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SCHEDULE 14A INFORMATION
(Rule 14a - 101)
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Dear Stockholders:
On behalf of the Board of Directors, it is our pleasure to invite you
to attend Lomak's 1998 Annual Meeting of Stockholders to be held at the Fort
Worth Club, 306 West Seventh Street, 12th Floor, Fort Worth, Texas on Thursday,
May 28, 1998 at 9:00 a.m. local time.
Details of the meeting are given in the enclosed Notice of Annual
Meeting of Stockholders. During the meeting, we plan to review the business and
affairs of the Company. The Company's expanded development and exploration
activities will also be discussed.
We hope you personally attend the meeting, but whether or not you
expect to attend, please sign and return the enclosed proxy card at your
earliest convenience so that your shares will be represented and voted at the
Annual Meeting. You may revoke your proxy prior to, or at the meeting, and still
vote in person if you so desire.
Sincerely,
John H. Pinkerton
President
April 14, 1998
Fort Worth, Texas
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LOMAK PETROLEUM, INC.
500 THROCKMORTON STREET, SUITE 1900
FORT WORTH, TEXAS 76102
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1998
To the Stockholders of Lomak Petroleum, Inc.:
The Annual Meeting of Stockholders (the "Meeting") of Lomak Petroleum,
Inc. (the "Company") will be held at the Fort Worth Club, 306 West Seventh
Street, 12th Floor, Fort Worth, Texas, on Thursday, May 28, 1998 at 9:00 a.m.
local time. The list of stockholders entitled to vote at the Meeting will be
open to the examination of any stockholder during ordinary business hours for a
period of ten days prior to the Meeting at the Company's headquarters, 500
Throckmorton Street, Fort Worth, Texas. Such list will also be produced at the
time and place of the Meeting and be kept open during the Meeting for the
inspection by any stockholder who may be present. The purposes for which the
Meeting is to be held are as follows.
1. To elect a board of seven Directors, each for one-year terms.
2. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
The holders of shares of Common Stock and the $2.03 Convertible
Exchangeable Preferred Stock of record at the close of business on March 31,
1998 are entitled to notice of and to vote at the Meeting or any adjournment
thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED. ANY PERSON
GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME PRIOR TO ITS EXERCISE AND,
IF PRESENT AT THE MEETING, MAY WITHDRAW IT AND VOTE IN PERSON.
BY THE ORDER OF THE BOARD OF DIRECTORS
Jeffery A. Bynum
Secretary
April 14, 1998
Fort Worth, Texas
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LOMAK PETROLEUM, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1998
The enclosed proxy is solicited by and on behalf of the Board of
Directors (the "Board") of LOMAK PETROLEUM, INC., a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held Thursday,
May 28, 1998 at 9:00 a.m. local time, at the Fort Worth Club, 306 West Seventh
Street, 12th Floor, Fort Worth, Texas 76102 and any adjournment thereof (the
"Meeting"). The matters to be considered and acted upon at the Meeting are
described in the foregoing Notice of Annual Meeting of Stockholders and this
Proxy Statement. This Proxy Statement and the related form of proxy are being
mailed on or about April 14, 1998, to all holders of the Company's Common Stock,
$.01 par value (the "Common Stock") and the Company's $2.03 Convertible
Exchangeable Preferred Stock, $1 par value (the "Preferred Stock") (collectively
the "Stockholders") of record on March 31, 1998. Shares of the Common Stock and
Preferred Stock represented by proxies will be voted as hereinafter described or
as otherwise specified by each Stockholder. Any proxy given by a Stockholder may
be revoked by the Stockholder at any time prior to the voting of the proxy by
delivering a written notice to the Secretary of the Company, by executing and
delivering a later-dated proxy or by attending the meeting and voting in person.
The persons named as proxies are John H. Pinkerton and Chad L.
Stephens, President and Senior Vice President of the Company, respectively. The
cost of preparing, assembling and mailing the proxy, this Proxy Statement and
the other material enclosed and all clerical and other expenses of solicitation
will be borne by the Company. In addition to the solicitation of proxies by use
of the mails, directors, officers and employees of the Company may solicit
proxies by telephone, telegram or personal interview. The Company also will
request brokerage firms and other custodians, nominees and fiduciaries to
forward soliciting material to the beneficial owners of Common Stock and
Preferred Stock held of record by such custodians and will reimburse such
custodians for their expenses in forwarding soliciting materials.
VOTING RIGHTS
Only holders of shares of Common Stock and Preferred Stock of record at
the close of business on March 31, 1998 will be entitled to vote at the Meeting.
On March 26, 1998, the Company had 21,193,742 issued and outstanding shares of
Common Stock, each such share entitling the holder thereof to one vote on each
matter and 1,149,840 outstanding shares of Preferred Stock, each such share
entitling the holder thereof to one vote on each matter. Holders of shares of
Common Stock and Preferred Stock are not entitled to cumulative voting rights.
