SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant: X
Filed by a Party other than the Registrant:
Check the appropriate box:
____________________________________________________________________________
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FX ENERGY, INC.
____________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2), or Item 22(a)(2)
of Schedule 14A.
[ ] 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:
____________________________________________________________________________
[ ] 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:________________
<PAGE>
PROXY
FX ENERGY, INC.
Annual Meeting of the Shareholders of (This Proxy is Solicited on Behalf
FX Energy, Inc. on May [ ], 2000 of the Board of Directors)
The undersigned hereby appoints David N. Pierce and Scott J. Duncan
proxies, with full power of substitution, to vote the shares of common stock of
FX ENERGY, INC. (the "Company"), which the undersigned is entitled to vote at
the Annual Meeting of Shareholders of the Company ("Annual Meeting") to be held
at Little America Hotel, 500 South Main, Salt Lake City, Utah, on May [ ],
2000, at 10:00 a.m., local time, or any adjournment(s) thereof, such proxies
being directed to vote as specified below. If no instructions are specified,
such proxy will be voted "FOR" each proposal.
To vote in accordance with the Board of Directors' recommendations, sign
below. The "FOR" boxes may, but need not, be checked. To vote against any of
the recommendations, check the appropriate box marked "AGAINST" below. To
withhold authority for the proxies to vote for any of the recommendations, check
the appropriate box(es) marked "WITHHOLD AUTHORITY" below.
The Board of Directors recommends votes "FOR" the following proposals, each
of which has been proposed by the Board of Directors:
1. To elect each of the following nominees to serve as a director for a
term expiring at the 2003 Annual Meeting of the Shareholders of the
Company and until a successor is elected and qualified. To withhold
your vote for any individual nominee, strike a line through such
nominee's name.
Andrew W. Pierce Jay W. Decker Jerzy B. Maciolek
2. To approve the FX Energy, Inc. 1999 Stock Option and Award Plan.
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
3. To approve the proposed amendment to FX Energy's Articles of
Incorporation to increase FX Energy's authorized capitalization to
100,000,000 shares of Common Stock; and
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment (s) thereof.
FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY [ ]
PLEASE PRINT YOUR NAME AND SIGN EXACTLY AS YOUR NAME APPEARS IN THE RECORDS OF
THE COMPANY. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. IF YOUR
SHARES ARE HELD AT A BROKERAGE HOUSE, PLEASE INDICATE IN THE SPACE PROVIDED THE
NAME OF THE BROKERAGE HOUSE AND THE NUMBER OF SHARES HELD.
Dated:_____________ Number of Shares Held of Record _________
_______________________________ __________________________________________
Number of Shares Held at a Name of Brokerage or Clearing House
Brokerage or Clearing House
_______________________________ __________________________________________
Signature Signature (if held jointly)
_______________________________ __________________________________________
Print Name Print Name
PLEASE MARK, SIGN, DATE, AND
RETURN THIS PROXY TO: FX ENERGY, INC.
3006 SOUTH HIGHLAND DRIVE, SUITE 206
SALT LAKE CITY, UTAH 84106
<PAGE>
FX ENERGY, INC.
March [ ], 2000
Dear FX Energy stockholder:
Our 1999 Annual Report and our Proxy Statement for the 2000 Annual
Stockholders' Meeting of FX Energy, Inc. are enclosed. At this meeting, we will
seek your support for the election of directors, an amendment to the Articles of
Incorporation to increase the authorized shares of Common Stock and for the
approval of our 1999 Stock Option Plan.
The Board of Directors has approved the increase in the authorized
capitalization in order to preserve the rights of stockholders under the
Stockholder Rights Plan, which the stockholders approved in 1997 as an anti-
takeover measure to protect against attempts to acquire FX Energy on terms that
the Board of Directors does not believe to be in the best interest of
stockholders. In addition, the increase in capitalization will enhance FX
Energy's ability to fund additional capital requirements resulting from its
first commercial discovery in Poland, the Wilga 2, and other exploration,
appraisal, development and property acquisition activities in Poland.
These are important considerations for all stockholders. Therefore, the
Board of Directors urges you to review each of these proposals carefully. The
enclosed Proxy Statement discusses the intended benefits as well as possible
disadvantages of these proposals.
Your Board of Directors believes that the adoption of all of the proposals
is in the best interests of all stockholders.
Sincerely,
FX ENERGY, INC.
/s/ David N. Pierce
President
<PAGE>
FX ENERGY, INC.
3006 SOUTH HIGHLAND DRIVE, SUITE 206
SALT LAKE CITY, UTAH 84106
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY [ ], 2000
To the stockholders of FX Energy, Inc.:
The 2000 Annual Stockholders' Meeting (the "Annual Meeting") of FX Energy,
Inc. (the "Company"), will be held in the [ ] Room, Little America Hotel,
500 South Main Street, Salt Lake City, Utah, on May [ ], 2000. The Annual
Meeting will convene at 10:00 a.m., local time, to consider and take action on
the following proposals:
(1) To elect three directors to serve until the expiration of their
respective terms and until their respective successors are elected and
qualified;
(2) To approve the FX Energy, Inc., 1999 Stock Option and Award Plan;
(3) To approve the proposed amendment to FX Energy's Articles of
Incorporation to increase FX Energy's authorized capitalization to
100,000,000 shares of Common Stock; and
(4) To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) thereof.
Only owners of record of the 14,849,003 shares of FX Energy's Common Stock
issued and outstanding as of the close of business on March [ ], 2000 (the
"Record Date"), will be entitled to notice of and to vote at the Annual Meeting.
Each share of Common Stock is entitled to one vote.
Holders of at least a majority of the shares of Common Stock outstanding on
the Record Date must be represented at the meeting to constitute a quorum for
conducting business.
The attendance at and/or vote of each stockholder at the Annual Meeting is
important, and each stockholder is encouraged to attend.
FX ENERGY, INC.
By Order of the Board Of Directors
/s/ Scott J. Duncan, Secretary
Salt Lake City, Utah
March [ ], 2000
_______________________________________________________________________________
Important
Regardless of whether you plan to attend the meeting in person, please fill in,
sign, date, and return the enclosed proxy promptly in the self-addressed,
stamped envelope provided. No postage is required if mailed in the United
States.
_______________________________________________________________________________
_______________________________________________________________________________
SPECIAL REQUEST
If your shares are held in the name of a brokerage firm, nominee, or other
institution, only it can vote your shares. Please contact promptly the person
responsible for your account and give instructions for your shares to be voted.
_______________________________________________________________________________
<PAGE>
FX ENERGY, INC.
3006 SOUTH HIGHLAND DRIVE, SUITE 206
SALT LAKE CITY, UT 84106
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the management of FX Energy, Inc., to be voted at the
Annual Stockholders' Meeting to be held in the [ ] Room, Little America
Hotel, 500 South Main Street, Salt Lake City, Utah, on May [ ], 2000, at 10
a.m., local time, or at any adjournment thereof. The enclosed Proxy, when
properly executed and returned in a timely manner, will be voted at the Annual
Meeting in accordance with the directions set forth thereon. If no instructions
are indicated on the enclosed Proxy, the Proxy will be voted at the Annual
Meeting:
(1) FOR the election of three nominees of management set forth herein as
directors of FX Energy to serve as directors until the expiration of
their respective terms and until their successors are elected and
qualified;
(2) FOR the approval of the FX Energy, Inc., 1999 Stock Option and Award
Plan (the "Plan");
(3) FOR the approval of the proposed amendment to FX Energy's Articles of
Incorporation to increase FX Energy's authorized capitalization to
100,000,000 shares of Common Stock; and
(4) IN accordance with the best judgment of the persons acting as proxies on
other matters presented for a vote.
The enclosed Proxy, even though executed and returned to FX Energy, may be
revoked at any time before it is voted, either by giving a written notice,
mailed or delivered to the Secretary of FX Energy, by submitting a new Proxy
bearing a later date, or by voting in person at the Annual Meeting. If the
Proxy is returned to FX Energy without specific direction, the Proxy will be
voted in accordance with the Board of Directors' recommendations as set forth
above.
The entire expense of this Proxy solicitation will be borne by FX Energy.
In addition to this solicitation, officers, directors, and regular employees of
FX Energy, who will receive no extra compensation for such services, may solicit
proxies by mail, by telephone, or in person. This statement and form of Proxy
were first mailed to stockholders on or about March [ ], 2000.
Only holders of FX Energy's 14,849,003 shares of Common Stock, par value
$0.001 (the "Common Stock"), issued and outstanding as of the close of business
on March [ ], 2000 (the "Record Date"), will be entitled to vote at the Annual
Meeting. Each share of Common Stock is entitled to one vote. Holders of at
least a majority of the 14,849,003 shares of Common Stock outstanding on the
Record Date must be represented at the Annual Meeting to constitute a quorum for
conducting business.
