<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
Santa Fe Snyder Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
SANTA FE SNYDER CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of Santa Fe Snyder Corporation will be
held at the Omni Houston Hotel, Four Riverway, Houston, Texas, on Thursday,
September 2, 1999 at 10:00 a.m. for the following purposes:
(A) To elect four directors;
(B) To ratify and approve the appointment of PricewaterhouseCoopers LLP as
independent public accountants for the fiscal year ending December 31,
1999; and
(C) To transact such other business as is properly brought before the
meeting.
Common stockholders of record at the close of business on July 12, 1999 are
entitled to notice of and to vote at the meeting. A list of such stockholders
will be kept at the office of the Corporation at 840 Gessner, Houston, Texas
77024, for a period of ten days prior to the meeting.
By order of the Board of Directors.
MARK A. OLDER
Corporate Secretary
840 Gessner
Houston, Texas 77024
July 20, 1999
YOUR VOTE IS IMPORTANT
PLEASE MARK, DATE, AND SIGN YOUR PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 3
SANTA FE SNYDER CORPORATION
840 GESSNER
HOUSTON, TEXAS
---------------------
PROXY STATEMENT
JULY 20, 1999
---------------------
ANNUAL MEETING OF STOCKHOLDERS, SEPTEMBER 2, 1999
The annual meeting of stockholders of Santa Fe Snyder Corporation (the
"Corporation") will be held on September 2, 1999 in Houston, Texas. The enclosed
proxy card is solicited by the Board of Directors of the Corporation, and your
execution and prompt return of the card is requested. Every common stockholder,
regardless of the number of shares held, should be represented at the annual
meeting. Whether or not you expect to be present at the meeting, please mark,
sign and date the enclosed proxy card and return it in the enclosed envelope.
Any stockholder giving a proxy has the right to revoke it. If you attend the
meeting and wish to vote your shares in person, you may do so at that time.
The shares represented by your proxy will be voted in accordance with the
specifications made on the proxy card. Unless otherwise directed, it is intended
that such shares will be voted:
(A) For the election to the Corporation's Board of Directors of the four
nominees named below; and
(B) For the ratification and approval of the appointment of
PricewaterhouseCoopers LLP as independent public accountants for the
fiscal year ending December 31, 1999; and
(C) In accordance with the best judgment of the persons acting under the
proxy concerning other matters that are properly brought before the
meeting.
Common stockholders of record at the close of business on July 12, 1999 are
entitled to notice of the meeting and are entitled to vote at the meeting in
person or by proxy. Each share of common stock of the Corporation is entitled to
one vote. At the close of business July 12, 1999, the Corporation had
approximately 170,997,000 shares of common stock outstanding and entitled to
vote. The Corporation anticipates first sending this proxy statement and the
enclosed proxy card to stockholders on or about July 20, 1999.
<PAGE> 4
ELECTION OF DIRECTORS
The number of directors of the Corporation, as determined by the Board
under Article Fifth of the Corporation's Restated Certificate of Incorporation,
is currently eleven. The terms of four present directors expire in 1999, and
four directors are to be elected at the 1999 annual meeting for a term of three
years. Directors hold office until the annual meeting for the year in which
their terms expire and until their successors are elected and qualify. The
nominees for whom the enclosed proxy is intended to be voted are set forth
below. It is not contemplated that any of these nominees will be unavailable for
election, but if such a situation should arise, the proxy will be voted in
accordance with the best judgment of the persons acting under it. The election
as directors of the persons nominated in this proxy statement will require a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. A holder of a share will be treated as
being present at a meeting if the holder of such share is either present in
person at the meeting or is represented at the meeting by a valid proxy, whether
the proxy is marked as casting a vote or abstaining, is left blank or does not
empower such proxy to vote with respect to some or all matters to be voted upon
at the meeting. In determining the number of votes cast, shares abstaining from
voting or not voted on a matter (including elections) will not be treated as
votes cast. In general, pursuant to the Corporation's Bylaws, action on a matter
(other than the election of directors) shall be approved if the votes cast in
favor of the matter exceed the votes cast opposing the matter.
Unless otherwise indicated, each director listed below has served in his or
her present occupation for at least five years. Ages are as of July 1, 1999.
NOMINEES FOR ELECTION AS DIRECTORS TO BE ELECTED
FOR A TERM OF THREE YEARS ENDING IN 2002
<TABLE>
<CAPTION>
FIRST
ELECTED A
NAME, AGE AND BUSINESS EXPERIENCE DIRECTOR
- --------------------------------- ---------
<S> <C>
Allan V. Martini, 71........................................ 1990
Retired Vice President Exploration/Production and director
of Chevron Corporation (petroleum operations) since August
1988. Mr. Martini served in that position from July 1986
until his retirement.
James E. McCormick, 71...................................... 1999(1)
Retired President, Chief Operating Officer and director of
Oryx Energy Company (petroleum operations) since March
1992. Mr. McCormick served in that position from November
1988 until his retirement. Mr. McCormick is also a
director of Lone Star Technologies, BJ Services, Inc.
(oilfield services), TESCO Corporation (oil field drilling
systems), and Dallas National Bank.
Reuben F. Richards, 69...................................... 1992
Chairman of the Board, Terra Industries Inc.
(agribusiness) from December 1982 until his retirement in
March 1996; Chief Executive Officer thereof from December
1982 to May 1991 and President thereof from July 1983 to
May 1991; Chairman of the Board, Engelhard Corporation
(specialty chemicals, engineering materials and precious
metals management services) from May 1985 to December 1994
and director thereof since prior to 1990; Chairman of the
Board of Minorco (U.S.A.) Inc. from May 1990 to March 1996
and Chief Executive Officer and President from February
1994 to March 1996. Mr. Richards is also a director of
Ecolab, Inc. (cleaning and sanitizing products), Engelhard
Corporation and Potlatch Corporation (forest products).
Kathryn D. Wriston, 59...................................... 1990
For the past five years, director of various corporations
and organizations, including Northwestern Mutual Life
Insurance Company (life insurance) and the Stanley Works
(manufacturer of tools).
</TABLE>
2
<PAGE> 5
DIRECTORS CONTINUING IN OFFICE UNTIL 2000
<TABLE>
<CAPTION>
FIRST
ELECTED A
NAME, AGE AND BUSINESS EXPERIENCE DIRECTOR
- --------------------------------- ---------
<S> <C>
William E. Greehey, 62...................................... 1991
Chairman of the Board, Chief Executive Officer and
director of Valero Energy Corporation (refining and
marketing) since 1983.
Harold R. Logan, Jr., 54.................................... 1999(1)
Executive Vice President/Finance and a director of
TransMontaigne Inc., a holding company engaged in
providing logistical services, i.e. transportation,
terminaling and marketing to the manufacturers and
end-users of refined petroleum products. Senior Vice
President/Finance and a director of Associated Natural Gas
Corporation from 1987 until 1994. Mr. Logan also serves as
a director of Suburban Propane Partners, L.P. (retail
propane distribution) and Union Banc Shares, Ltd.
