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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
VAALCO ENERGY, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
VAALCO ENERGY, INC.
4600 Post Oak Place, Suite 309
Houston, Texas 77027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, JUNE 5, 2002
Notice is hereby given that the Annual Meeting of the Stockholders of
VAALCO Energy, Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, June 5, 2002 at 10:00 a.m. at the headquarters of the Company, 4600
Post Oak Place, Suite 309, Houston, Texas 77027, for the following purposes:
(1) To elect a Board of Directors as follows:
(a) The holders of Common Stock and Convertible Preferred
Stock, Series A, will voting together as a class
elect two Class I directors to hold office for the
ensuing three years; and
(b) The holders of Convertible Preferred Stock, Series A,
will elect one Class I director to hold office for
the ensuing three years.
(2) To ratify the appointment of Deloitte & Touche as the
independent public accountants to audit the Company's accounts
for the fiscal year ended December 31, 2002.
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
The holders of record of Common Stock and Convertible Preferred Stock,
Series A, of the Company at the close of business on April 13, 2002 will be
entitled to notice of and to vote at the annual meeting.
By Order of the Board of Directors,
/s/ Gayla M. Cutrer
Gayla M. Cutrer
Secretary
April 18, 2002
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. EVEN IF YOU PLAN
TO BE PRESENT, YOU ARE URGED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
IF YOU ATTEND THE MEETING YOU CAN VOTE EITHER IN PERSON OR BY YOUR PROXY.
-1-
VAALCO ENERGY, INC.
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, JUNE 5, 2002
This Proxy Statement is furnished to the record holders of common
stock, par value $0.10 per share ("Common Stock") and Convertible Preferred
Stock, Series A, par value $10.00 per share ("Preferred Stock") of VAALCO
Energy, Inc. (the "Company"), in connection with the solicitation by the Board
of Directors of the Company of proxies to be used at the annual meeting
("Meeting") of stockholders to be held on Wednesday, June 5, 2002 at 10:00 a.m.
at the headquarters of the Company, 4600 Post Oak Place, Suite 309, Houston,
Texas 77027, and any adjournment thereof.
Matters to be Considered at the Meeting
Unless otherwise indicated, proxies in the form enclosed that are
properly executed, duly returned and not revoked will be voted in favor of:
(1) The election of the Class I director nominees to the Board of
Directors named herein; and
(2) The ratification of the appointment of Deloitte & Touche as
the independent public accountants to audit the Company's
accounts for the fiscal year ended December 31, 2002.
The Board of Directors is not presently aware of other proposals that
may be brought before the Meeting. In the event other proposals are brought
before the Meeting, the persons named in the enclosed proxy will vote in
accordance with what they consider to be in the best interests of the Company
and its stockholders.
Voting and Revocability of Proxies
Proxies in the form enclosed, properly executed by stockholders and
received in time for the Meeting, will be voted as specified therein. If a
stockholder does not specify otherwise, the shares represented by his or her
proxy will be voted FOR the nominees for election of directors as listed herein
and FOR ratification of Deloitte & Touche as the independent public accountants
to audit the Company's accounts for the fiscal year ending December 31, 2002.
The giving of a proxy does not preclude the right to vote in person should the
person giving the proxy so desire. Any proxy may be revoked at any time before
it is exercised by delivering written notice of revocation to the Company at or
prior to the Meeting, by duly executing a proxy bearing a later date or by
voting in person at the Meeting. The mailing address of the Company's principal
executive offices is 4600 Post Oak Place, Suite 309, Houston, Texas 77027 (Tel.
No. 713/623-0801). This Proxy Statement is being mailed on or about April 18,
2002 to holders of record of Common Stock and Preferred Stock at the close of
business on April 12, 2002 (the "Record Date").
Voting and Quorum Requirements
At the close of business on the Record Date, there were outstanding and
entitled to vote 20,744,569 shares of Common Stock and 10,000 shares of
Preferred Stock. A complete list of all stockholders entitled to vote at the
Meeting will be open for examination by any stockholder during normal business
hours for a period of ten days prior to the Meeting at the Company's
headquarters.
The holder of the Preferred Stock has the right to vote as a class with
the holders of Common Stock on all matters submitted to a vote of the holders of
Common Stock on an "as converted basis." Accordingly, with respect to all
matters to come before the Meeting other than the election of the Preferred
Stock Nominee (as defined below), each share of Common Stock entitles the holder
to one vote, and each share of Preferred Stock entitles the holder to 2,750
votes so that, as of the Record Date, 48,244,569 shares of Common Stock are
deemed to be outstanding and entitled to vote at the Meeting. In addition, the
Certificate of Incorporation of the Company provides that one director in each
class of directors shall be a designee (a "Preferred Stock Nominee") of the
holders of the Preferred Stock. Accordingly, the holder of the Preferred Stock,
voting separately as a class, is entitled to vote for a Preferred Stock Nominee.
