<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>l88898adef14a.txt
<DESCRIPTION>BENTON OIL AND GAS COMPANY--DEFINITIVE PROXY
<TEXT>
<PAGE> 1
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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:
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<S> <C>
[ ] 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.
</TABLE>
Benton Oil and Gas Company
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
BENTON OIL AND GAS COMPANY
6267 CARPINTERIA, SUITE 200
CARPINTERIA, CALIFORNIA 93013
(805) 566-5600
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME AND DATE 9:00 a.m. on Monday, July 30, 2001
PLACE Doubletree Hotel
Allen Center
400 Dallas Street
Houston, Texas 77002
ITEMS OF BUSINESS (1) To elect six directors
(2) To adopt and approve the 2001 Long Term
Stock Incentive Plan
(3) To ratify the appointment of independent
accountants
(4) To consider such other business as may
properly come before the meeting
RECORD DATE You are entitled to vote if you were a
stockholder at the close of business on
Wednesday, June 13, 2001.
VOTING BY PROXY Please submit the proxy as soon as possible so
that your shares can be voted at the meeting in
accordance with your instructions. You may
submit your proxy (1) over the Internet, (2) by
telephone or (3) by mail. For specific
instructions, please refer to the Questions and
Answers beginning on page 4 of this proxy
statement and the instructions on the proxy
card.
STOCKHOLDER LISTING A list of our stockholders as of June 13, 2001
will be available for inspection by our
stockholders at the Doubletree Hotel, Allen
Center, 400 Dallas Street, Houston, Texas
during the ten days immediately preceding the
date of the Annual Meeting.
By Order of the Board of Directors
/s/ PETER J. HILL
PETER J. HILL
President and Chief Executive Officer
This proxy statement and accompanying proxy card are being distributed on or
about June 22, 2001.
<PAGE> 3
2001 ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
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Notice of Annual Meeting of Stockholders..........................................................................1
Q:Why am I receiving these materials?....................................................................4
Q:What information is contained in these materials?......................................................4
Q:What proposals will be voted on at the meeting?........................................................4
Q:What shares owned by me can be voted?..................................................................4
Q:What is the difference between holding shares as a stockholder of record and as a beneficial owner?....4
Stockholder of Record...............................................................................4
Beneficial Owner....................................................................................4
Q:How can I vote my shares in person at the meeting?.....................................................4
Q:How can I vote my shares without attending the meeting?................................................5
Q:Can I change my vote?..................................................................................5
Q:How are votes counted?.................................................................................5
Q:What is the voting requirement to approve each of the proposals?.......................................5
Q:What does it mean if I receive more than one proxy or voting instruction card?.........................5
Q:Where can I find the voting results of the meeting?....................................................5
STOCK OWNERSHIP...................................................................................................6
Who are the largest owners of Benton's stock?............................................................6
How much stock do Benton's directors and executive officers own?.........................................6
Section 16(a) Beneficial Ownership Reporting Compliance.............................................7
BOARD STRUCTURE AND COMPENSATION.................................................................................8
DIRECTOR COMPENSATION ARRANGEMENTS................................................................................9
PROPOSAL NO. 1- ELECTION OF DIRECTORS.............................................................................9
PROPOSAL NO. 2- APPROVAL OF 2001 LONG TERM STOCK INCENTIVE PLAN..................................................12
PROPOSAL NO. 3- RATIFICATION OF INDEPENDENT ACCOUNTANTS .........................................................14
EXECUTIVE OFFICERS AND KEY EMPLOYEES.............................................................................15
EXECUTIVE COMPENSATION...........................................................................................16
SUMMARY COMPENSATION TABLE..............................................................................16
OPTION GRANTS IN LAST FISCAL YEAR.......................................................................17
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES........................18
REPORT OF THE HUMAN RESOURCES COMMITTEE..........................................................................19
REPORT OF THE AUDIT COMMITTEE....................................................................................20
STOCK PERFORMANCE GRAPH..........................................................................................21
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................................22
ADDITIONAL QUESTIONS AND INFORMATION REGARDING THE ANNUAL MEETING AND STOCKHOLDER PROPOSALS......................23
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Q:What happens if additional proposals are presented at the meeting?....................................23
Q:What class of shares are entitled to be voted?........................................................23
Q:What is the quorum requirement for the meeting?.......................................................23
Q:Who will count the vote?..............................................................................23
Q:Is my vote confidential?..............................................................................23
Q:Who will bear the cost of soliciting votes for the meeting?...........................................23
Q:May I propose actions for consideration at next year's annual meeting of stockholders or
nominate individuals to serve as directors?...........................................................23
ANNEX A - Audit Committee Charter................................................................................25
ANNEX B - 2001 Long Term Stock Incentive Plan....................................................................29
</TABLE>
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Q: WHY AM I RECEIVING THESE MATERIALS?
A: The Board of Directors of Benton Oil and Gas Company is providing these
proxy materials to you in connection with Benton's annual meeting of
stockholders, which will take place on July 30, 2001. You are invited to
attend the meeting and are requested to vote on the proposals described in
this proxy statement.
Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this proxy statement relates to the proposals to
be voted on at the meeting, the voting process, the compensation of
directors and our most highly paid officers, and certain other required
information. Our 2000 Annual Report to Stockholders was previously mailed to
you.
Q: WHAT PROPOSALS WILL BE VOTED ON AT THE MEETING?
A: There are three proposals scheduled to be voted on at the meeting:
- The election of directors
- The approval of the 2001 Long Term Stock Incentive Plan
- The ratification of independent accountants
Q. WHAT SHARES OWNED BY ME CAN BE VOTED?
A: You may vote all shares owned by you as of June 13, 2001, the record date.
These shares include those (1) held directly in your name as a stockholder
of record and (2) held for you as the beneficial owner through a
stockbroker, bank or other nominee.
Q. WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD
AND AS A BENEFICIAL OWNER?
A: Many Benton stockholders hold their shares through a stockbroker, bank or
other nominee rather than directly in their own names. As summarized below,
there are some distinctions between shares held of record and those owned
beneficially.
STOCKHOLDER OF RECORD
If your shares are registered directly in your name with Benton's transfer
agent, Wells Fargo Bank Minnesota, you are considered the stockholder of
record with respect to those shares, and these proxy materials are being
sent directly to you by Benton. As a stockholder of record, you have the
right to grant your voting proxy directly to Benton or to vote in person at
the meeting. Benton has enclosed a proxy card for your use.
BENEFICIAL OWNER
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of the shares held in
street name, and these proxy materials are being forwarded to you by your
broker or nominee who is considered the stockholder of record with respect
to those shares. As the beneficial owner, you have the right to direct your
broker on how to vote and are also invited to attend the meeting. However,
since you are not the stockholder of record, you may not vote these shares
in person at the meeting. Your broker or nominee has enclosed a voting
instruction card for your use.
Q: HOW CAN I VOTE MY SHARES IN PERSON AT THE MEETING?
A: Shares held directly in your name as the stockholder of record may be voted
in person at the annual meeting. If you choose to do so, please bring the
enclosed proxy card or proof of identification.
EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING, WE RECOMMEND THAT
YOU ALSO SUBMIT YOUR PROXY AS DESCRIBED BELOW SO THAT YOUR VOTE WILL BE
COUNTED IF YOU LATER CANNOT ATTEND OR DECIDE NOT TO ATTEND THE MEETING.
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Q: HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE MEETING?
A: Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct your vote without attending the
meeting. You may vote by granting a proxy or, for shares held in street
name, by submitting voting instructions to your broker or nominee. In most
instances, you will be able to do this over the Internet, by telephone or
mail. Please refer to the summary instructions below and those included on
your proxy card or, for shares held in street name, the voting instruction
card included by your broker or nominee.
BY INTERNET - If you have Internet access, you may submit your proxy from
any location in the world by following the "Vote by Internet" instructions
on the proxy card.
BY TELEPHONE - If you live in the United States or Canada, you may submit
your proxy by following the "Vote by Telephone" instructions on the proxy
card,
BY MAIL - You may do this by signing your proxy card or, for shares held in
street name, the voting instruction card included by your broker or nominee
and mailing it in the enclosed, postage prepaid and addressed envelope. If
you provide specific voting instructions, your shares will be voted as you
instruct. If you sign but do not provide instructions, your shares will be
voted as described below in "HOW ARE VOTES COUNTED?"
Q: CAN I CHANGE MY VOTE?
A: You may change your proxy instructions at any time prior to the vote at the
annual meeting. For shares held directly in your name, you may accomplish
this by granting a new proxy by Internet, telephone or mail or by attending
the annual meeting and voting in person. Attendance at the meeting will not
cause your previously granted proxy to be revoked unless you specifically so
request. For shares held beneficially by you, you may accomplish this by
submitting new voting instructions to your broker or nominee.
Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote "FOR" all of the nominees, or
your vote may be "WITHHELD" for one or more of the nominees, in which case
your vote will be FOR all the nominees from whom you do not specifically
withhold your vote. For approval of the 2001 Long Term Stock Incentive Plan
and the ratification of independent accountants, you may vote "FOR,"
"AGAINST" or "ABSTAIN." If you "ABSTAIN," it has the same effect as a vote
"AGAINST."
If you sign your proxy card or broker instruction card with no further
instructions, your shares will be voted in accordance with the
recommendations of the Board.
Q: WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
A: In the election of directors, the six persons receiving the highest number
of "FOR" votes will be elected. The approval of the 2001 Long Term Stock
Incentive Plan and the ratification of independent accountants requires the
affirmative "FOR" vote of a majority of those shares present, in person or
by proxy, and entitled to vote. If you are the beneficial owner and do not
provide your broker or nominee with voting instructions, your shares may
constitute broker non-votes, as described in "WHAT IS THE QUORUM REQUIREMENT
FOR THE MEETING?" on page 23. In tabulating the voting results for any
particular proposal, shares which constitute broker non-votes are not
considered entitled to vote.
Q: WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY OR VOTING INSTRUCTION
CARD?
A: It means you have shares which are registered in different ways or are held
in more than one account. Please provide voting instructions for all proxy
and voting instruction cards you receive.
Q: WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?
A: We will announce preliminary voting results at the meeting and publish final
results in our quarterly report on Form 10-Q for the third quarter of 2001.
Additional Q&A information regarding the annual meeting and stockholder
proposals may be found on pages 23 and 24 below.
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STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF BENTON'S STOCK?
The following table shows the amount of Benton common stock
beneficially owned by any person or group that is the direct or beneficial owner
of more than 5% of Benton's common stock as of June 13, 2001.
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<CAPTION>
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AGGREGATE NUMBER PERCENT OF
OF SHARES SHARES
NAME AND ADDRESS BENEFICIALLY OWNED OUTSTANDING(1)
---------------- ------------------ --------------
<S> <C> <C>
Heartland Advisors, Inc. 3,416,200(2) 10.06%
789 North Water Street
Milwaukee, WI 53202
Cumberland Associates LLC 3,270,000(3) 9.63%
1114 Avenue of the Americas
New York, NY 10036
Dimensional Fund Advisors 2,317,100(4) 6.83%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
A.E. Benton 1,987,500(5) 5.62%
P.O. Box 600
Carpinteria, CA 93014
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(1) The percentage of common stock is based upon 33,946,919 shares of common
stock outstanding on June 13, 2001.
(2) This information is based upon a Schedule 13G filed with the Securities and
Exchange Commission on January 16, 2001.
(3) This information is based upon a Schedule 13G filed with the Securities and
Exchange Commission on February 14, 2001.
(4) This information is based upon a Schedule 13G filed with the Securities and
Exchange Commission on February 2, 2001.
(5) Includes 1,387,500 shares which may be acquired by exercise of vested
options which are currently exercisable or exercisable within 60 days. See
"Certain Relationships and Related Transactions."
HOW MUCH STOCK DO BENTON'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table shows the amount of common stock of Benton
beneficially owned (unless otherwise indicated) by Benton's directors and
nominees for director, the executive officers of Benton named in the Summary
Compensation Table below and the directors and executive officers of Benton as a
group. Except as otherwise indicated, all information is as of June 13, 2001.
The number of shares beneficially owned by each director or executive
officer is determined under rules of the Securities and Exchange Commission, and
the information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares as to
which the individual has the sole or shared voting power or investment power and
also any shares which the individual has the right to acquire as of August 12,
2001 (60 days after the record date of June 13, 2001) through the exercise of
stock options or other rights. Unless otherwise indicated, each person has sole
investment and voting power (or shares such powers with his spouse) with respect
to the shares set forth in the following table.