Edward T. Story, 55......................................... 1999(1)
President of SOCO International plc., an independent
international oil and gas company traded on the London
Stock Exchange. From 1991 until the formation of SOCO
International plc in 1997 through the consolidation of
international interests of Snyder Oil Corporation and
various third parties, Mr. Story was Vice
President-International of Snyder Oil Corporation and
President of SOCO International, Inc. Mr. Story also
serves as a director of Cairn Energy plc, (London based
oil and gas company), First BankAmerica, Inc., (bank
holding company), Hallwood Realty Corporation, the general
partner of Hallwood Realty Partners, L.P., (real estate),
and Sen Hong Resources Limited, (Hong Kong based oil and
gas company).
DIRECTORS CONTINUING IN OFFICE UNTIL 2001
Melvyn N. Klein, 57......................................... 1993
Attorney and Counselor at Law; private investor; the sole
stockholder of a general partner of GKH Partners, L.P., an
investment partnership. Mr. Klein is also a principal of
Questor Management Company, and director of Anixter
International (distributor of networking products), Bayou
Steel Corporation (specialty steel manufacturer) and
Hanover Compressor Corporation (provider of full service
natural gas compression and fabricator of compressors and
production equipment).
John A. Hill, 57............................................ 1999(1)
Vice Chairman and Managing Director of First Reserve
Corporation, an oil and gas investment management company.
Prior to joining First Reserve, Mr. Hill was President,
Chief Executive Officer and Director of Marsh & McLennan
Asset Management Company and served as the Deputy
Administrator of the Federal Energy Administration during
the Ford Administration. Mr. Hill is a trustee of the
Putnam Funds in Boston and a director of TransMontaigne
Inc. and various companies controlled by First Reserve
Corporation.
James L. Payne, 61.......................................... 1986
Chairman of the Board and Chief Executive Officer of the
Corporation since June 1990 and President from January
1990 until April 1, 1998. Mr. Payne was President of Santa
Fe Energy Company, a predecessor in interest of the
Corporation from January 1986 to January 1990 when he
became President of the Corporation. Mr. Payne is also a
director of Pool Energy Services Co. (oilfield services)
and BJ Services, Inc. (oilfield services).
John C. Snyder, 57.......................................... 1999(1)
Chairman of the Board of the Corporation since May 1999.
From the inception of predecessors in interest of Snyder
Oil Corporation in 1978, Mr. Snyder served as Chairman and
a director of Snyder Oil Corporation. Mr. Snyder is also a
director of SOCO International plc, a director of the
Community Enrichment Center of Fort Worth, a director of
Texas Capital BancShares, Inc. and is a member of the
National Petroleum Council.
</TABLE>
- ---------------
(1) First elected to the board on May 5, 1999 in conjunction with the merger of
Snyder Oil Corporation into the Corporation.
3
<PAGE> 6
CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
Mr. Payne is also a director of Pool Energy Services Co., which provides
various oilfield services. During 1998 the Corporation paid Pool subsidiaries an
aggregate of $117,651 for services performed on properties operated by the
Corporation. Mr. Payne is also a director of BJ Services which also provides
various oilfield services. During 1998 the Corporation paid BJ Services an
aggregate of $1,314,953 for services performed on properties operated by the
Corporation. Mr. Payne has no direct or personal interest in these services. His
interest arises only because of his position as an officer of the Corporation
and a director of Pool Energy Services Co. and BJ Services. In the opinion of
the Corporation, the amounts paid for services performed by Pool and BJ Services
were competitive and were normal and customary in the industry.
Mr. Klein is the sole stockholder of a general partner in GKH Partners,
L.P. ("GKH"). The Corporation entered into an Agreement Regarding Shelf
Registration dated March 24, 1995, with HC Associates ("HC") which owns more
than 3% of the Corporation's common stock whereby the Corporation agreed that
upon written demand (which demand may be submitted to the Corporation once,
provided such registration is effected and the registration statement is
declared effective) from HC, GKH, GKH Investments, L.P., Cockrell Equity
Partners, L.P., and Cockrell Investment Partners, L.P. (collectively, the
"Selling Stockholders") at any time prior to March 27, 2000 to file with the
Securities and Exchange Commission a registration statement to register the
offer and sale, from time to time, by the Selling Stockholders of up to
5,203,091 shares of the Corporation's common stock beneficially owned by them as
of March 24, 1995, subject to certain specified restrictions. The Corporation is
obligated to pay all expenses incidental to such registration, excluding
underwriting discounts, commissions, fees or disbursements of legal counsel for
the Selling Stockholders. This agreement was amended in 1997 to include two
demand rights (provided that any one-demand cover at least 40% of its holdings)
and up to two piggyback rights. In addition, in connection with the merger of
Snyder Oil Corporation into the Corporation, GKH received a fee for financial
advisory services in the amount of $500,000.
See also "-- Compensation Committee Interlocks and Insider Participation."
Other Information Concerning Directors. In 1998, the Board met six times,
and each member of the Board as it was composed at the time attended at least
75% of the total number of meetings of the Board and the total number of
meetings held by all committees of the Board on which he or she served.
Directors Compensation. Directors who are not employees of the Corporation
or its subsidiaries receive an annual cash retainer fee of $10,000 (plus an
additional $2,000 annual retainer for the committee chairmen) with the Chairman
of the Board receiving a monthly fee of $10,000 . Non-employee directors also
receive a fee of $1,000 for each meeting of the Board attended, and a fee of
$1,000 for each committee meeting attended plus expenses. In addition, pursuant
to the 1990 Incentive Stock Compensation Plan and the 1995 Incentive Stock
Compensation Plan for Nonexecutive Employees and Directors (the "Stock Plans"),
non-employee directors receive annually (i) 2,000 shares of Common Stock with a
six month restriction period during which such shares cannot be transferred and
(ii) 5,000 Non-Qualified Stock Options ("NQSO's") per year having a strike price
of the Fair Market Value (as defined in the Stock Plan) on the date of grant. In
addition, all newly elected directors receive a one-time grant of 10,000 NQSO's
with a strike price of the Fair Market Value on the date the director is first
elected. Mr. Snyder also received a one time grant of 10,000 NQSO's effective on
the date of the merger of Snyder Oil Corporation into the Corporation. In
connection with the amendment of the 1990 Stock Plan in 1996, then current
directors received a similar one-time grant of 10,000 NQSO's effective February
1, 1996.
Board Committees. In 1998, the Board maintained Audit, Compensation and
Benefits, Executive and Nominating Committees. Following are the members of each
committee and brief descriptions of the functions of the Board Committees. All
chairpersons of the above committees are non-employee directors.
The current members of the Audit Committee are Harold R. Logan, Jr.
