UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Panhandle Royalty Company
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
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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.
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NOTICE OF ANNUAL SHAREHOLDERS MEETING
TO BE HELD FEBRUARY 22, 2002
Notice is hereby given that the annual meeting of the shareholders of
Panhandle Royalty Company (the "Company") will be held at the Waterford
Marriott, 6300 Waterford Boulevard (63rd and North Pennsylvania), Oklahoma City,
Oklahoma, on February 22, 2002, at 9:00 A.M., for the following purposes:
1. To elect three directors;
2. To ratify the selection of Ernst & Young LLP as independent auditors
for the Company;
3. To consider and act upon any other matter which may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on January 15, 2002, shall
be entitled to vote at the meeting.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE MARK, DATE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE PREPAID ENVELOPE ENCLOSED
FOR YOUR CONVENIENCE.
YOUR VOTE IS IMPORTANT.
PLEASE VOTE!
By Order of the Board of Directors
/s/ MICHAEL C. COFFMAN
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Michael C. Coffman, Secretary
Oklahoma City, Oklahoma
January 23, 2002
PANHANDLE ROYALTY COMPANY
GRAND CENTRE, SUITE 210
5400 N. GRAND BOULEVARD
OKLAHOMA CITY, OK 73112-5688
JANUARY 23, 2002
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Panhandle
Royalty Company (the "Company") for use at the annual meeting of shareholders
(the "meeting") to be held Friday, February 22, 2002, and at any adjournment(s)
thereof.
When the proxy is properly executed and returned, the shares it represents
will be voted at the meeting in accordance with any directions noted thereon. If
no direction is indicated, it is the intention of the persons named on the
enclosed proxy to vote the proxy for the nominees for director set forth
thereon, and for the ratification of the selection of Ernst & Young LLP, as
independent auditors for the Company. Should other matters come before the
meeting, the proxy will be voted as the Board of Directors of the Company may,
in its discretion, determine.
If the enclosed form of proxy is executed and returned, it nevertheless may
be revoked at any time before it is exercised, by signing and sending to the
Company a later dated proxy or a written revocation, or by attending the meeting
and voting in person.
The mailing address of the Company is Grand Centre, Suite 210, 5400 N.
Grand Blvd., Oklahoma City, OK 73112. It is anticipated that the proxies and
proxy statements will be mailed to shareholders on or about January 23, 2002.
The cost of the solicitation will be borne by the Company. It is not
contemplated that the solicitation will be other than by mail.
VOTING SECURITIES
The certificate of incorporation of the Company provide for one vote for
each share of class A common stock owned by the shareholder. At the meeting,
unless specifically provided otherwise by the Oklahoma General Corporation Act,
each holder of class A common stock shall be entitled to cast one vote per share
of stock owned. Votes may be cast by shareholders either in person or by proxy.
The owner of class B common stock has no voting rights.
All holders of class A common stock of record at the close of business on
January 15, 2002, shall be eligible to vote. As of January 15, 2002, there were
2,066,441 shares of the Company's class A common stock of record, held by
approximately 2,600 shareholders.
The holders of a majority of shares of class A common stock issued and
outstanding must be present at the meeting, in person or by proxy, to constitute
a quorum.
A proxy is enclosed for your signature. Please return it immediately, dated
and signed exactly as the stock appears in your name. If stock is held in joint
tenancy, both joint tenants should sign the proxy card. Proxies for stock held
by a corporation should be signed in the full corporate name, by the president
or other authorized officer. In the event the record owner of stock is deceased,
the personal representative, executor or administrator should sign the proxy and
a certified copy of the letters of appointment should be attached to the proxy.
The Company knows of no arrangement, the operation of which would result in
a change in control of the Company at any future date.
(1)
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of November 30, 2001, the following person or "group" as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934, was known to
Panhandle to be the only beneficial owner of more than five percent of the
outstanding shares of Panhandle's class A common stock.
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP CLASS
---- -------------------- ----------
Robert Robotti 123,397 shares, shared voting 5.9%
c/o Robotti & Company and investment powers
Incorporated,
52 Vanderbilt Avenue,
New York, NY 10017
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of January 15, 2002, the number of
shares of the Company's class A common stock beneficially owned by each director
and nominee for director of the Company, and by all directors and officers of
the Company as a group, the nature of the beneficial ownership of such shares,
and the percent of the outstanding shares of such stock represented by the
number of shares owned by such person or group:
AMOUNT AND NATURE OF PERCENT OF
DIRECTOR OR GROUP BENEFICIAL OWNERSHIP CLASS
----------------- -------------------- ----------
Michael A. Cawley 300 shares, sole voting *
and investment powers
Sam J. Cerny 300 shares, sole voting *
and investment powers
E. Chris Kauffman (1) 6,600 shares, shared voting *
and investment powers
H W Peace II 30,808 shares, shared voting 1.5%
and investment powers
Ray H. Potts 1,480 shares, shared voting *
and investment powers
Robert A. Reece 16,044 shares, sole voting *
and investment powers
Jerry L. Smith 19,572 shares, sole voting 1.0%
and investment powers
All directors and 37,408 shares, shared voting 1.8%
officers as a and investment powers
group (9 persons)
78,568 shares, sole voting 3.8%
and investment powers
115,976 shares, total 5.6%
* Less than 1% owned
(1) The sale of 2,700 shares of Panhandle Royalty Company Class A common
stock in July, 2001 by the Estate of Linda Patricia Kauffman was not
reported by Mr. Kauffman on FORM 4, until December 29, 2001.
