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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MURPHY OIL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MURPHY OIL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
[SPUR LOGO APPEARS HERE] [MURPHY OIL CORPORATION LOGO APPEARS HERE]
NOTICE OF ANNUAL MEETING
To the Stockholders of Murphy Oil Corporation:
The Annual Meeting of Stockholders of Murphy Oil Corporation will be held at
the South Arkansas Arts Center, 110 East 5th Street, El Dorado, Arkansas, on
Wednesday, May 14, 1997, at 10:00 a.m., Central Daylight Time, for the
following purposes:
To elect directors to serve for the ensuing year.
To vote upon proposed amendments to the 1992 Stock Incentive Plan as
described in the Proxy Statement.
To vote upon a proposed Employee Stock Purchase Plan as described in the
Proxy Statement.
To express approval or disapproval of the action of the Board of
Directors in appointing KPMG Peat Marwick LLP as the Company's independent
auditors for 1997.
To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on March 17, 1997, the
record date fixed by the Board of Directors of the Company, will be entitled
to notice of and to vote at the meeting or any adjournment thereof. A list of
all stockholders entitled to vote is on file at the offices of the Company,
200 Peach Street, El Dorado, Arkansas 71730.
Please sign, date and return the enclosed proxy card promptly.
Walter K. Compton
Secretary
El Dorado, Arkansas
March 27, 1997
PROXY STATEMENT
SOLICITATION March 27, 1997
The solicitation of the enclosed proxy is made on behalf of the Board of
Directors of the Company for use at the Annual Meeting of Stockholders to be
held on May 14, 1997. It is expected that this Proxy Statement and related
materials will first be mailed to stockholders on or about March 27, 1997.
The address of the Company's Executive Offices is 200 Peach Street, P.O. Box
7000, El Dorado, Arkansas 71731-7000.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting is required for approval of matters
presented to the meeting. Your executed proxy will be voted at the meeting,
unless you revoke it at any time before the vote by filing with the Secretary
of the Company an instrument revoking it, duly executing a proxy card bearing
a later date, or appearing at the meeting and voting in person. Proxies
returned to the Company, votes cast other than in person, and written
revocations will be disqualified if received after commencement of the
meeting.
Votes cast by proxy or in person at the meeting will be counted by the
persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will treat shares represented by properly
signed and returned proxies that reflect abstentions as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum and for purposes of determining the outcome of any other business
submitted at the meeting to the stockholders for a vote. Abstentions, however,
do not constitute a vote "for" or "against" any matter and thus will be
disregarded in the calculation of "votes cast."
The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or persons entitled to vote and that
the broker or nominee does not have discretionary power to vote on a
particular matter) as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. However, for purposes of
determining the outcome of any matter as to which the broker has physically
indicated on the proxy that it does not have discretionary authority to vote,
those shares will be treated as
1
not present and not entitled to vote with respect to that matter (even though
those shares are considered entitled to vote for quorum purposes and may be
entitled to vote on other matters).
Unless specification to the contrary is made, the shares represented by the
enclosed proxy will be voted FOR all the nominees for director; FOR approval
of proposed amendments to 1992 Stock Incentive Plan; FOR approval of proposed
Employee Stock Purchase Plan; and FOR the confirmation of the appointment of
KPMG Peat Marwick LLP as the Company's independent auditors.
VOTING SECURITIES
On March 17, 1997, the record date for the meeting, the Company had
outstanding shares of Common Stock, all of one class and each share
having one vote in respect of all matters to be voted on at the meeting. This
amount does not include shares of treasury stock. Information as to the
amount of Common Stock owned by directors and officers and certain others
appears in the table under the heading "Certain Stock Ownership".
ELECTION OF DIRECTORS
The Bylaws of the Company provide for eleven directors to be elected on
May 14, 1997. The Bylaws also provide that the directors elected at each
Annual Meeting of Stockholders shall serve until their successors are elected
and qualified.
To the extent authorized by the proxies, the shares represented by the
proxies will be voted in favor of the election as directors of the eleven
nominees whose names are set forth below. If for any reason any of these
nominees is not a candidate when the election occurs, the shares represented
by such proxies will be voted for the election of the other nominees named and
may be voted for any substituted nominees. However, management of the Company
does not expect this to occur. All of management's nominees were elected at
the last Annual Meeting of stockholders. The names of the nominees and certain
information as to them are as follows:
PRINCIPAL OCCUPATION OR
EMPLOYMENT (FOR MORE OTHER PUBLIC
THAN THE PAST FIVE YEARS DIRECTOR COMPANY
NAME AND AGE UNLESS OTHERWISE STATED) SINCE DIRECTORSHIPS
------------ -------------------------- -------- --------------------
B.R.R. Butler*# Managing Director, 1991 KS Biomedix Holdings
London, England Retired, of The British PLC
Age: 67 Petroleum Company PLC. Guildford, England
2
PRINCIPAL OCCUPATION OR
EMPLOYMENT (FOR MORE OTHER PUBLIC
THAN THE PAST FIVE YEARS DIRECTOR COMPANY
NAME AND AGE UNLESS OTHERWISE STATED) SINCE DIRECTORSHIPS
------------ -------------------------- -------- --------------------
George S. Dembroski+* Vice Chairman, RBC Domin- 1995 Cameco, Inc.
Toronto, Ontario ion Securities Inc. Saskatoon,
Canada Saskatchewan,
Age: 62 Canada
Electrohome Ltd.
Kitchener, Ontario,
Canada
Claiborne P. Deming(S) President and Chief 1993 First United
El Dorado, Arkansas Executive Officer of the Bancshares, Inc.
Age: 42 Company since October 1, El Dorado, Arkansas
1994, Executive Vice
President and Chief
Operating Officer of the
Company from March 1,
1992 to October 1, 1994,
President of Murphy Oil
USA, Inc. from July 1,
1989 to March 1, 1992.
H. Rodes Hart(S) *# Chairman and Chief 1975 None
Nashville, Tennessee Executive Officer,
Age: 65 Franklin Industries
Inc., engaged in the
manufacture of brick and
industrial minerals,
President and Chief
Executive Officer of
Franklin Industries Inc.
from 1967 to February 1,
1992.
Vester T. Hughes, Jr.+# Partner, Hughes & Luce, 1973 None
Dallas, Texas Attorneys.
Age: 68
C. H. Murphy, Jr.(S)* Chairman of the Board of 1950 First Commercial
El Dorado, Arkansas the Company from June 1, Corporation
Age: 77 1972 to October 1, 1994. Little Rock, Arkan-
sas
Michael W. Murphy(S)+* President, Marmik Oil Com- 1977 First Commercial
El Dorado, Arkansas pany, engaged in explo- Corporation
Age: 49 ration for and produc- Little Rock, Arkan-
tion of oil and gas. sas
Chairman and Chief Exec-
utive Officer of Murphy-
Graham, Inc. and Presi-
dent, Murphy Motor Co.,
engaged in automobile
dealerships.
R. Madison Murphy(S) Chairman of the Board of 1993 Deltic Timber
El Dorado, Arkansas the Company since Octo- Corporation
Age: 39 ber 1, 1994, Executive El Dorado, Arkansas
Vice President and Chief First United
Financial and Adminis- Bancshares, Inc.
trative Officer of the El Dorado, Arkansas
Company from March 1,
1992 to October 1, 1994,
Chief Administrative po-
sition added February 3,
1993, Vice President,
Planning of the Company
from February 1, 1988 to
March 1, 1992.
William C. Nolan, Partner, Nolan and 1977 None
Jr.(S)+* Alderson, Attorneys.
El Dorado, Arkansas
Age: 57
Caroline G. Theus*# President, Inglewood Land 1985 None
Alexandria, Louisiana and Development Company,
Age: 53 a farming and land
holding corporation.
