<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
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> 2
LOGO
GIANT INDUSTRIES, INC.
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 corporate headquarters of the Company located at
23733 North Scottsdale Road, Scottsdale, Arizona 85255, on Thursday, May 11,
2000, at 10:00 a.m., for the following purposes:
1. To elect one director to Class II 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, 2000; 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 17, 2000, 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, 2000
<PAGE> 3
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 11, 2000, at 10:00 a.m., or at any
postponement or adjournment thereof. The Annual Meeting will be held at the
corporate headquarters of the Company located at 23733 North Scottsdale Road,
Scottsdale, Arizona 85255.
This Proxy Statement and the accompanying form of proxy are being first
mailed to stockholders on or about March 30, 2000. 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 17, 2000
(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 9,147,574 shares of Common Stock outstanding and 256 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, 1999, is
being mailed to Stockholders with this Proxy Statement.
<PAGE> 4
ELECTION OF DIRECTORS
NOMINEES
The Board of Directors (the "Board") of the Company currently 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 currently
are two Class I directors, two Class II directors and two Class III directors.
The term of office of the two Class II directors expires at the 2000 Annual
Meeting of Stockholders. Mr. Harry S. Howard, Jr., one of the Class II directors
whose term expires at the 2000 Annual Meeting of Stockholders, has chosen not to
stand for reelection at the 2000 Annual Meeting of Stockholders. As a result,
the Company intends to reduce the size of the Board from six to five directors
and to have only one director in Class II effective as of the conclusion of this
year's Annual Meeting.
The Board of Directors proposes that Mr. Fredric L. Holliger be elected to
serve as the Company's Class II director for a term of three years until the
Annual Meeting of Stockholders in 2003 and until his successor is elected and
qualified. Mr. Holliger is currently serving as a Class II director, and a brief
description of his business experience 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 NOMINEE. Mr. Holliger has consented to being
named herein and has indicated his intention to serve if elected. If for any
reason Mr. Holliger 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.
<TABLE>
<CAPTION>
NOMINEE AGE, PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
------- -------------------------------------------------
<S> <C>
Fredric L. Holliger Fredric L. Holliger, age 52, has served as a director,
Executive Vice President and Chief Operating Officer of the
Company since October 1989. Mr. Holliger joined Giant
Industries Arizona, Inc. ("Giant Arizona"), the Company's
principal wholly-owned subsidiary, 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 Co., Inc.
("Phoenix Fuel"), an industrial/commercial petroleum
products distributor, since it was acquired by Giant Arizona
in June 1997.
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ITS NOMINEE FOR
DIRECTOR.
OTHER DIRECTORS AND EXECUTIVE OFFICERS
The remaining directors and executive officers of the Company, as of March
1, 2000, are listed below:
<TABLE>
<CAPTION>
NAME AGE POSITION CLASS(1)
---- --- -------- --------
<S> <C> <C> <C>
Harry S. Howard, Jr. 82 Director II
2000
James E. Acridge 59 Chairman of the Board, President and Chief III
Executive Officer 2001
Richard T. Kalen, Jr. 57 Director III
2001
Anthony J. Bernitsky, Jr. 70 Director I
2002
F. Michael Geddes 60 Director I 2002
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NAME AGE POSITION CLASS(1)
---- --- -------- --------
<S> <C> <C> <C>
Morgan Gust 52 Executive Vice President
Monte N. Swetnam 63 Executive Vice President, Administration and
Corporate Affairs
Jack W. Keller 55 President of the Company's Phoenix Fuel
Strategic Business Unit
Philip W. Tomczyk 47 President of the Company's Retail Group
Strategic Business Unit
Carl D. Shook 61 Executive Vice President of the Company's
Refining Group Strategic Business Unit
C. Leroy Crow 49 Executive Vice President of the Company's
Refining Group Strategic Business Unit
Kim H. Bullerdick 46 Vice President, Legal Department Director and
Secretary
Mark B. Cox 41 Vice President, Treasurer, Financial Officer
and Assistant Secretary
Gary R. Dalke 47 Vice President, Controller, Accounting Officer
and Assistant Secretary
</TABLE>
- ---------------
(1) Each director's term of office expires in the year set forth opposite his
name above. The Director elected at the Annual Meeting of Stockholders shall
be elected for a term of three years and will hold office until his
successor has been elected and qualified. Each officer serves until his
successor is chosen and qualified or until his earlier resignation or
removal.
