-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FWA3DwMsrxQlw5zdY7Bq7fHlg70JQuN7/lbss0tH6S3h/OLcklWni2eV9FBzaFco pHMIcrsks6J68NfcSOQ+Qw== 0000927356-98-000552.txt : 19980409 0000927356-98-000552.hdr.sgml : 19980409 ACCESSION NUMBER: 0000927356-98-000552 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980522 FILED AS OF DATE: 19980408 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTERN GAS RESOURCES INC CENTRAL INDEX KEY: 0000856716 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION [4922] IRS NUMBER: 841127613 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-10389 FILM NUMBER: 98589921 BUSINESS ADDRESS: STREET 1: 12200 N PECOS ST CITY: DENVER STATE: CO ZIP: 80234-3439 BUSINESS PHONE: 3034525603 MAIL ADDRESS: STREET 1: 12200 NORTH PECOS ST CITY: DENVER STATE: CO ZIP: 80234 DEF 14A 1 DEFINITIVE NOTICE AND 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 Section 240.14a-11(c) or Section 240.14a-12 WESTERN GAS RESOURCES, INC. - -------------------------------------------------------------------------------- (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)(4) 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: ------------------------------------------------------------------------- Notes: WESTERN GAS RESOURCES, INC. 12200 NORTH PECOS STREET DENVER, COLORADO 80234 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 22, 1998 TO THE STOCKHOLDERS OF WESTERN GAS RESOURCES, INC.: The Annual Meeting of Stockholders of Western Gas Resources, Inc., a Delaware corporation (the "Company"), will be held at the Brown Palace Hotel, Central City Room, 321 Seventeenth Street, Denver, Colorado 80202, on Friday, May 22, 1998 at 10:00 A.M. local time for the following purposes: 1. To elect four Class Three Directors to serve until their terms expire in 2001 and until their successors have been elected and qualified; 2. To transact such other business as may properly come before the meeting or any postponement or adjournment thereof. Accompanying this Notice of Annual Meeting of Stockholders is a Proxy, a Proxy Statement and a copy of the Company's 1997 Annual Report to Stockholders. Only holders of record of shares of the Company's Common Stock at the close of business on March 27, 1998 are entitled to receive notice of, and to vote at, the Annual Meeting or any postponement or adjournment thereof. Stockholders are cordially invited to attend the Annual Meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. IF YOU DO ATTEND THE MEETING IN PERSON, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON. By Order of the Board of Directors, BRION G. WISE Chairman of the Board and Chief Executive Officer Denver, Colorado April 8, 1998 WESTERN GAS RESOURCES, INC. 12200 NORTH PECOS STREET DENVER, COLORADO 80234 PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 22, 1998 This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Western Gas Resources, Inc. (the "Company") of proxies for use at the Annual Meeting of Stockholders of the Company to be held at 10:00 A.M. local time on Friday, May 22, 1998 at the Brown Palace Hotel, Central City Room, 321 Seventeenth Street, Denver, Colorado 80202, and at any postponement or adjournment thereof. This Proxy Statement and the enclosed Proxy are being mailed to stockholders on or about April 15, 1998. The only outstanding voting securities of the Company are its Common Stock, par value $0.10 (the "Common Stock"). On March 27, 1998, the record date for the Annual Meeting, there were 32,147,207 shares of Common Stock entitled to vote at the Annual Meeting. Each holder of record of Common Stock at the close of business on the record date will be entitled to one vote for each share so held. The presence at the Annual Meeting in person or by proxy of the holders of a majority of the outstanding shares entitled to vote is necessary to constitute a quorum for the transaction of business. If a Proxy in the accompanying form is duly executed, dated and returned, the shares represented thereby will be voted in accordance with instructions set forth thereon unless revoked. Stockholders attending the Annual Meeting may vote their shares in person whether or not a Proxy has been previously executed and returned. Unless contrary instructions are given, the persons designated as Proxy holders on the Proxy card will vote FOR election of the nominees named therein as directors. If any other matter is properly presented at the meeting, which is not currently anticipated, the Proxy holders will vote the Proxies in accordance with their best judgment in such matters. The cost of soliciting the Proxies will be borne by the Company. Votes cast by proxy or in person at the Annual Meeting will be counted by a person appointed by the Company to act as the election inspector for the meeting. The election inspector will treat shares represented by proxies that reflect abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum. Any stockholder returning a Proxy may revoke it at any time before it has been exercised by giving written notice of such revocation to the Company addressed to John C. Walter, Secretary, 12200 North Pecos Street, Denver, Colorado 80234. No such revocation shall be effective unless it has been received by the Company at or prior to the Annual Meeting. PROPOSAL ONE ELECTION OF DIRECTORS The Company's Certificate of Incorporation establishes three classes of directors, each serving a three-year term ending in successive years. There are four Class Three Directors whose terms expire this year: Walter L. Stonehocker, Dean Phillips, Bill M. Sanderson and James A. Senty. The Board of Directors (the "Board") has nominated Messrs. Stonehocker, Phillips, Sanderson and Senty for re-election as Class Three Directors. The terms of these Class Three Directors, if elected, will expire on the date of the Company's Annual Meeting of Stockholders in 2001, and at such time as their successors are elected and qualified. If any of the nominees is not elected or is unable to serve (although such a contingency is not expected), the remaining Board members may elect a substitute or, alternatively, may reduce the size of the Board, all in accordance with the Company's Bylaws. THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR PROPOSAL ONE, THE ELECTION OF CLASS THREE DIRECTORS. The holders of a majority of the shares of Common Stock present in person or by proxy shall constitute a quorum. Abstentions will be treated as shares that are present for purposes of determining the presence of a quorum. Directors shall be elected by a plurality of the votes cast in the election of directors. Under applicable Delaware law, in tabulating the vote, abstentions and broker non- votes will be disregarded and will have no effect on the outcome of the vote. The current directors, including the nominees for re-election, are described under the caption "Directors and Officers." 2 SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT The following table sets forth as of March 27, 1998 (except as otherwise indicated) information with respect to: (i) stockholders who were known to the Company to own more than 5% of the Common Stock of the Company ("Significant Stockholder") and (ii) information regarding ownership by the Company's directors and the four most highly compensated executive officers and by all directors and officers as a group, of the Company's Common Stock, $2.28 Cumulative Preferred Stock and $2.625 Cumulative Convertible Preferred Stock.
