<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Giant Industries, 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)(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):
........................................................
4) Proposed maximum aggregate value of transaction:
........................................................
5) Total fee paid:
........................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
........................................................
2) Form, Schedule or Registration Statement No.:
........................................................
3) Filing Party:
........................................................
4) Date Filed:
........................................................
<PAGE>
<PAGE>
GIANT INDUSTRIES, INC. LOGO
23733 NORTH SCOTTSDALE ROAD
SCOTTSDALE, ARIZONA 85255
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Giant Industries, Inc.:
The Annual Meeting of Stockholders of Giant Industries, Inc.
(the "Company") will be held at the Radisson Resort Scottsdale,
7171 North Scottsdale Road, Scottsdale, Arizona 85253, on Thursday,
May 6, 1999, at 10:00 a.m., for the following purposes:
1. To elect two directors to Class I of the Board of
Directors in accordance with Article FIFTH of the Restated
Certificate of Incorporation;
2. To consider and act upon a proposal to ratify the
appointment by the Board of Directors of Deloitte & Touche LLP as
independent auditors for the Company and its subsidiaries for the
year ending December 31, 1999; and
3. To transact such other business as may properly be
brought before the meeting or any postponement or adjournment
thereof.
Only holders of record of the Company's Common Stock at the
close of business on March 19, 1999, will be entitled to notice of,
and to vote at, such meeting. A list of stockholders entitled to
vote at the meeting will be open for inspection at the Company's
corporate headquarters for any purpose germane to the meeting
during ordinary business hours for 10 days prior to the date of the
meeting.
Your attention is directed to the accompanying Proxy
Statement. It is important that your shares be represented and
voted whether or not you expect to attend the meeting in person.
Therefore, please date, sign and complete the enclosed proxy and
return it without delay in the enclosed envelope, which requires no
postage stamp if mailed in the United States.
By Order of the Board of Directors
/s/ James E. Acridge
----------------------------------
James E. Acridge
Chairman of the Board of Directors
Scottsdale, Arizona
March 29, 1999
<PAGE>
<PAGE>
GIANT INDUSTRIES, INC.
23733 NORTH SCOTTSDALE ROAD
SCOTTSDALE, ARIZONA 85255
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Giant Industries, Inc., a
Delaware corporation (the "Company"), of proxies for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Thursday, May 6, 1999, at 10:00 a.m., or at any postponement or
adjournment thereof. The Annual Meeting will be held at the
Radisson Resort Scottsdale, 7171 North Scottsdale Road, Scottsdale,
Arizona 85253.
This Proxy Statement and the accompanying form of proxy are
being first mailed to stockholders on or about March 29, 1999. The
stockholder giving the proxy may revoke it at any time before it is
exercised at the meeting by: (a) delivering to the Secretary of the
Company a written instrument of revocation bearing a date later
than the date of the proxy, (b) duly executing and delivering to
the Secretary a subsequent proxy relating to the same shares, or
(c) attending the meeting and voting in person (attendance at the
meeting will not in and of itself constitute revocation of a
proxy). Any proxy that is not revoked will be voted at the Annual
Meeting in accordance with the stockholder's instructions. If you
return a properly signed and dated proxy card but do not mark any
choices on one or more items, your shares will be voted in
accordance with the recommendations of the Board of Directors as to
such items. The proxy card gives authority to the proxies to vote
your shares in their discretion on any other matter properly
presented at the Annual Meeting.
Only holders (the "Stockholders") of the Company's common
stock, par value $0.01 per share (the "Common Stock"), at the close
of business on March 19, 1999 (the "Record Date"), are entitled to
notice of, and to vote at, the Annual Meeting and any postponement
or adjournment thereof. On the Record Date there were 10,838,767
shares of Common Stock outstanding and 270 record holders of the
Company's Common Stock. Each share of Common Stock is entitled to
one vote on each matter to be considered at the Annual Meeting. An
affirmative vote of a majority of the shares of Common Stock entitled
to vote at the Annual Meeting is required for the election of
directors, and an affirmative vote of a majority of the shares of
Common Stock represented and entitled to vote at the Annual Meeting
is required for approval of all other items being submitted to the
Stockholders for their consideration. With regard to the election of
directors, votes may be cast in favor of or withheld from each
nominee. Votes that are withheld will have the effect of a negative
vote. Abstentions may be specified on all proposals except the
election of directors. Abstentions are included in the determination
of the number of shares represented for a quorum. Abstentions will
have the effect of a negative vote on a proposal. Broker non-votes
are not counted for purposes of determining whether a quorum is
present or whether a proposal has been approved. Proxies will be
tabulated by the Company's transfer agent. The Company shall, in
advance of the Annual Meeting, appoint one or more Inspectors of
Election to count all votes and ballots at the Annual Meeting and
make a written report thereof.
Proxies will be solicited from the Company's stockholders by
mail. The cost of solicitation of proxies by the Board will be
borne by the Company. In addition to solicitation by mail, proxies
may be solicited by directors, executive officers and employees of
the Company personally, by telephone, or by mail. Forms of proxy
material also may be distributed through brokers, custodians and
other like parties to the beneficial owners of the Company's Common
Stock, and the Company may reimburse such parties for their
reasonable out-of-pocket and clerical expenses incurred in
connection therewith.
The Annual Report of the Company for the year ended December
31, 1998, is being mailed to Stockholders with this Proxy
Statement.
<PAGE>
<PAGE>
ELECTION OF DIRECTORS
NOMINEES
The Board of Directors of the Company consists of six members.
In accordance with the terms of the Company's Restated Certificate
of Incorporation, the directors are divided into three classes.
There are currently two Class I directors, two Class II directors
and two Class III directors. The term of office of the two Class I
directors expires at the 1999 Annual Meeting of Stockholders.
The Board of Directors proposes that Mr. Anthony J. Bernitsky
and Mr. F. Michael Geddes be elected to serve as the Class I
directors for a term of three years until the Annual Meeting of
Stockholders in 2002 and until their successors are elected and
qualified. Both of these nominees are currently serving as Class I
directors, and a brief description of the business experience of
each nominee for the last five years is set forth below. UNLESS
OTHERWISE INSTRUCTED, THE PERSONS NAMED IN THE ACCOMPANYING PROXY
WILL VOTE FOR THE ELECTION OF SUCH NOMINEES. Both nominees have
consented to being named herein and have indicated their intention
to serve if elected. If for any reason either nominee should become
unable to serve as a director, the accompanying proxy may be voted
for the election of a substitute nominee designated by the Board of
Directors.
NOMINEE AGE, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- ---------- -------------------------------------------------
Anthony J. Bernitsky Mr. Anthony J. Bernitsky, age 69, has served
as director of the Company since August
1996. Mr. Bernitsky also serves as a member
of the Compensation Committee and the
Nominating Committee. Mr. Bernitsky is co-
owner of Sandia Oil Company ("Sandia"),
which, through October of 1998, operated a
wholesale and retail gasoline business with
service stations and convenience stores
located in New Mexico and on the Navajo
Indian Reservation. Mr. Bernitsky started
Sandia in 1982 and has served continuously
on its Board of Directors and as its
President. Mr. Bernitsky also is a co-owner,
officer and director of Sandia Stores and
Arlenco Petroleum ("Arlenco"), businesses
which are substantially the same as Sandia.
Substantially all of the assets of Sandia,
Sandia Stores and Arlenco were leased to
an unrelated operating company effective
November 1, 1998. Mr. Bernitsky also is a
director of the New Mexico Petroleum
Marketers Association.
