<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GOODRICH PETROLEUM CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(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:
<PAGE>
GOODRICH PETROLEUM CORPORATION
HOUSTON, TEXAS
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1997
----------------
To the Stockholders:
The Annual Meeting of the Stockholders (the "Annual Meeting") of Goodrich
Petroleum Corporation, a Delaware corporation (the "Company"), will be held at
the Plaza Room, Ritz-Carlton Hotel, 1919 Briar Oaks, Houston, Texas, on May
21, 1997, at 11:00 a.m. local time, for the following purposes:
1. To elect two directors to serve until the annual stockholders' meeting
in 2000 and until their successors have been elected and qualified; and
2. To approve an amendment to the Company's 1995 Nonemployee Director
Stock Option Plan.
3. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ended December 31, 1997; and
4. To transact such other business as may properly come before such
meeting or any adjournment(s) thereof.
The close of business on March 24, 1997, has been fixed as the record date
for the determination of stockholders entitled to receive notice of and to
vote at the Annual Meeting or any adjournment(s) thereof.
You are cordially invited to attend the Annual Meeting. It is important that
your shares be represented at the Annual Meeting regardless of whether you
plan to attend. Therefore, please mark, sign, date and return the enclosed
proxy promptly. If you are present at the meeting, and wish to do so, you may
revoke the proxy and vote in person.
By Order of the Board of Directors
Walter G. "Gil" Goodrich
President and Chief Executive
Officer
April 18, 1997
Houston, Texas
<PAGE>
GOODRICH PETROLEUM CORPORATION
5847 SAN FELIPE
SUITE 700
HOUSTON, TEXAS 77057
----------------
PROXY STATEMENT
----------------
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Goodrich
Petroleum Corporation, a Delaware corporation (the "Company") for use at the
Annual Meeting to be held at 11:00 a.m., local time on May 21, 1997, at the
Plaza Room, Ritz-Carlton Hotel, 1919 Briar Oaks, Houston, Texas, or at any
adjournment(s) thereof. The solicitation of proxies by the Board of Directors
will be conducted primarily by mail. In addition, directors, officers and
employees of the Company may solicit proxies by fax, telex, telephone and
personal interview. The Company will bear the cost of preparing and mailing
proxy materials as well as the cost of soliciting proxies. The Company will
reimburse banks, brokerage firms, custodians, nominees and fiduciaries for
their expenses in sending proxy materials to the beneficial owners of shares
of the Company's common stock (the "Common Stock"). The approximate date on
which this Proxy Statement and the accompanying proxy will first be sent to
Stockholders is April 22, 1997.
The enclosed proxy, even though executed and returned, may be revoked at any
time prior to the voting of the proxy (a) by execution and submission of a
revised proxy, (b) by written notice to the Secretary of the Company or (c) by
voting in person at the Annual Meeting. In the absence of such revocation,
shares represented by the proxies will be voted at the Annual Meeting.
Only holders of record of shares of Common Stock at the close of business on
March 24, 1997 (the "Record Date") will receive notice of and will be entitled
to vote at the Annual Meeting. At the close of business on March 24, 1997,
there were 41,804,510 shares of Common Stock outstanding. Holders of record of
shares of Common Stock on the Record Date are entitled to one vote for each
share of Common Stock held. The presence, in person or by proxy, of at least a
majority of the outstanding shares of Common Stock is required for a quorum.
The Company's annual report to stockholders for the year ended December 31,
1996, including financial statements, is being mailed herewith to all
stockholders entitled to vote at the Annual Meeting. The annual report does
not constitute a part of the proxy soliciting material.
PROPOSAL 1--ELECTION OF DIRECTORS
GENERAL
Two directors are to be elected at the Annual Meeting. The Company's Bylaws
provide for a classified Board of Directors. The Board of Directors is divided
into Classes I, II and III, the terms of office of which are currently
scheduled to expire, respectively, on the dates of the Company's Annual
Meetings of Stockholders in 1999, 1997 and 1998. Henry Goodrich, and Basil M.
Briggs have been nominated to serve as Class II directors and, if elected,
will serve until the Company's 2000 Annual Meeting of Stockholders and until
their respective successors shall have been elected and qualified. Each of the
nominees for director currently serves as a director of the Company. The
remaining directors named below will not be required to stand for election at
the Annual Meeting because their present terms expire in either 1998 or 1999.
Jeff H. Benhard resigned from the Board of Directors on December 6, 1996. At
its regularly scheduled meeting in March, the Board of Directors considered
and adopted a mandatory 72 year old retirement age for the Board of Directors.
In accordance with the Board's new retirement policy, James R. Jenkins, Wayne
G. Kees
<PAGE>
and John C. Napley resigned from the Board of Directors effective April 15,
1997. The Board has determined to reduce the Board of Directors to seven from
eleven as a result of such resignations.
Basil M. Briggs is currently a Class III director. As a result of the
retirements described herein Mr. Briggs has been nominated to become a Class
II director in order to comply with provisions of Delaware law and the
Company's bylaws which require an equal number of directors to be assigned to
each class or a difference between classes of no more than one director in the
event that there are more directors than can be assigned equally to three
classes.
A plurality of the votes cast in person or by proxy by the holders of Common
Stock is required to elect a director. Accordingly, abstentions and "broker
non-votes" will have no effect on the outcome of the election assuming a
quorum is present or represented by proxy at the Annual Meeting. A broker non-
vote occurs if a broker or other nominee does not have discretionary authority
and has not received instructions with respect to a particular item.
Stockholders may not cumulate their votes in the election of directors.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted FOR the election of the nominees listed below.
Although the Board of Directors does not contemplate that any of the nominees
will be unable to serve, if such a situation arises prior to the Annual
Meeting, the persons named in the enclosed proxy will vote for the election of
such other person(s) as may be nominated by the Board of Directors.
DIRECTORS AND DIRECTOR NOMINEES
The following sets forth information regarding the names, ages and principal
occupations of the nominees and directors and directorships in other companies
held by them:
CLASS II DIRECTORS AND NOMINEES--TERMS EXPIRING AT THE 2000 ANNUAL MEETING
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Basil M. Briggs.................. 61 Director
Henry Goodrich................... 66 Chairman of the Board, Director
CLASS III DIRECTORS--TERMS EXPIRING AT THE 1998 ANNUAL MEETING
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Benjamin F. Edwards, II.......... 71 Director
Walter G. Goodrich............... 38 President, Chief Executive Officer and
Director
Arthur A. Seeligson.............. 38 Director
CLASS I DIRECTORS--TERMS TO EXPIRE AT THE 1999 ANNUAL MEETING
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
Sheldon Appel.................... 63 Director
J. Michael Watts................. 37 Director
</TABLE>
Basil M. Briggs has been a practicing attorney in Detroit, Michigan since
1961 and is currently of counsel with the firm of Miro,Weiner & Kramer in
Bloomfield Hills, Michigan. Mr. Briggs is also a director of Marcum Natural
Gas Services, Inc.
Henry Goodrich is a petroleum geologist with over 45 years experience in the
oil and gas industry. Mr. Goodrich has served as an exploration geologist with
the Union Producing Company and the McCord Oil Company. From 1971 to 1975, Mr.
Goodrich was President, Chief Executive Officer and a partner of the McCord-
Goodrich Oil Company. In 1975, Mr. Goodrich formed the Goodrich Oil Company.
Mr. Goodrich was
2
<PAGE>
elected Chairman of the Board of the Company in March 1996. Mr. Goodrich also
serves as a consultant to the Company. Mr. Goodrich is also a director of Pan
American Life Insurance Company.
