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SCHEDULE 14A INFORMATION
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
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Under Rule 14a-12 |
Giant Industries, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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Per unit price or other underlying value of transaction computed pursuant to
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state how it was determined): |
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Fee paid previously with preliminary materials. |
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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
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Date Filed: |
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GIANT INDUSTRIES, INC.
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Notice of 2006 Annual Meeting of Stockholders
Dear stockholder:
Our 2006 annual meeting of stockholders will be held at
4:00 p.m. on April 10, 2006 at the Hyatt Regency
Greenwich located at 1800 East Putnam Avenue,
Old Greenwich, Connecticut 06870. At the meeting, you will
be asked to:
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1. Elect two directors to hold office until the 2009 annual
meeting of stockholders, |
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2. Ratify the appointment of Deloitte & Touche LLP
as our independent auditors for the year ending
December 31, 2006, and |
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3. Consider any other matters that may properly come before
the meeting. |
Stockholders of record at the close of business on
February 24, 2006 are entitled to vote at the meeting and
at any adjournment of the meeting. A list of stockholders
entitled to vote at the meeting will be open for inspection
during ordinary business hours at our corporate headquarters
building from March 27, 2006 to April 10, 2006. Our
stockholders may inspect this list for any purpose related to
the meeting.
Details regarding admission to the meeting and the business to
be conducted at the meeting are provided in the accompanying
proxy statement. It is important that your shares be represented
and voted whether or not you expect to attend the meeting in
person. Therefore, please date, sign and complete the enclosed
proxy and return it in the enclosed envelope, which requires no
postage stamp if mailed in the United States.
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By Order of the Board of Directors |
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Fred L. Holliger |
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Chairman of the Board of Directors |
Scottsdale, Arizona
March 1, 2006
GIANT INDUSTRIES, INC.
23733 North Scottsdale Road
Scottsdale, Arizona 85255
PROXY STATEMENT
The Annual Meeting
Our board of directors is soliciting your proxy to encourage
your participation in our upcoming annual meeting and to obtain
your support on each of the proposals. You also may attend the
meeting and vote your shares directly. Your vote is important.
As a result, even if you do not attend in person, we encourage
you to vote by proxy.
This year we will hold the meeting on Monday, April 10,
2006, at 4:00 p.m. We will hold it at the Hyatt Regency
Greenwich located at 1800 East Putnam Avenue, Old Greenwich,
Connecticut 06870. This proxy statement contains important
information for you to consider when deciding how to vote on the
matters brought before the meeting. Please read it carefully. We
are first mailing this proxy statement and the proxy card to
stockholders on or about March 6, 2006. We also are mailing
our 2005 annual report to you with this proxy statement.
Questions and Answers About the Annual Meeting and Voting
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What is the purpose of the meeting? |
At our annual meeting, stockholders will vote to elect three
directors and ratify the selection of our independent auditors.
In addition, management will report on our performance during
2005 and respond to questions from stockholders.
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Who is entitled to vote at the meeting? |
The board has set February 24, 2006 as the record date for
the annual meeting. If you were a stockholder at the close of
business on February 24, 2006, you are entitled to vote at
the meeting.
As of the record date, 14,617,097 shares of our common
stock were issued and eligible to vote at the meeting. There
were 230 stockholders of record.
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What are my voting rights? |
Holders of our common stock are entitled to one vote per share.
Therefore, a total of 14,617,097 votes are entitled to be cast
at the meeting. There is no cumulative voting.
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How many shares must be present to hold the
meeting? |
In accordance with our bylaws, shares equal to at least one-half
of the voting power of the outstanding shares of common stock as
of the record date must be present at the meeting in order to
hold the meeting and conduct business. This is called a quorum.
Shares are counted as present at the meeting if:
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You are present and vote in person at the meeting, or |
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You have properly submitted a proxy card by mail. |
If you are stockholder of record, you can give a proxy to be
voted at the meeting by completing, signing and mailing the
enclosed proxy card. If you hold your shares in “street
name,” you must vote your shares through your broker or
nominee. Your broker or nominee has enclosed or will otherwise
provide to you a voting instruction card for your use in
directing the broker or nominee how to vote your shares.
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What is the difference between a stockholder of record and
a “street name” holder? |
If your shares are registered directly in your name, you are
considered the stockholder of record with respect to those
shares.