F. Michael Geddes Mr. F. Michael Geddes, age 59, has served
as a director of the Company since
September 1991 and is a member of the
Audit Committee. He has been the Chairman
and President of Geddes and Company, a
private investment and consulting firm,
since October 1978. He also serves as
Chairman and Chief Executive Officer of
Coe & Van Loo Consultants, Inc., an
engineering and land planning firm; CVL
Consultants, Inc., a corporation engaged
in engineering and land planning; GS&B
Holding, Inc., a holding company with
ownership interests in a financial futures
brokerage firm; Eagle Western Properties
Company, a firm involved in real estate
management, development and brokerage; and
Athearn, Inc., a manufacturer of HO scale
model trains.
<PAGE>
<PAGE>
OTHER DIRECTORS AND EXECUTIVE OFFICERS
The remaining directors and executive officers of the Company,
as of March 1, 1999, are listed below:
NAME AGE POSITION CLASS(1)
- ---- --- ------------------------ --------
James E. Acridge 58 Chairman of the Board, III
President and 2001
Chief Executive Officer
Richard T. Kalen, Jr. 56 Director III
2001
Fredric L. Holliger 51 Director, Executive Vice II
President and Chief 2000
Operating Officer
Harry S. Howard, Jr. 81 Director II
2000
Morgan Gust 51 Executive Vice President
Monte N. Swetnam 62 Executive Vice President
Administration and
Corporate Affairs
Jack W. Keller 54 President of Phoenix Fuel Co., Inc.
Philip W. Tomczyk 46 President of the Company's
Retail Group Business Unit
Guy W. Yates 59 President of the Company's
Refining Group Business Unit
Kim H. Bullerdick 45 Vice President; Director, Legal
Department; and Secretary
Mark B. Cox 40 Vice President, Treasurer, Financial
Officer and Assistant Secretary
Gary R. Dalke 46 Vice President, Controller,
Accounting Officer and Assistant
Secretary
_______________
(1) Each director's term of office expires in the year set forth
opposite his name above. Directors elected at the Annual
Meeting of Stockholders shall be elected for a term of three
years and will hold office until their successors have been
elected and qualified. Each officer serves until his
successor is chosen and qualified or until his earlier
resignation or removal.
James E. Acridge has served as Chairman of the Board of
Directors, President and Chief Executive Officer of the Company
since October 1989. Mr. Acridge also serves as Chairman of the
Nominating Committee. Mr. Acridge started Giant Industries Arizona,
Inc. ("Giant Arizona"), the Company's principal wholly-owned
subsidiary, in 1969. The Company was formed in 1989 in connection
with the concurrent initial public offering of stock by the Company
and the reorganization of Giant Arizona and Hixon Development
Company ("Hixon"). As a result of the reorganization, Giant Arizona
and Hixon became the principal wholly-owned subsidiaries of the
Company. Subsequent to the reorganization, Hixon was renamed Giant
Exploration and Production Company ("Giant E&P"). Giant E&P sold
substantially all of its assets in August 1996. Mr. Acridge has
served continuously as the Chairman of the Board of Directors,
President and Chief Executive Officer of the Company and Giant
Arizona since their formation. Since June 1997, Mr. Acridge also
has served as Chairman of the Board of Phoenix Fuel Co., Inc.
("Phoenix Fuel"), an industrial/commercial petroleum products
distributor, all of whose stock was acquired by Giant Arizona in
June 1997.
Richard T. Kalen, Jr. has served as a director of the Company
since December 1989. Mr. Kalen also serves as Chairman of the
Compensation Committee and as a member of the Audit and Nominating
Committees. He has been the President and owner of Kalen &
Associates, an executive search and consulting firm, since April
1988.
Fredric L. Holliger has served as a director, Executive Vice
President and Chief Operating Officer of the Company since October
1989. Mr. Holliger joined Giant Arizona as Senior Vice President,
and President of the Giant Arizona refining division, in February
1989, and continues to serve as a director, Executive Vice
President and Chief Operating Officer of Giant Arizona. Mr.
Holliger also has served as a director and Chief Executive Officer
of Phoenix Fuel since June 1997.
Harry S. Howard, Jr. has served as a director of the Company
since January 1992. He also serves as Chairman of the Audit
Committee and as a member of the Compensation Committee. He is the
retired President and Chief Operating Officer of American Can
Company.
Morgan Gust has served as Executive Vice President of the Company
and Giant Arizona since February 1999. From September 1990 through
September 1998, Mr. Gust served in various senior management positions
for the Company and Giant Arizona, including Vice President, Vice
President Administration, General Counsel, and Secretary. From
October 1998 until January 1999, Mr. Gust was not with the Company.
Upon returning to the Company in January 1999, Mr. Gust was part of
senior management until being elected Vice President by the Board of
Directors of the Company on February 25, 1999.
Monte N. Swetnam has served as Executive Vice President
Administration and Corporate Affairs of the Company and Giant
Arizona since December 1998 and as Executive Vice President of
Giant E&P since January 1994. From October 1997 to December 1998,
Mr. Swetnam served as Vice President, Corporate Affairs for Giant
Arizona. From November 1996 to October 1997, he served as Vice
President, Refining Operations for Giant Arizona.
Jack W. Keller has served as the President of Phoenix Fuel
since December 1996. From 1989 to December 1996, Mr. Keller served
in various senior management roles with Phoenix Fuel, including
Chief Operating Officer from 1993 to 1996 and General Manager from
1989 to 1993. From December 1997 to September 1998, Mr. Keller also
served as Senior Vice President, Marketing Division of Giant
Arizona.
Philip W. Tomczyk has served as the President of the Company's
Retail Group Business Unit since February 1999. From December 1997 to
February 1999, Mr. Tomczyk served as Senior Vice President of Giant
Arizona's Retail Division. From February 1997 to November 1997, Mr.
Tomczyk provided consulting services to the Company. From August
1996 to February 1997, Mr. Tomczyk was the President of Discovery &
Solutions, a strategic planning consulting firm that he founded. In
May 1996, Mr. Tomczyk purchased three apartment buildings that he
remodeled and continues to own and operate. From February 1992 to
April 1996, Mr. Tomczyk served as a Senior Vice President of Circle
K Corp. where he was responsible for gasoline, engineering,
construction, real estate and mergers and acquisitions.
Guy W. Yates has served as President of the Company's Refining
Group Business Unit since February 1999. Prior to that, Mr. Yates
served as Senior Vice President, Acquisitions of Giant Arizona from
1997 through February 1999. From 1989 to 1997, Mr. Yates served as
Giant Arizona's Vice President, Marketing and Product Supply. From
1982 through 1989, Mr. Yates served as Giant Arizona's Vice President,
Marketing.
Kim H. Bullerdick has served as Vice President; Director,
Legal Department and Secretary of the Company and Giant Arizona
since December 1998. From September 1998 to December 1998, Mr.
Bullerdick served as an Assistant Secretary of the Company and
Giant Arizona. Mr. Bullerdick joined Giant Arizona in June 1987
as Corporate Counsel. In August 1995, he was appointed Assistant
General Counsel of Giant Arizona, and in 1998, he was appointed
Associate General Counsel; Manager, Legal Department; and Manager,
Regulatory Affairs.
Mark B. Cox has served as Vice President, Treasurer, Financial
Officer and Assistant Secretary of the Company and Giant Arizona
since December 1998. From September 1998 to December 1998, Mr. Cox
served as Treasurer and Assistant Secretary of the Company and
Giant Arizona. From 1997 to September 1998, Mr. Cox served as
Treasurer of the Company and Giant Arizona. From 1994 to 1997, Mr.
Cox served as Assistant Treasurer of Giant Arizona.