Benjamin F. Edwards, II has been an independent oil and gas consultant since
1975. From July 1977 through August 1984, Mr. Edwards was a full-time
consultant to Patrick Petroleum Company for corporate development, corporate
planning and financial matters.
Walter G. "Gil" Goodrich is the President and Chief Executive Officer of the
Company. Mr. Goodrich was Goodrich Oil Company's Vice President of Exploration
from 1985-89 and its President from 1989 to August 1995. He joined Goodrich
Oil Company as an exploration geologist in 1980.
Arthur A. Seeligson has primarily been engaged in the management of his
personal investments since 1995. From 1991 to 1993, Mr. Seeligson was a Vice
President, Energy Corporate Finance at Schroder Wertheim & Company, Inc. From
1993 to 1995, Mr. Seeligson was a Principal, Corporate Finance, at
Wasserstein, Perella & Co.
Sheldon Appel has been involved in real estate development and finance since
1955 when he formed the Sheldon Appel Companies. Mr. Appel is a member of the
Rand Corporation Board of Visitors.
J. Michael Watts is currently employed as a Financial Consultant for Smith
Barney, Inc. From 1985 to 1996, he served as a Director and Vice President of
Marketing and Administration of Goodrich Oil Company after joining Goodrich
Oil Company in 1983. From 1981 to 1983, Mr. Watts was employed by P&O Falco,
Inc. Mr. Watts is the son-in-law of Henry Goodrich and the brother-in-law of
Walter G. Goodrich.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are Walter G. Goodrich, Roland L.
Frautschi and Robert C. Turnham, Jr. Biographical information regarding Mr.
Goodrich is included under the caption "Election of Directors--Directors and
Director Nominees."
Roland Frautschi is the Company's Senior Vice President, Chief Financial
Officer and Treasurer. He was employed by Goodrich Oil Company from 1982 to
August 1995. During that time, he served Goodrich Oil Company in a number of
capacities, including internal auditor, controller and from 1990 to August
1995, as Goodrich Oil Company's Vice President of Finance.
Robert C. Turnham, Jr., the Company's Senior Vice President and Chief
Operating Officer, has held various positions in the oil and gas business
since 1981. From 1981 to 1984, Mr. Turnham served as a financial analyst for
Pennzoil USA. In 1984, he formed Turnham-Interests, Inc., a petroleum land
management company. From 1993 to August 1995, he served as president and as a
partner of Liberty Production Company, an oil and gas exploration and
production company.
Each of the executive officers assumed their positions with the Company in
August 1995.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has four standing committees and had
one special purpose committee during 1996-1997, the membership and functions
of which are described below:
Executive Committee. The members of the Executive Committee are Messrs.
Walter G. Goodrich, Henry Goodrich and a director that has not currently been
designated by the Board of Directors. The Executive Committee is delegated the
authority to approve any actions that the Board of Directors could approve,
except to the extent restricted by law or by the Company's Certificate of
Incorporation or Bylaws.
Audit Committee. The members of the Audit Committee are Messrs. Appel,
Briggs and Watts. Mr. Benhard served on the Audit Committee until his
resignation from the Board of Directors in December 1996. The Audit
Committee's functions include making recommendations concerning the engagement
of independent auditors,
3
<PAGE>
reviewing with the independent auditors the plan and results of the auditing
engagement, approving professional services provided by the independent
auditors and reviewing the adequacy of the Company's internal accounting
controls.
Compensation Committee. The members of the Compensation Committee are
Messrs. Briggs, Edwards and Seeligson. Mr. Benhard served on the Compensation
Committee until his resignation from the Board of Directors in December 1996.
The Compensation Committee's functions include a general review of the
Company's compensation and benefit plans to ensure that they meet corporate
objectives. In addition, the Compensation Committee makes recommendations to
the Board on (i) compensation of all officers of the Company, (ii) granting of
awards under and administering the Company's stock option and other benefit
plans, and (iii) adopting and changing major Company compensation policies and
practices.
Joint Participation Committee. The members of the Joint Participation
Committee during 1996 were Messrs. Seeligson and Benhard. The function of the
Joint Participation Committee is to provide oversight of the Company's
decisions regarding participation with Goodrich Oil Company pursuant to the
Joint Participation Agreement. See "Certain Relationships and Other
Transactions--Joint Participation Agreement with Goodrich Oil Company."
Special Committee. The Special Committee was formed on April 17, 1996, and
its members were Messrs. Seeligson and Briggs. The Board authorized the
Special Committee to evaluate a transaction involving the proposed acquisition
of the oil and gas properties of La/Cal Energy Partners II and certain working
interest owners, on behalf of the Company and to proceed with negotiating the
terms of an acquisition if warranted by their evaluation. The Special
Committee met twelve times between May 1996 and January 1997. The Special
Committee recommended the Board approve the negotiated terms of the
acquisition and the Board so approved such action. The transaction was
finalized on January 31, 1997.
The Board of Directors held ten meetings in 1996. The Audit, Compensation,
and Joint Partcipation Committees met two, three and two times, respectively
in 1996. The Special Committee met twelve times during its existence in 1996
and early 1997. The Executive Committee did not meet in 1996. Each director
other than Sheldon Appel and James R. Jenkins, attended at least 75% of the
aggregate number of meetings of the Board of Directors and any committee on
which such director served.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The table below sets forth, as of March 24, 1997, certain information with
respect to the shares of Common Stock beneficially owned by (i) each person
known by the Company to own beneficially five percent or more of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each of the executive officers of the Company, and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP
------------------
NAME OF BENEFICIAL OWNER AMOUNT PERCENT
------------------------ ---------- -------
<S> <C> <C>
Walter G. Goodrich (1).... 10,165,888 23.3%
5847 San Felipe, Suite
700
Houston, TX 77057
Henry Goodrich (2)........ 6,123,487 14.3%
333 Texas St., Suite
1350
Shreveport, LA 71101
Leo Bromberg (3).......... 4,215,395 9.8%
280 S. Beverly Dr. Suite
401
Beverly Hills, CA 90212
Rochelle Rand (4)......... 3,495,093 8.2%
2550 Fifth Ave., Suite
126
San Diego, CA 92103
J. Michael Watts (5)...... 1,341,603 3.2%
Sheldon Appel (6)(7)...... 1,004,750 2.4%
Roland L. Frautschi (8)... 864,233 2.1%
Basil M. Briggs (7)....... 30,652 *
Benjamin F. Edwards, II
(7)...................... 32,000 *
Arthur A. Seeligson
(7)(9)................... 180,000 *
Robert C. Turnham, Jr.
(10)..................... 130,390 *
Directors and Executive
Officers as a Group (9
persons)(11)............. 14,446,176 31.7%
</TABLE>
- --------
* Less than 1%.
(1) Includes 4,402,152 shares held by HGF Partnership, and includes 1,024,676
shares issuable to HGF Partnership II upon the conversion of 114,874
shares of the Company's Series B Convertible Preferred Stock. Both
partnerships are Louisiana partnerships owned by Henry Goodrich and Walter
G. Goodrich. Henry Goodrich is the managing general partner of HGF
Partnership and HFG Partnership II, and Walter G. Goodrich holds an
indirect general partnership interest in both partnerships. Henry Goodrich
exercises sole voting and investment power with respect to the shares held
by both partnerships. Includes 378,841 shares issuable upon the conversion
of 42,471 shares of Series B Convertible Preferred Stock. Also includes
2,201,076 shares currently owned by Goodrich Energy, Inc. and 491,965
shares issuable to Goodrich Energy, Inc. upon the conversion of 55,153
shares of Series B Convertible Preferred Stock. Walter G. Goodrich is the
sole stockholder of Goodrich Energy, Inc. Also includes 13,320 shares of
Common Stock issuable upon the conversion of 4,000 shares of Series A
Preferred Stock and options to purchase 62,500 shares that are exercisable
pursuant to the Company's 1995 Stock Option Plan. Henry Goodrich and
Walter G. Goodrich beneficially own an aggregate of 10,862,547 shares, or
24.8% of the outstanding shares of Common Stock.