(2)
PROPOSAL NUMBER ONE: ELECTION OF DIRECTORS
The following persons are the present directors of the Company:
POSITIONS AND OFFICES SERVED AS
PRESENTLY HELD WITH DIRECTOR PRESENT
NAME AGE THE COMPANY SINCE TERM ENDS
---- --- --------------------- --------- ---------
Michael A. Cawley 54 Director 1991 Feb. 2004
Sam J. Cerny 69 Director 1993 Feb. 2003
E. Chris Kauffman 61 Director 1991 Feb. 2003
H W Peace II 66 Director, Chief 1991 Feb. 2002
Executive Officer and
President
Ray H. Potts 69 Director 1997 Feb. 2004
Robert A. Reece 57 Director 1986 Feb. 2002
Jerry L. Smith 61 Director, Chairman of 1987 Feb. 2002
the Board
All those named above also hold office in the Company's subsidiary, Wood Oil
Company.
There are three vacancies for three year terms beginning February 2002.
Nominees for the vacancies are H W Peace II, Robert A. Reece and Jerry L. Smith.
The Board of Directors of the Company has no reason to believe that either of
the nominees will be unable to serve as director. However, if either nominee
should be unable, for any reason, to accept nomination or election, it is the
intention of the persons named in the enclosed proxy to vote those proxies for
the election of such other person, or persons, as the Board of Directors of the
Company may, in its discretion, determine.
THE DIRECTORS RECOMMEND THAT THE SHAREHOLDERS ELECT
H W Peace II, Robert A. Reece and Jerry L. Smith
The following is a list of the current executive officers of the Company,
all of whom hold office at the discretion of the Board of Directors. Any officer
may be removed from office, with or without cause, at any time by the Board of
Directors.
(3)
POSITIONS AND OFFICES
PRESENTLY HELD WITH OFFICER
NAME AGE THE COMPANY SINCE
---- --- --------------------- -------
Jerry L. Smith 61 Chairman of the Board 1997
H W Peace II 66 Director, Chief Executive 1991
Officer and President
Michael C. Coffman 48 Vice-President, Chief 1990
Financial Officer,
Secretary and Treasurer
Wanda C. Tucker 65 Vice-President of Land 1990
All those named above also hold office in the Company's subsidiary, Wood
Oil Company.
INFORMATION REGARDING NOMINEES, DIRECTORS AND OFFICERS
H W Peace II holds bachelors and masters degrees in geology. For thirty-eight
years he has been employed as a geologist, in management or as an officer and/or
director with companies in the petroleum industry. He has been employed by Union
Oil Company of California, Cotton Petroleum, and Hadson Petroleum Corporation.
He has been president of the Company since 1991.
Robert A. Reece is an attorney, and for more than five years, has been of
counsel with the firm of Crowe & Dunlevy. He is active in the management of his
family's investments. He is also a director of National Bank of Commerce.
Jerry L. Smith for the last eleven years has been the owner of Smith Capital
Corporation in Dallas. This corporation is a private investment firm focusing on
commercial real estate and securities. Mr. Smith also a past Treasurer and
Director of the Association of Graduates of the United States Air Force Academy.
Michael A. Cawley is an attorney and is the president and chief executive
officer of the Samuel Roberts Noble Foundation, Inc. He has been employed by the
Noble Foundation for the last eight years. Prior to joining the Noble
Foundation, he was engaged in the practice of law in Ardmore, Oklahoma, with the
firm of Thompson & Cawley. He is also a director of Noble Drilling Corporation
and Noble Affiliates, Inc.
Sam J. Cerny is a geological engineer and has been employed by Shell Oil
Company, Cleary Petroleum Corporation and it's successor company, Grace
Petroleum Corporation, where he served as President/CEO from 1976 to 1991. He is
a past president of the Oklahoma Independent Petroleum Association and for the
last five years has been active as a petroleum management consultant.
