<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Cabot Oil & Gas Corporation
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[CABOT OIL & GAS CORPORATION LOGO]
March 31, 1995
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Cabot Oil & Gas Corporation to be held on Thursday, May 18, 1995 at 10:00 a.m.
at the Ritz-Carlton, Houston, Texas.
The attached Notice of Annual Meeting and Proxy Statement cover the formal
business of the meeting. To better acquaint you with the directors, the Proxy
Statement contains biographical information of each nominee and each director
continuing in office.
A report on the operations of the Company and its plans will be presented
at the meeting. In addition, directors and officers of the Company will be
present to respond to your questions.
Whether or not you plan to attend the Annual Meeting, it is important that
your shares be represented. Please complete, sign, date and return the enclosed
proxy card in the postage-paid envelope provided.
Sincerely,
/s/ JOHN H. LOLLAR
JOHN H. LOLLAR
Chairman of the Board,
Chief Executive Officer
and President
<PAGE> 3
CABOT OIL & GAS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1995
The Annual Meeting of Stockholders of Cabot Oil & Gas Corporation (the
"Company"), a Delaware corporation, will be held in The Colonnade Salon, The
Ritz-Carlton, 1919 Briar Oaks Lane, Houston, Texas 77027, on Thursday, May 18,
1995 at 10:00 a.m., for the following purposes:
1. To elect four persons to the Board of Directors of the Company.
2. To approve an amendment to the Company's Incentive Stock Option
Plan.
3. To ratify the appointment of the firm of Coopers & Lybrand L.L.P.,
independent certified public accountants, as auditors of the Company for
its 1995 fiscal year.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only holders of record of the Class A Common Stock and the 6% Convertible
Redeemable Preferred Stock at the close of business on March 20, 1995 are
entitled to receive notice of and to vote at the Annual Meeting. The transfer
books of the Company will not be closed.
Stockholders who do not expect to be present at the Annual Meeting are
urged to complete, date, sign and return the accompanying proxy in the enclosed,
self-addressed envelope requiring no postage if mailed in the United States. You
may still vote in person if you decide to attend the Annual Meeting.
It is important that your shares be voted at the Annual Meeting. Please
exercise your right to vote and return a completed form of proxy at your
earliest convenience.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ MOLLY S. WILLIAMS
MOLLY S. WILLIAMS
Secretary
Houston, Texas
March 31, 1995
<PAGE> 4
CABOT OIL & GAS CORPORATION
15375 MEMORIAL DRIVE
HOUSTON, TEXAS 77079
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1995
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Cabot Oil & Gas Corporation (the "Company") of proxies
for use at its 1995 Annual Meeting of Stockholders or any adjournment thereof
(the "Annual Meeting") to be held at the Ritz-Carlton, Houston, Texas, on
Thursday, May 18, 1995, at 10:00 a.m. for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. You may revoke your proxy
at any time prior to its use by a written communication to Ms. Molly S.
Williams, Secretary of the Company, or by a duly executed proxy bearing a later
date.
Stockholders attending the Annual Meeting may vote their shares in person
even though they have already executed a proxy. Properly executed proxies not
revoked will be voted in accordance with the specifications thereon at the
Annual Meeting and at any adjournment thereof. Proxies on which no voting
instructions are indicated will be voted for the election of the nominees for
directors, for approval of an amendment to the Incentive Stock Option Plan, for
ratification of the appointment of Coopers & Lybrand L.L.P., independent
certified public accountants, as auditors of the Company for its 1995 fiscal
year and in the best judgment of the proxy holders on any other matter that may
properly come before the Annual Meeting.
Only holders of record of the Company's Class A Common Stock, par value
$.10 per share ("Common Stock") and the Company's 6% Convertible Redeemable
Preferred Stock ("6% Preferred Stock") as of the close of business on March 20,
1995 are entitled to vote at the Annual Meeting. As of that date, the Company
had outstanding and entitled to vote 22,773,505 shares of Common Stock and
1,134,000 shares of 6% Preferred Stock. Each share of Common Stock is entitled
to one vote per share and each share of the 6% Preferred Stock is entitled to
1.739 votes per share. There is no provision for cumulative voting. A quorum for
the consideration of business at the Annual Meeting consists of a majority of
all outstanding shares of stock entitled to vote at the Annual Meeting. This
Proxy Statement and form of Proxy are being first sent or given to security
holders on March 31, 1995.
In accordance with Delaware law, a stockholder entitled to vote for the
election of directors can withhold authority to vote for all nominees for
director or can withhold authority to vote for certain nominees for director.
Abstentions from proposals are treated as votes against the particular proposal.
Broker non-votes on proposals are treated as shares as to which voting power has
been withheld by the beneficial holders of those shares and, therefore, as
shares not entitled to vote on the proposal as to which there is the broker
non-vote.
PROPOSAL I.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of directors serving
staggered three-year terms. Robert F. Bailey, John G.L. Cabot, William H. Knoell
and C. Wayne Nance have been nominated for election at the Annual Meeting for
terms of three years, each to hold office until the expiration of his term in
1998 and until his successor shall have been elected and shall have qualified.
It is the intention of the persons named in the enclosed form of proxy to
vote such proxies for the election of Messrs. Bailey, Cabot, Knoell and Nance
for terms of three years. If any one of the nominees is not so available at the
time of the Annual Meeting to serve, proxies received will be voted for
substitute nominees to be designated by the Board of Directors or, in the event
no such designation is made by the Board, proxies will
<PAGE> 5
be voted for a lesser number of nominees. In no event will the proxies be voted
for more than the number of nominees set forth below.
CERTAIN INFORMATION REGARDING NOMINEES AND DIRECTORS
Set forth below, as of March 1, 1995, for each director that will continue
to serve after the Annual Meeting and for each nominee for election as a
director of the Company, is information regarding his age, position(s) with the
Company, membership on committees of the Board of Directors, the period during
which he has served as a director and term of office, his business experience
during at least the past five years, and other directorships currently held by
him.
ROBERT F. BAILEY
Age: 62
Committee Membership: Audit, Safety and Environmental Affairs
Director Since: 1994
Term of Office Expires: 1995 (Nominee for Director)
Business Experience:
Trans Republic Energy, L.P.
President - 1992 to present
Alta Energy Corporation
President - prior to 1992
Other Directorships:
Washington Energy Company
Texas Commerce Bank - Midland
SAMUEL W. BODMAN
Age: 56
Committee Membership: Compensation, Nominations
Director Since: 1989
Term of Office Expires: 1996
Business Experience:
Cabot Corporation:
Chairman of the Board - October 1988 to present
President - February 1991 to present,
January 1987 to October 1988
Chief Executive Officer - February 1988 to present
Other Directorships:
Cabot Corporation
John Hancock Mutual Life Insurance Company
Westvaco Corporation
Security Capital Group Incorporated
2
<PAGE> 6
HENRY O. BOSWELL
Age: 65
Committee Membership: Audit, Compensation
Director Since: 1991
Term of Office Expires: 1997
Business Experience:
Retired since 1987
Amoco Production Company
President - 1983 to October 1987
Amoco Corporation
Director - 1983 to October 1987
Amoco Canada Petroleum Ltd.
