DEF 14A 2003 Proxy Statement
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-11(c) or Rule 14a-12.
COMSTOCK RESOURCES, INC.
(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 amount on which 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 offering fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of the filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[GRAPHIC OMITTED]
COMSTOCK RESOURCES, INC.
Notice of 2003 Annual Meeting of Stockholders
and Proxy Statement
Please Complete, Sign, Date
And Return Your Proxy Promptly
Monday, May 19, 2003
10:00 A.M.
Westin Stonebriar Resort
1549 Legacy Drive
Frisco, Texas 75034
[GRAPHIC OMITTED]
COMSTOCK RESOURCES, INC.
5300 TOWN and COUNTRY BLVD.
SUITE 500
FRISCO, TEXAS 75034
April 22, 2003
Dear Comstock Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Comstock Resources, Inc. The meeting will be held at 10:00 a.m., local time, on
Monday, May 19, 2003, at the Westin Stonebriar Resort at 1549 Legacy Drive in
Frisco, Texas. Your board of directors and management look forward to greeting
those of you who are able to attend in person. We have included a map and
directions to the meeting site on the back page of this proxy statement.
o You will find enclosed the Notice of Annual Meeting of Stockholders on
the following page that identifies two proposals for your action.
o At the meeting we will present a report on Comstock's 2002 operating
results and on other matters of interest to you.
o You will find enclosed our 2002 Annual Report, which includes our
financial statements.
Your vote is important. The board of directors appreciates and encourages
stockholder participation in Comstock's affairs. Whether or not you can attend
the meeting, please read the Proxy Statement carefully, then sign, date and
return the enclosed proxy promptly in the envelope provided, so that your shares
will be represented at the meeting.
On behalf of the board of directors, thank you for your cooperation and
continued support.
Sincerely,
/s/ M. JAY ALLISON
M. Jay Allison
Chairman of the Board and President
COMSTOCK RESOURCES, INC.
5300 Town and Country Blvd.
Suite 500
Frisco, Texas 75034
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 19, 2003
The 2003 Annual Meeting of Stockholders of Comstock Resources, Inc. will be
held at the Westin Stonebriar Resort at 1549 Legacy Drive in Frisco, Texas, on
May 19, 2003 at 10:00 a.m., local time, for the following purposes:
1. To elect two Class C directors to serve a term of three years until
their successors are duly elected and qualified; and
2. To transact such other business as may properly come before the
meeting and any adjournments thereof.
You must be a stockholder of record at the close of business on April 16,
2003 to be entitled to vote at the annual meeting.
Your participation in Comstock's affairs is important. Our officers will be
present to respond to questions from shareholders. To ensure your
representation, if you do not expect to be present at the meeting, please sign
and date the enclosed proxy card and return to us promptly. A stamped envelope
has been provided for your convenience. The prompt return of proxies will ensure
a quorum and save us the expense of future solicitation.
By Order of the Board of Directors,
/s/ ROLAND O. BURNS
Roland O. Burns
Secretary
April 22, 2003
IMPORTANT
TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOU MAY WITHDRAW YOUR PROXY.
COMSTOCK RESOURCES, INC.
5300 Town and Country Blvd., Suite 500
Frisco, Texas 75034
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 19, 2003
INTRODUCTION
Our board of directors is soliciting your proxy to encourage your
participation in the voted at the annual meeting and to obtain your support on
the proposal being voting on. You are invited to attend the annual meeting and
vote your shares directly. However, even if you do not attend, you may vote by
proxy, which allows you to direct another person to vote your shares at the
meeting on your behalf. Our principal executive offices are located at 5300 Town
and Country Blvd., Suite 500, Frisco, Texas 75034.
This Proxy Solicitation
There are two parts to this solicitation: the proxy card and this proxy
statement. The proxy card is the means by which you actually authorize another
person to vote your shares in accordance with your instructions. We are first
sending the notice, this proxy statement, and the proxy card on or about April
22, 2003 to all shareholders entitled to vote.
This proxy statement provides you with a variety of information on the
proposals and other matters that you may find useful in determining how to vote.
It is divided into five sections following this Introduction:
o "Voting," page 2.
o "Common Stock Ownership," page 3.
o "Proposals to be Voted Upon," page 4.
o "Our Meetings and Committees," page 5.
o "Executive Compensation," page 8.
For your reference, a table showing the performance of our common stock
over the past five years is included on page 12.
We are soliciting and will pay for soliciting these proxies. Our directors,
officers and employees may solicit proxies in person, by telephone or by other
electronic means of communication. We have also retained American Stock Transfer
& Trust Company to assist in distributing proxy solicitation materials. We will
reimburse brokers and other nominees for reasonable out-of-pocket expenses they
incur in forwarding these proxy materials to you if you are a beneficial owner.
