UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
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Filed
by the Registrant þ
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Filed
by a Party Other Than the Registrant o
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Check
the Appropriate Box:
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o
Preliminary Proxy Statement
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o Confidential, for Use of the
Commission Only (as Permitted by Rule
14a-6(e)(2))
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þ
Definitive Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to §240.14a-12
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Swift
Energy Company
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of filing fee (Check the appropriate box):
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þNo fee
required
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o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
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(1)
Title of each class of securities to which transaction
applies:
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(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):
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(4)
Proposed maximum aggregate value of transaction:
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(5)
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Fee
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box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement mother,
or the Form or Schedule and the date of its
filing.
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(1)
Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
to
be held May 13, 2008
The
annual meeting of shareholders of SWIFT ENERGY COMPANY (the “Company” or “Swift
Energy”) will be held at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive,
Houston, Texas, on Tuesday, May 13, 2008, at 4:00 p.m., Houston time, for the
following purposes:
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1.
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To
elect three Class III directors to serve until the 2011 annual meeting of
shareholders, or until their successors are duly qualified and
elected;
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2.
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To
amend the Swift Energy Company 2005 Stock Compensation Plan (the “2005
Plan”) to increase the number of shares of the Company’s common stock
available for awards under the plan by up to 800,000 additional
shares;
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3.
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To
amend the Swift Energy Company Employee Stock Purchase Plan (the
“ESPP”) to increase the number of shares of the Company’s common stock
available for issuance under the plan by up to 200,000 additional
shares;
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4.
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To
ratify the selection of Ernst & Young LLP as Swift Energy’s
independent auditor for the fiscal year ending December 31, 2008;
and
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5.
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Such
other business as may properly be presented at the annual meeting, or at
any and all adjournments or postponements
thereof.
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A record
of shareholders has been taken as of the close of business on March 24, 2008,
and only shareholders of record on that date will be entitled to vote at the
annual meeting, or any adjournment or postponement thereof. A complete list of
shareholders will be available commencing May 2, 2008, and may be inspected
during normal business hours prior to the annual meeting at the offices of the
Company, 16825 Northchase Drive, Suite 400, Houston, Texas 77060. This list
will also be available at the annual meeting.
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By
Order of the Board of Directors,
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April
7, 2008
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Bruce
H. Vincent
President
and Secretary
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Your Vote
Is Important!
Whether
or not you plan to attend the annual meeting of shareholders, we urge you to
vote and submit your proxy by telephone, Internet, or mail as promptly as
possible to ensure the presence of a quorum for the annual meeting. For
additional instructions on voting by telephone or the Internet, please refer to
the enclosed instruction sheet. To vote and submit your proxy by mail, please
complete, sign and date the enclosed proxy card and return it in the enclosed
postage prepaid envelope. If you attend the annual meeting, you may revoke the
proxy and vote in person. If you hold your shares through an account with a
brokerage firm, bank or other nominee, please follow the instructions you
receive from them to vote your shares.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2008 ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON MAY 13, 2008
The Proxy
Statement for the 2008 Annual Meeting of Shareholders and the 2007 Annual Report
to Shareholders are available at
http://ww3.ics.adp.com/streetlink/sfy.
TABLE
OF CONTENTS
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SWIFT
ENERGY COMPANY
16825
Northchase Drive, Suite 400
Houston,
Texas 77060
(281)
874-2700
PROXY STATEMENT
for
the
2008
ANNUAL MEETING OF SHAREHOLDERS
This
proxy statement, the accompanying proxy card and the Annual Report to
Shareholders of Swift Energy Company (“Swift Energy” or the “Company”) are being
mailed to Swift Energy’s shareholders beginning on or about April 9,
2008. The Board of
Directors (the “Board”) of Swift Energy is soliciting your proxy to vote your
shares of Swift Energy common stock at the annual meeting of shareholders (the
“Annual Meeting”) to be held at the Wyndham Greenspoint Hotel, 12400 Greenspoint
Drive, Houston, Texas, on Tuesday, May 13, 2008, at 4:00 p.m., Houston
time. The Board is soliciting proxies to give all shareholders
the opportunity to vote on the matters that will be presented at the Annual
Meeting. This proxy statement provides you with the information on
these matters to assist you in voting your shares.
What
is a proxy?
A proxy
is your legal designation of another person or persons (the “proxy” or
“proxies”) to vote on your behalf. By completing and returning the
enclosed proxy card, you are giving the designated proxies appointed by the
Board the authority to vote your shares in the manner you indicate on your proxy
card.
Who
are the proxies appointed by the Board of Directors for the Annual
Meeting?
The
proxies for the Company appointed by the Board at a meeting held on
February 11, 2008, are the following representatives of Swift
Energy:
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Terry
E. Swift
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Chairman
of the Board and Chief Executive Officer
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Bruce
H. Vincent
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President,
Secretary and Director
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Alton
D. Heckaman, Jr.
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Executive
Vice President and Chief Financial
Officer
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Can
I receive more than one proxy card?
Yes. If
you received multiple proxy cards, you may hold your shares in different ways
(e.g., joint tenancy,
trusts or custodial accounts) or in multiple accounts. If your shares
are held by a broker, often referred to as being held in “street name,” you will
receive your proxy card or cards or other voting information from your broker,
and you will return your proxy card or cards to your broker. You should vote on and sign
each proxy card you receive.
Who
is qualified to vote?
You are
qualified to receive notice of and to vote at the Annual Meeting if you own
shares of Swift Energy common stock at the close of business on our record date
of Monday, March 24, 2008.
How
many shares of Swift Energy common stock are entitled to vote at the Annual
Meeting?
As of
March 24, 2008, there were 30,477,314 shares of Swift Energy common stock
issued, outstanding and entitled to vote at the Annual Meeting. Each
share of Swift Energy common stock is entitled to one vote on each matter
presented.
What
is the difference between a “shareholder of record” and a “street name”
holder?
These
terms describe how your shares are held. If your shares are
registered directly in your name with American Stock Transfer & Trust
Company, the Company’s transfer agent, you are a “shareholder of
record.” If your shares are held in the name of a brokerage, bank,
trust or other nominee as a custodian, you are a “street name”
holder.
How do I
vote my shares?
If you
are a “shareholder of record,” you have several choices. Please refer
to the specific instructions set forth on the enclosed proxy card, but in
general, you can vote your proxy:
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by
mailing the enclosed proxy card;
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over
the telephone; or
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via
the Internet.
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If you
choose to vote via the Internet, our electronic voting system has been designed
to authenticate your identity as a shareholder. If you hold your
shares in “street name,” your broker, bank, trustee or nominee will provide you
with materials and instructions for voting your shares.
Can
I vote my shares in person at the Annual Meeting?
If you
are a “shareholder of record,” you may vote your shares in person at the Annual
Meeting. If you hold your shares in “street name,” you must obtain a
proxy from your broker, banker, trustee or nominee, giving you the right to vote
the shares in person at the Annual Meeting.
What
are the Board’s recommendations on how I should vote my shares?
The Board
recommends that you vote your shares as follows:
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Proposal
1 —
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FOR the election of all
three nominees for Class III directors, with terms to expire at the 2011
Annual Meeting of Shareholders.
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Proposal
2 —
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FOR the amendment of the
Swift Energy Company 2005 Stock Compensation Plan to increase the number
of shares of Swift Energy common stock available for awards under the plan
by up to 800,000 shares.
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Proposal
3 —
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FOR the amendment of the
Swift Energy Company Employee Stock Purchase Plan to increase the number
of shares of Swift Energy common stock available for issuance under the
plan by up to 200,000 shares.
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Proposal
4 —
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FOR the ratification of
the selection of Ernst & Young LLP as Swift Energy’s independent
auditor for the fiscal year ending December 31,
2008.
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What
are my choices when voting?
Proposal
1 — You may cast your vote in favor of electing the nominees as directors or
withhold your vote on one or more nominees.
Proposals
2, 3 and 4 — Each proposal requires the affirmative vote of the holders of a
majority of the shares entitled to vote on, and that voted for or against or
expressly abstained with respect to, each proposal.
How
will my shares be voted if I do not specify how they should be
voted?
If you
sign and return your proxy card without indicating how you want your shares to
be voted, the designated proxies appointed by the Board will vote as
follows:
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Proposal
1 —
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FOR the election of all
three nominees for Class III directors, with terms to expire at the 2011
Annual Meeting of Shareholders.
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Proposal
2 —
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FOR the amendment of the
Swift Energy Company 2005 Stock Compensation Plan to increase the number
of shares of Swift Energy common stock available for awards under the plan
by up to 800,000 additional shares.
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Proposal
3 —
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FOR the amendment of the
Swift Energy Company Employee Stock Purchase Plan to increase the number
of shares of Swift Energy common stock available for issuance under the
plan by up to 200,000 additional shares.
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Proposal
4 —
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FOR the ratification of
the selection of Ernst & Young LLP as Swift Energy’s independent
auditor for the fiscal year ending December 31,
2008.
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2
How
are votes withheld, abstentions and broker non-votes treated?
Votes
withheld and abstentions are deemed as “present” at the Annual Meeting, are
counted for quorum purposes, and other than for Proposal 1, will have the same
effect as a vote against the matter. For Proposal 1, votes withheld
will have the same effect as not voting. Broker non-votes, if any,
while counted for general quorum purposes, are not deemed to be “present” with
respect to any matter for which a broker does not have authority to vote and
also have the same effect as not voting.
Can
I change my vote after I have mailed in my proxy card?
You may
revoke your proxy in one of the following ways:
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send
a written notice of revocation to the Secretary of the Company that is
received prior to the Annual Meeting, stating that you revoke your
proxy;
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sign
a later-dated proxy card and submit it so that it is received prior to the
Annual Meeting; or
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attend
the Annual Meeting and vote your shares in
person.
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What
vote is required to approve each proposal?
Each
proposal requires the affirmative vote of the holders of a majority of the
shares entitled to vote on, and that voted for or against or expressly abstained
with respect to, each proposal.
Who
pays the cost of this proxy solicitation?
The cost
of preparing, printing and mailing this proxy statement and soliciting proxies
is paid by Swift Energy. The Company will also request brokerage firms, banks,
nominees, custodians and fiduciaries to forward proxy materials to the
beneficial owners of shares of Swift Energy common stock as of the record date
and will reimburse these entities for the cost of forwarding the proxy materials
in accordance with customary practice. Your cooperation in promptly voting your
shares and submitting your proxy by telephone, Internet or completing and
returning the enclosed proxy card by mail will help to avoid additional
expense.
Is
this proxy statement the only way the proxies are being solicited?
In
addition to this solicitation by the Board, employees of Swift Energy may
solicit proxies in person or by mail, delivery service, telephone or facsimile,
without additional compensation. The Company has also retained
Georgeson Shareholder Communications Inc. to act as a proxy solicitor in
conjunction with the Annual Meeting. The Company has agreed to pay
this firm $9,000, plus reasonable out-of-pocket expenses, for standard proxy
solicitation services.
If
you have any further questions about voting your shares or attending the Annual
Meeting, please contact our Investor Relations Department at (281) 874-2700 or
(800) 777-2412.
3
Swift
Energy has three classes of directors. Every year, each director of one class is
elected to serve a three-year term or until his or her successor has been duly
elected and qualified. Ms. Deanna L. Cannon and Messrs. Douglas
J. Lanier and Bruce H. Vincent, incumbent Class III directors, have been
nominated by the Board to stand for reelection as Class III directors. Directors
are elected by a majority of the votes cast by the holders of shares present and
entitled to vote in the election of directors at a meeting of the shareholders
at which a quorum is present.
The
current composition of the Board is:
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Class
I Directors:
(term
to expire at 2009 annual meeting)
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Clyde
W. Smith, Jr.
Terry
E. Swift
Charles
J. Swindells
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Class
II Directors:
(term
to expire at 2010 annual meeting)
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Raymond
E. Galvin
Greg
Matiuk
Henry
C. Montgomery
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Class
III Directors:
(standing
for reelection at this annual meeting
for
term to expire at 2011 annual meeting)
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Deanna
L. Cannon
Douglas
J. Lanier
Bruce
H. Vincent
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Deanna L. Cannon, 47, has
served as a director of Swift Energy since May 2004. Ms. Cannon
is a shareholder and director of Corporate Finance Associates of Northern
Michigan, an investment banking firm, a director of Corporate Finance Associates
Worldwide, and holds her securities license under Corporate Finance Securities.
She is also President of Cannon & Company CPA’s PLC, a privately held
consulting firm. She served Miller Exploration Company as Chief
Financial Officer and Secretary from November 2001 to December 2003, as Vice
President—Finance and Secretary from June 1999 to November 2001, and as a
director of one of its wholly owned subsidiaries from May 2001 to December
2003. Miller Exploration Company was a publicly held independent oil
and gas exploration and production company that was acquired by Edge Petroleum
Corporation in December 2003. Previously, Ms. Cannon was employed in
public accounting for 16 years. Ms. Cannon holds a Bachelor of
Science degree in Accounting and is a Certified Public Accountant.
Douglas J. Lanier, 58, has
served as a director of Swift Energy since May 2005. Mr. Lanier
retired in 2004 as Vice President of ChevronTexaco Exploration & Production
Company, Gulf of Mexico Business Unit. He began his career with Gulf
Oil Company in 1972 and served in various positions until 1989, when
Mr. Lanier was appointed Assistant General Manager–Production for Chevron
USA Central Region in Houston. He served in subsequent appointments
until he joined Chevron Petroleum Technology Company as President in
1997. In October of 2000, he was appointed Vice President of the Gulf
of Mexico Shelf Strategic Business Unit. Mr. Lanier holds the
degree of Bachelor of Science in Petroleum Engineering. He is a
member of the Society of Petroleum Engineers and is a registered Professional
Engineer in Texas (inactive). Mr. Lanier was inducted into the
University of Tulsa College of Engineering Hall of Fame in 2003.
Bruce H. Vincent, 60, was
elected as a director of Swift Energy in May 2005 and was appointed President of
the Company in November 2004. He also was appointed Secretary in
February 2008 and previously served as Secretary from August 2000 until May
2005. Mr. Vincent previously served as President of Swift Energy
International, Inc. from February 2004 to May 2005, as Executive Vice
President—Corporate Development from August 2000 to November 2004, and as Senior
Vice President—Funds Management since joining the Company in
1990. Mr. Vincent holds the degrees of Bachelor of Arts and
Master of Business Administration.
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The Board
of Directors unanimously recommends that shareholders vote “FOR” all of
the director nominees to serve as directors in the Class for which they
are nominated.
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The
persons named as proxies on the accompanying proxy card, unless authority is
withheld by a shareholder on a proxy card, intend to vote “FOR” the election of
all of the nominees named in this proxy statement standing for reelection as
Class III directors. If any nominee should become unavailable or unable to serve
as a director, the persons named as proxies may vote for a substitute selected
by them, or the size of the Board may be reduced accordingly; however, the Board
is not aware of any circumstances likely to render any nominee
unavailable.
4
Clyde W. Smith, Jr., 59, has
served as a director of Swift Energy since 1984. Since January 2002,
Mr. Smith has served as President of Ascentron, Inc., an electronics
manufacturing services company. From May 1998 until January 2002,
Mr. Smith served as General Manager of D.W. Manufacturing, Inc. d/b/a
Millennium Technology Services, an electronics manufacturer which was acquired
by Ascentron, Inc. in January of 2002. Mr. Smith is a Certified
Public Accountant, and holds the degree of Bachelor of Business Administration
in Management.
Charles J. Swindells,
65, has served as a director of Swift Energy since February
2006. Ambassador Swindells currently serves as Vice Chairman, Western
Region of U.S. Trust, Bank of America Private Wealth Management, and also is a
director on the Board of The Greenbrier Companies, Inc., an international
supplier of transportation equipment and services to the railroad
industry. He served as United States Ambassador to New Zealand and
Samoa from 2001 to 2005. Prior to becoming Ambassador, he was Vice
Chairman of U.S. Trust Company, N.A. from 1993 until 2001. Ambassador
Swindells also served as Chairman of the Board of a non-profit board of trustees
for Lewis & Clark College in Portland, Oregon from 1998 until
2001. He holds the degree of Bachelor of Science in Political
Science.
Terry E. Swift, 52, has
served as the Chief Executive Officer of Swift Energy since May 2001, as
Chairman of the Board since June 1, 2006, and as a director of the Company since
May 2000. He was President of the Company from November 1997 to
November 2004, Chief Operating Officer from 1991 to February 2000, and Executive
Vice President from 1991 to 1997. Mr. Swift served in other
progressive positions of responsibility since joining the Company in
1981. He holds the degrees of Bachelor of Science in Chemical
Engineering and Master of Business Administration. He is the son of
the late A. Earl Swift, founder of Swift Energy, and the nephew of
Virgil N. Swift, Director Emeritus.
Raymond E. Galvin, 76, has
served as Vice Chairman of the Board since June 1, 2006, and as a director of
Swift Energy since August 2003. From 1992 until he retired in
February 1997, Mr. Galvin was President of Chevron USA Production
Company. He also served as a director of Chevron Corporation from
1995 to 1997 and as a Vice President of Chevron Corporation from 1988 to
1997. Mr. Galvin has also served as chairman of the Natural Gas
Council and the Natural Gas Supply Association. Mr. Galvin holds
the degree of Bachelor of Science in Petroleum Engineering.
Greg Matiuk, 62, has served
as a director of Swift Energy since September of 2003. After 36 years
of service, Mr. Matiuk retired from ChevronTexaco Corporation in May 2003,
having last served as Executive Vice President, Administrative and Corporate
Services, a position he had held since 2001. From 1998 until 2001, he
was Vice President, Human Resources and Quality, and from 1996 to 1998, he
served as Vice President of Strategic Planning and
Quality. Mr. Matiuk began his career at Chevron Corporation in
1967 as a production and reservoir engineer. He holds the degree of
Bachelor of Science in Geological Engineering and an Executive Master of
Business Administration.
Henry C. Montgomery, 72, has
served as a director of Swift Energy since 1987. Since 1980,
Mr. Montgomery has been Chairman of the Board of Montgomery Professional
Services Corporation, a financial management and accounting outsourcing
firm. Since 2006, he has been Chairman and Chief Executive Officer of
Montgomery Pacific Outsourcing LLC, a financial management and accounting
outsourcing firm with subsidiary operations in the
Philippines. Mr. Montgomery also currently serves as Chairman of
the Board of Catalyst Semiconductor, Inc., which designs, develops and markets
programmable integrated circuit products, and Chairman of the Board of ASAT
Holdings, Ltd., which packages and tests semiconductor devices. Mr.