All properly executed and returned proxies as well as shares represented in
person at the meeting will be counted for purposes of determining if a quorum is
present, whether the proxies are instructed to abstain from voting or consist of
broker non-votes. Under Nevada corporate law and FX Energy's Articles of
Incorporation and Bylaws, the election of directors requires the vote of a
plurality of the shares present at the Annual Meeting. The amendment to the
Articles of Incorporation and certain other specified matters are considered
approved by the stockholders if approved by the holders of a majority of the
issued and outstanding Common Stock at a meeting of the stockholders at which a
quorum is present. All other matters are considered approved by the
stockholders if approved by the holders of a majority of the shares present at a
meeting of the stockholders at which a quorum is present. Therefore,
abstentions and broker non-votes will have the same legal effect as a
vote against matters other than the election of directors; abstentions and
broker non-votes will not be counted for the election of directors.
Officers and directors holding an aggregate of 1,165,760 shares of Common
Stock, or approximately 6.13% of the issued and outstanding shares, have
indicated their intent to vote in favor of all proposals.
<PAGE>
______________________________________________________________________________
PROPOSAL 1: ELECTION OF DIRECTORS
______________________________________________________________________________
General
FX Energy's Articles of Incorporation provide that the Board of Directors
shall be divided into three classes, with each class as equal in number as
practicable. One class is to be elected each year for a three-year term. At
the Annual Meeting, three directors will be elected to serve three-year terms.
Votes will be cast, pursuant to authority granted by the enclosed Proxy
when properly executed and returned to FX Energy, for the election of the
nominees named below as directors of FX Energy, except as otherwise specified in
the Proxy. In the event a nominee shall be unable to serve, votes will be cast,
pursuant to authority granted by the enclosed Proxy, for such person as may be
designated by the Board of Directors. Biographical information follows for each
person nominated and for each director whose term of office will continue after
the Annual Meeting. The officers of FX Energy are elected at the Annual Meeting
of the Board of Directors to hold office until their respective successors are
elected and qualified. The information concerning the nominees and directors
and their security holdings has been furnished by them to FX Energy. (See
"Principal Stockholders" below.)
Executive Officers, Directors, and Nominees
The Board of Directors' nominees for election as directors of FX Energy at
the Annual Meeting are Andrew W. Pierce, Jay W. Decker and Jerzy B. Maciolek.
The following table sets forth the name, age, term of directorship, and
principal business experience of each executive officer and director of FX
Energy who has served in such position since FX Energy's last fiscal year:
________________________________________________________________________________
Year
Director Term Business Experience During Past
Name Age Since Expires Five Years and Other Information
________________________________________________________________________________
David N. Pierce 53 1992 2002 President, Director and Chairman
of FX Energy since 1992. For
over three years prior to 1992,
Vice-President and Director of
FX Energy's predecessor,
Frontier Exploration Company,
co-founded with his brother,
Andrew W. Pierce in January
1989. Executive capacities with
privately held oil and gas
companies since 1979. Graduate
of Princeton University and
Stanford Law School.
________________________________________________________________________________
Andrew W. Pierce 52 1992 2000 Vice-President and Director of
FX Energy since 1992. For over
three years prior to 1992,
President and Director of FX
Energy's predecessor, Frontier
Exploration Company, co-founded
with his brother, David N.
Pierce, in January 1989, which
was acquired by FX Energy in
1992.
________________________________________________________________________________
Thomas B. Lovejoy 63 1995 2001 Vice-chairman of the Board of
Directors. Engaged in financial
advisory and investment banking
activities since 1961. In 1992,
formed Lovejoy Associates, Inc.,
Greenwich, Connecticut, to
provide financial strategic
advice respecting private
placements, mergers and
acquisitions. 1989-1992,
Managing Director of
<PAGE>
________________________________________________________________________________
Year
Director Term Business Experience During Past
Name Age Since Expires Five Years and Other Information
________________________________________________________________________________
Thomas B. Lovejoy, continued natural resource, utility, and
mining groups for Prudential
Securities, Inc., New York City.
1980 to 1988, managing director
of the energy, and natural
resources group of Paine Webber,
Inc. Since 1993, Director of
Scaltech, Inc., Houston, Texas,
a processor of petroleum
refinery oil waste. B.S. from
the Massachusetts Institute of
Technology and M.B.A. from
Harvard Business School.
________________________________________________________________________________
Scott J. Duncan 51 1993 2001 Vice-President Investor
Relations, Secretary and
Director of FX Energy.
Financial consultant to FX
Energy from its inception
through April 1993, when he
became FX Energy's Treasurer
until December 1998. Graduate
of the University of Utah School
of Business.
________________________________________________________________________________
Peter L. Raven(1) 61 1996 2002 Retired, President of American
Ultramar. From 1957 through
1985, various positions with
Ultramar, PLC, London, England,
a fully integrated oil and gas
company, and its U.K. and
American held subsidiaries,
including Chief Financial
Officer of Ultramar PLC. From
1985 through 1988, Executive
Vice-President, and from 1988
through 1992, President of
American Ultramar. Graduate of
the Downside School in England,
the Institute of Chartered
Accountants in 1962, and the
Harvard Business School Advanced
Management Program in 1987.
________________________________________________________________________________
Jay W. Decker(1) 48 1996 2000 President of Patina Oil & Gas
Corporation, an independent oil
company, Denver, Colorado, since
March 1998 and Director since
May 1996. From September 1995
through March 1998, Executive
Vice-President and Director of
Hugoton Energy Corporation, an
independent oil company, Denver,
Colorado. From 1989 until its
merger into Hugoton, President
and Chief Executive Officer of
Consolidated Oil & Gas, Inc.,
Denver, Colorado. Prior to 1989,
Vice-President of Operations for
General Atlantic Energy Company
and in various capacities for
Peppermill Oil Company, Wainoco
Oil & Gas, and Shell Oil
Company. B.S. degree from the
University of Wyoming.
________________________________________________________________________________
Jerzy B. Maciolek 49 1996 2000 Vice-President of International
Exploration and Director of FX
Energy. Employed by FX Energy
since September 1995.
Instrumental in FX Energy's
exploration efforts in Poland.
Member of the Advisory Board of
the Polish Oil and Gas Company.
Prior to becoming a Company
employee, a private consultant
for over five years, including
consulting on hydrocarbon
potential of Poland and
Kazakhstan, translating and
interpreting geological and
geophysical information for
several integrated hydrocarbon
potential reports on Poland and
Kazakhstan and developing
applied integrated geophysical
interpretations over gold mines
in Nevada, California, and
Mexico. Since 1992, provided
consulting services to FX Energy
regarding exploration projects
in the western United States and
Poland. M.S. in exploration
geophysics from the Mining and
Metallurgy Academy in Krakow,
Poland.
________________________________________________________________________________
Dennis L. Tatum 38 1999 2002 Vice President and Treasurer of
FX Energy. Appointed as a
Director of FX Energy during
1999. Joined FX Energy in March
1997 as Controller prior to
becoming Treasurer in December
1998. From 1989-1997, employed
by Zilkha Energy, a private oil
________________________________________________________________________________
<PAGE>
________________________________________________________________________________
Year
Director Term Business Experience During Past
Name Age Since Expires Five Years and Other Information
________________________________________________________________________________
Dennis L. Tatum, continued and gas firm with interests in
the Gulf of Mexico, where he was
instrumental in overseeing joint
ventures. From 1987-1989,
employed by Global Natural
Resources, a public oil and gas
firm with domestic and
international holdings, where he
was responsible for acquisition
accounting. From 1983-1987,
employed by for Roosth &
Genecov, a private real estate
and oil and gas firm in Tyler,
Texas. B.B.A. in Accounting
from University of Texas at
Tyler in 1983, CPA from the
State of Texas in 1984. Series
7 securities license 1994 -
1998.
________________________________________________________________________________
Dennis B. Goldstein(1) 54 1999 2001 Corporate Counsel, Assistant
Secretary and Manager of Land
Services for Homestake Mining
Company, a publicly traded
mining company, San Francisco,
California since 1976.
Instrumental in Homestake's gold
exploration activities conducted
in Poland during 1998 and 1999
Deputy Attorney General, State
of California 1973-1976.
Graduate of Brown University in
1967, Stanford University Law
School in 1971 and the Executive
Program of the Stanford Graduate
School of Business in 1987.
Member of California Bar
Association.
________________________________________________________________________________
(1) Member of the Compensation and Audit Committees of the Board of
Directors of FX Energy.
Board of Directors Meetings and Committees
The Board of Directors had four meetings during 1999 and one meeting to
date in 2000. The directors also discussed the business and affairs of FX
Energy informally on numerous occasions throughout the year and took several
actions through unanimous written consents in lieu of meetings. Jerzy B.