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.
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 Arizona 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.
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.
Anthony J. Bernitsky 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. Since founding it in 1982, Mr. Bernitsky has been a
co-owner, director and the President of Sandia Oil Company ("Sandia"). Mr.
Bernitsky also was a founder, co-owner, officer and director of Sandia Stores, a
business that was substantially the same as Sandia. Until October 1998, Sandia
operated a wholesale and retail gasoline business with service stations and
convenience stores located in New Mexico and on the Navajo Indian Reservation.
In October 1998, Sandia leased all of its operating assets to an unrelated
3
<PAGE> 6
company then known as Sandia Acquisition Company ("SAC"). SAC subsequently was
renamed Sandia Oil Company and the original Sandia Oil Company was renamed
PoorBern Leasing Company. Mr. Bernitsky remains a co-owner, director and the
President of PoorBern Leasing Company. Mr. Bernitsky is not an owner, officer or
director of the new Sandia Oil Company. Mr. Bernitsky also is a director of the
New Mexico Petroleum Marketers Association.
F. Michael Geddes has served as a director of the Company since September
1991 and is a member of the Audit Committee and the Compensation 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 investment; and Athearn,
Inc., a manufacturer of HO scale model trains.
Morgan Gust has served as Executive Vice President of the Company and Giant
Arizona since February 1999. From August 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 absent from the
Company. Upon returning to the Company in January 1999, Mr. Gust was part of
senior management until being elected Executive 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 the Company's Phoenix Fuel
Strategic Business Unit since February 1999 and 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
Strategic 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.
Carl D. Shook has served as Executive Vice President of the Company's
Refining Group Strategic Business Unit and as Executive Vice President, Refining
Group of Giant Arizona since February 2000. From February 1999 to February 2000,
Mr. Shook served as Senior Vice President, Engineering and Technical Services
for Giant Arizona. From January 1998 to February 1999, Mr. Shook served as Vice
President, Engineering and Analysis for Giant Arizona. From October 1996 until
January 1998, Mr. Shook served as Vice President, Corporate Planning and
Evaluation for Giant Arizona. From February 1995 until October 1996, Mr. Shook
served as Senior Vice President of Refinery Operations for Giant Arizona.
4
<PAGE> 7
C. Leroy Crow has served as Executive Vice President of the Company's
Refining Group Strategic Business Unit and as Executive Vice President, Refining
Group of Giant Arizona since February 2000. From February 1999 to February 2000,
Mr. Crow served as Senior Vice President, Refinery Operations and Raw Material
Supply for Giant Arizona. From December 1997 to February 1999, Mr. Crow served
as Senior Vice President, Operations Division for Giant Arizona. From February
1996 to December 1997, Mr. Crow served as the Vice President of Operations for
Phoenix Fuel. Prior to joining Phoenix Fuel in February 1996, Mr. Crow was the
General Manager of Pro Petroleum, a wholesale fuel distributor in Phoenix,
Arizona, from 1993 to 1996.
Kim H. Bullerdick has served as Vice President, Legal Department Director
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 11 meetings during 1999. The Board has
established an Audit Committee, a Compensation Committee and a Nominating
Committee. During 1999, 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 1999.
The Compensation Committee of the Board of Directors is comprised of
Messrs. Kalen (Chairman), Bernitsky, Geddes 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 Stock Plans and an executive officer of the Company that involves
a
5
<PAGE> 8
grant, award or other acquisition of the Company's equity securities must be
approved by the Board of Directors if Committee approval would not exempt the
transaction from Section 16(b) of the Securities Exchange Act of 1934, as
amended. The Compensation Committee held three meetings during 1999.
