===============================================================================
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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
CABOT OIL & GAS CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
March 27, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Cabot Oil & Gas Corporation to be held on Thursday, May 2, 2002, at 10:00 a.m.,
local time, at our corporate headquarters, Cabot Oil & Gas Corporation, First
Floor Auditorium, 1200 Enclave Parkway, Houston, Texas.
The attached Notice of Annual Meeting and Proxy Statement cover the formal
business of the meeting. To better acquaint you with the directors, the Proxy
Statement contains biographical information on each nominee and each director
continuing in office.
A report on the operations of the Company and its future plans will be
presented at the meeting. In addition, directors and officers of the Company
will be present to respond to your questions.
Whether or not you plan to attend the Annual Meeting, it is important that
your shares be represented. Please complete, sign, date and return the enclosed
proxy card in the postage-paid envelope provided, or if your proxy card or
voting instructions form so indicates, vote electronically via the Internet or
telephone.
Sincerely,
Ray R. Seegmiller
Chairman of the Board
CABOT OIL & GAS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 2, 2002
The Annual Meeting of Stockholders of Cabot Oil & Gas Corporation (the
"Company"), a Delaware corporation, will be held at the Company's corporate
headquarters, First Floor Auditorium, 1200 Enclave Parkway, Houston, Texas
77077, on Thursday, May 2, 2002, at 10:00 a.m., for the following purposes:
I. To elect three persons to the Board of Directors of the Company.
II. To approve an amendment to the Company's Certificate of Incorporation
to increase the authorized Common Stock of the Company and to
eliminate the Class B Common Stock.
III. To ratify the appointment of the firm of PricewaterhouseCoopers LLP,
independent certified public accountants, as auditors of the Company
for its 2002 fiscal year.
IV. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Only holders of record of the Class A Common Stock at the close of business
on March 14, 2002 are entitled to receive notice of and to vote at the Annual
Meeting. The transfer books of the Company will not be closed.
It is important that your shares be represented and voted at the Annual
Meeting. Stockholders are urged to vote their shares by one of the following
methods whether or not they plan to attend the Annual Meeting:
. vote over the Internet or by telephone using the instructions on the proxy
card, if this option is available to you (please refer to your proxy card
to determine if this option is available to you); or
. complete, sign, date and return the accompanying proxy card in the
enclosed, self-addressed envelope (the self-addressed envelope requires no
postage if mailed in the United States).
You may still vote in person if you do attend the Annual Meeting.
Please exercise your right to vote at your earliest convenient time.
By Order Of The Board of Directors,
Lisa A. Machesney
Corporate Secretary
Houston, Texas
March 27, 2002
CABOT OIL & GAS CORPORATION
1200 Enclave Parkway
Houston, Texas 77077
PROXY STATEMENT
Annual Meeting of Stockholders
To Be Held May 2, 2002
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Cabot Oil & Gas Corporation (the "Company") of proxies
for use at its 2002 Annual Meeting of Stockholders, to be held at the Company's
corporate headquarters, 1200 Enclave Parkway, Houston, Texas, on Thursday, May
2, 2002, at 10:00 a.m., or any adjournment or postponement thereof (the "Annual
Meeting"), for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. You may revoke your proxy at any time prior to its use
by a written communication to Ms. Lisa A. Machesney, Corporate Secretary of the
Company, or by a duly executed proxy bearing a later date.
Stockholders attending the Annual Meeting may vote their shares in person
even though they have already executed a proxy. Properly executed proxies not
revoked will be voted in accordance with the specifications thereon at the
Annual Meeting and at any adjournment thereof. Proxies on which no voting
instructions are indicated will be voted FOR Proposals I, II and III and in the
best judgment of the proxy holders on any other matters that may properly come
before the meeting.
Only holders of record of the Company's Class A Common Stock, par value
$.10 per share ("Common Stock"), as of the close of business on March 14, 2002,
are entitled to vote at the Annual Meeting. As of that date, the Company had
outstanding and entitled to vote 31,605,585 shares of Common Stock. Each share
of Common Stock is entitled to one vote per share. There is no provision for
cumulative voting. A quorum for the consideration of business at the Annual
Meeting consists of a majority of all outstanding shares of stock entitled to
vote at the Annual Meeting. The Proxy Statement and form of Proxy are being
first sent or given to security holders on or about March 27, 2002.
In accordance with Delaware law, a stockholder entitled to vote for the
election of directors can withhold authority to vote for all nominees for
director or can withhold authority to vote for certain nominees for director.
Abstentions and broker non-votes (proxies submitted by brokers that do not
indicate a vote for a proposal because they do not have discretionary voting
authority and have not received instructions as to how to vote on that proposal)
are counted as present in determining whether the quorum requirement is
satisfied. For purposes of determining the outcome of any question as to which
the broker has physically indicated on the proxy that it does not have
discretionary authority to vote, these shares will be treated as not present and
not entitled to vote with respect to that question, even though those shares are
considered entitled to vote for quorum purposes and may be entitled to vote on
other questions. Accordingly, because the vote required for amendment of the
certificate of incorporation is a majority of the outstanding shares,
abstentions and broker non-votes will have the same effect as votes against
adoption. Because the vote required for approval of the other proposals is a
majority of the shares present in person or by proxy at the meeting and entitled
to vote on the proposal, abstentions will have the same effect as votes against
the proposal, but broker non-votes will not affect the outcome of the voting on
those proposals.
PROPOSAL I.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes of directors serving
staggered three-year terms. Dan O. Dinges, Arthur L. Smith and William P.
Vititoe have been nominated for election at the Annual Meeting for terms of
three years, each to hold office until the expiration of his term in 2005 and
until his successor shall have been elected and shall have qualified. Each
nominee is currently a director of the Company. The current three-year term of
Ray R. Seegmiller, Chairman and Chief Executive Officer of the Company, expires
at the Annual Meeting. Mr. Seegmiller has not been nominated for re-election to
the Board of Directors as Mr. Seegmiller will retire as a director and officer
of the Company following conclusion of the Annual Meeting. Mr. Dan O. Dinges,
President and Chief Operating Officer, will assume the position of Chairman of
the Board, Chief Executive Officer and President at that time.
It is the intention of the persons named in the enclosed form of proxy to
vote such proxies FOR the election of Messrs. Dinges, Smith and Vititoe for
terms of three years. If any one of the nominees is not available at the time
of the Annual Meeting to serve, proxies received will be voted for substitute
nominees to be designated by the Board of Directors or, in the event no such
designation is made by the Board, proxies will be voted for a lesser number of
nominees. In no event will the proxies be voted for more than the number of
nominees set forth below.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF MESSRS. DINGES, SMITH AND VITITOE TO THE BOARD OF DIRECTORS.
CERTAIN INFORMATION REGARDING NOMINEES AND DIRECTORS
Set forth below, as of March 1, 2002, for each current director and for
each nominee for election as a director of the Company, is information regarding
age, position(s) with the Company, membership on committees of the Board of
Directors, the period served as a director and term of office, business
experience during at least the past five years, and other directorships
currently held. Messrs. Seegmiller and Siess will retire from the Board
following conclusion of the 2002 Annual Meeting of Stockholders. It is expected
that Mr. Boswell will retire from the Board following conclusion of the 2003
Annual Meeting of Stockholders, in accordance with the Board's mandatory
retirement policy.
[photo appears here] ROBERT F. BAILEY
Age: 69
Director Since: 1994
Committee Membership: Audit, Safety and
Environmental Affairs
Term of Office Expires: 2004
Business Experience:
TransRepublic Resources, Inc. (oil and gas
production) President and Chief Executive Officer-
1992 to present
Alta Energy Corporation
President and Chief Executive Officer-prior
to 1992
[photo appears here] HENRY O. BOSWELL
Age: 72
Director Since: 1991
Committee Membership: Audit (Chairman), Compensation,
Compensation Subcommittee, Executive
Term of Office Expires: 2003
Business Experience:
Retired October 1987
Amoco Production Company
President - 1983 to October 1987
Amoco Corporation
Director - 1983 to October 1987
Amoco Canada Petroleum Ltd.
Chairman of the Board - 1983 to October 1987
Other Directorships:
Rowan Companies, Inc.
2
[photo appears here] JOHN G.L. CABOT
Age: 67
Director Since: 1989
Committee Memberships: Safety and Environmental
Affairs (Chairman), Audit
Term of Office Expires: 2004
Business Experience:
Retired September 1995
Cabot Corporation
Chief Financial Officer - October 1992 to
September 1995
Vice Chairman of the Board - October 1988 to
September 1995
Other Directorships:
Cabot Corporation
Eaton Vance Corp.
[photo appears here] DAN O. DINGES
Age: 48
Director Since: September 2001
Position: President and Chief Operating Officer
Term of Office Expires: 2002 (Nominee for Director)
Business Experience:
Cabot Oil & Gas Corporation
President and Chief Operating Officer -
September 2001 to present
Samedan Oil Corporation (a subsidiary of Noble
Affiliates, Inc.)