Maciolek, a Director and Vice President of International Exploration of FX
Energy who is responsible for FX Energy's day to day activities in Poland,
consulted with the members of the Board of Directors informally from time to
time during 1999, but did not attend any formal meeting.
The Audit Committee recommends the selection of independent auditors,
approves the scope of audit and related fees, and reviews financial reports,
audit results, internal accounting procedures, related party transactions, where
appropriate, and programs to comply with applicable requirements relating to
financial accountability. The Audit Committee's responsibilities also include
the development of policies and procedures for compliance by FX Energy and its
officers and directors with applicable laws and regulations. The Audit
Committee met twice during 1999 and has met once to date in 2000 to review the
results of the audit of the 1999 financial statements of FX Energy by its
auditor.
The Compensation Committee has the responsibility to review performance of
senior management, recommend compensation, and develop compensation strategies
and alternatives throughout FX Energy. The Compensation Committee met twice
during 1999 to review FX Energy's compensation programs and to consider
and approve salaries, stock option grants and bonus payments related to 1999 and
2000. The Committee has also met once in 2000.
In connection with the adoption of a Stockholder Rights Plan, the Board of
Directors formed a Rights Redemption Committee during 1997 to perform certain
functions in accordance with such plan and appointed David N. Pierce, Andrew W.
Pierce, Thomas B. Lovejoy, Peter L. Raven, and Jay W. Decker to such
Committee. The Rights Redemption Committee has not met.
<PAGE>
Vote Required
Directors are elected by the affirmative vote of the holders of a plurality
of the shares of Common Stock voted at the Annual Meeting. Abstentions and
broker non-votes will not be counted in the election of directors.
The Board of Directors recommends a vote "FOR" the election of the nominees
of management, Andrew W. Pierce, Jay W. Decker and Jerzy B. Maciolek, as
directors of FX Energy, to serve in such capacities until the expiration of
their term and until their successors are elected and qualified.
Certain Relationships and Related Transactions
Unless otherwise indicated, the terms of the following transactions between
related parties were not determined as a result of arm's length negotiations.
Consulting Agreement
During January through April 1999, FX Energy engaged Lovejoy and
Associates, a consulting company owned by Tom Lovejoy, a director of FX Energy,
to advise FX Energy respecting future financing alternatives, possible
sources of debt and equity financing, with particular emphasis on funding for FX
Energy's Polish activities and FX Energy's relationship with the investment
community at a fee of $17,000 per month. During 1999, the consulting
agreement was terminated when Mr. Lovejoy became FX Energy's Chief Financial
Officer.
Officer Option Exercises and Loans
On February 17, 1998, two of FX Energy's officers exercised options to
purchase 300,000 shares of FX Energy's Common Stock at $1.50 per share that were
scheduled to expire on May 6, 1998. The officers paid the cost of exercising
the options by utilizing a bonus credit of $100,000 each issued to them during
1997 and signing a full recourse note payable to FX Energy for $125,000 each
bearing interest at 7.7%. On April 10, 1998, in consideration of the agreement
of the two officers to refrain from selling FX Energy's Common Stock in market
transactions, FX Energy agreed to advance the officers, on a non-recourse basis,
additional funds to cover their tax liabilities and other considerations. As of
December 31, 1999, the notes receivable and accrued interest totaled
$2,036,385. FX Energy had no commitment to advance additional funds to the
officers.
In consideration for extending the term from December 31, 1999 through
December 31, 2000, the officers agreed that if the average closing price of the
Common Stock for five consecutive trading days results in a value of
the collateral equal to or above the total principal and accrued interest
balances, the officers will repay the loans within 45 days thereafter either in
cash or by tendering to FX Energy such number of shares which at the average
closing price for the previous five consecutive trading days equals the
principal and interest then accrued.
The notes receivable and accrued interest are collateralized by 233,340
shares of FX Energy's Common Stock. In accordance with SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," FX Energy recorded an
impairment allowance of $666,000 as of December 31, 1999, based on the value of
the underlying collateral. The impairment allowance will be adjusted quarterly
based on the market value of the collateral shares.
<PAGE>
Principal Stockholders
The following table sets forth, as of the Record Date, the name, address
and shareholdings of each person who owns of record, or was known by FX Energy
to own beneficially, 5% or more of the Common Stock currently issued and
outstanding; the name and shareholdings of each director; and the shareholdings
of all executive officers and directors as a group. Unless otherwise indicated,
all shares consist of Common Stock, and all such shares are owned beneficially
and of record by the named person or group. Options include only vested
amounts; unvested options are excluded.
_________________________________________________________________________
Directors and Principal Stockholders
-------------------------------------
Nature of Percentage of
Beneficial Owner Ownership Amount (1) Ownership (2)
_________________________________________________________________________
David N. Pierce Common Stock 206,493(3) 1.1%
Options 706,667(6) 3.6%
-------
Total 913,160 4.6%
Andrew W. Pierce Common Stock 208,500 1.1%
Options 661,667(6) 3.4%
-------
Total 870,167 4.4%
Thomas B. Lovejoy Common Stock 527,367(4) 2.8%
Options 461,667(6) 2.4%
-------
Total 989,034 5.1%
Scott J. Duncan Common Stock 175,500(5) 0.9%
Options 151,667(6) 0.8%
-------
Total 327,167 1.7%
Peter L. Raven Common Stock 40,000 0.2%
Options 10,000(6) 0.1%
-------
Total 50,000 0.3%
Jay W. Decker Options 12,000(6) 0.1%
Jerzy B. Maciolek Options 361,668(6) 1.9%
Dennis L. Tatum Common Stock 2,500 0.0%
Options 46,801(6) 0.2%
-------
Total 49,301 0.3%
Dennis B. Goldstein Common Stock 5,400(7) 0.0%
All Executive
Officers Common Stock 1,165,760 6.1%
and Directors as a Options 2,412,137 11.3%
Group (9 persons) ---------
Total 3,577,897 16.7%
=========
_________________________________________________________________________
(1) Except as otherwise noted, shares are owned beneficially and of record,
and, such record stockholder has sole voting, investment, and
dispositive power.
(2) Calculations of total percentages of ownership outstanding for each
individual assumes the exercise of currently vested options held by that
individual to which the percentage relates. Percentages calculated for
totals of all executive officers and directors as a group assume the
exercise of all vested options held by the indicated group.
(3) Includes 48,000 shares held by David N. Pierce as custodian for minor
children. Mr. Pierce is deemed to hold or share voting and
dispositive power over all of such shares. Excludes 19,000 shares held
by Mr. Pierce's wife, Mary Phillips, and 23,000 held by Mary
Phillips as custodian for an adult child, of which Mr. Pierce disclaims
beneficial ownership. Mr. Pierce's address is in care of FX Energy.
<PAGE>
(4) Includes 41,000 shares held in trust for the benefit of Thomas B.
Lovejoy's children, 49,500 shares held in Mr. Lovejoy's IRA account,
10,000 shares held by Mr. Lovejoy's spouse's IRA account, and 210,000
shares held by Lovejoy Associates, Inc., (of which Mr. Lovejoy is
sole owner). Mr. Lovejoy is deemed to hold dispositive power over all
of such shares. Mr. Lovejoy's address is 48 Burying Hill Road,
Greenwich CT 06831.
(5) Includes 123,000 shares held by Scott J. Duncan jointly with his wife,
Cathy H. Duncan; 7,000 shares held solely by Cathy H. Duncan;
and 48,000 shares held by Cathy Duncan as custodian for minor children.
Mr. Duncan is deemed to hold or share voting and dispositive
power over all of such shares.
(6) These vested options give the holders the right to acquire shares of
Common Stock at prices ranging from $1.50 to $10.25 per share with
various expiration dates ranging from August 2000 to December 2006.
(7) Includes 400 shares held by Dennis B. Goldstein as custodian for a minor
child. Mr. Goldstein is deemed to hold or share voting and
dispositive power over all of such shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
FX Energy's directors and executive officers, and persons who own more than 10%
of a registered class of FX Energy's equity securities to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of equity securities of FX Energy. Officers, directors,
and greater than 10% stockholders are required to furnish FX Energy with copies
of all Section 16(a) forms they file.
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to FX Energy during or respecting its last fiscal year ended December
31, 1999, no person who, at any time during the most recent fiscal year, was a
director, officer, beneficial owner of more than 10% of any class of equity
securities of FX Energy or any other person known to be subject to Section 16 of
the Exchange Act failed to file, on a timely basis, reports required by Section
16(a) of the Exchange Act.
Executive Compensation
Summary Compensation
The following table sets forth, for the last three fiscal years of FX
Energy, the annual and long term compensation earned by, awarded to, or paid to
the person who was Chief Executive Officer of FX Energy and each of the four
other highest compensated Executive Officers of FX Energy as of the end of the
last fiscal year (the "Named Executive Officers").
