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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 [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
[LOGO OF MURPHY OIL CORPORATION 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 13, 1998, at 10:00 a.m., Central Daylight Time, for the
following purposes:
To elect directors to serve for the ensuing year.
To approve or disapprove the action of the Board of Directors in
appointing KPMG Peat Marwick LLP as the Company's independent auditors for
1998.
To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on March 16, 1998, 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 30, 1998
PROXY STATEMENT
SOLICITATION March 30, 1998
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 13, 1998. It is expected that this Proxy Statement and related
materials will first be mailed to stockholders on or about March 30, 1998.
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 at 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 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; and FOR the
confirmation of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors.
VOTING SECURITIES
On March 16, 1998, the record date for the meeting, the Company had
outstanding 44,949,634 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 3,818,596 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 13, 1998. The Bylaws also provide that the directors elected at each
Annual Meeting of Stockholders shall serve until their successors are elected
and qualified.
1
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 p.l.c.
Age: 68 Petroleum Company p.l.c. Guildford, England
George S. Dembroski+* Vice Chairman, Retired, of 1995 Cameco, Inc.
Toronto, Ontario, RBC Dominion Securities Saskatoon,
Canada Inc. Vice Chairman RBC Saskatchewan,
Age: 63 Dominion Securities Inc. Canada
from June, 1981 to Decem- Electrohome Ltd.
ber 31, 1997. Kitchener, Ontario,
Canada
Claiborne P. President and Chief 1993 First United
Deming(S) Executive Officer of the Bancshares, Inc.
El Dorado, Arkansas Company since October 1, El Dorado, Arkansas
Age: 43 1994, Executive Vice
President and Chief
Operating Officer of the
Company from March 1,
1992 to October 1, 1994.
H. Rodes Hart(S)*# Chairman and Chief 1975 None
Nashville, Tennessee Executive Officer,
Age: 66 Franklin Industries Inc.,
engaged in the
manufacture of brick and
industrial minerals.
Vester T. Hughes, Partner, Hughes & Luce, 1973 None
Jr.+# Attorneys.
Dallas, Texas
Age: 69
C. H. Murphy, Jr.(S)* Chairman of the Board of 1950 First Commercial
El Dorado, Arkansas the Company from June 1, Corporation
Age: 78 1972 to October 1, 1994. Little Rock, Arkan-
sas
Michael W. President, Marmik Oil Com- 1977 First Commercial
Murphy(S)+* pany, engaged in explora- Corporation
El Dorado, Arkansas tion for and production Little Rock, Arkan-
Age: 50 of oil and gas. Presi- sas
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 October Corporation
Age: 40 1, 1994, Executive Vice El Dorado, Arkansas
President and Chief Fi- First United
nancial and Administra- Bancshares, Inc.
tive Officer of the Com- El Dorado, Arkansas
pany from March 1, 1992
to October 1, 1994, Chief
Administrative position
added February 3, 1993.
William C. Nolan, Partner, Nolan and 1977 None
Jr.(S)+* Alderson, Attorneys.
El Dorado, Arkansas
Age: 58
Caroline G. Theus*# President, Inglewood Land 1985 None
Alexandria, and Development Company,
Louisiana a farming and land
Age: 54 holding corporation.
Lorne C. Webster+* Chairman of Prenor Group 1989 Bankmont Financial
Montreal, Quebec, Ltd., a financial Corp.
Canada services corporation. Chicago, Illinois
Age: 69 H. B. Fuller Company
St. Paul, Minnesota
- - --------
(S) Executive Committee
+ Audit Committee
* Executive Compensation and Nominating Committee
# Public Policy and Environmental Committee
2
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. The 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.
