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:
COMSTOCK RESOURCES, INC.
5300 Town and Country Blvd.
Suite 500
Frisco, Texas 75034
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 16, 2000
To the Stockholders of Comstock Resources, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Comstock
Resources, Inc. will be held at the Stonebriar Country Club, 5050 Country Club
Drive, Frisco, Texas, on May 16, 2000 at 10:00 a.m., for the following purposes:
1. To elect two Class C directors to serve terms of three years until
their successors are duly elected and qualified;
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for 2000; and
3. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on April 3, 2000 as
the record date for determining the stockholders entitled to notice and to vote
at the meeting or any adjournment thereof. A list of such stockholders will be
open to examination of any stockholder at the Company's offices at 5300 Town and
Country Blvd., Suite 500, Frisco, Texas, 75034, during ordinary business hours,
for a period of at least ten days prior to the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ROLAND O. BURNS
------------------
ROLAND O. BURNS
SECRETARY
Dallas, Texas
April 4, 2000
IMPORTANT
TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY 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 16, 2000
The Board of Directors of Comstock Resources, Inc., a Nevada corporation
(the "Company"), hereby solicits your proxy in the form enclosed for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the
Stonebriar Country Club, 5050 Country Club Drive, Frisco, Texas at 10:00 A.M.,
on May 16, 2000, or at any adjournment thereof. The expenses of this
solicitation will be borne by the Company. Proxies may be solicited by mail,
personal interview, telegram and telephone by directors, officers, employees and
agents of the Company.
This Proxy Statement and the accompanying form of proxy are being mailed to
stockholders on or about April 4, 2000. The principal executive office of the
Company is located at 5300 Town and Country Blvd., Suite 500, Frisco, Texas
75034, telephone (972) 668-8800.
Only stockholders of record at the close of business on April 3, 2000 are
entitled to notice of and to vote at the Annual Meeting. On that date, there
were 25,375,198 shares of the Company's common stock, $.50 par value (the
"Common Stock"), outstanding. Included in the total outstanding shares are 2,813
shares reserved for conversion of shares which have not been tendered for
exchange subsequent to the Company's reincorporation in Nevada in 1981. Such
shares are not eligible to vote at the Annual Meeting. In addition, there are
3,000,000 shares of the Company's Series A 1999 Convertible Preferred Stock (the
"Preferred Stock") outstanding which are entitled to vote on an as converted
basis the equivalent of 7,500,000 shares of Common Stock. Accordingly, the
aggregate shares entitled to vote at the meeting are 32,872,385. Each share is
entitled to one vote.
You are encouraged to attend the Annual Meeting and vote in person.
Execution of the enclosed proxy will not in any way affect your right to do so.
A stockholder may revoke a proxy at any time prior to the voting thereof by
filing with the Secretary of the Company, prior to the stockholder vote, a
written revocation or duly executed form of proxy bearing a later date, or by
voting in person at the Annual Meeting.
Attendance at the Annual Meeting, either in person or by proxy, by the
record holders of a majority of the outstanding shares of the Common Stock
constitutes a quorum. Cumulative voting is not permitted. With regard to the
election of directors, votes may be cast in favor or withheld; votes that are
withheld will be excluded entirely from the vote and will have no effect, except
as it affects the total number of votes a nominee receives. Abstentions may be
specified on all proposals (but not on the election of directors) and will be
counted as present for purposes of the item on which the abstention is noted.
Under the rules of the New York Stock Exchange, Inc. ("NYSE"), brokers who hold
shares in street name for customers have the authority to vote on certain items
when they have not received instructions from beneficial owners. Brokers that do
not receive instructions are entitled to vote on the election of directors and
the ratification of accountants. Under applicable Nevada law, a broker non-vote
will have no effect on the outcome of the election of directors or the
ratification of accountants.
1
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL HOLDERS
The following table sets forth certain information, as of April 3, 2000,
with respect to the beneficial ownership of Common Stock by (i) each executive
officer of the Company named in the Summary Compensation Table set forth in this
Proxy Statement, (ii) each director and each nominee for director of the
Company, (iii) all directors and executive officers of the Company as a group
and (iv) each person known by the Company to be the beneficial owner of 5% or
more of the Common Stock.
