SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
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Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
THE MERIDIAN RESOURCE CORPORATION
(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
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1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
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): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
[ ] 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: N/A
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4) Date Filed: N/A
THE MERIDIAN RESOURCE CORPORATION
1401 ENCLAVE PARKWAY, SUITE 300
HOUSTON, TEXAS 77077
NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of the Meridian Resource Corporation:
The 2003 Annual Meeting of Shareholders of The Meridian Resource
Corporation (the "Company") will be held on July 2, 2003, at 10:00 a.m. Houston
time, at The West Lake Club, 510 West Lake Park Boulevard, Houston, Texas, for
the following purposes:
1. To elect two persons to serve as Class I Directors on the Company's
Board of Directors, to hold office until the 2006 Annual Meeting of
Shareholders or until such person's successor shall be duly elected and
qualified.
2. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on May 22, 2003, as
the record date for determination of shareholders who are entitled to notice of
and to vote either in person or by proxy at the 2003 Annual Meeting of
Shareholders and any adjournment thereof.
All shareholders are cordially invited to attend the meeting in person.
Even if you plan to attend the meeting, YOU ARE REQUESTED TO SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY AS SOON AS POSSIBLE.
Each shareholder of the Company has previously received a copy of the
Company's 2002 Annual Report to Shareholders (the "Annual Report") or is
receiving a copy of the Annual Report with this Proxy Statement. If a
shareholder did not receive a copy of the Annual Report, such shareholder should
contact Lloyd V. DeLano at the Company at (281) 597-7000 and the Company will
send a copy of the Annual Report to such shareholder free of charge.
By Order of the Board of Directors
JOSEPH A. REEVES, JR.
Chairman of the Board and
Chief Executive Officer
May 29, 2003
THE MERIDIAN RESOURCE CORPORATION
1401 ENCLAVE PARKWAY, SUITE 300
HOUSTON, TEXAS 77077
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by order of the Board of Directors
of The Meridian Resource Corporation (the "Company") to be voted at the 2003
Annual Meeting of Shareholders (the "Meeting"), to be held at the time and place
and for the purposes set forth in the accompanying notice. Such notice, this
Proxy Statement and the form of Proxy are being mailed to shareholders on or
about June 2, 2003.
The Company will bear the costs of soliciting proxies in the accompanying
form. In addition to the solicitation made hereby, proxies also may be solicited
by telephone, telegram or personal interview by officers and regular employees
of the Company. The Company will reimburse brokers or other persons holding
stock in their names or in the names of their nominees for their reasonable
expenses in forwarding proxy material to beneficial owners of stock.
All duly executed proxies received prior to the Meeting will be voted in
accordance with the choices specified thereon, unless revoked in the manner
provided hereinafter. As to any matter for which no choice has been specified in
a proxy, the shares represented thereby will be voted by the persons named in
the proxy (i) "for" the election as director of the nominees listed herein and
(ii) in the discretion of such persons, in connection with any other business
that may properly come before the Meeting. A shareholder of the Company who has
executed and returned a proxy may revoke it at any time prior to the exercise
thereof by written notice to the Secretary of the Company at the above address
of the Company or by the execution and delivery of a later dated proxy, or by
attendance at the Meeting and voting their shares in person.
As of the close of business on April 25, 2003, the Company had outstanding
and entitled to vote 50,150,260 shares of Common Stock, $.01 par value ("Common
Stock"). The outstanding shares of Common Stock are the only shares of capital
stock of the Company entitled to vote at the Meeting. Each share of Common Stock
is entitled to one vote with respect to each matter to be acted on at the
Meeting.
The holders of a majority of the outstanding shares of Common Stock as of
the record date, whether represented in person or by proxy, will constitute a
quorum for the transaction of business at the Meeting as to any matter for which
all of the Common Stock is entitled to vote. Under Texas law, any unvoted
position in a brokerage account with respect to any matter will be considered as
not voted and will not be counted toward fulfillment of quorum requirements as
to that matter.
PROPOSAL ONE --
ELECTION OF CLASS I DIRECTORS
Two directors will be elected by the holders of the Common Stock at the
Meeting to serve as the Class I Directors of the Company's Board of Directors
until the 2006 Annual Meeting of Shareholders or until such person's successor
shall be duly elected. The Board of Directors recommends the election of James
T. Bond and Jack A. Prizzi as the Class I Directors. Messrs. Bond and Prizzi are
each currently directors of the Company. Unless contrary instructions are set
forth in the proxies, it is intended that each person executing a proxy will
vote all shares represented by such proxy for the election as director of both
Mr. Bond and Mr. Prizzi. Should either of Messrs. Bond or Prizzi become unable
or unwilling to accept nomination or election, it is intended that the person
acting under the proxy will vote for the election of such other person as
the Board of Directors of the Company may recommend. Management has no reason to
believe that either Mr. Bond or Mr. Prizzi will be unable or unwilling to serve
if elected.
There are currently two Class I directorships up for election. With respect
to this election, proxies cannot be voted for other than such directorships. A
nominee for director receiving a plurality of votes cast at the Meeting and
entitled to be cast for such nominee will be elected as director. Abstentions
and broker non-votes will not be treated as a vote for or against a particular
director and will not affect the outcome of the election of directors.
DIRECTORS
The Company's Bylaws provide that the Board of Directors shall be
classified into three classes: Class I Directors, Class II Directors and Class
III Directors. Each class serves for a term of three years or until a director's
successor is duly elected and qualified.
Set forth below is certain information concerning the current directors of
the Company, including the nominees for election as Class I Directors, with each
person's business experience for at least the past five years.
DIRECTOR EXPIRATION OF
NAME AGE PRESENT POSITIONS WITH THE COMPANY SINCE PRESENT TERM
---- --- ---------------------------------- -------- -------------
James T. Bond............... 78 Class I Director 1997 2003
Jack A. Prizzi.............. 68 Class I Director 1993 2003
E. L. Henry................. 67 Class II Director 1998 2004
Joe E. Kares................ 59 Class II Director 1990 2004
Gary A. Messersmith......... 54 Class II Director 1997 2004
Michael J. Mayell........... 55 Class III and President 1990 2005
Joseph A. Reeves, Jr. ...... 56 Class III Director, Chairman of 1990 2005
the Board and Chief Executive
Officer
James T. Bond is President of JTB Exploration and was formerly General
Manager of H.L. Hawkins, Jr. Oil and Gas located in Houston and New Orleans,
Louisiana. He has been associated with such company for over fifty years.