(2) Includes 4,402,152 shares held by HGF Partnership, and includes 1,024,676
shares issuable to HGF Partnership II upon the conversion of 114,874
shares of Series B Convertible Preferred Stock. Both partnerships are
Louisiana partnerships owned by Henry Goodrich and Walter G. Goodrich.
Henry Goodrich is the managing general partner of HGF Partnership and HFG
Partnership II, and Walter G. Goodrich holds an indirect general
partnership interest in both partnerships. Henry Goodrich exercises sole
voting and
5
<PAGE>
investment power with respect to the shares held by both partnerships. Also
includes options to purchase 50,000 shares that are currently exercisable
pursuant to the Company's 1995 Stock Option Plan. Henry Goodrich and Walter
G. Goodrich beneficially own an aggregate of 10,682,547 shares or 24.8% of
the outstanding shares of Common Stock.
(3) Includes 2,060,667 shares held by Mr. Bromberg as trustee. Mr. Bromberg
has advised the Company that he exercises sole investment and voting
control over such shares. Also includes 175,635 shares issuable upon the
conversion of 19,690 shares of Series B Convertible Preferred Stock held
by Mr. Bromberg personally and 1,020,974 shares issuable upon the
conversion of 114,459 shares of Series B Convertible Preferred Stock held
by Mr. Bromberg as trustee.
(4) Based upon a report on Schedule 13G dated February 14, 1996.
(5) Includes 170,831 shares held by Mr. Watts' wife and 299,720 shares held
jointly by Mr. Watts and his wife over which Mr. Watts exercises shared
voting and investment power. Also includes 266,253 shares issuable upon
the conversion of 29,849 shares of Series B Convertible Preferred Stock.
(6) Includes 818,280 shares of Common Stock held and 46,580 shares issuable
upon the conversion of 5,222 shares of Series B Convertible Preferred
Stock held by the Sheldon Appel Company, a partnership affiliated with Mr.
Appel. Mr. Appel has advised the Company that he exercises sole voting and
investment power with respect to these shares. Also includes 109,890
shares of Common Stock issuable upon the conversion of 33,000 shares of
Series A Convertible Preferred Stock.
(7) Includes 30,000 shares issuable upon the exercise of outstanding stock
options under the Company's 1995 Nonemployee Director Stock Option Plan.
(8) Includes 30,000 shares issuable upon the exercise of outstanding stock
options under the Company's 1995 Stock Option Plan and 12,667 shares of
Common Stock issuable upon the conversion of 3,800 shares of Series A
Convertible Preferred Stock. Also includes 170,738 shares issuable upon
the conversion of 19,141 shares of Series B Convertible Preferred Stock.
(9) Includes 40,000 shares issuable upon the exercise of outstanding stock
options under the Company's Non-employee Director Stock Option Plan.
(10) Includes 20,000 shares issuable upon the exercise of outstanding stock
options under the Company's 1995 Stock Option Plan and 10,989 shares of
Common Stock issuable upon the conversion of 3,300 shares of Series A
Convertible Preferred Stock.
(11) The number of shares of Common Stock beneficially owned by all executive
officers and directors as a group includes (i) 190,000 shares issuable
upon the exercise of outstanding stock options under the Company's 1995
Nonemployee Director Stock Option Plan, (ii) 162,500 shares issuable upon
the exercise of outstanding stock options under the Company's 1995 Stock
Option Plan (iii) 146,866 shares issuable upon the conversion of 44,100
shares of Series A Convertible Preferred Stock, and (iv) 2,390,042 shares
issuable upon the conversion of 266,710 shares of Series B Convertible
Preferred Stock.
DIRECTOR COMPENSATION
General. For serving on the Company's Board of Directors, each of the
directors who are not officers or consultants of the Company or its
subsidiaries are paid $1,000 for each meeting attended. In addition, directors
are reimbursed for their reasonable out-of-pocket expenses in connection with
travel to meetings of the Board of Directors or committees thereof and receive
periodic grants of options to purchase Common Stock. Directors do not receive
compensation for serving on committees except that members of the Special
Committee, received $1,000 for each in-person meeting and $250 for each
telephonic meeting.
Nonemployee Director Stock Option Plan. The Goodrich Petroleum Corporation
1995 Nonemployee Director Stock Option Plan (the "Director Option Plan")
provides for the grant of options to acquire Common Stock, to be granted to
each director who is not and has never been an employee of the Company (a
"Nonemployee Director"). The purposes of the Director Option Plan are to
attract and retain the services of
6
<PAGE>
experienced and knowledgeable outside directors of the Company and to provide
an incentive for such outside directors to increase their proprietary interest
in the Company's long-term success and progress. The Director Option Plan
covers an aggregate of 500,000 shares of Common Stock (subject to adjustments
in the event of stock dividends, stock splits and certain other events).
On the date of each annual meeting of stockholders, each Nonemployee
Director who is continuing in office automatically receives an option to
purchase 10,000 shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock on the date of grant. Nine non-employee
Directors received such an option grant in connection with the Company's
annual shareholders meeting held May 22, 1996.
Exercisability. Each option granted under the Director Option Plan will
expire ten years from the date the option is granted. If an option holder
ceases to be a director of the Company for any reason, the option may be
exercised in full within one year after the date of cessation (if otherwise
within the option period), but not thereafter, unless the option holder dies
within one year after ceasing to be a director of the Company, in which case,
such option may be exercised (to the extent such option was exercisable by the
option holder at the time of his death) within one year after the date of
death (if otherwise within the option period).
Proposal number two of this Proxy extends the exercise period under the
Nonemployee Director Stock Option Plan to four years after the date a director
ceases to hold office. See "Proprosal 2--To Amend the 1995 Nonemployee
Director Stock Option Plan."
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table summarizes with respect to the Company's Chief Executive
Officer, certain information relating to the compensation earned for services
rendered in all capacities during the years indicated. No other executive
officer met the compensation criteria for reporting.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(2) COMPENSATION
---------------------- ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL FISCAL OPTIONS ALL OTHER
POSITION YEAR SALARY BONUS (NUMBER) COMPENSATION
------------------ ------ ------ ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Walter G. Goodrich...... 1996 $150,000 17,500 -- --0--
President and Chief
Executive Officer 1995 $ 56,500(1) --0-- 250,000 --0--
</TABLE>
- --------
(1) The Company commenced operations on August 15, 1995.
(2) During the years ended December 31, 1995 and 1996 perquisites for the
person named in the Summary Compensation Table aggregated less than 10% of
the total annual salary and bonus reported for such individual in the
Summary Compensation Table. Accordingly, no such amounts are included in
the Summary Compensation Table.