Shares Beneficially Owned
--------------------------
Name (1) Number (2) Percent
- ------------------------------------------------- --------- -------
M. Jay Allison 1,841,704 6.8%
President, Chief Executive Officer and
Chairman of the Board of Directors
Roland O. Burns 493,375 1.9%
Director, Senior Vice President, Chief
Financial Officer, Secretary and Treasurer
Mack D. Good 13,150 *
Vice President of Operations
Richard S. Hickok 148,536 (3) *
Director
Franklin B. Leonard 180,203 (4) *
Director
Cecil E. Martin, Jr 108,969 *
Director
Richard G. Powers 87,000 *
Vice President of Land
David W. Sledge 75,845 *
Director
Michael W. Taylor 94,625 *
Vice President of Corporate Development
All Executive Officers and Directors 3,148,507 11.3%
as a Group (11 Persons)
Becker Capital Management 1,584,100 (5) 6.2%
1211 S.W. Fifth Avenue, Suite 2185
Portland, Oregon 97204
Compression, Inc. 3,124,000 (5) 12.3%
Two West Second Street
Tulsa, Oklahoma 74103
Dimensional Fund Advisors 1,762,825 (5) 6.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Prudential Insurance Company of America 1,497,000 (5) 5.9%
751 Broad Street
Newark, New Jersey 07102
Trust Company of the West 5,000,000 (6) 16.3%
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 in the following amounts: Mr.
Allison-1,567,500 shares; Mr. Burns-398,125 shares; Mr. Good-6,250 shares;
Mr. Hickok-76,000 shares; Mr. Leonard-85,000 shares; Mr. Martin-65,000
shares; Mr. Powers-87,000 shares; Mr. Sledge-50,000 shares; Mr. Taylor-
94,625 shares; and all executive officers and directors-2,533,250.
(3) Includes 32,572 shares held by a corporation owned 90% by Mr. Hickok's wife
and 10% by Mr. Hickok's children.
(4) Includes 45,771 shares held by a trust for the benefit of Mr. Leonard's
wife.
(5) Ownership based on Schedule 13-D or 13G filings.
(6) Represents shares issuable upon conversion of shares of 1999 Series A
Convertible Preferred Stock. Trust Company of the West or an affiliate
thereof as investment manager or in a similar capacity for certain funds
and institutions which hold the shares of preferred stock.
2
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors presently consists of six 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 term expires at the
Annual Meeting, are Roland O. Burns and Richard S. Hickok. The Class A
directors, whose term expires in 2001, are Franklin B. Leonard and Cecil E.
Martin, Jr. The Class B directors, whose term expires in 2002, are M. Jay
Allison and David W. Sledge. At the Annual Meeting, two Class C directors will
be elected, each for a term of three years beginning in 2000 and until their
successors are duly elected and qualified. The Board of Directors has nominated
Roland O. Burns and Richard S. Hickok to serve as the Class C directors. Further
information with respect to the nominees and the other directors continuing in
office is set forth below.
Nominees for Three-Year Terms
ROLAND O. BURNS, (40) Director, Senior Vice President, Chief Financial Officer,
Secretary and Treasurer
Mr. Burns has been a director of the Company since 1999 and has been Senior
Vice President of the Company since 1994, Chief Financial Officer and Treasurer
since 1990 and Secretary since 1991. From 1982 to 1989, he was employed by the
public accounting firm, Arthur Andersen, LLP. During his tenure with Arthur
Andersen LLP., 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.
RICHARD S. HICKOK, (74) Director
Mr. Hickok has been a director of the Company since 1987. From 1948 to
1983, he was employed by the international accounting firm of Main Hurdman where
he retired as Chairman. From 1978 to 1980, Mr. Hickok served as a Trustee of the
Financial Accounting Foundation and has extensive involvement serving on various
committees of the American Institute of Certified Public Accountants. Mr. Hickok
holds a B.S. degree from the Wharton School of the University of Pennsylvania.
Directors Continuing in Office
M. JAY ALLISON, (44) President, Chief Executive Officer and Chairman of the
Board of Directors
Mr. Allison has been a director of the Company since 1987, and President
and Chief Executive Officer of the Company since 1988. Mr. Allison was elected
Chairman of the Board of Directors in 1997. From 1987 to 1988, Mr. Allison
served as Vice President and Secretary of the Company. 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.