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Annual Restricted Securities Other
Name and Year Compen- Stock Underlying LTIP Compen-
Principal Ended Salary Bonus sation Award(s) Options/SARs Payouts sation
Position Dec. 31, $ $(1) ($) ($) (no.)(5) ($)
________________________________________________________________________________
David N.
Pierce 1999 $197,466 $242,983 $-- -- 60,000 -- --
President (CEO)
1998 185,600 185,760 100,000(2) -- 60,000 -- --
1997 153,256 185,760 -- -- 55,000 -- --
Andrew W.
Pierce 1999 $146,951 $151,307 $-- -- 50,000 -- --
Vice-President (COO)
1998 134,400 115,200 100,000(2) -- 50,000 -- --
1997 114,267 115,200 -- -- 45,000 -- --
Thomas B.
Lovejoy 1999 $146,951 $151,307 $--(4) -- 50,000
Vice-Chairman(CFO)
1998 -- -- --(4) -- --
1997 -- -- --(4) -- --
Scott J.
Duncan 1999 $114,806 $118,209 $-- -- 50,000 -- --
Vice President
Secretary 1998 105,000 90,000 -- -- 50,000 -- --
1997 88,750 90,000 -- -- 45,000 -- --
Jerzy B.
Maciolek 1999 $146,951 $151,307 $100,000(3)-- 50,000 -- --
Vice-President Exploration
1998 134,400 115,200 100,000(3)-- 50,000 -- --
1997 113,600 115,200 -- -- 45,000 -- --
________________________________________________________________________________
(1) All 1999 bonuses were approved by FX Energy's Board of Directors on
November 1, 1999 and accrued for as of December 31, 1999. 25% of
the accrued bonus was paid on February 15, 2000. The remaining 75%
will not be paid in cash until FX Energy raises a significant
amount of additional capital.
(2) During 1998, David N. Pierce and Andrew W. Pierce applied a $100,000
bonus, which was awarded to them during 1997, against their exercise
of stock options for 150,000 shares each. (See "Certain Relationships
and Related Transactions.")
(3) During 1998 and 1999, Jerzy B. Maciolek was awarded a $100,000 bonus
each year to be used against future stock option exercises or
payable in cash in the event his employment with FX Energy is
terminated. At the end of 1999, Mr. Maciolek had not used the $200,000
bonus.
(4) Excludes $60,000, $200,000 and $120,000 paid during 1999, 1998 and 1997,
respectively, to Lovejoy and Associates, a consulting firm
owned by Mr. Lovejoy, prior to Mr. Lovejoy becoming FX Energy's Chief
Financial Officer during 1999.
(5) Includes stock options only.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information respecting all individual grants
of options and stock appreciation rights ("SARs") made during the last completed
fiscal year to the Named Executive Officers of FX Energy.
(a) (b)(1) (c)(1) (d) (e)
Potential
%of Total Realizable Value
Number of Options/SARs at Assumed Rate
Securities Granted to of Share Price
Underlying Employees Exercise or Appreciation for
Options/SARs During Fiscal Base Price Expiration Option Term ($)
Name Granted (no.) Year ($/share) Date 5% 10%
________________________________________________________________________________
David N.
Pierce 60,000 14.0% $5.750 11/1/06 $140,520 $327,360
Andrew W.
Pierce 50,000 11.6% 5.750 11/1/06 117,100 272,800
Thomas B.
Lovejoy 50,000 11.6% 5.750 11/1/06 117,100 272,800
Scott J.
Duncan 50,000 11.6% 5.750 11/1/06 117,100 272,800
Jerzy B.
Maciolek 50,000 11.6% 5.750 11/1/06 117,100 272,800
_________________
(1) Includes stock options only.
<PAGE>
Aggregate Option/SAR Exercises in Last Fiscal Year and Year End Option/SAR
Values
The following table sets forth information respecting the exercise of
options and SARs during the last completed fiscal year by the Named Executive
Officers and the fiscal year end values of unexercised options and SARs.
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Option/
Options/SARs at FY End SARs at FY End
Value (no.) ($)
Shares Acquired Realized Exercisable/ Exercisable/
Name on Exercise (no.) ($) Unexercisable(7) Unexercisable(1)
________________________________________________________________________________
David N.
Pierce -- -- 706,667/118,333 (2) $1,425,000/$ --
Andrew W.
Pierce -- -- 661,667/ 98,333 (3) 1,306,250/ --
Thomas B.
Lovejoy -- -- 461,667/ 98,333 (4) 831,250/ --
Scott J.
Duncan -- -- 151,667/ 98,333 (5) 118,750/ --
Jerzy B.
Maciolek -- -- 361,668/148,332 (6) 581,250/ --
________________
(1) Based on the closing sales price for the Common Stock of $5.375 on
December 31, 1999.
(2) Consists of options to purchase 500,000 shares of Common Stock becoming
exercisable in installments of 100,000 shares per year commencing
June 1, 1995, at an exercise price of $3.00 per share expiring June 9,
2004; 100,000 shares of Common Stock at an exercise price of $3.00 per
share expiring October 5, 2000; 50,000 shares of Common Stock at an
exercise price of $8.875 per share expiring November 4, 2001; 55,000
shares of Common Stock becoming exercisable in installments of 18,333
shares per year commencing December 1, 1998, at an exercise price of
$6.625 per share, expiring November 30, 2004; 60,000 shares of Common
Stock becoming exercisable in installments of 20,000 shares per year
commencing November 10, 1999, at an exercise price of $8.625 per share,
expiring November 10, 2005; and 60,000 shares of Common Stock
becoming exercisable in installments of 20,000 shares per year
commencing November 1, 2000, at an exercise price of $5.75 per share,
expiring November 1, 2006.
(3) Consists of options to purchase 500,000 shares of Common Stock becoming
exercisable in installments of 100,000 shares per year commencing
June 1, 1995, at an exercise price of $3.00 per share expiring June 9,
2004; 50,000 shares of Common Stock at an exercise price of $3.00 per
share expiring October 5, 2000; 65,000 shares of Common Stock at an
exercise price of $8.875 per share expiring November 4, 2001; 45,000
shares of Common Stock becoming exercisable in installments of 15,000
shares per year commencing on December 1, 1998, at an exercise price
of $6.625 per share, expiring November 30, 2004; 50,000 shares of Common
Stock becoming exercisable in installments of 16,667 shares per
year commencing on November 10, 1999, at an exercise price of $8.625 per
share, expiring November 10, 2005; and 50,000 shares of Common
Stock becoming exercisable in installments of 16,667 shares per year
commencing November 1, 2000, at an exercise price of $5.75 per share,
expiring November 1, 2006.
(4) Consists of options to purchase 150,000 shares of Common Stock becoming
exercisable on August 3, 1995, at an exercise price of $3.00 per
share expiring August 3, 2000; 100,000 shares of Common Stock becoming
exercisable on August 3, 1995, at an exercise price of $3.00 per
share expiring August 3, 2001; 100,000 shares of Common Stock becoming
exercisable on August 3, 1995, at an exercise price of $3.00 per
share expiring August 3, 2002; 65,000 shares of Common Stock at an
exercise price of $8.875 per share expiring November 4, 2001; 45,000
shares of Common Stock becoming exercisable in installments of 15,000
shares per year commencing on December 1, 1998, at an exercise price
of $6.625 per share, expiring November 30, 2004; 50,000 shares of Common
Stock becoming exercisable in installments of 16,667 shares per
year commencing on November 10, 1999, at an exercise price of $8.625 per
share, expiring November 10, 2005; and 50,000 shares of Common
Stock becoming exercisable in installments of 16,667 shares per year
commencing November 1, 2000, at an exercise price of $5.75 per share,
expiring November 1, 2006.
(5) Includes options to purchase 50,000 shares of Common Stock at an
exercise price of $3.00 expiring October 5, 2000; 55,000 shares of
Common Stock at an exercise price of $8.875 per share expiring November
4, 2001; 45,000 shares of Common Stock becoming exercisable in
installments of 15,000 shares per year commencing December 1, 1998, at
an exercise price of $6.625 per share, expiring November 30, 2004;
50,000 shares of Common Stock becoming exercisable in installments of
16,667 shares per year commencing on November 10, 1999, at an
exercise price of $8.625 per share, expiring November 10, 2005; and
50,000 shares of Common Stock becoming exercisable in installments of
16,667 shares per year commencing November 1, 2000, at an exercise price
of $5.75 per share, expiring November 1, 2006.