Chairman of the Board - 1983 to October 1987
Other Directorships:
ServiceMaster Management Corporation
Rowan Companies, Inc.
JOHN G.L. CABOT
Age: 60
Committee Memberships: Nominations, Safety and Environmental Affairs
Director Since: 1989
Term of Office Expires: 1995 (Nominee for Director)
Business Experience:
Cabot Corporation:
Chief Financial Officer - October 1992 to present
Vice Chairman of the Board - October 1988 to present
Other Directorships:
Cabot Corporation
Eaton Vance Corp.
KN Energy, Inc. (Advisory Director)
WILLIAM R. ESLER
Age: 69
Committee Membership: Audit, Safety and Environmental Affairs
Director Since: 1992
Term of Office Expires: 1997
Business Experience:
Retired since February 1991
Southwestern Public Service Company
Chairman of the Board and Chief Executive Officer - July 1989 to
February 1991
President and Chief Executive Officer - January 1989 to July 1989
President and Chief Operating Officer - 1985 to July 1989
Director - 1985 to 1992
Utility Engineering Corporation
Chairman of the Board - 1989 to 1991
3
<PAGE> 7
WILLIAM H. KNOELL
Age: 70
Committee Membership: Audit, Safety and Environmental Affairs
Director Since: 1990
Term of Office Expires: 1995 (Nominee for Director)
Business Experience:
Retired since September 1989
Cyclops Industries, Inc.
Chairman, President and Chief Executive Officer - 1987 to September
1989
Director until April 1992
Other Directorships:
DQE
Duquesne Light Company
JOHN H. LOLLAR
Age: 56
Director Since: 1992
Term of Office Expires: 1996
Business Experience:
Cabot Oil & Gas Corporation
Chairman of the Board and
Chief Executive Officer - January 1993 to present
President and Chief Operating Officer - October 1992 to present
Transco Exploration and Production Company
President and Chief Operating Officer - 1982 to 1992
Other Directorships:
Inspectorate PLC
CARL M. MUELLER
Age: 74
Committee Membership: Compensation, Safety and Environmental Affairs
Director Since: 1990
Term of Office Expires: 1996
Business Experience:
Retired since June 1985
Bankers Trust New York Corporation and Bankers Trust Company
Vice Chairman of the Board - 1977 to June 1985
Other Directorships:
Teltrend, Inc.
AEA Investors, Inc.
BT Capital Corporation
P. Leiner, Inc.
4
<PAGE> 8
C. WAYNE NANCE
Age: 63
Committee Memberships: Compensation, Nominations
Director Since: 1992
Term of Office Expires: 1995 (Nominee for Director)
Business Experience:
C. Wayne Nance & Associates, Inc. (petroleum consulting and
investments)
President - July 1989 to present
The Mitchell Group
Senior Vice President - July 1989 to present
Tenneco Oil Company
Retired - July 1989
President - March 1987 to July 1989
Other Directorships:
Matador Petroleum Corporation
D.I. Industries Inc.
CHARLES P. SIESS, JR.
Age: 68
Committee Memberships: Audit, Safety and Environmental Affairs
Director Since: 1989
Term of Office Expires: 1997
Business Experience:
Bridas S.A.P.I.C. Oil Exploration
Consultant and Acting General Manager - January 1993 to January 1994
Cabot Oil & Gas Corporation
Retired in December 1992
Chairman of the Board and Chief Executive Officer - December 1989 to
December 1992
Other Directorships:
Cabot Corporation
CAMCO, Inc.
Rowan Companies, Inc.
WILLIAM P. VITITOE
Age: 56
Committee Memberships: Compensation, Nominations
Term of Office Expires: 1996
Business Experience:
Washington Energy Company
Chairman of the Board, Chief Executive Officer and
President - January 1994 - Present
ANR Pipeline
President, Chief Executive Officer - October 1990 - December 1993
AIT Enterprise Group
President - July 1989 - October 1990.
Other Directorships:
Washington Energy Company
Comerica Bank
Michigan Mutual/Amerisure
5
<PAGE> 9
INFORMATION ON THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held eight meetings during the year ended December
31, 1994. The Board of Directors has four standing committees: the Audit
Committee, the Compensation Committee, the Nominations Committee and the Safety
and Environmental Affairs Committee. Membership on each committee is listed
above. All standing committees are composed entirely of nonemployee directors.
The Audit Committee annually recommends the independent public accountants
to be appointed by the Board of Directors as auditor of the Company and its
subsidiaries; the committee also reviews the arrangements for and the results of
the auditor's examination of the Company's books and records, internal
accounting control procedures, and the activities and recommendations of the
Company's internal auditors. It reports to the Board of Directors on Audit
Committee activities and makes such investigations as it deems appropriate. The
Audit Committee held three meetings during 1994.
The Compensation Committee determines the salaries, bonuses and other
remuneration of the Company's officers who are also directors, reviews and
approves the salaries, bonuses and other remuneration of all other executive
officers, and determines the aggregate amount of bonuses and other incentives to
be paid pursuant to the Company's incentive compensation program. It administers
the Company's Annual Target Cash Incentive Plan, 1994 Long-Term Incentive
Compensation Plan, Incentive Stock Option Plan and supplemental retirement
plans, including the adoption of the rules and regulations therefor and the
determination of awards. It also makes recommendations to the Board of Directors
with respect to the Company's compensation policy. The Compensation Committee
held four meetings during 1994.
The Nominations Committee considers and proposes nominees for membership on
the Board of Directors, including nominations made by stockholders, reviews the
composition of the Board of Directors and makes recommendations to the Board of
Directors concerning corporate governance. Any stockholder desiring to make a
nomination to the Board of Directors should submit such nomination for
consideration by the Nominations Committee, including such nominee's
qualifications, to Ms. Molly S. Williams, Secretary, Cabot Oil & Gas
Corporation, 15375 Memorial Drive, Houston, Texas 77079 not less than 30 days
nor more than 60 days prior to the 1996 Annual Meeting. The Nominations
Committee held two meetings during 1994.
The Safety and Environmental Affairs Committee reviews the Company's safety
and environmental management programs and major hazard analyses. It also reviews
the nature of and extent of Company spending from time to time for safety and
environmental compliance. It further consults with outside and internal advisors
of the Company regarding the management of the Company's safety and
environmental programs. The Safety and Environmental Affairs Committee held two
meetings during 1994.
All directors attended 75% or more of the meetings of the Board of
Directors and of the committees held while they were members during 1994.
DIRECTOR'S COMPENSATION
Directors who are not employees of the Company were compensated during 1994
by the payment of a quarterly cash fee of $4,000, plus $1,000 for attendance by
them at each Board meeting and $500 for attendance at each meeting of a
committee of which they are a member. Committee chairmen received an additional
fee of $500 per quarter. Directors are further compensated $500 for attendance
at business meetings when so requested by the Chairman of the Board of
Directors.