Senior Vice President and Division General
Manager, Offshore Division - 1998 to September
2001
Vice President and Division Manager, Offshore
Division - 1989 to 1998
Division Manager, Offshore Division - 1986 to
1989
Division Landman, Offshore Division 1981 to
1986
Mobil Oil Corporation
Land Supervisor - 1978 to 1981
[photo appears here] JAMES G. FLOYD
Age: 65
Director Since: July 2001
Committee Memberships: Nominations, Safety and
Environmental Affairs
Term of Office Expires: 2003
Business Experience:
Retired April 1, 2001
The Houston Exploration Company
President, Chief Executive Officer and
Director - January 1986 to April 2001
Seagull Energy Corporation
Director of Seagull Energy Corporation and
President of subsidiary Seagull Exploration
& Production, Inc. - 1981 to 1986
3
[photo appears here] C. WAYNE NANCE
Age: 70
Director Since: 1992
Committee Memberships: Compensation (Chairman),
Compensation Subcommittee (Chairman), Executive,
Nominations
Term of Office Expires: 2004
Business Experience:
C. Wayne Nance & Associates, Inc. (petroleum
consulting and investments)
President - July 1989 to present
The Mitchell Group (equity investment advising)
Senior Vice President - July 1989 to present
Other Directorships:
Matador Petroleum Corporation
[photo appears here] P. DEXTER PEACOCK
Age: 60
Director Since: 1998
Committee Memberships: Executive (Chairman),
Audit, Safety and Environmental Affairs
Term of Office Expires: 2003
Business Experience:
Andrews & Kurth L.L.P., Houston, Texas
Of Counsel - January 1998 to present
Partner - 1991 to 1997
Managing Partner - 1986 to 1991
[photo appears here] RAY R. SEEGMILLER
Age: 66
Director Since: 1997
Position: Chairman and Chief Executive Officer
Committee Memberships: Executive
Term of Office Expires: 2002
Business Experience:
Cabot Oil & Gas Corporation
Chairman and Chief Executive Officer -
September 2001 - Present
Chairman, President and Chief Executive
Officer - May 1999 to September 2001
President and Chief Executive Officer - May
1998 to May 1999
President and Chief Operating Officer -
September 1997 to May 1998
Executive Vice President and Chief Operating
Officer - March 1997 to September 1997
Vice President, Chief Financial Officer and
Treasurer - August 1995 to March 1997
RCS Enterprises, Inc.
President and Chief Executive Officer - May
1993 to June 1995
Terry Petroleum Company
President and Chief Executive Officer - May
1988 to April 1993
Other Directorships:
Domestic Petroleum Council - Chairman
4
[photo appears here] CHARLES P. SIESS, JR.
Age: 75
Director Since: 1989
Committee Memberships: Nominations (Chairman),
Executive, Safety and Environmental Affairs
Term of Office Expires: 2002
Business Experience:
Retired May 1999
Cabot Oil & Gas Corporation
Chairman of the Board - May 1998 to May 1999
Chairman of the Board and Chief Executive
Officer - September 1997 to May 1998
Chairman of the Board, Chief Executive Officer
and President - May 1995 to September 1997 and
December 1989 to December 1992
Bridas S.A.P.I.C. Oil Exploration
Consultant and Acting General Manager -
January 1993 to January 1994
[photo appears here] ARTHUR L. SMITH
Age: 49
Director Since: 1999
Committee Memberships: Audit, Compensation
Term Office Expires: 2002 (Nominee for Director)
Business Experience:
John S. Herold, Inc. (petroleum research and
consulting)
Chairman and Chief Executive Officer - May
1999 to present
Torch Energy Advisors (energy financial and
operational outsourcing)
Chairman and Chief Executive Officer - June
1998 to November 1998
John S. Herold, Inc.
Chairman and Chief Executive Officer -
December 1984 to May 1998
Other Directorships:
John S. Herold, Inc.
Evergreen Resources Inc.
Plains All American GP, LLC
Houston Producers Forum
5
[photo appears here] WILLIAM P. VITITOE
Age: 63
Director Since: 1994
Committee Memberships: Compensation, Compensation
Subcommittee, Nominations
Term of Office Expires: 2002 (Nominee for
Director)
Business Experience:
Retired May 1998
Consultant to Puget Sound Energy, Inc. -
February 1997 to May 1998
Washington Energy Company
Chairman of the Board, Chief Executive Officer
and President - January 1994 to February 1997
ANR Pipeline Company
President and Chief Executive Officer -
October 1990 to December 1993
Other Directorships:
Aegis Software & Design
Comerica Inc.
Amerisure Inc.
Midwest Independent System Operator, Inc.
6
INFORMATION ON THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held six meetings during the year ended December 31,
2001. All directors attended 75% or more of the meetings of the Board of
Directors and of the committees held while they were members during 2001.
The Board of Directors has six standing committees: the Audit Committee,
the Compensation Committee, the Compensation Subcommittee, the Nominations
Committee, the Safety and Environmental Affairs Committee and the Executive
Committee. Membership on each committee is listed above and below. All
standing committees, with the exception of the Executive Committee, are composed
entirely of non-employee directors.
The Nominations Committee will consider persons for Board of Directors
membership suggested by stockholders. Any stockholder desiring to propose a
nominee to the Board of Directors should submit such proposed nominee for
consideration by the Nominations Committee, including the proposed nominee's
qualifications, to Ms. Lisa A. Machesney, Corporate Secretary, Cabot Oil & Gas
Corporation, 1200 Enclave Parkway, Houston, Texas 77077.
NUMBER OF
COMMITTEE MEMBERS MEETINGS IN 2001 RESPONSIBILITIES
-----------------------------------------------------------------------------------------------------------------------------
AUDIT COMMITTEE Henry O. Boswell * 3 Annually recommends the independent public
Robert F. Bailey accountants to be appointed by the Board of Directors
John G. L. Cabot as auditor of the Company and its subsidiaries; the
P. Dexter Peacock committee also reviews the arrangements for and the
Arthur L. Smith results of the auditor's examination of the Company's
books and records, internal accounting control
procedures, and the internal audit activities and
recommendations. It reports to the Board of
Directors on Audit Committee activities and makes
such investigations as it deems appropriate. For
additional information on the Audit Committee
responsibilities see Audit Committee Report.
-----------------------------------------------------------------------------------------------------------------------------
COMPENSATION COMMITTEE C. Wayne Nance * 3 Determines the salaries, bonuses and other
Henry O. Boswell remuneration of the Company's officers who are also
Arthur L. Smith directors, reviews and approves the salaries, bonuses
William P. Vititoe and other remuneration of all other executive
officers, and determines the aggregate amount of
bonuses and other incentives to be paid pursuant to
the Company's incentive compensation program. It
administers the Company's Annual Target Cash
Incentive Plan, and supplemental retirement plans,
including the adoption of the rules and regulations
therefore and the determination of awards. It also
makes recommendations to the Board of Directors with
respect to the Company's compensation policy.
-----------------------------------------------------------------------------------------------------------------------------
COMPENSATION C. Wayne Nance * 1 Created to ensure each member is an "outside
SUBCOMMITTEE Henry O. Boswell director" as defined for purposes of Section 162(m)
William P. Vititoe of the Internal Revenue Code. It administers the
Company's Second Amended and Restated 1994 Long-Term
Incentive Plan and Incentive Stock Option Plan,
including the adoption of the rules and regulations
therefor and the determination of awards.
-----------------------------------------------------------------------------------------------------------------------------
7
-----------------------------------------------------------------------------------------------------------------------------
NOMINATIONS COMMITTEE Charles P. Siess, Jr. * 1 Considers and proposes nominees for membership on the
James G. Floyd Board of Directors, including proposed nominations
C. Wayne Nance made by stockholders, reviews the composition of the
William P. Vititoe Board of Directors and makes recommendations to the
Board of Directors concerning corporate governance.
-----------------------------------------------------------------------------------------------------------------------------
SAFETY & ENVIRONMENTAL John G.L. Cabot * 2 Reviews the Company's safety and environmental
AFFAIRS COMMITTEE Robert F. Bailey management programs and evaluates major hazard
James G. Floyd analyses. From time to time, it also reviews the
P. Dexter Peacock nature of and extent of Company spending for safety
Charles P. Siess, Jr. and environmental compliance. It further consults
with outside and internal advisors of the Company
regarding the management of the Company's safety and
environmental programs.
-----------------------------------------------------------------------------------------------------------------------------
EXECUTIVE COMMITTEE P. Dexter Peacock * 13 Created on February 22, 2001, to exercise all power
Henry O. Boswell and authority of the Board of Directors, except as
C. Wayne Nance limited by the Company's by-laws or applicable law.
Ray R. Seegmiller
Charles P. Siess, Jr.
-----------------------------------------------------------------------------------------------------------------------------
* Committee Chairman
DIRECTOR COMPENSATION
For the first quarter of 2001, directors who are not employees of the Company
were compensated by the payment of a quarterly cash fee of $6,000, plus $1,000
for attendance by them at each Board meeting and $1,000 for attendance at each
meeting of a committee of which they are a member, with the exception of the
Compensation Subcommittee. Members of the Compensation Subcommittee receive no
additional fees for their services on this committee. Committee chairmen
received an additional fee of $500 per quarter. Directors are further
compensated $500 for attendance at business meetings when so requested by the
Chairman of the Board of Directors.
