<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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
March 31, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Cabot Oil & Gas Corporation to be held on Tuesday, May 9, 2000 at 10:00 a.m.,
local time, at our corporate headquarters, Cabot Oil & Gas Corporation, First
Floor, 1200 Enclave Parkway, 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 future 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, or if your proxy card
or voting instructions form so indicates, vote electronically via the Internet
or telephone.
Sincerely,
RAY R. SEEGMILLER
Chairman of the Board
<PAGE> 3
CABOT OIL & GAS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
The Annual Meeting of Stockholders of Cabot Oil & Gas Corporation (the
"Company"), a Delaware corporation, will be held at the Company's corporate
headquarters, 1200 Enclave Parkway, Houston, Texas 77077, on Tuesday, May 9,
2000 at 10:00 a.m., for the following purposes:
I. To elect four persons to the Board of Directors of the Company.
II. To ratify the appointment of the firm of PricewaterhouseCoopers
LLP, independent certified public accountants, as auditors of the
Company for its 2000 fiscal year.
III. To transact such other business as may properly come before the
meeting or any adjournments or postponements 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 15, 2000 are
entitled to receive notice of and to vote at the Annual Meeting. The transfer
books of the Company will not be closed.
It is important that your shares be represented and voted at the Annual
Meeting. Stockholders are urged to vote their shares by one of the following
methods whether or not they plan to attend the Annual Meeting:
o vote over the Internet or by telephone using the instructions on
the proxy card, if this option is available to you (please refer
to your proxy card to determine if this option is available to
you); or
o complete, sign, date and return the accompanying proxy card in
the enclosed, self-addressed envelope (the self-addressed
envelope requires no postage if mailed in the United States).
You may still vote in person if you do attend the Annual Meeting.
Please exercise your right to vote at your earliest convenient time.
BY ORDER OF THE BOARD OF DIRECTORS,
LISA A. MACHESNEY
Corporate Secretary
Houston, Texas
March 31, 2000
<PAGE> 4
CABOT OIL & GAS CORPORATION
1200 Enclave Parkway
Houston, Texas 77077
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
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 2000 Annual Meeting of Stockholders, to be held at the
Company's corporate headquarters, 1200 Enclave Parkway, Houston, Texas, on
Tuesday, May 9, 2000, at 10:00 a.m., or any adjournment or postponement thereof
(the "Annual Meeting"), 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. Lisa A. Machesney, Corporate 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 ratification of the appointment of PricewaterhouseCoopers LLP,
independent certified public accountants, as auditors of the Company for its
2000 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 15,
2000, are entitled to vote at the Annual Meeting. As of that date, the Company
had outstanding and entitled to vote 25,098,846 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. The
Proxy Statement and form of Proxy are being first sent or given to security
holders on or about March 31, 2000.
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.
PROPOSAL I.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of directors
serving staggered three-year terms. Henry O. Boswell, William R. Esler, Charles
P. Siess, Jr., and P. Dexter Peacock 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 2003 and until his successor shall have been elected
and shall have qualified. Each nominee is currently a director of the Company.
<PAGE> 5
It is the intention of the persons named in the enclosed form of proxy
to vote such proxies for the election of Messrs. Boswell, Esler, Siess and
Peacock 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 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, 2000, 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. It is expected that Messrs. Knoell, Esler and Siess will
retire from the Board at the Board of Directors meeting immediately following
the 2000, 2001 and 2002 Annual Meetings of Stockholders, respectively, in
accordance with the Board's mandatory retirement guidelines. Mr. Samuel W.
Bodman, a director since 1989, resigned from the Board of Directors on December
8, 1999.
<TABLE>
<S> <C>
ROBERT F. BAILEY
Age: 67
Committee Membership: Audit, Safety and Environmental Affairs
Director Since: 1994
Term of Office Expires: 2001
[PHOTO] Business Experience:
TransRepublic Resources, Inc.
President and Chief Executive Officer - 1992 to present
Alta Energy Corporation
President and Chief Executive Officer - prior to 1992
Other Directorships:
Chase Bank Texas - Midland - Advisory Director
HENRY O. BOSWELL
Age: 70
Committee Membership: Compensation, Compensation Subcommittee, Audit (Chairman)
Director Since: 1991
Term of Office Expires: 2000 (Nominee for Director)
Business Experience:
Retired October 1987
[PHOTO] 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:
Rowan Companies, Inc.
</TABLE>
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<PAGE> 6
<TABLE>
<S> <C>
JOHN G.L. CABOT
Age: 65
Committee Memberships: Safety and Environmental Affairs, Nominations (Chairman)
Director Since: 1989
Term of Office Expires: 2001
Business Experience:
[PHOTO] Retired September 1995
Cabot Corporation
Chief Financial Officer - October 1992 to September 1995
Vice Chairman of the Board - October 1988 to September 1995
Other Directorships:
Cabot Corporation
Eaton Vance Corp.
WILLIAM R. ESLER
Age: 74
Committee Membership: Audit, Safety and Environmental Affairs
Director Since: 1992
Term of Office Expires: 2000 (Nominee for Director)
Business Experience:
[PHOTO] Retired 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
WILLIAM H. KNOELL
Age: 75
Committee Membership: Audit, Safety and Environmental Affairs (Chairman)
Director Since: 1990
Term of Office Expires: 2001
Business Experience:
[PHOTO] Retired September 1989
Cyclops Industries, Inc.
Chairman, President and Chief Executive Officer - 1987 to September 1989
Director until April 1992
Other Directorships:
DQE Corporation
Carnegie Mellon University, Life Trustee
</TABLE>
-3-
<PAGE> 7
<TABLE>
<S> <C>
C. WAYNE NANCE
Age: 68
Committee Memberships: Nominations, Compensation (Chairman), and Compensation Subcommittee (Chairman)
Director Since: 1992
Term of Office Expires: 2001
[PHOTO] 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
Other Directorships:
Matador Petroleum Corporation
P. DEXTER PEACOCK
Age: 58
Committee Memberships: Audit, Safety and Environmental Affairs
Director Since: 1998
Term of Office Expires: 2000 (Nominee for Director)
[PHOTO] Business Experience:
Andrews & Kurth L.L.P.