Nonemployee directors also received nondiscretionary automatic grants of
nonqualified options to purchase 10,000 shares of the Common Stock at a price
equal to 100% of the fair market value on the date first elected to the Board of
Directors under either the 1990 Nonemployee Director Stock Option Plan or the
1994 Nonemployee Director Stock Option Plan. Messrs. Bodman, Cabot and Siess
(nonemployee directors who did not receive an option upon the date first elected
to the Board of Directors) each received a nondiscretionary automatic grant of
nonqualified options to purchase 10,000 shares of Common Stock on December 17,
1993. In addition, under the 1994 Nonemployee Director Stock Option Plan,
nonemployee directors will also receive a nondiscretionary automatic grant of a
nonqualified option to purchase an additional 5,000 shares of Common Stock upon
reelection to a new term of office. Directors who are employees of the
6
<PAGE> 10
Company receive no additional compensation for their duties as directors. All
directors were also reimbursed for travel expenses incurred for attending all
Board and committee meetings.
PROPOSAL II.
APPROVAL OF FIRST AMENDMENT TO INCENTIVE STOCK OPTION PLAN
The Board of Directors has adopted, subject to stockholder approval, a
First Amendment (the "Amendment") to the Incentive Stock Option Plan of Cabot
Oil & Gas Corporation (the "Stock Option Plan"). A copy of the Amendment is
attached hereto as Exhibit A and is incorporated herein by reference. The Stock
Option Plan was adopted in January 1990 in connection with the Company's initial
public offering. The Stock Option Plan was intended as an incentive to retain
key executives and other selected employees of the Company and to reward them
for making contributions to the success of the Company. The Stock Option Plan
provides for stock options with respect to a total of 1,000,000 shares of Common
Stock. As of December 31, 1994 options to purchase a total of 608,075 shares
were outstanding under the Stock Option Plan, 395,905 of which are currently
exercisable. The Stock Option Plan is administered by the Compensation Committee
of the Board of Directors. In 1993, the Board of Directors adopted, and the
stockholders approved in May 1994, the 1994 Long-Term Incentive Plan ("1994
Plan"). Due to the adoption of the 1994 Plan, no further stock options will be
granted under the Stock Option Plan. There are, therefore, no new plan benefits
that will be received by or allocated to individuals eligible to participate in
the Stock Option Plan.
The Amendment is intended to conform the provision of the Stock Option Plan
with regard to termination of employment to the provision on termination of
employment included in the 1994 Plan. The Amendment would allow the Compensation
Committee, in its discretion, to provide for an extension of the exercisability
of a stock award set forth in the agreement covering such award, accelerate the
vesting or exercisability of a stock option award, eliminate or waive certain
restrictions or otherwise amend or modify a stock option award in any manner
that is either (i) not adverse to the participant or (ii) consented to by such
participant. By conforming the provisions of the Stock Option Plan and the 1994
Plan on termination of employment, the Compensation Committee would be able to
deal with all options of a terminating employee in a consistent manner.
Approval of the amendment to the Incentive Stock Option Plan will require
the affirmative vote of a majority of the shares of Common Stock and the 6%
Preferred Stock voting on the proposal.
For this purpose, abstentions will be counted as votes against and broker
non-votes will not be treated as voting on the proposal. The persons named on
the accompanying proxy will vote in accordance with the choice specified
thereon, or, if no choice is properly indicated, in favor of the approval of the
Amendment.
PROPOSAL III.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation by the Audit Committee, has
approved and recommended the appointment of Coopers & Lybrand L.L.P.,
independent public accountants, as auditors to examine the Company's financial
statements for 1995. Neither such firm nor any of its associates has any
relationship with the Company except in their capacity as auditors. The persons
named in the accompanying proxy will vote in accordance with the choice
specified thereon, or, if no choice is properly indicated, in favor of the
designation of Coopers & Lybrand L.L.P. as auditors of the Company.
A representative of Coopers & Lybrand L.L.P. is expected to attend the
Annual Meeting and to be available to respond to appropriate questions raised
during the Annual Meeting. The representative will also have an opportunity to
make a statement during the meeting if the representative so desires.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes annual and long-term compensation paid to
the Company's Chief Executive Officer and the Company's four most highly
compensated executive officers other than the Chief Executive Officer who were
serving as of December 31, 1994 for all services rendered to the Company and its
subsidiaries during each of the last three completed fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ------------
AWARDS
OTHER ------------
ANNUAL SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) OPTIONS(#) ($)(3)
------------------ ---- ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
J. H. Lollar 1994 370,883 0 14,766 30,000 9,240
Chairman of the 1993 350,000 120,000 5,764 28,000 8,994
Board and CEO 1992 86,558 275,000 835 60,000 3,462
J. U. Clarke (4) 1994 233,333 0 21,121(5) 10,500 9,240
Executive Vice 1993 85,228 200,000 561 30,000 3,000
President, Chief 1992 0 0 0 0 0
Financial Officer
H. B. Whitehead 1994 161,833 0 1,288 8,000(8) 8,273
Vice President -- 1993 144,500 45,000 44,310(6) 8,000 7,380
Regional Manager 1992 137,000 32,000 12,079(7) 13,400 5,480
K. O. Kuwitzky(9) 1994 161,111 0 1,312 22,500 6,444
Vice President -- 1993 0 0 0 0 0
Marketing 1992 0 0 0 0 0
C. P. Cook 1994 152,283 0 3,060 6,000(12) 7,571
Vice President -- 1993 147,750 35,000 11,174(10) 7,000 7,510
Regional Manager 1992 143,000 32,000 28,648(11) 13,400 5,720
</TABLE>
---------------
(1) No bonuses were paid to the Chief Executive Officer or the four most highly
compensated executive officers in 1994. See "Compensation Committee
Report -- Executive Compensation Annual Incentive Bonus." Mr. Lollar's 1992
bonus included $250,000 paid upon commencement of employment with the
Company in October 1992. Mr. Clarke's 1993 bonus included $150,000 paid
upon commencement of employment with the Company in August 1993.
(2) Unless otherwise indicated, the amount in this column represents premiums
paid on and a tax gross-up for imputed income on executive term life
insurance.
(3) The amounts in this column represent the Company's contribution to the
401(k) plan on behalf of the named executive officer.
(4) Resigned from the Company effective February 1, 1995. See "Severance
Arrangements."
(5) Represents $1,762 for premiums paid on and a tax gross-up for imputed
income on executive term life insurance and $19,359 tax gross-up on a
sign-on bonus paid in 1993.
(6) Represents $400 for premiums paid on and a tax gross-up for imputed income
on executive term life insurance and $43,910 tax gross-up for relocation
expenses.
