DEF 14A
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d85198ddef14a.txt
DEFINITIVE PROXY STATEMENT
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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PRIMEENERGY CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
PRIMEENERGY CORPORATION
TO BE HELD
JUNE 7, 2001
---------------------
Notice is hereby given that the Annual Meeting of Stockholders of
PrimeEnergy Corporation will be held on Thursday, June 7, 2001, at 10:00 a.m.,
EDT, at the Roger Sherman Inn, New Caanan, Connecticut, for the following
purposes:
1. To elect a Board of Directors of thirteen (13) persons as nominated
in the accompanying Proxy Statement, such Directors to hold office until
the next annual meeting of stockholders and until their successors are
elected; and
2. To transact such other procedural business as may properly be
brought before the meeting or at any adjournment or adjournments thereof.
The meeting may be adjourned from time to time without other notice than by
announcement at its meeting, or at any adjournment thereof, and any and all
business for which the meeting is hereby noticed may be transacted at any such
adjournment.
The Board of Directors has fixed April 18, 2001, as the date for the taking
of a record of the stockholders entitled to notice of and to vote at the meeting
and at any adjournment or adjournments thereof. The stock transfer books will
not be closed.
Enclosed is a form of proxy solicited by the Board of Directors of the
Company. Stockholders who do not plan to attend the meeting in person are
requested to date, sign and return the enclosed proxy in the enclosed envelope,
to which no postage need be affixed if mailed in the United States. Your proxy
may be revoked at any time before it is exercised and will not be used if you
attend the meeting and prefer to vote in person.
BY ORDER OF THE BOARD OF
DIRECTORS
JAMES F. GILBERT
Secretary
April 27, 2001
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PRIMEENERGY CORPORATION
ONE LANDMARK SQUARE
STAMFORD, CONNECTICUT 06901
PROXY STATEMENT
SOLICITATION BY THE BOARD OF DIRECTORS OF PROXIES FROM
STOCKHOLDERS FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 7, 2001
The Board of Directors of PrimeEnergy Corporation, a Delaware corporation,
(hereinafter called the "Company") solicits your proxy in the enclosed form
which, if you do not plan to attend the Annual Meeting of Stockholders of the
Company on Thursday, June 7, 2001, you are requested to fill out, sign as
indicated and return to the Company in the enclosed self-addressed envelope,
which requires no postage if mailed in the United States. Any proxy given
pursuant to this solicitation may be revoked by the person giving it at any time
before it is exercised by notice in person or in writing to the Company. The
approximate day on which the proxy statement and form of proxy will be sent to
security holders is April 27, 2001.
Proxies are being solicited by mail and all expenses of solicitation have
been or will be borne by the Company. In addition, arrangements may be made with
brokerage houses and other custodians, nominees and fiduciaries to send proxies
and proxy material to their principals, and the Company will reimburse them for
their expenses in so doing.
Only stockholders of record at the close of business on April 18, 2001, are
entitled to vote at the 2001 Annual Meeting. At that date, the Company had
outstanding and entitled to vote 3,886,511 shares of Common Stock, each share
entitling the record holder thereof to one vote.
All shares of the Company represented by proxies received in time and in
proper form and condition and not revoked will be voted as specified in the
proxy; or in the absence of specific direction, the proxy will be voted by the
person designated therein:
FOR the election as Directors of the Company of the thirteen (13)
nominees named below, to hold office until the next annual meeting of
stockholders and until their respective successors shall be duly elected.
In the event any of the nominees should become unable to serve as a
Director, the proxies will be voted in accordance with the best judgment of
the person acting under it.
The election of Directors will require the affirmative votes of a plurality
of the shares of the Common Stock voting in person or by proxy at the Annual
Meeting. The Company's transfer agent will tabulate all votes which are received
prior to the date of the Annual Meeting. The Company will appoint two inspectors
of election, who may be officers or employees, to receive the transfer agent's
tabulation, to tabulate all other votes, and to certify the results of the
elections. Abstentions and broker non-votes are each included in the
determination of the number of shares present and voting (i.e., for quorum
purposes), but shall not be counted.
