<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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 (S) 240.14a-11(c) or (S) 240.14a-12
Western Gas Resources, 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:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
WESTERN GAS RESOURCES, INC.
12200 North Pecos Street
Denver, Colorado 80234
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 19, 2000
To the Stockholders of
WESTERN GAS RESOURCES, INC.:
The Annual Meeting of Stockholders of Western Gas Resources, Inc., a Delaware
corporation (the "Company"), will be held at the Embassy Suites Hotel, Remington
III Ballroom, 1881 Curtis Street, Denver, Colorado 80202 on Friday, May 19, 2000
at 10:00 A.M. local time for the following purposes:
1. To elect three Class Two Directors to serve until their terms expire in
2003 or until their successors have been elected and qualified;
2. To transact such other business as may properly come before the meeting or
any postponement or adjournment thereof.
Accompanying this Notice of Annual Meeting of Stockholders is a Proxy, a Proxy
Statement and a copy of the Company's 1999 Annual Report to Stockholders.
Only holders of record of shares of the Company's Common Stock at the close of
business on April 10, 2000 are entitled to receive notice of, and to vote at,
the Annual Meeting or any postponement or adjournment thereof.
Stockholders are cordially invited to attend the Annual Meeting. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. IF YOU DO
ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
By Order of the Board of Directors,
BRION G. WISE
Chairman of the Board
Denver, Colorado
April 19, 2000
<PAGE>
WESTERN GAS RESOURCES, INC.
12200 North Pecos Street
Denver, Colorado 80234
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
To be held on May 19, 2000
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Western Gas Resources, Inc. (the "Company") of proxies for
use at the Annual Meeting of Stockholders of the Company to be held at 10:00
A.M. local time on Friday, May 19, 2000 at the Embassy Suites Hotel, Remington
III Ballroom, 1881 Curtis Street, Denver, Colorado 80202 and at any postponement
or adjournment thereof. This Proxy Statement and the enclosed Proxy are being
mailed to stockholders on or about April 19, 2000.
The only outstanding voting securities of the Company eligible to vote are its
Common Stock, par value $0.10 (the "Common Stock"). On April 10, 2000, the
record date for the Annual Meeting, there were 32,176,444 shares of Common Stock
entitled to vote at the Annual Meeting. Each holder of record of Common Stock
at the close of business on the record date will be entitled to one vote for
each share so held.
The presence at the Annual Meeting in person or by proxy of the holders of a
majority of the outstanding shares entitled to vote is necessary to constitute a
quorum for the transaction of business. If a Proxy in the accompanying form is
duly executed, dated and returned the shares represented thereby will be voted
in accordance with instructions set forth thereon unless revoked. Stockholders
attending the Annual Meeting may vote their shares in person whether or not a
Proxy has been previously executed and returned. Unless contrary instructions
are given, the persons designated as Proxy holders on the Proxy card will vote
FOR election of the nominees named therein as directors. If any other matter is
properly presented at the meeting, which is not currently anticipated, the Proxy
holders will vote the Proxies in accordance with their best judgment in such
matters. The cost of soliciting the Proxies will be borne by the Company.
Votes cast by proxy or in person at the Annual Meeting will be counted by a
person appointed by the Company to act as the election inspector for the
meeting. The election inspector will treat shares represented by proxies that
reflect abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum.
Any stockholder returning a Proxy may revoke it at any time before it has been
exercised by giving written notice of such revocation to the Company addressed
to John C. Walter, Secretary, 12200 North Pecos Street, Denver, Colorado 80234.
No such revocation shall be effective unless it has been received by the Company
at or prior to the Annual Meeting.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation establishes three classes of
directors, each serving a three-year term ending in successive years. There are
two Class Two Directors whose terms expire this year: Ward Sauvage and Joseph E.
Reid. The Board of Directors (the "Board") has nominated Messrs. Sauvage and
Reid for re-election as Class Two Directors. Lanny F. Outlaw was appointed to
the Board on October 1, 1999 and has been nominated for election to the Board as
a Class Two director.
The terms of these Class Two Directors, if elected, will expire on the date of
the Company's Annual Meeting of Stockholders in 2003, or at such time as their
successors are elected and qualified.
If any of the nominees is not elected or is unable to serve (although such a
contingency is not expected), the remaining Board members may elect a substitute
or, alternatively, may reduce the size of the Board, all in accordance with the
Company's Bylaws.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR PROPOSAL ONE, THE ELECTION
OF CLASS TWO DIRECTORS.
The holders of a majority of the shares of Common Stock present in person or by
proxy shall constitute a quorum. Abstentions will be treated as shares that are
present for purposes of determining the presence of a quorum. Directors shall
be elected by a plurality of the votes cast in the election of directors. Under
applicable Delaware law, in tabulating the vote, abstentions and broker non-
votes will be disregarded and will have no effect on the outcome of the vote.
The current directors, including the nominees, are described under the caption
"Directors and Officers."
2
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
AND MANAGEMENT
The following table sets forth as of March 31, 2000 (except as otherwise
indicated) information with respect to: (i) stockholders who were known to the
Company to own more than 5% of the Common Stock of the Company ("Significant
Stockholder") and (ii) information regarding ownership by the Company's
directors and the four most highly compensated Executive Officers and by all
directors and officers as a group of the Company's Common Stock, $2.28
Cumulative Preferred Stock and $2.625 Cumulative Convertible Preferred Stock.
<TABLE>
<CAPTION>
$2.625 Cumulative
$2.28 Cumulative Convertible
Common Stock Preferred Stock Preferred Stock
--------------------------------------- --------------------- -----------------
Number
of Shares Exercisable
(excluding Stock % of Number % of Number % of
Name of Beneficial Owner options) Options (1)(13) Class of Shares Class of Shares Class
- ------------------------------- --------------- --------------- ----- -------------- ----- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
State Street Research
One Financial Center
Boston, MA 02111.................. 3,545,300 (2) - 11.0 - (2) - - (2) -
The Prudential Insurance Company
of America
751 Broad Street
Newark, NJ 07102-3777............. 3,234,313 (2) - 10.1 - (2) - - (2) -
Brion G. Wise..................... 3,814,930 - 11.9 1,600 * - -
12200 N. Pecos Street
Denver, CO 80234
Ward Sauvage...................... 3,057,076 (3) - 9.5 - - - -
Box 132
Oberlin, KS 67749
Walter L. Stonehocker............. 2,803,141 (4) - 8.7 14,000 1.0 31,800 (4) 1.2
15600 Holly
Brighton, CO 80601
Dean Phillips..................... 1,834,825 (5) - 5.7 - - - -
524 N. 30th Street
Quincy, IL 62301
Bill M. Sanderson................. 622,275 (6) 70,000 1.9 - - - -
Richard B. Robinson............... 11,300 (7) 1,667 * 1,000 (12) * - -
James A. Senty.................... 9,320 (8) 1,667 * - - - -
Joseph E. Reid.................... - 1,667 * - - - -
Lanny F. Outlaw................... 85,333 (9) 94,000 * - - - -
John C. Walter.................... 29,625(10) 37,600 * - - - -
John F. Chandler.................. 15,339(14) 36,920 * - - - -
Edward A. Aabak................... 22,554(11) 28,000 * - - - -
William J. Krysiak................ 4,926(15) 22,800 * - - - -
Directors and officers
as a group (18 persons)....... 12,347,718 376,601 38.4 16,800 1.3 31,800 1.2
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%.
