UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Securities Exchange Act of 1934 (Amendment No. )
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PRIMEENERGY CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
PrimeEnergy Corporation
TO BE HELD
May 20, 20102, 2013
Notice is hereby given that the Annual Meeting of Stockholders of PrimeEnergy Corporation (the “Company”) will be held on Thursday, May 20, 2010,2, 2013, at 9:00 a.m., EDT, at the offices of the Company, One Landmark Square, 11th Floor, Stamford, CTConnecticut 06901, for the following purposes:
1. To elect a Board of Directors of seven (7) persons as nominated in the accompanying Proxy Statement, such Directors to hold office until the next annual meeting of stockholders and until their successors are elected;
2. An advisory (non-binding) vote to approve our executive compensation as described in the accompanying Proxy Statement;
3. An advisory (non-binding) vote on the frequency of future votes on executive compensation, and
2.4. To transact such other procedural business as may properly be brought before the Meeting or at any adjournment or adjournments thereof.
The Meeting may be adjourned from time to time without other notice than by announcement at the Meeting, or at any adjournment thereof, and any and all business for which the Meeting is hereby noticed may be transacted at any such adjournment.
The Board of Directors has fixed April 1, 2010,March 26, 2013, as the date for the taking of a record of the stockholders entitled to notice of and to vote at the Meeting and at any adjournment or adjournments thereof. The stock transfer books will not be closed.
Enclosed is a form of proxy solicited by the Board of Directors of the Company. Stockholders who do not plan to attend the Meeting in person are requested to date, sign and return the enclosed proxy in the enclosed envelope, to which no postage need be affixed if mailed in the United States. Your proxy may be revoked at any time before it is exercised and will not be used if you attend the Meeting and prefer to vote in person.
BY ORDER OF THE BOARD OF DIRECTORS | ||||||
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PATRICIA C. DELANEY | ||||||
Secretary | ||||||
April 5, 2013
Important Notice Regarding Internet Availability of
Proxy Materials for the Annual Meeting of Stockholders
to be Heldheld on May 20, 20102, 2013
The proxy material for this Annual Meeting and the Company’s 20092012 Annual Report
to Stockholders are available at www.RRDEZProxy.com/2010/2013/PrimeEnergyCorporation
PrimeEnergy Corporation
One Landmark Square9821 Katy Freeway
Stamford, Connecticut 06901Houston, Texas 77024
PROXY STATEMENT
Solicitation by the Board of Directors of Proxies from
Stockholders for Annual Meeting of Stockholders
May 20, 20102, 2013
The Board of Directors of PrimeEnergy Corporation, a Delaware corporation, (hereinafter called the “Company”) solicits your proxy in the enclosed form which, if you do not plan to attend the Annual Meeting of Stockholders of the Company on Thursday, May 20, 2010,2, 2013, you are requested to fill out, sign as indicated and return to the Company in the enclosed self-addressed envelope, which requires no postage if mailed in the United States. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is exercised by notice (i) in person by the stockholder’s oral revocation at the Annual Meeting or (2) in writing to the Company.Company at One Landmark Square, Stamford, Connecticut 06901 (Attention: Corporate Secretary), if the proxy was executed and returned. The approximate date on which the proxy statement and form of proxy will be sent to security holders is April 20, 2010.5, 2013.
Proxies are being solicited by mail and all expenses of solicitation have been or will be borne by the Company. In addition, arrangements may be made with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy material to their principals and the Company will reimburse them for their expenses in so doing.
Only stockholders of record at the close of business on April 1, 2010,March 26, 2013 (the “Record Date”), are entitled to vote at the 20102013 Annual Meeting. At that date,Meeting and any adjournment thereof. There were 2,501,138 shares of common stock (“Common Stock”) outstanding on the Company had outstanding andRecord Date. Each holder of Common Stock is entitled to vote 3,026,397 shares of Common Stock,on the proposals presented in this Proxy Statement for each share held, each share entitling the record holder thereof to one vote.
Matters to be PresentedVoted on at the Annual Meeting
The only matterThere are three (3) proposals that are scheduled to be presentedvoted on at thisthe Annual Meeting isMeeting. Shareholders are being asked to vote on (1) the election of seven (7) Directors named below. Please see “Electionherein to the Board of Directors” at page 3.Directors of the Company, (2) an advisory (non-binding) vote to approve the executive compensation paid as described in this Proxy Statement, and (3) an advisory (non-binding) vote on the frequency of future votes on executive compensation. .
All shares of the Company represented by proxies received in time and in proper form and condition and not revoked will be voted as specified in the proxy; or in the absence of specific direction, the proxy will be voted by the person designated therein:
FOR the election as Directors of the Company of the seven (7) nominees named below,herein, to hold office until the next annual meeting of stockholders and until their respective successors shall be duly elected. elected;
FOR the approval of executive compensation, and
FOR a three year frequency of future advisory votes on executive compensation.
In the event any of the nominees should become unable to serve as a Director, it is intended that, pursuant to the proxiesaccompanying form of proxy, votes will be voted in accordance withcast for a substitute nominee designated by the best judgmentBoard of the person acting under it.Directors.
The election of Directors will require the affirmative votes of a plurality of the shares of the Common Stock voting in person or by proxy at the Annual Meeting. The Company’s transfer agent will tabulate all votes whichthat are received prior to the date of the Annual Meeting. The Company will appoint two inspectors of election, who may be officers or employees, to receive the transfer agent’s tabulation, to tabulate all other votes, and to certify the results of the elections. Abstentions and broker non-votes are each included in the determination of the number of shares present and voting (i.e., for quorum purposes), but shall not be counted for the purposes of the election of Directors.
As to the advisory vote for the approval of the compensation paid to the named executive officers described in this proxy statement, the approval will be determined by a majority of the votes cast, without regard to broker non-votes or proxies marked “Abstain.” With respect to the advisory vote on the frequency of future votes on executive compensation, a shareholder may vote for 1, 2 or 3 years, or may abstain, and the advisory vote on frequency will be determined by the number of years that receives the most votes cast.
The management knows of no mattermatters to be submitted to the 20102013 Annual Meeting with respect to which the stockholders are entitled to vote other than the election of Directors and the two (2) advisory (non-binding) votes described above, but if procedural matters do properly come before the Meeting, the persons named in the proxy will vote according to their best judgment.