If your shares are held in a stock brokerage account or by a
bank or other nominee, then the brokerage firm, bank or other
nominee is considered to be the stockholder of record with
respect to those shares. You, however, are still considered the
beneficial owner of those shares, and your shares are said to be
held in “street name.” Street name holders generally
cannot vote their shares directly and must instead instruct the
brokerage firm, bank or other nominee how to vote their shares
using the method described above under “How do I vote my
shares?”.
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What does it mean if I receive more than one proxy
card? |
If you receive more than one proxy card, it means that you hold
shares registered in more than one account or that more than one
person in your household holds our shares. To ensure that all of
these shares are voted, please sign and return each proxy card.
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Can I vote my shares in person at the meeting? |
If you are stockholder of record, you may vote your shares in
person by attending the meeting and completing a floor ballot.
Even if you currently plan to attend the meeting, we recommend
that you also submit your proxy as described above so that your
vote will be counted if you later decide not to attend the
meeting.
If you are a street name holder, you may vote your shares in
person at the meeting only if you obtain a signed letter or
other proxy from your broker, bank or other nominee giving you
the right to vote the shares at the meeting.
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What vote is required for the matters brought before the
meeting? |
The election of directors requires the favorable vote of a
majority of the shares of common stock entitled to vote. All
other items being submitted to stockholders for a vote require
the favorable vote of a majority of the shares of common stock
represented at the meeting and entitled to vote.
For the election of directors, you may vote in favor of or
withhold your vote from each nominee. If you withhold your vote,
that will have the same effect as a vote against the nominee.
You may abstain from voting on all proposals except the election
of directors. We do not include abstentions in determining how
many shares are represented for purposes of a quorum. If you
abstain from voting on a proposal, that will have the same
effect as a vote against the proposal.
If you hold your shares in street name and do not provide voting
instructions to your broker, bank or nominee, your shares will
not be voted on any proposal on which your broker does not have
discretionary authority to vote under the rules of the New York
Stock Exchange. In this situation, a “broker non-vote”
occurs. We do not count broker non-votes in determining whether
a quorum is present or whether a proposal passes.
Our transfer agent will count the votes. In advance of the
meeting, we will appoint an election inspector to count all the
votes cast at the meeting and to report on the results.
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How does the board recommend that I vote? |
The board recommends a vote:
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FOR the nominees for director, and |
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FOR the ratification of the selection of Deloitte &
Touche LLP as our independent auditors for 2006. |
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What if I sign and return my proxy card but I do not
specify how I want my shares voted? |
If you do not specify how you want to vote your shares on your
proxy card, we will vote them:
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FOR the nominees for director, and |
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FOR the ratification of the selection of Deloitte &
Touche LLP as our independent auditors for 2006. |
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Can I change or revoke my vote after submitting my
proxy? |
Yes. You may revoke your proxy and change your vote at any time
before your proxy is voted at the annual meeting. You can change
your vote in any of the following ways:
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Delivering to our corporate secretary a written revocation
notice with a date later than the date of the proxy, |
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Signing and delivering to our corporate secretary a later proxy
relating to the same shares, or |
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Attending the meeting and voting in person. Please note that
simply attending the meeting is not sufficient to revoke your
proxy. To change or revoke your vote, you must submit a new
proxy card or a written revocation at the meeting. |
The proxy holders will vote all properly submitted proxies that
are not revoked.
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How can I attend the meeting? |
Stockholders may be asked to present valid picture
identification, such as a driver’s license or passport,
before being admitted to the meeting. If you hold your shares in
street name, you will need proof of ownership in order to vote
at the meeting. A recent brokerage statement or letter from the
broker or bank are examples of proof of ownership.
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Who pays for the cost of proxy preparation and
solicitation? |
We are soliciting proxies by mail, and we will pay the costs of
soliciting these proxies. Our directors, executive officers and
employees also may solicit proxies personally, by telephone or
by mail. We may distribute proxy materials through brokers,
custodians and other similar parties to the owners of our stock.
We will reimburse them for their reasonable,
out-of-pocket expenses
for forwarding proxy materials to our stockholders.
Election of Directors
Nominees
We currently have six members on our board of directors. In
September 2005, we reduced the size of our board from seven to
six following the resignation of Richard T. Kalen, Jr.
Our board of directors is divided into three classes. As of
March 1, 2006, there were two class I directors
(George M. Rapport and Donald M. Wilkinson), two class II
directors (Fred L. Holliger and Brooks J. Klimley), and two
class III directors (Larry L. DeRoin and Anthony J.