GOODRICH PETROLEUM CORPORATION 1995 STOCK OPTION PLAN ("GOODRICH PLAN")
The Goodrich Plan provides for the granting of options (either incentive
stock options within the meaning of Section 422(b) of the Code, or options
that do not constitute incentive stock options ("nonqualified stock
options")), restricted stock awards, stock appreciation rights, long-term
incentive awards, and phantom stock awards, or any combination thereof. The
Goodrich Plan covers an aggregate of 3,000,000 shares of Common Stock (subject
to certain adjustments in the event of stock dividends, stock splits and
certain other events). No more than 500,000 shares of Common Stock, subject to
adjustments, may be issued pursuant to grants made
7
<PAGE>
under the Goodrich Plan to any one employee in any one year. The limitation
set forth in the preceding sentence will be applied in a manner which permits
compensation generated in connection with the exercise of options, stock
appreciation rights and, if determined by the Compensation Committee,
restricted stock awards to constitute "performance-based" compensation for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code").
Administration. The Goodrich Plan is administered by the Compensation
Committee which consists of members of the Board who are outside and
disinterested directors for purposes of the Code and the Exchange Act. The
Compensation Committee has the power to determine which employees will receive
an award, the time or times when such award will be made, the type of the
award and the number of shares of Common Stock to be issued under the award or
the value of the award. Only persons who at the time of the grant are
employees or consultants of the Company or of any subsidiary of the Company
are eligible to receive grants under the Goodrich Plan.
Options. The Goodrich Plan provides for two types of options: incentive
stock options and nonqualified stock options. The Compensation Committee will
designate the employees to receive the options, the number of shares subject
to the options, and the terms and conditions of each option granted under the
Goodrich Plan. The term of any option granted under the Goodrich Plan shall be
determined by the Compensation Committee; provided, however, that the term of
any incentive stock option cannot exceed ten years from the date of the grant
and any incentive stock option granted to an employee who possesses more than
10% of the total combined voting power of all classes of stock of the Company
or of its subsidiary within the meaning of Section 422(b)(6) of the Code must
not be exercisable after the expiration of five years from the date of grant.
The exercise price per share of Common Stock of options granted under the
Goodrich Plan is determined by the Compensation Committee; provided, however,
that such exercise price cannot be less than the fair market value of a share
of Common Stock on the date the option is granted (subject to adjustments).
Further, the exercise price of any incentive stock option granted to an
employee who possesses more than 10% of the total combined voting power of all
classes of stock of the Company or of its subsidiaries within the meaning of
Section 422(b)(6) of the Code must be at least 110% of the fair market value
of the shares at the time such option is granted. The exercise price of
options granted under the Goodrich Plan is paid in full in a manner prescribed
by the Compensation Committee.
Restricted Stock Awards. Pursuant to a restricted stock award, shares of
Common Stock will be issued or delivered to the employee at any time the award
is made without any cash payment to the company, except to the extent
otherwise provided by the Compensation Committee or required by law; provided,
however, that such shares will be subject to certain restrictions on the
disposition thereof and certain obligations to forfeit such shares to the
Company as may be determined in the discretion of the Compensation Committee.
The restrictions on disposition may lapse based upon (a) the Company's
attainment of specific performance targets established by the Compensation
Committee that are based on (i) the price of a share of Common Stock, (ii) the
Company's earnings per share, (iii) the Company's revenue, (iv) the revenue of
a business unit of the Company designated by the Compensation Committee, (v)
the return on stockholders' equity achieved by the Company, or (vi) the
Company's pre-tax cash flow from operations, (b) the grantee's tenure with the
Company, or (c) a combination of both factors. The Company retains custody of
the shares of Common Stock issued pursuant to a restricted stock award until
the disposition restrictions lapse. An employee may not sell, transfer,
pledge, exchange, hypothecate, or otherwise dispose of such shares until the
expiration of the restriction period. However, upon the issuance to the
employee of shares of Common Stock pursuant to a restricted stock award,
except for the foregoing restrictions, such employee will have all the rights
of a stockholder of the Company with respect to such shares, including the
right to vote such shares and to receive all dividends and other distributions
paid with respect to such shares.
Stock Appreciation Rights. A stock appreciation right permits the holder to
receive an amount (in cash, Common Stock, or a combination thereof) equal to the
number of stock appreciation rights exercised by the holder multiplied by the
excess of the fair market value of Common Stock on the exercise date over the
stock appreciation rights' exercise price. Stock appreciation rights may or may
not be granted in connection with the
8
<PAGE>
grant of an option and no stock appreciation right may be exercised earlier
than six months from the date of grant. A stock appreciation right may be
exercised in whole or in such installments and at such times as determined by
the Compensation Committee.
Long-Term Incentive and Phantom Stock Awards. The Goodrich Plan permits
grants of long-term incentive awards ("performance awards") and phantom stock
awards, which may be paid in cash, Common Stock, or a combination thereof as
determined by the Compensation Committee. Performance awards granted under the
Goodrich Plan have a maximum value established by the Compensation Committee
at the time of the grant. A grantee's receipt of such amount is contingent
upon satisfaction by the Company, or any subsidiary, division or department
thereof, of future performance conditions established by the Compensation
Committee prior to the beginning of the performance period. Such performance
awards, however, shall be subject to later revisions as the Compensation
Committee shall deem appropriate to reflect significant unforeseen events or
changes. A performance award will terminate if the grantee's employment with
the Company terminates during the applicable performance period. Phantom stock
awards granted under the Goodrich Plan are awards of Common Stock or rights to
receive amounts equal to share appreciation over a specific period of time.
Such awards vest over a period of time or upon the occurrence of a specific
event(s) (including, without limitation, a change of control) established by
the Compensation Committee, without payment of any amounts by the holder
thereof (except to the extent required by law) or satisfaction of any
performance criteria or objectives. A phantom stock award terminates if the
grantee's employment with the Company terminates during the applicable vesting
period or, if applicable, the occurrence of a specific event(s), except as
otherwise provided by the Compensation Committee at the time of grant. In
determining the value of performance awards or phantom stock awards, the
Compensation Committee shall take into account the employee's responsibility
level, performance, potential, other awards under the Goodrich Plan, and other
such consideration as it deems appropriate. Such payment may be made in a lump
sum or in installments as prescribed by the Compensation Committee. Any
payment made in Common Stock will be based upon the fair market value of the
Common Stock on the payment date.
STOCK OPTION GRANTS
No stock options were granted to the named executive officer during fiscal
1996.
STOCK OPTION EXERCISES AND YEAR-END HOLDINGS
The named executive officer did not exercise any stock options during 1996.
The following table sets forth information concerning option holdings and
the value of unexercised in-the money options held by the executive officer of
the Company named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE MONEY
OPTIONS HELD AT OPTIONS HELD AT
DECEMBER 31, 1996(1) DECEMBER 31, 1996(1)
------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXCERCISABLE
---- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Walter G. Goodrich......... 62,500 187,500 --0-- --0--
</TABLE>
- --------
(1) Computed based on the difference between aggregate fair market value and
aggregate exercise price. The fair market value of the Company's Common
Stock on December 31, 1996 was $.625 per share based on the average of the
high and low sales prices on the New York Stock Exchange on such date.
COMPENSATION REPORT OF THE BOARD OF DIRECTORS
The Compensation Committee is responsible for evaluating the performance of
management, determining the compensation for certain executive officers of the
Company, and administering the Company's stock option plans under which stock-
related grants and awards may be made to employees of the Company. The members
of the Compensation Committee have furnished the following report on executive
compensation for 1996.