The management knows of no matter to be submitted to the 2001 Annual
Meeting with respect to which the stockholders are entitled to vote other than
the election of Directors, but if procedural matters do properly come before the
meeting the persons named in the proxy will vote according to their best
judgment.
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SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of the
Common Stock of the Company owned beneficially by any person, including any
"group" as that term is defined in Section 12d(3) of the Securities Exchange Act
of 1934, known to the Company to be the beneficial owner of five percent (5%) or
more of the Common Stock, as of April 18, 2001. Information as to beneficial
ownership is based upon statements furnished to the Company by such persons.
Except as indicated, all shares are held directly, with full voting and
dispositive powers, and percentages are calculated on the basis of the shares
issued and outstanding, and with respect to those named persons holding options
presently exercisable or within 60 days of April 18, 2001, includes the number
of shares to be issued upon exercise of such options.
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ----------------- --------
Charles E. Drimal, Jr. 1,205,006(1) 26.0
One Landmark Square
Stamford, Connecticut 06901
McJunkin Corporation 698,521 17.97
835 Hillcrest Drive
Charleston, West Virginia
25311
Robert de Rothschild 493,732(2) 12.7
1251 Avenue of the Americas
51st Floor
New York, New York 10020
Jan K. Smeets 275,232(3) 7.08
9 Locust Avenue
Larchmont, New York 10538
Matthias Eckenstein 240,829 6.2
Solothurner Str 94
4008 Basel, Switzerland
Clint Hurt 240,000(4) 6.18
107 North "N"
Midland, Texas 79701
---------------
(1) Includes 457,506 shares held directly; and 747,500 shares subject to options
all presently exercisable.
(2) Shares held of record by Amrace, Inc., a private company controlled by, or
for the benefit of, Mr. de Rothschild.
(3) Includes 2,500 shares held by Mr. Smeets for each of his three children.
(4) Shares held of record by Clint Hurt & Associates, Inc., a private company
controlled by Mr. Hurt.
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5
The following table sets forth information at April 18, 2001, with respect
to the shares of the Company's Common Stock beneficially owned by the Company's
Directors and nominees and by all Directors and officers of the Company as a
group:
AMOUNT
BENEFICIALLY
NAME OWNED(1) PERCENT OF CLASS (1)
---- ------------ --------------------
Samuel R. Campbell 129,317(2) 3.33
James E. Clark none Less than one
Beverly A. Cummings 100,000(3) 2.51
Charles E. Drimal, Jr. 1,205,006(4) 26.0
Matthias Eckenstein 240,829 6.2
H. Gifford Fong 93,332 2.4
Thomas S. T. Gimbel 50,000 1.29
Clint Hurt 240,000(5) 6.18
Robert de Rothschild 493,732(6) 12.7
Jarvis J. Slade 11,490 Less than one
Jan K. Smeets 275,232(7) 7.08
Gaines Wehrle none(8) Less than one
Michael H. Wehrle 13,000(8) Less than one
All Directors and officers 2,851,938(2)(3)(4)(5)(6) 60.24
as a group (7)(8)
---------------
(1) Unless otherwise indicated, all shares are owned directly and the holder
thereof has sole voting and investment powers with respect thereto, and
percentages are calculated on the basis of the shares issued and
outstanding, and with respect to those persons, or group, holding options
presently exercisable or within 60 days, includes the number of shares to
be issued upon exercise of such options.
(2) Includes 55,300 shares held of record by Mr. Campbell's immediate family,
as to all of which shares Mr. Campbell retains voting rights.
(3) Represents shares subject to options all presently exercisable.
(4) Includes 457,506 shares held directly and 747,500 shares subject to options
all presently exercisable.
(5) Shares held of record by Clint Hurt & Associates, Inc., a private company
controlled by Mr. Hurt.
(6) Shares held of record by Amrace, Inc., a private company controlled by, or
for the benefit of, Mr. de Rothschild.
(7) Includes 2,500 shares held by Mr. Smeets for each of his three children.
(8) Does not include any beneficial ownership of such persons in 698,521 shares
held of record by McJunkin Corporation, a private company, by reason of
their positions with, or ownership of interests in, McJunkin Corporation.