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NAME AMOUNT AND PERCENT OF
NATURE OF SHARES
BENEFICIAL OWNERSHIP (1) OUTSTANDING(2)
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<S> <C> <C> <C>
Peter J. Hill....................................... 50,000 Direct *
175,000 Unvested Options
Michael B. Wray..................................... 59,300 Direct 1.63%
503,000 Vested Options
Steven W. Tholen.................................... 125,000 Direct *
210,000 Unvested Options
Robert Stephen Molina............................... 0 Direct
115,000 Unvested Options
E. Sven Hagen....................................... **
David H. Pratt...................................... **
Chris C. Hickok..................................... 500 Direct *
123,333 Vested Options
51,667 Unvested Options
Andrei Popov........................................ 300 Direct *
132,501 Vested Options
49,166 Unvested Options
Stephen D. Chesebro'................................ 75,000 Direct *
John U. Clarke...................................... 47,600 Direct *
Byron A. Dunn....................................... 25,000 Direct *
H. H. Hardee........................................ 68,000 Direct *
Patrick M. Murray................................... 25,000 Direct *
All current directors and executive officers as a
Group (11) persons................................ 475,700 Direct 3.56%
758,834 Vested Options
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* Represents less than 1% of the Company's outstanding common stock.
** Information not available. Messrs. Hagen and Pratt resigned in 2001.
(1) "Vested Options" are stock options which may be exercised as of August 12,
2001. "Unvested Options" are options that have been granted, but are not yet
exercisable.
(2) Percentages are based upon 33,946,919 shares of common stock outstanding on
June 13, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and holders of more than 10% of our common stock
to file reports with the Securities and Exchange Commission regarding their
ownership and changes in ownership of our stock. Benton believes that during
fiscal 2000, its officers, directors and 10% stockholders complied with all
Section 16(a) filing requirements. In making this statement, Benton has relied
upon the written representations of its directors and officers.
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BOARD STRUCTURE AND COMPENSATION
Our Board currently has seven directors and the following two
committees: (1) Audit and (2) Human Resources. The membership at the conclusion
of fiscal 2000 and the function of each committee are described below. During
2000, the Board held eight meetings and 14 telephonic meetings. Messrs.
Chesebro', Clarke, Dunn, Hardee and Murray were appointed to the Board in
October 2000. Dr. Hill was elected to the Board in July 2000. Each nominee for
director listed below attended at least 75% of all Board and applicable
committee meetings held in 2000 from the date such nominee became a member of
the Board. Mr. Wray is not a nominee for election as a director at this meeting.
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NAME OF DIRECTOR AUDIT HUMAN RESOURCES
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Stephen D. Chesebro'........................ X
John U. Clarke.............................. X X
Byron A. Dunn............................... X
H. H. Hardee................................ X X
Peter J. Hill...............................
Patrick M. Murray........................... X
Michael B. Wray.............................
Number of Meetings in Fiscal 2000............ 4 1
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X = Committee member
THE AUDIT COMMITTEE
The Audit Committee reviews our auditing, accounting, financial
reporting and internal control functions and makes recommendations to the Board
for the selection of independent accountants. In discharging its duties, the
committee:
- reviews and approves the scope of the annual audit and the
independent accountant's fees;
- meets independently with our internal accounting staff, our
independent accountants and our senior management; and
- reviews the general scope of our accounting, financial
reporting, annual audit and internal audit program, and
matters relating to internal control systems as well as the
results of the annual audit.
Each member of the Audit Committee is an "independent director," as
defined in the rules of The New York Stock Exchange. The Audit Committee
operates pursuant to a written charter, a copy of which is attached as Appendix
A to this proxy statement.
THE HUMAN RESOURCES COMMITTEE
The Human Resources Committee determines, approves and reports to the
Board on all elements of compensation for our elected executive officers.
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DIRECTOR COMPENSATION ARRANGEMENTS
Directors are elected at the annual stockholders' meeting and hold
office until the next annual stockholders' meeting and until their successors
are elected and qualified. During 2000, our former directors who were not
Company officers were paid an annual retainer of $20,000 and were paid a fee of
$2,000 for each Board meeting attended, $500 for each committee meeting attended
and $250 for participation in telephonic meetings. Directors were reimbursed for
all travel and related expenses.
Additionally, our Director Stock Option Plan provides that each person
who is elected to serve as a non-employee director of our company is annually
and automatically granted an option to purchase 10,000 shares of common stock at
an exercise price equal to the market price on September 26 of each year.
However, no options to purchase common stock were granted to directors in 2000.
The Director Stock Option Plan was replaced with the Non-Employee Director Stock
Purchase Plan ("the Stock Purchase Plan") in January 2001.
The Stock Purchase Plan was adopted to encourage our directors to
acquire a greater proprietary interest in our company through the ownership of
our common stock. Each non-employee director may elect once each year, prior to
January 1, to be effective for the following year and until a new election is
made, to receive shares of our common stock for all or a portion of their fee
for serving as a director. The number of shares issuable will be equal to 1.5
times the amount of cash compensation due the director divided by the fair
market value of the common stock on the scheduled date of payment of the
applicable director's fee. The shares will have a restriction upon their sale
for one year from the date of issuance. With respect to 2001, upon election by
the stockholders at the 2001 Annual Meeting, each Director that has previously
elected to receive restricted stock in lieu of fees will be issued a number of
restricted shares equal to 1.5 times cash compensation of $37,000 divided by the
share price at the closing price on the date of the Annual Meeting.
In January 2001, each non-employee member of the Board of Directors
received 25,000 shares of the Company's restricted stock with respect to
Directors' service from the date of their election through the 2001 Annual
Meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
In June 2001, the Board of Directors amended the By-Laws to provide for
a Board composed of six members, effective immediately following this annual
meeting of stockholders. Therefore, there are six nominees for election to our
Board this year. Dr. Hill has served as a director since the last annual
meeting. The remaining nominees have served as directors since their appointment
to the Board during 2000. Information regarding the business experience of each
nominee is provided below. All directors are elected annually to serve until the
next annual meeting and until their respective successor is elected.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION TO THE BOARD
OF EACH OF THE FOLLOWING NOMINEES.
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STEPHEN D. CHESEBRO' From February 1997 to December 1997, Mr. Chesebro' served as
Appointed Director in October 2000 Group Vice President - Oil and Gas and from December 1997 until
Age 59 December 1998 he served as President and Chief Operating Officer
of Pennzoil Company. Mr. Chesebro' served as President and Chief
Executive Officer of PennzEnergy, the independent oil and gas
exploration and production company that was formerly a business
unit of Pennzoil Company, from December 1998 until he retired in
1999. From 1993 to 1996, Mr. Chesebro' was Chairman and Chief
Executive Officer of Tenneco Energy, a $4 billion global company
with 3,000 employees. Tenneco Energy was part of Tenneco, Inc.,
a worldwide corporation that owned diversified holdings in six
major industries. In 1964, Mr. Chesebro' graduated from the
Colorado School of Mines. He was awarded the school's
Distinguished Achievement Medal in 1991 and received his honorary
doctorate from the institution in 1998. He currently serves on
the school's visiting committee for petroleum engineering. In
1994, Mr. Chesebro' was the first American awarded the H.E. Jones
London Medal by the Institution of Gas Engineers, a British
professional association.
JOHN U. CLARKE Mr. Clarke is Managing Director of SCF Partners, a private equity
Appointed Director in October 2000 investment company focused on the oil and gas services and
Age 48 equipment sectors of the energy industry. From 1999 to 2000, Mr.
Clarke was Executive Vice President of Dynegy, Inc. where he was also
an Advisory Director and member of the Office of the Chairman. He had
responsibility for Dynegy's retail business, global technology and
e-commerce initiatives, mergers, acquisitions, strategic investments,
telecommunications, and branding activities. Mr. Clarke joined Dynegy
in April 1997 as Senior Vice President and Chief Financial Officer.
Prior to joining Dynegy, Mr. Clarke was a managing director and co-head
of specialty energy practice group with Simmons & Company
International, a Houston-based investment banking firm. From 1995 to
1997, he served as president of Concept Capital Group, a financial
advisory firm formed by Mr. Clarke in 1995. Mr. Clarke was Executive
Vice President and Chief Financial and Administrative Officer with
Cabot Oil and Gas from 1993 to 1995. He was with Transco Energy from
1981 to 1993, last serving as Senior Vice President and Chief Financial
Officer. Mr. Clarke began his professional career with Tenneco in 1978.
Mr. Clarke is a member of the Board of Directors of NATCO Group, Inc.,
a publicly traded engineering, construction and fabrication company
serving the petroleum industry. He is also a member of the Board of
Directors of FuelQuest.com, a market service provider to petroleum
marketers and Pilko & Associates, a management consulting firm
specializing in environmental health and safety issues. He also served
as director of Allwaste, Inc. Mr. Clarke earned a Bachelor of Arts
degree in Economics from the University of Texas in 1975 and a Master
of Business Administration degree from Southern Methodist University in
1977.
BYRON A. DUNN Mr. Dunn is an Executive Director in the energy investment
Appointed Director in October 2000 banking group of UBS Warburg LLC. Prior to joining UBS Warburg
Age 43 LLC in 1996, Mr. Dunn spent two years as a Senior Vice President
specializing in energy and oilfield services with Jeffries & Company,
Inc. Mr. Dunn also has over five years of operational experience in the
oil and gas industry, serving from 1979 through 1984 in drilling,
production and reservoir assignments for Chevron USA in Texas,
Louisiana and the Gulf of Mexico. In addition,
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during 1991 and 1992, Mr. Dunn spent considerable time in West Siberia,
Europe and South America as manager of upstream business development
and acquisitions for Phibro Energy. Mr. Dunn earned a Bachelor of
Science degree in Chemical Engineering from the Illinois Institute of
Technology in 1979 and a Master of Business Administration degree from
the University of Chicago in 1986.
H. H. HARDEE Mr. Hardee has been a Senior Vice President-Investment Officer
Appointed Director in October 2000 with Dain Rauscher Wessels since 1994. From 1991 through 1994,
Age 46 Mr. Hardee was a Senior Vice President with Kidder Peabody. From
1977 through 1991, Mr. Hardee was a Senior Vice President at
Rotan Mosle/Paine Webber Inc. During his tenure at Dain
Rauscher, he has been in the top 1% of his peer group and has
been a member of the Chairman's Council since joining the firm.
Mr. Hardee is a licensed investment advisor and has served in
various board capacities including investment policy and
syndicate underwriting. Mr. Hardee's expertise is advising high
net worth individuals and small to mid sized corporations. He
currently advises/manages over $200 million in assets. He is
also a published author in the area of financial investing. Mr.
Hardee is a former director of the Bank of Almeda and Gamma
Biologicals. He is also a former limited partner and advisory
director of the Houston Rockets of the National Basketball
Association and former advisory finance Chairman for the Ft. Bend
Texas Independent School District. Currently, he is an elder at
Southminster Presbyterian Church and a board member of the
Southminster Presbyterian School.
PETER J. HILL Dr. Peter J. Hill has served as our President and Chief Executive
Director since July 2000 Officer and a director since July 10, 2000. From 1998 until
Age 54 2000, Dr. Hill was Chief Operating Officer and Executive Director
of Hardy Oil & Gas in London, U.K. From 1995 until 1998, Dr. Hill
served as Managing Director of Deminex and was responsible for its
worldwide production and exploration activities, including projects in
Russia and Venezuela. Prior to 1995, Dr. Hill spent 22 years with
British Petroleum in a range of senior positions in Australia, Egypt,
New Zealand, the North Sea and South America. Dr. Hill served as Chief
Geologist for the BP Group and served from 1990 through 1994, as the
president of BP Venezuela and Regional Director - Central and South
America. Dr. Hill holds a B.S. Degree in Geology from Southampton
University, England, and a shared Doctorate of Philosophy in
Sedimentology from Southampton University and Trinity College, Ireland.
PATRICK M. MURRAY Mr. Murray became President, Chief Executive Officer and a
Appointed Director in October 2000 Director of Dresser, Inc. in 2001. From 1998 through 2001, Mr.
Age 58 Murray served as president of Dresser Equipment Group Inc. From
1994 through 1998, he held positions as Senior Vice President,
Strategic Initiatives and Vice President, Operations of Dresser
Industries, Inc. Prior to joining Dresser, Mr. Murray spent nine
years as President of Sperry-Sun Drilling Services, Inc., a
former subsidiary of Baroid Corporation and a subsidiary of
Dresser Industries, Inc. He joined NL Industries, Inc. in 1973
and served in a variety of increasingly senior management
positions, including Controller. Mr. Murray has a B.S. degree
and an MBA from Seton Hall University. Mr. Murray is a member of
the American Petroleum Institute, the Society of Petroleum
Engineers and is on the board of the Valve Manufacturers
Association.