9
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The Company has developed a compensation policy which is designed to attract
and retain key executives responsible for the success of the Company and
motivate management to enhance long-term stockholder value. The annual
compensation package of executive officers primarily consists of (i) a cash
salary which reflects the responsibilities relating to the position and
individual performance, (ii) variable performance awards payable in cash or
stock and tied to the individual's or the Company's achievement of certain
goals or milestones, and (iii) long-term stock based incentive awards which
strengthen the mutuality of interest between the executive officers and the
Company's stockholders.
In determining the level and position of compensation for each of the
Company's executive officers, the Board of Directors took into account various
qualitative and quantitative indicators of corporate and individual
performance. Although no specific target has been established, the Board
generally seeks to set salaries at the low to medium end of the range in
comparison to peer group companies. In setting such salaries, the Board
considers its peer group to be certain companies in the energy exploration and
production industry with market capitalizations similar to that of the
Company. In addition, in evaluating the performance of management, the Board
takes into consideration such factors as oil and gas drilling results,
successful acquisitions and operating results. In addition, the Board
recognizes performance and achievements that are more difficult to quantify,
such as the successful supervision of major corporate projects, demonstrated
leadership ability, and contributions to the industry and community
development.
For 1996, the Board included in its evaluations the financial and
exploration results of the Company along with each individual's job
performance. Additionally, the executive officers role in the negotiations of
the La/Cal II acquisition was considered. Base compensation is established by
the Compensation Committee, subject to the approval of the Board of Directors,
and reviewed annually. When establishing or reviewing base compensation levels
for each executive officer, the Compensation Committee, in accordance with its
general compensation policy, considers numerous factors, including the
responsibilities relating to the position, the qualifications of the
executive, and the relevant experience the individual brings to the Company,
strategic goals for which the executive has responsibility and compensation
levels of comparable companies. No predetermined weights are given to any one
of such factors. The salaries for each of the executive officers in 1996,
including the Company's Chief Executive Officer, were determined based upon
the foregoing factors. In 1996, Walter G. Goodrich, the Company's Chief
Executive Officer, was paid at an annual rate of $150,000.
In addition to each executive officer's base compensation, the Board may
award cash bonuses and/or grant awards under the Company's stock option plan
to chosen executive officers depending on the extent to which certain personal
and corporate performance goals are achieved. Such goals are the same as
discussed above. In early 1997, Walter G. Goodrich was awarded a cash bonus of
$17,500 related to his 1996 performance.
The Board has not yet adopted a policy with respect to the limitation under
the Federal Tax Code that generally limits the Company's ability to deduct
compensation in excess of $1,000,000 to a particular executive officer in any
year.
The foregoing report is given by the following members of the Board of
Directors.
Basil M. Briggs
Benjamin F. Edwards, II
Arthur A. Seeligson
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<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
Common Stock to the S&P 500 Index and the Principal Financial Securities, Inc.
Small Cap E&P Index for the period beginning August 31, 1995 and ending
December 31, 1996. The graph assumes that the value of the investment in the
shares of Common Stock and each index was $100 at August 31, 1995 (using the
closing price of $1.125 for the Company's Shares), and that all dividends were
reinvested. The Common Stock began trading on the New York Stock Exchange on
August 15, 1995. Prior to that time there was no market in the Company's stock
and, accordingly, five year data is not applicable.
COMPARISON OF CUMULATIVE RETURN
AMONG GOODRICH PETROLEUM CORPORATION
S&P 500 INDEX AND THE PRINCIPAL FINANCIAL SECURITIES, INC. SMALL CAP E&P INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
8/31/95 12/29/95 6/28/98 12/31/98
<S> <C> <C> <C> <C>
Goodrich Petroleumn Corporation 100.00 72.22 72.22 61.11
Principal Financial Securities, Inc.
Small Cap E&P Index 100.00 94.74 107.37 136.84
S&P 500 Index 100.00 111.38 120.33 132.52
</TABLE>
11
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, no executive officer of the Company served as (i) a
member of the Compensation Committee (or other Board committees performing
equivalent functions or, in the absence of any such committee, the entire
Board of Directors) of another entity, one of whose executive officers served
as a Director of the Company, or (ii) a director of another entity, one of
whose executive officers served on the Board of Directors of the Company or
its subsidiaries.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than ten
percent of the Common Stock, to file initial reports of ownership and reports
of changes in ownership (Forms 3, 4, and 5) of Common Stock with the
Securities and Exchange Commission (the "SEC") and the New York Stock
Exchange. Officers, directors and greater than 10% stockholders are required
by SEC regulation to furnish the Company with copies of all such forms that
they file.
The Company believes that during the fiscal year ended December 31, 1996,
all Section 16(a) filing requirements applicable to its officers, directors
and greater than 10% stockholders were complied with, except Form 5s of
Messrs. Turnham and Frautschi relating to the grant of options to purchase
100,000 shares of common stock each which should have been filed in February
1997 were filed under Form 4s in April 1997.
CERTAIN RELATIONSHIPS AND OTHER TRANSACTIONS
Joint Participation Agreement with Goodrich Oil Company
During the negotiations between Patrick Petroleum Company ("Patrick") and
La/Cal Energy Partners ("La/Cal"), representatives of Patrick requested that
the Company have participation rights in prospects generated and drilled by
Goodrich Oil Company after the Merger. Goodrich Oil Company is owned by Henry
Goodrich, who is the father of the Company's Chief Executive Officer and is
the Chairman of the Board of the Company, and is engaged in developing oil and
gas drilling programs for its participants, primarily in South Louisiana and
East Texas. Goodrich Oil Company is a party to participation agreements, with
certain industry partners and individual investors pursuant to which such
persons (the "GOC Participants") invest in drilling programs developed by
Goodrich Oil Company.
The Company entered into a Joint Participation Agreement with Goodrich Oil
Company pursuant to which the Company and Goodrich Oil Company agreed to offer
to the other a 50% participation interest in such company's share of all
drilling prospects and acquisitions of producing properties identified after
August 15, 1995 by either company. Accordingly, the GOC Participants have had
the opportunity to invest, through Goodrich Oil Company, in prospects or
acquisitions identified by the Company, and the Company has had the
opportunity to participate in future Goodrich Oil Company drilling programs
and acquisitions. Goodrich Oil Company did not receive any compensation or
management fees from the Company, and the Company did not receive any such
fees from Goodrich Oil Company, in connection with such arrangements. During
1996, the Company and Goodrich Oil Company participated in eight of ten wells
drilled by the Company.
The Joint Participation Committee terminates on the earlier of (i) December
31, 2000, or (ii) at such time as neither Walter G. Goodrich or Henry Goodrich
is an employee, director or consultant of the Company. Goodrich Oil Company
has advised the Company that it does not intend to pursue additional drilling
prospects or acquisitions subsequent to May 1, 1997. Accordingly, the Company
expects to terminate the Joint Participation Agreement as it relates to future
prospects and acquisitions at such time.
During 1996, Henry Goodrich, Walter G. Goodrich, Roland Frautshi and J.
Michael Watts participated as individual investors in Goodrich Oil Company's
drilling programs and accordingly acquired working interests in eight of ten
wells drilled by the Company. Such persons have paid their pro rata share of
all expenses associated
12
<PAGE>
with their interests in each prospect. During 1996, the sum of such persons'
participation interests in the Goodrich Oil Company drilling programs did not
exceed 10% of the aggregate interests of the Goodrich Oil Company
Participants.
Marketing Agreement
The Company entered into an agreement with Natural Gas Ventures, L.L.C.