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DIRECTORS AND EXECUTIVE OFFICERS
At the 2001 Annual Meeting, the stockholders of the Company will elect
thirteen (13) Directors, in each case to hold office until the next annual
meeting or until their respective successors shall be duly elected. There will
be submitted by the management to the 2001 Annual Meeting for election as
Directors, the thirteen (13) nominees whose names, together with certain
information concerning them, are set out below. In the event any of the nominees
shall become unable to serve as a Director, the proxy will be voted in
accordance with the best judgment of the person acting under it; however, no
circumstances are at present known which would render any nominee unavailable.
OFFICES HELD
WITH THE DIRECTOR
NOMINEE AGE PRINCIPAL OCCUPATION COMPANY SINCE
------- --- -------------------- ------------ --------
Samuel R. Campbell 75 Private Investor, Director November
Southampton, New York 1989
James E. Clark 72 Private Investor and Director June
Financial Consultant, 1996
Calabasas, California
Beverly A. Cummings 48 Executive Vice President and Director; Executive February
Treasurer of the Company; Vice President and 1988
Executive Vice President Treasurer
of PrimeEnergy Management
Corporation
Charles E. Drimal, Jr. 53 President of the Company; Director; President October
President of PrimeEnergy 1987
Management Corporation
Matthias Eckenstein 71 Architect and Developer, Director August
Basel, Switzerland 1989
H. Gifford Fong 56 Investment Technology Director May
Consultant, Lafayette, 1994
California
Thomas S. T. Gimbel 46 Managing Director of Director March
Alternative Investments, 1989
Credit Suisse Asset
Management Group,
investment bankers and
brokers, New York, New
York
Clint Hurt 65 President, Clint Hurt & Director February
Associates, Inc., a 1988
private oil and gas
exploration company,
Midland, Texas
Robert de Rothschild 54 Private Investor, Director February
New York, New York 1988
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OFFICES HELD
WITH THE DIRECTOR
NOMINEE AGE PRINCIPAL OCCUPATION COMPANY SINCE
------- --- -------------------- ------------ --------
Jarvis J. Slade 75 Merchant Banker Director November
and Consultant, 1989
New York, New York
Jan K. Smeets 53 Private Investor, Director February
Larchmont, New York 1988
Gaines Wehrle 43 Senior Vice President, Director May
McJunkin Corporation, 1987
Charleston, West Virginia
Michael H. Wehrle 45 Senior Vice President and Director May
Chief Financial Officer, 1987
McJunkin Corporation,
Charleston, West Virginia
All of the above named nominees are currently Directors of the Company, and
each has served continuously as a Director since the date indicated. Messrs.
Gaines Wehrle and Michael H. Wehrle are brothers. There is no other family
relationship between any nominee for Director or executive officer of the
Company. By agreements entered into in October, 1987, and so long as McJunkin
Corporation shall be the holder of ten percent or more of the Company's Common
Stock, two persons designated by McJunkin Corporation will be nominated for
election as Directors of the Company. Messrs. Gaines Wehrle and Michael H.
Wehrle, who are presently serving as such Directors, have been designated by
McJunkin Corporation and are nominees for election as Directors at the 2001
Annual Meeting.
The Board of Directors met three times in 2000. All of the incumbent
Directors attended at least 75% of the meetings of the Board and committees on
which they served, except Messrs. Clark, Gimbel, de Rothschild and Gaines
Wehrle. Directors are reimbursed for travel and related expenses in connection
with attendance at Board and committee meetings. All Directors receive $500 for
each Board meeting attended.
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee, but no other standing committees. The Board as a whole
functions as the nominating committee to select management's nominees for
election as Directors of the Company.
The Executive Committee, composed of Messrs. Drimal, Jr., Hurt, Smeets and
Ms. Cummings, is authorized to exercise all the authority of the Board in the
business and affairs of the Company, except as limited by applicable law. The
Executive Committee met three times during 2000, and informally, by telephone or
office conference on a regular basis, usually weekly, during the year.