(Chairman), Reuben F. Richards, Edward T. Story and Kathryn D. Wriston. The
principal functions of the Audit Committee, which met three times in 1998,
include overseeing the performance and reviewing the scope of the audit function
of independent accountants and internal audit. The Audit Committee also reviews,
among other things, audit
4
<PAGE> 7
plans and procedures, the Corporation's policies with respect to conflicts of
interest and the prohibition on the use of corporate funds or assets for
improper purposes, changes in accounting policies, and the use of independent
accountants for non-audit services.
The current members of the Compensation and Benefits Committee are William
E. Greehey (Chairman), John A. Hill, James E. McCormick and Reuben F. Richards.
The principal function of the Compensation and Benefits Committee, which met
four times in 1998, is to administer all executive compensation and benefit
plans of the Corporation. In addition, the Committee reviews the actions of the
Pension Benefits Committee which is composed of employees of the Corporation,
making recommendations to the Board of Directors concerning future membership of
that committee and such other recommendations as may be necessary or
appropriate, and recommending to the Board of Directors substantive amendments
to the Corporation's retirement plan. Members of the Compensation and Benefits
Committee are not eligible to participate in any benefit plans of the
Corporation that they administer except the Stock Plans pursuant to which grants
may be made only as described above.
The current members of the Executive Committee are Melvyn N. Klein
(Chairman), William E. Greehey, Harold R. Logan, Jr., Allan V. Martini, James L.
Payne, John C. Snyder and Edward T. Story. The Executive Committee, which did
not meet in 1998, may exercise, during periods between meetings of the Board of
Directors, all powers of the Board in the management and business of the
Corporation, subject to limitations imposed by the Bylaws, Certificate of
Incorporation or applicable law.
The name of the Nominating Committee was changed in May 1999 to the
Nominating and Governance Committee. The current members of this Committee are
John A. Hill (Chairman), Allan V. Martini, James L. Payne and John C. Snyder.
This Committee, which met once in 1998, receives recommendations for review and
evaluates the qualifications of and selects and recommends to the Board of
Directors, nominees for election as Directors. The Committee will consider
nominees recommended by stockholders. Any such recommendation, together with the
nominee's qualifications and consent to be considered as a nominee, should be
sent in writing to the Secretary of the Corporation not less than 90 days nor
more than 120 days prior to the annual meeting. The Committee will also address
issues relating to corporate governance.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the best of the Corporation's knowledge, the following persons are the
only persons who are beneficial owners of more than five percent of the
Corporation's common stock based upon the number of shares outstanding on July
1, 1999:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF PERCENT
COMMON OF
NAME AND ADDRESS STOCK CLASS
- ---------------- ---------- -------
<S> <C> <C>
FMR Corp.(1)................................................ 22,175,945 13.0
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------------
(1) As reported at June 10, 1999, as of May 31, 1999, Fidelity Management &
Research Company ("Fidelity"), 82 Devonshire Street, Boston, Massachusetts
02109, a wholly owned subsidiary of FMR Corp. and an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940, was the
beneficial owner of 18,717,508 shares or 10.95% of the common stock outstanding
of the Corporation as a result of acting as investment adviser to various
investment companies registered under Section 8 of the Investment Company Act of
1940.
The ownership of one investment company, Fidelity Dividend Growth Fund,
amounted to 11,384,515 shares or 6.6% of the common stock outstanding of the
Corporation. Fidelity Dividend Growth Fund has its principal business office at
82 Devonshire Street, Boston, Massachusetts 02109.
Edward C. Johnson, 3d, FMR Corp., through its control of Fidelity, and the
Fidelity Funds each has the power to dispose of the 18,717,508 shares owned by
the funds. Neither FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp.,
has the sole power to vote or direct the voting shares owned directly by the
Fidelity Funds, which power resides with the Funds' Board of Trustees. Fidelity
carries out the voting of the shares under written guidelines established by the
Funds' Boards of Trustees.
Fidelity Management Trust Company ("FMT"), 82 Devonshire Street, Boston,
Massachusetts 02109, a wholly owned subsidiary of FMR Corp. and a bank as
defined in Section 3(a)(6) of the Securities Exchange Act of 1934, is the
beneficial owner of 3,458,437 shares or less than 2% of the common stock
outstanding of the Corporation as a result of its serving as an investment
manager of the institutional account(s). Mr. Johnson and FMR Corp., through its
control of FMT, each has dispositive power over 3,458,437 shares and sole power
to vote or direct the voting of 2,999,534 shares, and no power to vote or direct
the voting of 458,903 shares of common stock owned by the institutional
account(s) as reported above.
Members of Mr. Johnson's family and trusts for their benefit are the
predominant owners of Class B shares of common stock of FMR Corp., representing
approximately 49% of the voting power of FMR Corp. Mr. Johnson owns 12% and
Abigail Johnson owns 24.5% of the aggregate outstanding voting stock of FMR
Corp. Mr. Johnson is Chairman of FMR Corp. and Abigail P. Johnson is a Director
of FMR Corp. The Johnson family group and all other Class B stockholders have
entered into a stockholders' voting agreement under which all Class B shares
will be voted in accordance with the majority vote of Class B shares.
Accordingly, through their ownership of voting common stock and the execution of
the stockholders' voting agreement, members of the Johnson family may be deemed,
under the Investment Company Act of 1940, to form a controlling group with
respect to FMR Corp.
6
<PAGE> 9
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the amount of common stock beneficially
owned as of July 1, 1999 by each of the directors and executive officers, and by
all directors and executive officers as a group. Unless otherwise noted, each of
the named persons and members of the group has sole voting and investment power
with respect to the shares shown.
<TABLE>
<CAPTION>
SHARES
NAME OF DIRECTOR OWNED PERCENT
EXECUTIVE OFFICER OR GROUP BENEFICIALLY OF CLASS
- -------------------------- ------------ --------
<S> <C> <C>
William E. Greehey(1)....................................... 91,317 --
John A. Hill(2)............................................. 223,867
Melvyn N. Klein(3).......................................... 5,090,294 3.0
Harold R. Logan, Jr.(4)..................................... 18,040
Allan V. Martini(1)......................................... 49,998 --
James E. McCormick(2)....................................... 51,660
Reuben F. Richards(1)....................................... 48,478 --
John C. Snyder(5)........................................... 4,184,929 2.5
Edward T. Story(6).......................................... 1,171,917
Kathryn D. Wriston(1)....................................... 48,720 --
James L. Payne(7)........................................... 2,435,488 1.4
Hugh L. Boyt(8)............................................. 722,856 --
Jerry L. Bridwell(9)........................................ 740,186 --
Janet F. Clark(10).......................................... 356,160 --
Duane C. Radtke(11)......................................... 356,275 --
Directors and Executive Officers as a Group -- 15(12)....... 15,590,185 9.1
</TABLE>
- ---------------
(1) Includes 39,091 shares which could be received upon the exercise of options
within 60 days. The weighted average exercise price of such options is
$7.2985.
(2) Includes 20,500 shares which could be received upon the exercise of options
within 60 days. The weighted average exercise price of such options is
$7.4085.