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of the Common Stock of the Company owned beneficially by any person, including any “group” as that term is defined in Section 12d(3)12d (3) of the Securities Exchange Act of 1934, known to the Company to be the beneficial owner of five percent (5%) or more of the Common Stock, as of April 1, 2010.March 26, 2013. Information as to beneficial ownership is based upon statements furnished to the Company by such persons. Except as indicated, all shares are held directly, with full voting and dispositive powers, and percentages are calculated on the basis of the shares issued and outstanding, and with respect to those named persons holding options presently exercisable or within 60 days of April 1, 2010,March 26, 2013, includes the number of shares to be issued upon exercise of such options.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | Amount and Nature of Beneficial Ownership | Percent of Class | |||||||||
Charles E. Drimal, Jr. | 1,223,862 | (1) | 32.87 | 1,223,454 | (1) | 38.25 | |||||||
One Landmark Square Stamford, Connecticut 06901 | |||||||||||||
McJunkin Corporation | 623,521 | (2) | 20.60 | ||||||||||
835 Hillcrest Drive Charleston, West Virginia 25311 | |||||||||||||
Amrace, Inc. | 391,422 | 12.93 | 391,422 | 15.65 | |||||||||
1251 Avenue of the Americas 27th Floor New York, New York 10020 | |||||||||||||
Ebersole Gaines Wehrle | 241,500 | (2) | 9.65 | ||||||||||
P.O. Box 2509 Charleston, West Virginia | |||||||||||||
Matthias Eckenstein | 224,000 | (3) | 7.40 | 224,000 | (3) | 8.95 | |||||||
Solothurner Str 94 4008 Basel, Switzerland | |||||||||||||
Clint Hurt | 201,250 | (4) | 6.65 | 201,250 | (4) | 8.05 | |||||||
107 North “N” Midland, Texas 79701 | |||||||||||||
Jan K. Smeets | 189,500 | (5) | 6.26 | 184,500 | (5) | 7.38 | |||||||
9 Locust Avenue Larchmont, New York 10538 | |||||||||||||
H. Gifford Fong | 136,941 | (6) | 5.47 | ||||||||||
3658 Mt. Diablo Boulevard Suite 200 Lafayette, California 94549 |
(1) | Includes |
(2) |
(3) | Mr. Eckenstein has sole voting power with respect to these shares, pursuant to voting |
(4) | Shares held of record by Clint Hurt & Associates, Inc., a private company controlled by Mr. |
(5) | Includes |
(6) | Includes 54,141 shares as to which Mr. Fong has shared voting and investment power and 82,800 shares for which Mr. Fong has sole voting power pursuant to voting agreements dated June 28, 2006, between Mr. Fong and his two sons who are the record owners of such shares. Mr. Fong has no dispositive powers with respect to such 82,800 shares and no pecuniary interest in such shares. |
The following table sets forth information at April 1, 2010,March 26, 2013, with respect to the shares of the Company’s Common Stock beneficially owned by the Company’s Directors and nominees and by all Directors andexecutive officers of the Company, individually, and as a group:
Name | Amount Beneficially Owned(1) | Percent of Class (1) | Amount Beneficially Owned(1) | Percent of Class(1) | |||||
Beverly A. Cummings | 75,000 | (2) | 2.42 | 75,000(2) | 2.92 | ||||
Charles E. Drimal, Jr. | 1,223,862 | (3) | 32.87 | 1,223,454(3) | 38.25 | ||||
Matthias Eckenstein | 224,000 | (4) | 7.40 | 224,000(4) | 8.95 | ||||
H. Gifford Fong | 136,941 | (5) | 4.52 | 136,941(5) | 5.47 | ||||
Thomas S. T. Gimbel | 47,179 | 1.56 | 1,000 | 0.04 | |||||
Clint Hurt | 201,250 | (6) | 6.65 | 201,250(6) | 8.05 | ||||
Jan K. Smeets | 189,500 | (7) | 6.26 | 184,500(7) | 7.38 | ||||
All Directors and officers as a group | 2,097,732 | (2)(3)(4)(5)(6)(7) | 55.30 | ||||||
All Directors and executive officers as a group | 2,046,145(2)(3)(4)(5)(6)(7) | 71.06 |
(1) | Unless otherwise indicated, all shares are owned directly and the holder thereof has sole voting and investment powers with respect thereto, and percentages are calculated on the basis of the shares issued and outstanding, and with respect to those persons, or group, holding options presently exercisable or within 60 days, includes the number of shares to be issued upon exercise of such options. |
(2) | Includes 5,000 shares |
(3) | Includes |
(4) | Mr. Eckenstein has sole voting power with respect to these shares, pursuant to voting |
(5) | Includes 54,141 shares |
(6) | Shares held of record by Clint Hurt & Associates, Inc., a private company controlled by Mr. |
(7) | Includes |
Mr. Drimal is the only Director who has pledged Common Stock as security.
Item 1. Election of DirectorsELECTION OF DIRECTORS
(PROPOSAL NO. 1)
There will be submitted by the management to the 20102013 Annual Meeting for election as Directors, the seven (7) nominees whose names, together with certain information concerning them, are set out below. All of the nominees are presently serving as Directors of the Company. Each nominee was elected to their present term of office by the shareholders and has served continuously as a Director since the date indicated below. The nominees, whose terms are expiring this year, are proposed for re-election for a one year term expiring in 2014. Four of the Company’s Directors are independent directors within the meaning of applicable regulatory standards. There is no family relationship between any nominee for Director or the executive officers of the Company. In the event any of the nominees shall become unable to serve as a Director, it is intended that the proxy will be voted in accordance withfor a substitute nominee designated by the best judgmentBoard of the person acting under it;Directors; however, no circumstances are at present known which would render any nominee unavailable.
The Board of Directors recommends a voteFOR the election of all Nominees
(Proposal No. 1 on the Proxy)
Nominees
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| Director
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since February 1988 |
Beverly A. Cummings, age 60, is a Certified Public Accountant and holds a Bachelor of Science degree from the State University of New York and a Master of Business Administration from Rutgers University. She was elected Vice President, Chief Financial Officer and Treasurer of the Company in October, 1987, and Executive Vice President and Treasurer in May, 1991, and serves as the Principal Financial Officer of the Company. Ms. Cummings holds similar positions with the Company’s subsidiaries. The attributes that prompted Ms. Cummings’ election to the Board were her significant financial skills and experience, as well as her understanding of oil and gas operations, and in particular of those of PrimeEnergy. Those qualifications continue to contribute to her effective service as a director today.
Charles E. Drimal, Jr. | Director since October 1987 |
Charles E. Drimal, Jr., age 65, has served as President and Chief Executive Officer of the Company since October, 1987, and holds the position of Chairman of the Board of Directors. He also holds similar positions with the Company’s subsidiaries. Mr. Drimal is a graduate of the University of Maryland and Samford University School of Law and is a member of the New York State Bar. The leadership skills, experience and thorough knowledge of the oil and gas industry that uniquely qualified Mr. Drimal to become the President and Chief Executive Officer in 1987 have continued to make him an invaluable member and Chairman of the Board of Directors.