The presence at the Meeting in person or by proxy of the holders of a
majority of the outstanding shares of Common Stock and Preferred Stock in the
aggregate entitled to vote shall constitute a quorum for the transaction of
business. If a quorum is present, the affirmative vote of a plurality of the
shares cast at the Meeting and entitled to vote will be required to act on the
election of directors, and the affirmative vote by the holders of a majority of
the shares cast at the Meeting will be required to act on all other matters to
come properly before the Meeting. If a stockholder, present in person or by
proxy, abstains on any matter, the stockholder's shares will not be voted on
such matter and will be not treated as a vote against such matter. Broker
non-votes are treated as shares as to which voting power has been withheld by
the beneficial owners of such shares and, therefore, as votes not cast. A broker
non-vote occurs if a broker or other nominee does not have discretionary
authority and has not received instruction with respect to a particular item.
All shares of Common Stock and Preferred Stock represented by properly
executed and unrevoked proxies will be voted at the Meeting in accordance with
the direction on the proxies. IF NO DIRECTION IS INDICATED, THE SHARES WILL BE
VOTED "FOR" THE ELECTIONS OF THE NOMINEES NAMED HEREIN AS DIRECTORS. The Company
does not know af any matters, other than those described above, which will come
before the Meeting. If any other matters are properly presented for action at
the meeting, the persons named in the proxies and acting thereunder will have
discretion to vote on such matters in accordance with their best judgement.
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SECURITY OWNERSHIP
The following table sets forth certain information as of March 26, 1998
regarding (i) the share ownership of the Company by each person known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock or Preferred Stock of the Company, (ii) the share ownership of the
Company by each Director and each of the four Named Executive Officers (as
defined under "Executive Compensation - Summary Compensation Table"), and (iii)
the share ownership of the Company by all Directors and executive officers, as a
group. The business address of each officer and Director listed below is: c/o
Lomak Petroleum, Inc., 500 Throckmorton Street, Fort Worth, Texas 76102.
COMMON STOCK PREFERRED STOCK
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NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY PERCENT BENEFICIALLY PERCENT
OWNER OWNED OF CLASS OWNED OF CLASS
- ------------------------------- ------------------------ ----------- ------------------------------
Thomas J. Edelman 1,058,066 (1) 4.95% 0 0%
John H. Pinkerton 504,476 (2) 2.36% 0 0%
C. Rand Michaels 335,162 (3) 1.58% 0 0%
Robert E. Aikman 95,776 (4) 0.45% 0 0%
Anthony V. Dub 72,200 (5) 0.34% 0 0%
Allen Finkelson 19,320 (6) 0.09% 0 0%
Ben A. Guill 73,715 (7) 0.35% 0 0%
Steven L. Grose 106,728 (8) 0.50% 0 0%
Chad L. Stephens 140,984 (9) 0.66% 0 0%
Thomas W. Stoelk 39,250 (10) 0.18% 0 0%
All Directors and executive officers as a group (16 persons) 2,650,018 (11) 12.01% 0 0%
Public Employees Retirement System of Ohio 1,250,000 (12) 5.90% 0 0%
Franklin Resources Inc 1,531,490 (13) 7.23% 0 0%
Cincinnati Financial Corporation 0 0% 86,957 (14) 7.56%
Guardian Life Insurance Company of America 0 0% 191,304 (15) 16.64%
Highbridge Capital Corporation 0 0% 83,000 (16) 7.22%
Palisade Capital 0 0% 121,739 (17) 10.59%
Merrill Lynch Asset Management 0 0% 91,304 (18) 7.94%
Pecks Management 0 0% 86,957 (19) 7.56%
Putman Investments 0 0% 52,174 (20) 4.54%
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(1) Includes 195,000 shares which may be purchased under currently exercisable stock options or options that are
exercisable within 60 days; 113,333 shares held under IRA, KEOGH and pension plan accounts; 37,916 shares owned by Mr.
Edelman's spouse; and 92,850 shares owned by Mr. Edelman's minor children, to which Mr. Edelman disclaims beneficial
ownership.
(2) Includes 215,000 shares which may be purchased under currently exercisable stock options or options that are
exercisable within 60 days; 115,899 shares held under IRA and pension plan accounts; 4,772 shares owned by Mr.
Pinkerton's minor children; and 3,499 shares owned by Mr. Pinkerton's spouse, to which Mr. Pinkerton disclaims
beneficial ownership.
(3) Includes 72,500 shares which may be purchased under currently exercisable stock options or options that are exercisable
within 60 days; 1,804 shares held under the IRA account; 107,011 shares owned by Mr. Michael's spouse; and 19,460
shares owned by Mr. Michael's children, to which Mr. Michaels disclaims beneficial ownership.
(4) Includes 28,200 shares which may be purchased under currently exercisable stock options or options that are exercisable
within 60 days; 9,366 shares owned by Mr. Aikman's spouse; and 10,010 shares owned by Mr. Aikman's minor children, to
which Mr. Aikman disclaims beneficial ownership.
(5) Includes 7,200 shares which may be purchased under currently exercisable stock options or options that are exercisable
within 60 days.
(6) Includes 13,200 shares which may be purchased under currently exercisable stock options or options that are exercisable
within 60 days.
(7) Includes 7,200 shares which may be purchased under currently exercisable stock options or options that are exercisable
within 60 days.
(8) Includes 72,500 shares which may be purchased under currently exercisable stock option or options that are exercisable
within 60 days.
