<PAGE>
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 [_]
Filed by a party other than the registrant [X]
Check the appropriate box:
[_] Preliminary proxy statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[_] Definitive proxy statement RULE 14a-6(e)(2))
[_] Definitive additional materials
[X] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
MESA Inc.
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(Name of Registrant as Specified In Its Charter)
The Washington/Davis Group
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[_] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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:
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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Notes:
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WASHINGTON/DAVIS GROUP
SOLICITATION OF WRITTEN REQUEST
OF SHAREHOLDERS OF MESA INC.
TO CALL A SPECIAL MEETING
"Shareholder voting is the heart of corporate democracy, and in
theory is the ultimate source of management accountability to
shareholders."
Boone Pickens
Advocate, United Shareholders Association
--------
(Volume 2, No. 7 August 1987)
THE WASHINGTON/DAVIS GROUP INTENDS TO PROVIDE SHAREHOLDERS WITH THE OPPORTUNITY
TO EXPRESS THEIR VIEWS AT A SPECIAL MEETING. SIGNING A WRITTEN REQUEST TO CALL
A SPECIAL MEETING WILL NOT AFFECT A SHAREHOLDER'S ABILITY TO VOTE FOR OR AGAINST
ANY PROPOSALS PRESENTED AT THE SPECIAL MEETING.
Dear Fellow MESA Shareholders:
In June 1995, Dennis Washington, Marvin Davis and entities affiliated
with Mr. Davis, David H. Batchelder and Dorn Parkinson (together, the
"Washington/Davis Group") formed a group for the purpose of maximizing the value
of MESA Inc. ("MESA" or the "Company") for all of the Company's shareholders.
The Washington/Davis Group has announced its intention to solicit Written
Requests to call a special meeting for the purpose of removing all of the
current members of the Board of Directors of the Company (the "Board") and
electing eight persons nominated by the Washington/Davis Group (the "Nominees")
who would be committed to exploring all alternatives for maximizing the value of
the Company for all shareholders. As of July 31, 1995, the Washington/Davis
Group owned approximately 9.4% of the outstanding stock of the Company.
MESA is a highly leveraged company with long-term debt totaling
approximately $1.2 billion and with book equity of only $117 million as of March
31, 1995. IN ITS REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995, MESA
STATED: "THE COMPANY'S CURRENT FINANCIAL FORECASTS INDICATE THAT IT WILL BE
UNABLE TO FUND ITS PRINCIPAL AND INTEREST OBLIGATIONS IN 1996 WITH CASH FLOWS
FROM OPERATING ACTIVITIES AND AVAILABLE CASH AND SECURITIES BALANCES." During
the six years ended December 31, 1994, the Company incurred net losses of more
than $600 million, which amounts to more than $9.00 per share.
In response to these financial circumstances, MESA attempted during
the first half of 1995 to sell its interest in the Hugoton field. That effort
failed. Management and the Board now ask our forbearance while they pursue a
reaffirmed commitment to refinance debt and sell the Hugoton assets in pieces.
While indicating a willingness to consider a sale or merger of the Company, the
Board has refused to appoint an independent committee of directors with
independent financial and legal advisors to explore all alternatives to enhance
the value of the Company for all shareholders.
<PAGE>
HOW HAVE YOUR MESA SHARES PERFORMED?
Let's look at the record. MESA'S COMMON STOCK HAS FALLEN FROM A PRICE
PER SHARE AT THE BEGINNING OF 1984 OF OVER $65 (WHICH REPRESENTS THE PRICE OF
THE PUBLIC EQUITY SECURITIES OF THE COMPANY'S PREDECESSOR ADJUSTED TO CURRENT
SHARE EQUIVALENTS) TO APPROXIMATELY $5 AS OF DECEMBER 31, 1994. THIS REPRESENTS
A DECLINE OF MORE THAN 90%, WHICH CONTINUES, AS DEMONSTRATED BY THE JULY 31,
1995 PRICE PER SHARE OF $4.25. The cumulative total shareholder return (change
in stock price plus dividend reinvestment) for the Company shown on the graph
below reflects the trading prices of, and dividends paid with respect to, such
securities for the relevant time periods and is adjusted to give effect
retroactively to the one-for-five reverse stock split effected on December 31,
1991.
"Over the long haul, the market reflects management's ability to make the most
out of its assets. So the price of a company's stock is like a report card."
Boone Pickens
Boone, p. 73
-----
(Houghton Mifflin, 1987)
<TABLE>
<CAPTION>
============================================================================================================================
12/31 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment* $100.00 $138.15 $96.73 $143.21 $99.93 $156.58 $114.49 $42.65 $19.55 $13.15 $15.99 $13.86
============================================================================================================================
</TABLE>
* Assumes $100 invested on December 31, 1983. The price information was
prepared by Standard & Poor's Compustat Services, a division of McGraw-Hill
Companies. The Company's common stock began trading on the New York Stock
Exchange on January 2, 1992. Prior to that time, the common equity securities
of the Company's predecessors also traded on such exchange.