Matthias Eckenstein | Director | since August 1989 |
Mr. Eckenstein, age 83, is a Swiss citizen and a resident of Switzerland. He studied law and architecture in Basel, Switzerland, at the University of Geneva and the Ecole des Beaux Arts, Paris, France. He is a director and principal in several privately held companies providing financial consulting services in construction, hotel management and architectural matters. Mr. Eckenstein brings to the Board a global and varied perspective which stem from his background in managing all phases of numerous successful construction operations in Europe and the United States. Mr. Eckenstein’s valuable first-hand experience in the development, financing and construction of large commercial projects factored into his election to the Board and has proven beneficial to the Board over the last 24 years.
H. Gifford Fong | Director since May 1994 |
Mr. Fong, age 68, is President of Gifford Fong Associates, an investment technology consulting firm located in Lafayette, California. Mr. Fong holds a Bachelor of Science, a Master of Business Administration and a Juris
Doctor degree from the University of California. Mr. Fong is the editor of The Journal of Investment Management and is the author and a frequent contributor of numerous trade journal publications. Mr. Fong’s expertise in transaction valuation, portfolio risk management and asset management is an important resource for the Board. His substantial knowledge and experience in financial matters and business operations fully qualify him to serve as a member of the Board of Directors.
Thomas S. T. Gimbel | Director |
Thomas S. T. Gimbel, age 58, is the Executive Managing Director of Optima Fund Management LLC, an investment advisory and asset management firm registered with the Securities and Exchange Commission, with offices in New York City. He previously served as Managing Director, Business and Product Development of that firm. Prior to joining Optima, he was the Managing Director of Hedge Fund Investments at Credit Suisse Asset Management, New York. In addition, he is Vice President and Director of American Farmland Company, a Maryland Corporation. Mr. Gimbel holds a Bachelor of Arts degree in economics from Bowdoin College and a Master of Business Administration from Columbia University Graduate School of Business. His proven ability to develop successful investment and management strategies for his clients, his keen business acumen, and his knowledge of the financial markets were some of the qualities that first formed the basis for his election to the Board. Those qualities along with his experience in financial analysis continue to make Mr. Gimbel’s participation on the Board efficacious.
Clint Hurt | Director |
Clint Hurt, age 77 is president of Clint Hurt & Associates, Inc., a private oil and gas exploration company located in Midland, Texas. He is past president of the Independent Oil & Gas Association of West Virginia and is a former director of Chase Bank of Texas, Midland, Texas. Mr. Hurt’s expertise in the oil and gas industry and his unique insight into the trends and developments in the industry made him an excellent candidate for the Board. Those attributes have also enabled him to make an important contribution to the Company in his 25 years of service to the Board.
Jan K. Smeets | Director | |||||||
since February 1988 |
AllJan K. Smeets, age 65, is a citizen of the above-named nominees are currently DirectorsNetherlands and a resident of the United States. Mr. Smeets is a graduate of M.I.T. and holds a Master of Business Administration from Stanford Business School. Mr. Smeets is the President of Smeets Management, Inc., a privately held company in Larchmont, New York that provides administrative and management consulting services. Prior to that Mr. Smeets was a process engineer at Lago Oil & Transport Company (ESSO) in Aruba, a management consultant with McKinsey & Company in New York and a director of Citco Group, Ltd. His background in assessing and analyzing financial statements and related reports qualify him as an audit committee financial expert within the meaning of the rules of the Securities and Exchange Commission and enable him to fulfill his role as Chairman of the Audit Committee. Mr. Smeets’ experience in advising businesses on the development of operational budgets, capital plans, and strategic goals have also resulted in his effectively serving the Board as a director.
Information about the Executive Officers (for information regarding Ms. Cummings and Mr. Drimal, see the description on page 4).
Patricia C. Delaney, age 54, has served as the Secretary of the Company since May 2012, and each hasserves as secretary of the Company’s subsidiaries. She is an attorney in Hauppauge, New York.
Lynne Pizor, age 53, served continuously as Controller of the Company from January 1986 until June 2011, when she resigned.
Mr. Drimal, Ms. Cummings and Ms. Delaney were elected by the Board of Directors to their respective offices in May 2012, at the annual meeting of the Board. Each will hold their respective offices until his or her successor is elected by the Board.
TRANSACTIONS WITH RELATED PERSONS
On April 17, 2012, the Company purchased 45,179 shares of Common Stock from Thomas S.T. Gimbel, for the price of $25 per share. Mr. Gimbel is a Director since the date indicated. There is no family relationship between any nominee forand a Director or executive officerNominee of the Company.
The Company believes thattransaction was approved by the members of our Boardthe Audit Committee.
Clint Hurt, a director of Directors,the Company, is a member of Hurt Interest LLC, a company owned by Mr. Hurt and nominees,a family member. In the normal course of their businesses, Mr. Hurt and our management, have individual skills and experiences, whether in financial matters, business operations and relationships, orHurt Interest LLC make investments in oil and gas operations,producing properties, some of which are operated by the Company’s subsidiary, Prime Operating Company. They receive, like the other interest owners in the properties operated by Prime Operating Company, including the Company, revenue payments from the sale of oil and gas produced by the properties. In 2012, Mr. Hurt and Hurt Interest LLC received approximately $699,000 from the Company for their interests in properties operated by the Company of which Mr. Hurt received $419,500.
Board Independence and Composition
The core responsibility of the Board of Directors is to provide objective, independent judgment in its management oversight function and the Board’s composition reflects that principle. The Board is composed of a majority of independent directors. A director’s independence is determined in accordance with the definition set forth in National Association of Securities Dealers (“NASDAQ”) listing standards and other pertinent and applicable legal and regulatory standards. The Board of Directors annually reviews the relationships between directors or members of their immediate families and the Company, within order to make recommendations to the knowledgefull Board for its determination regarding the independence of each director. As a result of this review, the Board has determined that the following directors are independent directors: Matthias Eckenstein, H. Gifford Fong, Thomas S.T. Gimbel, and ability necessary for our business and operations. FiveJan K. Smeets.
The Board of Directors, in its discretion, may elect a Chairman of the Company’s seven Directors mayBoard. The Chairman leads the Board and presides at all Board meetings, and is responsible for delivery of information for the Board’s informed decision-making.