With respect to the election of a Preferred Stock Nominee, each share of
Preferred Stock entitles the holder to one vote. All holders of record of Common
Stock or Preferred Stock on the Record Date shall be entitled to vote at the
Meeting.
-2-
Regarding the election of directors, the enclosed form of proxy
provides a means for stockholders to vote FOR the nominees as directed therein,
to withhold authority to vote for one or more of the applicable nominees or to
withhold authority to vote for all of the applicable nominees. With respect to
other proposals to be voted upon, stockholders may vote in favor of a proposal,
against a proposal, or may abstain from voting. Unless a holder of Common Stock
or Preferred Stock who withholds authority votes in person at the meeting or
votes by means of another proxy, the withholding of authority will have no
effect upon the election of those directors for whom authority to vote is
withheld because the Company's By-laws provide that directors are elected by a
plurality of the votes cast. Abstentions and broker non-votes have no effect on
determinations of plurality except to the extent that they affect the total vote
received by any particulate candidate.
The affirmative vote of the holders of at least a majority of the
issued and outstanding shares of Common Stock and, on an as converted basis, the
Preferred Stock, voting together as a class present or represented and entitled
to vote at the Meeting is required for the ratification of the appointment of
auditors for the current fiscal year. With respect to the ratification of the
appointment of auditors, abstaining shares will be considered present at the
Meeting for this matter so that the effect of abstentions will be the equivalent
of a "no" vote. With respect to broker non-votes, the shares will not be
considered present at the Meeting for this matter so that broker non-votes will
have the practical effect of reducing the number of affirmative votes required
to achieve a majority vote by reducing the total number of shares from which the
majority is calculated.
The holders of a majority of the issued and outstanding Common Stock
together with, on an as converted basis, the issued and outstanding Preferred
Stock, entitled to vote at the Meeting, present in person or represented by
proxy, constitutes a quorum for purposes of the Common Stock. The presence in
person or by proxy of the holders of record of one-third of the total number of
shares of Preferred Stock then outstanding and entitled to vote shall be
necessary and sufficient to constitute a quorum of holders of Preferred Stock.
Broker non-votes and abstentions count towards the establishment of a quorum. At
the Meeting or at any adjournment thereof, the absence of a quorum of the
holders of shares of Preferred Stock shall not prevent the election of directors
other than those to be elected by the holders of shares of Preferred Stock, and
the absence of a quorum of the holders of shares of the Common Stock shall not
prevent the election of directors to be elected by the holders of shares of
Preferred Stock.
-3-
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth information with respect to the
ownership of shares of Common Stock and Preferred Stock as of the Record Date by
(i) each director and each executive officer of the Company, (ii) all executive
officers and directors of the Company as a group and (iii) each person known by
the Company to own beneficially more than 5% of the outstanding shares of Common
Stock or Preferred Stock. To the Company's knowledge, the persons indicated
below have sole voting and investment power with respect to the shares indicated
as owned by them, except as otherwise stated. The address for each director and
executive officer is 4600 Post Oak Place, Suite 309, Houston, Texas 77027,
unless otherwise indicated below or in the footnotes.
Common Stock Preferred Stock
---------------------------------------------------- --------------------------------
Percent Upon
Conversion of
Percent of Preferred Percent of
Name of Beneficial Owner Amount Class Stock Amount Class
- -------------------------------- --------------- ------------------- -------------- ---------------- --------------
Directors:
Robert L. Gerry I.............. 2,010,000 (1) 9.2% 4.1% -- --
Virgil A. Walston, Jr.......... 3,300,082 (2) 15.9% 6.8% -- --
W. Russell Scheirman........... 800,000 (3) 3.7% 1.6% -- --
Arne R. Nielsen................ 1,000 * * -- --
Lawrence C. Tucker............. 31,263,441 (4) 64.8% 64.8% 10,000 (4) 100%
T. Michael Long................ 31,263,441 (4) 64.8% 64.8% 10,000 (4) 100%
Walter W. Grist................ -- -- -- -- --
Common Stock owned by all
directors and executive
officers as a group
(7 persons)................ 37,374,523 (5) 74.7% 74.7% 10,000 100%
5% Stockholders:
Dorothy J. Alcorn.............. 1,434,332 (6) 6.9% 3.0% -- --
26 Meadow View
Victoria, TX 77904
The 1818 Fund II, L.P.......... 31,263,441 (7) 64.8% 64.8% 10,000 100%
c/o Brown Brothers
Harriman & Co.