Jack A. Prizzi has served as Managing Director of Jack A. Prizzi and Co.,
an investment and financial advisory firm in New York, New York, since December
1988.
E. L. Henry has been a partner with the law firm of Adams and Reese L.L.P.
in Baton Rouge, Louisiana since 1987. Mr. Henry was formerly Commissioner of the
Division of Administration for the State of Louisiana from 1980 through 1984, a
member of the Louisiana House of Representatives from 1968 through 1980 and
Speaker of the Louisiana House of Representatives from 1972 through 1980.
Joe E. Kares has been a partner with the public accounting firm of Kares &
Cihlar in Houston, Texas since 1980.
Gary A. Messersmith has been a partner with the law firm of Looper, Reed &
McGraw, a Professional Corporation, in Houston, Texas since 2001, and from 1982
to 2001 was a partner with the law firm of Fouts & Moore, L.L.P. in Houston,
Texas.
Michael J. Mayell is President of the Company. Prior to assuming such
position with the Company, Mr. Mayell held a similar position with Texas
Meridian Resources, Ltd. from 1988 to 1990.
Joseph A. Reeves, Jr. is Chairman of the Board and Chief Executive Officer
of the Company. Prior to assuming his positions with the Company, Mr. Reeves
held similar positions with the Company's predecessor, Texas Meridian Resources,
Ltd., from 1988 until 1990.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings during the year ended December
31, 2002. In 2002, each director attended at least 80% of the total combined
number of meetings held by the Board of Directors and by the committees on which
each director served.
The Board of Directors has an Executive Committee, an Audit Committee, an
Executive Compensation Committee, a Directors' Stock Plan Administration
Committee and an Employee Compensation Committee. The Company does not have a
nominating or other similar committee.
The Executive Committee is currently comprised of Messrs. Reeves and Mayell
and is responsible for assisting with the general management of the business and
affairs of the Company during intervals between meetings of the Board of
Directors. Twelve meetings of the Executive Committee were held in 2002.
The Audit Committee is currently comprised of Messrs. Kares, Henry and
Prizzi and is charged with the duties of recommending the appointment of the
independent certified public accountants, reviewing their fees, ensuring that
proper guidelines are established for the dissemination of financial
information, meeting periodically with the independent auditors, the Board of
Directors and certain officers of the Company and its subsidiaries to ensure the
adequacy of internal controls and reporting, reviewing consolidated financial
statements and performing any other duties or functions deemed appropriate by
the Board of Directors. All members of the Audit Committee are non-employee
directors. The Board of Directors has determined that each member of the Audit
Committee is "independent", as such term is defined in sections 303.01(B)(2)(a)
and (3) of the New York Stock Exchange listing standards. Four Audit Committee
meetings were held in 2002. The Audit Committee is governed by a written charter
approved by the Board of Directors. A copy of this charter is included in
Appendix A to the Company's 2001 proxy statement.
The Executive Compensation Committee is currently comprised of Messrs.
Kares, Messersmith and Prizzi, all of whom are non-employee directors of the
Company. The Executive Compensation Committee is generally responsible for
determining the cash compensation to be paid to each of Messrs. Reeves and
Mayell; however, during 2001 and 2002, compensation decisions with respect to
Messrs. Reeves and Mayell were made by the full Board of Directors with Messrs.
Reeves and Mayell abstaining.
The Directors' Stock Plan Administration Committee is currently comprised
of Messrs. Reeves and Mayell and is responsible for administering the Company's
Non-Employee Director Stock Option Plan. One Directors' Stock Plan
Administration Committee meeting was held in 2002.
The Employee Compensation Committee is currently comprised of Messrs.
Reeves and Mayell. The Employee Compensation Committee sets the salaries of all
employees, including the elected officers and other senior executives, and
grants bonuses to such elected officers and other senior executives. The
salaries of the members of the Employee Compensation Committee are set by the
Executive Compensation Committee or the full Board of Directors. Two Employee
Compensation Committee meetings were held in 2002.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company receive an annual retainer, payable
in quarterly installments, of $20,000. Non-employee directors also are
reimbursed for expenses incurred in attending Board of Directors and committee
meetings, including those for travel, food and lodging. Directors and members of
committees of the Board of Directors who are employees of the Company or its
affiliates are not compensated for their Board of Directors and committee
activities.
The Company has a Non-Employee Director Stock Option Plan (the "Director
Stock Option Plan") pursuant to which options to purchase up to 570,000 shares
of Common Stock may be granted. Under the Director Stock Option Plan, each
non-employee director is granted, on the date of his appointment, election,
reappointment or re-election as a member of the Board of Directors, an option
("Director Option") to purchase 15,000 shares of Common Stock at an exercise
price per share equal to the fair market value of a share of Common Stock on the
date of grant. The duration of each Director Option is five years from the date
of grant, and each Director Option may be exercised in whole or in part at any
time after the date of grant;
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provided, however, that the option vests with respect to 25% of the shares of
Common Stock covered by such Director Option one year after the date of grant,
with respect to an additional 25% of such shares of Common Stock two years after
the date of grant, and with respect to the remaining shares of Common Stock
three years after the date of grant. There are currently outstanding options to
acquire 193,000 shares under the Director Stock Option Plan with a weighted
average exercise price of $4.45 per share. There are currently 310,000
additional shares available for grant under the Director Stock Option Plan.
REPORT ON EXECUTIVE COMPENSATION
GENERAL POLICY
The Company's executive compensation program is designed to attract,
motivate and retain talented management personnel and to reward management for
successfully performing their duties and improving shareholder value.
Compensation and incentives are provided through the combination of cash
salaries and bonuses, stock option and other stock-based awards, and grants of
net profit interests in the Company's drilling prospects. The Company's overall
compensation package is intended to provide the Company's executive officers
with above average compensation for above average results and performance, with
an emphasis on compensation that rewards the executive for actions that have
demonstrably benefited the long-term interests of the Company. Decisions with
respect to compensation for any particular executive officer or employee are
based on a number of subjective factors, including the individual's performance
and contribution to the future growth of the Company, the financial and
operational results of the Company and industry and market conditions and the
need to insure the continued employment of individuals that the Board of
Directors believes are key to the long-term prospects of the Company.