3
FRANKLIN B. LEONARD, (72) Director
Mr. Leonard has been a director of the Company since 1960. From 1961 to
1994, Mr. Leonard served as President of Crossley Surveys, Inc., a New York
based company which conducted statistical surveys. Mr. Leonard's family's
involvement in the Company spans four generations dating back to the 1880's when
Mr. Leonard's great grandfather was a significant shareholder of the Company.
Mr. Leonard holds a B.S. degree from Yale University.
CECIL E. MARTIN, JR., (58) Director
Mr. Martin has been a director of the Company since 1988. From 1973 to 1991
he served as Chairman of a public accounting firm in Richmond, Virginia. Mr.
Martin also serves as a director for CareerShop.com. Mr. Martin holds a B.B.A.
degree from Old Dominion University and is a Certified Public Accountant.
DAVID W. SLEDGE, (43) Director
Mr. Sledge was elected to the Board of Directors of the Company in 1996.
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 the officers or directors of
the Company.
Meetings of the Board of Directors and Committees
During 1999, the Board of Directors held six meetings and each director
participated in all of the meetings. The Company's Executive Committee is
authorized to act and acts during the intervals between the meetings of the
Board of Directors and has all of the powers and authority of the Board of
Directors in the management of the business and affairs of the Company, except
the power to declare dividends; to adopt, amend or repeal bylaws; to adopt an
agreement of merger or consolidation; to sell substantially all of the Company's
assets; to recommend a dissolution of the Company to the stockholders; or to
authorize the issuance of stock of the Company. The Executive Committee consists
of M. Jay Allison as Chairman, and Cecil E. Martin, Jr. and Richard S. Hickok as
members. The Executive Committee did not meet in 1999.
The Company's Audit Committee has responsibility for recommending retention
or change of the Company's independent auditors, reviewing with management and
the independent auditors the Company's financial statements, accounting and
financial policies and practices, audit scope and adequacy of the Company's
internal control structure. The Audit Committee consists of Richard S. Hickok,
as Chairman, and Franklin B. Leonard and David W. Sledge as members. The Audit
Committee held two meetings during 1999 at which all members were present. In
addition, the Company's senior financial management, as well as the Company's
independent public accountants, consult regularly with the Audit Committee on an
informal basis to discuss various accounting related issues.
4
The Company's Compensation Committee reviews and recommends to the Board of
Directors the compensation and promotion of officers of the Company, the terms
of any proposed employee benefit arrangements and the making of awards under
such arrangements. The Compensation Committee consists of Cecil E. Martin, Jr.,
as Chairman, and Franklin B. Leonard and David W. Sledge as members. The
Compensation Committee held two meetings during 1999 at which all members were
present.
The Company has not established a formal nominating committee and presently
the full Board of Directors considers director nominations.
Compensation of Directors
The Company pays annual fees to directors who are not employees of the
Company and reimburses such directors for expenses in attending meetings. In
1999, the Company paid a annual fee of $35,000 to each director who chairs a
committee and an annual fee of $30,000 to each remaining non-employee director.
Under a plan established by the Board of Directors, each director can make an
annual election to receive his director fees in cash or in the equivalent number
of shares of Common Stock at the then current market price of Common Stock. In
December 1999, the Company issued 44,255 shares of Common Stock, at its then
current market price of $2.9375 per share, to the non-employee directors, in
full payment of 2000 director fees aggregating $130,000. The Company also paid
Mr. Martin $25,000 for additional services provided to the Company under a
consulting agreement. Beginning in 2000, the Company has agreed to pay Mr.
Martin $35,000 under a consulting agreement.
Under the Company's 1999 Long-term Incentive Plan (the "Incentive Plan"),
each non-employee director receives on the date of initial election or
appointment to the Board of Directors options to acquire 10,000 shares of Common
Stock. In addition, each non-employee director receives at each annual meeting
of stockholders, so long as such person remains a director, options to acquire
10,000 shares of Common Stock. The exercise price equals the fair market value
on the date of grant.
Under Nevada law, directors will be elected by a plurality vote and the
persons receiving the greatest number of votes will be elected as the Class C
Directors.