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 1999, 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 $500 for each member of the Board's Audit,
Compensation and Nominating Committees for each in-person meeting attended by
such director. In addition, all directors are reimbursed for reasonable
out-of-pocket expenses incurred in connection with attendance at Board of
Directors and Committee meetings.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Chief Executive
Officer and the four other most highly compensated executive officers of the
Company who were serving as executive officers at the end of 1999 (collectively,
the "named executive officers") for services rendered to the Company and its
subsidiaries during the periods indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------------------- ------------
OTHER SECURITIES ALL OTHER
ANNUAL UNDERLYING COMPEN-
SALARY BONUS COMPEN- OPTIONS/ SATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($) SATION($) SARS(#) ($)(2)
--------------------------- ---- -------- -------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
James E. Acridge 1999 $583,044 $487,500 (3) -0- $4,800
Chairman of the Board, 1998 584,231 -0- (3) 167,401 4,800
President and Chief Executive 1997 540,385 101,000 (3) -0- 6,787
Officer
Fredric L. Holliger 1999 347,781 175,000 (3) 50,000 4,800
Director, Executive Vice 1998 347,308 -0- (3) 50,000(4) 4,800
President and Chief 1997 315,385 72,500 (3) -0- 6,787
Operating Officer
Morgan Gust 1999 243,228 175,000 (3) 50,000 4,800
Executive Vice President 1998 231,461 -0- (3) 50,000(4) 4,800
1997 232,308 59,800 (3) -0- 6,787
Jack W. Keller(5) 1999 170,441 180,000(6) (3) -0- 4,800
President of Phoenix Fuel 1998 -- -- -- -- --
Strategic Business Unit 1997 -- -- -- -- --
Gary R. Dalke(5) 1999 162,614 151,000(6) (3) -0- 4,800
Vice President, Controller, 1998 -- -- -- -- --
Financial Officer and Assistant 1997 -- -- -- -- --
Secretary
</TABLE>
- ---------------
(1) Includes compensation deferred at the election of the named executive
officer.
(2) The amounts disclosed in this column for 1999 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) Cancelled in 1999 in connection with the termination of the Company's 1998
Phantom Stock Plan.
(5) Information for 1998 and 1997 is not provided because neither Mr. Keller nor
Mr. Dalke was an executive officer in either of those years. Mr. Keller and
Mr. Dalke both became executive officers of the Company on February 25,
1999.
(6) $90,000 of the total bonus received in 1999 by each of Mr. Keller and Mr.
Dalke represent the first installment of a stay-on bonus the Company agreed
to pay to Mr. Keller and Mr. Dalke in connection with the acquisition by
Giant Arizona of Phoenix Fuel in 1997.
7
<PAGE> 10
The following table sets forth information concerning options and stock
appreciation rights granted to the named executive officers in 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARS EXERCISE MARKET APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE PRICE ON OPTION TERM(4)
OPTIONS/SARS EMPLOYEES IN PRICE DATE OF EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) GRANT DATE 5% 10%
---- ------------ ------------ --------- -------- ----------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
James E. Acridge..... -0- N/A N/A N/A N/A N/A N/A
Fredric L.
Holliger........... 25,000(1)(3) 25% $12.00 $8.375 December 11, 2007 $8,516 $146,476
25,000(2)(3) 25% $18.50 $8.375 December 11, 2007 $ 0 $ 0
Morgan Gust.......... 25,000(1)(3) 25% $12.00 $8.375 December 11, 2007 $8,516 $146,476
25,000(2)(3) 25% $18.50 $8.375 December 11, 2007 $ 0 $ 0
Jack W. Keller....... -0- N/A N/A N/A N/A N/A N/A
Gary R. Dalke........ -0- N/A N/A N/A N/A N/A N/A
</TABLE>
- ---------------
(1) The options are exercisable at a price above the closing price of the
Company's Common Stock on the date of grant (December 31, 1999). 20,000 of
the options are immediately exercisable and the remaining 5,000 options vest
on May 1, 2000.
(2) The options are exercisable at a price above the closing price of the
Company's Common Stock on the date of grant (December 31, 1999). 10,000 of
the options are immediately exercisable, 5,000 options vest on December 31,
2000 and the remaining 10,000 options vest on December 31, 2001.
(3) The options were issued by the Company to replace grants of phantom stock
units previously made under the 1998 Phantom Stock Plan. The 1998 Phantom
Stock Plan was terminated in 1999 to avoid the application of certain
accounting rules that could have been detrimental to the Company. The option
grants were made on substantially the same terms and conditions as the
phantom stock unit awards that were cancelled.
(4) The 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.