(1) The directors and officers have the right to acquire the shares of Common
Stock reflected in this column either currently or within 60 days after
March 31, 2000 through the exercise of stock options.
3
<PAGE>
(2) Amount and nature of beneficial ownership is at December 31, 1999 as
reported in the applicable Schedule 13G and includes shares held by
subsidiaries and affiliates. The percent of class was calculated using
total shares outstanding at December 31, 1999. The Company's only voting
security is its Common Stock. As the applicable rules require presentation
only of ownership in excess of 5% of the Company's voting securities and as
the Company has no knowledge of ownership of any preferred securities, no
information regarding preferred securities is presented for this beneficial
owner.
(3) Includes 2,102,576 shares of Common Stock held by Sauvage Gas Company
(owned 100% by ALS Enterprise) and 954,500 shares of Common Stock held by
Sauvage Gas Service Corporation (owned 100% by ALS Enterprise). ALS
Enterprise is owned as follows: Ward Sauvage Trust No. 1 - 21.6475%, Janice
Sauvage Trust No. 1 - 21.6475%, Marquis W. Sauvage Trust - 27.1045%, Alan
Sauvage Trust - 27.1055% and Nolan C. Rucker - 2.4950%.
(4) Includes 1,257,759 shares of Common Stock owned directly by Mr.
Stonehocker, 1,384,379 shares of Common Stock held by Mr. Stonehocker's
wife, 127,820 shares of Common Stock held by the WGP Trust, of which Mrs.
Stonehocker is the trustee, 3,183 shares of Common Stock held by a son
directly and through 10% or more ownership in a partnership, 15,000 shares
of $2.625 Cumulative Convertible Preferred Stock held by Mr. Stonehocker's
wife, 1,800 shares of $2.625 Cumulative Convertible Preferred Stock held by
Mr. and Mrs. Stonehocker as tenants-in-common, and 14,000 shares of $2.28
Cumulative Preferred Stock held by Mr. and Mrs. Stonehocker as tenants-in-
common and 30,000 of Common Stock held by Mr. and Mrs. Stonehocker as
tenants-in-common.
(5) Includes 1,815,725 shares of Common Stock owned directly by Mr. Phillips
and 19,100 shares of Common Stock held by Mr. Phillips' wife.
(6) Includes 60,090 shares of Common Stock held as joint tenants by Mr.
Sanderson and his wife, 491,139 shares of Common Stock held by Cedar Assets
L.L.L.P. for which Mr. Sanderson and his wife are the general partners,
39,982 shares of Common Stock held by the Sanderson Stock Trust, of which
Mr. Sanderson's wife is the trustee, 200 shares held by the Sanderson
Family Foundation for which Mr. Sanderson and his wife are the directors
and 864 shares of Common Stock held by Mr. Sanderson's wife, 30,000 owned
directly through an IRA account.
(7) Includes 6,000 shares of Common Stock held by the Lentz, Evans & King
Pension Fund, for the benefit of Mr. Robinson, 1,000 shares owned directly
by Mr. Robinson's wife and 800 shares of Common Stock held by Mr. Robinson
and his wife as custodians for their minor children and 3,500 owned
directly by Mr. Robinson.
(8) Includes 2,200 shares of Common Stock owned directly by Mr. Senty and 2,120
shares of Common Stock owned directly by Mr. Senty's wife.
(9) Includes 74,000 shares of Common Stock held as joint tenants by Mr. Outlaw
and his wife, 11,333 shares owned by Western Gas Resources, Inc.'s Profit
Sharing plan for the benefit of Mr. Outlaw.
(10) All of Mr. Walter's shares are held as joint tenants with his wife.
(11) Includes 11,100 shares of Common Stock held by Mr. Aabak directly, 1,200
shares of Common Stock held as joint tenants by Mr. Aabak and his wife and
10,254 shares owned by Western Gas Resources, Inc.'s Profit Sharing plan
for the benefit of Mr. Aabak.
(12) All shares held by the Lentz, Evans & King Profit Sharing plan.
(13) Amounts include forfeiture of options related to the Stock Option Exchange
Program, see further discussion at "Stock Option, Retirement and Bonus
Plans-Option Repricing."
(14) Includes 2,500 shares owned directly by Mr. Chandler and 12,839 owned by
Western Gas Resources, Inc.'s Profit Sharing plan for the benefit of Mr.
Chandler.
(15) All of Mr. Krysiak's shares are held as joint tenants with his wife.
4
<PAGE>
DIRECTORS AND OFFICERS
Set forth below is certain information concerning the directors and officers of
the Company.
NAME AGE POSITION
---- --- --------
Brion G. Wise..............54 Chairman of the Board (1)
Walter L. Stonehocker......75 Vice Chairman of the Board (3)
Dean Phillips..............68 Director (3)(5)
Joseph E. Reid.............71 Director (2)(4)(5)
Richard B. Robinson........51 Director (1)(4)(5)
Bill M. Sanderson..........70 Director (3)
Ward Sauvage...............74 Director (2)
James A. Senty.............64 Director (3)(4)(5)
Lanny F. Outlaw............64 Chief Executive Officer, President and Director
(2)
John C. Walter.............54 Executive Vice President, General Counsel and
Secretary
Edward A. Aabak............48 Senior Vice President - Operations
John F. Chandler...........43 Senior Vice President - Marketing and Business
Development and Assistant Secretary
William J. Krysiak.........39 Vice President - Finance
Vance S. Blalock...........46 Treasurer and Assistant Secretary
Brian E. Jeffries..........42 Vice President - Gas Marketing
J. Burton Jones............40 Vice President - Business Development
Jeffery E. Jones...........46 Vice President - Production
David D. Keanini..........39 Vice President - Engineering, Environmental &
Safety
- -------------------------
(1) Class One Director; term expires in 2002.
(2) Class Two Director; term expires in 2003.
(3) Class Three Director; term expires in 2001.
(4) Member of the Audit Committee.
(5) Member of the Compensation and Nominating Committee.