Fifty-Nine Wall Street
New York, New York 10005
MetLife, Inc................... 1,500,000 (8) 7.2% 3.1% -- --
One Madison Avenue
New York, New York 10010
________________________________
* Less than 1%.
(1) Includes 1,000,000 shares that may be acquired within sixty days upon the
exercise of options and 1,000,000 shares held in a trust of which Mr. Gerry
is a trustee and beneficiary.
(2) Excludes 148,700 shares of Common Stock owned by Mr. Walston's sons in
which Mr. Walston disclaims beneficial ownership. Includes 177,500 shares
of Common Stock owned by V.A. Walston & Associates, Inc.
(3) Represents 800,000 shares that may be acquired within sixty days upon the
exercise of options.
(4) Includes 27,500,000 shares issuable upon conversion of Preferred Stock.
Messrs. Tucker and Long are each deemed to beneficially own the shares of
Common Stock and Preferred Stock held by The 1818 Fund II, L.P. (the
"Fund"). Messrs. Tucker and Long have shared voting and investment power
with respect to all of the shares that they are deemed to beneficially own.
See note (7) below. The address of Messrs. Long and Tucker is 59 Wall
Street, New York, New York 10005.
-4-
(5) Includes 1,800,000 shares of Common Stock subject to options exercisable
within 60 days and 27,500,000 shares of Common Stock issuable upon
conversion of Preferred Stock.
(6) Includes 177,500 shares of Common Stock held by Alcorn Production Company,
a company controlled by Mrs. Alcorn.
(7) Includes 27,500,000 shares issuable upon conversion of the Preferred Stock.
The sole general partner of the Fund is Brown Brothers Harriman & Co., a
New York limited partnership ("BBH&C"). By virtue of BBH&C's relationship
with the Fund, BBH&C may be deemed to beneficially own 31,263,441 shares of
Common Stock and 10,000 shares of Preferred Stock. Lawrence C. Tucker and
T. Michael Long are general partners of BBH&C. By virtue of a resolution
adopted by BBH&C designating Messrs. Tucker and Long, or either of them, as
the sole and exclusive partners of BBH&C having voting power (including the
power to vote or to direct the voting) and investment power (including the
power to dispose or to direct the disposition) with respect to the
securities of the Company, each of Messrs. Long and Tucker may be deemed to
beneficially own 31,263,441 shares of Common Stock and 10,000 shares of
Preferred Stock. The Fund and BBH&C have shared voting and investment power
with respect to all of the shares that they are deemed to beneficially own.
The address of BBH&C is 59 Wall Street, New York, New York 10005. The
preceding information is based on a Schedule 13D/A filed May 29, 1998, by
the Fund, BBH&C and Messrs. Long and Tucker.
(8) Based on a Schedule 13G, filed February 14, 2001, by MetLife, Inc.
("MetLife") and its wholly-owned subsidiary, Metropolitan Life Insurance
Company ("MLIC") which states that MetLife and MLIC both have shared voting
and investment power over 1,500,000 shares. In the Schedule 13G, MetLife
and MLIC state that the shares were acquired for the benefit of separate
account customers of MetLife and MLIC by their affiliate, State Street
Research & Management Company, Inc., an investment advisor registered under
Section 203 of the Investment Advisors Act. Both MetLife and MLIC disclaim
beneficial ownership of these shares in the Schedule 13G.
-5-
ITEM 1.
ELECTION OF DIRECTORS
Nominees
Pursuant to the Company's Restated Certificate of Incorporation, the
Board of Directors is divided into three classes that are elected for staggered
three-year terms and hold office until their successors are duly elected and
qualified. The term of the Class I directors, currently comprised of Messrs.
Nielsen, Scheirman and Tucker, expires at the Meeting. The term of the Class II
directors, currently comprised of Messrs. Walston and Long, will expire at the
2003 annual meeting of shareholders. The term of the Class III directors,
currently comprised of Messrs. Gerry and Grist, will expire at the 2004 annual
meeting of shareholders.
The Class I nominees for election at the Meeting, other than the
Preferred Stock Nominee, are Messrs. Scheirman and Nielsen. These nominees will
be elected by both the holders of the Common Stock and, on an as converted
basis, the owner of the Preferred Stock. The holders of the Common Stock and the
Preferred Stock will vote together as a class.