Decisions with respect to the cash compensation of the Company's executive
officers were made in a bifurcated manner during 2002. The Employee Compensation
Committee of the Board of Directors, which is comprised of Messrs. Reeves and
Mayell set the salaries of all employees (except for themselves), including
elected officers and other senior executives, and granted cash bonuses to such
elected officers and other senior executives. Cash compensation decisions with
respect to Messrs. Reeves and Mayell were approved by the Board of Directors,
with Messrs. Reeves and Mayell abstaining. Decisions with respect to the
granting of stock-based awards and the payment of other non-cash compensation
for all of the Company's executive officers, including Messrs. Reeves and
Mayell, were made by the full Board of Directors, with each of Messrs. Reeves
and Mayell abstaining with respect to matters pertaining to either one of them.
The components of the Company's executive compensation program are more
specifically summarized below.
BASE SALARY
The base salaries of the Company's employees are determined based on their
positions with the Company, their talents and experience and competitive market
factors, including the desire by the Company to attract and retain executives
with expertise and proven success in 3-D seismic exploration. Generally, base
salaries are received in cash, however, the Company adopted a deferred
compensation program in 1996 that allows the Company's Chief Executive Officer,
President and other officers to receive payment of their salaries in deferred
stock rights in lieu of cash compensation. The purpose of this deferred
compensation program is to preserve company liquidity and further align the
executive officers' interests with those of the Company's shareholders. Stock
cannot be issued under such deferred compensation arrangements until the death,
retirement or termination of the executive officer, and until such issuance, the
value of such stock rights are subject to the general credit of the Company and
changes in market value for the Company's Common Stock.
In reviewing the base salaries of the Company's executive officers, the
Company considers data from published reports regarding compensation of
executive officers from a cross section of other energy companies, which may or
may not include companies represented in the peer group used in completing the
Company's performance graph. These reports are used as a check on the general
competitiveness of the Company's salaries and not as a means to mathematically
establish salaries within specified percentiles of salary ranges.
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BONUS COMPENSATION
Bonus compensation is provided to the Company's executive officers and
other employees from time to time based on their employment agreements, if any,
the financial results of the Company and various subjective factors, including
the executive's or employee's contribution to the Company's success in finding
reserves and acquiring prospects, identifying and obtaining sources of capital
for the Company and increasing shareholder value. A Christmas bonus of up to one
month's base salary was awarded and paid during 2000, 2001 and 2002 to the
Company's employees.
NET PROFIT INTERESTS
The Company believes that the granting of participation interests in the
Company's prospects to its employees promotes in them a proprietary interest in
the Company's exploration efforts that benefits the Company and its
shareholders. To achieve this objective, the Company grants an interest (either
in the form of a bonus or real property right, depending on the level of the
employee) in the net profits received from all wells drilled to all of its
employees, including its executive officers. Each employee's level of
participation in these well bonus plans is based on various factors, including
the employee's tenure, salary level, job classification and contribution to the
Company's long-term prospects.
LONG-TERM INCENTIVE COMPENSATION
The Board of Directors believes that long-term incentive compensation is an
important component of the Company's compensation program and that the value of
long-term incentive compensation should be directly related to increases in
shareholder value. Thus, as part of total compensation, the Company provides
long-term incentive compensation to its executive officers through stock options
under the Company's stock option plans.
Under the Company's existing stock option plans (collectively, the
"Incentive Plans"), the Board of Directors has the authority to grant to the
Company's executive officers and key employees options to purchase shares of
Common Stock for terms of up to ten years, with vesting conditions established
by the Board of Directors, and other forms of stock-based compensation including
restricted stock. Awards under the Incentive Plans are intended to provide
incentives to the participants to increase shareholder value by providing
benefits that are directly related to the market value of the Common Stock. The
Board of Directors believes that stock-based compensation provides a desirable
form of incentive to the Company's executive officers in that stock-based
compensation received by an executive officer generally will be of no value to
the officer unless the value of the Common Stock increases.
If a stock option or other stock-based award is granted to an executive
officer, the number of shares of Common Stock subject to the granted option or
award will be based on, among other things, the level of responsibility of the
executive officer and the anticipated contribution of the officer to the future
growth of the Company. The Board of Directors also considers the amount and
terms of the options and other stock-based benefits held by the executive
officers.
DISCUSSION OF COMPENSATION OF THE CHIEF EXECUTIVE OFFICER AND PRESIDENT
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During 2002, Messrs. Reeves' and Mayell's salaries and bonuses were paid in
accordance with their employment agreements except that each received an
additional $100,000 bonus in recognition for their efforts in raising additional
capital during 2002. The Board of Directors believes that the granting of these
stock options and the approval of these bonus payments further aligns Messrs.
Reeves and Mayell's interests with those of the Company and further insures
their continued employment with the Company and rewards them for their efforts
that were instrumental to the future prospects of the Company.
TAX MATTERS
Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as
amended, currently imposes a $1 million limitation on the deductibility of
certain compensation paid to the Company's five highest paid executive officers.
Excluded from the limitation is compensation that is "performance based".
Excluded compensation must meet certain criteria, including being based upon
predetermined objective standards approved by the Company's shareholders. Awards
under the Incentive Plans as well as bonus and salary compensation awarded to
the Company's executive officers do not currently satisfy the requirements of
Section 162(m); however, since the Company currently does not expect to be
paying federal income taxes in the near future, the Board of Directors and
Executive Compensation Committee do not believe that such non-deductibility will
have a material effect on the Company. The Board of Directors intend to take
into account the potential application of Section 162(m) with respect to
incentive compensation awards and other compensation decisions made by them in
the future.
Joseph A. Reeves, Jr. Michael J. Mayell
James T. Bond E. L. Henry
Joe E. Kares Gary A. Messersmith
Jack A. Prizzi
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As discussed above, certain components of the compensation of the executive
officers of the Company, other than Messrs. Reeves and Mayell, are determined by
the Employee Compensation Committee of the Board of Directors of the Company,
which is comprised of Messrs. Reeves and Mayell. Stock-based and other non-cash
compensation decisions with respect to the Company's executive officers are made
by the full Board of Directors, with each of Messrs. Reeves and Mayell
abstaining with respect to matters pertaining to either one of them. For a
discussion of certain transactions between the Company and members of the Board
of Directors, see "Certain Relationships and Related Transactions" beginning on
page 19 of this Proxy Statement. In addition, cash compensation decisions during
2002 with respect to Messrs. Reeves and Mayell were made by the full Board of
Directors, with each of Messrs. Reeves and Mayell abstaining.