The Annual Meeting
The annual meeting will be held on Monday, May 19, 2003 at the Westin
Stonebriar Resort in Frisco, Texas beginning at 10:00 a.m. A quorum of
shareholders is necessary to hold a valid meeting. A majority of our common
stock must be represented at the annual meeting, whether in person or by proxy,
for a quorum to exist.
Abstentions and broker non-votes will be counted in determining whether or
not there is a quorum at the annual meeting. A broker non-vote occurs when a
broker votes on some matters on the proxy card but not on other matters because
he does not have the authority to do so. Abstentions and broker non-votes will
not be counted when tabulating the votes cast on the election of the directors.
1
Stockholder Proposals
There were no stockholder proposals submitted for the 2003 annual meeting.
To be timely considered,under applicable SEC rules, for presentation at the 2004
Annual Meeting of the stockholders and to be included in the related proxy
statement and form of proxy, our Secretary must receive stockholder proposals at
our principal executive offices no later than December 26, 2003.
Stockholders
On April 16, 2003, we had 28,994,561 issued and outstanding shares of
common stock, held by approximately 7,500 beneficial stockholders. Such shares
are eligible to vote at the annual meeting. In addition, there are 1,757,310
shares of our Series A 1999 Convertible Preferred Stock outstanding which are
entitled to vote, as a single class with the common stock on an as converted
basis, the equivalent of 4,393,275 shares of common stock. Accordingly, the
aggregate number of shares entitled to vote at the meeting is 33,387,836.
You are entitled to one vote at the annual meeting for each share of our
common stock that you owned of record at the close of business on April 16,
2003. The number of shares you own (and may vote) is listed on the enclosed
proxy card.
VOTING
How to Vote Your Shares
You may vote your shares at the annual meeting in person or by proxy. To
vote in person, you must attend the annual meeting, and obtain and submit a
ballot, which will be provided at the meeting. To vote by proxy, you must
complete, sign, date and return the enclosed proxy card.
The proxy card is fairly simple to complete, with specific instructions
right on the card. By completing and submitting it, you will direct the
designated persons (known as "proxies") to vote your shares at the annual
meeting in accordance with your instructions. The board of directors has
appointed M. Jay Allison and Roland O. Burns to serve as the proxies for the
annual meeting.
Your proxy will be valid only if you sign, date and return it so that it is
received before the annual meeting. If you complete all of the proxy card except
the voting instructions, then the designated proxies will vote your shares "for"
the election of both nominated directors. If any nominee for election to the
board of directors is unable to serve, which is not anticipated, or if any other
matters properly come before the meeting, then the designated proxies will vote
your shares in accordance with their best judgment.
You may revoke your proxy at any time before it is exercised by any of the
following means:
o Notifying our Corporate Secretary in writing of such revocation;
o Submitting a properly completed and later dated proxy; or
o Attending the annual meeting and voting in person. Your attendance at
the annual meeting will not by itself revoke a proxy; you must vote
your shares.
Where to Find Voting Results
We will publish the voting results in our Quarterly Report on Form 10-Q for
the second quarter of 2003, which we intend to file with the Securities and
Exchange Commission in August 2003.