Of Counsel - January 1998 to present
Partner - 1991 to 1997
Managing Partner - 1986 to 1991
Other Directorships:
Chase Bank of Houston, N.A.
RAY R. SEEGMILLER
Age: 64
Position: Chairman, President and Chief Executive Officer
Director Since: 1997
Term of Office Expires: 2002
Business Experience:
Cabot Oil & Gas Corporation
Chairman, President and Chief Executive Officer - May 1999 to present
President and Chief Executive Officer - May 1998 to May 1999
[PHOTO] President and Chief Operating Officer - September 1997 to May 1998
Executive Vice President and Chief Operating Officer - March 1997 to September 1997
Vice President, Chief Financial Officer and Treasurer - August 1995 to March 1997
RCS Enterprises, Inc.
President and Chief Executive Officer - May 1993 to June 1995
Terry Petroleum Company
President and Chief Executive Officer - May 1988 to April 1993
Other Directorships:
Domestic Petroleum Counsel - Vice Chairman
Independent Petroleum Association of America
</TABLE>
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<PAGE> 8
<TABLE>
<S> <C>
CHARLES P. SIESS, JR.
Age: 73
Director Since: 1989
Committee Memberships: Nominations, Safety and Environmental Affairs
Term of Office Expires: 2000 (Nominee for Director)
Business Experience:
Retired May 1999
[PHOTO] Cabot Oil & Gas Corporation
Chairman of the Board - May 1998 to May 1999
Chairman of the Board and Chief Executive Officer - September 1997 to May 1998
Chairman of the Board, Chief Executive Officer and President - May 1995 to September 1997 and
December 1989 to December 1992
Bridas S.A.P.I.C. Oil Exploration
Consultant and Acting General Manager - January 1993 to January 1994
Other Directorships:
Rowan Companies, Inc.
ARTHUR L. SMITH
Age: 47
Director Since: 1999 (elected by the Board of Directors in October 1999)
Committee Memberships: Audit, Compensation
Term Office Expires: 2002
Business Experience:
John S. Herold, Inc. (petroleum research and consulting)
[PHOTO] Chairman and Chief Executive Officer - May 1999 to present
Torch Energy Advisors (energy financial and operational outsourcing)
Chairman and Chief Executive Officer - June 1998 to November 1998
John S. Herold, Inc.
Chairman and Chief Executive Officer - December 1984 to May 1998
Other Directorships:
Plains All American, Inc.
John S. Herold, Inc.
</TABLE>
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<PAGE> 9
<TABLE>
<S> <C>
WILLIAM P. VITITOE
Age: 61
Director Since: 1994
Committee Memberships: Compensation, Compensation Subcommittee, Nominations
Term of Office Expires: 2002
Business Experience:
Retired May 1998
Consultant to Puget Sound Energy, Inc. - February 1997 to May 1998
[PHOTO] Washington Energy Company
Chairman of the Board, Chief Executive Officer and President - January 1994 to February 1997
ANR Pipeline Company
President and Chief Executive Officer - October 1990 to December 1993
Other Directorships:
Aegis Software
Comerica Bank
Michigan Mutual/Amerisure
Midwest Independent System Operator, Inc.
</TABLE>
INFORMATION ON THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held six meetings during the year ended December
31, 1999. The Board of Directors has five standing committees: the Audit
Committee, the Compensation Committee, the Compensation Subcommittee, 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 internal audit activities and
recommendations. 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 1999.
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, and supplemental retirement
plans, including the adoption of the rules and regulations therefore 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 three meetings during 1999.
The Compensation Subcommittee was created by the Board of Directors in
December 1999 to ensure each member is an "outside director" as defined for
purposes of Section 162(m) of the Internal Revenue Code. It administers the
Company's Amended and Restated 1994 Long-Term Incentive Plan and Incentive Stock
Option Plan, including the adoption of the rules and regulations therefore and
the determination of awards. The Compensation Subcommittee held no meetings
during 1999.
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. Lisa A. Machesney, Corporate Secretary,
Cabot Oil & Gas Corporation, 1200 Enclave Parkway, Houston, Texas 77077. The
Nominations Committee held two meetings during 1999.
The Safety and Environmental Affairs Committee reviews the Company's
safety and environmental management programs and evaluates major hazard
analyses. From time to time, it also reviews the nature of and extent of Company
spending for safety and environmental compliance. It further consults with
outside and internal advisors of the Company
-6-
<PAGE> 10
regarding the management of the Company's safety and environmental programs. The
Safety and Environmental Affairs Committee held two meetings during 1999.
With the exception of Messrs. Nance and Siess, all directors attended
75% or more of the meetings of the Board of Directors and of the committees held
while they were members during 1999. Mr. Nance attended 72% and Mr. Siess
attended 70% of the meetings of the Board of Directors and the committees upon
which they served during 1999.
DIRECTOR COMPENSATION
Directors who are not employees of the Company were compensated during
1999 by the payment of a quarterly cash fee of $6,000, plus $1,000 for
attendance by them at each Board meeting and $1,000 for attendance at each
meeting of a committee of which they are a member, with the exception of the
Compensation Subcommittee. Members of the Compensation Subcommittee receive no
additional fees for their services on this committee. 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. In lieu of the above stated fees, Mr. Siess,
during his tenure as Chairman of the Board, received for the period June 1, 1998
to June 1, 1999 a fee of $225,000, payable monthly in arrears in twelve
installments of $18,750 per month.
Non-employee 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
Amended and Restated 1994 Nonemployee Director Stock Option Plan. In addition,
nonemployee directors also receive a nondiscretionary automatic grant of a
nonqualified option to purchase an additional 5,000 shares of Common Stock at
each annual meeting of stockholders under the Amended and Restated 1994
Nonemployee Director Stock Option Plan. Directors who are employees of the
Company receive no additional compensation for their duties as directors. All
directors were reimbursed for travel expenses incurred for attending all Board
and committee meetings.