</TABLE>
11
<PAGE> 13
PROPOSAL NO. 2
APPROVAL OF 2001 LONG TERM STOCK INCENTIVE PLAN
Benton's Board of Directors, subject to stockholder approval, has
adopted a 2001 Long Term Stock Incentive Plan (the "2001 Plan") which provides
for grants of stock options to eligible participants including employees,
officers, directors, consultants and other key persons. Benton adopted the 1999
Stock Option Plan for employees and directors. This plan was designed to provide
an additional incentive for key participants for Benton's success to align the
interests of the participants with the interests of stockholders and to provide
incentives to exert maximum efforts for the success of Benton by giving them the
opportunity to continue to acquire a proprietary interest in Benton and to
participate in its success. The 2001 Plan is intended to continue to provide
these incentives.
If this Plan is adopted by the stockholders, then no further options
will be granted under the 1999 Stock Option Plan. As of June 13, 2001, there
were 619,500 shares of common stock available for grant under the 1999 Stock
Option Plan.
The full text of the Plan is attached as Appendix B. The principal
features of the Plan are outlined below:
DESCRIPTION OF THE PLAN
The Plan authorizes the grant to participants of options to purchase up
to 1,697,000 shares of Benton common stock. The Plan will be administered by the
Human Resources Committee of the Board of Directors, which is appointed by a
majority of the Board. The committee construes and interprets the terms and
provisions of the plan and has the power to determine to whom grants are made,
whether they are transferable, the time of exercise within the option term and
the size of the option grant. No officer may be granted more than 500,000
options during any one fiscal year. Options are granted only to employees,
officers, directors, consultants and other persons providing key services to the
Company or a subsidiary and the purchase price of each option granted cannot be
less than 100% of the fair market value of the common stock on the date of
grant.
Options granted under the Plan are incentive stock options or
non-qualified stock options as defined under the Internal Revenue Code of 1986,
as amended. The shares issued upon the exercise of options granted may be
previously unissued shares, reacquired shares, or shares bought in the open
market. The purchase price for all shares purchased pursuant to options
exercised must be either paid in cash, or paid in full in Benton common stock
valued at fair market value on the date of exercise, or a combination of cash
and common stock.
The term of each option may not exceed ten years and, additionally, may
not exceed twelve months following the termination of providing services to
Benton, unless modified by the Human Resources Committee.
Options granted under the Plan are not transferable except by will or
the laws of descent and distribution. Options may be exercised during the
participant's lifetime only by the participant or the participant's guardian or
legal representative.
The Board may amend, modify or terminate the Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other purpose
permitted by law. Stockholder approval will be sought for plan amendments if it
is determined to be required or advisable under Securities and Exchange
Commission regulations, applicable stock exchange rules, or other applicable
laws or regulations.
TAX CONSEQUENCES OF THE PLAN
No taxable income is realized by the participant upon the grant of an
incentive or non-qualified stock option, and no tax deduction is then available
to Benton. Upon exercise of the option, the excess of the fair market value of
the shares on the date of exercise over the option price will be taxable to the
participant and deductible by Benton. The tax basis of shares acquired will be
the fair market value on the date of exercise.
No taxable income is realized by a participant, and no tax deduction is
available to Benton upon either the grant or exercise of an incentive stock
option or non-qualified stock option. If a participant holds the shares
12
<PAGE> 14
acquired upon the exercise of an incentive stock option for more than one year
after the stock option exercise and more than two years after the date of the
option grant (the "holding period"), the difference between the option price and
the amount realized upon the sale of the shares will be treated as long-term
capital gain or loss and no deduction will be available to Benton. If the shares
are transferred before the expiration of the holding period, the participant
will realize ordinary income, and Benton will be entitled to a deduction on a
portion of the gain, if any, equal to the difference between the option price
and the lesser of the fair market value of the shares on the date of exercise or
the amount realized on the disposition. Any further gain or loss will be taxable
as long-term or short-term capital gain or loss depending upon the holding
period before disposition. When a holder of a non-qualified stock option
exercises his or her option, ordinary income will be realized and will be
subject to withholding. Generally, such income will be realized at the time of
exercise and in an amount equal to the excess, measured at the time of exercise,
of the then fair market value over the option price. Benton will generally be
entitled to a deduction for Federal income tax purposes equal to the amount of
ordinary income realized by the option holder, subject to certain withholding
requirements.
If stockholders approve the Plan, we believe that compensation received
by participants on the exercise of non-qualified options, or the disposition of
shares acquired upon the exercise of any incentive stock options, will be
considered performance-based compensation and thus not subject to the $1,000,000
limit on deductibility of compensation under Section 162(m) of the Code.
Participants are responsible for the payment of all withholding taxes
due in connection with the exercise or disposition of a stock option.
Participants may direct us to withhold shares to be issued on an option exercise
to satisfy the withholding obligation.
The foregoing summary is not a complete description of the U.S. Federal
income tax aspects of the Plan. Moreover, the foregoing summary relates only to
Federal income taxes; there may also be Federal estate and gift tax consequences
associated with the Plan, as well as foreign, state and local tax consequences.
CHANGE OF CONTROL
Upon a change in control (as defined in the Plan), any stock option
that is not then exercisable will become fully exercisable. During the 60-day
period following a change in control, a participant will have the right, in lieu
of paying the exercise price for the shares of common stock under an option, to
elect to surrender all or part of the option to Benton and to receive cash, or
in certain circumstances shares of common stock, in an amount equal to the
amount by which the change in control price (as defined in the Plan) exceeds the
exercise price per share of the common stock underlying the option.
PLAN AWARDS
Any awards under the Plan will be at the discretion of the Human
Resources Committee or the Board. Therefore, it is not possible at present to
determine the amount or form of any award that would be available for grant to
any individual during the term of the Plan or that would have been granted
during 2000, had the Plan been in effect.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL TO
APPROVE THE 2001 LONG TERM STOCK INCENTIVE PLAN. IN ORDER TO BE APPROVED, THE
AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF THE SHARES PRESENT AND ENTITLED TO
VOTE IS NEEDED.
13
<PAGE> 15
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed
PricewaterhouseCoopers LLP as Benton's independent accountants to audit Benton's
consolidated financial statements for the year ended December 31, 2001. During
2000, PricewaterhouseCoopers LLP, served as Benton's independent accountants and
provided certain tax and consulting services. Representatives of
PricewaterhouseCoopers LLP are expected to attend the meeting where they will be
available to respond to questions and, if they desire, to make a statement.
Audit Fees. The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services rendered for the audit of our annual financial statements
for 2000 and the review of the financial statements in our Forms 10-Q was
$539,500. Included in the aggregate fees are 100 percent of the audit fees
billed by PricewaterhouseCoopers LLP in 2000 to Geoilbent and Arctic Gas
totaling $250,000.
All Other Fees. The aggregate fees billed by PricewaterhouseCoopers LLP
for other non-audit services rendered to us for the year ended December 31, 2000
was $258,000.
The Audit Committee has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS BENTON'S INDEPENDENT ACCOUNTANTS
FOR 2001. If the appointment is not ratified, our Board will select other
independent accountants.
14
<PAGE> 16
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table provides information regarding each of Benton's
executive officers and certain key employees.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Dr. Peter J. Hill (1) 54 President and Chief Executive Officer
Michael B. Wray 65 Chairman of the Board
Steven W. Tholen 50 Senior Vice President - Finance and
Administration, Chief Financial Officer and
Treasurer
Robert Stephen Molina 53 Vice President, General Counsel and Secretary
Chris C. Hickok 43 Vice President - Controller and Chief
Accounting Officer
Andrei E. Popov 37 Vice President - Corporate Business
Development
</TABLE>
------------------
(1) See Dr. Hill's biography on page 11.
Michael B. Wray has served as Chairman of the Board since October 2000,
and will continue in that role until this annual meeting of stockholders. He was
named to the Office of the Chief Executive in August 1999 upon the resignation
of Mr. A.E. Benton and was succeeded by Dr. Hill as Chief Executive in August
2000. Mr. Wray served as Vice Chairman from February 1998 to October 2000. From
January 1996 to February 1998, Mr. Wray served as our President. He served as
our Chief Financial Officer from January 1996 to August 1997. From January 1994
through December 1995, Mr. Wray served as a consultant to us. From January 1992
until July 1993, Mr. Wray served as Vice President-Finance and Administration of
Del Mar Operating, Inc. From 1985 through 1991, Mr. Wray served as an
independent financial consultant to oil and gas exploration and production
companies. From 1979 to 1985, Mr. Wray served as a senior financial officer of
Guardian Oil Company, Huffco Petroleum Corporation and May Petroleum, Inc. Prior
to that time, Mr. Wray worked for over 15 years in New York as an investment
banker, security analyst and officer in various investment firms including
Donaldson, Lufkin & Jenrette, Inc., Drexel & Co. and L.F. Rothschild & Co. Mr.
Wray began his career as an attorney with Morgan, Lewis & Bockius in
Philadelphia. Mr. Wray holds a B.A. degree from Amherst College and a L.L.B.
degree from Columbia Law School.
Steven W. Tholen has served as our Senior Vice President - Finance and
Administration and Chief Financial Officer since January 1, 2001. From June 1995
through 2000, Mr. Tholen was Vice President and Chief Financial Officer of Penn
Virginia Corporation. From 1990 to 1995, Mr. Tholen served in various capacities
at Cabot Oil and Gas Corporation, including Treasurer. Mr. Tholen holds a B.S.
degree from St. John's University and an M.B.A. degree from the University of
Denver.
Robert Stephen Molina has served as our Vice President, General Counsel
and Secretary since January 5, 2001. From 1981 until December 2000, Mr. Molina
served Atlantic Richfield Company in various legal capacities including Chief
Counsel of ARCO Latin America from 1997 to 2000, Special International Counsel
at ARCO International from 1994 to 1997, Vice President and General Counsel of
Vastar Resources, Inc. from 1993 to 1994, and General Attorney of ARCO Oil and
Gas Company in 1993. Mr. Molina holds a B.A. degree from University of Texas at
Austin and a J.D. degree from Southern Methodist University School of Law.
Chris C. Hickok was first appointed controller in November 1991 and was
elected Vice President - Controller and Chief Accounting Officer in January
1995. From March 1979 to September 1991, Mr. Hickok was employed by Mission
Resources, Inc. and held various positions in the accounting and finance
department including Financial Analyst, Assistant Controller and Controller. Mr.
Hickok holds a B.S. degree in business administration from California State
University at Hayward and is a Certified Management Accountant.
Andrei E. Popov has served as our Vice President - Corporate Business
Development since May 1998. Mr. Popov was first employed by us in May 1992 and
was appointed manager of corporate business development in
15
<PAGE> 17
1995. From 1986 to 1992, Mr. Popov was employed in various managerial and
professional positions in Russia, most recently as Deputy Director General of
the Russian Canadian Joint Venture EMING, managing operations of the joint
venture on behalf of the Canadian party. Prior to that he held research
positions for the Russian Oil and Gas Geophysical Association "Neftegeophysica,"
one of the largest geophysical contractors in Russia, and the Academy of Science
Institute of Physics in Moscow. Mr. Popov received his M.S. degree in physics
from the Moscow Engineering Physics Institute.
EXECUTIVE COMPENSATION
The following table discloses compensation received by Benton's Chief
Executive Officers and its four other most highly paid executive officers for
the fiscal year ending December 31, 2000 and their compensation for each of the
other years indicated.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------- ------------------
OTHER ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
------------------------------------- ------- ------------ ------------- ----------------- ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Peter J. Hill, 2000 $163,077 $0 (2) 175,000 $67
President and Chief Executive
Officer (1)
Michael B. Wray, 2000 $300,000 $0 (2) 0 $ 1,751(5)
Office of the Chief Executive (3) 1999 203,077 40,000 175,000 2,478
1998 400,000 0 48,000 3,233
Bruce M. McIntyre, 2000 $0 $0 (2) 0 $ 79,000(4)
Office of the Chief Executive (4) 1999 0 0 60,000 57,250
1998 0 0 0 10,000 38,250
E. Sven Hagen, 2000 $250,000 $0 (2) 0 $262(5)
Senior Vice President - 1999 250,000 $40,000 225,000 353
Exploration and Production (7) 1998 250,000 0 20,000 445
David H. Pratt 2000 $230,769 $0 (2) 65,000 $ 12,162(6)
Senior Vice President- 1999 0 0 60,000 130,000
Chief Financial Officer 1998 0 0 0 120,000
And Treasurer (6)
Chris C. Hickok, 2000 $180,000 $0 (2) 0 $262(5)
Vice President - Controller 1999 150,000 0 115,000 353
1998 150,000 0 5,000 445
Andrei Popov, 2000 $170,000 $0 (2) 0 $236(5)
Vice President - Business 1999 150,000 0 115,000 262
Development 1998 140,385 0 10,000 288
</TABLE>
(1) Dr. Hill was elected as President and Chief Executive Officer on August
29, 2000.