(6) Includes options to purchase 150,000 shares of Common Stock at any time
through August 30, 2000, at an exercise price of $1.50; 65,000
shares of Common Stock at an exercise price of $8.875 per share through
November 4, 2001; 50,000 shares of Common Stock becoming
exercisable in installments of 16,667 shares per year commencing on May
12, 1998, at an exercise price of $8.25 per share, expiring May 11,
2004; 100,000 shares of Common Stock becoming exercisable in
installments of 33,333 shares per year commencing on July 18, 1998, at
an exercise price of $7.25 per share, expiring July 17, 2004; 45,000
shares of Common Stock becoming exercisable in installments of 15,000
shares per year commencing December 1, 1998, at an exercise price of
$6.625 per share, expiring November 30, 2004; 50,000 shares of
Common Stock becoming exercisable in installments of 16,667 per year
commencing on November 10, 1999, at an exercise price of $8.625 per
share, expiring November 10, 2005; and 50,000 shares of Common Stock
becoming exercisable in installments of 16,667 shares per year
commencing November 1, 2000, at an exercise price of $5.75 per share,
expiring November 1, 2006.
(7) Includes stock options only.
<PAGE>
Directors' Compensation
FX Energy reimburses its directors for costs incurred by them in attending
meetings of the Board of Directors and its Committees. FX Energy does not pay
any separate compensation to employees who serve on the Board of
Directors.
During 1999, Lovejoy and Associates, a consulting firm owned by Thomas B.
Lovejoy, was paid $60,000 prior to Mr. Lovejoy becoming FX Energy's Chief
Financial Officer; Peter L. Raven received a cash fee of $18,000 and was granted
seven-year options to purchase 10,000 shares of Common Stock at $5.75 per share;
Jay W. Decker received a cash fee of $18,000 and was granted seven-year options
to purchase 10,000 shares of Common Stock at $5.75 per share; and Dennis B.
Goldstein received a cash fee of $16,500; was granted seven-year options to
purchase 16,000 shares of Common Stock, including 6,000 shares at $6.75 per
share and 10,000 shares at $5.75 per share. The exercise prices of the
foregoing options are equal to the market price of the Common Stock as of the
date of grant.
Employment Agreements, Termination of Employment, and Change in Control
FX Energy has entered into executive employment agreements with each of the
Named Executive Officers, except for Thomas B. Lovejoy. Each employment
agreement is for a three-year term and is automatically extended for an
additional year on the anniversary date of such agreement. The agreements
provided for annual salaries during 1999 of David N. Pierce, $197,466; Andrew W.
Pierce, $146,951; Scott J. Duncan, $114,806; and Jerzy B. Maciolek, $146,951.
In addition, the Named Executive Officers may receive such bonuses or incentive
compensation as the Board of Directors or Compensation Committee may deem
appropriate. Each agreement provides that the Board of Directors or
Compensation Committee may increase the base salary under the agreements at the
beginning of each year, with such increases to be at least 7.5% for
David N. Pierce, Andrew W. Pierce and Scott J. Duncan. Each Executive Officer
is entitled under his respective employment agreement to certain continuation of
compensation in the event the agreement is terminated upon death or disability
or FX Energy terminates the agreement other than for cause.
In addition to the foregoing terms, Mr. Maciolek's employment agreement
provides for annual bonuses of $100,000, payable in cash, stock, or options, as
may be determined by the Board of Directors or the Compensation Committee, based
on the progress of projects on which Mr. Maciolek is primarily engaged. On
each of May 12, 1999, 2000 and 2001, Mr. Maciolek is entitled to receive a bonus
in the form of a $100,000 credit that may be applied against the exercise of his
options to purchase Common Stock.
Each executive employment agreement provides that, on the occurrence of a
change of control event, the employee may terminate the agreement. In the event
of such termination, the employee is entitled to a termination payment equal to
150% of his annual salary (100% in the case Jerzy B. Maciolek), and the value of
previously granted employee benefits. Additionally, FX Energy is required to
maintain certain benefits and, in the case of David N. Pierce, Andrew W. Pierce
and Scott J. Duncan, repurchase outstanding options. Options held by Jerzy B.
Maciolek will immediately vest on such termination. For purposes of the
foregoing, a change of control shall exist on any of the following events: (i)
the sale by FX Energy of all or substantially all of its assets; (ii) a
transaction or series of transactions resulting in a single person or group of
persons under common control owning 25% of the outstanding Common Stock; (iii) a
change in the composition of the Board of Directors so that more than 50% of the
directors are persons neither nominated nor elected by the Board of
Directors or any authorized Committee; (iv) the decision by FX Energy to
terminate its business and liquidate its assets; or (v) a merger or
consolidation of FX Energy in which FX Energy's existing shareholders own less
than 50% of the outstanding voting shares of the surviving entity.
<PAGE>
Options Granted to Officers, Directors, Employees, and Consultants
FX Energy currently has outstanding options to purchase an aggregate of
3,896,501 shares that have been granted to officers, directors, employees, and
consultants of FX Energy. Of such options, 587,334 contain vesting limitations
contingent on continuing association with FX Energy. These options are
exercisable at prices ranging between $1.50 and $10.25 per share. Options issued
to executive officers and directors contain terms providing that in the event of
a change in control of FX Energy and at the election of the optionee, the
unexercised options will be canceled, and FX Energy will pay to the optionee an
amount equal to the number of unexercised options multiplied by the amount by
which the fair market value of the Common Stock as of the date preceding the
change of control event exceeds the option exercise price. The grants of
options to officers and directors were not the result of arm's length
negotiations.
Report of the Compensation Committee
General
Under the supervision of the Compensation Committee, FX Energy has
developed and implemented compensation policies, plans, and programs that seek
to enhance FX Energy's ability to recruit and retain qualified executive and
other personnel, including stock option and award programs that create long-term
incentive for executive management and key employees by enabling them to acquire
an equity stake in FX Energy.
FX Energy's basic compensation practices consist of salary, bonus, and
stock options. In developing and implementing compensation policies and
procedures, the Compensation Committee's objectives are to provide
rewards for the long-term value of individual contribution and performance to FX
Energy; provide rewards that are both recurring and non-recurring and both
financial and non-financial; provide for fairness and consistency; pay
competitively; conduct an effective performance review process; and meet all
legal requirements.
The functions of the Compensation Committee are to:
* Review and recommend to the Board of Directors the amount and manner
of compensation of the Chief Executive Officer for final
determination by the Board of Directors.
* Consider the recommendations of the Chief Executive Officer
respecting the amount and manner of compensation of the other
executive officers and recommend to the Board of Directors the amount
and manner of compensation for such executive officers for final
determination by the Board of Directors.
* Consult with the Chief Executive Officer respecting the amount and
manner of compensation for other executive level personnel.
* Counsel the Chief Executive Officer in personnel matters, management
organization and long range management success or planning.
* Support an employment environment of equal opportunity without regard
to discrimination on the basis of age, race, religion, sex, or
national origin.
* Prepare for inclusion in FX Energy's proxy or information statement
for its annual shareholders' meeting disclosure of the Compensation
Committee's compensation policies applicable to executive
officers, including the specific relationship of corporate
performance to executive compensation.
* Develop and administer FX Energy's stock option and stock award plans
for executive officers and other employees.
<PAGE>
1999 Compensation Review for Executives and Employees other than the Chief
Executive Officer
Utilizing the criteria and objectives set forth above, in November 1999,
the Compensation Committee met to review 1999 year-end raises, bonuses and
option awards. Initially, the Committee reviewed the budget prepared
by management for the balance of 1999 through early 2001. The Committee and
management discussed in detail FX Energy's upcoming capital requirements,
discretionary expenditures, and alternative sources of capital.
The material prepared by management included a proposal for raises to be
effective January 1, 2000, the payment of cash bonuses prior to the end of 1999
and the immediate grant of stock options.
The Compensation Committee and Board of Directors had previously established
the 1999 base salary for all officers by reference to an informal overview of
similar companies, adjusted as the Compensation Committee deemed appropriate for
variations in geographic location, size, emphasis on exploration as compared
to the level of production and reserves, and profitability. Because of the
foregoing variations, the group of similar firms reviewed by the Compensation
Committee did not include all of the firms included in the peer group whose
stock performance is reflected in the Performance Graph - Comparison of Five-
Year Cumulative Total Returns included within this document. In reviewing the
performance of FX Energy's employees, the Compensation Committee specifically
reviewed the individual objective criteria that had been established at the
beginning of 1999 as a measure of performance. The Compensation Committee
discussed those objectives that had been met or exceeded as well as those
objectives that had not been met, reviewing the extent to which the
failure to meet specific objectives was reasonably within the control or
responsibility of FX Energy 's management. Other management accomplishments not
included in the objective criteria were also discussed.
Based on the recommendation of management, the Compensation Committee
recommended that salaries be continued at current levels until FX Energy obtains
significant additional funding. Upon completion of such significant additional
funding, executive officers will receive a 7.5% salary increase retroactive to
January 1, 2000.