Montgomery is a member of the board of directors of the Honolulu Symphony
Orchestra Society and sits on the advisory board for the Miami University Center
for Corporate Governance and Ethics (Oxford,
Ohio). Mr. Montgomery holds the degree of Bachelor of Arts in
Economics.
The
biographies for the Class III directors are set forth above under “Proposal
1—Election of Directors.”
5
The Board
has determined that each of the following directors is an “independent director”
as such term is defined in Section 303A of the Listed Company Manual of the
New York Stock Exchange, Inc. (“NYSE”): Deanna L. Cannon,
Raymond E. Galvin, Douglas J. Lanier, Greg Matiuk, Henry C. Montgomery, Clyde W.
Smith, Jr., and Charles J. Swindells. These independent directors represent
a majority of the Company’s Board of Directors. Messrs. Swift and
Vincent are not independent directors because they serve as officers of the
Company. Mr. Swift serves as Chief Executive Officer, and
Mr. Vincent serves as President and Secretary.
The Board
has also determined that each member of the Audit, Corporate Governance and
Compensation Committees of the Board meets the independence requirements
applicable to those committees prescribed by the NYSE and the U.S. Securities
and Exchange Commission (“SEC”). Further, the Board has determined that
Henry C. Montgomery, Chairman of the Audit Committee, Clyde W. Smith, Jr.
and Deanna L. Cannon, members of the Audit Committee, are each an “audit
committee financial expert,” as such term is defined in Item 407(d) of
Regulation S-K promulgated by the SEC.
The Board
reviewed the applicable standards for Board member and Board committee
independence and the criteria applied to determine “audit committee financial
expert” status, as well as the answers to annual questionnaires completed by
each of the independent directors. On the basis of this review, the Board made
its independence and “audit committee financial expert”
determinations.
At each
executive session of the independent directors, the Lead Director presides.
Mr. Galvin was elected as Lead Director by the independent directors in May
2006. For purposes of Rule 303A.03 of the NYSE Listed Company Manual,
the term “independent directors” is equivalent to “non-management
directors.”
The Board
has established the following standing committees: Audit,
Compensation, Corporate Governance and Executive Committees. Descriptions of the
membership and functions of these committees are set forth below. The
following chart identifies the committees upon which each member of the Board
serves, the chairmen of the committees, and the number of meetings and actions
by consent by the Board and the committees during 2007:
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Board
of Directors
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Audit
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Corporate
Governance
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Compensation
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Executive
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Number
of meetings held in 2007
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11
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5
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6
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3
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4
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Number
of actions by consent in 2007
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2
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0
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0
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0
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0
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Terry
E. Swift
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C
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C
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Deanna
L. Cannon
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M
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M
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M
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Raymond
E. Galvin
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VC
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M
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M
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Douglas
J. Lanier
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M
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M
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M
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Greg
Matiuk
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M
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C
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M
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Henry
C. Montgomery
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M
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C
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M
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Clyde
W. Smith, Jr.
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M
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M
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C
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Charles
J. Swindells
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M
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M
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M
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Bruce
H. Vincent
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M
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C
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= Chairman
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VC
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= Vice
Chairman
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M
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= Member
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During
2007, each director attended at least 75% of the aggregate of (i) the total
number of meetings of the Board and (ii) the total number of meetings of all
committees of the Board on which he or she served.
6
Audit Committee.
The Audit Committee assists the Board in fulfilling its responsibilities
with respect to oversight in monitoring (i) the integrity of the financial
statements of the Company; (ii) Swift Energy’s compliance with legal and
regulatory requirements; (iii) the independent auditor’s selection,
qualifications and independence; and (iv) the performance of Swift Energy’s
internal audit function and independent auditor. The committee is required to be
comprised of three or more non-employee directors, each of whom is determined by
the Board to be “independent” under the rules promulgated by the SEC under the
Securities Exchange Act of 1934 (the “Exchange Act”) and meets the financial
literacy and experience requirements under the rules or listing standards
established by the NYSE, all as may be amended from time to time. In addition,
at least one member of the committee must satisfy the definition of audit
committee financial expert as such term may be defined from time to time under
the rules promulgated by the SEC. The Board has determined that
Messrs. Montgomery and Smith and Ms. Cannon qualify as audit committee
financial experts and that each member of the Audit Committee is independent as
defined in the NYSE Listed Company Manual and the rules of the SEC. A report of
the Audit Committee appears later in this proxy statement.
Messrs. Montgomery (Chairman) and Smith and Ms. Cannon are members of
the Audit Committee.
Compensation
Committee. The Compensation Committee discharges the responsibilities of
the Board relating to compensation of the Company’s executive officers. This
includes evaluating the compensation of the executive officers of the Company
and its affiliates and their performance relative to their compensation to
assure that such executive officers are compensated effectively in a manner
consistent with the strategy of Swift Energy, competitive practices, and the
requirements of the appropriate regulatory bodies. In addition, this committee
evaluates and makes recommendations to the Board regarding the compensation of
the directors. The Compensation Committee also evaluates and approves any
amendment, subject to shareholder approval, to the Company’s existing
equity-related plans and approves the adoption of any new equity-related plans,
subject to shareholder and Board approval. The Compensation Committee is
required to be comprised of at least three directors who are non-employee
directors and determined by the Board to be independent under SEC rules and
NYSE’s listing standards. The Board has determined that all members are
independent as defined by the NYSE listing standards or rules of the SEC and
NYSE. The report of the Compensation Committee is included below.
Messrs. Smith (Chairman), Lanier, Matiuk, Montgomery and Swindells are
members of the Compensation Committee.
Corporate
Governance Committee. The Corporate Governance Committee identifies
individuals qualified to become directors and nominates candidates for
directorships and also recommends to the Board the membership for each of the
Board’s committees. This committee may consider nominees recommended by
shareholders upon written request by a shareholder in accordance with the
procedures for submitting shareholder proposals. The Corporate Governance
Committee also develops, monitors and recommends to the Board corporate
governance principles and practices applicable to Swift Energy. The committee
also assists management of the Company in identifying, screening and
recommending to the Board individuals qualified to become executive officers of
the Company. In addition, this committee administers the Company’s conflicts of
interest policy. The Corporate Governance Committee is required to be comprised
of at least three directors who are non-employee directors and determined by the
Board to be independent under the NYSE listing standards and the rules of the
SEC. Messrs. Matiuk (Chairman), Galvin and Swindells and Ms. Cannon
are members of the Corporate Governance Committee and, as determined by the
Board, all are independent as defined in the NYSE listing standards and rules of
the SEC.
Executive
Committee. The Executive Committee is authorized to act for the Board at
times when it is not convenient for the full Board to act as an assembled board,
except where full Board action is required by applicable law. Any action taken
by the Executive Committee is required to be reported at the next full Board
meeting. Messrs. Swift (Chairman), Galvin and Lanier are members of the
Executive Committee.
7
In
accordance with its charter, the Compensation Committee periodically evaluates
the compensation of non-employee directors, including for service on Board
committees, and recommends annual retainer and meeting fees for non-employee
directors and for service on Board committees, sets the terms and awards of any
stock-based compensation and submits these recommendations to the Board of
Directors for approval subject to shareholder approval, if
required. Directors who are also employees of the Company receive no
additional compensation for service as directors. The following table
shows compensation for non-employee directors for 2007:
|
Annual
Board Retainer
|
$
|
35,000
|
||
|
Meeting
Fee
|
$
|
2,500
|
(1)
|
|
|
Annual
Committee Retainer
|
$
|
5,000
|
(2)
|
|
|
Committee
Premiums:
|
||||
|
Audit
Committee Chair
|
$
|
15,000
|
(3)
|
|
|
Compensation
Committee Chair
|
$
|
10,000
|
(4)
|
|
|
Corporate
Governance Committee Chair
|
$
|
8,000
|
(4)
|
|
|
Executive
Committee Member
|
$
|
8,000
|
||
|
Lead
Director Premium
|
$
|
8,000
|
||
|
Annual
Restricted Stock Grant Value
|
$
|
120,000
|
(5)
|
|
(1)
|
Annual
meeting fee paid per meeting for a minimum of five
meetings.
|
|
|
(2)
|
Annual
fee for serving on one or more committees.
|
|
|
(3)
|
Annual
fee for a minimum of four meetings.
|
|
|
(4)
|
Annual
fee for a minimum of two meetings.
|
|
|
(5)
|
Number
of restricted shares to be determined, based on the closing stock price on
the day after the annual meeting. Restrictions on restricted
shares lapse as to one-third of such shares each year beginning on the
first anniversary of the grant date, and subject to a one-year service
restriction, restrictions on all shares lapse when a director ceases to be
a member of the Board.
|
|
The
following table sets forth certain summary information regarding compensation
paid or accrued by the Company to or on behalf of the Company’s non-employee
directors for the fiscal year ended December 31, 2007:
|
Name
|
Fees
Earned or Paid in Cash
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)(1)
|
Non-Equity
Incentive Plan Compensation
($)
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
($)
|
All
Other Compensation
($)(2)
|
Total
($)
|
|||||||||||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|||||||||||||||||||||
|
Deanna
L. Cannon
|
$ | 52,500 | $ | 113,068 | $ | 19,142 | $ | — | $ | — | $ | — | $ | 184,710 | ||||||||||||||
|
Raymond
E. Galvin
|
$ | 68,500 | $ | 113,068 | $ | 18,172 | $ | — | $ | — | $ | — | $ | 199,740 | ||||||||||||||
|
Douglas
J. Lanier
|
$ | 60,500 | $ | 113,068 | $ | 0 | $ | — | $ | — | $ | — | $ | 173,568 | ||||||||||||||
|
Greg
Matiuk
|
$ | 60,500 | $ | 113,068 | $ | 11,396 | $ | — | $ | — | $ | — | $ | 184,964 | ||||||||||||||
|
Henry
C. Montgomery
|
$ | 67,500 | $ | 113,068 | $ | 16,740 | $ | — | $ | — | $ | — | $ | 197,308 | ||||||||||||||
|
Clyde
W. Smith, Jr.
|
$ | 62,500 | $ | 113,068 | $ | 16,740 | $ | — | $ | — | $ | — | $ | 192,308 | ||||||||||||||
|
Charles
J. Swindells
|
$ | 52,500 | $ | 113,068 | $ | 0 | $ | — | $ | — | $ | — | $ | 165,568 | ||||||||||||||
|
(1)
|
The
amounts in columns (c) and (d) reflect the dollar amount recognized for
financial statement purposes for the fiscal year ended December 31, 2007,
in accordance with Statement of Financial Accounting Standards (SFAS) No.
123(R) of awards pursuant to the Company’s stock compensation plans, and
thus include amounts from awards granted in and prior to
2007. Assumptions used in the calculation of these amounts are
included in footnote 6 to the Company’s audited financial statements for
the fiscal year ended December 31, 2007, included in the Company’s Annual
Report on Form 10-K for the year ended December 31,
2007.
|
|
|
(2)
|
No
perquisites are included in this column as to any director, as in the
aggregate perquisites for any director during 2007 did not exceed
$10,000.
|
|
8
The Board
of Directors maintains a policy that the Board reviews from time to time
relating to post-retirement director compensatory agreements. The policy
provides for agreements or arrangements with former directors, including
consulting services, in instances in which a majority of the independent
directors of the Board agree that an individual former director has specific
expertise that the Board and management agree is of material benefit to the
Company. Any agreements with former directors currently in effect or about to
expire will be reviewed in accordance with this policy.
Mr. Virgil
Swift served as a director from 1981 until the annual meeting of shareholders on
May 10, 2005, at which time he was given the honorary title of Director
Emeritus. The full Board concluded that the service of
Mr. V. Swift, due to his extensive experience with Swift Energy and
the oil and gas industry, was an invaluable asset to the Company, and thus a
consulting agreement was entered into with this former
director. Mr. V. Swift received compensation during 2007
pursuant to a consulting agreement which has been in effect since July 2000 and
was renewed on similar terms effective July 1, 2006. Pursuant to such
agreement, Mr. V. Swift is paid $5,000 per month for providing advisory
services to key employees, officers and directors, especially in the area of the
Company’s New Zealand oil and gas exploration and production operations, and as
otherwise requested by the Chairman of the Board and Chief Executive Officer, or
by the President. The consulting agreement is terminable by either party without
cause upon two weeks’ written notice. Upon a change of control during
the term of the consulting agreement, all outstanding stock options held by
Mr. V. Swift will become 100% vested.
The Board
formally considered, addressed and approved a Board succession plan during 2004,
as recommended to the Board by the Corporate Governance Committee. In adopting
such plan, the Board took into consideration the Company’s Principles of
Corporate Governance that present members of the Board will notify the Board
when they reach the age of 75, and the Board, after receiving the recommendation
of the Corporate Governance Committee, will determine whether or not such
director will continue as a member of the Board. In accordance with the Board
succession plan, Mr. Galvin would have been scheduled for such
consideration at the 2006 annual meeting. The Corporate Governance
Committee recommended, and the Board approved, the nomination of Mr. Galvin
to stand for election, and Mr. Galvin was reelected as a Class II director
with a term to expire at the 2007 Annual Meeting. Mr. Galvin was
again scheduled for such consideration at the 2007 Annual Meeting. The Corporate
Governance Committee considered Mr. Galvin’s industry experience and
wide-ranging management background, and determined that especially with the
passing of A. Earl Swift in May 2006, the Board and the Company would benefit
from Mr. Galvin’s depth of experience and his continuing to serve as Lead
Director, Vice Chairman and a member of the Executive Committee. The
Corporate Governance Committee recommended, and the Board approved, with
Mr. Galvin’s abstention, that Mr. Galvin be nominated to stand for
reelection for a full three-year term as a Class II director, and
Mr. Galvin was reelected at the 2007 Annual Meeting as a Class II director,
with a term to expire at the 2010 Annual Meeting.
Identifying
Candidates
The
Corporate Governance Committee, in consultation with the Chairman of the Board,
is responsible for identifying and screening potential director candidates and
recommending qualified candidates to the Board for nomination. The
Committee considers recommendations of potential candidates from current
directors and shareholders. Shareholders’ nominations for directors
must be made in writing and include the name, age, business and residence
address of the recommended nominee, the class and number of shares, if any, of
Swift Energy which are beneficially owned by the recommended nominee, and any
other information required to be disclosed in the Company’s proxy statement by
rules promulgated by the SEC. Additionally, the recommendation must
include the name and address of the shareholder, the number of shares of the
Company’s securities that the shareholder beneficially owns, and the period for
which the shareholder has held such shares. Nominations must be
addressed as follows and received no later than March 14, 2009, and no
earlier than February 12, 2009, in order to be considered for the next
annual election of directors:
|
Chairman
of the Corporate Governance Committee
Swift
Energy Company
c/o
Office of the Corporate Secretary
16825
Northchase Drive, Suite 400
Houston,
Texas 77060
|
9
Qualifications
The
Corporate Governance Committee has not established a specific minimum or maximum
age, education, years of business experience or specific types of skills for
potential director candidates, but, in general, consideration is given to each
candidate’s reputation, mature judgment, career specialization, relevant
technical skills, diversity and the extent to which the candidate would fill a
present need on the Board.
The
Company’s Principles for Corporate Governance require that each
director:
|
|
•
|
understand
Swift Energy’s business and the marketplaces in which it
operates;
|
|
|
•
|
regularly
attend meetings of the Board and of the Board committee(s) on which he or
she serves;
|
|
|
•
|
review
the materials provided in advance of meetings and any other materials
provided to the Board from time to
time;
|
|
|
•
|
monitor
and keep abreast of general economic, business and management news and
trends, as well as developments in Swift Energy’s competitive environment
and Swift Energy’s performance with respect to that
environment;
|
|
|
•
|
actively,
objectively and constructively participate in meetings and the strategic
decision-making processes;
|
|
|
•
|
share
his or her perspective, background, experience, knowledge and insights as
they relate to the matters before the Board and its
committees;
|
|
|
•
|
be
reasonably available when requested to advise the CEO and management on
specific issues not requiring the attention of the full Board but where an
individual director’s insights might be helpful to the CEO or management;
and
|
|
|
•
|
be
familiar and comply in all respects with the Code of Ethics and Business
Conduct of the Company, as adopted and as may be amended from time to
time.
|
Nomination
of Candidates
In
determining whether to nominate a candidate, either from an internally generated
or shareholder recommendation, the Corporate Governance Committee will consider
the current composition and capabilities of serving board members, as well as
additional capabilities considered necessary or desirable in light of existing
and future Company needs. The Corporate Governance Committee also
exercises its independent business judgment and discretion in evaluating the
suitability of any recommended candidate for nomination.
During
2007, the Compensation Committee of the Board consisted of Messrs. Smith,
Lanier, Matiuk, Montgomery and Swindells, all of whom are independent
directors. To the Company’s knowledge, there are no compensation
committee interlocks involving members of the Compensation Committee or other
directors of the Company.
Part of
the Company’s historical and ongoing corporate governance practices is the
Company’s policy that requires officers, directors, employees and certain
consultants of the Company to submit annual disclosure statements regarding
their compliance with the Company’s conflict of interest policy. A management
representation letter is provided to the Corporate Governance Committee of the
Board regarding the results of the annual disclosure statements and management’s
assessment of any potential or actual conflicts of interest. Based on this
assessment and further discussion with management, the Corporate Governance
Committee then directs management on what additional action, if any, the
Committee determines is necessary to be undertaken with regard to any potential
or actual conflict of interest or related party transaction.
The
Company also requires that officers, directors, employees and certain
consultants of the Company provide an annual reaffirmation of the Company’s Code
of Ethics and Business Conduct. A copy of the Code of Ethics and Business
Conduct is redistributed in connection with this requirement, and each such
person is asked to reaffirm and reacknowledge that they have reviewed and
refreshed their knowledge of the provisions of the Code of Ethics and Business
Conduct and will comply with such Code. They also reaffirm their understanding
that their continued service to the Company is dependent upon compliance with
the Company’s Code of Ethics and Business Conduct. In addition, all
officers, directors, employees and consultants are required to annually
recertify their
10
understanding
of, and adherence to, the Company’s Insider Trading Policy. A copy of
the Insider Trading Policy is also redistributed in connection with this
requirement.
The
charters for each of the Audit, Corporate Governance and Compensation Committees
are reviewed annually by each committee and by the Corporate Governance
Committee. The committee charters, the Board-adopted Principles of
Corporate Governance for the Company and the Code of Ethics and Business Conduct
are applicable to all employees, directors and consultants and are posted on the
Company’s website at www.swiftenergy.com. The committee charters,
Principles of Corporate Governance and Code of Ethics and Business Conduct are
also available in print, without charge, to any shareholder who requests a
copy. Requests should be directed to the Company’s Investor Relations
Department at 16825 Northchase Drive, Suite 400, Houston, Texas 77060; by
telephone at (281) 874-2700 or (800) 777-2412; or by email to
info@swiftenergy.com.