PROPOSAL II.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation by the Audit Committee, has
approved and recommended the appointment of PricewaterhouseCoopers LLP,
independent public accountants, as auditors to examine the Company's financial
statements for 2000. 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 PricewaterhouseCoopers LLP as auditors of the Company.
A representative of PricewaterhouseCoopers LLP 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.
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<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 other most
highly compensated executive officers who were serving as of December 31, 1999
for all services rendered to the Company and its subsidiaries during each of the
last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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Annual Compensation Long-Term Compensation
-----------------------------------------------------------------------------
Awards Payouts
--------------------------------------
Name and Year Salary ($) Bonus Other Annual Restricted Securities LTIP All Other
Principal Position ($) Compensation Stock Underlying Payouts Compensation
($) (1) Awards ($) Options ($) (10) ($) (12)
(3) (4) (#) (11)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ray R. Seegmiller 1999 375,000 200,000 18,806 0(5) 70,000 101,999 10,000
Chairman, President and 1998 339,042 99,000 20,246 0 62,000 0 10,000
Chief Executive Officer 1997 319,111 200,000 13,950 187,000 10,000 0 9,029
H. Baird Whitehead 1999 215,000 83,700 6,283 0(6) 16,000 78,461 9,976
Senior Vice President 1998 198,333 34,400 9,696 0 10,000 44,813 10,000
1997 183,750 120,000 7,294 102,000 5,000 0 8,142
James M. Trimble 1999 215,000 80,700 8,182 0(7) 16,000 78,461 10,000
Senior Vice President 1998 210,833 37,800 9,328 0 12,000 28,008 10,000
1997 182,083 125,000 9,230 102,000 5,000 0 9,017
Michael B. Walen 1999 160,000 60,000 3,811 0(8) 15,000 0 7,360
Vice President - 1998 150,417 24,000 13,490(2) 0 10,000 0 8,097
Regional Manager 1997 127,611 52,000 7,128 51,000 0 0 5,892
Jeffrey W. Hutton 1999 155,000 51,700 2,828 0(9) 15,000 62,769 7,156
Vice President - Marketing 1998 149,792 23,900 2,846 0 10,000 22,406 8,792
1997 139,375 70,000 3,002 85,000 4,000 0 7,775
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</TABLE>
1/ The amount in this column represents premiums paid on and a tax gross-up
for imputed income on executive term life insurance and a tax gross-up on
club dues. 1999 premiums paid on and a tax gross-up for imputed income on
executive term life insurance represents $14,480, $1,826, $2,947, $2,139,
and $785 for Messrs. Seegmiller, Whitehead, Trimble, Walen and Hutton,
respectively. The tax gross-up on club dues represents $4,326, $4,457,
$5,235, $1,672 and $2,043 for Messrs. Seegmiller, Whitehead, Trimble, Walen
and Hutton, respectively.
2/ Also includes a $9,874 tax gross up for imputed income on relocation
expenses.
3/ The amount in this column for 1997 represents the value of restricted stock
grants made to the named executive on May 5, 1997 based on closing market
prices on such date of $17.00, as reported on the New York Stock Exchange,
Inc. Composite Transactions Reporting System.
4/ Messrs. Seegmiller, Whitehead, Trimble, Walen and Hutton were granted
11,000, 6,000, 6,000, 3,000 and 5,000 shares of restricted stock,
respectively, on May 5, 1997. The restrictions on these shares lapse in
full in three years from the date of grant.
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<PAGE> 12
5/ Mr. Seegmiller holds a total of 11,000 shares of restricted stock as of
December 31, 1999. The market value of the 11,000 shares at December 31,
1999 was $184,719. No dividends are paid on the restricted stock held.
6/ Mr. Whitehead holds a total of 6,000 shares of restricted stock as of
December 31, 1999. The market value of the 6,000 shares at December 31,
1999 was $96,375. No dividends are paid on the restricted stock held.
7/ Mr. Trimble holds a total of 6,000 shares of restricted stock as of
December 31, 1999. The market value of the 6,000 shares at December 31,
1999 was $96,375. No dividends are paid on the restricted stock held.
8/ Mr. Walen holds a total of 3,000 shares of restricted stock as of December
31, 1999. The market value of the 3,000 shares at December 31, 1999 was
$48,188. No dividends are paid on the restricted stock held.
9/ Mr. Hutton holds a total of 5,000 shares of restricted stock as of December
31, 1999. The market value of the 5,000 shares at December 31, 1999 was
$80,313. No dividends are paid on the restricted stock held.
10/ The amount in this column next to the year 1999 represents the value of a
performance share payout of 5,395, 4,150, 4,150 and 3,320 shares of Common
Stock to Messrs. Seegmiller, Whitehead, Trimble and Hutton respectively,
for the performance period July 1, 1996 through June 30, 1999, based upon
the average of the high and low trading prices on the date the shares were
issued of $18.90625, as reported on the New York Stock Exchange, Inc.
Composite Transactions Reporting System.
11/ The amount in this column next to the year 1998 represents the value of a
performance share payout of 3,000, 1,875, and 1,500 shares of Common Stock
to Messrs. Whitehead, Trimble, and Hutton, respectively, for the
performance period July 1, 1995 through June 30, 1998, based upon the
average of the high and low trading prices on the date the shares were
issued of $14.9375, as reported on the New York Stock Exchange, Inc.
Composite Transactions Reporting System.
12/ The amount in this column represents the Company's contributions to the
401(k) Plan and the associated nonqualified agreement or the associated
nonqualified Deferred Compensation Plan on behalf of the named executive.
OPTION GRANTS IN LAST FISCAL YEAR
Set forth below is certain information relating to the Company's grants
of options during 1999 to the executive officers named in the preceding Summary
Compensation Table, including the relative size of each grant, and each grant's
exercise price and expiration date. Also included is information relating to the
potential realizable value of the options granted, based upon assumed annualized
stock value appreciation rates. Neither the option values reflected in the table
nor the assumptions utilized in arriving at the values should be considered
indicative of future stock performance.