(3) Includes 5,048,083 shares of common stock which may be deemed to be owned
by GKH primarily through its participation in HC Associates, a Delaware
general partnership ("HC"). The partners of HC (and their respective
percentage interests in HC) are GKH Investments, L.P. (the "GKH Fund")
(92.743587%), GKH as nominee for GKH Private Limited ("GKHPL") (3.506488%),
Cockrell Equity Partners, L.P. (1.089978%) and Cockrell Investment
Partners, L.P. (2.659947%). The sole general partner of the GKH Fund, a
Delaware limited partnership is GKH. Pursuant to a management agreement,
GKH manages assets on behalf of GKHPL. Mr. Klein is the sole stockholder of
one of the general partners in GKH, the general partner of the GKH Fund and
the nominee for GKHPL and disclaims beneficial ownership of the shares held
by HC. Also includes 39,091 shares which could be received upon the
exercise of options within 60 days. The weighted average exercise price of
such options is $7.2985.
(4) Includes 10,250 shares which could be received upon the exercise of options
within 60 days. The weighted average exercise price of such options is
$9.0854.
(5) Includes 521,345 shares which could be received upon the exercise of
options within 60 days. The weighted average exercise price of such options
is $7.2887. Also, includes 7,708 shares owned by members of Mr. Snyder's
immediate family and which he disclaims beneficial ownership.
(6) Includes 142,270 shares which could be received upon the exercise of
options within 60 days. The weighted average exercise price of such options
is $6.7772.
(7) Mr. Payne's stock ownership includes 68,753 shares of common stock arising
from participation in the Corporation's Savings Investment Plan and
1,985,680 shares of common stock which could be received upon the exercise
of options within 60 days. The weighted average exercise price of such
options is $7.8405. In addition, Mr. Payne's total includes 1,000 shares
owned by his wife. Mr. Payne disclaims beneficial ownership of these
shares.
7
<PAGE> 10
(8) Mr. Boyt's stock ownership includes 8,793 shares of common stock arising
from participation in the Corporation's Savings Investment Plan and 648,248
shares of common stock which could be received upon the exercise of options
within 60 days. The weighted average exercise price of such options is
$7.4696.
(9) Mr. Bridwell's stock ownership includes 45,671 shares of common stock
arising from participation in the Corporation's Savings Investment Plan and
606,076 shares of common stock which could be received upon the exercise of
options within 60 days. The weighted average exercise price of such options
is $7.9636. Finally, Mr. Bridwell's total includes 2,472 shares owned by
his children.
(10) Ms. Clark's stock ownership includes 12,234 shares of common stock arising
from participation in the Corporation's Savings Investment Plan and 315,450
shares of common stock which could be received upon the exercise of options
within 60 days. The weighted average exercise price of such options is
$8.8608.
(11) Mr. Radtke's stock ownership includes 13,646 shares of common stock arising
from participation in the Corporation's Savings Investment Plan and 291,815
shares of common stock which could be received upon the exercise of options
within 60 days. The weighted average exercise price of such options is
$7.8294.
(12) The stock ownership described includes 149,097 shares arising from
participation in the Corporation's Savings Investment Plan and 4,757,589
shares which could be received upon the exercise of options within 60 days.
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
The Compensation and Benefits Committee (the "Committee") has been
chartered by the Board to review salaries and other compensation of officers,
including Mr. Payne, the Corporation's Chief Executive Officer, and key
employees on an annual basis. Following review, the Committee submits
recommendations to the Board regarding such salaries and compensation. In
addition, the Committee selects officers and key employees for participation in
incentive compensation plans, establishes performance goals for those officers
and key employees who participate in such plans and reviews and monitors
benefits under all employee plans of the Corporation.
Compensation Policies for Executive Officers
As a result of an extensive review undertaken in 1995 with the assistance
of Hay Management Consultants, a performance based executive compensation
program was developed. The overall program was reviewed by Hay in 1998 and it
was determined by the Committee that the program continued to be appropriate, is
competitive, reinforces the Corporation's business strategy and supports
objectives for enhanced stockholder value. It is designed to attract, retain and
motivate key employees by providing total compensation opportunities consistent
with those maintained by the Corporation's peer group. The group used for this
purpose includes companies from the peer group used for purposes of the
performance graph, which companies the Committee believes approximate the
Corporation's size and asset mix. The program allows compensation to vary
significantly based on performance results, to balance objectives for short-term
operating performance, and to encourage stock ownership among key employees.
Base salaries for the executive group are maintained near the median
competitive position for comparable positions among the peer group. Annual
incentive opportunities are targeted to provide compensation between the median
and upper quartile of the Corporation's peer group described above. Long-term
incentive opportunities are provided through grants of stock options and Phantom
Units made pursuant to the Corporation's Stock Plans and are targeted between
median and upper quartile award levels with upside opportunities based on
sustained performance and creation of stockholder value.
As a result of the review undertaken by Hay in 1998 it was determined that
Messrs. Payne, Boyt and Bridwell would not receive salary adjustments, while Ms.
Clark and Mr. Radtke as well as certain other executive officers and key
employees would receive modest increases.
8
<PAGE> 11
Annual incentives are provided through the Incentive Compensation Plan (the
"IC Plan"). Goals have been established which, if met at the target objective,
will result in the executive officer being paid 50 percent of the maximum amount
for which the individual is eligible. All executive officers participate in the
IC Plan with maximum payout percentages of base salary in 1998 ranging from 100
percent for Mr. Payne to 40 percent. The Committee may increase or decrease the
ultimate award by 25 percent at its discretion.
The goals established for 1998 were based upon discretionary cash flow per
share, production, reserve replacement, the performance of the Corporation's
common stock as compared to the peer group shown in the performance graph, and
an individual discretionary award. The awards were subject to reduction by 50%
in the event the Corporation failed to achieve net income to common
stockholders. Discretionary cash flow per share is defined as net cash provided
by operating activities before changes in operating assets and liabilities minus
exploration dry hole costs plus total exploration expense minus capitalized
interest divided by the average number of common shares outstanding. The
discretionary cash flow and production goals each comprised 25% of the total
award with the reserve replacement and stock price performance goals each
comprising 20% of the total award. The individual discretionary award was
potentially payable up to 10% of the total award. With the exception of the
stock performance goal and the discretionary award, the goals were compared
against profit plan projections. The discretionary cash flow and production
goals were not met, the reserve replacement goal was met in full and the stock
price performance goal was met at the 50% level. An average individual
discretionary award of 8% was also granted. Since the Corporation failed to
achieve net income to common stockholders, the payout was reduced by 50%. The
Committee, however, exercised its discretion and increased all awards by 25% of
the maximum potential award thereby causing an overall average payout of 44%.
In addition to the above described cash payments, the executive officers
and key employees are eligible to participate in grants made under the Stock
Plans. In order to further the identity of interest of employees with that of
its stockholders, all forms of compensation under the Stock Plans relate to
common stock.