The Audit Committee, composed of Messrs. Eckenstein, Hurt and Smeets, met
three times in 2000. Ms. Beverly A. Cummings, Executive Vice President of the
Company, served as a member of the Audit Committee until her resignation from
the Committee in December, 2000, and the appointment of Mr. Hurt as a member of
the Committee. The Board of Directors believes that the Audit Committee members
satisfy applicable requirements for independence, financial literacy and
expertise. The Committee selects and engages independent auditors to audit the
books, records and accounts of the Company, determines the scope of such audits,
and reviews the financial policies and control procedures of the Company.
The Compensation Committee, composed of Messrs. Hurt, Gimbel and Smeets,
met once in 2000. The Committee evaluates the Company's compensation policies
and establishes salaries, bonuses and other compensation for the Company's
executive officers.
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The executive officers of the Company, together with certain information
concerning them, are set out below.
OFFICES HELD
OFFICER AGE WITH THE COMPANY
------- --- ----------------
Charles E. Drimal, Jr. 53 President
Beverly A. Cummings 48 Executive Vice President
and Treasurer
James F. Gilbert 68 Secretary
Each of the above officers were elected by the Board of Directors to their
respective offices in May, 2000, at the annual meeting of the Board and each
will hold their respective offices until their successors are elected by the
Board.
The principal occupation and employment for the past five years of each of
the Directors and nominees for Director and of each of the executive officers of
the Company is as follows:
Mr. Campbell is a private investor residing in Southampton, New York. He is
a graduate of Harvard College and holds a Certificate in Real Estate from New
York University Graduate School. He was elected a Director of the Company in
November, 1989.
Mr. Clark attended DePaul University and Northwestern University and is a
Chartered Life Underwriter and Chartered Financial Consultant. From 1983 to
1990, he was president, Western Operations, of The Prudential Insurance Company
of America. Since 1990, he has acted as a financial consultant to various
publicly and privately held companies. He serves as a director of the American
Asian Association, Inc., the UCLA Heart Institute and is a Trustee of the Yul
Brenner Cancer Foundation. He was elected a Director of the Company in June,
1996.
Ms. Cummings is a Certified Public Accountant and holds a Bachelor of
Science degree from the State University of New York and a Master of Business
Administration from Rutgers University. She has been Vice President, Finance of
PrimeEnergy Management Corporation since August, 1985, Secretary from May, 1983,
to June, 1990, and was Controller from June, 1981, to January, 1986, and is a
director of PrimeEnergy Management. She was elected Vice President, Finance and
Treasurer of the Company in October, 1987, and Executive Vice President and
Treasurer in May, 1991. She has served as a Director of the Company since
February, 1988.
Mr. Charles E. Drimal, Jr. has served as a Director and President and Chief
Executive Officer of the Company since October, 1987. He also is President and a
director of PrimeEnergy Management Corporation, the Company's wholly-owned
subsidiary and has held those positions since May, 1983. Mr. Drimal is a
graduate of the University of Maryland and Samford University School of Law and
is a member of the New York State Bar.
Mr. Eckenstein is a Swiss citizen and a resident of Switzerland. He studied
law and architecture in Basel, Switzerland, and at the University of Geneva and
the Ecole des Beaux Arts, Paris, France. He is a director and principal in
several privately held companies providing financial consulting services in
construction, hotel management and architectural matters. He was elected a
Director of the Company in August, 1989.
Mr. Fong is president of Gifford Fong Associates, investment technology
consultants, Lafayette, California. He holds a Bachelor of Science, a Master of
Business Administration and law degrees from the University of California. He is
on the editorial board of The Journal of Portfolio Management and is the editor
of The Financial Analysts Journal and is the author and contributor of numerous
trade journal publications. Mr. Fong was elected a Director of the Company in
May, 1994.
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Mr. Gimbel is the Managing Director of Alternative Investments for Credit
Suisse Asset Management Group, New York, and has held that position since
January, 1999. Prior to that date and from January, 1995, he held the position
of Senior Vice President of PaineWebber, Incorporated, investment bankers and
brokers, New York. Mr. Gimbel holds a Bachelor of Arts degree in economics from
Bowdoin College and a Master of Business Administration from Columbia University
Graduate School of Business. He was elected a Director of the Company in March,
1989.