In
addition, the Code of Ethics for Senior Financial Officers and Principal
Executive Officer, as adopted by the Board, is posted on Swift Energy’s website,
where the Company also intends to post any waivers from or amendments to this
Code of Ethics.
During
2007, the Company received research, technical writing, publishing and
website-related services from Tec-Com Inc., a corporation located in Knoxville,
Tennessee, and controlled and majority owned by the aunt of the Company’s
Chairman of the Board and Chief Executive Officer. For the fiscal year ended
December 31, 2007, the Company paid approximately $0.6 million to Tec-Com
for such services pursuant to the terms of the contract between the parties. The
contract was renewed on July 1, 2007, and expires on June 30,
2010. The Company believes that the terms of this contract are
consistent with comparable arrangements with third parties that provide similar
services.
The
Company has not adopted a formal related party transaction policy. As
a matter of corporate governance policy and practice, related party transactions
are presented and considered by the Corporate Governance Committee of the
Company’s Board of Directors. See discussion set forth above under
“Board of Directors—Corporate Governance.”
11
The
following table sets forth information concerning the shareholdings as of March
3, 2008 (unless otherwise indicated), with respect to each person, to the
Company’s knowledge, who beneficially owned more than five percent of the
Company’s outstanding common stock:
|
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
|
Percent
of Class
|
|||||
|
Dimensional
Fund Advisors LP
1299
Ocean Avenue
Santa
Monica, California 90401
|
2,382,251
|
(1)
|
7.8%
|
||||
|
EARNEST
Partners, LLC
1180
Peachtree Street NE, Suite 2300
Atlanta,
Georgia 30309
|
2,206,840
|
(2)
|
7.2%
|
||||
|
Barclays
Global Investors (Deutchland) AG(4)
Apianstrasse
6, D-85774
Unterfohring,
Germany
|
2,065,094
|
(3)
|
6.8%
|
||||
|
The
Vanguard Group, Inc.
100
Vanguard Blvd.
Malvern,
Pennsylvania 19355
|
1,606,321
|
(4)
|
5.3%
|
||||
|
(1)
|
Based
on a Schedule 13G dated February 6, 2008, filed with the SEC to reflect
shares held at December 31, 2007, Dimensional Fund Advisors LP
(“Dimensional”) is an investment advisor in accordance with SEC Rule
13d-1(b)(1)(ii)(E), and holds sole voting and dispositive power as to
2,382,251 shares. Dimensional disclaims beneficial ownership of
all such securities.
|
||
|
(2)
|
Based
on a Schedule 13G dated January 31, 2008, filed with the SEC to reflect
shares held at December 31, 2007, EARNEST Partners, LLC, is an investment
advisor in accordance with SEC Rule 13d-1(b)(1)(ii)(E), and holds sole
voting power as to 670,589 shares, shared voting power as to 606,751
shares, and sole dispositive power as to all 2,206,840
shares.
|
||
|
(3)
|
Based
on a Schedule 13G dated February 6, 2008, filed with the SEC to reflect
shares held at December 31, 2008, by the following
entities:
|
||
|
•
|
Barclays
Global Investors, NA, a Bank as defined in Section 3(a)(6) of the
Securities Act of 1933, holds sole voting power as to 1,002,884 shares and
sole dispositive power as to 1,093,795 shares.
|
||
|
•
|
Barclays
Global Fund Advisors, an investment advisor in accordance with SEC Rule
13d-1(b)(1)(ii)(E) holds sole voting power as to 688,692 shares and sole
dispositive power as to 939,614 shares.
|
||
|
•
|
Barclays
Global Investors, Ltd., a Bank as defined in Section 3(a)(6) of the
Securities Act of 1933, holds sole voting power as to 900 shares and sole
dispositive power as to 31,685 shares. The address of Barclays
Global Investors, Ltd. is Murray House, 1 Royal Mint Court, London
EC3N 4HH.
|
||
|
(4)
|
Based
on a Schedule 13G dated February 12, 2008, filed with the SEC to reflect
shares held at December 31, 2007, The Vanguard Group, Inc. is an
investment advisor in accordance with SEC Rule 13d-1(b)(1)(ii)(E), and
holds sole voting power as to 39,045 shares and sole dispositive power as
to 1,606,321 shares.
|
||
12
The
following table sets forth information concerning the shareholdings, as of
March 3, 2008 (unless otherwise indicated), of the members of the Board,
the Chief Executive Officer, the Chief Financial Officer, the three most highly
compensated executive officers other than the CEO and CFO, and all executive
officers and directors as a group:
|
Name
of Beneficial Owner
|
Position
|
Amount
and Nature of Beneficial Ownership(1)
|
Percent
of Class
|
||||||
|
Terry
E. Swift
|
Chairman
of the Board and
Chief
Executive Officer
|
275,168
|
(2)
|
||||||
|
Deanna
L. Cannon
|
Director
|
15,240
|
(2)
|
||||||
|
Raymond
E. Galvin
|
Director
|
35,580
|
(2)
|
||||||
|
Douglas
J. Lanier
|
Director
|
8,380
|
(2)
|
||||||
|
Greg
Matiuk
|
Director
|
16,380
|
(2)
|
||||||
|
Henry
C. Montgomery
|
Director
|
22,409
|
(2)
|
||||||
|
Clyde
W. Smith, Jr.
|
Director
|
45,450
|
(3)
|
(2)
|
|||||
|
Charles
J. Swindells
|
Director
|
5,700
|
(2)
|
||||||
|
Alton
D. Heckaman, Jr.
|
Executive
Vice President and
Chief
Financial Officer
|
140,307
|
(2)
|
||||||
|
Bruce
H. Vincent
|
President,
Secretary and Director
|
190,905
|
(2)
|
||||||
|
Joseph
A. D’Amico
|
Executive
Vice President
|
54,958
|
(2)
|
||||||
|
James
P. Mitchell
|
Senior
Vice President—Commercial Transactions and Land
|
34,134
|
(2)
|
||||||
|
All
executive officers and
directors
as a group
(15
persons)
|
1,078,054
|
3.5%
|
|||||||
|
(1)
|
Unless
otherwise indicated below, the persons named have sole voting and
investment power, or joint voting and investment power with their
respective spouses, over the number of shares of the common stock of the
Company shown as being beneficially owned by them, less the shares set
forth in this footnote. The table includes the following shares that were
acquirable within 60 days following March 3, 2008, by exercise of options
granted under the Company’s stock plans: Mr. Swift—0;
Ms. Cannon—2,000; Mr. Galvin—1,000; Mr. Lanier—0;
Mr. Matiuk—0; Mr. Montgomery—2,000; Mr. Smith—2,000;
Ambassador Swindells—0; Mr. Heckaman—0; Mr. Vincent—0;
Mr. D’Amico—0; Mr. Mitchell—0; and all executive officers and
directors as a group—7,000.
|
|
|
(2)
|
Less
than one percent.
|
|
|
(3)
|
Mr. Smith
disclaims beneficial ownership as to 1,000 shares held in a Roth IRA for
the benefit of Mr. Smith’s
son.
|
|
13
The Board
appoints the executive officers of the Company annually. Information regarding
Terry E. Swift, Chief Executive Officer, and Bruce H. Vincent, President,
is set forth previously in this proxy statement under “Board of
Directors.” Set forth below is certain information, as of the date of
this proxy statement, concerning the other executive officers of the
Company.
Robert J. Banks, 53, was
appointed Executive Vice President and Chief Operating Officer in February 2008,
prior to which appointment he served as Vice President―International
Operations & Strategic Ventures since 2006. Mr. Banks has
also served as Vice President―International
Operations of the Company’s subsidiary, Swift Energy International, since he
joined the Company in 2004. Mr. Banks has held senior-level
positions and led international units for Vanco Energy Company, Mosbacher Energy
Company, Kuwait Foreign Petroleum Company and Santa Fe International
Corporation. Mr. Banks holds the degree of Bachelor of Science
from Pennsylvania State University.
Joseph A. D’Amico, 59, was
appointed Executive Vice President of Swift Energy in August 2000, and was
appointed Chief Operating Officer in February 1999. He served as
Chief Operating Officer until February 2008 and will remain Executive Vice
President until his retirement in May 2008. He served in other
progressive positions of responsibility since joining the Company in
1988. Mr. D’Amico holds the degrees of Bachelor and Master of
Science in Petroleum Engineering and the degree of Master of Business
Administration.
Alton D. Heckaman, Jr., 51,
was appointed Executive Vice President of Swift Energy in November 2004 and
Chief Financial Officer in August 2000. He previously served as
Senior Vice President—Finance from August 2000 until November
2004. He served in other progressive positions of responsibility
since joining the Company in 1982. He is a Certified Public
Accountant and holds the degrees of Bachelor of Business Administration in
Accounting and Master of Business Administration.
James M. Kitterman, 63, was
appointed Senior Vice President—Operations of Swift Energy in May
1993. He had previously served as Vice President—Operations since
joining the Company in 1983. Mr. Kitterman holds the degrees of
Bachelor of Science in Petroleum Engineering and Master of Business
Administration.
James
P. Mitchell,
53, was appointed Senior Vice President―Commercial Transactions and Land
in February 2003. He previously served as Vice President―Land and
Property Transactions from December 2001 to February 2003, and Vice
President―Land from 1996 to 2001. He served in other progressive
positions of responsibility since joining
the Company in 1987. Mr. Mitchell holds the degree of Bachelor
of Arts in History and Business Law.
David W. Wesson, 49, was
appointed Controller of Swift Energy in January 2001. He previously
served as Assistant Controller—Reporting from April 1999 to January 2001, and in
other progressive positions of responsibility since joining the Company in
1988. Mr. Wesson is a Certified Public Accountant and holds the
degree of Bachelor of Business Administration in Accounting.
14
Overview
This
compensation discussion and analysis describes the material elements of
compensation paid to our officers, including our Chief Executive Officer, Chief
Financial Officer and our three other most highly compensated executive
officers, each as named in the tables set forth in this proxy statement and
which we refer to as our “Named Executive Officers.” We have a total
of sixteen officers. All officers of Swift Energy and its affiliates
are collectively referred to as “Officers.”
Our
Officer compensation program is recommended by executive management, working in
consultation with the Chairman of the Compensation Committee, referred to in
this section as the “Committee.” These recommendations are reviewed,
adjusted as deemed appropriate and approved on an annual basis by the
Committee.
Compensation
Philosophy and Objectives
Our
policy is to establish competitive compensation programs that promote and
advance the interests of Swift Energy by aiding in the recruiting, hiring,
retaining and rewarding of qualified employees, and aligning the financial
interest of managerial and key employees with the growth and financial success
of the Company by offering stock-based incentives. The Committee evaluates the
performance of our Officers relative to their compensation to assure that such
Officers are compensated fairly and in a manner consistent with competitive
practices within the oil and gas industry.
Our
Compensation Committee
The
Compensation Committee was established by the Board of Directors in 1982 and has
always been composed solely of independent directors, as defined by the rules
and regulations of the SEC and the rules of the NYSE. Discharging the
responsibilities of the Board of Directors of Swift Energy relating to
compensation of our Officers is the primary function of the
Committee.
On an
annual basis, the Committee reviews and considers corporate goals and objectives
relevant to the CEO’s compensation and evaluates the CEO’s performance in light
of those goals and objectives. The Committee determines the amounts
and individual elements of total compensation for the CEO based on this
evaluation. The Committee determines the criteria to be used to evaluate the CEO
and submits such criteria to the full Board for approval. In
determining the CEO’s long-term compensation, the Committee considers the
Company’s performance, the value of similar incentive awards to CEOs at
comparable companies and the awards given to the CEO in prior years, together
with any other factors the Committee deems appropriate or
applicable.
Additionally,
the Committee annually reviews, modifies (if the Committee deems necessary) and
approves executive management’s recommendations of our Officer compensation
program. The Committee also evaluates and makes recommendations to
the Board regarding the compensation of the non-employee directors.
The
Committee has used consultants in the past, and the Committee uses some of the
same methodologies as the consultants that it previously engaged. No
consultants were retained by the Committee for 2007 compensation
determinations.
While the
Committee has, and has exercised, the ultimate authority to determine and
approve criteria to be used to evaluate the Officers in determining 2007
compensation levels, the evaluation of Officers’ (other than the CEO)
performance measured against those criteria is an ongoing collaborative process
between the CEO and the Committee Chairman. The Committee may
delegate its authority to subcommittees made up of Committee members, so long as
any such subcommittee reports on its activities or actions at the next scheduled
meeting of the full Committee.
Use
of Peer Data and Other Information
In 2007,
executive management supervised the compilation of peer group information on the
amounts of base salary, bonus and long-term equity incentives paid by our
peers. Bonus and long-term equity incentive information, as a
percentage of base salary, is also compiled for the Committee’s
review. Swift Energy Officers’ compensation was compared on both a
component and total basis to the average level, median level and the
66th
15
percentile
of compensation for our competitive peers. For the Named Executive
Officers, these comparisons are made by position or rank (such as second highest
paid named executive officer) and by title. The peer group consisted
of approximately 17 independent oil and gas companies. These
comparisons are then repeated with a peer group of 32 oil and gas companies,
some with smaller and some with larger market capitalization. Each of
the 17 companies in the smaller peer group is also contained in the larger peer
group. This comparison to peer market data is used solely for
background information to make subjective judgments about how our overall
compensation program and its components compare to those of our
peers. The peer market data is not used in any formulaic or
statistical manner to determine executive management’s compensation program
recommendation or Committee decisions.
The peers
we used for comparison include: Abraxas Petroleum Corporation, Apache
Corporation, Berry Petroleum Company, Brigham Exploration Company, Cabot Oil
& Gas Corporation, Callon Petroleum Company, Chesapeake Energy Corporation,
Clayton Williams Energy, Inc., Comstock Resources, Inc., Denbury Resources Inc.,
Devon Energy Corporation, Energy Partners, Ltd., Forest Oil Corporation,
Goodrich Petroleum Corporation, Mariner Energy, Inc., McMoRan Exploration Co.,
The Meridian Resource Corporation, Newfield Exploration Company, Noble Energy,
Inc., Petrohawk Energy Corporation, Petroquest Energy, Inc., Pioneer Natural
Resources Company, Plains Exploration & Production Company, Pogo Producing
Company LLC, Quicksilver Resources Inc., Range Resources Corporation,
Southwestern Energy Company, St. Mary Land & Exploration Company, Stone
Energy Corporation, Ultra Petroleum Corp. and XTO Energy Inc.
Executive
Compensation Criteria and Performance Measurement
Our
Officer compensation program consists of three primary components: base salary,
cash incentive bonuses and long-term stock-based incentives. Swift
Energy’s executive management utilizes more than one method to analyze and make
its annual compensation recommendations.
Base Salary. In
determining base salary for 2007, the Committee examined (i) the Officer’s role
and scope of responsibility, (ii) each Officer’s individual performance during
the past year, (iii) the amount of each Officer’s compensation for the preceding
three years, (iv) the range paid by other oil and gas exploration and production
companies, based on peer market data, (v) the Officer’s direct or related
industry experience, (vi) an evaluation of the Company’s performance during the
preceding year, (vii) the amount of funds available for compensation and (viii)
internal equity, although the Committee does not employ a specific formula or
have a specific ratio as to the relationship of base salaries among the
Officers. Using the CEO’s recommendation (other than for the CEO’s
compensation), an evaluation of these factors as a whole and a general sense of
fairness, the Committee then makes its determination as to base
salaries. As part of its process in making compensation
determinations, the Committee reviews Officer individual performance
evaluations, each Officer’s review of his or her own performance throughout the
previous year, consideration of each Officer’s accomplishment of his or her
pre-established individual goals during the previous year and a performance
review and compensation recommendation by the CEO.
Cash Incentive Bonuses for
2007 were awarded in February 2008 based upon both individual and Company
performance during 2007, weighted one-third for individual performance and
two-thirds for Company-wide performance, as well as a special incentive project
amount. The individual performance evaluation of each Officer is the
same evaluation as that made for purposes of setting base salary. At
the beginning of 2007, a minimum cash incentive bonus target was set for each
Officer as a percentage of base salary, which ranged from 100% for the CEO to
40% for various other Officers. The minimum cash incentive bonus target is based
on specific roles and responsibilities of the Officers. However,
after a year-end review of industry trends and peer data, the Committee
effectively increased the cash incentive bonus targets for all Officers by
including the special projects incentive noted above. The additional maximum
incentive bonus target for the special projects incentive ranged from 100% for
the CEO to 40% of base salary for various Officers.
16
The
Company-wide factor for 2007 for the Officers is based upon each Officer being
assigned in early 2007 a specific percentage weighting for each of six to ten
operating and financial metrics. The Chief Executive Officer,
President and Chief Financial Officer receive a percentage weighting for all ten
metrics. The metrics that were used to determine two-thirds of the
2007 annual cash bonus were:
|
|
•
|
earnings
per share
|
|
|
•
|
cash
flow per share
|
|
|
•
|
net
margin
|
|
|
•
|
corporate
reserves
|
|
|
•
|
U.S.
production
|
|
|
•
|
U.S.
controllable LOE per unit of
production
|
|
|
•
|
U.S.
finding and development costs per
Mcfe
|
|
|
•
|
New
Zealand production
|
|
|
•
|
New
Zealand controllable LOE per unit of
production
|
|
|
•
|
New
Zealand and development costs per
Mcfe
|
At the
beginning of 2007, target levels on a Company-wide basis were established for
each metric. For 2007 performance, each Officer was assigned a
specific percentage for each metric that ranged from 0% to 30%, with all metrics
totaling 100%. Metrics and their weightings change from year to year
Company-wide, since each year we evaluate the compensation program of the
previous three years. The target levels for each operating and
financial metric are set for a qualifying level, a baseline level and a maximum
level. Subject to discretionary modifications by the Committee, if
the qualifying level is not reached, no bonus is awarded for such
metric. The baseline target is that level that was expected to be
reached and represents 100% weighting of that
metric. The maximum target is that level that represents exceptional
performance which, at the discretion of the Committee, would receive weighting
of over 100% for that metric. For 2007 performance, the Committee
used discretion to give partial credit for achievement of certain
metrics. The Committee examined non-recurring items, such as the
strategic decision to exit New Zealand and the actual financial or operating
impact on each metric as compared with the predetermined targets
levels. The Committee concluded that 50% credit was appropriate for
the earnings per share, U.S. production, U.S. controllable LOE per unit of
production and the New Zealand production metrics. The Committee
further concluded that 25% credit was appropriate for the New Zealand
controllable LOE per unit of production metric. No credit was given
for the U.S. finding and development costs per Mcfe or the New Zealand finding
and development costs per Mcfe metrics. Full credit was given for the three
remaining metrics: cash flow per share, net margin and corporate
reserves. The Company-wide weighted average factor for the CEO was
determined to be 66.3 % of a possible 100%.