In reviewing FX Energy's cash resources, required expenditures and
discretionary expenditures, the Compensation Committee considered alternative
non-cash methods of compensation for FX Energy's executives other than the Chief
Executive Officer that would enable FX Energy to conserve cash for its short-
term cash requirements. This included a discussion of the possible effect of
significant cash expenditures for executive and non-executive bonuses. Based
upon such discussions and the ongoing activities of FX Energy, the
Compensation Committee determined to grant such cash bonuses equal to the 1999
base salaries for all officers. The bonuses were awarded in light of FX
Energy's continued progress towards acquiring oil and gas assets in
Poland, expanding FX Energy's strategic alliances and, in general, advancing FX
Energy's exploration program in Poland, without ascribing any specific relative
significance to individual criteria. Because possible future exploration,
appraisal, development and property acquisition opportunities may require
additional capital, the Compensation Committee recommended payment of 25% of
such bonuses on February 15, 2000 and deferment of 75% of such bonuses until FX
Energy obtains significant additional capital.
Management proposed, and the Compensation Committee recommended to the
Board of Directors, that 199 stock option awards for executives be made at the
same level as 1998. On November 1, 1999, acting on recommendation of the
Compensation Committee, the Board of Directors approved grants to twenty-seven
individuals, twenty-two employees, one consultant and four directors, to
purchase a total of 481,000 shares at a price of $5.75 per share, the closing
price of FX Energy's Common Stock on such date. Included in this number
are options to purchase 310,000 shares granted to executive officers, as
described above. All options granted will vest in three equal increments,
commencing on the first anniversary of grant, with a seven-year exercise
period.
<PAGE>
1999 Chief Executive Officer Compensation Review
The Compensation Committee and Board of Directors had previously
established the 1999 base salary of the Chief Executive Officer by reference to
an informal overview of similar companies, adjusted as the Compensation
Committee deemed appropriate for variations in geographic location,
size, emphasis on exploration as compared to the level of production and
reserves, and profitability. Because of the foregoing variations, the group of
similar firms reviewed by the Compensation Committee did not include all of the
firms included in the peer group whose stock performance is reflected in the
Performance Graph - Comparison of Five-Year Cumulative Total Returns included
within this document. The Compensation Committee recommended that the Chief
Executive Officer's salary be continued at the 1999 level until FX Energy
obtains significant additional funding. Upon completion of such significant
additional funding, the Chief Executive Officer will receive a 7.5% salary
increase retroactive to January 1, 2000.
The annual bonus for the Chief Executive Officer was awarded on the same
basis as applied to other executives. Objective criteria where expectations
have been met or exceeded included continuing the development of FX Energy's
relationships with the government of Poland and FX Energy's strategic partners,
furthering FX Energy's exploration acreage and potential in Poland, negotiating
and developing exploration schedules with strategic partners, progress on
purchasing oil and gas assets in Poland, efforts to obtain additional funding,
conceiving and implementing programs to achieve growth, maintaining compliance
with regulatory requirements, achieving a high regard of shareholders and the
broad business community in the integrity of FX Energy and its management, and
minimizing factors that represent significant business risks, without any
specific weight assigned to any specific factors. The Committee weighed these
accomplishments against delays in completing exploration tests and in completing
its contemplated acquisition of oil and gas assets from POGC. The Committee
deemed each of the latter to be largely due to factors outside the Chief
Executive Officer's ability to control and concluded that the Chief Executive
Officer had met or exceeded the overall objective criteria that had been
established.
The Compensation Committee recommended to grant a cash bonus to the Chief
Executive Officer equal to 120% of his 1999 base salary. Because possible
future exploration, appraisal, development and property acquisition
opportunities may require additional capital, the Compensation Committee
recommended payment of 25% of such bonus on February 15, 2000 and deferment of
75% of such bonus until FX Energy obtains significant additional capital.
The Committee intends that stock options serve as a significant
component of the Chief Executive Officer's total compensation package in order
to retain his efforts on behalf of FX Energy and to focus his efforts
on enhancing shareholder value. On November 1, 1999, upon the recommendation of
the Compensation Committee, the Board of Directors awarded the Chief Executive
Officer options to purchase 60,000 shares of Common Stock at a price of $5.75
per share, the closing price of FX Energy's Common Stock on such date. The
options granted will vest in three equal increments, commencing on the first
anniversary of grant, with a seven-year exercise period.
The foregoing report has been furnished by: Dennis B. Goldstein
Jay W. Decker
Peter L. Raven
<PAGE>
Compensation and Option Committee Interlocks and Insider Participation
The members of the Compensation Committee are Dennis B. Goldstein, Jay W.
Decker, and Peter L. Raven. No member of such Committee is a present or former
officer of FX Energy or any subsidiary. There are no other interlocks. No
member of such Committee, his family, or his affiliate was a party to any
material transactions with FX Energy or any subsidiary since the beginning of
the last completed fiscal year, except for the engagement of Lovejoy Associates,
Inc., as a financial consultant (see "Certain Relationships and Related
Transactions"). No executive officer of FX Energy serves as an executive
officer, director, or member of a Compensation Committee of any other entity, an
executive officer or director of which is a member of the Compensation Committee
of FX Energy.
Audit Committee Report
The Audit Committee met twice during 1999 and once during 2000. During the
course of each meeting the Audit Committee met with management and the
independent auditors separately and collectively to discuss matters
pertaining to the audited financial statements. The independent auditors also
discussed with the Audit Committee certain required matters pertaining to SAS 61
and the Independent Standards Board Standard No.1 regarding the
auditor's independence. The Audit Committee recommended to the Board of
Directors that the audited financial statements be included in FX Energy's
Annual Report on Form 10-K.
The foregoing report has been furnished by: Peter L. Raven
Jay W. Decker
Dennis B. Goldstein
Five Year Performance Comparison
The graph on the following page provides an indicator of cumulative total
shareholder returns for FX Energy as compared with the Total Returns Index for
the Nasdaq Stock Market (US companies) and industry group. The industry peer
group selected by FX Energy is comprised of US companies whose stock is traded
on Nasdaq and which are included in Standard Industrial Code 131 entitled "Crude
Petroleum and Natural Gas." For the five year period shown on the graph, the
total number of Peer Group distinct issues is 181. The total active issues on
December 31, 1998 was 57. The Peer Group comprised of firms in Standard
Industrial Classification Code 131 is different than the group of firms similar
to FX Energy considered in determining executive compensation. The Compensation
Committee selected firms from the Standard Industrial Classification Code 131
that were similar to FX Energy in terms of geographic location, size, and
emphasis on exploration as compared to the level of production and reserves, and
profitability. However, FX Energy believes that it is appropriate to provide
cumulative total shareholder returns data based on the broader Industrial
Classification Code group involving a larger number of firms.
<PAGE>
FX Energy, Inc.
Performance Graph
Comparison of Five-Year Cumulative Total Returns
[Performance Graph appears here]
The plot points for the above graph are detailed in the following table:
12/1994 12/1995 12/1996 12/1997 12/1998 12/1999
_______________________________________________________________________________
FX Energy 60.42 279.46 196.38 305.89
Nasdaq Stock Market
(US Companies) 99.43 140.64 172.95 212.12 298.89
NASDAQ Stocks (SIC 1310
-1319 US Companies)
Crude Petroleum &
Natural Gas 107.06 112.51 162.63 154.99 75.19
_______________________________________________________________________________
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization of the
previous trading day.
C. If the monthly interval, based on the fiscal year end, is not a trading day,
the preceding trading day is used.
D. The index level for each series was set to $100 on January 31, 1995, the date
on which FX Energy registered its Common Stock under Section 12 of the
Exchange Act. (The graph indicates the value over time of a $100 investment
in FX Energy made on January 31, 1995 compared to a $100 investment in each
of the other two categories made on the same date.)
E. FX Energy began trading on the Nasdaq market in June 1996; from January 1995
until June 1996 FX Energy traded on the Electronic Bulletin Board under the
symbol FOEX.
<PAGE>
_______________________________________________________________________________
PROPOSAL 2: APPROVAL OF 1999 STOCK OPTION AND AWARD PLAN
_______________________________________________________________________________
General
On November 1, 1999, the Board of Directors of FX Energy approved the terms
of the 1999 Stock Option and Award Plan (the "1999 Plan"). In order for certain
1999 Plan provisions relating to incentive stock options to be effective, it
must be approved by the stockholders of FX Energy and is being submitted for
such approval pursuant to this Proxy Statement.
Plan Summary
The Board of Directors of FX Energy believes that it is important that
senior management as well as other employees and individuals who contribute to
the success of FX Energy have a stake in the enterprise as stockholders.