$2.625 Cumulative $2.28 Cumulative Convertible Common Stock Preferred Stock Preferred Stock ------------------------------- ----------------- ------------------- Number of Shares Exercisable (excluding Stock % of Number of % of Number of % of Name of Beneficial Owner options) Options (1) Class Shares Class Shares Class - --------------------------- ------------ ----------- ----- ------- ----- ------ ------ Merrill Lynch Asset Management............... 3,525,158 (2) - 11.0% - (2) - % - (2) - % 800 Scudders Mill Road Plainsboro, New Jersey 08536 The Prudential Insurance Company of America....... 2,563,500 (2) - 8.0 - (2) - - (2) - 751 Broad Street Newark, New Jersey 07102 KeyCorp.................... 1,830,287 (2) - 5.7 - (2) - - (2) - 127 Public Square Cleveland, Ohio 44114 Brion G. Wise.............. 3,814,930 - 11.9 1,600 * - - 12200 N. Pecos Street Denver, Colorado 80234 Ward Sauvage............... 3,062,576 (3) - 9.5 - - - - Box 132 Oberlin, Kansas 67749 Walter L. Stonehocker...... 2,803,141 (4) - 8.7 14,000 1.0 31,800 1.2 15600 Holly Brighton, Colorado 80601 Dean Phillips.............. 1,824,825 (5) - 5.7 - - - - 524 N. 30th Street Quincy, Illinois 62301 Bill M. Sanderson.......... 496,575 (6) 42,000 1.5 - - - - Richard B. Robinson........ 7,800 (7) 3,500 * 1,000 * - - James A. Senty............. 4,320 (8) 5,000 * - - - - Joseph E. Reid............. - 3,750 - - - - - Lanny F. Outlaw............ 59,000 (9) 58,000 * - - - - Gary W. Davis.............. 31,589 (10) 23,000 * 1,500 (11) * - - John C. Walter............. 29,625 (11) 30,800 * - - - - John F. Chandler........... 3,762 52,250 * - - - - Directors and officers.... as a group (18 persons). 12,166,301 348,950 37.8 18,700 1.3 31,800 1.2
- ------------------------------- Footnotes on following page. 3 * Less than 1%. (1) The directors and officers have the right to acquire the shares of Common Stock reflected in this column either currently or within 60 days after March 27, 1998 through the exercise of stock options. However, not all stock options contained in this table are in-the-money as of March 27, 1998. (2) Amount and nature of beneficial ownership is at December 31, 1997 as reported in the applicable Schedule 13G and includes shares held by subsidiaries and affiliates. The percent of class was calculated using total shares outstanding at December 31, 1997. The Company's only voting security is its Common Stock. As the applicable rules require presentation only of ownership in excess of 5% of the Company's voting securities and as the Company has no knowledge of ownership of any preferred securities, no information regarding preferred securities is presented for this beneficial owner. (3) Includes 2,102,576 shares of Common Stock held by Sauvage Gas Company (owned 100% by the Ward Sauvage Trust #1) and 960,000 shares of Common Stock held by Sauvage Gas Service Corporation (owned 100% by Mr. Sauvage's children). (4) Includes 1,257,759 shares of Common Stock owned directly by Mr. Stonehocker, 1,384,379 shares of Common Stock held by Mr. Stonehocker's wife, 127,820 shares of Common Stock held by the WGP Trust, of which Mrs. Stonehocker is the trustee, 3,183 shares of Common Stock held by a son directly and through 10% or more ownership in a partnership and 30,000 shares of Common Stock held by Mr. and Mrs. Stonehocker as tenants-in- common. (5) Includes 1,815,725 shares of Common Stock owned directly by Mr. Phillips and 9,100 shares of Common Stock held by Mr. Phillips' wife. (6) Includes 102,070 shares of Common Stock held as joint tenants by Mr. Sanderson and his wife, 342,559 shares of Common Stock held by Cedar Assets L.L.L.P. for which Mr. Sanderson and his wife are the general partners, 50,882 shares of Common Stock held by the Sanderson Stock Trust, of which Mr. Sanderson's wife is the trustee, 200 shares held by the Sanderson Family Foundation for which Mr. Sanderson and his wife are the directors and 864 shares of Common Stock held by Mr. Sanderson's wife. (7) Includes 6,000 shares of Common Stock held by the Lentz, Evans & King Pension Fund, for the benefit of Mr. Robinson, 1,000 shares owned directly by Mr. Robinson's wife and 800 shares of Common Stock held by Mr. Robinson and his wife as custodians for their minor children. (8) Includes 2,200 shares of Common Stock owned directly by Mr. Senty and 2,120 shares of Common Stock owned directly by Mr. Senty's wife. (9) All of Mr. Outlaw's shares are held as joint tenants with his wife. (10) Includes 6,419 shares of Common Stock owned directly by Mr. Davis, 21,397 shares of Common Stock held as joint tenants and 3,773 shares of Common Stock and 1,500 shares of $2.28 Cumulative Preferred Stock held by Mr. Davis' wife. (11) All of Mr. Walter's shares are held as joint tenants with his wife. 4 DIRECTORS AND OFFICERS Set forth below is certain information concerning the directors and officers of the Company.