3
PRINCIPAL OCCUPATION OR
EMPLOYMENT (FOR MORE OTHER PUBLIC
THAN THE PAST FIVE YEARS DIRECTOR COMPANY
NAME AND AGE UNLESS OTHERWISE STATED) SINCE DIRECTORSHIPS
------------ -------------------------- -------- --------------------
Lorne C. Webster+* Chairman of Prenor Group 1989 Bankmont Financial
Montreal, Quebec, Ltd., a financial Corp.
Canada services corporation. Chicago, Illinois
Age: 68 H. B. Fuller Company
St. Paul, Minnesota
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(S) Executive Committee
+ Audit Committee
* Executive Compensation and Nominating Committee
# Public Policy and Environmental Committee
Claiborne P. Deming, C. H. Murphy, Jr., Michael W. Murphy, R. Madison
Murphy, William C. Nolan, Jr. and Caroline G. Theus are all related by blood.
Michael W. Murphy and R. Madison Murphy are sons of C. H. Murphy, Jr.,
Claiborne P. Deming and William C. Nolan, Jr. are nephews of C. H. Murphy,
Jr., and Caroline G. Theus is a niece of C. H. Murphy, Jr. These six nominees,
their spouses, and members of their immediate families directly or indirectly
own in the aggregate approximately 25% of the outstanding Common Stock of the
Company and may be considered the controlling persons of the Company. See also
"Certain Stock Ownerships".
COMMITTEES
The standing committees of the Board of Directors are the Executive
Committee, the Audit Committee, the Executive Compensation and Nominating
Committee, and the Public Policy and Environmental Committee. The Executive
Committee is empowered to exercise certain functions of the Board of Directors
when the Board is not in session. The Audit Committee's functions include
supervision and review of the results and scope of the work of the Company's
independent auditors and the Company's internal Audit Division. This committee
meets with representatives of the independent auditors and with members of the
internal Audit Division for these purposes. The Executive Compensation and
Nominating Committee administers the Company's Stock Incentive Plan and
reviews generally the compensation of all executive and key personnel of the
Company and subsidiaries. This committee specifically determines the
compensation of the Chairman of the Board, the President, and certain other
officers.
4
Other duties and authority of the Executive Compensation and Nominating
Committee, as fixed by the Board of Directors, are as follows:
"The Executive Compensation and Nominating Committee shall have the
power to: propose and consider suggestions as to candidates for membership
on the Board; review and propose to the Board criteria for Board
membership and responsibilities; periodically recommend to the Board
candidates for vacancies on the Board due to resignations or retirements
or due to such standards for composition of Board membership as may from
time to time legally prevail; review and recommend to the Board such
modifications to the prevailing Board of Directors retirement policy as
may be deemed appropriate in light of contemporary standards; and propose
to the Board on or before the February meeting of each year a slate of
directors for submission to the stockholders at the annual meeting."
Stockholders desiring to recommend for consideration by the Executive
Compensation and Nominating Committee candidates for membership on the Board
of Directors should address their recommendations to: Executive Compensation
and Nominating Committee of the Board of Directors, c/o Secretary, Murphy Oil
Corporation, P.O. Box 7000, El Dorado, Arkansas 71731-7000.
The Public Policy and Environmental Committee provides review and oversight of
the Company's environmental, health and safety compliance policies, programs
and practices.
MEETINGS AND ATTENDANCE
During 1996 there were eight meetings of the Board of Directors, twelve
meetings of the Executive Committee, two meetings of the Audit Committee, four
meetings of the Executive Compensation and Nominating Committee, and two
meetings of the Public Policy and Environmental Committee. All nominees
attended a minimum of 75% of the total number of meetings of the Board of
Directors and committees on which they served.
COMPENSATION OF DIRECTORS
The Company has a standard arrangement for compensation of directors who are
not also employees of the Company. Under this arrangement, for fiscal year
1996, nonemployee directors were compensated at the rate of $20,000 per annum
plus $1,000 for each meeting attended of the Board, the Audit Committee, the
Executive Compensation and Nominating Committee, or the Public Policy and
Environmental Committee. Beginning in 1997, the per annum amount will increase
to $30,000. The Chairman of the Board is paid $70,000 per
5
annum. No compensation is paid for attendance at meetings of the Executive
Committee. The Company also reimburses directors for travel, lodging and
related expenses they incur in attending Board and committee meetings.
The Company adopted a retirement plan for nonemployee directors (the
"Director Retirement Plan") effective May 1, 1994. The Director Retirement
Plan provides a retirement benefit to any nonemployee director who has served
as a director with at least five (5) years of service if retirement occurs at
or after the age of 72, or with at least ten (10) years of service if
retirement occurs prior to the age of 72. The Director Retirement Plan will
pay an annual benefit equal to the annual retainer in effect at the time of
the director's retirement. Benefits will be paid for a period equal to years
of service. Payment of retirement benefits will be in the form of quarterly
payments which will commence on the first day of the calendar quarter
following the later of the director's attainment of age 65 or actual
retirement from the Board. If a director dies prior to retirement from the
Board, no benefits will be paid under this plan. In the event a director dies
after retirement from the Board, benefits will be paid to the surviving
spouse, but in no event will the total of such benefits exceed ten (10) years.
If there is no surviving spouse, no benefits will be paid to any other party,
beneficiary or estate.
CERTAIN STOCK OWNERSHIPS
The following table and related text sets forth information, by the categories
listed, concerning ownership of Common Stock of the Company at February 1,
1997 with respect to each director or nominee, directors, nominees and
officers as a group, and each person known to the Company to own as much as 5%
of the Company's Common Stock.
TYPE OF OWNERSHIP
----------------------------------------------
VOTING AND
INVESTMENT
PERSONAL, POWER ONLY, SUBJECT TO
WITH FULL SPOUSE AND NOT OPTIONS PERCENT OF
VOTING AND PERSONAL, AS AND OTHER INCLUDED IN EXERCISABLE OUTSTANDING
INVESTING BENEFICIARY HOUSEHOLD OTHER WITHIN (IF GREATER
NAME POWER OF TRUST(S) MEMBERS(1) COLUMNS(2) 60 DAYS TOTAL THAN .09)
---- ---------- ------------ ---------- ----------- ----------- --------- -----------
B. R. R. Butler......... 2,000 -- -- -- -- 2,000 --
George S. Dembroski..... -- -- -- -- -- -- --
Claiborne P. Deming..... 98,402 366,469 92,853 464,980 42,120 1,064,824 2.4
H. Rodes Hart........... -- -- -- 254,670 -- 254,670 --
Vester T. Hughes, Jr.... 3,474 -- -- -- -- 3,474 --
C. H. Murphy, Jr. ...... 1,138,361 -- 3,036 2,683,212 -- 3,824,609 8.5
Michael W. Murphy....... 137,195 306,696 32,049 28,727 -- 504,667 1.1
R. Madison Murphy....... 105,911 610,862 82,736 619,052 -- 1,418,561 3.2
William C. Nolan, Jr.... 163,483 130,798 500 484,196 -- 778,977 1.7
Caroline G. Theus....... 106,471 164,855 14,271 678,580 -- 964,177 2.1
Lorne C. Webster........ 100 -- -- 2,320 -- 2,420 --
All directors together
with six officers
as a group............. 1,783,657 1,579,680 225,555 5,215,737 77,480 8,882,109 19.8
6
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(1) Includes shares directly owned and shares owned as beneficiary of trusts.
(2) Includes shares held as trustee for others and shares owned by a
corporation or other organization of which the named person is an officer.
Under the Securities laws of the United States, the Company's directors and
its executive officers are required to report their ownership of the Company's
Common Stock and any changes in that ownership to the Securities and Exchange
Commission and the New York Stock Exchange. Specific due dates for these
reports have been established and the Company is required to report in this
proxy statement any failure to file by these dates. In 1997, due to an error
by Company staff, Form 5's were filed one business day late for: C. H. Murphy,
Jr., Caroline G. Theus, Claiborne P. Deming, Herbert A. Fox, Jr., Steven A.
Cosse, Odie F. Vaughan, and Walter K. Compton.