In
addition to the Company-wide metrics and the individual performance metrics, the
Committee used a special projects incentive for the successful completion of
corporate projects that were designed to achieve the Company’s overall
objectives. In general, this type of special incentive involved
material projects or nonrecurring items that were not or could not be specified
at the beginning of the year when initial metrics and target levels were
established. The percentage assigned to the special projects incentive was then
added to the regular bonus percent.
The CEO’s
total annual bonus, as a percentage of base salary, was 124.9%. The
total annual bonus for the CEO was determined by adding the Company-wide metric
result (44.2%), the individual performance metric result (27.3%) and the special
project incentive amount (53.4%). The Company-wide metric of 44.2%
was determined by multiplying the 66.3% Company-wide weighted average factor
times the metric’s weighting of two-thirds times the 100% award
target. The individual performance result of 27.2% was determined by
multiplying the 82% performance factor times the metric’s weighting of
one-third times
the 100% award target. Of a possible 100% award target, the CEO
received 71.5% for the combined Company-wide and individual performance
awards. Of a possible 100% award target, the CEO received 53.4% for
the special projects incentive award, as determined by the
Committee. The CEO’s total annual bonus, as a percent of base salary,
was compared with the industry peer data for performance, competitive and
informational purposes.
The
requirements that an Officer had to meet in 2007 to receive an annual incentive
bonus include: (i) being a full-time Officer of Swift Energy or one of its
subsidiaries on the date of the award; (ii) having no violations of our Code of
Ethics and Business Conduct; (iii) meeting or exceeding 50% of the Officer’s
personal goals based on the CEO’s assessment; and (iv) the bonus must have been
approved by the CEO and the Committee.
17
Long-Term Stock-Based
Incentives are provided through a combination of grants of stock options
and restricted stock, usually on an annual basis during February, to Officers
and others under the Swift Energy 2005 Stock Compensation Plan. This
component is intended to retain and motivate our Officers to improve long-term
shareholder value, with the compensation element of stock options representing a
longer-term award subject to a higher degree of shared risk and with restricted
stock providing a more immediate equity-based award linked to the Company’s
performance. In determining and awarding long-term stock-based incentives, the
Committee takes into account the total of such award for all employees in
relation to the current total number of outstanding options, so as to avoid
excessive dilution. Grants of stock options have always vested in
equal amounts over five years. Shares of restricted stock granted to
Officers and employees typically vest in equal amounts over three
years.
At the
beginning of 2007, a minimum long-term stock-based incentive target was set for
each Officer as a percentage of base salary, which ranged from 250% for the CEO
to 100% for various other Officers. The
minimum long-term stock-based incentive target was based on
specific roles and responsibilities of the Officers. However, based
on the year-end review of industry trends and peer data, the Committee
effectively increased the long-term stock-based incentive targets by including
an extra project incentive award. The additional maximum long-term
stock-based incentive target for the extra incentive ranged from 250% for the
CEO to 100% of base salary for various Officers.
The
Company-wide metrics and individual performance metrics discussed under
“Executive Compensation Criteria and Performance Measurement—Cash Incentive
Bonuses” above are also used to determine an Officer’s long-term stock-based
incentive award. Generally, our Officers’ roles and responsibilities are taken
into account in determining the relative size of awards made as long-term
stock-based incentives.
In
addition to the Company-wide metrics and the individual performance metrics, the
Committee provided an extra incentive award for the successful completion of
strategic and long-term corporate projects that were designed to achieve the
Company’s overall long-term objectives. In general, this type of
extra incentive award involved material projects or non-recurring items that
were not or could not be specified at the beginning of the year when initial
metrics and target levels were established. The actual percentage
award assigned for the extra long-term incentive target was then added to the
regular long-term stock-based incentive amounts.
The CEO’s
total long-term stock-based incentive, as a percentage of base salary, was
378.8%. The total long-term stock-based incentive for the CEO was
determined by adding the Company-wide metric result (110.4%), the individual
performance metric result (68.4%) and the extra incentive amount
(200.0%). The Company-wide metric of 110.4% was determined by
multiplying the 66.3% Company-wide weighted average factor times the metric’s
weighting of two-thirds times the 250% award target. The individual
performance result of 68.4% was determined by multiplying the 82.0% performance
factor times the metric’s weighting of one-third times
the 250% award target. Of a possible 250% minimum long-term
stock-based incentive award target, the CEO received an award of 178.8% for the
combined Company-wide and individual performance awards. Of a
possible 250% extra award target, the CEO received 200.0% for the extra projects
incentive award, as determined by the Committee. The CEO’s total
long-term stock-based incentive, as a percent of base salary, was compared with
the industry peer data for performance, competitive and informational
purposes.
Executive
Perquisites and Other Business-Related Benefits
Swift
Energy offers a limited number of perquisites to its executives. From time to
time, our Officers are provided with financial planning services, which may
include tax and estate planning. During 2007, certain officers were reimbursed
by the Company for income tax preparation services by independent third
parties. We also provide our Officers with certain “whole” life
insurance benefits in addition to the supplemental life, voluntary life and
accidental death and dismemberment insurance coverage available to all
employees. Officers are provided with a club membership (or
memberships in the case of a few Officers). The Named Executive Officers are
also occasionally provided with tickets to local sporting events, which are
primarily used for business entertainment or provided to other officers or key
employees. Officers are taxed on all applicable perquisites, as
required. With respect to taxes paid by Officers on whole life
insurance benefits, Officers are reimbursed for the taxable amount for such
insurance coverage after the amount is reported to the Internal Revenue
Service.
Officers
and employees also have access to Company vehicles on a limited, as-needed and
approved basis in connection with business-related matters. In
general, spousal travel for invited officers and directors is provided in
connection with one Board meeting annually and special oil and gas industry
functions which specifically promote or advance the business purposes of the
Company.
18
Post-Termination
Compensation and Change of Control Benefits
We have
nine employment agreements with certain of our Officers; each Named Executive
Officer has an employment agreement. All of the employment agreements
with Officers provide for an initial three-year term, which is automatically
extended for one year on the anniversary date of the agreement (such period, as
so extended at any time, the “Contract Term”). These agreements
provide for payment of certain amounts and continuation of medical benefits for
one-half of the remainder of the Contract Term upon termination of employment
other than for cause. The payment is equal to the executive’s base
salary in effect immediately prior to the termination date and one week’s salary
for every year of service to Swift Energy, plus, in the case of Messrs. Swift,
Heckaman and Kitterman, certain amounts compounded at a rate of 8% per annum,
representing amounts in lieu of Company contributions to its 401(k) plan for
those periods of employment prior to adoption of such a plan by Swift
Energy. The agreements can be terminated by Swift Energy other than
for cause only by a majority of the continuing directors who have been directors
for two years or nominated for election by a majority of continuing
directors. Upon employment termination in connection with or
following a change of control, the executives are entitled to receive their
salary that would have been paid for the remainder of the Contract Term plus two
weeks’ salary for every year of service to Swift Energy, continuation of medical
and dental insurance and universal life coverage for certain periods, plus, in
the case of Messrs. Swift, Heckaman and Kitterman, the aforementioned amounts in
lieu of 401(k) plan payments. Immediately prior to termination of
employment, all outstanding stock options vest.
Indemnification
Agreements
During
2006, we entered into a new form of indemnification agreement with each of our
Officers and directors. Previously, only a few officers who had been
with the Company for a long period of time had such agreements. These
new indemnification agreements provide for the Company to, among other things,
indemnify such persons against certain liabilities that may arise by reason of
their status or service as officers or directors, to advance their expenses
incurred as a result of a proceeding as to which they may be indemnified and to
cover such person under any officers and directors liability insurance policy we
choose, in our discretion, to maintain. These indemnification agreements are
intended to provide indemnification rights to the fullest extent permitted under
Texas law and shall be in addition to any other rights the indemnitee may have
under the Company’s Restated Articles of Incorporation, Bylaws and applicable
law. We believe these indemnification agreements enhance our ability
to attract and retain knowledgeable and experienced officers and
directors.
Section
162(m) of the Internal Revenue Code
Section
162(m) generally limits deductions for compensation paid to any employee in
excess of $1.0 million per year. Certain performance-based
compensation is exempt from this limitation, including stock options, which are
considered inherently performance-based, and other awards that are contingent
upon the attainment of pre-approved performance goals. The
Compensation Committee addressed this issue in the Swift Energy Company 2005
Stock Compensation Plan. Because amounts of compensation paid to
certain Officers may be subject to the limitations on deductibility by the
Company under Section 162(m) of the Internal Revenue Code, the 2005 Plan
authorizes the use of both options and performance-based cash or
stock bonus awards that are intended to qualify for the performance-based
compensation exception to the deduction limitation. In addition, the
2005 Plan provides that any such Officer may not receive a grant in any given
calendar year of awards covering or measured by more than 120,000 shares of the
Company’s common stock. Further under the 2005 Plan, acceleration of
vesting or exercisability of awards held by those Officers can only be related
to their death, disability, termination of employment upon retirement, or a
change of control, as defined in the 2005 Plan.
The
Compensation Committee reviewed and discussed the Compensation Discussion and
Analysis with management. Based upon this review, the related
discussions and other matters deemed relevant and appropriate by the
Compensation Committee, the Compensation Committee has recommended to the Board
of Directors that the Compensation Discussion and Analysis be included in this
proxy statement to be delivered to shareholders of Swift Energy.
|
Clyde
W. Smith, Jr. (Chairman)
Douglas
J. Lanier
Greg
Matiuk
Henry
C. Montgomery
Charles
J. Swindells
|
19
The
following table sets forth certain summary information regarding compensation
paid or accrued by the Company to or on behalf of the Company’s Chief Executive
Officer, Chief Financial Officer, and each of the three most highly compensated
executive Officers of the Company other than the CEO and CFO for the fiscal
years ended December 31, 2006 and December 31, 2007:
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)(1)
|
Stock
Awards
($)(2)
|
Option
Awards
($)(2)
|
Non-Equity
Incentive Plan Compen-sation
($)
|
Change
in Pension and Non-qualified Deferred Compen-sation Earnings
($)
|
All
Other Compen-sation
($)(3)(4)
|
Total
($)
|
||||||||||||||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
||||||||||||||||||||||||
|
Terry
E. Swift
Chairman
of the Board and Chief Executive Officer
|
2007
|
$ | 580,000 | $ | 724,249 | $ | 653,541 | $ | 1,415,873 | $ | — | $ | — | $ | 37,841 | $ | 3,411,504 | ||||||||||||||||
|
2006
|
$ | 550,000 | $ | 947,408 | $ | 322,893 | $ | 967,600 | $ | — | $ | — | $ | 34,608 | $ | 2,822,509 | |||||||||||||||||
|
Alton
D. Heckaman, Jr.
Executive
Vice President and Chief Financial Officer
|
2007
|
$ | 380,000 | $ | 287,012 | $ | 270,982 | $ | 407,810 | $ | — | $ | — | $ | 28,122 | $ | 1,373,926 | ||||||||||||||||
|
2006
|
$ | 360,000 | $ | 372,613 | $ | 132,384 | $ | 444,688 | $ | — | $ | — | $ | 26,314 | $ | 1,335,999 | |||||||||||||||||
|
Bruce
H. Vincent
President
and Secretary
|
2007
|
$ | 454,000 | $ | 472,921 | $ | 396,000 | $ | 594,165 | $ | — | $ | — | $ | 42,322 | $ | 1,959,408 | ||||||||||||||||
|
2006
|
$ | 430,000 | $ | 592,561 | $ | 191,426 | $ | 891,522 | $ | — | $ | — | $ | 37,956 | $ | 2,143,465 | |||||||||||||||||
|
Joseph
A. D’Amico
Executive
Vice President
|
2007
|
$ | 380,000 | $ | 163,373 | $ | 240,905 | $ | 215,191 | $ | — | $ | — | $ | 42,260 | $ | 1,041,729 | ||||||||||||||||
|
2006
|
$ | 360,000 | $ | 311,120 | $ | 136,221 | $ | 213,212 | $ | — | $ | — | $ | 32,551 | $ | 1,053,104 | |||||||||||||||||
|
James
P. Mitchell
Senior
Vice President—Commercial Transactions and Land
|
2007
|
$ | 315,000 | $ | 189,989 | $ | 163,396 | $ | 165,451 | $ | — | $ | — | $ | 36,063 | $ | 869,899 | ||||||||||||||||
|
2006
|
$ | 300,000 | $ | 251,709 | $ | 83,024 | $ | 136,262 | $ | — | $ | — | $ | 26,528 | $ | 797,523 | |||||||||||||||||
20
|
(1)
|
Bonus
amounts in column (d) for 2006 and 2007 include amounts earned during 2006
and 2007, but paid in 2007 and 2008, respectively.
|
||||||||||||||||||||
|
(2)
|
The
amounts in columns (e) and (f) reflect the dollar amount recognized for
financial statement purposes for each of fiscal years ended December 31,
2006 and December 31, 2007, in accordance with Statement of Financial
Accounting Standards (SFAS) No. 123(R) of awards pursuant to the Company’s
stock compensation plans and thus include amounts from awards granted in
and prior to the year being reported. Assumptions used in the
calculation of these amounts are included in footnote 6 to the Company’s
audited financial statements for the fiscal years ended December 31, 2006
and December 31, 2007, included in the Company’s Annual Report on Forms
10-K for the years ended December 31, 2006 and December 31, 2007,
respectively.
|
||||||||||||||||||||
|
(3)
|
Includes
all other compensation items (column (i)) for each of 2006 and 2007 not
reportable in columns (c) through (h):
|
||||||||||||||||||||
|
Swift
|
Heckaman
|
Vincent
|
D’Amico
|
Mitchell
|
|||||||||||||||||
|
Savings
Plan Contributions*
|
2007
|
$
|
11,250
|
$
|
11,250
|
$
|
11,250
|
$
|
11,250
|
$
|
11,250
|
||||||||||
|
2006
|
$
|
11,000
|
$
|
11,000
|
$
|
11,000
|
$
|
11,000
|
$
|
11,000
|
|||||||||||
|
Life
Insurance Premiums**
|
2007
|
$
|
16,324
|
$
|
9,828
|
$
|
19,471
|
$
|
21,087
|
$
|
17,144
|
||||||||||
|
2006
|
$
|
12,243
|
$
|
7,171
|
$
|
14,341
|
$
|
11,701
|
$
|
8,155
|
|||||||||||
|
Tax
Reimbursement for Life Insurance Premiums***
|
2007
|
$
|
7,780
|
$
|
4,557
|
$
|
9,114
|
$
|
7,436
|
$
|
5,183
|
||||||||||
|
2006
|
$
|
7,780
|
$
|
4,557
|
$
|
9,030
|
$
|
6,265
|
$
|
3,788
|
|||||||||||
|
Contributions
to Employee Stock Ownership Plan Account****
|
2007
|
$
|
2,487
|
$
|
2,487
|
$
|
2,487
|
$
|
2,487
|
$
|
2,487
|
||||||||||
|
2006
|
$
|
3,585
|
$
|
3,585
|
$
|
3,585
|
$
|
3,585
|
$
|
3,585
|
|||||||||||
|
*
|
Company
contributions to the Named Executive Officer’s Swift Energy Company
Employee Savings Plan account (100% in Company common
stock).
|
||||||||||||||||||||
|
**
|
Insurance
premiums paid by the Company with respect to life insurance for the
benefit of the Named Executive Officer.
|
||||||||||||||||||||
|
***
|
Amount
paid to the Named Executive Officer as a tax reimbursement with respect to
the life insurance premiums paid for the Named Executive
Officer.
|
||||||||||||||||||||
|
****
|
Company
contributions (100% in Company common stock) to the Named Executive
Officer’s Swift Energy Company Employee Stock Ownership Plan
account.
|
||||||||||||||||||||
|
(4)
|
No
perquisites are included in this column as to any Named Executive Officer,
as in the aggregate perquisites for any Named Executive Officer during
each of 2006 and 2007 did not exceed
$10,000.
|
||||||||||||||||||||
21
The
following table sets forth certain information with respect to the options
granted during the year ended December 31, 2007 to each Named Executive Officer
listed in the Summary Compensation Table:
|
Name
|
Grant
Date
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards
|
Estimated
Future Payouts
Under
Equity Incentive Plan
Awards
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)
|
All
Other Option Awards: Number of Securities Under-lying
Options
(#)
|
Exercise
or Base Price of Option Awards
($/Sh)
|
Grant
Date Fair Value of Stock and Option Awards
|
|||||||||||
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
|||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
(l)
|
|||||||
|
Terry
E. Swift
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
23,700
|
(1)
|
—
|
$
|
43.48
|
$
|
1,030,476
|
||||
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
34,100
|
(1)
|
$
|
43.48
|
$
|
703,524
|
|||||
|
Alton
D. Heckaman, Jr.
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
9,900
|
(1)
|
—
|
$
|
43.48
|
$
|
430,452
|
||||
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
14,300
|
(1)
|
$
|
43.48
|
$
|
295,026
|
|||||
|
06/14/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
562
|
(3)
|
$
|
44.24
|
$
|
8,136
|
|||||
|
06/15/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
827
|
(3)
|
$
|
45.15
|
$
|
11,390
|
|||||
|
06/18/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
887
|
(3)
|
$
|
45.78
|
$
|
8,712
|
|||||
|
09/27/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
1,659
|
(3)
|
$
|
41.08
|
$
|
24,602
|
|||||
|
12/28/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
1,437
|
(2)
|
$
|
43.58
|
$
|
19,255
|
|||||
|
Bruce
H. Vincent
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
14,600
|
(1)
|
—
|
$
|
43.48
|
$
|
634,808
|
||||
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
21,100
|
(1)
|
$
|
43.48
|
$
|
435,293
|
|||||
|
06/18/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
1,296
|
(3)
|
$
|
45.78
|
$
|
12,789
|
|||||
|
12/28/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
1,345
|
(2)
|
$
|
43.58
|
$
|
16,499
|
|||||
|
Joseph
A. D’Amico
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
7,300
|
(1)
|
—
|
$
|
43.48
|
$
|
317,404
|
||||
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
10,500
|
(1)
|
$
|
43.48
|
$
|
213,288
|
|||||
|
James
P. Mitchell
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
5,700
|
(1)
|
—
|
$
|
43.48
|
$
|
247,836
|
||||
|
02/06/2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
8,200
|
(1)
|
$
|
43.48
|
$
|
167,332
|
|||||
|
(1)
|
Amount
shown reflects number of restricted shares or stock options granted to the
Named Executive Officer during 2007 pursuant to the 2005
Plan. Restrictions on restricted shares lapse as to one-third
of such shares each year beginning on the first anniversary of the grant
date. Stock options become exercisable over a five year period
at 20% on each anniversary of the grant date, and expire ten years from
the grant date.
|
|
|
(2)
|
Amount
reflects number of reload stock options granted pursuant to the Swift
Energy Company 2001 Omnibus Stock Compensation Plan. Reload
stock options vest 100% on the first anniversary of the grant date and
expire on the expiration date of the original options whose exercise
triggers the awarding of the reload options, or two years, whichever is
later. For additional discussion of reload options, refer to
“Proposal 2—To Amend the Swift Energy Company 2005 Stock Compensation
Plan to Increase the Number of Shares of the Company’s Common Stock
Available for Awards under the Plan by up to 800,000 Shares—Summary of the
2005 Plan—Reload Options.”
|
|
|
(3)
|
Amount
reflects number of reload stock options granted pursuant to the Swift
Energy Company 1990 Stock Compensation Plan. Reload stock
options vest 100% on the first anniversary of the grant date and expire on
the expiration date of the original options whose exercise is the basis
for the awarding of the reload options, or two years, whichever is
later.
|
|
22
The
following table includes certain information about stock options and restricted
stock outstanding at December 31, 2007, for each Named Executive Officer listed
in the Summary Compensation Table:
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)(1)
|
Equity
Incentive Plan Awards: Number of Un-earned Shares, Units or Other Rights
That Have Not Vested
(#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
($)
|
|||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||
|
Terry E.
