def14a
|
|
|
|
|
|
|
OMB APPROVAL |
|
|
|
|
|
OMB Number:
|
|
3235-0059 |
|
|
Expires:
|
|
February 28, 2006 |
|
|
Estimated average burden hours per
response |
12.75 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
|
|
|
Filed by the Registrant
þ |
|
Filed by a Party other than the Registrant o |
|
|
Check the appropriate box: |
|
|
|
o Preliminary Proxy Statement |
|
o
Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
|
þ Definitive Proxy Statement |
|
o Definitive Additional Materials |
|
o
Soliciting Material Pursuant to §240.14a-12 |
Holly 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):
|
|
|
þ No fee required. |
|
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
|
|
|
1) Title of each class of securities to which transaction applies: |
|
|
|
2) Aggregate number of securities to which transaction applies: |
|
|
|
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
|
|
|
4) Proposed maximum aggregate value of transaction: |
|
|
|
o Fee paid previously with preliminary materials. |
|
|
|
o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
|
|
|
1) Amount Previously Paid: |
|
|
|
2) Form, Schedule or Registration Statement No.: |
|
|
SEC 1913 (11-01) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
TABLE OF CONTENTS
HOLLY CORPORATION
100 Crescent Court
Suite 1600
Dallas, Texas 75201-6915
April 10, 2006
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Holly Corporation to be held on Thursday,
May 11, 2006, at 10:00 a.m., local time, in the Garden
Room, Hotel Crescent Court, 400 Crescent Court, Dallas,
Texas. Please find enclosed a notice to stockholders, a Proxy
Statement describing the business to be transacted at the
meeting, a form of proxy for use in voting at the meeting and an
Annual Report for Holly Corporation.
At the Annual Meeting, you will be asked (i) to elect ten
directors to the Board of Directors of the Company, (ii) to
approve an amendment to the Companys Restated Certificate
of Incorporation to increase the total number of shares of
Common Stock, par value $0.01 per share, that the
Corporation has the authority to issue from
50,000,000 shares to 100,000,000 shares and
(iii) to act upon such other business as may properly come
before the Annual Meeting or any adjournment or postponement
thereof.
We hope that you will be able to attend the Annual Meeting, and
we urge you to read the enclosed Proxy Statement before you
vote. Whether or not you plan to attend, please complete, sign,
date and return the enclosed proxy card or grant your proxy by
Internet or telephone, as described on the enclosed proxy card,
as promptly as possible. It is important that your shares be
represented at the meeting.
|
|
|
Very truly yours, |
|
|
|
|
|
|
LAMAR NORSWORTHY
|
|
Chairman of the Board |
YOUR VOTE IS IMPORTANT
All stockholders are cordially invited to attend the Annual
Meeting in person. However, to ensure your representation at the
meeting, you are urged to complete, sign, date and return, in
the enclosed postage paid envelope, the enclosed proxy card or
to grant your proxy by the Internet or by telephone, as
described on the enclosed proxy card, as promptly as possible.
Returning your proxy card or granting your proxy by the Internet
or by telephone will help the Company assure that a quorum will
be present at the meeting and avoid the additional expense of
duplicate proxy solicitations. Any stockholder attending the
meeting may vote in person even if he or she has returned the
proxy card or has granted his or her proxy by telephone. When
providing your proxy, please indicate whether you plan to attend
the Annual Meeting in person.
HOLLY CORPORATION
100 Crescent Court
Suite 1600
Dallas, Texas 75201-6915
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 10, 2006
PLEASE TAKE NOTICE that the 2006 Annual Meeting of Stockholders
(the Annual Meeting) of Holly Corporation (the
Company) will be held on Thursday, May 11,
2006, at 10:00 a.m. local time in the Garden Room, Hotel
Crescent Court, 400 Crescent Court, Dallas, Texas, to consider
and vote on the following matters:
|
|
|
1. Election of ten directors to serve on the Board of
Directors (the Board of Directors) of the Company
until the Companys next annual meeting; |
|
|
2. Approval of an Amendment to the Companys Restated
Certificate of Incorporation to increase from
50,000,000 shares to 100,000,000 shares the total
number of shares of Common Stock, par value $0.01 per
share, that the Company has the authority to issue; and |
|
|
3. Such other business as may properly come before the
meeting, or any postponement or adjournment thereof. |
The Companys Annual Report for its year ending
December 31, 2005 is being distributed with this Proxy
Statement.
The close of business on March 22, 2006 (the Record
Date), has been fixed as the record date for the
determination of stockholders entitled to receive notice of, and
to vote at, the Annual Meeting and any adjournment or
postponement thereof. Only holders of record of the
Companys common stock at the close of business on the
Record Date are entitled to notice of, and to vote at, the
Annual Meeting. A list of stockholders entitled to vote at the
Annual Meeting will be available for inspection by any
stockholder for any purpose germane to the Annual Meeting during
ordinary business hours for the ten days preceding the Annual
Meeting at the Companys offices at the address on this
notice and also at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, please
complete, sign, date and return the enclosed proxy card or grant
your proxy by the Internet or telephone, as described on the
enclosed proxy card, as promptly as possible. When providing
your proxy, please indicate whether you plan to attend the
Annual Meeting in person. You may revoke your proxy before the
Annual Meeting as described in the Proxy Statement under the
heading Solicitation and Revocability of Proxies.
The prompt return of proxies will save the expense involved in
further communications.
|
|
|
By Order of the Board of Directors: |
|
|
|
|
|
|
ERIN O. ROYSTON |
|
Secretary |
PROXY STATEMENT
OF
HOLLY CORPORATION
100 Crescent Court
Suite 1600
Dallas, Texas 75201-6915
SOLICITATION AND REVOCABILITY OF PROXIES
The Board of Directors requests your proxy for use at the Annual
Meeting of Stockholders to be held on Thursday, May 11,
2006, and at any adjournment or postponement thereof. By signing
and returning the enclosed proxy card or granting your proxy by
the Internet or by telephone, you authorize the persons named on
the proxy card, or in your telephonically or
electronically-submitted proxy (collectively, the
Proxy), to represent you and to vote your shares at
the Annual Meeting. This Proxy Statement and the proxy card were
first mailed to stockholders of the Company on or about
April 10, 2006.
This solicitation of proxies is made by the Board of Directors
and will be conducted primarily by mail. Officers, directors and
employees of the Company may solicit proxies personally or by
telephone, electronic mail, telegram or other forms of wire or
facsimile communication. The Company may also request banking
institutions, brokerage firms, custodians, nominees and
fiduciaries to forward solicitation material to the beneficial
owners of the Companys common stock (the Common
Stock) that those companies hold of record. The costs of
the solicitation, including reimbursement of such forwarding
expenses, will be paid by the Company.
If you attend the Annual Meeting, you may vote in person. If you
are not present at the Annual Meeting, your shares can be voted
only if you have returned a properly signed proxy card, are
represented by another proxy, or have granted your proxy by the
Internet or by telephone. You may revoke your proxy, whether
granted by the Internet or by telephone or by returning the
enclosed proxy card, at any time before it is exercised at the
Annual Meeting by (a) signing and submitting a later-dated
proxy to the Secretary of the Company, (b) delivering
written notice of revocation of the proxy to the Secretary of
the Company, or (c) voting in person at the Annual Meeting.
In addition, if you granted your proxy by the Internet or by
telephone, you may revoke such grant by resubmitting your proxy
by the Internet or by telephone at any time prior to
11:59 p.m., Eastern Daylight Time, on May 10, 2006. In
the absence of any such revocation, shares represented by the
persons named in the Proxies will be voted at the Annual Meeting.
VOTING AND QUORUM
The only outstanding voting securities of the Company are shares
of Common Stock. As of the close of business on the Record Date,
there were 29,007,555 shares of Common Stock outstanding
and entitled to be voted at the Annual Meeting.
Each outstanding share of Common Stock is entitled to one vote.
The presence, in person or by proxy, of a majority of the shares
of Common Stock issued and outstanding and entitled to vote as
of the Record Date shall constitute a quorum at the Annual
Meeting. The holders of a majority of the Common Stock entitled
to vote who are present or represented by proxy at the Annual
Meeting have the power to adjourn the Annual Meeting from time
to time without notice, other than an announcement at the Annual
Meeting of the time and place of the holding of the adjourned
meeting, until a quorum is present. At any such adjourned
meeting at which a quorum is present, any business may be
transacted that could have been transacted at the Annual Meeting
had a quorum originally been present. Proxies solicited by this
Proxy Statement may be used to vote in favor of any motion to
adjourn the Annual Meeting. The persons named in the Proxy
intend to vote in favor of any motion to adjourn the Annual
Meeting to a subsequent day if, prior to the Annual Meeting,
such persons have not received sufficient proxies to approve the
proposals described in this Proxy Statement. If such a motion is
approved but sufficient proxies are not received by the time set
for the resumption of the Annual Meeting, this process will be
repeated until sufficient proxies to vote in favor of the
proposals
described in this Proxy Statement have been received or it
appears that sufficient proxies will not be received.
Abstentions and broker non-votes will count in determining if a
quorum is present at the Annual Meeting. A broker non-vote
occurs if a broker or other nominee attending the meeting in
person or submitting a proxy card does not have discretionary
authority to vote on a particular item and has not received
voting instructions with respect to that item.
PROPOSAL ONE ELECTION OF DIRECTORS
The Board of Directors has designated Buford P. Berry, Matthew
P. Clifton, W. John Glancy, William J. Gray, Marcus R.
Hickerson, Thomas K. Matthews, II, Robert G. McKenzie,
Lamar Norsworthy, Jack P. Reid and Paul T. Stoffel as nominees
for election as directors of the Company at the Annual Meeting
(each, a Nominee). All of the Nominees currently
serve as directors of the Company. If elected, each Nominee will
serve until the expiration of his term at the Annual Meeting of
Stockholders in 2007 and until his successor is elected and
qualified or until his earlier death, resignation or removal
from office. For information about each Nominee, see
Directors.
The Board of Directors has no reason to believe that any of the
Nominees will be unable or unwilling to serve if elected. If a
Nominee becomes unable or unwilling to serve prior to the
election, your proxy will be voted for the election of a
substitute nominee recommended by the current Board of
Directors, or the number of the Companys directors will be
reduced.
Required Vote and Recommendation
The election of directors requires the affirmative vote of a
plurality of the shares of Common Stock present or represented
by proxy and entitled to vote at the Annual Meeting.
Accordingly, under Delaware law and the Companys Restated
Certificate of Incorporation and Bylaws, abstentions and broker
non-votes will not have any effect on the election of a
particular director. Unless otherwise instructed in the Proxy or
unless authority to vote is withheld, the Proxy will be voted
for the election of each of the Nominees.