Brion G. Wise, has served as Chairman of the Board since July 1987. Mr. Wise
served as Chief Executive Officer from December 31, 1986 through October 1, 1999
and as President from 1971 through 1986. Mr. Wise received his Bachelor of
Science Degree in Chemical Engineering from Washington State University.
Walter L. Stonehocker, has served as Vice Chairman of the Board since July 1992,
a director since July 1987, Senior Vice President from January 1985 to July 1992
and Vice President from 1971 to 1985. In addition, he has been active as a
lobbyist for the oil and gas industry in various western states.
Dean Phillips, has served as a director of the Company since July 1987 and as a
member of the Compensation and Nominating Committee since May 1995. Mr.
Phillips has been engaged in the wholesale and retail distribution of natural
gas liquids since 1956. Mr. Phillips also serves as an officer and director of
several banking institutions in Missouri and Illinois.
Joseph E. Reid, has served as a director of the Company since May 1994, a member
of the Audit Committee since May 1995 and as a member of the Compensation and
Nominating Committee since May 1994. Mr. Reid has been involved in the oil and
gas business since 1956, and since 1987 has been an independent oil and gas
consultant. From 1984 to 1986 he served as President and Chief Executive
Officer of Meridian Oil, Inc., from 1982 to 1984 as an independent oil and gas
consultant and from 1978 to 1982 as President and Chief Executive Officer of
Superior Oil Company. Mr. Reid also serves as a director for Riverway Bank. He
received his M.B.A. from the Harvard Graduate School of Business and his
Bachelor of Science Degree from Louisiana State University.
5
<PAGE>
Richard B. Robinson, has served as a director of the Company since July 1987, a
member of the Audit Committee since May 1988 and as a member of the Compensation
and Nominating Committee since September 1993. Mr. Robinson has been a
shareholder of the law firm of Lentz, Evans and King P.C. since 1980. He has
also been an adjunct professor at the University of Denver College of Law since
1980. He has represented the Company since 1977 with respect to tax, corporate
and partnership law matters. Mr. Robinson received his Juris Doctor Degree from
the University of Denver and his L.L.M. in Taxation from New York University.
Bill M. Sanderson, has served as a director of the Company since July 1987,
President from December 1986 through March 1996, Chief Operating Officer from
May 1986 through March 1996 and Senior Vice President from 1981 through 1986.
Mr. Sanderson received his Bachelor of Science Degree, cum laude, in Chemical
Engineering from Texas Tech University.
Ward Sauvage, has served as a director of the Company since July 1987. Mr.
Sauvage was engaged in the wholesale and retail distribution of natural gas
liquids from 1949 through 1993. He owns certain interests in several banking
institutions in Nebraska and serves as a director of such institutions. Mr.
Sauvage is Chairman of the Board and President of Sauvage Gas Company, a
diversified private investment company formed in 1958.
James A. Senty, has served as a director of the Company since July 1987, a
member of the Audit Committee since May 1988 and as a member of the Compensation
and Nominating Committee since September 1993. Mr. Senty has been engaged in
the wholesale and retail distribution of natural gas liquids since 1960. He has
owned certain banking interests since 1976 and currently serves as Chairman of
the Board of The Park Bank. He is also Chairman of the Board and President of
Midwest Bottle Gas Co., a company which directly and through subsidiaries is
engaged in the retail and wholesale marketing of natural gas, natural gas
liquids and other related items in several states. He is a director and Senior
Vice President of MNIC Companies, the parent organization of several insurance
companies in Wisconsin.
Lanny F. Outlaw, has served as Chief Executive Officer since October 1, 1999 and
President since April 1996. Mr. Outlaw served as Chief Operating Officer from
April 1996 through October 1, 1999, Executive Vice President from September
1994 through March 1996, Vice President-Business Development and Rocky Mountain
Region from October 1993 to September 1994 and Vice President-Business
Development from August 1987 to October 1993. Mr. Outlaw was employed by Shell
Oil Company from 1958 to 1987 in various management positions within the
Exploration and Production Department. Mr. Outlaw received his Bachelor of
Science Degree in Engineering from the South Dakota School of Mines and
Technology.
John C. Walter, has served as Executive Vice President, General Counsel and
Secretary since September 1994, Vice President-General Counsel from May 1988 to
August 1994, Corporate Counsel from May 1986 to April 1988 and Land Manager from
March 1983 to April 1986. Mr. Walter received his Bachelor of Arts Degree in
Economics and Juris Doctor Degree from the University of Colorado.
Edward A. Aabak, has served as Senior Vice President - Operations since
September 1997, Vice President - Northern Region from June 1995 to August 1997,
Vice President - Rocky Mountain Region from September 1994 to May 1995, and
Operations Manager of the Rocky Mountain Region from February 1993 to August
1994. From 1982 to 1992, Mr. Aabak was employed by DEKALB Energy Company in
various management, engineering and operations functions. From 1976 to 1982,
Mr. Aabak was employed by Dome Petroleum Limited. Mr. Aabak holds a Bachelor of
Science Degree in Chemical Engineering from the University of Alberta.
John F. Chandler, has served as Senior Vice President - Marketing and Business
Development since April 1996, Vice President - Marketing and Pipelines from
September 1993 through March 1996, Manager of Business Development from January
1991 through August 1993 and from July 1984 through August 1993 in various
positions in engineering and business development. Mr. Chandler received his
Bachelor of Science Degree in Engineering from the South Dakota School of Mines
and Technology.
William J. Krysiak, has served as Vice President - Finance since September 1993,
Corporate Controller from June 1993 to August 1993, Controller - Financial
Accounting from June 1990 to May 1993, Director of Tax Accounting and Reporting
from May 1987 to May 1990 and in various other positions in the accounting area
since August 1985. Mr.
6
<PAGE>
Krysiak is the principal financial and accounting officer of the Company. He
received his Bachelor of Science Degree in Business Administration from Colorado
State University and is a Certified Public Accountant.
Vance S. Blalock, has served as Treasurer since November 1994, Controller of
Systems Development and Acquisitions from January 1993 through November 1994, as
Controller of Operational Accounting from May 1990 through December 1992 and in
various other positions in the accounting area from September 1981 through April
1990. Ms. Blalock received her Bachelor of Science Degree in Commerce from the
University of Louisville and is a Certified Public Accountant.
Brian E. Jeffries, has served as Vice President - Gas Marketing since April 1996
and has been employed by the Company since November 1992 as Director of
Marketing and Transportation. Mr. Jeffries was employed by United Gas Pipe Line
Company from 1991 to 1992 and for LaSER Marketing Company from 1988 through 1991
in various marketing management positions. Mr. Jeffries received his Bachelor
of Science Degree in Civil Engineering from the University of Colorado.
