant. Other than the compensation stated
herein, the Company has not entered into any arrangement, including consulting
contracts, in consideration of the director's service on the board.
Other Officers
The following is a list of the names and ages of all the other officers
of the Company, indicating all positions and offices with the Company held by
each such person and each such person's principal occupation or employment
during the past five years.
Richard R. Frazier, 51, has served as President and Chief Operating
Officer of Magnum Hunter Production, Inc. and Gruy Petroleum Management Co.
since January 1994. From 1977 to 1993, Mr. Frazier was employed by Edisto
Resources Corporation in Dallas, serving as Executive Vice President Exploration
and Production from 1983 to 1993, where he had overall responsibility for its
property acquisition, exploration, drilling, production, gas marketing and
engineering functions. From 1972 to 1976, Mr. Frazier served as District
Production Superintendent and Petroleum Engineer with HNG Oil Company (now Enron
Oil & Gas Company) in Midland, Texas. Mr. Frazier's initial employment, from
1968 to 1971, was with Amerada Hess Corporation as a petroleum engineer involved
in numerous projects in Oklahoma and Texas. Mr. Frazier graduated in 1970 from
the University of Tulsa with a Bachelor of Science Degree in Petroleum
Engineering.
5
<PAGE>
He is a registered Professional Engineer in Texas and a member of the Society of
Petroleum Engineers and many other professional organizations.
Chris Tong, 41, has served as Senior Vice President and Chief Financial
Officer since August, 1997. Previously, Mr. Tong was Senior Vice President of
Finance of Tejas Acadian Holding Company and its subsidiaries including Tejas
Gas Corp., Acadian Gas Corporation and Transok, Inc., all of which are
wholly-owned subsidiaries of Tejas Gas Corporation. In January 1998, Tejas Gas
Corporation was acquired by Shell Oil. Mr. Tong held these positions since
August 1996, and served in other treasury positions with Tejas beginning August
1989. He was also responsible for managing Tejas' property and liability
insurance. From 1980 to 1989, Mr. Tong served in various energy lending
capacities with Canadian Imperial Bank of Commerce, Post Oak Bank, and Bankers
Trust Company in Houston, Texas. Prior to his banking career, Mr. Tong also
served over a year with Superior Oil Company as a Reservoir Engineering
Assistant. Mr. Tong is a summa cum laude graduate of the University of
Southwestern Louisiana with a Bachelor of Arts degree in Economics and a minor
in Mathematics.
David S. Krueger, 48, has served as Vice President and Chief Accounting
Officer of the Company since January 1997. Mr. Krueger acted as Vice
President-Finance of Cimarron Gas Holding Co., a gas processing and natural gas
liquids marketing company in Tulsa, Oklahoma, from April 1992 until January
1997. He served as Vice President and Controller of American Central Gas
Companies, Inc., a gas gathering, processing and marketing company from May 1988
until April 1992. From 1974 to 1986, Mr. Krueger served in various managerial
capacities for Southland Energy Corporation. From 1971 to 1973, Mr. Krueger was
a staff accountant with Arthur Andersen LLP. Mr. Krueger, a certified public
accountant, graduated from the University of Arkansas with a B.S./B.A. degree in
Business Administration and earned his M.B.A. from the University of Tulsa.
Morgan F. Johnston, 37, has served as Vice President and General
Counsel since April, 1997 and has served as the Company's Secretary since May 1,
1996. Mr. Johnston was in private practice as a sole practitioner from May 1,
1996 to April 1, 1997, specializing in corporate and securities law. From
February 1994 to May 1996, Mr. Johnston served as general counsel for Millennia,
Inc. (formerly known as SOI Industries, Inc.) and Digital Communications
Technology Corporation, two American Stock Exchange listed companies. He also
served as general counsel to Halter Capital Corporation, a private consulting
firm from August 1991 to May 1996. For the two years prior to August 1, 1991, he
was securities counsel for Motel 6 L.P., a New York Stock Exchange listed
company. Mr. Johnston graduated cum laude from Texas Tech Law School in May 1986
and is licensed to practice law in the State of Texas.
Michael P. McInerney, 56, has served as Vice President, Corporate
Development & Investor Relations of the Company since October 1997. Prior to
joining the Company, Mr. McInerney owned Energy Advisors, Inc., an energy
consulting firm, from June 1993 until October 1997. Mr. McInerney was employed
from 1981 until June 1993 by Triton Energy Corporation, an independent energy
company, where his responsibilities included investor relations, acquisitions
and corporate planning. Before joining Triton Energy Corporation, Mr. McInerney
served nine years in various financial management positions with American
Natural Resources Company, a gas transmission and distribution corporation. Mr.
McInerney graduated from the University of Michigan with a B.B.A.