(2) The aggregate amount of additional compensation reported is less than
the lesser of $50,000 or 10 percent of the total annual salary and
bonus reported for the named executive officer. No other annual
compensation was paid or payable to the named executive officers in the
years indicated.
(3) Mr. Wray resigned as President of Benton and was appointed Vice
Chairman of the Board in February 1998. Mr. Wray was named to the
Office of the Chief Executive on August 31, 1999 and was succeeded by
Dr. Hill as Chief Executive on August 29, 2000. Mr. Wray was elected as
Chairman of the Board on October 5, 2000. See "Certain Relationships
and Related Party Transactions."
16
<PAGE> 18
(4) Mr. McIntyre was named to the Office of Chief Executive on August 31,
1999 and was succeeded by Dr. Hill as Chief Executive on August 29,
2000. He received consulting fees of $23,500 and $11,000 during 2000
and 1999, respectively, for serving in this capacity. Mr. McIntyre
received directors fees of $55,500, $46,250 and $38,250 in 2000, 1999
and 1998, respectively. Mr. McIntyre resigned as a director on October
5, 2000 and is not an employee.
(5) Represents premiums paid by Benton with respect to term life insurance
on behalf of the named executive officers.
(6) Mr. Pratt was elected Senior Vice President in January 2000. From July
1996 to January 2000, Mr. Pratt was a financial consultant to Benton
Oil and Gas Company. He received $11,667, $130,000 and $120,000 in
2000, 1999 and 1998, respectively, for serving in this capacity.
Additionally, premiums paid by Benton for term life insurance on behalf
of Mr. Pratt were $495 in 2000. Mr. Pratt resigned in March 2001. In
connection with his resignation, we entered into a separation agreement
with Mr. Pratt and paid him a lump sum severance payment of $480,769
(not reflected in this table).
(7) Mr. Hagen resigned in January 2001. In connection with his resignation,
we entered into a separation agreement with Mr. Hagen and paid him a
lump sum severance payment of $375,000 (not reflected in this table).
The following table shows information concerning options to purchase
Common Stock granted to each of the named executive officers during 2000.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------
PERCENT OF TOTAL GRANT
OPTIONS/SARS DATE
GRANTED TO EXERCISE OR PRESENT
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION VALUE
NAME GRANTED (#) (1) FISCAL YEAR (2) ($/SHARE) DATE ($) (3)
---- --------------- ----------------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Peter J. Hill 175,000 72.9% $2.125 8/29/10 $305,466
Michael B. Wray 0 - - - -
Bruce M. McIntyre 0 - - - -
E. Sven Hagen 0 - - - -
David H. Pratt(4) 65,000 27.1% 1.875 2/2/10 $89,706
Chris C. Hickok 0 - - - -
Andrei Popov 0 - - - -
</TABLE>
(1) The options granted in 2000 are exercisable 50% after the first year,
75% after the second year and 100% after the third year.
(2) Benton granted options representing 240,000 shares to employees in
2000.
(3) To calculate the present value of option/SAR grants, we have used the
Black-Scholes option pricing model. The actual value, if any, an
executive may realize will depend on the excess of the stock price over
the exercise price on the date the option is exercised, so that there
is no assurance the value realized by an executive will be at or near
the value estimated by the Black-Scholes model. The estimated values
under that model for the stock options granted on August 29 and
February 2 are based on assumptions that include (i) a stock price
volatility of 73.83 percent, (ii) a risk-free rate of return based on a
10-year U.S. Treasury rate at the time of grant of 5.81 percent and
6.71 percent for Dr. Hill's grant and Mr. Pratt's grant, respectively,
and (iii) an option exercise term of ten years. No adjustments were
made for the non-transferability of the options or to reflect any risk
of forfeiture prior to vesting. The Securities and Exchange Commission
requires disclosure of the potential realizable value or present value
of each grant. The use of the Black-Scholes model to indicate the
present value of each grant is not an endorsement of this valuation,
which is based on certain assumptions, including the assumption that
the option will be held for the full ten-year term prior to exercise.
(4) Mr. Pratt forfeited 32,500 of the options to purchase common stock
granted on February 2, 2000 when he resigned in March 2001.
17
<PAGE> 19
The following table provides information regarding the exercise of
stock options during 2000 by each of the named executive officers and the
year-end value of unexercised options held by such officers.
AGGREGATE OPTIONS/SAR EXERCISES IN 2000 AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
OPTIONS/SARS AT YEAR-END AT YEAR END (1)
------------------------ ----------------------------
NUMBER OF
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------ -------- --------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter J. Hill 0 0 0 175,000 0 0
Michael B. Wray 40,000 14,400 391,167 111,833 0 0
Bruce M. McIntyre 10,000 16,725 140,000 0 0 0
E. Sven Hagen 0 0 274,166 135,834 0 0
James M. Whipkey 33,000 39,188 73,667 0 0 0
David H. Pratt 0 0 83,333 105,000 0 0
Chris C. Hickok 0 0 110,000 65,000 0 0
Andrei Popov 0 0 109,168 72,499 0 0
</TABLE>
(1) The value of unexercised options is based upon the difference between the
exercise price and the average of the high and low market price on December
31, 2000 of $1.56.
EMPLOYMENT AGREEMENTS AND SEVERANCE PLAN
The Company has entered into employment agreements (the "Employment
Agreements") with Dr. Hill and Messrs. Tholen and Molina which contain severance
provisions in the event of a change in control of the Company. Following a
change in control of the Company, if the employee is "involuntarily terminated"
(as defined in the Employment Agreement), the employee is entitled to a cash
severance payment equal to a multiple of his annual base salary at the rate in
effect prior to termination. For Dr. Hill, such multiple is three times his
annual base salary. For Messrs. Tholen and Molina, such multiple is one times
their annual base salary. Effective July 10, 2000, Dr. Hill entered into an
Employment Agreement for a term of three years with a base salary of $350,000.
Effective January 1, 2001, Mr. Tholen entered into an Employment Agreement for a
term of two years with a base salary of $250,000. Effective January 1, 2001, Mr.
Molina entered into an Employment Agreement for a term of two years with a base
salary of $200,000. Salaries are reviewed annually and bonuses are within the
discretion of the Board of Directors.
Mr. Benton had entered into a consulting agreement with the Company,
which also provided for severance payments in the event of a change in control,
equal to three times his annual consulting payments. In May 2001, the Company
and Mr. Benton entered into an agreement to terminate his consulting agreement.
The Company had previously entered into Employment Agreements with
Messrs. Popov and Hickok which contained severance provisions in the event of a
change in control of the Company. In May 2001, the Employment Agreement with Mr.
Popov was amended, with the result that Mr. Popov will receive benefits, if any,
in the event of a change in control or severance under the Company's Change of
Control Severance Plan rather than under the Employment Agreement, and is
entitled to receive benefits under the Company's Relocation/Reduction in Force
Plan, described below, in the event of his employment termination. The Company's
Change of Control Severance Plan provides severance benefits in the event of a
change of control to all eligible employees of the Company in an amount
calculated pursuant to the Plan, up to a total of 24 months salary and bonus. In
June 2001, the Employment Agreement with Mr. Hickok was terminated. Mr. Hickok
is entitled to receive benefits under the Company's Relocation/Reduction in
Force Severance Plan pursuant to which benefits are paid based upon salary and
years of service with the Company in the event of termination of employment or
relocation, as defined in that Plan.
18
<PAGE> 20
In January 2000, Mr. Wray entered into an Employment Agreement for a
term of one year, with an annual base salary of $300,000. In May 2001, Mr.
Wray's Employment Agreement was terminated. See "Certain Relationships and
Related Transactions."
REPORT OF THE HUMAN RESOURCES COMMITTEE
The Human Resources Committee of the Board of Directors has furnished
the following report on executive compensation. This report 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 or under
the Securities Exchange Act of 1934, except to the extent that Benton Oil and
Gas Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
2000 COMPENSATION. During 2000, several members of the Company's Board
of Directors resigned, and new members were elected to the Board. No current
member of the Human Resources Committee was a member of the Committee that
determined the executive officers' (including the chief executive officers')
compensation for 2000. No current member of the Board of Directors was a member
of the Compensation Committee that determined 2000 compensation. Therefore, this
Report is limited to disclosure of the Human Resource Committee's philosophy
with respect to future compensation decisions.
During 2000, Messrs. Hill, Wray and McIntyre each served in the role
of chief executive officer. Messrs. Wray and McIntyre agreed to serve in the
Office of the Chief Executive until the election of Dr. Hill in July 2000.
During 2000, Mr. Wray was paid a total of $300,000, which included compensation
for his service in the Office of the Chief Executive, and Mr. McIntyre was paid
a total of $23,500 for serving in the Office of the Chief Executive. To the
knowledge of the members of the Human Resources Committee, there were no formal
or fixed guidelines established with respect to the cash or stock option
components of compensation paid to Messrs. Wray and McIntyre.
Dr. Hill assumed the position of Chief Executive Officer and President
on July 10, 2000. Dr. Hill's annual compensation for 2000 was $163,077, payable
pursuant to the Employment Agreement entered into with the Company, which calls
for an annual base salary for 2000 of $350,000 and a target bonus of 50% of his
base salary, based on performance criteria that were to be established related
to the Company's cash flow and reserves. Dr. Hill also received stock options to
purchase 175,000 shares of the Company's stock at the closing price on the
effective date of this employment, based upon negotiations with the Company's
Board of Directors.
COMPENSATION PHILOSOPHY. The Company's executive compensation
philosophy has historically been and is currently focused on aligning the
interests of its management team with those of its stockholders. In order to
attract, maintain and reward its key management personnel, the Committee
believes that it is appropriate to grant stock options to these employees and to
newly hired key personnel as an integral part of their overall compensation. In
addition, the Committee believes that generally, it is limited to cash and stock
options as components of total compensation it offers to executive officers. Due
to the Company's cash constraints, it believes that offering stock options will
be an important component in total compensation to executive officers in the
future. The Committee has no fixed and formal guidelines for determining the
number of options to be granted. However, the Committee believes that granting
stock options has the inherent benefit of directly aligning compensation to
stock performance and thus to increasing stockholder value. The Human Resources
Committee will consider the amount of unvested options held by an executive
officer or the Chief Executive Officer in determining the amount of options to
award. The base salary, bonus and number of stock options to be granted to an
individual will be based upon the Committee's understanding of the performance
of each individual determined after consultations with and recommendations from
the Chief Executive Officer and after a subjective performance review of each of
the executive officers. Certain of the executive officers have entered into
employment agreements with the Company, which provide for an initial base salary
with an annual review of such employee's salary by the Company.
For compensation payable in 2001, the Human Resources Committee
intends to review published compensation data and proxies from other comparable
public companies when making compensation awards to the Company's executive
officers. The Company has not hired any independent consultants to review
compensation data from comparable public companies. From its general review of
published compensation data and proxy statements from other public companies,
the Human Resources Committee intends to establish salaries and cash bonuses
comparable to what the officer could receive from other exploration and
production companies.
19
<PAGE> 21
The Human Resources Committee of the Board of Directors has not
formalized a policy with respect to qualifying compensation paid to executive
officers under Section 162(m) of the Internal Revenue Code, but intends to study
the Company's compensation plans to develop a formal policy, if necessary.
STEPHEN D. CHESEBRO'
JOHN U. CLARKE
H.H. HARDEE
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Board's Compensation Committee is or has
been an officer or employee of Benton.
REPORT OF THE AUDIT COMMITTEE
We have reviewed and discussed the Company's audited financial
statements for the year ended December 31, 2000 with management and
PricewaterhouseCoopers LLP, certified public accountants, the independent
auditors and accountants for the Company. In addition, we discussed with
PricewaterhouseCoopers LLP the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU Section 380) with respect
to those statements.
We have received the written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independence Standards Board Standard No.
1 (Independence Standards Board Standard No. 1, Independence Discussions and
Audit Committees) and have discussed with PricewaterhouseCoopers LLP its
independence in connection with its audit of the Company's most recent financial
statements.
Based upon these reviews, discussions, and management's assurances, we
recommend to the Board of Directors that these audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.