J. Burton Jones, has served as Vice President - Business Development since
September 1997 and has been employed by the Company since August 1996 as
Director of Strategic Planning. Mr. Jones was employed by Burlington Resources
Inc. from July 1988 to August 1996 in various gas supply and business
development positions, most recently as Director, Gas Supply. Mr. Jones
received his Bachelor of Science Degree in Petroleum Engineering from Texas Tech
University.
Jeffery E. Jones, has served as Vice President - Production since October 1993
and has been employed by the Company since 1989, previously as Production
Manager. From 1987 to 1989, Mr. Jones was an independent oil and gas
consultant. Mr. Jones received his Bachelor of Science Degree in Psychology
from Colorado College and his Bachelor of Science Degree in Mechanical
Engineering from the University of Colorado.
David D. Keanini has served as Vice President-Engineering, Environmental and
Safety since January 2000, General Manager-Engineering, Environmental and Safety
from December 1998 to December 1999, Operations Manager-Rocky Mountain Region
from August 1994 to December 1998 and in various other positions in the
Engineering area since September 1989. Mr. Keanini was previously employed by
Propak Systems from 1984 to 1989 and by Colorado Interstate Gas from 1982 to
1984. Mr. Keanini holds a Bachelor of Science degree in Chemical and Petroleum
Refining Engineering from the Colorado School of Mines.
Meetings and Committees of the Board of Directors
The Company's Board held nine meetings during 1999. Each director attended at
least 75% of the total number of meetings of the Board and its committees on
which such director served during his tenure, except for Richard Robinson who
attended 67% of the total number of meetings of the Compensation Committee. The
Board has a standing Audit Committee and a standing Compensation and Nominating
Committee ("Compensation Committee"), as well as other committees. The Audit
Committee and the Compensation Committee are composed solely of non-employee
directors.
Messrs. Reid, Robinson and Senty are members of the Audit Committee. The Audit
Committee recommends the appointment of independent auditors and reviews the
plan, scope, and results of the audit, monitors the fees for the audit and other
services and reviews the findings and recommendations of the independent
accountants concerning internal accounting procedures and controls. The Audit
Committee also recommends accounting and internal auditing policies which, in
the Audit Committee's judgment, should receive the attention of the Board. The
Audit Committee met twice in 1999.
Messrs. Phillips, Reid, Robinson and Senty are members of the Compensation
Committee. The Compensation Committee makes recommendations to the Board
regarding: (i) employee compensation, including compensation of the Company's
Executive Officers; and (ii) individuals to nominate for election to the Board
and Board committee assignments. The Compensation Committee does not consider
nominees for the Board recommended by stockholders. The Compensation Committee
met three times in 1999.
7
<PAGE>
Remuneration of Directors
Directors who are also full-time employees of the Company receive no fees or
remuneration for services as members of the Board. For the year ended December
31, 1999, non-employee directors of the Company received annual fees of $25,000
each, payable in quarterly installments, and annual fees of $5,000 for each
committee on which such director served. Each director also has the option of
obtaining health insurance through the Company under similar terms as the
Executive Officers. The Company has entered into Indemnification Agreements
with each of the Company's directors (each, a "Director Indemnification
Agreement"), which, among other things, places the burden of proof upon the
Company to prove in any particular instance that a director was not entitled to
indemnification and which allows a director to seek the appointment of an
independent legal counsel to determine whether indemnification is appropriate
following certain types of changes of control of the Company. See also "Stock
Option, Retirement and Bonus Plans - Key Employees' Incentive Stock Option Plan
and Non-Employee Directors Stock Option Plan" included elsewhere in this Proxy
Statement.
Compliance with the Reporting Requirements of Section 16(a) of the Securities
Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 and the related regulations
require the Company's directors, Executive Officers and persons who own more
than 10% of the Company's Common Stock to file with the Securities and Exchange
Commission and the New York Stock Exchange initial reports of their beneficial
ownership and reports of any changes in their beneficial ownership of the
Company's Common Stock and other equity securities of the Company. In addition,
such persons are required to furnish the Company with copies of all such
filings. To the Company's knowledge, based solely upon a review of the copies
of such reports furnished to the Company and written representations from its
directors and Executive Officers, all reports which were required during the
fiscal year ended 1999, of its directors, Executive Officers and 10% beneficial
owners complied with Section 16(a) filing requirements, except as follows: one
report relating to a new officer was filed late by David D. Keanini for his
initial statement of beneficial ownership of securities.
Transactions with Affiliates
The Company entered into agreements with key employees, including each of its
officers, other than Mr. Wise who served as Chief Executive Officer for the
Company until October 1, 1999, which committed the Company to loan an amount
sufficient to exercise certain of their respective stock options. The Company
forgave loans and accrued interest if the employee was continuously employed by
the Company for periods specified under the agreements or Board resolutions. At
December 31, 1999, loans and accrued interest to certain officers totaling
$760,878 relating to 50,000 options were outstanding. Amounts outstanding were
as follows: Lanny F. Outlaw, $380,665 related to 25,000 options and John C.
Walter, $380,213 related to 25,000 options. The loans bear interest at the
applicable federal rate, as specified in Section 1274(d) of the Internal Revenue
Code of 1986, as amended, in effect upon the date of the loan. In January 2000
the Board extended the forgiveness on the outstanding loan amounts for Mr.
Outlaw and Mr. Walter for one year.
During the year ended December 31, 1999, the Company purchased and sold natural
gas liquids to affiliates of James A. Senty, a director of the Company, for
total payments and receipts of approximately $198,500. Mr. Robinson is a
stockholder of the law firm of Lentz, Evans and King P.C., which has represented
the Company in certain tax, corporate and partnership law matters since 1977.
For the year ended December 31, 1999, the total amount of legal fees paid to
Lentz, Evans and King P.C. was approximately $27,000. As of December 31, 1999,
the Company had borrowed $150 million from The Prudential Insurance Company of
America, a Significant Stockholder, paid interest of approximately $13.9
million related to such borrowings, and in 1999 paid $1.2 million in yield
maintenance payments on certain prepayments and other charges on the borrowings.