Bernitsky). In December 2005, Mr. Bernitsky was moved from
class I to class III to rebalance the classes
following the resignation of Mr. Kalen. The term of each
class of director is three years, with the term of one class
expiring at each of our annual meetings of stockholders. The
term of office of the class II directors expires at the
2006 annual meeting of stockholders.
Our corporate governance and nominating committee recommended to
the board that Mr. Holliger and Mr. Klimley be
nominees for director at the annual meeting. Based on the
committee’s recommendation, our board nominated both
individuals for election to class II at the annual meeting.
Mr. Holliger and Mr. Klimley have consented to being
named as nominees and have indicated their intention to serve if
elected. Both of the
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nominees are currently serving as directors and a brief
description of their business experience is set forth below.
Unless otherwise instructed, the proxy holders will vote for the
election of Mr. Holliger and Mr. Klimley. If for any
reason either of the nominees should become unable to serve as a
director, the proxy holders may vote for the election of a
substitute nominee designated by the board.
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Age (as of March 1, 2006), |
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Principal Occupation and Business Experience |
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Fred L. Holliger
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Fred L. Holliger, age 58, has served as one of our
directors since we went public in October 1989 and as our
chairman of the board and chief executive officer since March
2002. From October 1989 to March 2002, Mr. Holliger was our
executive vice president and chief operating officer.
Mr. Holliger joined us as senior vice president, and
president of our refining division, in February 1989. |
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Brooks J. Klimley
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Brooks J. Klimley, age 48, has served as one of our
directors since August 2002. Mr. Klimley also serves as a
member of the audit committee and the compensation committee and
is chairman of the corporate governance and nominating
committee. Since 2005, Mr. Klimley has served as the
President of CIT Energy, an energy finance and advisory
business. In this role, Mr. Klimley is responsible for
refining CIT’s strategy to expand client relationships and
product offerings to support the global financing needs of
companies throughout the energy sector. From 2001 to 2004,
Mr. Klimley was a managing director at Citigroup Global
Markets Inc. and its predecessor firm Salomon Smith Barney,
Inc., and he was the co-head of the diversified industrials
group. From 1998 to 2001, Mr. Klimley was senior managing
director and co-head of the natural resources group for Bear,
Stearns & Co., Inc., where he led origination and
execution teams covering a broad range of natural resources
companies. |
The board of directors recommends a vote FOR its
nominees for director.
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Other directors and executive officers
Our other directors whose terms will continue after the annual
meeting and our executive officers are listed below:
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Age as of | |
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Fred L. Holliger
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Director, Chairman and Chief Executive Officer |
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II 2006 |
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Brooks J. Klimley
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Director |
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II 2006 |
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Larry L. DeRoin
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Director |
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III 2007 |
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Anthony J. Bernitsky
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Director |
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III 2007 |
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George M. Rapport
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Director |
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I 2008 |
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Donald M. Wilkinson
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Director |
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Morgan Gust
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President |
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Mark B. Cox
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Executive Vice President, Treasurer, Chief Financial Officer,
and Assistant Secretary |
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C. Leroy Crow
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Executive Vice President of our Refining Group Strategic
Business Unit |
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Jack W. Keller
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President of our Wholesale Strategic Business Unit |
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Robert C. Sprouse
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Executive Vice President of our Retail Group Strategic Business
Unit |
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S. Leland Gould
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Executive Vice President, Governmental Affairs and Real Estate |
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Kim H. Bullerdick
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Senior Vice President, General Counsel, and Secretary |
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Gregory A. Barber
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Vice President, Chief Accounting Officer, and Assistant Secretary |
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Natalie R. Dopp
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Vice President, Human Resources |
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Each director’s term of office expires in the year set
forth opposite his name above. Each officer serves until his or
her successor is chosen and qualified or until his or her
earlier resignation or removal. |
Larry L. DeRoin has served as one of our directors since June
2002. Mr. DeRoin also serves as a member of the audit
committee and the corporate governance and nominating committee
and is chairman of the compensation committee. Since September
2000, Mr. DeRoin has been the president of DeRoin
Management, Inc., which provides investment, management and
consulting services. From 1993 to September 2000,
Mr. DeRoin was chairman and chief executive officer of
Northern Border Partners, L.P., chairman of the management
committee for Northern Border Pipeline Co., and president of
Northern Plains Natural Gas Co.
Anthony J. Bernitsky has served as one of our directors since
August 1996. Mr. Bernitsky also serves as a member of the
audit committee, the compensation committee, and the corporate
governance and nominating committee. Mr. Bernitsky has been
a co-owner, director and the president of PoorBern Leasing
Company since he founded it in 1982. PoorBern Leasing Company
leases property used in a wholesale and retail gasoline business
with service stations and convenience stores located in New
Mexico and on the Navajo Indian Reservation to a third party
that operates the business.