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<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value at Assumed Annual Rates
of Stock Price Appreciation
for Option Term
- --------------------------------------------------------------------------------------------------------------------------
Percent of
Number of Total
Securities Options
Underlying Granted to
Options Employees Exercise
Granted in Fiscal Price Expiration
Name (#) (1) (2) Year ($/Sh) (3) Date (4) 5% ($)(5) 10% ($)(6)
- ---------------------- --------------- ------------- -------------- ----------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
R.R. Seegmiller 70,000 17.8% $17.4375 May 11, 2004 $337,239 $745,206
H.B. Whitehead 16,000 4.1% $17.4375 May 11, 2004 $77,083 $170,333
J.M. Trimble 16,000 4.1% $17.4375 May 11, 2004 $77,083 $170,333
M.B. Walen 15,000 3.8% $17.4375 May 11, 2004 $72,266 $159,687
J.W. Hutton 15,000 3.8% $17.4375 May 11, 2004 $72,266 $159,687
- ---------------------- --------------- ------------- -------------- ----------------- ---------------- -------------------
</TABLE>
1/ There were no adjustments or amendments during 1999 to the exercise price
of stock options previously awarded to any of the named executive officers.
2/ For each of the named executive officers, 33 1/3% of each option becomes
exercisable on the first anniversary of the date of grant (May 11, 2000)
and the remainder of such option becomes exercisable in 33 1/3% increments
on each of the next two anniversaries of such date.
3/ Equal to 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.
4/ 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 to
satisfy tax obligations.
5/ The stock price required to produce this value is $22.2552 and would
produce a corresponding $120,905,857 increase in total stockholder value
based upon 25,096,178 shares of Common Stock outstanding on March 1, 2000.
6/ The stock price required to produce this value is $28.0833 and would
produce a corresponding $267,168,892 increase in total stockholder value
based upon 25,096,178 shares of Common Stock outstanding on March 1, 2000.
AGGREGATED FY-END OPTION VALUES
Set forth below is supplemental information relating to options
exercised during 1999 and the number and intrinsic value of stock options held
at December 31, 1999 ("FY-End"), by the executive officers named in the
preceding Summary Compensation Table. Year-end values are based on the Company's
stock price at December 31, 1999, do not reflect the actual amounts, if any,
which may be realized upon the future exercise of remaining stock options, and
should not be considered indicative of future stock performance.
-10-
<PAGE> 14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at FY-End (#) Options at FY-End ($)
- ------------------------------- --------------- --------------- -------------------------- ------------------------
Shares Value Exercisable/ Exercisable/
Name Acquired on Realized ($) Unexercisable Unexercisable (2)
Exercise (#) (1)
- ------------------------------- --------------- --------------- -------------------------- ------------------------
<S> <C> <C> <C> <C>
R.R. Seegmiller n/a n/a 67,333/114,667 $50,000/0
H.B. Whitehead 12,000 $43,125 55,068/24,332 $46,688/0
J.M. Trimble n/a n/a 65,234/25,666 $43,313/0
M.B. Walen n/a n/a 18,334/21,666 $11,813/0
J.W. Hutton n/a n/a 30,001/22,999 $10,125/0
- ------------------------------- --------------- --------------- -------------------------- ------------------------
</TABLE>
1/ Value realized equals the fair market value of the Common Stock on the date
of exercise (average of the high and low trading price) less the exercise
price, times the number of shares acquired.
2/ 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 $16.0625 per share as reported on the
New York Stock Exchange, Inc. Composite Transactions Reporting System for
December 31, 1999.
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
There were no additional long-term incentive awards made in 1999 to the
executive officers named in the Summary Compensation Table.
PENSION PLAN TABLE
Company employees are covered by the Company's Pension Plan (the
"Pension Plan"), a noncontributory defined benefit 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.
-11-
<PAGE> 15
PENSION PLAN TABLE
<TABLE>
<CAPTION>
REMUNERATION YEARS OF SERVICE
- ------------------- --------------------------------------------------------------------------------------------------
5 10 15 20 25 30 35
- ------------------- ------------- ------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
125,000 8,714 17,428 26,141 34,855 43,569 52,283 60,997
150,000 10,589 21,178 31,766 42,355 52,944 63,533 74,122
175,000 12,464 24,928 37,391 49,855 62,319 74,783 87,247
200,000 14,339 28,678 43,016 57,355 71,694 86,033 100,372
225,000 16,214 32,428 48,641 64,855 81,069 97,283 113,497
250,000 18,089 36,178 54,266 72,355 90,444 108,533 126,622
275,000 19,964 39,928 59,891 79,855 99,819 119,783 139,747
300,000 21,839 43,678 65,516 87,355 109,194 131,033 152.872
350,000 25,589 51,178 76,766 102,355 127,944 153,533 179,122
400,000 29,339 58,678 88,016 117,355 146,694 176,033 205,372
500,000 36,839 73,678 110,516 147,355 184,194 221,033 257,872
600,000 44,339 88,678 133,016 177,355 221,694 266,033 310,372
700,000 51,839 103,678 155,516 207,355 259,194 311,033 362,872
- ------------------- ------------- ------------- ------------- ------------- ------------- ------------- --------------
</TABLE>
Compensation under the Pension Plan generally consists of taxable
income and 401(k) deferred amounts. 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
1999 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. Seegmiller 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. Seegmiller's supplemental pension benefits,
Messrs. Seegmiller, Whitehead, Trimble, Walen and Hutton had 9.00, 19.25, 16.67,
12.57 and 14.75 years of credited service, respectively, as of December 31,
1999.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee and the Compensation Subcommittee of the
Board of Directors administer the Company's compensation programs. The
Compensation Committee (the "Committee") is comprised of four non-employee
directors: Mr. Nance, Chairman, and Messrs. Boswell, Smith and Vititoe. The
Committee has responsibility for determining the salaries, annual incentive
compensation and other remuneration of the officers of the Company who are also
directors and for reviewing and approving the salaries, annual 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 Compensation Subcommittee (the "Subcommittee") is comprised of three
non-employee directors: Mr. Nance, Chairman, and Messrs. Boswell and Vititoe. It
was established on December 8, 1999 to administer the Company's long-term
incentive plans for officers and employees.