Patrick M. Murray, John U. Clarke, Byron A. Dunn and H.H. Hardee are
the members of the Audit Committee. Each of these persons is independent, as
defined in Sections 303.01(B)(2)(a) and (3) of the New York Stock Exchange's
listing standards.
The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is attached to this Proxy Statement as Exhibit A.
The information in the foregoing paragraphs shall not be deemed to be
soliciting material, or be filed with the SEC or subject to Regulation 14A or
14C or to liabilities of Section 18 of the Securities Act of 1993, nor shall it
be deemed to be incorporated by reference into any filing under the Securities
Act or the Securities Exchange Act of 1934, except to the extent that we
specifically incorporate these paragraphs by reference.
PATRICK M. MURRAY, CHAIRMAN
JOHN U. CLARKE
BYRON A. DUNN
H.H. HARDEE
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<PAGE> 22
STOCK PERFORMANCE GRAPH
The graph below shows the cumulative total stockholder return over the
five-year period ending December 31, 2000, assuming the investment of $100 on
December 31, 1995 in each of Benton's common stock, the S&P Composite -500 Stock
Index and the Wilshire Domestic Oil Index.
[CHART]
Assumes that the value of the investment in Benton stock and each index
was $100 at December 31, 1995 and that all dividends were reinvested.
PLOT POINTS
(DECEMBER 31 OF EACH YEAR)
<TABLE>
<CAPTION>
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Benton $100 $151 $86 $20 $13 $10
S&P 500 $100 $123 $164 $211 $255 $232
Wilshire Domestic $100 $139 $161 $106 $125 $169
Oil
</TABLE>
The Wilshire Domestic Oil Index, as prepared by Wilshire Associates
Incorporated, is composed of companies that are classified as domestic oil
companies under Standard Industrial Classification codes (1300-1399, 2900-2949,
5170-5179 and 5980-5989). After an individual review of each company, Wilshire
Associates determines whether such company is primarily engaged in the domestic
oil industry and is appropriate for its index. A list of the companies
comprising the Wilshire Domestic Oil index will be provided without charge upon
request to Investor Relations, Benton Oil and Gas Company, 6267 Carpinteria
Avenue, Suite 200, Carpinteria, California 93013, or can be obtained upon
written request to Wilshire Associates Incorporated, 1299 Ocean Avenue, Santa
Monica, California 90401.
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<PAGE> 23
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From 1996 through 1998, we made unsecured loans to our then Chief
Executive Officer, A.E. Benton. Each of these loans was evidenced by a
promissory note bearing interest at the rate of 6 percent per annum. We
subsequently obtained a security interest in Mr. Benton's shares of stock, and
proceeds from stock option agreements. At December 31, 1998, the $5.5 million
owed to us by Mr. Benton exceeded the value of our collateral, due to the
decline in the price of our stock. As a result, we recorded an allowance for
doubtful accounts of $2.9 million. The portion of the note secured by our stock
and stock options, $2.1 million, was presented on the Balance Sheet as a
reduction from Stockholders' Equity at December 31, 1998. In August 1999, Mr.
Benton filed a Chapter 11 (reorganization) bankruptcy petition in the U.S.
Bankruptcy Court for the Central District of California, in Santa Barbara,
California. We recorded an additional $2.8 million allowance for doubtful
accounts for the remaining principal and accrued interest owed to us at June 30,
1999, and continue to record additional allowances as interest accrues ($0.8
million for the period July 1, 1999 to March 31, 2001). Measuring the amount of
the allowances requires judgments and estimates, and the amount eventually
realized may differ from the estimate.
In February 2000, we entered into a Separation Agreement and a
Consulting Agreement with Mr. Benton pursuant to which we retained Mr. Benton as
an independent contractor to perform certain services for us. Mr. Benton has
agreed to propose a plan of reorganization in his bankruptcy case that provides
for the repayment of our loans to him. Under the proposed plan, which we
anticipate will be submitted to the bankruptcy court in late June or early July
2001, we will retain our security interest in Mr. Benton's 600,000 shares of our
stock and in his stock options. Repayment of our loans to Mr. Benton may be
achieved through Mr. Benton's liquidation of certain real and personal property
assets and a phased liquidation of stock resulting in Mr. Benton's exercise of
his stock options. The amount that we eventually realize, including Benton Oil
and Gas Company stock and the timing of receipt of payments, will depend upon
the timing and results of the liquidation of Mr. Benton's assets.
For the three months ended March 31, 2000 and 2001, we paid to Mr.
Benton $55,962 and $80,833, respectively, and have paid a total of $536,545 from
February 2000 through May 11, 2001 for services performed under the Consulting
Agreement. On May 11, 2001 the Consulting Agreement was terminated.
In May 2001, we entered into a Termination Agreement and a Consulting
Agreement with our Chairman of the Board, Michael B. Wray. Under the Termination
Agreement, Mr. Wray has agreed to terminate any employment relationship or
officer position with us (other than Chairman of the Board) and any of our
subsidiaries and affiliates as of May 7, 2001. As consideration for entering
into the Termination Agreement and settlement of all sums owed to Mr. Wray for
his services as director through the 2001 Annual Meeting of Stockholders or as
an employee, we paid Mr. Wray $100,000. Upon execution of the Termination
Agreement, all stock options previously granted to Mr. Wray vested in their
entirety. Additionally, under the terms of the Consulting Agreement, Mr. Wray
received $100,000 and will provide consulting services on matters pertaining to
our business and that of our affiliates through December 31, 2001.
In September 1997, we loaned $500,000 to Mr. Whipkey, our then Senior
Vice President and Chief Financial Officer, for the purchase of a home in
connection with his recruitment and relocation. The loan bore interest at 6
percent and was secured by a mortgage on the home. On December 30, 1998 Mr.
Whipkey made an interest payment in the amount of $10,000. During 1999, Mr.
Whipkey made payments of principal and interest of $126,091, and on February 9,
2000, he made a payment of principal and interest of $95,605. On April 25, 2000,
Mr. Whipkey repaid the entire balance of principal and interest outstanding on
his loan.
At April 30, 2001, excluding the loans outstanding from Mr. Benton
described above, one former employee owed a balance of $33,732 on a loan bearing
interest at 6 percent per annum.
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<PAGE> 24
ADDITIONAL QUESTIONS AND INFORMATION REGARDING
THE ANNUAL MEETING AND STOCKHOLDER PROPOSALS
Q: WHAT HAPPENS IF ADDITIONAL PROPOSALS ARE PRESENTED AT THE MEETING?
A: Other than the three proposals described in this proxy statement, we do not
expect any matters to be presented for a vote at the annual meeting. If you
grant a proxy, the persons named as proxy holders, Steven W. Tholen and
Robert Stephen Molina, will have the discretion to vote your shares on any
additional matters properly presented for a vote at the meeting. If for any
unforeseen reason any of our nominees is not available as a candidate for
director, the persons named as proxy holders will vote your proxy for such
other candidate or candidates as may be nominated by the Board of Directors.
Q: WHAT CLASS OF SHARES ARE ENTITLED TO BE VOTED?
A: There is only one class of common stock. Each share of our common stock
outstanding as of the close of business on June 13, 2001, the record date,
is entitled to one vote at the annual meeting. On the record date, we had
approximately 33,946,919 shares of common stock issued and outstanding.
Q: WHAT IS THE QUORUM REQUIREMENT FOR THE MEETING?
A: The quorum requirement for holding the meeting and transacting business is a
majority of the outstanding shares entitled to be voted. The shares may be
present in person or represented by proxy at the meeting. Both abstentions
and broker non-votes are counted as present for the purpose of determining
the presence of a quorum. Generally, broker non-votes occur when shares held
by a broker for a beneficial owner are not voted with respect to a
particular proposal because (1) the broker has not received voting
instructions from the beneficial owner and (2) the broker lacks
discretionary voting power to vote such shares.
Q: WHO WILL COUNT THE VOTE?
A: A representative of Wells Fargo Bank Minnesota, Benton's transfer agent,
will tabulate the votes and act as the inspector of election.
Q: IS MY VOTE CONFIDENTIAL?
A: Proxy instructions, ballots and voting tabulations that identify individual
stockholders are handled in a manner that protects your voting privacy. Your
vote will not be disclosed either within Benton or to third parties except
(1) as necessary to meet applicable legal requirements, (2) to allow for the
tabulation of votes and certification of the vote, or (3) to facilitate a
successful proxy solicitation by our Board. Occasionally, stockholders
provide written comments on their proxy card which are then forwarded to
Benton management.
Q: WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE MEETING?
A: Benton will pay the entire cost of preparing, assembling, printing, mailing
and distributing these proxy materials, except that certain expenses for
Internet access will be incurred by you if you choose to access the proxy
materials and/or vote over the Internet. In addition to the mailing of these
proxy materials, the solicitation of proxies or votes may be made in person,
by telephone or by electronic communication by our directors, officers, and
employees, who will not receive any additional compensation for such
solicitation activities. We will reimburse brokerage houses and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses for forwarding proxy and solicitation materials to stockholders.
Q: MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR'S ANNUAL MEETING OF
STOCKHOLDERS OR NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS?
A: You may submit proposals for consideration at future stockholder meetings,
including director nominations.
STOCKHOLDER PROPOSALS: In order for a stockholder proposal to be considered
for inclusion in Benton's proxy statement for next year's annual meeting,
the written proposal must be received by Benton no later than March 1, 2002.
Such proposals also will need to comply with Securities and Exchange
Commission regulations regarding the inclusion of stockholder proposals in
company-sponsored proxy materials. Similarly, in order for a
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<PAGE> 25
stockholder proposal to be raised from the floor during next year's annual
meeting, written notice must be received by Benton no later than May 17,
2002 and shall contain such information as required under our Bylaws. If the
actual date for the 2001 annual meeting is set earlier than July 30, 2002,
then the deadline for notice of shareholder proposals to be raised from the
floor will be correspondingly earlier than May 17, 2002.
NOMINATION OF DIRECTOR CANDIDATES: You may propose director candidates for
consideration by our Board's Nominating Committee. In addition, our Bylaws
permit stockholders to nominate directors at a stockholder meeting. In order
to make a director nomination at next year's stockholder meeting, you must
notify Benton not fewer than 75 days in advance of the annual meeting of
stockholders. Thus, since July 30, 2001 is specified as the meeting date in
this year's proxy statement, in order for any such nomination notice to be
timely for next year's annual meeting, it must be received by Benton no
later than May 17, 2002 (i.e., 75 days prior to July 30, 2002). In addition,
the notice must meet all other requirements contained in our Bylaws. If the
actual date for the 2002 annual meeting is set earlier than July 30, then
the deadline for director nominations will be correspondingly earlier than
May 17, 2002.
COPY OF BYLAW PROVISIONS: You may contact our Corporate Secretary at our
headquarters for a copy of the relevant Bylaw provisions regarding the
requirements for making stockholder proposals and nominating director
candidates.
By Order of the Board of Directors
/s/ PETER J. HILL
PETER J. HILL
President and Chief Executive Officer
June 15, 2001
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<PAGE> 26
ANNEX A
AUDIT COMMITTEE CHARTER
25
<PAGE> 27
BENTON OIL AND GAS COMPANY
(the "Company")
AUDIT COMMITTEE CHARTER
(this "Charter")
1. The Audit Committee (the "Committee") shall be comprised entirely of
independent directors, each of whom shall be, in the judgment of the board of
directors of the Company (the "Board"), financially literate or be able to
become financially literate within a reasonable period of time after appointment
to the Committee. At least one member of the Committee must have accounting or
related financial management expertise, as the Board interprets such
qualification in its business judgment.
The number of members comprising the Committee shall be determined by
the Board, but in no event shall the Committee consist of less than three
independent directors. Members of the Committee may have no relationship to the
Company that may interfere with the exercise of their independence from
management and the Company. Each member of the Committee must also meet the
independence and any other requirements of the Audit Committee Policy of the New
York Stock Exchange. The Committee members may designate one member to serve as
Chairman. The Committee members shall be appointed by the Board and shall serve
terms of such length as the Board may determine. Committee members shall serve
at the pleasure of the full Board.
2. The purposes of the Committee are to:
(a) oversee the Company's accounting and financial reporting
policies and practices, as well as its internal controls;
(b) oversee the quality and objectivity of the Company's financial
statements and the independent audit thereof;
(c) ascertain the independence and objectivity of the Company's
independent auditors; and
(d) act as a liaison between the Company's independent auditors
and the Board.