AUDIT COMMITTEE REPORT
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 2002.
6
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communications with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors' independence.
Based on the reviews and discussions referred to above, we recommended to
the Board of Directors that the financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2002.
We also have considered whether the provision by the independent auditors
of non-audit services is compatible with maintaining the auditors' independence.
Joe E. Kares, Chairman E. L. Henry Jack A. Prizzi
COMPENSATION
EXECUTIVE COMPENSATION
The following tables contain compensation data for the five highest paid
executive officers serving at the end of 2002 whose 2002 salary and annual bonus
compensation exceeded $100,000, and other individuals who would otherwise have
been included in this table but for the fact that such individuals were not
serving as executive officers of the Company at the end of 2002 (collectively,
the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION -----------------------
------------------------------------------ RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARD OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(1)(2) ($)(5) ($)(1) (#) ($)(3)
--------------------------- ---- -------- --------- ------------ ---------- ---------- ------------
Joseph A. Reeves, Jr. ............ 2002 $ 57,693 $879,071 $58,810 $800,000 $ -- $11,000
CEO 2001 40,613 760,000 -- 834,160 -- 10,500
2000 41,557 800,987 -- 800,000 -- 10,500
Michael J. Mayell................. 2002 $ 57,693 $879,071 $58,810 $800,000 $ -- $11,000
President 2001 40,613 760,000 -- 834,160 -- 10,500
2000 41,557 800,987 -- 800,000 -- 10,500
James H. Shonsey*................. 2002 $191,667 $ 59,375 $ -- $ -- $ -- $11,000
Executive Vice President and 2001 78,333 -- -- -- -- 2,844
Chief Financial Officer(4) 2000 -- -- -- -- -- --
Lloyd V. DeLano................... 2002 $167,999 $433,781 $ -- $ -- $ -- $11,000
Senior Vice President and 2001 167,999 437,395 -- -- -- 10,500
Chief Accounting Officer 2000 162,076 421,750 -- -- -- 10,500
James W. Carrington, Jr. ......... 2002 $166,812 $417,789 $ -- $ -- $ -- $10,009
Executive Vice President, 2001 166,812 419,014 -- -- -- 10,500
Land and Legal -- TMRX.......... 2000 160,931 454,406 -- -- -- 10,500
---------------
* Resigned effective April 30, 2003
(1) Salary and bonus compensation excludes amounts deferred by Messrs. Reeves
and Mayell pursuant to a deferred compensation plan (the "DCP"), which have
been reported in the Restricted Stock Award column. The DCP was approved by
the Board of Directors and the shareholders of the Company in 1996 as a
method to preserve the Company's liquidity and further align the executive
officers' interests with those of the Company's shareholders. No actual
shares of Common Stock are issued and the officer has no rights with respect
to any shares unless and until there is a distribution. Distributions cannot
be made until the death, retirement or termination of employment of the
officer. Until distribution, the value of such stock rights are subject to
the general credit of the Company and the market value of the Common Stock.
Pursuant to the DCP, the Company also granted to each officer an equal
matching deferral, which is subject to a one- 7
year vesting and is included in the Restricted Stock Award column. Under the
terms of the grants, the employee and matching deferrals are allocated to a
Common Stock account in which units are credited to the accounts of the
officer based on the number of shares that could be purchased at the market
price of the Common Stock at December 31, 1997 ($9 9/16 per share), for the
deferrals during the first half of 1998; at June 30, 1998 ($7 1/16 per
share), for the deferrals during the second half of 1998; at December 31,
1998 ($3 3/16 per share), for the deferrals during the first half of 1999;
June 30, 1999 ($3 7/8 per share), for the deferrals during the second half
of 1999; at December 31, 1999 ($3.0625 per share) for the deferrals during
the first half of 2000; at June 30, 2000 ($5.703125 per share) for the
deferrals during the second half of 2000; at December 31, 2000 ($8.625 per
share) for the deferrals during the first half of 2001; and at June 30, 2001
($7.17 per share) for the deferrals during the second half of 2001 and at
December 31, 2001 ($3.99 per share) for deferrals during the first half of
2002 and at June 30, 2002 ($3.72 per share) for deferrals during the second
half of 2002. Pursuant to the DCP, Messrs. Reeves and Mayell each elected to
defer $400,000, $417,080 and $400,000 of their compensation for 2000, 2001
and 2002 respectively. As of December 31, 2002, each of Messrs. Reeves and
Mayell had rights to 921,476 shares (including matching deferrals) with a
total value (including matching deferrals) as of December 31, 2002 of
$829,328. An amount equal to the dividends, if any, that would have
otherwise been paid with respect to such shares had they actually been
issued will be credited to the respective Common Stock accounts as well.
(2) Under the Company's Well Bonus Plan Mr. DeLano received bonus amounts in
2002, 2001 and 2000 as follows: $376,781, $437,395 and $421,750,
respectively. Under the same plan Mr. Carrington was paid in 2002, 2001 and
2000 the following amounts: $360,839, $419,014 and $398,970, respectively.
(3) Includes Company contributions to its 401(k) plan.
(4) Mr. Shonsey began employment with the Company in September 2001 and resigned
effective as of April 30, 2003.
(5) Includes the value conveyed during the applicable year attributable to net
profits interests assigned to the Named Executive Officer during the
applicable year in connection with their employment agreements. In
connection with such employment agreements, the Company adopted in 1994 a
program under which net profits interests are granted to certain key
employees of the Company in prospects and wells that the Company is pursuing
and drilling. In general, the net profits interest is 2.00% of any well and
is subject to proportional reduction to the Company's interests. Pursuant to
these arrangements, during 2002, net profits interests of 2% were granted to
each of Messrs. Reeves and Mayell in various prospects acquired by the
Company in 2002. Although such grants were intended to provide long-term
incentive for the executive officer or employee by aligning his or her
interests with those of the Company in its drilling efforts, such grants are
not subject to vesting, the continued employment of the individual with the
Company or other conditions. Accordingly, such grants are considered part of
the Company's annual compensation package and not compensation under a
long-term incentive plan. Each grant of a net profits interest is reflected
in this table at a value based on a third party appraisal of the interest
granted or the Company's current estimate of value for those prospects for
which a third party appraisal has not yet been completed. Such values are
appraisals or estimates only and the actual realized value of such interests
may prove to be higher or lower than the amounts reflected in this table.