During 1996, each of the directors and officers satisfied their Form 4
filing requirement except for Mrs. Caroline Theus. Mrs. Theus is the Trustee
of trusts for her children. In 1996 Mrs. Theus was named a Co-Trustee of
existing trusts which hold Company stock of which her siblings are
beneficiaries. Mrs. Theus expressly disclaims beneficial ownership of shares
of the Company's Common Stock held by the trusts. A total of two reports
reporting two transactions were not filed on a timely basis but have now been
submitted.
The only persons or entities known to the Company to be the owner of more
than 5% of the Company's outstanding stock, other than C. H. Murphy, Jr., 200
Jefferson Avenue, El Dorado, Arkansas, whose holdings are described above,
are: First United Trust Company, N.A., Main at Washington Streets, El Dorado,
Arkansas; and Capital Research and Management Company, 333 South Hope Street,
Los Angeles, California. First United Trust Company, N.A., a wholly owned
subsidiary of First United Bancshares, Inc., has advised the Company that it,
as trustee, exercises voting or investment power over 2,544,066 shares of the
Company's Common Stock, representing 5.7% of the total outstanding. Capital
Research and Management Company, a wholly owned subsidiary of The Capital
Group Companies, Inc. exercised as of December 31, 1996, investment discretion
with respect to 4,151,200 shares, representing 9.3% of outstanding stock, as a
result of acting as investment adviser to various investment companies
registered under Section 8 of the Investment Company Act of 1940.
7
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the individual
who served as the Company's chief executive officer during 1996 and the four
other most highly compensated executive officers of the Company at the end of
1996:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------ ---------------------
OTHER ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPENSA- STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL SALARY BONUS TION AWARDS OPTIONS SATION
POSITION YEAR ($)(1) ($)(2) ($)(3) ($)(4) (#) ($)(5)
- ---------------------- ---- ------- ------- --------- ---------- ---------- -------
Claiborne P. Deming 1996 400,008 300,000 48,672 214,375 12,000 36,228
President and Chief
Executive Officer, 1995 400,008 - - - 12,000 29,728
Murphy Oil Corporation 1994 330,840 74,873 - 141,750 6,500 25,132
Enoch L. Dawkins 1996 280,834 165,000 34,766 107,188 8,000 24,095
President, Murphy
Exploration & 1995 251,674 13,433 - - 8,000 19,385
Production Company (a 1994 241,668 45,000 - 91,125 4,000 18,152
100% subsidiary)
Herbert A. Fox, Jr. 1996 268,336 140,000 24,336 107,188 8,000 21,840
Vice President, 1995 251,674 - - - 8,000 17,760
Murphy Oil Corporation 1994 216,670 65,000 - 70,875 2,750 15,438
Steven A. Cosse 1996 231,670 135,000 17,383 107,188 8,000 18,704
Senior Vice President
and General 1995 217,504 - - - 8,000 14,750
Counsel, Murphy Oil 1994 185,335 33,500 - 50,625 2,250 12,738
Corporation
Clefton D. Vaughan 1996 204,006 60,000 24,336 75,031 3,500 16,999
Vice President, 1995 196,458 - - - 3,500 14,346
Murphy Oil Corporation 1994 190,172 21,000 - 50,625 2,000 13,611
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(1) Includes amounts of cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers.
(2) Bonuses were awarded and paid after the end of the year in which they are
reported. Because these payments related to services rendered in the year
prior to payment, the Company reported bonuses as a component of
compensation expense in the prior year.
(3) Represents the amount of income tax payments made by the Company for
restricted stock awards that vested in 1996.
(4) Represents the closing stock price of unrestricted stock on date of grant
($42.875 on February 6, 1996 and $40.50 on March 2, 1994) times the number
of restricted shares granted. Dividends are being paid on restricted stock
at the same rate paid to all shareholders. Awards are subject to
performance-based conditions and are forfeited if grantee terminates for
any reason other than retirement, death or full disability. None
8
of the restricted stock awards vest in under five years from the date of
grant. Based on the results of specified financial objectives, one-half of
restricted stock awards granted in 1992 were forfeited effective December
31, 1996. Excluding these forfeited shares, on December 31, 1996 Mr. Deming
held a total of 10,250 restricted shares having a then current value of
$570,156; Mr. Dawkins held a total of 6,000 restricted shares having a then
current value of $333,750; Mr. Fox held a total of 5,125 restricted shares
having a then current value of $285,078; Mr. Cosse held a total of 4,375
restricted shares having a then current value of $243,359; and Mr. Vaughan
held a total of 3,875 restricted shares having a then current value of
$215,547. Mr. Vaughan retired on January 1, 1997 and forfeited 1,900 of
these shares.
(5) The total amounts shown in this column for 1996 consist of the following:
Mr. Deming: $15,600--Dividends on restricted stock; $20,004--Company
contributions to defined contribution plan; $624--Benefit attributable to
Company-owned term life insurance policy. Mr. Dawkins: $9,425--Dividends
on restricted stock; $14,046--Company contributions to defined
contribution plan; $624--Benefit attributable to Company-owned term life
insurance policy. Mr. Fox: $7,800--Dividends on restricted stock;
$13,416--Company contributions to defined contribution plan; $624--Benefit
attributable to Company-owned term life insurance policy. Mr. Cosse:
$6,500--Dividends on restricted stock; $11,580--Company contributions to
defined contribution plan; $624--Benefit attributable to Company-owned
term life insurance policy. Mr. Vaughan: $6,175--Dividends on restricted
stock; $10,200--Company contributions to defined contribution plan; $624--
Benefit attributable to Company-owned term life insurance policy.
9
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to stock options exercised in fiscal
1996 and the fiscal year-end value of unexercised options for each officer
listed in the compensation table (Named Executives).
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT FY-
SHARES OPTION AT FY-END (#) END ($)(*)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
Claiborne P. Deming..... 198 $8,378 31,250 27,250 $603,734 $349,484
Enoch L. Dawkins........ -- -- 8,500 18,000 157,844 230,375
Herbert A. Fox, Jr...... -- -- 12,875 17,375 231,508 220,570
Steven A. Cosse......... -- -- 5,625 17,125 105,305 216,648
Clefton D. Vaughan...... 928 46,516 13,500 8,000 238,688 102,750
- ---------
(*) Represents market value of underlying securities at year-end less the
exercise price.
OPTION GRANTS
Shown below is further information on grants of stock options pursuant to
the 1992 Stock Incentive Plan during the fiscal year ended December 31, 1996,
to the officers of the Company listed in the compensation table.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#)(1)(2) IN FISCAL YEAR ($/SH) DATE VALUE ($)(3)
- ---- ----------------- -------------- ----------- ---------- ------------
Claiborne P. Deming..... 12,000 7.14% $42.4375 02/06/06 $87,240
Enoch L. Dawkins........ 8,000 4.76% 42.4375 02/06/06 58,160
Herbert A. Fox, Jr...... 8,000 4.76% 42.4375 02/06/06 58,160
Steven A. Cosse......... 8,000 4.76% 42.4375 02/06/06 58,160
Clefton D. Vaughan...... 3,500 2.08% 42.4375 02/06/06 25,445
- ---------
(1) No stock appreciation rights were granted in 1996.
(2) Options granted in 1996 vest 50% at the end of two years and 100% at the
end of three years from the date of grant and are exercisable for a period
of 10 years from the date of grant.
10
(3) Values were based on the Black-Scholes option pricing model adapted for
use in valuing executive stock options. The actual value, if any, an
executive may realize will depend on the excess of the stock price over
the exercise price on the date the option is exercised, so there is no
assurance that value realized by the executive will be at or near the
value estimated by the Black-Scholes model. The estimated values under
that model are based on arbitrary assumptions as to certain variables and
in 1996 included the following:
. Risk-free rate of return 5.26%
. Stock volatility 17.64%
. Dividend yield 3.2%
. Expected life of option 5 years
Based on the Black-Scholes option pricing model, using the above assumptions,
the options granted in 1996 have been valued at $7.27 per share as of the
grant date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Executive Compensation and Nominating Committee of the
Board of Directors of the Company during 1996 were Messrs. Butler, Dembroski,
Hart, C. H. Murphy, Jr., Michael W. Murphy, Nolan and Webster and Ms. Theus.