Mr. Hurt is president of Clint Hurt & Associates, Inc., a private oil and
gas exploration company located in Midland, Texas. He is past president of the
Independent Oil & Gas Association of West Virginia and is a former director of
Chase Bank of Texas, Midland, Texas. In 2001, Mr. Hurt was selected by Governor
Wise of West Virginia to be the official representative of the State of West
Virginia to the Interstate Oil & Gas Compact Commission. He was elected a
Director of the Company in February, 1988.
Mr. de Rothschild, a citizen of France and a resident of the United States,
is a private investor and Assistant Vice President of Rothschild, Inc. He was a
director of Rothschild, North America from February, 1988, to January 1, 1994.
He was elected a Director of the Company in February, 1988.
Mr. Slade is a graduate of Yale University and holds a Master of Business
Administration from Stanford Business School. For more than ten years he has
acted as a merchant banker in New York City. He is Chairman of the board of MCRB
Corporation and a director of ICN Corp. and Lexington Management Group, Inc. He
was elected a Director of the Company in November, 1989.
Mr. Smeets, a citizen of the Netherlands and a resident of the United
States, is a private investor in Larchmont, New York. He was elected as a
Director of the Company in February, 1988. He is a graduate of M.I.T. and holds
a Master of Business Administration from Stanford Business School. He was
elected a Director of the Company in February, 1988.
Mr. Gaines Wehrle is a Senior Vice President of McJunkin Corporation,
Charleston, West Virginia, a privately held company and has held that position
since April, 1987. McJunkin Corporation is a national distributor, primarily of
pipes, valves and fittings. Prior to that date, he was manager of corporate
development of the Company. He was elected a Director of the Company in May,
1987.
Mr. Michael H. Wehrle is a Senior Vice President and Chief Financial
Officer of McJunkin Corporation and has held that position since April, 1987.
Prior to that date, he was vice president of Hillcrest Oil and Gas Company, a
private company. He was elected a Director of the Company in May, 1987.
Mr. Gilbert was a Director of the Company from its organization in March,
1973, to October, 1987. He has been Secretary of the Company from March, 1973,
and serves as secretary of the Company's subsidiaries. He is an attorney in
Dallas, Texas.
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EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY COMPENSATION TABLE
The following table discloses compensation for the last three fiscal years
ended December 31, 2000, received by the Company's Chief Executive Officer and
the only other executive officer of the Company and its subsidiaries.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
AWARDS
OTHER ------------
ANNUAL COMPENSATION ANNUAL (2) ALL OTHER
NAME AND PRINCIPAL ------------------------------- COMPENSATION OPTIONS COMPENSATION
POSITION(1) YEAR SALARY($) BONUS($) ($)(3) (#) ($)(4)
------------------ -------- --------- -------- ------------ ------------ ------------
Charles E. Drimal, Jr. 2000 224,404 500,000 1,500 6,800
President, Chief 1999 217,868 -0- 1,500 -- 8,557
Executive Officer 1998 211,522 -0- 1,500 -- 8,330
and Director
Beverly A. Cummings 2000 224,404 200,000 1,500 6,800
Executive Vice 1999 217,868 -0- 1,500 -- 8,557
President, Treasurer 1998 211,522 -0- 1,500 -- 8,330
and Director
---------------
(1) Each of the named officers hold similar positions with the Company's
subsidiaries and also serve as directors of each of the subsidiaries.
(2) References to "Restricted Stock Awards", "SARs" and "LTIP Payouts" in the
Summary Compensation Table and to SARs in the Fiscal Year End Option Values
table below have been omitted as the Company has no Restricted Stock Awards,
SARs or LTIP Payouts.
(3) Includes $1,500 paid to each of Mr. Drimal and Ms. Cummings as Director's
fees in 1998, 1999 and 2000.
(4) The amounts in this column represents the Company's contributions to its
401(k) plan to each of the named officers for the years indicated.
