ELECTION OF CLASS III DIRECTORS
Two directors will be elected by the holders of the Common Stock and
Preferred Stock at the Meeting to serve as the Class III Directors of the
Company's Board of Directors until the 2002 Annual Meeting of Shareholders or
until such person's successor shall be duly elected. The Board of Directors
recommends the election of Joseph A. Reeves, Jr. and Michael J. Mayell as the
Class III Directors. Messrs. Reeves and Mayell are each currently directors of
the Company. Unless contrary instructions are set forth in the proxies, it is
intended that the persons executing a proxy will vote all shares represented by
such proxy for the election as director of each of Messrs. Reeves or Mayell.
Should any of Messrs. Reeves and Mayell become unable or unwilling to accept
nomination or election, it is intended that the person acting under the proxy
will vote for the election of such other person as the Board of Directors of
the Company may recommend. Management has no reason to believe that either Mr.
Reeves or Mr. Mayell will be unable or unwilling to serve if elected.
There are currently two Class III directorships up for election. With
respect to this Proposal One, proxies cannot be voted for other than such
directorships. A nominee for director receiving a plurality of votes cast at
the Meeting and entitled to be cast for such nominee will be elected as
director. Abstentions and broker non-votes will not be treated as a vote for or
against a particular director and will not affect the outcome of the election
The Company's Bylaws provide that the Board of Directors (other than
the Preferred Directors) shall be classified into three classes: Class I, Class
II and Class III Directors. In addition, pursuant to the terms and conditions
of the Certificate of Designation, the holders of the Preferred Stock are
entitled to elect that number of Preferred Directors that equals the product
(rounded downward to the nearest whole number, but in no event less than one)
of the total number of directors of the Company following such election
multiplied by 20%. As the holder of all of the issued and outstanding Preferred
Stock on the Record Date and pursuant to the terms of the Certificate of
Designation, SLOPI currently is entitled to elect one Preferred Director to the
Company's Board of Directors.
Set forth below is certain information concerning the current
directors of the Company, including the nominees for election as Class III
Director, with each person's business experience for at least the past five
WITH THE DIRECTOR OF PRESENT
NAME AGE COMPANY SINCE TERM
---- --- ------- ----- ----
Joseph A. Reeves, Jr. 52 Class III Director, 1990 1999
Chairman of the Board
and Chief Executive
Michael J. Mayell 52 Class III Director and 1990 1999
James T. Bond 74 Class I Director 1997 2000
E. L. Henry 63 Class II Director 1998 2001
Joe E. Kares 55 Class II Director 1990 2001
Gary A. Messersmith 50 Class II Director 1997 2001
Jack A. Prizzi 64 Class I Director 1993 2000
Paul D. Ching 48 Preferred Director 1999 1999
Joseph A. Reeves, Jr. is Chairman of the Board and Chief Executive
Officer of the Company. Before assuming his positions with the Company, Mr.
Reeves held similar positions with the Company's predecessor, Texas Meridian
Resources, Ltd. ("TMR") from 1988 until 1990.
Michael J. Mayell is President of the Company. Before assuming such
position with the Company, Mr. Mayell held a similar position with TMR from
1988 to 1990.
James T. Bond is General Manager of H.L. Hawkins, Jr. Oil and Gas
located in Houston and New Orleans, Louisiana. He has been associated with such
company for fifty years.
E. L. "Bubba" Henry has been a partner in the law firm of Adams and
Reese L.L.P. since 1987.
Joe E. Kares has been a partner with the public accounting firm of
Kares & Cihlar in Houston, Texas since 1980.
Gary A. Messersmith has been a partner with the law firm of Fouts &
Moore, L.L.P., in Houston, Texas since 1982.
Jack A. Prizzi has served as Managing Director of Jack A. Prizzi and
Co., an investment and financial advisory firm in New York, New York since
Paul D. Ching is President and General Manager of Shell Continental
Companies and has been employed by Shell Oil Company or its affiliates for the
past 25 years.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held five meetings during the fiscal year ended
December 31, 1998. In 1998, each director attended at least 75% of the total
combined number of meetings held by the Board and by the committees on which
each director served.
The Board of Directors has an Executive Committee, an Audit Committee, an
Executive Compensation Committee, a Directors' Stock Plan Administration
Committee and an Employee Compensation Committee.
The Company does not have a nominating or other similar committee.
The Executive Committee is currently comprised of Messrs. Reeves and
Mayell and is responsible for assisting with the general management of the
business and affairs of the Company during intervals between meetings of the
Board of Directors. No meetings of the Executive Committee were held in 1998.
The Audit Committee is currently comprised of Messrs. Kares, Bond and
Ching and is charged with the duties of recommending the appointment of the
independent certified public accountants, reviewing their fees, insuring that
proper guidelines are established for the dissemination of financial
information, meeting periodically with the independent auditors, the Board of
Directors and certain officers of the Company and its subsidiaries to ensure
the adequacy of internal controls and reporting, reviewing consolidated
financial statements and performing any other duties or functions deemed
appropriate by the Board of Directors. All members of the Audit Committee are
non-employee directors. One Audit Committee meeting was held in 1998. Pursuant
to the terms and conditions of the Certificate of Designation, at least one
Preferred Director shall be a member of the Audit Committee.
The Executive Compensation Committee (the "Executive Compensation
Committee") is currently comprised of Messrs. Kares, Messersmith and Prizzi,
all of whom are non-employee directors of the Company. The Executive
Compensation Committee is generally responsible for determining the cash
compensation to be paid to each of Messrs. Reeves and Mayell; however, during
1998, compensation decisions with respect to Messrs. Reeves and Mayell were
made by the full Board of Directors, with Messrs. Reeves and Mayell abstaining.
No Executive Compensation Committee meetings was were held in 1998.
The Directors' Stock Plan Administration Committee is currently comprised
of Messrs. Reeves and Mayell and is responsible for administering the Director
Plan. No Directors' Stock Plan Administration Committee meetings were held in
The Employee Compensation Committee is comprised of Messrs. Reeves and
Mayell. The Employee Compensation Committee sets the salaries of all employees,
including the elected officers and other senior executives, other than their
own salaries (which are set by the Executive Compensation Committee or the full
Board of Directors), and grants bonuses to such elected officers and other
senior executives. No Employee Compensation Committee meetings were held in