Consistent with this belief, the award of stock options has been and will
continue to be an important element of their compensation program. The Board of
Directors and the stockholders previously approved and adopted the 1995 Stock
Option and Award Plan, the 1996 Stock Option and Award Plan, the 1997
Stock Option and Award Plan and the 1998 Stock Option and Award Plan. Through
December 31, 1999, options to purchase an aggregate of 1,938,501 shares had been
granted under such plans, leaving 61,499 shares available under such plans. As
the award of stock options is an important element of FX Energy's compensation
program, the Board of Directors believes that another plan should be adopted.
The 1999 Plan is intended to (a) attract competent directors, executive
personnel and other employees, (b) ensure the retention of the services of
existing directors, executive personnel and employees, and (c) provide
incentives to all of such personnel to devote the utmost effort and skill to the
advancement and betterment of FX Energy by permitting them to participate in
ownership and thereby permitting them to share in increases in the
value which they help produce.
The 1999 Plan is to be administered either by the Board of Directors or by
the appropriate committee (the "Committee") to be appointed from time to time by
such Board of Directors. Currently the Compensation Committee recommends to the
Board of Directors actions respecting the 1999 Plan. Awards granted under the
1999 Plan may be incentive stock options ("ISOs") as defined in the Internal
Revenue Code (the "Code"), appreciation rights, options that do not qualify as
ISOs, or stock bonus awards that are awarded to employees, including officers
and directors, who, in the opinion of the Board or the Committee, have
contributed, or are expected to contribute, materially to the success of FX
Energy. In addition, at the discretion of the Board of Directors or the
Committee, options or bonus stock may be granted to individuals who are not
employees but contribute to the success of FX Energy.
The exercise price of options granted under the 1999 Plan is to be based on
the fair market value of the underlying Common Stock at the time of grant and,
in the case of ISOs, may not be less than 100% of the fair market value of such
capital stock on the date the option is granted (110% of the fair market value
in the case of 10% stockholders). Options granted under the 1999 Plan shall
expire not later than ten years after the date of grant (five years in the case
of ISOs granted to 10% stockholders). The option price may be paid by cash or,
at the discretion of FX Energy's Board of Directors or Committee, by delivery of
shares of Common Stock of FX Energy already owned by the optionee (valued at
their fair market value at the date of exercise), a fully secured promissory
note, or a combination thereof.
<PAGE>
All of the employees, officers, and directors of FX Energy are eligible to
participate under the 1999 Plan. A maximum of 500,000 shares are available for
grant under the 1999 Plan. The identification of individuals entitled to
receive awards, the terms of the awards, and the number of shares subject to
individual awards are determined by the Board of Directors or the Committee, in
their sole discretion; provided, however, that in no event may the aggregate
fair market value of shares for which an ISO is first exercisable in any
calendar year by any eligible employee exceed $100,000.
The aggregate number of shares with respect to which options or stock
awards may be granted under the 1999 Plan, the number of shares covered by each
outstanding option and the purchase price per share shall be adjusted for any
increase or decrease in the number of issued shares resulting from a
recapitalization, reorganization, merger, consolidation, exchange of shares,
stock dividend, stock split, reverse stock split, or other subdivision or
consolidation of shares. In the case of an ISO, the ratio of the option price
immediately after the change to the fair market value of the stock subject to
the option immediately after the corporation transaction must not be more
favorable to the optionee on a share by share basis than the ratio of the old
option price to the fair market value of the stock subject to the option
immediately before such transaction. All such adjustments shall be made by the
Board or the Committee, whose good faith determination shall be binding
absent manifest error.
The Board of Directors or the Committee may from time to time alter, amend,
suspend, or discontinue the 1999 Plan with respect to any shares as to which
options or stock awards have not been granted. However, no such alteration or
amendment (unless approved by the stockholders) shall (a) increase (except
adjustment for an event of dilution) the maximum number of shares for which
options or stock awards may be granted under the 1999 Plan either in the
aggregate or to any eligible employee; (b) reduce (except adjustment for an
event of dilution) the minimum option prices which may be established under the
1999 Plan; (c) extend the period or periods during which options may be granted
or exercised; (d) materially modify the requirements as to eligibility for
participation in the 1999 Plan; (e) change the provisions relating to events of
dilution; or (f) materially increase the benefits accruing to the eligible
participants under the 1999 Plan.
Certain Tax Matters
A participant to whom a nonqualified option is granted will not realize
income at the time of the grant. Upon exercise of the option, the excess of the
fair market value of the stock on the date of exercise over the exercise
price will be taxable to the optionee as ordinary income. The tax basis to the
optionee for the stock acquired is the exercise price plus the amount recognized
as income. FX Energy will be entitled to a deduction equal to the amount of the
ordinary income realized by the optionee in the taxable year which includes the
end of the optionee's taxable year in which he realizes the ordinary income.
When shares acquired pursuant to the exercise of the option are disposed of, the
holder will realize additional capital gain or loss equal to the
difference between the sales proceeds and his or her tax basis in the stock.
If a participant to whom an option is granted exercises such option by
payment of the exercise price in whole or in part with previously owned shares,
the optionee will not realize income with respect to the number of shares
received on exercise which equals the number of shares delivered by the
optionee. The optionee's basis for the delivered shares will carry over to the
option shares received. With regard to the number of nonqualified option shares
received that exceed the number of shares delivered, the optionee will realize
ordinary income at the time of exercise; the optionee's tax basis in these
additional option shares will equal the amount of ordinary income realized plus
the amount of any cash paid.
<PAGE>
Recipients of ISOs will not be required to recognize income at the time of
the grant of the options or at the time of exercise of the options as long as
the stock received on exercise is held for at least two years from the
date of the grant of the ISOs or one year from the date of exercise (although
the difference between the fair market value of the stock and the exercise price
paid at the time of exercise must be taken into account for alternative minimum
tax purposes). If the stock received upon exercise of an ISO is disposed of
prior to the expiration of either of such periods, the optionee will be required
to recognize as ordinary income the amount by which the fair market value of the
stock received at the time of exercise exceeds the exercise price of the ISOs.
Under the 1999 Plan, stock appreciation rights ("SARs") can be granted at
the time an option is granted with respect to all or a portion of the shares
subject to the related option. SARs can only be exercised to the extent
the related option is exercisable and cannot be exercised for the six month
period following the date of grant, except in the event of death or disability
of the optionee. The exercise of any portion of either the related option
or the tandem SARs will cause a corresponding reduction in the number of shares
remaining subject to the option or the tandem SARs, thus maintaining a balance
between outstanding options and SARs. SARs permit the holder to receive an
amount (in cash, shares, or a combination of cash and shares, as determined by
the Board of Directors at the time of grant) equal to the number of SARs
exercised multiplied by the excess of the fair market value of the shares on the
exercise date over the exercise price of the related options.
Under the terms of the 1999 Plan, the Board of Directors or the Committee
may also grant stock awards which may, at the discretion of such Board of
Directors or Committee, be subject to forfeiture under certain conditions.
Recipients of stock awards will realize ordinary income at the time
of the lapse of any forfeiture provisions equal to the fair market value of the
shares less any amount paid in connection with the issuance (the Board of
Directors or the Committee can require the payment of par value at the
time of the grant). FX Energy will realize a corresponding compensation
deduction. The holder will have a basis in the shares acquired equal
to any amount paid on exercise plus the amount of any ordinary income recognized
by the holder. On sale of the shares, the holder will have a capital gain or
loss equal to the sale proceeds minus his or her basis in the shares.
Vote Required
Adoption of the 1999 Plan requires the approval of a majority of the shares
present, in person or represented by Proxy, and entitled to vote at the Annual
Meeting. Abstentions and broker non-votes will have the same legal effect as a
vote against the approval of the 1999 Plan.
The Board of Directors recommends a vote "FOR" the approval of the 1999
Plan. It is intended that, in the absence of contrary specifications, votes
will be cast pursuant to the enclosed proxies for the approval of the
1999 Plan.
<PAGE>
________________________________________________________________________________
PROPOSAL 3: AMENDMENT TO THE ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED SHARES OF COMMON STOCK
________________________________________________________________________________
General
The Board of Directors of FX Energy has unanimously approved the amendment
to the Articles of Incorporation (the "Amendment") to increase the authorized
capital of FX Energy to 100,000,000 shares of Common Stock. FX Energy is
currently authorized to issue 30,000,000 shares of Common Stock, $0.001 par
value, and, 5,000,000 shares of Preferred Stock, $0.001 par value ("Preferred
Stock"). FX Energy has issued and outstanding only Common Stock, which has full
voting rights.
There are currently 14,847,003 shares of Common Stock issued and
outstanding and 4,146,501 shares reserved for issuance on exercise of
outstanding options and warrants, for a total of 18,995,504 shares. In
addition, FX Energy is obligated under its Stockholder Rights Plan to reserve
for issuance on the exercise of rights in certain circumstances that number of
shares that equals up to 80% of the shares outstanding, which could result in
the issuance of up to 15,196,403 additional shares. Therefore, based on the
number of shares now issued and outstanding and reserved for issuance on the
exercise of outstanding options or warrants, the issuance of the maximum number
of shares under the rights plan would result in a total of 34,191,907 shares
issued and outstanding, as compared to FX Energy's current authorization to
issue 30,000,000 shares of Common Stock.