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George M. Rapport has served as one of our directors since
September 2001. Mr. Rapport also serves as chairman of the
audit committee and as a member of the compensation committee
and the corporate governance and nominating committee. He
currently is a director and the chief financial officer for
Knightsbridge Petroleum (UK) Ltd., an international oil and
gas exploration and production company, and the finance director
for Knightsbridge Chemicals Limited, an international chemicals
manufacturing company. Both of these companies are subsidiaries
of Knightsbridge Investments Limited (“Knightsbridge”)
of which Mr. Rapport is a shareholder. In August 2004,
Knightsbridge acquired Nimir Petroleum Limited
(“Nimir”), an international oil and gas exploration
and production company. From August 2001 to October 2004,
Mr. Rapport was the senior vice president and chief
financial officer of Nimir. From May 2001 to August 2001,
Mr. Rapport was a financial advisor to Nimir. From 1993 to
May 2001, he was a managing director — private banking
for Chase Manhattan Bank in New York.
Donald M. Wilkinson has served as one of our directors since
September 2003. Mr. Wilkinson also serves as a member of
the audit committee, the compensation committee, and the
corporate governance and nominating committee. Since 1984,
Mr. Wilkinson has been the chairman and chief investment
officer of Wilkinson O’Grady & Co., Inc., a global
asset management firm located in New York City that he
co-founded in 1972. Mr. Wilkinson is a member of the Board
of Visitors of the Virginia Military Institute and is a former
chairman of the Board of Trustees for the Darden School of
Business Management at the University of Virginia.
Morgan Gust has served as our president since March 2002. From
February 1999 to March 2002, Mr. Gust served as our
executive vice president. Mr. Gust joined the company in
August 1990, and over the years served in various senior
management positions for us, including vice president, vice
president administration, general counsel, and corporate
secretary.
Mark B. Cox has served as our vice president, treasurer,
financial officer and assistant secretary since December 1998.
In March 2002, Mr. Cox was named chief financial officer
and in April 2004, Mr. Cox was made executive vice
president.
C. Leroy Crow has served as executive vice president of our
refining group strategic business unit since March 2000. From
February 1999 to February 2000, Mr. Crow served as our
senior vice president, refinery operations and raw material
supply. Mr. Crow joined us in June 1997 when we acquired
Phoenix Fuel, and since then has served in various senior
management positions for us, including senior vice president,
operations division and vice president of operations.
Jack W. Keller has served as the president of our wholesale
strategic business unit since its formation in July 2005
following the acquisition of Dial Oil Co. (“Dial”).
The wholesale group combines the operations of Phoenix Fuel and
Dial. He also has served as the president of Phoenix Fuel since
we acquired it in June 1997 and as chief operating officer of
Phoenix Fuel since May 1998. Mr. Keller also has served as
president and chief operating officer of Dial since its
acquisition.
Robert C. Sprouse has served as executive vice president of our
retail group strategic business unit since April 2003. From
January 2000 to April 2003, Mr. Sprouse served as our
director of retail operations. From 1996 to January 2000,
Mr. Sprouse held several management positions with
Strasburger Enterprises, Inc., a retail management consulting
company.
S. Leland Gould has served as our executive vice president,
governmental affairs and real estate since June 2002. From March
2002 to June 2002, Mr. Gould served as our executive vice
president of retail operations. Mr. Gould joined us in
August 2000 as vice president, strategic business development.
Prior to August 2000, Mr. Gould was vice president and
national sales manager for Wolf Camera, a photo retail store
chain with 800 stores nationwide. Mr. Gould also is a
director and the treasurer for the New Mexico Oil and Gas
Association and is a director for the New Mexico Petroleum
Marketers Association.
Kim H. Bullerdick has served as our vice president and corporate
secretary since December 1998 and our general counsel since May
2000. In April 2004, Mr. Bullerdick was made senior vice
president. From December 1998 to May 2000, Mr. Bullerdick
was our legal department director.
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Gregory A. Barber has served as our vice president, chief
accounting officer, and assistant secretary since August 2005.
From April 2004 to August 2005, Mr. Barber served as our
vice president, corporate controller. From March 2001 to June
2004, Mr. Barber served as our vice president, special
project management. From February 1999 to March 2001,
Mr. Barber served as our vice president, branded wholesale
marketing.