As part of the ongoing strategy discussed above, in July and October 1998,
the Committee granted Mr. Payne, the executive officers and other key employees
Non-Qualified Stock Options ("NQSO's") as noted in the table entitled
"Options/SAR Grants in Last Fiscal Year". The October grant was made in lieu of
a salary increase for most individuals including Mr. Payne. All grants were made
at fair market value. The July awards were to vest as to one-third of the grant
per year over a three-year period and the October awards were to vest at the
conclusion of a three year period.
Also, as part of the strategy discussed above, in December 1998, the
Committee granted a total of 200,943 Phantom Units to 21 individuals, including
Mr. Payne and the executive officers. Mr. Payne received 49,050 Units, Mr. Boyt
17,857 Units, Ms. Clark 12,799 Units, and Mr. Radtke 12,799 Units. The remaining
individuals participating in the grant received Units in amounts ranging from
5,357 to 12,799. The Units were to be earned over a three-year period commencing
January 1, 1999 with ultimate payout, if any, to be made in an equivalent number
of shares of common stock. The Committee established four equally weighted goals
which must be attained over this three-year period. Full payout would have
resulted if discretionary cash flow (as described above) and production volumes
equaled the three-year projected levels established by the 1999 profit plan, the
common stock price performance equaled the S&P 500 Index over the three-year
period and the common stock price at the end of the three years equaled an
established target. If the above goals were substantially exceeded, possible
payouts may increase by 100 percent. Failure to meet a threshold goal level will
result in the reduction or total elimination of a payout. As a result of the
merger with Snyder Oil Corporation on May 5, 1999, all NQSQ's became fully
vested and the Phantom Units were paid in cash at the maximum level pursuant to
the terms of the Stock Plans.
Chief Executive Compensation
The review of executive compensation discussed above included a review of
Mr. Payne's compensation. As in the case of most of the executive officers, as a
result of the review of the peer group, it was determined that Mr. Payne's
salary not be increased in 1998. Mr. Payne did receive a grant of 110,000 NQSQ's
with a strike price of $10.625 in June 1998 and 200,000 NQSO's with a strike
price of $8.125 in October 1998.
9
<PAGE> 12
Section 162(m) of the Internal Revenue Code of 1986, as amended
The Committee continues to review implications of the $1 million pay cap
rules set forth in Section 162(m) of the Internal Revenue Code of 1986, as
amended, and takes this into account when establishing and reviewing
compensation policies.
Compensation and Benefits Committee
William E. Greehey, Chairman
Reuben F. Richards
Kathryn D. Wriston
Compensation Committee Interlocks and Insider Participation
No member of the Compensation and Benefits Committee was an officer or
employee of the Corporation in 1996, 1997 or 1998.
The following table summarizes certain information regarding compensation
paid or accrued by the Corporation during each of the last three fiscal years to
the Chief Executive Officer and each of the Corporation's four other most highly
compensated executive officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------ PAYOUTS
SECURITIES -------
UNDERLYING LTIP ALL OTHER
NAME AND OPTIONS/SARS PAYOUT COMPENSATION
PRINCIPAL POSITION YEAR SALARY $ BONUS $(1) #S(2) $(3) $(4)
- ------------------ ---- -------- ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
James L. Payne................ 1998 515,000 231,750 310,000 -- 28,767
Chairman of the Board, and 1997 515,000 562,464 60,000 -- 30,500
Chief Executive Officer 1996 515,000 708,125 225,000 515,025 30,900
Hugh L. Boyt.................. 1998 245,000 90,956 125,000 -- 13,447
President and Chief 1997 230,000 171,271 20,000 -- 13,400
Operating Officer 1996 230,000 215,625 70,000 140,625 13,800
Jerry L. Bridwell(6).......... 1998 230,000 77,625 -- -- 10,920
Senior Vice President -- 1997 230,000 188,398 20,000 -- 11,560
Exploration and Land 1996 230,000 172,500 70,000 140,625 12,420
Janet F. Clark(5)............. 1998 225,000 75,938 110,000 -- 11,747
Senior Vice President -- 1997 206,250 138,558 135,000 -- 7,159
Finance Chief Financial 1996 -- -- -- -- --
Officer and Treasurer
Duane C. Radtke............... 1998 199,250 63,885 115,000 -- 10,935
Senior Vice President -- 1997 187,000 122,541 20,000 -- 10,640
Production 1996 170,208 146,850 45,000 87,495 9,684
</TABLE>
- ---------------
(1) The bonus amounts shown for 1998 were payable in cash, while the amounts in
1997 and 1996, although determined on a cash basis, were actually paid in
shares of common stock pursuant to the Stock Plans. For 1997, Messrs. Payne,
Boyt, Bridwell, Ms. Clark and Mr. Radtke received 9,798, 3,282, 3,282, 2,414
and 2,135 shares of Bonus Stock, and 44,091, 9,846, 14,769, 10,862 and 9,606
shares of Restricted Stock, respectively. For 1996, Messrs. Payne, Boyt,
Bridwell and Mr. Radtke received 6,460, 2,084, 3,067 and 1,059 shares of
Bonus Stock and 41,200, 9,200, 0, and 8,544 shares of Restricted Stock,
respectively.
(2) As a result of the spin-off of Monterey Resources, Inc. by the Corporation
in July 1997, all outstanding NQSO's were adjusted to reflect the effect of
the transaction on the value of the Corporation's common stock. The
anti-dilution formula follows the Internal Revenue Service approved
guidelines for adjusting
10
<PAGE> 13
Qualified Incentive Stock Options and took into account the average sales
prices for the Corporation's common stock for a period of time before and
after the spin-off. As a result of the adjustment, the number of options
outstanding increased by a factor of 1.7045 and the strike price was reduced
accordingly at that time. The Corporation will receive the same overall
consideration for the underlying securities upon exercise of the option. All
outstanding Phantom Units were also adjusted utilizing the same formula. All
other terms and conditions of the options and the Phantom Units remained
unchanged.
As a result of the adjustment, the number of options granted in 1996 as
shown in the table to Messrs. Payne, Boyt, Bridwell and Radtke were
increased to 383,513, 119,316, 119,316 and 76,703, respectively. The
options shown as granted in 1997 for these individuals were granted
following the spin-off and no adjustment was made to these options. Ms.
Clark received two option grants in 1997. The first grant of 100,000
options was made prior to the spin-off and was increased to 170,450 options
as a result of the adjustment. The second grant of 35,000 options was made
following the spin-off and therefore no adjustment was made to these
options.
(3) The amounts reflect the value of shares of common stock received as a result
of the accelerated payout of Phantom Units in November 1996.
(4) Amounts shown reflect matches made by the Corporation for employee
contributions to the Santa Fe Energy Resources, Inc. Savings Investment Plan
as well as the performance match. (See "-- Benefit Plans -- Savings Plan"
for a description of the Savings Investment Plan and the performance match).