Swift
Stock
Options
|
4,002
|
—
|
—
|
$
|
16.96
|
02/04/2012
|
—
|
—
|
—
|
—
|
||||||||||||
|
8,000
|
8,000
|
(2)
|
—
|
$
|
13.84
|
11/04/2013
|
—
|
—
|
—
|
—
|
||||||||||||
|
5,200
|
10,400
|
(2)
|
—
|
$
|
25.18
|
11/08/2014
|
—
|
—
|
—
|
—
|
||||||||||||
|
5,080
|
20,320
|
(2)
|
—
|
$
|
44.24
|
02/08/2016
|
—
|
—
|
—
|
—
|
||||||||||||
|
—
|
34,100
|
(2)
|
—
|
$
|
43.48
|
02/06/2017
|
—
|
—
|
—
|
—
|
||||||||||||
|
Reload
Stock Options
|
3,075
|
—
|
—
|
$
|
28.97
|
02/18/2008
|
—
|
—
|
—
|
—
|
||||||||||||
|
8,169
|
—
|
—
|
$
|
51.21
|
11/28/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
5,609
|
—
|
—
|
$
|
28.97
|
12/07/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
934
|
—
|
—
|
$
|
43.48
|
12/07/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
9,869
|
—
|
—
|
$
|
28.97
|
02/07/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
|
647
|
—
|
—
|
$
|
35.04
|
02/20/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
8,330
|
—
|
—
|
$
|
43.48
|
02/20/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
4,458
|
—
|
—
|
$
|
51.21
|
02/20/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1
|
—
|
—
|
$
|
30.47
|
05/08/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
29,749
|
—
|
—
|
$
|
51.21
|
05/08/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
5,297
|
—
|
—
|
$
|
51.21
|
02/04/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
3,821
|
—
|
—
|
$
|
28.97
|
11/04/2013
|
—
|
—
|
—
|
—
|
|||||||||||||
|
2,546
|
—
|
—
|
$
|
43.48
|
11/04/2013
|
—
|
—
|
—
|
—
|
|||||||||||||
|
2,162
|
—
|
—
|
$
|
51.21
|
11/04/2013
|
—
|
—
|
—
|
—
|
|||||||||||||
|
3,011
|
—
|
—
|
$
|
43.48
|
11/08/2014
|
—
|
—
|
—
|
—
|
|||||||||||||
|
2,556
|
—
|
—
|
$
|
51.21
|
11/08/2014
|
—
|
—
|
—
|
—
|
|||||||||||||
|
Restricted
Stock
|
—
|
—
|
—
|
—
|
—
|
10,800
|
$
|
475,524
|
(4)
|
—
|
—
|
|||||||||||
|
—
|
—
|
—
|
—
|
—
|
11,667
|
$
|
513,698
|
(5)
|
—
|
—
|
||||||||||||
|
—
|
—
|
—
|
—
|
—
|
23,700
|
$
|
1,043,511
|
(5)
|
—
|
—
|
||||||||||||
|
Alton
D. Heckaman, Jr.
Stock
Options
|
2,270
|
5,000
|
(2)
|
—
|
$
|
13.84
|
11/04/2013
|
—
|
—
|
—
|
—
|
|||||||||||
|
5,100
|
3,400
|
(2)
|
—
|
$
|
25.18
|
11/08/2014
|
—
|
—
|
—
|
—
|
||||||||||||
|
2,220
|
8,880
|
(2)
|
—
|
$
|
44.24
|
02/08/2016
|
—
|
—
|
—
|
—
|
||||||||||||
|
—
|
14,300
|
(2)
|
—
|
$
|
43.48
|
02/06/2017
|
—
|
—
|
—
|
—
|
||||||||||||
|
Reload
Stock Options
|
792
|
—
|
—
|
$
|
31.79
|
02/18/2008
|
—
|
—
|
—
|
—
|
||||||||||||
|
1,658
|
—
|
—
|
$
|
49.70
|
11/09/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,541
|
—
|
—
|
$
|
21.21
|
12/07/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
214
|
—
|
—
|
$
|
23.19
|
12/07/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,263
|
—
|
—
|
$
|
47.35
|
12/07/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
—
|
887
|
(3)
|
—
|
$
|
45.78
|
06/18/2009
|
—
|
—
|
—
|
—
|
||||||||||||
|
—
|
1,642
|
(3)
|
—
|
$
|
41.08
|
09/27/2009
|
—
|
—
|
—
|
—
|
||||||||||||
|
—
|
17
|
(3)
|
—
|
$
|
41.08
|
09/27/2009
|
—
|
—
|
—
|
—
|
||||||||||||
|
2,489
|
—
|
—
|
$
|
34.41
|
02/07/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,210
|
—
|
—
|
$
|
35.05
|
02/07/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
|
238
|
—
|
—
|
$
|
38.41
|
02/07/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
23
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)(1)
|
Equity
Incentive Plan Awards: Number of Un-earned Shares, Units or Other Rights
That Have Not Vested
(#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
($)
|
|||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||
|
|
15,384
|
—
|
—
|
$
|
21.94
|
08/01/2010
|
—
|
—
|
—
|
—
|
||||||||||||
|
3,322
|
—
|
—
|
$
|
33.01
|
08/01/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
|
4,218
|
—
|
—
|
$
|
50.01
|
08/01/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
|
10,000
|
—
|
—
|
$
|
35.04
|
02/20/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,772
|
—
|
—
|
$
|
49.41
|
02/20/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
24,594
|
—
|
—
|
$
|
30.47
|
05/08/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
250
|
—
|
—
|
$
|
49.41
|
05/08/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
—
|
827
|
(3)
|
—
|
$
|
45.15
|
02/04/2012
|
—
|
—
|
—
|
—
|
||||||||||||
|
1,925
|
—
|
—
|
$
|
39.64
|
02/04/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,796
|
—
|
—
|
$
|
40.57
|
02/04/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,321
|
—
|
—
|
$
|
31.40
|
11/11/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
216
|
—
|
—
|
$
|
38.41
|
11/11/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
—
|
562
|
(3)
|
—
|
$
|
44.24
|
11/11/2012
|
—
|
—
|
—
|
—
|
||||||||||||
|
—
|
571
|
(3)
|
—
|
$
|
43.58
|
11/11/2012
|
—
|
—
|
—
|
—
|
||||||||||||
|
1,545
|
—
|
—
|
$
|
36.22
|
11/04/2013
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,010
|
—
|
—
|
$
|
47.92
|
11/04/2013
|
—
|
—
|
—
|
—
|
|||||||||||||
|
2,076
|
—
|
—
|
$
|
49.70
|
11/04/2013
|
—
|
—
|
—
|
—
|
|||||||||||||
|
—
|
866
|
(3)
|
—
|
$
|
43.58
|
11/04/2013
|
—
|
—
|
—
|
—
|
||||||||||||
|
Restricted
Stock
|
—
|
—
|
—
|
—
|
—
|
3,540
|
$
|
155,866
|
(4)
|
—
|
—
|
|||||||||||
|
—
|
—
|
—
|
—
|
—
|
5,134
|
$
|
226,050
|
(5)
|
—
|
—
|
||||||||||||
|
—
|
—
|
—
|
—
|
—
|
9,900
|
$
|
435,897
|
(5)
|
—
|
—
|
||||||||||||
|
Bruce
H. Vincent
Stock
Options
|
12,500
|
—
|
—
|
$
|
35.04
|
02/20/2011
|
—
|
—
|
—
|
—
|
||||||||||||
|
18,000
|
—
|
—
|
$
|
30.47
|
05/08/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,303
|
—
|
—
|
$
|
16.96
|
02/04/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
6,000
|
6,000
|
(2)
|
—
|
$
|
13.84
|
11/04/2013
|
—
|
—
|
—
|
—
|
||||||||||||
|
6,480
|
4,320
|
(2)
|
—
|
$
|
25.18
|
11/08/2014
|
—
|
—
|
—
|
—
|
||||||||||||
|
3,340
|
13,360
|
(2)
|
—
|
$
|
44.24
|
02/08/2016
|
—
|
—
|
—
|
—
|
||||||||||||
|
—
|
21,100
|
(2)
|
—
|
$
|
43.48
|
02/06/2017
|
—
|
—
|
—
|
—
|
||||||||||||
|
Reload
Stock Options
|
10,037
|
—
|
—
|
$
|
40.57
|
06/27/2008
|
—
|
—
|
—
|
—
|
||||||||||||
|
3,625
|
—
|
—
|
$
|
49.61
|
11/08/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
468
|
—
|
—
|
$
|
33.01
|
12/07/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,323
|
—
|
—
|
$
|
46.66
|
12/07/2008
|
—
|
—
|
—
|
—
|
|||||||||||||
|
—
|
1,296
|
(3)
|
—
|
$
|
45.78
|
06/18/2009
|
—
|
—
|
—
|
—
|
||||||||||||
|
1,421
|
—
|
—
|
$
|
36.22
|
02/07/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,103
|
—
|
—
|
$
|
46.66
|
02/07/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
|
2,746
|
—
|
—
|
$
|
47.92
|
08/01/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
|
2,653
|
—
|
—
|
$
|
49.61
|
08/01/2010
|
—
|
—
|
—
|
—
|
|||||||||||||
|
7,554
|
—
|
—
|
$
|
48.40
|
05/08/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
2,987
|
—
|
—
|
$
|
47.67
|
02/04/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
915
|
—
|
—
|
$
|
51.84
|
02/04/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
—
|
583
|
(3)
|
—
|
$
|
43.58
|
02/04/2012
|
—
|
—
|
—
|
—
|
||||||||||||
|
2,134
|
—
|
—
|
$
|
46.66
|
11/11/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
640
|
—
|
—
|
$
|
51.84
|
11/11/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
—
|
762
|
(3)
|
—
|
$
|
43.58
|
11/11/2012
|
—
|
—
|
—
|
—
|
24
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying
Unexercised Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
(#)
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)(1)
|
Equity
Incentive Plan Awards: Number of Un-earned Shares, Units or Other Rights
That Have Not Vested
(#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested
($)
|
|||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||
|
3,483
|
—
|
—
|
$
|
47.67
|
11/04/2013
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,673
|
—
|
—
|
$
|
49.61
|
11/04/2013
|
—
|
—
|
—
|
—
|
|||||||||||||
|
Restricted
Stock
|
—
|
—
|
—
|
—
|
—
|
4,500
|
$
|
198,135
|
(4)
|
—
|
—
|
|||||||||||
|
—
|
—
|
—
|
—
|
—
|
7,667
|
$
|
337,578
|
(5)
|
—
|
—
|
||||||||||||
|
—
|
—
|
—
|
—
|
—
|
14,600
|
$
|
642,838
|
(5)
|
—
|
—
|
||||||||||||
|
Joseph
A. D’Amico
Stock
Options
|
12,500
|
—
|
—
|
$
|
35.04
|
02/20/2011
|
—
|
—
|
—
|
—
|
||||||||||||
|
33,000
|
—
|
—
|
$
|
30.47
|
05/08/2011
|
—
|
—
|
—
|
—
|
|||||||||||||
|
4,000
|
—
|
—
|
$
|
8.30
|
11/11/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
8,000
|
4,000
|
(2)
|
—
|
$
|
13.84
|
11/04/2013
|
—
|
—
|
—
|
—
|
||||||||||||
|
5,820
|
3,880
|
(2)
|
—
|
$
|
25.18
|
11/08/2014
|
—
|
—
|
—
|
—
|
||||||||||||
|
2,220
|
8,880
|
(2)
|
—
|
$
|
44.24
|
02/08/2016
|
—
|
—
|
—
|
—
|
||||||||||||
|
—
|
10,500
|
(2)
|
—
|
$
|
43.48
|
02/06/2017
|
—
|
—
|
—
|
—
|
||||||||||||
|
Restricted
Stock
|
—
|
—
|
—
|
—
|
—
|
4,020
|
$
|
177,000
|
(4)
|
—
|
—
|
|||||||||||
|
—
|
—
|
—
|
—
|
—
|
5,134
|
$
|
226,050
|
(5)
|
—
|
—
|
||||||||||||
|
—
|
—
|
—
|
—
|
—
|
7,300
|
$
|
321,419
|
(5)
|
—
|
—
|
||||||||||||
|
James
P. Mitchell
Stock
Options
|
1,600
|
—
|
—
|
$
|
16.96
|
02/04/2012
|
—
|
—
|
—
|
—
|
||||||||||||
|
1,500
|
—
|
—
|
$
|
8.30
|
11/11/2012
|
—
|
—
|
—
|
—
|
|||||||||||||
|
4,000
|
4,000
|
(2)
|
—
|
$
|
13.84
|
11/04/2013
|
—
|
—
|
—
|
—
|
||||||||||||
|
200
|
2,040
|
(2)
|
—
|
$
|
25.18
|
11/08/2014
|
—
|
—
|
—
|
—
|
||||||||||||
|
820
|
—
|
—
|
$
|
25.18
|
11/08/2014
|
—
|
—
|
—
|
—
|
|||||||||||||
|
1,420
|
5,680
|
(2)
|
—
|
$
|
44.24
|
02/08/2016
|
—
|
—
|
—
|
—
|
||||||||||||
|
—
|
8,200
|
(2)
|
—
|
$
|
43.48
|
02/06/2017
|
—
|
—
|
—
|
—
|
||||||||||||
|
Restricted
Stock
|
—
|
—
|
—
|
—
|
—
|
2,100
|
$
|
92,463
|
(4)
|
—
|
—
|
|||||||||||
|
—
|
—
|
—
|
—
|
—
|
3,267
|
$
|
143,846
|
(5)
|
—
|
—
|
||||||||||||
|
—
|
—
|
—
|
—
|
—
|
5,700
|
$
|
250,971
|
(5)
|
—
|
—
|
|
(1)
|
Amount
reflects the aggregate market value of unvested restricted shares at
December 31, 2007, which equals the number of unvested restricted shares
in column (g) multiplied by the closing price of the Company’s common
stock at December 31, 2007 ($44.03).
|
|
|
(2)
|
Stock
options become exercisable in five equal installments each year beginning
on the first anniversary of the grant date.
|
|
|
(3)
|
Reload
stock options vest 100% on the first anniversary of the grant date and
expire on the expiration date of the original options whose exercise is
the basis for the awarding of the reload options, or two years, whichever
is later.
|
|
|
(4)
|
Restrictions
on restricted shares lapse as to 20% of such shares each year beginning on
February 8, 2007, and on the anniversary of such date
thereafter.
|
|
|
(5)
|
Restrictions
on restricted shares lapse as to one-third of such shares each year
beginning on the first anniversary of the grant
date.
|
|
25
The
following table includes information regarding stock options exercised and
restricted stock vested for the Named Executive Officers named in the Summary
Compensation Table during the fiscal year ended December 31,
2007:
|
Option
Awards
|
Stock
Awards
|
|||||||||
|
Name
|
Number
of Shares Acquired on Exercise
(#)
|
Value
Realized on Exercise
($)(1)
|
Number
of Shares Acquired on Vesting
(#)
|
Value
Realized on Vesting
($)(2)
|
||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
||||||
|
Terry
E. Swift
|
0
|
$
|
0
|
9,433
|
$
|
401,998
|
||||
|
Alton
D. Heckaman, Jr.
|
15,698
|
$
|
454,938
|
3,746
|
$
|
160,022
|
||||
|
Bruce
H. Vincent
|
7,302
|
$
|
204,075
|
5,333
|
$
|
228,091
|
||||
|
Joseph
A. D’Amico
|
3,809
|
$
|
103,738
|
3,906
|
$
|
166,689
|
||||
|
James
P. Mitchell
|
0
|
$
|
0
|
2,333
|
$
|
99,715
|
||||
|
(1)
|
Amount
reflects value realized by determining the difference between the market
price of the underlying securities at exercise and the exercise price of
the stock options.
|
|
|
(2)
|
Amount
reflects value realized by multiplying the number of shares of restricted
stock vesting by the market value on the vesting
date.
|
|
26
The table
below and the discussion that follows reflect the amount of compensation payable
to each Named Executive Officer upon death, permanent disability, change of
control or other termination under employment agreements and the Company’s
compensation plans. The amounts shown assume that such termination
was effective December 31, 2007. The actual amounts to be paid out
can only be determined at the time of such executive’s separation from the
Company.