(7) Represents $662 for premiums paid on and a tax gross-up for imputed income
on executive term life insurance and $11,417 (the equivalent of one month's
salary) as a relocation allowance.
(8) No restricted stock awards were made during the years reported. However, in
connection with the Company's initial public offering, Mr. Whitehead
purchased 3,125 shares of restricted stock in February 1990, all of which
are still held. The market value (net of the purchase price) of such shares
at December 31, 1994 was $20,312.00.
(Footnotes continued on next page)
8
<PAGE> 12
(9) Mr. Kuwitzky's employment with the Company was terminated effective March
9, 1995 due to a Company-wide reduction in force program. See "Severance
Arrangements."
(10) Represents $1,145 for premiums paid on and a tax gross-up for imputed
income on executive term life insurance and $10,029 tax gross-up for
relocation expenses.
(11) Represents $1,732 for premiums paid on and a tax gross-up for imputed
income on executive term life insurance, $11,916 (the equivalent of one
month's salary) as a relocation allowance and $15,000 tax gross-up for
relocation expenses.
(12) No restricted stock awards were made during the years reported. However, in
connection with the Company's initial public offering, Mr. Cook purchased
12,500 shares of restricted stock in February 1990, all of which are still
held. The market value (net of the purchase price) of such shares at
December 31, 1994 was $81,250.00.
OPTION GRANTS IN LAST FISCAL YEAR
Set forth below is supplemental information relating to the Company's
grants of options during 1994 to the executive officers named in the preceding
Summary Compensation Table, including the relative size of each grant, and each
grant's exercise price and expiration date. Also included is information
relating to the potential realizable value of the options granted, based upon
assumed annualized stock value appreciation rates. Neither the option values
reflected in the table nor the assumptions utilized in arriving at the values
should be considered indicative of future stock performance.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OF OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH)(2) DATE(3) 5%($) 10%($)
---- ------------- ------------- ----------- ------------------ ------- -------
<S> <C> <C> <C> <C> <C> <C>
J. H. Lollar...... 30,000(4) 13.4% $ 20.44 May 20, 1999 169,415(6) 374,365(8)
J. U. Clarke...... 10,500(4) 4.7% $ 20.44 May 20, 1999 59,295(6) 131,028(8)
H. B. Whitehead... 8,000(4) 3.6% $ 20.44 May 20, 1999 45,177(6) 99,830(8)
K. O. Kuwitzky.... 15,000(5) 10.0% $ 21.13 February 23, 2004 198,664(7) 504,458(9)
7,500 $ 20.44 May 20, 1999 42,354(6) 93,591(8)
C. P. Cook........ 6,000(4) 2.7% $ 20.44 May 20, 1999 33,883(6) 74,873(8)
</TABLE>
---------------
(1) There were no adjustments or amendments during 1994 to the exercise price of
stock options previously awarded to any of the named executive officers.
(2) Based on the average of the high and low trading price per share of the
Company's common stock on the date of grant, as reported on The New York
Stock Exchange, Inc. Composite Transactions Reporting System.
(3) The options permit the exercise price to be paid in cash or by tendering
shares of Common Stock. The options permit the withholding of shares, at the
discretion of the Compensation Committee, to satisfy tax obligations.
(4) 33 1/3% of such options become exercisable on the first anniversary of the
date of grant (May 20, 1994) and the remaining 66 2/3% of such option
becomes exercisable in 33 1/3% increments on each of the next two
anniversary dates of the date of grant. Mr. Clarke's options were forfeited
upon his resignation on February 1, 1995.
(5) Of the 15,000 subject to the first grant 25% of such options became
exercisable on the first anniversary of the date of grant (February 23,
1994) and the remaining 75% becomes exercisable in 25% increments on each of
the next three anniversaries of such date. The remaining 7,500 are subject
to the terms of (4) above. 18,750 of Mr. Kuwitzky's options were forfeited
upon his termination on March 9, 1995.
(6) The stock price required to produce this value is $26.09 and would produce a
corresponding $128,598,758 increase in total stockholder value based upon
22,772,934 shares of Common Stock outstanding on March 1, 1995.
(7) The stock price required to produce this value is $34.37 and would produce a
corresponding $301,610,810 increase in total stockholder value based upon
22,772,934 shares of Common Stock outstanding on March 1, 1995.
(8) The stock price required to produce this value is $32.92 and would produce a
corresponding $284,178,889 increase in total stockholder value based upon
22,772,934 shares of Common Stock outstanding on March 1, 1995.
(9) The stock price required to produce this value is $54.80 and would produce a
corresponding $165,853,770 increase in total stockholder value based upon
22,772,934 shares of Common Stock outstanding on March 1, 1995.
9
<PAGE> 13
AGGREGATED FY-END OPTION VALUES
Set forth below is supplemental information relating to the number and
intrinsic value of stock options held at December 31, 1994 ("FY-End"), by the
executive officers named in the preceding Summary Compensation Table. Year-end
values are based on the Company's stock price at December 31, 1994, do not
reflect the actual amounts, if any, which may be realized upon the future
exercise of remaining stock options, and should not be considered indicative of
future stock performance. No options were exercised by the individuals named in
the Summary Compensation Table during 1994.
AGGREGATED FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
--------------------- ---------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE(1)
---- --------------------- ---------------------
<S> <C> <C>
J. H. Lollar................................... 41,200/76,800 -0-/-0-
J. U. Clarke (2)............................... 7,500/33,000 -0-/-0-
H. B. Whitehead................................ 23,240/19,160 $ 10,050/$6,700
K. O. Kuwitzky (2)............................. 3,750/18,750 -0-/-0-
C. P. Cook..................................... 25,840/15,560 $ 10,000/$6,750
</TABLE>
---------------
(1) A stock option is considered to be "in-the-money" if the price of the
related stock is higher than the exercise price of the option. The closing
market price of the Common Stock was $14.50 per share as reported on the New
York Stock Exchange, Inc. Composite Transaction Reporting System for
December 31, 1994.
(2) All of Mr. Clarke's and Mr. Kuwitzky's unexercisable options were forfeited
upon termination.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR.
Shown below is information with respect to long term incentive awards made
to the executive officers named in the Summary Compensation Table.
LONG TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PERFORMANCE OR PAYOUTS UNDER NON-STOCK
NUMBER OF SHARES, OTHER PERIOD UNTIL PRICE-BASED PLANS
UNITS OR OTHER MATURATION OR ------------------------
NAME RIGHTS(1) PAYOUT(2) TARGET (#) MAXIMUM (#
---- ------------------ ------------------ ---------- -----------
<S> <C> <C> <C> <C>
J. H. Lollar.............................. 10,000 3 Years 10,000 15,000
J. U. Clarke.............................. 3,500 3 Years 3,500 5,250
H. B. Whitehead........................... 3,000 3 Years 3,000 4,500
K. O. Kuwitzky............................ 2,500 3 Years 2,500 3,750
C. P. Cook................................ 2,000 3 Years 2,500 3,750
</TABLE>
---------------
(1) Performance shares were awarded under the 1994 Long-Term Incentive Plan.