2
COMMON STOCK OWNERSHIP
The following table sets forth stockholder information as of April 16, 2003
for persons known to us to be large stockholders (5% or more), directors or
executive officers. Ownership of our common stock is shown in terms of
"beneficial ownership." A person generally "beneficially owns" shares if he has
either the right to vote those shares or dispose of them. More than one person
may be considered to beneficially own the same shares. In this proxy statement,
unless otherwise noted, a person has sole voting and dispositive power for those
shares shown as beneficially owned by him. Shares shown as beneficially owned by
our executive officers include shares that they have the right to acquire by
exercising options on or before June 15, 2003. The percentages shown in this
proxy statement compare the person's beneficially owned shares with the total
number of shares of our common stock outstanding on April 16, 2003 (28,994,561
shares), plus shares that can be acquired by such person by exercising options
on or before June 15, 2003 and shares issuable upon conversion of our Series A
1999 Convertible Preferred Stock.
Shares Beneficially Owned
--------------------------
Name (1) Number (2) Percent
------------------------------------------------- ----------- ----------
M. Jay Allison 2,277,204 7.4%
President, Chief Executive Officer and
Chairman of the Board of Directors
Roland O. Burns 597,522 2.0%
Director, Senior Vice President, Chief
Financial Officer, Secretary and Treasurer
Mack D. Good 40,000 *
Vice President of Operations
David K. Lockett 32,336 *
Director
Cecil E. Martin, Jr 97,700 *
Director
Stephen E. Neukom 42,150 *
Vice President of Marketing
Richard G. Powers 126,500 *
Vice President of Land
Daniel K. Presley 72,851 *
Vice President of Accounting
David W. Sledge 74,864 *
Director
Michael W. Taylor 159,250 *
Vice President of Corporate Development
All Executive Officers and
Directors as a Group (10 Persons) 3,520,377 11.0%
Barclays Global Investors, NA 1,538,394(3) 5.3%
45 Fremont Street
San Francisco, California 94105
Becker Capital Management 1,754,600(3) 6.1%
1211 SW Fifth Avenue, Suite 2185
Portland, Oregon 97204
Compression, Inc. 2,791,450(3) 9.6%
Two West Second Street
Tulsa, Oklahoma 74103
Dimensional Fund Advisors Inc. 2,041,125(3) 7.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Trust Company of the West 4,393,275(4) 13.2%
865 South Figueroa, Suite 1800
Los Angeles, California 90017
* Indicates less than one percent.
(1) Unless otherwise noted, the address of each beneficial owner is c/o
Comstock Resources, Inc., 5300 Town and Country Blvd. Suite 500,
Frisco, Texas 75034.
(2) Includes shares issuable pursuant to stock options which are presently
exercisable or exercisable within 60 days of April 16, 2003 in the
following amounts: Mr. Allison-1,900,000 shares; Mr. Burns-483,750
shares; Mr. Good-40,000 shares; Mr. Lockett -30,000 shares; Mr. Martin
-50,000 shares; Mr. Neukom-42,150 shares; Mr. Powers-126,500 shares;
Mr. Presley-71,500 shares Mr. Sledge-40,000 shares; Mr. Taylor-159,250
shares; and all executive officers and directors-2,943,150 shares.
(3) Based on Schedule 13-D or 13-G filings.
(4) Represents shares issuable upon conversion of shares of Series A 1999
Convertible Preferred Stock. Trust Company of the West or an affiliate
thereof acts as investment manager or in a similar capacity for
certain funds and institutions which hold the shares of preferred
stock.
3
PROPOSALS TO BE VOTED UPON
(1) Election of Directors
On the agenda for the annual meeting will be the election of two Class C
directors to serve a term of three years beginning at this annual meeting. The
nominees receiving the greatest number of votes cast will be elected. So, if you
do not vote for a particular nominee on your proxy card, your vote will not
count either "for" or "against" the nominee. A "broker-non-vote" will also have
no effect on the outcome since only a plurality of votes actually cast is
required to elect a director. Our board of directors presently consists of five
members comprised of three classes (Class A, B and C). Directors are elected in
classes to serve terms of three years. The Class C directors, whose terms expire
at the annual meeting, are Roland O. Burns and David K. Lockett. The Class B
directors, whose terms expire in 2005, are M. Jay Allison and David W. Sledge.
The Class A director, whose term expires in 2004, is Cecil E. Martin, Jr.
The board of directors has nominated Roland O. Burns and David K. Lockett
for re-election to the board of directors.
Nominees for Three-Year Terms
ROLAND O. BURNS, (43) Director, Senior Vice President, Chief Financial Officer,
Secretary and Treasurer
Mr. Burns has been one of our directors since 1999, and has been our Senior
Vice President since 1994, our Chief Financial Officer and Treasurer since 1990
and our Secretary since 1991. From 1982 to 1989, he was employed by the public
accounting firm, Arthur Andersen LLP. During his tenure with Arthur Andersen,
Mr. Burns worked primarily in the firm's oil and gas audit practice. Mr. Burns
received B.A. and M.A. degrees from the University of Mississippi in 1982 and is
a Certified Public Accountant.
DAVID K. LOCKETT, (48) Director
Mr. Lockett was appointed to our board of directors in 2001. Mr. Lockett is
currently a Vice President of Dell Computer Corp. and heads up Dell's Small and
Medium Business group. Mr. Lockett has been employed by Dell Computer Corp. for
the last ten years and has spent the past twenty-five years in the technology
industry. Mr. Lockett received a B.B.A. degree from Texas A&M University in
1976.