In 1996 the Company purchased crude oil at competitive prices, and on terms
no more favorable to the sellers than those offered by unaffiliated third
parties, from properties in which interests were owned by directors and
affiliates of directors. These directors and their affiliates and the amounts
of such purchases were: Marmik Oil Company (89% owned by Michael W. Murphy)
$203,796 and Munoco Company (associate of Mr. Nolan) $136,918.
COMPENSATION COMMITTEE REPORT FOR 1996
The Executive Compensation and Nominating Committee of the Board of
Directors of the Company, which is comprised entirely of independent, outside
directors, has prepared this Compensation Committee Report which describes the
guiding principles followed by the Company in establishing its pay practices
and reviews compensation decisions which were made during 1996 affecting the
Company's president and four other most highly compensated executive officers.
EXECUTIVE COMPENSATION PHILOSOPHY AND PRINCIPLES
The Company's executive compensation programs and plans are based on
principles designed to align the interests of executives with those of
stockholders and provide a direct link with the Company's values, objectives,
business strategy and financial results. The
11
following general guidelines have been adopted by the Committee and have been
used as the basic architecture for all executive compensation and benefit
arrangements for the Company:
. All programs are directed toward attracting and retaining key executives
who are critical to the long-term success of the Company and each of its
business units and who exhibit a high degree of business responsibility,
personal integrity and professionalism.
. These programs are designed to reward executives for both the short-term
and long-term achievement of Company and business unit objectives that
lead to the enhancement of shareholder value.
. All pay and benefit programs are intended to be competitive within each
industry segment, with upside opportunity and downside risk linked to
the achievement of annual and long-term performance objectives which are
regularly reviewed and approved by the Committee.
At the present time, executive compensation programs consist of base salary,
an annual cash incentive plan and long-term incentives in the form of both
stock options and performance-based restricted stock. The executive benefits
that are offered are typical of those provided by others in the industry. Each
of these compensation arrangements is briefly reviewed in the following
section.
BASE SALARY PRACTICES
Officers and other employees are compensated within established salary range
guidelines that are generally based on similar positions in companies of
comparable size, complexity, and industry orientation to the Company. The
actual base pay level for each officer is based on a combination of
experience, performance and other factors that are determined to be important
by the Committee. Each year, the Company participates in salary surveys within
each industry segment and from time to time uses the services of outside
consultants to further supplement its competitive information. The petroleum
industry survey in which the Company participates contains over 25
corporations that the Committee believes are representative of the Company's
labor market for management talent. The survey is conducted by a major
compensation consulting firm. Many of the companies in the survey group are
included in the S&P Oil-Domestic Integrated line on our performance graph as
shown on page 16, infra. The Committee generally targets the base salary of
most officers to be at or near the median (50th percentile) of the competitive
market which has been described to be other integrated energy companies. The
actual salaries and the amount of increase for 1996 to the Named Executives
were near the median levels of the salaries and increases in the referenced
survey. The base salary of most officers is reviewed annually, with
12
the amount of any increases based on factors such as Company performance,
general economic conditions, marketplace compensation trends and individual
performance. In determining base salary and increase in salaries, the most
important criteria in the Committee's analysis are marketplace comparisons and
individual performance. Overall corporate performance which may include those
measures used to determine annual incentive compensation awards were also
considered by the Committee in making salary adjustments in 1996.
ANNUAL INCENTIVE COMPENSATION PROGRAM
In 1996, the Company restructured its annual incentive compensation plan.
The plan concept follows many of the precepts of economic value added and
measures the Company's ability to earn a return on capital that exceeds the
weighted average cost of capital as well as the improvement in the Company's
return on capital. The specific performance measure used for the 1996
performance year was return on capital employed. The targeted level of return
on capital employed was developed based upon a projection of the Company's
weighted average cost of capital, with an adjustment for the projected cost of
equity. All participants in the plan, including the five proxy-named
executives, were measured on this corporate-wide measure of Company
performance. In 1996, the Company exceeded its return on capital employed
performance target, resulting in annual incentive awards that were between the
25th and 50th percentile levels of general industry practices. Target awards
for corporate officers pursuant to the plan, including the proxy-named
executives, range from 15 percent to 45 percent of base salary. Actual awards
may range from 0 percent to 150 percent of the target award amount;
additionally, actual award levels may be adjusted by an additional 25 percent
of the award earned based upon individual performance and contribution.
LONG-TERM INCENTIVE COMPENSATION
Under the 1992 Stock Incentive Plan (the 1992 Plan) as approved by the
Company's stockholders, long-term incentives may be provided through stock
options, stock appreciation rights and performance-based restricted stock, all
designed to increase the stock ownership of management and link these key
individuals directly to stockholders. All long-term incentive awards granted
during 1996 were granted under the 1992 Plan. Where appropriate, the Committee
uses the Black-Scholes option valuation model to determine the expected value
of stock options. Under the 1992 Plan, the Committee may award up to one-half
of one percent of the total issued and outstanding shares as of December 31 of
the immediately preceding year for executive long-term incentives. The 1992
Plan provides that no more than 50% of the shares may be granted as incentive
stock options, and no more than 50% can be granted as performance-based
restricted stock.
13
A stock option granted under the Plan gives the executive the right to
purchase a specified number of shares of the Company's common stock at an
option price equal to the market price on the date the option was granted.
Options, which may be either non-qualified stock options or incentive stock
options, vest 50% at the end of two years and 100% at the end of three years
from the date of grant and are exercisable for a period of 10 years from the
date of grant. The size of option grants awarded each year is based on
competitive practices in general industry using comparative data provided by a
major compensation consulting firm. Actual grant levels of long-term incentive
award opportunities are generally based in a range between the 25th and 50th
percentile competitive practices in the survey data base. The Company's stock
option grants in 1996 were between the 25th and 50th percentile levels of
general industry practices. In addition, the Committee considers the total
number of grants each executive has been awarded in recent years in
determining whether to grant additional stock options or performance-based
restricted stock. Non-qualified stock options and performance-based restricted
shares were granted in 1996 to all Named Executives; however, no stock
appreciation rights were granted in 1996.
The Company has studied Section 162(m) of the Internal Revenue Code and
fully intends to comply with this provision of the Code such that the Company
will be able to fully deduct its compensation expense for all proxy-named
executives. The transitional rules which pertain to this provision of the Code
will expire in 1997, thereby requiring the Company to propose certain
amendments to the 1992 Plan. These amendments to the 1992 Plan, discussed on
page 18, infra, will ensure the Company that its stock-based compensation for
the proxy-named executives will be performance-based and fully tax deductible
to the Company going forward.
DISCUSSION OF 1996 COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Mr. Claiborne P. Deming served as President and Chief Executive Officer of
the Company for the complete fiscal year 1996. During 1996, the Committee made
the following determinations regarding Mr. Deming' s compensation:
. Mr. Deming received no base salary adjustment during 1996 which was Mr.
Deming's request based upon the Company' s performance during 1995.
. As noted earlier, the Company restructured its annual incentive compensation
plan in 1996 to focus upon financial performance, as measured by return on
capital employed, which will lead to the enhancement of shareholder value.
As a participant in the plan, Mr. Deming earned an annual incentive award
which was equal to $300,000, which exceeded 150 percent of his target award
level. The corporate performance criteria of the plan, which was the sole
basis upon which Mr. Deming's performance was based, was the Company's 1996
return on capital employed.