("NGV"), a Louisiana limited liability company, that affiliates of Goodrich
Oil Company formed in August 1994, to operate as an agent for the purpose of
marketing Goodrich Oil Company's and its contracting parties' natural gas. The
Company and other contracting parties contribute nautral gas to NGV, which NGV
then markets to gas purchasers, pursuant to the Joint Venture Agreement
between NGV and Seaber Corporation ("Seaber") (described below). The Company
can terminate this agreement on 60-days advance notice. The Company and the
other contracting parties are entitled to participate, on a pro rata basis, in
any net profits or equity benefits received by NGV under its Joint Venture
Agreement with Seaber, provided the Company and the other contracting parties
have not terminated the agreement and are delivering gas under the agreement
at the time the net profits and equity interest are earned. The Company
believes its contract with NGV allows it to realize higher prices for its
contributed gas because of the greater market power associated with larger
volumes of gas than the Company would have for sale on a stand-alone basis.
NGV has entered into a natural gas marketing joint venture agreement (the
"Joint Venture Agreement") with Seaber whereby Seaber acts as agent for NGV in
its gas marketing efforts. Pursuant to the Joint Venture Agreement, Seaber
arranges short-term gas sales contracts on behalf of NGV with gas purchasers,
and NGV delivers to Seaber sufficient gas quantities to fulfill NGV's
contractual obligations. NGV can terminate the Joint Venture Agreement on a
60-days advance notice. During the term of the Joint Venture Agreement, on a
calendar year basis, NGV has the option to share in 50 percent of all Seaber's
net profits provided that NGV meets certain scheduled delivery requirements.
Each year, 25% of NGV's share of the Seaber net profits is retained by Seaber
as an account payable, which Seaber uses as additional working capital. At the
end of the term of the Joint Venture Agreement, and subject to delivering
scheduled volumes of gas, NGV can elect to convert its cumulative accounts
payable into 50% of the outstanding Seaber common stock, or can choose to
receive the payable in cash.
As set forth above, provided certain conditions are met, NGV will distribute
the Seaber net profits and equity interests if any, to its contracting parties
on a pro rata basis. No such distributions occurred in 1996.
During 1996, NGV marketed under such arrangement natural gas representing
approximately 35% of the Company's total revenues.
Consulting Agreement with Henry Goodrich
The Company entered into a five-year consulting agreement with Mr. Henry
Goodrich commencing August 15, 1995. Mr. Goodrich provides consulting services
to the Company with regard to the identification and evaluation of acquisition
and drilling opportunities, financing transactions, investor relations and
other matters. Mr. Goodrich receives annual consulting fees from the Company
of $150,000 for such services over the five-year term of the agreement. Mr.
Goodrich was awarded a bonus of $17,500 related to the Company's performance
in 1996.
Consulting Agreement with Leo E. Bromberg
The Company entered into a five-year consulting agreement with Mr. Leo E.
Bromberg commencing October 20, 1995, which the Company or Mr. Bromberg may
terminate on any anniversary date of the consulting agreement. Mr. Bromberg
provides consulting services to the Company with regard to the acquisition and
financing of hydrocarbon assets. Mr. Bromberg receives annual consulting fees
from the Company of $120,000 for such services over the five-year term of the
agreement.
13
<PAGE>
PROPOSAL 2--TO AMEND THE 1995 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
At the Annual Meeting, the stockholders will be asked to approve an
amendment (the "Amendment") to the Company's 1995 Nonemployee Director Stock
Option Plan (the "Director Option Plan") to extend the option exercise period
for Nonemployee Directors whose membership on the Board terminates to the
fourth anniversary of the date of termination. The Amendment was unanimously
approved by the Board on March 20, 1997, subject to stockholder approval at
the Annual Meeting.
Below is a summary of the primary features of the Amendment and the Director
Option Plan. A copy of the Amendment is attached hereto as Appendix I hereto,
and a copy of the Director Option Plan and revised Nonemployee Director Stock
Option Agreement is available upon a stockholder's written request to the
Company at 5847 San Felipe, Suite 700, Houston, Texas 77057. Approval of the
Amendment requires the affirmative vote of a majority of the shares present,
or represented, and entitled to vote at the Annual Meeting. Accordingly,
abstentions will have the effect of a vote against the proposal, and broker
non-votes will have no effect on the proposal (assuming a quorum is present).
DESCRIPTION OF THE AMENDMENT
Prior to the Amendment, in the event a Nonemployee Director's membership on
the Board terminates for any reason, the Nonemployee Director's outstanding
options are exercisable in full by the Nonemployee Director at any time during
a period of twelve months following such termination or, if the Nonemployee
Director dies during such twelve-month period, by the Nonemployee Director's
estate (or the person who acquires the option by will or the laws of descent
and distribution or otherwise by reason of the death of the Nonemployee
Director) at any time during a period of one year following the Director's
death, subject to the expiration date of such options.
The Amendment provides that, in the event a Nonemployee Director's
membership on the Board terminates for any reason, the Nonemployee Director's
outstanding options would be exercisable in full by the Nonemployee Director
or the Nonemployee Director's estate (or the person who acquires the option by
will or the laws of descent and distribution or otherwise by reason of the
death of the Nonemployee Director) at any time during a period of four years
following the date the Nonemployee Director ceases to be a director, subject
to the expiration date of such options.
PURPOSE OF THE DIRECTOR OPTION PLAN
The Director Option Plan is intended to promote the interests of the Company
and its stockholders by helping award and retain outside directors and
allowing them to develop a sense of proprietorship and personal involvement in
the development and financial success of the Company. Shares issuable pursuant
to the Director Option Plan may be authorized but unissued shares or
reacquired shares, and the Company may purchase shares required for this
purpose. The aggregate maximum number of shares authorized to be issued under
the Director Option Plan pursuant to grants of stock options is 500,000 shares
of Common Stock (which amount is subject to adjustment upon a reorganization,
stock split, recapitalization, or other change in the Company's capital
structure). Shares subject to expired options are not counted against the
number of shares available under the Director Option Plan.
ELIGIBILITY
Only directors who are not and never have been employed by the Company
("Nonemployee Directors") are eligible to receive options under the Director
Option Plan.
TERM OF THE DIRECTOR OPTION PLAN
The Director Option Plan was effective as of August 15, 1995 (the "Effective
Date"). If not sooner terminated by the Board, the Director Option Plan will
terminate on the date that the remaining shares of Common Stock that may be
issued under the Director Option Plan are not sufficient to cover the options
required to be granted under the terms of the Director Option Plan.
14
<PAGE>
OPTION AWARDS
Under the terms of the Director Option Plan, each Nonemployee Director who
served in such capacity on the Effective Date received a grant of a
nonstatutory stock option to acquire 20,000 shares of Common Stock. Each
Nonemployee Director elected or appointed to the Board after the Effective
Date will receive, as of the date of such election or appointment, a grant of
a nonstatutory stock option to acquire 20,000 shares of Common Stock (which
amount is subject to adjustment upon a reorganization, stock split,
recapitalization, or other change in the Company's capital structure).
Further, each Nonemployee Director serving in such capacity immediately after
an Annual Meeting in a year subsequent to the Effective Date and not receiving
an initial grant as of such date will receive, as of the date of such Annual
Meeting, a grant of a nonstatutory stock option to acquire 10,000 shares of
Common Stock (which amount is subject to adjustment upon a reorganization,
stock split, recapitalization, or other change in the Company's capital
structure). The exercise price for shares purchased pursuant to an option
granted under the Director Option Plan is the mean of the high and low prices
of the shares of Common Stock subject to the option as reported on the New
York Exchange composite tape on the date the option is granted or on the last
preceding date on which such prices were so reported. Options granted under
the Director Option Plan are for a term of ten years from the date of grant.