NAME AGE POSITION ---- --- -------- Brion G. Wise.......... 52 Chairman of the Board and Chief Executive Officer (1) Walter L. Stonehocker.. 73 Vice Chairman of the Board (3) Dean Phillips.......... 66 Director (3)(5) Joseph E. Reid......... 69 Director (2)(4)(5) Richard B. Robinson.... 49 Director (1)(4)(5) Bill M. Sanderson...... 68 Director (3) Ward Sauvage........... 72 Director (2) James A. Senty......... 62 Director (3)(4)(5) Lanny F. Outlaw........ 62 President and Chief Operating Officer John C. Walter......... 52 Executive Vice President, Vice President - General Counsel and Secretary Edward A. Aabak........ 46 Senior Vice President - Operations John F. Chandler....... 41 Senior Vice President - Marketing and Pipelines and Assistant Secretary Gary W. Davis.......... 41 Senior Vice President - Engineering and Production Vance S. Blalock....... 44 Treasurer and Assistant Secretary Brian E. Jeffries...... 40 Vice President - Gas Marketing J. Burton Jones........ 38 Vice President - Business Development Jeffery E. Jones....... 45 Vice President - Production William J. Krysiak..... 37 Vice President - Finance - -------------------------
(1) Class One Director; term expires in 1999. (2) Class Two Director; term expires in 2000. (3) Class Three Director; term expires in 1998. (4) Member of the Audit Committee. (5) Member of the Compensation and Nominating Committee. Brion G. Wise, has served as Chairman of the Board since July 1987, Chief Executive Officer since December 31, 1986 and as President from 1971 through 1986. Mr. Wise received his Bachelor of Science Degree in Chemical Engineering from Washington State University. Walter L. Stonehocker, has served as Vice Chairman of the Board since July 1992, a director since July 1987, Senior Vice President from January 1985 to July 1992 and Vice President from 1971 to 1985. In addition, he has been active as a lobbyist for the oil and gas industry in various western states. Dean Phillips, has served as a director of the Company since July 1987 and as a member of the Compensation and Nominating Committee since May 1995. Mr. Phillips has been engaged in the wholesale and retail distribution of natural gas liquids since 1956. Mr. Phillips also serves as an officer and director of several banking institutions in Missouri and Illinois. Joseph E. Reid, has served as a director of the Company since May 1994, a member of the Audit Committee since May 1995 and as a member of the Compensation and Nominating Committee since May 1994. Mr. Reid has been involved in the oil and gas business since 1956, and since 1987 has been an independent oil and gas consultant. From 1984 to 1986 he served as President and Chief Executive Officer of Meridian Oil, Inc., from 1982 to 1984 as an independent oil and gas consultant and from 1978 to 1982 as President and Chief Executive Officer of Superior Oil Company. Mr. Reid also serves as a director for Riverway Bank and Cliffs Drilling Co. He received his M.B.A. from the Harvard Graduate School of Business and his Bachelor of Science Degree from Louisiana State University. 5 Richard B. Robinson, has served as a director of the Company since July 1987, a member of the Audit Committee since May 1988 and as a member of the Compensation and Nominating Committee since September 1993. Mr. Robinson has been a shareholder of the law firm of Lentz, Evans and King P.C. since 1980. He has also been an adjunct professor at the University of Denver College of Law since 1980. He has represented the Company since 1977 with respect to tax, corporate and partnership law matters. Mr. Robinson received his Juris Doctor Degree from the University of Denver and his LL. M. in Taxation from New York University. Bill M. Sanderson, has served as a director of the Company since July 1987, President from December 1986 through March 1996, Chief Operating Officer from May 1986 through March 1996 and Senior Vice President from 1981 through 1986. Mr. Sanderson received his Bachelor of Science Degree, cum laude, in Chemical Engineering from Texas Tech University. Ward Sauvage, has served as a director of the Company since July 1987. Mr. Sauvage was engaged in the wholesale and retail distribution of natural gas liquids from 1949 through 1993. He owns certain interests in several banking institutions in Nebraska and serves as a director of such institutions. Mr. Sauvage is Chairman of the Board and President of Sauvage Gas Company, a diversified private investment company formed in 1958. James A. Senty, has served as a director of the Company since July 1987, a member of the Audit Committee since May 1988 and as a member of the Compensation and Nominating Committee since September 1993. Mr. Senty has been engaged in the wholesale and retail distribution of natural gas liquids since 1960. He has owned certain banking interests since 1976 and currently serves as Chairman of the Board and President of Midwest Bottle Gas Co., a company which directly and through subsidiaries is engaged in the retail and wholesale marketing of natural gas, natural gas liquids and other related items in several states. He is a director and Senior Vice President of MNIC Companies, the parent organization of several insurance companies in Wisconsin. Lanny F. Outlaw, has served as President and Chief Operating Officer since April 1996, Executive Vice President from September 1994 through March 1996, Vice President-Business Development and Rocky Mountain Region from October 1993 to September 1994 and Vice President-Business Development from August 1987 to October 1993. Mr. Outlaw was employed by Shell Oil Company from 1958 to 1987 in various management positions within the Exploration and Production Department. Mr. Outlaw received his Bachelor of Science Degree in Engineering from the South Dakota School of Mines and Technology. John C. Walter, has served as Executive Vice President, Vice President - General Counsel and Secretary since September 1994, served as Vice President-General Counsel from May 1988 to August 1994, Corporate Counsel from May 1986 to April 1988 and Land Manager from March 1983 to April 1986. Mr. Walter received his Bachelor of Arts Degree in Economics and Juris Doctor Degree from the University of Colorado. Edward A. Aabak, has served as Senior Vice President - Operations, since September 1997, Vice President - Northern Region from September 1994 to August 1997 and Operations Manager of the Rocky Mountain Region from February 1993 to September 1994. From 1982 to 1992, Mr. Aabak was employed by DEKALB Energy Company in various management, engineering and operations