Based upon the structure that best serves the interests of the Company, the Board determines whether the role of the Chairman of the Board and the Chief Executive Officer should be deemed toheld by one individual or should be “independent,” withinseparated. Currently, the meaningBoard believes that the positions of applicable regulatory standards, eachChairman of themthe Board and Chief Executive Officer should be held by the same person because this combination has served as such for over fifteen yearsthe Company well in the past and theycontinues to work well today, by providing unified leadership and direction. The Directors have a close relationship to each other. These Directors havealso determined that it is not necessary to appoint a “leadlead independent director.”director at this time.
The Board’s Role in Risk Oversight
The Company’s risk management efforts are the responsibility of the Board of Directors. The Company’s Chief Executive Officer and the Chief Financial Officer review with the Board areas of material operational, financial and regulatory risks and the likelihood of the risks coming to fruition, to enable the Board to understand the relative magnitude of such risks and the management and mitigation strategies undertaken by the Company.
The Board of Directors met twothree times in 2009. All2012. Each director attended 75% or more of the incumbent Directors attended bothaggregate number of meetings of the Board of Directors except Messrs. Eckenstein and Fong, each of whom was unable to attend one meeting. All of the incumbent Directors attended all Committee meetingscommittee or committees thereof on which such director served during 2012.
Board Attendance at Annual Meeting
The Company does not have a policy that requires members of the Board on which that Director served.of Directors are reimbursed for travel and related expenses in connection with attendance atto attend the Annual Meeting. All members of the Board and Committee meetings.of Directors are encouraged to attend the Company’s annual meeting of stockholders. SixAnnual Meeting. All of the seven incumbentmembers of the Board of Directors attended the Company’s 2009 annual meeting of stockholders.
Your Board of Directors recommends a vote “FOR” eachAnnual Meeting of the above nominees for election as a Director.Company held in May 2012 except Matthias Eckenstein and Thomas S. T. Gimbel.
Committees of the Board of Directors
The Board of Directors has an Executive Committee, an Audit Committee and a Compensation Committee.
Executive Committee but no other standing committees. All Committee members attended all meetings of their respective Committees.
The Executive Committee, composed of Messrs. Drimal, Jr., Hurt, Smeets and Ms. Cummings, is authorized to exercise all the authority of the Board in the business and affairs of the Company, except as limited by applicable law. The Executive Committee met twelvethree times during 2009,2012, and informally, by telephone or office conference on a regular basis, usually weekly, during the year.
The Audit Committee, composed of Messrs. Eckenstein, Hurt and Smeets, met once in 2009.2012. All members of the Audit Committee were independent under NASDAQ listing standards and other pertinent legal and regulatory standards. The Board of Directors believeshas determined that Mr. Smeets meets the Audit Committee members satisfy applicable requirements for independence,qualifications of an “audit committee financial literacyexpert” within the meaning of the regulations of the Securities and expertise.Exchange Commission and NASDAQ listing standards. The Committee selects and engages independent auditors to audit the books, records and accounts of the Company, determines the scope of such audits, and reviews the financial policies and control procedures of the Company. The report of the Audit Committee is included in this Proxy Statement on page 8.11. The Board of Directors and the Audit Committee have adopted a written charter for the Audit Committee, a copy of which iswas attached as Annex A to thisthe Company’s 2011 Proxy Statement. The Board of Directors has determined that Mr. Hurt no longer meets the criteria for director independence under NASDAQ listing standards. The Board will select another member of the Committee during 2013.
The Compensation Committee, composed of Messrs. Hurt, Gimbel and Smeets, met oncetwice in 2009.2012. All members of the Compensation Committee were independent under NASDAQ listing standards and other pertinent legal and regulatory standards. The charter of the Compensation Committee also requires that members of the Committee also qualify as “outside directors” within the meaning of Section 162(m) of the Internal Revenue and as “non-employee” directors within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended. The Committee annually reviews and evaluates the Company’s compensation policies and establishes salaries, bonuses and other compensation for the Company’s executive officers. The Board of Directors believes thatofficers and directors. Mr. Drimal and Ms. Cummings participate in discussions with the Compensation Committee members satisfy applicable regulatory requirements for independence. Theand make recommendations to the Committee with respect to the compensation of executive officers and directors. Neither Mr. Drimal nor Ms. Cummings participates in the deliberations or approval of the Committee concerning their respective compensation. Although the Compensation Committee has the authority, it has not engaged any outside compensation consultants to assist the Committee in determining the compensation policies of the Company, and no such outside consultants have been engaged by the Company or the Board of Directors. The reportBoard of Directors has determined that Mr. Hurt no longer meets the criteria for director independence under NASDAQ listing standards. The Board will select another member of the Compensation Committee is included in this Proxy Statement on page 7.during 2013. The Board of Directors and the Compensation Committee have adopted a written charter, a copy of which iswas attached as Annex B to thisthe Company’s 2011 Proxy Statement.
The Board as Nominating Committee
The Company does not have a standing nominating committee. The Board of Directors of the Company acts as the nominating committee, with Mr. Drimal and Ms. Cummings abstaining, in the review and selection of Directors for election at the annual meetingabstaining. The majority of the Company’s stockholders. The remaining Directors of the Company, Messrs. Eckenstein, Fong, Gimbel Hurt and Smeets, who function as a nominating committee, and are believed to satisfy applicable regulatory requirements for independence. Those Directors are responsible for collecting and analyzing information with regard to directors’ “independence” as defined by NASDAQ listing standards and other pertinent legal and/or regulatory standards in effect at the time. They are also responsible for making recommendations concerning committee membership and ensuring that committee members satisfy the criteria for membership on a particular committee for independence and have the skills to effectively participate on a particular committee. The Directors who function as the nominating committee are also responsible for identifying and evaluating prospective nominees for vacancies on the Board of Directors believes that this procedure is adequate in the process of selecting persons for elections as Directors of the Company. The seven Directors of the Company currently serving as Directors were designated as nominees for re-election at the 2010 Annual Meeting of Stockholders. No other nominees were considered and no nominations were proposed by any stockholder or group.Directors. The Board of Directors will consider meritorious director candidates submitted to it by members of the Board and by stockholders of the Company, without regard to race, religion, gender, national origin or disability. The Board does not have a formal policy with regard to considering diversity in its consideration of director nominations. Candidates for election must be willing to devote the time necessary to serve as a director and must possess the level of education, experience, and expertise, both with respect to financial matters and the oil and gas industry in general, required to perform the duties of a member of the board of directors of a public company, and in particular of the Company. Submission mustThe Board of Directors strive to recommend candidates that further its objective of having a board that encompasses a broad range of talents and expertise and reflects a diversity of background, experience and viewpoints. The procedure to be accompaniedfollowed by biographical materiala shareholder to submit a nominee to the Committee is set forth in “Stockholder Proposals and Nominations” in this Proxy Statement.