Effective April 1, 2001, directors who are not employees of the Company
were compensated an annual fee of $50,000 ($53,000 fee for committee chairmen),
payable quarterly, for their services on the Company's board of directors and
its committees. With the exception of the Executive Committee and the
Compensation Subcommittee, directors are further compensated $500 for telephonic
special meetings of the board of directors or its committees, $1,000 for in-
person special meetings of the board of directors or its committees and $1,000
for attendance at business meetings when requested by the Chairman of the Board
of Directors. Members of the Executive Committee are compensated $1,000 per
meeting. The Members of Compensation Subcommittee receive no additional fees for
their services on this committee.
Non-employee directors also received nondiscretionary automatic grants of
non-qualified options to purchase 10,000 shares of the Common Stock at a price
equal to 100% of the fair market value on the date first elected to the Board of
Directors under either the 1990 Non-employee Director Stock Option Plan or the
Second Amended and Restated 1994 Non-employee Director Stock Option Plan. In
addition, non-employee directors receive a nondiscretionary automatic grant of a
non-qualified option to purchase an additional 5,000 shares of Common Stock at
each annual meeting of stockholders under the Second Amended and Restated 1994
Non-employee Director Stock Option Plan. Directors who are employees of the
Company receive no additional compensation for their duties as directors. All
directors were reimbursed for travel expenses incurred for attending all Board
and committee meetings.
8
PROPOSAL II.
APPROVAL OF AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED
COMMON STOCK AND TO ELIMINATE THE CLASS B COMMON STOCK
DESCRIPTION OF PROPOSED AMENDMENT
The Board of Directors has approved, and is recommending to the
stockholders for approval at the Annual Meeting, an amendment to Article IV of
the Company's Certificate of Incorporation, which sets forth the terms of the
Company's authorized capital stock. Article IV currently authorizes 40,000,000
shares of Class A Common Stock, par value $.10 per share ("Class A Common
Stock"), and 800,000 shares of Class B Common Stock, par value $.10 per share
("Class B Common Stock"), as well as 5,000,000 shares of Preferred Stock, par
value $.10 per share. The Class B Common Stock, which has 3/16th of a vote per
share, was issued to the Company's former sole stockholder prior to the
Company's initial public offering in 1990, and was retired in 1991. The Company
has not issued any shares of Class B Common Stock since that time.
The proposed amendment would (i) eliminate the Class B Common Stock from
the Certificate of Incorporation and change the name of the Class A Common Stock
to simply "Common Stock" and (ii) increase the authorized Common Stock from the
40,000,000 shares of Class A Common Stock currently authorized to 80,000,000
shares of Common Stock. The Board of Directors determined that this amendment is
advisable and in the best interests of the Company and directed that the
proposed amendment be submitted to the stockholders for their approval at the
Annual Meeting. The full text of the proposed amendment to the Certificate of
Incorporation is set forth in Appendix A to this Proxy Statement. If adopted by
the stockholders, this amendment would become effective upon filing of an
appropriate certificate of amendment with the Secretary of State of the State of
Delaware.
The additional shares of Common Stock authorized by the proposed amendment
would have the same rights and privileges as the shares of Class A Common Stock
currently authorized. The Common Stock has no preemptive rights to purchase
Common Stock or other securities.
PURPOSES AND EFFECTS OF PROPOSED AMENDMENT
The Company issued 1,999,993 shares of Class A Common Stock in connection
with its August 2001 acquisition of Cody Company. At February 1, 2002,
31,905,097 shares of Class A Common Stock were issued and outstanding and
3,078,734 shares of Class A Common Stock were reserved for issuance under the
Company's stock option and other employee benefit plans. As a result,
approximately 5,000,000 shares are available for issuance for future purposes.
In this light, the Board of Directors deems it advisable to increase the
Company's authorized Common Stock. The additional Common Stock to be authorized
would be available for possible future financing and acquisition transactions,
stock dividends or splits, employee benefit plans and other corporate purposes.
Having such shares available for issuance in the future would give the Company
greater flexibility and allow shares of Common Stock to be issued without the
expense and delay of a special stockholders' meeting. The additional shares of
Common Stock would be available for issuance without further action by the
stockholders unless such action is required by applicable law or the rules of
any stock exchange on which the Common Stock may be listed. The New York Stock
Exchange, on which the Common Stock is listed, currently requires stockholder
approval as a prerequisite to listing shares in certain instances, including in
connection with acquisition transactions where the present or potential issuance
of shares could result in an increase in the number of shares of common stock
outstanding of at least 20%.
Other than for the possibility of issuing new shares of Common Stock under
the Company's stock option or benefit plans, the Company has no present
arrangements, commitments, understandings or pending negotiations for the
issuance of additional shares of newly authorized Common Stock.
The Company has not proposed the increase in the authorized number of
shares of Common Stock with the intention of using the additional shares for
anti-takeover purposes, although the Company could theoretically use the
additional shares to make more difficult or to discourage an attempt to acquire
control of the Company. The Company is not aware of any pending or threatened
efforts to acquire control of the Company.
9
REQUIRED VOTE
Approval of the proposal to eliminate the Class B Common Stock and increase
the number of authorized shares of Common Stock by amending the Company's
Certificate of Incorporation requires the affirmative vote of a majority of the
shares outstanding on the record date. Votes may be cast FOR or AGAINST the
proposal, and stockholders may also ABSTAIN from voting on the proposal.
Because shares represented by abstentions or broker non-votes are considered
outstanding, abstentions and broker non-votes will have the same effect as a
vote AGAINST the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION.
PROPOSAL III.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon recommendation by the Audit Committee, has
approved and recommended the appointment of PricewaterhouseCoopers LLP,
independent public accountants, as auditors to examine the Company's financial
statements for 2002. Neither such firm nor any of its associates has any
relationship with the Company except in their capacity as auditors. The persons
named in the accompanying proxy will vote in accordance with the choice
specified thereon, or, if no choice is properly indicated, in favor of the
designation of PricewaterhouseCoopers LLP as auditors of the Company.
A representative of PricewaterhouseCoopers LLP is expected to attend the
Annual Meeting and to be available to respond to appropriate questions raised
during the Annual Meeting. The representative will also have an opportunity to
make a statement during the meeting if the representative so desires.
See Audit Committee Report on page 18 for further information.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF THE FIRM OF PRICEWATERHOUSECOOPERS LLP,
INDEPENDENT CERTIFIED PUBLIC ACCOUNTS, AS AUDITORS OF THE COMPANY FOR ITS
2002 FISCAL YEAR.
10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes annual and long-term compensation paid to
the Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers who were serving as of December 31, 2001 for all
services rendered to the Company and its subsidiaries during each of the last
three fiscal years.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------------------------ -------------------------------------
Awards Payouts
-------------------------------------
Restricted
Other Annual Stock Securities LTIP All Other
Name and Compensation Awards ($) Underlying Payouts Compensation
Principal Position Year Salary ($) Bonus ($) ($) (4) (5) (6) (7) Options (#) ($) (13) ($) (14)
----------------------------------------------------------------------------------------------------------------------------------
Ray R. Seegmiller (1) 2001 426,665 350,000 34,878 433,120(8) 65,000 0 10,500
Chairman and Chief 2000 395,412 218,000 34,596 596,250 50,000 0 10,500
Executive Officer 1999 375,000 200,000 18,806 0 70,000 101,999 10,000
Dan O. Dinges (2) 2001 102,083 222,000(3) 923 575,500(9) 75,000 0 6,125
President and Chief 2000 0 0 0 0 0 0 0
Operating Officer 1999 0 0 0 0 0 0 0
Michael B. Walen 2001 244,917 160,000 12,650 335,510(10) 30,000 0 10,500
Senior Vice President, 2000 175,750 62,000 6,012 129,188 11,000 0 9,430
Exploration and Production 1999 160,000 60,000 3,811 0 15,000 0 7,360
Scott C. Schroeder 2001 167,500 94,000 2,537 135,350(11) 12,000 0 10,050
Vice President and Chief 2000 124,583 40,000 756 104,344 7,000 0 6,427
Financial Officer 1999 117,000 36,000 424 0 7,000 0 5,300
Jeffrey W. Hutton 2001 173,333 100,000 3,309 108,280(12) 10,000 0 10,500
Vice President, Marketing 2000 160,833 51,000 3,532 114,281 9,000 0 8,501
1999 155,000 51,700 2,828 0 15,000 62,769 7,156
-------------------------------------------------------------------------------------------------------------------------------
1/ Mr. Seegmiller will retire as a director and officer of the Company
following conclusion of the 2002 Annual Meeting.
2/ Mr. Dinges joined the Company in September 2001. Mr. Dinges will assume the
position of Chairman, Chief Executive Officer and President at the Board of
Directors meeting immediately following the 2002 Annual Meeting.
3/ Includes a $150,000 bonus paid upon commencement of employment with the
Company in September 2001.