See also "-- Employment Agreements" and "-- Well Bonus Plans and NPI Rights"
below.
8
The following table summarizes the number and value of options exercised by
the Named Executive Officers during 2002, as well as the number and value of
unexercised options owned by the Named Executive Officers as of December 31,
2002.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 2002
AND DECEMBER 31, 2002 OPTION VALUE
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES ACQUIRED VALUE DECEMBER 31, 2002(#) OPTIONS AT
ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE DECEMBER 31, 2002($)
NAME (#) ($) (1) EXERCISABLE/UNEXERCISABLE
---- --------------- -------- ------------------------- -------------------------
Joseph A. Reeves, Jr.(1)... -- -- 1,725,000/ /
Michael J. Mayell(1)....... -- -- 1,725,000/ /
James H. Shonsey........... -- -- 5,000/5,000 /
Lloyd V. DeLano............ -- -- 75,000/ /
James W. Carrington,
Jr. ..................... -- -- 17,500/ /
---------------
(1) Excludes (i) the warrants (the "General Partner Warrants") granted to each
of Messrs. Reeves and Mayell in October 1990 in connection with the
Company's formation and (ii) warrants ("Executive Officer Warrants") issued
in prior years to Messrs. Reeves and Mayell in connection with the surrender
of certain "Class B Warrants" to the Company. The value of these warrants at
December 31, 2002, based on the difference between the market price of the
Common Stock at December 31, 2002 and the exercise price of the respective
warrants, was $725,820.40 for each of Messrs. Reeves and Mayell.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2002, with
respect to our compensation plans (including individual compensation
arrangements) under which equity securities are authorized for issuance:
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
BE ISSUED UPON EXERCISE EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (a))(1)
------------- ----------------------- -------------------- ---------------------------
Equity compensation plans
approved by security
holders...................... 6,606,579 $4.16 445,765
Equity compensation plans not
approved by security
holders......................
Total.......................... 6,606,579 $4.16 445,765
---------------
(1) Does not include 3,600,000 shares which have been reserved for
issuance inlieu of cash compensation under the Company's deferred
compensation plan, which plan was approved by security holders.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement ("Employment
Agreement") with each of Messrs. Reeves and Mayell. Each Employment Agreement is
for a term of three years, renewable annually for a term to extend three years
from such renewal date. Each Employment Agreement provides for compensation in a
minimum amount of $289,800 per annum along with annual bonuses in cash
substantially consistent with previous annual bonuses, to be reviewed at least
annually for possible increases, and additional bonuses and other perquisites in
accordance with Company policy. If either of Messrs. Reeves or Mayell terminates
his employment for "Good Reason" (as defined below), or is terminated by the
Company for other than "Good Cause" (as defined below), such individual would
receive a cash lump sum payment equal to the sum of
9
(i) the base salary for the remainder of the employment period under the
Employment Agreement, (ii) an amount equal to the last annual bonus paid to him,
(iii) two times the sum of his annual base salary and last annual bonus, (iv)
all compensation previously deferred and any accrued interest thereon, (v) a
lump-sum retirement benefit equal to the actuarial equivalent of the benefits
lost by virtue of the early termination of the employee and (vi) continuation of
benefits under the Company's benefit plans. If either of Messrs. Reeves or
Mayell dies or is terminated by the Company for Good Cause, such individual or
such individual's estate, as applicable, would receive all payments then due him
under the Employment Agreement through the date of termination, including a
prorated annual bonus and any compensation previously deferred. Each of Messrs.
Reeves and Mayell also is entitled under his Employment Agreement to certain
gross-up payments if an excise tax is imposed pursuant to Section 4999 of the
Internal Revenue Code, which imposes an excise tax on certain severance payments
in excess of three times an annualized compensation amount following certain
changes in control.
The term "Good Reason" is defined in each Employment Agreement, with
respect to each of Messrs. Reeves and Mayell, generally to mean (i) a change in
the nature or scope of the duties or responsibilities of such individual, unless
remedied by the Company, (ii) any failure by the Company to pay any form of
compensation stated in each Employment Agreement, unless remedied by the
Company, (iii) requiring such individual to be based at any office or location
30 miles or more from the current location of the Company, other than travel
reasonably required in the performance of such individual's responsibilities,
(iv) any purported termination by the Company of such individual's employment
other than due to death or for Good Cause or (v) any failure of the Company to
require a successor of the Company to assume the terms of the Employment
Agreement. The term "Good Cause" is defined in each Employment Agreement,
generally to mean (i) such individual has been convicted of a felony that is no
longer subject to direct appeal, (ii) such individual has been adjudicated to be
mentally incompetent so as to affect his ability to serve the Company and such
adjudication is no longer subject to direct appeal or (iii) such individual has
been found guilty of fraud or willful misfeasance so as to materially damage the
Company and such finding is no longer subject to direct appeal.
In connection with the execution of their Employment Agreements, both
Messrs. Reeves and Mayell were granted a 2% net profits interest in the oil and
natural gas production from the Company's properties to the extent the Company
acquires a mineral interest therein. The net profits interest for Messrs. Reeves
and Mayell applies to all properties on which the Company expends funds during
their employment with the Company. The net profits interests represent real
property rights that are not subject to vesting or continued employment with the
Company. Messrs. Reeves and Mayell did not participate in the Well Bonus Plans
(as such term is defined under "-- Well Bonus Plans and NPI Rights" below) for
any particular property to the extent their original 2% net profits interest
grant covered such property. See also note 5 under "-- Summary Compensation
Table" above and "-- Well Bonus Plans and NPI Rights" below.
Mr. Lloyd V. DeLano entered into an employment agreement with the Company
under which he is given the title Senior Vice President and Chief Accounting
Officer of the Company. Mr. DeLano's employment agreement provides that he will
receive a monthly salary of $14,000 and an annual bonus in the amount determined
in the discretion of the Company's Board of Directors. If Mr. DeLano is
terminated, depending on the circumstances, he may be entitled to receive a
payment equal to six times his monthly salary. Also, if a change in control of
the Company occurs, he may be entitled to receive his monthly salary for
eighteen months after such event.