Gary R. Dalke has served as Vice President, Controller,
Accounting Officer and Assistant Secretary of the Company and Giant
Arizona since December 1998. From September 1998 to December 1998,
Mr. Dalke served as an Assistant Secretary of the Company and Giant
Arizona. From April 1998 to September 1998, Mr. Dalke served as
Chief Information Officer of Giant Arizona, and from July 1998 to
December 1998, Mr. Dalke served as the Controller for Giant
Arizona. From January 1990 to July 1998, Mr. Dalke served as Chief
Financial Officer of Phoenix Fuel. From January 1997 to July 1998,
Mr. Dalke also was Vice President of Phoenix Fuel, and from June
1997 to September 1998, he was also Treasurer of Phoenix Fuel.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held 13 meetings during 1998. The Board
has established an Audit Committee, a Compensation Committee and a
Nominating Committee. During 1998, all incumbent directors attended
75% or more of the aggregate of: (i) the total number of meetings
of the Board of Directors, and (ii) the total number of meetings
held by all committees on which such director served.
The Audit Committee of the Board of Directors is comprised of
Messrs. Howard (Chairman), Geddes and Kalen. The Audit Committee,
among other functions: (i) reviews and recommends the engagement
each year of the Company's independent auditors, (ii) consults with
the independent auditors on the adequacy of the Company's internal
controls, (iii) reviews with the independent auditors the auditors'
reports on the Company's financial statements and submits such
reports to the Board of Directors with the Committee's
recommendations and comments, and (iv) takes such other steps as
the Committee deems necessary to carry out the normal functions of
an audit committee. The Audit Committee held three meetings during
1998.
The Compensation Committee of the Board of Directors is
comprised of Messrs. Kalen (Chairman), Bernitsky and Howard. The
Compensation Committee determines the compensation of the Chief
Executive Officer and Chief Operating Officer. It reviews,
modifies, if necessary, and approves recommendations by the Chief
Executive Officer as to the compensation of other officers and key
personnel. It also establishes the Company's annual bonus plans for
management each year. In addition, the Compensation Committee
oversees the administration of the Company's 1989 Stock Incentive
Plan, the Company's 1998 Phantom Stock Plan, and the Company's 1998
Stock Incentive Plan, as each may be amended (collectively, the
"Stock Plans"), but any transaction between the Company or the
Plans and an executive officer of the Company that involves a grant,
award or other acquisition of the Company's equity securities
(including phantom stock units issued pursuant to the 1998 Phantom
Stock Plan) must be approved by the Board of Directors. The
Compensation Committee held two meetings during 1998.
The Nominating Committee of the Board of Directors is
comprised of Messrs. Acridge (Chairman), Bernitsky and Kalen. The
Nominating Committee studies and makes recommendations concerning
the composition of the Board of Directors and the committees
thereof, reviews the qualifications of potential candidates for
director of the Company and recommends to the Board nominees for
election as directors. The Nominating Committee will also consider
as nominees for director persons recommended by the stockholders.
Such recommendations should be sent to the Secretary of the Company
not later than 120 days preceding the next Annual Meeting of
Stockholders at which directors are to be elected and should
include the address of the person and a brief description of his or
her qualifications. The Nominating Committee did not meet during
1998, and its functions were performed as a part of a meeting of
the full Board of Directors.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company is entitled
to compensation for services rendered as a board member calculated as
follows: (i) $1,500 per month for each calendar month or portion
thereof during which such person was a director, (ii) $1,500 for
each in-person meeting and $500 for each telephonic meeting of the
Board of Directors attended by such director, and (iii) $750 for
the Chairman and $500 for each member of the Board's Audit,
Compensation and Nominating Committees for each in-person meeting
attended by such director. In addition, all directors are
reimbursed for reasonable out-of-pocket expenses incurred in
connection with attendance at Board of Directors and Committee
meetings.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the
Chief Executive Officer, the only two additional executive officers
of the Company who were serving as executive officers at the end of
1998, and two additional individuals for whom disclosure would have
been required but for the fact that such individuals were not
serving as executive officers of the Company at the end of 1998
(collectively, the "named executive officers") for services
rendered to the Company and its subsidiaries during the periods
indicated.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
---------------------------------------- ------------
OTHER SECURITIES ALL OTHER
ANNUAL UNDERLYING COMPEN-
NAME AND COMPEN- OPTIONS/ SATION
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) SATION ($) SARS (#) ($)(2)
- ----------------------------- ---- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James E. Acridge 1998 $584,231 $ -0- (3) 167,401 $4,800
Chairman of the Board, 1997 540,385 101,000 (3) -0- 6,787
President and Chief Executive 1996 521,366 95,750 (3) -0- 2,388
Officer
Fredric L. Holliger 1998 347,308 -0- (3) 50,000 4,800
Director, Executive Vice 1997 315,385 72,500 (3) -0- 6,787
President and Chief 1996 294,309 79,000 (3) -0- 7,138
Operating Officer
Morgan Gust (4) 1998 231,461 -0- (3) 50,000 4,800
Executive Vice President 1997 232,308 59,800 (3) -0- 6,787
1996 215,396 66,600 (3) -0- 7,138
Monte N. Swetnam (5) 1998 176,029 -0- (3) -0- 4,800
Executive Vice President 1997 170,644 33,390 (3) -0- 7,233
Administration and 1996 158,077 84,920 $49,190(6) -0- 7,138
Corporate Affairs
A. Wayne Davenport (7) 1998 184,423 -0- 22,021(8) -0- 4,800
Vice President and 1997 181,154 18,700 (3) -0- 6,787
Chief Financial Officer 1996 172,404 30,250 (3) -0- 5,836
</TABLE>
_______________
(1) Includes compensation deferred at the election of the named
executive officer.
(2) The amounts disclosed in this column for 1998 represent
401(k) Company matching contributions of $4,800 for each of
the named executive officers.
(3) No such compensation was paid other than perquisites and
other personal benefits (including any car allowances and
any amounts paid for group medical insurance premiums in
excess of amounts paid generally for all salaried employees),
which have not been included because their aggregate value
did not meet the reporting threshold of the lesser of $50,000
or 10 percent of salary plus bonus.
(4) From October 1998 until January 1999, Mr. Gust was not with
the Company.
(5) Mr. Swetnam was elected as an executive officer of the
Company by the Board of Directors on December 10, 1998.
(6) Total for 1996 includes $41,711 of moving expenses reimbursed
to Mr. Swetnam by the Company.
(7) Effective August 5, 1998, Mr. Davenport ceased serving as an
executive officer of the Company. Mr. Davenport, however,
continued to receive his base salary through January 31, 1999.
(8) Total for 1998 includes $13,609 of moving expenses reimbursed
to Mr. Davenport by the Company and a $7,500 automobile
allowance.
<PAGE>
<PAGE>
The following table sets forth information concerning options
and stock appreciation rights, in the form of phantom stock units
("SARs"), granted to the named executive officers in 1998.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
--------------------------------------------------------------------------
POTENTIAL
REALIZABLE
VALUE AT
PERCENT OF ASSUMED ANNUAL
NUMBER OF TOTAL RATES OF STOCK
SECURITIES OPTIONS/SARs EXERCISE MARKET PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE PRICE ON FOR OPTION TERM (5)
OPTIONS/SARs EMPLOYEES IN PRICE DATE OF EXPIRATION ------------------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) GRANT DATE 0% 5% 10%
- ------------------- ---------------- ------------ --------- -------- ----------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James E. Acridge 167,401 (1) 60.3% $ 8.875 $ 8.875 December 13, 2008 $ 0 $934,339 $2,367,797
Fredric L. Holliger 25,000 (2)(4) 9.0% 12.00 17.00 December 11, 2007 125,000 387,665 788,310
25,000 (3)(4) 9.0% 18.50 17.00 December 11, 2007 0 225,165 625,810
Morgan Gust 25,000 (2)(4) 9.0% 12.00 17.00 December 11, 2007 125,000 387,665 788,310
25,000 (3)(4) 9.0% 18.50 17.00 December 11, 2007 0 225,165 625,810
Monte N. Swetnam -0- N/A N/A N/A N/A N/A N/A N/A
A. Wayne Davenport -0- N/A N/A N/A N/A N/A N/A N/A
</TABLE>
______________
(1) The options are exercisable at a price equal to the closing
price of the Company's Common Stock on the date of grant
(December 14, 1998) and vest in three equal annual installments
beginning December 14, 1999.