4/ The amount in this column for 2001 represents premiums paid on and a tax
gross-up for imputed income on executive term life insurance and a tax
gross-up on club dues. The 2001 premiums paid on and a tax gross-up for
imputed income on executive term life insurance represents $30,166, $923,
$3,873, $742 and $1,681 for Messrs. Seegmiller, Dinges, Walen, Schroeder and
Hutton, respectively. The 2001 tax gross-up on club dues represents $4,712,
$0, $8,777, $1,795 and $1,628 for Messrs. Seegmiller, Dinges, Walen,
Schroeder and Hutton, respectively.
11
5/ Unless otherwise indicated, the amount in this column for 2000 and 2001
represents the value of restricted stock grants made to the named executive
on May 9, 2000 and May 2, 2001, based on the closing market prices on such
dates of $19.875 and $27.07, respectively.
6/ Messrs. Seegmiller, Walen, Schroeder and Hutton were granted 30,000, 6,500,
5,250 and 5,750 shares of stock, respectively, on May 9, 2000. The
restrictions on these shares lapse in full three years from the date of
grant provided the officer is still employed with the Company.
7/ Messrs. Seegmiller, Walen, Schroeder and Hutton were granted 16,000, 8,000,
5,000 and 4,000 shares of stock respectively, on May 2, 2001. The
restrictions on these shares lapse in full three years from the date of
grant provided the officer is still employed with the Company.
8/ Mr. Seegmiller holds a total of 46,000 shares of restricted stock as of
December 31, 2001. The market value of the 46,000 shares on December 31,
2001 was $1,106,300. No dividends are paid on the restricted stock held.
9/ This amount represents the value of a 25,000 share restricted stock grant
made to Mr. Dinges on September 17, 2001, based on a closing market price of
$23.02 on September 17, 2001, the restrictions on which lapse in full on
September 17, 2004 provided Mr. Dinges is still employed with the Company.
Mr. Dinges holds a total of 25,000 shares of restricted stock as of December
31, 2001. The market value of the 25,000 shares on December 31, 2001 was
$601,250. No dividends are paid on the restricted stock held.
10/ This amount represents the value of an 8,000 share restricted stock award
made to Mr. Walen on May 2, 2001, based on a closing market price of $27.07
on May 2, 2001, and the value of a 5,000 share restricted stock award made
to Mr. Walen on July 17, 2001 based upon a closing market price of $23.79 on
July 17, 2001. The restrictions on each of these awards will lapse in full
three years from the date of grant provided Mr. Walen is still employed with
the Company. Mr. Walen holds a total of 19,500 shares as of December 31,
2001. The market value of the 19,500 shares on December 31, 2001 was
$468,975. No dividends are paid on the restricted shares held.
11/ Mr. Schroeder holds a total of 10,250 shares of restricted stock as of
December 31, 2001. The market value of the 10,250 shares on December 31,
2001 was $246,513. No dividends are paid on the restricted stock held.
12/ Mr. Hutton holds a total of 9,750 shares of restricted stock as of December
31, 2001. The market value of the 9,750 shares on December 31, 2001 was
$234,488. No dividends are paid on the restricted stock held.
13/ The amount in this column for the year 1999 represents the value of a
performance share payout of 5,395 and 3,320 shares of Common Stock to
Messrs. Seegmiller and Hutton respectively, for the performance period July
1, 1996 through June 30, 1999, based upon the average of the high and low
trading prices on the date the shares were issued of $18.90625.
14/ The amount in this column represents the Company's contributions to the
401(k) Plan and the associated non-qualified agreement or the associated
non-qualified Deferred Compensation Plan on behalf of the named executive.
OPTION GRANTS IN LAST FISCAL YEAR
Set forth below is certain information relating to the Company's grant of
options during 2001 to the executive officers named in the preceding Summary
Compensation Table, including the relative size of each grant, and each grant's
exercise price and expiration date. Also included is information relating to
the potential realizable value of the options granted, based upon assumed
annualized stock value appreciation rates. Neither the option values reflected
in the table nor the assumptions utilized in arriving at the values should be
considered indicative of future stock performance.
12
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
---------------------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total
Underlying Options
Options Granted to Exercise
Granted Employees in Price Expiration
Name (#) (1) (2) Fiscal Year ($/Sh) (5) Date (6) 5% ($) 10% ($)
---------------------------------------------------------------------------------------------------------------------
R.R. Seegmiller 65,000 16.0% $ 27.30 May 2, 2006 $490,230 $1,070,290
D.O. Dinges 75,000 (3) 18.6% $23.475 September 17, 2006 $486,375 $1,074,825
M.B. Walen 20,000 4.9% $ 27.30 May 2, 2006 $150,840 $ 329,320
10,000 (4) 2.5% $23.625 July 17, 2006 $ 65,270 $ 144,230
S.C. Schroeder 12,000 3.0% $ 27.30 May 2, 2006 $ 90,504 $ 197,592
J.W. Hutton 10,000 2.5% $ 27.30 May 2, 2006 $ 75,420 $ 164,660
---------------------------------------------------------------------------------------------------------------------
1/ There were no adjustments or amendments during 2001 to the exercise price of
stock options previously awarded to any of the named executive officers.
2/ Unless otherwise indicated, for each of the named executive officers,
33 1/3% of each option becomes exercisable on the first anniversary of the
date of grant (May 2, 2002) and the remainder of such option becomes
exercisable in 33 1/3% increments on each of the next two anniversaries of
such date.
3/ For Mr. Dinges, 33 1/3% of the option becomes exercisable on the first
anniversary of the date of grant (September 17, 2002) and the remainder of
such option becomes exercisable in 33 1/3% increments on each of the next
two anniversaries of such date.
4/ For Mr. Walen's award of 10,000 shares, 33 1/3% of the option becomes
exercisable on the first anniversary of the date of grant (July 17, 2002)
and the remainder of such option becomes exercisable in 33 1/3% increments
on each of the next two anniversaries of such date.
5/ Equal to the average of the high and low trading price per share of the
Company's Common Stock on the date of grant.
6/ The expiration date is the fifth anniversary from the date of grant. The
options permit the exercise price to be paid in cash or by tendering shares
of Common Stock. The options permit the withholding of shares to satisfy tax
obligations.
AGGREGATED FY-END OPTION VALUES
Set forth below is supplemental information relating to options exercised
during 2001 and the number and intrinsic value of stock options held at December
31, 2001 ("FY-End"), by the executive officers named in the preceding Summary
Compensation Table. Year-end values are based on the Company's stock price on
December 31, 2001, do not reflect the actual amounts, if any, which may be
realized upon the future exercise of remaining stock options, and should not be
considered indicative of future stock performance.
13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at FY-End (#) Options at FY-End ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) (1) Unexercisable Unexercisable (2)
----------------------------------------------------------------------------------------------------------------------------
R.R. Seegmiller 30,000 $377,913 63,334/183,666 $386,504/404,284
D.O. Dinges 0 0 0/75,000 0/$43,125
M.B. Walen 0 0 16,167/42,333 $ 64,143/71,595
S.C. Schroeder 9,333 $103,497 4,667/18,999 $ 26,338/37,241
J.W. Hutton 23,000 $271,617 5,000/21,000 $ 33,063/61,113
------------------------------------------------------------------------------------------------------------------------------
1/ Value realized equals the Common Stock market price received by the
Executive Officer on the date of exercise (via a cashless exercise and sale
of the Common Stock) less the exercise price, times the number of shares
exercised.
2/ A stock option is considered to be "in-the-money" if the price of the
related stock is higher than the exercise price of the option. The closing
market price of the Common Stock on December 31, 2001 was $24.05 per share.
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
There were no additional long-term incentive awards made in 2001 to the
executive officers named in the Summary Compensation Table.
PENSION PLAN TABLE
Company employees are covered by the Company's Pension Plan (the "Pension
Plan"), a noncontributory defined benefit plan that provides benefits based
generally upon the employee's compensation levels during the last years of
employment. In addition, the Company has entered into agreements to supplement
the benefits payable to certain officers to the extent benefits under the
Pension Plan are limited by provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), or the Employee Retirement Income Security Act of 1974, as
amended. The following table sets forth estimated annual benefits payable for
eligible employees (including executive officers) who retire at age 65 under the
Pension Plan (and, where applicable, such supplemental agreements) for specified
earnings and years of service classification. Amounts shown are for employees
(including all persons listed in the Summary Compensation Table) who were not
"grandfathered" under the Pension Plan (based on years of service and age) as of
September 30, 1988.