14
. During the year, long-term incentive awards were made to Mr. Deming in the
following amounts: 12,000 non-qualified stock options were granted on
February 6 at an exercise price of $42.4375, which was the share' s fair
market value on the date of grant. These options will vest 50% two years
from the date of grant and 100% three years from the date of grant. The
option grant was made in consideration of Mr. Deming's performance during
the preceding fiscal year. The size of Mr. Deming's grant was below the 25th
percentile of competitive practice based upon survey data provided by a
major compensation consulting firm. In addition, he was awarded 5,000 shares
of performance-based restricted stock. These shares may vest at the end of
the five-year performance period based on the Company's achievement of total
shareholder returns compared to those achieved by a group of peer companies.
A major compensation consulting firm assisted the Committee in determining
the size of stock option grants and performance-based restricted stock
awarded to Mr. Deming.
The Executive Compensation and Nominating Committee members during 1996 were
Messrs. Butler, Dembroski, Hart, C. H. Murphy, Jr., Michael W. Murphy, Nolan
and Webster and Ms. Theus.
15
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph presents a comparison of the cumulative five-year
shareholder returns (including the reinvestment of dividends) for the Company,
the Standard and Poor's 500 Stock Index and the S&P Oil-Domestic Integrated
Index.
MURPHY OIL CORPORATION
COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER
RETURNS
[GRAPH APPEARS HERE]
- -------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- -----------------------------------------------------------
Murphy Oil Corporation 100 108 125 137 138 191
S&P 500 Index 100 108 118 120 165 203
S&P Oil--Domestic Integrated 100 102 108 113 129 163
- -------------------------------------------------------------------------------
Data are provided by Standard & Poor's Compustat.
16
RETIREMENT PLANS
The following table shows the estimated annual pension benefit payable, at
age 65, under Murphy Oil Corporation's Retirement Plan at December 31, 1996
for the salary and length of service indicated. The amounts shown are subject
to reduction for social security benefits.
PENSION PLAN TABLE
YEARS OF SERVICE
--------------------------------------------------------------------
REMUNERATION(/1/) 15 20 25 30 35 40
- ----------------- -------- -------- -------- -------- -------- --------
$ 150,000 $ 36,000 $ 48,000 $ 60,000 $ 72,000 $ 84,000 $ 96,000
200,000 48,000 64,000 80,000 96,000 112,000 128,000(2)
250,000 60,000 80,000 100,000 120,000 140,000(2) 160,000(2)
300,000 72,000 96,000 120,000 144,000(2) 168,000(2) 192,000(2)
350,000 84,000 112,000 140,000(2) 168,000(2) 196,000(2) 224,000(2)
400,000 96,000 128,000(2) 160,000(2) 192,000(2) 224,000(2) 256,000(2)
450,000 108,000 144,000(2) 180,000(2) 216,000(2) 252,000(2) 288,000(2)
500,000 120,000 160,000(2) 200,000(2) 240,000(2) 280,000(2) 320,000(2)
600,000 144,000(2) 192,000(2) 240,000(2) 288,000(2) 336,000(2) 384,000(2)
700,000 168,000(2) 224,000(2) 280,000(2) 336,000(2) 392,000(2) 448,000(2)
- ---------
(1) During 1996, the maximum compensation limit for qualified retirement
plans, as established by the Internal Revenue Service, was $150,000
($160,000 effective January 1, 1997).
(2) Exceeds presently allowable maximum legislative limits for annual pension
benefits under a defined benefit pension plan. In 1996, the maximum
benefit allowable was $120,000 ($125,000 effective January 1, 1997).
A portion of the benefits shown above would be paid under the Company's
Supplemental Benefit Plan to the extent such benefits exceed legislative
limitations.
The credited years of service for Messrs. Deming, Fox, Cosse and Vaughan are
eighteen years, twenty-seven years, seventeen years and thirty-three years,
respectively.
As of January 1, 1992 employees of Murphy Exploration & Production Company,
formerly named Ocean Drilling & Exploration Company (ODECO), began
participating in the Company's plans. Prior to that time such employees
participated in similar plans of ODECO. Employees of the Company or one of its
100% owned subsidiaries who were previously included in the ODECO Retirement
Plan may receive a benefit upon retirement
17
which is based on a combination of the Company and ODECO plans. The following
table indicates the estimated annual benefit computed on a straight life
annuity basis payable, at age 65, under the ODECO plan for the salary and
length of service indicated.
PENSION PLAN TABLE
YEARS OF SERVICE
-------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- --------
$200,000............................ $59,352 79,082 98,812 118,542 138,272*
250,000............................ 74,352 99,082 123,812* 148,542* 173,272*
300,000............................ 89,352 119,082 148,812* 178,542* 208,272*
350,000............................ 104,352 139,082* 173,812* 208,542* 243,272*
- ---------
* Exceeds presently allowable maximum legislative limits for annual pension
benefits under a defined benefit pension plan.
The above tables do not reflect any reductions in retirement benefits that
would result from the selection of one of either plan's various available
survivorship options nor the actuarial reductions required by the plans for
retirement earlier than age 62.
The credited years of service for Mr. Dawkins is thirty-one years.
It is not feasible to calculate the specific amount attributable to the plan
in respect to each employee. The Company had no required contributions to the
Retirement Plan in 1996 and therefore no contributions were made.
PROPOSED AMENDMENTS TO THE 1992 STOCK INCENTIVE PLAN
As originally adopted the 1992 Stock Incentive Plan ("the 1992 Plan") did
not limit the total number of shares of Common Stock for which stock options,
stock appreciation rights, and restricted stock awards could be granted to any
one individual, and the performance criteria were not specified. In order to
comply with Section 162(m) of the Internal Revenue Code amendments to the 1992
Plan, in the form attached as Exhibit A, are proposed. These amendments were
approved by the Board of Directors on February 5, 1997. The proposed
amendments provide that the maximum number of shares of Common Stock for which
incentive stock options, nonqualified stock options, and stock appreciation
rights may be granted under the Plan to any one employee for any calendar year
is 100,000 and that the maximum number of shares of restricted stock which can
be granted pursuant to the Plan
18
will be 50,000 shares per year to any one employee. The amendments also
provide that the performance criteria for the determination of the
performance-based restricted shares is the five-year total shareholder return
for Murphy Oil Corporation as compared to a peer group of six companies and
that the Executive Compensation and Nominating Committee may from time to time
establish a different performance criteria.
The Board of Directors recommends that the shareholders vote FOR the
proposed amendments to the 1992 Stock Incentive Plan. Proxies solicited on
behalf of the Board will be voted FOR this proposal.
PROPOSAL TO APPROVE EMPLOYEE STOCK PURCHASE PLAN
On February 5, 1997, the Board of Directors adopted the Employee Stock
Purchase Plan ("ESP Plan") in the form attached as Exhibit B covering 50,000
shares of Common Stock. The purpose of the ESP Plan is to provide employees
with at least two years of service (other than employees covered by a
collective-bargaining agreement, part-time employees and those who have a
restricted stock award outstanding under the 1992 Stock Incentive Plan) of the
Company and certain subsidiaries with an opportunity to subscribe for shares
of Common Stock on an installment basis via payroll deduction and thereby
obtain or increase a proprietary interest in the Company.
It is the intention of the Company to have the ESP Plan qualified under
section 423 of the Internal Revenue Code. The provisions of the ESP Plan
shall, accordingly, be construed so as to extend and limit participation in
accordance with section 423.
The exercise price per share shall be 90% of the fair market value of a
share on the Enrollment Date. The fair market value is the closing price as
reported by the New York Stock Exchange on such date or the most recent
trading date preceding such date.
The Plan will be administered by a Stock Administrator appointed by the
Board.
Commencement of the plan is scheduled for July 1, 1997 subject to approval
by the shareholders. Failure to obtain shareholder approval shall void the ESP
Plan.
The Board of Directors recommends that the shareholders vote FOR the
approval of the ESP Plan. Proxies solicited on behalf of the Board will be
voted FOR this proposal.