The Board of Directors believes that this procedure is adequate in the process of selecting persons for elections as Directors of the proposed candidate and such other information as would be required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission. Submissions should be forwarded to the SecretaryCompany. The seven Directors of the Company at One Landmark Square, Stamford, Connecticut 06901, in compliance with the procedures described under “Stockholders’ Proposals” set out below.
The principal occupation and employment for the past five years of each of thecurrently serving as Directors andwere designated as nominees for Director and of each of the executive officers of the Company is as follows:
Ms. Cummings is a Certified Public Accountant and holds a Bachelor of Science degree from the State University of New York and a Master of Business Administration from Rutgers University. She was elected Vice President, Finance and Treasurer of the Company in October, 1987, and Executive Vice President and Treasurer in May, 1991, and serves as the Principal Financial Officer of the Company. Ms. Cummings holds similar positions with the Company’s subsidiaries. She has served as a Director of the Company since February, 1988.
Mr. Charles E. Drimal, Jr. has served as a Director and President and Chief Executive Officer of the Company since October, 1987. He also holds similar positions with the Company’s subsidiaries. Mr. Drimal is a graduate of the University of Maryland and Samford University School of Law and is a member of the New York State Bar.
Mr. Eckenstein is a Swiss citizen and a resident of Switzerland. He studied law and architecture in Basel, Switzerland, andre-election at the University2013 Annual Meeting of GenevaStockholders. No other nominees were considered and the Ecole des Beaux Arts, Paris, France. He is a director and principal in several privately held companies providing financial consulting services in construction, hotel management and architectural matters. He was elected a Director of the Company in August, 1989.
Mr. Fong is president of Gifford Fong Associates, investment technology consultants, Lafayette, California. He holds a Bachelor of Science, a Master of Business Administration and law degrees from the University of California. He is the editor of The Journal of Investment Management and is the author and contributor of numerous trade journal publications. Mr. Fong was elected a Director of the Company in May, 1994.
Mr. Gimbel is the Executive Managing Director of Optima Fund Management LLC, New York, prior to which he was Managing Director, Business and Product Development of that firm since July, 2004. Prior to that date, and from February, 1999, he was the Managing Director of Hedge Fund Investments at Credit Suisse Asset Management, New York. Mr. Gimbel holds a Bachelor of Arts degree in economics from Bowdoin College and a Master of Business Administration from Columbia University Graduate School of Business. He was elected a Director of the Company in March, 1989.
Mr. Hurt is president of Clint Hurt & Associates, Inc., a private oil and gas exploration company located in Midland, Texas. He is past president of the Independent Oil & Gas Association of West Virginia and is a former director of Chase Bank of Texas, Midland, Texas. He was elected a Director of the Company in February, 1988.
Mr. Smeets, a citizen of the Netherlands and a resident of the United States, is a private investor in Larchmont, New York. He was elected as a Director of the Company in February, 1988. He is a graduate of M.I.T. and holds a Master of Business Administration from Stanford Business School.
Ms. Pizor has served as Controller of the Company since January, 1986, and Principal Accounting Officer of the Company since September, 2008. She also holds similar positions with the Company’s subsidiaries. She is a graduate of Wagner College with a Bachelor of Science degree in Economics and Business Administration and is a Certified Public Accountant.
Mr. Gilbert has been Secretary of the Company from March, 1973, and serves as secretary of the Company’s subsidiaries. He is an attorney in Dallas, Texas.
The executive officers of the Company, together with certain information concerning them, are set out below.
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Each of the above officersno nominations were electedproposed by the Board of Directors to their respective offices in June, 2009, at the annual meeting of the Board. Each will hold their respective offices until his successor is elected by the Board. The Company does not have the separate position of Chairman of the Board of Directors. Mr. Drimal, as President and Chief Executive Officer, serves as the Chairman of the Board of Directors. The Company believes that the combination of chief executive officer and chairman is appropriate for the size and nature of the Company.
TRANSACTIONS WITH RELATED PERSONS
On April 3, 2008, Prime Offshore L.L.C, a subsidiary of the Company, entered into a Twenty Million Dollar ($20,000,000) subordinated debt facility with Artic Management Corporation, an entity controlled by Matthias Eckenstein, a Director and Director Nominee of the Company. Mr. Eckenstein’s ownership interest in the Company is set out on pages 2 and 3 of this Proxy Statement. The credit facility matures January, 2012, and bears an annual interest rate of ten percent (10%). As of the date of this Proxy Statement, the entire amount of the principal of the subordinated debt facility is outstanding. At April 1, 2010, an aggregate of $3,979,490 of interest has been paid.any stockholder or group.
EXECUTIVE AND DIRECTOR COMPENSATION
The Company has been guided by its Chief Executive Office, Charles E. Drimal, Jr., and Chief Financial Officer, Beverly A. Cummings since 1987. The Board of Directors attributes much of the success of the Company to Mr. Drimal’s and Ms. Cummings’ leadership, skills and dedication to the Company and its shareholders. In order to retain such highly skilled and experienced professionals for its senior management team, the Board of Directors must offer highly competitive compensation packages. At the same time, the Board of Directors is mindful that the primary goal of the Company is to build long-term shareholder value.
There are three elements of the compensation paid to the senior management team, to wit: (i) base salary; (ii) bonus (cash incentive) compensation, and (iii) equity awards. The base salaries that were provided to the senior management team were based upon a number of considerations including each executive officer’s level of responsibility, changes in their responsibilities from year to year, experience, skills and leadership ability. Additionally, the Compensation Committee gave consideration to the executive officer’s ability to be awarded additional compensation in the form of a bonus which compensation was more directly tied to the Company’s performance. After discussing all of those considerations, the Compensation Committee recommended the same percentage increase in each of the executive officer’s salary. The base salary paid to each executive officer in 2012 is set forth in the “Salary” column of the Summary Compensation Table set forth in this proxy statement.
The cash incentive bonus compensation awarded to each executive officer is intended to correlate to the Company’s performance. The Compensation Committee focused on performance measures such as the increase in oil and gas reserves, debt level, growth in the Company’s well servicing subsidiaries and growth in the
Company’s oil and gas operations. The Compensation Committee believes this combination of metric categories is the important measurement necessary for increasing shareholder value and growing the Company. As a result, the Compensation Committee awarded each of the executive officers a cash incentive bonus. The cash bonus paid to each executive officer in 2012 is set forth in the “Bonus” column of the Summary Compensation Table set forth in this proxy statement.