Directors Continuing in Office
M. JAY ALLISON, (47) President, Chief Executive Officer and Chairman of the
Board of Directors
Mr. Allison has been one of our directors since 1987, and our President and
Chief Executive Officer since 1988. Mr. Allison was elected Chairman of our
board of directors in 1997. From 1987 to 1988, Mr. Allison served as our Vice
President and Secretary. From 1981 to 1987, he was a practicing oil and gas
attorney with the firm of Lynch, Chappell & Alsup in Midland, Texas. In 1983,
Mr. Allison co-founded a private independent oil and gas company, Midwood
Petroleum, Inc., which was active in the acquisition and development of oil and
gas properties from 1983 to 1987. He received B.B.A., M.S. and J.D. degrees from
Baylor University in 1978, 1980 and 1981, respectively. Mr. Allison currently
serves on the Board of Regents for Baylor University.
CECIL E. MARTIN, JR., (61) Director
Mr. Martin has been one of our directors since 1988. Mr. Martin has been an
independent commercial real estate developer since 1991. From 1973 to 1991 he
served as Chairman of a public accounting firm in Richmond, Virginia. Mr. Martin
holds a B.B.A. degree from Old Dominion University and is a Certified Public
Accountant.
4
DAVID W. SLEDGE, (46) Director
Mr. Sledge was elected to our board of directors in 1996. Since 1996, he
has been investing in oil and gas exploration activities. Mr. Sledge served as
President of Gene Sledge Drilling Corporation, a privately held contract
drilling company based in Midland, Texas until its sale in October 1996. Mr.
Sledge served Gene Sledge Drilling Corporation in various capacities from 1979
to 1996. Mr. Sledge is a past director of the International Association of
Drilling Contractors and is a past chairman of the Permian Basin chapter of this
association. He received a B.B.A. degree from Baylor University in 1979.
There are no family relationships among any of our officers or directors.
The board of directors recommends that you vote for the re-election of
Messrs. Burns and Lockett.
2. Other Matters
Neither Comstock nor its directors intend to bring before the annual
meeting any matters other than the election of the two Class C directors.
KPMG LLP served as our independent public accountants for 2002. The audit
committee has not made a determination regarding the selection of our
independent public accountants for 2003 which can be submitted for approval by
our stockholders. A representative of KPMG is expected to attend the annual
meeting and have the opportunity to make a statement if he desires to do so and
be available to answer your questions.
OUR MEETINGS AND COMMITTEES
During 2002, our board of directors held six meetings and took action by
written consent five times. All of the directors attended all of their board and
committee meetings. The board of directors has four standing committees: the
executive committee, the audit committee, the nominating committee and the
compensation committee. The executive committee is empowered to take action when
the board of directors is unable to meet and is comprised of M. Jay Allison,
Roland O. Burns and Cecil E. Martin, Jr. The audit committee, compensation
committee and nominating committee are comprised entirely of the three outside
directors. If you desire to nominate a director, you should forward your
nomination to our Corporate Secretary.
The Audit Committee
The primary responsibility of the audit committee is to assist the board of
directors in overseeing management and the independent auditors in fulfilling
their responsibilities in the financial reporting process of Comstock. The audit
committee is composed of independent directors within the meaning of applicable
New York Stock Exchange rules, as amended, and operates under a written charter
adopted and approved by the board of directors on May 16, 2000, which was
attached to our 2001 proxy statement as Exhibit B. During the fiscal year 2002,
the audit committee held five meetings and was composed of Cecil E. Martin, Jr.,
as chairman, David K. Lockett and David W. Sledge.
Our audit committee annually considers and recommends to our board of
directors the selection of our independent public accountants. As recommended by
the audit committee, on April 22, 2002, the board of directors decided to no
longer engage Arthur Andersen LLP as our independent public accountants and
engaged KPMG LLP to serve as our independent public accountants for 2002. Arthur
Andersen LLP's reports on our consolidated financial statements for 2000 and
2001 did not contain an adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During fiscal years 2001 and 2002 and through the date of their appointment,
there were no disagreements with Arthur Andersen LLP on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to Arthur Andersen LLP's satisfaction,
would have caused them to make reference to the subject matter in connection
with their report on our consolidated financial statements for such years; and
5
there were no reportable events, as listed in Item 304 (a) (l) (v) of Regulation
S-K. During fiscal years 2001 and 2002 and through April 22, 2002, we did not
consult KPMG LLP with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on our consolidated financial statements, or any
other matters or reportable events listed in Items 304 (a) (2) (i) and (ii) of
Regulation S-K.
Report of the Audit Committee
The audit committee has reviewed and discussed with our management our
audited financial statements as of and for the fiscal year ended December 31,
2002. The audit committee has also discussed with our independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended. The audit committee has
received the written disclosures and the letter from our independent auditors
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as amended, and has discussed with the
independent auditors that firm's independence.
Based on the review and discussions referred to in the above paragraph, the
audit committee recommended to the board of directors that the audited financial
statements be included in our Annual Report on Form 10-K for the year ended
December 31, 2002 for filing with the Securities and Exchange Commission.