14
PENSION PLAN TABLE
REMUNERATION YEARS OF SERVICE
---------------------------------------------------------------------------------------
5 10 15 20 25 30 35
---------------------------------------------------------------------------------------
125,000 8,631 17,262 25,892 34,523 43,154 51,785 60,415
150,000 10,506 21,012 31,517 42,023 52,529 63,035 73,540
175,000 12,381 24,762 37,142 49,523 61,904 74,285 86,665
200,000 14,256 28,512 42,767 57,023 17,279 85,535 99,790
225,000 16,131 32,262 48,392 64,523 80,654 96,785 112,915
250,000 18,006 36,012 54,017 72,023 90,029 108,035 126,040
300,000 21,756 43,512 65,267 87,023 108,779 130,535 152,290
400,000 29,256 58,512 87,767 117,023 146,279 175,535 204,790
450,000 33,006 66,012 99,017 132,023 165,029 198,035 231,040
500,000 36,756 73,512 110,267 147,023 183,779 220,535 257,290
600,000 44,256 88,512 132,767 177,023 221,279 265,535 309,790
700,000 51,756 103,512 155,267 207,023 258,779 310,535 362,290
750,000 55,506 111,012 166,517 222,023 277,529 333,035 388,540
Compensation under the Pension Plan generally consists of taxable
income and 401(k) deferred amounts. The Pension Plan provides for full vesting
after five years of service. Benefits are payable for the life of the employee
on a single-life annuity basis and are not subject to any deductions for Social
Security or other offset amounts. Covered compensation under the Pension Plan
in 2001 for the executive officers named in the Summary Compensation Table is
the amounts under the "Salary" and "Bonus" columns set forth in such table. The
Company provides Mr. Seegmiller supplemental pension benefits by granting one
month's additional service credit for each month of actual service. For
purposes of the Pension Plan, including Mr. Seegmiller's supplemental pension
benefits, Messrs. Seegmiller, Dinges, Walen, Schroeder and Hutton had 13.00,
0.25, 14.67, 6.17 and 16.75 years of credited service, respectively, as of
December 31, 2001.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee and the Compensation Subcommittee of the Board
of Directors administer the Company's compensation programs. The Compensation
Committee (the "Committee") is comprised of four non-employee directors: Mr.
Nance, Chairman, and Messrs. Boswell, Smith and Vititoe. The Committee has
responsibility for determining the salaries, annual incentive compensation and
other remuneration of the officers of the Company who are also directors; and
for reviewing and approving the salaries, annual incentive compensation and
other remuneration of all other officers of the Company. The Committee also
approves the design of the Company's compensation and benefit plans. The
Compensation Subcommittee (the "Subcommittee") is comprised of three non-
employee directors: Mr. Nance, Chairman, and Messrs. Boswell and Vititoe. The
Subcommittee administers the Company's long-term incentive plans for officers
and employees.
15
The objectives of the executive compensation program are to align
compensation with business strategy, to create value for the stockholders, to
attract, retain, motivate and reward highly qualified executives and to support
a performance-based culture throughout the Company.
The Committee also believes that executive compensation should be subject
to objective scrutiny. Consequently, the Committee retains the services of an
independent consultant, who on a regular basis evaluates the compensation
programs and practices for the Company's executive officers against an industry
peer group.
COMPONENTS OF COMPENSATION
The Committee relates total compensation levels for the Company's senior
executives to the compensation paid to executives of a peer group of companies.
This peer group consists of companies that are in the same industry and are
considered by the Committee to be competitors for investment dollars in the
energy sector of the market. The Committee reviews and approves the selection
of the peer companies used for compensation comparison purposes. The companies
chosen for the peer group generally are not the same companies which comprise
the Dow Jones Secondary Oils Index, shown in the Performance Graph included in
this proxy statement. The Committee believes that the Company's competitors for
executive talent are not necessarily all of the companies included in the Dow
Jones Secondary Oils Index used for comparing stockholder returns. Competition
for talent is not limited to the size of the organization. Therefore, the
Committee takes into account larger and smaller market capitalization firms in
its selection of the peer group.
The components of the Company's executive compensation program are base
salary, annual incentive bonus and long-term incentives. These components are
described below. In determining each component of compensation, the Committee
or the Subcommittee (for long-term incentives) consider competitive data from
the peer group and the overall value of the total compensation package. The
Committee and the Subcommittee believe that the total compensation package
should be competitive and targeted at the median level of compensation for the
peer group and that superior performance should produce a corresponding increase
in value for annual and long-term incentives.
BASE SALARIES
The Committee reviews each executive's base salary annually. Base salaries
are targeted at market levels and are adjusted by the Committee to recognize
varying levels of responsibility, prior experience, breadth of knowledge,
internal equity issues and external pay practices. Base salaries in 2001 for
the executive officers named in the Summary Compensation Table as a group
approximate the 50th percentile of the predicted competitive market base salary
for similar positions in the peer group. Mr. Seegmiller's base salary of
$410,000 was increased to $430,000 in 2001. This salary approximates the 50th
percentile of the competitive market for his position and reflects his depth of
experience as a Chief Executive.
ANNUAL INCENTIVE BONUS
The Annual Target Cash Incentive Plan promotes the Company's pay-for-
performance philosophy by providing executives, as well as other key employees,
with incentives in the form of annual cash bonuses to achieve corporate business
and individual performance goals. Annual bonus opportunities allow the Company
to communicate specific goals that are of primary importance during the coming
year and motivate executives to achieve these goals. The current measurement
criteria used in the Annual Target Cash Incentive Plan are designed to recognize
that certain factors which impact performance are controllable, while others are
not controllable, and to reward executives for superior performance against
those factors which are deemed controllable. These factors measure both short-
term success and long-term value creation.
The bonus pool that can be generated under the Annual Target Cash Incentive
Plan is subject to a two-part threshold. For each of the threshold tests that
are met, one-half of the bonus potential becomes available. The two threshold
tests are: (i) annual cash flow for the Company must equal or exceed two times
debt service, with debt service including interest and dividend payments, but
excluding originally scheduled principal payments unless the Company's total
borrowing capacity is diminished at the time of the principal repayment; and
(ii) the Company must achieve positive earnings, after the inclusion of an
accrual for the contemplated bonus payment. These thresholds are approved
annually by the Committee in conjunction with its approval of each bonus plan
participant's incentive target percentage.
If one or both of the two threshold tests is met, the bonus pool is
determined by measuring each business unit's performance and the total Company
performance against two factors: (i) 75% of the bonus earned is measured on
budgeted discretionary cash flow targets adjusted for non-controllable items,
such as commodity prices, interest rates and non-
16
recurring items and (ii) 25% of the bonus earned is measured through an
assessment of overall reserve replacement, factoring in the costs associated
with adding these reserves. The Chief Executive Officer has discretion to adjust
this factor from 0 to 50% based upon an evaluation of reserves replacement and
finding costs. The Committee then has the discretion to adjust, on a subjective
basis, the final overall bonus pool for any business unit and the final bonus
payment for any participant to reflect its assessment of the unit's and the
participant's performance. If a bonus pool is generated based upon achievement
of the established Company goals, executives earn bonuses to the extent of the
performance of their primary business unit and the Company's overall
performance. Individual incentive target percentage opportunity is set at the
median of market levels based on peer data and at a level considered by the
Compensation Committee to be appropriate.
In 2001, both threshold tests were met. The Company's performance ranked
the best in the Company's history as a public company. Based upon total Company
performance, and the performance of each business unit, the formula in the bonus
plan produced bonuses ranging from 82.5% to 135.3% of the pre-established bonus
targets for the executive officers of the Company, including the executives
named in the above tables. The Committee then applied its discretion to
recognize several accomplishments during the year. These accomplishments
include record production growth of 21%, including 12% from drilling and 9% from
the Cody Company acquisition, marking the first time the Company has shown
double digit, organic production growth; and record financial results in both
absolute and per share terms, including $47.1 million net income, or $1.50 per
share, and $230.5 million discretionary cash flow, or $7.61 per share. This
resulted in cash bonus payments ranging from 89% to 143% of the pre-established
bonus targets to the executive officers of the Company, including the executive
officers named in the above tables. Mr. Seegmiller received a cash bonus of
$350,000. This represents 125% of Mr. Seegmiller's target and recognizes the
same factors in the Company's 2001 performance that were applied to the entire
group of executive officers.
LONG TERM INCENTIVES
In 2001, the Subcommittee used a combination of stock options and
restricted stock to provide long-term incentives to the Company's executives.
The Subcommittee's objective was to deliver approximately 60% of the long-term
incentive value via stock options and approximately 40% in the form of
restricted stock. The size of the long-term incentive awards is based primarily
on competitive practice and is generally targeted to be at the 50th percentile
of values granted by the peer group. The Subcommittee does not typically
consider the amount of options previously granted and outstanding when
determining the size of stock option grants to executive officers.
Stock options are granted under the Second Amended and Restated 1994 Long-
Term Incentive Plan at an option price not less than the fair market value of
the Common Stock on the date of grant. Accordingly, stock options have value
only if the stock price appreciates after the date the options are granted.
This design focuses executives on the creation of stockholder value over the
long-term and encourages equity ownership in the Company.
Restricted stock awards are granted under the Second Amended and Restated
1994 Long-Term Incentive Plan. The Company's restricted stock awards to
executives in 2001 consisted of grants of Common Stock, the restrictions on
which lapse in full three years from the date of the grant. The restricted
stock will be forfeited if, during the three-year restrictive period, the
executive leaves the Company for any reason other than retirement, termination
without cause, death or disability. Prior to the lapse of such restrictions,
the participant has no right to vote or receive dividends on such shares. The
restricted stock award may not be assigned or transferred except by will or the
laws of descent and distribution. In the event of a Change of Control (as
defined), the restrictive period shall lapse and a stock certificate
representing the shares of restricted stock shall be issued to the executive.