The Company awarded options to purchase shares of the Company’s common stock to the executive officers in May 1989. The objective of the award was to retain high level officers and to motivate them to continue their relationship with the Company and thereby align their interests with the long term interests of its shareholders. The options that were awarded have been fully exercisable by the executive officers since May 1994. The Compensation Committee believes the options awarded to the executive officers represent a significant stake in the Company and determined not to award any more options or other types of equity compensation to the executive officers in 2012.
The following table discloses compensation for the fiscal years ended December 31, 20092012 and 2008,2011, received by the Company’s Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer(1)Officer (1) (2).
All Other Compensation ($) | Total ($) | ||||||||||
Annual Compensation | |||||||||||
Name and Principal Position(2) | Year | Salary($) | Bonus($) | ||||||||
Charles E. Drimal, Jr. | |||||||||||
President and Director; the Principal Executive Officer | 2009 | 360,500 | -0- | 53,300 | (3) | 413,800 | |||||
2008 | 350,000 | 1,250,000 | 50,205 | (4) | 1,650,205 | ||||||
Beverly A. Cummings | |||||||||||
Executive Vice President, Treasurer and Director; the Principal Financial Officer | 2009 | 360,500 | -0- | 24,989 | (5) | 385,489 | |||||
2008 | 350,000 | 500,000 | 24,405 | (6) | 874,405 | ||||||
Lynne Pizor | |||||||||||
Controller; the Principal Accounting Officer | 2009 | 180,250 | -0- | 7,485 | (7) | 187,735 | |||||
2008 | 150,478 | 40,000 | 7,619 | (8) | 198,097 |
Annual Compensation | All Other Compensation)($) | Total ($) | ||||||||
Name and Principal Position(2) | Year | Salary($) | Bonus($) | |||||||
Charles E. Drimal, Jr. Chairman, Chief Executive Officer and President; Principal Executive Officer | 2012 | 400,000 | 2,000,000 | 52,388(3) | 2,452,388 | |||||
2011 | 371,107 | 1,800,000 | 48,194(4) | 2,219,301 | ||||||
Beverly A. Cummings Executive Vice President, Treasurer and Director; Principal Financial Officer | 2012 | 400,000 | 800,000 | 30,726(5) | 1,230,726 | |||||
2011 | 371,107 | 720,000 | 30,311(6) | 1,121,418 | ||||||
Lynne Pizor(7) Controller; Principal Accounting Officer | 2012 | — | — | — | — | |||||
2011 | 126,410 | — | 8,009(8) | 134,419 |
(1) | Columns for “Stock Awards”, “Option Awards”, “Non-Equity Incentive Plan Compensation” and “Nonqualified Deferred Compensation Earnings” are omitted as the Company has no such compensation awards or plans. |
(2) |
(3) | Includes |
(4) | Includes $2,000 Director’s fees; $9,800 as the Company’s contribution to its 401(k) plan; club dues, |
Includes $1,500 Director’s fees; |
Includes |
Ms. Pizor resigned from her position in June 2011. |
(8) | Includes |
The Company’s Directors each receive $500 for each Board of Directors meeting attended, but do not receive any fee for attending Committee meetings. The Directors are reimbursed for travel and related expenses in connection with attendance at Board and Committee meetings. All Directors as a group of seven received an aggregate of $6,000 as cash Directors’ fees for the fiscal year ended December 31, 2009. No reference is made for “Stock Awards”, “Option Awards”, “Non-Equity Incentive Plan Compensation” or “Non-Qualified Deferred Compensation Earnings” as the Company has no such Director awards or compensation.
The Compensation Committee of the Board of Directors consists of Messrs. Gimbel, Hurt and Smeets, none of whom is an employee of the Company. The Company believes that each member of the Compensation Committee meets applicable regulatory independence requirements. The Compensation Committee makes all decisions concerning compensation of executive officers who receive salary and bonus in excess of $100,000 annually and determines the total amount of bonuses to be paid annually. The Compensation Committee’s policy is to offer executive officers competitive compensation packages that will permit the Company to attract and retain highly qualified individuals and to motivate and reward such individuals on the basis of the Company’s performance.
The compensation of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer is largely dependent upon the overall performance of the Company. For the year ended December 31, 2010, the base salary of the Principal Executive Officer of the Company, Charles E. Drimal, Jr., remains $360,500 and the base salary of the Principal Financial Officer, Beverly A. Cummings, remains $360,500. For the year ended December 31, 2010, the base salary of the Principal Accounting Officer of the Company, Lynne Pizor, remains $180,250. No cash bonuses were paid for the year ended December 31, 2009.
This report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended December 31, 2009, Messrs. Clint Hurt, Thomas S.T. Gimbel and Jan K. Smeets served as members of the Compensation Committee. None of such persons was, during the fiscal year, or was formerly, an officer or employee of the Company or any of its subsidiaries. There are no committee interlocks with other companies within the meaning of the Securities and Exchange Commission’s rules.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
There were no stock options granted by the Company to the named executive officers during the fiscal year ended December 31, 2009,2012, no options were exercised by any of such persons and there were no stock awards to such persons. The following table sets forth information with respect to all unexercised options held by the named executive officers of the Company at December 31, 2009.2012. All unexercised options are fully exercisable. There are no options which are not fully exercisable. References relating to options which are unexercisable, equity incentive plan awards, unearned options and stock awards are omitted in the table below.
Unexercised Options and Fiscal Year-End Option Values
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Number of Fiscal Year-End(1) | Option Exercise Price | Option Expiration Date | ||||
Name | All Exercisable | |||||
Charles E. Drimal, Jr. | 523,125 | $1.00 | Non-expiring | |||
174,375 | $1.25 | Non-expiring | ||||
Beverly A. Cummings | 52,500 | $1.00 | Non-expiring | |||
17,500 | $1.25 | Non-expiring |
(1) |
The Company’s Directors each receive $500 for each Board of Directors meeting, but do not receive any fee for attending Committee meetings. The Directors are reimbursed for travel and related expenses in connection with attendance at Board and Committee meetings. All Directors as a group of seven received an aggregate of $10,500 as cash Directors’ fees for the fiscal year ended December 31, 2012. No reference is made for “Stock Awards”, “Option Awards”, “Non-Equity Incentive Plan Compensation” or “Non-Qualified Deferred Compensation Earnings” as the Company has no such Director awards or compensation.
ADVISORY NON-BINDING VOTE ON EXECUTIVE COMPENSATION
(Proposal No. 2 on the Proxy)
The Board of Directors believes that the Company’s compensation programs and policies are centered on a pay for performance culture and are strongly aligned with the long-term interests of shareholders.