Each performance share represents the right to receive, after the end of the
performance period, from 0% to 150% of a share of Common Stock, based on the
Company's performance. The performance criteria that determines the number
of shares of Common Stock of the Company issued per performance share is the
relative total shareholder return on the Company's Common Stock as compared
to the total shareholder return on the common equity of each company in a
specified comparator group of 13 companies. For this purpose, total
shareholder return is expressed as a percentage equal to common stock price
appreciation as averaged for the first and last month of the performance
period plus dividends (on a cumulative reinvested basis). After the end of
each performance period, the Company will issue shares in respect to such
performance share award for such period based on the relative ranking of the
Company versus the comparator group for total shareholder return during the
performance period, using a specified scale. See "Compensation Committee
Report on Executive Compensation -- Long Term Incentives".
(2) The performance period began to run on July 1, 1994 and will end on June 30,
1997. Unless otherwise determined by the Compensation Committee, if a
participant's employment terminates prior to the end of a Performance
Period, no shares of Common Stock shall be issued to such participant. Due
to their separation from the Company, no shares will be issued to Mr. Clarke
or Mr. Kuwitzky.
10
<PAGE> 14
PENSION PLAN TABLE
Company employees are covered by the Company's Pension Plan (the "Pension
Plan"), a noncontributory defined benefit pension plan that provides benefits
based generally upon the employee's compensation levels during the last years of
employment. In addition, the Company has entered into agreements to supplement
the benefits payable to certain officers to the extent benefits under the
Pension Plan are limited by provisions of the Internal Revenue Code of 1986, as
amended (the "Code") or the Employee Retirement Income Security Act of 1974, as
amended. The following table sets forth estimated annual benefits payable for
eligible employees (including executive officers) who retire at age 65 under the
Pension Plan (and, where applicable, such supplemental agreements) for specified
earnings and years of service classification. Amounts shown are for employees
(including all persons listed in the Summary Compensation Table) who were not
"grandfathered" under the Pension Plan (based on years of service and age) as of
September 30, 1988.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------
REMUNERATION 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
125,000..................................... 26,666 35,555 44,444 53,333 62,221
150,000..................................... 32,291 43,055 53,819 64,583 75,346
175,000..................................... 37,916 50,555 63,194 76,833 88,471
200,000..................................... 43,541 58,055 72,569 87,083 101,596
225,000..................................... 49,166 65,555 81,944 98,333 114,721
250,000..................................... 54,791 73,055 91,319 109,583 127,846
275,000..................................... 60,416 80,555 100,694 120,833 140,971
300,000..................................... 66,041 88,055 110,069 132,083 154,096
400,000..................................... 88,541 118,055 147,569 177,083 206,596
450,000..................................... 99,791 133,055 166,319 199,583 232,846
500,000..................................... 111,041 148,055 185,069 222,083 259,096
600,000..................................... 133,541 178,055 222,569 267,083 311,596
</TABLE>
Compensation under the Pension Plan generally consists of base salary and
any short-term incentive payments. The Pension Plan provides for full vesting
after five years of service. Benefits are payable for the life of the employee
on a single-life annuity basis and are not subject to any deductions for Social
Security or other offset amounts. Covered compensation under the Pension Plan in
1994 for the executive officers named in the Summary Compensation Table is the
amounts under the "Salary" and "Bonus" columns set forth in such table. The
Company provides Mr. Lollar supplemental pension benefits by granting one
month's additional service credit for each month of actual service. For purposes
of the Pension Plan, including Mr. Lollar's supplemental pension benefits,
Messrs. Lollar, Clarke, Whitehead, Kuwitzky and Cook had 3.33, 1.33, 14.25, 0.80
and 10.00 years of credited service, respectively, as of December 31, 1994. Mr.
Clarke's and Mr. Kuwitzky's participation in the Company's Pension Plan
terminated unvested upon each of their separations from the Company.
11
<PAGE> 15
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee of the Company's Board of Directors ("the
Committee") is comprised of five disinterested, non-employee directors. The
Committee has responsibility for determining the salaries, incentive
compensation and other remuneration of the officers of the Company who are also
directors and for reviewing and approving the salaries, incentive compensation
and other remuneration of all other officers of the Company. The Committee also
approves the design of the Company's compensation and benefit plans.
The foundation of the executive compensation program is based on principles
designed to align compensation with business strategy, to create value for the
stockholders and to support a performance-based culture throughout the Company.
Consistent with these principles, the Committee's compensation policy for
executive officers, including the executive officers named in the foregoing
tables, is to:
- Tie total executive compensation to the performance of the Company,
providing both reward and penalty based on the Company's performance
compared to its peers and individual performance.
- Comprise a significant amount of the compensation as long-term, at-risk
pay to focus management on the long-term interests of the stockholders.
- Tie the at-risk components of pay primarily to equity-based opportunities
to encourage a personal proprietary interest in the Company and to align
executives' interests with those of stockholders. The Committee believes
this promotes a continuing focus on building stockholder value and
profitability.
- Enhance the Company's ability to attract, retain and encourage the
development of exceptionally knowledgeable and experienced executives
upon whom, in large part, the successful operation and management of the
Company depends.
The Committee also believes that executive compensation should be subject
to objective scrutiny. Consequently, the Committee retains the services of an
independent consultant, who on a regular basis evaluates the compensation
programs and practices for the Company's executive officers against a
competitive industry peer group.
COMPONENTS OF COMPENSATION
The Committee relates total compensation levels for the Company's senior
executives to the compensation paid to executives of a peer group of companies.
This peer group consists of companies that are in the same industry and are
considered by the Committee to be direct competitors for investment dollars in
the energy sector of the market. The Committee reviews and approves the
selection of the peer companies used for compensation comparison purposes.
Currently, the peer group is made up of twelve (12) companies.
The companies chosen for the peer comparator group used for compensation
purposes generally are not the same companies which comprise the Dow Jones
Secondary Oil's Index in the Performance Graph included in this proxy statement.
The Committee believes that the Company's most direct competitors for executive
talent are not necessarily all of the companies included in the Dow Jones
Secondary Oil's Index used for comparing stockholder returns.
The key elements of the Company's executive compensation program are base
salary, annual incentive bonus and long-term incentives. These key elements are
addressed separately below. In determining each component of compensation, the
Compensation Committee considers competitive data from the comparator group of
companies for each component of pay and the overall value of the total
compensation package. The Committee believes that the total compensation package
should be competitive and targeted at the median level of compensation for the
comparator group but that superior performance should reflect a corresponding
increase in value for short and long term incentives.
12
<PAGE> 16
BASE SALARIES
The Compensation Committee reviews each executive's base salary annually.
Base salaries are targeted at market levels and are adjusted by the Committee to
recognize varying levels of responsibility, prior experience, breadth of
knowledge, internal equity issues and external pay practices. Base salaries in
1994 for the executive officers named in the Summary Compensation Table as a
group were at, or near, the 50th percentile of the predicted competitive market
base salary for similar positions in the peer comparator group. Increases to
base salaries are driven primarily by individual performance.