functions. From 1976 to 1982, Mr. Aabak was employed by Dome Petroleum Limited. Mr. Aabak holds a Bachelor of Science Degree in Chemical Engineering from the University of Alberta. John F. Chandler, has served as Senior Vice President - Marketing and Pipelines since April 1996, Vice President - Marketing and Pipelines from September 1993 through March 1996, Manager of Business Development from January 1991 through August 1993 and from July 1984 through August 1993 in various positions in engineering and business development. Mr. Chandler received his Bachelor of Science Degree in Engineering from the South Dakota School of Mines and Technology. Gary W. Davis, has served as Senior Vice President - Engineering and Production since September 1997, Vice President - Southern Region from October 1993 to August 1997, Vice President-Engineering/ Environmental from 6 January 1985 to October 1993 and has been an engineer with the Company since June 1980. Mr. Davis received his Bachelor of Science Degree in Chemical and Petroleum Engineering from the Colorado School of Mines. Vance S. Blalock, has served as Treasurer since November 1994, Controller of Systems Development and Acquisitions from January 1993 through November 1994, as Controller of Operational Accounting from May 1990 through December 1992 and in various other positions in the accounting area from September 1981 through April 1990. Ms. Blalock received her Bachelor of Science Degree in Commerce from the University of Louisville and is a Certified Public Accountant. Brian E. Jeffries, has served as Vice President - Gas Marketing since April 1996 and has been employed by the Company since November 1992 as Director of Marketing and Transportation. Mr. Jeffries was employed by United Gas Pipe Line Company from 1991 to 1992 and for LaSER Marketing Company from 1988 through 1991 in various marketing management positions. Mr. Jeffries received his Bachelor of Science Degree in Civil Engineering from the University of Colorado. J. Burton Jones, has served as Vice President - Business Development since September 1997 and has been employed by the Company since August 1996 as Director of Strategic Planning. Mr. Jones was employed by Burlington Resources Inc. from July 1988 to August 1996 in various gas supply and business development positions, most recently as Director, Gas Supply. Mr. Jones received his Bachelor of Science Degree in Petroleum Engineering from Texas Tech University. Jeffery E. Jones, has served as Vice President - Production since October 1993 and has been employed by the Company since 1989, previously as Production Manager. From 1987 to 1989, Mr. Jones was an independent oil and gas consultant. Mr. Jones received his Bachelor of Science Degree in Psychology from Colorado College and his Bachelor of Science Degree in Mechanical Engineering from the University of Colorado. William J. Krysiak, has served as Vice President - Finance since September 1993, Corporate Controller from June 1993 to August 1993, Controller - Financial Accounting from June 1990 to May 1993, Director of Tax Accounting and Reporting from May 1987 to May 1990 and in various other positions in the accounting area since August 1985. Mr. Krysiak is the principal financial and accounting officer of the Company. He received his Bachelor of Science Degree in Business Administration from Colorado State University and is a Certified Public Accountant. MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The Company's Board held 11 meetings during 1997. Each director attended at least 75 percent of the total number of meetings of the Board and its committees on which such director served during his tenure. The Board has a standing Audit Committee and a standing Compensation and Nominating Committee ("Compensation Committee"), as well as other committees. The Audit Committee and the Compensation Committee are composed solely of non-employee directors. Messrs. Reid, Robinson and Senty are members of the Audit Committee. The Audit Committee recommends the appointment of independent auditors and reviews the plan, scope, and results of the audit, monitors the fees for the audit and other services and reviews the findings and recommendations of the independent accountants concerning internal accounting procedures and controls. The Audit Committee also recommends accounting and internal auditing policies which, in the Audit Committee's judgment, should receive the attention of the Board. The Audit Committee met twice in 1997. Messrs. Phillips, Reid, Robinson and Senty are members of the Compensation Committee. The Compensation Committee makes recommendations to the Board regarding: (i) employee compensation, including compensation of the Company's executive officers; and (ii) individuals to nominate for election to the Board and Board committee assignments. The Compensation Committee does not consider nominees for the Board recommended by stockholders. The Compensation Committee met four times in 1997. 7 REMUNERATION OF DIRECTORS Directors who are also full-time employees of the Company receive no fees or remuneration for services as members of the Board. For the year ended December 31, 1997, non-employee directors of the Company received annual fees of $25,000 each, payable in quarterly installments, and annual fees of $5,000 for each committee on which such director served. Each director also has the option of obtaining health insurance through the Company under similar terms as the executive officers. The Company has entered into Indemnification Agreements with each of the Company's directors (each, a "Director Indemnification Agreement"), which, among other things, places the burden of proof upon the Company to prove in any particular instance that a director was not entitled to indemnification and which allows a director to seek the appointment of an independent legal counsel to determine whether indemnification is appropriate following certain types of changes of control of the Company. See also "Stock Option, Retirement and Bonus Plans - Key Employees' Incentive Stock Option Plan and Non-Employee Directors Stock Option Plan" included elsewhere in this Proxy Statement. COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(a) OF THE SECURITIES ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 and the related regulations require the Company's directors, executive officers and persons who own more than ten percent of the Company's Common Stock to file with the Securities and Exchange Commission and the New York Stock Exchange initial reports of their beneficial ownership and reports of any