(9) Includes 72,500 shares which may be purchased under currently exercisable stock options or options that are exercisable
within 60 days; 15,000 shares owned by Mr. Stephens' spouse; and 3,879 shares owned by Mr. Stephens' minor children, to
which Mr. Stephens disclaims beneficial ownership.
(10) Includes 38,250 shares which may be purchased under currently exercisable stock options or options that are exercisable
within 60 days.
(11) Includes 862,900 shares which may be purchased under currently exercisable stock options or options that are
exercisable within 60 days.
(12) Such stockholder's address is 227 East Town Street, Columbus, Ohio 43215.
(13) Such stockholder's address is 777 Mariners Island Blvd., 6th Floor, San Mateo, California 94404.
(14) Such stockholder's address is 6200 South Gilmore Road, Fairfield, Ohio 45014-5141.
(15) Such stockholder's address is 201 Park Avenue, New York, New York 10003.
(16) Such stockholder's address is PO Box 30554 Seven Miles Beach, Grand Cayman Islands.
(17) Such stockholder's address is One Bridge Plaza, Suite 695, Fort Lee, New Jersey 07024.
(18) Such stockholder's address is 800 Scuddersmill Road, Plainsboro, New Jersey 08536.
(19) Such stockholder's address is 1 Rockefeller Place, Suite 320, New York, New York 10020.
(20) Such stockholder's address is One Post Office Square, Boston, Massachusetts 02109.
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PROPOSAL I -- ELECTION OF DIRECTORS
NOMINATION AND ELECTION OF DIRECTORS
The Board has nominated Messrs. Robert E. Aikman, Anthony V. Dub,
Thomas J. Edelman, Allen Finkelson, Ben A. Guill, C. Rand Michaels, and John H.
Pinkerton (all of whom are currently members of the Board) to serve as Directors
of the Company for terms of one year expiring at the 1999 Annual Meeting of
Stockholders and until their successors have been elected and qualified.
Unless otherwise specified, shares represented by proxies will be voted
in favor of the election of all of the nominees, except that, in the event any
nominee should not continue to be available for election, such proxies will be
voted for the election of such other persons as the Board may recommend.
Management does not presently contemplate that any of the nominees will become
unavailable for election for any reason.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES.
INFORMATION CONCERNING NOMINEES
The following table sets forth the names of the nominees and certain
information with regard to each nominee.
HELD
NAME OF NOMINEE AGE OFFICE SINCE POSITION WITH COMPANY
--------------- --- ------------ ---------------------
Robert E. Aikman 66 1990 Director
Anthony V. Dub 48 1995 Director
Thomas J. Edelman 47 1988 Chairman and Director
Allen Finkelson 51 1994 Director
Ben A. Guill 47 1995 Director
C. Rand Michaels 61 1976 Vice Chairman
and Director
John H. Pinkerton 44 1988 President, Chief Executive
Officer and Director
ROBERT E. AIKMAN, a Director, joined the Company in 1990. Mr. Aikman
has more than 40 years experience in petroleum and natural gas exploration and
production throughout the United States and Canada. From 1984 to 1994 he was
Chairman of the Board of Energy Resources Corporation. From 1979 through 1984,
he was the President and principal shareholder of Aikman Petroleum, Inc. From
1971 to 1977, he was President of Dorchester Exploration Inc. and from 1971 to
1980, he was a Director and a member of the Executive Committee of Dorchester
Gas Corporation. Mr. Aikman is also Chairman of Provident Trade Company,
President of EROG, Inc. and President of The Hawthorne Company, an entity which
organizes joint ventures and provides advisory services for the acquisition of
oil and gas properties, including the financial restructuring, reorganization
and sale of companies. He was President of Enertec Corporation which was
reorganized under Chapter 11 of the Bankruptcy Code in December 1994. In
addition, Mr. Aikman is a director of the Panhandle Producers and Royalty Owners
Association and a member of the Independent Petroleum Association of America,
Texas Independent Producers and Royalty Owners Association and American
Association of Petroleum Landmen. Mr. Aikman graduated from the University of
Oklahoma in 1952.
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ANTHONY V. DUB, was elected to serve as a Director of the Company in
1995. Mr. Dub is Chairman of Indigo Capital, LLC, a financial advisory firm
based in New York City. Prior to forming Indigo Capital in 1997, he served as an
officer of Credit Suisse First Boston, an investment banking firm. Mr. Dub
joined Credit Suisse First Boston in 1971 and was named a Managing Director in
1981. Mr. Dub also serves as a Director of Nimbus CD International Inc. Mr. Dub
received his Bachelor of Arts Degree from Princeton University in 1971.
THOMAS J. EDELMAN, holds the office of Chairman and is Chairman of the
Board of Directors. Mr. Edelman joined the Company in 1988 and served as its
Chief Executive Officer until 1992. From 1981 to 1997, Mr. Edelman served as a
director and President of Snyder Oil Corporation ("SOCO"), an independent,
publicly traded oil and gas company. In 1996, Mr. Edelman was appointed
Chairman, President and Chief Executive Officer of Patina Oil & Gas Corporation.
Prior to 1981, Mr. Edelman was a Vice President of The First Boston Corporation.