19
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors desires to obtain from the stockholders an indication
of their approval or disapproval of the Board's action in appointing KPMG Peat
Marwick LLP, Certified Public Accountants, as independent auditors of the
Company for the year 1997. KPMG Peat Marwick LLP has been serving the Company
and its subsidiaries as independent auditors for many years. The firm has
advised the Company that its members have no direct or indirect financial
interest in the Company or any of its subsidiaries. Members of the firm are
expected to be present at the Annual Meeting for the purpose of responding to
inquiries by stockholders and such representatives will have an opportunity to
make a statement if they desire to do so.
In the event a majority of the stockholders voting should indicate they
disapprove the appointment of KPMG Peat Marwick LLP the adverse vote will be
considered as a directive to the Board of Directors to select other auditors
for the following year. Because of the difficulty and expense of making any
substitution of auditors during a year, it is contemplated that the
appointment for 1997 will be permitted to stand unless the Board finds other
good reason for making a change.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1998 Annual Meeting of stockholders must be
received by the Company at its executive offices on or before December 1, 1997
in order to be considered for inclusion in the proxy materials.
20
OTHER INFORMATION
The management of the Company knows of no business other than that described
above that will be presented for consideration at the meeting. If any other
business properly comes before the meeting, it is the intention of the persons
named in the proxies to vote such proxies thereon in accordance with their
judgment.
The expense of this solicitation, including cost of preparing and mailing
this Proxy Statement, will be paid by the Company. Such expenses may also
include the charges and expenses of banks, brokerage houses and other
custodians, nominees or fiduciaries for forwarding proxies and proxy material
to beneficial owners of shares.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
Walter K. Compton
Secretary
El Dorado, Arkansas
March 27, 1997
PLEASE COMPLETE AND RETURN YOUR PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE REQUIRED IF IT IS MAILED
IN THE UNITED STATES OF AMERICA.
21
EXHIBIT A
PROPOSED AMENDMENTS TO 1992 STOCK INCENTIVE PLAN
SECTION 4. Stock Subject to the Plan, is amended to add the following
language at the conclusion of the first paragraph of that section:
"Maximum Grants. Notwithstanding any provision contained in this Plan to
the contrary, the maximum number of shares of Common Stock for which
Incentive Stock Options, Nonqualified Stock Options, and Stock
Appreciation Rights may be granted under the Plan to any one Employee for
any calendar year is 100,000."
SECTION 8. Restricted Stock Awards, is amended to add the following language
at the conclusion of the second paragraph of that section:
"The maximum number of shares of restricted stock which can be granted
pursuant to the Plan will be 50,000 shares per year to any one Employee.
Currently, the performance criteria for the determination of the
performance-based restricted shares is the 5-year total shareholder return
for Murphy Oil Corporation as compared to a peer group of six companies.
The Committee may from time to time establish a different performance
criteria."
EXHIBIT B
MURPHY OIL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the Employee Stock Purchase Plan
of Murphy Oil Corporation, effective as of the first day of the calendar
quarter following the effective date.
1. Purpose. The purpose of the Plan is to provide Employees of the Company
and its Subsidiaries with an opportunity to purchase Shares of the Company. It
is the intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under section 423 of the Code. The provisions of the Plan
shall, accordingly, be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean Class A stock, $1.00 par value, of the
Company.
(d) "Company" shall mean Murphy Oil Corporation, a Delaware corporation,
or any successor which adopts this Plan.
(e) "Compensation" for the Offering Period shall mean base salary only,
excluding any incentive payments, and commissions that may be paid from
time to time to the Employee from the Employer.
(f) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of a leave
of absence except as provided in paragraph 10(b).
(g) "Designated Subsidiary" shall mean each of the Subsidiaries
designated in the Appendix attached to this Plan as having adopted the
Plan. In addition, such term shall include each Subsidiary as may be
designated by the Board from time to time among a group consisting of the
Company and its Subsidiaries, including corporations that become
Subsidiaries after the adoption and approval of the Plan.
1
(h) "Eligible Employee" shall have the meaning set forth in Section
3(a).
(i) "Employee" shall mean any person, including an officer, who is a
full-time employee of the Employer and who does not have a Restricted
Stock Award outstanding under the 1992 Stock Incentive Plan.
(j) "Employer" shall mean the Company and each of its Designated
Subsidiaries.
(k) "Enrollment Date" shall mean the first day of each Offering Period.
(l) "Exercise Date" shall mean the last day of each Offering Period.
(m) "Exercise Price" shall have the meaning as defined in paragraph
7(b).
(n) "Offering Period" shall mean the period described in paragraph 4.
(o) "Participant" shall mean an Eligible Employee who has elected to
participate herein.
(p) "Participant Account" shall mean that separate account maintained
hereunder to record the amount that a Participant has contributed to the
Plan during an Offering Period.
(q) "Plan" shall mean the Murphy Oil Corporation Employee Stock Purchase
Plan.
(r) "Plan Custodian" shall mean or any successor
appointed by the Company.
(s) "Share" shall mean a share of Common Stock.
(t) "Stock Administrator" shall mean the committee appointed by the
Board pursuant to paragraph 13 to act of behalf of the Board and
administer the Plan.
(u) "Subsidiary" shall mean a corporation, domestic or foreign, of which
at the time of the granting of the option pursuant to paragraph 7, not
less than fifty percent (50%) of the total combined voting power of all
classes of stock are held by the Company or a Subsidiary, whether or not
such corporation now exists or is hereafter organized or acquired by the
Company or a Subsidiary.
3. Eligibility.
(a) General Rule. Any Employee who has completed two years of service
with the Employer as of any Enrollment Date shall be eligible to
participate as an "Eligible Employee" during the Offering Period beginning
on such Enrollment Date, subject to the requirements of paragraph 5 and
the limitations imposed by section 423(b) of the Code.
2
(b) Exceptions. Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option to purchase Shares
under the Plan if:
(i) Immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to section
424(d) of the Code) would own stock (including for purposes of this
paragraph 3(b) any stock he holds outstanding options to purchase)
possessing five percent (5%) or more of the total combined voting
power or value of all classes of stock of the Company or of any
Subsidiary computed in accordance with the Code (S) 423(b)(3), or
(ii) Such option would permit such Employee's right to purchase
stock under all employee stock purchase plans (described in section
423 of the Code) of the Company and its Subsidiaries to accrue at a
rate which exceeds by Twenty-Five Thousand Dollars ($25,000) the fair
market value of such stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding at
any time, in accordance with the provisions of Code (S) 423(b)(8).
4. Offering Periods. Each calendar quarter shall be an Offering Period;
provided, however, that the initial Offering Period may, at the discretion of
the Board, start on any date specified by the Board and end on the last day of
such calendar quarter.
5. Participation. An Eligible Employee shall become a Participant by
completing a subscription agreement in such form as shall be specified by the
Company ("Subscription Agreement"), and returning it to the Stock
Administrator prior to the Enrollment Date of the applicable Offering Period,
unless a later time for filing the Subscription Agreement is set by the Board
for all Eligible Employees with respect to such Offering Period.
6. Payment for Shares.
(a) At the time a Participant files his or her Subscription Agreement,
such Participant shall elect to have payroll deductions made on each pay
date during the Offering Period at a whole percentage rate not to exceed
ten percent (10%) of the Compensation which he or she receives on each pay
date during the Offering Period.
(b) All payroll deductions made by a Participant shall be credited to
his or her Participant Account under the Plan. A Participant may not make
any separate cash payment into his or her Participant Account.
(c) A Participant may discontinue his or her participation in the Plan
as provided in paragraph 10, but no other change can be made during an
Offering Period and, specifically, a Participant may not alter the amount
of his payroll deductions for that Offering Period.
3
7. Grant of Option.
(a) On the Enrollment Date of each Offering Period each Eligible
Employee shall be granted an option to purchase on the subsequent Exercise
Date up to a number of whole Shares determined by dividing ten percent
(10%) of the Eligible Employee's Compensation by ninety percent (90%) of
the fair market value of a Share on the Enrollment Date; provided,
however, that the number of Shares subject to such option shall be
reduced, if necessary, to a number of Shares which would not exceed the
limitations described in paragraph 3(b) or paragraph 12(a) hereof. The
fair market value of a Share shall be determined as provided in paragraph
7(b) herein.