E. Chris Kauffman is a vice-president of Campbell-Kauffman, Inc., an independent
insurance agency in Oklahoma City. He had been involved with the Agency since it
was formed in 1981. He is chairman of the Central Oklahoma Transportation &
Parking Authority Trust.
Ray H. Potts holds a master's degree in geology from the University of Missouri.
He was employed for six years as an exploration geologist for the Pure Oil
Company and in 1967 formed Potts-Stephenson Exploration Company, later changed
to PSEC, Inc. In 1997 PSEC, Inc. was sold to ONEOK Resources Company. Mr. Potts
is currently active in the oil and gas industry and has been involved in several
national and state trade associations, geological societies and numerous civic
activities.
(4)
Michael C. Coffman is a certified public accountant. Since 1975, he has worked
in public accounting and as a financial officer of three publicly owned
companies involved in the oil and gas industry. He has been an officer of the
Company since 1990.
Wanda C. Tucker has been a full-time employee of the Company since 1978 and has
served in various positions with the Company and has held the position of Vice
President of Land for the past eleven years.
None of the organizations described in the business experiences of the
Company directors and officers are parents, subsidiaries, or affiliates of
Panhandle Royalty Company.
The Board of Directors has three committees. A compensation committee
composed of three directors, Michael A. Cawley, E. Chris Kauffman and H W Peace
II, met one time during 2001. The committee reviews officer performance, and
recommends compensation amounts for officers and directors. The retirement
committee composed of E. Chris Kauffman, Robert A. Reece, Ray H. Potts and
Michael C. Coffman, Vice President, oversee the administration of the Company's
Employee Stock Ownership Plan. This committee met once during the year. The
Company has an audit committee. Information regarding the functions performed by
the committee, its membership, and the number of meetings held during the fiscal
year, is set forth in the "Report of The Audit Committee", included in this
proxy statement.
During the fiscal year ended September 30, 2001, the Board of Directors
held nine meetings. At each meeting a quorum of directors were present.
REMUNERATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the remuneration received by the Company's
executive officers for services, in all capacities, to the Company and its
subsidiary during the fiscal year ended September 30, 2001.
SUMMARY COMPENSATION TABLE
NAME AND ALL
PRINCIPAL OTHER
POSITION YEAR SALARY BONUS COMPENSATION
--------- ---- ------ ----- ------------
H W Peace II 2001 $ 138,756 $ 25,600 $24,653(1)
President & 2000 $ 128,000 $ 18,100 $21,915(1)
Chief Executive 1999 $ 125,000 $ 13,100 $20,715(1)
Officer
Michael C. Coffman 2001 $ 92,250 $ 15,600 $16,628(2)
Vice President, 2000 $ 87,875 $ 10,600 $14,771(2)
Chief Financial 1999 $ 85,625 $ 5,600 $13,684(2)
Officer
(1) Represents the value of 1,541 shares for 2001, 1,565 shares for 2000,
and 2,589 shares for 1999, of Company stock contributed to the
Panhandle Employee Stock Ownership Plan (ESOP) on Mr. Peace's behalf.
(2) Represents value of 1,039 shares for 2001, 1,055 shares for 2000, and
1,710 shares for 1999, of Company stock contributed to the Panhandle
Employee Stock Ownership Plan (ESOP) on Mr. Coffman's behalf.
The ESOP is a defined contribution plan, non-voluntary and
non-contributory and serves as the retirement plan for the Company's
employees. Contributions are at the discretion of the Board of
Directors and, to date, all contributions have been made in shares of
Company stock. Contributions are allocated to all participants in
proportion to their salaries for the plan year and 100% vesting occurs
after three years of service.
(5)
Outside directors are paid $1,000, plus travel expenses, for attending each
meeting of the Board of Directors and $200 for each committee meeting of the
Board. Any director who must travel in excess of 50 miles to attend a meeting
receives an additional $100 for each meeting. Outside directors can elect to be
included in the Panhandle Royalty Company Deferred Compensation Plan For
Non-Employee Directors (the "Plan"). The Plan provides that each eligible
director can individually elect to receive shares of Company stock rather than
cash for Board meeting fees and Board committee meeting fees. These unissued
shares are credited to each directors deferred fee account at the fair market
value of the shares on the date of the meeting. Upon retirement, termination or
death of the director, or upon a change in control of the Company, the shares
accrued under the Plan will be either issued to the director or may be converted
to cash, at the directors' discretion, at the fair market value of the shares on
the conversion date, as defined. All directors are participating in the Plan.
In addition to the above, Jerry L. Smith, Chairman of the Board of
Directors, who is not an employee of the Company, is entitled to receive a $100
per hour fee for time spent, other than Board or committee meetings, on Company
business. During fiscal 2001 and 2000, no payments were made to Mr. Smith, under
this arrangement.