From 1975 through 1980, Mr. Edelman was with Lehman Brothers Kuhn Loeb
Incorporated. Mr. Edelman received his Bachelor of Arts Degree from Princeton
University and his Masters Degree in Finance from Harvard University's Graduate
School of Business Administration. Mr. Edelman serves as a director of Petroleum
Heat & Power Co., Inc., a Connecticut-based fuel oil distributor, Star Gas
Corporation, a private company, which is the general partner of Star Gas
Partners, L.P., a publicly-traded master limited partnership, which distributes
propane gas, as well as, Paradise Music & Entertainment, Inc., and Weatherford
Enterra, Inc.
ALLEN FINKELSON, was appointed a Director in 1994. Mr. Finkelson has
been a partner at Cravath, Swaine & Moore since 1977, with the exception of the
period from September 1983 through August 1985, when he was a managing director
of Lehman Brothers Kuhn Loeb Incorporated. Mr. Finkelson was first employed by
Cravath, Swaine & Moore as an associate in 1971. Mr. Finkelson received his
Bachelor of Arts Degree from St. Lawrence University and his Doctor of Laws
Degree from Columbia University School of Law.
BEN A. GUILL, was elected to serve as a Director of the Company in
1995. Mr. Guill is a Partner and Managing Director of Simmons & Company
International, an investment banking firm located in Houston, Texas focused
exclusively on the oil service and equipment industry. Mr. Guill has been with
Simmons & Company since 1980. Prior to joining Simmons & Company, Mr. Guill was
with Blyth Eastman Dillon & Company from 1978 to 1980. Mr. Guill received his
Bachelor of Arts Degree from Princeton University and his Masters Degree in
Finance from the Wharton Graduate School of Business at the University of
Pennsylvania.
C. RAND MICHAELS, who holds the office of Vice Chairman and is a
Director, served as President and Chief Executive Officer of the Company from
1976 through 1988 and Chairman of the Board from 1984 through 1988, when he
became Vice Chairman. Mr. Michaels received his Bachelor of Science Degree from
Auburn University and his Master of Business Administration Degree from the
University of Denver. Mr. Michaels is also a director of American Business
Computers Corporation, a public company serving the beverage dispensing and fast
food industries, and North Coast Energy, Inc. ("North Coast").
JOHN H. PINKERTON, President, Chief Executive Officer and a Director,
joined the Company in 1988. He was appointed President in 1990 and Chief
Executive Officer in 1992. Previously, Mr. Pinkerton was a Senior Vice
President-Acquisitions of SOCO. Prior to joining SOCO in 1980, Mr. Pinkerton was
with Arthur Andersen & Co. Mr. Pinkerton received his Bachelor of Arts Degree in
Business Administration from Texas Christian University and his Master of Arts
Degree in Business Administration from the University of Texas. Mr. Pinkerton is
also director of North Coast and Venus Exploration, Inc. publicly traded
exploration and production companies in which Lomak owned 24% and 21%,
respectively, at December 31, 1997.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND COMMITTEES
During 1997, the Board met seventeen times. During 1997, each Director
attended or participated in at least 75% of the meetings of the Board and of the
Committees on which they served. In addition, management confers frequently with
its Directors on an informal basis to discuss Company affairs.
The committees of the Board, the current members and the primary
functions of the committees are as follows:
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EXECUTIVE COMMITTEE. The Executive Committee was established in 1994 to
review and authorize actions required in the management of the business and
affairs of the Company, which would otherwise be determined by the Board, where
it is not practicable to convene the full Board. The members of the Executive
Committee are Messrs. Edelman, Finkelson and Pinkerton. During 1997, the
Executive Committee held no meetings.
COMPENSATION COMMITTEE. The Compensation Committee reviews and approves
executive salaries and administers bonus, incentive compensation and stock
option plans of the Company. This Committee advises and consults with management
regarding pensions and other benefits and significant compensation policies and
practices of the Company. This Committee also considers nominations of
candidates for corporate officer positions. The members of Compensation
committee are Messrs. Aikman, Finkelson and Guill. During 1997, the Compensation
Committee held five meetings.
AUDIT COMMITTEE. The Audit Committee reviews the professional services
provided by the Company's independent public accountants and the independence of
such accountants from management of the Company. This Committee also reviews the
scope of the audit coverage, the annual financial statements of the Company and
such other matters with respect to the accounting, auditing and financial
reporting practices and procedures of the Company as it may find appropriate or
as have been brought to its attention. The members of the audit committee are
Messrs. Aikman, Dub and Guill. During 1997, the Audit Committee held two
meetings.
DIVIDEND COMMITTEE. The Dividend Committee was established in late 1997
and is authorized and directed to approve the payment of dividends on all of the
Company's securities at the same rates as were paid by the Company to its
shareholders in the previous quarter. The members of the Dividend Committee are
Messrs. Edelman and Pinkerton. During 1997, the Dividend Committee held four
meetings.
INSIDER TRANSACTION REVIEW COMMITTEE. The Insider Transaction Review
Committee was established in late 1996 and is responsible for reviewing certain
grants, issuances and dispositions of the Company's common stock under each of
the Company's benefit plans. In June 1997 the Insider Transaction Review
Committee was dissolved and its duties were taken over by the Compensation
Committee. The members of the Insider Transaction Review Committee were Messrs.