Shares represented by proxies will be voted FOR the election of the Board
of Directors' nominees unless otherwise indicated on the proxy. If at the time
of the meeting, any of the nominees has become unavailable for any reason, the
persons entitled to vote the proxy shall vote for such substitute nominee or
nominees as they, in their discretion, may determine. The Company knows of no
reason why any nominee would be unavailable to serve.
5
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
Chief Executive Officer and the four other highest paid executive officers of
the Company.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
------------------------
Annual Compensation ($) Restricted Stock
---------------------------------- Stock Option
Name and Principal Position Year Salary Bonus Other (1)(2) Awards ($)(3) Awards(#)
- -------------------------------- ------ -------- -------- ----------- ------------ --------
M. Jay Allison, 1999 $245,000 $470,000 $39,133 $697,500 540,000
President and Chief 1998 $245,000 $405,000 $39,900 - 460,000
Executive Officer 1997 $245,000 $450,000 $ 5,925 - 340,000
Roland O. Burns, 1999 $140,000 $170,000 $15,091 $174,375 135,000
Senior Vice President and 1998 $140,000 $100,800 $15,474 - 115,000
Chief Financial Officer 1997 $132,500 $112,000 $ 3,970 - 85,000
Mack D. Good (4), 1999 $101,333 $ 50,000 $ 3,035 - 58,000
Vice President of Operations
Richard G. Powers, 1999 $112,500 $ 73,000 $ 4,762 - 72,000
Vice President of Land 1998 $112,500 $ 20,000 $ 5,058 - 20,000
1997 $ 90,000 $ 50,000 $ 1,797 - 20,000
Michael W. Taylor, 1999 $115,000 $108,500 $ 4,837 - 90,000
Vice President of 1998 $115,000 $ 25,000 $ 5,058 - 25,000
Corporate Development 1997 $ 93,000 $ 90,000 $ 2,056 - 45,000
(1)The value of all perquisites provided to each executive officer by the
Company 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 the Company's
401(k) profit sharing plan and the present value of interest free loans of
the amounts paid by the Company for premiums under split-dollar life
insurance arrangements for Mr. Allison of $34,296 and $34,842 in 1999 and
1998, respectively and for Mr. Burns of $10,252 and $10,416 in 1999 and
1998, respectively. The Company's split dollar insurance program is
designed for the Company to recover its aggregate premium cost.
(3)Restricted stock grants were made in 1999 to Mr. Allison and Mr. Burns for
180,000 and 45,000 shares, respectively. Such grants vest 25% per year.
(4)Mr. Good was appointed an executive officer on February 24, 1999.
The following table sets forth certain information regarding stock options
granted during 1999 to the named executive officers of the Company.
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 540,000 53.5 $3.87 7/1/2008 $1,153,654 $2,841,506
Roland O. Burns 135,000 13.4 $3.87 7/1/2008 $ 288,414 $ 710,376
Mack D. Good 58,000 5.7 $3.87 7/1/2008 $ 123,911 $ 305,199
Richard G. Powers 72,000 7.1 $3.87 7/1/2008 $ 153,821 $ 378,867
Michael W. Taylor 90,000 8.9 $3.87 7/1/2008 $ 192,276 $ 473,584
6
The following table sets forth certain information with respect to the
value of the named executive officers option exercises in 1999 and unexercised
options at December 31, 1999.
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 100,000 $233,487 1,407,500 1,347,500 $175,000 --
Roland O. Burns 15,000 $ 4,688 358,125 341,875 $ 39,375 $ 4,375
Mack D. Good -- -- 6,250 61,750 -- --
Richard G. Powers -- -- 79,000 106,500 -- --
Michael W. Taylor -- -- 69,625 185,375 -- --
(1) The last sale price for a share of Common Stock as reported by the NYSE on
December 31, 1999 was $2.8125 and the exercise prices of the options in
this table ranged from $2.00 to $12.375 per share.