R. Douglas Cronk, 51, has served as Vice President of Operations for
Magnum Hunter Production, Inc. and Gruy Petroleum Management Co. since May 1996,
at which time the Company acquired from Mr. Cronk Rampart Petroleum, Inc., based
in Abilene, Texas. Rampart had been an active operating and exploration company
in the north central and west Texas region since 1983. Prior to the formation of
Rampart, Mr. Cronk was an independent oil and gas consultant in Houston, Texas
for approximately two years. From 1974 to 1981, Mr. Cronk held various positions
with subsidiaries of Deutsch Corporation of Tulsa, Oklahoma, including Southland
Drilling and Production where he became Vice President of Drilling and
Production. Mr. Cronk is a Chemical Engineer graduate from the University of
Tulsa.
6
<PAGE>
Craig Knight, 41, has served as Vice President of Operations for Hunter Gas
Gathering, Inc. since March, 1998. Prior to joining the Company Mr. Knight was
employed by MidCon Corp. and its affiliates since 1979 in various capacities.
From 1995 to his departure from MidCon he served as the Sr. Business Manager,
Gathering and Processing for MidCon Gas Products Corp. where he managed MidCon's
gathering and processing activities in the Panhandle and Permian Basin regions
of Texas. From 1992 -1994, he served as an account manager of the Electric Power
Sector Start-up Group for MidCon Gas Services Corp and as Manager - West Region
for MidCon Marketing Corp. Mr. Knight graduated from Texas Tech University with
a B.S. in Engineering Technology with Construction Specialty. He also received
his M.B.A. in Executive Programs from University of Houston in 1989.
Executive Compensation
The following table contains information with respect to all cash
compensation paid or accrued by the Company during the past three fiscal years
to the Chief Executive Officer of the Company and the other most highly
compensated executive officer(s) of the Company. No other officer individually
received annual cash compensation exceeding $100,000 during the past three
years.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
---------------------------------------------------
Annual Compensation Awards Payout
------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name, Other Number
Principal Annual Restricted Options LTP All Other
Position Year Salary Bonus Compensation Stock SARs Payouts Compensation
- ------------------------------------------------------------------------------------------------------------------------------------
Gary C. Evans 1997 $200,025 $250,000 - - - - -
President and CEO 1996 $150,000 $100,000 - - - - -
Matthew C. Lutz 1997 $106,000 $100,000 - - - - -
Executive V.P. and 1996 $ 65,600 $ 10,000 - - - - -
Chairman
Richard R. Frazier 1997 $124,200 $ 50,000 - - - - -
President of
Magnum Hunter
Production, Inc.
David S. Krueger 1997 $ 93,366 $ 10,000 - - - - -
Vice President and
Chief Accounting
Officer
R. Douglas Cronk 1997 $ 92,033 $ 10,000 - - - - -
V.P. of Magnum
Hunter Production, Inc.
L.T. Rochford 1995 $ 96,000 $ -0- $15,693 - - - -
Former CEO
</TABLE>
7
<PAGE>
Option/SAR Grants in Last Fiscal Year
(Individual Grants)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Securities Percent of total Exercise of
Underlying Options/SARs options/SARs granted to base price
Name granted (#) employees in fiscal year ($/Sh) Expiration date
(a) (b) (c) (d) (e)
- ------------------------------------------------------------------------------------------------------------------------------------
Gary C. Evans 50,000 $4.50 12/05/2001
500,000 36.0% $5.875 12/12/2002
Richard R. Frazier 50,000 $4.50 12/05/2001
100,000 9.8% $5.875 12/12/2002
Matthew C. Lutz 350,000 23.0% $5.875 12/12/2002
David S. Krueger 25,000 1.6% $5.875 12/12/2002
R. Douglas Cronk 50,000 3.2% $5.875 12/12/2002
</TABLE>
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Mr. Gary C. Evans, Mr. Matthew C. Lutz, Mr. Richard R. Frazier and Mr.
Chris Tong each have employment agreements with the Company. Mr. Evans'
agreement terminates January 1, 2003 and continues thereafter on a year to year
basis and provides for a salary of $250,000 per annum. Mr. Lutz's agreement
terminates January 1, 2003 and continues thereafter on a year to year basis and
provides for a salary of $150,000 per annum. Mr. Frazier's agreement terminates
January 1, 2001 and continues thereafter on a year to year basis and provides
for a salary of $150,000 per annum. Mr. Tong's agreement terminates September 1,
2000 and continues thereafter on a six month basis and provides for a salary of
$150,000 per annum. All of the agreements provide that the same benefits
supplied to other Company employees shall be available to the employee. The
employment agreements also contain, among other things, covenants by the
employee that in the event of termination, he will not compete with the Company
in certain geographical areas or hire any employees of the Company for a period
of two years after cessation of employment.
In addition, all of the agreements contain a provision that upon a
change-in-control of the Company and the employee's position is terminated or
the employee leaves for "good cause", the employee is entitled to receive,
immediately in one lump sum, certain compensation. In the case of Mr. Evans and
Mr. Lutz, the employee shall receive three times the employee's base salary,
bonus for the last fiscal year, and any other compensation received by him
during the last fiscal year. In the case of Mr. Frazier and Mr. Tong, the
employee shall receive the greater of (i) the employee's base salary for the
entire remaining term or any renewal period thereof, or (ii) the employee's base
salary, bonus for the last fiscal year, and any other compensation received by
him during the last fiscal year multiplied by two. Also, any medical, dental and
group life insurance covering the employee and his dependents shall continue
until the earlier of (i) twelve months after the change- in-control or (ii) the
date the employee becomes a participant in the group insurance benefit program
of a new employer. The Company also has key man life insurance on Mr. Evans in
the amount of $5,000,000.