2
<PAGE>
HOW MUCH COMPENSATION HAS THE CHAIRMAN RECEIVED?
DURING THIS SAME PERIOD, BOONE PICKENS, THE COMPANY'S CHAIRMAN, WAS PAID
CASH COMPENSATION TOTALING A STAGGERING SUM OF MORE THAN $110 MILLION, AN
AVERAGE OF MORE THAN $10.0 MILLION PER YEAR DURING THE ELEVEN YEAR PERIOD ENDED
DECEMBER 31, 1994! In 1994 alone, with the Company incurring a net loss of $83
million and facing the clear threat of liquidity problems in 1996 (as disclosed
in their public documents), the Board awarded Boone Pickens more than $1.9
million in compensation, including bonuses of more than $1.0 million. The Board
even granted employee stock options on one million shares at $4.25 per share
less than 30 days prior to the announcement that the Company was considering the
sale of its Hugoton assets. The following graph demonstrates the cumulative
cash compensation paid by the company to Mr. Pickens.
<TABLE>
<CAPTION>
============================================================================================
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulative 22.9 34.2 67.0 73.5 80.1 102.7 105.2 105.6 111.0 111.8 112.7
Compensation
through Year End
($ in millions)*
============================================================================================
</TABLE>
____________________
* The compensation data were obtained from proxy materials filed by the
Company and its predecessors. Compensation includes salary, bonus, deferred
compensation paid during the period, incentive awards, general partner fees and
cash payments with respect to retirement contributions in excess of certain
limitations. Not included are life insurance premiums, retirement plan
contributions, deferred compensation accrued but not paid during the period,
payments made with respect to the Company's use of the Chairman's personally
owned property, moving expenses, purchase of the Chairman's residence and stock
options.
3
<PAGE>
HOW COULD THIS HAVE HAPPENED AND WHAT CAN WE DO NOW?
"Boards of directors don't stop mergers or block offers for
companies. The CEO's do. Not one out of fifty boards will stand
up to a CEO. In most cases, the CEO knows the board is
beholden to him because he put them there in the first place."
Boone Pickens
Boone, p. 128
-----
(Houghton Mifflin, 1987)
To be sure, natural gas producing companies have experienced declining
commodity prices during the last several years. However, in the opinion of the
Washington/Davis Group, a central problem plaguing the Company is ineffective
oversight by the current Board. SHAREHOLDERS WILL BE ABLE TO SEND THE MESSAGE
THAT THE BOARD'S BRAND OF CORPORATE GOVERNANCE IS UNACCEPTABLE BY SUPPORTING THE
WASHINGTON/DAVIS GROUP'S EFFORTS TO CALL THE SPECIAL MEETING. The
Washington/Davis Group, unlike certain current members of the Board, do not have
any financial relationship with the Company or management (other than customary
fees paid to Mr. Batchelder and Mr. Parkinson as independent directors), are not
eligible to receive salaries, bonuses or stock options, do not have financial
interests in firms that provide professional or other services to the Company,
have not entered into financial transactions with members of management and have
not received fees from the Company for use of personally owned property.
None of Mr. Washington, Mr. Davis, Mr. Batchelder, Mr. Parkinson or
any entity affiliated with these individuals has any present intention of
attempting to gain control of the Company through an acquisition of shares or
assets or through a merger or other business combination, or a joint venture,
partnership or similar transaction involving the Company. Members of the
Washington/Davis Group are significant shareholders who are committed to
maximizing shareholder value for all shareholders. Members of the
Washington/Davis Group believe that their interests are aligned with the
interests of the shareholders generally. As of July 31, 1995, Mr. Washington
and an affiliate of Mr. Davis owned 3,500,000 shares and 2,500,000 shares or
approximately 5.5% and 3.9%, respectively, of the outstanding common stock of
the Company.
The Washington/Davis Group intends to solicit Written Requests for the
purpose of calling the Special Meeting at which MESA shareholders would be asked
to vote for or approve (i) the removal of the ten directors currently serving on
the Board, (ii) an amendment to the Company's Bylaws to provide that the Board
shall consist of eight directors, which number may be increased or decreased by
the Board, (iii) the election of the eight Nominees to replace the MESA
directors so removed and (iv) to the extent that the Board, prior to the Special
Meeting, has adopted measures that would contravene or impede the purposes of
the foregoing proposals, a resolution that would rescind such measures. If the
Nominees are elected at the Special Meeting, the Washington/Davis Group expects
that the new Board promptly would form a committee of independent directors,
with independent financial and legal advisors, to consider all alternatives to
maximize the value of the Company for all shareholders. The Nominees also
intend to cause the Company to redeem the rights issued under the Company's
recently adopted "poison pill" Rights Plan. Any actions taken by the Nominees
would be subject to their fiduciary duties as directors of the Company.