These transactions were all entered into by the Company in the ordinary course
of its business, on a basis the Company believes approximates arm's length.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid by the
Company in each of the last three years ended December 31, 1999 to the Chief
Executive Officer and the four most highly compensated Executive Officers other
than the Chief Executive Officer (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation (1)(2) Awards
-------------------- ----------
Securities
Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options Compensation
- --------------------------- ------ ---------- ----------- (#) (3) ($)(4)
---------- ---------------
<S> <C> <C> <C> <C> <C>
Brion G. Wise* 1999 $ 67,500 - - $ 5,767
Chairman of the Board and 1998 90,000 - - 5,940
Chief Executive Officer 1997 93,462 - - 5,989
Lanny F. Outlaw 1999 378,612 $ 50,000 42,000 20,740
Chief Executive Officer 1998 378,612 - - 31,585
and President (effective
10/1/99) 1997 378,000 - - 123,140
John C. Walter 1999 251,722 35,000 36,000 16,034
Executive Vice President 1998 243,000 - - 20,034
1997 243,300 - - 52,700
John F. Chandler 1999 252,658 - 44,333 (5) 10,884
Senior Vice President -
Marketing 1998 243,300 - - 15,783
and Business Development 1997 243,000 - - 29,466
Edward A. Aabak 1999 201,154 - 46,000 (6) 12,530
Senior Vice President- 1998 185,000 - - 13,556
Operations 1997 184,742 - - 10,481
William J. Krysiak 1999 192,116 30,000 30,000 12,368
Vice President-Finance 1998 196,885 - - 19,309
1997 184,742 - - 30,540
- -----------------------
</TABLE>
* Disclosure for Mr. Wise is made for his tenure as Chief Executive Officer
through October 1, 1999.
(1) The column for Other Annual Compensation has been omitted (in accordance
with the applicable rules) because perquisites and other personal benefits
awarded, earned or paid to the Named Officers were not in excess of the
lesser of either $50,000 or 10% of the total annual salary and bonus for
each Named Officer.
(2) Amounts shown set forth all cash compensation earned by each of the Named
Officers in the years shown.
(3) The columns for Long-Term Compensation - Restricted Stock Awards and Long-
Term Compensation - Payouts have been omitted (in accordance with the
applicable rules) because no such compensation has been awarded, earned or
paid to any of the Named Officers.
(4) Amounts shown consist of the following: (i) the Company's annual
contribution to each of the Named Officers' Retirement Plan accounts; (ii)
the Company's Retirement Plan match; (iii) group term life insurance
premiums paid by the Company; and (iv) principal and interest associated
with loans to the Named Officer to exercise
(5) options to purchase the Company's Common Stock. See further discussion at
"Directors and Officers - Transactions with Affiliates' and "Stock Option,
Retirement and Bonus Plans - $5.40 Stock Option Plan and Key Employees"
Incentive Stock Option Plan, 1999 Stock Option Plan."
(6) Includes 8,333 stock options granted in lieu of bonus for Mr. Chandler.
(7) Includes 10,000 stock options granted in lieu of bonus for Mr. Aabak.
9
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year End
Option/SAR Values
The following table provides information with respect to the stock options
exercised during the year ended December 31, 1999 and the value as of December
31, 1999 of unexercised in-the-money options held by the Named Officers. The
value realized on the exercise of options is calculated using the difference
between the option exercise price and the fair market value of the Company's
Common Stock on the date of exercise. The value of unexercised in-the-money
options at year end is calculated using the difference between the option
exercise price and the fair market value of the Company's Common Stock at
December 31, 1999.
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In-the-Money
Acquired on Value Options/SARs at FY-End (#) Options/SARs at FY-End ($)
-------------------------- --------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lanny F. Outlaw - - 60,000 82,000 - 322,476
John C. Walter - - 19,200 48,800 - 276,408
John F. Chandler - - 18,350 57,133 - 280,391
Edward A. Aabak - - 12,000 54,000 - 281,188
William J. Krysiak - - 9,600 36,400 - 230,340
</TABLE>
Ten-Year Option/SAR Repricings
In March 1999, the Executive Officers were granted a total of 300,000 options,
which vest ratably over the next three years, under the 1997 Plan. The exercise
price of $5.51 was determined by using the average stock price for the ten days
prior to the grant. The shares were issued as follows: Lanny F. Outlaw 42,000,
John F. Chandler 36,000, John C. Walter 36,000, Edward A. Aabak 36,000, J.
Burton Jones 30,000, Jeffery E. Jones 30,000, Brian E. Jeffries 30,000, William
J. Krysiak 30,000 and Vance S. Blalock 30,000. In exchange, the Executive
Officers were required to relinquish a total of 246,200 vested and unvested
options at prices ranging from $18.63 to $34.00 per share (see table below).
The Compensation and Nominating Committee believes that the granting of these
options was a necessary incentive to induce the Executive Officers to remain
with the Company and provide the additional efforts needed during a critical
time in the Company's history.
The following table provides information concerning all repricings of stock
options of all Executive Officers since the fiscal year ended December 31, 1988.
See "Stock Option, Retirement and Bonus Plans - Option Repricings."
<TABLE>
<CAPTION>
Number of Length of
Securities Original Option
Underlying Market Price of Exercise Price Term Remaining
Options/SARs Stock at Time at Time of at Date of
Repriced or of Repricing or Repricing or New Exercise Repricing or
Name Date Amended (#) Amendment Amendment Price Amendment
- ------------------- ------------ ------------ ---------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Lanny F. Outlaw 3/12/99 30,000 $7.063 $18.63 $5.51 4 years
John C. Walter 3/12/99 30,000 7.063 18.63 5.51 4 years
John F. Chandler 3/12/99 25,000 7.063 34.00 5.51 11 months
3/12/99 25,000 7.063 18.63 5.51 4 years
Edward A. Aabak 3/12/99 4,100 7.063 32.38 5.51 4 years
3/12/99 15,000 7.063 18.63 5.51 4 years
William J. Krysiak 3/12/99 25,000 7.063 30.19 5.51 11 months
3/12/99 25,000 7.063 18.63 5.51 4 years
Vance S. Blalock 3/12/99 3,000 7.063 18.63 5.51 4 years
J. Burton Jones 3/12/99 10,000 7.063 19.65 5.51 5 years, 3 mo
3/12/99 4,100 7.063 19.00 5.51 5 years, 6 mo
Jeffery E. Jones 3/12/99 25,000 7.063 26.50 5.51 11 months
3/12/99 25,000 7.063 18.63 5.51 4 years
</TABLE>
10
<PAGE>
Report of the Compensation Committee
In 1993, the Board created the Compensation Committee and directed it to make
recommendations to the Board regarding employee compensation, including the
compensation of the Company's Executive Officers. In 1995, the Compensation
Committee's duties were expanded to include selecting candidates for nomination
to the Board for consideration. The Compensation Committee currently consists
of Dean Phillips, Joseph E. Reid, Richard B. Robinson and James A. Senty, none
of whom is or has been an officer or employee of the Company. The Compensation
Committee met three times in 1999.
Compensation of Executive Officers
The annual compensation of each of the Executive Officers of the Company
consists primarily of a base salary, a discretionary bonus and stock options.
In addition, the Executive Officers participate in the Company-wide Retirement
Plan, which consists of elective employee salary reduction contributions, a
Company match equal to 50% of employee contributions on the first 4% of employee
compensation contributed and, as determined by the Board in its sole discretion,
an annual Company contribution for all employees equal to a specified percentage
of base compensation.