The function of the Committee is oversight of the auditing process of
the Company and its subsidiaries. It is the responsibility of management to
maintain appropriate systems for accounting and the independent auditors'
responsibility to plan and perform a proper audit. The Company and the Board
recognize that financial management members and the independent auditors have
more time, knowledge and detailed information concerning the Company than do
Committee members. Consequently, in performing its functions, the Committee is
not expected to provide any expert or special assurance as to the Company's
financial statements or any professional certification as to the independent
auditors' work. The independent auditors are ultimately accountable to the Board
and the Committee, as representatives of the Company's shareholders. The
Committee and the Board have the ultimate authority and responsibility to
select, evaluate and, where appropriate, replace the independent auditors (or,
if applicable, to nominate the independent auditors to be proposed for
shareholder approval in any proxy statement).
3. The Committee shall prepare the report required by the rules of the
Securities and Exchange Commission (the "Commission") to be included in the
Company's annual proxy statement.
4. The Committee shall review the internal accounting and financial
controls of the Company's foreign and other operations to determine whether such
internal controls are adequate, effective and in compliance with the regulatory
reporting requirements, if any, of the particular country. The Committee shall
report any significant deficiencies to the full Board along with curative
recommendations.
5. The Committee shall review with management and the independent
auditors the internal accounting reports and quarterly and annual financial
statements along with related footnotes.
6. To carry out its purposes, the Committee shall have the following
duties and responsibilities:
(a) to evaluate and recommend the selection, retention or termination
of independent auditors and, in connection therewith, to evaluate the
proposed fees and other compensation, if any, to be paid to the
auditors for audit and non-audit services;
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<PAGE> 28
(b) to assess and evaluate the independence of the auditors by (i)
ensuring that the auditors submit on a periodic basis to the Committee
a formal written statement of the auditors delineating all
relationships between the auditors and the Company and its officers,
subsidiaries and affiliates; (ii) actively engaging in a dialogue with
the auditors with respect to any disclosed relationships or services
that may affect the objectivity and independence of the auditors and
(iii) recommending that the Board take appropriate action in response
to the auditors' report to satisfy itself of the auditors'
independence;
(c) to meet with the Company's independent auditors, as necessary (i)
to review the arrangements for and scope of the annual audit and any
special audits; (ii) to discuss any matters of concern relating to the
Company's financial statements, including any adjustments to such
statements recommended by the independent auditors, or other results of
said audit(s); (iii) to consider the independent auditors' comments
with respect to the Company's financial policies, reporting procedures,
internal accounting controls and management's responses thereto; and
(iv) to review the form of opinion the independent auditors propose to
render to the Board and shareholders; (v) discuss the matters required
to be discussed by Statement on Auditing Standards No. 61 relating to
the conduct of the audit;
(d) meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor
and control such exposures;
(e) to consider the effect upon the Company of any changes in
accounting principles or practices proposed by management;
(f) review with the Company's General Counsel legal matters that may
have a material impact on the financial statements, the Company's
compliance policies and any material reports or inquires received from
regulators or governmental agencies.
(g) review with management and the independent auditor the Company's
quarterly and yearly financial statements prior to the filing of such
statements with the Commission;
(h) to investigate improprieties or suspected improprieties in the
Company's operations brought to the attention of the Committee;
(i) to review the findings of examinations conducted by the Commission
and consult with Company management on appropriate responses;
(j) to review and investigate any violations of the Company's Insider
Trading Policy brought to the Committee's attention and report the
Committee's findings to the Board with recommendations for appropriate
action;
(k) to report its activities to the Board on a regular basis and to
make such recommendations with respect to the above and other matters
as the Committee may deem necessary and appropriate;
(l) to review such other matters as may be appropriately delegated to
the Committee by the Board;
(m) to oversee that the Company, its subsidiaries, and affiliates
comply with applicable regulatory requirements, including, but not
limited to the Securities Act of 1933, as amended, and the Securities
and Exchange Act of 1934, as amended (the "Securities Acts");
(n) obtain from the Independent Auditor assurance that Section 10A of
the Private Securities Litigation Reform Act of 1995 has not been
implicated;
(o) obtain reports from management and the Independent Auditor that the
Company's subsidiary/foreign affiliated entities are in conformity with
applicable legal requirements and the Company's Code of Conduct;
(p) advise the Board of Directors with respect to the Company's
policies and procedures regarding compliance with applicable laws and
regulations and with the Company's Code of Conduct;
(q) understand and assess Company processes and policies for
communication with shareholders, institutional investors, analysts and
brokers;
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<PAGE> 29
(r) meet annually with the Chief Executive Officer, Chief Financial
Officer and General Counsel to obtain and understanding of the investor
community's overall views and concerns about the Company; and
(s) conduct a self-assessment program to determine how effectively the
Audit Committee members are meeting their responsibilities.
7. The Committee shall meet at such times and from time to time as it
deems appropriate and is empowered to hold special meetings as circumstances
require.
8. The Committee shall meet as may be appropriate with the Chief
Financial Officer of the Company and any other officers as circumstances may
require.
9. The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including the authority to retain special
counsel and other experts or consultants at the expense of the Company.
10. In addition to the duties stated in this Charter, the Committee
shall undertake such additional activities within the scope of its primary
function as the Committee may from time to time determine or as may otherwise be
required by law, the Company's Certificate of Incorporation (the "Certificate"),
Bylaws or the Board.
11. While the Committee has the responsibilities and powers set forth
in this Charter, it is not the duty of the Committee to plan or conduct audits
or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditors. Nor is it
the duty of the Committee to conduct investigations, to resolve disagreements,
if any, between management and the independent auditors or to assure the
compliance with laws and regulations and the Company's policies.
12. The Company shall indemnify, in accordance with and to the fullest
extent now or hereafter permitted by law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit, or proceedings, whether civil, criminal, administrative or investigative,
(including, without limitation, an action by or in the right of the company) by
reason of his acting as a member of the Committee against any liability or
expense actually or reasonably incurred by such person; provided that the member
acted in good faith and in a manner he or she reasonably believed to be lawful
and in or not opposed to the best interests of the Company. This right to
indemnity held by the members of the Committee is in addition to any other
remedies afforded the members under the Company's Certificate and Bylaws.
13. The Committee shall review this Charter at least once annually and
shall recommend any changes to the Board. The Board shall review and reassess
the adequacy of this Charter on an annual basis.
14. The material in this Charter is not soliciting material, is not
deemed filed with the Commission and is not incorporated by reference in any
filing of the Company under the Securities Acts, whether made before or after
the date this Charter is first included in the Company's annual proxy statement
filed with the Commission and irrespective of any general incorporation language
in such filing.
15. This Charter shall be construed in accordance with and governed by
the laws of the State of Delaware.
16. This Charter may not be amended, modified or supplemented except by
a writing signed and adopted by the then incumbent members of the Committee and
approved by the Board.
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ANNEX B
2001 LONG TERM STOCK INCENTIVE PLAN
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<PAGE> 31
BENTON OIL AND GAS COMPANY
2001 LONG TERM STOCK INCENTIVE PLAN
I. PURPOSE
The purpose of this 2001 Long Term Stock Incentive Plan (the "Plan") is to
enable Benton Oil and Gas Company (the "Company"), and such of its subsidiaries
(as defined in Section 424(f) of the Internal Revenue Code of 1986 (the "Code"))
and affiliates as the Board of Directors of the Company (the "Board") shall from
time to time designate ("Participating Subsidiaries"), to attract and retain
qualified Participants, and to provide such persons with additional motivation
to advance the interests of the Company and its Participating Subsidiaries. The
Plan provides for the grant of Stock Options, Limited Rights and Supplemental
Bonuses to Participants.
II. CERTAIN DEFINITIONS
2.1 "CHANGE OF CONTROL". The term "Change of Control" shall mean any of
the following events:
(A) any Person, as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than Company, any trustee or other fiduciary
holding securities under an employee benefit plan of Company, or any company
owned, directly or indirectly, by the stockholders of Company in substantially
the same proportions as their ownership of stock of Company) is or becomes the
"Beneficial Owner" as defined in Rule 13d-3 under the Exchange Act, directly or
indirectly, of 25% or more of the combined voting power of Company's outstanding
securities;
(B) individuals who constitute the Board on the effective date
of the Plan (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any Person becoming a director subsequent to
such effective date whose election, or nomination for election by Company's
stockholders, was approved by a vote of at least a majority of the directors
comprising the Incumbent Board (either by a specific vote or by approval of the
proxy statement of Company in which such person is named as a nominee for
director, without objection to such nomination) shall be, for purposes of this
clause (B), considered as though such Person were a member of the Incumbent
Board.
(C) the stockholders of the Company shall approve a merger,
consolidation, recapitalization, or reorganization of the Company, a reverse
stock split of outstanding voting securities, or consummation of any such
transaction if stockholder approval is not obtained, other than (1) any such
transaction which would result in at least 50% of the total voting power
represented by the voting securities of the surviving entity outstanding
immediately after such transaction being "Beneficially Owned" (as defined above)
by 75% or more of the holders of outstanding voting securities of the Company
immediately prior to the transaction, with the voting power of each such
continuing holder relative to other such continuing holders not substantially
altered in the transaction, or (2) a merger or consolidation effected to
implement a recapitalization of Company (or similar transaction) in which no
"Person" (as defined above) acquires more than 50% of the combined voting power
of the Company's then outstanding securities; or
(D) the stockholders of Company approve a plan of complete
liquidation of Company or an agreement for the sale or disposition by Company of
all or substantially all of Company's assets.
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Notwithstanding anything in the foregoing to the contrary, no Change of Control
shall be deemed to have occurred with respect to any particular Participant by
virtue of any transaction which results in such Participant, or a group of
Persons which includes such Participant, acquiring, directly or indirectly, 25%
or more of the combined voting power of the Company's outstanding securities.
2.2 "COMMON STOCK". Common Stock means Common Stock, par value $0.01
share of the Company.
2.3 "DISINTERESTED PERSON". A Disinterested Person is a person who, at
the time he exercises discretion in administering the Plan, qualifies as a
"disinterested person" under Rule 16b-3(c)(2) under the Exchange Act.
2.4 "EMPLOYEE". An Employee is an employee of the Company or any
Participating Subsidiary.
2.5 "EXCHANGE ACT". "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
2.6 "FAIR MARKET VALUE". The Fair Market Value of a share of Common
Stock on any date shall be the closing price of Common Stock as reported in the
Wall Street Journal for securities listed on the NASDAQ or the New York Stock
Exchange for the date in question, or if no such closing price is available, the
closing price on the next preceding date for which a closing price was so
reported, unless otherwise specified by the Subcommittee.
2.7 "LIMITED RIGHT". A Limited Right is the right to receive payment,
in cash, following a Change of Control, of an amount equal to the product
computed by multiplying (i) the excess of (A) the higher of (x) the Minimum
Price Per Share, if the Change of Control occurs as a result of a Transaction,
tender offer or exchange offer, or (y) the highest Fair Market Value per share
during the period commencing thirty days prior to the Change of Control and
ending immediately prior to the date the Limited Right is exercised, over (B)
the Option Price per share under the Stock Option to which such Limited Right
relates, by (ii) the number of shares of Common Stock as to which such Limited
Right is being exercised provided that, in the case of any ISO, the amount
computed under part (A) of the foregoing formula shall be equal to the Fair
Market Value of Common Stock on the date the Limited Right is in fact exercised,
and provided further that, in the case of any other Limited Right that has not
been outstanding at least seven months at the time the Change of Control occurs,
the amount computed under part (A) of the foregoing formula shall be equal to
the highest amount that could be computed under part (y) of such formula using a
Fair Market Value that first became determinable six months or more after the
date of grant of the Limited Right (with such Fair Market Value otherwise
determined in accordance with the foregoing formula).
2.8 "MINIMUM PRICE PER SHARE". Minimum Price Per Share means the
highest gross price (before brokerage commissions and soliciting dealer's fees)
paid or to be paid for a share of Common Stock (whether by way of exchange,
conversion, distribution or upon liquidation or otherwise) in any Transaction,
tender offer or exchange offer occurring prior to the date on which such Limited
Right is exercised. If the consideration paid or to be paid in any such
Transaction, tender offer or exchange offer shall consist, in whole or in part,
of consideration other than cash, the Subcommittee shall take such action, as in
its judgment it deems appropriate,
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<PAGE> 33
to establish the cash value of such consideration, but such valuation shall not
be less than the value, if any, attributed to such consideration in writing by
any party to such Transaction, tender offer or exchange offer other than the
Company.
2.9 "PARTICIPANT". A Participant is an Employee of the Company or a
Subsidiary, and any director, consultant or other person providing key services
to the Company or a Subsidiary to whom a Stock Option, Limited Right or
Supplemental Bonus is granted.