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 candidates for membership on the Board of
Directors for consideration by the Executive Compensation and Nominating
Committee 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 1997 there were six meetings of the Board of Directors, thirteen
meetings of the Executive Committee, two meetings of the Audit Committee, two
meetings of the Executive Compensation and Nominating Committee, and two
meetings of the Public Policy and Environmental Committee. All nominees except
C. H. Murphy, Jr. and Michael W. Murphy 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
1997, nonemployee directors were compensated at the rate of $30,000 per annum
plus $1,000 for each meeting attended of the Board, the Audit Committee, the
3
Executive Compensation and Nominating Committee, or the Public Policy and
Environmental Committee. The Chairman of the Board is paid the above plus an
additional $50,000 per 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 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 the number of shares of Common Stock of the
Company at February 1, 1998 owned by each director or nominee, Named
Executives (as hereinafter defined), 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 PERSONAL, SPOUSE AND NOT OPTIONS PERCENT OF
VOTING AND PERSONAL, AS IN COMPANY AND OTHER INCLUDED IN EXERCISABLE OUTSTANDING
INVESTING BENEFICIARY 401(K) HOUSEHOLD OTHER WITHIN (IF GREATER
NAME POWER OF TRUST(S) PLAN MEMBERS(1) COLUMNS(2) 60 DAYS TOTAL THAN .09)
---- ---------- ------------ ---------- ---------- ----------- ----------- --------- -----------
B. R. R. Butler......... 2,000 -- -- -- -- -- 2,000 --
George S. Dembroski..... -- -- -- -- -- -- -- --
Claiborne P. Deming..... 103,267(3) 382,384 8,614 95,247 831,918 52,519 1,473,949 3.3
H. Rodes Hart........... -- -- -- -- 254,670 -- 254,670 --
Vester T. Hughes, Jr.... 3,474 -- -- -- -- -- 3,474 --
C. H. Murphy, Jr. ...... 1,009,836 -- -- 3,036 2,087,484 -- 3,100,356 6.9
Michael W. Murphy....... 93,695 306,696 -- 32,049 28,727 -- 461,167 1.0
R. Madison Murphy....... 105,780(3) 620,009 2,278 82,736 992,119 -- 1,802,922 4.0
William C. Nolan, Jr.... 162,403 130,798 -- 500 484,196 -- 777,897 1.7
Caroline G. Theus....... 105,430 164,855 -- 14,674 678,530 -- 963,489 2.1
Lorne C. Webster........ 100 -- -- -- 5,600 -- 5,700 --
Herbert A. Fox, Jr...... 11,414(3) -- 4,965 110 -- 12,480 28,969 --
Enoch L. Dawkins........ 8,363(3) 408 1,223 -- -- 16,640 26,634 --
Steven A. Cosse......... 6,535(3) -- 1,348 -- -- 12,480 20,363 --
Woods W. Allen, Jr. .... 3,110(3) -- 93 -- -- 11,440 14,643 --
All directors, five
named executives and
four other officers as
a group................ 1,621,888(4) 1,605,150 24,454 228,708 5,363,244 124,279 8,967,723 20.0
- - --------
(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.
(3) Included are shares of "restricted stock" awarded in 1994 and 1996
pursuant to the Company's 1992 Stock Incentive Plan. Such shares are
subject to vesting requirements, but the recipients are entitled to vote
such shares upon their issuance. The amount of restrictive stock for each
individual is: Deming 9,582; Madison Murphy 422; Fox 4,790; Dawkins 5,354;
Cosse' 4,227; and Allen 1,691.
(4) This total includes 32,547 shares of restricted stock, which includes the
shares discussed in note 3 above and also shares of three officers not
individually named.
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 during 1997. All of the
director and officer filing requirements were satisfied during the relevant
period. In making this statement, the Company has relied on the written
representations of its incumbent directors and officers and copies of the
reports that they have filed with the Commission.