The Company's Certificate of Designation, pursuant to which the
Preferred Stock was issued on April 21, 1998, provides that the holders of the
Preferred Stock have the right to appoint three directors to the Company's Board
of Directors, voting together as a class. Messrs. Tucker, Long and Grist were
elected as directors by the holders of the Preferred Stock as Class I, Class II
and Class III directors, respectively. Each director elected by the holders of
shares of Preferred Stock shall, unless his term shall expire earlier in
accordance with the provisions thereof, hold office until the annual meeting of
stockholders at which directors of the class to which he has been elected stand
for election or until his successor, if any, is elected and qualified. Mr.
Tucker, whose term expires at the Meeting, has been nominated as the Class I
Preferred Stock Nominee (together, with Mr. Scheirman and Mr. Nielsen, the
"Nominees").
If any director elected by the holders of Preferred Stock shall cease
to serve as a director before his or her term shall expire (except by reason of
the termination of the voting rights accorded to the holders of Preferred Stock
in accordance with the Certificate of Designation), the holders of the Preferred
Stock then outstanding and entitled to vote for such director may, by written
consent as provided herein, elect a successor to hold office for the unexpired
term of the director whose place shall be vacant. Any director elected by the
holders of shares of Preferred Stock voting separately as a single class may be
removed from office with or without cause by the vote or written consent of the
holders of at least a majority of the outstanding shares of Preferred Stock, at
the time of removal.
It is intended that all shares of Common Stock and Preferred Stock
represented by the proxies will be voted for the election of the Nominees,
except where authority to vote in the election of directors has been withheld.
Should the Nominees become unable or unwilling to serve as directors at the time
of the Meeting, the person or persons exercising the proxies will vote for the
election of substitute Nominees designated by the Board of Directors, or the
Board of Directors may choose to reduce the number of members of the Board of
Directors to be elected at the Meeting in order to eliminate the vacancy. The
Nominees have consented to being nominated and have expressed their intention to
serve if elected. The Board of Directors has no reason to believe that the
Nominees will be unable or unwilling to serve if elected. Only the Nominees or
substitute Nominees designated by the Board of Directors will be eligible to
stand for election as directors at the Meeting. See "Stockholders' Proposals for
Next Annual Meeting."
-6-
Directors and Executive Officers
The following table provides information with respect to the Nominees,
all current directors and all present executive officers of the Company. Each
executive officer has been elected to serve until his successor is duly
appointed or elected by the Board of Directors or his earlier removal or
resignation from office.
Class I Director, Age and Position with the Company Company Position Since
- ---------------------------------------------------------------------- -------------------------------------------
Arne R. Nielsen, 75, Director (Nominee)............................... 1989
W. Russell Scheirman, 46, President, Chief Financial
Officer and Director (Nominee).................................... 1991
Lawrence C. Tucker, 59, Director (Nominee)........................... 1998
Class II Directors, Age and Position with the Company Company Position Since
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Virgil A. Walston, Jr., 67, Vice Chairman of the Board
and Chief Operating Officer....................................... 1989
T. Michael Long, 58, Director ........................................ 1998
Class I Director, Age and Position with the Company Company Position Since
- ---------------------------------------------------------------------- -------------------------------------------
Robert L. Gerry I, 64, Chairman of the Board and
Chief Executive Officer........................................... 1997
Walter W. Grist, 61, Director......................................... 1998
The following is a brief description of the background and principal
occupation of each director (including each Nominee) and executive officer:
Arne R. Nielsen - Mr. Nielsen has been a Director of the Company since
March 1989. He is currently the Chairman and Chief Executive Officer of
Shiningbank Energy Income Fund, a position he has held since 1996. He served as
the Chairman of the Board of Serenpet, Inc. from April 1995 through July 1996,
President, Chief Executive Officer and Chairman of the Board of Poco Petroleums
Ltd. from January 1992 through May 1994, and President and Chief Executive
Officer of Bowtex Energy (Canada) Corporation from July 1990 through January
1992. Mr. Nielsen also served as the Chairman of the Board and Chief Executive
Officer of Mobil Oil Canada from April 1986 to January 1989.
W. Russell Scheirman - Mr. Scheirman has served as the President of
the Company since 1992, and as Chief Financial Officer and a Director of the
Company since 1991. From 1991 to 1992, Mr. Scheirman was Executive Vice
President of the Company. He was an Associate at McKinsey & Company, Inc. from
1989 to 1991, an investment banker with Copeland, Wickersham and Wiley from 1984
to 1989, and a Petroleum Reservoir Engineer for Exxon Company, U.S.A. from 1978
to 1984. Mr. Scheirman holds a B.S. (Summa Cum Laude) and M.S. in Mechanical
Engineering from Duke University (1977 and 1978, respectively) and an M.B.A.
from California Lutheran University (1984).