The Board of Directors recommends a vote FOR the
election of each of the nominees.
PROPOSAL TWO AMENDMENT TO RESTATED
CERTIFICATE
OF INCORPORATION TO INCREASE AUTHORIZED SHARES
The Board of Directors is seeking stockholder approval to amend
the Companys Restated Certificate of Incorporation to
increase the Companys authorized shares of Common Stock to
100,000,000 shares.
Current Capital Structure
As of March 22, 2006, the Company had 29,007,555
outstanding shares of Common Stock, 6,810,305 shares of
Common Stock held in treasury, and no outstanding shares of
Preferred Stock, plus outstanding options that would allow the
holders of these options to purchase 1,017,750 additional
shares of Common Stock. The Company is currently authorized to
issue 50,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock.
The Board of Directors has determined that it is in the best
interest of the Company and its stockholders to approve an
amendment to the Companys Restated Certificate of
Incorporation to increase the number of authorized shares of the
Companys Common Stock from 50,000,000 shares to
100,000,000 shares. The proposed amendment to the
Companys Restated Certificate of Incorporation is attached
to this Proxy Statement as Appendix A.
Purpose of the Proposal
The Board of Directors has proposed this amendment to ensure
that the Company has sufficient authorized shares available to
provide the Company with flexibility in the future to issue
shares for general
2
corporate purposes in connection with, by way of example and
without limitation, possible stock splits effected in the form
of stock dividends, payments of stock dividends, future equity
financings, future acquisitions or mergers, provision of equity
incentives to employees, and recapitalizations. In determining
to propose the amendment, the Board of Directors considered that
without an increase in authorized shares, it would not be
possible for the Company to effect a normal stock split by means
of a stock dividend. If the proposed amendment is approved, the
additional authorized shares (the Additional Shares)
may be issued at such times, for such purposes, and for such
consideration as the Board of Directors may determine to be in
the best interests of the Company and its stockholders and,
except as otherwise required by applicable law, without further
authority from the stockholders of the Company. The Company has
no current plans or agreements for any use of any of the
Additional Shares.
As of March 22, 2006, the maximum number of unreserved
shares of Common Stock that may be issued by the Company was
11,636,208. If stockholders do not approve the increase in the
Companys authorized Common Stock, the Company may not be
able to effect any of the general corporate purposes described
above, or any combination thereof.
Effect of Issuance of Additional Shares
Except in the case of a stock dividend or stock split effected
in the form of a stock dividend, issuance of any of the
Additional Shares may, among other things, have a dilutive
effect on earnings per share, and on stockholders equity
and voting rights. Issuance of Additional Shares, or the
perception that Additional Shares may be issued, may also
adversely affect the market price of the Companys Common
Stock. Holders of Common Stock do not have preemptive rights to
subscribe for any Additional Shares, if issued by the Company.
There are no conversion, redemption, sinking fund or similar
provisions regarding the Common Stock.
In addition, if the Company were to sell or otherwise issue
authorized but unissued Common Stock at a time when a takeover
is pending or threatened, the issuance of the Additional Shares
of Common Stock could discourage the takeover by making a
takeover more expensive and subject to additional risks. The
proposal is not being recommended in response to any specific
effort of which the Company is aware to obtain control of the
Company, nor is the Board of Directors currently proposing to
stockholders any anti-takeover measures.
Required Vote and Recommendation
Adoption of Proposal Two requires the affirmative vote of
the holders of a majority of the shares of the Companys
Common Stock outstanding and entitled to vote at the Annual
Meeting. Accordingly, under Delaware law and the Companys
Restated Certificate of Incorporation and Bylaws, abstentions
and broker non-votes will have the same effect as a vote against
Proposal Two. Unless otherwise instructed in the Proxy or
unless authority to vote is withheld, the Proxy will be voted
for Proposal Two.
The Board of Directors recommends a vote FOR
amending the Companys Restated Certificate of
Incorporation to increase the number of authorized shares of
Common Stock to 100,000,000 shares.
3
OWNERSHIP OF SECURITIES
The following table and the notes thereto set forth certain
information regarding the beneficial ownership of Common Stock
as of the Record Date by (i) each current director of the
Company, (ii) the named executive officers of the Company,
(iii) all executive officers and directors of the Company
as a group and (iv) each other person known to the Company
to own beneficially more than five percent of Common Stock
outstanding on the Record Date. Unless otherwise indicated, the
address for each stockholder listed in the following table is
c/o Holly Corporation, 100 Crescent Court, Dallas, Texas
75201-6915.
The Company has determined beneficial ownership in accordance
with regulations of the Securities and Exchange Commission (the
SEC). The number of shares beneficially owned by a
person includes shares of Common Stock that are subject to stock
options that are either currently exercisable or exercisable
within 60 days after the Record Date. These shares are also
deemed outstanding for the purpose of computing the percentage
of outstanding shares owned by the person. These shares are not
deemed outstanding, however, for the purpose of computing the
percentage ownership of any other person. Unless otherwise
indicated, to the Companys knowledge, each stockholder has
sole voting and dispositive power with respect to the securities
beneficially owned by that stockholder. On the Record Date,
there were 29,007,555 shares of Common Stock outstanding.
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares | |
|
Percent of | |
|
|
and Nature of | |
|
Common Stock | |
Name and Address of Beneficial Owner |
|
Beneficial Ownership | |
|
Outstanding | |
|
|
| |
|
| |
Brown Brothers Harriman Trust Company of Texas
|
|
|
4,769,544 |
(1) |
|
|
16.44 |
% |
|
2001 Ross Ave.
|
|
|
|
|
|
|
|
|
|
Dallas, Texas 75201-2996
|
|
|
|
|
|
|
|
|
FMR Corp.
|
|
|
3,242,400 |
(2) |
|
|
11.18 |
% |
|
82 Devonshire Street
|
|
|
|
|
|
|
|
|
|
Boston, Massachusetts 02109
|
|
|
|
|
|
|
|
|
Lamar Norsworthy
|
|
|
781,250 |
(3)(4)(5) |
|
|
2.65 |
% |
Paul T. Stoffel
|
|
|
761,505 |
|
|
|
2.63 |
% |
Jack P. Reid
|
|
|
303,358 |
|
|
|
* |
|
Matthew P. Clifton
|
|
|
214,617 |
(4)(5) |
|
|
* |
|
Stephen J. McDonnell
|
|
|
131,363 |
(4) |
|
|
* |
|
W. John Glancy
|
|
|
84,313 |
(4) |
|
|
* |
|
Marcus R. Hickerson
|
|
|
21,729 |
(6) |
|
|
* |
|
William J. Gray
|
|
|
16,701 |
|
|
|
* |
|
David L. Lamp
|
|
|
10,301 |
(5) |
|
|
* |
|
Robert G. McKenzie
|
|
|
7,505 |
|
|
|
* |
|
Thomas K. Matthews, II
|
|
|
5,105 |
|
|
|
* |
|
Buford Berry
|
|
|
3,505 |
|
|
|
* |
|
P. Dean Ridenour
|
|
|
2,357 |
|
|
|
* |
|
All directors and executive officers as a group
(13 persons)(3)(4)(6)
|
|
|
2,343,610 |
(7) |
|
|
8.15 |
% |
|
|
(1) |
Brown Brothers Harriman Trust Company of Texas (Brown
Brothers Texas) is deemed to beneficially own
4,769,544 shares in its capacity as trustee of trusts for
the benefit of Betty Regard, Margaret Simmons and Suzanne
Bartolucci. Brown Brothers Texas has sole voting power and sole
investment power with respect to these 4,769,544 shares.
Additionally, Brown Brothers Texas is deemed to beneficially own
643,424 shares in its capacity as co-trustee with
Mr. Norsworthy of trusts for the benefit of
Mr. Norsworthy, Nona B. Norsworthy, Nona Barrett, Mary
Francis Norsworthy Fernandes, Hudson Alexander Fernandes and
Sophia Faye Fernandes. Brown Brothers Texas and
Mr. Norsworthy have |
4
|
|
|
shared voting power and shared investment power with respect to
these shares. Brown Brothers Harriman & Co. and Brown
Brothers Harriman Trust Company are controlling entities of
Brown Brothers Texas. |
|
(2) |
FMR Corp. has filed with the SEC a Schedule 13G/ A, dated
February 14, 2006. Based on the Schedule 13G, FMR
Corp. has sole dispositive power with respect to
3,242,400 shares, sole voting power with respect to
582,434 shares, and shared voting power and shared
dispositive power with respect to no shares. |
|
(3) |
Includes 643,432 shares deemed to be beneficially owned by
Mr. Norsworthy in his capacity as co-trustee with Brown
Brothers Texas as described above in footnote (1).
Mr. Norsworthy disclaims beneficial ownership except as to
3,217 shares beneficially owned by the trusts. |
|
|
(4) |
The number of shares beneficially owned includes shares of
Common Stock of which such individuals have the right to acquire
beneficial ownership either currently or within 60 days
after the record date, upon the exercise of options, as follows:
448,000 shares for Mr. Norsworthy, 109,800 shares
for Mr. Clifton, 65,000 shares for Mr. Glancy,
120,000 shares for Mr. McDonnell, and
762,800 shares for all directors and executive officers as
a group. The number of shares beneficially owned also includes
unvested shares of restricted stock which such individuals
cannot dispose of until the restrictions on these shares lapse,
as follows: 72,640 shares for Mr. Norsworthy,
50,124 shares for Mr. Clifton, 11,513 shares for
Mr. Glancy, 7,363 shares for Mr. McDonnell,
10,296 shares for Mr. Lamp, 2,357 shares for
Mr. Ridenour and 154,293 shares for all directors and
executive officers as a group. |
|
|
|
(5) |
The number of shares beneficially owned includes shares in the
Thrift Plan for Employees of Holly Corporation, Its Affiliates
and Subsidiaries as follows: 44,640.94 shares for
Mr. Norsworthy, 18,323.94 shares for Mr. Clifton,
5.16 shares for Mr. Lamp, and 62,946 shares for
all directors and executive officers as a group. All such shares
are subject to the participants directions as to holding
or selling such shares. |
|
|
(6) |
Mr. Hickerson disclaims beneficial ownership except as to
9,729 of these shares. |
|
(7) |
Includes 649,944 shares as to which the holders disclaim
beneficial ownership. |
DIRECTORS
The following table sets forth certain information regarding the
directors of the Company. Each directors term of office
expires at the Annual Meeting.
|
|
|
|
|
|
|
Name of Nominee |
|
Age | |
|
Current Title |
|
|
| |
|
|
Buford P. Berry
|
|
|
70 |
|
|
Director |
Matthew P. Clifton
|
|
|
54 |
|
|
Chief Executive Officer, Director |
W. John Glancy
|
|
|
64 |
|
|
Senior Vice President and General Counsel, Director |
William J. Gray
|
|
|
65 |
|
|
Director |
Marcus R. Hickerson
|
|
|
79 |
|
|
Director |
Thomas K. Matthews, II
|
|
|
80 |
|
|
Director |
Robert G. McKenzie
|
|
|
68 |
|
|
Director |
Lamar Norsworthy
|
|
|
59 |
|
|
Chairman of the Board |
Jack P. Reid
|
|
|
69 |
|
|
Director |
Paul T. Stoffel
|
|
|
72 |
|
|
Director |
Buford P. Berry, a director since May 2004, has served as
a manager and an Advisory Committee Member of Dorchester
Minerals Management GP LLC since February 2003. He is currently
of counsel to Thompson & Knight, L.L.P., a Texas based
law firm. Mr. Berry has been an attorney with
Thompson & Knight L.L.P., serving in various capacities
since 1963, including as Managing Partner from 1986 to 1998.