2.10 "STOCK OPTION". A Stock Option is the right granted under the Plan
to a Participant to purchase, at such time or times and at such price or prices
("Option Price") as are determined by the Subcommittee, the number of shares of
Common Stock determined by the Subcommittee.
2.11 "SUBCOMMITTEE". Subcommittee means the Committee described in
Section IV.
2.12 "SUPPLEMENTAL BONUS". A Supplemental Bonus is the right to receive
payment, in shares of Common Stock, cash or a combination of shares of Common
Stock and cash, of an amount specified by the Subcommittee pursuant to Section
7.6.
2.13 "TRANSACTION". A Transaction is (A) any consolidation or merger of
the Company in which the Company is not the surviving corporation other than a
merger solely to effect a reincorporation or a merger of the Company as to which
stockholder approval is not required pursuant to Sections 251(f) or 253 of the
Delaware General Corporation Law, (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of 50% or more
of the assets or earnings power of the Company, or (C) the adoption of any plan
or proposal for the liquidation or dissolution of the Company.
For purposes of this Plan, the Subcommittee may, by resolution, clarify the date
as of which a Change of Control shall be deemed to have occurred.
III. INCENTIVE STOCK OPTIONS AND NONSTATUTORY STOCK OPTIONS
The Stock Options granted under the Plan may be either:
(a) Incentive Stock Options ("ISOs") which are intended to be "incentive stock
options" as that term is defined in Section 422 of the Code: or
(b) Nonstatutory Stock Options ("NSOs") which are intended to be options that do
not qualify as "incentive stock options" under Section 422 of the Code.
The individual Option Agreement(s) shall clearly designate whether the Stock
Options granted are ISOs or NSOs. Subject to other provisions of the Plan, a
Participant may receive ISOs and NSOs at the same time, provided that the ISOs
and NSOs are clearly designated as such.
Except as otherwise expressly provided herein, all of the provisions and
requirements of the Plan relating to Stock Options shall apply to ISOs and NSOs.
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IV. ADMINISTRATION
4.1 SUBCOMMITTEE. The Plan shall be administered by a Subcommittee of
the Board. The Subcommittee shall consist of at least two members of the Board
of Directors who are not employed by the Company and who shall be Disinterested
Persons. Subject to the provisions of the Plan, the Subcommittee shall have full
authority to administer the Plan, including authority to grant awards under the
Plan and determine the terms thereof, to interpret and construe any provision of
the Plan and any Stock Option, Limited Right or Supplemental Bonus granted
thereunder, to adopt such rules and regulations for administering the Plan,
including those it may deem necessary in order to comply with the requirements
of the Code or in order that Stock Options that are intended to be ISOs will be
classified as incentive stock options under the Code, or in order to conform to
any regulation or to any change in any law or regulation applicable thereto and
to make all other decisions and determinations under the plan.
4.2 ACTIONS OF SUBCOMMITTEE. All actions taken and all interpretations
and determinations made by the Subcommittee in good faith (including
determinations of Fair Market Value) shall be final and binding upon all
Participants, the Company and all other interested persons. No member of the
Subcommittee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan, and all members of
the Subcommittee shall, in addition to their rights as directors, be fully
protected by the Company with respect to any such action, determination or
interpretation.
V. ELIGIBILITY AND PARTICIPATION
5.1 ELIGIBLE PARTICIPANTS. Grants of Stock Options, Limited Rights and
Supplemental Bonuses may be made to Participants. The Subcommittee shall from
time to time determine the Employees to whom Stock Options shall be granted, the
number of shares of Common Stock subject to each Stock Option to be granted to
each such Participant, the Option Price of such Stock Options and the terms and
conditions of such Stock Options, subject to the provisions of this Plan. No
officer may be granted more than 500,000 options during any one fiscal year.
5.2 OPTION PRICE. Except as otherwise provided in Section 7.8, the
Option Price of any ISO or NSO shall not be less than the Fair Market Value of a
share of Common Stock on the date on which the Stock Option is granted and shall
not be less than par value of Common Stock. If an ISO is granted to an Employee
who then owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any parent or subsidiary corporation
of the Company, the Option Price of such ISO shall be at least 110% of the Fair
Market Value of the Common Stock subject to the ISO on the date such ISO is
granted, and such ISO shall not be exercisable after five years after the date
on which it was granted.
5.3 OPTION AGREEMENT. Each Stock Option shall be evidenced by a written
agreement ("Option Agreement") containing such terms and provisions as the
Subcommittee may determine, subject to the provisions of this Plan.
VI. SHARES OF COMMON STOCK SUBJECT TO THE PLAN
6.1 MAXIMUM NUMBER. The maximum aggregate number of shares of Common
Stock that may be issued under the Plan shall be 1,697,000 shares, subject to
adjustment as provided in Section 6.2. Such shares may be authorized and
unissued shares or may be treasury shares. The aggregate Fair Market Value
(determined as of the time the ISO is granted) of the Common
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Stock as to which all ISOs granted to an individual may first become exercisable
in a particular calendar year may not exceed $100,000, provided that to the
extent that Stock Options intended to be ISOs (together with all incentive stock
options granted under other Company plans to such individual) become exercisable
in a given year in excess of this limit, such Stock Options shall be deemed to
be NSOs and shall be exercisable as such. If any shares of Common Stock subject
to Stock Options are not purchased or otherwise paid for before such Stock
Options expire or otherwise terminate, unless such Stock Options are surrendered
upon exercise of Limited Rights, such shares may again be made subject to Stock
Options or otherwise issued under the Plan. Shares shall be treated as issued
under the Plan and counted against the limitation set forth in this Section 6.1,
including with respect to the payment of Supplemental Bonuses, in a manner that
complies with applicable requirements under Rule 16b-3 under the Exchange Act.
On an annual basis, Stock Options may not be granted to any individual
participant in excess of 500,000 Options.
6.2 CAPITAL CHANGES. In the event any changes are made to the shares of
Common Stock (whether by reason of merger, consolidation, reorganization,
recapitalization, stock dividend in excess of one percent (1%) at any single
time, stock split, combination of shares, exchange of shares, extraordinary cash
dividend, change in corporate structure or otherwise), the Subcommittee shall,
in order to prevent dilution or enlargement of Participants' rights, make
appropriate adjustments in: (i) the number and kind of shares theretofore made
subject to Stock Options, and in the Option Price of said shares; and (ii) the
aggregate number of shares which may be issued under the Plan. If any of the
foregoing adjustments shall result in a fractional share, the fraction shall be
disregarded, and the Company shall have no obligation to make any cash or other
payment with respect to such a fractional share.
VII. EXERCISE OF STOCK OPTIONS
7.1 TIME OF EXERCISE. Subject to the provisions of the Plan, including
without limitation Section 7.7, the Subcommittee, in its discretion, shall
determine the time when a Stock Option, or a portion of a Stock Option, shall
become exercisable, and the time when a Stock Option, or a portion of a Stock
Option, shall expire. Such time or times shall be set forth in the Option
Agreement evidencing such Stock Option. An ISO shall expire, to the extent not
exercised, no later than the tenth anniversary of the date on which it was
granted, and an NSO shall expire, to the extent not exercised, no later than 10
years and one day after the date on which it was granted. The Subcommittee may
accelerate the vesting of any Participant's Stock option by giving written
notice to the Participant. Unless otherwise determined by the Subcommittee, the
acceleration of the exercise period of a Stock Option shall not affect the
expiration date of that Stock Option.
7.2 SURRENDER OF SHARES IN PAYMENT OF EXERCISE PRICE. The Subcommittee,
in its sole discretion, may permit a Participant to surrender to the Company
shares of the Common Stock as part or full payment for the exercise of a Stock
Option. Such surrendered shares shall be valued at their Fair Market Value on
the date of exercise. Unless otherwise determined by the Subcommittee, any such
shares surrendered by the Participant shall have been held by him for at least
six months prior to surrender.
7.3 USE OF PROMISSORY NOTE: EXERCISE LOANS. The Subcommittee may, in
its sole discretion, impose terms and conditions, including conditions relating
to the manner and timing of payments of the Option Price, on the exercise of
Stock Options. Such terms and conditions may include, but are not limited to,
permitting a Participant to deliver to the Company his
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promissory note as payment for the exercise of a Stock Option; provided that,
with respect to any promissory note given as payment or partial payment for the
exercise of an ISO, all terms of such note shall be determined at the time a
Stock Option is granted and set forth in the Option Agreement. The Subcommittee,
in its sole discretion, may authorize the Company to make a loan to a
Participant in connection with the exercise of Stock Options, or authorize the
Company to arrange or guaranty loans to a Participant by a third party,
including in connection with broker assisted cashless exercises. The foregoing
notwithstanding, a Participant shall pay at least the par value of the Common
Stock to be acquired upon exercise of a Stock Option in the form of lawful
consideration under the Delaware General Corporation Law prior to issuance of
such shares.
7.4 STOCK RESTRICTION AGREEMENT. The Subcommittee may provide that
shares of Common Stock issuable upon the exercise of a Stock Option shall, under
certain conditions, be subject to restrictions whereby the Company has a right
of first refusal with respect to such shares or a right or obligation to
repurchase all or a portion of such shares, which restrictions may survive a
Participant's term of employment with the Company. The acceleration of time or
times at which the Stock Option becomes exercisable may be conditioned upon the
Participant's agreement to such restrictions.
7.5 TERMINATION OF EMPLOYMENT BEFORE EXERCISE. If a Participant's
employment with the Company or a Participating Subsidiary shall terminate for
any reason other than the Participant's disability, any ISO then held by the
Participant, to the extent then exercisable under the applicable Option
Agreement(s), shall remain exercisable after the termination of his employment
for a period of three months. If the Participant's employment is terminated
because the Participant is disabled within the meaning of Section 22(e)(3) of
the Code, any ISO then held by the Participant, to the extent then exercisable
under the applicable Option Agreement(s), shall remain exercisable after the
termination of his employment for a period of one year (but in no event beyond
ten years from the date of grant of the ISO). If the Stock Option is not
exercised during the applicable period, it shall be deemed to have been
forfeited and of no further force or effect. The period and extent to which an
NSO may be exercised following termination of employment shall be determined by
the Subcommittee.
7.6 GRANT OF SUPPLEMENTAL BONUSES. The Subcommittee, either at the time
of grant or at any time prior to exercise of any NSO or Limited Right, may
provide for a Supplemental Bonus from the Company or Participating Subsidiary in
connection with a specified number of shares of Common Stock then purchasable,
or which may become purchasable, under an NSO, or a specified number of Limited
Rights which may be or become exercisable. A Supplemental Bonus shall be
automatically payable upon the exercise of the NSO or Limited Right with regard
to which such Supplemental Bonus was granted. A Supplemental Bonus shall not
exceed the amount necessary to reimburse the Participant for the income tax
liability incurred by him upon the exercise of the NSO or upon the exercise of
such Limited Right, calculated using the maximum combined federal and applicable
state income tax rates then in effect and taking into account the tax liability
arising from the Participant's receipt of the Supplemental Bonus, all as
determined by the Subcommittee. The Subcommittee may, in its discretion, elect
to pay any part or all of the Supplemental Bonus in: (i) cash; (ii) shares of
Common Stock; or (iii) any combination of cash and shares of Common Stock;
provided that bonuses payable in respect of Limited Rights shall be payable only
in cash. The Subcommittee's election shall be made by giving written notice to
the Participant not later than 90 days after the related exercise, which notice
shall specify the portion which the Subcommittee elects to pay in cash, shares
of Common Stock or a combination thereof. In the event any portion is to be paid
in shares of Common Stock, the number of shares to be delivered shall be
determined by dividing the amount which
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<PAGE> 37
the subcommittee elects to pay in shares of Common Stock by the Fair Market
Value of one share of Common Stock on the date of exercise. Any fractional share
resulting from any such calculation shall be disregarded. Said shares, together
with any cash payable to the Participant, shall be delivered within said 90-day
period.
7.7 OPTION VESTING UPON CHANGE OF CONTROL OF THE COMPANY. In the event
of a Change of Control of the Company, the vesting of Stock Options granted
pursuant to the Plan shall automatically be accelerated, so that all Stock
Options outstanding at the time of such Change of Control will be exercisable
immediately except as otherwise provided in Section 2.1.