changes in their beneficial ownership of the Company's Common Stock and other equity securities of the Company. In addition, such persons are required to furnish the Company with copies of all such filings. To the Company's knowledge, based solely upon a review of the copies of such reports furnished to the Company and written representations from its directors and executive officers, all reports which were required during the fiscal year ended 1997, of its directors, executive officers and ten percent beneficial owners complied with Section 16(a) filing requirements, except as follows: two reports relating to a change in beneficial ownership were filed late, one by Brian E. Jeffries and the other by William J. Krysiak. Both of the reports related to the exercise of in-the-money stock options by Mr. Jeffries and Mr. Krysiak of 1,200 and 875, respectively. TRANSACTIONS WITH AFFILIATES The Company has entered into agreements with key employees, including each of its officers, other than Mr. Wise, that commit the Company to loan an amount sufficient to exercise certain of their respective stock options. The Company will forgive the loan and accrued interest if the employee has been continuously employed by the Company for periods specified under the agreements or Board resolutions. The loans bear interest at the applicable federal rate, as specified in Section 1274(d) of the Internal Revenue Code of 1986, as amended, in effect upon the date of the loan. At December 31, 1997, loans and accrued interest to certain officers totaling $854,253 relating to 62,500 options were outstanding. Amounts outstanding were as follows: Lanny F. Outlaw, $345,413 related to 25,000 options; John C. Walter, $344,961 related to 25,000 options and Gary W. Davis, $163,879 related to 12,500 options. During the year ended December 31, 1997, the Company forgave loans and accrued interest to certain key employees, including its officers, totaling approximately $711,000 relating to 104,172 options. Amounts forgiven greater than $60,000 are as follows: Gary W. Davis, $259,392 and Lanny F. Outlaw, $103,894. During the year ended December 31, 1997, the Company purchased and sold natural gas liquids to affiliates of James A. Senty, a director of the Company, for total payments and receipts of approximately $5.8 million. During the year ended December 31, 1997, the Company leased rail cars from an affiliate of Ward Sauvage, a director of the Company, for total payments of approximately $187,000. During the year ended December 31, 1997, the Company leased rail cars from an affiliate of Dean Phillips, a director of the Company, for total payments of approximately $158,000. As of December 31, 1997, the Company had borrowed $200 million from The Prudential Insurance Company of America, a Significant Stockholder, and for the year ended December 31, 1997, paid interest of approximately $15.7 million related to such borrowings. During the year ended December 31, 1997, the Company also paid The Prudential Insurance Company of America approximately $553,000 related to medical insurance and related fees. These transactions were all entered into by the Company in the ordinary course of its business, on a basis the Company believes approximates arm's length. 8 EXECUTIVE COMPENSATION The following table sets forth information regarding compensation paid by the Company in each of the last three years ended December 31, 1997 to the Chief Executive Officer and the four most highly compensated executive officers other than the Chief Executive Officer (collectively, the "Named Officers"). SUMMARY COMPENSATION TABLE
Long-Term Annual Compensation Compensation (1)(2) Awards ---------------------- --------------- Securities Underlying All Other Name and Principal Position Year Salary ($) Bonus ($) Options (#)(3) Compensation ($)(4) - ----------------------------- ---------- ---------- --------- --------------- ------------------- Brion G. Wise 1997 $ 93,462 $ - - $ 5,989 Chairman of the Board and 1996 90,000 - - 5,767 Chief Executive Officer 1995 90,000 - - 4,867 Lanny F. Outlaw 1997 378,000 - - 123,140 President and Chief 1996 305,586 64,438 100,000 27,426 Operating Officer 1995 170,000 60,000 - 14,958 John C. Walter 1997 243,000 - - 52,700 Executive Vice President 1996 211,539 45,813 32,000 16,060 1995 155,000 60,000 - 10,140 John F. Chandler 1997 243,000 - - 29,466 Senior Vice President - 1996 202,115 46,250 32,000 13,262 Marketing and Pipelines 1995 125,000 60,000 - 6,913 Gary W. Davis 1997 228,981 - - 263,461 Senior Vice President - 1996 197,327 45,269 20,000 12,934 Engineering and Production 1995 $150,000 $65,000 - $ 8,028 - -------------------
(1) The column for Other Annual Compensation has been omitted (in accordance with the applicable rules) because perquisites and other personal benefits awarded, earned or paid to the Named Officers were not in excess of the lesser of either $50,000 or 10% of the total annual salary and bonus for each Named Officer. (2) Amounts shown set forth all cash compensation earned by each of the Named Officers in the years shown. (3) The columns for Long-Term Compensation - Restricted Stock Awards and Long- Term Compensation - Payouts have been omitted (in accordance with the applicable rules) because no such compensation has been awarded, earned or paid to any of the Named Officers. (4) Amounts shown consist of the following: (i) the Company's annual contribution to each of the Named Officers' Retirement Plan accounts; (ii) the Company's Retirement Plan match; (iii) group term life insurance premiums paid by the Company; and (iv) principal and interest associated with loans to the Named Officer to exercise options to purchase the Company's Common Stock. See further discussion and "Directors and Officers - Transactions with Affiliates" and "Stock Option, Retirement and Bonus Plans -$5.40 Stock Option Plan and Key Employees' Incentive Stock Option Plan." 9 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES The following table provides information with respect to the stock options exercised during the year ended December 31, 1997 and the value as of December 31, 1997 of unexercised in-the-money options held by the Named Officers. The value realized on the exercise of options is calculated using the difference between the option exercise price and the fair market value of the Company's Common Stock on the date of exercise. The value of unexercised in-the-money options at year end is calculated using the difference between the option exercise price and the fair market value of the Company's Common Stock at December 31, 1997.