Matthew P. Clifton, a director since 1995, has been with
the Company for over twenty years and was elected as the
Companys Chief Executive Officer effective January 1,
2006. Mr. Clifton served as President
5
of the Company from 1995 to January 1, 2006, and since
March 2004, has served as Chairman of the Board and Chief
Executive Officer of Holly Logistic Services, L.L.C., the
general partner of HEP Logistics Holdings, L.P., which is the
general partner of Holly Energy Partners, L.P.
(HEP), a Delaware limited partnership. The Company
currently owns a 45% interest (including the general partner
interest) in Holly Energy Partners, L.P.
W. John Glancy, a director from 1975 to 1995 and
since September 1999, has been Senior Vice President and General
Counsel of the Company since April 1999. He also held the office
of Secretary from April 1999 through February 2005. From
December 1998 to September 1999, he was Senior Vice President,
Legal of the Company. From 1997 through March 1999, he practiced
law in the Law Offices of W. John Glancy in Dallas.
Mr. Glancy currently also serves as Vice President and
General Counsel of Holly Logistic Services, L.L.C.
William J. Gray, a director since September 1996, is a
private consultant. He has served as a governmental affairs
consultant for the Company since January 2003 and also served as
a consultant to the Company from October 1999 through September
2001. Until October 1999, Mr. Gray was Senior Vice
President, Marketing and Supply of the Company.
Marcus R. Hickerson, a director since 1960, was a
consultant to Centex Development Company from 1987 to 1999 and
has been President of Waxahachie Community Development
Corporation since October 1999.
Thomas K. Matthews, II, a director since 1978, is a
financial consultant.
Robert G. McKenzie, a director since 1992, is a financial
consultant. From January 1990 to August 1999, he was Executive
Vice President and Chief Operating Officer of Brown Brothers
Harriman Trust Company of Texas.
Lamar Norsworthy, a director since 1967, serves as
Chairman of the Board. Mr. Norsworthy was the
Companys Chairman of the Board and Chief Executive Officer
from 1977 to January 1, 2006. Mr. Norsworthy is also a
director of Cooper Cameron Corporation and has served as a
director of Holly Logistic Services, L.L.C. since March 2004.
Jack P. Reid, a director since 1977, was a consultant to
the Company from August 1999 through July 2002. Until August
1999, Mr. Reid was Executive Vice President, Refining, of
the Company.
Paul T. Stoffel, a director since 2001, is Chairman of
Triple S Capital Corp. and of Paul Stoffel Investments, engaged
in public and private equity investments.
Compensation of Directors
The Company recently implemented changes to the cash and equity
components of the compensation of its non-employee directors.
For the year ended December 31, 2006, directors who are not
employees of the Company or its subsidiaries are currently
compensated by: (a) a $35,000 annual cash retainer, payable
in four quarterly installments (adjusted from $25,000 in 2005);
(b) $1,500 per attended meeting of the Board and per
each attended meeting of a committee of the Board, except that
in the case of special Board meetings or committee meetings held
by conference telephone, no fee is paid for meetings lasting
less than thirty minutes, $750 is paid for meetings lasting
between thirty minutes and two hours, and the full $1,500 is
paid only for meetings lasting more than two hours (adjusted
from $1,500 in 2005, when payment was limited to one committee
meeting per day); and (c) an annual grant of restricted
share units equal in value to $80,000 on the date of grant
(adjusted from $40,000 in 2005). With respect to the restricted
share units, the units will have their restrictions lapse in 25%
increments every three months and will fully vest one year
following the date of grant (adjusted from a three-year
restricted period in 2005). Under the current compensation
program, a number of shares of Holly Corporation common stock
equal to the vested restricted share units will be earned and
transferred to the director at the earlier of three years from
the date of grant or cessation of the directors service on
the Board of Directors. Until such time, the director will
receive dividend equivalent rights, but not voting rights. Under
new stock ownership guidelines approved by the Board of
Directors in 2006, directors will
6
be expected to retain fifty percent of the restricted share
units until a specified ownership level is achieved. In addition
to the foregoing, the director who serves as the chairperson of
the Audit Committee of the Board of Directors will receive a
$10,000 special annual retainer for his service as committee
chair (adjusted from $5,000 in 2005). Each director who serves
as the chairperson of the Compensation, Nominating/ Corporate
Governance and Public Policy committees of the Board of
Directors will receive a $5,000 special annual retainer for his
service as committee chair. Officers of the Company who also
serve on the Board of Directors do not receive supplemental
compensation for their service as directors.
MEETINGS AND COMMITTEES OF DIRECTORS
The Companys Board of Directors is comprised of a majority
of independent directors as defined in Section 303A.02 of
the New York Stock Exchange listing standards. The directors
determined by the Board to be independent under this standard
are Buford P. Berry, William J. Gray, Thomas K.
Matthews, II, Robert G. McKenzie, Paul T. Stoffel, Jack P.
Reid and Marcus R. Hickerson. In determining that
Mr. Hickerson is an independent director, the Board
considered the fact that Mr. Hickersons
52-year-old son, M.
Neale Hickerson, is employed as a Vice President of the Company
and certain subsidiaries, including Holly Logistic Services,
L.L.C. From January 2004 to February 2005, M. Neale
Hickersons title as an officer of the Company was Vice
President, Treasury and Investor Relations, and his current
title is Vice President, Investor Relations. The Boards
determination that the employment of M. Neale Hickerson would
not interfere with Marcus R. Hickersons ability to act
independently from the management of the Company was based
particularly on the fact that Marcus R. Hickerson satisfies all
of the independence requirements of Section 303A.02(b) of
the New York Stock Exchange rules and of Rule 10A-3 under
the Exchange Act. Additionally, the Board based its
determination on the role played in the Company by M. Neale
Hickerson and the fact that he is not an Executive Officer of
the Company.
The Companys Board of Directors held six meetings during
2005. The Board of Directors has six principal standing
committees: the Executive Committee, the Audit Committee, the
Compensation Committee, the Long-Term Compensation Committee,
the Nominating/ Corporate Governance Committee, and the Public
Policy Committee. Each of the Committees is appointed by the
Board of Directors. During 2005, each director attended at least
75% of the aggregate of the total number of meetings of the
Board of Directors and of all committees of the Board of
Directors on which that director served. The Company does not
have a policy requiring the Chairman of the Board or other
directors to attend the Companys Annual Meeting. All of
the Companys directors attended the 2005 Annual Meeting of
Stockholders.
The current members of the Executive Committee are
Messrs. Norsworthy (Chairman), Clifton, Glancy and Reid.
The Executive Committee of the Board of Directors has the
authority of the Board, to the extent permitted by law and
subject to any limitations that may be specified from time to
time by the Board, for the management of the business and
affairs of the Company between meetings of the Board. During
2005, the committee met four times.
The current members of the Audit Committee are
Messrs. McKenzie (Chairman), Berry, Matthews, and Stoffel.
The Audit Committee of the Board of Directors is responsible for
monitoring the Companys internal accounting controls,
selecting and engaging independent auditors, reviewing quarterly
and annual reports filed with the SEC, and reviewing certain
activities of the independent auditors and their reports and
conclusions. In addition, the committee selects persons to
conduct internal audits of certain Company transactions and
related financial controls and reviews the reports developed
from such internal audits. During 2005, the committee met seven
times. The Board of Directors has adopted a written charter for
the Audit Committee, which is available on the Companys
website at www.hollycorp.com and is available in print to any
shareholder who requests it. As described above, all members of
the Audit Committee have been determined to be independent as
independence is defined in Section 303A.02 of the New York
Stock Exchanges listing standards. The Board of Directors
has determined that Mr. McKenzie satisfies the requirements
of the SEC regulations for an audit committee financial
expert and has designated Mr. McKenzie as the
Companys audit committee financial expert.
7
The current members of the Compensation Committee are
Messrs. Berry (Chairman), Matthews and McKenzie. The
Compensation Committee of the Board of Directors is responsible
for the oversight of compensation programs and plans that affect
the executive officers of the Company. The committee determines
the level of compensation, including compensation under the
Companys Long-Term Incentive Compensation Plan, paid to
the Companys Chief Executive Officer and all other
executive officers. The committee is also responsible for
establishing and overseeing the compensation program for
non-employee directors who serve on the Companys Board of
Directors. As described above, all members of the Compensation
Committee have been determined to be independent as independence
is defined in Section 303A.02 of the New York Stock
Exchanges listing standards. During 2005, the committee
met seven times. The Board of Directors has adopted a written
charter for the Compensation Committee, which is available on
the Companys website at www.hollycorp.com and is available
in print to any shareholder who requests it.
The Long-Term Compensation Committee of the Board of Directors
had previously been responsible for developing and approving
awards of long-term compensation of executives and key employees
under the Companys Long-Term Incentive Compensation Plan.
As of February 10, 2006, the foregoing responsibilities
have been transferred by the Board of Directors to the
Compensation Committee. The members of the Long-Term
Compensation Committee were Messrs. Berry (Chairman),
Matthews and McKenzie. During 2005, the committee met six times.
The current members of the Nominating/ Corporate Governance
Committee are Messrs. Matthews (Chairman), Hickerson,
McKenzie and Stoffel. The Nominating/ Corporate Governance
Committee of the Board of Directors is responsible for advising
the Board of Directors concerning the appropriate composition of
the Board of Directors and its committees (including identifying
individuals qualified to serve on the Board of Directors and its
committees), the selection of director nominees for each annual
meeting of the Companys stockholders, and appropriate
corporate governance practices. As described above, all members
of the Nominating/ Corporate Governance Committee have been
determined to be independent as independence is defined in
Section 303A.02 of the New York Stock Exchanges
listing standards. During 2005, the committee met four times.