8
<PAGE> 11
The following table provides information on option exercises during 1999 by
the named executive officers and the value of such officers' unexercised options
at December 31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/ IN-THE-MONEY
SARS AT FISCAL OPTIONS/SARS AT
SHARES YEAR-END(#) FISCAL YEAR-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
---- ----------- ----------- --------------------- ------------------
<S> <C> <C> <C> <C>
James E. Acridge......... 90,714 $230,414 86,801/111,600 $ 9,375/-0-
Fredric L. Holliger...... 18,143 $ 17,735 52,000/ 20,000 $ 7,500/-0-
Morgan Gust.............. -0- -0- 55,000/ 20,000 $37,500/-0-
Jack W. Keller........... -0- -0- -0-/ -0- -0-/-0-
Gary R. Dalke............ -0- -0- -0-/ -0- -0-/-0-
</TABLE>
- ---------------
(1) Calculated based upon the difference between the closing market price per
share for the Company's Common Stock on December 31, 1999, as reported by
the New York Stock Exchange, and the exercise price.
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 -- $589,950, Mr. Holliger -- $351,900, and
Mr. Gust -- $260,820. 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 (as defined
in the agreement) 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, 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
9
<PAGE> 12
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, the executive's employment is terminated by reason of the
executive's death or disability, by the Company with or without cause or by the
executive with good reason, 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.
Mr. Keller and Mr. Dalke entered into Employment Agreements with Phoenix
Fuel in connection with Giant Arizona's acquisition of Phoenix Fuel in June
1997. These agreements currently provide for base salary at an annual rate as
follows: Mr. Keller -- $173,000, Mr. Dalke -- $165,000. The amounts are subject
to change during the respective terms of such agreements, both of which expire
in April of 2000. The agreements also provide for the payment of a stay-on bonus
to each executive, payable in specified amounts over a period of time selected
by the executive, which in no event can extend beyond January 1, 2001. A portion
of each stay-on bonus can be paid in Common Stock of the Company at the election
of the executive. Each agreement provides that the executive is entitled to
participate in any employee benefits that may be adopted for the benefit of
senior executives.
If the executive's employment is terminated by reason of his death or
disability (as defined in the agreement), upon expiration of the term of the
agreement, for cause (as defined in the agreement) or by the executive, 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 policies prior to the date of termination, (iii) any accrued and
vested benefits required to be provided under applicable benefit plans and
programs, together with any amounts required to be paid in the event of the
executive's death or disability under 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) a prorated portion of the executive's stay-on bonus
in the event the executive's employment is terminated by the executive's death
or disability, and (vi) any portion of the executive's stay-on bonus that has
accrued and been earned but has not been paid in the event the executive's
employment is terminated upon expiration of the term of the agreement, for cause
or by the executive (these amounts are collectively referred to as the
"Keller/Dalke Termination Amounts").
If the executive's employment is terminated without cause, the executive is
entitled to receive: (i) the Keller/Dalke Termination Amounts, (ii) the
executive's stay-on bonus, to be paid in the same amounts and at the same times
as if the executive's employment had not been terminated, and (iii) a lump sump
payment equal to any unpaid base salary to which the executive would have been
entitled had he remained employed through the term of the agreement, unless the
executive is released from the restrictions of a covenant not to compete that is
contained in the agreement.
10
<PAGE> 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "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) of Regulation S-K.
The duties of the 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 and was terminated by the Committee in
1999 (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 must be approved by the
Board of Directors if Committee approval would not exempt the transaction from
Section 16(b) of the Exchange Act.
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 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 to 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 core values.
11
<PAGE> 14
(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 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 that
will increase the market value of the Company's Common Stock over the long
term and that 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 that total compensation does not exceed 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 applying the foregoing compensation policies to the Chief Executive
Officer's compensation for services rendered in 1999, the Committee authorized
an increase in the Chief Executive Officer's salary of $19,950, resulting in his
base salary being increased from $570,000 per year to $589,950 per year,
effective May 1, 1999. The Committee authorized this increase after reviewing
and considering the foregoing compensation policies, the results of an executive
compensation study conducted by the Committee, and various other materials and
information relating to compensation.
In awarding cash bonus compensation for 1999 for executive officers, the
Company utilized a 1999 Bonus Plan (the "Plan") for all the executive officers,
as well as for most other employees, except for the Company's top three
executive officers, James E. Acridge, Fredric L. Holliger and Morgan Gust. The
Plan set forth guidelines to be used by the Company's Strategic Business Units
("SBU's"), and by its corporate administration groups, (the "Business Groups")
to develop bonus programs that were then approved by senior management. The
criteria that had to be satisfied in order for an employee to receive a bonus
were recommended by each Business Group. The program developed by a Business
Group was to provide for the payment of bonuses based on the satisfaction of
operations, budget or earnings goals by an employee's division, location, unit,
or SBU, by the Company, or by a combination of these groups. All bonus goals
were to be measurable and tied to actual results. Goals for executive officers
were to be tied primarily to financial performance rather than to individual
performance, although individual performance could be considered. The bonus
programs developed by the Business Groups, as well as the bonuses paid to
employees pursuant to the programs, were approved by an Administrative Committee
consisting of certain designated members of senior management. Each executive
officer that was eligible for a bonus under the Plan received a bonus for
services rendered to the Company in 1999. An executive officer needed to be
employed by the Company on the date that the bonus was paid, which was February
16, 2000.