Value of Unexercised Number of Unexercised In-the-Money Shares Options/SARs at FY-End (#) Options/SARs at FY-End ($) Acquired on Value -------------------------- -------------------------- Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable - --------------------------- ------------- ------------ ----------- ------------- ----------- ------------- Brion G. Wise - $ - - - $ - $ - Lanny F. Outlaw - - 38,000 92,000 220,500 672,000 John C. Walter - - 24,400 37,600 113,400 243,600 John F. Chandler - - 46,400 35,600 102,900 236,600 Gary W. Davis - $ - 19,000 26,000 $ 84,000 $161,000
REPORT OF THE COMPENSATION COMMITTEE In 1993, the Board created the "Compensation Committee" and directed it to make recommendations to the Board regarding employee compensation, including the compensation of the Company's executive officers. In 1995, the Compensation Committee's duties were expanded to include the nomination of directors. The Compensation Committee currently consists of Dean Phillips, Joseph E. Reid, Richard B. Robinson and James A. Senty, none of whom is or has been an officer or employee of the Company. The Compensation Committee met four times in 1997. Compensation of Executive Officers The annual compensation of each of the executive officers of the Company consists primarily of a base salary, an annual bonus and stock options. In addition, the executive officers participate in the Company-wide Retirement Plan, which consists of elective employee salary reduction contributions, a Company match equal to 25% of employee contributions on the first four percent of employee compensation contributed and, as determined by the Board in its sole discretion, an annual Company contribution for all employees equal to a specified percentage of base compensation. Previously, it had been the Company's practice to pay its executive officers below-average base salaries compared to comparable positions at comparable companies, while providing them above-average incentive compensation in the form of bonuses. Based upon the recommendations of the Compensation Committee, in 1996, the Company: (i) increased the base salaries of the executive officers to levels that approached those paid to officers at comparable companies, based upon prior studies performed by an outside consultant retained by the Compensation Committee; and (ii) adopted a plan for the executive officers that provided for a sliding scale of bonuses pursuant to a formula tied to earnings available to common stockholders for the fiscal year. The Company continued this policy in 1997. Because the Company's earnings attributable to Common Stockholders did not reach the minimum target level, no bonuses were paid to the executive officers of the Company for the fiscal year ended December 31, 1997. The Company granted no options in 1997 to the executive officers to purchase shares of the Company's Common Stock. Two executive officers exercised an aggregate of 2,075 previously granted options in 1997 and, at December 31, 1997, the executive officers, as a group, have been granted options to purchase an aggregate of 543,200 shares of the Company's Common Stock. The Compensation Committee continues to believe that options for the Company's Common Stock are an important element of the executive officers' compensation package because options aid in the objectives of aligning the executive officers' interests with those of the stockholders and giving the executive officers 10 a direct stake in the performance of the Company. However, the Committee believes that, at the present time, the executive officers have been granted a sufficient number of options under current plans to accomplish this goal. Finally, the Compensation Committee recommended to the Board that the Company make a contribution to the Company's Retirement Plan of five percent of 1997 base salaries for all eligible employees, including each of the executive officers. In making this recommendation, the Compensation Committee considered, among other things, the financial performance of the Company, as measured by net income and cash flow from operations and the total compensation packages that employees in the oil and gas industry receive. Subject to certain exceptions, Section 162(m) of the Internal Revenue Code limits to $1,000,000 the amount of executive compensation that a company may deduct as an expense for federal income tax purposes in any one year for any one executive. Although none of the Company's executive officers received in excess of $1,000,000 in compensation for any year, the Compensation Committee intends to structure future executive officer compensation in a manner that will preserve the tax deductibility of executive compensation. Compensation of the Chief Executive Officer The annual compensation of Brion G. Wise, the Company's Chief Executive Officer, consists primarily of base salary. Mr. Wise's annual compensation is significantly lower than compensation paid by comparable companies for comparable positions. In preparing their recommendation regarding Mr. Wise's compensation, the Compensation Committee considered certain subjective factors unrelated to the Company's financial performance, principally Mr. Wise's belief that it was not necessary to pay him a market rate because he received substantial dividends from the shares of the Company's Common Stock that he owns. Mr. Wise is not eligible for awards under the Company's various stock option plans because the Compensation Committee and the Board believe his interests are already strongly tied to those of its stockholders. He is, however, entitled to participate in the Company's Retirement Plan. Mr. Wise did not receive a bonus for the fiscal year ended December 31, 1997. March 27, 1998 Compensation Committee Dean Phillips Joseph E. Reid Richard B. Robinson James A. Senty COMPENSATION COMMITTEE INTER-LOCK AND INSIDER PARTICIPATION The Compensation Committee consists of Dean Phillips, Joseph E. Reid, Richard B. Robinson and James A. Senty, none of whom is or was an officer or employee of the Company. During the year ended December 31, 1997, the Company purchased and sold natural gas liquids to affiliates of James A. Senty for total payments and receipts of approximately $5.8 million. During the year ended December 31, 1997, the Company leased rail cars from an affiliate of Dean Phillips for total payments of approximately $158,000. Mr. Robinson is a stockholder of the law firm of Lentz, Evans and King P.C., which has represented the Company in certain tax, corporate and partnership law matters since 1977. For the year ended December 31, 1997, the total amount of legal fees paid to Lentz, Evans and King P.C. was approximately $12,000. All such