The audit committee has reviewed the relationship between Comstock and KPMG
in 2002. The aggregate fees billed for professional services rendered by KPMG in
2002, including fees for KPMG's reaudit of the 2000 and 2001 financial
statements previously audited by Arthur Andersen LLP, are as follows:
Financial Information Systems
Audit Fees Design and Implementation Fees All Other Fees(1)
---------------- ------------------------------ -----------------
$281,434 $ - $22,175
_________
(1) Services provided include income tax return preparation and
registration statement review.
The audit committee has determined that the services rendered by KPMG are
compatible with maintaining KPMG's independence.
The Audit Committee
Cecil E. Martin, Jr., Chairman
David K. Lockett
David W. Sledge
Compensation Committee
The duties of the compensation committee are generally:
o To recommend to the board of directors the remuneration arrangements
for executive officers and directors;
o To recommend to the board of directors compensation plans in which
officers or directors are eligible to participate; and
o To grant awards under our 1999 Long-term Incentive Plan.
See page 10 for the Compensation Committee Report on Executive
Compensation.
During the fiscal year 2002, the compensation committee held two meetings
and was composed of Mr. Sledge, as chairman, and Messrs. Lockett and Martin.
6
Nominating Committee
The primary duties of the nominating committee are to assist the board of
directors in identifying and evaluating candidates for members on our board of
directors and to nominate candidates for election to our board of directors.
During 2002, the nominating committee consisted of Mr. Lockett as chairman, and
Messrs. Martin and Sledge. The nominating committee will consider nominees
recommended by our stockholders. Any stockholder wishing to nominate a candidate
for director should send a cover letter providing the address, phone number and
resume of the nominee to our principal executive offices, to the attention of
the nominating committee.
Corporate Governance Matters
In response to certain corporate scandals, Congress passed the
Sarbanes-Oxley Act of 2002 late last year which addressed a broad spectrum of
issues dealing with corporate governance matters. The SEC and the New York Stock
Exchange have also enacted proposed, and in some cases, final, rules which
implement the provisions of the Sarbanes-Oxley Act and also enact certain other
new corporate governance regulations. We are continually monitoring these rules
and developments and intend to take such actions and adjust our corporate
governance structure to the extent needed in order to fully comply with all
laws, as well as SEC and NYSE rules when they become applicable to us.
Director Compensation
In 2002, our non-employee directors received directors' fees of $30,000 per
year, plus an additional $5,000 for committee chairman. Beginning on January 1,
2003, the directors' retainer was increased to $40,000. In addition, the
chairmen of committees receive an additional retainer as follows: audit -
$25,000, compensation - $10,000 and nominating - $5,000. Certain of our
directors elected to receive shares of our common stock for payment of their
directors fees in 2002. Each director also receives an option to purchase 20,000
shares of common stock when the director is initially elected or appointed to
the board of directors and receives an option grant each year at the annual
meeting to purchase an additional 10,000 shares of common stock. In addition, we
reimburse our directors for expenses, including travel, they incur in connection
with attending board or committee meetings. We also paid Cecil E. Martin, Jr.
$35,000 in 2002 for additional services provided to us under a consulting
agreement. This agreement was terminated effective December 31, 2002.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our executive
officers, directors and persons who own more than 10% of our common stock to
file reports with the Securities and Exchange Commission and to provide copies
to us of ownership. The Securities Exchange Commission regulations require us to
identify anyone who filed a required report late during the most recent fiscal
year. Based upon a review of these records and amendments thereto, all of these
filing requirements for 2002 were timely met.
7
EXECUTIVE COMPENSATION
This section provides summary information regarding the compensation of M.
Jay Allison, our Chairman of the Board of Directors, President and Chief
Executive Officer, and our four most highly compensated officers other than Mr.
Allison: Roland O. Burns, our Senior Vice President, Chief Financial Officer,
Secretary and Treasurer; Mack D. Good, our Vice President of Operations; Richard
G. Powers, our Vice President of Land; and Michael W. Taylor, our Vice President
of Corporate Development.
Messrs. Allison, Burns, Good, Powers and Taylor had their salaries reviewed
and established in 2002 for 2003. This is consistent with our compensation
principles for executive officers which is described in more detail in the
Compensation Committee's Report on Executive Compensation on page 11. In 2003,
Messrs. Allison, Burns, Good, Powers and Taylor received cash bonuses for their
performance in 2002. In 2002, the Company awarded 234,250 options to purchase
common stock to these executive officers and awarded restricted stock grants to
Messrs. Allison and Burns for a total of 56,250 shares. The executive officers
receive medical, group life insurance and other benefits including matching
contributions under our 401(k) plan that are available generally to all of our
salaried employees.