Mr. James W. Carrington, Jr. entered into an employment agreement with the
Company under which he is given the title Executive Vice President -- Land and
Legal. Mr. Carrington's employment agreement provides that he will receive a
monthly salary of $13,901 and an annual bonus in the amount determined in the
discretion of the Company's Board of Directors. If Mr. Carrington is terminated,
depending on the circumstances, he may be entitled to receive a payment equal to
six times his monthly salary. Also, if a change in control of the Company
occurs, he may be entitled to receive his monthly salary for eighteen months
after such event.
10
THE INCENTIVE PLANS
The Incentive Plans authorize the Board of Directors or a Committee of the
Board of Directors to issue stock options, stock appreciation rights, restricted
stock and performance awards. The aggregate number of shares of Common Stock
that currently may be issued under the Incentive Plans is 8,209,840, which
represents approximately 16.4% of the total number of shares of Common Stock
outstanding. There are currently 7,764,075 shares allocated to outstanding
options or existing or future stock rights under deferred compensation
arrangements under the Incentive Plans. Therefore, approximately 445,765 shares
are available for grant of additional options or stock-based compensation. As of
December 31, 2002, none of the stock options granted under the Incentive Plans
were "in-the-money".
WELL BONUS PLANS AND NPI RIGHTS
During 1998, the Company implemented a net profits program that was adopted
effective as of November 1997. All employees participated in this program.
Pursuant to this program, the Company adopted three separate well bonus plans:
(i) The Meridian Resource Corporation Geoscientist Well Bonus Plan (the
"Geoscientist Plan"), (ii) The Meridian Resource Corporation TMR Employees Trust
Well Bonus Plan (the "Trust Plan") and (iii) The Meridian Resource Corporation
Management Well Bonus Plan (the "Management Plan"), and with the Trust Plan and
the Geoscientist Plan, (the "Well Bonus Plans"). The Executive Committee of the
Board of Directors, which is comprised of Messrs. Reeves and Mayell,
administered each of the Well Bonus Plans. The participants in each of the Well
Bonus Plans were designated by the Executive Committee in its sole discretion.
Participants in the Management Plan were limited to executive officers of the
Company and other key management personnel designated by the Executive
Committee. Neither Messrs. Reeves nor Mayell participated in the Management
Plan, except with respect to a small number of wells and prospects not covered
by their original net profits grants described under "-- Employment Agreements"
above. The participants in the Trust Plan generally were all employees of the
Company that did not participate in one of the other Well Bonus Plans. Pursuant
to the Well Bonus Plans, the Executive Committee designated, in its sole
discretion, the individuals and wells that participated in each of the Well
Bonus Plans. The Executive Committee also determined the percentage bonus that
was paid under each well and the individuals that participated thereunder. The
Well Bonus Plans covered all properties on which the Company expended funds
during each participant's employment with the Company, with the percentage bonus
generally ranging from less than .1% to .5% of the net profits derived from each
well included in the well bonus plan, depending on the level of the employee.
Effective March 2001, the participants in the Geoscientist Plan were
notified that no additional future wells would be placed into the plan. During
2002, the Executive Committee decided to modify this position and for certain
key geoscientists the plan will include future new wells.
Effective December 2001, an agreement was executed to repurchase and
terminate certain interests in the Well Bonus Plans from current and former
employees in exchange for the issuance of Common Stock. The offering was for a
total of 1,940,991 shares of our Common Stock. The Common Stock was issued on
February 4, 2002, at the then current price of $3.48 per share.
11
EXECUTIVE OFFICERS
The following table provides information with respect to the executive
officers of the Company. Each executive officer has been elected to serve until
his or her successor is duly appointed or elected by the Board of Directors or
his or her earlier removal or resignation from office.
YEAR FIRST
ELECTED
NAME OF OFFICER POSITION WITH THE COMPANY AGE AS OFFICER
--------------- ------------------------- --- ----------
Joseph A. Reeves, Jr. ...... Chairman of the Board and Chief Executive 56 1990
Officer
Michael J. Mayell........... Director and President 55 1990
James H. Shonsey*........... Executive Vice President and Chief 51 2001
Financial Officer
Lloyd V. DeLano............. Jr. Vice President and Chief Accounting
Officer 52 1993
James W. Carrington, Jr. ... Executive Vice President -- Land and 52 1998
Legal -- TMRX
---------------
* Resigned effective April 30, 2003
For additional information regarding Messrs. Reeves and Mayell, see "Directors",
above.
James H. Shonsey joined the Company as Vice President of Corporate Finance
and Capital Markets in September 2001. Mr. Shonsey has over 28 years of
experience in corporate finance. Most recently, he was the Chief Financial
Officer of Westport Resources Corporation in Denver, Colorado. At Westport, Mr.
Shonsey was responsible for all the financial activities including Treasury,
Financial Reporting, Tax, and Financial Accounting. While Vice President at
Snyder Oil Corporation, he performed various financial duties from 1991 to 1997,
and he was the Director of Operations Accounting at Apache Corporation from 1987
to 1991. Mr. Shonsey resigned from the Company effective April 30, 2003.
Lloyd V. DeLano joined the Company in January 1992 performing contract work
and became an employee of the Company in October 1992. Mr. DeLano was named Vice
President -- Director of Accounting of The Meridian Resource & Exploration
Company (a wholly owned subsidiary of the Company) in April 1993 and in June
1996 was named Vice President and Chief Accounting Officer of the Company. Mr.
DeLano is a Certified Public Accountant with 30 years of oil and natural gas
experience.
James W. Carrington, Jr. joined the Company in March 1998 as Vice President
of Land of The Meridian Resource & Exploration Company (a wholly owned
subsidiary of the Company). Prior to assuming his position with the Company, Mr.
Carrington was employed by CNG Producing Company.
Other than Mr. Bond, who is Mr. Mayell's father-in-law, there are no family
relationships among the officers and directors of the Company.
12
STOCK PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock to the New York Stock Exchange Market Index and Peer Group Index from
December 31, 1997 through December 31, 2002. The graph assumes that the value of
the investment in the Common Stock and each index was $100 at December 31, 1997,
and that all dividends were reinvested.