The Company granted a total of 326,666 options in 1999 to the Executive Officers
to purchase shares of the Company's Common Stock. The Executive Officers, as a
group, have been granted options to purchase an aggregate of 681,816 shares of
the Company's Common Stock. The Compensation Committee continues to believe
that options for the Company's Common Stock are an important element of the
Executive Officers' compensation package because options aid in the objectives
of aligning the Executive Officers' interests with those of the stockholders and
giving the Executive Officers a direct stake in the performance of the Company.
In March 1999, the Executive Officers were granted a total of 300,000 options,
which vest ratably over the next three years, under the 1997 Plan. The exercise
price of $5.51 was determined by using the average stock price for the ten days
prior to the grant. In exchange, the Executive Officers were required to
relinquish a total of 246,200 vested and unvested options at prices ranging from
$18.63 to $34.00 per share. The Compensation and Nominating Committee believes
that the granting of these options was a necessary incentive to induce the
Executive Officers to remain with the Company and provide the additional efforts
needed during this critical time in the Company's history.
The Compensation Committee approved the granting of stock options in lieu of
bonus compensation for Executive Officers with options which were to be granted
under 1999 Stock Option Plan of the Company. Under the program, an Executive
Officer would receive a grant of one option for each $3.00 of bonus
compensation. The valuation of these options was based upon an "Executive
Option Valuation" model incorporated in the Bloomberg system, which considered
the average value of an option with these characteristics and assumed a 25%
volatility factor. The model also considered limitation factors that hinder an
Executive Officer's ability to trade the Company's Common Stock on volatility to
arrive at the stock option valuation of $3.00. The total number of options
granted under the exchange was 26,666 at an exercise price of $12.71, which was
determined by using the average closing price for the ten days prior to the
grant. Three Executive Officers participated in the exchange of bonus
compensation for stock options: Edward A. Aabak received 10,000 stock option
grants; John F. Chandler received 8,333 stock option grants and J. Burton Jones
received 8,333 stock option grants.
As a result of financial performance of the Company in 1999, the Executive
Officers recommended to the Compensation and Nominating committee, that the
Executive Officers as a group receive pay increases of up to 5% of base salary.
Mr. Outlaw recommended discretionary bonuses for the Executive Officers for
1999, which was approved by the Compensation Committee and the Board. The
Executive Officers were extended the option of taking the bonus in in cash or in
stock option grants. Finally, the Compensation Committee recommended to the
Board that the Company make a contribution to the Company's Retirement Plan of
5% of 1999 base salaries for all eligible employees, including each of the
Executive Officers. In making this recommendation, the Compensation Committee
considered, among other things, the financial performance of the Company, as
measured by net income and cash flow from operations and the total compensation
packages received by employees in the oil and gas industry.
Subject to certain exceptions, Section 162(m) of the Internal Revenue Code
limits to $1,000,000 the amount of executive compensation that a company may
deduct as an expense for federal income tax purposes in any one year for any one
executive. Although none of the Company's Executive Officers received in excess
of $1,000,000 in compensation for
11
<PAGE>
any year, the Compensation Committee intends to structure future executive
officer compensation in a manner that will preserve the tax deductibility of
executive compensation.
Compensation of the Chief Executive Officer
The compensation of Brion G. Wise, the Company's Chief Executive Officer through
October 1, 1999, consisted primarily of base salary. Mr. Wise's compensation was
significantly lower than compensation paid by comparable companies for
comparable positions. In preparing their recommendation regarding Mr. Wise's
compensation, the Compensation Committee considered certain subjective factors
unrelated to the Company's financial performance, principally Mr. Wise's belief
that it was not necessary to pay him a market rate because he received
substantial dividends from the shares of the Company's Common Stock that he
owns. Mr. Wise was not eligible for awards under the Company's various stock
option plans because the Compensation Committee and the Board believe his
interests are already strongly tied to those of its stockholders. He is,
however, entitled to participate in the Company's Retirement Plan. Mr. Wise did
not receive a bonus for the fiscal year ended December 31, 1999.
Mr. Outlaw, who was President and Chief Operating Officer of the Company since
April 1996, was promoted to Chief Executive Officer and President of the Company
on October 1, 1999. Pursuant to an Employment Agreement, Mr. Outlaw's
compensation consists primarily of an annual base salary of $425,000 and
discretionary bonus and stock options as determined by the Board. In preparing
their recommendation, the Compensation Committee considered comparable salaries
for comparable positions in the industry. Mr. Outlaw is eligible to participate
in the Company's qualified retirement plans and the Company's loan program in
connection with the Agreement to Provide Loan(s) to Exercise Key Employees'
Stock Options. Under the Employment Agreement, Mr. Outlaw is subject to certain
covenants relating to confidentiality and non-competition following termination.
The Employment Agreement with Mr. Outlaw terminates upon May 31, 2001 (unless
extended), death, disability or upon the Company's or Mr. Outlaw's election to
terminate the Employment Agreement, whichever is the first to occur.
March 31, 1999
Compensation Committee
Dean Phillips
Joseph E. Reid
Richard B. Robinson
James A. Senty
Compensation Committee Inter-lock and Insider Participation
The Compensation Committee consists of Dean Phillips, Joseph E. Reid, Richard B.
Robinson and James A. Senty, none of whom is or was an officer or employee of
the Company. During the year ended December 31, 1999, the Company purchased
from and sold natural gas liquids to affiliates of James A. Senty for total
payments and receipts of approximately $198,500. Mr. Robinson is a stockholder
of the law firm of Lentz, Evans and King P.C., which has represented the Company
in certain tax, corporate and partnership law matters since 1977. For the year
ended December 31, 1999, the total amount of legal fees paid to Lentz, Evans and
King P.C. was approximately $27,000. All such transactions were entered into by
the Company in its ordinary course of business, on a basis the Company believes
approximates arm's length.
Employment Agreements
The Company has entered into an Employment Agreement (an "Executive Employment
Agreement") with each of the Company's Executive Officers, other than Mr. Wise
who served as Chief Executive Officer until October 1, 1999. Pursuant to the
Executive Employment Agreement, as amended, the Company has agreed to pay each
executive officer a minimum annual compensation based upon such executive
officer's base salary, plus a bonus determined by the Board in its sole and
absolute discretion. The employment of the executive officer continues until it
is terminated in accordance with the Executive Employment Agreement. The
Company may terminate an executive officer "for cause" at any time and the
executive officer may terminate employment upon 90 days prior notice. If the
Company terminates the executive officer without "cause," the executive officer
is entitled to severance equal to one year's base salary, which increases to two
years' base salary if the termination without cause occurs within one year after
certain changes in
12
<PAGE>
control of the Company. In all cases, the executive officer is subject to
certain covenants relating to confidentiality, non-competition and non-
solicitation of customers and employees following termination.