Finkelson and Guill. During 1997, the Insider Transaction Review Committee held
no meetings.
Non-officer Directors receive $25,000 per annum and are reimbursed for
expenses in attending Board and Committee meetings. The Directors receive no
compensation for Committee meetings attended. Directors who are officers of the
Company or its affiliates are not compensated for their Board and Committee
activities.
The Company's Outside Directors Stock Option Plan (the "Directors
Plan"), which is administered by the Compensation Committee, provides for the
granting of options to purchase shares of Common Stock to outside directors of
the Company. The plan permits optionees to acquire up to 200,000 shares of
Common Stock. All options issued under the plan vest 30% after one year, 60%
after two years and 100% after three years. At December 31, 1997 a total of
108,000 options had been granted under the plan of which 40,800 were exercisable
at that date. The options outstanding at December 31, 1997 were granted at
exercise prices ranging from $7.75 to $16.88 per share. The exercise price of
all such options was equal to the fair market value of the common stock on the
date of grant.
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EXECUTIVE OFFICERS
Set forth below is certain information, as of April 1, 1998, regarding
the executive officers of the Company:
NAME AGE OFFICER SINCE POSITION(S) WITH COMPANY
---- --- ------------- ------------------------
Thomas J. Edelman 47 1988 Chairman
John H. Pinkerton 44 1988 President and Chief Executive Officer
C. Rand Michaels 61 1976 Vice Chairman
Steven L. Grose 49 1980 Senior Vice President - Appalachia Region
Chad L. Stephens 43 1990 Senior Vice President - Southwest Region
Thomas W. Stoelk 42 1994 Senior Vice President - Finance and Administration
Paul F. Blanchard 37 1997 Vice President - Midcontinent Division
Jeffery A. Bynum 43 1985 Vice President - Land and Secretary
John R. Frank 42 1994 Vice President - Information Management
Danny M. Sowell 47 1996 Vice President - Energy Services
George A. Teer 50 1997 Vice President - Permian Division
Geoffrey T. Doke 31 1996 Controller
For biographical information with respect to Messrs. Edelman, Pinkerton
and Michaels, see "Election of Directors - Information Concerning Nominees"
above.
STEVEN L. GROSE, Senior Vice President - Appalachia Region, joined the
Company in 1980. Previously, Mr. Grose was employed by Halliburton Services,
Inc. as a Field Engineer from 1971 until 1974. In 1974, he was promoted to
District Engineer and in 1978, was named Assistant District Superintendent based
in Pennsylvania. Mr. Grose is a member of the Society of Petroleum Engineers and
a trustee of The Ohio Oil and Gas Association. Mr. Grose received his Bachelor
of Science Degree in Petroleum Engineering from Marietta College. Mr. Grose is
also a director of North Coast.
CHAD L. STEPHENS, Senior Vice President - Southwest Region, joined the
Company in 1990. Previously, Mr. Stephens was with Duer Wagner & Co., an
independent oil and gas producer, since 1988. Prior thereto, Mr. Stephens was an
independent oil operator in Midland, Texas for four years. From 1979 to 1984,
Mr. Stephens was with Cities Service Company and HNG Oil Company. Mr. Stephens
received his Bachelor of Arts Degree in Finance and Land Management from the
University of Texas.
THOMAS W. STOELK, Senior Vice President - Finance and Administration,
joined the Company in 1994. Mr. Stoelk is a Certified Public Accountant and was
a Senior Manager with Ernst & Young LLP. Prior to rejoining Ernst & Young LLP in
1986 he was with Partners Petroleum, Inc. Mr. Stoelk received his Bachelor of
Science Degree in Industrial Administration from Iowa State University.
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PAUL F. BLANCHARD, Vice President - Midcontinent Division, joined the
Company in March 1997. Previously Mr. Blanchard was operations manager for the
Oklahoma Division of Enron Oil & Gas Company, where he was employed from 1991 to
1997. From 1990 to 1991, Mr. Blanchard was with Louisiana Land and Exploration
Company. Prior to that, Mr. Blanchard was with Texas Oil & Gas Company. Mr.
Blanchard received his Bachelor of Science Degree in Petroleum Engineering from
the University of Oklahoma.
JEFFERY A. BYNUM, Vice President - Land and Secretary, joined the
Company in 1985. Previously, Mr. Bynum was employed by Crystal Oil Company and
Kinnebrew Energy Group. Mr. Bynum holds a Professional Certification with
American Association of Petroleum Landmen and attended Louisiana State
University in Baton Rouge, Louisiana and Centenary College in Shreveport,
Louisiana.
JOHN R. FRANK, Vice President - Information Management, joined the
Company in 1990. Prior to being appointed Vice President, he served as
Controller. Previously Mr. Frank was with Appalachian Exploration, Inc. from
1977 to 1990, with the last portion being Vice President, Finance. Mr. Frank
received his Bachelor of Arts Degree in Accounting and Management from Walsh
College and attended graduate studies at the University of Akron.