The Board of Directors is asking shareholders to vote in an advisory, non-binding manner on the compensation paid to our Principal Executive Officer and Principal Financial Officer (collectively, the “Named Executive Officers”), as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K (including the compensation tables and accompanying narrative discussion). Item 402 of Regulation S-K is the SEC regulation that sets forth what companies must include in their proxy statement as to compensation.
This proposal, commonly known as a “Say on Pay” proposal, gives you as a shareholder the opportunity to vote on the Company’s executive pay program. In proposal no. 3, the Board of Directors is seeking your advice
on the frequency of such votes in the future. Pursuant to section 14A of the Securities and Exchange Act of 1934, which is applicable to smaller reporting companies this year, the Board of Directors is requesting shareholders to cast a non-binding advisory vote on the following resolution:
“Resolved, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, compensation tables and narrative discussion is hereby APPROVED.”
Since your vote is advisory, it will not be binding upon the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
The Board of Directors recommends a voteFOR this Resolution.
(Proposal No. 2 on the Proxy)
ADVISORY NON-BINDING VOTE ON FREQUENCY OF SAY-ON-PAY VOTES
(Proposal No. 3 on the Proxy)
Pursuant to Section 14A of the Exchange Act, which is applicable to smaller reporting companies this year, our shareholders are being asked to vote, on an advisory basis, on how frequently our shareholders should have a “Say on Pay” vote in the future. Although this frequency vote is advisory and is not binding on the Board of Directors, the Compensation Committee will take into account the outcome of the vote when considering how frequently to hold Say on Pay votes. You may choose from the following alternatives: every year, every two years, every three years or you may abstain. The Directors of the Company will ask you to vote on an advisory basis on the frequency of Say on Pay votes at least once every six years. Shareholders are not voting to approve or disapprove the Board of Director’s recommendation.
The Board of Directors believes and recommends that the Say on Pay vote should be conducted every three years so that shareholders may express their views on the Company’s executive compensation program. The Compensation Committee, which administers the Company’s executive compensation program, values the opinions expressed by shareholders in these votes and will continue to consider the outcome of these votes in making its decisions on executive compensation.
The Board of Directors recommends that you vote to conduct future Say on Pay votes everythree years.
(Proposal No. 3 on the Proxy)
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. These include, but are not limited to, those matters under Statements on Auditing Standards.Standards No. 61, as amended and adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee has discussed with the independent auditors the auditors’ independence from management and the Company
including the matters in the written disclosures required by the Independence StandardsPublic Company Accounting Oversight Board. The Company’s auditors do not perform financial information system design and implementation services, internal audit or tax services.services for the Company.
The Audit Committee discussed with the Company’s independent auditors the overall scope and plans for their audits. The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2009,2012, for filing with the Securities and Exchange Commission. The Committee has also recommended the selection of the Company’s independent auditors for 2010.2013.
Audit Committee
Jan K. Smeets, Chairman
Matthias Eckenstein
Clint Hurt
This report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
CODE OF BUSINESS CONDUCT AND ETHICS
The Company is committed to observing sound, ethical principles in the conduct of its business and operations and by our officers and employees in the course of their duties. The Company has adopted a Code of Business Conduct and Ethics whichadopted by the Company was amended in December, 2011. The Code, as amended, is available at the Company’s web-site www.primeenergy.com. These provisions areatwww.primeenergy.com. The Code of Conduct is applicable to the Company’s operations and to all of its employees, including the Company’s principal executive officer, principal financial officer, principal accounting officer, and principle accounting officer.Directors. Any amendments to or waivers fromof the Code, to the extent applicable to the Company’s principal executive officers, will be posted on the Company’s web-site.
The Company believes that a majority of its Directors, and nominees, are “independent”, within the meaning of applicable regulatory standards.
The Company’s risk management efforts are the responsibility of the Board of Directors. The Company’s Chief Executive Officer and the Chief Financial Officer review with the Board areas of material risk, both operational and financial, which may affect the Company, to enable the Board to understand such risks and the management and mitigation strategies undertaken by the Company.
SECTION 16(a) BENEFICIAL OWNEROWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended requires the Company’s executive officers and Directors, and persons who own more than ten percent of a registered class of the Company’s equity securities (collectively, “Reporting Persons”), to file reports of ownership and changes in ownership of such securities with the Securities and Exchange Commission and to furnish the Company with copies of such reports. To the Company’s knowledge, based solely on review of the copies of such reports furnished to the Company with respect to the fiscal year ended December 31, 2009, all required2012, no Reporting Persons failed to file reports wereon a timely filed by such persons.basis during the most recent fiscal year.
INDEPENDENT PUBLIC ACCOUNTANTS — FEES AND SERVICES
The Company engaged Grassi & Co. (of which Pustorino, Puglisi & Co. LLPLLC is a division) as the principal accountants for the Company with respect to the audit of the Company’s financial statements for the years ended December 31, 20092012 and 2008.2011. There were no disagreements with Pustorino, PuglisiGrassi & Co., LLPCo on any matters of accounting
principles or practices, financial statement disclosure or auditing scope or procedures in connection with their audits. Representatives of Pustorino, PuglisiGrassi & Co. LLPCo are not expected to be present at the 20102013 Annual Meeting of Stockholders, but will be available by speaker telephone during the Meetingmeeting and will have the opportunity to make a statement if they desire to do so, and will be available to answer stockholders’ questions.
The audit fees for professional audit services provided by Pustorino, PuglisiGrassi & Co., LLP,Co, for the audit of the Company’s annual financial statements for each of the years ended December 31, 2009,2012, and December 31, 2008,2011, were $337,000$309,500 and $277,250.$295,500. No fees were billed or paid by the Company for internal audit, tax or other services for the years ended December 31, 2009,2012 or 2008.2011.
STOCKHOLDERS’ PROPOSALS AND NOMINATIONS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, stockholders may present proper proposals for inclusion in the Company’s proxy statement and form of proxy and for consideration at its annual meeting of stockholders by submitting their proposals to the Company in a timely manner. In order to be so included for the 2011 annual meeting,2014 Annual Meeting, stockholder proposals must be received by the Company at its principal executive offices One Landmark Square, 11th Floor, Stamford, Connecticut 06901,at 9821 Katy Freeway, Houston, Texas 77024, no later than December 22, 2010,6, 2013, and must otherwise comply with the requirements of Rule 14a-8.