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COMPENSATION COMMITTEE REPORT
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain information regarding the compensation of
its Chief Executive Officer and other executive officers whose salary and bonus
exceed $100,000 per year. Disclosure requirements include a report explaining
the rationale and considerations that lead to fundamental executive compensation
decisions. The following report has been prepared to fulfill this requirement.
The Compensation Committee ("Committee") of the Board of Directors sets and
administers the policies that govern the annual compensation and long-term
compensation of executive officers of the company. The Committee consists of
Messrs. Gimbel, Hurt and Smeets, none of whom is an employee of the Company. The
Committee makes all decisions concerning compensation of executive officers who
receive salary and bonus in excess of $100,000 annually and determine the total
amount of bonuses to be paid annually. The Committee's policy is to offer
executive officers competitive compensation packages that will permit the
Company to attract and retain highly qualified individuals and to motivate and
reward such individuals on the basis of the Company's performance.
At present, the executive compensation package consists of base salary and
cash bonus awards. Executive salaries are reviewed by the Committee on an annual
basis and are set for individual executive officers based on subjective
evaluations of each individual's performance and the Company's performance.
Cash bonuses may be awarded on an annual basis for effort and performance.
The use of a specific formula to evaluate management performance is not employed
because it is difficult to define an appropriate formula and it restricts the
flexibility of the Committee. The Committee considers the achievements of the
Company, specifically including earnings for the year, return on stockholders'
equity and growth in proved oil and natural gas reserves, in determining
appropriate levels for bonus awards. Following a review of the Company's
performance at December 2000, the Committee determined that cash bonuses should
be awarded, set a total dollar limit for the bonus pool and awarded cash bonuses
to the executive officers, based upon contribution to the Company's performance
during the year.
The compensation of the Chief Executive Officer is largely dependent upon
the overall performance of the Company. For the year ended December 31, 2000,
the base salary of the Chief Executive Officer of the Company, Charles E.
Drimal, Jr., increased 3 percent to $224,404 from $217,868, and a cash bonus
award of $500,000 was paid.
Compensation Committee
Clint Hurt, Chairman
Thomas S. T. Gimbel
Jan K. Smeets
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 2000, only Messrs. Clint Hurt,
Thomas S.T. Gimbel and Jan K. Smeets served as members of the Compensation
Committee. None of such persons was, during the fiscal year, or was formerly, an
officer or employee of the Company or any of its subsidiaries. Messrs. Hurt and
Smeets, together with Ms. Beverly A. Cummings, Executive Vice President of the
Company, and Mr. Charles E. Drimal, Jr., President of the Company, constitute
the Executive Committee of the Board of Directors of the Company. Messrs. Hurt
and Smeet also serve on the Audit Committee.
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STOCK OPTION GRANTS, OPTIONS EXERCISES AND HOLDINGS
There were no stock options granted by the Company to the named executive
officers during the fiscal year ended December 31, 2000, and no options were
exercised by any of them during that year. The following table sets forth
information with respect to unexercised options held by the named executive
officers of the Company at December 31, 2000.
FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Charles E. Drimal, Jr........................... 747,500 -- $4,513,581 --
Beverly A. Cummings............................. 100,000 -- $ 593,625 --
---------------
(1) The average bid price of the Company's Common Stock on December 31, 2000, as
reported in the over-the-counter market, was $7.13.
SECTION 16(a) BENEFICIAL OWNER COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and to furnish the Company with copies of such reports. To
the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company with respect to the fiscal year ended December 31,
2000, all required reports were timely filed by such persons.
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STOCK PERFORMANCE GRAPH
The following graph shows the changes over the past five year period in the
value of $100 invested in: (1) PrimeEnergy Corporation Common Stock; (2) the
NASDAQ Market Index; and (3) a peer group consisting of all the crude petroleum
and natural gas companies with stock trading on the NASDAQ Market within SIC
code 1311, consisting of approximately 190 companies. The year end values of
each investment are based on share price appreciation and assume that $100 was
invested December 31, 1995, and that all dividends are reinvested. Calculations
exclude trading commissions and taxes. The comparison in the graph is required
by the SEC and, therefore, is not intended to forecast or be indicative of
possible future performance of the Company's Common Stock.