-12-
<PAGE> 16
The objectives of the executive compensation program are to align
compensation with business strategy, to create value for the stockholders, to
attract, retain, motivate and reward highly qualified executives and to support
a performance-based culture throughout the Company.
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 an 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 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 thirteen companies: Anadarko Petroleum
Corporation, Apache Corporation, Burlington Resources, Inc., Devon Energy
Corporation, EOG Resources, Inc., Kerr-McGee Corporation, Noble Affiliates,
Inc., Occidental Petroleum Corporation, Ocean Energy, Inc., Pioneer Natural
Resources, Tesoro Petroleum Corporation, Union Pacific Resources, Inc. and
Unocal Corporation (the "Peer Group").
The companies chosen for the Peer Group generally are not the same
companies which comprise the Dow Jones Secondary Oils Index, shown in the
Performance Graph included in this proxy statement. The Committee believes that
the Company's competitors for executive talents are not necessarily all of the
companies included in the Dow Jones Secondary Oils Index used for comparing
stockholder returns.
The components of the Company's executive compensation program are base
salary, annual incentive bonus and long-term incentives. These components are
described below. In determining each component of compensation, the Committee
and the Subcommittee consider competitive data from the Peer Group and the
overall value of the total compensation package. The Committee and the
Subcommittee believe that the total compensation package should be competitive
and targeted at the median level of compensation for the Peer Group and that
superior performance should produce a corresponding increase in value for annual
and long-term incentives.
BASE SALARIES
The 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
1999 for the executive officers named in the Summary Compensation Table as a
group were below the 50th percentile of the predicted competitive market base
salary for similar positions in the Peer Group. Because of the challenging
business environment facing the Company due to depressed natural gas prices in
the first half of 1999, no increases to base salaries were made. Mr.
Seegmiller's 1998 base salary of $375,000 was not increased during 1999, and is
below the 50th percentile of the competitive market for his position. As no base
salary increases were made in the Company during 1999, Mr. Seegmiller requested
and the Committee concurred that it was appropriate to also freeze Mr.
Seegmiller's base salary.
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 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. The current measurement criteria
used in the Annual Target Cash Incentive Plan are designed to recognize that
certain factors which impact performance are controllable, while others are not
controllable, and to reward executives for superior performance against those
factors which are deemed controllable.
Beginning in 1999, the bonus pool that can be generated under the
Annual Target Cash Incentive Plan is subject to a three-part threshold. For each
of the three threshold tests that is met, one-third of the bonus potential
becomes available. The three threshold tests are: (i) annual cash flow for the
Company must equal or exceed two times debt service, with debt service including
interest and dividend payments, but excluding originally scheduled principal
payments unless the Company's total borrowing capacity is diminished at the time
of the principal repayment; (ii) the Company must achieve 75% or greater
performance against its target for annual discretionary cash flow; and (iii) the
Company must
-13-
<PAGE> 17
achieve an 85% or greater replacement ratio for annual reserves. These
thresholds are approved annually by the Compensation Committee in conjunction
with its approval of each bonus plan participant's incentive target percentage.
If one or more of the three threshold tests is met, the bonus pool is
determined by measuring each business unit's performance and the total Company
performance against the budgeted discretionary cash flow targets adjusted for
non-controllable items, such as commodity prices, interest rates and
non-recurring items. The Committee then has the discretion to adjust the final
overall bonus pool for any business unit and the final bonus payment for any
participant to reflect its assessment of the unit's and the participant's
performance. If a bonus pool is generated based upon achievement of the
established Company goals, executives earn bonuses to the extent of the
performance of their primary business unit, the Company's overall performance
and achievement of individual performance goals. Individual incentive target
percentage opportunity is set at the median of market levels, which is
considered by the Compensation Committee to be appropriate.
In 1999, each of the three threshold tests were met. Based upon this
performance, and the performance of each business unit, the formula in the bonus
plan produced bonuses ranging from 58% to 94% of pre-established bonus targets
for the executive officers of the Company, including the executives named in the
above tables. The Committee then applied its discretion to recognize that the
Company overcame a difficult commodity price environment in early 1999 and
reported profitable full year results, replaced 124% of its production through
drilling and acquisitions, posted 4% growth in production over 1998 with
drilling and dry hole costs 60% lower than 1998 and reduced debt by $50 million.
As a result, the Committee authorized Mr. Seegmiller to award an additional
$110,000 to those employees whose performance was exemplary. This resulted in
cash bonus payments ranging from 61% to 107% of the pre-established bonus
targets to the executive officers of the Company, including the executive
officers named in the tables above. Mr. Seegmiller received a cash bonus of
$200,000. This represents 89% of Mr. Seegmiller's target and recognizes the same
factors in the Company's 1999 performance that were applied to the entire group
of executive officers.
LONG TERM INCENTIVES
In 1999, the Company used stock options to provide long-term incentives
to the Company's executives. The Company did not grant restricted stock or
performance shares during 1999. However, the performance shares granted in 1996
under the performance share provisions of the 1994 Long-Term Incentive Plan paid
out in 1999 in shares of the Company's Common Stock.
Each grant of performance shares has a three-year performance period.
For the 1996 grant of performance shares the performance period was July 1, 1996
to June 30, 1999. 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 upon 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 peer 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). Since July 1998, two of the peer companies used in the 1996
peer group have been merged out of existence: Oryx Energy Company merged with
Kerr-McGee Corporation, with Kerr-McGee Corporation surviving; and Seagull
Energy Corporation merged with Ocean Energy, Inc., with Ocean Energy, Inc.
surviving. As a result, three alternative methods were developed to access the
Company's performance for the 1996 performance shares.