In the event of any merger, reorganization, recapitalization, separation,
liquidation, stock dividend, split-up, share combination or other change in the
corporate structure of the Company affecting the shares of restricted stock, the
number of shares of restricted stock shall be equitably adjusted by the
Subcommittee to prevent dilution or enlargement of rights.
In 2001 Mr. Seegmiller was granted an option to purchase 65,000 shares of
Common Stock with an exercise price of $27.30 and a restricted stock award of
16,000 shares in accordance with the competitive market data.
17
The Company's stock options are intended to constitute "qualified
performance based compensation" as defined under Section 162(m) of the Code,
with the effect that the deduction disallowance of Section 162(m) of the Code
should not be applicable to compensation paid to covered employees under the
stock option provisions. It is the Committee's and the Subcommittee's intent
that the majority of long-term incentive awards will qualify under Section
162(m) of the Internal Revenue Code. To date the Company has experienced no
loss of tax deduction as a result of 162(m).
CONCLUSION
The Committee and the Subcommittee believe these executive compensation
policies and programs serve the interests of stockholders and the Company
effectively. The various pay vehicles offered are appropriately balanced to
provide increased motivation for executives to contribute to the Company's
overall future success, thereby enhancing the value of the Company for the
stockholders' benefit. We will continue to monitor the effectiveness of the
Company's total compensation program to meet the current needs of the Company.
Compensation Committee Compensation Subcommittee
C. Wayne Nance, Chairman C. Wayne Nance, Chairman
Henry O. Boswell Henry O. Boswell
Arthur L. Smith William P. Vititoe
William P. Vititoe
AUDIT COMMITTEE REPORT
The Audit Committee is composed of five non-employee directors. The Board
of Directors has made a determination that the members of the Audit Committee
satisfy the requirements of the New York Stock Exchange as to independence,
financial literacy and experience. The responsibilities of the Audit Committee
are set forth in the Charter of the Audit Committee, which was adopted on May 9,
2000 and revised on February 19, 2002 by the Board of Directors of the Company.
The Audit Committee, among other matters, is responsible for annually
recommending the independent accountants to be appointed by the Board of
Directors as the auditors of the Company and its subsidiaries, and reviewing the
arrangements for and the results of the auditors' examination of the Company's
books and records, auditors' compensation, internal accounting control
procedures, and activities and recommendations of the Company's internal
auditors. It also reviews the Company's accounting policies, control systems
and compliance activities. The Audit Committee also reviews the Charter of the
Audit Committee. This is a report on the Audit Committee's activities relating
to the calendar year 2001.
REVIEW OF AUDITED FINANCIAL STATEMENTS WITH MANAGEMENT
The Audit Committee reviewed and discussed the audited financial statements
with the management of the Company.
REVIEW OF FINANCIAL STATEMENTS AND OTHER MATTERS WITH INDEPENDENT ACCOUNTANTS
The Audit Committee discussed with the independent auditors the matters
required to be discussed by SAS 61 (Codification of Statements on Auditing
Standards, AU Section 380). The Audit Committee has received and reviewed the
written disclosures and the letter from PricewaterhouseCoopers, LLP ("PWC"), the
Company's independent accountants, required by Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," and has
discussed with PWC the independent accountant's independence. These discussions
included a review of all audit and non-audit services (including internal audit
and tax services) provided by PWC to the Company.
RECOMMENDATION THAT FINANCIAL STATEMENTS BE INCLUDED IN ANNUAL REPORT
Based on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year 2001 for
filing with the Securities and Exchange Commission.
18
AUDIT FEES
The Company was billed an aggregate of $330,000 in professional fees and
out-of-pocket costs by its auditors, PWC, to audit the Company's financial
statements for the year ended December 31, 2001 and to review financial
information included in the Company's Forms 10-Q.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
PWC performed no financial information systems design and implementation
services during 2001.
ALL OTHER FEES
Total fees and out-of-pocket costs billed by PWC for other services
rendered in 2001 were $696,000. These other services were comprised of tax
compliance and other tax related items ($250,000), consultations regarding the
Company's acquisition of Cody Company ($224,000), internal audit services
($183,000) and audits of the Company's benefit plans ($39,000). The Audit
Committee and Board of Directors are aware that PWC provides these services to
the Company and considered whether the provision of these services is compatible
with maintaining PWC's independence.
OTHER MATTERS
On February 18, 2002 the Audit Committee decided to take actions consistent
with the SEC's revised rules on auditor independence prior to the required
adoption date. As a result, the Audit Committee determined that, commencing
with the 2002 Internal Audit Plan, PWC will perform no financial control related
internal audits, maintaining only the operations related internal audits. In
the interest of promoting investor confidence in the Company, the Audit
Committee determined to take additional actions, not required by the new rules,
so that commencing with the 2003 Internal Audit Plan, the Audit Committee will
select a new independent auditing firm to perform the Company's remaining
internal audit function.
Audit Committee
Henry O. Boswell (Chairman)
Robert F. Bailey
John G. L. Cabot
P. Dexter Peacock
Arthur L. Smith
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No member of the Compensation Committee was, during 2001, an officer or
employee of the Company or any of its subsidiaries, or formerly an officer of
the Company or any of its subsidiaries. During 2001, the Company had no
Compensation Committee interlocks.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Mr. William P. Vititoe, a director of the Company, failed to timely file a
Form 4 disclosing one stock option exercise transaction that took place on
January 26, 2001. A corrective report was filed on March 8, 2001.
Mr. Scott C. Schroeder, who was elected Vice President, Chief Financial
Officer and Treasurer on February 22, 2001, failed to file a Form 3 disclosing
his initial beneficial ownership of Company securities by the due date of March
5, 2001 and instead filed March 9, 2001, four days late.
19
EMPLOYMENT AGREEMENTS
AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into Change in Control Agreements (the "Agreements")
with the current executive officers named in the Summary Compensation Table, and
with seven other officers of the Company. The Agreements are intended to
encourage such employees to remain in the employ of and to carry out their
duties with the Company. In 2001 the Board of Directors made certain revisions
to the program initially implemented in 1995. The term of the Agreements is
three years from July 17, 2001 (from September 17, 2001 for Mr. Dinges), subject
to automatic one-year extensions on the second and each subsequent anniversary
thereof unless prior to such anniversary the Company gives written notice that
the term shall not be so extended. The Agreements provide that in the event of
a change in control or in the event deemed to be in anticipation of a change in
control, such individuals will receive certain benefits in the event of a
termination of their employment within two years of such event. A "change in
control" is generally defined as occurring if (i) any "person" becomes the
"beneficial owner," of securities of the Company representing 35% or more of
common stock or of the combined voting power of the then outstanding voting
securities of the Company, with certain exceptions; (ii) individuals who, as the
date of the Agreement, constitute the Board, together with individuals nominated
with the approval of those directors (other than in connection with an election
contest) (collectively, the "Incumbent Board") cease to constitute at least a
majority of the Board; (iii) a reorganization, merger or consolidation or sale
or other disposition of all or substantially all of the assets of the Company (a
"Business Combination") is consummated, unless, following the Business
Combination (a) all or substantially all of the individuals and entities who
were the beneficial owners of the common stock and outstanding voting securities
immediately prior to the Business Combination beneficially own, directly or
indirectly, more than 50% of the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from the Business Combination in substantially the same proportions as
their ownership, immediately prior to the Business Combination, of the Common
Stock and outstanding voting securities, (b) no "person" (excluding any entity
resulting from such Business Combination) beneficially owns, directly or
indirectly, 35% or more of the then outstanding shares of common equity of the
entity resulting from such Business Combination or the combined voting power of
the then outstanding voting securities of such entity except to the extent that
such ownership existed prior to the Business Combination and (c) at least of
majority of the members of the board of directors of the corporation, or the
similar managing body of a non-corporate entity, resulting from such Business
Combination were members of the Incumbent Board at the time of execution of the
initial agreement, or of the action of the Board, providing for such Business
Combination; or (iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
Benefits are provided under the Agreements unless such termination of
employment is (i) for cause (as defined in the Agreements), (ii) voluntary by
the executive and does not constitute a constructive termination without cause
(as defined in the Agreements), or (iii) because of the death or disability of
the executive.
Generally, benefits payable under the terms of the Agreements include (i) a
lump-sum cash payment equal to three times the sum of (a) base salary in effect
immediately prior to the change in control or, if greater, immediately prior to
the executive's termination and (b) the greater of (1) 100% of the executive's
target bonus with respect to the fiscal year during which the change in control
occurred or, if greater, the fiscal year during which the executive's
termination occurred or (2) the executive's actual bonus paid in the fiscal year
immediately preceding the change in control or if termination of employment
occurs prior to a "change in control," termination of employment, (ii) payment
with respect to any performance shares granted to the executive, such payment to
be prorated based on actual service completed at the time of the executive's
termination, and valued according to the percentage of goal attainment on the
date of termination, (iii) immediate vesting and exercisability of all of the
executive's options to purchase securities of the Company, (iv) immediate
vesting and lapse of restrictions on any restricted stock grants outstanding at
the time of the executive's termination, (v) subject to the payment of the
applicable premiums, continued medical, dental and life insurance coverage for
three years following the date of the executive's termination, (vi) effective
crediting of an additional three years of service in the Company's retirement
plans in which the executive is participating at the time of the change in
control and (vii) outplacement assistance in an amount not to exceed 15% of the
executive's base salary in effect on the date of a change in control (the
"Termination Benefits"). In the event the excise tax relating to Section 280G
of the Code applies to payments by the Company, the Company will make an
additional payment to the executive in an amount such that after payment of
income and excise taxes, the executive retains an amount equal to the
Termination Benefits. No payments have been made under the Agreements.