|
Equity
Acceleration(2)
|
||||||||||||||||
|
Cash
Payments
|
Benefit
Cost(1)
|
Stock
Options
|
Restricted
Stock
|
Total
|
||||||||||||
|
Terry
E. Swift
|
||||||||||||||||
|
Death
|
$
|
1,860,797
|
$
|
7,200
|
$
|
452,047
|
$
|
—
|
$
|
2,320,044
|
||||||
|
Disability
|
$
|
1,860,797
|
$
|
16,324
|
$
|
452,047
|
$
|
—
|
$
|
2,329,168
|
||||||
|
Change
of Control
|
$
|
2,174,314
|
$
|
17,400
|
$
|
452,047
|
$
|
989,222
|
$
|
3,632,983
|
||||||
|
Other
Termination
|
$
|
1,159,964
|
$
|
7,200
|
$
|
452,047
|
$
|
—
|
$
|
1,619,211
|
||||||
|
Alton
D. Heckaman, Jr.
|
||||||||||||||||
|
Death
|
$
|
1,237,509
|
$
|
7,200
|
$
|
223,984
|
$
|
—
|
$
|
1,468,693
|
||||||
|
Disability
|
$
|
1,237,509
|
$
|
9,828
|
$
|
223,984
|
$
|
—
|
$
|
1,471,321
|
||||||
|
Change
of Control
|
$
|
1,435,425
|
$
|
17,400
|
$
|
223,984
|
$
|
381,916
|
$
|
2,058,725
|
||||||
|
Other
Termination
|
$
|
778,432
|
$
|
7,200
|
$
|
223,984
|
$
|
—
|
$
|
1,009,526
|
||||||
|
Bruce
H. Vincent
|
||||||||||||||||
|
Death
|
$
|
1,249,459
|
$
|
7,200
|
$
|
269,708
|
$
|
—
|
$
|
1,526,367
|
||||||
|
Disability
|
$
|
1,249,459
|
$
|
19,471
|
$
|
269,708
|
$
|
—
|
$
|
1,538,638
|
||||||
|
Change
of Control
|
$
|
1,418,750
|
$
|
17,400
|
$
|
269,708
|
$
|
535,713
|
$
|
2,241,571
|
||||||
|
Other
Termination
|
$
|
709,375
|
$
|
7,200
|
$
|
269,708
|
$
|
—
|
$
|
986,283
|
||||||
|
Joseph
A. D’Amico
|
||||||||||||||||
|
Death
|
$
|
1,068,750
|
$
|
4,800
|
$
|
197,808
|
$
|
—
|
$
|
1,271,358
|
||||||
|
Disability
|
$
|
1,068,750
|
$
|
21,087
|
$
|
197,808
|
$
|
—
|
$
|
1,287,645
|
||||||
|
Change
of Control
|
$
|
1,219,167
|
$
|
11,600
|
$
|
197,808
|
$
|
403,050
|
$
|
1,831,625
|
||||||
|
Other
Termination
|
$
|
609,584
|
$
|
4,800
|
$
|
197,808
|
$
|
—
|
$
|
812,192
|
||||||
|
James
P. Mitchell
|
||||||||||||||||
|
Death
|
$
|
892,500
|
$
|
12,000
|
$
|
162,531
|
$
|
—
|
$
|
1,067,031
|
||||||
|
Disability
|
$
|
892,500
|
$
|
17,144
|
$
|
162,531
|
$
|
—
|
$
|
1,072,175
|
||||||
|
Change
of Control
|
$
|
1,023,750
|
$
|
29,000
|
$
|
162,531
|
$
|
236,309
|
$
|
1,451,590
|
||||||
|
Other
Termination
|
$
|
511,875
|
$
|
12,000
|
$
|
162,531
|
$
|
—
|
$
|
686,406
|
||||||
|
(1)
|
Includes
payment of insurance continuation as provided in employment
agreement.
|
|
|
(2)
|
Includes
value of option spread and full value awards upon accelerated vesting of
equity grants at $44.03 per share (closing price on December 31,
2007).
|
|
27
Computation
of Payments
Under
existing employment agreements and the Company’s compensation plans, in the
event of termination of employment of a Named Executive Officer by the Company
or the Named Executive Officer or upon a change of control of the Company (each,
an “Event”), Named Executive Officers are entitled to receive a cash lump sum
payment equal to:
|
|
•
|
the
compensation which otherwise is payable to the Named Executive Officer for
one-half of the remainder of the contract term (for the remainder of the
full contract term in the event of a change of control), based on salary
prior to the Event, plus
|
|
|
•
|
one
week (two weeks in the event of a change of control) of the Named
Executive Officer’s current salary for every year of service to the
Company (rounded up to the nearest full year of service),
plus
|
|
|
•
|
a
gross up payment for any excise tax paid by the Named Executive Officer
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended,
and any interest or penalties with respect to such tax,
plus
|
|
|
•
|
applicable
only to each of Messrs. Swift, Heckaman, Kitterman, a cash payment in the
amount of $84,964, $70,753 and $101,479, respectively, as of December 31,
2000, compounded at a rate of 8.0% per annum, representing amounts in lieu
of Company contributions to a 401(k) plan for those periods of their
employment prior to adoption of such a plan by the
Company.
|
In
addition to the lump sum payment described above, upon a change of control or
death or disability of a Named Executive Officer, the Named Executive Officer
will receive accelerated vesting on all outstanding unvested stock options,
making them immediately exercisable (except in the event of other termination,
in which case the date such options become first exercisable will remain
unchanged).
In the
event of death, spouses and dependents of Named Executive Officers will also be
provided with medical and dental coverage for one year from the date of
death.
Upon an
Event other than death, Named Executive Officers will also receive universal
life premiums paid by the Company for one year following the date of permanent
disability.
In the
event of a change of control, Named Executive Officers, along with all other
employees with awards under the Company’s equity compensation plans, will
additionally receive accelerated vesting on all unvested restricted stock
outstanding for more than one year and medical and dental coverage to be
provided to the Named Executive Officer, his spouse and his dependents for the
remainder of the contract term.
Upon an
Event other than death, permanent disability or change of control, Named
Executive Officers will additionally receive medical and dental coverage to be
provided to the Named Executive Officer, his spouse and his dependents for a
period of between 12 and 18 months following the termination date.
Each
Named Executive Officer must also observe a noncompete provision of his
employment agreement. Based on the terms of the employment agreement,
the covenant not to compete provision would in no event be effective for longer
than three years following the termination of a Named Executive
Officer.
A Named
Executive Officer will not receive compensation under his employment agreement
if the Company terminates the Named Executive Officer for
Cause. Cause is defined in the employment agreement as commission of
fraud against the Company, willful refusal, after a Change in Control, without
proper legal cause to faithfully and diligently perform the Named Executive
Officer’s duties as directed or breach of the confidentiality provision of the
employment agreement.
28
The
purpose of the 2005 Stock Compensation Plan (the “2005 Plan”) is to promote and
advance the interest of the Company by aiding in hiring, retaining and rewarding
qualified employees and increasing managerial and key employees’ interest in the
growth and financial success of the Company by offering stock-based incentives
tied to performance. The 2005 Plan is one of the primary tools we use
to achieve this purpose. We believe the competition for top-notch oil
and gas professionals will continue to intensify in our industry, especially in
the regions in which we operate. The Company anticipates that it
will, as a general matter, grant restricted stock and/or options on an annual
basis, although future grant awards and grant recipients have not been
determined. Therefore, the number, amount and type of awards to be
received by or allocated to eligible persons in the future under the 2005 Plan
cannot be determined at this time. The Board of Directors has
authorized an amendment to the 2005 Plan, subject to shareholder approval, to
increase the number of shares of the Company’s common stock available for award
under the 2005 Plan by up to 800,000 shares.
An
aggregate of 900,000 shares of the Swift Energy common stock was reserved for
awards under the 2005 Plan when the plan was approved by shareholders at the
2005 Annual Meeting. At the 2006 and 2007 Annual Meetings, the
Company’s shareholders approved increasing the shares available under the 2005
Plan by 850,000 shares and 300,000 shares, respectively. As of
December 31, 2007, an aggregate of up to 714,103 shares was still available for
awards under the 2005 Plan, which represents approximately 2.37% of the
Company’s issued and outstanding shares as of such date. During
January and February 2008, the Company granted 276,710 stock options and 134,800
restricted stock awards to all officers and employees of the
Company. These grants reduced the available shares by 533,263 shares
when taking into account that the pool of shares is reduced by one share for
every stock option that is granted, and is reduced by 1.44 shares for every
restricted stock award that is granted. On February 29, 2008, taking
the 2008 activity into account, an aggregate of up to 174,263 shares was
available for awards. Each year since the 2005 Plan’s inception, the
price of the Company’s common stock has reached all time
highs. Additionally, because of the Company’s record performance in
terms of revenues, net income and cash flow since the 2005 Plan’s inception, and
the intense competition in the industry for qualified oil and gas personnel, the
Company granted shares of restricted stock across the board to all of the
Company’s employees, including Officers, in each of the last three
years.
The
Company has not approved any awards under the 2005 Plan that are conditioned
upon shareholder approval of the proposed plan amendment. On December
31, 2007, 380 individuals were eligible to participate in the 2005 Plan, an
approximate 10% increase from 2006.
Copies of
the 2005 Plan as filed with the SEC may be obtained by going to the SEC’s
website at www.sec.gov. The 2005 Plan appears as an exhibit to the
Company’s Form 8-K filed with the SEC on May 12, 2005, Amendment No. 1 to the
2005 Plan is appended as Exhibit 10.1 to the Company’s Form 8-K filed with the
SEC on May 12, 2006, Amendment No. 2 to the 2005 Plan is appended as Exhibit
99.1 to the Company’s Form 10-Q filed with the SEC on May 5, 2007, and Amendment
No. 3 to the 2005 Plan is appended as Exhibit 10 to the Company’s Form 8-K filed
with the SEC on May 11, 2007. The entire 2005 Plan may also be
obtained without charge by writing to the Company at 16825 Northchase Drive,
Suite 400, Houston, Texas 77060, Attention: Secretary, or calling (281) 874-2700
or (800) 777-2412.
The 2005
Plan authorizes the Company to grant various awards (“Awards”) to directors,
Officers and all employees of the Company or its subsidiaries, including
incentive stock options (“ISOs”), nonqualified stock options (“NSOs”), “reload”
options (“Reload Options”), stock appreciation rights (“SARs”), restricted stock
grants (“Restricted Stock Grants”), restricted unit grants (“Restricted Unit
Grants”) and performance bonus awards (“Performance Bonus
Awards”). Terms used but not defined in this summary have the same
meanings as defined in the 2005 Plan.
Administration. The Compensation
Committee of the Board will have sole authority to construe and interpret the
2005 Plan, to select participants (“Participants”), to grant Awards and to
establish the terms and conditions of Awards. The Compensation
Committee is allowed to give the Company’s Chief Executive Officer specifically
limited written authority to grant Awards to new employees.
29
Eligibility. Any employee of the
Company or its subsidiaries, including any Officer or employee-director, any
consultant, and the non-employee directors of the Company, are eligible to
receive various Awards under the 2005 Plan.
Shares Subject
to
2005 Plan. As of May 11,
2007, the maximum number of shares of common stock in respect of which Awards
could be granted under the 2005 Plan (the “Plan Maximum”) was 2,050,000 shares
in a “fungible pool” of shares, plus shares covered by previous Awards granted
prior to May 10, 2005 under any prior long-term incentive plan which Awards are
forfeited or cancelled. That pool of shares is reduced by one share
for every stock option that is granted and is reduced by 1.44 shares for every
“full-value” Award that is granted. “Full-value” Awards consist of
Restricted Stock Grants, Restricted Unit Grants and SARs. Thus, if
only stock options are granted, options covering up to 2,050,000 shares may be
granted; if only “full-value” Awards are granted, Awards covering only 1,423,611
shares may be granted. If both stock options and “full-value” Awards are granted
under the 2005 Plan, the number of shares which can be covered by Awards will
fall somewhere between 1,423,611 shares and 2,020,000 shares, depending upon the
ultimate mix of stock options and “full-value” Awards that are granted under the
2005 Plan. ISOs cannot be granted under the 2005 Plan covering more
than 875,000 shares (“ISO Limit”). The reserved share numbers (and the share
numbers constituting the Plan Maximum, ISO Limit, and Named Executive Officer
limits) are subject to appropriate adjustment in the event of a reorganization,
stock split, stock dividend, merger, consolidation, or other change in
capitalization of the Company affecting its common stock.
As of
February 29, 2008, there remained 174,263 shares of common stock in respect of
which Awards may be granted under the 2005 Plan (174,263 shares available if
only stock options Awards are granted, 121,015 shares available if only
“full-value” Awards are granted). At such date, options to purchase
462,023 shares have been granted, and 1,556,669 shares of restricted stock have
been awarded under the 2005 Plan.
If the
proposal to make 800,000 additional shares available under the 2005 Plan is
approved by shareholders, the same counting rules described above will
apply. Therefore, in addition to those currently available under the
2005 Plan, if only stock options are granted, options covering up to 800,000 may
be granted; if only “full-value” Awards are granted, Awards covering only
555,555 may be
granted. Taking this into consideration, if the proposed additional
shares are made available under the 2005 Plan, the number of shares that can be
covered by Awards will fall somewhere between 974,263 and 676,571 shares if a
combination of both stock options and “full-value” Awards are
granted.
Term. The 2005 Plan will
terminate on May 10, 2015, unless sooner terminated by the Board, except with
respect to Awards then outstanding.
Amendment.
The Board may amend the 2005 Plan at any time, except that (1) the Board
must obtain shareholder approval to make any amendment that would increase the
total number of shares reserved for issuance (except for adjustments necessary
to reflect changes in capitalization), materially modify eligibility
requirements, materially increase the benefits accruing to Participants
resulting in the repricing of Awards already issued, materially extend the term
of the plan, or increase the maximum number of shares covered by Awards to Named
Executive Officers, and (2) certain amendments are altogether prohibited (e.g.,
any amendment that would impair a Participant’s vested rights).
Incentive Stock
Options. Options designated as ISOs within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”), together with the
regulations promulgated thereunder, may be granted under the 2005 Plan up to the
ISO Limit. To the extent that any portion of an ISO that first
becomes exercisable by any Participant during any calendar year exceeds the
$100,000 aggregate fair market value limitation of Section 422(d) of the Code,
or such other limit as may be imposed by the Code, such excess portion shall be
treated as a validly granted NSO. ISOs shall be exercisable for such periods as
the Compensation Committee shall determine, but in no event for a period
exceeding ten years or, for Participants who own more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company (“10%
Shareholders”), five years.
Non-Qualified
Stock Options. NSOs may be granted for
a stated number of shares of common stock and will be exercisable for such
period or periods as the Compensation Committee shall
determine. Holders of NSOs may elect to have the Company withhold
from shares to be delivered upon exercise of an NSO, shares whose fair market
value satisfy withholding taxes attributable to the exercise of the
NSOs. If shares are delivered for this purpose, the Compensation
Committee, in its sole discretion, may grant replacement NSOs in the form of
Reload Options (see below) in the amount of some or all of the shares delivered
to satisfy the withholding tax obligation.
30
Exercisability. ISOs and NSOs will
become exercisable in installments as determined in its sole discretion by the
Compensation Committee, although it is generally anticipated in keeping with
past Company practice that such options may be exercised as to 20% installments
on each of the first five anniversary dates of the date of grant or such other
period as may be designated by the Compensation Committee. The
exercise price for options may be paid in cash or by delivery of shares of
common stock already owned for more than six months by the Participant and
having a market value equal to the exercise price.
Option Exercise
Prices.
Stock options may only be issued at an exercise price that is at least one
hundred percent (100%) of the Fair Market Value of the common stock on the date
of grant, and ISOs granted to 10% Shareholders must have an exercise price of at
least one hundred ten percent (110%) of the Fair Market Value of the common
stock on the date of grant. The 2005 Plan provides that the option
exercise price may be paid in cash, by check, by cash equivalent, by a
broker-assisted exercise, with shares of common stock (but only where acceptable
to the Compensation Committee and only with shares owned for six months), or a
combination of the above.
Termination of
Awards.
Unless otherwise provided in an Award or the 2005 Plan, Awards will terminate
(i) three months following the holder’s termination of employment by the Company
except for death, disability, retirement, or upon a Change of Control, (ii) on
the first-year anniversary of a Participant’s death or disability, or (iii) on
the tenth-year anniversary of the date of grant.
Reload
Options.
Under the 2005 Plan, unless otherwise provided in a Participant’s stock option
agreement, whenever a Participant holding an ISO or NSO exercises an option (the
“Original Option”) and pays part or all of the exercise price by tendering
shares of common stock (a “stock-for-stock exercise”), the Participant will
automatically receive a “Reload Option” giving that Participant an option to
purchase the exact number of shares tendered in the stock-for-stock exercise at
an exercise price equal to the Fair Market Value of such shares at the date of
grant of such Reload Options, which date of grant will be the date of the notice
of exercise of the Original Option. Reload Options are not
exercisable after the later of the expiration of the option term of the Original
Option or two years following the date of grant of the Reload
Option. Except as described above, the terms and conditions of Reload
Options will be identical to the terms and conditions of the related Original
Options. Reload Options are designed to encourage stock-for-stock exercises by
Participants, without necessarily diluting a Participant’s percentage ownership
of the Company’s common stock or the Company’s outstanding common
stock.
Limitation on
Options and Awards to Named Executive Officers. Because amounts of
compensation paid to Named Executive Officers are subject to the limitations on
deductibility by the Company under Section 162(m) of the Code, the 2005 Plan
provides that such Named Executive Officers may not receive a grant in any given
calendar year of Awards covering or measured by more than 100,000 shares of the
Company’s common stock. Further, acceleration of vesting or
exercisability of Awards held by Named Executive Officers can only be related to
their death, disability, termination of employment upon retirement, or a Change
of Control.
Transferability.
The Compensation Committee may allow transfer of Awards to family
members, trusts and partnerships for their benefit or owned by them, or to
charitable trusts. Awards held by transferees are subject to the same
restrictions and forfeiture upon termination of employment applicable to the
original holder of the Award. ISOs are not transferable except by
will or the laws of descent and distribution.
Change of
Control. In the event of a change of control of the Company as
described in the 2005 Plan, all stock options and SARs outstanding for more
than a year shall become fully vested and fully exercisable (unless otherwise
excepted), and all restrictions and conditions of Restricted Stock Grants and
Restricted Unit Grants outstanding shall be deemed to be satisfied, unless the
Board expressly provides otherwise. A “change of control” occurs upon: (i) any
person or group becoming the beneficial owner of shares with 40% or more of the
votes that may be cast for the election of directors; (ii) persons who were
directors of the Company immediately prior to a cash tender offer, exchange
offer, merger, sale of assets, or contested election cease to constitute a
majority of the Board; (iii) the shareholders of the Company approve a
transaction in which the Company ceases to be an independent publicly owned
corporation or approve the sale of all or substantially all the assets of the
Company; or (iv) a tender offer or exchange offer is made for shares of the
Company’s common stock (other than by the Company) and shares are acquired
thereunder.