4
The only persons or entities known to the Company to be the owners 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; Capital Research and Management Company, 333 South Hope Street, Los
Angeles, California; and Wellington Management Company, LLP, 75 State Street,
Boston, Massachusetts. First United Trust Company, N.A., a wholly owned
subsidiary of First United Bancshares, Inc., has advised the Company that it,
as trustee, exercised voting or investment power over 2,551,564 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, 1997, investment discretion
with respect to 5,753,200 shares of the Company's Common Stock, representing
12.8% of the total outstanding, as a result of acting as investment advisor to
various investment companies registered under Section 8 of the Investment
Company Act of 1940. Wellington Management Company, LLP, exercises investment
power over 2,359,100 shares of the Company's Common Stock, representing 5.3%
of the total outstanding, as a result of acting as investment advisor to
various investment companies registered under Section 203 of the Investment
Company Act of 1940.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the individual
who served as the Company's chief executive officer during 1997 and the four
other most highly compensated executive officers of the Company at the end of
1997:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(4)
--------------------------------- --------------------- ALL
OTHER RESTRICTED SECURITIES OTHER
ANNUAL STOCK UNDERLYING COMPEN-
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS SATION
POSITION YEAR ($)(1) ($)(2) ($)(3) ($)(5) (#) ($)(6)
- - ---------------------- ---- ------- ------- ------------ ---------- ---------- -------
Claiborne P. Deming 1997 537,508 363,000 -- -- 60,000 40,614
President and Chief
Executive Officer, 1996 400,008 300,000 48,672 214,375 12,480 36,228
Murphy Oil Corporation 1995 400,008 -- -- -- 12,480 29,728
Herbert A. Fox, Jr. 1997 293,336 175,000 -- -- 30,000 21,556
Vice President, 1996 268,336 140,000 24,336 107,188 8,320 21,840
Murphy Oil Corporation 1995 251,674 -- -- -- 8,320 17,760
Enoch L. Dawkins 1997 305,840 160,000 -- -- 30,000 23,353
President, Murphy
Exploration & 1996 280,834 165,000 34,766 107,188 8,320 24,095
Production Company (a 1995 251,674 13,433 -- -- 8,320 19,385
100% subsidiary)
Steven A. Cosse 1997 244,168 130,000 -- -- 30,000 17,929
Senior Vice President
and General 1996 231,670 135,000 17,383 107,188 8,320 18,704
Counsel, Murphy Oil 1995 217,504 -- -- -- 8,320 14,750
Corporation
Woods W. Allen, Jr. 1997 206,114 62,000 -- -- 22,500 14,997
Executive Vice
President, 1996 182,124 65,000 -- 64,313 6,760 13,178
Murphy Exploration & 1995 135,399 -- -- -- 3,120 9,877
Production
Company (a 100%
subsidiary)
- - --------
(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 reimbursements made by the Company in
1997 for restricted stock awards that vested in 1996.
(4) The number of outstanding stock options and restricted shares were
adjusted in 1997 due to the spin-off of Deltic Timber Corporation on
December 31, 1996. The number of Securities Underlying Options
5
presented represents the number of options including the spin-off
adjustments. The dollar amount shown for Restricted Stock Awards in 1996
represents the dollar value of the grant on the date granted, calculated on
the number of restricted shares granted times the closing stock price on
date of grant. These antidilution adjustments were intended to preserve the
economic value of the stock options and restricted share awards at the time
of the spin-off. In the case of stock options, the adjustment was
calculated by multiplying the number of Company shares under the original
award by a factor of 1.04, and dividing the original exercise price by the
same factor. The number of outstanding restricted shares were adjusted by
multiplying the number of Company shares under the original award by
1.1274.
(5) Represents the closing stock price of unrestricted stock on date of grant
($42.875 on February 6, 1996) 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 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. On
December 31, 1997, Mr. Deming held a total of 9,582 nonvested restricted
shares having a then current value of $519,225; Mr. Fox held a total of
4,790 nonvested restricted shares having a then current value of $259,558;
Mr. Dawkins held a total of 5,354 nonvested restricted shares having a
then current value of $290,120; Mr. Cosse held a total of 4,227 nonvested
restricted shares having a then current value of $229,051; and Mr. Allen
held a total of 3,100 nonvested restricted shares having a then current
value of $167,981.
(6) The total amounts shown in this column for 1997 consist of the following:
Mr. Deming: $12,936--Dividends on nonvested restricted stock; $26,850--
Company contributions to defined contribution plan; $828--Benefit
attributable to Company-provided term life insurance policy.
Mr. Fox; $6,467--Dividends on nonvested restricted stock; $14,261--Company
contributions to defined contribution plan; $828--Benefit attributable to
Company-provided term life insurance policy.
Mr. Dawkins: $7,228--Dividends on nonvested restricted stock; $15,297--
Company contributions to defined contribution plan; $828--Benefit
attributable to Company-provided term life insurance policy.
Mr. Cosse: $5,706--Dividends on nonvested restricted stock; $11,395--
Company contributions to defined contribution plan; $828--Benefit
attributable to Company-provided term life insurance policy.
Mr. Allen: $4,185--Dividends on nonvested restricted stock; $9,984--Company
contributions to defined contribution plan; $828--Benefit attributable to
Company-provided term life insurance policy.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to stock options exercised in fiscal
1997 and the fiscal year-end value of unexercised options for each officer
listed in the compensation table (Named Executives):
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT FY-
SHARES OPTIONS AT FY-END (#) END ($)*
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ------------ ------------ ----------- ------------- ----------- -------------
Claiborne P. Deming..... -- $ -- 42,119 78,720 $754,391 $298,702
Herbert A. Fox, Jr...... 4,661 242,331 4,160 42,480 49,670 189,604
Enoch L. Dawkins........ 2,150 109,650 8,320 42,480 115,340 189,604
Steven A. Cosse......... 2,172 113,148 4,160 42,480 49,670 189,604
Woods W. Allen, Jr...... 1,144 16,115 6,500 30,820 110,047 130,535
- - --------
* Represents market value of underlying securities at year-end less the
exercise price.
6
OPTION GRANTS
Shown below is further information on grants of stock options pursuant to
the 1992 Stock Incentive Plan during the fiscal year ended December 31, 1997,
to the Named Executives of the Company listed in the compensation table,
including certain options that were granted with exercise prices above fair
market value (FMV) at date of grant:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE GRANT
UNDERLYING EMPLOYEES OR BASE DATE
OPTIONS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED (#)(1)(2) YEAR ($/SH) DATE VALUE ($)(3)
- - ---- ----------------- ---------- -------- ---------- ------------
Claiborne P. Deming..... 15,000 3.64% $50.375 02/04/07 $146,250
15,000 3.64% 55.4125 02/04/07 132,300
15,000 3.64% 60.45 02/04/07 122,700
15,000 3.64% 65.4875 02/04/07 116,400
Herbert A. Fox, Jr...... 7,500 1.82% 50.375 02/04/07 73,125
7,500 1.82% 55.4125 02/04/07 66,150
7,500 1.82% 60.45 02/04/07 61,350
7,500 1.82% 65.4875 02/04/07 58,200
Enoch L. Dawkins........ 7,500 1.82% 50.375 02/04/07 73,125
7,500 1.82% 55.4125 02/04/07 66,150
7,500 1.82% 60.45 02/04/07 61,350
7,500 1.82% 65.4875 02/04/07 58,200
Steven A. Cosse......... 7,500 1.82% 50.375 02/04/07 73,125
7,500 1.82% 55.4125 02/04/07 66,150
7,500 1.82% 60.45 02/04/07 61,350
7,500 1.82% 65.4875 02/04/07 58,200
Woods W. Allen, Jr...... 5,625 1.37% 50.375 02/04/07 54,844
5,625 1.37% 55.4125 02/04/07 49,613
5,625 1.37% 60.45 02/04/07 46,013
5,625 1.37% 65.4875 02/04/07 43,650
- - --------
(1) No stock appreciation rights were granted in 1997.
(2) Options granted in 1997 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.
(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. There is no
assurance that the 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 1997 included the following:
100% FMV 110% FMV 120% FMV 130% FMV
-------- -------- -------- --------
. Risk-free rate of return 6.18% 6.28% 6.37% 6.47%
. Stock volatility 17.37% 17.37% 17.37% 17.37%
. Dividend yield 3.0% 3.0% 3.0% 3.0%
. Expected life of option 5 years 6 years 7 years 8 years
Based on the Black-Scholes option pricing model using the above assumptions,
the options granted in 1997 have been valued as of the grant date as follows:
100% FMV - $9.75
110% FMV - $8.82
120% FMV - $8.18
130% FMV - $7.76
7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Executive Compensation and Nominating Committee of the
Board of Directors of the Company during 1997 were Messrs. Butler, Dembroski,
Hart, C. H. Murphy, Jr., Michael W. Murphy, Nolan and Webster and Ms. Theus.
In 1997 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)
$125,238 and Munoco Company (affiliate of Mr. Nolan) $168,468.
The Company customarily retires aircraft from its fleet when the aircraft
becomes 13-15 years old. In 1997, a 1984 model Cessna Citation SII was sold to
C. H. Murphy Family Investments Limited Partnership at its appraised value.
The transaction was preapproved by the Executive Compensation and Nominating
Committee. The C. H. Murphy Family Investments Limited Partnership is a
Delaware limited partnership whose partners include C. H. Murphy, Jr. and
members of his immediate family.
COMPENSATION COMMITTEE REPORT FOR 1997
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 1997 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 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 achievements 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
8
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 the
performance graph as shown on page 11. 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 increases for 1997 for the
Named Executives were near the median levels of the salaries in the referenced
survey. The base salary of most officers is reviewed annually, with 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, including the Company's
improvement in earnings and total shareholder return, were also considered by
the Committee in making salary adjustments in 1997.
ANNUAL INCENTIVE COMPENSATION PROGRAM
The Company restructured its annual incentive compensation plan in 1996. 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 1997 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 Named Executives, were measured on
this corporate-wide measure of Company performance. In 1997, 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 Named Executives, range from 15 percent to 45
percent of base salary. Actual awards may range from zero 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, as amended in 1997, (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 1997 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 Plan also has a carry-forward feature
which allows the Committee to use shares from years that were below the one-
half of one percent threshold to grant awards in a particular year that may
exceed this utilization level. In 1997, the Company used this feature of the
Plan for the first time since the Plan's adoption and made grants which were
0.9% of total Company shares outstanding. The 1992 Plan provides that no more
than 50% of the shares granted may be incentive stock options, and no more
than 50% may be performance-based restricted stock.
A stock option granted under the Plan gives the grantee the right to
purchase a specified number of shares of the Company's Common Stock at an
option price equal to or above the market price on the date the option was
granted. Options, which may be either nonqualified stock options or incentive
stock options, vest
9
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 of competitive practices in the survey data base. The Company's
stock option grants in 1997 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. Nonqualified stock options were granted in 1997 to all Named
Executives; however, no stock appreciation rights or performanced-based
restricted shares were granted in 1997. The option grants to seven executives
in the Company, including the Named Executives, featured certain grants that
were deemed premium options. These option grants have exercise prices which
are either 110%, 120%, or 130% of the market price on the date of grant. These
option grants provide a higher incentive and share price performance before
the executive is able to realize economic gain from his option shares. The
first time that the Company has granted premium options was in 1997.
DISCUSSION OF 1997 COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Claiborne P. Deming served as President and Chief Executive Officer of the
Company for the complete fiscal year 1997. During 1997, the Committee made the
following determinations regarding Mr. Deming's compensation:
. Mr. Deming received a significant base salary adjustment during 1997. This
salary adjustment was made to bring Mr. Deming's base salary to the 50th
percentile of the competitive salary level reported to the Committee by a
major compensation consulting firm.
. As noted earlier, the Company restructured its annual incentive
compensation plan two years ago 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 of $363,000. The performance criteria of the plan
was the Company's 1997 return on capital employed.
. In 1997, Mr. Deming received a grant of 60,000 nonqualified stock options.