The performance match is contributed in the year following the performance
and therefore total amounts shown for 1996, 1997 and 1998 include the match
made for 1995, 1996 and 1997 results, respectively. The Corporation made a
performance match in February 1999 for 1998 results for Messrs. Payne, Boyt,
Bridwell, Ms. Clark and Mr. Radtke in the amount of $1,408 for each
individual. In addition, amounts shown for 1997 and 1998 also include the
match made by the Corporation relating to deferrals under the Deferred
Compensation Plan. (See "-- Benefit Plans -- Savings Plan" for a description
of the Deferred Compensation Plan). These amounts are also subject to the
performance match outlined in the Savings Investment Plan. In February 1999,
the Corporation allocated to accounts maintained by Messrs. Payne, Boyt,
Bridwell, Ms. Clark and Mr. Radtke $3,124, $749, $312, $572 and $345,
respectively, as a performance match.
(5) Ms. Clark's employment with the Corporation commenced on January 1, 1997.
(6) Mr. Bridwell retired from the Corporation on June 30, 1999.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------- POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED
SECURITIES TOTAL RATES OF STOCK
UNDERLYING OPTIONS/SARS EXERCISE PRICE APPRECIATION
OPTIONS/SARS GRANTED TO OR BASE FOR OPTION TERM
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME #S FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ------------ ------------ -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
James L. Payne........... 110,000 6.28% 10.625 6/29/08 735,009 1,862,696
200,000 11.43% 8.125 10/28/08 1,021,960 2,589,820
Hugh L. Boyt............. 45,000 2.57% 10.625 6/29/08 300,685 762,012
80,000 4.57% 8.125 10/28/08 408,784 1,035,928
Jerry L. Bridwell........ -- -- -- -- -- --
Janet F. Clark........... 45,000 2.57% 10.625 6/29/08 300,685 762,012
65,000 3.71% 8.125 10/28/08 332,137 841,691
Duane C. Radtke.......... 55,000 3.14% 10.625 6/29/08 367,504 931,348
60,000 3.43% 8.125 10/28/08 306,588 776,946
</TABLE>
11
<PAGE> 14
The NQSO's were granted at market on the date of the grant and as to the first
grant shown were to vest one-third per year over a three-year period. The second
grant shown was to vest in full, three years following the grant date. As a
result of the merger with Snyder Oil Corporation on May 5, 1999, all options
vested.
AGGREGATED OPTION/SAR EXERCISES DURING 1998 AND OPTION/SAR VALUES AT DECEMBER
31, 1998
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT
SHARES OPTIONS/SARS DECEMBER 31, 1998(1)
ACQUIRED VALUE AT DECEMBER 31, 1998 ($)
ON REALIZED --------------------------- ---------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James L. Payne.............. -- -- 1,507,842 477,838 1,236,815 24,426
Hugh L. Boyt................ -- -- 470,143 178,105 422,404 8,549
Jerry L. Bridwell........... -- -- 552,971 53,105 422,404 8,549
Janet F. Clark.............. -- -- 125,300 190,150 -- --
Duane C. Radtke............. -- -- 137,915 153,900 183,333 4,885
</TABLE>
- ---------------
(1) The closing price of common stock on December 31, 1998 was $7.25
LONG-TERM INCENTIVE PLAN AWARDS IN 1998
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUT UNDER
NUMBER OF PERFORMANCE NON-STOCK PRICE-BASED PLANS
SHARES, UNITS OR OTHER PERIOD -------------------------------
OR OTHER UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS # OR PAYOUT # # #
- ---- ------------- ---------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C>
James L. Payne.................... 49,050 1/1/99-12/31/01 7,357 49,050 98,100
Hugh L. Boyt...................... 17,857 1/1/99-12/31/01 2,678 17,857 35,714
Jerry L. Bridwell................. -- 1/1/99-12/31/01 -- -- --
Janet F. Clark.................... 12,799 1/1/99-12/31/01 1,919 12,799 25,598
Duane C. Radtke................... 12,799 1/1/99-12/31/01 1,919 12,799 25,598
</TABLE>
In December 1998, the individuals described above (as well as other
executive officers and key employees) received grants of Phantom Units pursuant
to the Stock Plans in the amounts indicated. The grant was effective January 1,
1999 with the Units being earned over a three-year period. Ultimate payout, if
any, was to be made in an equivalent number of shares of common stock. Four
equally weighted goals were established which must be attained over the
three-year performance period. Full payout at the target level would have
resulted if discretionary cash flow and production volumes equaled the three
year projected levels established by the 1999 profit plan, the common stock
price performance equaled the S&P 500 Index over the three-year period and the
common stock price at the end of the three years equaled an established target.
If the above goals were substantially exceeded, possible payouts may increase to
the maximum shown. Failure to meet a threshold level, shown above as the
combined threshold level of all four goals, would have resulted in a reduction
or total elimination of a payout. As a result of the merger with Snyder Oil
Corporation on May 5, 1999, all Phantom Unit awards were paid out in cash at the
maximum level pursuant to the terms of the Stock Plans.
CHANGE IN CONTROL
The Stock Plans and the IC Plan contain "Change in Control" provisions. A
Change in Control is generally defined to occur if (a) any "person" becomes the
beneficial owner of securities representing 25% or more of the voting power of
the Corporation's outstanding securities; or (b) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors cease to constitute at least a majority of the Board; or
(c) the Corporation's stockholders approve a merger or
12
<PAGE> 15
consolidation of the Corporation with another corporation and the voting
securities of the Corporation outstanding immediately prior thereto do not
represent 65% of the combined voting power of the voting securities outstanding
immediately thereafter; or (d) the Corporation's stockholders approve a plan of
complete liquidation or an agreement for the sale or disposition by the
Corporation of all or substantially all of its assets. The merger with Snyder
Oil resulted in a Change in Control. Therefore, at the time of the merger all
stock options granted under the Stock Plans became exercisable, all restrictions
on Restricted Stock lapsed, all goals associated with Phantom Units awards were
deemed met at the maximum level and such awards became payable in cash and each
participant in the IC Plan who remains employed at year-end will be entitled to
the maximum bonus that would have been payable if all performance goals had been
met in full.
PERFORMANCE GRAPH
The following performance graph compares the performance of the common
stock to the S&P 500 Index and to an index composed of independent oil and gas
companies which the Corporation believes have an asset base and operations which
are comparable to those of the Corporation.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)
AMONG SANTA FE ENERGY RESOURCES, INC., THE S&P 500
INDEX AND A PEER GROUP(2)
MEASUREMENT PERIOD SANTA FE ENERGY
(FISCAL YEAR COVERED) RESOURCES, INC. PEER GROUP S & P 500
--------------------- ----------------- ------------ -------------
12/93 100 100 100
12/94 86 88 101
12/95 104 107 139
12/96 150 140 171
12/97 217 133 229
12/98 140 92 294
(1) $100 invested on December 31, 1993 in stock or index -- including
reinvestment of dividends. Fiscal year ending December 31.