(b) The exercise price per Share offered in a given Offering Period (the
"Exercise Price") shall be ninety percent (90%) of the fair market value
of a Share on the Enrollment Date of such Offering Period. The fair market
value of a Share on an Enrollment Date shall be the closing price of such
Share as reported by the New York Stock Exchange on such date or the most
recent trading date preceding such date (or if the Shares did not trade on
such date, for the most recent trading day preceding the Enrollment Date,
as the case may be, on which the Shares traded).
8. Exercise of Option. The Participant's option for the purchase of a Share
will be exercised automatically on the Exercise Date of the Offering Period of
reference by purchasing the maximum number of whole Shares subject to such
option which may be purchased at the Exercise Price with the funds in his or
her Participant Account unless prior to such Exercise Date the Participant has
withdrawn from the Offering Period pursuant to paragraph 10. Unused funds in
his or her Participant Account, if any, will be refunded (in a lump sum, in
cash), without interest, as soon as practicable following such Exercise Date.
During a Participant's lifetime, a Participant's option to purchase Shares
hereunder is exercisable only by such Participant.
9. Delivery. Shares issued pursuant to the exercise of the option will be
held in custody by the Plan Custodian until termination of the Participant's
Continuous Status as an Employee or request by the Participant for delivery of
all Shares. All dividends will be credited to the Participant's account and
will be reinvested for additional Shares. Shares shall be delivered within
forty-five (45) days after termination or receipt of such request.
10. Withdrawal; Termination of Employment.
(a) A Participant may withdraw all, but not less than all, of the
payroll deductions credited to his or her Participant Account at any time
by notice in the form specified by the Company given to the Stock
Administrator prior to the Exercise Date. All of the
4
Participant's payroll deductions credited to his or her Participant
Account will be paid to such Participant as soon as practicable after
receipt of his or her notice of withdrawal. Such withdrawal shall
permanently terminate the Participant's participation for the Offering
Period in which the withdrawal occurs.
(b) In the event of the termination of the Participant's Continuous
Status as an Employee for any reason other than death, on or before the
Exercise Date of reference, he or she will be deemed to have elected to
withdraw from the Plan and receive any Shares held by the Plan Custodian
for the Participant and any funds credited to this or her Participant
Account on the date of such withdrawal; provided, however, that a
Participant who goes on a leave of absence shall be permitted to remain in
the Plan with respect to an Offering Period which commenced prior to the
beginning of such leave of absence. Payroll deductions for a Participant
who has been on a leave of absence will resume upon return to work at the
same rate as in effect prior to such leave unless the leave of absence
begins in one Offering Period and ends in a subsequent Offering Period, in
which case the Participant shall not be permitted to re-enter the Plan
until a new Subscription Agreement is filed with respect to an Offering
Period which commences after such Participant has returned to work from
the leave of absence.
(c) Upon termination of the Participant's Continuous Status as an
Employee because of death, any unused funds in such Participant Account
will be returned to his or her estate, without interest.
(d) A Participant's withdrawal from one Offering Period will not have
any effect upon his or her eligibility to participate in a different
Offering Period or in any similar Plan which may hereafter be adopted by
the Company.
11. Interest. No interest shall accrue on the payroll deductions of a
Participant in the Plan.
12. Shares.
(a) The maximum number of Shares which shall be made available for sale
under the Plan shall be fifty thousand (50,000) Shares, subject to
adjustment upon changes in capitalization of the Company as provided in
paragraph 17. Either authorized and unissued Shares or issued Shares
heretofore or hereafter reacquired by the Company may be made subject to
purchase under the Plan, in the sole and absolute discretion of the Board.
Further, if for any reason any purchase of Shares under the Plan is not
consummated, the Shares subject to such Subscription Agreement may be
subjected to
5
a new Subscription Agreement under the Plan. If, on a given Exercise Date,
the Shares with respect to which options are to be exercised exceed the
Shares then available under the Plan, the Company shall make a pro rata
allocation of the Shares remaining available for purchase in as uniform a
manner as shall be practicable and as it shall determine to be equitable.
In such event, the Company shall give notice of such reduction of the
Shares which each Employee shall be allowed to purchase. Notwithstanding
anything to the contrary herein, the Company shall not be obligated to
issue Shares hereunder if, in the opinion of counsel for the Company, such
issuance would constitute a violation of federal or state securities laws
or the laws of any country.
(b) Neither the Participant nor his or her beneficiaries will have any
interest or voting right in Shares covered by his or her option until such
option has been exercised and the Shares purchased.
13. Administration. The Plan shall be administered by the Stock
Administrator appointed by the Board. The Stock Administrator shall have all
of the powers of the Board with respect to the Plan except for those powers
set forth in paragraph 18 hereof. Members of the Board who are Eligible
Employees are permitted to participate in the Plan; provided, however, that
(i) members of the Board who are Eligible Employees may not vote on any matter
affecting the administration of the Plan or the grant of any option pursuant
to the Plan, and (ii) if a committee is appointed to be the Stock
Administrator, no member of such committee will be eligible to participate in
the Plan. The Stock Administrator appointed hereunder shall have the following
powers and duties:
(a) To direct the administration of the Plan in accordance with the
provisions herein set forth;
(b) To adopt rules of procedure and regulations necessary for the
administration of the Plan provided the rules are not inconsistent with
the terms of the Plan;
(c) To determine, in its sole discretion, all questions with regard to
rights of Employees and Participants under the Plan, including but not
limited to, the eligibility of an Employee to participate in the Plan;
(d) To enforce the terms of the Plan and the rules and regulations it
adopts;
(e) To direct the distribution of the Shares purchased hereunder;
(f) To furnish the Employer with information which the Employer may
require for tax or other purposes;
6
(g) To engage the service of counsel (who may, if appropriate, be
counsel for the Employer) and agents whom it may deem advisable to assist
it with the performance of its duties;
(h) To prescribe procedures to be followed by Participants in electing
to participate herein;
(i) To receive from each Employer and from Employees such information as
shall be necessary for the proper administration of the Plan;
(j) To maintain, or cause to be maintained, separate accounts in the
name of each Participant to reflect the Participant's Participant Account
under the Plan;
(k) To interpret and construe the Plan in its sole discretion; and
(l) To make any changes or modifications necessary to administer and
implement the provisions of this Plan in any foreign country to the
fullest extent possible.
14. Transferability. Neither any monies credited to Participant's
Participant Account nor any rights with regard to the exercise of an option to
receive Shares under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way (other than by will or by laws of descent and
distribution) by the Participant. Any such attempt at assignment, transfer,
pledge, or other disposition shall be without effect, except that the Company
shall treat such act as an election to withdraw funds in accordance with
paragraph 10.
15. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such funds.
16. Reports. Individual Participant Accounts will be maintained for each
Participant, and statements will be given to Participants promptly following
an Exercise Date, which statements will set forth the amounts of payroll
deductions, the per share purchase price, the Shares purchased, and the
remaining cash balance, if any.
17. Adjustments Upon Changes in Capitalization. If an option under this Plan
is exercised subsequent to any stock split, spinoff, recapitalization,
reorganization, reclassification, merger, consolidation, exchange of shares,
or the like occurring after such option was granted, as a result of which
shares of any class of stock shall be issued in respect of the outstanding
shares, or shares shall be changed into a different number of the same or
another class or classes, the number of Shares to which such option shall be
applicable and the option price for such Shares shall be appropriately
adjusted by the Company. Any such
7
adjustment however, in the Shares shall be made without change in the total
price to be paid upon exercise of any option granted under the Plan which has
not been exercised in full, but shall involve only, if appropriate on
adjustment, in the price per Share. Notwithstanding the above, no adjustments
shall be made for stock dividends. For the purposes of this paragraph, any
distribution of Shares to shareholders in an amount aggregating twenty percent
(20%) or more of the outstanding Shares shall be deemed a stock split and any
distributions of Shares aggregating less than twenty percent (20%) of the
outstanding Shares shall be deemed a stock dividend.