With respect to Mr. Holliger and Mr. Gust, cash bonuses for 1999 were
determined by considering the criteria for executive compensation set forth in
the Plan, as well as the following other criteria: (i) the Company's overall
performance, (ii) their individual performance and the contributions that each
made to the success of the Company, (iii) the Company's accomplishments during
the year, including the opening of the Flagstaff terminal, the successful
avoidance of year 2000 computer
12
<PAGE> 15
problems, the construction of a number of new retail service stations and the
demolition and rebuilding of two additional stores, and (iv) compensation paid
to executive officers by other companies. The 1999 bonus paid to Mr. Acridge was
determined by considering the compensation paid to executive officers by other
companies, and reflected his value and his contributions to the Company not only
during the year, but during his entire tenure as Chief Executive Officer.
During 1999, Mr. Holliger and Mr. Gust also were awarded 50,000 stock
options each under the 1998 Stock Incentive Plan. The awards were made to
replace grants of phantom stock units previously made under the 1998 Phantom
Stock Plan. The Committee terminated the Phantom Stock plan in 1999 in order to
avoid the application of certain accounting rules that could have been
detrimental to the Company. The option grants were made on substantially the
same terms and conditions as the phantom stock unit awards that were canceled.
The Company's bonus plans generally are 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 determined by the Committee.
The Committee and the Board of Directors reserve the right, in their sole
discretion, to amend, modify or eliminate the annual bonus plan or its
application or administration, in whole or in part, in future years. If the
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
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.
<TABLE>
<S> <C>
Chief Executive Officer: Compensation Committee:
James E. Acridge Richard T. Kalen, Jr.
Anthony J. Bernitsky
Harry S. Howard, Jr.
F. Michael Geddes
</TABLE>
13
<PAGE> 16
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
S&P INDUSTRIALS INDEX, AND S&P ENERGY COMPOSITE INDEX
1994 1995 1996 1997 1998 1999
----- ---- ---- ---- ---- ----
Giant Industries 100 167.22 193.83 266.60 133.17 118.96
S&P Industrials 100 134.59 165.55 216.90 290.00 365.04
S&P Energy Composite 100 130.77 164.47 206.00 207.10 246.45
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock as of March 15, 2000 (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
WITHIN 60 TOTAL
DAYS BENEFICIALLY PERCENT
NAME COMMON STOCK OF MARCH 15 ESOP(1) OWNED OF CLASS
- ---- ------------ ----------- ------- ------------ --------
<S> <C> <C> <C> <C> <C>
James E. Acridge 2,055,983(2) 86,801 0(3) 2,142,784 23.20%
Fredric L. Holliger 23,927(4) 57,000 6,860 87,787 *
Morgan Gust 500 60,000 4,070 64,570 *
Jack W. Keller 0 0 19 19 *
Gary R. Dalke 0 0 19 19 *
Anthony J. Bernitsky 30,000(5) 0(6) 0(6) 30,000 *
F. Michael Geddes 10,200 0(6) 0(6) 10,200 *
Harry S. Howard, Jr. 4,500(7) 0(6) 0(6) 4,500 *
Richard T. Kalen, Jr. 100 0(6) 0(6) 100 *
Executive Officers and Directors
as a Group (15 Persons) 2,127,325 233,968 19,237 2,380,530 25.37%
</TABLE>
- ---------------
* Less than 1%
(1) Shares allocated to the individual's ESOP account as of December 31, 1998,
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
14
<PAGE> 17
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 2,055,883 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.