(2) The SARs are exercisable at a price below the closing price
of the Company's Common Stock on the date of grant (January
30, 1998) and vest in three installments of 10,000, 10,000 and
5,000 on August 1, 1998, May 1, 1999 and May 1, 2000.
(3) The SARs are exercisable at a price above the closing price
of the Company's Common Stock on the date of grant (January
30, 1998) and vest in four installments of 5,000, 5,000, 5,000
and 10,000 on December 31, 1998, December 31, 1999, December
31, 2000 and December 31, 2001.
(4) Upon exercise, the recipient is entitled to receive up to,
but no more than, an amount in cash (or shares of the Common
Stock of the Company or any combination of cash or shares of
stock, at the option of the Compensation Committee) equal in
value to the sum of: (i) the fair market value (as defined in
the 1998 Phantom Stock Plan) of one share of Common Stock
over the exercise price of the SAR multiplied by the number
of SARs exercised, and (ii) all dividends during the period
from the grant date through the date of exercise of the SAR
attributable to that number of shares of Common Stock equal
to the number of SARs exercised.
(5) The 0%, 5% and 10% assumed rates of compounded stock price
appreciation are mandated by the rules of the Securities and
Exchange Commission and do not represent the Company's estimate
or projection of future Common Stock prices.
The following table provides information on option exercises
during 1998 by the named executive officers and the value of such
officers' unexercised options and SARs at December 31, 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/ IN-THE-MONEY
SARS AT FISCAL OPTIONS/SARS AT
SHARES YEAR-END (#) FISCAL YEAR-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#)(1) REALIZED ($) UNEXERCISABLE UNEXERCISABLE(2)
- --------------------- --------------- ------------ --------------------- -------------------
<S> <C> <C> <C> <C>
James E. Acridge..... -0- -0- 121,714/167,401 $62,021/$83,700
Fredric L. Holliger.. -0- -0- 55,143/ 35,000 (3) 27,029/ -0-
Morgan Gust.......... -0- -0- 40,000/ 35,000 (3) 57,500/ -0-
Monte N. Swetnam..... -0- -0- 5,000/ -0- -0-/ -0-
A. Wayne Davenport... -0- -0- 5,000/ -0- 625/ -0-
</TABLE>
_______________
(1) No stock options were exercised in 1998 by the named
executive officers.
(2) Calculated based upon the difference between the closing
market price per share for the Company's Common Stock on
December 31, 1998, as reported by the New York Stock Exchange,
and the exercise price.
(3) Totals include 15,000 exercisable SARs and 35,000
unexercisable SARs.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Mr.
Acridge, Mr. Holliger and Mr. Gust. These agreements currently
provide for base salary at an annual rate as follows: Mr. Acridge -
$570,000, Mr. Holliger - $340,000, and Mr. Gust - $252,000. The
amounts are subject to change during the respective terms of such
agreements as the Board of Directors deems appropriate. All three
employment agreements expire on December 10, 2000 and automatically
extend for successive one-year periods thereafter unless notice of
termination is given by the executive or the Company. Each
agreement provides that the executive is entitled to participate in
any discretionary bonus, stock option, profit sharing, life
insurance, hospitalization and medical coverage, and such other
benefit plans that may be applicable to the Company's senior
executive employees.
If, absent a change in control of the Company (as defined in
the agreement), the executive's employment is terminated by reason
of his death or disability (as defined in the agreement), by the
Company with cause or by the executive with or without good reason
(as defined in the agreement), the executive (or his estate or
beneficiaries) is entitled to (i) any base salary that has accrued
but not been paid as of the termination date, (ii) reimbursement
for expenses incurred by the executive in accordance with
applicable Company policy prior to the date of termination, (iii)
any accrued and vested benefits required to be provided by the
terms of any Company-sponsored benefit plans, together with any
amounts required to be paid in the event of the executive's death
or disability by applicable law, (iv) any discretionary bonus with
respect to a prior fiscal year that has been accrued and been
earned but has not been paid, (v) exercise all vested, unexercised
stock options outstanding at the termination date in accordance
with the plans pursuant to which such options were issued, and (vi)
a right of first refusal to cause the transfer, to the extent
permitted by the terms of the policies, of the ownership of all
key-man life insurance policies maintained by the Company on the
executive, such transfer to be at the sole cost and expense of the
executive (these amounts collectively referred to as the
"Termination Amounts").
If, absent a change in control of the Company (as defined in
the agreement), the executive's employment is terminated by the
Company without cause or the Company or the Board of Directors gives
written notice to the executive of its intention not to renew the
term of the employment agreement, the executive is entitled to
receive (i) the Termination Amounts, and (ii) a lump sum payment
equal to his then effective full annual base salary.
If, at any time within a three-year period following a change
in control of the Company (as defined in the agreement), the
executive's employment is terminated by reason of the executive's
death or disability (as defined in the agreement), by the Company
with or without cause or by the executive with good reason (as
defined in the agreement), or if during such three-year period the
term of the agreement is not extended, the executive is entitled to
(i) the Termination Amounts except the rights related to vested
stock options described in item (v) above, and (ii) a lump sum
payment in an amount equal to three times the sum of: (x) the
executive's then effective base salary, and (y) the average of the
annual bonuses paid to the executive for the three fiscal years
immediately preceding the fiscal year in which the termination
occurs. In addition, all unvested stock options or other stock
awards owned by the executive that would otherwise have vested
after the termination date shall become fully vested and
exercisable at the termination date, and the executive (or his
estate or beneficiaries) shall have the right to exercise all
vested, unexercised stock options or awards outstanding at the
termination date (including the accelerated options and awards) in
accordance with the terms (except the vesting terms with respect to
the accelerated options and awards) of the plans and agreements
pursuant to which such options and other awards were issued. For
Federal income tax purposes, Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), may limit the deductibility
to the Company of any such lump sum payment by the Company. In
addition, the Code may require the executive to pay an excise tax
on certain amounts in excess of the limits prescribed by the Code.
Upon written request to the Company by the executive, the Company
must reimburse the executive for certain amounts related to the
excise tax paid by the executive.
<PAGE>
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors makes
this report on executive compensation pursuant to Item 402 of
Regulation S-K. Notwithstanding anything to the contrary set forth
in any of the Company's previous filings under the Securities Act
of 1933, as amended ("Securities Act"), or the Securities Exchange
Act of 1934, as amended ("Exchange Act"), that might incorporate
future filings, including this Proxy Statement, in whole or in
part, this report and the total return graph which follows this
report shall not be incorporated by reference into any such
filings, and such information shall be entitled to the benefits
provided in Item 402(a)(9).
The duties of the Compensation Committee include: (i)
establishing the appropriate level of compensation for the Chief
Executive Officer and the Chief Operating Officer, (ii) reviewing,
modifying if necessary, and approving the Chief Executive Officer's
recommendations for compensation of other officers and certain key
personnel, (iii) formulating and adopting annual bonus plans for
management, and (iv) overseeing the administration of the Company's
1989 Stock Incentive Plan, which plan was adopted by the Board of
Directors and approved by the stockholders in 1989, the Company's
1998 Stock Incentive Plan, which plan was adopted by the Board of
Directors and approved by the stockholders in 1998, and the
Company's 1998 Phantom Stock Plan, which plan was adopted by the
Board of Directors in 1997 to be effective in 1998 (collectively,
the "Stock Plans"). Although the Committee oversees the
administration of the Stock Plans, any transaction between the
Company or the Stock Plans and an executive officer of the Company
that involves a grant, award or other acquisition of the Company's
equity securities (including phantom stock units issued pursuant to
the 1998 Phantom Stock Plan) must be approved by the Board of
Directors.