Lawrence C. Tucker - Mr. Tucker is a general partner of BBH&CO, a
private banking company, and has been with BBH&Co. for 35 years. Mr. Tucker
currently serves as a member of the Steering Committee of BBH&Co. With T.
Michael Long, Mr. Tucker is responsible for the corporate finance activities of
BBH&CO., including management of the 1818 Funds, private equity investing
partnerships with committed capital exceeding $1 billion. Mr. Tucker is a
director of Riverwood International Corporation, National Healthcare
Corporation, WorldCom Venture Fund, US Unwired, Inc., 2-tel technologies, Inc.,
Xspedius, Digex, Inc. and also serves as an Advisory Director for WorldCom, Inc.
Mr. Tucker has a B.S. degree from Georgia Institute of Technology and an MBA
from the Wharton School of the University of Pennsylvania.
Virgil A. Walston, Jr. - Mr. Walston, a co-founder of the Company, has
been the Chief Operating Officer and Vice Chairman of the Board of Directors of
the Company since 1989. From 1985 to 1989 Mr. Walston was Chief Operating
Officer of Alcorn International, Inc., which was acquired by the Company in
1989. Mr. Walston was a Manager-Middle East/Far East Operations for Occidental
Petroleum, Inc. from 1983 to 1985. He was a General Manager for Cities East Asia
from 1980 to 1983, a Manager of Exploration Operations for Cities Eastern
International in 1979, a New Ventures Manager for Cities International from 1976
to 1979, an Exploration Manager for Cities Service Indonesia in 1976, a
Geological Manager for Cities Service Philippines in 1975, a Senior Project
-7-
Manager for Cities Service East Asia in 1974, and a Petroleum Geologist for ESSO
Libya and ESSO Eastern from 1963 to 1974. Mr. Walston holds a B.S. in Geology
from the University of Texas (1959) and an M.S. in Geology from Texas Tech
University (1963).
T. Michael Long - Mr. Long is a general partner of BBH&Co. and has
been with BBH&Co. for 30 years. With Mr. Tucker, Mr. Long is responsible for the
corporate finance activities of BBH&Co., including management of the 1818 Funds,
private equity investing partnerships with committed capital exceeding $1
billion. Mr. Long received a B.A. degree from Harvard College in 1965 and he
received an MBA from The Harvard University Graduate School of Business in 1971.
Mr. Long is a director of HCA Healthcare Company, Computerized Medical Systems,
Inc., PICIS, Inc., Genesee & Wyoming, Inc., and MedSource Technologies, Inc.
Robert L. Gerry I - Mr. Gerry has been Chairman of the Board and Chief
Executive Officer of the Company since August 1997. Until August 1997, Mr. Gerry
had been Vice-Chairman of Nuevo Energy Company ("Nuevo") since February 1994.
Prior to being appointed Vice-Chairman of Nuevo, Mr. Gerry had served as
President and Chief Operating Office of Nuevo since its formation in March 1990.
Mr. Gerry had been Senior Vice President of Energy Assets International
Corporation ("EAIC") since January 1989. For ten years prior to joining EAIC,
Mr. Gerry was active as an independent investor concentrating on energy
investments. He currently serves on the Board of Directors of Nuevo, a position
he has held since 1990, and Earth Satellite Corporation and as a Trustee of
Texas Children's Hospital.
Walter W. Grist - Mr. Grist has been with BBH&Co. for over 30 years.
Mr. Grist is one of several managers of the 1818 Funds, private equity investing
partnerships with committed capital exceeding $1 billion. Mr. Grist received his
B.S. degree is Business Administration at New York University in 1965. Mr. Grist
is a director of Computerized Medical Systems and Western Oil Sands, Inc.
Mr. Nielsen is a Canadian citizen. All other officers and directors of
the Company are United States citizens.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by the SEC's
regulations to furnish the Company with copies of all Section 16(a) forms they
filed with the SEC.
To the Company's knowledge and except as otherwise set forth below,
based solely on a review of the copies of such reports furnished to the Company
and written representations that no other reports were required, during the
fiscal year ended December 31, 2001, the Company's officers, directors and
greater than ten percent stockholders had complied with all Section 16(a) filing
requirements.