In connection with one such loan to Mr. Acridge, Mr. Acridge granted a
purchase option to the lender for 144,040 shares of Company Common Stock at
a price of $10.625 per share. Such option may be exercised at any time after
the earliest of: (i) November 22, 1999, (ii) the Company's execution of a
letter of intent, agreement or other document with respect to a transaction
or series of transactions relating to a corporate reorganization or other
fundamental event that would lead to the delisting of the Company's capital
stock on the New York Stock Exchange, or (iii) the occurrence of an event of
default under the stock pledge agreement related to the loan. In addition,
if at any time Mr. Acridge tenders payment in full of all principal and
accrued but unpaid interest under the loan, the lender has five (5) business
days to elect, in his sole discretion, to either: (i) accept such payment
and surrender his rights under the option, or (ii) exercise the option as an
offset of the amounts due under the loan. If the option is not exercised
within such five-day period, it expires. Unless the option expires earlier
in connection with the repayment of the loan by Mr. Acridge, the option
expires on November 22, 2000.
In connection with another such loan to Mr. Acridge, Mr. Acridge granted a
purchase option to the lender for 96,961 shares of Company Common Stock at a
price of the lower of $12.00 per share or the average daily closing price on
the New York Stock Exchange from December 30, 1999 to the date the option is
exercised. Such option may be exercised at any time after the earliest of:
(i) December 29, 2001, or (ii) the Company's execution of a letter of
intent, agreement or other document with respect to a transaction or series
of transactions relating to a corporate reorganization or other fundamental
event that would lead to the delisting of the Company's capital stock on the
New York Stock Exchange. In addition, if at any time Mr. Acridge tenders
payment in full of all principal and accrued but unpaid interest under the
loan, the lender has five (5) business days to elect, in his sole
discretion, to either: (i) accept such payment and surrender his rights
under the option, or (ii) exercise the option as an offset of the amounts
due under the loan. If the option is not exercised within such five-day
period, it expires. Unless the option expires earlier in connection with the
repayment of the loan by Mr. Acridge, the option expires on December 29,
2001.
(3) As of December 31, 1998, Mr. Acridge had 172,055 Shares allocated to his
ESOP account. Such Shares were distributed to Mr. Acridge on December 9,
1999, in accordance with the terms of the ESOP.
(4) Includes 1,000 shares of Common Stock owned by Mr. Holliger's minor child as
to which Mr. Holliger disclaims beneficial ownership.
(5) Shares are held in a living trust where Mr. Bernitsky and his spouse are
settlors, co-trustees and beneficiaries.
(6) To date, non-employee directors have not participated in the Company's stock
incentive plans or the ESOP.
(7) Shares are held in a living trust where Mr. Howard and his spouse are
settlors, co-trustees and beneficiaries.
15
<PAGE> 18
SHARES OWNED BY CERTAIN SHAREHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Company's Common Stock as of March 15, 2000 (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(1)
23733 N. Scottsdale Road
Scottsdale, Arizona 85255 2,142,784 23.20%
Wells Fargo Bank, N.A.(2)
as Trustee of Giant Industries, Inc.
Employee Stock Ownership Plan
343 Sansome Street, 3rd Floor
San Francisco, California 94163 1,339,932 12.84%
Mellon Financial Corporation(3)
One Mellon Center
Pittsburgh, Pennsylvania 15258 850,900 8.15%
Dimensional Fund Advisors Inc.(4)
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 811,900 7.78%
DePrince, Race & Zollo, Inc.(5)
201 S. Orange Avenue, Suite 850
Orlando, Florida 32801 627,800 6.02%
</TABLE>
- ---------------
(1) The nature of the beneficial ownership of the shares held by Mr. Acridge is
described in more detail on page 14 hereof in the table regarding Security
Ownership of Management.
(2)Such shares and percent of class are as reported on a Schedule 13G, dated
February 29, 2000, filed by Wells Fargo & 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 14 hereof.
(3) Such shares and percent of class are as reported on a Schedule 13G, dated
January 21, 2000, filed by Mellon Financial Corporation ("Mellon") and
certain of its direct and indirect subsidiaries. The Schedule 13G states
that Mellon has sole voting power as to 841,000 shares of the Company's
Common Stock and sole dispositive power as to 850,900 shares of the
Company's Common Stock. The Schedule 13G also states that of those shares,
Boston Group Holdings, Inc. and The Boston Company, Inc. have sole voting
power as to 611,100 shares of the Company's Common Stock and sole
dispositive power as to 621,000 shares of the Company's Common Stock.
(4) Such shares and percent of class are as reported on a Schedule 13G, dated
February 11, 2000, filed by Dimensional Fund Advisors Inc. ("Dimensional").