As reflected in the Summary Compensation Table, Mr. Lollar's base salary
for 1994 increased by seven percent to reflect his performance and the external
market for his position.
ANNUAL INCENTIVE BONUS
The Annual Target Cash Incentive Plan promotes the Company's
pay-for-performance philosophy by providing executives with direct financial
incentives in the form of annual cash bonuses to achieve corporate business
goals and individual performance goals. Annual bonus opportunities allow the
Company to communicate specific goals that are of primary importance during the
coming year and motivate executives to achieve these goals.
A bonus pool is generated under the Annual Target Cash Incentive Plan when
the Company has met pre-determined performance goals which measure the Company's
success. These goals are approved by the Board of Directors each year in
conjunction with its approval of the Company's operating and capital spending
plans. Goals are set for finding costs, reserve additions, produced volumes,
operating cash flow, economic value added and other discretionary objectives. A
weighting factor is established for such goals with equal weight given to
financial performance criteria (50%) and operating measurement criteria (50%).
If a bonus pool is generated based upon achievement of the established Company
goals, executives earn bonuses to the extent pre-established individual
performance goals are achieved.
Individual targets are set at market levels which are considered by the
Compensation Committee to be appropriate, based upon corporate and individual
performance. The Company did not achieve the pre-determined performance goals in
1994 and therefore no bonuses were paid to executives.
LONG TERM INCENTIVES
The Company uses two types of awards to provide long term incentives to
executives: stock options and performance shares. The Committee places greater
emphasis on stock options as long term incentive awards for key executives but
also believes that performance share awards should be made to those individuals
who have a direct impact on the Company's profitability.
Stock options are granted at an option price not less than the fair market
value of the Common Stock on the date of grant. Accordingly, stock options have
value only if the stock price appreciates from the date the options are granted.
This design focuses executives on the creation of stockholder value over the
long term and encourages equity ownership in the Company.
The size of stock option grants is based primarily on competitive practice
and is generally targeted to be at the 50th percentile of option values granted
by the comparator companies. The Committee does not typically consider the
amount of options previously granted and outstanding when determining the size
of option grants to executive officers. The Committee's objective is to deliver
a competitive award opportunity based on the dollar value of the award granted.
As a result, the number of shares underlying stock option awards is dependent on
the stock price on the date of grant.
Performance shares, a form of stock award, are granted to executives under
the 1994 Incentive Plan. Each grant of performance shares has a three-year
performance period, which runs from July 1 of the initial year of the
performance period to June 30 of the third succeeding year.
13
<PAGE> 17
Each performance share represents the right to receive, after the end of
the performance period, from 0% to 150% of a share of Common Stock, based on the
Company's performance. The performance criteria that determines the number of
shares of Common Stock of the Company issued per performance share is the
relative total shareholder return on the Company's Common Stock as compared to
the total shareholder return on the common equity of each company in a
comparator group. For this purpose, total shareholder return is expressed as a
percentage equal to common stock price appreciation as averaged for the first
and last month of the performance period plus dividends (on a cumulative
reinvested basis). The comparator group consists of Anadarko Petroleum
Corporation, Apache Corporation, Burlington Resources, Inc. (Meridian Oil),
Devon Energy Corporation, Enron Oil & Gas Company, The Louisiana Land &
Exploration Company, Noble Affiliates, Inc., Oryx Energy Company, Parker &
Parsley Petroleum Company, Plains Petroleum Company, Santa Fe Energy Resources,
Inc. and Seagull Energy Corporation. If any member of the comparator group
ceases to have publicly traded common stock, it will be removed from the
comparator group.
After the end of each performance period, the Company will issue shares of
Common Stock in respect of each performance share award for such period based on
the relative ranking of the Company versus the comparator group for total
shareholder return during the performance period using the following scale:
<TABLE>
<CAPTION>
COMPANY PERCENT
RELATIVE PLACEMENT PERFORMANCE SHARES
------------------ ------------------
<S> <C>
1 (highest)....................................... 150%
2................................................. 140%
3................................................. 130%
4................................................. 120%
5................................................. 110%
6................................................. 100%
7................................................. 75%
8................................................. 50%
9................................................. 25%
10................................................. 0%
11................................................. 0%
12................................................. 0%
13 (lowest)........................................ 0%
</TABLE>
If a participant is not an employee on the last day of the relevant
performance period, no shares of Common Stock shall be issued in respect of the
participant's performance share award unless otherwise determined by the
Compensation Committee. Prior to the issuance of shares of Common Stock in
respect of a performance share award, the participant will have no right to vote
or receive dividends on such shares. Each award of performance shares may not be
assigned or transferred except by will or the laws of descent and distribution.
In the event the Company ceases to have publicly traded common stock as a result
of a business combination or other extraordinary transaction, the performance
period for each outstanding performance share award shall be terminated
effective upon the date of such cessation.
The performance share provisions are intended to constitute "qualified
performance based compensation" as defined under Section 162(m) of the Code,
with the effect that the deduction disallowance of Section 162(m) of the Code
should not be applicable to compensation paid to covered employees under the
performance share provisions. It is the Committee's intent that all long term
incentive awards will qualify under Section 162(m) of the Internal Revenue Code.
In 1994 Mr. Lollar received an option to purchase 30,000 shares of Common
Stock with an exercise price of $20.44 as detailed in the table on page 10. Mr.
Lollar now holds 10,000 shares of the Company's Common Stock and with the 1994
grant holds options to purchase an additional 118,000 shares. The Committee
believes this equity interest provides an appropriate link to the interests of
stockholders.
Concurrent with the award of stock options, Mr. Lollar received a
contingent grant of 10,000 performance shares with a three year performance
period commencing July 1, 1994. The final award may range from 0% to 150% of the
initial award amount based upon the Company's performance against the comparator
group as discussed above.
14
<PAGE> 18
CONCLUSION
The Committee believes these executive compensation policies and programs
serve the interests of stockholders and the Company effectively. The various pay
vehicles offered are appropriately balanced to provide increased motivation for
executives to contribute to the Company's overall future successes, thereby
enhancing the value of the Company for the stockholders' benefit.
We will continue to monitor the effectiveness of the Company's total
compensation program to meet the current needs of the Company.
Compensation Committee
Carl M. Mueller, Chairman
Samuel W. Bodman
Henry O. Boswell
C. Wayne Nance
William P. Vititoe
15
<PAGE> 19
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No member of the Compensation Committee was, during 1994, an officer or
employee of the Company or any of its subsidiaries, or formerly an officer of
the Company or any of its subsidiaries. During 1994, the Company had no
Compensation Committee interlocks.