Annual bonus plans generally include criteria for cash bonuses
for key personnel who, by the nature and scope of their positions,
significantly impact the overall results and success of the
Company. The purpose of the 1989 Stock Incentive Plan and the 1998
Phantom Stock Plan is to enable the Company and its subsidiaries to
obtain and retain competent personnel who will contribute to the
Company's success by their ability, ingenuity and industry and to
provide incentives to the participating officers and other key
employees that are linked directly to increases in stockholder
value. The purpose of the 1998 Stock Incentive Plan is to attract,
retain and motivate officers and other key employees of and
consultants to the Company and its subsidiaries and to provide such
persons with incentives and rewards for superior performance linked
to the profitability of the Company's business and increases in
stockholder value.
The major elements considered by the Committee in establishing
executive compensation are the following:
(1) The level of compensation paid executive officers in
similar positions by other companies. To ensure that
pay is competitive, the Committee, from time to time,
compares the Company's total compensation and
benefits packages with those of other companies in
the same or similar industries or with other similar
attributes such as size or capitalization. Some, but
not all, of these companies are included in the S&P
Industrials Index and the S&P Energy Composite Index
which are used for comparative purposes in the total
return graph which follows this report. Many of the
companies used in such indexes are engaged in
different businesses than those engaged in by the
Company and almost all are larger. The Committee
recognizes that the Company's asset and business mix
is rather unique given the Company's relatively small
size, making direct comparisons of compensation
difficult. The Committee also recognizes, however,
that total compensation for similar positions must be
competitive to attract and retain competent employees.
(2) The individual performance of each executive officer.
Individual performance includes any specific
accomplishments of such executive officer,
demonstration of job knowledge and skills, teamwork
and demonstration of the Company's six core values as
set forth in the Company's Strategic Plan.
(3) The responsibility and authority of each position
relative to other positions within the Company.
(4) Corporate performance and business unit performance.
Corporate performance and business unit performance
are evaluated both subjectively and objectively.
Subjectively, the Compensation Committee discusses
and makes its own determination of how the Company
and each business unit performed relative to the
opportunities and difficulties encountered during the
year and relative to the performance of competitors
and business conditions. Objectively, corporate
performance and business unit performance are
measured by earnings, cash flow and other financial
results compared to budgeted results.
(5) Incentives for executive officers to make decisions
and take actions which will increase the market value
of the Company's Common Stock over the long term and
which encourage such officers to remain with the
Company as long-term employees.
In the case of base salary and awards granted under the Stock
Plans to executive officers, the application and weight given each
of these factors is not done mechanically or quantitatively but
rather the Committee uses its discretion, best judgment and the
experience of its members to examine the totality of all of the
relevant factors. In exercising this discretion, the Committee
believes that it tends to give greater weight to factors (1), (2),
and (3) above in fixing base salary and any merit/cost of living
increase and to factor (5) in making awards under the Stock Plans.
In applying factor (1), the Committee believes it has set total
compensation approximately in the mid-range of amounts paid to
equally competent employees in similar positions at other
companies, after giving effect to the fact that the Company does
not have a defined benefit or actuarial pension plan while
contributions by companies with such plans tend to be quite
significant, and the Committee's belief that the Company has
historically granted fewer stock options than appears to be the
practice at other companies.
In the case of 1998 bonus plans for executive officers, the
Company utilized both a profit bonus plan and bonus plan for
managers and executives. The Company's profit bonus plan tied cash
bonuses directly to corporate performance and individual
performance as follows:
a. Corporate Performance. Earnings per share must have
reached a predetermined threshold before any profit bonus
could be paid.
b. Individual Performance. To be eligible to receive a
profit bonus, a participant's overall performance must
have been evaluated to be at a level that is at least
satisfactory.
If each of these two criteria was met, executives were
eligible to receive a cash bonus in an amount up to two percent of
their base pay. A participant, however, had to be employed by the
Company on the date any bonus payment was made, which according to
the plan could be no later than March 15, 1999. All of the
Company's employees were eligible to participate in the profit
bonus plan. No bonuses were paid to any employees pursuant to this
plan for 1998 as the Company did not reach the plan's earnings per
share threshold.
The Company's bonus plan for managers and executives for 1998
tied cash bonuses directly to the Company's creation of a bonus
pool and individual performance as follows:
a. Bonus Pool. The Company must create a bonus pool from
which any bonuses could be paid. The amount of the bonus
pool is dependent on Company performance and other
factors deemed appropriate.
b. Individual Performance. To be eligible to receive a
bonus, the participant's supervisor must recommend
that the participant be considered for a bonus based
upon the participant's contributions to the Company's
success during the year, beyond those inherent in the
participant's job, which the supervisor believes merit
financial recognition over and above the participant's
regular compensation.
In the event a bonus pool were created, the participant's
supervisor would be responsible for recommending the amount of
bonus actually to be paid to a participant. The amount of the
recommended bonus would be within the complete and sole discretion
of the supervisor. A participant had to be employed by the Company
on the date that any bonus payment was made, which according to the
plan could be no later than March 15, 1999. No bonuses were paid to
any employees pursuant to this plan as the Company did not create a
bonus pool for 1998.
The Company's bonus plans are generally administered as to
eligible personnel other than the Chief Executive Officer and Chief
Operating Officer by an Administrative Committee consisting of
certain designated members of senior management, including the
Chief Executive Officer and Chief Operating Officer. As to the
Chief Executive Officer and Chief Operating Officer, the amount
of cash bonus to be paid pursuant to a plan is administered by
the Compensation Committee.
The Compensation Committee and the Board of Directors reserve
the right, in their sole discretion, to amend, modify or eliminate
the annual bonus plans or their application or administration, in
whole or in part, in future years. If the Compensation Committee
determines to continue such a plan to future years, the elements of
the plan will be adjusted to reflect the amount of earnings to be
required before the plan becomes effective, the range of bonuses
payable at various levels of earnings and other such matters.
The Revenue Reconciliation Act of 1993 includes a provision
limiting tax deductions for certain executive compensation in
excess of $1,000,000 for each executive. The Committee understands
that this limitation generally applies to all compensation
otherwise deductible for tax years beginning after December 31,
1993. Qualified performance based compensation, payments made to
tax qualified retirement plans and the payment of excludable fringe
benefits are, however, not included in the deduction limit. In
addition, compensation otherwise subject to the limit paid pursuant
to a binding written contract in effect on February 17, 1993 and at
all times thereafter is not subject to the deduction limit. The
Compensation Committee has analyzed the impact of this tax law on
the compensation policies of the Company, has determined that
historically the effect of this provision on the taxes paid by the
Company is not significant, and has decided for the present to not
modify the compensation policies of the Company based on such tax
law. The Committee will periodically reconsider its decision as
circumstances dictate.
In applying the foregoing compensation policies to the Chief
Executive Officer's compensation for services rendered in 1998, the
Compensation Committee authorized an increase in the Chief
Executive Officer's salary of $20,000, resulting in his base salary
being increased from $550,000 a year to $570,000 a year, effective
May 1, 1998. The Compensation Committee authorized this increase
after reviewing and considering the foregoing compensation
policies, the results of an executive compensation study conducted
by the Compensation Committee, and various other materials and
information relating to compensation.
The Chief Executive Officer did not receive a cash bonus for
services rendered in 1998 because the Company did not achieve the
pretax earnings threshold required before a cash bonus would be
paid under the profit bonus plan and no bonus pool was established
under the Company's bonus plan for managers and executives. For
these same reasons, none of the other executive officers received a
cash bonus for 1998.