The Board of Directors has adopted a written charter for the
Nominating/ Corporate Governance Committee, which is available
on the Companys website at www.hollycorp.com and is
available in print to any shareholder who requests it.
The current members of the Public Policy Committee are
Messrs. Hickerson (Chairman), Gray, and Reid. The Public
Policy Committee of the Board of Directors is responsible for
reviewing the Companys policies and procedures on matters
of public and governmental concern that significantly affect the
Company, including but not limited to environmental,
occupational health and safety, and equal employment opportunity
matters. The committee is also responsible for recommending to
management and the Board of Directors the formulation or
modification of policies and procedures concerning such matters.
During 2005, the committee met four times. As described above,
all members of the Public Policy Committee have been determined
to be independent as independence is defined in
Section 303A.02 of the New York Stock Exchanges
listing standards.
STOCKHOLDER NOMINATING PROCEDURES
AND COMMUNICATIONS WITH THE BOARD
The Company does not have a formal policy by which its
stockholders may recommend director candidates, but the
Nominating/ Corporate Governance Committee will consider
candidates recommended by stockholders. A stockholder wishing to
submit such a recommendation should send a letter to the
Secretary of the Company at 100 Crescent Court, Suite 1600,
Dallas, Texas 75201-6915. The mailing envelope must contain a
clear notation indicating that the enclosed letter is a
Director Nominee Recommendation. The letter must
identify the author as a stockholder and provide a brief summary
of the candidates qualifications, as well as contact
information for both the candidate and the stockholder. At a
minimum, candidates for election to the Board must meet the
independence requirements of Section 303A.02 of the New
York Stock Exchanges listing standards and Rule 10A-3
under the Exchange Act. Candidates should also have relevant
8
business and financial experience, and they must be able to read
and understand fundamental financial statements. Candidates
recommended by stockholders will be evaluated in the same manner
as candidates recommended by anyone else, although the
independent directors may prefer candidates who are personally
known to the existing directors and whose reputations are highly
regarded. In evaluating proposed candidates, the Nominating/
Corporate Governance Committee will consider all relevant
qualifications as well as the needs of the Company in terms of
compliance with the New York Stock Exchanges listing
standards and SEC rules.
William J. Gray has been selected to preside at regularly
scheduled meetings of non-management directors. Persons wishing
to communicate with the non-management directors are invited to
email the Presiding Director at presiding.director@hollycorp.com
or write to: William J. Gray, Presiding Director,
c/o Secretary, Holly Corporation, 100 Crescent Court,
Dallas, Texas 75201-6915. Although the Company has not to date
developed formal processes by which stockholders may otherwise
communicate directly with directors, the Company believes that
its process with regard to communicating with non-management
directors, and its informal process under which any
communication sent to the Board of Directors in care of the
Chairman of the Board or Secretary of the Company is forwarded
to the Board of Directors for consideration, has served the
Board of Directors and the stockholders needs. There
is no screening process, and all stockholder communications that
are received by officers for the Board of Directors
attention are forwarded to the Board of Directors.
EXECUTIVE OFFICERS
The following table sets forth information regarding the
Executive Officers of the Company and certain of its
subsidiaries:
|
|
|
|
|
|
|
Name |
|
Age | |
|
Title |
|
|
| |
|
|
Lamar Norsworthy
|
|
|
59 |
|
|
Chairman of the Board |
Matthew P. Clifton
|
|
|
54 |
|
|
Chief Executive Officer |
W. John Glancy
|
|
|
64 |
|
|
Senior Vice President and General Counsel |
David L. Lamp
|
|
|
48 |
|
|
Executive Vice President, Refining and Marketing |
Stephen J. McDonnell
|
|
|
55 |
|
|
Vice President and Chief Financial Officer |
P. Dean Ridenour
|
|
|
64 |
|
|
Vice President and Chief Accounting Officer |
David L. Lamp, joined the Company in January of 2004 as
Vice President, Refining Operations and was elected Executive
Vice President, Refining and Marketing in November 2005. Prior
to joining the Company, Mr. Lamp was Vice President of
El Paso Energy Corporation (El Paso) and
General Manager of El Pasos 250,000 BPD Aruba
refinery. Prior to his position with El Paso, Mr. Lamp
was employed by Koch Industries, where he served as Refinery
Manager and EVP-Refining and Chemicals Operations. In 1998,
Mr. Lamp moved to Director of Operations for a large
international chemical and fiber joint venture owned partially
by Koch (KOSA).
Stephen J. McDonnell, was appointed Vice President and
Chief Financial Officer of the Company in September 2001. From
August 2000 to September 2001, he was Vice President, Finance
and Corporate Development. Prior to joining the Company,
Mr. McDonnell was employed by Central and South West
Corporation as a vice president in the mergers and acquisitions
area from 1996 to June 2000. Mr. McDonnell also has served
as Vice President and Chief Financial Officer for HEP since
March 2004.
P. Dean Ridenour, was appointed Vice President and
Chief Accounting Officer of the Company in December 2004.
Beginning in October 2002, Mr. Ridenour began providing
full-time consulting services to the Company, and in August
2004, Mr. Ridenour became a full-time employee and officer
of the Company in the position of Vice President, Special
Projects, serving in that position until December 2004. From
April 2001 until October 2002, Mr. Ridenour was temporarily
retired. From July 1999 through April 2001, Mr. Ridenour
served as Chief Financial Officer and director of GeoUtilities,
Inc., an internet-based superstore for energy,
9
telecom and other utility services, which was purchased by
AES Corporation in March 2000. He was employed for
34 years by Ernst & Young LLP, including
20 years as an audit partner, retiring in 1997.
Mr. Ridenour also has served as a director of HEP since
August 2004 and as Vice President and Chief Accounting Officer
for HEP since January 2005.
The Executive Officers named above were elected by the Board of
Directors to serve in such capacities until their respective
successors have been duly elected and qualified, or until their
earlier death, resignation or removal from office. Biographical
information on Messrs. Clifton, Glancy and Norsworthy is
set forth previously in this Proxy Statement under
Directors.
CODE OF BUSINESS CONDUCT AND ETHICS
The Company has adopted a code of business conduct and ethics
(the Code of Ethics) that applies to all officers,
directors and employees, including the Companys principal
executive officer, principal financial officer, principal
accounting officer and persons performing similar functions (the
Principal Financial Officers). A copy of the
Companys Code of Ethics and a description of all
amendments adopted thereto in the last twelve months are posted
on the Companys Internet website at www.hollycorp.com and
is available in print to any shareholder who requests it. The
Company intends to satisfy the disclosure requirement under
Item 10 of
Form 8-K regarding
an amendment to, or waiver from, a provision of its Code of
Ethics with respect to its Principal Financial Officers by
posting such information on this Internet website.
CORPORATE GOVERNANCE GUIDELINES
The Company has adopted Corporate Governance Guidelines (the
Governance Guidelines) to promote the functioning of
the Board of Directors and its committees and to set forth a
common set of expectations as to how the Board should perform
its functions. A copy of the Governance Guidelines is posted on
the Companys Internet website at www.hollycorp.com and the
information therein is available in print to any shareholder who
requests it.
10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth information for the last three
years concerning the cash and non-cash compensation provided or
awarded by the Company to its Chief Executive Officer and its
other four most highly compensated executive officers for all
services rendered in all capacities to the Company and its
subsidiaries, including in the case of Messrs. Clifton,
Glancy and McDonnell, in their capacity as executive officers of
Holly Logistic Services, L.L.C., the general partner of HEP
Logistics Holdings, L.P., which is the general partner of the
Companys publicly-traded subsidiary, HEP. All references
to stock options and shares of Common Stock reflect adjustments
for the two-for-one stock split effective August 16, 2004.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted | |
|
All Other | |
|
|
|
|
Salary | |
|
Bonus | |
|
Stock Awards | |
|
Compensation | |
Name and Principal Position |
|
Year | |
|
($)(1) | |
|
($)(1) | |
|
(#)(2) | |
|
($)(3) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Lamar Norsworthy
|
|
|
2005 |
|
|
|
621,509 |
|
|
|
1,332,000 |
|
|
|
22,275 |
|
|
|
2,373,125 |
|
|
Chairman of the Board |
|
|
2004 |
|
|
|
563,945 |
|
|
|
1,620,032 |
|
|
|
95,900 |
|
|
|
36,232 |
|
|
|
|
|
2003 |
|
|
|
539,240 |
|
|
|
521,280 |
|
|
|
|
|
|
|
16,705 |
|
Matthew P. Clifton
|
|
|
2005 |
|
|
|
514,958 |
|
|
|
1,103,000 |
|
|
|
9,225 |
|
|
|
2,368,150 |
|
|
Chief Executive Officer |
|
|
2004 |
|
|
|
467,457 |
|
|
|
1,474,736 |
|
|
|
89,050 |
|
|
|
31,960 |
|
|
|
|
|
2003 |
|
|
|
446,125 |
|
|
|
436,163 |
|
|
|
|
|
|
|
9,179 |
|
W. John Glancy
|
|
|
2005 |
|
|
|
271,894 |
|
|
|
238,000 |
|
|
|
4,050 |
|
|
|
302,443 |
|
|
Senior Vice President |
|
|
2004 |
|
|
|
246,483 |
|
|
|
380,305 |
|
|
|
11,750 |
|
|
|
10,359 |
|
|
and General Counsel |
|
|
2003 |
|
|
|
233,630 |
|
|
|
214,370 |
|
|
|
|
|
|
|
7,595 |
|
Stephen J. McDonnell
|
|
|
2005 |
|
|
|
240,718 |
|
|
|
185,000 |
|
|
|
1,800 |
|
|
|
177,779 |
|
|
Vice President and |
|
|
2004 |
|
|
|
232,012 |
|
|
|
145,000 |
|
|
|
8,400 |
|
|
|
9,678 |
|
|
Chief Financial Officer |
|
|
2003 |
|
|
|
219,728 |
|
|
|
107,000 |
|
|
|
|
|
|
|
7,528 |
|
David L. Lamp
|
|
|
2005 |
|
|
|
241,334 |
|
|
|
483,000 |
|
|
|
2,000 |
|
|
|
10,248 |
|
|
Executive Vice President, |
|
|
2004 |
|
|
|
189,491 |
|
|
|
210,000 |
|
|
|
3,800 |
|
|
|
186,406 |
|
|
Refining & Marketing |
|
|
2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Bonuses were paid in March 2006 based upon services rendered in
2005. Any perquisites or other personal benefits received from
the Company by any of the named executive officers were less
than the lesser of $50,000 or 10% of the individuals total
annual salary and bonus. Messrs. Clifton, Glancy and