(2) This group of companies, which includes the Corporation, also currently
includes Anadarko Petroleum Corp., Apache Corp., Barrett Resources Corp.,
Burlington Resources, Cabot Oil & Gas, Cross Timbers Oil Co., Devon Energy,
Enron Oil & Gas, Mitchell Energy & Development, Noble Affiliates, Inc.,
Ocean Energy (reflects value of United Meridian Corporation through date of
merger with Ocean Energy on March 27, 1998), Oryx Energy Co., PennzEnergy
(formerly Pennzoil Co.), Pioneer Natural Resources, Pogo Producing Company,
Seagull Energy Corp., Union Texas Petroleum Holdings, Inc., Vastar
13
<PAGE> 16
Resources, Inc., and Vintage Petroleum. Due to activities such as
reorganizations and mergers, additions and deletions are made to the group
from time to time.
BENEFIT PLANS
The Corporation maintains a 401(k) savings plan and a retirement income
plan. In addition, the Corporation has entered into employment agreements with
certain officers and key employees and maintains a severance program for all
full-time salaried employees. These plans and agreements are briefly described
below.
Savings Plan. The Corporation maintains the Santa Fe Snyder Corporation
Savings Investment Plan (the Snyder Oil Corporation profit sharing plan was
merged into the Savings Investment Plan). The Savings Investment Plan offers
eligible employees an opportunity to make long-term investments on a regular
basis through salary contributions, which are supplemented by matching employer
contributions. Substantially all salaried employees are eligible to participate
on the first day of the month after their date of hire. The Corporation will
match an employee's contribution up to 4% of such employee's compensation.
In addition to the employer match described above, at the end of each
fiscal year, the Company's performance is evaluated using the same performance
measures used in the IC Plan. If the performance meets or exceeds the goals for
that year, participants will receive up to another fifty cents on each regular
matching dollar contributed by the Corporation. The regular employer matching
contributions as well as the performance match are made in common stock. The
goals were 44% met in 1998 and a partial performance match was made in February
1999.
The Savings Investment Plan is intended to qualify as a Section 401(k) cash
or deferred compensation arrangement whereby an employee's contributions and the
employer's matching contributions are not subject to federal income taxes at the
time of the contribution to the Savings Investment Plan, and the Savings
Investment Plan is subject to the restrictions imposed by the Code. A variety of
investment alternatives are offered, including a fund which is invested in
common stock.
The Corporation also maintains a non-qualified Deferred Compensation Plan
whereby employees earning in excess of $100,000 per year are allowed to defer
all or a portion of their salary until any future year or retirement. These
amounts are not matched by the Corporation. Employees earning in excess of
$160,000 per year may also defer up to 4% of such excess and the amount will be
matched by the Corporation. The amount contributed is also subject to the
performance match described above in the Savings Investment Plan.
Retirement Plans. The Corporation maintains the Santa Fe Snyder Corporation
Retirement Income Plan, a qualified defined benefit plan for substantially all
salaried employees, and the Santa Fe Snyder Corporation Supplemental Retirement
Plan which is a non-qualified plan. The Supplemental Plan will pay benefits to
Retirement Plan participants where the Retirement Plan formula produces a
benefit to members in excess of limits imposed by ERISA and applicable
government regulations. It also includes amounts deferred under the Deferred
Compensation Plan as pensionable compensation. Benefits which have accrued to
the Corporations' participants under both the Retirement Income Plan and
Supplemental Plan are shown below for selected compensation levels and years of
service. As of December 31, 1998, Messrs. Payne, Boyt, Bridwell, Radtke and Ms.
Clark were credited with 16.8, 15.2, 24.8, 6.7 and 2.0 years of service under
the plans, respectively.
14
<PAGE> 17
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE YEARLY ----------------------------------------------------
COMPENSATION 15 20 25 30 35
- -------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$250,000................................ $ 45,000 $ 60,000 $ 75,000 $112,000 $131,000
$350,000................................ $ 63,000 $ 84,000 $106,000 $158,000 $185,000
$450,000................................ $ 82,000 $109,000 $137,000 $205,000 $239,000
$550,000................................ $101,000 $134,000 $168,000 $251,000 $293,000
$650,000................................ $119,000 $159,000 $199,000 $298,000 $348,000
$750,000................................ $138,000 $184,000 $230,000 $344,000 $402,000
$850,000................................ $156,000 $208,000 $261,000 $391,000 $456,000
$950,000................................ $175,000 $233,000 $292,000 $437,000 $510,000
</TABLE>
Benefit figures shown are amounts payable based on a straight life annuity
assuming retirement by the participant at age 62 in 1998 without a joint
survivorship provision. The benefits listed in the above table are not subject
to any deduction for social security or other offset amounts.
Benefits under the plans are computed based on a participant's total
compensation for the 60 consecutive months during the ten-year period
immediately prior to the termination of his covered employment for which his
total compensation is the highest, divided by 60. If a participant has not
received compensation for 60 consecutive months during such ten-year period, his
compensation shall equal the total of his compensation for the longest period of
consecutive months during such ten-year period divided by the total number of
months of compensation so considered.
Compensation recognized under the plans is the total basic compensation,
including any elective salary deferral amounts excluded from income pursuant to
Section 125 or 402 of the Code, plus overtime, shift differentials and bonuses
(whether cash or stock) paid pursuant to recurring bonus programs, including
compensation deferred under the Deferred Compensation Plan, but excluding any
special or extraordinary bonuses and any other items of compensation. A
participant's basic compensation is the regular rate of pay specified for his
position and does not include automobile allowances, imputed income under any
group term life insurance program, moving expense or other reimbursements,
fringe benefits, or similar items.
The pension compensation therefore differs from the compensation listed in
the Summary Compensation Table in several respects. Pension compensation is
based on average compensation as explained above. It does not include restricted
stock awards, stock options and other compensation in the "All Other
Compensation" column (i.e., employer matching contributions to the Savings
Investment Plan and the performance match). It also does not include special or
extraordinary bonuses.
The pension compensation of officers listed in the Summary Compensation
Table is listed below:
<TABLE>
<CAPTION>
PENSION COMPENSATION
NAME (FINAL AVERAGE PAY)
- ---- --------------------
<S> <C>
James L. Payne............................................ $799,900
Hugh L. Boyt.............................................. $339,900
Jerry L. Bridwell......................................... $338,400
Duane C. Radtke........................................... $251,600
Janet F. Clark............................................ $303,100
</TABLE>
Employment Agreements. As of June 30, 1999, the Corporation has entered
into employment agreements (the "Employment Agreements") covering 23 employees
of the Corporation (including each of the individuals named in the Summary
Compensation Table (except Mr. Bridwell who voluntary terminated his Employment
Agreement in May 1999). The Employment Agreements are intended to encourage such
employees to remain in the employ of the Corporation. The initial term of most
Employment Agreements is for three years; however, beginning on the second
January 1 and each succeeding January 1 after its effective date, the term is
automatically extended for an additional one-year period, unless by September 30
of the preceding year the Corporation gives notice that the Employment Agreement
will not be so extended. The
15
<PAGE> 18
term of the Employment Agreement, however, is automatically extended for a
minimum period of 24 months following a Change in Control (three years in the
case of Mr. Payne). A Change in Control is defined substantially the same as in
the Stock Plans.