7.8 STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the Plan may, in the discretion of the Subcommittee, be granted
either alone or in addition to, in tandem with, or in substitution for, any
other award granted under the Plan or any other plan of the Company or any
Participating Subsidiary or any other right of a Participant to receive payment
from the Company or any Participating Subsidiary. If an award is granted in
substitution for another such award, the Committee shall require the surrender
of such other award in consideration for the grant of the new award. Awards
granted in addition to or in tandem with other awards may be granted either as
of the same time as or a different time from the grant of such other awards. The
per share Option Price of any Stock Option:
(A) Granted in substitution for an outstanding award shall be
not less than the lesser of the Fair Market Value of a share of Common Stock at
the date such substitute award is granted or such Fair Market Value at that date
reduced to reflect the fair market value (as determined by the Subcommittee) at
that date of the award required to be surrendered by the Participant as a
condition to receipt of the substitute award; or
(B) Retroactively granted in tandem with an outstanding award
shall be not less than the lesser of the Fair Market Value of a share of Common
Stock at the date of grant of the later award or at the date of grant of the
earlier award.
Except for the Option Price required to be paid upon the exercise of Stock
Options and except as provided in this Section 7.8, only services may be
required as consideration for the grant of any award under the Plan.
VIII. LIMITED RIGHTS
8.1 GRANT OF LIMITED RIGHTS. The Subcommittee may in its discretion
grant Limited Rights to a Participant concurrently with the grant of each ISO or
at any time with respect to any NSO. Such Limited Rights shall be exercisable
with respect to the number of shares of Common Stock which are, or may become,
purchasable under any such Stock Option. The Subcommittee may, in its
discretion, specify the terms and conditions of such rights, including without
limitation the date or dates upon which such rights shall expire and become void
and unexercisable, except that Limited Rights granted with respect to an ISO
shall only be exercisable, and shall expire, at the time or times the ISO is
exercisable and expires, respectively. In any event, a Limited Right shall not
be exercisable within six months from the date of grant of the Limited Right.
Each Participant to whom Limited Rights are granted shall be given written
notice advising him of the grant of such rights and specifying the terms and
conditions of the rights, which shall be subject to all the provisions of this
Plan.
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<PAGE> 38
8.2 EXERCISE OF LIMITED RIGHTS. Subject to the limitations set forth in
Section 8.1, a Limited Right may be exercised only during the period beginning
on the first day following the occurrence of a Change of Control and ending on
the sixtieth day following such date; provided, however, that if the Change of
Control occurs prior to the expiration of six months after the date of grant of
a Limited Right, then such Limited Right shall be exercisable for a period of 60
days following expiration of such six-month period. Upon the occurrence of a
tender or exchange offer constituting a Change of Control, a Limited Right may
be exercised in such manner regardless of whether the Board supports or opposes
such tender or exchange offer. A Participant shall exercise his Limited Rights
by delivering a written notice to the Subcommittee specifying the number of
shares with respect to which he exercises Limited Rights and agreeing to
surrender the right to purchase an equivalent number of shares of Common Stock
subject to his Stock Option. If a Participant exercises Limited Rights, payment
of his Limited Rights shall be made in accordance with Section 8.3 on or before
the thirtieth day after the date of exercise of the Limited Rights. A Limited
Right shall remain exercisable during the exercise periods specified in
accordance with Section 8.1 and this Section in the event of a termination of
employment of the Participant holding the Limited Right after a Change of
Control. Notwithstanding the above, upon a termination of the employment of the
holder of the Limited Right before the occurrence of any Change of Control, the
Limited Right shall expire immediately.
8.3 FORM OF PAYMENT. If a Participant elects to exercise Limited Rights
as provided in Section 8.2, the Company shall pay to the Participant in cash the
amount set forth in Section 2.7 hereof, calculated with respect to the shares as
to which the Participant has exercised Limited Rights, within thirty days of the
date of exercise of the Limited Rights. If such amount is not paid in full
within the prescribed period, the Company shall be liable to such Participant
for the costs of collection of such amount, including attorney's fees.
8.4 TERMINATION. When a Limited Right is exercised, the Stock Option to
which it relates, if any, shall cease to be exercisable to the extent of the
number of shares of Common Stock with respect to which such Limited Right was
exercised. Upon the exercise or termination of a Stock Option, any Limited Right
granted with respect thereto shall terminate to the extent of the number of
shares as to which such Stock Option was exercised or terminated.
IX. NO CONTRACT OF EMPLOYMENT
Nothing in this Plan shall confer upon the Participant the right to
continue in the employ of the Company, or any Participating Subsidiary, nor
shall it interfere in any way with the right of the Company, or any such
Participating Subsidiary, to discharge the Participant at any time for any
reason whatsoever, with or without cause. Nothing in this Article IX shall
affect any rights or obligations of the Company or any Participant under any
written contract of employment.
X. NO RIGHTS AS A STOCKHOLDER
A Participant shall have no rights as a stockholder with respect to any
shares of Common Stock subject to a Stock Option, until such Stock Option is
exercised. Except as provided in Section 6.2, no adjustment shall be made in the
number of shares of Common Stock issued to a Participant, or in any other rights
of the Participant upon exercise of a Stock Option by reason of any dividend,
distribution or other right granted to stockholders for which the record date is
prior to the date of exercise of the Participant's Stock Option.
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XI. NON-TRANSFERABILITY
No Stock Option, Limited Right or Supplemental Bonus right granted
under this Plan, nor any other rights acquired by a Participant under this Plan,
shall be assignable or transferable by a Participant, other than by will or the
laws of descent and distribution, or pursuant to a qualified domestic relations
order as defined under the Internal Revenue Code or Title I of the Employee
Retirement Income Security Act of 1974, and any ISO shall be exercisable, during
his lifetime, only by him. In the event of a Participant's death, the Stock
Option or any Limited Right or Supplemental Bonus right may be exercised by the
Personal Representative of the Participant's estate or, if no Personal
Representative has been appointed, by the successor or successors in interest
determined under the Participant's will or under the applicable laws of descent
and distribution.
XII. COMPLIANCE WITH RULE 16b-3
It is the intent of the Company that the Plan comply in all respects
with Rule l6b-3 under the Exchange Act in connection with any award granted to a
person who is subject to Section 16 of the Exchange Act. Accordingly, if any
provision of the Plan or any agreement hereunder does not comply with the
requirements of Rule 16b-3 as then applicable to any such person, such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements with respect to such person.
XIII. AMENDMENT
The Company by action of the Board may amend, modify or terminate this
Plan at any time or, by action of the Subcommittee may amend, modify or
terminate any outstanding Option Agreement, except that any such amendment,
modification or termination of the Plan shall be subject to the approval of the
Company's stockholders within one year after such Board action if such
stockholder approval is required by any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the
Common Stock may be listed or quoted, or if the Board in its discretion
determines that obtaining such stockholder approval is for any reason advisable.
Moreover, no action may be taken by the Company without the consent of the
affected Participant which will materially impair the rights of any Participant
under any award then outstanding or which will prevent an ISO from continuing to
qualify under Section 422 of the Code.
XIV. REGISTRATION OF OPTIONED SHARES
No Stock Option shall be exercisable unless the Company's sale of such
optioned shares is pursuant to an applicable effective registration statement
under the Securities Act of 1933, as amended, or unless, in the opinion of
counsel to the Company, the Company's sale of such optioned shares would be
exempt from the registration requirements of the Securities Act of 1933, as
amended, and unless, in the opinion of such counsel, such sale would be exempt
from the registration or qualification requirements of applicable state
securities law.
XV. WITHHOLDING TAXES
The Company or a Participating Subsidiary may take such steps as the
Subcommittee may deem necessary or appropriate for the withholding of any taxes
which the Company or the Participating Subsidiary is required by any law or
regulation or any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with any Stock
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Option, Limited Right or Supplemental Bonus, and to take such other action as
the Subcommittee may deem necessary or advisable to enable the Company and
Participants to satisfy obligations for the payment of tax liabilities in excess
of such withholding obligations relating to any such award. This authority shall
include authority to withhold or receive shares or other property and to make
cash payments in respect thereof in satisfaction of Participant's tax
obligations.
XVI. FINANCING ARRANGEMENTS
The Subcommittee, in its discretion, may enter into arrangements with
one or more banks, brokers or other financial institutions to facilitate the
exercise, and the disposition of shares acquired upon exercise of Stock Options
or Supplemental Bonuses, including, without limitation, arrangements for the
simultaneous exercise of Stock Options (including a related Supplemental Bonus),
and sale of the shares acquired upon such exercise.
XVII. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the
Plan to stockholders of the Company for approval shall be construed as creating
any limitations on the power or authority of the Board to adopt such other or
additional incentive or other compensation arrangements of whatever nature as
the Board may deem necessary or desirable or preclude or limit the continuation
of any other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of employees,
which the Company or any subsidiary now has lawfully put into effect, including,
without limitation, any retirement, pension, savings and stock purchase plan,
insurance, death and disability benefits and executive short-term incentive
plans.
XVIII. EFFECTIVE DATE
This Plan was adopted by the Board of Directors and became effective on
the date the Plan is approved by the Company's stockholders at the stockholders'
meeting in 2001 by the affirmative votes of the holders of a majority of shares
present in person or represented by proxy, and entitled to vote at such meeting,
or any adjournment thereof, or by the written consent of the holders of a
majority of shares entitled to vote, in each case in accordance with applicable
provisions of the Delaware General Corporation Law. Any Stock Options, Limited
Rights, or Supplemental Bonus granted under the Plan prior to such approval of
stockholders shall be effective when granted (unless, with respect to any such
award, the Subcommittee specifies otherwise at the time of grant), but no such
award may be exercised prior to such stockholder approval, and if stockholders
fail to approve the Plan as specified hereunder, any such award shall be
canceled. No ISO shall be granted subsequent to ten years after the effective
date of the Plan. Unless earlier terminated by the Board, the Plan shall
terminate when no shares of Common Stock remain reserved and available for
issuance and the Company has no further obligation with respect to any award
granted under the Plan.
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BENTON OIL AND GAS COMPANY
ANNUAL MEETING OF STOCKHOLDERS
MONDAY, JULY 30, 2001
9:00 A.M.
DOUBLETREE HOTEL
ALLEN CENTER
400 DALLAS STREET
HOUSTON, TEXAS 77002
--------------------------------------------------------------------------------
BENTON OIL AND GAS COMPANY
6267 CARPINTERIA AVENUE, SUITE 200
CARPINTERIA, CALIFORNIA 93013
PROXY
--------------------------------------------------------------------------------
This proxy is solicited by the Board of Directors for use at the Annual Meeting
on July 30, 2001.
The shares of stock you hold in your account will be voted as your specify
below.
If no choice is specified, the proxy will be voted "FOR" Items 1, 2 and 3.
By signing the proxy, you revoke all prior proxies and appoint Steven W. Tholen
and Robert Stephen Molina, and each of them, with full power of substitution, to
vote your shares on the matters shown on the reverse side and any other matters
which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
<PAGE> 42
-----------
COMPANY #
CONTROL #
-----------
There are three ways to vote your Proxy
Your telephone or Internet vote authorizes the Named Proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
- Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days
a week.
- You will be prompted to enter your 3-digit Company Number and your
7-digit Control Number which is located above.
- Follow the simple instructions to Voice provides you.
VOTE BY INTERNET - http://www.aproxy.com/bno/ - QUICK *** EASY *** IMMEDIATE
- Use the Internet to vote your proxy 24 hours a day, 7 days a week.
- You will be prompted to enter your 3-digit Company Number and your
7-digit Control Number which is located above to obtain your records
and create an electronic ballot.
VOTE BY MAIL
Mark, sign and ate your proxy card and return it in the postage-paid envelope
we've provided or return it to Benton Oil and Gas Company, c/o Shareowner
Services, P.O. Box 64873, St. Paul, MN 55164-0837.
If you vote by Phone or Internet, Please do not mail your Proxy Card
Please detach here
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. Election of directors: 01 Steven D. Chesebro' [_] Vote FOR [_] Vote WITHHELD
02 John U. Clarke all nominees From all nominees
03 Byron A. Dunn
04 H. H. Hardee
05 Peter J. Hill
06 Patrick M. Murray
(Instructions: To withhold authority to vote for any indicated nominee, ----------------------------------------------------
write the number(s) of the nominee(s) in the box provided to the right.)
----------------------------------------------------
2. To adopt and approve the 2001 Long Term Stock Incentive Plan. [_] For [_] Against [_] Abstain
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent accountants for the year ended December 31, 2001. [_] For [_] Against [_] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH
PROPOSAL.
Address Change? Mark Box [_] Date________________________________________________
Indicate changes below:
----------------------------------------------------
----------------------------------------------------
Please sign exactly as your name(s) appear on Proxy.
If held in joint tenancy, all persons must sign.
Trustees, administrators, etc. should include title
and authority. Corporations should provide full
name or corporation and name of authorized officer
signing the proxy.
</TABLE>
</TEXT>
</DOCUMENT>