Stockholder Rights Plan
At the 1997 stockholder meeting, the stockholders approved the adoption of
the Stockholder Rights Plan as an anti-takeover measure. The Stockholder Rights
Plan is triggered when a single acquirer or a group accumulates a position of
20% or more of FX Energy's stock. Frequently an accumulation of a substantial
block of stock is an initial step in an attempted takeover of a company,
particularly when the potential acquiror expects that the terms of such
acquisition may not be deemed by the Board of Directors to be in the best
interest of the stockholders. In general, rights issued under the plan would
enable each stockholder, other than the potential acquiror, to purchase at 50%
of market price one additional share of Common Stock for each share already
owned.
The Board of Directors believes that the circumstances supporting adoption
of the Stockholder Rights Plan in 1997 are even more important today. As the
oil industry in general experiences growth in view of recent increases in crude
oil prices, successful firms may be attractive acquisition targets. FX Energy
believes that it has achieved significant progress in Poland, including its
first commercial gas discovery, the possible acquisition of oil and gas
properties from the Polish Oil and Gas Company ("POGC"), the continued
strategic alliances with Apache Corporation ("Apache") and POGC, and, overall
growth in stockholder value.
The Board of Directors believes that FX Energy's achievements may not be
reflected at all times in the trading prices for the Common Stock due to general
uncertainties among investors respecting FX Energy's operations in Poland and
the oil industry generally. The uncertainties include concerns related to oil
prices, the supply and demand for oil and gas, political conditions in
international oil producing regions, the extent of domestic production and
importation of oil in certain relevant markets, the level of consumer demand,
the competitive position of oil or gas as a source of energy as compared with
other energy sources, and the effect of federal and state regulation on the
production, transportation, and sale of oil. In addition, it may be difficult
for members of the investment community not directly involved in the oil and gas
industry in Poland to evaluate the results of exploration because of the
preliminary and inconclusive results of specific drilling or other exploration
activity, particularly prior to the discovery of commercial oil or gas or the
establishment of reserves and ongoing production.
In view of all of the foregoing, the Board of Directors believes that it
continues to be in the best interests of the stockholders to retain the full
potential benefits of the Stockholder Rights Plan by ensuring that FX Energy
has a sufficient number of authorized but unissued shares to permit all
shareholders other than a potential acquiror to purchase additional shares under
the plan. The Board of Directors believes that this will continue to encourage
potential acquirers to initiate negotiations with the Board of Directors, which
has an obligation to all stockholders, and to discourage bidders from placing
stockholders in a position in which they would be forced to make decisions
individually without the opportunity for collective deliberation.
<PAGE>
The Stockholder Rights Agreement contemplates that FX Energy will reserve a
sufficient number of authorized but unissued shares of Common Stock to permit
the exercise in full of the rights granted to the current stockholders should
these rights become exercisable. Depending upon the number of shares owned by a
potential acquirer, the number of shares of Common Stock presently authorized
may be insufficient to permit exercise in full of the rights upon the occurrence
of a triggering event. Consequently, the effectiveness of the Stockholder
Rights Agreement may be impaired if an insufficient number of shares are
authorized and reserved for issuance upon the exercise of rights under this
agreement. In order to be in compliance with the Shareholders Rights Plan upon
stockholders' approval of increasing the authorized shares of Common Stock to
100,000,000 shares, a maximum of 55,555,556 shares of Common Stock may be
issued, resulting in a maximum of 44,444,444 shares reserved for issuance under
FX Energy's Stockholder Rights Plan.
Additional Stock Issuances
FX Energy has previously announced that it intends to seek additional
capital to fully fund any additional exploration, appraisal, development and
property acquisition activities it may enter into with Apache and POGC.
FX Energy filed and obtained the effectiveness of a shelf registration statement
permitting it to sell debt or equity securities from time to time. These
securities can be sold in one or more classes or series and in amounts, at
prices and on terms that FX Energy will determine at the time of specific
offerings. They may include debt instruments, Common Stock, Preferred Stock,
depository shares relating to the Preferred Stock of FX Energy, warrants to
purchase debt securities, Common Stock or Preferred Stock, and guarantees of the
payment of debt securities issued by one or more subsidiaries of FX Energy. The
shelf registration statement permits the sale of such securities with
an aggregate initial offering price of up to $100,000,000. In order to issue
such debt or equity securities, FX Energy will be required to update the shelf
registration statement with the Securities and Exchange Commission to
specifically identify the terms of the securities to be issued and the proposed
application of the proceeds. While FX Energy is not yet proposing to offer a
portion of the securities registered, it filed the shelf registration statement
in anticipation of raising additional financing in connection with its
contemplated proposed business activities. If the amendment to the Articles of
Incorporation is not approved by the stockholders and FX Energy wishes to issue
Common Stock in connection with a future financing effort, it may be unable to
do so.
The authorized and unissued Common Stock and Preferred Stock can be issued
from time to time by the Board of Directors without further stockholder action.
The Articles of Incorporation grant the Board of Directors broad authority,
without seeking stockholder approval, to establish different series of Preferred
Stock at the time of issuance, and to designate the preferences, limitations,
and relative rights of any such series. Such broad authorization enables the
Board of Directors to authorize the issuance of Preferred Stock with voting,
dividend, liquidation, and other rights superior to the rights of other
stockholders. The issuance of stock with such superior rights might have the
effect of impeding or thwarting an effort to acquire or take over control of FX
Energy that was not endorsed by the Board of Directors. FX Energy is not
currently contemplating the issuance of any shares of Preferred Stock.
The Board of Directors may from time to time also issue shares of Common
Stock without seeking stockholder approval. Therefore, the possibility that the
Board of Directors might issue a substantial amount of Common Stock to persons
opposed to a change in control of FX Energy would discourage other persons from
acquiring shares of Common Stock with a view toward acquiring control.
Recommendation of the Board of Directors
Because of the requirement under the Stockholder Rights Plan to reserve for
issuance the maximum number of shares that may be issuable under such plan, the
conclusion of the Board of Directors that it is in the best interest of the
stockholders to be able to implement fully the Stockholder Rights Plan, and FX
Energy's anticipated need for additional capital, the Board of Directors
believes that the authorized capitalization of FX Energy should be increased to
100,000,000 shares of Common Stock.
<PAGE>
The Board of Directors recommends a vote "FOR" the adoption of the proposed
amendment to the Articles of Incorporation. It is intended that, in the absence
of contrary specifications, votes will be cast pursuant to the enclosed proxies
for the adoption of the proposed amendment.
Vote Required
The above proposal will be approved if the number of votes cast for such
proposal constitutes at least a majority of the issued and outstanding Common
Stock of FX Energy. Abstentions and broker non-votes will have the same
legal effect as a vote against the proposal. Directors and officers holding
1,165,760 shares, or approximately 6.13% of the issued and outstanding shares,
have indicated their intention to vote in favor of adoption.
________________________________________________________________________________
INDEPENDENT PUBLIC ACCOUNTANTS
________________________________________________________________________________
The selection of FX Energy's auditors will not be submitted to the
stockholders for their approval in the absence of a requirement to do so. It is
anticipated that representatives of PricewaterhouseCoopers LLP will be
present at the Annual Meeting and will be provided the opportunity to make a
statement, if they desire to do so, and be available to respond to appropriate
questions.
________________________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________________________
No proposals have been submitted by stockholders of FX Energy for
consideration at the Annual Meeting. It is anticipated that the next Annual
Meeting of Stockholders will be held during May 2001. Stockholders may
present proposals for inclusion in the Proxy Statement to be mailed in
connection with the 2001 Annual Meeting of Stockholders of FX Energy, provided
such proposals are received by FX Energy no later than November 15,
2000, and are otherwise in compliance with applicable laws and regulations and
the governing provisions of the Articles of Incorporation and Bylaws of FX
Energy.
________________________________________________________________________________
OTHER MATTERS
________________________________________________________________________________
Management does not know of any business other than that referred to herein
which may be considered at the Annual Meeting. If any other matters should
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of Proxy to vote the proxies held by them
in accordance with their best judgment.
In order to assure the presence of the necessary quorum and to vote on the
matters to come before the Annual Meeting, please indicate your choices on the
enclosed Proxy and date, sign, and return it promptly in the envelope provided.
The signing of a Proxy by no means prevents your attending the meeting.
By Order of the Board of Directors
FX ENERGY, INC.
/s/ Scott J. Duncan, Secretary
Salt Lake City, Utah
March [ ], 2000
<PAGE>