Information Concerning the Operation of the Board of Directors
The business of the Company is managed under the direction of the
Board of Directors. The Board of Directors meets on a quarterly basis to review
significant developments affecting the Company and to act on matters requiring
Board approval. The Board of Directors may also hold special meetings when an
important matter requires Board action between regularly scheduled meetings.
Directors are not compensated for service on the Board of Directors or any
committee thereof. During 2001, the Board of Directors of the Company met
formally three (3) times and executed three (3) unanimous consents. All of the
Company's directors attended the meetings of the Board of Directors except for
Mr. Tucker, who attended two meetings.
In order to facilitate the various functions of the Board of
Directors, the Board of Directors has created a Compensation Committee comprised
of T. Michael Long and Lawrence C. Tucker, both of whom are non-employee
directors. The Compensation Committee establishes and approves the terms of
employment of executive officers and reviews and approves management's
recommendations concerning compensation of certain other employees. During 2001,
the Compensation Committee held one meeting. All directors who were members of
the Compensation Committee were present at the committee meeting. The Company
does not have a nominating committee.
-8-
Audit Committee Report
The Audit Committee assists the Board of Directors in fulfilling its
responsibility for overseeing the quality and integrity of the Company's
accounting, auditing and financial reporting practices. In carrying out this
responsibility, the Audit Committee (i) reviews with the Company's independent
auditors the scope of the annual audit, (ii) reviews the independent auditors'
management letter and (I) meets with the Company's internal auditors. The Board
of Directors has not adopted an audit committee charter. The Audit Committee is
comprised of Mr. Nielsen and Mr. Grist. The board of directors believes that
both members of the Company's Audit Committee are independent based on the
definition of independence in the New York Stock Exchange's listing standards.
During 2001, the Audit Committee held one meeting at which both members were
present.
The Company's management is responsible for preparing the Company's
financial statements and implementing its internal accounting controls. Deloitte
& Touche, the Company's independent public accountants, are responsible for
expressing an opinion on the conformity of the Company's audited financial
statements with generally accepted accounting principles. In carrying out its
responsibility to oversee these processes, the Audit Committee has reviewed the
audited financial statements in the Company's Annual Report for the year ended
December 31, 2001 and discussed these financial statements with management and
Deloitte & Touche. The Audit Committee's discussions with management and
Deloitte & Touche included a review of the quality of the accounting principles
used to prepare the Company's financial statements. The Audit Committee also
discussed with Deloitte & Touche such other matters as are required to be
discussed with the Company's independent auditors under generally accepted
auditing standards, including Statement on Auditing Standards No. 61.
Audit Fees. For the year ended December 31, 2001, the aggregate fees
billed to the Company by its principal accounting firm, Deloitte & Touche, for
services related to Deloitte & Touche's audit of the Company's financial
statements and reviews of its Form 10-QSBs for 2001 were $73,000.
Financial Information Systems Design and Implementation Fees. The
Company was not billed any amounts during 2001 by Deloitte & Touche for
operating or supervising its information system, or designing a hardware or
software system that aggregates data for, or generates information that is
significant to, the Company's financial statements.
All Other Fees. The aggregate amount of all other fees Deloitte &
Touche billed to the Company during 2001 was $73,500.
After reviewing the non-audit services provided by Deloitte & Touche
and engaging in discussions with Deloitte & Touche regarding their independence,
the Audit Committee determined that the non-audit services provided to the
Company by Deloitte & Touche were not inconsistent with Deloitte & Touche's
status as independent auditors. The Audit Committee has received the written
disclosures and the letter from Deloitte & Touche required by Independence
Standards Board Standard No. 1.
Based on its reviews of the Company's audited financial statements and
the discussions with management and Deloitte & Touche described above, the Audit
Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 2001 for filing with the SEC.
Arne R. Nielsen
Walter W. Grist
Certain Relationships and Related Transactions
On April 21, 1998 VAALCO consummated the acquisition of 1818 Oil Corp. from the
Fund in exchange for 10,000 shares of Convertible Preferred Stock, Series A. The
Preferred Stock is convertible into 27.5 million shares of VAALCO, $0.10 par
value per share, Common Stock. In connection with the acquisition of 1818 Oil
Corp., the Company issued to the Fund Common Stock and Preferred Stock which
votes as a class with the Common Stock on an as converted basis, representing
approximately 65% of the outstanding voting power of the Company on an as
converted basis (excluding options and warrants). In addition, the terms of the
Preferred Stock acquired by the Fund provide that while the Preferred Stock is
outstanding, the holders of Preferred Stock, voting together as a class, are
entitled to elect three directors of the Company. Messrs. Grist, Long and Tucker
were appointed to the Board of Directors as the Fund's nominees.