During 1998, the Chief Executive Officer did receive a grant
of options to acquire 167,401 shares of Company Common Stock
pursuant to the Company's 1989 Stock Incentive Plan. One-third of
these options vest and become exercisable each year commencing
December 14, 1999 at an exercise price of $8.875 per share, which
was the fair market value of the Company's Common Stock on the date
of the grant. In recommending this grant to the Board of Directors,
the Committee weighed the totality of all relevant factors,
including: (i) the Chief Executive Officer did not receive a cash
bonus for services rendered during 1998; (ii) the Chief Executive
Officer voluntarily chose not to accept the full amount of bonuses
awarded to him in 1997; (iii) the Chief Executive Officer
voluntarily chose not to accept various merit/cost-of-living
increases awarded to him in past years; (iv) the Chief Executive
Officer voluntarily chose not to accept a special bonus paid to
employees in 1994 who had participated in a voluntary salary
reduction program; (v) the Company's successful acquisition of
seven service station/convenience stores and related assets from
DeGuelle Oil Company and DeGuelle Enterprises in February 1998;
(vi) the Company's successful acquisition of 32 service
station/convenience stores and related assets, and the lease of one
other service station/convenience store, from Kaibab Industries,
Inc. in June and July 1998; (vii) the number of options to acquire
stock that companies having attributes similar to the Company have
granted to their Chief Executive Officers; (viii) the additional
incentive provided by the options for the Chief Executive Officer
to make decisions and take actions that will increase the market
value of the Company's Common Stock over the long term; and (ix)
the substantial contribution that the Chief Executive Officer has
made to the success of the Company since 1993, when options were
last granted to him. In recommending the amount of the options
granted, the Committee also considered the options and restricted
stock previously granted to the Chief Executive Officer, and the
amount of Company Common Stock already owned by the Chief Executive
officer, and concluded that the option grant furthers the purposes
of the 1989 Stock Incentive Plan.
Chief Executive Officer: Compensation Committee:
James E. Acridge Richard T. Kalen, Jr.
Anthony J. Bernitsky
Harry S. Howard, Jr.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P INDUSTRIALS INDEX,
AND S&P ENERGY COMPOSITE INDEX
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Giant Industries, Inc. 100 73.17 122.36 141.83 195.07 97.44
S&P Industrials 100 103.82 139.73 171.87 225.18 301.07
S&P Energy Composite 100 103.84 135.78 170.78 213.90 215.05
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the
beneficial ownership of the Company's Common Stock as of February
26, 1999 (unless otherwise noted) by: (i) each director and nominee
for director of the Company; (ii) each named executive officer; and
(iii) all executive officers and directors of the Company as a group
(15 persons). Except as otherwise indicated, to the knowledge of the
Company, all persons listed below have sole voting and investment
power with respect to their shares of the Company's Common Stock,
except to the extent that authority is shared by spouses under
applicable law. The Common Stock constitutes the only outstanding
class of equity securities of the Company.
<TABLE>
<CAPTION>
OPTIONS
EXERCISABLE TOTAL
WITHIN 60 DAYS BENEFICIALLY PERCENT
NAME COMMON STOCK OF FEBRUARY 26 ESOP(1) OWNED OF CLASS
- ------------------------------------- ------------ -------------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
James E. Acridge..................... 2,303,892(2) 121,714 167,308 2,592,914 23.66%
Fredric L. Holliger.................. 24,142(3) 40,143 6,619 70,904 *
Morgan Gust.......................... 500 25,000 3,943 29,443 *
Monte N. Swetnam..................... 0 5,000 807 5,807 *
A. Wayne Davenport................... 500 5,000 807 6,307 *
Anthony J. Bernitsky................. 30,000(4) 0(5) 0(5) 30,000 *
F. Michael Geddes.................... 10,200 0(5) 0(5) 10,200 *
Harry S. Howard, Jr.................. 4,500(6) 0(5) 0(5) 4,500 *
Richard T. Kalen, Jr................. 100 0(5) 0(5) 100 *
Executive Officers and
Directors as a Group (15 Persons).... 2,375,949 218,691 191,888 2,786,528 25.20%
*Less than 1%
</TABLE>
______________
(1) Shares allocated to the individual's ESOP account as of
December 31, 1997, the most recent date for which information
as to individual allocations is available. Each ESOP
participant has the right to direct the Trustee to vote the
participant's proportionate share of all shares of Company
Common Stock held by the ESOP with such proportionate share
being determined by multiplying the total number of shares
held by the ESOP by a fraction, the numerator of which is
the number of shares allocated to such participant and the
denominator of which is the number of shares allocated to all
participants' accounts as of the Record Date. The Trustee of
the ESOP and the participants have shared dispositive power
with respect to the shares allocated to a participant's account.
(2) Mr. Acridge has pledged 2,302,792 shares of his Common Stock to
various lenders as security for loans, the proceeds of which
were used for general purposes and not to finance the acquisition
of Common Stock. Mr. Acridge retains the right to direct the
voting and disposition of such shares and the right to receive
all dividends, subject to standard default provisions.
(3) Includes 3,000 shares of Common Stock owned by Mr. Holliger's
minor children as to which Mr. Holliger disclaims beneficial
ownership.
(4) Shares are held in a living trust where Mr. Bernitsky and his
spouse are settlors, co-trustees and beneficiaries.
(5) To date, non-employee directors have not participated in the
Company's stock incentive plans or the ESOP.
(6) Shares are held in a living trust where Mr. Howard and his
spouse are settlors, co-trustees and beneficiaries.
<PAGE>
<PAGE>
SHARES OWNED BY CERTAIN SHAREHOLDERS
The following table sets forth information concerning the
beneficial ownership of the Company's Common Stock as of February
26, 1999 (unless otherwise noted) by each stockholder who is known
by the Company to own beneficially in excess of 5% of the Company's
outstanding Common Stock. Except as set forth below, no other
person or entity is known by the Company to beneficially own more
than 5% of its outstanding Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNERS OWNERSHIP OF CLASS
- ------------------------------------ ----------------- --------
<S> <C> <C>
James E. Acridge 2,592,914(1) 23.66%
23733 N. Scottsdale Road
Scottsdale, Arizona 85255
Wells Fargo Bank, N.A. 1,602,994(2) 14.79%
as Trustee of Giant Industries, Inc.
Employee Stock Ownership Plan
343 Sansome Street, 3rd Floor
San Francisco, California 94163
Dimensional Fund Advisors Inc. 775,200(3) 7.15%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Nike Securities, L.P. 728,858(4) 6.72%
1001 Warrenville Road
Suite 300
Lisle, Illinois 60532
</TABLE>
______________
(1) The nature of the beneficial ownership of the shares held by
Mr. Acridge is described in more detail on page 15 hereof in
the table regarding Security Ownership of Management.
(2) Such shares are as reported on a Schedule 13G, dated March 24,
1999, filed by Wells Fargo and Company ("WFC"). The Schedule
13G states that WFC is filing the Schedule 13G on behalf of
certain of its subsidiaries, including Wells Fargo Bank, N.A.
The total reported includes the shares of Common Stock allocated
to the accounts of the named executive officers and the executive
officers and directors as a group in the table regarding Security
Ownership of Management on page 15 hereof.
(3) Such shares are as reported on a Schedule 13G, dated February
12, 1999, filed by Dimensional Fund Advisors Inc.
("Dimensional"). The Schedule 13G states that Dimensional,
an investment advisor registered under the Investment Company
Act of 1940 (the "Investment Act"), furnishes investment
advice to four investment companies registered under the
Investment Act, and serves as investment manager to certain
other investment vehicles, including commingled group trusts
(collectively, the "Portfolios"). The Schedule 13G further
states that in its role as investment advisor and investment
manager, Dimensional possesses both voting and investment
power over the Company's Common Stock owned by the
Portfolios. The Schedule 13G states that all the Company's
Common Stock reported in the Schedule 13G is owned by the
Portfolios, and that Dimensional disclaims beneficial
ownership of such securities.