Section 16 (a) Beneficial Ownership Reporting Compliance
Incorporated by reference from page 31 of Form 10-KSB which has been
sent to all security holders in connection with this proxy statement.
8
<PAGE>
II. INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of
Deloitte & Touche LLP as independent auditors of the Company for its fiscal year
to ended December 31, 1998, and is submitting such selection to the Company's
shareholders for their ratification. The Board recommends that such appointment
be approved by the shareholders. The Company's independent auditors for its
fiscal years ended December 31, 1996 and 1997 was Deloitte & Touche LLP. The
affirmative vote of a majority of the shares of common stock present or
represented at the meeting is necessary to ratify the appointment of Deloitte &
Touche LLP. A representative of Deloitte & Touche LLP is expected to be present
at the Meeting. If the foregoing proposal is not approved, or if Deloitte &
Touche LLP declines to act or otherwise becomes incapable of performing, or if
its appointment is otherwise discontinued, the Board of Directors will appoint
other independent accountants whose appointment for any period subsequent to
fiscal year 1998 will be subject to approval by the shareholders at the 1999
Annual Meeting.
The Board of Directors recommends a vote FOR this proposal.
SHAREHOLDERS PROPOSALS AND OTHER MATTERS
The management of Magnum Hunter Resources, Inc. is not aware of any
matters other than those set forth in this Proxy Statement which will be
presented for action at the Meeting. If any other matters should properly come
before the Meeting, the persons authorized under management's proxies shall vote
and act with respect thereto according to their best judgment.
Proposals of shareholders intended to be presented at the Annual
Meeting of Shareholders in 1999 must be received by the Company by December 31,
1998, in order to be considered for inclusion in the Company's proxy statement
and form of proxy relating to that meeting. The Company will bear the cost of
the solicitation of the Board of Directors' proxies for the Meeting, including
the cost of preparing, assembling, and mailing proxy materials, the handling and
tabulation of proxies received and charges of brokerage houses and other
institutions, nominees and fiduciaries in forwarding such materials to
beneficial owners. In addition to the mailing of the proxy material, such
solicitation may be made in person or by telephone or facsimile by directors,
officers and regular employees of the Company, and no additional compensation
will be paid to such individuals.
9
<PAGE>
REVOCABLE PROXY
MAGNUM HUNTER RESOURCES, INC.
600 East Las Colinas Blvd., Suite 1200,
Irving, Texas 75039
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Gary C. Evans and Matthew C. Lutz, or
either of them, with full power of substitution, proxies of the undersigned,
with all the powers that the undersigned would possess if personally present to
cast all votes that the undersigned would be entitled to vote at the Annual
Meeting of Stockholders of Magnum Hunter Resources, Inc. (the "Company") to be
held on Thursday, May 28, 1998, at the Omni Park West Hotel, 1590 LBJ Freeway,
Dallas, Texas, 75234 at 2:00 p.m., Central Daylight Savings Time, and any and
all adjournments or postponements thereof, with respect to the following matters
described in the accompanying Proxy Statement and, in their discretion, on other
matters which come before the meeting.
(1) The election of six (6) Directors to serve until the 1999
Annual Meeting or until their respective successors are duly
elected and qualified;
<TABLE>
<CAPTION>
<S> <C>
o FOR the nominees listed below o WITHHOLD AUTHORITY
(Except as indicated to the contrary below). to vote for the nominees listed below.
</TABLE>
Gary C. Evans Matthew C. Lutz
Gerald W. Bolfing Oscar C. Lindemann
John H. Trescot, Jr. James E. Upfield
Instructions: To withhold authority to vote for any individual nominee or
nominees, write their names here.
- --------------------------------------------------------------------------------
(2) To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors to examine the accounts of the
Company for the fiscal year ending December 31, 1998;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Your Board of Directors unanimously recommends a vote FOR the directors set
forth above and FOR the proposal set forth above.
(Continued and to be signed on the reverse side)
<PAGE>
(Continued from other side)
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof. This Proxy will be
voted at the Annual Meeting or any adjournment or postponement
thereof as specified. If no specifications are made, this
Proxy will be voted FOR the election of directors and FOR the
other proposal as set forth above. This Proxy hereby revokes
all prior proxies given with respect to the shares of the
undersigned.
Date:________________________________, 1998
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(Signature)
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(Please print your name)
(Please sign name as fully and exactly as it appears opposite. When
signing in a fiduciary or representative capacity, please give full title as
such. When more than one owner, each owner should sign. Proxies executed by a
corporation should be signed in full corporate name by duly authorized officer.
If a partnership, please sign in partnership name by an authorized person.)
PLEASE MARK, SIGN, DATE AND MAIL TO THE COMPANY
AT THE ADDRESS STATED ON THE RETURN ENVELOPE.