The first method simply removed Seagull Energy Corporation and Oryx
Energy Company from the peer group while at the same time eliminating the top
and bottom payout percentage. Under this method, the Company ranked seventh for
a 75% payout. The second method used the Dow Jones Secondary Oils Index as a
means to roll forward Seagull Energy Corporation's and Oryx Energy Company's
trading values. Under this method, the Company ranked sixth for a 100% payout.
The third method used the actual ratio of shares contributed by Seagull Energy
Corporation and Oryx Energy Company in their respective business combinations
multiplied by the respective June 1999 average trading price. Under this method,
the Company ranked seventh for a 75% payout.
Since the Committee viewed each method as having merit, it averaged the
results from the three methods entitling the executive officers of the Company,
including certain of the executives named in the above tables, to receive 83% of
their respective performance shares in shares of the Company's Common Stock. Mr.
Seegmiller received 5,395 shares of Common Stock.
Stock options are granted under the Amended and Restated 1994 Long-Term
Incentive Plan 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
-14-
<PAGE> 18
the stock price appreciates after 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 a stock option grant is based primarily on competitive
practice and is generally targeted to be at the 50th percentile of values
granted by the Peer Group. During 1999 the size of the stock option grant was
targeted at slightly above the median percentile of the competitive market due
to the Committee's desire to focus more on long-term incentive pay and in
recognition that no salary increases were made during 1999. The Committee does
not typically consider the amount of options previously granted and outstanding
when determining the size of stock 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.
In 1999 Mr. Seegmiller was granted an option to purchase 70,000 shares
of Common Stock with an exercise price of $17.4375. In addition to the
competitive market data, the Committee also considered the fact that Mr.
Seegmiller did not receive a salary increase during 1999.
The Company's stock options and performance shares 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 stock options and performance share provisions. It is the
Committee's and the Subcommittee's intent that the majority of long-term
incentive awards will qualify under Section 162(m) of the Internal Revenue Code.
To date the Company has experienced no loss of tax deduction as a result of
162(m).
CONCLUSION
The Committee and the Subcommittee believe 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
C. Wayne Nance, Chairman
Henry O. Boswell
Arthur L. Smith
William P. Vititoe
Compensation Subcommittee
C. Wayne Nance, Chairman
Henry O. Boswell
William P. Vititoe
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No member of the Compensation Committee was, during 1999, 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 1999, Mr. Charles P. Siess, Jr.
who served as Chairman of the Company from January 1, 1999 until May 11, 1999,
served as a director of Cabot Corporation.
-15-
<PAGE> 19
Mr. Samuel W. Bodman, Chairman and Chief Executive Officer of Cabot Corporation
served as Chairman of the Compensation Committee of the Company from January 1,
1999 to December 8, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Mr. Robert R. McBride, Jr. was elected Vice President and Regional
Manager of the Company on September 16, 1999. Mr. McBride's Form 3, reporting
his initial beneficial ownership of the Company's Common Stock, was due for
filing at the Commission by September 26, 1999. It was not filed until November
10, 1999.
EMPLOYMENT AGREEMENTS
AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into Change in Control Agreements (the
"Agreements") with the current executive officers named in the Summary
Compensation Table, and with nine other officers of the Company. The Agreements
are intended to encourage such employees to remain in the employ of and to carry
out their duties with the Company. The term of the Agreements was initially
three years from November 3, 1995, subject to automatic one-year extensions on
the second and each subsequent anniversary thereof unless prior to such
anniversary the Company gives written notice that the term shall not be so
extended. The Agreements provide that in the event of a change in control, such
individuals will receive certain benefits in the event of a termination of their
employment within two years of such change in control. A "change in control" is
generally defined as occurring if (i) any "person" becomes the "beneficial
owner," directly or indirectly, of securities of the Company representing 35% or
more of the combined voting power of the Company's then outstanding securities,
(ii) during any 12-month period, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute a majority
thereof unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by the vote of at least a
majority of the directors then still in office who were directors at the
beginning of the period or (iii) the Company sells or otherwise disposes of, in
one transaction or a series of transactions, in a single 12-month period, assets
or properties of the Company representing 50% or more of the total proved
reserves (on a volumetric basis) of the Company as of the beginning of such
12-month period. Benefits are provided under the Agreements unless such
termination of employment is (i) for cause (as defined in the Agreements), (ii)
voluntary by the executive and does not constitute a constructive termination
without cause (as defined in the Agreements), or (iii) because of the death or
disability of the executive.
Generally, benefits payable under the terms of the Agreements include
(i) a lump-sum cash payment equal to three times the sum of (a) base salary in
effect immediately prior to the change in control or, if greater, immediately
prior to the executive's termination and (b) the greater of (1) 80% of the
executive's target bonus with respect to the fiscal year during which the change
in control occurred or, if greater, the fiscal year during which the executive's
termination occurred or (2) the executive's actual bonus paid in the fiscal year
immediately preceding the change in control, (ii) payment with respect to any
performance shares granted to the executive, such payment to be prorated based
on actual service completed at the time of the executive's termination, and
valued according to the percentage of goal attainment on the date of
termination, (iii) immediate vesting and exercisability of all of the
executive's options to purchase securities of the Company, (iv) immediate
vesting and lapse of restrictions on any restricted stock grants outstanding at
the time of the executive's termination, (v) subject to the payment of the
applicable premiums, continued medical, dental and life insurance coverage for
three years following the date of the executive's termination, (vi) effective
crediting of an additional three years of service in the Company's retirement
plans in which the executive is participating at the time of the change in
control and (vii) outplacement assistance in an amount not to exceed 15% of the
executive's base salary in effect on the date of a change in control (the
"Termination Benefits"). In the event the excise tax relating to Section 280G of
the Code applies to payments by the Company, the Company will make an additional
payment to the executive in an amount such that after payment of income taxes
(but not the excise tax) on such additional payment, the executive retains an
amount equal to the excise tax originally imposed. No payments have been made
under the Agreements.