STOCK OPTION, RETIREMENT AND BONUS PLANS
Retirement Plan
The Company's Retirement Plan (a defined contribution plan) is administered by
the Board. All employees of the Company are eligible to participate in the
Retirement Plan. For the year ended December 31, 1999, subject to certain
restrictions, each participant may elect to reduce his or her salary and have
contributed biweekly to the Retirement Plan on his or her behalf an amount which
on an annual basis may not exceed the lesser of 15% of his or her base
compensation or $10,500. The Company contributes to the accounts of
participating employees a match of 50% of employee contributions on the first 4%
of employee compensation contributed. Additionally, the Company may make annual
contributions to the accounts of each participant, as determined by the Board in
its sole discretion, in amounts up to 10% of the base compensation of such
participants. The Company's contributions and matching contributions under the
Retirement Plan become vested at the rate of 20% after completion of two years
of service with an additional 20% vesting each year thereafter until fully
vested.
Incentive Bonus Plans
In 1999, the Board approved the 2000 Bonus Incentive Compensation Plan for the
Executive Officers of the Company. The Executive Officers' bonuses will be tied
to the Company's 2000 earnings attributable to Common Stock, EBITDA (earnings
before taxes, depreciation and amortization) and earnings per share. If the
earnings target (which could be adjusted by the Board to reflect non-recurring,
unusual items) is met or exceeded, the Executive Officers would receive a
minimum bonus of 5% of their adjusted base pay. Under the 2000 Bonus Incentive
Compensation Plan, awarded bonuses are paid to the Executive Officer if the
Executive Officer does not voluntarily terminate employment with the company at
the end of the fiscal year.
$5.40 Stock Option Plan
In April 1987 and as further amended in February 1994, the Company adopted an
Employee Stock Option Plan ("$5.40 Plan") that authorized granting options to
employees to purchase 483,000 shares of the Company's Common Stock. The Company
entered into agreements committing the Company to loan to certain employees an
amount sufficient to exercise their options, provided that the Company will not
loan in excess of 25% of the total amount available to the employee in any one
year. Pursuant to the agreements, the Company was required to forgive any such
loan and associated accrued interest on July 2, 1997 or December 31, 1997, if
the employee was then employed on such dates by the Company. See further
discussion at "Directors and Officers - Transactions with Affiliates."
Key Employees' Incentive Stock Option Plan and Non-employee Director Stock
Option Plan
Effective April 1987, the Board of the Company adopted a Key Employees'
Incentive Stock Option Plan ("Key Employee Plan") and a Non-Employee Director
Stock Option Plan ("Directors' Plan") that authorize the granting of options to
purchase 250,000 and 20,000 shares of the Company's Common Stock, respectively.
Under the plans, each of these options became exercisable as to 25% of the
shares covered by such plans on the later of January 1, 1992 or one year from
the date of grant, subject to the continuation of the optionee's relationship
with the Company, and became exercisable as to an additional 25% of the covered
shares on the later of each subsequent January 1 through 1995 or on each
subsequent date of grant anniversary, subject to the same condition. Each of
these plans will terminate on the earlier of February 6, 2000 or, assuming the
grant of the maximum number of options available for grant under the plans, the
date on which all options granted under each of the plans have been exercised in
full. The Company has entered into agreements committing the Company to loan
certain employees an amount sufficient to exercise their options as each portion
of their options vests. The Company will forgive such loans and associated
accrued interest if the employee has been continuously employed by the Company
for four years after the date of each loan increment. In January 2000, for two
of the Company's officers, the Board voted to extend the maturity for each of
the loan increments for one year for all of the maturities. See further
discussion at "Directors and Officers - Transactions with Affiliates."
13
<PAGE>
1993 and 1997 Stock Option Plans
The 1993 Stock Option Plan ("1993 Plan") became effective on May 24, 1993 and
the 1997 Stock Option Plan ("1997 Plan") became effective on May 21, 1997 after
approvals by the Company's stockholders. Each plan is intended to be an
incentive stock option plan in accordance with the provisions of Section 422 of
the Internal Revenue Code of 1986, as amended. The Company has reserved
1,000,000 shares of Common Stock for issuance upon exercise of options under
each of the 1993 Plan and the 1997 Plan. The 1993 Plan and the 1997 Plan will
terminate on the earlier of March 21, 2003 and May 21, 2007, respectively, or,
assuming the grant of the maximum number of options available for grant under
the plans, the date on which all options granted under each of the plans have
been exercised in full.
Under both of the plans, the Board of the Company determines and designates from
time to time those employees of the Company to whom options are to be granted.
If any option terminates or expires prior to being exercised, the shares
relating to such option are released and may be subject to reissuance pursuant
to a new option. The Board has the right to, among other things, fix the price,
terms and conditions for the grant or exercise of any option. The purchase
price of the stock under each option shall be the fair market value of the stock
at the time such option is granted. Under the 1993 Plan, options granted vest
20% each year on the anniversary of the date of grant commencing with the first
anniversary. Under the 1997 Plan, the Board has the authority to set the
vesting schedule from 20% per year to 33 1/3% per year. Under both plans, the
employee must exercise the option within five years of the date each portion
vests.
1999 Stock Option Plan
The 1999 Stock Option Plan ("1999 Plan") became effective on May 21, 1999 after
approvals by the Company's stockholders. The plan is intended to be an
incentive stock option plan in accordance with the provisions of Section 422 of
the Internal Revenue Code of 1986, as amended. The Company has reserved 750,000
shares of Common Stock for issuance upon exercise of options under the 1999
Plan. The 1999 Plan will terminate on the earlier of May 21, 2009 or the date
on which all options granted under the 1999 Plan have been exercised in full.
Under the 1999 Plan, the Board determines and designates from time to time those
employees of the Company to whom options are to be granted. If any option
terminates or expires prior to being exercised, the shares relating to such
option are released and may be subject to re-issuance pursuant to a new option.
The Board has the right, among other things, to fix the purchase price, terms
and conditions for the grant or exercise of any option. The purchase price of
the stock under each option is the Fair Market Value of the stock at the time
such option is granted. For purposes of the 1999 Plan, Fair Market Value of
stock shall mean the New York Stock Exchange Composite Transactions average
closing price for the stock reflected in The Wall Street Journal or another
publication selected by the Board for the ten (10) days preceding the day the
Option is granted to each eligible employee. Under the 1999 Plan, the Board has
the authority to set the vesting schedule from 20% to 33 1/3% per year with
portions vesting over a three, four, or five year period from the date of the
grant. The employee's right to exercise options under the 1999 Plan is subject
to continuous employment since the grant was made. If the employee dies or
becomes disabled (within the meaning of the 1999 Plan) then all of the options
granted to the employee shall become 100% exercisable.