(4) Such shares are as reported on Schedule 13G, dated February 12,
1999, filed by Nike Securities L.P., First Trust Advisors
L.P., and Nike Securities Corporation. According to the
Schedule 13G, each of such entities has shared voting and
dispositive power with respect to all of the shares of the
Company's Common Stock reported on the Schedule 13G. The
Schedule 13G states that Nike Securities L.P. is the sponsor
of several unit investment trusts that hold shares of the
Company's Common Stock. The Schedule 13G further states that
no unit investment trust sponsored by Nike Securities L.P.
holds 5% or more of the Company's Common Stock. The Schedule
13G also states that First Trust Advisors, L.P. is an
affiliate of Nike Securities L.P. and acts as portfolio
supervisor of the unit investment trusts that hold shares
of the Company's Common Stock. The Schedule 13G states that
Nike Securities Corporation is the parent of both Nike
Securities L.P. and First Trust Advisors L.P.
<PAGE>
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's
officers and directors, and persons who own more than 10 percent of
a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities
and Exchange Commission ("SEC") and the New York Stock Exchange.
Officers, directors and greater than 10 percent stockholders are
required by SEC regulations to furnish the Company with copies of
all Section 16(a) reports they file. Based solely upon a review of
Forms 3 and 4 and any amendments thereto furnished to the Company
during 1998, and Forms 5 and any amendments thereto furnished to
the Company with respect to 1998, or written representations that
no Forms 5 were required, the Company believes that each person who
at any time during 1998 was a director, officer, or greater than 10
percent beneficial owner filed on a timely basis reports required
by Section 16(a) during 1998 and prior fiscal years.
<PAGE>
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Kalen, Howard and Bernitsky served on the Compensation
Committee throughout 1998. No member of the Committee was an
officer or employee or former officer or employee of the Company or
any of its subsidiaries. During 1998, there were no relationships
required to be disclosed pursuant to Item 402(j)(3) of Regulation
S-K.
Mr. Bernitsky is the founder, co-owner and an officer of Sandia
and Arlenco, and serves on their Boards of Directors. During 1998,
Sandia and Arlenco made purchases of petroleum products from Giant
Arizona in the ordinary course of business totaling $705,466 and
$1,591,232, respectively. These purchases were made pursuant to
several supply agreements between Giant Arizona and each of Sandia
and Arlenco. The agreements continue until canceled by either party
upon 30 days notice. Giant Arizona expects Sandia and Arlenco to
continue to make purchases in excess of $60,000 per year in the
ordinary course of business pursuant to these agreements. The
Company believes that these supply agreements are fair to the
Company and Giant Arizona, and are in the Company's and Giant
Arizona's best interests.
During 1998, Giant Arizona made purchases of petroleum
products from Sandia in the ordinary course of business totaling
$433,829. These purchases were pursuant to a short-term supply
agreement. The Company believes that the terms of the supply
agreement were fair to the Company and Giant Arizona, and were in
the Company's and Giant Arizona's best interests.
In addition, during 1998 Giant Arizona made payments to Sandia
of (i) $93,700 for improvements to jobber stations that participate
in Giant Arizona's Conoco branding program, (ii) $16,200 for the
rent of a service station in Kayenta, Arizona, and (iii) $3,192 for
a variety of miscellaneous expenses. The Company believes that the
terms of the agreements pursuant to which these payments were made
were fair to the Company and Giant Arizona, and were in the Company's
and Giant Arizona's best interests.
<PAGE>
<PAGE>
CERTAIN TRANSACTIONS
Giant Arizona leases approximately 46,467 square feet of land
used as a service station site in a shopping center immediately
adjacent to the Company's headquarters owned by a partnership
controlled by Mr. Acridge. The original 1991 lease agreement
established a base rent of $6,875 per month, subject to adjustment
upwards every five years based on changes in the Consumer Price
Index, for an initial lease term of 10 years with four renewal
options of five years each. The rent currently is $7,887 per month.
Giant Arizona and the partnership each have a right of first
refusal upon any sale of the site or the service station,
respectively, during the lease term. During 1998, Giant Arizona
paid $109,923 as rent, rental taxes, and common area maintenance
expenses under the terms of the lease.
The partnership described above rents approximately 3,900
square feet of excess office space from Giant Arizona in the
Company's headquarters building. The partnership pays annual rent
of $17.75 per square foot. The rental arrangement is cancelable by
either party on 10 days' prior written notice. In addition, the
partnership reimburses Giant Arizona for the cost and expenses of
any services performed by Giant Arizona for the benefit of the
adjacent shopping center, which is also owned by the partnership.
During 1998, the partnership paid Giant Arizona $70,540 as rent and
$32,000 as expense reimbursement.
On May 15, 1998, Giant Arizona purchased 1.76 acres of land in
Phoenix, Arizona for the construction of a retail service
station/convenience store at the offered price of $890,000 from a
limited liability company controlled by Mr. Acridge. This site was
part of a parcel of land approximately 14 gross acres in size
purchased by the limited liability company in September 1996 at a
price of $1,389,465. The 1.76 acre site was appraised for $915,000
as of September 5, 1997 by an appraiser not affiliated with the
Company or Mr. Acridge.
Giant Arizona leases approximately 5,590 square feet of office
space in an office building owned by a limited liability company
controlled by Mr. Acridge. Giant Arizona pays annual rent of $20.00
per square foot. The initial term of the lease is for five years
with one option to renew for an additional five years. During 1998,
Giant Arizona paid $74,051 as rent, rental taxes, and common area
maintenance expenses under the terms of the lease.
In addition to the above described space, Giant Arizona leases
approximately 8,176 square feet of additional office space in the
same building from the limited liability company described above.
Pursuant, however, to a sublease between Giant Arizona and a
separate limited liability company controlled by Mr. Acridge, Giant
Arizona subleases the space to such entity for use as an inn. The
initial term for each of the lease and the sublease is for five
years with one option to renew for an additional five years, and
the rent under each is $20.00 per square foot. All amounts due from
Giant Arizona to the lessor under the lease are paid to the lessor
by the sublessee under the terms of the sublease. The sublease
provides that Giant Arizona may terminate the sublease at any time
upon 120 days prior written notice.
In connection with the 1985 divorce of Mr. Acridge from
Christine V. Acridge, Giant Arizona agreed to redeem 1,646 shares
of Giant Arizona stock held by Ms. Acridge for $1,500,000. The
purchase price was to be paid $275,000 initially followed by 300
monthly payments. The unpaid principal earns interest at the rate
of 13.589328% per annum. Mr. Acridge personally guaranteed the
obligations of Giant Arizona. In August 1998, in exchange for Mr.
Acridge directly assuming the payment obligations of Giant Arizona
to Ms. Acridge, Giant Arizona paid Mr. Acridge $1,214,838. In
connection with this transaction, a complete release of claims was
received from Ms. Acridge.
In March 1999, the Board of Directors of the Company
authorized Giant Arizona, or another appropriate subsidiary of the
Company, to assume the obligations of a limited liability company
controlled by Mr. Acridge as lessee under a ground lease for a
parcel of land in Santa Fe, New Mexico. Giant Arizona intends to
develop the property for use in connection with its local operations.
The initial term of the lease is for 20 years with four renewal
options of five years each. The initial base rent is $144,000 per
year and is subject to adjustment upwards every three years based on
changes in the Consumer Price Index. In connection with the assumption
of the lease obligations by Giant Arizona, the parties currently
anticipate that the original lessee will be completely released from
its obligations under the lease and Mr. Acridge will be released from
a personal guaranty he made on behalf of the original lessee. In
connection with the assumption, it currently is anticipated that
Giant Arizona will pay the original lessee $208,959, the net amount
invested in the property by the original lessee to date. In reaching
the decision to approve the transaction, the Board of Directors
considered (i) the cost of acquiring a similar parcel in the area,
and (ii) the strategic value to Giant Arizona of the location of the
property.