In the event that following a Change in Control (and during the term of the
Employment Agreement) employment is terminated by the employee for "Good Reason"
or the employee is involuntarily terminated by the Corporation other than for
"Cause" (as those terms are defined in the Employment Agreements), or if during
the six months preceding a Change in Control, the employee's employment is
terminated by the employee for Good Reason or by the Corporation other than for
Cause, and such termination is demonstrated to be connected with the Change in
Control, the Employment Agreements provide for payment of certain amounts to the
employee based on the employee's salary and bonus under the IC Plan; payout of
nonvested restricted stock, phantom units, stock options, if any, and
continuation of certain insurance benefits on a tax neutral basis for a period
of up to 24 months (36 months in the case of Mr. Payne). The payments and
benefits are payable pursuant to the Employment Agreement only to the extent
they are not paid out under the terms of any other plan of the Corporation. The
payments and benefits provided by these Employment Agreements may be further
limited by certain restrictions commonly known as Parachute Payment limitations
as set forth in the Employment Agreements. In the event Mr. Payne's payments
would exceed the Parachute Payment Limits, he will be made "whole" on a net
after-tax basis for any excise tax incurred. Without giving effect to such
limitation, the estimated value of the payments and benefits that Messrs. Payne,
Boyt, Ms. Clark and Mr. Radtke and all executive officers as a group would be
entitled to receive if a qualifying termination occurred on July 1, 1999 would
be $3,024,502, $927,836, $629,220, $656,314 and $5,237,872, respectively. The
merger with Snyder Oil Corporation on May 5, 1999, resulted in a Change in
Control. Due to modifications in the duties of Messrs. Payne, Boyt, Radtke and
Ms. Clark as a result of the merger "Good Reason" exists which would allow them
to terminate employment and receive payments pursuant to the Employment
Agreements.
Severance Program. The Corporation maintains a Severance Program for all
full-time salaried employees who are terminated by the Corporation or terminated
or constructively terminated by an acquiring corporation, other than for Cause
(as defined in the Severance Program). However, following a Change in Control
(defined substantially the same as in the Stock Plans), an executive officer or
key employee who has entered into an Employment Agreement is not eligible to
receive duplicate benefits under the Employment Agreement and the Severance
Program. A participant in the Severance Program is generally entitled to an
amount of up to 78 weeks' pay based upon a participant's age, length of service
and highest rate of base salary in effect during the 24-month period preceding
his termination, provided that the aggregate of such payment does not exceed two
times the participant's actual salary for the 12-month period preceding the date
of termination. In addition, a participant is entitled to continuation of health
and life insurance benefits for up to a period of two years. The merger with
Snyder Oil Corporation on May 5, 1999 resulted in a Change in Control.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP served as the independent public accountants for
the Corporation in 1998 and has been appointed the Corporation's independent
public accountants for 1999. Representatives of PricewaterhouseCoopers LLP will
be present at the annual meeting with the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
The stockholders are requested to ratify and approve the appointment of
PricewaterhouseCoopers LLP as independent public accountants for 1999.
The appointment of PricewaterhouseCoopers LLP will be approved if the votes
cast in favor of such approval exceed the votes cast opposing such approval.
16
<PAGE> 19
OTHER BUSINESS
The Board knows of no business that will come before the meeting except
that indicated above. However, if any other matters are properly brought before
the meeting, it is intended that the persons acting under the proxy will vote
thereunder in accordance with their best judgment.
COST OF PROXY SOLICITATION
The cost of preparing, assembling and mailing this proxy material will be
borne by the Corporation. In addition to solicitation by mail, solicitations may
be made by regular employees of the Corporation or by paid solicitors in person
or by telephone or telegraph. Arrangements may be made with brokerage houses,
custodians, nominees and fiduciaries to send proxy material to their principals
and the Corporation will reimburse them for their expense in so doing.
STOCKHOLDER PROPOSALS
In accordance with the bylaws of the Corporation and the proxy rules of the
Securities and Exchange Commission, in order for proposals by stockholders to be
brought before the 2000 annual meeting and included in the proxy material
solicited by the Corporation for the 2000 annual meeting such proposals must be
received at the Corporation's executive offices no later than May 5, 2000;
provided, however that if the date of the 2000 annual meeting is scheduled to be
held prior to August 3, 2000 or later than October 2, 2000, the proposals are
then required to be received by the Corporation within a reasonable time before
its solicitation is made if the proposals are to be included in such proxy
material, and no later than the close of business on the tenth day following the
day on which the proxy materials for the 2000 annual meeting are first mailed if
the proposals are to be brought before the 2000 annual meeting.
By order of the Board of Directors.
MARK A. OLDER
Corporate Secretary
July 20, 1999
17
<PAGE> 20
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<S> <C>
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Approval of
Directors [ ] [ ] Independent [ ] [ ] [ ]
(See Reverse) Accountants
For, except vote withheld from the
following nominee(s):
- --------------------------------------
PLEASE COMPLETE, SIGN AND PROMPTLY MAIL THIS
PROXY IN THE ENCLOSED ENVELOPE.
Note: Please sign exactly as name appears on this
card. Joint owners should each sign personally.
Corporation proxies should be signed by an
authorized officer. Executors, administrators,
trustees, etc. should so indicate when signing.
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SIGNATURE(S) DATE
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<PAGE> 21
SANTA FE SNYDER CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING ON SEPTEMBER 2, 1999
The undersigned hereby constitutes and appoints John C. Snyder, James L. Payne
and William E. Greehey and each of them, his true and lawful agents and proxies
with full power of substitution in each, to represent the undersigned at the
Annual Meeting of Stockholders of Santa Fe Snyder Corporation to be held at the
Omni Hotel, Four Riverway, Houston, Texas on Thursday, September 2, 1999 at
10:00 a.m., and at any adjournments thereof, on all matters coming before said
meeting.
Proposal 1 -- Election of Directors. Nominees:
Allan V. Martini, James E. McCormick, Reuben F. Richards and
Kathryn D. Wriston
Proposal 2 -- To ratify and approve the appointment of Price Waterhouse Coopers
LLP as independent public accountants for the fiscal year ending
December 31, 1999.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIIRECTORS' RECOMMENDATIONS. THE PROXY COMMITTEE CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THIS CARD PROVIDES VOTING INSTRUCTIONS FOR SHARES HELD FOR THE BENEFIT OF
COMPANY EMPLOYEES IN THE SANTA FE SNYDER INVESTMENT PLAN.
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SEE REVERSE
SIDE
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