Employment Agreements
Effective June 23, 1999 the Company entered into employment agreements with
M. Jay Allison, the President and Chief Executive Officer of the Company, and
Roland O. Burns, Senior Vice President, Chief Financial Officer, Secretary and
Treasurer of the Company. Under the agreements, the Company has agreed to employ
each of Mr. Allison and Mr. Burns for a period of 12 months at a minimum base
rate of $245,000, and $140,000 per annum, respectively. Each of the employment
agreements provides for the payment of severance benefits in an amount equal to
three times the sum of the existing annual base salary plus the annual bonus of
the employee upon (i) a change in control followed by (ii) the occurrence of
certain specified events, including the assignment of the employee to duties
inconsistent with his position immediately prior to the change in control, a
reduction in the employee's salary, requiring the employee to be relocated,
failure of a successor to the Company to assume the obligations of the Company
under the employment agreement, failure of the Company to re-elect the employee
to the offices held by him immediately prior to a change in control and a breach
by the Company (or any successor) of any provisions of the employment agreement.
The severance benefit payments are payable as a single cash payment within 30
days of the employee's termination of employment. As defined in the employment
agreements, a "change in control" is deemed to have taken place if, without the
approval or recommendation of a majority of the then existing Board of Directors
of the Company, (a) a third person causes or brings about the removal or
resignation of a majority of the then existing members of the Board or if a
third person causes or brings about an increase in the size of the Board such
that the then existing members of the Board thereafter represent a minority of
the total number of persons comprising the entire Board; (b) a third person,
including a group, becomes the beneficial owner of shares of any class of the
Company's stock having 20% or more of the total number of votes that may be cast
for the election of directors of the Company; or (c) the Company's stockholders
approve a merger or other business combination of the Company with or into
another corporation pursuant to which the Company will not survive or will
survive only as a subsidiary of another corporation, or the sale or other
disposition of all or substantially all of the assets of the Company, or any
combination of the foregoing.
7
Report of Compensation Committee on Executive Compensation
The duties of the Company's Compensation Committee include the annual
review and approval of the Company's management compensation strategy, review
and determination of individual elements of compensation for the Company's
executive officers and oversight of the administration of the Incentive Plan.
The Compensation Committee has not established any specific criteria in
determining executive compensation. The goal of the Company's compensation
arrangements is to attract, retain and reward personnel critical to the
long-term success of the Company. To achieve this basic goal, the Compensation
Committee sets annual base salaries for the Chief Executive Officer and the
other executive officers and awards discretionary cash bonuses based on the
Company's financial performance during the prior year, as well as the
Compensation Committee's subjective assessment of an individual's own
performance and ability in the position held by that person.
Base Salaries. The Company's compensation policy is for the Compensation
Committee to annually review and set executive base salaries, including that of
the President and Chief Executive Officer, within a competitive range given the
Company's growth strategy. Once generally established, base salaries are
adjusted within the competitive range on an individual basis based on past
performance. In 1999, the Compensation Committee did not adjust the base
salaries of Mr. Allison or any of the other named executive officers.
Discretionary Cash Bonuses. The Compensation Committee granted cash bonuses of
$965,500 in the aggregate for 1999 to the Company's seven executive officers,
including $470,000 to Mr. Allison, for their performance with respect to the
Company's achievements in 1999. These achievements included the recapitalization
of the Company in April 1999 and the successful drilling program, which in the
opinion of the Committee, substantially enhanced the Company's long-term
business and financial prospects. The amount of each bonus was determined based
upon the Compensation Committee's subjective assessment of the contribution of
each executive officer. With respect to Mr. Allison, the Compensation Committee
considered primarily his role and performance in directing the Company's 1999
results.
Incentive Plan Awards. The Compensation Committee believes that a significant
portion of executive compensation should be dependent on value created for the
Company's stockholders. Through the Incentive Plan, stock options are granted to
key members of management to align the interests of management with the
interests of stockholders in working to increase the value of the Company's
Common Stock. On June 23, 1999, the Compensation Committee granted options under
the Incentive Plan to purchase 970,000 shares of Common Stock, at an exercise
price of $3.875 per share, to the Company's executive officers and certain other
key employees. Of the options granted, options to purchase 955,000 shares of
Common Stock were granted to executive officers and options to purchase 15,000
shares of Common Stock were granted to other key employees. The options to
executive officers will vest over a four year period with service to the
Company. Of the options granted to executive officers, options to purchase
540,000 shares of Common Stock were granted to Mr. Allison. Both the size of
grants and the proportion relative to the total number of option shares granted
generally increased as a function of the recipient's higher level of
responsibility within the Company and individual performance. The factors upon
which the Committee granted options, including the grants to Mr. Allison, were
the same as those considered in awarding discretionary cash bonuses. The
Compensation Committee also made grants of restricted Common Stock to Mr.