In
connection with a Change in Control, the Compensation Committee may also cash
out Awards at the higher of the highest price for shares of the Company’s common
stock in reported NYSE trading or the highest price paid in any bona fide
transaction related to a Change in Control. The 2005 Plan also
contains provisions that create
31
a
mechanism for a conditional exercise in certain Change of Control transactions
pending a cancellation of vested unexercised options.
Stock
Appreciation Rights. Under the 2005 Plan,
the Compensation Committee may grant an Award of SARs that entitle a Participant
to receive the excess (if any) of the Fair Market Value of a share of common
stock on the date of exercise of the SAR, over the Fair Market Value of a share
of common stock on the date of grant of the SAR (“Spread”). The
Spread may only be paid in shares having a Fair Market Value on the date of
payment equal to the Spread. The Compensation Committee may establish
procedures for exercise and restrictions regarding the dates on which SARs may
be exercised, and subject to the other provisions of the 2005 Plan, a SAR shall
not be exercisable before the first anniversary date of the date of
grant.
Stock Grants,
Restricted Stock Grants, and Restricted Unit Grants. The Compensation
Committee may in its discretion grant shares of common stock to a Participant
with or without restrictions, vesting requirements or other
conditions. A Restricted Stock Grant is an Award of shares of the
Company’s common stock that does not vest until certain conditions established
by the Compensation Committee have been satisfied. Restricted Awards must
provide for vesting of such Awards over at least a three-year period, unless
specifically determined otherwise by the Compensation Committee, or a one-year
period if the Restricted Award is performance-based (“Restriction
Period”). A Restricted Unit Grant is an Award of “units” subject to
similar vesting conditions, each unit having a value equal either to a share of
common stock or the amount by which a share of common stock appreciates in value
between the date of grant and the date at which any restrictions
lapse. During the Restriction Period, a Participant may vote and
receive dividends on the shares of common stock awarded pursuant to a Restricted
Stock Grant, but may not sell, assign, transfer, pledge or otherwise encumber
such shares. During the restricted period, the certificates
representing Restricted Awards will bear a restrictive legend and will be held
by the Company, or will be recorded on the books of the Company’s stock transfer
agent, but not issued to the Participant until the restrictions on the shares
covered by the Restricted Award lapse. When the Restriction Period
expires or the restriction with respect to installments of shares lapses,
provided that federal income tax withholding is provided for, the Participant is
entitled to receive (i) with respect to a Restricted Stock Grant, shares of
common stock free and clear of restrictions on sale, assignment, transfer,
pledge, or other encumbrances, or (ii) with respect to a Restricted Unit Grant,
payment for the value of the units.
Restricted Awards
for Non-Employee Directors. Under the 2005 Plan,
non-employee directors can only receive Restricted Awards described in this
paragraph. Under the 2005 Plan on the date of each annual meeting of
shareholders, each non-employee director will receive a Restricted Award
consisting of that number of shares of Company common stock determined by
dividing $120,000 by the closing price of a share of common stock on the date of
the Award, payable only in installments as described below. The
service restrictions on non-employee directors’ Restricted Awards shall lapse on
the date of the next annual meeting of shareholders following the grant date,
and each Restricted Award shall vest ratably in three equal installments,
one-third on the date of each of the three successive annual meetings of
shareholders following the grant date; provided that following the date of such
initial lapse of restrictions, if a non-employee director’s service as a
director terminates and the non-employee director is in good standing as
determined in the sole discretion of the Board of Directors, then the Restricted
Award of that non-employee director shall vest immediately. Prior to
the date of such initial lapse of restrictions, no vesting shall occur upon a
non-employee director’s termination of service (other than by death or
disability, in which cases all Restricted Awards shall vest
immediately).
Performance Bonus
Awards. The
Compensation Committee, in its sole discretion, may award Participants a
Performance Bonus Award in the form of cash or shares of common stock, or a
combination thereof, on such terms and conditions as the Compensation Committee
designates. Performance Bonus Awards will be based upon evaluation of a variety
of performance factors. Performance factors are to be determined
prior to the period of performance, which shall be not less than one year, and
may include (i) increases in earnings, earnings per share, EBITDA, revenues,
cash flow, return on equity, or total shareholder return, (ii) year-end volumes
of proved oil and gas reserves and/or year-end probable reserves, (iii) yearly
oil and gas production, (iv) share price performance, (v) relative
technical, commercial and leadership attributes, or (vi) similar performance
factors. If a Performance Bonus Award is paid in whole or in part in
shares of common stock, the number of shares shall be determined based upon the
NYSE closing price-based Fair Market Value of such
shares. Performance Bonus Awards are subject to terms and conditions
set by the Committee in its sole discretion.
32
Under
current U.S. federal tax law, the following are the U.S. federal income tax
consequences generally arising with respect to Awards made under the 2005
Plan.
Exercise
of Incentive Stock Option and Subsequent Sale of Shares
A
Participant who is granted an ISO does not realize taxable income at the time of
the grant or at the time of exercise. If the Participant makes no
disposition of shares acquired pursuant to the exercise of an ISO before the
later of two years from the date of grant or one year from such date of exercise
(“statutory holding period”), any gain (or loss) realized on such disposition
will be recognized as a long-term capital gain (or loss). Under such
circumstances, the Company will not be entitled to any deduction for federal
income tax purposes.
However,
if the Participant disposes of the shares during the statutory holding period,
that will be considered a disqualifying disposition. Provided the amount
realized in the disqualifying disposition exceeds the exercise price, the
ordinary income a Participant shall recognize in the year of a disqualifying
disposition will be the lesser of (i) the excess of the amount realized over the
exercise price, or (ii) the excess of the fair market value of the shares at the
time of the exercise over the exercise price; and the Company generally will be
entitled to a deduction for the amount of ordinary income recognized by such
Participant. The ordinary income recognized by the Participant is not
considered wages and the Company is not required to withhold, or pay employment
taxes, on such ordinary income. Finally, in addition to the ordinary
income described above, the Participant shall recognize capital gain on the
disqualifying disposition in the amount, if any, by which the amount realized in
the disqualifying disposition exceeds the fair market value of the shares at the
time of the exercise, which shall be long-term or short-term capital gain
depending on the Participant’s post-exercise holding period for such
shares.
To the
extent a Participant pays all or part of the exercise price of an ISO by
tendering previously acquired common stock owned by such Participant, the tax
consequences described above generally will apply to such
exchange. However, if a Participant exercises an ISO by tendering
shares previously acquired on the exercise of an ISO, a disqualifying
disposition will occur if the applicable holding period requirements described
above have not been satisfied with respect to the surrendered
stock. The consequence of such a disqualifying disposition is that
the Participant may recognize ordinary income at that time.
Notwithstanding
the favorable tax treatment of ISOs for regular tax purposes, as described
above, for alternative minimum tax purposes, an ISO is generally treated in the
same manner as a NSO. Accordingly, a Participant must generally
include as alternative minimum taxable income for the year in which an ISO is
exercised, the excess of the fair market value of the shares acquired on the
date of exercise over the exercise price of such shares. However, to
the extent a Participant disposes of such shares in the same calendar year as
the exercise, only an amount equal to the Participant’s ordinary income for
regular tax purposes with respect to such disqualifying disposition will be
recognized for the Participant's calculation of alternative minimum taxable
income in such calendar year.
Exercise
of Nonqualified Stock Option and Subsequent Sale of Shares
A
Participant who is granted a NSO does not realize taxable income at the time of
the grant, but does recognize ordinary income at the time of exercise in an
amount equal to the excess of the fair market value of the shares acquired on
the date of exercise over the exercise price of such shares; and the Company
generally will be entitled to a deduction for the amount of ordinary income
recognized by such Participant. The ordinary income recognized by the
Participant is considered supplemental wages and the Company is required to
withhold, and the Company and the Participant are required to pay, applicable
employment taxes on such ordinary income.
Upon the
subsequent disposition of shares acquired through the exercise of a NSO, any
gain (or loss) realized on such disposition will be recognized as a long-term or
short-term capital gain (or loss) depending on the Participant’s post-exercise
holding period for such shares. The tax basis in the shares acquired
at exercise of the NSO used to determine the amount of any capital gain or loss
on a future taxable disposition of such shares is the fair market value of the
shares on the date of exercise.
To the
extent a Participant pays all or part of the exercise price of a NSO by
tendering shares of common stock previously owned by the Participant, the tax
consequences described above generally would apply. However, the
number of shares received upon exercise of such option equal to the number of
shares surrendered in payment of the exercise price will have the same basis and
tax holding period as the shares surrendered. The additional
shares
33
received
upon such exercise will have a tax basis equal to the amount of ordinary income
recognized on such exercise and a holding period that commences on the date of
the exercise.
Lapse
of Restrictions on Restricted Stock and Subsequent Sale of Shares
When the
restrictions on a Restricted Award lapse, the Participant will recognize
ordinary income in an amount equal to the excess of the fair market value of the
shares at such time over the amount, if any, paid for such shares, and the
Company generally will be entitled to a deduction for the amount of ordinary
income recognized by such Participant. The ordinary income recognized
by the Participant is considered supplemental wages, and the Company is required
to withhold, and the Company and the Participant are required to pay, applicable
employment taxes on such ordinary income. Upon the subsequent
disposition of the formerly restricted shares, any gain (or loss) realized on
such disposition will be recognized as a long-term or short-term capital gain
(or loss) depending on the Participant’s holding period for such shares after
their restrictions lapse.
Under
Section 83(b) of the Code, a Participant who receives an Award of restricted
stock may elect to recognize ordinary income for the taxable year in which the
restricted stock was received equal to the excess of the fair market value of
the restricted stock on the date of the grant, determined without regard to the
restrictions, over the amount (if any) paid for the restricted stock. Any gain
(or loss) recognized upon a subsequent disposition of the shares will be capital
gain (or loss) and will be long-term or short-term depending on the post-grant
holding period of such shares. The amount recognized as taxable
income is added to any amount paid for the shares to determine their tax
basis. If, after making the election, a Participant forfeits any
shares of restricted stock, such Participant is only entitled to a tax deduction
with respect to the consideration (if any) paid for the restricted stock, not
the amount elected to be included as income at the time of grant.
Stock
Appreciation Rights and Performance Awards
A
Participant who is granted a SAR does not realize taxable income at the time of
the grant, but does recognize ordinary income at the time of exercise of the SAR
in an amount equal to the excess of the fair market value of the shares (on the
date of exercise) with respect to which the SAR is exercised, over the grant
price of such shares, and the Company generally will be entitled to a deduction
for the amount of ordinary income recognized by the such
Participant.
A Named
Executive Officer who has been awarded a Performance Bonus Award does not
realize taxable income at the time of the grant, but does recognize ordinary
income at the time the Award is paid equal to the amount of cash (if any) paid
and the fair market value of shares (if any) delivered, and the Company
generally will be entitled to a deduction for the amount of ordinary income
recognized by the such Participant.
The
ordinary income recognized by a Participant in connection with a SAR or
Performance Bonus Award is considered supplemental wages and the Company is
required to withhold, and the Company and the Participant are required to pay,
applicable employment taxes on such ordinary income.
To the
extent, if any, that shares are delivered to a Participant in satisfaction of
either the exercise of a SAR, or the payment of a Performance Bonus Award, upon
the subsequent disposition of such shares any gain (or loss) realized will be
recognized as a long-term, or short-term, capital gain (or loss) depending on
the participant’s post-delivery holding period for such shares.
Code
Section 162(m)
Section
162(m) of the Code generally disallows a tax deduction to public companies for
compensation in excess of $1 million paid to the Company’s chief executive
officer or any of the three other most highly compensated Officers, not
including the chief financial officer. Certain performance-based
compensation is specifically exempt from the deduction limit if it otherwise
meets the requirements of Section 162(m). Stock options and SARs
granted under the 2005 Plan qualify as “performance-based
compensation.” Other awards will be “performance-based compensation”
if they are so designated and if their grant, vesting or settlement is subject
to the performance criteria described above meeting specified performance
criteria and complying with Section 162(m) regulations and
rules. Restricted stock awards that vest solely upon the passage of
time do not qualify as “performance-based compensation.”
34
Code
Section 409A
To the
extent that any award under the 2005 Plan is or may be considered to involve a
nonqualified deferred compensation plan or deferral subject to Code Section
409A, the Company intends that the terms and administration of such Award shall
comply with the provisions of such section, applicable IRS guidance and good
faith reasonable interpretations thereof. The Compensation Committee
intends to amend the provisions of the 2005 Plan in order to comply with Section
409A requirements, all as specifically authorized in the 2005 Plan and make
other technical amendments that do not require shareholder
approval.
The
foregoing is only a summary of the effect of U.S. federal income taxation upon
employees and the Company with respect to the grant and exercise of stock
options, SARs, restricted stock and performance awards under the 2005
Plan. It is not intended as tax advice to employees participating in
the 2005 Plan, who should consult their own tax advisors. It does not
purport to be a complete description of the tax consequences under all
circumstances, nor does it describe the tax laws of any municipality, state or
foreign country in which the employee’s income or gain may be
taxable.
The
following table provides information as of December 31, 2007, regarding shares
outstanding and available for issuance under the Company’s existing stock
compensation and employee stock purchase plans:
|
(a)
|
(b)
|
(c)
|
||||||||
|
Plan
Category
|
Number
of Securities
to
be Issued Upon
Exercise
of
Outstanding
Options,
Warrants
and Rights
|
Weighted-Average
Exercise
Price of
Outstanding
Options,
Warrants
And
Rights
|
Number
of Securities
Remaining
Available for
Future
Issuance Under
Equity
Compensation
Plans
(excluding
securities
reflected in
column (a))
|
|||||||
|
Equity
compensation plans approved by security holders
|
1,449,240
|
$
|
28.47
|
772,824
|
||||||
|
Equity
compensation plans not approved by security holders
|
—
|
$
|
—
|
—
|
||||||
|
Total
|
1,449,240
|
$
|
28.47
|
772,824
|
(1)
|
|||||
|
(1)
|
Includes
58,721 shares remaining available for issuance under the Swift Energy
Company Employee Stock Purchase Plan and 714,103 under the 2005
Plan.
|
|
The
affirmative vote of the holders of a majority of the shares entitled to vote on,
and that voted for or against or expressly abstained with respect to, Proposal
2, is required to approve the amendment of the 2005 Plan to make additional
shares available for Awards under the 2005 Plan. Unless otherwise
directed by a proxy marked to the contrary, it is the intention of the persons
designated on the proxy card to vote the proxies “FOR” the proposed amendment of
the 2005 Plan. The Board believes that such approval is essential to
enable the Company to continue to attract and retain qualified employees and
directors. The Board supports management’s belief that the approval
of the proposed amendment to make up to 800,000 shares of the Company’s common
stock available for Awards under the 2005 Plan will contribute to the
continuation of the Company’s history of employee and director longevity, as the
Company’s stock compensation plans have done in the past.
|
The
Board of Directors unanimously recommends that shareholders vote “FOR”
amending the Swift Energy Company 2005 Stock Compensation Plan to increase
the number of shares available for Awards under the plan by up to 800,000
shares of the Company’s common
stock.
|
35
The
purpose of the Swift Energy Company Employee Stock Purchase Plan (the “Purchase
Plan”) is to provide our employees with the opportunity to acquire a proprietary
interest in Swift Energy Company, thereby increasing their interest in Swift
Energy, and encouraging them to remain employed with the Company. The
Board has authorized, subject to shareholder approval, an amendment to the
Purchase Plan, which increases the number of shares that may be issued under the
Purchase Plan by up to 200,000 shares.
As
originally adopted in 1993, a maximum of 500,000 shares of common stock have
been reserved for the Purchase Plan, and no additional shares have been added
since the Purchase Plan’s inception. Without shareholder approval of
the proposed increase, there are 58,721 shares remaining for future grants under
the Purchase Plan. If this proposal is approved, the maximum shares
available for issuance under the Purchase Plan will increase to 700,000, leaving
258,721 shares available for future issuance. Without shareholder
approval, once the 58,721 remaining shares are issued, the Purchase Plan will be
terminated.
The
Purchase Plan is one of the many benefits offered to our employees and is used
as a retention tool by the Company. More specifically, we use the
Purchase Plan as an opportunity to align our employees’ interest with those of
our shareholders. As of February 29, 2008, the number of
participating employees increased to 184, approximately 50% of our total
employees. Our Board is proposing to increase the number of shares
available under the Purchase Plan to ensure that our employees continue to have
the opportunity to acquire ownership in Swift Energy.
The
Purchase Plan provides all employees of the Company and its subsidiaries, except
officers, the opportunity to acquire Company common stock at a 15% discount
through payroll deductions, and qualifies as an “employee stock purchase plan”
under Section 423 of the Internal Revenue Code.
Eligibility. All
employees of the Company and its subsidiaries, except officers, who have
attained the age of 21 and are employees as of the first business day of the
plan year are eligible to participate in the Purchase Plan. On
December 31, 2007, 365 employees were eligible to participate in the Purchase
Plan.
Administration of the Purchase
Plan. The Purchase Plan is administered by the Purchase Plan’s
Administration Committee. The Administration Committee is comprised
of not less than two members of the Compensation Committee.
Plan Year. The plan
year is a twelve-month calendar year, beginning on January 1 and ending on
December 31 of each year.
Purchase Plan
Provisions. Each plan year, unless the Board determines
otherwise, the Compensation Committee will offer to each eligible employee the
opportunity to purchase Company common stock by submitting written notice of his
or her election to purchase the common stock and a payroll deduction
authorization. By making a timely election to participate prior to
the start of a plan year, including stating the percentage of compensation to be
withheld, each eligible employee will be entitled to purchase that number of
full shares which can be purchased at the exercise price with the total amount
withheld. An employee may authorize a payroll deduction of up to 10%
of his base salary during the plan year. The employee may elect to
stop his or her payroll deductions, or decrease payroll deductions, for a given
year by providing the appropriate prior written notice. Any amounts
remaining credited to an employee’s payroll deduction account on the last day of
the plan year, after deducting the amount for common stock purchased by the
Employee, shall be refunded in cash. The exercise price for each
offering will be 85% of the lower of the fair market value of Company common
stock at the beginning of the plan year or the fair market value of common stock
on the last day of the plan year. Fair market value is defined as the
closing price of Company common stock as quoted on the NYSE.
If this
proposal is not approved, no more than 500,000 shares of common stock may be
sold pursuant to the Purchase Plan, subject to appropriate adjustments in the
event of reorganization, mergers, recapitalizations, reclassifications, stock
splits or other similar changes in the Company’s capitalization. The
Purchase Plan includes provisions governing the effects of a merger,
consolidation or other reorganization of the Company, including a provision that
permits the Company to allow for the preservation of participants’ rights in the
event of such a reorganization of the Company.