Stockholder proposals to be brought before the 2011 annual meeting,2014 Annual Meeting, made outside the Rule 14a-8 processes, must be submitted to the Company pursuant to Rule 14a-8, no later than March 4, 2011,February 19, 2014, or will be considered untimely and entitle the Company to discretionary voting under Rule 14a-4.
If a stockholder desires to recommend an individual as a nominee for director to the Board of Directors, the stockholder shall mail the recommendation to the Secretary of the Board of Directors. The recommendation must include the name, address (business and personal) and the occupation of the nominee. The recommendation must also include such other information regarding the nominee as may reasonably be required by the Company.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders may communicate with the members of the Board of Directors by mailing their communications to the Company, at PrimeEnergy Corporation, 9821 Katy Freeway, Houston, Texas 77024. All communications addressed to the attention of a particular director shall be forwarded to the director.
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Annual Report of the Company for its fiscal year ended December 31, 2009,2012, accompanies this Proxy Statement. The audited financial statements of the Company are included in such Annual Report.
It is important that proxies be returned promptly. Stockholders are requested to date, sign and return the enclosed proxy in the enclosed envelope, to which no postage need be affixed if mailed in the United States. If you attend the 20102013 Annual Meeting, you may revoke your proxy and vote in person if you so desire, otherwise your proxy will be voted for you.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PATRICIA C. DELANEY
PATRICIA C. DELANEY
Secretary
Houston, Texas
April 5, 2013
PrimeEnergy Corporation | ||||
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PRIMEENERGY CORPORATION
CHARTER AND POWERS OF THE AUDIT COMMITTEE
RESOLVED, that the charter and powers of the Audit Committee of the Board of Directors (the “Audit Committee”) shall be:
Overseeing that management has maintained the reliability and integrity of the accounting policies and financial reporting and disclosure practices of the Company;
Overseeing that management has established and maintained processes to assure that an adequate system of internal control is functioning within the Company;
Overseeing that management has established and maintained processes to assure compliance by the Company with all applicable laws, regulations and Company policy;
RESOLVED, that the Audit Committee shall have the following specific powers and duties:
PRIMEENERGY CORPORATION
COMPENSATION COMMITTEE CHARTER
The Compensation Committee is appointed by the Board of Directors to discharge the Board’s responsibilities relating to compensation of the Company’s directors and officers. The Committee has overall responsibility for approving and evaluating the director and officer compensation plans, policies and programs of the Company. The Compensation Committee is also responsible for producing an annual report on executive compensation for inclusion in the Company’s proxy statement.
The Compensation Committee shall consist of no fewer than three members. The members of the Compensation Committee: will meet the requirements that he/she is a “non-employee director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended; will satisfy the requirements of an “outside director” for purposes of Section 162(m) of the Internal Revenue Code; will meet the independence requirements of the applicable regulatory standards; will be appointed by the Board; and may be replaced by the Board.
The Compensation Committee shall have the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of director, CEO or senior executive compensation and shall have sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee shall also have authority to obtain advice and assistance from internal or external legal, accounting or other advisors.
The Compensation Committee shall annually review and approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and recommend to the Board the CEO’s compensation levels based on this evaluation.
The Compensation Committee shall annually review and make recommendations to the Board with respect to the compensation of all directors, officers and other key executives, including incentive-compensation plans and equity-based plans.
The Compensation Committee shall annually review and approve, for the CEO and the senior executives of the Company, (a) the annual base salary level, (b) the annual incentive opportunity level, (c) the long-term incentive opportunity level, (d) employment agreements, severance arrangements, and change in control agreements/provisions, in each case as, when and if appropriate, and (e) any special or supplemental benefits.
The Compensation Committee may form and delegate authority to subcommittees when appropriate.
The Compensation Committee shall make regular reports to the Board, review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval and annually review its own performance.
PrimeEnergy Corporation
Using ablack ink pen, mark your votes with anX as shown in | ||||||
this example. Please do not write outside the designated areas. | x |
Annual Meeting Proxy Card
q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
| 1. Election of Directors | |||||||||||||||||||||
For | Withhold | For | Withhold | For | Withhold | + | ||||||||||||||||
Nominees: | ||||||||||||||||||||||
01 - Beverly A. Cummings | ¨ | ¨ |
02 - Charles E. Drimal, Jr. | ¨ | ¨ |
03 - Matthias Eckenstein | ¨ | ¨ | ||||||||||||||
04 - H. Gifford Fong | ¨ | ¨ | 05 - Thomas S. T. Gimbel | ¨ | ¨ | 06 - Clint Hurt | ¨ | ¨ | ||||||||||||||
07 - Jan K. Smeets | ¨ | ¨ |
The Board recommends a vote FOR all Nominees.
For | Against | Abstain | ||||
2. An advisory (non-bonding) vote to approve our executive compensation as described in the proxy statement. | ¨ | ¨ | ¨ |
1 Year | 2 Years | 3 Years | Abstain | |||||
3. An advisory (non-binding) vote on the frequency of future votes on executive compensation. | ¨ | ¨ | ¨ | ¨ |
The Board recommends a vote FOR item 2 and FOR a three year frequency on item 3.
In their discretion, the proxies appointed herein are authorized to vote upon any other business as may properly come before the meeting or any adjournments thereof.
Non-Voting Items
Change of Address —Please print new address below. | Meeting Attendance | |||
Mark box to the right if you plan to attend the Annual Meeting. | ¨ |
Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. |
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¢ | 1 U P X | P E C 1 | + | |||||||||
q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
Proxy — PrimeEnergy Corporation
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of PrimeEnergy Corporation (the “Company”), revoking all prior proxies, does by these presents name, constitute and appoint Charles E. Drimal, Jr. and James F. Gilbert,Patricia C. Delaney, and each of them, the true and lawful proxy and attorney-in-fact of the undersigned, with full power of substitution, to vote all shares of the Common Stock, par value $.10 per share, of the Company standing in the name of the undersigned on the books of the Company at the close of business on April 1, 2010,March 26, 2013, or in respect of which the undersigned is entitled to vote at the Company’s Annual Meeting of Stockholders to be held on Thursday, May 20, 2010,2, 2013, at 9:00 a.m., EDT,EST, at the offices of the Company, One Landmark Square, 11th Floor, Stamford, CT 06901, and at any and all adjournments of said meeting, hereby granting to said proxies and attorneys-in-fact, and each of them, full power and authority to vote in the name of the undersigned at said meeting, and at any and all adjournments thereof, on the matters set forth on reverse side.
PLEASE SIGN ON REVERSE SIDE AND RETURN PROMPTLYPROMPTLY.
(Continued and to be signed and dated on reverse side.)