The following table sets forth certain information regarding compensation
earned during each of our last three fiscal years by Mr. Allison, our Chief
Executive Officer, and our four other highest paid executive officers (these
persons are referred to as our "named executive officers").
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-----------------------
Restricted Stock
Annual Compensation ($) All Other Stock Option
---------------------------------
Name and Principal Position Year Salary Bonus Other (1)(2) Compensation (3) Awards ($) (4)Awards (#)
----------------------------- ----- -------- -------- ------------ --------------- ------------ ---------
M. Jay Allison, 2002 $324,000 $981,750 $21,707 $60,700 $414,000 135,000
President and Chief 2001 300,000 890,000 38,799 56,500 288,900 260,000
Executive Officer 2000 270,000 830,000 38,707 - 399,375 135,000
Roland O. Burns, 2002 $190,000 $399,000 $10,685 $26,000 $103,500 33,750
Senior Vice President and 2001 172,500 330,000 15,805 23,125 72,225 66,250
Chief Financial Officer 2000 155,000 290,000 15,147 - 99,844 33,750
Mack D. Good, 2002 $150,000 $157,500 $6,000 $14,250 - 25,000
Vice President of Operations 2001 130,000 135,000 6,000 12,750 - 25,000
2000 115,000 125,000 4,938 - - 25,000
Richard G. Powers, 2002 $143,000 $126,000 $6,000 $12,150 - 18,000
Vice President of Land 2001 131,000 100,000 6,000 11,050 - 28,000
2000 120,500 90,000 5,045 - - 18,000
Michael W. Taylor, 2002 $155,000 $147,000 $6,000 $14,500 - 22,500
Vice President of 2001 140,000 135,000 6,000 13,250 - 22,500
Corporate Development 2000 132,500 125,000 5,100 - - 22,500
(1) The value of all perquisites provided to each executive officer by us did
not exceed the lesser of $50,000 or 10% of such officer's salary and bonus
for the year.
(2) Other compensation includes matching contributions under our 401(k) profit
sharing plan and the present value of interest free loans of the amounts
paid by us for premiums under split-dollar life insurance arrangements for
Mr. Allison of $15,707, $32,799, and $ 33,607 in 2002, 2001 and 2000,
respectively, and for Mr. Burns of $4,685, $9,805 and $10,047 in 2002, 2001
and 2000, respectively. Our split dollar insurance program is designed for
us to recover our aggregate premium cost.
(3) This amount represents life insurance policy premiums paid by us for the
benefit of our executive officers pursuant to our Executive Life Insurance
Plan. Participants in this plan will receive an interest in any cash
surrender value under the insurance policy and may receive the full dollar
value of the remainder of the premiums paid by us.
(4) Restricted stock grants for 45,000 shares were made in each year to Mr.
Allison and restricted stock grants for 11,250 shares were made in each
year to Mr. Burns. Such grants vest four years after the award date.
8
The following table sets forth certain information regarding stock options
granted during 2002 to our named executive officers.
OPTION GRANTS
Potential Realizable
Value
At Assumed Annual
Number of Percent of Rates of Stock Price
Securities Total Options Appreciation for
Underlying Granted to Exercise or Option Term
Options Employees in Base Price Expiration ------------------------
Name Granted Fiscal Year Per Share Date 5% 10%
---------------- ---------- ----------- ---------- ---------- --------- -----------
M. Jay Allison 135,000 49% $9.20 01-01-09 $422,399 $958,279
Roland O. Burns 33,750 12% $9.20 01-01-09 105,600 239,570
Mack D. Good 25,000 9% $9.20 01-01-09 78,222 177,459
Richard G. Powers 18,000 7% $9.20 01-01-09 56,320 127,771
Michael W. Taylor 22,500 8% $9.20 01-01-09 70,400 159,713
The following table sets forth certain information with respect to the
value of our named executive officers' option exercises in 2002 and unexercised
options at December 31, 2002.
OPTION EXERCISES/OPTIONS HELD AT YEAR END
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at Fiscal Year End at Fiscal Year End(1)
Acquired on Value --------------------------- ----------------------------
Name Exercise Received Exercisable Unexercisable Exercisable Unexercisable
--------------- ----------- ---------- ----------- -------------- ----------- ------------
M. Jay Allison 160,000 $813,105 1,970,000 540,000 $3,887,575 $1,186,650
Roland O. Burns 50,000 254,140 483,750 135,000 916,956 296,663
Mack D. Good 6,000 31,604 40,000 89,500 216,600 162,893
Richard G. Powers 9,500 49,953 126,500 72,000 335,741 158,220
Michael W. Taylor 34,125 173,860 159,250 90,000 131,314 197,775
________________
(1) The last sale price for a share of Common Stock as reported by the New York
Stock Exchange on December 31, 2002 was $9.29 and the exercise prices of
the options in this table ranged from $3.44 to $12.38 per share.