4
<PAGE>
IS IT TRUE THAT MESA ADOPTED A POISON PILL?
"[P]oison pills are unacceptable, period, because their purpose is
to protect inept management."
Boone Pickens
Boone, p. 234
-----
(Houghton Mifflin, 1987)
"Poison pills so fundamentally alter the relationship between
ownership and management that they should never be permitted
unless approved by shareholders."
Boone Pickens
Advocate, United Shareholders Association
--------
(Volume 2, No. 7 August 1987)
Yes, incredible as it seems, given Boone Pickens' consistent and often
stinging criticism of corporate managements who adopt poison pills under the
guise of protecting shareholder rights, the Company recently adopted such a
plan. The poison pill would unleash its catastrophic economic results on any
person or group of persons who, in the aggregate, own 10% or more of the
outstanding shares. This could be the case even if the group's only acts were
to enter into an agreement to exercise their rights under Texas law to call a
special meeting of shareholders, unless that agreement arises in response to a
------
public proxy or consent solicitation process. The Washington/Davis Group
already has incurred significant time and expense associated with this Written
Request solicitation so that shareholders may have the opportunity to exercise
their rights to vote at a special meeting. The Company has claimed that its
poison pill is not a management entrenchment device, defending it on the basis
that the Rights are scheduled to expire on December 31, 1996. Yet, it is during
this critical period that the Board should be pursuing viable alternatives to
maximize shareholder value and not standing behind this "unacceptable" device.
THE WASHINGTON/DAVIS GROUP BELIEVES THAT THE COMPANY'S ADOPTION OF A
POISON PILL AND ITS REFUSAL TO ESTABLISH A COMMITTEE OF INDEPENDENT DIRECTORS
WITH INDEPENDENT FINANCIAL AND LEGAL ADVISORS ARE INCONSISTENT WITH MAXIMIZING
THE VALUE OF THE COMPANY FOR ALL SHAREHOLDERS.
TIME IS NOT OUR ALLY.
The Washington/Davis Group believes that the Board must act now to
seek potential acquirors or merger partners. During 1994 the Company recognized
interest and general and administrative ("G&A") expenses of more than $173
million. For the first quarter of 1995, interest and G&A expenses totaled more
than $43 million. The amount of such expenses in 1994 constituted approximately
$2.70 per share, or more than 60% of the total equity value of the Company as of
July 31, 1995. The Washington/Davis Group believes that a prompt and thorough
exploration of all alternatives for maximizing shareholder value, including a
sale or merger of the Company, should be directed by a committee of independent
directors who would be acting on behalf of all shareholders.
If you help us call a Special Meeting, you will have the opportunity
to consider our Nominees. Their qualifications speak for themselves, combining
some of the nation's
5
<PAGE>
foremost authorities on corporate governance and shareholder rights with
successful businessmen and highly experienced financial and operating
participants in the oil and gas industry.
THE MESA SHAREHOLDERS DESERVE AN OPPORTUNITY TO DECIDE. SIGNING A
WRITTEN REQUEST WILL NOT AFFECT YOUR ABILITY TO VOTE FOR OR AGAINST ANY
PROPOSALS PRESENTED AT THE SPECIAL MEETING.
The Washington/Davis Group
August 7, 1995
6
<PAGE>
Supplement to Letter
--------------------
Dennis R. Washington, Marvin Davis and entities affiliated with Mr. Davis (the
"Davis Entities"), David H. Batchelder, Dorn Parkinson (together, the
"Washington/Davis Group"), the individuals (the "Nominees") to be nominated for
election to the Board of Directors of MESA Inc. ("MESA") by the Washington/Davis
Group and certain officers of Batchelder & Partners, Inc., Joel L. Reed and
Kathy Scott, may be deemed to be participants in the solicitation of written
requests as that term is defined in Rule 14a-11(b) of the Securities Exchange
Act of 1934, as amended. As of July 31, 1995, Mr. Washington beneficially owned
3,500,000 shares of MESA's common stock ("Shares"). As of July 31, 1995, the
Davis Entities beneficially owned 2,500,000 Shares. Neither of Messrs.
Batchelder or Parkinson own any securities of MESA, however, Mr. Parkinson's
minor son beneficially owned 3,800 Shares. Messrs. Batchelder and Parkinson
currently are directors of the Company. The Nominees are David H. Batchelder,
Charles C. Cox, Michael C. Jensen, Leonard Judd, Sy Orlofsky, Dorn Parkinson,
Kurt H. Wulff and James J. Zehentbauer. As of July 31, 1995, Mr. Jensen
beneficially owned 1,500 Shares. Except as set forth herein, none of the persons
who may be deemed to be participants in the solicitation of written requests has
any interest, direct or indirect, by security holdings or otherwise, in
connection with such solicitation.
7