DANNY M. SOWELL, Vice President - Energy Services, joined the Company
in 1996. Previously, Mr. Sowell was President and Chief Executive Officer of Jay
Gas Marketing, which Lomak acquired in 1996. Prior to founding Jay Gas, Mr.
Sowell was Director of Marketing for a subsidiary of Oklahoma Gas & Electric
Company. Mr. Sowell received his Master and Bachelor of Science Degrees in
Mathematics from Lamar University.
GEORGE A. TEER, Vice President - Permian Division, joined the Company
in 1994. Previously Mr. Teer was with Bass Enterprises from 1974 to 1994, with
the last portion being Manager of their West Texas Division. Mr. Teer received
his Bachelor of Science Degree in Petroleum Engineering from Texas A&M
University.
GEOFFREY T. DOKE, Controller, joined the Company in 1991. He was
appointed Treasurer in 1996 and Controller in 1997. Previously, Mr. Doke served
in the accounting department of Edisto Resources Corporation. Mr. Doke received
his Bachelor of Business Administration Degree in Finance and International
Business from Baylor University and his Master of Business Administration Degree
from Case Western Reserve University.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board establishes the general
compensation policies of the Company, establishes the compensation plans and
specific compensation levels for officers and certain other managers and
administers the Company's stock option plan for all employees.
In establishing compensation policies, the Committee believes that the
cash compensation of executive officers, as well as other key employees, should
be competitive with other similar size oil and gas companies while, within the
Company, being fair and discriminating on the basis of personal performance.
Annual awards of stock options and restricted stock grants are intended both to
retain executives and to motivate them to improve long-term stock market
performance.
In establishing total compensation (salary plus bonus) for its
executives, the Company targets the median cash compensation for competitors of
executives having similar responsibilities. Base salaries have historically been
set below the median, so that bonuses, which are primarily determined by
individual performance, will constitute a larger portion of cash compensation.
The base salary for Mr. Pinkerton was increased 37% during 1997. Mr. Pinkerton's
bonus is based on Company performance. The Committee has not established any
particular formula or singled out particular factors as more important than
others. In determining Mr. Pinkerton's bonus for 1997, the Committee considered
the fact that 1997 constituted the eighth consecutive year in which the Company
substantially increased its revenues, cash flow, production and reserves. In
addition, the Committee considered more subjective criteria, such as steps taken
during 1997 to improve the Company's long-term prospects. The bonuses of other
executives
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are influenced by Company performance, but are determined primarily based upon
performance of the executive's duties and success in attaining performance goals
which are directed toward improving Company performance.
Stock options and bonuses are awarded to Mr. Pinkerton and other
executives and key employees to retain and motivate the grantees and to improve
long-term market performance. The Committee generally determines the number of
options granted and the amount of the bonuses awarded to Mr. Pinkerton and to
other executives and key employees based on how an individual's responsibilities
might affect the long-term price of the Common Stock. The Committee occasionally
grants additional options when the Committee believes additional incentives are
appropriate. To date, options have been granted only at the prevailing market
price and will have value only if the price of the Common Stock increases.
Generally, to provide incentives for its executives to remain with the Company
and to benefit for the improvement in the performance of the Company, options
have a term of five years and vest over three years. An employee must be
employed by the Company at the time of vesting in order to exercise the options.
In addition, officer annual bonuses are awarded whereby no more than 50% of
the amount is payable in the year of the award, with the remaining 50% vesting
over a one to three year period. These bonuses are payable, at the option of
the officer, in cash or shares of the Company's Common Stock. An officer must
be employed by the Company at the time of vesting in order to receive the
vested bonus previously granted to such officer. The restricted stock issued
pursuant to the bonuses represents unregistered shares and therefore initially
cannot be sold by the recipient.
In the aggregate, approximately 32% of the Named Executive Officers'
cash compensation for 1997 consisted of incentive bonuses tied to Company and
individual performance. Mr. Pinkerton received approximately 44% of his cash
compensation for 1997 from incentive bonuses. When the potential future value of
stock options and restricted stock grants are included (assuming a 10% annual
increase in the stock price), approximately 74% of the total compensation of Mr.
Pinkerton for 1997 is from incentives which are linked to creation of
stockholder value.
No voting member of the Committee is a former or current officer or
employee of the Company or any of its subsidiaries. No member of the
Compensation Committee had any Compensation Committee Interlocks during the
Company's last fiscal year.
The foregoing report has been furnished by the members of the Committee
Robert Aikman
Allen Finkelson
Ben A. Guill
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The voting members of the Company's Compensation Committee consists of
Messrs. Aikman, Finkelson and Guill, none of whom are officers of the Company.
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SUMMARY COMPENSATION TABLE
The following table sets forth information for the years ended
December 31, 1997, 1996, and 1995 representing all compensation awarded to,
earned by or paid to the five highest paid executive officers (the "Named
Executive Officers").