1999 Non-Employee Directors' Stock Option Plan
Effective March 12, 1999, the Board adopted a 1999 Non-Employee Directors' Stock
Option Plan ("1999 Directors' Plan") that authorizes the granting of options to
purchase 15,000 shares of the Company's Common Stock. During 1999, the Board
approved grants totaling 15,000 options to several Board members. Under the
1999 Director Plan, each of these options becomes exercisable as to 33 1/3% of
the shares covered by it on each anniversary from the date of grant. This plan
terminates on the earlier of March 12, 2009 or the date on which all options
granted have been exercised in full.
Option Repricings
In March 1999, the Executive Officers were granted a total of 300,000 options,
which vest ratably over the next three years, under the 1997 Plan. The exercise
price of $5.51 was determined by using the average stock price for the ten days
prior to the grant. The shares were issued as follows: Lanny F. Outlaw 42,000,
John F. Chandler 36,000, John C. Walter 36,000, Edward A. Aabak 36,000, J.
Burton Jones 30,000, Jeffery E. Jones 30,000, Brian E. Jeffries 30,000, William
J. Krysiak 30,000 and Vance S. Blalock 30,000. In exchange, the Executive
Officers were required to relinquish a total of 246,200 vested and unvested
options at prices ranging from $18.63 to $34.00 per share (see table under
Ten-Year
14
<PAGE>
Option/SAR Repricings). The Compensation and Nominating Committee believes
that the granting of these options was a necessary incentive to induce the
Executive Officers to remain with the Company and provide the additional efforts
needed during a critical time in the Company's history.
The following indexed graph indicates the Company's total return to its
stockholders from December 31, 1994 to December 31, 1999 as compared to total
return for the Standard & Poor's 500 Index and a Peer Group Index selected by
the Company, assuming a common starting point of $100 and that all dividends
were reinvested. The information contained in this graph is not necessarily
indicative of future Company performance.
[PERFORMANCE CHART APPEARS HERE]
WESTERN GAS RES INC
Cumulative Total Return
--------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
WESTERN GAS RESOURCES, INC. 100.00 84.73 102.45 118.94 31.55 73.55
PEER GROUP 100.00 126.52 161.64 149.93 102.66 121.47
S & P 500 100.00 137.58 169.17 225.61 290.09 351.13
* $100 invested on 12/31/94 in stock or index. Total return includes
reinvestment of dividends (if applicable). Dates are for fiscal years ending
on December 31 in each of the years indicated.
* Peer group (WGR) consists of 15 companies, including the Company. The other
14 companies in the peer group are as follows: Anadarko Petroleum Corp.
Apache Corp., Berry Petroleum Co., Cabot Oil & Gas Corp., Devon Energy Corp.,
Mitchell Energy and Development Corp., Murphy Oil Corp., Noble Affiliates
Inc., Pioneer Natural Resources Co., Pogo Producing Co., Questar Corp.,
Ranger Oil Ltd., Triton Energy Corp., and Valero Energy Corp. The total
return for each company in the peer group has been weighted for stock market
capitalization. The peer group consists of independent oil and natural gas
producers, gatherers, transporters and marketers of natural gas and natural
gas liquids and certain natural gas pipelines.
15
<PAGE>
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP served as the Company's independent accountants for
1999. A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting and will have an opportunity to make a statement if he desires to
do so and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder proposals to be considered for inclusion in the Company's
solicitation of Proxies for the 2001 Annual Meeting of Stockholders must be
received by the Secretary of the Company (at 12200 North Pecos Street, Denver,
Colorado 80234) no later than January 15, 2001.
OTHER BUSINESS
All items of business expected to be brought before the meeting by management of
the Company are set forth in this Proxy Statement. Management knows of no other
business to be presented. If other matters of business not presently known to
management properly come before the meeting, it is intended that the persons
named in the Proxies will have discretionary authority to vote the shares
thereby represented in accordance with their best judgment.
THE ENCLOSED PROXY SHOULD BE COMPLETED, DATED, SIGNED AND RETURNED IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. PROMPT MAILING OF THE PROXY WILL BE APPRECIATED.
By Order of the Board of Directors,
WESTERN GAS RESOURCES, INC.
BRION G. WISE
Chairman of the Board
Denver, Colorado
April 19, 2000
16
<PAGE>
WESTERN GAS RESOURCES
c/o Equi Serve
P.O. Box 9398
Boston, MA 02205-9398
- --------------------------------------- ---------------------------------------
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Follow these four easy steps: Follow these four easy steps:
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2. Call the toll-free number 2. Go to the Website
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(1-877-779-8683).
3. Enter your 14-digit Voter Control 3. Enter your 14-digit Voter Control
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4. Follow the recorded instructions. 4. Follow the instructions provided.
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Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/wgr
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Do not return your Proxy Card if you are voting by Telephone or Internet
WGR37A DETACH HERE
[ X ] Please mark
votes as in
this example.
1. ELECTION OF THREE CLASS TWO
CLASS DIRECTORS.
Nominees: (01) Lanny F. Outlaw, 2. In their discretion, the Proxies
(02) Ward Sauvage and are authorized to vote upon such
(03) Joseph E. Reid other business as may properly
come before the meeting or any
FOR WITHHELD postponement or adjournments
[ ] [ ] thereof.
[ ] _________________________ This proxy, when properly executed,
For all nominees except as will be voted in the manner directed
noted above herein by the undersigned
stockholder. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES
LISTED IN ITEM 1.
MARK HERE FOR ADDRESS
CHANGE AND NOTE
AT LEFT [ ]
Please sign exactly as name appears
at the left. When shares are held by
joint tenants, both should sign. When
signing as an attorney, executor,
administrator, trustee or guardian
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Please mark, sign, date and mail this
proxy promptly in the enclosed
envelope.
Signature:______________Date:________ Signature:______________Date:________
<PAGE>
WGR37B DETACH HERE
PROXY
WESTERN GAS RESOURCES, INC.
Annual Meeting of Stockholders - May 19, 2000
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Brion G. Wise and John C. Walter, and
each of them, as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated below, all the
shares of common stock of Western Gas Resources, Inc. held of record by the
undersigned on the close of business on April 10, 2000, at the Annual Meeting of
Stockholders of Western Gas Resources, Inc., to be held on Friday, May 19, 2000
at 10:00 A.M., local time at the Embassy Suites Hotel, Remington III Ballroom,
1881 Curtis Street, Denver, Colorado 80202 and at any postponement or
adjournment thereof.
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SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
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