[PERFORMANCE GRAPH]
As of December 31
------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
------------------------------------------------------------------------------------
PrimeEnergy Corporation $100.00 $200.00 $378.95 $231.58 $200.00 $300.00
Peer Group Index 100.00 132.97 134.78 107.96 131.87 167.53
NASDAQ Market Index 100.00 124.27 152.00 214.39 378.12 237.66
INDEPENDENT PUBLIC ACCOUNTANTS
The Company engaged Pustorino, Puglisi & Co. as the principal accountants
for the Company with respect to the audit of the Company's financial statements
for the years ended December 31, 1999 and 2000. There were no disagreements with
Pustorino, Puglisi & Co., LLP on any matters of accounting principles or
practices, financial statement disclosure or auditing scope or procedures in
connection with their audits. Representatives of Pustorino, Puglisi & Co. LLP
are not expected to be present at the Annual Meeting of Stockholders, but will
be available by speaker telephone during the Meeting and will have the
opportunity to make a statement if they desire to do so, and will be available
to answer stockholders' questions.
11
14
AUDIT COMMITTEE REPORT
A copy of the Charter and Powers of the Audit Committee of PrimeEnergy
Corporation, as adopted by the Committee and the Board of Directors of the
Company, is attached as Annex A to this Proxy Statement.
The Audit Committee reports as follows:
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their audits. The Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-KSB for
the year ended December 31, 2000 for filing with the Securities and Exchange
Commission. The Committee has also recommended the selection of the Company's
independent auditors for 2001.
Audit Committee
Jan K. Smeets, Chairman
Matthias Eckenstein
Clint Hurt
This Report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
12
15
STOCKHOLDERS' PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, stockholders may present proper proposals for inclusion in the
Company's proxy statement and form of proxy and for consideration at its annual
meeting of stockholders by submitting their proposals to the Company in a timely
manner. In order to be so included for the 2002 annual meeting, stockholder
proposals must be received by the Company no later than December 27, 2001, and
must otherwise comply with the requirements of Rule 14a-8.
Stockholder proposals to be brought before the 2002 annual meeting, made
outside the Rule 14a-8 processes, must be submitted to the Company pursuant to
Rule 14a-4, no later than March 18, 2001, or will be considered untimely and
entitle the Company to discretionary voting under Rule 14a-4.
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Annual Report of the Company for its fiscal year ended December 31,
2000, accompanies this Proxy Statement. The audited financial statements of the
Company are included in such Annual Report.
It is important that proxies be returned promptly. Stockholders are
requested to date, sign and return the enclosed proxy in the enclosed envelope,
to which no postage need be affixed if mailed in the United States. If you
attend the 2001 Annual Meeting, you may revoke your proxy and vote in person if
you so desire, otherwise your proxy will be voted for you.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES F. GILBERT
Secretary
Stamford, Connecticut
April 27, 2001
13
16
ANNEX A
PRIMEENERGY CORPORATION
CHARTER AND POWERS OF THE AUDIT COMMITTEE
RESOLVED, that the charter and powers of the Audit Committee of the Board
of Directors (the "Audit Committee") shall be:
- Overseeing that management has maintained the reliability and integrity
of the accounting policies and financial reporting and disclosure
practices of the Company;
- Overseeing that management has established and maintained processes to
assure that an adequate system of internal control is functioning within
the Company;
- Overseeing that management has established and maintained processes to
assure compliance by the Company with all applicable laws, regulations
and Company policy;
RESOLVED, that the Audit Committee shall have the following specific powers
and duties:
1. Holding such regular meetings as may be necessary and such special
meetings as may be called by the Chairman of the Audit Committee or at
the request of the independent accountants;
2. Creating an agenda for ensuing year;
3. Reviewing the independence and performance of the independent
accountants and making recommendations to the Board of Directors
regarding the appointment or termination of the independent
accountants;
4. Conferring with the independent accountants concerning outside
auditor's accountability to the Board of Directors and the audit
committee, and the scope of their examinations of the books and records