Long-term
Annual Compensation Compensation
--------------------------- -----------------
Name and Stock Option All Other
Principal Position Year Salary ($) Bonus($) Awards (#) Compensation ($)(a)
- ------------------------------------------------------------------------------------------------------------------------
Thomas J. Edelman 1997 $172,500 $125,000 (b) 50,000 $39,992
Chairman 1996 133,333 187,500 (c) 50,000 36,996
1995 120,833 75,000 (e) 50,000 10,608
John H. Pinkerton 1997 281,666 250,000 (b) 50,000 39,992
President & Chief Executive 1996 210,000 375,000 (c) 50,000 23,976
Officer 1995 179,167 150,000 (e) 50,000 14,062
Steven L. Grose 1997 121,250 60,000 (d) 25,000 20,002
Senior Vice President-Appalachia 1996 100,417 50,000 (d) 25,000 8,137
1995 88,750 30,000 (e)
Chad L. Stephens 1997 125,833 50,000 (d) 25,000 21,504
Senior Vice President-Midcontinent 1996 102,917 75,000 (d) 25,000 18,430
1995 90,000 50,000 (e) 25,000 7,093
Thomas W. Stoelk 1997 126,250 70,000 (d) 25,000 22,102
Senior Vice President-Finance and 1996 105,833 65,000 (d) 25,000 13,863
Administration 1995 96,667 35,000 (e) 25,000 8,159
(a) Represents the Company's contribution to the 401(k) and deferred compensation plans on behalf of the named
executive.
(b) Bonus amounts include $125,000 of contributions made to the Company's Deferred Compensation Plan on behalf of the
named executive which vest in three equal amounts occurring annually on January 1st if they remain employed by
the Company.
(c) Messrs. Edelman and Pinkerton bonus amounts include $112,500 and $225,000, respectively, of contributions made to
the Company's Deferred Compensation Plan on behalf of the named executive which vest in three equal amounts
occurring annually on January 1st if they remain employed by the Company.
(d) Fifty percent of bonus amounts vest on January 1st of the following year if they remain employed by the Company.
(e) Fifty percent of bonus amounts vest in two equal installments occurring annually on January 1st if they remain
employed by the Company.
STOCK OPTION GRANTS AND EXERCISES
The Company's stock option plan, which is administered by the
Compensation Committee, provides for the granting of options to purchase shares
of Common Stock to key employees and certain other persons who are not employees
for advice or other assistance or services to the Company. The plan permits
optionees to acquire up to 3 million shares of Common Stock to be outstanding at
any time subject to the limitation that the outstanding options cannot exceed
10% of all outstanding Common Stock on a fully diluted basis. All options issued
under the plan vest 30% after one year, 60% after two years and 100% after three
years. At December 31, 1997, a total of 1,499,692 options were outstanding under
the plan of which 688,457 were exercisable at that date. The options outstanding
at December 31, 1997 were granted at exercise prices ranging from $3.38 to
$18.00 per share. The exercise price of all such options was equal to the fair
market value of the Common Stock on the date of grant.
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STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information for the fiscal year ended
December 31, 1997, respecting the grant of stock options to the Named Executive
Officers. The stock options were granted at the market price on the date of
grant. No stock appreciation rights have ever been granted by the Company.
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (a)
------------------------------------------------------------- ----------------------------
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted (#) Fiscal Year Price Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------
Thomas J. Edelman 50,000 10.7% $17.75 3/12/02 $245,000 $542,000
John H. Pinkerton 50,000 10.7% 17.75 3/12/02 245,000 542,000
Steven L. Grose 25,000 5.3% 17.75 3/12/02 122,500 271,000
Chad L. Stephens 25,000 5.3% 17.75 3/12/02 122,500 271,000
Thomas W. Stoelk 25,000 5.3% 17.75 3/12/02 122,500 271,000
(a) The assumed annual rates of stock price appreciation used in showing the potential
realizable value of stock option grants are prescribed by the Securities and Exchange
Commission. The actual realized value of the options may be significantly greater or less
than assumed amounts. For options granted in 1997, the values shown for 5% and 10%
appreciation equate to a stock price of $22.65 and $28.59, respectively, at the expiration
date of the options.
YEAR END OPTION VALUES TABLE
The following table sets forth information at December 31, 1997,
respecting exercisable and non-exercisable options held by the Named Executive
Officers. The table also includes the value of "in-the-money" options which
represents the spread between the exercise price of the existing stock options
and the year end Common Stock price of $16.25.
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Shares Year-End 1997 Year-End 1997
Acquired on Value (Unexercisable (U)/ (Unexercisable (U)/
Name Exercise (#) Realized Exercisable (E)) Exercisable (E))
- ---------------------------------------------------------------------------------------------------------------
Thomas J. Edelman -0- $ -0- 55,000 U $ 386,250 U
145,000 E 1,107,500 E
John H. Pinkerton -0- -0- 55,000 U 386,250 U
21,667 E 1,739,204 E
Steven L. Grose 5,000 58,750 27,500 U 193,125 U
55,166 E 467,198 E
Chad L. Stephens 5,000 58,750 27,500 U 193,125 U
56,167 E 478,339 E
Thomas W. Stoelk 19,250 194,531 27,500 U 193,125 U
13,250 E 93,812 E
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STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the percentage change in the
cumulative total return of the Common Stock, Dow Jones Secondary Oils Index, and
the S&P 500 Index for the five year period ending December 31, 1997. The graph
assumes that $100 was invested in Common Stock and each index on December 31,
1992. Furthermore, dividends are reinvested on the ex-dividend dates.
[GRAPH]
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Lomak Petroleum, Inc. $100 $171 $162 $229 $403 $382
DJ Secondary Oils 100 111 118 133 163 170
S&P 500 100 111 111 149 181 237
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has no employment agreements with any of its executives or
other employees.