The Company has entered into both an employment agreement and a Change in
Control Agreement with Mr. Ray R. Seegmiller, Chairman and Chief Executive
Officer of the Company. The employment agreement provides that if Mr.
Seegmiller terminates his employment for good reason (as defined in the
agreement) or the Company terminates his employment for any reason other than
cause (as defined in the agreement), Mr. Seegmiller shall receive 12 months of
base salary, as well as continuation of all applicable benefit programs. Under
the terms of Mr. Seegmiller's Change in Control
20
Agreement, in the event of a termination, Mr. Seegmiller will be required to
elect between receiving the Termination Benefits or the amounts payable to Mr.
Seegmiller under his employment agreement.
In anticipation of Mr. Seegmiller's retirement from the Company effective
June 1, 2002, the Compensation Committee approved a lump sum cash payment of
$910,000 to be paid to Mr. Seegmiller on May 31, 2002 in recognition of his
current employment agreement provisions, his contributions to the Company and in
lieu of any long term incentive awards in 2002. Mr. Seegmiller will also
receive a lump sum payment under his existing supplemental executive retirement
plan of $1,665,290. This amount is enhanced as the result of inclusion in the
benefit calculation the value of certain restricted stock awards made in 1995
and 1997, and the $910,000 payment described above. Also in anticipation of Mr.
Seegmiller's retirement, the Compensation Subcommittee accelerated to May 2,
2002, the lapsing of restriction on the restricted stock granted to Mr.
Seegmiller on May 9, 2000 and May 2, 2001. On May 9, 2000 and May 2, 2001, Mr.
Seegmiller was granted 30,000 and 16,000 shares of restricted stock,
respectively, the restriction on which would have lapsed May 9, 2003 and May 2,
2004, respectively. The Compensation Subcommittee also accelerated to May 2,
2002, the vesting of all unvested stock options granted to Mr. Seegmiller under
the Second Amended and Restated 1994 Long-Term Incentive Plan. Mr. Seegmiller
will continue to receive a number of employee benefits (including life, medical
and dental insurance, financial counseling and club dues) for one year after his
retirement, as provided by his employment agreement.
The Company has entered into both an employment agreement and a Change in
Control Agreement with Mr. Dan O. Dinges, a Director and President and Chief
Operating Officer of the Company. The employment agreement provides that if Mr.
Dinges terminates his employment for good reason (as defined in the agreement)
or the Company terminates his employment for any reason other than cause (as
defined in the agreement), Mr. Dinges shall receive (i) a lump sum cash payment
equal to two times his annual base salary plus two times his annual target
bonus, (ii) a 24 month continuation of medical and life insurance programs at
the premium rate applicable to active executives, (iii) full vesting of all of
his restricted stock awards and (iv) full vesting of all of his stock option
awards. Under the terms of Mr. Dinges' Change in Control Agreement, in the
event of a termination, Mr. Dinges will be required to elect between receiving
the Termination Benefits or the amounts payable to Mr. Dinges under his
employment agreement.
21
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares the Common Stock ("COG") performance with the
performance of the Standard & Poor's 500 Stock Index and the Dow Jones Secondary
Oils-US Index for the period December 1996 through December 2001. The graph
assumes that the value of the investment in the Company's Common Stock and in
each index was $100 on December 31, 1996 and that all dividends were reinvested.
[GRAPH]
DEC-96 DEC-97 DEC-98 DEC-99 DEC-00 DEC-01
----------------------------------------------------------------------------------------------
S&P 500 100.0 131.0 165.9 198.3 178.2 155.0
----------------------------------------------------------------------------------------------
COG 100.0 114.3 89.6 96.6 185.1 144.7
----------------------------------------------------------------------------------------------
DJ Secondary Oils-US 100.0 98.2 65.8 75.0 118.7 107.6
----------------------------------------------------------------------------------------------
22
BENEFICIAL OWNERSHIP OF OVER FIVE PERCENT OF COMMON STOCK
The following table reports beneficial ownership of Common Stock by holders
of more than five percent of any class of the Company's voting securities.
Unless otherwise noted, all ownership information is based upon filings made by
such persons with the Commission.
NUMBER OF SHARES
NAME AND ADDRESS OF OF COMMON STOCK PERCENT OF
BENEFICIAL OWNER OWNED CLASS
--------------------------------------- ---------------------------- ------------------
Mellon Financial Corporation
One Mellon Center
Pittsburgh, PA 15258 1,910,348(1) 6.04%
Neuberger Berman, Inc.
Neuberger Berman, LLC.
605 Third Avenue
New York, NY 10158-3698 2,290,731(2) 7.25%
State Street Research & Management Company
One Financial Center, 30th Floor
Boston, MA 02111-2690 2,031,000(3) 6.43%
Wellington Management Company, LLP
75 State Street
Boston, MA 02109 2,667,275(4) 8.44%
_____________
(1) According to a Schedule 13G, dated January 16, 2002, filed with the
Commission by Mellon Financial Corporation and Mellon Bank N.A., Mellon
Financial Corporation has sole voting power over 1,470,620 of these shares,
shared voting power over 419,500 of these shares, sole dispositive power
over 1,451,248 of these shares and shared dispositive power over 419,500 of
these shares. According to the filing, Mellon Bank N.A. beneficially owns
1,892,191 of these shares. Mellon Bank N.A. has sole voting power over
1,458,691 of these shares, shared voting power over 419,500 of these
shares, sole dispositive power over 1,433,091 of these shares and shared
dispositive power over 419,500 of these shares.
(2) According to Amendment No. 1 to a Schedule 13G, dated February 11, 2002,
filed with the Commission by Neuberger Berman, Inc. and Neuberger Berman,
LLC., they have sole voting power over 1,190,831 of these shares, shared
voting power over 749,800 of these shares and shared dispositive power over
all of these shares.
(3) According to Schedule 13G, dated February 21, 2002, filed with the
Commission by State Street Research & Management Company, it has sole
voting power over 1,962,700 of these shares, no voting power over the
remainder and sole dispositive power over all of these shares.
(4) According to Amendment No. 14 to a Schedule 13G, dated February 14, 2002,
filed with the Commission by Wellington Management Company, LLP, it has
shared voting power over 1,502,975 of these shares, no voting power over
the remainder of these shares and shared dispositive power over all of
these shares.
23
BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reports, as of March 1, 2002, beneficial ownership of
Common Stock by each current director of the Company, by each executive officer
listed in the Summary Compensation Table and by all directors and executive
officers as a group. Unless otherwise indicated, the persons below have sole
voting and investment power with respect to the shares of Common Stock shown as
beneficially owned by them.
NUMBER OF SHARES
OF COMMON PERCENT
NAME OF BENEFICIAL OWNER STOCK OWNED CLASS
------------------------ ----------------- -------
Robert F. Bailey.................................. 6,501 1/ *
Henry O. Boswell.................................. 29,001 2/ *
John G.L. Cabot................................... 97,002 3/ *
James G. Floyd.................................... 10,000 *
C. Wayne Nance.................................... 22,001 4/ *
P. Dexter Peacock................................. 16,001 5/ *
Charles P. Siess, Jr.............................. 40,760 6/ *
Arthur L. Smith................................... 8,334 7/ *
William P. Vititoe................................ 12,616 8/ *
Ray R. Seegmiller................................. 173,334 9/13/14/ *
Dan O. Dinges..................................... 25,000 15/ *
Michael B. Walen.................................. 38,879 10/13/14/16/ *
Scott C. Schroeder................................ 12,937 11/13/14/ *
Jeffrey W. Hutton................................. 10,286 12/13/14/ *
All directors and executive officers as a group
(17 individuals)................................ 516,521 17/ 1.7%
* Represents less than 1% of the outstanding Common Stock.
1/ Includes 6,001 shares purchasable upon the exercise of options within 60
days.
2/ Includes 15,001 shares purchasable upon the exercise of options within 60
days.
3/ Includes 1,782 shares held by Mr. Cabot's spouse and 10,395 shares held by
various trusts of which Mr. Cabot serves as co-trustee, as to all of which
Mr. Cabot shares voting and/or investment power; Mr. Cabot disclaims
beneficial ownership of such shares. Also includes 10,001 shares purchasable
upon the exercise of options within 60 days.
4/ Includes 20,001 shares purchasable upon the exercise of options within 60
days.
5/ Includes 12,001 shares purchasable upon the exercise of options within 60
days.
6/ Includes 15,001 shares purchasable upon the exercise of options within 60
days.