(PERFORMANCE GRAPH)
--------------------------------------------------------------------------------
DECEMBER 31,
---------------------------------------------------------
1997 1998 1999 2000 2001 2002
--------------------------------------------------------------------------------
The Company 100 33 32 90 42 9
NYSE Market Index 100 119 130 133 122 99
Peer Group Index 100 89 92 150 113 92
The Company's Peer Group is comprised of Anadarko Petroleum Corporation,
Apache Corporation, Burlington Resources Inc., Chesapeake Energy Corporation,
EEX Corporation, Noble Affiliates, Inc., Ocean Energy, Inc., Pogo Producing
Company, Questar Corporation and The Williams Company Inc.
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of April 25, 2003, with
respect to the beneficial ownership of Common Stock by (a) each director, (b)
each Named Executive Officer, (c) each shareholder known by the Company to be
the beneficial owner of more than 5% of the Common Stock and (d) all executive
officers and directors of the Company as a group.
NUMBER
OF SHARES
BENEFICIALLY
NAME OWNED(1) PERCENT
---- ------------ -------
Joseph A. Reeves, Jr.(2).................................... 4,442,337 8.2%
Michael J. Mayell(3)........................................ 4,334,584 8.0%
James H. Shonsey(4)**....................................... 5,000 *
Lloyd V. DeLano(5).......................................... 115,319 *
James W. Carrington, Jr.(6)................................. 79,477 *
James T. Bond(7)............................................ 35,000 *
E. L. Henry(8).............................................. 35,500 *
Joe E. Kares(9)............................................. 42,500 *
Gary A. Messersmith(10)..................................... 55,972 *
Jack A. Prizzi(11).......................................... 43,300 *
All executive officers and directors as a group (10
persons)(2),(3),(4),(5),(6),(7),(8),(9),(10),(11)......... 9,188,989 15.7%
Shell Oil Company(12)....................................... 7,082,030 14.1%
Kayne Anderson Capital Advisers, L.P.(13)................... 6,812,117 13.6%
---------------
* Less than one percent.
** Resigned effective April 30, 2003.
(1) Shares of Common Stock which are not outstanding but which can be acquired
by a person upon exercise of an option or warrant within sixty days are
deemed outstanding for the purpose of computing the percentage of
outstanding shares beneficially owned by such person.
(2) Includes 397,362 shares, 507,993 shares, 714,000 shares and 1,725,000
shares of Common Stock that Mr. Reeves has the right to acquire upon the
exercise of the General Partner Warrant, Executive Warrants, and stock
options under the Company's stock option plans, respectively. Also includes
1,097,982 vested shares underlying deferred compensation arrangements.
Excludes 96,417 unvested shares under deferred compensation arrangements.
Mr. Reeves' business address is 1401 Enclave Parkway, Suite 300, Houston,
Texas 77077.
(3) Includes 289,609 shares, 507,993 shares, 714,000 shares and 1,725,000
shares of Common Stock that Mr. Mayell has the right to acquire upon the
exercise of the General Partner Warrant, Executive Warrants, and stock
options under the Company's stock option plans, respectively. Also includes
1,097,982 vested shares underlying deferred compensation arrangements.
Excludes 96,417 unvested shares under deferred compensation arrangements.
Mr. Mayell's business address is 1401 Enclave Parkway, Suite 300, Houston,
Texas 77077.
(4) Includes 5,000 shares of Common Stock that Mr. Shonsey has the right to
acquire upon the exercise of stock options. Excludes 5,000 shares
underlying options that are not exercisable within 60 days.
(5) Includes 75,000 shares of Common Stock that Mr. DeLano has the right to
acquire upon the exercise of stock options.
(6) Includes 17,500 shares of Common Stock that Mr. Carrington has the right to
acquire upon the exercise of stock options.
(7) Includes 15,000 shares of Common Stock that Mr. Bond has the right to
acquire upon the exercise of stock options.
14
(8) Includes 35,500 shares of Common Stock that Mr. Henry has the right to
acquire upon the exercise of stock options. Excludes 7,500 shares
underlying options that are not exercisable within 60 days.
(9) Includes 42,500 shares of Common Stock that Mr. Kares has the right to
acquire upon the exercise of stock options. Excludes 7,500 shares
underlying options not exercisable within 60 days.
(10) Includes 42,500 shares of Common Stock that Mr. Messersmith has the right
to acquire upon the exercise of stock options. Excludes 7,500 shares
underlying options not exercisable within 60 days.
(11) Includes 35,000 shares of Common Stock that Mr. Prizzi has the right to
acquire upon the exercise of stock options.
(12) Based solely upon a Schedule 13D filed with the Securities and Exchange
Commission. Shell Oil Company controls Shell Louisiana Onshore Properties
Inc. ("SLOPI"). Shell Oil Company's business address is One Shell Plaza,
Houston, Texas 77002. SLOPI's business address is P.O. Box 7986, Newark,
Delaware.
(13) Based upon a Schedule 13G filed with the Securities and Exchange
Commission. The business address of Kayne Anderson Capital Advisers, L.P.,
is 1800 Avenue of the Stars, 2nd Floor, Los Angeles, California 90067.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PARTICIPATION INTERESTS
In the ordinary course of business, the Company offers participation in
exploration prospects to industry partners. Terms of each participation vary
depending on the risk and economic conditions existing in the oil and gas
industry at the time of grant. In addition, in an effort to provide the
Company's executive officers and key employees with additional incentive to
identify and develop successful exploratory prospects for the Company, the
Company has adopted a policy of offering to its principal executive officers and
key employees responsible for the identification and development of prospects
the right to participate in each of the prospects pursued by the Company. Such
participation is required to be on the same terms and conditions as the Company
and its outside partners and is currently limited in aggregate to an approximate
8% working interest in any prospect. The maximum percentage that either Messrs.
Reeves and Mayell may elect to participate in any prospect is a 4% working
interest. Since 1994, each of Messrs. Reeves and Mayell have participated in
every prospect that the Company has drilled on a 1.5% working interest basis
(other than the Chocolate Bayou Field in which they had a 3.5% interest and
certain prospects completed prior to 1994, in which Messrs. Reeves and Mayell
have working interests of up to 2.5%) and upon the same terms and conditions as
other third party working interest owners.