The Board has adopted a change in control plan pursuant to which a key
employee group comprised of executive officers and other key employees of the
Company designated by the Board (the "Management Group") will receive a certain
level of severance and vesting benefits if there is a change in control of the
Company and all other employees of the Company (the "Employee Group") will
receive more limited severance and vesting benefits. Upon a change in control of
the Company all non-vested securities of the Company held by persons in both the
Executive Group and the Employee Group, including, without limitation, all
non-vested options to purchase Common Stock held by them, will automatically
vest.
If any person in the Management Group is terminated within one year of
such change in control or if job responsibilities or compensation of a person in
the Management Group is materially altered within one year of such change in
control, then such person shall receive a lump sum payment (the "Management
Payment") equal to (i) an amount equal to such person's base salary for the year
in which the Management Payment is to be made plus (ii) an amount equal to the
average of such person's bonuses for the two years prior thereto. If any person
in the Employee Group is terminated within one year of such change in control,
then such person shall receive a lump sum payment (the "Employee Payment") equal
to (i) an amount equal to one quarter of such person's base salary for the year
in which the
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Employee Payment is to be made plus (ii) an amount equal to one quarter of the
average of such person's bonuses for the two years prior thereto.
Notwithstanding the foregoing, the amount of either the Management
Payment or the Employee Payment (collectively, the "Payment") is dependent upon
the duration of employment with the Company, with each person receiving
one-third of the Payment if they have been employed by the Company for less than
two years, two-thirds of the Payment if they have been employed by the Company
for between two and three years and receiving the full amount of the Payment if
they have been employed by the Company for at least three years.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Edelman, Chairman of the Company, previously served as an executive
officer and is currently a stockholder of Snyder Oil Corporation ("SOCO"). Mr.
Edelman also serves as executive officer and major shareholder of Patina Oil &
Gas Corporation. The Company SOCO and Patina did not have any transactions or
hold interests in any of the same properties during 1997.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors and persons who beneficially own more than ten percent of
the Company's stock to file initial reports of ownership and reports of changes
of ownership with the Securities and Exchange Commission and the NYSE. Copies of
such reports are required to be furnished to the Company.
Based solely on a review of such forms furnished to the Company and
certain written representations from the executive officers and directors, the
Company believes that all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than 10% beneficial owners were
complied with on a timely basis.
OTHER BUSINESS
Management of the Company knows of no other business which will be
presented for consideration at the meeting, but should any other matters be
brought before the Meeting, it is intended that the persons named in the
accompanying proxy will vote such proxy at their discretion.
It is expected that representatives of Arthur Andersen will be present
at the Meeting with an opportunity to make a statement should they desire to do
so and to respond to appropriate questions from stockholders.
ANNUAL REPORT
The Annual Report for the fiscal year ended December 31, 1997,
accompanies this proxy statement. The Annual Report does not constitute a part
of the proxy soliciting material.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any stockholder desiring to present to stockholders a stockholder
proposal at the 1999 Annual Meeting must transmit such proposal to the Company
so that it is received by the Company on or before November 28, 1998. All such
proposals should be in compliance with applicable Securities and Exchange
Commission regulations.
BY ORDER OF THE BOARD OF DIRECTORS
Jeffery A. Bynum
Secretary
April 14, 1998
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FRONT:
- ------
LOMAK PETROLEUM, INC.
1. Election of Directors For Withheld For All
(see reverse) All All Except _____________________________________________
___ ___ ___ Print Nominee Exception
Area reserved for
Name & Address
Date: ________________________________, 1998
Signature(s) ________________________________
Signature(s) ________________________________
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES NAMED. In accordance with their judgment the
proxies are authorized to vote upon any other matters that may properly come
before the meeting. The signer hereby revokes all proxies heretofore given by
the signer to vote at said meeting or any adjournments thereof. NOTE: Please
sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, administrator, trustee, or guardian, please give full
title as such.
BACK:
- -----
PROXY PROXY
LOMAK PETROLEUM, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - MAY 28, 1998
The undersigned hereby appoints Chad L. Stephens and John H. Pinkerton, and each
of them, his/her true and lawful agents and proxies with full power of
substitution and revocation, to vote, as designated on the reverse side hereof,
all the Common and Preferred Stock of Lomak Petroleum, Inc. which the
undersigned has power to vote, with all powers which the undersigned possess if
personally present, at the Annual Meeting of Stockholders of Lomak Petroleum,
Inc. to be held on May 28, 1998, and at any adjournments thereof.
1. To elect a board of seven Directors, each for a one-year term: The nominees
of the Board of Directors are: Robert E. Aikman, Anthony V. Dub, Thomas J.
Edelman, Allen Finkelson, Ben A. Guill, C. Rand Michaels and John H.
Pinkerton
You are encouraged to specify your choice by marking the appropriate box, SEE
REVERSE SIDE. Your shares cannot be voted unless you sign and return this card.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
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