The Company has entered into both an employment agreement and a Change
in Control Agreement with Mr. Ray R. Seegmiller, Chairman, President and Chief
Executive Officer of the Company. The employment agreement provides that if Mr.
Seegmiller terminates his employment for good reason (as defined in the
agreement) or the Company terminates his employment for any reason other than
cause (as defined in the agreement), Mr. Seegmiller shall receive 12 months of
base salary, as well as continuation of all applicable benefit programs. Under
the terms of Mr. Seegmiller's Change in Control Agreement, in the event of a
termination, Mr. Seegmiller will be required to elect between receiving the
Termination Benefits or the amounts payable to Mr. Seegmiller under his
employment agreement.
-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-US Index for the period December 1994 through December 1999. The
graph assumes that the value of the investment in the Company's Common Stock and
in each index was $100 on December 31, 1994 and that all dividends were
reinvested.
[GRAPH]
<TABLE>
<CAPTION>
- -------------------------- ------------ ------------- ------------ ------------ ------------ ------------
Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99
- -------------------------- ------------ ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 100 134.1 161.3 211.3 267.6 319.9
COG 100 101.1 119.3 136.2 107.0 115.3
DJ Secondary Oils-US 100 113.0 136.7 143.1 102.4 113.3
- -------------------------- ------------ ------------- ------------ ------------ ------------ ------------
</TABLE>
-17-
<PAGE> 21
BENEFICIAL OWNERSHIP OF OVER FIVE PERCENT OF COMMON STOCK
The following table reports beneficial ownership of Common Stock by
holders of more than five percent of any class of the Company's voting
securities. Unless otherwise noted, all ownership information is based upon
filings made by such persons with the Commission.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME AND ADDRESS OF OF COMMON STOCK PERCENT OF
BENEFICIAL OWNER OWNED CLASS
--------------------------- ---------------- -----------
<S> <C> <C>
Louis M. Bacon 1,603,000(1) 5.9%
Moore Capital Management, Inc.
Moore Global Investments, Ltd.
1251 Avenue of the Americas
New York, NY 10020
NewSouth Capital Management, Inc. 2,121,180(2) 7.8%
1000 Ridgeway Loop Road, Suite 233
Memphis, TN 38120
Puget Sound Energy, Inc. 1,972,174(3) 7.3%(3)
411 108th Avenue, N.E.
Bellevue, WA 98009-5515
Vanguard Windsor Fund-Windsor Fund. 2,409,500(4) 8.9%
Post Office Box 2600
Valley Forge, PA 19482
Wellington Management Company, LLP 3,026,700(5) 11.2%(5)
75 State Street
Boston, MA 02109
</TABLE>
- -------------
(1) An Amendment No. 1 to a Schedule 13G, dated February 4, 2000 was filed with
the Commission by (1) Louis M. Bacon in his capacity as (a) Chairman and
Chief Executive Officer, director and controlling shareholder of Moore
Capital Management, Inc. ("MCM") and (b) Chairman and Chief Executive
Officer, director and majority interest holder in Moore Capital Advisors,
LLC ("MCA"), (2) MCM, and (3) Moore Global Investments, Ltd. ("MGI").
According to the Amendment No. 1, Mr. Bacon has shared voting power and
shared dispositive power over all of these shares. MCM and MGI have shared
voting and dispositive power over 1,282,400 of these shares and no voting
or dispositive power over the remainder.
(2) According to Amendment No. 5 to a Schedule 13G, dated February 10, 2000,
filed with the Commission by NewSouth Capital Management, Inc., it has
shared voting power over 20,000 of these shares and sole dispositive power
over all of these shares.
(3) Consists of 1,972,174 shares of Common Stock issuable upon conversion of
1,134,000 shares of 6% Preferred Stock (100% of the series) currently
owned. 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 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 is entitled to 1.739 votes for each share and votes
together with 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. On February 10, 1997, WECO merged with Puget Sound Power & Light
Company to form Puget Sound Energy, Inc. ("PSE"). On May 6, 1999, PSE sold
its 2,133,000 shares of Common Stock. The Company has entered into an
agreement with PSE to repurchase their preferred shares by November 1, 2000
for a total price of $51.6 million.
(4) According to Amendment No. 8 to a Schedule 13G, dated February 1, 2000,
filed with the Commission by Vanguard Windsor Funds - Windsor Fund, 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 -
Windsor Fund. See Note (5) below.
(5) According to Amendment No. 12 to a Schedule 13G, dated February 9, 2000,
filed with the Commission by Wellington Management Company, LLP, it has
shared voting power over 617,200 of these shares, no voting power over the
remainder and shared dispositive power over all of these shares. This
amount includes the 2,409,500 shares beneficially owned by the Vanguard
Windsor Funds - Windsor Fund. See Note (4) above.
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reports, as of February 15, 2000, beneficial
ownership of Common Stock by each current director of the Company, by each
current 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.
-18-
<PAGE> 22
<TABLE>
<CAPTION>
Number of Shares
of Common Percent
Name of Beneficial Owner Stock Owned Class
--------------------------------------------- --------------------- ----------
<S> <C> <C>
Robert F. Bailey............................ 7,167 1/ *
Henry O. Boswell............................ 19,001 2/ *
John G.L. Cabot............................. 105,851 3/ *
William R. Esler............................ 16,001 4/ *
William H. Knoell........................... 17,667 5/ *
C. Wayne Nance.............................. 16,667 6/ *
P. Dexter Peacock........................... 4,334 7/ *
Charles P. Siess, Jr........................ 490,093 8/ 1.9%
Arthur L. Smith............................. 0 *
William P. Vititoe.......................... 9,282 9/ *
Ray R. Seegmiller........................... 91,759 10/15/ *
H. Baird Whitehead.......................... 74,098 11/15/ *
James M. Trimble............................ 97,369 12/15/ *
Michael B. Walen............................ 23,075 13/15/ *
Jeffrey W. Hutton........................... 40,825 14/15/ *
All directors and executive officers
as a group (19 individuals)............ 1,046,159 16/ 4.2%
</TABLE>
- -------------
* Represents less than 1% of the outstanding Common Stock.