of the Company and its subsidiaries; reviewing and approving the
independent accountants annual engagement letter; directing the special
attention of the auditors to specific matters or areas deemed by the
Committee or the auditors to be of special significance; and
authorizing the auditors to perform such supplemental reviews or audits
as the Committee may deem desirable;
5. Reviewing with management and the independent accountants significant
risks and exposures, audit activities and significant audit findings;
6. Reviewing the range and cost of audit and non-audit services performed
by the independent accountants;
7. Reviewing the Company's audited annual financial statements and the
independent accountants' opinion rendered with respect to such
financial statements, including reviewing the nature and extent of any
significant changes in accounting principles or the application
therein;
8. Reviewing the adequacy of the Company's systems of internal control;
9. Obtaining from the independent accountants their recommendations
regarding internal controls and other matters relating to the
accounting procedures and the books and records of the Company and its
subsidiaries and reviewing the correction of controls deemed to be
deficient;
10. Providing independent, direct communication between the Board of
Directors and independent accountants;
11. Reviewing with appropriate Company personnel the actions taken to
ensure compliance with the Company's Code of Conduct and the results of
confirmations and violations of such Code;
12. Reviewing the programs and policies of the Company designed to ensure
compliance with applicable laws and regulations and monitoring the
results of these compliance efforts;
A-1
17
13. Reviewing the procedures established by the Company that monitor the
compliance by the Company with its loan and indenture covenants and
restrictions;
14. Reporting through its Chairman to the Board of Directors following the
meetings of the Audit Committee;
15. Maintaining minutes or other records of meetings and activities of the
Audit Committee;
16. Reviewing the powers of the Committee annually and reporting and making
recommendations to the Board of Directors on these responsibilities;
17. Conducting or authorizing investigations into any matters within the
Audit Committee's scope of responsibilities. The Audit Committee shall
be empowered to retain independent counsel, accountants, or others to
assist it in the conduct of any investigation;
18. Considering such other matters in relation to the financial affairs of
the Company and its accounts, and in relation to the internal and
external audit of the Company as the Audit Committee may, in its
discretion, determine to be advisable.
A-2
18
PRIMEENERGY CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of PrimeEnergy Corporation (the
"Company"), revoking all prior proxies, does by these presents name,
constitute and appoint Charles E. Drimal, Jr. and James F. Gilbert, and
each of them, the true and lawful proxy and attorney-in-fact of the
undersigned, with full power of substitution, to vote all shares of the
Common Stock, par value $.10 per share, of the Company standing in the
name of the undersigned on the books of the Company at the close of
business on April 18, 2001, or in respect of which the undersigned is
entitled to vote at the Company's Annual Meeting of Stockholders, to be
held on Thursday, June 7, 2001 at 10:00 a.m., and at any and all
adjournments of said meeting, hereby granting to said proxies and
attorneys-in-fact, and each of them, full power and authority to vote
in the name of the undersigned at said meeting, and at any and all
adjournments thereof, on the matters set forth on reverse side.
PLEASE SIGN ON REVERSE SIDE AND RETURN PROMPTLY
(Continued and to be signed and dated on reverse side)
19
Please mark
your votes as
indicated in [X]
this example
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The Board of Directors recommends a vote FOR Item 1.
FOR Item 1. WITHHELD
FOR FOR ALL
Item 1- ELECTION OF DIRECTORS [ ] [ ] Item 2- In their discretion,
to serve until the annual the proxies appointed herein
meeting in 2002 and until their are authorized to vote upon
successors are duly elected. any other business as may
properly come before the
meeting or any adjournments
thereof.
Nominees:
Samuel R. Campbell Beverly A. Cummings
James E. Clark H. Gifford Fong
Charles E. Drimal, Jr. Clint Hurt
Matthias Eckenstein Jarvis J. Slade
Thomas S. T. Gimbel Michael H. Wehrle
Robert de Rothschild
Jan K. Smeets
Gaines Wehrie
To withhold authority to vote for any individual nominee(s), enter the name of
the nominee(s) in the space below.
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Signature(s) Date
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.