Natalie R. Dopp has served as our vice president, human
resources since September 2002. Prior to that, Ms. Dopp was
responsible for our recruiting and compensation functions.
Ms. Dopp joined us in April 2000 and prior to that she was
employed by Scottsdale Insurance Company, a subsidiary of
Nationwide Insurance.
About the board of directors
Our board of directors meets throughout the year on a set
schedule. The board also holds special meetings and acts by
unanimous written consent from time to time as appropriate. The
non-management members of the board and, when different
individuals, the independent members of the board periodically
meet in executive session without management present. As
provided in the corporate governance guidelines adopted by the
board, the non-management directors designate the director who
will preside at the executive sessions. The non-management
directors have designated Mr. Klimley as the presiding
director. He will continue to serve in that role until such time
as the non-management directors designate someone else to serve
in that role. It is anticipated that the non-management
directors will consider the designation at least once a year.
Our board held nine meetings during 2005. The board has
established an audit committee, a compensation committee, and a
corporate governance and nominating committee. During 2005, all
incumbent directors attended 75% or more of the aggregate of:
(1) the total number of meetings of the board, and
(2) the total number of meetings of all committees on which
the director served.
It is our policy that our board of directors should make every
effort to attend the annual meeting. Last year, all members of
the board attended the annual meeting.
Independent directors
Our board has determined that it is comprised of a majority of
individuals who are independent under the rules of the New York
Stock Exchange and applicable federal law. The board has
determined that the following directors are independent:
Anthony J. Bernitsky, George M. Rapport,
Donald M. Wilkinson, Brooks J. Klimley and
Larry L. DeRoin.
In reaching that determination, the board affirmatively
determined that the individuals it considers independent have no
material relationship with us, either directly or as a partner,
shareholder or officer of a company that has a relationship with
us. In particular, the board determined that these individuals
satisfied all of the following standards:
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Neither they, nor any immediate member of their family, have
ever been employed by us. |
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Neither they, nor any immediate member of their family, has
received any direct compensation from us (director and committee
fees and pensions or other forms of deferred compensation for
prior service were not considered compensation for this purpose;
provided such compensation was not contingent in any way on
continued service) in any twelve-month period within the last
three years. |
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• |
Neither the director, nor any immediate family member, is
employed by another company that makes payments to, or receives
payments from, us for property or services in an amount which,
in any of the last three fiscal years, exceeds $60,000. |
| |
| |
• |
They satisfy each of the bright-line standards of the New York
Stock Exchange that must be met if a director is to be
considered independent. |
8
Our directors on the audit committee meet the following
additional two standards:
|
|
|
| |
• |
They have not accepted, directly or indirectly, any consulting,
advisory or other compensatory fee from us other than
(1) compensation for board or committee service, or
(2) fixed amounts of compensation under a retirement plan
for prior service that is not contingent on continued service. |
| |
| |
• |
They are not affiliated with us. By this we mean that the
director does not directly, or indirectly through one or more
intermediaries, control us, and is not controlled by, or under
common control with, us. The director is not considered to be in
control of us if (1) he is not the beneficial owner,
directly or indirectly, of more than 10% of any class of our
voting equity securities, and (2) he is not one of our
executive officers. |
About the committees of the board of directors
Our board has an audit committee, a compensation committee, and
a corporate governance and nominating committee. Each of the
committees has a written charter that may be found on our
website at www.giant.com. In addition, copies of the charters
are available to all stockholders by calling
(480) 585-8888 or
by writing to: Kim H. Bullerdick, Corporate Secretary, at
our corporate headquarters located at
23733 N. Scottsdale Road, Scottsdale, AZ 85255. All of
the members of each of our committees are independent directors
as required by the New York Stock Exchange listing standards and
applicable federal law. The following table presents information
about each committee.