McDonnell also serve as officers of Holly Logistic Services,
L.L.C., the general partner of HEP Logistics Holdings, L.P., the
general partner of HEP (collectively, HEP). The
costs of their salaries, bonuses, payroll taxes, benefits, and
other direct costs are included within an annual administrative
fee charged to HEP in accordance with an Omnibus Agreement the
Company entered into with HEP. |
|
(2) |
Restricted Stock Awards: In February 2005, the Company granted
restricted stock to the Companys officers and other key
employees, including the named executive officers. With the
exception of Messrs. Norsworthy, Clifton and Glancy, the
restricted shares issued in February of 2005 will vest 1/3 on
January 1, 2008, 1/3 on January 1, 2009, and the
remaining 1/3 will vest on January 1, 2010. Restricted
shares granted to Messrs. Norsworthy, Clifton and Glancy,
and beginning in 2006, Lamp, are subject to Company performance
standards. The restricted shares issued in February of 2005 to
Messrs. Norsworthy, Clifton and Glancy will vest 1/3 after
January 1, 2008 if the performance standard is achieved by
December 31, 2007, 1/3 after January 1, 2009 if the
performance standard is achieved by December 31, 2008, and
the remaining 1/3 after January 1, 2010 if the performance
standard is achieved by December 31, 2009. The price of
Company stock at the time of the February 2005 grants was
$33.65. The aggregate total value based on per share prices at
the date of grant of the 2005 restricted share grants to each of
the named executive officers was as follows: $749,554 for
Mr. Norsworthy, $310,421 for Mr. Clifton, $136,283 for
Mr. Glancy, $60,570 for Mr. McDonnell and $67,300 for
Mr. Lamp. During the restricted period, executives receive
dividends on the restricted shares and have voting rights
associated with such shares. |
11
|
|
(3) |
All Other Compensation details for 2005: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance | |
|
|
|
|
|
Company | |
|
|
|
|
Share | |
|
Dividends on | |
|
Dividends on | |
|
Matching | |
|
|
Name |
|
Payment | |
|
Restricted Shares | |
|
Phantom Shares | |
|
Thrift Plan | |
|
Total | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Lamar Norsworthy
|
|
$ |
2,317,560 |
|
|
$ |
32,921 |
|
|
$ |
14,244 |
|
|
$ |
8,400 |
|
|
$ |
2,373,125 |
|
Matthew P. Clifton
|
|
$ |
2,317,560 |
|
|
$ |
40,260 |
|
|
$ |
1,930 |
|
|
$ |
8,400 |
|
|
$ |
2,368,150 |
|
W. John Glancy
|
|
$ |
289,659 |
|
|
$ |
4,384 |
|
|
|
|
|
|
$ |
8,400 |
|
|
$ |
302,443 |
|
Stephen J. McDonnell
|
|
$ |
165,540 |
|
|
$ |
3,839 |
|
|
|
|
|
|
$ |
8,400 |
|
|
$ |
177,779 |
|
David L. Lamp
|
|
|
|
|
|
$ |
1,928 |
|
|
|
|
|
|
$ |
8,320 |
|
|
$ |
10,248 |
|
Long-Term Incentive Plans Performance Share
Awards in Last Year
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance or Other |
|
|
Number of Shares, |
|
Period Until |
|
|
Units or Other Rights |
|
Maturation or |
Name |
|
(#)(1) |
|
Payout |
|
|
|
|
|
Norsworthy
|
|
|
22,275 |
|
|
|
1/2008 |
|
Clifton
|
|
|
18,450 |
|
|
|
1/2008 |
|
Glancy
|
|
|
4,050 |
|
|
|
1/2008 |
|
McDonnell
|
|
|
2,387 |
|
|
|
1/2008 |
|
Lamp
|
|
|
2,000 |
|
|
|
1/2008 |
|
|
|
(1) |
Performance Share Awards: On February 17, 2005, the Company
granted performance share units to the Companys officers
and other key employees, including the named executive officers.
The units represent an award for a designated performance
period. At the end of the performance period, all recipients
except Messrs. Norsworthy and Clifton are entitled to a
number of shares equal to a percentage of the awarded units as
determined by reference to the total shareholder return (the
TSR) of the Company compared to the TSR of a select
group of peer companies (the Peer Group). TSR
includes both appreciation in share price during the performance
period and the assumed reinvestment of any dividends declared
into additional shares at the time dividends are paid. The
number of shares of Company stock payable to the recipient at
the end of the period is determined by multiplying the number of
Units by a performance percentage, which may be from
0% to 200% depending upon the Companys TSR ranking as
compared to the Peer Group. Messrs. Norsworthy and Clifton
are entitled to a cash payment equal to the value of the units
as determined by reference to the TSR of the Company compared to
the TSR (determined as set forth above) of the Peer Group. The
share price for the TSR calculation of the Company is the
average share price for the final thirty-day trading period of
the performance period (the Share Price). The amount
payable to the recipient at the end of the period is determined
by multiplying the number of Units by a performance
percentage, which may be from 0% to 200% depending upon
the Companys TSR ranking as compared to the Peer Group,
further multiplied by the Share Price. |
Aggregated Option Exercises In Last Year
and Year-End Option Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
|
|
|
|
|
|
|
|
|
Underlying Unexercised | |
|
Value of Unexercised In-the | |
|
|
|
|
|
|
|
|
Options at | |
|
Money Options at | |
|
|
|
|
Shares | |
|
|
|
December 31, 2005 | |
|
December 31, 2005(3) | |
|
|
Option | |
|
Acquired | |
|
Value | |
|
| |
|
| |
Name |
|
Price(2) | |
|
on Exercise | |
|
Realized | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Total Norsworthy(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
620,248 |
|
|
|
48,000 |
|
|
$ |
33,971,600 |
|
|
$ |
2,540,160 |
|
Total Clifton
|
|
$ |
6.13 |
|
|
|
262,200 |
|
|
$ |
7,262,688 |
|
|
|
97,800 |
|
|
|
32,000 |
|
|
$ |
5,176,449 |
|
|
$ |
1,693,440 |
|
Total Glancy
|
|
$ |
4.23 |
|
|
|
50,000 |
|
|
$ |
2,055,831 |
|
|
|
64,000 |
|
|
|
16,000 |
|
|
$ |
3,397,360 |
|
|
$ |
846,720 |
|
Total McDonnell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,000 |
|
|
|
8,000 |
|
|
$ |
6,159,290 |
|
|
$ |
423,360 |
|
Total Lamp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
|
|
(1) |
In addition to stock options for 592,000 shares of Common
Stock exercisable at the end of 2005, Mr. Norsworthy holds
28,248 Phantom Shares that were granted for past services and to
compensate for the exclusion of the officer from the Employee
Stock Ownership Plan (ESOP) in the 1986-88 fiscal
years. Phantom Shares are unsecured rights to cash payments
based on the market value of such shares at future dates.
Payments based on market value of Common Stock are generally due
40 days after termination of employment or the date of
final distribution to the officer under the ESOP unless the
officer elects to defer payments to future dates that may not be
later than 60 days after the officers death or
permanent disability. |
|
(2) |
Calculated as an average exercise price of all options exercised
by the executive during the year. |
|
(3) |
Calculated based on the fair market value of the Companys
Common Stock on December 31, 2005 ($58.87 per share)
minus the relevant exercise prices. |
Bonus Arrangements
The Company and its principal subsidiaries provide incentive
bonuses for certain key personnel. Bonuses are based in part on
the performance of the Company and in part on assessment of
individual performance. See Compensation Committee Report
on Executive Compensation.
Retirement Plan
The Company has a noncontributory Retirement Plan for all
permanent employees. The following table sets forth the
estimated annual retirement benefits (subject to reduction for
Social Security offsets) that would be payable in 2006 for
certain salary ranges under the Retirement Plan and the
Retirement Restoration Plan described below:
Pension Plan Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years of Credited Service at Normal Retirement | |
Highest 3-Year |
|
| |
Average Pay |
|
10 | |
|
15 | |
|
20 | |
|
25 | |
|
30 | |
|
35 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
150,000
|
|
|
24,000 |
|
|
|
36,000 |
|
|
|
48,000 |
|
|
|
60,000 |
|
|
|
72,000 |
|
|
|
84,000 |
|
200,000
|
|
|
32,000 |
|
|
|
48,000 |
|
|
|
64,000 |
|
|
|
80,000 |
|
|
|
96,000 |
|
|
|
112,000 |
|
250,000
|
|
|
40,000 |
|
|
|
60,000 |
|
|
|
80,000 |
|
|
|
100,000 |
|
|
|
120,000 |
|
|
|
140,000 |
|
300,000
|
|
|
48,000 |
|
|
|
72,000 |
|
|
|
96,000 |
|
|
|
120,000 |
|
|
|
144,000 |
|
|
|
168,000 |
|
350,000
|
|
|
56,000 |
|
|
|
84,000 |
|
|
|
112,000 |
|
|
|
140,000 |
|
|
|
168,000 |
|
|
|
196,000 |
|
400,000
|
|
|
64,000 |
|
|
|
96,000 |
|
|
|
128,000 |
|
|
|
160,000 |
|
|
|
192,000 |
|
|
|
224,000 |
|
450,000
|
|
|
72,000 |
|
|
|
108,000 |
|
|
|
144,000 |
|
|
|
180,000 |
|
|
|
216,000 |
|
|
|
252,000 |
|
500,000
|
|
|
80,000 |
|
|
|
120,000 |
|
|
|
160,000 |
|
|
|
200,000 |
|
|
|
240,000 |
|
|
|
280,000 |
|
550,000
|
|
|
88,000 |
|
|
|
132,000 |
|
|
|
176,000 |
|
|
|
220,000 |
|
|
|
264,000 |
|
|
|
308,000 |
|
600,000
|
|
|
96,000 |
|
|
|
144,000 |
|
|
|
192,000 |
|
|
|
240,000 |
|
|
|
288,000 |
|
|
|
336,000 |
|
650,000
|
|
|
104,000 |
|
|
|
156,000 |
|
|
|
208,000 |
|
|
|
260,000 |
|
|
|
312,000 |
|
|
|
364,000 |
|
700,000
|
|
|
112,000 |
|
|
|
168,000 |
|
|
|
224,000 |
|
|
|
280,000 |
|
|
|
336,000 |
|
|
|
392,000 |
|
The compensation covered by the Companys retirement plans
is the average annual base compensation during the highest
compensated consecutive
36-month period of
employment with the Company for each employee. At
December 31, 2005, the covered compensation for
Messrs. Norsworthy, Clifton, Glancy, McDonnell and Lamp
were $575,019, $476,160, $250,667, $230,819 and $221,568,
respectively. At December 31, 2005,
Messrs. Norsworthy, Clifton, Glancy, McDonnell and Lamp
were credited with 34, 25, 6, 5 and 1 year(s) of
service, respectively. Under the Retirement Plan, subject to
certain age and
length-of-service
requirements, employees upon normal retirement are entitled to a
life annuity with yearly pension payments equal to 1.6% of
average annual base compensation during their highest
compensated consecutive
36-month period of
employment with the Company multiplied by total credited years
of service, less 1.5% of primary Social Security benefits
multiplied by such service years but not to exceed 45% of such
benefits. Benefits up to
13
limits set by the Internal Revenue Code are funded by Company
contributions to the Retirement Plan, with the amounts
determined on an actuarial basis. The Internal Revenue Code of
1986, as amended (the Code), currently limits
benefits that may be covered by the Retirement Plans
assets to $175,000 per year (subject to increases for
future years based on price level changes) and limits the
compensation that may be taken into account in computing such
benefits to $220,000 per year (subject to certain upward
adjustments for future years). Effective from the 1995 fiscal
year, the Company has a Retirement Restoration Plan that
provides for additional payments from the Company so that total
Retirement Plan benefits for specified executives will be
maintained at the levels provided in the Retirement Plan before
the application of the limitations of the Code.