Options granted under the Director Option Plan are fully exercisable following
the date of grant. Options granted under the Director Option Plan are not
transferable by the option holder except by will or by the laws of descent and
distribution and are exercisable only by the Nonemployee Director (or his or
her guardian or legal representative) during the lifetime of the Nonemployee
Director. The option price upon exercise may be paid by a Nonemployee Director
in cash, other shares of Common Stock owned by the Nonemployee Director, or by
a combination of cash and Common Stock.
TERMINATION OF BOARD MEMBERSHIP
Under the current terms of the Director Option Plan, in the event the
Nonemployee Director's membership on the Board terminates for any reason, the
Nonemployee Director's outstanding options are exercisable in full at any time
during a period of one year following such termination, subject to the
expiration date of such options. If the Nonemployee Director dies during such
one-year period, the Nonemployee Director's outstanding options are
exercisable in full by the Nonemployee Director's estate (or the person who
acquires the option by will or the laws of descent and distribution or
otherwise by reason of the death of the Nonemployee Director) at any time
during a period of one year following the Director's death, subject to the
expiration date of such options. If the Amendment is approved, then, in the
event a Nonemployee Director's membership on the Board terminates for any
reason, the Nonemployee Director's outstanding options will be exercisable in
full at any time during a period of four years following such termination.
CORPORATE CHANGE
If the Company is not the surviving entity in any merger or consolidation,
all options outstanding under the Director Option Plan will be exercisable for
the number and class of securities or property that the Nonemployee Director
would have been entitled to had the option already been exercised. If the
Company sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets or if the Company is dissolved and liquidated,
each Nonemployee Director must surrender his outstanding options to the
Company and the Company will cancel such options and pay to each Nonemployee
Director and amount of cash equal to the per share price offered to
stockholders of the Company in any such sale lease exchange of assets or
dissolution transaction for the shares subject to such options over the
exercise prices under such options for such shares.
AMENDMENTS
The Board may terminate the Director Option Plan at any time with respect to
any shares for which options have not yet been granted. Further, the Board may
alter or amend the Director Option Plan from time to time; provided, however,
the Director Option Plan may not be amended more than once every six months
other than to comport with changes in the Internal Revenue Code of 1986, as
amended (the "Code"), the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or the rules thereunder; and provided, further,
15
<PAGE>
that no amendment may adversely affect the rights of any holder of an
outstanding option, or any unexercised portion thereof, without the holder's
consent and that no alteration or amendment that materially increases the
benefits accruing to Nonemployee Directors under the Director Option Plan,
increases the aggregate number of shares of Common Stock that may be issued
pursuant to the Director Option Plan, increases or decreases the number of
shares subject to each option, changes the schedule of grants, extends the
terms of the options, changes the class of individuals eligible to receive
options under the Director Option Plan or extends the term of the Director
Option Plan may be adopted without the prior approval of the stockholders of
the Company.
FEDERAL INCOME TAX ASPECTS OF THE DIRECTOR OPTION PLAN
An Nonemployee Director will not recognize any taxable income at the time an
option is granted under the Director Option Plan. Ordinary income will be
recognized by a Nonemployee Director at the time of exercise in an amount
equal to the excess of the fair market value of the shares of Common Stock on
the date of exercise over the option price for such shares. However, if other
shares of Common Stock have been purchased by a Nonemployee Director within
six months of the exercise of an option, recognition of the income
attributable to such exercise may under certain circumstances be postponed for
a period of up to six months from the date of such purchase of such other
shares of Common Stock due to liability to suit under Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). If
applicable, one effect of any such postponement would be to measure the amount
of the Nonemployee Director's taxable income by reference to the fair market
value of such shares at the time such liability to suit under Section 16(b) of
the Exchange Act no longer exists (rather than at the earlier date of the
exercise of the option). Upon a Nonemployee Director's exercise of an option
granted under the Director Option Plan, the Company may claim a deduction for
compensation paid at the same time and in the same amount as ordinary income
is recognized by the Nonemployee Director.
The Director Option Plan is not qualified under section 401(a) of the Code.
The comments set forth in the above paragraphs are only a summary of certain
of the Federal income tax consequences relating to the Director Option Plan.
No consideration has been given to the effects of state, local, or other tax
laws on the Director Option Plan or a Nonemployee Director.
INAPPLICABILITY OF ERISA
Based upon current law and published interpretations, the Company does not
believe the Director Option Plan is subject to any of the provisions of ERISA.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT
TO THE 1995 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN, AND PROXIES EXECUTED AND
RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
PROPOSAL 3--APPROVAL OF AUDITORS
The Board has appointed the firm of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997, subject to
ratification by the Company's stockholders. KPMG Peat Marwick LLP has acted as
the Company's auditors since its inception in 1995. A representative of KPMG
Peat Marwick LLP is expected to be present at the Annual Meeting, will be
offered the opportunity to make a statement if such representative desires to
do so and will be available to respond to appropriate questions.
The affirmative vote of holders of a majority of the shares of Common Stock
entitled to vote in person or by proxy at the 1997 Annual Meeting is required
to ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for fiscal year 1997. Approval of the proposal requires
the affirmative vote of a majority of the shares present, or represented, and
entitled to vote at the Annual Meeting. Accordingly, abstentions will have the
effect of a vote against the proposal, and broker non-votes will have no
effect on the proposal (assuming a quorum is present).
16
<PAGE>
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP, AND PROXIES EXECUTED AND RETURNED WILL
BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholders may propose matters to be presented at stockholders' meetings
and may also nominate persons to be directors. Formal procedures have been
established for those proposals and nominations.
PROPOSALS FOR 1998 ANNUAL MEETING
Pursuant to various rules promulgated by the SEC, any proposals of holders
of Common Stock intended to be presented to the annual meeting of stockholders
of the Company to be held in 1998 must be received by the Company, addressed
to Glynn E. Williams, Jr., Secretary, 5847 San Felipe, Suite 700, Houston,
Texas 77057, no later than February 19, 1998, to be included in the Company
proxy statement and form of proxy relating to that meeting. With respect to
business to be brought before the Annual Meeting, the Company has not received
any notices from its stockholders.
In addition to the SEC rules described in the preceding paragraph, the
Company's bylaws provide that for business to be properly brought before the
Company's annual meetings of stockholders, it must be either (a) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (b) otherwise brought before the meeting by or at
the direction of the Board of Directors or (c) otherwise properly brought
before the meeting by a stockholder of the Company who is a stockholder of
record at the time of giving of notice thereinafter provided for, who shall be
entitled to vote at such meeting and who complies with the following notice
procedures. In addition to any other applicable requirements, for business to
be brought before an annual meeting by a stockholder of the Company, the
stockholder must have given timely notice in writing of the business to be
brought before an annual meeting of stockholders of the Company to the
Secretary of the Company. To be timely, a stockholder's notice must be
delivered to or mailed and received at the Company's principal executive
offices, 5847 San Felipe, Suite 700, Houston, Texas 77057, on or before
February 19, 1998. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting,
(ii) the name and address, as they appear on the Company's books, of the
stockholder proposing such business, (iii) the acquisition date, the class and
the number of shares of Common Stock that are owned beneficially by the
stockholder, (iv) any material interest of the stockholder in such business
and (v) a representation that the stockholder intends to appear in person or
by proxy at the meeting to bring the proposed business before the meeting.