36
No
employee will be given the opportunity to purchase Company common stock under
the Purchase Plan if the employee, immediately after the opportunity is granted,
owns common stock possessing 5% or more of the total combined voting power or
value of all classes of Company stock. No employee will be given the
opportunity to purchase Company common stock which permits him or her to accrue
rights to purchase common stock under the Purchase Plan (and other stock
purchase plans, if others should be established) at a rate which exceeds $25,000
(or such other maximum as may be prescribed from time to time under the Internal
Revenue Code) of fair market value of such stock (determined as of the first day
of the plan year) for each calendar year in which the option is outstanding at
any time, in accordance with the provisions of Section 423 of the Internal
Revenue Code.
If a
participating employee’s employment with the Company is terminated for any
reason prior to expiration of a plan year, his or her participation will
terminate, and any balance in his payroll deduction account will be paid in
cash; however, a retired employee, and one whose employment is terminated due to
disability, may continue to participate for up to 90 days after termination of
employment. In the event of a participating employee’s death, his or
her heirs, legatees, distributees or personal representatives may complete
paying for the common stock he or she agreed to purchase by making a cash
contribution to his or her payroll deduction account during the period beginning
on the date of the employee’s death and ending 90 days following the employee’s
death. No common stock will be purchasable under any conditions more
than 27 months from the date it first became purchasable under the Purchase
Plan. No rights granted under the Plan may be transferred except by
will or the laws of descent and distribution and, during the lifetime of the
participant to whom granted, may be exercised only by such
participant.
All
shares purchased under a purchase opportunity will be paid for in full at the
time the opportunity is exercised by transfer of the purchase price from the
employee’s payroll deduction account.
If this
proposal is approved, the Company intends to register with the SEC the
additional shares of Swift Energy common stock for offer and sale to employees
under the Purchase Plan and for resale by the employees after
acquisition.
Amendments. The
Company, acting through its Board, is authorized to alter, amend, suspend or
terminate the Purchase Plan, except in respects which would retroactively affect
or impair the rights theretofore granted of any participant. No
amendment to the number of shares which may be sold under the Purchase Plan, or
which changes the classification of employees eligible to participate, will be
effective unless the amendment is approved by the Company’s shareholders within
twelve months of the adoption of the amendment by the Board.
The
affirmative vote of the holders of a majority of the shares entitled to vote on,
and that voted for or against or expressly abstained with respect to Proposal 3,
is required to approve the amendment of the Purchase Plan to make additional
shares available for issuance under the Purchase Plan. Unless
otherwise directed by a proxy marked to the contrary, it is the intention of the
persons designated on the proxy card to vote the proxies “FOR” the proposed
amendment of the Purchase Plan. The Board believes that such approval
is essential to enable the Company to continue to attract and retain qualified
employees. The Board supports management’s belief that the approval
of the proposed amendment to make up to 200,000 additional shares of the
Company’s common stock available for issuance under the Purchase Plan will
contribute to the continuation of the Company’s history of employee
longevity.
|
The
Board of Directors unanimously recommends that shareholders vote “FOR”
amending the Swift Energy Company Employee Stock Purchase Plan to increase
the number of shares available for issuance under the plan by up to
200,000 shares of the Company’s common
stock.
|
37
The Audit
Committee of the Board of Directors has appointed Ernst & Young LLP as the
independent registered public accounting firm for the Company to audit its
consolidated financial statements and internal control over financial reporting
for 2008. See “Audit Committee Disclosure” above for more information
related to Ernst & Young LLP.
Stockholder
approval or ratification is not required for the selection of Ernst & Young
LLP, since the Audit Committee of the Board of Directors has the responsibility
for selecting the Company’s independent auditor. However, the selection is being
submitted for ratification at the Annual Meeting as a matter of good corporate
practice. No determination has been made as to what action the Board of
Directors would take if shareholders do not approve the appointment, but the
Audit Committee may reconsider whether or not to retain the firm. Even if the
selection is ratified, the Audit Committee, in its discretion, may direct the
selection of a different independent registered public accounting firm at any
time during the year if the Audit Committee determines that such a change would
be in the Company’s and its shareholders’ best interests.
|
The
Board of Directors unanimously recommends that shareholders vote “FOR” the
ratification of the selection of Ernst & Young LLP as the Company’s
independent auditor.
|
38
The Audit
Committee assists the Board in fulfilling its responsibilities with respect to
oversight in monitoring (i) the integrity of the financial statements of the
Company; (ii) Swift Energy’s compliance with legal and regulatory requirements;
(iii) the independent auditor’s selection, qualifications and independence; and
(iv) the performance of Swift Energy’s internal audit function and independent
auditor. The committee is required to be comprised of three or more non-employee
directors, each of whom is determined by the Board to be “independent” under the
rules promulgated by the SEC under the Securities Exchange Act of 1934 (the
“Exchange Act”), and meets the financial literacy and experience requirements
under the rules or listing standards established by the NYSE, all as may be
amended from time to time. In addition, at least one member of the committee
must satisfy the definition of audit committee financial expert as such term may
be defined from time to time under the rules promulgated by the SEC. The Board
has determined that Messrs. Montgomery and Smith and Ms. Cannon
qualify as audit committee financial experts and that each member of the Audit
Committee is independent as defined in the NYSE listing standards and the rules
of the SEC. A report of the Audit Committee appears later in this
proxy statement. The Audit Committee is comprised of
Messrs. Montgomery (Chairman) and Smith and Ms. Cannon.
The
charter of the Audit Committee provides that the Audit Committee shall approve,
in its sole discretion, any professional services to be provided by the
Company’s independent auditor, including audit services and significant
non-audit services (significant being defined for these purposes as non-audit
services for which fees in the aggregate equal 5% or more of the base annual
audit fee paid by the Company to its independent auditor), before such services
are rendered, and consider the possible effect of the performance of such latter
services on the independence of the auditor. The Audit Committee may delegate
preapproval authority to a member of the Audit Committee. The decisions of any
Audit Committee member to whom preapproval authority is delegated must be
presented to the full Audit Committee at its next scheduled meeting. All of the
services described above for 2007 and 2006 were preapproved by the Audit
Committee before Ernst & Young LLP was engaged to render the
services.
Ernst
& Young LLP, certified public accountants, began serving as the Company’s
independent auditor in 2002. The Audit Committee, with ratification
of the shareholders, engaged Ernst & Young LLP to perform an annual audit of
the Company’s financial statements for the fiscal year ended December 31,
2007. A representative from Ernst & Young LLP will be present at
this year’s Annual Meeting. Such representative will have the opportunity to
make a statement if he or she desires to do so and is expected to be available
to respond to appropriate questions.
The
following table presents fees and expenses billed by Ernst & Young LLP for
its audit of the Company’s annual consolidated financial statements and for its
review of the financial statements included in the Company’s Quarterly Reports
on Form 10-Q for 2007 and 2006, and for its audit of internal control over
financial reporting for 2007 and 2006, and for other services provided by Ernst
& Young LLP.
|
2007
|
2006
|
|||||||
|
Audit
Fees
|
$ | 1,850,600 | $ | 1,663,900 | ||||
|
Audit-Related
Fees
|
16,000 | 0 | ||||||
|
Tax
Fees
|
452,260 | 193,375 | ||||||
|
All
Other Fees
|
0 | 0 | ||||||
|
Totals
|
$ | 2,318,860 | $ | 1,857,275 | ||||
The tax
services provided in 2006 and 2007 generally consisted of compliance, tax advice
and tax planning services. The tax planning services generally consisted of
U.S., federal, state, local and international tax planning, compliance and
advice, and expatriate tax services.
39
In
connection with the financial statements for the fiscal year ended December 31,
2007, the Audit Committee has:
|
|
•
|
reviewed
and discussed the audited financial statements with
management;
|
|
|
•
|
discussed
with Ernst & Young LLP, the Company’s independent registered public
accounting firm (the “Auditor”), the matters required to be discussed by
the Statement on Auditing Standards No. 61, as amended;
and
|
|
|
•
|
received
and reviewed the written disclosure and the letter from the Auditor
required by Independence Standard No. 1, Independence Discussions with
Audit Committee, as amended, by the Independence Standard Board, and have
discussed with the auditor, the auditor’s
independence.
|
Based on
the reviews and discussion referred to above, we have recommended to the Board
of Directors that the Company’s audited financial statements be included in the
Annual Report on Form 10-K for the year ended December 31, 2007, filed with the
Securities and Exchange Commission.
|
AUDIT
COMMITTEE
Henry
C. Montgomery (Chairman)
Deanna
L. Cannon
Clyde
W. Smith, Jr.
|
40
Section
16(a) of the Exchange Act requires the Company’s directors, executive officers,
and persons who own more than 10% of the Company’s common stock to file reports
with the SEC regarding their ownership of, and transactions in, the Company’s
common stock. SEC regulations require Swift Energy to identify anyone who filed
a required report late during the most recent fiscal year. Based on a review of
the Forms 3 and 4 filed during the 2007 fiscal year and written certifications
provided to the Company, the Company believes that all of these reporting
persons timely complied with their filing requirements during 2007.
Pursuant
to various rules promulgated by the SEC, a shareholder who seeks to include a
proposal in the Company’s proxy materials for the annual meeting of the
shareholders of the Company to be held in 2009 must timely submit such proposal
in accordance with SEC Rule 14a-8 to the Company, addressed to the Secretary,
Swift Energy Company, 16825 Northchase Drive, Suite 400, Houston, Texas 77060,
no later than December 8, 2008. Further, a shareholder may not submit
a matter for consideration at the 2009 Annual Meeting unless the shareholder
shall have timely complied with the requirements in the Company’s Bylaws. The
Bylaws state that in order for business to be properly brought before an annual
meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the Secretary of the Company. To be timely, a shareholder’s notice
must be delivered to or mailed and received at the principal executive offices
of the Company not less than 60 days or more than 90 days prior to the first
anniversary of the preceding year’s annual meeting. A notice given pursuant to
this advance notice Bylaw will not be timely with respect to the Company’s 2009
annual meeting unless duly given by no later than March 13, 2009, and no
earlier than February 11, 2009.
The
Corporate Governance Committee will consider shareholder recommendations of
individuals for membership on the Board upon written request by a shareholder in
accordance with the procedures for submitting shareholder proposals. For more
information on shareholders’ nomination of directors refer to “Board of
Directors—Nomination of Directors” in this proxy statement.
With
respect to business to be brought before the 2008 Annual Meeting, the Company
has not received any notices, proposals, or nominees from shareholders that the
Company is required to include in this proxy statement.
Typically
the Lead Director presides at executive sessions of the independent directors of
the Board of Directors. Any communications that shareholders or other
interested parties may wish to send to the Board of Directors may be directly
sent to the Lead Director at the following address:
|
Lead
Director
Swift
Energy Company
c/o
CCI
P.O.
Box 561915
Charlotte,
NC 28256
|
Historically,
the Company’s annual meeting of its Board of Directors was held to coincide with
the annual meeting of its shareholders and a majority of the directors would
attend the annual meeting of shareholders; however, with the increased
responsibilities and time requirements in connection with the Board meeting, the
Board’s annual meeting is now held one week before the shareholders’ annual
meeting. Therefore, the Company does not have a policy with regard to Board
members’ attendance at its annual meetings of shareholders.
Although some of the members of the Board will attend the 2008 Annual
Meeting, it is not expected that a majority will be in attendance. Those in
attendance will be available to address shareholder questions. Three
directors attended the 2007 Annual Meeting.
41
The
statements contained in this proxy statement that are not historical are
“forward-looking statements,” as that term is defined in Section 21E of the
Exchange Act, that involve a number of risks and uncertainties. Forward-looking
statements use forward-looking terms such as “believe,” “expect,” “may,”
“intend,” “will,” “project,” “budget,” “should,” or “anticipate” or other
similar words. These statements discuss “forward-looking” information such as
future net revenues from production and estimates of oil and gas reserves. These
forward-looking statements are based on assumptions that the Company believes
are reasonable, but they are open to a wide range of uncertainties and business
risks, including the following:
|
|
•
|
fluctuations
of the prices received or demand for crude oil and natural gas over
time;
|
|
|
•
|
interruptions
of operations and damages due to hurricanes and tropical
storms;
|
|
|
•
|
geopolitical
conditions or hostilities;
|
|
|
•
|
uncertainty
of reserves estimates;
|
|
|
•
|
operating
hazards;
|
|
|
•
|
unexpected
substantial variances in capital
requirements;
|
|
|
•
|
currency
rate fluctuations with regard to the New Zealand
dollar;
|
|
|
•
|
environmental
matters; and
|
|
|
•
|
general
economic conditions.
|
Other
factors that could cause actual results to differ materially from those
anticipated are discussed in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2007. The Company will not update these forward-looking
statements unless required to do so by applicable law.
Upon
written request, Swift Energy will provide any shareholder of the Company, at no
charge, a copy of the Company’s Annual Report on Form 10-K for 2007, as filed
with the SEC, including the financial statements and schedules, but without
exhibits. Direct requests should be made by mail to Swift Energy
Company, Director of Corporate Development and Investor Relations, 16825
Northchase Drive, Suite 400, Houston, Texas 77060; by telephone at
(281) 874-2700 or (800) 777-2412; or by email to
info@swiftenergy.com.
The
information contained in this proxy statement in the sections entitled “Proposal
1—Election of Directors,” “Proposal 2—To Amend the Swift Energy Company 2005
Stock Compensation Plan to Increase the Number of Shares of the Company’s Common
Stock Available for Awards under the Plan by Up to 800,000 Additional Shares,”
“Proposal 3—To Amend the Swift Energy Company Employee Stock Purchase Plan to
Increase the Number of Shares of the Company’s Common Stock Available for
Issuance under the Plan by Up to 200,000 Additional Shares,” “Proposal 4—To
Ratify the Selection of Ernst & Young LLP as Swift Energy Company’s
Independent Auditor for the Fiscal Year Ending December 31, 2008,” “Compensation
Committee Report,” and “Audit Committee Report” shall not be deemed incorporated
by reference by any general statement incorporating by reference any information
contained in this proxy statement into any filing under the Securities Act or
the Exchange Act, except to the extent that the Company specifically
incorporates by reference the information contained in such sections, and shall
not otherwise be deemed filed under the Securities Act or the Exchange
Act.
|
By
Order of the Board of Directors,
Bruce
H. Vincent
President and Secretary
|
|
|
Houston,
Texas
April
7, 2008
|
42
SWIFT
ENERGY COMPANY
The
Board of Directors Solicits This Proxy for the
Annual
Meeting of Shareholders to be held on May 13, 2008
The
undersigned hereby constitutes and appoints Terry E. Swift, Bruce H. Vincent and
Alton D. Heckaman, Jr., or any one of them, with full power of substitution and
revocation of each, the true and lawful attorneys and proxies of the undersigned
at the Annual Meeting of Shareholders (the “Meeting”) of SWIFT ENERGY COMPANY
(the “Company”) to be held on Tuesday, May 13, 2008, at 4:00 p.m. Houston time,
at the Wyndham Greenspoint Hotel, 12400 Greenspoint Drive, Houston, Texas,
or any adjournments or postponements thereof, and to vote the shares of common
stock of the Company standing in the name of the undersigned on the books of the
Company (or which the undersigned may be entitled to vote) on the record date
for the Meeting with all powers the undersigned would possess if personally
present at the Meeting.
(Continued
and to be SIGNED on REVERSE side)
ANNUAL
MEETING OF SHAREHOLDERS OF
SWIFT
ENERGY COMPANY
MAY
13, 2008
|
PROXY
VOTING INSTRUCTIONS
|
|
MAIL –
Date, sign and mail your proxy card in the envelope provided as
soon as possible.
|
COMPANY
NUMBER
|
||
|
- OR
-
|
ACCOUNT
NUMBER
|
||
|
INTERNET –
Access www.voteproxy.com
and follow the on-screen instructions. Have your proxy card
available when you access the web page.
|
|||
|
|
|||
|
- OR
-
|
|||
|
IN
PERSON –
You may vote your shares in person by attending the Annual
Meeting.
|
|
You may enter
your voting instructions at www.voteproxy.com up until 11:59 Eastern Time
the day before the cut-off or meeting
date.
|
Please detach along perforated line and mail in
the envelope provided.
The
Board of Directors recommends a vote “FOR” Proposals 1, 2, 3 and 4.
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
|
Proposal
1. Election
of Directors:
Class III Nominees (Term to expire
2011)
|
FOR
|
AGAINST
|
ABSTAIN
|
|||||||||||||||
|
PROPOSAL 2:
Approval to amend the Swift Energy Company 2005 Stock Compensation
Plan to increase the number of shares available for
awards.
|
o
|
o
|
o
|
|||||||||||||||
|
NOMINEES:
|
||||||||||||||||||
|
o
|
FOR ALL
NOMINEES
|
O
|
Deanna L.
Cannon
|
|||||||||||||||
|
O
|
Douglas J.
Lanier
|
PROPOSAL 3:
Approval to amend the Swift Energy Company Employee Stock Purchase
Plan to increase the number of shares available for
issuance.
|
o
|
o
|
o
|
|||||||||||||
|
o
|
WITHHOLD
AUTHORITY
FOR ALL
NOMINEES
|
O
|
Bruce H.
Vincent
|
|||||||||||||||
|
o
|
FOR ALL
EXCEPT
(See
instructions below)
|
PROPOSAL
4: Ratification of selection of Ernst & Young LLP as
Swift Energy Company’s Independent Auditor for the fiscal year ending
December 31, 2008.
|
o
|
o
|
o
|
|||||||||||||
|
This
proxy will be voted in accordance with the specifications made
hereon. If NO specification is made, the shares will be voted
“FOR” Proposals 1, 2 3 and 4.
|
||||||||||||||||||
|
The
undersigned hereby acknowledges receipt of the Notice of 2008 Annual
Meeting of Shareholders, the Proxy Statement and the 2007 Annual Report to
Shareholders furnished herewith.
|
||||||||||||||||||
|
INSTRUCTIONS:To
withhold authority to vote for any individual nominee(s), mark “FOR
ALL EXCEPT” and fill in the circle next to each nominee you with to
withhold, as shown here: ●
|
PLEASE
SIGN, DATE AND RETURN IN THE ENCLOSED POSTATED PAID, PRE-ADDRESSED
ENVELOPE.
|
|||||||||||||||||
|
|
||||||||||||||||||
|
To change the
address on your account, please check the box at right and indicate your
new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
|
£
o
|
|||||||||||||||||
|
Signature of
Shareholder
|
Date:
|
Signature of
Shareholder
|
Date:
|
|||||||||||||||
|
Note:Please
sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder must sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership
name by authorized person.
|
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