During 2002, both Messrs. Reeves and Mayell, either personally or through
wholly owned or affiliated corporations, participated as working interest owners
in properties of the Company. Under the terms of the operating and other
agreements relating to the Company's wells and prospects, the Company, as
operator, incurs various expenses relating to the prospect or well that are then
billed to the working interest owner. During 2002, each of TODD (a company owned
by Mr. Reeves) and Sydson (a company owned by Mr. Mayell) were indebted to the
Company for certain expenses paid by the Company in respect of their working
interest in various prospects and wells in which the Company acted as operator.
TODD and Sydson collectively invested approximately $3,289,000 for the year
ended December 31, 2002, in oil and natural gas drilling activities for which
the Company was the operator. Net amounts due from TODD and Mr. Reeves were
approximately $186,000 as of December 31, 2002. Net amounts due from Sydson and
Mr. Mayell were approximately $1,370,000.
OTHER
Joe E. Kares, a member of the Executive Compensation Committee and
Chairman of the Audit Committee, is a partner in the public accounting firm of
Kares & Cihlar, which provided the Company and its affiliates with accounting
services for the years ended December 31, 2002, 2001, 2000 and 1999 and received
fees of approximately $282,000, $269,000,
15
$304,000 and $283,000, respectively. These fees exceeded 5% of the gross
revenues of Kares & Cihlar for 2002. The Company believes that these fees were
equivalent to the fees that would have been paid to similar firms providing its
services in arm's length transactions.
Mr. Messersmith, a member of the Executive Compensation Committee, is a
partner in the law firm of Looper, Reed & McGraw, a Professional Corporation,
and from 1982 to 2001 was a partner with the law firm of Fouts & Moore, L.L.P.,
in Houston, Texas, which periodically provided legal services for the Company.
In addition, the Company has Mr. Messersmith on personal retainer of $8,333.33
per month relating to services provided to the Company and a bonus in the form
of personal property valued at $12,500 was awarded during 2002. Mr. Messersmith
also participated in the Well Bonus Plans pursuant to which he was paid
approximately $377,000 during 2002.
CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing of this proxy statement, an
evaluation was conducted under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of
1934). Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that the design and operation of our disclosure
controls and procedures are effective. There have been no significant changes in
our internal controls or in other factors that could significantly affect these
controls subsequent to the date of our evaluation.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who beneficially own more than ten percent of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten-percent shareholders are required by
the regulations promulgated under Section 16(a) to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 1, 2002, through December 31, 2002, all filing requirements applicable
to officers, directors and greater than ten-percent shareholders were in
compliance.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Ernst & Young LLP served as the Company's principal independent accountants
for the fiscal year ended December 31, 2002, and has been recommended by the
Audit Committee to so serve for the current year. A representative of Ernst &
Young LLP will attend the Meeting with the opportunity to make a statement if he
or she desires to do so and to respond to appropriate questions.
The following table presents fees for the audits of the Company's annual
consolidated financial statements for 2002 and 2001 and for other services
provided by Ernst & Young LLP.
2002 2001
-------- --------
Audit Fees.................................................. $387,150 $384,100
Audit-Related Fees.......................................... $ -- $ --
Tax Fees.................................................... $ 64,020 $154,926
All Other Fees.............................................. $ -- $ --
16
TAX FEES
Tax fees are primarily for tax compliance and tax consulting services. The
Audit Committee has concluded that the provision of tax services is compatible
with maintaining Ernst & Young LLP's independence.
OTHER BUSINESS
Management does not intend to bring any business before the Meeting other
than the matters referred to in the accompanying notice and at this date has not
been informed of any matters that may be presented to the Meeting by others. If,
however, any other matters properly come before the Meeting, it is intended that
the persons named in the accompanying proxy will vote, pursuant to the proxy, in
accordance with their best judgment on such matters.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder to be presented at the Company's 2004 Annual
Meeting of Shareholders (the "2004 Annual Meeting") must be received by the
Company no later than February 3, 2004, in order to be eligible for inclusion in
the Company's Proxy Statement and proxy used in connection with the 2004 Annual
Meeting. Shareholder proposals as to which we receive notice that are proposed
to be brought before the 2004 Annual Meeting (outside the process of the
Securities and Exchange Commission's rule on shareholder proposals) will be
considered not properly brought before the meeting, and will be out of order,
unless we receive the notice as to that matter prior to April 2, 2004.
By Order of the Company's Board of
Directors
JOSEPH A. REEVES, JR.
Chairman of the Board and
Chief Executive Officer
May 29, 2003
17
THE MERIDIAN RESOURCE CORPORATION
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of The Meridian Resource Corporation, a
Texas corporation (the "Company"), hereby constitutes and appoints Joseph A.
Reeves, Jr. and Michael J. Mayell, and each of them, his true and lawful agents
and proxies, as proxies, with full power of substitution in each, to vote, as
designated on the reverse side, all shares of Common Stock, $.01 par value, of
the Company which the undersigned would be entitled to vote at the Annual
Meeting of Shareholders of the Company to be held July 2, 2003, and at any
adjournment(s) thereof, on the following matters more particularly described in
the Proxy Statement dated May 29, 2003.
(To Be Signed on REVERSE SIDE)
[X] Please mark your
votes as in this
example
1. Election of Class I Directors Receipt is hereby acknowledged of the
Notice of Annual Meeting of Shareholders
Nominees: and Proxy Statement, each dated May 29,
James T. Bond 2003, and the Annual Report to
Jack A. Prizzi Shareholders of the Company for the year
ended December 31, 2002.
[ ] FOR all nominees
(except as marked to the contrary)
[ ] WITHHOLD authority to vote for both nominees
INSTRUCTION: IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR EITHER
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE
LIST ABOVE.)
2. In their discretion the proxies are authorized to vote upon such Please mark, sign, date and return this
other business as may properly come before the meeting or any proxy card promptly using the enclosed
adjournment thereof. envelope.
SIGNATURE(S) DATE , 2003
---- ------
Note: Please sign your name exactly as name appears hereon. Co-fiduciaries
and joint owners must each sign. When signing as attorney, executor,
administrator, trustee of guardian, please give full title as such. If
a corporation, please sign in the full corporate name by the president
or other authorized officer. If a partnership, please sign in the
partnership name by authorized person.