-9-
EXECUTIVE COMPENSATION
The following table sets forth all compensation, for each executive
officer of the Company, including salaries, fees, bonuses and deferred
compensation, paid or accrued for the account of such persons for services
rendered in all capacities during the three-year period ended December 31, 2001.
The Company does not maintain any pension plans for the persons named below or
any other employees of the Company domiciled in the United States.
------------------------
Annual Compensation
------------------------
All other
Name and Compensation
Principal Position Year Salary Bonus
--------------------------------------------------- ----------- ------------ ----------- ----------------------
Robert L. Gerry I........................... 2001 $225,000 $ 95,000 0
Chief Executive Officer 2000 225,000 110,000 0
Chairman of the Board 1999 225,000 40,000 0
Virgil A. Walston, Jr....................... 2001 $199,000 $ 25,000 0
Chief Operating Officer 2000 144,000 0 0
and Vice Chairman of 1999 188,000 0 0
the Board
W. Russell Scheirman........................ 2001 $160,000 $ 55,000 0
President and 2000 160,000 60,000 0
Chief Financial Officer 1999 160,000 30,000 0
The aggregate amount of perquisites and other personal benefits paid
to each executive officer has not exceeded the lesser of 10 percent of such
officer's annual salary and bonus or $50,000 during the past three years. No
other compensation has been awarded to the Company's executive officers. The
Company has not awarded any long-term compensation during the three years ended
December 31, 2001 and none of the executive officers currently hold any
restricted stock.
Option/SAR Grants in 2001
No option grants or SAR grants were awarded to any executive officer
during 2001.
Aggregated Option/SAR Exercises in 2000 and Option/SAR Values At December 31,
2001
The following table sets forth as of December 31, 2001, certain
information concerning options to purchase Common Stock and SARs granted to the
executive officers named in the Summary Compensation Table. Such persons
exercised no stock options or SARs in 2001.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs (1)
---------------------- ---------------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- --------------------------- ---------------------- --------------------- ---------------------- ---------------------
Robert L. Gerry I........ -- -- 1,000,000/ -- (2) $ 0/ --
Virgil A. Walston, Jr.... -- -- -- / -- --/ --
W. Russell Scheirman..... -- -- 800,000/ -- (2) $ 50,000/ --
- ---------------------------
(1) Based on a stock price of $0.55 per share at December 31, 2001. The
exercise price of all options held by executive officers on December
31, 2001 was not less than $0.375.
(2) Represents options to purchase Common Stock.
Long-Term Incentive Plans
At this time, the Company has no long-term incentive plans.
-10-
ITEM 2.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche has been selected by the Company as its principal
independent public accountants for the Company's fiscal year ending December 31,
2002, and served in such capacity for the Company's fiscal year ended December
31, 2001. The Board recommends that the stockholders vote FOR the ratification
of the appointment by the Board of Directors of Deloitte & Touche to serve as
the Company's principal independent auditors for the fiscal year ending December
31, 2002. Unless otherwise indicated, all properly executed proxies received by
the persons named in the enclosed proxy will be voted for such ratification at
the Meeting.
Representatives of Deloitte & Touche are expected to be present at the
Meeting with the opportunity to make a statement if they desire to do so, and
such representatives are expected to be available to respond to appropriate
questions. If the stockholders do not ratify the selection of this firm, the
Board of Directors will consider the selection of another firm of independent
certified public accountants in the following year.
STOCKHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Any proposals of holders of Common Stock intended to be presented at
the annual meeting of stockholders of the Company to be held in 2003 must be
received by the Company at its principal executive offices, 4600 Post Oak Place,
Suite 309, Houston, Texas 77027, no later than December 19, 2002, in order to be
included in the proxy statement and form of proxy relating to that meeting. If
the date of the 2003 annual meeting of stockholders is changed by more than 30
days from the date of the 2002 annual meeting of stockholders, the deadline for
submitting proposals is a reasonable time before the Company begins to print and
mail its proxy materials for its 2003 annual meeting of stockholders.
The persons named in the Company's form of proxy for the 2003 annual
meeting of stockholders will have discretionary authority to vote any proxies
they hold at such meeting on any matter for which the Company does not receive
timely notice by March 14, 2003, unless the Company changes the date of its 2002
annual meeting of stockholders by more than 30 days from the date of the 2002
annual meeting of stockholders, in which case the Company will be able to
exercise discretionary authority if notice of the matter has not been received
in a reasonable time before the Company mails its proxy materials for the 2003
annual meeting of stockholders.