Notwithstanding the foregoing bylaw provisions, a stockholder shall also
comply with all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth in the foregoing
bylaw provisions. Notwithstanding anything in the Company's bylaws to the
contrary, no business shall be conducted at the annual meeting except in
accordance with the procedures outlined above.
NOMINATIONS FOR 1998 ANNUAL MEETING AND FOR ANY SPECIAL MEETINGS
Only persons who are nominated in accordance with the following procedures
will be eligible for election, and to serve, as directors. Nominations of
persons for election to the Company's Board of Directors may be made at a
meeting of stockholders (a) by or at the direction of the Board of Directors
or (b) by any stockholder of the Company who is a stockholder of record at the
time of giving of notice thereinafter provided for, who shall be entitled to
vote for the election of directors at the meeting and who complies with the
following notice procedures. Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to timely
notice in writing to the Secretary of the Company. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
Company's principal executive offices, 5847 San Felipe, Suite
700, Houston, Texas 77057 (i) with respect to an election to be held at the
annual meeting of stockholders of the
17
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Company, before February 19, 1998, and (ii) with respect to an election to be
held at a special meeting of stockholders of the Company for the election of
Directors, not later than the close of business on the 10th day following the
date on which notice of the date of the meeting was mailed or public
disclosure of the date of the meeting was made, whichever first occurs. Such
stockholder's notice to the Secretary shall set forth (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director, all information relating to the person that is required to be
disclosed in solicitations for proxies for election of directors, or is
otherwise required, pursuant to Regulation 14A under the Exchange Act
(including the written consent of such person to be named in the proxy
statement as a nominee and to serve as a director if elected); and (b) as to
the stockholder giving the notice, (i) the name and address, as they appear on
the Company's books, of such stockholder, and (ii) the class and number of
shares of capital stock of the Company which are beneficially owned by the
stockholder. In the event a person is validly designated as a nominee to the
Board and shall thereafter become unable or unwilling to stand for election to
the Board of Directors, the Board of Directors or the stockholder who proposed
such nominee, as the case may be, may designate a substitute nominee.
Notwithstanding the foregoing bylaw provisions, a stockholder shall also
comply with all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth in the foregoing
bylaw provisions.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the judgment
of the persons voting the proxy.
By Order of the Board of Directors
Walter G. "Gil" Goodrich
President and Chief Executive
Officer
Houston, Texas
April 18, 1997
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APPENDIX I
SECOND AMENDMENT TO
GOODRICH PETROLEUM CORPORATION
1995 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
WHEREAS, GOODRICH PETROLEUM CORPORATION (the "Company") has heretofore
adopted the GOODRICH PETROLEUM CORPORATION 1995 NONEMPLOYEE DIRECTOR STOCK
OPTION PLAN (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended as follows:
1. Subject to the provisions of paragraph 2 hereof, Paragraph 3 of the
Nonemployee Director Stock Option Agreement, which is incorporated by Article
II of the Plan, shall be deleted in its entirety and the following shall be
substituted therefor:
"3. Exercise of Option. Subject to the earlier expiration of this Option
as herein provided, this Option may be exercised, by written notice to the
Company at its principal executive office addressed to the attention of its
President and Chief Executive Officer, at any time and from time to time
after the date of grant hereof. This Option is not transferable by Director
otherwise than by will or the laws of descent and distribution, and may be
exercised only by Director (or Director's guardian or legal representative)
during Director's lifetime. If a Director's membership on the Board of
Directors of the Company (the "Board") terminates, this Option may be
exercised as follows:
(a) If Director's membership on the Board terminates by reason of
disability, this Option may be exercised in full by Director (or
Director's guardian or legal representative or Director's estate or the
person who acquires this Option by will or the laws of descent and
distribution or otherwise by reason of the death of Director) at any
time during the period of four years following such termination.
(b) If Director dies while a member of the Board, Director's estate,
or the person who acquires this Option by will or the laws of descent
and distribution or otherwise by reason of the death of Director, may
exercise this Option in full at any time during the period of four
years following the date of Director's death.
(c) If Director's membership on the Board terminates for any reason
other than as described in (a) or (b) above, this Option may be
exercised in full by Director (or Director's guardian or legal
representative or Director's estate or the person who acquires this
Option by will or the laws of descent and distribution or otherwise by
reason of the death of Director) at any time during the period of four
years following such termination.
This Option shall not be exercisable in any event after the expiration of
ten years from the date of grant hereof. The purchase price of shares as to
which this Option is exercised shall be paid in full at the time of
exercise (A) in cash (including check, bank draft or money order payable to
the order of the Company), (B) by delivering to the Company shares of Stock
having a fair market value equal to the purchase price, or (C) any
combination of cash or Stock. No fraction of a share of Stock shall be
issued by the Company upon exercise of an Option or accepted by the Company
in payment of the purchase price thereof; rather, Director shall provide a
cash payment for such amount as is necessary to effect the issuance and
acceptance of only whole shares of Stock. Unless and until a certificate or
certificates representing such shares shall have been issued by the Company
to Director, Director (or Director's guardian or legal representative or
Director's estate or the person permitted to exercise this Option in the
event of Director's death) shall not be or have any of the rights or
privileges of a stockholder of the Company with respect to shares
acquirable upon an exercise of this Option."
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2. This amendment to the Plan shall be effective with respect to all options
outstanding under the Plan on or after August 15, 1995, including options
granted to Director's who have resigned since the 1996 Annual Meeting of
Stockholders', provided that it is approved by the stockholders of the Company
at the 1997 Annual Meeting of Stockholders.
3. As amended hereby, the Plan is specifically ratified and reaffirmed.
A-2
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PROXY GOODRICH PETROLEUM CORPORATION PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 21, 1997
The undersigned hereby constitutes and appoints Walter G. Goodrich and
Glynn E. Williams, Jr. and each and either of them, his true and lawful
attorneys and proxies with full power of substitution, for and in the name,
place and stead of the undersigned, to attend the Annual Meeting of Stockholders
of Goodrich Petroleum Corporation to be held at the Ritz-Carlton Hotel, 1919
Briar Oaks, Houston, Texas on May 21, 1997 at 11:00 a.m., local time, and any
adjournment(s) thereof, with all powers the undersigned would possess if
personally present and to vote thereat, as provided on the reverse side of this
card, the number of shares the undersigned would be entitled to vote if
personally present. In accordance with their discretion, said attorneys and
proxies are authorized to vote upon such other matters as may properly come
before the meeting or any adjournment thereof.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY
IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.
(To be Signed and Continued on the Reverse Side.)
<PAGE>
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GOODRICH PETROLEUM CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
[ ]
For All
For Withhold (Except nominee(s)
All All written below)
1. Election of Directors -- [ ] [ ] [ ]
Nominees: Basil M. Briggs and Henry Goodrich
For Against Abstain
2. Proposal to approve an amendment [ ] [ ] [ ]
to the Company's 1995 Non employee
Director Stock Option Plan.
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For Against Abstain
3. Proposal to ratify the appointment [ ] [ ] [ ]
of KPMG Peat Marwick LLP as the
Company's independent auditors for
the fiscal year ended December 31,
1997.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY
WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL
BE VOTED FOR THE TWO NOMINEES AND FOR PROPOSALS 2 AND 3.
Dated: , 1997
--------------------------------
Signature(s)
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NOTE: When signing as attorney, executor, administrator, trustee or guardian,
please give full title. If more than one trustee, all should sign. All
joint owners must sign.
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