Thrift Plan
The Company has a Thrift Plan, which is qualified under the
Code, for eligible employees of the Company and its subsidiaries.
Employees may elect to participate in the Thrift Plan by making
contributions to the Plan of 1% to 50% of their compensation.
For employees with at least one year of service, the Company
matches employee contributions up to 4% of their compensation,
except for employees of Company subsidiaries in Lovington and
Artesia, New Mexico, Woods Cross, Utah, and Spokane, Washington
who are represented by, in New Mexico, the International
Union of Operating Engineers and, in Utah, United Steel
Workers PACE, for whom the Company matches employee
contributions up to 6% of their compensation. In 2006, employee
contributions that are made on a tax-deferred basis are
generally limited to $15,000 per year with employees over
50 years of age able to make additional tax deferred
contributions of $5,000. Employees may direct Company
contributions to be invested in Common Stock. Company
contributions vest upon the earlier of three years of credited
service or termination of employment due to retirement,
disability or death. Matching Company contributions for
executive officers under the Thrift Plan have been included in
the Summary Compensation Table under the column captioned
All Other Compensation.
Many employees of the Company and eligible affiliates with at
least one year of service, other than employees covered by
collective bargaining agreements, participated in an Employee
Stock Ownership Plan (ESOP) established in 1985. For
the 1987 through the 1996 fiscal years, shares of Common Stock
held by the ESOP were allocated to the accounts of participants
for each fiscal year on the basis of payments of principal on
the ESOPs ten-year installment note issued to the Company
in connection with the ESOPs purchase of Common Stock from
the Company. Shares were allocated to participants based on
their compensation. Participants shares vest upon the
earlier of five years credited service or termination of
employment due to retirement, disability or death. For the year
ending December 31, 2005, no shares of Common Stock held by
the ESOP were allocated to participants related to forfeitures
for the year ending December 31, 2005. Effective
August 1, 1999, the ESOP was merged into the Thrift Plan
and each participants ESOP account became a Company Stock
ESOP Account in the Thrift Plan. Over the twelve months ending
October 2002, shares in the Company Stock ESOP Account for each
participant were gradually shifted to each participants
regular Thrift Plan account and consequently became subject to
the participants directions as to holding or selling such
shares.
ESOP Restoration Plan
The Company adopted an ESOP restoration plan to provide
additional benefits to executives whose allocations of shares of
Common Stock from the ESOP for the 1995 and 1996 fiscal years
were reduced because of the application of limitations of the
Code. The plan provides for the grant to participants after the
end of the 1995 and 1996 fiscal years of phantom
shares equal in number to the number of shares not
allocated to participants because of the limitations of the
Code. The phantom shares under the plan are unsecured rights to
cash payments based on dividends paid on shares of Common Stock
and on the market value of such shares at future dates. Payments
based on market value of Common Stock will generally be made at
the time of a participants termination of employment. A
total of 61,880 phantom shares were granted to participants for
the 1995 and 1996 fiscal year. Phantom shares held at
December 31, 2005 by executive
14
officers are as follows: 11,320 shares by
Mr. Norsworthy, 5,360 by Mr. Clifton, none by
Mr. Glancy, none by Mr. McDonnell, and none by
Mr. Lamp.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
The basic objective of the Companys compensation program
for executives is to provide levels of compensation that allow
the Company to attract and retain productive executives who are
motivated to protect and enhance the long-term value of the
Company for its stockholders. The Company seeks to establish and
maintain levels of compensation that are competitive with levels
for comparable companies within its industry sector. Competitive
compensation levels are determined on the basis of available
information on compensation paid by companies in the
Companys industry that are most similar to the Company,
taking into account the Companys size and place in the
refining industry. In addition, the Company participates in and
regularly reviews compensation surveys of the petroleum and
refining industry conducted by a major independent executive
compensation consulting firm. Executive compensation programs
are intended to reward each executive based on Company
performance and individual performance and to balance
appropriately short-term and long-term considerations. The
Company targets the median (50th percentile) of competitive
pay data for establishing executive base salary levels and
incentive opportunities.
Elements of Compensation
The Companys executive compensation programs and plans are
comprised of the following elements:
|
|
|
|
|
Base salaries |
|
|
|
Annual incentive (bonus) opportunities |
|
|
|
Long-term incentive opportunities under the Companys
Long-Term Incentive Compensation Plan (which are granted by the
Compensation Committee) |
|
|
|
Employee benefit plans available to all full-time, salaried
employees of the Company |
|
|
|
Supplemental benefits including benefits earned under the
retirement restoration plan. |
Base salaries for executives are set at levels intended to be
competitive at the 50th percentile of comparably-sized
organizations in the petroleum and refining industry sector.
Salaries are reviewed and adjusted annually; individual salary
adjustments are made in consideration of the executives
performance and contributions to the Company as well as the
executives salary in relationship to competitive market
data. Base salary adjustments were made during 2005 for the
named executive officers.
Annual incentive (bonus) awards are based on an evaluation
of two or more of the following measures over a
12-month performance
period: the Companys performance against internal pre-tax
net income goals; the Companys performance against select
peer companies performance relative to basic earnings per
share growth, net profit margin, return on assets and return on
investment; divisional performance goals; and performance
against individual goals. With respect to the Chairman of the
Board and the Chief Executive Officer, any annual incentive
awards are weighted equally upon the Companys performance
against internal pre-tax net income goals and the Companys
performance against select peer companies performance
relative to basic earnings per share growth, net profit margin,
return on assets and return on investment. They have a bonus
target of 90% of base salary, which may be reduced to 0% or
increased to 300% of target depending upon performance relative
to the two measures. In 2005, the Committee determined that the
Chairman of the Board and Chief Executive Officer had earned the
maximum award based upon the Companys performance against
the internal pre-tax net income goal and 176% of target based
upon the Companys performance versus the select peer
companies.
Until 2004, the Company used stock options as its principal form
of long-term incentive compensation. Beginning in the latter
part of 2003, the Committee (and the then active Long-Term
Compensation
15
Committee) worked with advisors from an independent executive
compensation consulting firm in revising the Companys
approach to long-term incentives. In February 2005, the Company
granted both restricted stock and performance share units to the
Companys executive officers, including the named executive
officers. The amount and term of the February 2005 grants were
based on consideration of the success of the Company versus its
peer group. All February 2005 restricted stock grants are
time-lapse restricted shares with the restrictions lapsing
ratably over the last three years of a five-year period with the
exception of those granted to Messrs. Norsworthy, Clifton
and Glancy, which are subject to Company performance standards.
During the restricted period, executives receive dividends on
the restricted shares and have the voting rights associated with
such shares. The February 2005 performance share unit grants
provide that they will be earned over a three-year performance
period. The number of performance share units earned will be
based upon the Companys total stockholder return as
compared to a select group of refining industry sector peer
companies. The number of performance share units earned will be
in the range of zero to 200 percent of the number of units
granted, depending upon the Companys relative total
stockholder return. All performance share units are paid in the
form of Company stock with the exception of the awards to
Messrs. Norsworthy and Clifton, which will be paid in cash
with the value of the award at the conclusion of the performance
period being based upon both the number of performance share
units earned and the price of the Companys common shares
at the end of the period. Under new stock ownership guidelines
approved by the Committee in 2006, executives will be expected
to retain fifty percent of net profit shares received from
long-term incentive awards until a specified ownership level is
achieved.
Compensation of the Chairman of the Board and the Chief
Executive Officer
The compensation of the Companys Chairman of the Board and
the Companys Chief Executive Officer is determined by the
Committee based on consideration of the compensation programs
and principles described above. Lamar Norsworthy served as
Chairman of the Board and Chief Executive Officer from 1977
until January 1, 2006. Since January 1, 2006, Matthew
P. Clifton has served as the Companys Chief Executive
Officer, and Mr. Norsworthy has continued to serve as the
Chairman of the Board.
Effective January 1, 2006, Mr. Norsworthy received a
salary adjustment from $621,509 per year to
$647,000 per year. In addition, Mr. Norsworthy
received annual incentive awards totaling $1,332,000 for the
reporting period covered. Such awards were made based on
consideration of the Companys performance during this
period as set forth above. Based on recommendations of advisors
from an independent executive compensation consulting firm,
Mr. Norsworthy received awards of long-term incentive
compensation in the form of 22,275 restricted shares and 22,275
performance share units in February 2005 and 10,465 restricted
shares and 10,465 performance share units in February 2006.
28,000 of Mr. Norsworthys restricted shares, granted
in February 2004, vested in February 2006. In addition,
Mr. Norsworthy received a payment in January 2005 totaling
$2,317,560 related to the vesting of the February 2004
performance share unit grants. All compensation awarded to
Mr. Norsworthy during the reporting period is reflected in
and fully described in the Summary Compensation Table set forth
in the Proxy Statement.
Effective January 1, 2006, Mr. Clifton received a
salary adjustment from $467,457 per year to
$647,000 per year. In addition, Mr. Clifton received
annual incentive awards totaling $1,103,000 for the reporting
period covered. Such awards were made based on consideration of
the Companys performance during this period as set forth
above. Based on recommendations of advisors from an independent
executive compensation consulting firm, Mr. Clifton
received awards of long-term incentive compensation in the form
of 9,225 restricted shares and 18,450 performance share units in
February 2005 and 7,849 restricted shares and 7,849 performance
share units in February 2006. 28,000 of Mr. Cliftons
restricted shares, granted in February 2004, vested in February
2006. In addition, Mr. Clifton received a payment in
January 2005 totaling $2,317,560 related to the vesting of the
February 2004 performance share unit grants. All compensation
awarded to Mr. Clifton during the reporting period is
reflected in and fully described in the Summary Compensation
Table set forth in the Proxy Statement.
16
Deductibility of Executive Compensation
With respect to Section 162(m) of the Code and underlying
regulations pertaining to the deductibility of compensation to
named executive officers in excess of $1 million, the
Company has adopted a policy to comply with such limitations to
the extent practicable. The Companys Long-Term Incentive
Compensation Plan has been approved by stockholders; certain
elements of the plan are designed to provide performance-based
incentive compensation which would be fully deductible under
Section 162(m). Restricted Stock and Performance Share
grants made to executive officers who are also directors of the
Company are intended to be fully deductible under
Section 162(m). However, the Compensation Committee has
also determined that some flexibility is required,
notwithstanding the statutory and regulatory provisions, in
negotiating and implementing the Companys incentive
compensation programs. It has, therefore, retained the
discretion to award some bonus payments based on
non-quantitative performance measurements and other criteria
that it may determine, in its discretion, from time to time.
Compensation Committee of the Board of Directors
|
|
|
Buford P. Berry
Chairman |
|
Thomas K. Matthews
Robert G. McKenzie |
The Compensation Committee Report on Executive Compensation will
not be deemed incorporated by reference in any filing by the
Company under the Securities Act of 1933, as amended (the
Securities Act) or the Exchange Act, except to the
extent that the Company specifically incorporates such report by
reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The members of the Compensation Committee of the Board of
Directors during the year ending December 31, 2005 were
Messrs. Berry (Chairman), Matthews and McKenzie. None of
the members of the Committee was an officer or employee of the
Company or any of its subsidiaries during the year ending
December 31, 2005. No executive officer of the Company
served as a member of the compensation committee of another
entity that had an executive officer serving as a member of the
Companys Board of Directors or the Compensation Committee.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board has reviewed and discussed with
management the audited financial statements of the Company for
the year ended December 31, 2005 and has discussed with
representatives of Ernst & Young LLP, the
Companys independent auditors for the year ended
December 31, 2005, the matters required to be discussed by
Statement of Auditing Standards No. 61, as currently in
effect. The Audit Committee has received the written disclosures
and the letter from the independent auditors required by
Independence Standards Board Standard No. 1, as currently
in effect, and has discussed with representatives of
Ernst & Young LLP the independence of Ernst &
Young LLP. The Audit Committee has also considered whether the
independent auditors provision of non-audit services to
the Company is compatible with the auditors independence.
Based on the review and discussions referred to above, the Audit
Committee has recommended to the Board of Directors that the
audited financial statements for the year ended
December 31, 2005 be included in the Companys Annual
Report on
Form 10-K for the
year ended December 31, 2005 for filing with the SEC.
Audit Committee of the Board of Directors
|
|
|
Robert G. McKenzie,
Chairman |
|
Buford P. Berry
Thomas K. Matthews, II
Paul T. Stoffel |
17
The Audit Committee Report will not be deemed proxy soliciting
material and will not be incorporated by reference in any filing
by the Company under the Securities Act or the Exchange Act
except to the extent that the Company specifically incorporates
such report by reference.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors of the Company has
selected Ernst & Young LLP, independent certified
public accountants, to audit the books, records and accounts of
the Company and its consolidated subsidiaries for the 2006
calendar year. Ernst & Young LLP has conducted such
audits since 1977. It is expected that a representative of such
firm will be present in person or by conference telephone at the
Annual Meeting, will have an opportunity to make a statement if
the representative so desires, and will be available to respond
to appropriate questions.
AUDIT FEES
The following table sets forth the fees paid to Ernst &
Young LLP for services provided during 2005 and 2004:
|
|
|
|
|
|
|
|
|
|
|
|
2005 | |
|
2004 | |
|
|
| |
|
| |
Audit Fees(1)
|
|
$ |
1,142,000 |
|
|
$ |
1,139,000 |
|
Audit-Related Fees(2)
|
|
$ |
45,000 |
|
|
$ |
36,000 |
|
Tax Fees(3)
|
|
$ |
690,000 |
|
|
$ |
466,000 |
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
1,877,000 |
|
|
$ |
1,641,000 |
|
|
|
|
|
|
|
|
|
|
(1) |
Represents fees for professional services provided in connection
with the audit of the Companys annual financial statements
and internal control over financial reporting, review of the
Companys quarterly financial statements and audits
performed as part of registration statement filings of the
Company and its affiliates. Includes $431,000 in 2004 for audit
services for Navajo Pipeline Co., L.P. in connection with the
initial public offering of HEP, which costs HEP reimbursed to
the Company. |
|
(2) |
Represents fees for professional services in connection with the
Companys benefit plans. |
|
(3) |
Represents fees for professional services in connection with tax
compliance and planning. Includes $373,000 and $13,000 for tax
services provided to HEP in the years ended December 31,
2005 and 2004, respectively, as tax services are among the
administrative services that the Company provides to HEP under
the Omnibus Agreement. |
The Company has adopted a policy whereby the Audit Committee is
required to pre-approve the audit and non-audit services
performed by the independent auditor to assure that performing
such services does not impair the auditors independence.
The Audit Committee has approved a policy whereby it may
delegate its pre-approval authority, up to $75,000, to one or
more of the Committees members or to the Companys
Chief Accounting Officer, and any decisions made under such
delegation are required to be reported to the Audit Committee.
18
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing, for the period
commencing July 1, 2000 and ending December 31, 2005,
the yearly percentage change in the cumulative total stockholder
return on the Companys Common Stock to the cumulative
total return of the S&P Composite 500 Stock Index and of an
industry peer group chosen by the Company. The stock price
performance depicted in the foregoing graph is not necessarily
indicative of future price performance. The graph will not be
deemed to be incorporated by reference in any filing by the
Company under the Securities Act or the Exchange Act, except to
the extent that the Company specifically incorporates such graph
by reference.
COMPARISON OF CUMULATIVE TOTAL RETURN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
|
Base |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company Name/ Index |
|
|
Jul 01 |
|
|
Jul 02 |
|
|
Dec 02 |
|
|
Dec 03 |
|
|
Dec 04 |
|
|
Dec 05 |
|
|
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
HOLLY CORP
|
|
|
$ |
282.80 |
|
|
|
$ |
297.76 |
|
|
|
$ |
391.04 |
|
|
|
$ |
500.21 |
|
|
|
$ |
1,027.70 |
|
|
|
$ |
2,187.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S&P 500 INDEX
|
|
|
$ |
85.67 |
|
|
|
$ |
65.43 |
|
|
|
$ |
63.65 |
|
|
|
$ |
81.91 |
|
|
|
$ |
90.82 |
|
|
|
$ |
95.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PEER GROUP(2)
|
|
|
$ |
132.01 |
|
|
|
$ |
118.61 |
|
|
|
$ |
114.88 |
|
|
|
$ |
171.98 |
|
|
|
$ |
263.45 |
|
|
|
$ |
519.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
The amounts shown assume that the value of the investment in the
Company and each index was $100 on August 1, 2000 and that
all dividends were reinvested. |
|
(2) |
The Peer Group is made up of Frontier Oil Corporation, Giant
Industries, Inc., Marathon Oil Corporation, Sunoco, Inc., Tesoro
Petroleum Corp., Premcor, Inc. and Valero Energy Corporation.
Premcor was acquired by Valero in September of 2005. Most of the
peer group companies are also engaged in retail gasoline
marketing in addition to their refining activities.
Additionally, most of the peer companies are substantially
larger than the Company in terms of assets and sales. |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
During 2005 and the first part of 2006, Lamar Norsworthy, who
was Chairman of the Board and Chief Executive Officer of the
Company through the end of 2005 and is currently Chairman of the
Board, has jointly owned with the Company a jet aircraft which
Mr. Norsworthy operates for personal use and for Company
business travel. The aircraft was purchased for $3,550,000. For
the period from the acquisition of the aircraft
19
in July 2004 through November 2005, the aircraft was owned 25%
by Mr. Norsworthy and 75% by the Company (based on original
contributions to the purchase price of the aircraft). In
November 2005, Mr. Norsworthy purchased an additional 25%
interest in the aircraft from the Company for 25% of the
original purchase price, which was estimated by
Mr. Norsworthy and the Audit Committee of the
Companys Board of Directors to be the approximate fair
market value of the aircraft at the date Mr. Norsworthy
purchased the additional 25% interest. Since the acquisition of
the aircraft, Mr. Norsworthy and the Company have shared
all fixed costs and capital expenses associated with the
aircraft according to the ownership percentage of
Mr. Norsworthy and the Company from time to time. All
variable costs incurred have been paid directly by the
respective user, depending upon whether the aircraft was
operated for Mr. Norsworthys personal use or for
Company business. During 2005, the aircraft was operated by
Mr. Norsworthy for a total of 321 hours of which 33%
were for personal use and 67% were for Company business travel.
In February 2006, Mr. Norsworthy and the Company entered
into an agreement to purchase an aircraft to replace the
aircraft that had been jointly owned. The purchase price of the
new aircraft is $7,887,500 and will be shared 60% by
Mr. Norsworthy and 40% by the Company. The new aircraft
will be operated by Mr. Norsworthy for personal use and for
Company business travel under the same arrangement as used with
the prior jointly owned aircraft. It is expected that
Mr. Norsworthys personal use of the aircraft as a
percentage of the total hours of the aircrafts operation
will be less than Mr. Norsworthys percentage
ownership in the aircraft and share of fixed expenses.
Mr. Norsworthy and the Company plan to sell the aircraft
that has been jointly owned by Mr. Norsworthy and the
Company since July 2004 and to divide the net proceeds of that
sale in accordance with their 50% ownership percentages in that
aircraft. This arrangement has been reviewed and approved by the
Audit Committee.
M. Neale Hickerson, who is employed by the Company as Vice
President, Investor Relations, is the son of Marcus R.
Hickerson, a director of the Company. Neale Hickerson was paid
compensation in the amount of $279,990 for services rendered
during 2005.
Michael P. Clifton, who is employed by the Company as a manager
of supply and business development for the Companys
asphalt operations, is the son of Matthew P. Clifton, the Chief
Executive Officer and a director of the Company. Michael Clifton
was paid compensation in the amount of $109,938 for services
rendered during 2005.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Exchange Act requires the
Companys directors, executive officers and holders of more
than 10% of its shares of Common Stock to file with the
Commission and the New York Stock Exchange initial reports of
ownership of shares of Common Stock and reports of changes in
such ownership. The Commissions rules require such persons
to furnish the Company with copies of all Section 16(a)
reports that they file. Based on a review of these reports and
on written representations from the reporting persons that no
other reports were required, all such reports concerning
beneficial ownership were filed in a timely manner by reporting
persons except for the December 27, 2004 Form 4 report
on a sale by Jack P. Reid on December 23, 2004, in the
amount of 4,100 shares, which should have been reported as
a sale of 6,400 shares. This was corrected on a Form 5
filing on February 14, 2006.
ADDITIONAL INFORMATION
Stockholder Proposals
Proposals of stockholders to be considered for presentation at
the Companys 2007 Annual Meeting should be received by the
Company by December 9, 2006, in order to be considered for
inclusion in the proxy statement for that meeting. Pursuant to
Rule 14a-4(c)(1)
under the Securities Exchange Act of 1934, the Company
management will have discretionary authority to vote on any
matter of which the Company does not receive notice by
February 24, 2007 with respect to proxies submitted for the
Companys 2007 Annual Meeting.
20
Other Matters
The Board of Directors of the Company does not know of any other
matters to be acted upon at the meeting. However, if any other
matter properly comes before the meeting, the persons voting the
proxies will vote them in accordance with their best judgment.
Financial Statements Available
A copy of the Companys 2005 Annual Report containing the
audited consolidated balance sheet at December 31, 2005,
and the related consolidated statements of income, cash flows,
stockholders equity and comprehensive income for the year
ended December 31, 2005, is being mailed with this Proxy
Statement to stockholders entitled to notice of the Annual
Meeting. The Annual Report does not constitute a part of the
proxy solicitation material.
Voting Via the Internet or By Telephone
If you have shares registered directly with the Companys
transfer agent, you may choose to vote those shares via the
Internet or by telephone. Specific instructions for registered
stockholders interested in voting via the Internet or by
telephone are set forth on the enclosed proxy card. If you hold
shares with a broker or bank, you may also be eligible to vote
via the Internet or by telephone if your broker or bank
participates in the proxy voting program provided by ADP
Investor Communication Services. If your bank or brokerage firm
is participating in ADPs program, your voting form will
provide instructions.
Votes submitted via the Internet or by telephone must be
received by the transfer agent by 11:59 p.m., Eastern
Daylight Time, on May 10, 2006. Submitting your proxy via
the Internet or by telephone will not affect your right to vote
in person should you decide to attend the Annual Meeting. The
telephone and Internet voting procedures are designed to
authenticate stockholders identities, to allow
stockholders to give their voting instructions and to confirm
that stockholders instructions have been recorded
properly. Counsel has advised the Company that the Internet
voting procedures that have been made available are consistent
with the requirements of applicable law. A stockholder voting
via the Internet should understand that there may be costs
associated with electronic access, such as usage charges from
Internet access providers and telephone companies, that must be
borne by the stockholder.
|
|
|
ERIN O. ROYSTON |
|
Secretary |
21
Appendix A
TEXT OF PROPOSED AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION
OF
HOLLY CORPORATION
The Board of Directors of the Corporation proposes an amendment
to the Restated Certificate of Incorporation of the Corporation
to amend the first paragraph of ARTICLE FOURTH to read as
follows:
|
|
|
ARTICLE FOURTH: The total number of shares of stock
which the Corporation shall have authority to issue is One
Hundred One Million (101,000,000) shares, of which One Million
(1,000,000) shares of the par value of One Dollar ($1.00) each,
amounting in the aggregate to One Million Dollars ($1,000,000),
shall be Preferred Stock, and of which One Hundred Million
(100,000,000) shares of the par value of One Cent ($.01) each,
amounting in the aggregate to One Million Dollars ($1,000,000),
shall be Common Stock. |
A-1
HOLLY-PS-06
ANNUAL MEETING OF STOCKHOLDERS OF
HOLLY CORPORATION
May 11, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
ê Please detach along
perforated line and mail in the envelope provided. ê
n
|
|
|
|
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AND FOR APPROVAL OF THE AMENDMENT TO THE
CORPORATIONS RESTATED CERTIFICATE OF INCORPORATION.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
|
x |
|
|
1. |
|
Election of Directors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOMINEES: |
|
|
|
o
|
|
FOR ALL NOMINEES
|
|
¡
¡
|
|
B.P. Berry
M.P. Clifton
|
|
|
|
o
|
|
WITHHOLD AUTHORITY
FOR ALL NOMINEES
|
|
¡
¡
|
|
W.J. Glancy
W.J. Gray
|
|
|
|
o
|
|
FOR ALL EXCEPT
(See instructions below) |
|
¡
¡
|
|
M.R. Hickerson
T.K. Matthews
|
|
|
|
|
|
¡
¡
|
|
R.G. McKenzie
L. Norsworthy
|
|
|
|
|
|
|
|
¡
¡
|
|
J.P. Reid
P.T. Stoffel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTION:
|
|
To withhold authority to vote for any
individual nominee(s), mark FOR ALL EXCEPT and fill in
the circle next to each nominee you wish to withhold, as
shown here:
l
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To change the address on your account, please check
the box at right and indicate your new address in
the address space above. Please note that changes
to the registered name(s) on the account may not be
submitted via this method. |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
|
2.
|
|
Approval of Amendment to the
Corporations Restated Certificate of Incorporation to increase
the total number of shares of Common Stock par value $0.01 per share, that the Corporation has the authority to issue from
50,000,000 shares to 100,000,000 shares.
|
|
o
|
|
o
|
|
o |
|
|
3.
|
|
Other Business - Voting
upon any other business properly brought before the
meeting or any adjournment thereof.
|
|
|
|
|
|
|
|
|
|
|
|
This proxy when properly executed will be voted as directed. If no direction
is given, it will be voted FOR the election of all nominees as directors, FOR
approval of the amendment to the Corporations Restated Certificate of
Incorporation, and in the discretion of those authorized to vote this proxy on
any other business.
|
|
|
|
|
|
|
|
|
|
|
|
Receipt of the
Companys Annual Report for 2005, Notice of Annual Meeting
and related Proxy Statement is hereby acknowledged, and all former proxies
are hereby revoked. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please check the box if you are planning to attend the Annual Meeting in person. |
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature of
Stockholder |
|
|
Date: |
|
Signature of Stockholder |
|
Date: |
|
|
|
|
|
|
|
|
|
|
|
Note:
|
|
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person. |
|
|
PROXY
HOLLY CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 11, 2006
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Lamar Norsworthy, Gerard L. Regard, Matthew P. Clifton and Erin O. Royston, or any of them or their substitutes, are hereby appointed proxies to represent and to vote the stock of Holly Corporation standing in the name(s) of the undersigned at the Annual Meeting of Stockholders to be held in Dallas, Texas on May 11, 2006, and at all adjournments thereof.
TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS YOU DO NOT NEED TO MARK ANY OF THE BOXES, JUST DATE AND SIGN ON THE REVERSE SIDE.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEE
REVERSE SIDE
|
|
|
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
|
|
|
SEE REVERSE SIDE |
|
|
|
|
|
|
|
|
|
|
|
|
|
ANNUAL MEETING OF STOCKHOLDERS OF
HOLLY CORPORATION
May 11, 2006
PROXY VOTING INSTRUCTIONS
MAIL
- Date, sign and mail your proxy card in the envelope
provided as soon as possible.
- OR -
TELEPHONE
- Call toll-free 1-800-PROXIES
(1-800-776-9437) from any touch-tone telephone and follow the
instructions. Have your proxy card available when you call.
- OR -
INTERNET - Access www.voteproxy.com and follow the
on-screen instructions. Have your proxy card available when
you access the web page.
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPANY NUMBER |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCOUNT NUMBER |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
You may enter your voting instructions at 1-800-PROXIES or
www.voteproxy.com up until 11:59 PM
Eastern Time the day before the cut-off or meeting date.
ê
Please detach along perforated line and mail in the envelope provided
IF you are not voting via telephone or the Internet. ê
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AND
FOR APPROVAL OF THE AMENDMENT TO THE
CORPORATIONS RESTATED CERTIFICATE OF INCORPORATION.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
1. |
|
Election of Directors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
NOMINEES: |
|
|
o |
|
FOR ALL NOMINEES
|
|
¡
¡
|
|
B.P. Berry
M.P. Clifton
|
|
|
o
|
|
WITHHOLD AUTHORITY
FOR ALL NOMINEES
|
|
¡
¡
|
|
W.J. Glancy
W.J. Gray
|
|
|
o
|
|
FOR ALL EXCEPT
(See instructions below) |
|
¡
¡
|
|
M.R. Hickerson
T.K. Matthews
|
|
|
|
|
¡
¡
|
|
R.G. McKenzie
L. Norsworthy
|
|
|
|
|
|
|
¡
¡
|
|
J.P. Reid
P.T. Stoffel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INSTRUCTION:
|
|
To withhold authority to vote for any
individual nominee(s), mark FOR ALL EXCEPT and fill in
the circle next to each nominee you wish to withhold, as
shown here: l
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To change the address on your account, please check
the box at right and indicate your new address in
the address space above. Please note that changes
to the registered name(s) on the account may not be
submitted via this method. |
|
o |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
2.
|
|
Approval of Amendment to the
Corporations Restated Certificate of Incorporation to increase
the total number of shares of Common Stock par value $0.01 per share, that the Corporation has the authority to issue from
50,000,000 shares to 100,000,000 shares.
|
|
o
|
|
o
|
|
o |
|
|
|
|
|
|
|
|
|
3.
|
|
Other Business -
Voting upon any other business properly brought before the
meeting or any adjournment thereof.
|
|
|
|
|
|
|
|
|
|
This proxy when properly executed will be voted as directed. If no direction
is given, it will be voted FOR the election of all nominees as directors, FOR
approval of the amendment to the Corporations Restated Certificate of
Incorporation, and in the discretion of those authorized to vote this proxy on
any other business.
|
|
|
|
|
|
|
|
|
|
Receipt of the
Companys Annual Report for 2005, Notice of Annual Meeting
and related Proxy Statement is hereby acknowledged, and all former proxies
are hereby revoked. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Please
check the box if you are planning to attend the Annual Meeting in
person. |
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature of Stockholder |
|
|
Date: |
|
Signature of
Stockholder |
|
Date: |
|
|
|
|
|
|
|
|
|
|
Note:
|
|
Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
|
|
|