Employment Agreements
Effective June 1, 2002, we entered into employment agreements with M. Jay
Allison, our President and Chief Executive Officer, and Roland O. Burns, our
Senior Vice President, Chief Financial Officer, Secretary and Treasurer. Under
the agreements, we have agreed to employ each of Messrs. Allison and Burns for a
term of three years. As of each anniversary of the agreements, the agreements
will automatically be extended for an additional year, so that the remaining
term of the agreements will be three years as of each June 1. The agreements
provide that the base salary for Messrs. Allison and Burns will be no less than
$345,000 and $202,000, respectively. Each of the agreements provides for the
payment of severance benefits if the employee is terminated without cause, in an
amount equal to 150% of his salary and bonus for the fiscal year, plus continued
medical benefits for 18 months. If there is a change of control of Comstock and
the executive terminates employment within six months thereafter (or is
terminated by Comstock without cause at any time thereafter), the severance
benefit payable to the employee is 300% of his salary and highest annual bonus.
9
Supplemental Executive Retirement Plan.
During 2001, we adopted a supplemental retirement plan called the Executive
Life Insurance Plan. The purpose of the Plan is to provide supplemental
retirement benefits to all of our executive officers. Under this plan, we
contribute five percent (5%) of each participant's annual compensation to
purchase a variable universal life insurance policy. During employment, the
participants may designate a beneficiary to receive payment of the death benefit
(reduced by the amount of the premiums paid by us, which are repaid to us), but
have no rights of ownership in the policy. Upon a participant's retirement on or
after January 1, 2006, or upon a change of control of Comstock, the policy will
be transferred to the participant.
Compensation Committee Report on Executive Compensation
The compensation committee of the board of directors has oversight over our
executive compensation program and approves the base salaries and incentive
bonuses of our executive officers. The compensation committee is also
responsible for oversight of the administration of the 1999 Long-term Incentive
Plan. In 2002, the compensation committee was composed of David W. Sledge, as
chairman, David K. Lockett and Cecil E. Martin, Jr.
Executive Compensation - Philosophy and Program Components
Our philosophy is to provide a comprehensive compensation program to
attract, retain and reward key members of management who contribute to our
success and to motivate the management team in the development and execution of
current and long-term business strategies and goals. The three primary
components of our executive compensation are: base salary, cash bonuses and
stock-based incentives. Stock options and restricted stock grants are made
available to key employees under the 1999 Long-term Incentive Plan. Executives
also participate in certain benefit plans available to all salaried employees.
We believe that a significant portion of our executive officers' compensation
should be linked to our stock's performance and, in keeping with that objective,
a substantial portion of the compensation package is comprised of stock options
and restricted stock grants. Comstock's strategic and operating financial
results in 2002 exceeded the board of directors' goals for the year. In view of
these results the compensation committee believes the compensation paid to our
executive officers in 2002 was appropriate.
Base Salary
In 2002, base salaries for executive officers were based upon the
individual's responsibilities, experience and expected performance, taking into
account among other things, the individual's initiative, contributions to
Comstock's overall performance, managerial ability and handling of special
projects. These same factors are applied by the President, with the assistance
of the executive officers, to establish base salaries for other key management
employees. Base salaries for executive officers generally are reviewed annually
for possible adjustment, but are not necessarily changed that often. The
compensation committee also uses industry comparisons to ensure that the base
salaries for the executive officers remain competitive in keeping with the
objective of retaining key members of management.
Bonuses
In 2002, the compensation committee approved cash bonuses for key employees
based on Comstock's performance during 2002. The compensation committee reviewed
the 2002 bonus awards to the employees that were recommended by our President
and approved them without change.
10
Incentive Plan
In June 1999, Comstock adopted the 1999 Long-term Incentive Plan which was
approved by our stockholders. The purpose of the 1999 Long-term Incentive Plan
is to provide financial incentives to our key employees to promote our long-term
growth and financial success by:
o attracting and retaining key executive and managerial employees;
o motivating participating employees, by means of appropriate
incentives, to achieve long-range goals;
o attracting and retaining well-qualified individuals to serve as
members of our board of directors;
o providing incentive compensation opportunities which are competitive
with those of other public corporations; and
o further identifying the participants' interests with those of our
other stockholders through compensation alternatives based on our
common stock.