Allison for 180,000 shares and Mr. Burns for 45,000 shares. Such shares will
vest over a four year period based on service to the Company.
$1 Million Deduction Limit. Section 162(m) of the Internal Revenue Code
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.
The Committee considers the impact of the limits on deductibility of
8
compensation when determining executive officer compensation. Based on the
current level of executive officer base salaries and discretionary bonuses, the
Committee does not currently anticipate that any portion of the Company's
executive officer compensation would not be deductible under Section 162(m). The
Committee will continue to monitor whether the $1 million limit on deductibility
may impact its compensation policies.
The Compensation Committee
Cecil E. Martin, Jr., Chairman
Franklin B. Leonard
David W. Sledge
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five years
ended December 31, 1999 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 135 companies. The graph assumes
that $100 was invested in each category on the last trading day of 1994 and that
dividends, if any, were reinvested.
Stock Performance Graph
[GRAPHIC OMITTED]
Value of $100 Investment:
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
The Company $170 $392 $360 $ 92 $ 87
New York Stock Exchange 130 156 205 245 268
Public Oil & Gas Producers 110 146 148 119 145
9
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Arthur Andersen LLP as independent public accountants to audit the
consolidated financial statements of the Company for 2000. Stockholders are
being asked to ratify this appointment. Arthur Andersen LLP has served the
Company in this capacity since 1989. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting and will have the opportunity to
make a statement if they desire to do so, and will be available to respond to
appropriate questions.
The Board of Directors recommends that stockholders vote FOR such
ratification. Proxies solicited by the Board of Directors will be so voted
unless stockholders specify otherwise in their proxies. The affirmative vote of
the holders of a majority of the shares of Common Stock present or represented
and entitled to vote at the Annual Meeting is necessary for ratification of the
appointment of the independent accountants.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the Company's annual
meeting of stockholders in 2001 must be received by the Company by December 4,
2000, in order to be eligible for inclusion in the Company's proxy statement and
form of proxy relating to such meeting. Any such proposal must comply with the
federal proxy rules and state law. If a stockholder intends to present a
proposal at the Year 2001 annual meeting that is not included in the Company's
proxy statement, the Company shall have discretionary authority to vote against
such proposal unless the stockholder notifies the Company of such proposal no
later than 45 days before the Company first mailed its proxy materials for the
2000 Annual Meeting of Stockholders and certain other requirements are
satisfied.
ANNUAL REPORT
THE COMPANY'S 1999 ANNUAL REPORT TO STOCKHOLDERS (INCLUDING ITS ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999) IS BEING MAILED
TO STOCKHOLDERS OF RECORD TOGETHER HEREWITH.
OTHER BUSINESS
The Board of Directors is not aware of any matters other than those set
forth above which will be presented for action by the stockholders at the
meeting, but if any other matters should be presented, the persons named in the
proxy intend to vote such proxies in accordance with their best judgement,
unless otherwise restricted by law.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ROLAND O. BURNS
------------------
ROLAND O. BURNS
SECRETARY
Dallas, Texas
April 4, 2000
10
FORM OF PROXY
x PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE
WITHHOLD AUTHORITY Nominees:
FOR To vote for Nominees Roland O. Burns
listed Richard S. Hickok
1. Election of
two (2) Class C
Directors (term
expires in 2003): ----- -----
(Instruction: To withhold authority to vote for the individual nominee, write
that nominee's name on the line below.)
- ---------------------------
FOR AGAINST ABSTAIN
2. Proposal to ratify the
appointment of
Arthur Andersen LLP
independent accountants
for 2000 ----- ------ ------
3. 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 UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 and 2.
SIGNATURE(S) DATE:
----------------------------------- ----------
NOTE: Please sign exactly as your name appears on this proxy. If your stock is
jointly owned, both parties must sign. Fiduciaries and representatives should so
indicate when signing, and when more than one is named, a majority should sign.
COMSTOCK RESOURCES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - MAY 16, 2000
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 Tuesday, May 16,
2000 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.)