If the date of the 2002 annual meeting of stockholders is advanced or
delayed by more than 30 calendar days from the date of the 2002 annual meeting
of stockholders, the Company shall, in a timely manner, inform stockholders of
such change, by including a notice under Item 5 in its earliest possible
quarterly report on Form 10-QSB. The notice will include the new deadline for
submitting proposals to be included in the Company's proxy statement and the new
date for determining whether the Company may exercise discretionary voting
authority because it has not received timely notice of a matter.
In order to avoid controversy as to the date on which any such
proposal is received by the Company, it is suggested that stockholders submit
their proposals by certified mail, return receipt requested.
OTHER MATTERS
The management of the Company knows of no other matters which may come
before the Meeting. However, if any matters other than those referred to above
should properly come before the Meeting, it is the intention of the persons
named in the enclosed proxy to vote such proxy in accordance with their best
judgment.
The Company will pay all costs incurred in the solicitation of
proxies. In addition to solicitation by use of the mails, certain officers or
employees of the Company may solicit the return of proxies by telephone,
telegram or personal interview. Arrangements may be made with brokerage firms or
other custodians, nominees and fiduciaries to send proxy materials to the
beneficial owners of the voting securities of the Company.
-11-
FINANCIAL STATEMENTS
The Company will provide without charge to any stockholder as of the
Record Date a copy of the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2001, upon written or oral request to the Investor
Relations Department, VAALCO Energy, Inc., 4600 Post Oak Place, Suite 309,
Houston, Texas 77027, telephone (713) 628-0801, or it may be downloaded from the
Company's internet website at www.vaalco.com.
By Order of the Board of Directors,
Gayla M. Cutrer
Secretary
April 18, 2002
-12-
The Board of Directors recommends a vote FOR the Please mark
election of the nominees and FOR the foregoing your votes as |X|
proposals and if no specification is made, the indicated in
Shares will be voted for said nominees and this example
proposals.
1. PROPOSAL TO ELECT AS DIRECTORS of the Company one nominee for the Class I
position for A three-year term. Directors will hold office for the stated
term or until their successors are elected and shall qualify. Nominee:
Class I: 01 W. R. Scheirman and 02 A. R. Nielsen. In addition to the
nominee listed herein, the holders of Preferred Stock, Series A, will be
voting as a class for the election of one Class I director. This will
result in a total of three directors being elected to the Board of
Directors.
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
__________________________________________________________________________
FOR WITHHOLD authority only WITHHOLD
all nominees for those nominee(s) whose authority for
names I have written at right ALL nominees
[ ] [ ] [ ]
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE as the Independent
auditors of the Company for the fiscal year ending December 31, 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated:_____________________, 2002
_________________________________
Stockholder's Signature
_________________________________
Stockholder's Signature
Signature should agree with name
printed herein. Shares are held
in name of more than one person
EACH joint owner should sign.
Executors, administrators,
trustees, guardians and
attorneys should indicate the
capacity in which they sign.
Attorneys should submit powers
of attorney.such person's title
and relationship to the
partnership.
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* FOLD AND DETACH HERE *
PROXY FOR HOLDERS OF COMMON STOCK
VAALCO ENERGY, INC.
4600 Post Oak Place, Suite 309, Houston, Texas 77027
This Proxy is solicited by the Board of Director of VAALCO Energy, Inc.
(the "Company") for the Annual Meeting of Stockholder on June 5, 2002.
The undersigned hereby constitutes and appoints Robert L. Gerry, III and
W. Russell Scheirman, or either of them, with full power of substitution and
revocation to each, the and lawful attorneys and proxies of the undersigned at
the Annual Meeting of Stockholders of VAALCO Energy, Inc. to be held on June 5,
2002, at 10:00 a.m., Houston time, at the headquarters of the Company at 4600
Post Oak Place, Suite 309, Houston, Texas 77027 or any adjournment thereof (the
"Annual Meeting") and to vote the shares of Common Stock of the Company, $.10
par value per share ("Shares") standing in the name of the undersigned on the
books of the Company on the record date for the Annual Meeting, with all powers
the undersigned would possess if personally present at the Annual Meeting:
The undersigned hereby acknowledges previous receipt of the Notice of
Annual Meeting of Stockholders and the Proxy Statement and hereby revokes any
proxy or proxies heretofore given by the undersigned.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY IN THE STAMPED
PRE-ADDRESSED ENVELOPE ENCLOSED.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *