SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
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PYR Energy Corporation
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PYR ENERGY CORPORATION
1675 Broadway, Suite 2450
Denver, Colorado 80202
(303) 825-3748
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held March 13, 2002
The Annual Meeting Of Stockholders of PYR Energy Corporation will be held
on March 13, 2002 at 9:00 a.m. (Denver, Colorado time) at Wells Fargo Bank, 1740
Broadway, Main Floor - Forum Room, Denver, Colorado 80202, for the following
purposes:
1. To elect a Board Of Directors consisting of three Directors;
2. To consider and vote upon a proposal recommended by the Board Of
Directors to ratify the selection of Wheeler Wasoff, P.C. to serve as
our independent certified accountants; and
3. To transact any other business that properly may come before the
annual meeting.
Only the stockholders of record as shown on our transfer books at the close
of business on January 21, 2002 are entitled to notice of, and to vote at, the
annual meeting.
All stockholders, regardless of whether they expect to attend the meeting
in person, are requested to complete, date, sign and return promptly the
enclosed form of proxy in the accompanying envelope (which requires no postage
if mailed in the United States). The person executing the proxy may revoke it by
filing with our Secretary an instrument of revocation or a duly executed proxy
bearing a later date, or by electing to vote in person at the annual meeting.
ALL STOCKHOLDERS ARE EXTENDED A CORDIAL INVITATION TO ATTEND THE ANNUAL
MEETING.
By the Board Of Directors
/s/ D. Scott Singdahlsen
------------------------
D. Scott Singdahlsen
Chief Executive Officer
Denver, Colorado
February 1, 2002
PROXY STATEMENT
PYR ENERGY CORPORATION
1675 Broadway, Suite 2450
Denver, Colorado 80202
(303) 825-3748
ANNUAL MEETING OF STOCKHOLDERS
to be held March 13, 2002
This proxy statement is provided in connection with the solicitation of
proxies by and on behalf of the Board Of Directors of PYR Energy Corporation, a
Maryland corporation (referred to as the "Company" or "we" or "us"), to be voted
at the Annual Meeting Of Stockholders to be held at 9:00 a.m. (Denver, Colorado
time) on March 13, 2002 at Wells Fargo Bank, 1740 Broadway, Main Floor - Forum
Room, Denver, Colorado 80202, or at any adjournment or postponement of the
annual meeting. We anticipate that this proxy statement and the accompanying
form of proxy will be first mailed or given to stockholders on or about February
1, 2002.
The shares represented by all proxies that are properly executed and
submitted will be voted at the Annual Meeting in accordance with the
instructions indicated on the proxies. Unless otherwise directed, the shares
represented by proxies will be voted for each of the three nominees for director
whose names are set forth on the proxy card and in favor of ratification of
Wheeler Wasoff, P.C. as our independent certified accountants.
A stockholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of revocation to our Secretary, by
substituting a new proxy executed at a later date, or by requesting, in person
at the Annual Meeting, that the proxy be returned.
The solicitation of proxies is to be made principally by mail; however,
following the initial solicitation, further solicitations may be made by
telephone or oral communication with stockholders. Our officers, directors and
employees may solicit proxies, but these persons will not receive compensation
for that solicitation other than their regular compensation as employees.
Arrangements also will be made with brokerage houses and other custodians,
nominees and fiduciaries to forward solicitation materials to beneficial owners
of the shares held of record by those persons. We may reimburse those persons
for reasonable out-of-pocket expenses incurred by them in so doing. We will pay
all expenses involved in preparing, assembling and mailing this proxy statement
and the enclosed material. A majority of the issued and outstanding shares of
common stock entitled to vote, represented either in person or by proxy,
constitutes a quorum at any meeting of the stockholders. If sufficient votes for
approval of the matters to be considered at the annual meeting have not been
received prior to the meeting date, we intend to postpone or adjourn the annual
meeting in order to solicit additional votes. The form of proxy we are
soliciting requests authority for the proxies, in their discretion, to vote the
stockholders' shares with respect to a postponement or adjournment of the Annual
Meeting. At any postponed or adjourned meeting, we will vote any proxies
received in the same manner described in this proxy statement with respect to
the original meeting.
1. ELECTION OF DIRECTORS
At the annual meeting, the stockholders will elect three directors to serve
as our Board Of Directors. Each director will be elected to hold office until
the next annual meeting of stockholders and thereafter until his successor is
elected and qualified. The affirmative vote of a majority of the shares
represented at the annual meeting is required to elect each director. Cumulative
voting is not permitted in the election of directors. Consequently, each
stockholder is entitled to one vote for each share of common stock held in his
or her name. In the absence of instructions to the contrary, the person named in
the accompanying proxy shall vote the shares represented by that proxy for the
persons named below as management's nominees for directors. Each of the nominees
currently is a director of the Company.
Each of the nominees has consented to be named in this proxy statement and
to serve on the Board if elected. It is not anticipated that any of the nominees
will become unable or unwilling to accept nomination or election, but, if that
should occur, the persons named in the proxy intend to vote for the election of
such other person as the Board Of Directors may recommend.
The following table sets forth, with respect to each nominee for director,
the nominee's age, his positions and offices with the Company, the expiration of
his term as a director, and the year in which he first became a director.
Individual background information concerning each of the nominees follows the
table. For additional information concerning the nominees, including stock
ownership and compensation, see "--Executive Compensation", "--Stock Ownership
Of Directors And Principal Stockholders", and "--Certain Transactions With
Management And Principal Stockholders". Keith F. Carney, who currently is a
director, has declined to be nominated for consideration as a director following
the annual meeting, and his term as a director will expire at the annual
meeting.
Expiration Of Term Initial Date
Name Age Position With The Company As Director As Director
---- --- ------------------------- ----------- -----------
D. Scott Singdahlsen 43 Chief Executive Officer; 2002 Annual Meeting August 1997
President; and Chairman of
the Board
S. L. Hutchison 69 Director 2002 Annual Meeting April 1999
Bryce W. Rhodes 48 Director 2002 Annual Meeting April 1999
D. Scott Singdahlsen has served as our President, Chief Executive Officer
and Chairman of the Board since August 1997. Mr. Singdahlsen co-founded PYR
Energy, LLC in 1996 and served as General Manager and Exploration Coordinator.
Mr. Singdahlsen was a principal and co-founder of Interactive Earth Sciences
Corporation, a 3-D seismic management and interpretation consulting firm in
Denver, where he served as vice president, president and lead seismic
interpretation specialist from 1992 to 1996. Prior to forming Interactive Earth
Sciences Corporation, Mr. Singdahlsen was employed as a Development Geologist
for Chevron USA in the Rocky Mountain region. At Chevron, Mr. Singdahlsen was
involved in 3-D seismic reservoir characterization projects and geostatistical
analysis. Mr. Singdahlsen started his career at UNOCAL as an Exploration
Geologist in Midland, Texas. Mr. Singdahlsen earned a B.A. in Geology from
Hamilton College and a M.S. in Structural Geology from Montana State University.
2
S. L. Hutchison has served as a Director since April 1999, when he was
nominated and elected to the Board in connection with our private placement of
convertible promissory notes in October and November 1998. Since 1979, Mr.
Hutchison has served as Vice President and Chief Financial Officer of Victory
Oil Company, an oil and gas production company based in California, and other
companies in the Victory Group of companies. Also during that period, Mr.
Hutchison has served as Vice President and Chief Financial Officer and a
Director of Crail Capital, a real estate investment company that is owned by
Victory Oil Company, and Victex, Inc., a real estate and oil and gas company.
Mr. Hutchison also serves as Chief Financial Officer and a director of each of
the Crail Johnson Foundation and the Independent Oil Producers Agency, and is
the Treasurer and a director of the Los Angeles Maritime Institute. Mr.
Hutchison received a Bachelor's degree in accounting from the University of
Washington.
Bryce W. Rhodes has served as a Director since April 1999, when he was
nominated and elected to the Board in connection with our private placement of
convertible promissory notes in October and November 1998. Since 1996, Mr.
Rhodes has served as Vice President of Whittier Energy Company, an oil and gas
investment company. Mr. Rhodes also served as Investment Manager of Whittier
Energy Company from 1990 until 1996. Mr. Rhodes received B.A. degrees in Geology
and Biology from the University of California, Santa Cruz, in 1976 and an MBA
degree from Stanford University.
Other Executive Officers
Andrew P. Calerich, 37, has served as our Chief Financial Officer since
August 1997, as Secretary since May 1998, and as Vice President since August
1999. From 1993 to 1997, Mr. Calerich was a business and financial consultant
primarily to public and private oil and gas producers in Denver. From 1990 to
1993, Mr. Calerich was employed as corporate Controller at a publicly traded oil
and gas company in Denver. Mr. Calerich began his professional career in public
accounting at Arthur Andersen & Company. Mr. Calerich is a Certified Public
Accountant. He earned B.S. degrees in both Accounting and Business
Administration at Regis College in Denver, Colorado.
Kenneth R. Berry, Jr., 49, has served as Vice President of Land since
August 1999 and as Land Manager since October 1997. Mr. Berry is responsible for
the management of all land issues including leasing and permitting. Mr. Berry
has 23 years of experience as an independent landman. Prior to joining the
Company, Mr. Berry served as the managing land consultant for Swift Energy
Company in the Rocky Mountain region. Mr. Berry began his career in the land
department with Tenneco Oil Company after earning a B.A. degree in Petroleum
Land Management at the University of Texas -- Austin.
Each of the officers serves at the pleasure of the Board Of Directors.
There are no family relationships among our officers and directors.
3
Committees And Meetings
The Board Of Directors met six times during the fiscal year ended August
31, 2001 and each director participated in at least 75 percent of the aggregate
of the total number of meetings of the Board and of all committees on which that
director served during the year.
The Board Of Directors currently has a Compensation Committee, which met
three times during the fiscal year ended August 31, 2001. The Compensation
Committee has the authority to establish policies concerning compensation and
employee benefits. The Compensation Committee reviews and makes recommendations
concerning the compensation policies and the implementation of those policies
and determines compensation and benefits for executive officers. The
Compensation Committee currently consists of Messrs. Carney (Chairman),
Hutchison and Rhodes. None of the members of the Compensation Committee is an
employee of the Company.
The Board of Directors currently has an Audit Committee consisting of
Messrs. Hutchison (Chairman), Carney and Rhodes. The Audit Committee is
primarily responsible for the effectiveness of the Company's accounting policies
and practices, financial reporting and internal controls. The Audit Committee
charter was adopted by the Board Of Directors in June 2000 and was amended by
the Board in April 2001. A copy of the Audit Committee charter is attached as
Exhibit A to the Company's definitive Proxy Statement regarding the Annual
Meeting of the Company's stockholders held on June 18, 2001. A copy of that
Proxy Statement and the accompanying Audit Committee charter were filed with the
SEC on May 29, 2001 and can be found on the SEC's website at www.sec.gov. The
functions of the Audit Committee and its activities during the fiscal year ended
August 31, 2001 are described below under the heading "Audit Committee Report".
During the fiscal year ended August 31, 2001, the Board examined the composition
of the Audit Committee in light of the adoption by the SEC and the American
Stock Exchange (the "AMEX") of rules governing audit committees of issuers, such
as the Company, whose securities are quoted on the AMEX. Based upon this
examination, the Board confirmed that all members of the Audit Committee are
"independent" within the meaning of the AMEX's rules.
Audit Committee Report
The report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or the Exchange Act, except
to the extent that we specifically incorporate this information by reference,
and shall not otherwise be deemed filed under such Acts.
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed and discussed with management the audited financial statements in the
Company's Annual Report on Form 10-K for the year ended August 31, 2001 and the
unaudited financial statements included in the Quarterly Reports on Form 10-QSB
for the first three quarters of the fiscal year ended August 31, 2001.
The Committee discussed with the independent auditors, who are responsible
for expressing an opinion on the conformity of audited financial statements with
generally accepted accounting principles, the auditors' judgments as to the
quality, not just the acceptability, of the Company's accounting principles and
4
such other matters as are required to be discussed by the auditors with the
Committee under Statement on Auditing Standard No. 61, as amended. In addition,
the Committee discussed with the independent auditors the auditors' independence
from management and the Company, including the matters in the written
disclosures and the letter required by the Independence Standards Board Standard
No. 1. The Committee considered whether the auditors' providing services on
behalf of the Company other than audit services is compatible with maintaining
the auditors' independence.
The Committee discussed with the Company's independent auditors the overall
scope and plans for their respective audits. The Committee meets with the
independent auditors, with and without management present, to discuss the
results of the auditors' examinations, their evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
The Committee met three times during the fiscal year ended August 31, 2001 and
has thus far subsequently met two times.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors, and the Board approved, that the audited
financial statements be included in the Annual Report on Form 10-K for the year
ended August 31, 2001 for filing with the SEC. The Committee also has
recommended to the Board the selection of the Company's independent auditors.
The Audit Committee
Keith F. Carney
S.L. Hutchison
Bryce W. Rhodes
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires our directors, executive officers and beneficial owners of more than
10% of our common stock to file with the SEC initial reports of ownership and
reports of changes in ownership of our common stock and other equity securities.
We believe that during the fiscal year ended August 31, 2001, our officers,
directors and beneficial owners of more than 10% of our common stock complied
with all Section 16(a) filing requirements. In making these statements
concerning compliance with Section 16(a), we have relied upon the written
representations of our directors and officers.
Executive Compensation
Summary Compensation Table
The following table sets forth in summary form the compensation received
during each of the last three completed fiscal years ended August 31, 2001 by D.
Scott Singdahlsen, our Chief Executive Officer, President and Chairman Of The
Board, and Andrew P. Calerich, our Chief Financial Officer, Vice President and
Secretary. Other than Messrs. Singdahlsen and Calerich, none of our executive
officers received total salary and bonus exceeding $100,000 during any of the
last three fiscal years.
5
Summary Compensation Table
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------------------------------- --------------------------------
Other Restricted LTIP All other
Name and Fiscal Salary Bonus Annual Stock Options Payouts compensation
Principal Position Year ($)(1) ($)(2) Compensation Awards ($) (#) ($)(4) ($)(5)
($)(3)
---------------------------- -------- ---------- --------- ------------- ------------ --------- --------- -------------
D. Scott Singdahlsen 2001 $128,250 $40,000 -0- -0- -0- -0- -0-
Chief Executive Officer,
President and Chairman 2000 $110,000 $-0- -0- -0- -0- -0- -0-
Of the Board
1999 $77,917 $-0- -0- -0- -0- -0- -0-
Andrew P. Calerich 2001 $90,666 $10,000 -0- -0- -0- -0- -0-
Chief Financial Officer,
Vice President and 2000 $85,000 $-0- -0- -0- -0- -0- -0-
Secretary
1999 $66,667 $-0- -0- -0- -0- -0- -0-
---------------
(1) The dollar value of base salary (cash and non-cash) received during the
year indicated.
(2) The dollar value of bonus (cash and non-cash) received during the year
indicated.
(3) During the period covered by the Summary Compensation Table, we did not pay
any other annual compensation not properly categorized as salary or bonus,
including perquisites and other personal benefits, securities or property.
(4) We do not have in effect any plan that is intended to serve as incentive
for performance to occur over a period longer than one fiscal year except
for our 1997 and 2000 Stock Option Plans.
(5) All other compensation received that we could not properly report in any
other column of the Summary Compensation Table including annual Company
contributions or other allocations to vested and unvested defined
contribution plans, and the dollar value of any insurance premiums paid by,
or on behalf of, the Company with respect to term life insurance for the
benefit of the named executive officer, and, the full dollar value of the
remainder of the premiums paid by, or on behalf of, the Company.
Option Grants Table
The following table provides certain summary information concerning
individual grants of stock options made during the fiscal year ended August 31,
2001 to the following named executive officers.
6
Option Grants For Fiscal Year Ended August 31, 2001
---------------------------------------------------
Number of
Securities % of Total
Underlying Options Granted Exercise
Options to Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date
---- ----------- ----------- --------- ----
D. Scott Singdahlsen 100,000 33.3% $5.98 11/27/05
Andrew P. Calerich 45,000 15.6% $5.438 11/27/05
Aggregated Option Exercises And Fiscal Year-End Option Value Table
The following table provides certain summary information concerning stock
option exercises during the fiscal year ended August 31, 2001 by the named
executive officers and the value of unexercised stock options held by the named
executive officers as of August 31, 2001.
Aggregated Option Exercises
For Fiscal Year Ended August 31, 2001
And Year-End Option Values (1)
------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Year- Options at
End (#) (4) Fiscal Year-End ($) (5)
-------------------------- --------------------------
Shares
Acquired on
Name Exercise (2) Value Realized ($)(3) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------------------- ----------- ------------- ----------- -------------
D. Scott Singdahlsen None $-0- 33,333 166,667 $-0- $-0-
Andrew P. Calerich 125,000 $749,375 80,000 135,000 $31,900 $83,550
(1) No stock appreciation rights are held by any of the named executive
officers.
(2) The number of shares received upon exercise of options during the year
ended August 31, 2001.
(3) With respect to options exercised during the year ended August 31, 2001,
the dollar value of the difference between the option exercise price and
the market value of the option shares purchased on the date of the exercise
of the options.
(4) The total number of unexercised options held as of August 31, 2001,
separated between those options that were exercisable and those options
that were not exercisable on that date.
(5) For all unexercised options held as of August 31, 2001, the aggregate
dollar value of the excess of the market value of the stock underlying
those options over the exercise price of those unexercised options. These
values are shown separately for those options that were exercisable and
those options that were not yet exercisable on August 31, 2001 based on the
closing sale price of our common stock on that date, which was $2.08 per
share.
7
Employee Retirement Plans, Long-Term Incentive Plans and Pension Plans
Excluding the Company's stock option plans, we do not have any long-term
incentive plan to serve as incentive for performance to occur over a period
longer than one fiscal year.
Compensation Committee Interlocks and Insider Participation
No person who served as a member of the Compensation Committee during the
year ended August 31, 2001 was, during that year, an officer or employee of the
Company or of any of its subsidiaries, or was formerly an officer of the Company
or of any of its subsidiaries.
Compensation Committee Report on Executive Compensation
None of the members of the Compensation Committee of the Board of Directors
is an employee of the Company. The Compensation Committee sets and administers
the policies that govern the annual and long-term compensation of executive
officers of the Company. The Compensation Committee makes recommendations to the
full Board concerning compensation of executive officers and awards of stock
options under the Company's stock option plans.
Compensation Policies Toward Executive Officers. The Compensation
Committee's executive compensation policies are designed to provide competitive
levels of compensation that relate compensation to the Company's annual and
long-term performance, reward above average corporate performance compared to
other companies in the oil and gas industry, recognize individual initiative and
achievements, and assist the Company in retaining and attracting qualified
executive officers. The Compensation Committee attempts to achieve these
objectives through a combination of base salary, stock options, and cash bonus
awards. In determining compensation, the Compensation Committee considers the
matters discussed in this report as well as the recommendations of the Chief
Executive Officer concerning other executive officers and employees. The
Compensation Committee meet on November 20, 2000 to consider executive salaries
for the fiscal year ended August 31, 2001, as well as stock option grants and
cash bonuses regarding performance during the year ended August 31, 2000. This
report is based on that meeting and, with respect to the discussion of executive
salaries for the fiscal year ended August 31, 2000, the meeting of the Committee
held on August 11, 1999.
Executive Salaries. Executive salaries are reviewed by the Compensation
Committee on a yearly basis and are set for individual executive officers based
on subjective evaluations of each individual officer's performance and
contributions to the Company, the Company's past performance, the Company's
future prospects and long-term growth potential and a comparison of the salary
ranges for executives of other companies in the oil and gas industry. Through
consideration of these criteria, the Compensation Committee believes that
salaries may be set in a manner that is both competitive and reasonable within
the Company's industry.
The consideration of the Company's performance for the year ended August
31, 2000 included a review of the Company's net loss of $983,000 for fiscal 2000
compared to a net loss of $1,140,000 for the previous year, and the increased
recognition of the Company in the investment community. The consideration of the
Company's future prospects and potential for long-term growth at the November
20, 2000 meeting included a review of the development of the Company's East Lost
Hills prospect and the success in raising capital to fund such efforts. After
completing this review, the Committee recommended, and the Board approved,
increasing Mr. Singdahlsen's annual base salary to $132,000 and increasing Mr.
Calerich's base salary to $93,500 for fiscal 2001.
8
The consideration of the Company's performance for the year ended August
31, 2001 included a review of the development of the East Lost Hills prospect,
the success in raising capital to fund such efforts and the commencement of
production at the ELH #1 well. The consideration of the Company's future
prospects and potential for long-term growth included advancing the Company's
additional exploration projects, and continued recognition of the Company in the
investment community.
After completing its reviews at a meeting of the Committee on July 30,
2001, the Committee recommended, and the Board approved, increasing Mr.
Singdahlsen's annual base salary to $175,000 for fiscal 2002.
Stock Options. Stock options are granted to executive officers and other
employees of the Company by the full Board after recommendations of the
Compensation Committee as a means of providing long-term incentive to the
Company's employees. The Compensation Committee believes that stock options
encourage increased performance by the Company's employees and align the
interests of the Company's employees with the interests of the Company's
stockholders. Decisions concerning recommendations for the granting of stock
options to a particular executive officer are made after reviewing the number of
options previously granted to that officer, the number of options granted to
other executive officers (with higher ranking officers generally receiving more
options in the aggregate), and a subjective evaluation of that officer's
performance and contributions to the Company as described above under
"--Executive Salaries" and anticipated involvement in the Company's future
prospects. While stock options are viewed by the Committee on a more forward
looking basis than cash bonus awards based on prior performance, an executive
officer's prior performance will impact the number of options that may be
granted. At its November 27, 2000 meeting, after considering the foregoing
factors, the Committee recommended that the Company grant to Mr. Singdahlsen
options to purchase 100,000 shares for $5.98 per share until November 27, 2005,
and grant to Mr. Calerich options to purchase 45,000 shares for $5.44 per share
until November 27, 2005. The Board approved the grants recommended by the
Committee.
Cash Bonus Awards. The Compensation Committee considers on an annual basis
whether to pay cash bonuses to some or all of the Company's employees, including
the Company's executive officers. The Compensation Committee considers the
granting of bonuses with the objective that the Company will remain competitive
in its compensation practices and be able to retain highly qualified executive
officers. In determining the amounts of bonuses, the Compensation Committee
considers the performance of the Company and each executive officer in the past
year as described above under "--Executive Salaries". The Committee's review of
the Company's performance concentrates on exploration success, prospect
generation, investment community recognition of the Company and financial
stability. Based on the foregoing, at its July 30, 2001 meeting the Committee
recommended, and the Board approved, a bonus of $40,000 to Mr. Singdahlsen, and
a bonus of $10,000 to Mr. Calerich.
Chief Executive Officer Compensation. Generally, the compensation of the
Company's Chief Executive Officer is determined in the same manner as the
compensation for other executive officers of the Company as described above. The
Committee considered Mr. Singdahlsen's compensation after determining the base
salaries and bonuses of the other executive officers and the Committee's
decisions concerning Mr. Singdahlsen's compensation included consideration of
9
the relative amounts paid to these officers and Mr. Singdahlsen's added
responsibilities as Chief Executive Officer. As a result of these
considerations, as well as the compensation being paid to the chief executive
officers of other relatively comparable companies in the oil and gas industry,
the Committee increased Mr. Singdahlsen's base salary and paid Mr. Singdahlsen
the bonus as described above.
The Compensation Committee
Keith F. Carney
S. L. Hutchison
Bryce W. Rhodes
1997 Stock Option Plan
In August 1997, our 1997 Stock Option Plan (the "1997 Plan") was adopted by
the Board Of Directors and subsequently approved by the stockholders. Pursuant
to the 1997 Plan, we may grant options to purchase an aggregate of 1,000,000
shares of common stock to key employees, directors, and other persons who have
contributed or are contributing our success. The options granted pursuant to the
1997 Plan may be either incentive options qualifying for beneficial tax
treatment for the recipient or nonqualified options. The 1997 Plan may be
administered by the Board Of Directors or by an option committee. Administration
of the 1997 Plan includes determination of the terms of options granted under
the 1997 Plan. At August 31, 2001, options to purchase 726,500 shares were
outstanding under the Plan and there are no remaining options that may be
granted under the 1997 Plan.
2000 Stock Option Plan
In March 1999, our 2000 Stock Option Plan (the "2000 Plan") was adopted by
the Board Of Directors and subsequently approved by the stockholders. Pursuant
to the 2000 Plan, we may grant options to purchase shares of our common stock to
key employees, directors, and other persons who have contributed or are
contributing to our success. We initially could grant options to purchase up to
500,000 shares pursuant to the 2000 Plan. In June 2001, our stockholders
approved an amendment which allows us to grant options to purchase up to
1,500,000 shares pursuant to the 2000 Plan. The options granted pursuant to the
2000 Plan may be either incentive options qualifying for beneficial tax
treatment for the recipient or non-qualified options. The 2000 Plan may be
administered by the Board Of Directors or by an option committee. Administration
of the 2000 Plan includes determination of the terms of options granted under
the 2000 Plan. As of August 31, 2001, options to purchase 500,000 shares were
outstanding under the 2000 Plan and options to purchase 1,000,000 shares were
available to be granted pursuant to the 2000 Plan.
Compensation Of Outside Directors
Effective September 1, 1999, the Company granted options to purchase 20,000
shares of common stock to each director of the Company who is not also an
employee of the Company (each, an "Outside Director") as compensation for
serving as a director. The exercise price of these options is $4.13 per share.
At the end of every fiscal quarter after September 1, 1999, options to purchase
2,500 shares of common stock became exercisable for each Outside Director who
served as a director for the entire quarter so that all the options were
exercisable as of August 31, 2001. Directors also are reimbursed for expenses
incurred in connection with attending meetings and for other expenses incurred
on our behalf. The directors receive no other compensation for serving as
directors.
10
Employment Contracts And Termination of Employment And Change-In-Control
Arrangements
We do not have any written employment contracts with any of our officers or
other employees. We have no compensatory plan or arrangement that results or
will result from the resignation, retirement, or any other termination of an
executive officer's employment or from a change-in-control or a change in an
executive officer's responsibilities following a change-in-control, except that
both the 1997 Plan and the 2000 Plan provide for vesting of all outstanding
options in the event of the occurrence of a change-in-control.
Performance Graph
The following line graph compares the yearly percentage change in the
cumulative total stockholder return, assuming reinvestment of dividends
(regarding shares other than our common stock, on which no dividends have been
paid) for (1) our common stock, (2) the American Stock Exchange Oil and Gas
Index, and (3) the Standard & Poors S&P 500 Index. The comparison shown in the
graph is for the period from November 12, 1996 (when trading in our predecessor,
Mar Ventures Inc., began) through August 31, 1997, and for the years ended
August 31, 1998, 1999, 2000 and 2001. The cumulative total stockholder return on
the Company's common stock was measured by dividing the difference between the
Company's share price at both the end and at the beginning of the measurement
period by the share price at the beginning of the measurement period.
[Performance Graph appears here
based on the following data points:
11/12/96 8/29/97 8/31/98 8/31/99 8/31/00 8/31/01
Pyr Energy Corporation $100 $1,300.00 $500.00 $3,700.00 $3,900.00 $1,664.00
Amex Oil and Gas Index $100 $124.71 $106.50 $142.19 $141.82 $149.61
S&P 500 $100 $127.81 $136.02 $187.62 $215.65 $161.07
Stock Ownership Of Directors And Principal Stockholders
As of December 18, 2001, there were 23,641,357 shares of common stock
outstanding. The following table sets forth certain information as of that date
with respect to the beneficial ownership of common stock by each director and
nominee for director, by all executive officers and directors as a group, and by
each other person known by us to be the beneficial owner of more than five
percent of our common stock:
11
Percentage of
Name and Address of Number of Shares Shares
Beneficial Owner Beneficially Owned (1) Outstanding
---------------- ---------------------- -----------
D. Scott Singdahlsen 1,940,366 (2) 8.2%
1675 Broadway, Suite 2450
Denver, Colorado 80202
Keith F. Carney 97,402 (3) *
915 Bay Oaks Road
Houston, Texas 77008
S.L. Hutchison 3,229,508 (4) 13.7%
c/o Victory Oil Company
222 West Sixth Street, Suite 1010
San Pedro, California 90731
Bryce W. Rhodes 269,039 (5) 1.1%
c/o Whittier Energy Company
462 Stevens Avenue, Suite 109
Solana Beach, California 92075
All Executive Officers and Directors as a 6,204,180 (3)(4)(5)(6)(7) 25.63%
group (six persons)
Victory Oil Company 3,079,384 (8) 13.03%
222 West Sixth Street, Suite 1010
San Pedro, California 90731
---------------------------
(*) Less than one percent.
(1) "Beneficial ownership" is defined in the regulations promulgated by the
U.S. Securities and Exchange Commission as having or sharing, directly or
indirectly (1) voting power, which includes the power to vote or to direct
the voting, or (2) investment power, which includes the power to dispose or
to direct the disposition of shares of the common stock of an issuer. The
definition of beneficial ownership includes shares underlying options or
warrants to purchase common stock, or other securities convertible into
common stock, that currently are exercisable or convertible or that will
become exercisable or convertible within 60 days. Unless otherwise
indicated, the beneficial owner has sole voting and investment power.
(2) The shares shown for Mr. Singdahlsen include 200,000 shares owned by Mr.
Singdahlsen's two minor children. Also includes options to purchase 33,333
shares at $4.40 per share until May 15, 2005 and 33,333 shares at $5.98 per
share until November 27, 2005.
(3) Includes options to purchase 20,000 shares at $4.125 per share until
December 20, 2002 that currently are exercisable or that will become
exercisable within the next 60 days.
(4) Includes options to purchase 20,000 shares at $4.125 per share until
December 20, 2002 that currently are exercisable or that will become
exercisable within the next 60 days. Also includes the shares shown as
beneficially owned by Victory Oil Company as described in note (8) below.
Mr. Hutchison is the Vice President and Chief Financial Officer of Victory
Oil Company. Mr. Hutchison disclaims beneficial ownership of the shares
beneficially owned by Victory Oil Company.
12
(5) Includes 13,000 shares of common stock owned by Mr. Rhodes and 64,414
shares of common stock owned by Adventure Seekers Travel, Inc. Adventure
Seekers is owned by Mr. Rhodes' wife and Mr. Rhodes is the President of
Adventure Seekers. Also includes 171,625 shares that are held by Whittier
Energy Company. Mr. Rhodes is a Vice President of Whittier Energy Company.
Mr. Rhodes disclaims beneficial ownership of the shares beneficially owned
by Whittier Energy Company. Also includes options to purchase 20,000 shares
at $4.125 per share until December 20, 2002 that currently are exercisable
or that will become exercisable within the next 60 days.
(6) Includes 125,000 shares of common stock and options to purchase 155,000
shares of common stock at exercise prices ranging from $.69 to $5.44 per
share that currently are exercisable or that will become exercisable within
the next 60 days that are held by Andrew P. Calerich, Vice-President, Chief
Financial Officer and Secretary of the Company, and 32,600 shares held by
Mr. Calerich's wife's individual retirement account.
(7) Includes the following securities held directly or indirectly by Kenneth R.
Berry, Jr., who is Vice President of Land: an aggregate of 70,265 shares
owned by various entities, IRAs, and trusts with which Mr. Berry, or his
spouse or minor daughter, is associated; and options to purchase 285,000
shares of common stock at exercise prices ranging from $.69 to $5.44 per
share that currently are exercisable or that will become exercisable within
the next 60 days.
(8) Includes 100,000 shares owned by Crail Fund, a partnership that is owned by
the shareholders of Victory Oil Company. See "Certain Transactions With
Management And Principal Stockholders".
Certain Transactions With Management And Principal Stockholders
1998 Private Placement Of Notes
-------------------------------
In November 1998, we completed the sale of convertible promissory notes in
the total amount of $2,500,000 in a private placement transaction pursuant to
exemptions from federal and state registration requirements. Victory Oil Company
purchased $1.0 million of notes, and trusts for whom the Whittier Trust Company
and Whittier Trust Company of Nevada, Inc. serve as trustee, purchased $500,000
of notes. In addition, a company owned by Bryce Rhodes' wife purchased $40,000
of these notes. The remaining notes were sold to other investors.
These notes were automatically converted into shares of Series A Preferred
Stock at the rate of one share for each $100 principal amount of notes upon
approval by the stockholders of the Series A Preferred Stock on April 16, 1999.
As a result, no notes are currently outstanding.
Each share of Series A Preferred Stock issued had a face value of $100 per
share. The Series A Preferred Stock was convertible, in whole or in part, into
common stock at the rate of one share of common stock for each $.60 of face
value of Series Preferred Stock (or 166.67 shares of common stock for each $100
face amount share of Series A Preferred Stock). All these shares of Preferred
Stock were converted into shares of common stock.
We had the right to require that one-third of the outstanding Series A
Preferred Stock be redeemed or converted at any time after October 26, 1999,
provided that the market value of our common stock was at least $2.40 per share
based on a 45-day weighted average trading price. At October 26, 1999, we had
exceeded the $2.40 per share requirement and subsequently gave notice of
redemption to the holders of one-third of the Series A Preferred Stock.
13
We also had the right to require all of the outstanding Series A Preferred
Stock be redeemed or converted beginning at any time after October 26, 2000,
provided that the market value of our common stock was at least $4.80 per share
based upon a 45-day weighted average trading price. At October 26, 2000, we had
exceeded the $4.80 per share trading requirement. In November 2000, we informed
the holders of the Series A Preferred Stock that the outstanding shares would be
redeemed at 5:00 p.m. on December 8, 2000 if they were not converted into common
stock prior to that time. As a result, no shares of Series A Preferred Stock are
currently outstanding.
In connection with the sale of the convertible promissory notes, we agreed
to add, and our stockholders subsequently approved the election of, S.L.
Hutchison and Bryce W. Rhodes to the Board of Directors. Mr. Hutchison is the
Chief Financial Officer of Victory Oil Company and Mr. Rhodes is a beneficial
owner of less than five percent of the Whittier Trust Company and the Whittier
Trust Company of Nevada, Inc., and a beneficiary of trusts administered by those
companies that own our securities. Mr. Rhodes has no investment authority over
those trusts.
As a condition to the sale of these notes, D. Scott Singdahlsen, a director
and officer of the Company entered into a voting agreement with the purchasers
of the notes. Pursuant to this voting agreement, Mr. Singdahlsen agreed that he
will vote all the shares of common stock owned by him in favor of the election
of two nominees of the investors to serve on the Board Of Directors and for the
re-election of those nominees or other nominees at any time that the aggregate
percentage ownership of common equity owned by the investors is 20 percent or
more of the outstanding common stock. At the annual meeting of stockholders held
on March 13, 2000, all of Mr. Singdahlsen's shares were voted in favor of the
two nominees. Mr. Singdahlsen is required to vote for only one nominee at any
time after the aggregate percentage ownership of common equity owned by the
investors is less than 20 percent and greater than or equal to 10 percent of the
outstanding common stock. The obligation of Mr. Singdahlsen to vote for any
nominees of the investors terminates at any time after the percentage ownership
of common equity owned by the investors is less than 10 percent of the
outstanding common stock. As of December 28, 2001, the percentage ownership of
the common equity owned by the investors was greater than 10% but less than 20%
of the outstanding common stock so that they are entitled to require that Mr.
Singdahlsen vote in favor of one nominee for director. Mr. Hutchison has been
nominated by the investors to serve as a director.
Except as described above, during the fiscal year ended August 31, 2001,
there were no transactions between the Company and its directors, executive
officers or known holders of greater than five percent of the common stock in
which the amount involved exceeded $60,000 and in which any of the foregoing
persons had or will have a material interest.
2. PROPOSAL TO RATIFY THE SELECTION OF WHEELER WASOFF, P.C.
AS CERTIFIED INDEPENDENT ACCOUNTANTS
The Board Of Directors recommends that the stockholders vote in favor of
ratifying the selection of the certified public accounting firm of Wheeler
Wasoff, P.C. of Denver, Colorado as the auditors who will audit financial
statements, prepare tax returns, and perform other accounting and consulting
services we request for the fiscal year ended August 31, 2002 or until the Board
Of Directors, in its discretion, replaces them. Wheeler Wasoff, P.C. has audited
our financial statements since the fiscal year ended August 31, 1997.
14
Independent Public Accountants
Audit Fees. The Company paid Wheeler Wasoff, P.C. a total of $20,913 for
professional services rendered for the audit of the Company's financial
statements for the fiscal year ended August 31, 2001 and for their review of the
financial statements included in the Company's Quarterly Reports on Form 10-QSB
during the fiscal year ended August 31, 2001.
Financial Information Systems Design And Implementation Fees. Wheeler
Wasoff, P.C. did not perform services during the fiscal year ended August 31,
2001 relating to financial information systems and implementation.
All Other Fees. The Company paid Wheeler Wasoff, P.C. a total of $11,487
for all other services performed for the Company during the fiscal year ended
August 31, 2001.
Required Vote; Board Recommendation
An affirmative vote of the majority of shares represented at the annual
meeting is necessary to ratify the selection of auditors. There is no legal
requirement for submitting this proposal to the stockholders; however, the Board
Of Directors believes that it is of sufficient importance to seek ratification.
Whether the proposal is approved or defeated, the Board may reconsider its
selection of Wheeler Wasoff, P.C. It is expected that one or more
representatives of Wheeler Wasoff, P.C. will be present at the annual meeting
and will be given an opportunity to make a statement if they desire to do so and
to respond to appropriate questions from stockholders.
The Board Of Directors unanimously recommends that the stockholders vote
for approval of Wheeler Wasoff, P.C. as the Company's certified independent
accountants.
OTHER BUSINESS
The Board Of Directors is not aware of any other matters that are to be
presented at the annual meeting, and it has not been advised that any other
person will present any other matters for consideration at the meeting.
Nevertheless, if other matters should properly come before the annual meeting,
the stockholders present, or the persons, if any, authorized by a valid proxy to
vote on their behalf, shall vote on such matters in accordance with their
judgment.
VOTING PROCEDURES
Votes at the annual meeting are counted by an inspector of election
appointed by the Chairman of the meeting. If a quorum is present, an affirmative
vote of a majority of the votes entitled to be cast by those present in person
or by proxy is required for the approval of items submitted to stockholders for
their consideration, unless a different number of votes is required by Maryland
law or our certificate of incorporation. Abstentions by those present at the
annual meeting are tabulated separately from affirmative and negative votes and
do not constitute affirmative votes. If a stockholder returns his proxy card and
withholds authority to vote for any or all of the nominees, the votes
represented by the proxy card will be deemed to be present at the meeting for
purposes of determining the presence of a quorum but will not be counted as
affirmative votes. Shares in the names of brokers that are not voted are treated
as not present.
15
RESOLUTIONS PROPOSED BY INDIVIDUAL STOCKHOLDERS;
DISCRETIONARY AUTHORITY TO VOTE PROXIES
In order to be considered for inclusion in the proxy statement and form of
proxy relating to our next annual meeting of stockholders following the end of
our 2002 fiscal year, proposals by individual stockholders must be received by
us no later than September 23, 2002.
In addition, the proxy solicited by the Board of Directors for the next
annual meeting of stockholders following the end of our 2002 fiscal year will
confer discretionary authority on any stockholder proposal presented at that
meeting unless we are provided with notice of that proposal no later than
December 9, 2002.
AVAILABILITY OF REPORTS ON FORM 10-KSB
Upon written request, we will provide, without charge, a copy of our annual
report on Form 10-K for the fiscal year ended August 31, 2001 to any
stockholders of record, or to any stockholder who owns common stock listed in
the name of a bank or broker as nominee, at the close of business on January 21,
2002. Any request for a copy of our annual report on Form 10-K should be mailed
to the Secretary, PYR Energy Corporation, 1675 Broadway, Suite 2450, Denver,
Colorado 80202, (303) 825-3748.
FORWARD-LOOKING STATEMENTS
This proxy statement includes "forward-looking" statements within the
meaning of Section 21E of the Exchange Act. All statements other than statements
of historical facts included in this proxy statement, including without
limitation statements under "Recent Developments Concerning The Company"
regarding our financial position, business strategy, and plans and objectives of
management for future operations and capital expenditures, are forward-looking
statements. Although we believe that the expectations reflected in the
forward-looking statements and the assumptions upon which the forward-looking
statements are based are reasonable, we can give no assurance that such
expectations and assumptions will prove to have been correct. Additional
statements concerning important factors that could cause actual results to
differ materially from our expectations ("Cautionary Statements") are disclosed
below in the "Forward-Looking Statements--Cautionary Statements" section of our
Annual Report on Form 10-K for the fiscal year ended August 31, 2001. All
written and oral forward-looking statements attributable to us or persons acting
on our behalf subsequent to the date of this proxy statement are expressly
qualified in their entirety by the Cautionary Statements.
This Notice and Proxy statement are sent by order of the Board Of
Directors.
/s/ D. Scott Singdahlsen
------------------------
Dated: February 1, 2002 D. Scott Singdahlsen
Chief Executive Officer
* * * * *
PROXY PROXY
PYR ENERGY CORPORATION
For the Annual Meeting Of Stockholders
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints D. Scott Singdahlsen and Andrew P.
Calerich, or either of them, as proxies with full power of substitution to vote
all the shares of the undersigned with all of the powers which the undersigned
would possess if personally present at the Annual Meeting of Stockholders of PYR
Energy Corporation (the "Corporation") to be held at 9:00 a.m. (Denver, Colorado
time) on March 13, 2002, at Wells Fargo Bank, Main Floor-Forum Room, 1740
Broadway, Denver, Colorado 80202, or any adjournments thereof, on the following
matters:
[X] Please mark votes as in this example.
1. ELECTION OF DIRECTORS
Nominees: S. L. Hutchison, Bryce W. Rhodes and D. Scott Singdahlsen.
FOR ALL NOMINEES [ ]
WITHHELD FROM ALL NOMINEES [ ]
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE [ ]
2. Proposal to ratify the selection of Wheeler Wasoff, P.C. as the
Corporation's certified independent accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon an adjournment
or postponement of the meeting.
[ ] YES [ ] NO [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Unless contrary instructions are given, the shares represented by this
proxy will be voted in favor of Items 1, 2 and 3. This proxy is solicited on
behalf of the Board of Directors of PYR Energy Corporation.
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, DATE, SIGN AND RETURN THIS
PROXY IN THE ACCOMPANYING ENVELOPE.
(Continued and to be signed on the reverse side)
--------------------------------------------------------------------------------
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
Dated:
--------------------------------------------------
Signature:
--------------------------------------------------
Signature:
--------------------------------------------------
Signature if held jointly
(Please sign exactly as shown on your stock
certificate and on the envelope in which this
proxy was mailed. When signing as partner,
corporate officer, attorney, executor,
administrator, trustee, guardian, etc., give full
title as such and sign your own name as well. If
stock is held jointly, each joint owner should
sign.)