The compensation committee administers the 1999 Long-term Incentive Plan
and makes grants under this plan. Awards under the 1999 Long-term Incentive Plan
can consist of incentive stock options and non-qualified stock options as well
as restricted stock grants.
The compensation committee granted non-qualified stock options covering
273,750 shares to employees in 2002, including executive officers, under the
1999 Long-term Incentive Plan. As provided in the 1999 Long- term Incentive
Plan, options covering 30,000 shares were granted to non-employee directors.
Recipients exercised options covering a total of 313,875 shares in 2002. The
compensation committee also made grants of restricted common stock in 2002 for
56,250 shares. Such shares will not vest until July 1, 2007.
Other Compensation
At various times in the past, we have adopted certain broad-based employee
benefit plans in which the senior executive officers and other key management
employees have been permitted to participate, including the employees' 401(k)
profit-sharing plan and the life, disability, and health insurance benefit plans
available to all salaried employees. Other than with respect to common stock
held as an investment option under the 401(k) profit-sharing plan, benefits
under these plans are not directly or indirectly tied to our performance.
Chief Executive Officer Compensation
For his performance in 2002, a cash bonus was paid to Mr. Allison. As with
all executive officers, Mr. Allison's bonus compensation is linked to individual
performance and our corporate performance. Mr. Allison was also awarded options
to purchase 135,000 shares at the then current market price and restricted stock
grants for 45,000 shares.
$1 Million Deduction Limit
Section 162(m) of the Internal Revenue Code of 1986, as amended generally
limits the corporate income tax deduction for compensation paid to each
executive officer shown in the summary compensation table in the proxy statement
of a public company to $1 million, unless the compensation is "performance-based
compensation" and qualifies under certain other exceptions. Our policy is
primarily to design and administer compensation plans which support the
achievement of long-term strategic objectives and enhance shareholder value.
Where it is consistent with the compensation philosophy, the compensation
committee will also attempt to structure compensation programs that are
tax-advantageous to us. At the annual meeting in 2001, the shareholders approved
an amendment to the 1999 Long-term Incentive Plan that permits us to award stock
options that may qualify as "performance based compensation".
The Compensation Committee
David W. Sledge, Chairman
David K. Lockett
Cecil E. Martin, Jr.
11
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on our common stock during the five years ended
December 31, 2002 with the cumulative return on the New York Stock Exchange
Index and an index composed of all publicly traded oil and gas companies within
SIC Code 1311, consisting of 188 companies. The graph assumes that $100 was
invested in each category on the last trading day of 1997 and that dividends, if
any, were reinvested.
Stock Performance Graph
[GRAPHIC OMITTED]
Value of $100 Investment:
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Comstock $ 26 $ 24 $124 $ 59 $ 78
Public Oil & Gas Producers 80 98 124 114 122
New York Stock Exchange 119 130 133 122 99
By Order of the Board of Directors,
/s/ ROLAND O. BURNS
Roland O. Burns
Secretary
Frisco, Texas
April 22, 2003
12
COMSTOCK RESOURCES, INC.
ANNUAL MEETING OF STOCKHOLDERS
May 19, 2003
10:00 a.m.
at the Westin Stonebriar Resort
[GRAPHIC OMITTED]
Directions to the
Westin Stonebriar Resort
1549 Legacy Drive
Frisco, Texas 75034
FORM OF PROXY
x PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE
1. Election of two (2) Class C Directors (term expires in 2006)
NOMINEES:
____ FOR ALL NOMINEES __ Roland O. Burns
____ WITHHOLD AUTHORITY FOR ALL NOMINEES __ David K. Lockett
____ FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: X
2. In their discretion on such other matters which may properly come before this
meeting. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDER SIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR BOTH NOMINEES IN PROPOSAL 1.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.
SIGNATURE(S) DATE:
--------------------------------- -------------
NOTE: Please sign exactly as your name appears on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer is
a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
COMSTOCK RESOURCES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - MAY 19, 2003
The undersigned hereby appoints M. Jay Allison and Roland O. Burns, and each of
them with full power of substitution, attorneys, agents and proxies of the
undersigned to vote as directed on the reverse the shares of stock which the
undersigned would be entitled to vote, if personally present, at the Annual
Meeting of Stockholders of Comstock Resources, Inc. to be held Monday, May 19,
2003 at 10:00 a.m. and any adjournment or adjournments thereof. The undersigned
hereby revokes any proxy or proxies heretofore given to vote upon or act with
respect to such shares of stock and hereby ratifies and confirms all that said
attorneys, their substitutes, or any of them, may lawfully do by virtue hereof.
(To be Signed on Reverse Side.)