SEVERANCE ARRANGEMENTS
John U. Clarke, Executive Vice President and Chief Financial Officer of the
Company resigned from the Company effective February 1, 1995. In connection with
his separation from the Company, Mr. Clarke received a lump sum cash payment of
$176,250, subject to applicable FICA and withholding for federal income taxes.
In addition, Mr. Clarke and the Company agreed upon a one-year nonexclusive
consulting arrangement under which he is to be paid (i) monthly in advance a
retainer of $8,688 and (ii) in arrears for each month the amount of $1,000 per
day for each day worked, with a minimum payment per month of $6,000. The
consulting arrangement, therefore, will result in a minimum total payment by the
Company to Mr. Clarke of $176,256. The Company also agreed to reimburse Mr.
Clarke for COBRA medical insurance premiums incurred until the termination of
the consulting arrangement described above.
Kirk O. Kuwitzky's, Vice President -- Marketing, employment with the
Company was terminated effective March 9, 1995 as part of a company-wide
reduction in force program. In connection with his separation, the Company has
agreed to pay Mr. Kuwitzky a lump sum payment of $175,000, subject to
applicable FICA and withholding for federal income taxes. The Company also
agreed to continue Mr. Kuwitzky's life insurance and medical benefits for a
period of nine months.
16
<PAGE> 20
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares the Common Stock ("COG") performance with the
performance of the Standard & Poor's 500 Stock Index and the Dow Jones Secondary
Oils Index for the period February 1990 (the date of the Company's initial
public offering) through the end of 1994. The graph assumes that the value of
the investment in the Company's Common Stock and in each index was $100 on
February 8, 1990 and that all dividends were reinvested.
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
Measurement Period DJ Secondary
(Fiscal Year Covered) S&P 500 COG Oils
<S> <C> <C> <C>
Feb 90 100 100 100
Dec 90 103 93 85
Dec 91 133 73 84
Dec 92 144 107 84
Dec 93 158 128 94
Dec 94 160 89 91
</TABLE>
17
<PAGE> 21
BENEFICIAL OWNERSHIP OF OVER FIVE PERCENT OF COMMON STOCK
The following table reports beneficial ownership by holders of more than
five percent of the Common Stock. All ownership information is based upon
filings made by such persons with the Securities and Exchange Commission (the
"Commission") except as hereafter described.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME AND ADDRESS OF OF COMMON STOCK PERCENT OF
BENEFICIAL OWNER OWNED CLASS
------------------- --------------- ----------
<S> <C> <C>
Washington Energy Company................................. 2,133,000(1) 9.3%
815 Mercer Street
Seattle, WA 98111
FMR Corp.................................................. 1,324,828(2) 5.8%
82 Devonshire Street
Boston, MA 02109
Wellington Management Company............................. 2,331,283(3) 10.2%
75 State Street
Boston, MA 02109
The Prudential Insurance Company of America............... 1,760,460(4) 7.7%
751 Broad Street
Newark, N.J. 07102
Vanguard/Windsor Funds, Inc............................... 1,325,000(5) 5.8%
Post Office Box 2600
Valley Forge, PA 19482
</TABLE>
---------------
(1) On May 2, 1994, the Company and Washington Energy Company ("WECO") completed
the transaction to merge a subsidiary of the Company and Washington Energy
Resources Company ("WERCO"), a subsidiary of WECO. The Company acquired the
stock of WERCO in a tax-free exchange for total consideration of
approximately $168 million, subject to certain adjustments. The Company
issued to WECO 2,133,000 shares of Common Stock and 1,134,000 shares of 6%
Preferred Stock in exchange for the capital stock of WERCO. The 6% Preferred
Stock has a stated value of $50.00 per share and is convertible into
1,972,174 shares of the Company's Common Stock at $28.75 per share. WECO is
entitled to 1.739 votes for each share of 6% Preferred Stock held and vote
together with the holders of the Common Stock on all matters to be voted on
by the holders of the Common Stock, with certain exceptions when voting as a
class is required. Assuming full conversion of the 6% Preferred Stock into
shares of Common Stock, WECO will hold approximately 16% of the outstanding
Common Stock of the Company. Because of the size of WECO's investment in the
Company, as a part of the transaction, WECO was entitled to nominate two
persons to serve on the Company's Board of Directors. Messrs. Bailey and
Vititoe serve on behalf of WECO.
(2) According to Amendment No. 4 to a Schedule 13G, dated January 6, 1995, filed
with the Commission by FMR Corp., a Massachusetts corporation, it has sole
voting power over 128,200 of these shares and sole dispositive power over
all of these shares.
(3) According to Amendment No. 5 to a Schedule 13G, dated January 24, 1995,
filed with the Commission by Wellington Management Company, a Massachusetts
corporation, it has shared voting power over 55,310 of these shares and
shared dispositive power over all of these shares. This amount includes the
shares beneficially owned by The Windsor Fund, Inc. See Note (5) below.
(4) According to an Amendment No. 1 to a Schedule 13G, dated January 31, 1995,
filed with the Commission by The Prudential Insurance Company of America, a
New Jersey corporation, it has shared voting and dispositive power over
899,200 of these shares.
(5) According to Amendment No. 3 to a Schedule 13G, dated February 10, 1995,
filed with the Commission by Vanguard/Windsor Funds, Inc., a Maryland
corporation, it has sole voting power and shared dispositive power over
these shares. Wellington Management Company shares beneficial ownership over
all of these shares with, and is the investment advisor to, Vanguard/
Windsor Funds, Inc.
18
<PAGE> 22
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reports, as of March 1, 1995, beneficial ownership of
Common Stock by each current director of the Company, by each executive officer
listed in the Summary Compensation Table and by all directors and executive
officers as a group. Unless otherwise indicated, the persons below have sole
voting and investment power with respect to the shares of Common Stock shown as
beneficially owned by them. All ownership information is based upon filings made
by such persons with the Commission.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON PERCENT
NAME OF BENEFICIAL OWNER STOCK OWNED OF CLASS
------------------------ ---------------- --------
<S> <C> <C>
Robert F. Bailey....................................... 500
Samuel W. Bodman....................................... 149,969(1) *
Henry O. Boswell....................................... 14,000(2) *
John G.L. Cabot........................................ 255,845(3) 1.12
William R. Esler....................................... 8,500(4) *
William H. Knoell...................................... 11,000(5) *
John H. Lollar......................................... 51,200(6) *
Carl M. Mueller........................................ 14,000(7) *
C. Wayne Nance......................................... 7,500(8) *
Charles P. Siess, Jr................................... 189,949(9) *
William P. Vititoe..................................... -0-
John U. Clarke......................................... 11,600(10) *
H. Baird Whitehead..................................... 27,752(11) *
Kirk O. Kuwitzky....................................... 3,908(12)
Curtis P. Cook......................................... 38,424(13) *
All directors and executive officers as a group (20
individuals)......................................... 847,586(14) 3.7
</TABLE>
---------------
* Represents less than 1% of the outstanding Common Stock.