REPORT OF THE AUDIT COMMITTEE
The Audit committee is composed of three independent directors. The
committee and the Board of Directors, in fiscal 2000, adopted a written charter.
One meeting of the committee was held during the fiscal year. The Audit
committee's primary responsibility is to oversee the Company's financial
reporting process on behalf of the Board of Directors and report the results of
their activities to the Board. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the committee reviewed
the audited financial statements, to be included in the Annual Report on Form
10-KSB for the year ended September 30, 2001, with management including a
discussion of the quality, not just the acceptability, of the accounting
principals, the reasonableness of significant judgements, and the clarity of
disclosures in the financial statements.
The committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principals, their judgements as to
the quality, not just the acceptability, of the Company's accounting principals
and such other matters as are required to be discussed with the committee under
generally accepted auditing standards. In addition, the committee has discussed
with the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board.
The committee discussed with the Company's independent auditors the overall
scope and plan of the audit. The committee met with the independent auditors,
with and without management present, to discuss the results of their
examinations, their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting.
In reliance on the reviews and discussions referred to above, the committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-KSB for
the year ended September 30, 2001 for filing with the Securities and Exchange
Commission. The committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent auditors.
ROBERT A. REECE - AUDIT COMMITTEE CHAIRMAN
SAM J. CERNY - AUDIT COMMITTEE MEMBER
JERRY L. SMITH - AUDIT COMMITTEE MEMBER
PROPOSAL NUMBER TWO: SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected the certified public
accounting firm of Ernst & Young LLP as independent auditors to be employed by
the Company, subject to ratification by the shareholders of the
(6)
Company at the meeting. Ernst & Young LLP served as independent auditors for the
Company during the Company's last fiscal period. A vote of the majority of the
shareholders present at the meeting, in person or by proxy, is required for
approval of this proposal.
A representative of Ernst & Young LLP is expected to be present at the
meeting to respond to appropriate questions, and will have an opportunity to
make a statement if so desired.
THE DIRECTORS RECOMMEND THAT THE SHAREHOLDERS
RATIFY THE SELECTION OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS
ANNUAL FINANCIAL REPORT
Copies of the annual report to shareholders for the fiscal year ended
September 30, 2001 are being mailed simultaneously with this proxy statement.
OTHER MATTERS
The Board of Directors of the Company is aware of no other matters which
may come before the annual meeting. If any such matters should properly come
before the meeting, it is the intention of the persons named in the enclosed
proxy to vote such proxy as the Board of Directors may, in its discretion,
determine.
FUTURE PROPOSALS
If a shareholder wishes to submit a proposal for presentation at the 2003
annual meeting of shareholders, such proposal must be received at the Company's
principal office on or before September 24, 2002, if it is to be included in the
Company's Proxy Statement for that meeting.
FORM 10-KSB
A copy of the annual report to the Securities and Exchange Commission on
Form 10-KSB is available, free of charge, upon request made to:
Michael C. Coffman, Secretary
Panhandle Royalty Company
5400 N. Grand Blvd. - Suite #210
Oklahoma City, OK 73112-5688
By Order of the Board of Directors
/s/ MICHAEL C. COFFMAN
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January 23, 2002 Michael C. Coffman, Secretary
(7)
PROXY
Panhandle Royalty Company
Grand Centre, Suite 210, 5400 North Grand Blvd.
Oklahoma City, Ok 73112-5688
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Diane M. Coleman, Dorretta K. Moore, Wanda C.
Tucker, or any of them, as proxies each with full power of substitution, to
represent and vote all of the shares of Class A Common Stock of Panhandle
Royalty Company held of record by the undersigned on January 15, 2002, at the
annual meeting of stockholders to be held on February 22, 2002, or any
adjournment thereof. Should other matters properly come before the meeting, the
proxies are further authorized to vote thereon, in their discretion.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE FOLLOWING ITEMS:
1. ELECTION OF DIRECTORS (Three vacancies, each for a 3-year term)
H W Peace II [ ] FOR [ ] WITHHOLD AUTHORITY TO VOTE FOR
Robert A. Reece [ ] FOR [ ] WITHHOLD AUTHORITY TO VOTE FOR
Jerry L. Smith [ ] FOR [ ] WITHHOLD AUTHORITY TO VOTE FOR
2. PROPOSAL TO RATIFY SELECTION OF ERNST & YOUNG LLP, AS INDEPENDENT
AUDITORS FOR THE COMPANY
[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY TO VOTE FOR
(PLEASE SIGN ON REVERSE SIDE)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE NOMINEES AND FOR PROPOSAL 2.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW
DATED: , 2002
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SIGNATURE
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SIGNATURE, IF HELD JOINTLY
WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.