The Schedule 13G states that Dimensional, an investment advisor registered
under Section 203 of the Investment Advisors Act of 1940, furnishes
investment advice to four investment companies registered under the
Investment Company Act of 1940, and serves as investment manager to certain
other commingled group trusts and separate accounts (collectively, the
"Funds"). The Schedule 13G further states that in its role as investment
advisor or manager, Dimensional possesses both voting and/or investment
power over the Company's Common Stock owned by the Funds. The Schedule 13G
states that all the Company's Common Stock reported in the Schedule 13G is
owned by the Funds, and that Dimensional disclaims beneficial ownership of
such securities.
16
<PAGE> 19
(5) Such shares and percent of class are as reported on a Schedule 13G, dated
February 10, 2000, filed by DePrince, Race & Zollo, Inc.
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 1999, and Forms 5 and any
amendments thereto furnished to the Company with respect to 1999, or written
representations that no Forms 5 were required, the Company believes that each
person who at any time during 1999 was a director, officer, or greater than 10
percent beneficial owner filed on a timely basis reports required by Section
16(a) during 1999 and prior fiscal years, except that one Form 4, reporting the
granting of a derivative security by James E. Acridge, was not filed on a timely
basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Kalen, Howard and Bernitsky served on the Compensation Committee
throughout 1999. Mr. Geddes was elected to the Compensation Committee by the
Board on May 6, 1999. No member of the Committee was an officer or employee or
former officer or employee of the Company or any of its subsidiaries. During
1999, there were no relationships required to be disclosed pursuant to Item
402(j)(3) of Regulation S-K.
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 Company's
Chairman and Chief Executive Officer. 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 1999, Giant Arizona paid $110,092 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 thirty (30) days' prior written
notice. During 1999, the partnership paid Giant Arizona $70,540 as rent under
the terms of the lease.
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 currently pays annual rent of $20.45 per square foot. The rent is
subject to adjustment annually based on changes in the Consumer Price Index. The
initial term of the lease is for five years with one option to renew for an
additional five years. During 1999, Giant Arizona paid $164,199 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 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 currently
is $20.45 per square foot. The rent is subject to adjustment annually based on
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<PAGE> 20
changes in the Consumer Price Index. 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 July 1999, a subsidiary of the Company assumed 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. The initial term of the
lease is for 20 years with four renewal options of five years each. The current
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 the subsidiary, the original lessee was
released from its obligations under the lease and Mr. Acridge was released from
a personal guaranty he made on behalf of the original lessee. In connection with
the assumption of the lease, the subsidiary paid the original lessee $244,959,
the net amount invested in the property by the original lessee to the date of
assignment.
During August 1999, the Company repurchased 440,000 shares of its Common
Stock under its stock repurchase program from Mr. Acridge for $4,950,000 or
$11.25 per share. The per share price paid for the shares was at a discount to
the then current fair market value.
The Company believes that the foregoing transactions are fair to the
Company and its subsidiaries, and are in the best interests of the Company and
its subsidiaries. It is the policy of the Board of Directors to review all
related party transactions at least once a year.
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.
On March 1, 2000, the Board approved a further modification of the terms of
the loan. The revised terms provide that all principal and interest, including
interest that would otherwise have been payable on December 31, 1999, is fully
due and payable on February 28, 2001. In return for agreeing to the revised
terms, the Company received a pledge by an entity controlled by Mr. Acridge of
an equity interest in an entity that owns certain real property. The largest
principal amount outstanding under the loan during 1999 was, and the currently
outstanding principal amount under the loan is, $5,000,000.
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, 2000, 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, 1999. 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.
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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
2001 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, 2000.
In the event that a stockholder desires to present a proposal at the
Company's 2001 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: (i) 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, (ii) the name and address, as they appear on the Company's
books, of the stockholder proposing such business, (iii) the class and number of
shares of capital stock of the Company which are beneficially owned by such
stockholder, and (iv) 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.
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<PAGE> 22
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 Legal Department Director
Scottsdale, Arizona
March 29, 2000
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<PAGE> 23
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 11, 2000, 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, 2000, and the Proxy
Statement, dated March 29, 2000, 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 THE NOMINEE 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> 24
GIANT INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE LISTED BELOW AND
FOR ITEM 2.
1. Election of Director -- Nominee: Fredric L. Holliger
<TABLE>
<C> <S> <C> <C>
[ ] FOR [ ] WITHHOLD
</TABLE>
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, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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:, 2000 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.