7/ Includes 5,000 shares purchasable upon the exercise of options within 60
days.
8/ Includes 10,001 shares purchasable upon the exercise of options within 60
days.
9/ Includes 125,334 shares purchasable upon the exercise of options within 60
days.
10/ Includes 16,167 shares purchasable upon the exercise of options within 60
days.
11/ Includes 2,334 shares purchasable upon the exercise of options within 60
days.
12/ Includes 536 shares held in the Company's Savings Investment Plan as to
which Mr. Hutton shares voting and investment power.
24
13/ Includes 30,000, 6,500, 5,250 and 5,750 shares of restricted stock granted
to Messrs. Seegmiller, Walen, Schroeder and Hutton, respectively on May 9,
2000, the restrictions on which lapse May 9, 2003. Messrs. Seegmiller,
Walen, Schroeder and Hutton have no voting or investment power with respect
to these shares during the restrictive period.
14/ Includes 16,000, 8,000, 5,000 and 4,000 shares of restricted stock granted
to Messrs. Seegmiller, Walen, Schroeder and Hutton, respectively, on May 2,
2001, the restrictions on which lapse May 2, 2004. Messrs. Seegmiller,
Walen, Schroeder and Hutton have no voting power or investment power with
respect to these shares during the restrictive period.
15/ Includes 25,000 shares of restricted stock granted to Mr. Dinges on
September 17, 2001, the restrictions on which lapse September 17, 2004. Mr.
Dinges has no voting power or investment power with respect to these shares
during the restrictive period.
16/ Includes 5,000 shares of restricted stock granted to Mr. Walen on July 17,
2001, the restrictions on which lapse July 17, 2004. Mr. Walen has no voting
power or investment power with respect to these shares during the
restrictive period.
17/ Includes 1,639 shares held in the Company's Savings Investment Plan as to
which the executive officers share voting and investment power and 241,108
shares purchasable by the executive officers and directors upon the exercise
of options within 60 days. Also includes 119,000 shares of restricted stock
granted to the executive officers. See also Notes 1-16 above.
FUTURE STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in the proxy statement for
the 2003 Annual Meeting of Stockholders of the Company, and otherwise eligible,
should be sent to Ms. Lisa A. Machesney, Secretary, Cabot Oil & Gas Corporation,
1200 Enclave Parkway, Houston, Texas 77077 and must be received by November 26,
2002.
The Bylaws of the Company require timely advance written notice of
stockholder nominations of director candidates and of any other business to be
presented by a stockholder at an annual meeting of stockholders. To be timely,
the Bylaws require advance written notice be delivered to the Company's
Secretary at the principal executive offices of the Company not later than the
close of business on the 60th day, nor earlier than the close of business on the
90th day, prior to the anniversary of the preceding year's annual meeting (with
certain exceptions if the date of the annual meeting is different by more than
specified amounts from the anniversary date). The deadline for submission for
the 2003 Annual Meeting of Stockholders is currently March 3, 2003. To be
valid, a notice must set forth certain information specified in the Bylaws.
SOLICITATION OF PROXIES
The cost of soliciting proxies in the enclosed form will be borne by the
Company. In addition to solicitation by mail, officers, employees or agents of
the Company may solicit proxies personally, by telephone and by telegraph. The
Company may request banks and brokers or other similar agents or fiduciaries to
transmit the proxy material to the beneficial owners for their voting
instructions and will reimburse them for their expenses in so doing. Georgeson
Shareholder Communications has been retained to assist the Company in the
solicitation of proxies at a fee estimated not to exceed $7,500, plus expenses.
25
MISCELLANEOUS
The Company's management does not know of any matters to be presented at
the Annual Meeting other than those set forth in the Notice of Annual Meeting of
Stockholders. However, if any other matters properly come before the Annual
Meeting, the persons named in the enclosed proxy intend to vote the shares to
which the proxy relates on such matters in accordance with their best judgment
unless otherwise specified in the proxy.
BY ORDER OF THE BOARD OF DIRECTORS,
LISA A. MACHESNEY
Corporate Secretary
March 27, 2002
26
APPENDIX A
TEXT OF PROPOSED AMENDMENT TO
CERTIFICATE OF INCORPORATION
The first paragraph of Article IV of the Certificate of Incorporation is
amended and restated to read in its entirety as follows:
The aggregate number of shares of all classes of stock which the
Company shall have authority to issue is 85,000,000, divided into 5,000,000
shares of Preferred Stock, par value $.10 per share ("Preferred Stock"),
and 80,000,000 shares of Common Stock, par value $.10 per share (the
"Common Stock").
Section II of ARTICLE IV of the Certificate of Incorporation is amended and
restated to read in its entirety as follows:
SECTION II. COMMON STOCK
(1) Dividends. After the requirements with respect to preferential
dividends on Preferred Stock, if any, shall have been met and after the
Company shall have complied with all the requirements, if any, with respect
to the setting aside of sums as sinking funds or redemption or purchase
accounts and subject further to any other conditions which may be fixed in
accordance with the provisions of this Certificate of Incorporation, then,
but not otherwise, the holders of Common Stock shall be entitled to receive
such dividends, if any, as may be declared from time to time by the Board
of Directors on the Common Stock, which dividends shall be paid out of
assets legally available for payment of dividends and shall be distributed
among the holders of shares pro rata in accordance with the number of
shares of such stock held by each such holder.
(2) Liquidation. After distribution in full of the preferential
amount, if any, to be distributed to the holders of Preferred Stock in the
event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up of the Company, the holders of the Common
Stock shall be entitled to receive all the remaining assets of the Company,
tangible and intangible, of whatever kind available for distribution to
stockholders, which assets shall be distributed pro rata in accordance with
the number of shares of such stock held by each such holder.
(3) Voting. Except as may otherwise be required by law, this
Certificate of Incorporation or the provisions of the resolution or
resolutions as may be adopted by the Board of Directors pursuant to Section
I of this Article IV, each holder of Common Stock shall have one vote in
respect of each share of Common Stock held by such holder on each matter
voted upon by the stockholders. Cumulative voting of shares of Common
Stock is prohibited.
A-1
1029-PS-02
CABOT OIL & GAS CORP.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
-----------------
VOTE BY TELEPHONE
-----------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone 1-877-PRX-VOTE (1-877-779-8683).
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER 1-877-PRX-VOTE (1-877-779-8683).
3. ENTER YOUR VOTER CONTROL NUMBER LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
----------------
VOTE BY INTERNET
----------------
It's fast, convenient, and your vote is immediately confirmed and posted.
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS AND PROXY CARD.
2. GO TO THE WEBSITE HTTP://WWW.EPROXYVOTE.COM/COG
3. ENTER YOUR VOTER CONTROL NUMBER LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE INSTRUCTIONS PROVIDED.
YOUR VOTE IS IMPORTANT!
Go to HTTP://WWW.EPROXYVOTE.COM/COG anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
[1029 - CABOT OIL & GAS CORPORATION] [FILE NAME: ZCOG41.ELX]
[VERSION - (2)] [03/06/02] [ORIG. 03/04/02]
DETACH HERE ZCOG41
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ITEMS I, II AND III.
1. ELECTION OF DIRECTORS (check one box only)
NOMINEES: (01) Dan O. Dinges, (02) Arthur L. Smith, and (03) William P. Vititoe
FOR WITHHELD
[ ] [ ]
[ ]________________________________________
For all nominees except as noted above
2. To approve an amendment to the Company's Certificate of Incorporation to
increase the authorized Common Stock of the Company and to eliminate the
Class B Common Stock.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Ratification of the appointment of PricewaterhouseCoopers LLP, independent
certified public accountants, as auditors of the Company for it's 2002 fiscal
year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournments or postponements
thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please date this proxy and sign your name exactly as it appears hereon. In the
case of one or more joint owners, each joint owner should sign. If signing as
executor, trustee, guardian, attorney, or in any other representative capacity,
or as an officer of a corporation, please indicate your full title as such.
Signature:____________________________________ Date:______________
Signature:____________________________________ Date:______________
[1029 - CABOT OIL & GAS CORPORATION] [FILE NAME: ZCOG42.ELX]
[VERSION - (1)] [03/04/02] [ORIG. 03/04/02]
DETACH HERE ZCOG42
PROXY
CABOT OIL & GAS CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 2, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned acknowledges receipt of the notice of Annual Meeting of
Stockholders and the Proxy Statement, each dated March 27, 2002, and appoints
Lisa A. Machesney and Scott C. Schroeder, or either of them, proxies for the
undersigned, with power of substitution, to vote all of the undersigned's shares
of common stock of Cabot Oil & Gas Corporation at the Annual Meeting of
Stockholders to be held at Cabot Oil & Gas Corporation's corporate headquarters,
First Floor Assembly Room, in Houston, Texas, at 10:00 a.m., local time, on
May 2, 2002, and at any adjournments or postponements thereof.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS I, II,
AND III, AND WILL GRANT DISCRETIONARY AUTHORITY PURSUANT TO ITEM IV.
THIS PROXY WILL REVOKE ALL PRIOR PROXIES SIGNED BY YOU.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE