UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
Swift Energy Company
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
-----------------------------------------------------------------------
SWIFT ENERGY COMPANY
16825 NORTHCHASE DRIVE, SUITE 400
HOUSTON, TEXAS 77060
(281) 874-2700
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 2002
Notice is hereby given that the annual meeting of shareholders of SWIFT
ENERGY COMPANY (the "Company") will be held at the Marriott Hotel Greenspoint,
255 North Sam Houston Parkway East at the corner of Northchase Drive, Houston,
Texas, on Tuesday, May 14, 2002 at 4:00 p.m. Houston time for shareholders to
consider and vote upon the following proposals:
(1) To elect two members of Class III of the board of directors,
positions for which Virgil N. Swift and G. Robert Evans have
been nominated to serve for the terms specified in the
attached proxy statement or until their successors are elected
and qualified; and
(2) Such other business as may properly be presented at the
meeting, or any adjournment thereof.
A record of shareholders has been taken as of the close of business on
March 28, 2002, and only shareholders of record on that date will be entitled to
notice of and to vote at the meeting, or any adjournment thereof. A complete
list of shareholders will be available commencing May 3, 2002, and may be
inspected during normal business hours prior to the meeting at the offices of
the Company, 16825 Northchase Drive, Suite 400, Houston, Texas. This list will
also be available at the meeting.
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD RIGHT AWAY,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. A STAMPED ENVELOPE IS
ENCLOSED FOR THIS PURPOSE. YOUR PROMPT RETURN OF THE PROXY CARD WILL ENSURE A
QUORUM AND SAVE THE COMPANY THE EXPENSE OF FURTHER SOLICITATION.
By Order of the Board of Directors,
BRUCE H. VINCENT
April 9, 2002 Secretary
SWIFT ENERGY COMPANY
16825 NORTHCHASE DRIVE, SUITE 400
HOUSTON, TEXAS 77060
(281) 874-2700
PROXY STATEMENT
This proxy statement is mailed to shareholders commencing on or about
April 9, 2002, in connection with the solicitation by the board of directors
(the "Board") of SWIFT ENERGY COMPANY (the "Company") of proxies to be voted at
the annual meeting of shareholders to be held at the Marriott Hotel Greenspoint,
255 North Sam Houston Parkway East at the corner of Northchase Drive, Houston,
Texas, on May 14, 2002 at 4:00 p.m. Houston time, and any adjournment thereof
(the "Meeting"), for the purposes set forth in the accompanying Notice.
Management does not know of any matters other than those listed on the Notice
that will be presented for action at the Meeting.
The Annual Report to Shareholders covering the fiscal year ended
December 31, 2001 will be mailed to each shareholder entitled to vote at the
Meeting on or before the date of mailing this proxy statement.
The cost of soliciting proxies will be borne by the Company. In
addition to solicitations by mail, a number of regular employees of the Company
may solicit proxies in person or by telephone. The Company does not anticipate
retaining, but may decide to retain a proxy solicitor. The Company estimates the
cost of retaining a proxy solicitor to be approximately $5,000.
QUORUM AND VOTING
The record date for the determination of shareholders entitled to
notice of and to vote at the Meeting was the close of business on March 28,
2002. On the record date, there were 25,104,353 shares of common stock of the
Company, par value $.01 per share, issued and outstanding and entitled to vote.
Each share of common stock entitles the holder to one vote on each
matter presented at the Meeting. Proxies will be voted in accordance with the
directions specified thereon. Any proxy on which no direction is specified will
be voted for the election of both nominees named therein to the Board for the
terms indicated and otherwise at the discretion of the persons designated as
proxies. A shareholder may revoke his proxy at any time prior to the voting
thereof by attending and voting at the Meeting or by filing with the Secretary
of the Company a written revocation or a duly executed proxy bearing a later
date.
The presence, in person or by proxy, of the holders of a majority of
the issued and outstanding shares entitled to be voted at the Meeting is
necessary to constitute a quorum to transact business. If a quorum is not
present or represented at the Meeting, a majority of the votes represented at
the Meeting may adjourn the Meeting from time to time without notice other than
an announcement at the meeting until a quorum is present or represented.
An automated system administered by the Company's transfer agent
tabulates the votes. Abstentions are included in the determination of the number
of shares present and voting and are counted as abstentions in tabulating the
votes cast on nominations or proposals presented to shareholders. Broker
nonvotes are not included in the determination of the number of shares present
and voting or as a vote with respect to such nominations or proposals.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, two Class III directors are to be elected for terms to
expire at the 2005 Annual Meeting. There are three classes of directors and each
year the directors in one of these classes are nominated to serve three year
terms, or until their successors have been duly elected and qualified. In order
to be elected, each nominee for director must receive at least the number of
votes equal to a majority of the shares having voting power present in person or
represented by proxy at the Meeting.
The persons named as proxies on the accompanying proxy card have been
designated by the Board, and unless authority is withheld by a shareholder on a
proxy card, they intend to vote for the election of all of the nominees named
below to the Board. If any nominee should become unavailable or unable to serve
as a director, the person named as proxies may vote for a substitute selected by
them, or the Board may be reduced accordingly; however, the Board is not aware
of any circumstances likely to render any nominee unavailable. Any director
elected by the Board to fill a vacancy will be elected for the unexpired term of
such director's predecessor in office.
Class III
Virgil N. Swift
G. Robert Evans
Set forth below, for information purposes only, are the names and
remaining terms of the other five directors:
Class I
Clyde W. Smith, Jr.
Terry E. Swift
(Terms to expire at the 2003 Annual Meeting)
Class II
A. Earl Swift
Henry C. Montgomery
Harold H. Withrow
(Terms to expire at the 2004 Annual Meeting)
NOMINEES
Set forth below is certain information, as of the date of this proxy
statement, concerning the nominees for election to the Board of the Company.
CLASS III DIRECTORS
Virgil N. Swift, 73, has been a director of the Company since 1981 and
has acted as Vice Chairman of the Board since 1991. He acted as Executive Vice
President--Business Development
2
between November 1991 and June 30, 2000. He previously served as Executive Vice
President and Chief Operating Officer from 1982 to late 1991. Mr. Swift joined
the Company in 1981 as Vice President--Drilling and Production. For the
preceding 28 years he held various production, drilling and engineering
positions with Gulf Oil Corporation and its subsidiaries, last serving as
General Manager--Drilling for Gulf Canada Resources, Inc. Mr. Swift is a
registered professional engineer and holds a degree in Petroleum Engineering. He
is the brother of A. Earl Swift and the uncle of Terry E. Swift.
G. Robert Evans, 70, has been a director of the Company since 1994.
Effective January 1, 1998, Mr. Evans retired as Chairman of Material Sciences
Corporation, having held that position since 1991. Material Sciences Corporation
develops and commercializes continuously processed, coated materials
technologies. He remains a director of Material Sciences Corporation. He also
serves as a director of Consolidated Freightways Corporation, a trucking
company.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" BOTH OF THE NOMINEES FOR
DIRECTORS.
Set forth below, for information purposes only, is information
regarding the Class I and Class II directors whose terms will expire at the
annual meetings in 2003 and 2004, respectively:
CLASS I DIRECTORS
Clyde W. Smith, Jr., 53, has served as a director of the Company since
1984. Since January 2002, Mr. Smith has served as President of Ascentron, Inc.,
an electronics manufacturing services company, that acquired the assets of D.W.
Manufacturing, Inc. in January 2002. From May 1998 until January 2002, Mr. Smith
served as General Manager of D.W. Manufacturing, Inc. d/b/a Millennium
Technology Services, a White City, Oregon based electronics manufacturer. From
August 1997 to May 1998, when its assets were acquired by D.W. Manufacturing,
Mr. Smith served as President of Millennium Technology Inc., a
debtor-in-possession under the U.S. Bankruptcy Code. He served as President of
Somerset Properties, Inc., a real estate investment company, from 1985 to 1994
and as President of H&R Precision, Inc., a general contractor, from 1994 to
August 1997. Mr. Smith is a certified public accountant. On May 7, 1997, Mr.
Smith filed a petition under Chapter 7 of the U.S. Bankruptcy Code.
Terry E. Swift, 46, has served as the Chief Executive Officer of the
Company since May 2001, as a director of the Company since the 2000 annual
shareholders meeting and as President of the Company since November 1997. He
served as Executive Vice President from 1991 to 1997 and was Chief Operating
Officer from 1991 to January 2000. He served as Senior Vice
President--Exploration and Joint Ventures from 1990 to 1991 and as Vice
President--Exploration and Joint Ventures from 1988 to 1990. Mr. Swift has a
degree in Chemical Engineering and a Master's Degree in Business Administration.
He is the son of A. Earl Swift and the nephew of Virgil N. Swift.
CLASS II DIRECTORS
A. Earl Swift, 68, is Chairman of the Board of the Company and has
served in such capacity since the Company's founding in 1979. He previously
served as President from 1979 to November 1997, at which time Terry E. Swift was
elected President. He served as Chief Executive Officer from 1979 until May 2001
when Terry E. Swift was elected Chief Executive Officer. For the 17 years prior
to 1979, he was employed by affiliates of American Natural Resources Company.
Mr. Swift is a registered professional engineer and holds a degree in Petroleum
Engineering, a Juris Doctor degree and a Master's degree in Business
Administration. He is the brother of Virgil N. Swift and the father of Terry E.
Swift.
3
Henry C. Montgomery, 66, has served as a director of the Company since
1987. Since 1980, Mr. Montgomery has been and continues to serve as the Chairman
of the Board of Montgomery Financial Services Corporation, a management
consulting and financial services firm. Mr. Montgomery specializes in services
for companies in transition or that are financially troubled. The following
describes some of those engagements. From January 2000 to early March 2001, Mr.
Montgomery served as Executive Vice President, Finance and Administration, and
Chief Financial Officer of Indus International, Inc., a public company engaged
in enterprise asset management systems. For eight months in 1999 he served as
interim Executive Vice President of Finance and Administration and currently
serves on the board of directors of Spectrian Corporation, a public company
engaged in making cellular base station power amplifiers. From November 1996
through July 1997, Mr. Montgomery served as Executive Vice President of SyQuest
Technology, Inc., a public company engaged in the development, manufacture and
sale of computer hard drives. On November 17, 1998, SyQuest filed a petition
under Chapter 11 of the U.S. Bankruptcy Code. Mr. Montgomery served from March
1995 until mid-November 1996 as President and Chief Executive Officer of New
Media Corporation, a privately held company engaged in developing, manufacturing
and selling PCMCIA cards for the computer industry. On October 14, 1998, New
Media Corporation filed a petition under Chapter 11 of the U.S. Bankruptcy Code.
Mr. Montgomery currently also serves on the boards of directors of Consolidated
Freightways Corporation, a trucking company, and Catalyst Semiconductor, Inc., a
company that designs, develops and markets programmable integrated circuit
products.
Harold J. Withrow, 74, has been a director of the Company since 1988.
Mr. Withrow worked as an independent oil and gas consultant from 1988 until he
retired at the end of 1995. From 1975 until 1988, Mr. Withrow served as Senior
Vice President--Gas Supply for Michigan Wisconsin Pipe Line Company and its
successor, ANR Pipeline Company.
COMPENSATION TO DIRECTORS
Board members are reimbursed for travel expenses they incur in
attending Board meetings. Employees of the Company are not compensated for
serving as directors. During 2001, the five nonemployee members of the Board
received an aggregate amount of $12,250 each for attendance at Board meetings,
an annual fee of $5,000 each for serving on one or more committees of the Board,
and an annual fee of $15,000 each for services as a director. Aggregate
compensation paid to the five nonemployee directors during 2001 for their
services as directors totaled $161,250. Compensation to directors for 2002 is
currently being paid on the same basis as in 2001.
Under the Company's 1990 Nonqualified Stock Option Plan, as amended
(the "1990 Nonqualified Plan"), each nonemployee director is granted options to
purchase 10,000 shares of the Company's common stock on the date he first
becomes a nonemployee director. Additionally, on the day after each annual
meeting of the shareholders, each individual who is a nonemployee director on
that date is granted options to purchase 5,000 shares of the Company's common
stock. The 1990 Nonqualified Plan permits each nonemployee director to hold a
maximum of 60,000 options to purchase shares of common stock under the Plan,
subject to adjustments for changes in capitalization affecting the stock of the
Company.
One nonemployee director exercised options during the year ended
December 31, 2001 acquiring an aggregate of 16,100 shares of the Company's
common stock.
The following table presents information as of December 31, 2001
regarding the total number of unexercised options held by the nonemployee
directors under the 1990 Nonqualified Plan. Each of the five nonemployee
directors who were directors in May 2001 received an annual grant of options for
5,000 shares in May 2001, at an exercise price of $30.47. In 2002, each of the
five nonemployee directors will receive options to purchase 5,000 additional
shares under the 1990 Nonqualified Plan on the day following the 2002 Meeting.
4
NONEMPLOYEE DIRECTOR OPTIONS
DECEMBER 31, 2001
SHARES OF COMMON STOCK
UNDERLYING UNEXERCISED OPTIONS GRANTED UNDER 1990
NAME NONQUALIFIED PLAN
---- -------------------------------------------------
G. Robert Evans 37,000
Henry C. Montgomery 28,300
Clyde W. Smith, Jr. 46,500
Virgil N. Swift 5,000
Harold J. Withrow 58,760
For the number of options exercisable within 60 days of March 1, 2002
by each of the nonemployee directors, see footnote (1) to the table set forth
under "Principal Shareholders" below.
MEETINGS OF THE BOARD
During 2001, the Board met on nine occasions. In addition, management
confers frequently with its directors on an informal basis to discuss Company
affairs. During 2001, each director attended at least 75% of the aggregate of
(i) the total number of meetings of the Board and (ii) the total number of
meetings of all committees of the Board on which he served.
COMMITTEES OF THE BOARD
The Board of the Company has established the following standing
committees: Audit, Nominating and Corporate Governance, Compensation, Conflicts
of Interest, Executive and Special Transactions Committees. Descriptions of the
functions of the Audit, the Nominating and Corporate Governance and the
Compensation Committees are set forth below.
AUDIT COMMITTEE. The New York Stock Exchange (the "NYSE") has
established standards, which have been accepted by the Securities and Exchange
Commission (the "SEC"), with respect to independence and financial experience of
the members of audit committees. The NYSE standards require that all of the
members of audit committees be independent and that they all be able to read and
understand fundamental financial statements, including balance sheets, income
statements and cash flow statements. Additionally, at least one member of the
committee must have past employment experience in finance or accounting or other
comparable experience or background such as being or having been a chief
executive officer, chief financial officer or other senior officer with
financial oversight responsibilities. The members of the Swift Audit Committee
satisfy the NYSE criteria for both independence and experience.
5
The Audit Committee provides assistance to the Company's directors in
fulfilling the Board's oversight responsibility as to the Company's accounting,
auditing and financial reporting practices and as to the quality and integrity
of the financial reports of the Company. The specific functions and
responsibilities of the Audit Committee are set forth in the written charter of
the Audit Committee adopted by the Board. The Audit Committee reviews and
reassesses its charter annually and recommends any changes to the Board for
approval. A report of the Audit Committee appears under the caption "Audit
Committee Report," below. Messrs. Montgomery (Chairman), Smith and Evans are
members of the Audit Committee, which held seven meetings in 2001.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and
Corporate Governance Committee reviews the performance of directors and
recommends persons to be management's nominees for directorships. The Nominating
and Corporate Governance Committee may consider nominees recommended by
shareholders, upon written request by a shareholder addressed to any member of
the committee. See "Shareholder Proposals" herein. This committee also reviews
corporate governance duties and procedures and, where necessary, recommends
changes to the Board. Messrs. Evans, Smith and Withrow are members of the
Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee held one meeting in 2001.
COMPENSATION COMMITTEE. The Compensation Committee at all times is
comprised of at least three directors who are "nonemployee directors" as defined
in Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act").
The Compensation Committee has sole authority to administer the Company's stock
option plans and stock purchase plan, although it has no discretion as to awards
of stock options under the 1990 Nonqualified Plan. The Compensation Committee
also reviews and makes recommendations regarding the compensation levels of the
Company's executive officers. Messrs. Smith, Montgomery and Withrow are members
of the Compensation Committee, which held three meetings in 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the SEC, the NYSE and the Pacific
Stock Exchange initial reports of ownership and reports of changes in ownership
of common stock of the Company. Officers, directors and greater than 10%
shareholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
Forms 3 and 4 furnished to the Company during the fiscal year beginning January
1, 2001 and ending December 31, 2001, and Forms 5 furnished to the Company with
respect to such fiscal year, the Company's officers, directors and greater than
10% beneficial owners complied with all Section 16(a) filing requirements except
as follows: Mr. Joseph D'Amico filed a Form 4 for the month of December 2001 to
report an open market sale. This filing, however, was delayed, and was received
at the SEC twelve days late. In addition, in April 2002 Mr. D'Amico filed a Form
4 for the month of June 2000 reflecting two open market sales.
6
PRINCIPAL SHAREHOLDERS
The following table sets forth information concerning the
shareholdings, as of March 1, 2002 (unless otherwise indicated), of the seven
current members of the Board, each of the Company's five most highly compensated
executive officers, all executive officers and directors as a group, and each
person who beneficially owned more than five percent of the Company's
outstanding common stock.
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AT
MARCH 1, 2002(1)
----------------------------
PERCENT OF
CLASS
NAME OF PERSON OR GROUP POSITION NUMBER OUTSTANDING
----------------------- -------- ------ -----------
A. Earl Swift.............. Chairman of the Board (2) 241,761 (3)
Virgil N. Swift............ Vice Chairman of the Board 344,640(4) 1.4%
G. Robert Evans............ Director 32,700 (3)
Henry C. Montgomery........ Director 12,115 (3)
Clyde W. Smith, Jr......... Director 27,400 (3)
Harold J. Withrow.......... Director 63,140(5) (3)
Terry E. Swift............. President, Chief Executive Officer, and
Director(2) 159,226 (3)
Joseph A. D'Amico.......... Executive Vice President, Chief Operating
Officer 80,354 (3)
Bruce H. Vincent........... Executive Vice President--Corporate
Development and Secretary 134,003 (3)
James M. Kitterman......... Senior Vice President--Operations 129,188 (3)
All executive officers and directors as a group (13 persons)............... 1,372,748 5.5%
Zurich Scudder Investments, Inc............................................ 1,636,750(6) 6.5%
345 Park Avenue
New York, New York 10154
Boston Partners Asset Management, L.P...................................... 1,764,900(7) 7.0%
Boston Partners, Inc.
Desmond John Heathwood
28 State Street, 20th Floor
Boston, Massachusetts 02109
Franklin Resources, Inc.................................................... 2,234,356(8) 8.9%
Franklin Advisers, Inc.
Charles B. Johnson
Rupert H. Johnson, Jr.
One Franklin Parkway
San Mateo, California 94403
Neuberger Berman, Inc...................................................... 1,342,774(9) 5.3%
Neuberger Berman, LLC
Neuberger Berman Management Inc.
605 Third Avenue
New York, New York 10158-3698
----------
(1) Unless otherwise indicated below, the persons named have sole voting
and investment power over the number of shares of the Company's common
stock shown as being owned by them. The table includes the following
shares that were acquirable within 60 days following March 1, 2002 by
exercise of options granted under the Company's stock option plans: Mr.
A. E. Swift - 82,984; Mr. V. N. Swift - 56,084; Mr. Evans - 17,900; Mr.
Montgomery - 9,200;
7
Mr. Smith - 27,400; Mr. Withrow - 34,660; Mr. T. E. Swift - 115,065;
Mr. Vincent - 100,891; Mr. Kitterman - 93,605; Mr. D'Amico - 64,577;
and all executive officers and directors as a group - 711,675.
(2) Effective May 8, 2001, A. Earl Swift stepped down as Chief Executive
Officer and Terry E. Swift was appointed Chief Executive Officer.
(3) Less than one percent.
(4) Includes 121 shares held jointly by Mr. Virgil Swift and his wife and
119,400 shares held of record by a Texas family limited partnership in
which Mr. Virgil Swift and his wife hold a 2% interest. Mr. Virgil
Swift and his wife are both general partners of the family limited
partnership and, as such, they share voting and dispositive power as to
the 119,400 shares held by the family limited partnership.
Consequently, Mr. Virgil Swift is deemed to beneficially own the
119,400 shares held by the partnership. Mr. Virgil Swift expressly
disclaims beneficial ownership as to 92 %, or 109,848, of the shares
held by the partnership.
(5) Includes 22,810 shares as to which Mr. Withrow shares voting power with
his wife.
(6) Based on a Schedule 13G dated February 1, 2002 filed with the SEC to
reflect shares held at December 31, 2000, Zurich Scudder Investments,
Inc. ("Scudder"), an investment adviser registered under Section 203 of
the Investment Advisers Act of 1940, is deemed beneficial owner of
1,636,750 shares of the Company's common stock as a result of serving
as an investment adviser to one or more investment companies or other
managed accounts. Scudder has the sole power to dispose of and direct
the disposition of all 1,636,750 shares and has sole voting power as to
1,161,169 of such shares of the Company's common stock.
(7) Based on a Schedule 13G dated January 15, 2002 filed with the SEC to
reflect shares held at December 31, 2001, Boston Partners Asset
Management, L.P. ("BPAM") owns of record and beneficially 1,764,900
shares of the Company's common stock. Boston Partners, Inc. ("BP") is
the sole general partner of BPAM and, therefore, may be deemed to be
the beneficial owner of all 1,764,900 shares held by BPAM. Mr.
Heathwood is the principal stockholder of BP and, therefore, may be
deemed to be the beneficial owner of all 1,764,900 shares that BP may
be deemed to own beneficially.
(8) Based on a Schedule 13G dated February 14, 2002 filed with the SEC to
reflect shares beneficially held at December 31, 2000, one or more open
or closed-end investment companies or other managed accounts which are
advised by direct and indirect investment advisory subsidiaries (the
"Adviser Subsidiaries") of Franklin Resources, Inc. ("FRI")
beneficially own 2,234,356 shares of the Company's common stock. Such
advisory contracts grant to such Adviser Subsidiaries all investment
and/or voting power over the securities owned by such advisory clients.
Therefore, such Adviser Subsidiaries may be deemed to be, for such
purposes of Rule 13d-3 under the Exchange Act, the beneficial owner of
all 2,234,356 shares.
Beneficial ownership by investment advisory subsidiaries and other
affiliates of FRI is being reported in conformity with the guidelines
articulated by the SEC staff in Release No. 34-39538 (January 12, 1998)
relating to organizations, such as FRI, where related entities exercise
voting and investment powers over the securities being reported
independently from each other. As to the 2,234,356 shares, Franklin
Advisers, Inc., an indirect wholly owned investment advisory subsidiary
of FRI, holds sole voting and investment power which is exercised
independently from FRI and from all other investment advisor
subsidiaries of FRI. The clients of the Adviser Subsidiaries, including
investment companies registered under the Investment Company Act of
1940 and other managed accounts, have the right to receive dividends
from, as well as the proceeds from, the sale of the 2,234,356 shares of
the Company's common stock.
Charles B. Johnson and Rupert H. Johnson, Jr. (the "Principal
Shareholders") each own in excess of 10% of the outstanding common
stock of FRI and are the principal shareholders of FRI. FRI and the
Principal Shareholders may be deemed to be, for purposes of Rule 13d-3
under the Exchange Act, the beneficial owner of securities held by
persons and entities advised by FRI subsidiaries, which includes the
2,234,356 shares of the Company's common stock. FRI, the Principal
Shareholders and each of the Adviser Subsidiaries disclaim any economic
interest or beneficial ownership in any of the 2,234,356 shares.
FRI, the Principal Shareholders, and each of the Adviser Subsidiaries
are of the view that they are not acting as a "group" for purposes of
Section 13(d) under the Exchange Act and that they are not otherwise
required to attribute to each other the "beneficial ownership" of
securities held by any of them or by any persons or entities advised by
FRI subsidiaries.
8
(9) Based on a Schedule 13G dated February 11, 2002 filed with the SEC to
reflect shares held at December 31, 2001, Neuberger Berman, LLC
("Neuberger") and Neuberger Berman Management Inc. ("Management") serve
as sub-advisers and investment managers of various mutual funds and are
thus deemed beneficial owners of 1,342,774 shares of the Company's
common stock, which shares they hold for their clients and in which
shares they have no economic interest. Of the shares beneficially
owned, both Neuberger and Management share dispositive power as to all
1,342,774 shares and share voting power as to 798,290 shares of the
Company's common stock. Neuberger has sole voting power as to 525,074
shares. As the parent holding company of Neuberger and Management,
Neuberger Berman Inc. is also deemed beneficial owner of these shares.
EXECUTIVE OFFICERS
The executive officers of the Company are appointed annually by the
Board. Information regarding A. Earl Swift, Chairman of the Board, and Terry E.
Swift, President and Chief Executive Officer, is set forth above under "Election
of Directors--Nominees." Set forth below is certain information, as of the date
hereof, concerning the other executive officers of the Company.
Joseph A. D'Amico, 53, was appointed Executive Vice President in August
2000 and was appointed Chief Operating Officer of the Company in January 2000.
He was Senior Vice President of Exploration and Development of the Company from
February 1998 to January 2000. He served as the Company's Vice President of
Exploration and Development from 1993 to 1998, Director of Exploration and
Development from 1992 to 1993 and Funds Manager from 1988 to 1992. Mr. D'Amico
holds Bachelor of Science and Master of Science degrees in Petroleum Engineering
and a Master's degree in Business Administration.
Bruce H. Vincent, 54, was appointed Executive Vice President--Corporate
Development and Secretary of the Company in August 2000. Previously he served as
Senior Vice President--Funds Management since joining the Company in 1990. Mr.
Vincent holds a degree in Business Administration and a Master's degree in
Finance.
Alton D. Heckaman, Jr., 45, was appointed Senior Vice
President--Finance and Chief Financial Officer in August 2000. He had previously
served as Vice President and Controller from May 1993 and Assistant Vice
President--Finance from March 1986 to May 1993. Mr. Heckaman joined the Company
in 1982. He is a Certified Public Accountant and holds a degree in Accounting.
James M. Kitterman, 57, was appointed Senior Vice President--Operations
in May 1993. He had previously served as Vice President--Operations since
joining the Company in 1983. Mr. Kitterman holds a degree in Petroleum
Engineering and a Master's degree in Business Administration.
Victor R. Moran, 46, was appointed Senior Vice President--Energy
Marketing and Business Development in August 2000. From 1995, he served as Vice
President--Natural Gas Marketing/Business Development. He had previously served
as Director of Business Development since January 1992. Mr. Moran holds a degree
in government and a Juris Doctor degree.
David W. Wesson, 43, was appointed Controller in January 2001. He
previously served as Assistant Controller--Reporting from April 1999 to January
2001, Manager, Reporting/Budget from October 1995 to April 1999 and Manager,
Corporate Accounting/Budget from February 1990. He joined the Company as Senior
Accountant in 1988. Mr. Wesson is a Certified Public Accountant and holds a
degree in Accounting.
9
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain summary information regarding
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company (determined as of the end of 2001) for the
fiscal years ended December 31, 2001, 2000 and 1999.
SUMMARY COMPENSATION TABLE
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION ANNUAL COMPENSATION($)
----------------------------------------- --------------- -----------------------------
BONUS(1)
------------------------
COMMON
NAME AND STOCK
PRINCIPAL UNDERLYING LIFE
POSITION YEAR SALARY($) CASH($) STOCK($) OPTIONS/SARS(#) INSURANCE($)(2) 401(k)($)(3)
--------- ---- ---------- ---------- ---------- --------------- --------------- ------------
A. EARL SWIFT 2001 $ 856,842(4) $ 0 $ -0- 100,000 $ 126,772 $ 8,500
Former Chief Executive 2000 500,004 349,835 -0- 50,000 32,560 8,500
Officer(6) 1999 627,278(5) 250,000 -0- -0- 3,804 8,000
TERRY E. SWIFT 2001 $ 392,068 $ 96,600 $ -0- 67,500 $ 21,989 $ 8,500
President & Current Chief 2000 338,256 117,058 -0- 25,000 11,580 8,500
Executive Officer(7) 1999 307,500 55,349 13,839 -0- 5,709 8,000
JOSEPH A. D'AMICO 2001 $ 302,504 $ 35,300 $ -0- 45,500(5) $ 13,658 $ 8,500
Executive Vice President & 2000 243,945 93,337 -0- 37,000 6,400 8,500
Chief Operating Officer 1999 184,800 35,739 8,921 -0- 3,155 8,000
BRUCE H. VINCENT 2001 $ 277,424 $ 56,200 $ -0- 42,500(5) $ 18,825 $ 8,500
Executive Vice President 2000 233,010 87,278 -0- 21,000 9,027 8,500
- Corporate Development 1999 204,000 34,036 8,464 -0- 6,055 8,000
and Secretary
JAMES M. KITTERMAN 2001 $ 245,165 $ 24,500 $ -0- 20,000 $ 22,753 $ 8,500
Sr. Vice President 2000 223,700 69,258 -0- 22,000 11,401 8,500
Operations 1999 204,000 34,036 8,464 -0- 8,011 8,000
----------
(1) Bonus amounts reported for 2001, 2000 and 1999 include bonuses earned
during those years, but actually paid in the following year.
(2) Represents insurance premiums paid by the Company during the covered
fiscal year with respect to life insurance for the benefit of the named
executive officer.
(3) Contributions by the Company to the Swift Energy Company Employee
Savings Plan (100% in Company common stock for 2001 and one-half in
cash and one-half in Company common stock for 2000 and 1999) for the
account of the named executive officer.
(4) In accordance with the terms of A. Earl Swift's employment agreement,
he is entitled to a non-competition payment each year for five years
following his retirement as Chief Executive Officer of the Company. He
retired as Chief Executive Officer of the Company in 2001. His 2001
compensation reflects the first of the five non-competition payments in
the amount of $406,842.
(5) A. Earl Swift resigned as Chief Executive Officer, effective May 8,
2001.
10
(6) The 1999 salary for A. Earl Swift includes a one time payment of
$177,278 in accordance with written company policy as reimbursement for
unused vacation time accumulated.
(7) Terry E. Swift was appointed Chief Executive Officer, effective May 8,
2001.
EMPLOYMENT CONTRACTS
In November 2000, A. Earl Swift's employment agreement was amended and
restated. Under the amended terms of this agreement, Mr. Swift had the option to
work on a full-time basis until November 2002 or make an earlier transition from
full-time to part-time status. Effective May 8, 2001, Mr. Swift stepped down as
Chief Executive Officer and effective June 30, 2001 began working on a half-time
basis. He may continue on a half-time basis for five years (up to 46 weeks per
year as the Board may specify) on specific matters designated by the Board.
During this five year period, Mr. Swift's compensation will be one-half his
annual base compensation (i.e. $600,000) at the time of transition from a
full-time to half-time schedule, with a 4% per annum inflation adjustment, plus
any bonus provided by the Board. These amounts are also payable in one lump sum,
discounted to present value, upon Mr. Swift's death or disability, which also
triggers 100% vesting of all unexercised options, plus continuation of insurance
for his spouse and minor children for a year. In the event of a change of
control, Mr. Swift is to be paid a lump sum equal to the discounted present
value of amounts payable during the remainder of the contract, plus a one year
continuation of medical and dental coverage, and a tax gross-up if such payments
are deemed to be subject to "parachute payment" excise taxes. Mr. Swift's
contract also provides for a payment of approximately $407,000 per year to Mr.
Swift or his estate during each of the last five years of the agreement in
consideration of Mr. Swift's agreement not to compete with the Company while he
is receiving payments from the Company. The first of these payments was made in
2001. Upon termination of Mr. Swift's employment during its term, other than for
cause, Mr. Swift is entitled to receive continuation of his salary for a period
of one year plus 4 weeks' salary for every year of service to the Company if he
is then being employed and paid on a half-time basis. Insurance coverage is to
be continued while he is being paid, and all unexercised stock options held at
such date are to become vested.
Effective May 9, 2001, the Company entered into amended and restated
employment agreements with Terry E. Swift, President and Chief Executive
Officer, Bruce H. Vincent, Executive Vice President, Alton D. Heckaman, Senior
Vice President and Chief Financial Officer, James M. Kitterman, Senior Vice
President, and Joseph A. D'Amico, Executive Vice President and entered into a
new employment agreement with Victor Moran, Senior Vice President. All of the
agreements provide for an initial three-year term, which is automatically
extended for one year on each anniversary of the agreement (such period, as so
extended at any time, the "Contract Term"). These agreements provide for payment
of certain amounts and continuation of medical benefits for one-half of the
remainder of the Contract Term upon termination of employment other than for
cause. The payment shall be equal to the executive's base salary in effect
immediately prior to the termination date, plus one week's salary for every year
of service to the Company, plus in the case of Messrs. Swift, Kitterman and
Heckaman, certain amounts compounded at a rate of 8% per annum, representing
amounts in lieu of Company contributions to a 401-K plan for those periods of
employment prior to adoption of such a plan by the Company. The agreements also
provide for the continuation of medical benefits for one-half of the remainder
of the Contract Term upon termination of employment other than for cause. The
agreements can be terminated by the Company other than for cause only by a
majority of the continuing directors who have been directors for two years or
nominated for election by a majority of continuing directors. Upon employment
termination in connection with or following a change of control, the executives
are entitled to receive their salary that would have been paid for the remainder
of the Contract Term, plus two weeks' salary for every year of service to the
Company, plus in the case of Messrs. Swift, Kitterman and Heckaman, certain
amounts compounded at a rate of 8% per annum, representing amounts in lieu of
11
Company contributions to a 401-K plan for those periods of employment prior to
adoption of such a plan by the Company, and continuation of medical and dental
insurance and universal life coverages for certain periods. Immediately prior to
termination of employment, outstanding unexercised stock options vest or are
deemed to have vested, and the executives retain such options with no change to
their terms, except as to Mr. Moran for whom the only outstanding options that
vest are those granted after the date of his employment agreement.
STOCK OPTION GRANTS
During 2001, the following stock options were granted to the named
executive officers under the Company's stock compensation plans.
OPTION GRANTS IN 2001
INDIVIDUAL GRANTS GRANT DATE VALUE
------------------------------------------------------------------------------------------------- -----------------
% OF TOTAL
OPTIONS
NUMBER OF GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE PRESENT VALUE
NAME GRANTED FISCAL YEAR ($/SH) EXPIRATION DATE ($)(1)
---- ------------ ------------ ------------ --------------- -------------
A. Earl Swift 3,279 0.44% $ 34.87 02/07/10 $ 72,269
1,397 0.19% $ 34.87 12/07/08 29,419
1,703 0.23% $ 34.87 12/26/06 33,047
1,290 0.17% $ 34.87 11/03/07 25,911
100,000 13.39% $ 35.04 02/20/11 2,308,600
Terry E. Swift 17,500 2.34% $ 35.04 02/20/11 $ 404,005
50,000 6.69% $ 30.47 05/08/11 1,009,750
Joseph A. D'Amico 12,500 1.67% $ 35.04 02/20/11 $ 288,575
33,000 4.42% $ 30.47 05/08/11 666,435
1,594 0.21% $ 29.98 09/16/03 17,037
Bruce H. Vincent 12,500 1.67% $ 35.04 02/20/11 $ 288,575
30,000 4.02% $ 30.47 05/08/11 605,850
517 0.07% $ 29.98 08/14/03 5,466
1,969 0.26% $ 29.98 06/13/04 24,764
James M. Kitterman 20,000 2.68% $ 30.47 05/08/11 $ 403,900
----------
(1) Estimated present values are based on the Black-Scholes Model, a
mathematical formula used to value exchange-traded options. The stock
options granted by the Company are long term, non-transferable and
subject to vesting restrictions, while exchange-traded options are
short term and can be exercised or sold immediately in a liquid market.
The Black-Scholes Model considers a number of factors, including the
expected volatility of the stock, interest rates, and the estimated
time period until exercise of the option. In calculating the grant date
present values set forth in the table, the following ranges of
assumptions were used: daily volatility for common stock of 47.23% to
59.67%, risk-free rate of return of 3.78% to 5.36% and actual number of
years from grant date to expiration date. In each case, the risk-free
rate was based on a 10 year government bond as of the grant date and no
dividend yield. No adjustments were made for non-transferability or
risk of forfeiture. The ultimate value of the option will depend on the
future market price of the Company's common stock, which cannot be
forecast with reasonable accuracy.
12
OPTION VALUES
The following table contains information concerning the number of
shares acquired and value realized from the exercise of options during 2001 and
the number of unexercised options held by the named executive officers at
December 31, 2001.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR END OPTION VALUES
NUMBER OF SHARES OF
COMMON STOCK UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT YEAR END 2001 AT YEAR END 2001(1)
------------------------------ ------------------------------
SHARES
ACQUIRED
ON VALUE(2)
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ------------ ------------- ------------ -------------
A. Earl Swift 27,602 $ 694,940 43,658 167,989 $ 220,973 $ 588,584
Terry E. Swift -0- $ -0- 104,585 107,460 $ 939,315 $ 407,552
Joseph A. D'Amico 5,200 $ 108,086 58,769 81,694 $ 589,173 $ 226,000
Bruce H. Vincent 9,389 $ 206,948 95,272 72,226 $ 1,064,442 $ 183,343
James M. Kitterman -0- $ -0- 90,286 48,040 $ 1,011,640 $ 190,353
----------
(1) Options are "in-the-money" if the market price of a share of common
stock exceeds the exercise price of the option. The value of
unexercised in-the-money options equals the market price of shares at
December 31, 2001 ($20.20) less the exercise price.
(2) Value Realized represents the difference between the exercise price of
the options and the NYSE closing price on the exercise date for the
common stock received upon exercise.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2001, the Compensation Committee of the Company consisted of
Messrs. Smith, Montgomery and Withrow, who are all independent directors. To the
Company's knowledge, there are no inter-relationships involving members of the
Compensation Committee or other directors of the Company requiring disclosure in
this section of the proxy statement.
13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY
The Board first established its Compensation Committee in 1982. The
Compensation Committee has always been composed solely of nonemployee directors,
and has set executive compensation since that time. Since 1987 when the
Compensation Committee undertook an evaluation of the Company's policies,
compensation has been based upon Company performance.
Philosophically, the Compensation Committee and the Company's Chief
Executive Officer believed it to be beneficial to the Company in its early years
to keep executive compensation in the low to middle ranges in comparison to
levels paid by comparable entities, particularly in comparison to many companies
in the oil and gas industry. Since 1987, the bonus compensation of the Company's
Chief Executive Officer has been based almost solely upon the Company's
performance, as described below.
Since late 1989, the bonus formula for the Chief Executive Officer has
been based upon earnings per share and growth in oil and gas reserves, as
described in detail below. Since 1995, the Compensation Committee's criteria
also reflected the importance of cash flow to an oil and gas company and the
Company's increased emphasis on exploration and drilling activities to achieve
growth in probable reserves, in addition to acquisition of producing properties,
given the Compensation Committee's belief that successful drilling activities
are based upon a high level of drilling prospects. Accordingly, the bonus
formula in the 2001 Omnibus Stock Compensation Plan (the "2001 Plan"), the plan
which was adopted by the Shareholders at the 2001 Annual Meeting and was in
effect with respect to compensation in 2001, provides for bonuses based on
year-to-year increases in earnings per share, cash flow per share, proved
reserves and probable reserves and an assessment of the individual's
contribution over the course of the year.
COMPENSATION CRITERIA AND PERFORMANCE MEASUREMENT
The Company's executive compensation consists of three components: base
salary, annual incentive bonuses, and long term stock-based incentives.
BASE SALARY for a particular year is based upon (i) the executive's
scope of responsibility, (ii) an evaluation of each executive's individual
performance during the year, (iii) an attempt to keep executive salaries within
the range paid by comparably sized oil and gas exploration and production
companies, based in part upon annual surveys provided by outside consultants on
independent oil and gas companies with similar market capitalizations (the
"Compensation Surveys"), and (iv) an evaluation of the Company's performance
during the preceding year, including the Company's earnings, reserve growth and
cash flow. Individual performance evaluation is based upon each executive's
review of his own performance throughout the year and upon a performance review
by the Company's Chief Executive Officer, except in the case of the Chief
Executive Officer, whose performance is reviewed by the Compensation Committee.
The Compensation Surveys include companies in common with the Dow Jones
Oil, Secondary Index (the "Index") used in the "Five Year Shareholder Return
Comparison" set forth herein. The Compensation Surveys are used by the Company
for purposes of executive compensation comparison because they constitute a
broader group than the group of companies included in the Index, and because the
Compensation Surveys are comprised of companies somewhat closer in size and line
of business to the Company than some of the companies included in the Index. The
Index was selected in accordance with SEC rules solely for shareholder return
comparison purposes because it is a published industry index.
14
ANNUAL INCENTIVE BONUSES for a particular year are awarded after the
end of that year, based on both individual and Company performance during that
year. Under the 2001 Plan, bonuses are awarded in the form of Performance Bonus
Awards, which may be in cash, in shares of the Company's common stock or a
combination thereof, as determined by the Compensation Committee. The amount of
an executive officer's Performance Bonus Award for a particular year is
determined utilizing the following factors: (i) the increase in earnings per
share during that year and the increase in the cash flow per share during that
year (measures of short-term performance); (ii) the increase in the volume of
the Company's proved and probable oil and gas reserves during that year
(measures of long-term performance); (iii) individual performance of that
executive officer in contributing to either the Company's overall achievement of
its strategic objectives, or the achievement of the objectives of the
executive's department or group within the Company; and (iv) the Compensation
Committee's determination of the extent to which the executive officer's
individual performance merits a bonus. Historically, the Compensation Committee
has elected to have a portion of the bonus consist of Company stock.
In determining Performance Bonus Awards for 2001 (determined and paid
in February 2002), the Committee considered the 3% increase in net proved
reserves and the 29% increase in probable reserves, but also took into account
our decreases in earnings per share and cash flow per share from 2000 to 2001.
The Compensation Committee also took into account individual performance ratings
reflecting individual contribution and contribution to group effectiveness.
LONG-TERM STOCK-BASED INCENTIVES are provided through annual grants of
incentive stock options to executives and others under the 2001 Omnibus Stock
Option Plan. This component is intended to retain and motivate executives to
improve long-term shareholder value. Stock options are granted at the prevailing
market price. Grants have always vested in equal amounts over five years.
The Compensation Committee determines a total number of options to be
granted in any year based on the total number of outstanding unexercised
executive options, so as to avoid excessive dilution of the shareholders' value
in the Company through executive option exercises. Out of the number so
determined, options are granted to executive officers in varying amounts,
roughly related to their levels of executive responsibility. Outstanding
historical performance by an executive officer may be recognized through a
larger than normal option grant.
The Company believes that its compensation policy described above
provides an excellent link between the value created for shareholders and the
compensation paid to executive officers.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Effective May 8, 2001, A. Earl Swift resigned as Chief Executive
Officer of the Company and Terry E. Swift was appointed to replace him. Unless
otherwise noted, the discussion below includes the compensation of each of these
respective Chief Executive Officers for the full year.
Base Salary. A Earl Swift's base salary in 2001 was $450,000, compared
to $500,004 in 2000, and Terry E. Swift's base salary in 2001 was $392,068,
compared to his base salary of $338,256 in 2000 when he served as President but
not Chief Executive Officer of the Company. The Compensation Committee's
determination was based on the factors described above under "Compensation
Criteria and Performance Measurement--Base Salary."
Bonus. In determining the Chief Executive Officer's bonus, the
Compensation Committee has typically given more weight to factors based upon the
Company's performance than to its evaluation of his general contribution, since
the Compensation Committee does not observe and supervise such performance on a
day-to-day basis. The Company's performance was negatively affected by a number
of
15
factors in 2001, including the state of the industry. Therefore, consistent with
the Compensation Committee's philosophy, Terry E. Swift received a bonus of
$96,600 in cash for his partial year of service as Chief Executive Officer,
compared to his cash bonus of $117,058 in 2000 for his service as President of
the Company. A. Earl Swift did not receive a bonus for his partial year of
service as Chief Executive Officer.
Stock Options. In February 2001, the Company granted A. Earl Swift
100,000 options to purchase shares of the Company's common stock. This was a
special grant in anticipation of the shift of his role after 21 years of
leadership of the Company. The Compensation Committee, and the Board as a whole,
believe that it is important that he remain interested in the future success of
the Company. The Compensation Committee and the Board believed that the award
would be effective if it was substantial enough to draw Mr. Swift's continuing
interest and dedication. In 2001, the Company granted Terry E. Swift 67,500
options to purchase shares of the Company's common stock, as explained above
under "Compensation Criteria and Performance Measurement--Long-Term Stock-Based
Incentives."
Section 162(m) of the Internal Revenue Code. The Compensation Committee
does not propose to adopt any particular policy with respect to Section 162(m)
of the Internal Revenue Code. Section 162(m) generally limits deductions for
compensation paid to any employee in excess of $1 million per year. The Company
believes that any loss of deduction for compensation exceeding Section 162(m)'s
limitations is outweighed by the flexibility it gains in not meeting the
requirements of this section.
COMPENSATION COMMITTEE
Clyde W. Smith, Jr., Chairman
Henry C. Montgomery
Harold J. Withrow
16
FIVE YEAR SHAREHOLDER RETURN COMPARISON
The graph below compares the cumulative total return on the Company's
common stock to that of (i) the Standard & Poor's 500 Stock Index and (ii) the
Dow Jones Oil, Secondary Index, with "Cumulative total return" equaling (i) the
change in share price during the measurement period plus cumulative dividends
(of which, in accordance with its dividend policy, the Company has paid none)
for the measurement period (assuming dividend reinvestment), divided by (ii) the
share price at the beginning of the measurement period.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG SWIFT ENERGY COMPANY, THE S & P 500 INDEX
AND THE DOW JONES OIL COMPANIES, SECONDARY INDEX
[GRAPH]
* $100 INVESTED ON 12/31/96 IN STOCK OR INDEX-INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
CUMULATIVE TOTAL RETURN
-------------------------------------------------------------------------
12/96 12/97 12/98 12/99 12/00 12/01
-------- -------- -------- -------- -------- --------
SWIFT ENERGY COMPANY 100.00 77.55 27.15 42.34 138.54 74.38
S & P 500 100.00 133.36 171.47 207.56 188.66 166.24
DOW JONES OIL COMPANIES, SECONDARY 100.00 99.70 68.40 78.94 126.07 115.75
17
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed with management the
Company's audited financial statements for the year ended December 31, 2001. The
Audit Committee also discussed with the Company's independent auditors, Arthur
Andersen LLP ("Arthur Andersen"), the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended. The Audit Committee received
the written disclosures and the letter from Arthur Andersen required by
Independence Standards Board Standard No. 1 and discussed with Arthur Andersen
and carefully considered the independence of Arthur Andersen and its other
qualifications as the Company's independent auditors. Based on the review and
discussions referred to above, the Audit Committee recommended to the Board that
the audited financial statements be included in the Company's Annual Report on
Form 10-K for filing with the SEC for the year ended December 31, 2001. Before
making its recommendation to the Board, the Audit Committee carefully considered
Arthur Andersen's qualifications as the Company's independent auditors,
including their long experience with the Company that has allowed them to
perform their audit on a well-informed basis. Also, Arthur Andersen, has, in the
Company's experience with them, been conservative and careful in the work they
have performed for the Company. Based on its understanding at this time, the
Audit Committee retains its confidence in Arthur Andersen as its independent
auditors. The Audit Committee, however, will continue to monitor Arthur
Andersen's response to its recent challenges and will take whatever steps are
necessary to ensure independent, objective oversight of the Company's accounting
functions.
No portion of this Audit Committee Report shall be deemed to be
incorporated by reference into any filing under the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, through any general
statement incorporating by reference in its entirety the Proxy Statement in
which this report appears, except to the extent that the Company specifically
incorporates this report or a portion of it by reference. In addition, this
report shall not be deemed to be filed under either the Securities Act or the
Exchange Act.
AUDIT COMMITTEE
Henry C. Montgomery, Chairman
G. Robert Evans
Clyde W. Smith, Jr.
18
CONSIDERATION OF AUDITORS' FEES
AUDIT FEES
Audit fees billed or expected to be billed to the Company by Arthur
Andersen for its audit of the Company's annual financial statements for the year
ended December 31, 2001, and for its review of the financial statements included
in the Company's Quarterly Reports on Form 10-Q filed with the SEC for 2001
totaled $326,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage Arthur Andersen to provide advice to the
Company regarding financial information systems design and implementation during
the fiscal year ended December 31, 2001.
ALL OTHER FEES
Fees billed to the Company by Arthur Andersen during the Company's 2001
fiscal year for all other services rendered to the Company, including tax
related services, totaled $253,941.
In connection with the recently revised standards for independence of
the Company's independent public accountants promulgated by the SEC, the Audit
Committee has reviewed and is satisfied that the additional services did not
affect the independence of Arthur Andersen.
AUDITORS
Arthur Andersen, certified public accountants, has served as the
independent auditors of the Company since its inception. While management
anticipates that this relationship will continue to be maintained during 2002
and subsequent years, it is not proposed that any formal action be taken at the
Meeting with respect to the continued employment of Arthur Andersen, inasmuch as
no such action is legally required. A representative from Arthur Andersen will
be present at this year's Meeting. Such representative will have the opportunity
to make a statement if he desires to do so and is expected to be available to
respond to appropriate questions.
SHAREHOLDER PROPOSALS
Pursuant to various rules promulgated by the SEC, a shareholder that
seeks to include a proposal in the Company's proxy statement and form of proxy
card for the meeting of the shareholders of the Company to be held in 2003 must
timely submit such proposal in accordance with SEC Rule 14a-8 to the Company,
addressed to Bruce H. Vincent, Secretary, 16825 Northchase Drive, Houston, Texas
77060 no later than December 10, 2002. Further, a shareholder may not submit a
matter for consideration at the 2002 Meeting, regardless of whether presented
for inclusion in the Company's proxy statement and form of proxy card, unless
the shareholder shall have timely complied with the requirements in the
Company's Bylaws which set a notice deadline after which a shareholder will not
be permitted to present a proposal at the Company's shareholder meetings. The
Bylaws state that in order for business to be properly brought before an annual
meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the Secretary of the Company. To be timely, a shareholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Company not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting. A notice given pursuant to
this advance notice Bylaw will not be timely with respect to the Company's 2003
meeting unless duly given by no later than March 21, 2003 and no earlier than
February 19, 2003.
19
With respect to business to be brought before the 2002 Meeting, the
Company has not received any notices from shareholders that the Company is
required to include in this proxy statement.
FORWARD LOOKING STATEMENTS
The statements contained in this proxy statement that are not
historical are "forward-looking statements," as that term is defined in Section
21E of the Exchange Act that involve a number of risks and uncertainties.
Forward-looking statements use forward-looking terms such as "believe,"
"expect," "may," "intend," "will," "project," "budget," "should" or "anticipate"
or other similar words. These statements discuss "forward-looking" information
such as future net revenues from production and estimates of oil and gas
reserves.
These forward-looking statements are based on assumptions that the
Company believes are reasonable, but they are open to a wide range of
uncertainties and business risks, including the following:
o fluctuations of the prices received or demand for oil and natural
gas over time;
o uncertainty of reserve estimates;
o operating hazards;
o unexpected substantial variances in capital requirements;
o environmental matters; and
o general economic conditions.
Other factors that could cause actual results to differ materially from
those anticipated are discussed in the Company's Annual Report to Shareholders
for the year ended December 31, 2001. The Company will not update these
forward-looking statements unless the securities laws require the Company to do
so.
GENERAL
The information contained in this proxy statement in the sections
entitled "Election of Directors, Compensation Committee Report on Executive
Compensation," "Comparative Total Returns" and "Audit Committee Report" shall
not be deemed incorporated by reference by any general statement incorporating
by reference any information contained in this proxy statement into any filing
under the Securities Act, or the Exchange Act, except to the extent that the
Company specifically incorporates by reference the information contained in such
sections, and shall not otherwise be deemed filed under the Securities Act or
the Exchange Act.
By Order of the Board of Directors
BRUCE H. VINCENT
Secretary
Houston, Texas
April 9, 2002
20
PLEASE DATE, SIGN AND MAIL BACK YOUR
PROXY CARD AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
SWIFT ENERGY COMPANY
MAY 14, 2002
-PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED-
-----------------------------------------------------------------------------------------------------------------------------------
Please mark your -
A [X] votes as in this - - -
example.
To withhold authority to vote for any individual nominee, strike his name from the listing below.
PROPOSAL 1: FOR WITHHELD NOMINEES: Virgil N. Swift PROPOSAL 2: In their discretion, the Proxies are authorized to
FOR the election [ ] [ ] G. Robert Evans vote upon such other matters as may properly come before the
of both nominees Meeting, hereby revoking any proxy or proxies heretofore given
for directors by the undersigned.
listed for the terms specified in the
Company's 2002 Annual Proxy Statement The Board of Directors recommends a vote for both nominees
(except as marked to the contrary at right); named in Proposal 1. This proxy will be voted in accordance
or to WITHHOLD AUTHORITY to vote for all with the specifications made hereon. If NO specification is
nominees. made, the shares will be voted for both nominees.
The undersigned hereby acknowledges receipt of the Notice of
2002 Annual Meeting of Shareholders and Proxy Statement and
the 2001 Annual Report to Shareholders furnished herewith.
PLEASE SIGN AND RETURN IN THE ENCLOSED STAMPED, PRE-ADDRESSED
ENVELOPE.
SIGNATURE DATE SIGNATURE DATE
-------------------------------------- ------------ ---------------------------------- ------------
Note: Signature should agree with name as it appears hereon. If stock is held in the name of more than one person, EACH joint
owner should sign. Executors, administrators, trustees, guardians and attorneys should indicate the capacity in which they sign.
Attorneys should submit powers of attorney.
-----------------------------------------------------------------------------------------------------------------------------------
SWIFT ENERGY COMPANY
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 14, 2002
The undersigned hereby constitutes and appoints Clyde W. Smith, Jr., Henry
C. Montgomery or Terry E. Swift, or any of them, with full power of substitution
and revocation to each, the true and lawful attorneys and proxies of the
undersigned at the Annual Meeting of Shareholders (the "Meeting") of SWIFT
ENERGY COMPANY (the "Company") to be held on May 14, 2002 at 4:00 p.m. Houston
time, in the Marriott Hotel Greenspoint, 255 North Sam Houston Parkway East,
Houston, Texas, or any adjournments thereof, and to vote the shares of common
stock of the Company standing in the name of the undersigned on the books of the
Company (or which the undersigned may be entitled to vote) on the record date
for the Meeting with all powers the undersigned would possess if personally
present at the Meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)