transactions were entered into by the Company in its ordinary course of business, on a basis the Company believes approximates arm's length. EMPLOYMENT AGREEMENTS Effective November 15, 1994, the Company entered into an Employment Agreement (an "Executive Employment Agreement") with each of the Company's then-existing executive officers, other than Mr. Wise. Pursuant to the Executive Employment Agreement, as amended through 1997, the Company has agreed to pay each executive officer a minimum annual compensation based upon such executive officer's 1997 base salary, plus a bonus determined by the Board in its sole and absolute discretion. The employment of the executive officer continues until it is terminated 11 in accordance with the Executive Employment Agreement. The Company may terminate an executive officer "for cause" at any time and the executive officer may terminate employment upon 90 days prior notice. If the Company terminates the executive officer without "cause", the executive officer is entitled to severance equal to one year's base salary, which increases to two years' base salary if the termination without cause occurs within one year after certain changes in control of the Company. In all cases, the executive officer is subject to certain covenants relating to confidentiality, non-competition and non-solicitation of customers and employees following termination. The Company anticipates entering into amended Executive Employment Agreements with each of its executive officers, other than Mr. Wise, to reflect 1998 base salaries and provide for certain rights of indemnification comparable to those contained in the Director Indemnification Agreements. STOCK OPTION, RETIREMENT AND BONUS PLANS RETIREMENT PLAN The Company's Retirement Plan (a defined contribution plan) is administered by the Board. All employees of the Company are eligible to participate in the Retirement Plan. For the year ended December 31, 1997, subject to certain restrictions, each participant may elect to reduce his or her salary and have contributed biweekly to the Retirement Plan on his or her behalf an amount which on an annual basis may not exceed the lesser of 15% of his or her base compensation or $9,500. The Company contributes to the accounts of participating employees a match of 25% of employee contributions on the first 4% of employee compensation contributed. The Company may make annual contributions to the accounts of each participant, as determined by the Board in its sole discretion, in amounts up to 10% of the base compensation of such participants. Beginning January 1, 1998, the limitation related to employee contributions increased to $10,000 and the Company's match increased to 50% of employee contributions on the first 4% of employee compensation contributed. The Company's contributions and matching contributions under the Retirement Plan become vested at the rate of 20% after completion of two years of service with an additional 20% vesting each year thereafter until fully vested. INCENTIVE BONUS PLANS In 1997, the Board approved the 1997 Incentive Bonus Plan for the executive officers of the Company. The executive officers' bonuses were tied to the Company's 1997 earnings attributable to Common Stock. If the earnings target (which could be adjusted by the Board to reflect non-recurring, unusual items) was met or exceeded, the executive officers would receive a bonus ranging from 5% to 20% of their adjusted base pay. As the Company's 1997 earnings attributable to Common Stock were less than targeted, no bonuses were paid to such officers. No such plan has been approved by the Board for 1998. However, the Company anticipates that the Board will approve a 1998 Incentive Bonus Plan that allows for increasing bonuses based upon the Company's 1998 earnings attributable to Common Stock. $5.40 STOCK OPTION PLAN In April 1987 and as further amended in February 1994, the Company adopted an employee option plan ("$5.40 Plan") that authorized granting options to employees to purchase 483,000 shares of the Company's Common Stock. The Company entered into agreements committing the Company to loan to certain employees an amount sufficient to exercise their options, provided that the Company will not loan in excess of 25% of the total amount available to the employee in any one year. Pursuant to the agreements, the Company was required to forgive any such loan and associated accrued interest on July 2, 1997 or December 31, 1997, if the employee was then employed on such dates by the Company. See further discussion at "Directors and Officers - Transactions with Affiliates." KEY EMPLOYEES' INCENTIVE STOCK OPTION PLAN AND NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN Effective April 1987, the Board of Directors of the Company adopted a Key Employees' Incentive Stock Option Plan ("Key Employee Plan") and a Non-Employee Director Stock Option Plan ("Directors' Plan") that authorize the granting of options to purchase 250,000 and 20,000 shares of the Company's Common Stock, respectively. Under 12 the plans, each of these options became exercisable as to 25% of the shares covered by such plans on the later of January 1, 1992 or one year from the date of grant, subject to the continuation of the optionee's relationship with the Company, and became exercisable as to an additional 25% of the covered shares on the later of each subsequent January 1 through 1995 or on each subsequent date of grant anniversary, subject to the same condition. Each of these plans will terminate on the earlier of February 6, 2000 or, assuming the grant of the maximum number of options available for grant under the plans, the date on which all options granted under each of the plans have been exercised in full. The Company has entered into agreements committing the Company to loan certain employees an amount sufficient to exercise their options as each portion of their options vests. The Company will forgive such loans and associated accrued interest if the employee has been continuously employed by the Company for four years after the date of each loan increment. In January 1997, for two of the Company's officers, the Board of Directors voted to extend the maturity for each of the loan increments by three years for the first series of maturities and by two years for all other maturities. In January 1997, for one additional officer, the Board of Directors voted to extend the maturity for the first loan increment by one year and not to extend any of the remaining maturities. See further discussion at "Directors and Officers - Transactions with Affiliates." 