(1) Includes 950 shares for which Mr. Bodman is the indirect owner as Trustee
of the Elizabeth L. Bodman Trust, as to which Mr. Bodman disclaims
beneficial ownership, and 3,334 shares purchasable upon the exercise of
options within 60 days.
(2) Includes 10,000 shares purchasable upon the exercise of options within
sixty days.
(3) Includes 1,782 shares held by Mr. Cabot's spouse and 123,859 shares held by
various trusts in which Mr. Cabot serves as co-trustee, as to all of which
Mr. Cabot shares voting and investment power; Mr. Cabot disclaims
beneficial ownership of such shares. Also includes 3,334 shares purchasable
upon the exercise of options within 60 days.
(4) Includes 4,500 shares purchasable upon the exercise of options within sixty
days.
(5) Includes 10,000 shares purchasable upon the exercise of options within
sixty days.
(6) Includes 41,200 shares purchasable upon the exercise of options within
sixty days.
(7) Includes 10,000 shares purchasable upon the exercise of options within
sixty days and 237 shares held by Mr. Mueller's spouse, as to which Mr.
Mueller disclaims beneficial ownership.
(8) Includes 7,500 shares purchasable upon the exercise of options within sixty
days.
(9) Includes 139,334 shares purchasable upon the exercise of options within
sixty days.
(10) Includes 7,500 shares purchasable upon the exercise of options at February
1, 1995, the date of Mr. Clarke's resignation from the Company.
(11) Includes 1,308 shares held in the Company's Savings Investment Plan as to
which Mr. Whitehead shares voting and investment power and 23,240 shares
purchasable upon the exercise of options within sixty days.
(12) Includes 157.71 shares held in the Company's Savings Investment Plan as to
which Mr. Kuwitzky shares voting and investment power and 3,750 shares
purchasable upon the exercise of options within sixty days.
(13) Includes 45 shares held in the Company's Savings Investment Plan as to
which Mr. Cook shares voting and investment power and 25,840 shares
purchasable upon the exercise of options within sixty days.
(14) Includes 5,200 shares held in the Company's Savings Investment Plan as to
which the executive officers share voting and investment power and 359,352
shares purchasable by the executive officers and directors upon the
exercise of options within sixty days. See also Notes 1-13 above.
19
<PAGE> 23
FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in the proxy statement for
the 1996 Annual Meeting of Stockholders of the Company should be sent to Ms.
Molly S. Williams, Secretary, Cabot Oil & Gas Corporation, 15375 Memorial Drive,
Houston, Texas 77079 and must be received by December 2, 1995.
SOLICITATION OF PROXIES
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to solicitation by mail, officers, employees or agents of
the Company may solicit proxies personally, by telephone and by telegraph. The
Company may request banks and brokers or other similar agents or fiduciaries to
transmit the proxy material to the beneficial owners for their voting
instructions and will reimburse them for their expenses in so doing. Morrow &
Co., Inc. has been retained to assist the Company in the solicitation of proxies
at a fee to the Company estimated not to exceed $6,500.
MISCELLANEOUS
The Company's management does not know of any matters to be presented at
the Annual Meeting other than those set forth in the Notice of Annual Meeting of
Stockholders. However, if any other matters properly come before the Meeting,
the persons named in the enclosed proxy intend to vote the shares to which the
proxy relates on such matters in accordance with their best judgment unless
otherwise specified in the proxy.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ MOLLY S. WILLIAMS
MOLLY S. WILLIAMS
Secretary
March 31, 1995
20
<PAGE> 24
EXHIBIT A
CABOT OIL & GAS CORPORATION
INCENTIVE STOCK OPTION PLAN
FIRST AMENDMENT
Cabot Oil & Gas Corporation (the "Company") has previously established the
Cabot Oil & Gas Corporation Incentive Stock Option Plan (the "Plan") which was
approved by the Company's Board of Directors on January 15, 1990 and approved by
its stockholders on January 29, 1990. Subject to stockholder approval, the Board
of Directors of the Company hereby amends Section 7 Termination of Employment of
the Plan effective as of March 1, 1995, as follows:
(i) Paragraphs (a) and (b) of Section 7 are deleted in their entirety and
are replaced by the following:
"(a) Upon the termination of employment by a Participant, any
unexercised, deferred or unpaid Awards shall be treated as provided in
the agreement evidencing such Award. In the event of such termination,
the Committee may, in its discretion provide for the extension of the
exercisability of an Award, accelerate the vesting of exercisability
of an Award, eliminate or make less restrictive any restrictions
contained in an Award, waive any restrictions of the Plan or an Award
or modify the Award in any manner that is either (i) not adverse to
such Participant or (ii) consented to by such Participant."
(ii) The heading of paragraph "(c)" of Section 7 is hereby amended to read
"(b)".
IN WITNESS WHEREOF, the Company has executed this First Amendment by its
duly authorized representative the 23rd day of February, 1995 to be effective as
of March 1, 1995, subject to the approval of the Company's stockholders.
CABOT OIL & GAS CORPORATION
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[CABOT OIL & GAS CORPORATION LOGO]
<PAGE> 26
CABOT OIL & GAS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1995
P
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R
The undersigned acknowledges receipt of the Notice of Annual
O Meeting of Stockholders and the Proxy Statement, each dated March 31,
1995, and appoints Lisa A. Machesney and Molly S. Williams, or either of
X them, for the undersigned, with power of substitution, to vote of the
undersigned's shares of common stock of Cabot Oil & Gas Corporation
Y at the Annual Meeting of Stockholders to be held at the Ritz-Carlton
Hotel in Houston, Texas at 10:00 a.m., on May 18, 1995, and at any
adjournments or postponements thereof.
| THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
| THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
| BE VOTED FOR ITEMS 1, 2 AND 3 AND WILL GRANT DISCRETIONARY AUTHORITY
| PURSUANT TO ITEM 4.
THIS PROXY WILL REVOKE ALL PRIOR PROXIES SIGNED BY YOU.
* * * * * * * *
CONTINUE AND TO BE SIGNED ON REVERSE SIDE * SEE REVERSE *
* SIDE *
* * * * * * * *
/X/ Please mark
votes as in
this example
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ITMES 1, 2 AND 3.
1. ELECTION OF DIRECTORS (check one box only):
Nominees: Robert F. Bailey, John G.L. Cabot, William H. Knoell, and
C. Wayne Nance
/ / FOR / / WITHHELD
For, except vote withheld from the following nominee(s)
/ /
_____________________________________________________
2. Adoption of an Amendment to the Incentive Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratification of the appointment of Coopers & Lybrand LLP as the Company's
independent certified public accountants.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments or
postponements thereof.
MARK HERE / /
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
Please date this proxy and sign your same exactly as it appears herein, in the
case of one or more joint owners, each joint owner should sign. If signing as
executor, trustee, guardian, attorney, or in any other representative capacity
or as an officer of a corporation, please indicate your full title as such.
Signature: ______________________________________ Date _______________________
Signature: ______________________________________ Date _______________________