In the event of the proposed dissolution or liquidation of the Company or
upon a proposed reorganization, merger, or consolidation of the Company with
one or more corporations as a result of which the Company is not the surviving
corporation, or upon a proposed sale of substantially all of the property or
stock of the Company to another corporation, the Offering Period will
terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board, and the holder of each option then
outstanding under the Plan will thereafter be entitled to receive, upon the
exercise of such option, as nearly as reasonably may be determined, the cash,
securities, and/or property which a holder of one Share was entitled to
receive upon and at the time of such transaction for each Share to which such
option shall be exercised. The Board shall take such steps in connection with
such transactions as the Board may deem necessary to assure that the
provisions of this paragraph 17 shall thereafter be applicable, as nearly as
reasonably may be determined, in relation to the said cash, securities, and/or
property as to which such holder of such option might thereafter be entitled
to receive.
18. Amendment or Termination. The Board may at any time and for any reason
terminate or amend the Plan; provided, however, that the Board shall not,
without the approval of the stockholders of the Company, (i) increase the
maximum number of Shares which may be issued under the Plan (except pursuant
to paragraph 17) or (ii) amend the requirements as to the class of employees
eligible to purchase Shares under the Plan, or, if a committee is appointed as
the Stock Administrator pursuant to paragraph 13, permit the members of such
committee to participate in the Plan. The Plan shall automatically terminate
on the Exercise Date that Participants become entitled to purchase a number of
Shares greater than the number available for purchase under paragraph 12. In
the event of an automatic termination, reserved Shares remaining as of such
Exercise Date shall be sold to Participants on a pro rata basis, as described
in paragraph 12.
Except as specifically provided in the Plan, as required to comply with Code
section 423, or as required to obtain a favorable ruling from the Internal
Revenue Service, no
8
amendment may make any change in any option theretofore granted which
adversely affects the rights of any Participant without the consent of such
Participant.
19. Notices. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or
by the person, designated by the Company for the receipt thereof.
20. Shareholder Approval. Commencement of the Plan shall be subject to
approval by the shareholders of the Company within twelve months before or
after the date the Plan is adopted. Notwithstanding any provision to the
contrary, failure to obtain such shareholder approval shall void the Plan, any
options granted under the Plan, any Share purchases pursuant to the Plan, and
all rights of all Participants.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act of 1934, as amended, the
rules and regulations promulgated under both sets of laws, and the
requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the
Company as described in paragraph 20. It shall continue in effect for a term
of five (5) years unless sooner terminated under paragraphs 18 or 20.
23. No Rights Implied. Nothing contained in this Plan, any modification or
amendment to the Plan, or the creation of any Participant Account, the
execution of any Subscription Agreement, or the issuance of any Shares, shall
give any Employee or Participant any right to continue employment, any legal
or equitable right against the Employer or Company or any officer, director,
or employee of the Employer or Company, or interfere in any way with the
Company's right to terminate or otherwise modify an Employee's employment at
any time, except as expressly provided by the Plan.
9
24. Severability. In the event any provision of the Plan shall be held to be
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the Plan, but such provision shall be fully
severable and the Plan shall be construed and enforced as if the illegal or
invalid provision had never been included herein.
25. Notice. Any notice required to be given herein by the Employer, the
Company, or the Board shall be deemed delivered when (a) personally delivered,
including electronic transmission in such form as the Board shall direct, or
(b) placed in the mail of the country of the sender in an envelope addressed
to the last known address of the person to whom the notice is given.
26. Waiver of Notice. Any person entitled to notice under the Plan may waive
the notice.
27. Successors and Assigns. The Plan shall be binding upon all persons
entitled to purchase Shares under the Plan, their respective heirs, legatees,
and legal representatives, including, without limitation, such person's estate
and the executors, any receiver, trustee in bankruptcy or representative of
creditors of such person, and upon the Employer, its successors and assigns.
28. Headings. The titles and headings of the paragraphs are included for
convenience of reference only and are not to be considered in construction of
the provisions hereof.
29. Law. All questions arising with respect to the provisions of this
Agreement shall be determined by application of the laws of the State of
Delaware except to the extent Delaware law is preempted by federal statute.
The obligation of the Employer to sell and deliver Shares under the Plan is
subject to applicable laws and to the approval of any governmental authority
required in connection with the authorization, issuance, sale, or delivery of
such Shares.
30. No Liability for Good Faith Determinations. Neither the members of the
Board nor any member of the committee appointed to be the Stock Administrator
(nor their delegates) shall be liable for any act, omission, or determination
taken or made in good faith with respect to the Plan or any right to purchase
Shares granted under it, and members of the Board and the Stock Administrator
(and their delegates) shall be entitled to indemnification and reimbursement
by the Company in respect of any claim, loss, damage, or expense (including
attorneys' fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Company, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of
bad faith) arising therefrom to the full extent permitted by law and under any
directors' and officers' liability or similar insurance coverage that may from
time to time be in effect.
10
31. Participating Employers. This Plan shall constitute the Employee Stock
Purchase Plan of the Company and each Designated Subsidiary. A Designated
Subsidiary may withdraw from the Plan as of any Enrollment Date by giving
written notice to the Board, which notice must be received by the Board at
least thirty (30) days prior to such Enrollment Date.
IN WITNESS WHEREOF, this Employee Stock Purchase Plan has been executed this
day of , 1997, effective as of July 1, 1997.
MURPHY OIL CORPORATION
11
[SPUR LOGO APPEARS HERE]
[MURPHY OIL COPORATION LOGO APPEARS HERE]
[SPUR LOGO
APPEARS HERE]
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
ANNUAL MEETING
OF STOCKHOLDERS
EL DORADO, ARKANSAS
MAY 14, 1997
- --------------------------------------------------------------------------------
PLEASE MARK VOTE IN OVAL USING DARK INK ONLY. [x]
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
1. ELECTION OF DIRECTORS--
B.R.R. Butler, G.S. Dembroski, For Withhold For All (Except Nominee(s)
C.P. Deming, H.R. Hart, written below)
V.T. Hughes, Jr., C.H. Murphy, Jr., [_] [_] [_]
M.W. Murphy, R.M. Murphy,
W.C. Nolan, Jr., C.G. Theus,
and L.C. Webster.
2. Proposed Amendments to the 1992 Stock Incentive Plan as described in the
Proxy Statement.
For Against Abstain
[_] [_] [_]
3. Proposed Employee Stock Purchase Plan as described in the Proxy Statement.
For Withhold Abstain
[_] [_] [_]
4. Ratify the appointment of KPMG Peat Marwick LLP as auditors.
For Against Abstain
[_] [_] [_]
Dated ______________, 1997
--------------------------------------
--------------------------------------
Please sign exactly as your name or names appear hereon. For joint accounts,
each owner should sign. When signing as executor, administrator, attorney,
trustee or guardian, etc., please give your full title. Please return promptly.
[SPUR LOGO APPEARS HERE] [MURPHY OIL CORPORATION LOGO APPEARS HERE]
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, MAY 14, 1997
The stockholder(s) whose name(s) appears on the reverse side hereby appoints
R. Madison Murphy and Claiborne P. Deming, or each of them, as the
stockholder's proxy or proxies, with full power of substitution, to vote all
shares of Common Stock of Murphy Oil Corporation which the stockholder is
entitled to vote at the Annual Meeting of Stockholders to be held at the South
Arkansas Arts Center, 110 East 5th Street, El Dorado, Arkansas, on May 14,
1997, at 10:00 a.m., local time, and any adjournments thereof, as fully as the
stockholder could if personally present.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE
REVERSE SIDE, BUT IF NONE ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED ON THE REVERSE SIDE, AND FOR PROPOSALS 2, 3 AND 4.
(continued on reverse side)