The Company believes that the foregoing transactions are fair
to the Company and Giant Arizona, and are in the best interests of
the Company and Giant Arizona.
Certain other related party transactions are described above
under the heading "Compensation Committee Interlocks and Insider
Participation." It is the policy of the Board of Directors to
review all related party transactions at least once a year.
<PAGE>
<PAGE>
INDEBTEDNESS OF MANAGEMENT
In September 1998, the Company made an unsecured loan to Mr.
Acridge, the Company's Chairman of the Board, President and Chief
Executive Officer, in the original principal amount of $4,000,000.
The loan bore interest at the rate of the prime rate published in
the Western Edition of the Wall Street Journal on September 17,
1998 (the "Prime Rate") plus 2%. The loan and all accrued interest
was due in one lump sum on December 23, 1999. The purpose of the
loan was to, among other things, provide Mr. Acridge with
additional liquidity in connection with outstanding loans secured
by the Company's Common Stock owned by Mr. Acridge.
On December 23, 1998, the terms of the loan were modified at
the request of Mr. Acridge. The principal amount outstanding was
increased to $5,000,000, the interest rate was increased to the
Prime Rate plus 3%, and the maturity date was extended to February
28, 2001. In addition, Mr. Acridge agreed to pay all interest
accrued through December 31, 1998, and to make semi-annual interest
only payments thereafter. The largest principal amount outstanding
under the loan during 1998 was, and the currently outstanding
principal amount under the loan is, $5,000,000.
On October 30, 1998, the Company made a loan to A. Wayne
Davenport, the Company's former Vice President and Chief Financial
Officer, in connection with his departure from the Company. The
original principal amount of the loan was $150,000. From October
30, 1998 through January 31, 1999, the loan was interest free.
Thereafter, the loan bore interest at the rate of 12 percent per
annum. The purpose of the loan was to provide Mr. Davenport funds
to purchase a new home in New Mexico while his Arizona home was
being sold. The loan was secured by the Arizona property. The loan
and all accrued interest thereunder was repaid in full on March 10,
1999. The largest principal amount outstanding under the loan
during 1998 was $150,000.
<PAGE>
<PAGE>
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP as
independent auditors for the Company for the year ending December
31, 1999, subject to final approval of the Audit Committee and
ratification by the Stockholders at the Annual Meeting. Deloitte &
Touche LLP served as independent auditors for the Company for the
year ended December 31, 1998. Representatives of Deloitte & Touche
LLP will be present at the Annual Meeting of Stockholders and will
have an opportunity to make a statement if they so desire and to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITORS.
<PAGE>
<PAGE>
STOCKHOLDERS' PROPOSALS
The Company welcomes comments or suggestions from its
stockholders. In the event that a stockholder desires to have a
proposal formally considered at the 2000 Annual Meeting of
Stockholders, and evaluated by the Board for inclusion in the Proxy
Statement for that meeting, the proposal must be received in
writing by the Secretary of the Company at the address set forth on
the first page hereof on or before November 30, 1999.
In the event that a stockholder desires to present a proposal
at the Company's 2000 Annual Meeting without seeking to have the
proposal included in the Company's Proxy Statement, Company proxies
will not be allowed to use their discretionary voting authority in
connection with the proposal if the stockholder provides a written
statement to the Company that the stockholder intends to deliver a
proxy statement and form of proxy to holders of at least the
percentage of the Company's voting shares required under applicable
law to carry the proposal. The statement must be provided to the
Company within the time period specified in the Company's Bylaws
for the receipt of stockholder notices. The Company's Bylaws
provide that notice of a stockholder proposal must be delivered to
or mailed and received at the principal executive offices of the
Company not less than 90 days nor more than 120 days prior to the
Annual Meeting, provided, however, that in the event that less than
100 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was
made, whichever first occurs. Such stockholder's notice to the
Company must set forth as to each matter the stockholder proposes
to bring before the meeting (a) a brief description of the business
desired to be brought before the meeting, the reasons for
conducting such business at the meeting and, in the event that such
business includes a proposal to amend either the Amended and
Restated Certificate of Incorporation or By-Laws of the Company,
the language of the proposed amendment, (b) the name and address,
as they appear on the Company's books, of the stockholder proposing
such business, (c) the class and number of shares of capital stock
of the Company which are beneficially owned by such stockholder and
(d) any material interest of such stockholder in such business. The
stockholder must include the statement in the stockholder's filed
proxy materials. Immediately after the stockholder solicits the
percentage of stockholders required to carry the proposal, the
stockholder must also provide the Company with a statement from a
solicitor or other person with knowledge confirming that the
necessary steps have been taken to deliver a proxy statement and
form of proxy to holders of at least the percentage of the
Company's voting shares required under applicable law to carry the
proposal. All statements should be sent in writing to the
Secretary of the Company at the address set forth on the first page
hereof.
<PAGE>
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any other matters to be
presented at the Annual Meeting. If any other matter proper for
action at the Annual Meeting should be properly presented, the
holders of the accompanying proxy will vote the shares represented
by the proxy on such matter in accordance with their best judgment.
If any matter not proper for action at the Annual Meeting should be
presented, the holders of the proxy will vote against consideration
thereof or action thereon.
By Order of the Board of Directors
/s/ Kim H. Bullerdick
-----------------------------------------
Kim H. Bullerdick
Secretary, Vice President
and Director, Legal Department
Scottsdale, Arizona
March 29, 1999
<PAGE>
<PAGE>
APPENDIX A
PROXY GIANT INDUSTRIES, INC. PROXY
23733 NORTH SCOTTSDALE ROAD
SCOTTSDALE, ARIZONA 85255
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF GIANT
INDUSTRIES, INC.
Gary R. Dalke, Mark B. Cox, and Kim H. Bullerdick, and each
of them, are appointed proxies, with full power of substitution, to
vote all of the stock of the undersigned shown on the reverse side
hereof at the Annual Meeting of Stockholders of Giant Industries,
Inc., to be held on Thursday, May 6, 1999, or at any postponement
or adjournment thereof, with the same effect as if the undersigned
were present and voting the stock on all matters set forth in the
Notice of Annual Meeting of Stockholders, dated March 29, 1999, and
the Proxy Statement, dated March 29, 1999, as directed on the
reverse side hereof.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. UNLESS OTHERWISE
DIRECTED, OR IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
ALL OF THE NOMINEES IN ITEM 1, FOR ITEM 2 AND IN ACCORDANCE WITH
THE BEST JUDGMENT OF THE PROXIES OR ANY OF THEM ON ANY OTHER
MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING.
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED PREPAID ENVELOPE.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE.)
<PAGE>
<PAGE>
GIANT INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK
ONLY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED
BELOW AND FOR ITEM 2.
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
1. Election of Directors-
Nominees: Anthony J. Bernitsky and [ ] [ ] [ ]
F. Michael Geddes
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND WRITE THAT NOMINEE'S
NAME IN THE SPACE PROVIDED BELOW.)
_____________________________________
FOR AGAINST ABSTAIN
2. Ratification of the appointment of [ ] [ ] [ ]
Deloitte & Touche LLP by the Board
of Directors as the independent
auditors of the Company and its
subsidiaries for the fiscal year
ending December 31, 1999.
3. In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting.
The undersigned acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement.
Dated:_________________, 1999 Signature(s)_____________________
_________________________________
Please date and sign EXACTLY as
your name or names appear herein.
Persons signing in a fiduciary
capacity or as corporate officers
should so indicate.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED PREPAID ENVELOPE