These options included premium options wherein the exercise price is at a
premium to the share price on the date of grant. Mr. Deming's 60,000 stock
option grant was made in the following four tranches with 45,000 shares
issued at a premium to the Company's share price on the date of grant as
follows:
EXERCISE PRICE AS %
NUMBER OF SHARES OF SHARE PRICE FMV ACTUAL EXERCISE PRICE
---------------- ------------------- ---------------------
15,000 100% FMV $50.3750
15,000 110% FMV $55.4125
15,000 120% FMV $60.4500
15,000 130% FMV $65.4875
All 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
recognition of both Mr. Deming's performance and that of the Company in
1996 and early 1997. Mr. Deming's grant was between the 25th and 50th
percentiles of competitive practice based upon survey data provided by a
major compensation consulting firm. The compensation consulting firm
assisted the Committee in determining the size of the stock option grant to
Mr. Deming and all other Company executives.
10
. Finally, the Company did not grant performance-based restricted stock awards
to any of its executives, including Mr. Deming, in 1997. Such grants are
made biennially by the Committee, and the next grant of performance-based
restricted shares is scheduled to be awarded in 1998.
The Executive Compensation and Nominating Committee members during 1997 were
Messrs. Butler, Dembroski, Hart, C. H. Murphy, Jr., Michael W. Murphy, Nolan
and Webster and Ms. Theus.
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 (S&P 500 Index) and the S&P Oil
(Domestic Integrated) Index.
MURPHY OIL CORPORATION
COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURNS
[PERFORMANCE GRAPH APPEARS HERE]
- - --------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- - ------------------------------------------------------------
Murphy Oil Corporation $100 $116 $127 $128 $177 $198
S&P Oil (Domestic Integrated) 100 105 111 126 159 189
S&P 500 Index 100 110 112 153 189 252
- - --------------------------------------------------------------------------------
Data are provided by Standard & Poor's Compustat.
11
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, 1997
for the salary and length of service indicated. The amounts shown are subject
to reduction for social security benefits.
PENSION PLAN TABLE--MURPHY OIL CORPORATION PLAN
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 1997, the maximum compensation limit for qualified retirement plans,
as established by the Internal Revenue Service, was $160,000 ($160,000 also
for 1998).
(2) Exceeds presently allowable maximum legislative limits for annual pension
benefits under a defined benefit pension plan. In 1997, the maximum benefit
allowable was $125,000 ($130,000 effective January 1, 1998).
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 and Cosse are nineteen
years, twenty-eight years and eighteen 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 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--ODECO PLAN
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.
12
The credited years of service for Mr. Dawkins and Mr. Allen are thirty-two
and eleven years, respectively.
It is not feasible to calculate the specific amount attributable to the
plans in respect to each employee. The Company had no required contributions
to the retirement plans in 1997 and therefore no contributions were made.
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors desires that the stockholders indicate 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 1998. 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
disapproval of 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 1998 will be permitted to stand unless the Board finds other
good reason for making a change.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1999 Annual Meeting of Stockholders must be
received by the Company at its executive offices on or before December 1, 1998
in order to be considered for inclusion in the proxy materials.
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 30, 1998
PLEASE COMPLETE AND RETURN YOUR PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED IF IT IS MAILED IN THE UNITED STATES
OF AMERICA.
13
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-- For Withhold For All
B.R.R. Butler, G.S. Dembroski, [ ] [ ] [ ]
C.P. Deming, H.R. Hart,
V.T. Hughes, Jr., C.H. Murphy, Jr., (Except Nominee(s) written below)
M.W. Murphy, R.M. Murphy,
W.C. Nolan, Jr., C.G. Theus, ---------------------------------
and L.C. Webster. ---------------------------------
2. Approve the appointment of For Against Abstain
KPMG Peat Marwick LLP as auditors. [ ] [ ] [ ]
Dated: ______________, 1998
__________________________________
__________________________________
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.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
[MURPHY OIL CORPORATION LOGO APPEARS HERE]
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING, MAY 13, 1998
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 13, 1998, at 10:00 a.m., Central
Daylight 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 PROPOSAL 2.
---
(continued on reverse side)