1/ Includes 6,667 shares purchasable upon the exercise of options within 60
days.
2/ Includes 15,001 shares purchasable upon the exercise of options within 60
days.
3/ Includes 1,782 shares held by Mr. Cabot's spouse and 9,527 shares held by
various trusts of which Mr. Cabot serves as co-trustee, as to all of which
Mr. Cabot shares voting and/or investment power; Mr. Cabot disclaims
beneficial ownership of such shares. Also includes 6,667 shares purchasable
upon the exercise of options within 60 days.
4/ Includes 12,001 shares purchasable upon the exercise of options within 60
days.
5/ Includes 17,667 shares purchasable upon the exercise of options within 60
days.
6/ Includes 16,667 shares purchasable upon the exercise of options within 60
days.
7/ Includes 3,334 shares purchasable upon the exercise of options within 60
days.
8/ Includes 464,334 shares purchasable upon the exercise of options within 60
days.
9/ Includes 6,667 shares purchasable upon the exercise of options within 60
days.
10/ Includes 67,334 shares purchasable upon the exercise of options within 60
days.
11/ Includes 1,309 shares held in the Company's Savings Investment Plan as to
which Mr. Whitehead shares voting and investment power and 55,066 shares
purchasable upon the exercise of options within 60 days.
12/ Includes 1,812 shares held in the Company's Savings Investment Plan as to
which Mr. Trimble shares voting and investment power and 65,232 shares
purchasable upon the exercise of options within 60 days.
13/ Includes 645 shares held in the Company's Savings Investment Plan as to
which Mr. Walen shares voting and investment power and 18,334 shares
purchasable upon the exercise of options within 60 days.
14/ Includes 532 shares held in the Company's Savings Investment Plan as to
which Mr. Hutton shares voting and investment power and 30,001 shares
purchasable upon the exercise of options within 60 days.
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<PAGE> 23
15/ Includes 11,000, 6,000, 6,000, 3,000 and 5,000 shares of restricted stock
granted to Messrs. Seegmiller, Whitehead, Trimble, Walen and Hutton,
respectively on May 5, 1997, the restrictions on which lapse May 5, 2000.
Messrs. Seegmiller, Whitehead, Trimble, Walen and Hutton have no voting or
investment power with respect to these shares during the restrictive
period.
16/ Includes 11,382 shares held in the Company's Savings Investment Plan as to
which the executive officers share voting and investment power and 795,140
shares purchasable by the executive officers and directors upon the
exercise of options within 60 days. Also includes 44,500 shares of
restricted stock granted to the executive officers. See also Notes 1-15
above.
FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in the proxy statement
for the 2000 Annual Meeting of Stockholders of the Company, and otherwise
eligible, should be sent to Ms. Lisa A. Machesney, Secretary, Cabot Oil & Gas
Corporation, 1200 Enclave Parkway, Houston, Texas 77077 and must be received by
November 26, 2000.
The Bylaws of the Company require timely advance written notice of
stockholder nominations of director candidates and of any other business to be
presented by a stockholder at an annual meeting of stockholders. To be timely,
the Bylaws require advance written notice be delivered to the Company's
Secretary at the principal executive offices of the Company not later than the
close of business on the 60th day, nor earlier than the close of business on the
90th day, prior to the anniversary of the preceding year's annual meeting (with
certain exceptions if the date of the annual meeting is different by more than
specified amounts from the anniversary date). The deadline for submission for
the 2001 Annual Meeting of Stockholders is currently March 10, 2001. To be
valid, a notice must set forth certain information specified in the Bylaws.
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.
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<PAGE> 24
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 Annual
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,
LISA A. MACHESNEY
Corporate Secretary
March 31, 2000
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<PAGE> 25
CAB21B DETACH HERE
PROXY
CABOT OIL & GAS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned acknowledges receipt of the notice of Annual Meeting of
Stockholders and the Proxy Statement, each dated March 31, 2000, and appoints
Lisa A. Machesney and Scott C. Schroeder, or either of them, proxies for the
undersigned, with power of substitution, to vote all of the undersigned's shares
of common stock of Cabot Oil & Gas Corporation at the Annual Meeting of
Stockholders to be held at Cabot Oil & Gas Corporation, First Floor, in Houston,
Texas, at 10:00 a.m., local time, on May 9, 2000, 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 I AND
II AND WILL GRANT DISCRETIONARY AUTHORITY PURSUANT TO ITEM III.
THIS PROXY WILL REVOKE ALL PRIOR PROXIES SIGNED BY YOU.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE> 26
CABOT OIL & GAS
CORPORATION
c/o EQUISERVE
P.O. BOX 9398
BOSTON, MA 02205-9398
<TABLE>
<CAPTION>
VOTE BY TELEPHONE VOTE BY INTERNET
----------------- ----------------
<S> <C>
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement/Prospectus and Proxy Card. Statement/Prospectus and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/cog
3. Enter your 14-digit Voter Control Number 3. Enter your 14-digit Voter Control Number
located on your Proxy Card above your name. located on your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/cog anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
</TABLE>
DETACH HERE
[X] Please mark
votes as in
this example.
<TABLE>
<S> <C>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ITEMS I AND II.
1. ELECTION OF DIRECTORS (check one box only) FOR AGAINST ABSTAIN
NOMINEES: (01) Henry O. Boswell, (02) William R. Esler, II. Ratification of the appointment of [ ] [ ] [ ]
(03) Charles P. Siess, Jr. and (04) P. Dexter PricewaterhouseCoopers LLP as
Peacock the Company's independent
FOR WITHHELD certified public accountants.
[ ] [ ]
III. 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.
[ ]
--------------------------------------
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please date this proxy and sign your name exactly as it appears
hereon. 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:
--------------------------------- ------------ --------------------------------- ------------
</TABLE>