1993 AND 1997 STOCK OPTION PLANs The 1993 Stock Option Plan ("1993 Plan") became effective on May 24, 1993 and the 1997 Stock Option Plan ("1997 Plan") became effective on May 21, 1997 after approvals by the Company's stockholders. Each plan is intended to be an incentive stock option plan in accordance with the provisions of Section 422 of the Internal Revenue Code of 1986, as amended. The Company has reserved 1,000,000 shares of Common Stock for issuance upon exercise of options under each of the 1993 Plan and the 1997 Plan. The 1993 Plan and the 1997 Plan will terminate on the earlier of March 28, 2003 and May 20, 2007, respectively, or, assuming the grant of the maximum number of options available for grant under the plans, the date on which all options granted under each of the plans have been exercised in full. Under both of the plans, the Board of Directors of the Company determines and designates from time to time those employees of the Company to whom options are to be granted. If any option terminates or expires prior to being exercised, the shares relating to such option are released and may be subject to reissuance pursuant to a new option. The Board of Directors has the right to, among other things, fix the price, terms and conditions for the grant or exercise of any option. The purchase price of the stock under each option shall be the fair market value of the stock at the time such option is granted. Under the 1993 Plan, options granted vest 20% each year on the anniversary of the date of grant commencing with the first anniversary. Under the 1997 Plan, the Board of Directors has the authority to set the vesting schedule from 20% per year to 33 1/3% per year. Under both plans, the employee must exercise the option within five years of the date each portion vests. 13 PERFORMANCE GRAPH The following indexed graph indicates the Company's total return to its stockholders from December 31, 1992 to December 31, 1997 as compared to total return for the Standard & Poor's 500 Index and a Peer Group Index selected by the Company, assuming a common starting point of $100 and that all dividends were reinvested. The information contained in this graph is not necessarily indicative of future Company performance. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG WESTERN GAS RESOURCES, INC., THE S&P 500 INDEX AND A PEER GROUP** [PERFORMANCE GRAPH APPEARS HERE]
Western Gas Measurement Period Resources, S&P Peer Group (Fiscal Year Covered) Inc. 500 Index (WGR) - ------------------------------ ----------- --------- ----------- Measurement Point - 12/31/92 $100.00 $100.00 $100.00 FYE December 31, 1993 127.00 110.00 122.00 FYE December 31, 1994 75.00 112.00 109.00 FYE December 31, 1995 64.00 153.00 136.00 FYE December 31, 1996 77.00 189.00 176.00 FYE December 31, 1997 89.00 252.00 179.00
* $100 invested on 12/31/92 in stock or index. Total return includes reinvestment of dividends (if applicable). Dates are for fiscal years ending on December 31 in each of the years indicated. ** Peer Group (WGR) consists of 21 companies, including the Company. The other 20 companies in the Peer Group are as follows: Anadarko Petroleum Corp., Apache Corp., Berry Petroleum Co., Cabot Oil & Gas Corp., Devon Energy Corp., K N Energy Inc., Mitchell Energy and Development Corp., Murphy Oil Corp., Noble Affiliates Inc., Oryx Energy Co., Pioneer Natural Resources Co., Pogo Producing Co., Questar Corp., Ranger Oil Ltd., Santa Fe Energy Resources Inc., Seagull Energy Corp., Snyder Oil Corp., Tejas Gas Corp., Triton Energy Corp. and Valero Energy Corp. The total return for each company in the Peer Group has been weighted for stock market capitalization. These companies are independent oil and natural gas producers, gatherers, transporters and marketers of natural gas and natural gas liquids and certain natural gas pipelines. 14 INDEPENDENT ACCOUNTANTS Price Waterhouse LLP served as the Company's independent accountants for 1997. A representative of Price Waterhouse LLP will be present at the Annual Meeting and will have an opportunity to make a statement if he desires to do so and to respond to appropriate questions. STOCKHOLDER PROPOSALS Any stockholder proposals to be considered for inclusion in the Company's solicitation of Proxies for the 1999 Annual Meeting of Stockholders must be received by the Secretary of the Company (at 12200 North Pecos Street, Denver, Colorado 80234) no later than January 15, 1999. OTHER BUSINESS All items of business expected to be brought before the meeting by management of the Company are set forth in this Proxy Statement. Management knows of no other business to be presented. If other matters of business not presently known to management properly come before the meeting, it is intended that the persons named in the Proxies will have discretionary authority to vote the shares thereby represented in accordance with their best judgment. THE ENCLOSED PROXY SHOULD BE COMPLETED, DATED, SIGNED AND RETURNED IN THE ENCLOSED POSTAGE-PAID ENVELOPE. PROMPT MAILING OF THE PROXY WILL BE APPRECIATED. By Order of the Board of Directors, WESTERN GAS RESOURCES, INC. BRION G. WISE Chairman of the Board and Chief Executive Officer Denver, Colorado April 8, 1998 15 WESTERN GAS RESOURCES, INC. ANNUAL MEETING OF STOCKHOLDERS -- MAY 22, 1998 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Lanny F. Outlaw and John C. Walter, and each of them, as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote as designated below, all the shares of common stock of Western Gas Resources, Inc. held of record by the undersigned on the close of business on March 27, 1998, at the Annual Meeting of Stockholders of Western Gas Resources, Inc., to be held on Friday, May 22, 1998 at 10:00 A.M. local time at the Brown Palace Hotel, the Central City Room, 321 Seventeenth Street, Denver, Colorado 80202 and at any postponement or adjournment thereof, as follows: 1. ELECTION OF FOUR CLASS THREE DIRECTORS Nominees: Walter L. Stonehocker, Dean Phillips, Bill M. Sanderson and James A. Senty [_]FOR [_]WITHHELD [_]_________________________________ To withhold authority to vote for any individual nominee, check the box and write the name of such nominee on the above line. 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting and at any postponement or adjournment thereof. 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 ELECTION OF THE NOMINEES LISTED IN ITEM 1. Please mark, sign, date and mail this proxy promptly in the enclosed envelope. Date: , 1998 _______________________________ ___________________________________________ Signature of Stockholder ___________________________________________ Signature of Stockholder Please sign exactly as name appears at the left. 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. -----END PRIVACY-ENHANCED MESSAGE-----