|
|
|
|
Audit Committee |
|
The members of the committee are George M. Rapport
(Chairman), Anthony J. Bernitsky, Larry L. DeRoin,
Brooks J. Klimley, and Donald M. Wilkinson. The
committee met nine times, either in person or by telephone, in
2005. Our board has determined that Mr. Rapport qualifies
as an “audit committee financial expert” as that term
is defined in the rules of the Securities and Exchange
Commission. Among other matters, the committee: |
| |
|
|
|
• Directly hires and replaces the independent auditors
as appropriate. |
| |
|
|
|
• Evaluates the performance of, independence of, and
pre-approves the services provided by, the independent auditors. |
| |
|
|
|
• Discusses the quality of our accounting principles
and financial reporting procedures with management and our
independent auditors. |
| |
|
|
|
• Reviews with management and our independent auditors
our annual and quarterly financial statements and recommends to
the board whether the annual financial statements should be
included in our annual report. |
| |
|
|
|
• Oversees the internal auditing functions and
controls. |
| |
|
|
|
• Established procedures for handling complaints
regarding accounting, internal accounting controls and auditing
matters, including procedures for the confidential, anonymous
submission of concerns by employees regarding accounting and
auditing matters. |
| |
|
|
|
• Prepares the audit committee report required by the
rules of the Securities and Exchange Commission. |
| |
|
Compensation Committee |
|
The members of the committee are Larry L. DeRoin
(Chairman), Anthony J. Bernitsky, Brooks J. Klimley,
George M. Rapport, and Donald M. Wilkinson. The
committee met seven times, either in |
9
|
|
|
|
|
|
person or by telephone, in 2005. Among other matters, the
committee: |
| |
|
|
|
• Oversees the administration of our compensation
programs. |
| |
|
|
|
• Sets the compensation for our chief executive
officer and our president. |
| |
|
|
|
• Reviews the compensation of our executive officers. |
| |
|
|
|
• Prepares the report on executive compensation
required by the rules of the Securities and Exchange Commission. |
| |
|
Corporate Governance and Nominating Committee |
|
The members of the committee are Brooks J. Klimley
(Chairman), Anthony J. Bernitsky, Larry L. DeRoin,
George M. Rapport, and Donald J. Wilkinson. The
committee met three times, either in person or by telephone, in
2005. Among other matters, the committee: |
| |
|
|
|
• Identifies individuals believed to be qualified to
become members of our board and recommends to the board the
nominees to stand for election as directors at the annual
meeting. |
| |
|
|
|
• Makes recommendations to the board as to changes
that the committee believes to be desirable to the size of the
board and any committee of the board and to the types of
committees of the board. |
| |
|
|
|
• Makes recommendations to the board regarding the
composition of board committees. |
| |
|
|
|
• Develops and recommends to the board a set of
corporate governance guidelines and reviews those guidelines at
least once a year. |
In identifying and nominating candidates to the board, the
corporate governance and nominating committee considers, among
other factors, the following:
|
|
|
| |
• |
Personal qualities, including background and reputation,
reflecting the highest personal and professional integrity. We
seek individuals of exceptional talent and judgment. We also
seek individuals with the ability to work with other directors
and director nominees to build a board that is effective and
responsive to the needs of the stockholders. |
| |
| |
• |
Current knowledge of (1) the communities in which we do
business, (2) our industry, (3) other industries
relevant to our business, or (4) other organizations of
similar size. |
| |
| |
• |
Ability and willingness to commit adequate time to board and
committee matters. |
| |
| |
• |
Diversity of viewpoints, background, experience and other
demographics. |
| |
| |
• |
The individual’s agreement with our corporate governance
guidelines. |
10
Director candidates proposed by you
The corporate governance and nominating committee may consider
candidates recommended by our stockholders. If a stockholder
wishes to propose a nominee for consideration by the committee,
he or she may do so by submitting name(s) and supporting
information to:
|
|
| |
Giant Industries, Inc. |
| |
23733 N. Scottsdale Rd. |
| |
Scottsdale, AZ 85255 |
| |
Attention: Corporate Secretary |
When submitting nominees for consideration, a stockholder should
explain why the proposed nominee meets the factors that the
corporate governance and nominating committee considers
important. All candidates proposed will be evaluated by the same
criteria regardless of who proposes the candidate.
Corporate governance guidelines
We have adopted a set of corporate governance guidelines. A copy
of the corporate governance guidelines may be found on our
website at www.giant.com. In addition, copies of the corporate
governance guidelines are available to all stockholders by
calling
(480) 585-8888 or
by writing to: Kim H. Bullerdick, Corporate Secretary, at
our corporate headquarters located at
23733 N. Scottsdale Road, Scottsdale, AZ 85255. The
guidelines set out our thoughts on, among other things, the
following:
|
|
|
| |
• |
The role of our board and management. |
| |
| |
• |
The functions of our board and its committees and the
expectations we have for our directors. |
| |
| |
• |
The selection of directors, the chairman of the board, and the
chief executive officer. |
| |
| |
• |
Election terms, retirement of directors, and management
succession. |
| |
| |
• |
Executive and board compensation. |
| |
| |
• |
Evaluating board performance. |
| |
| |
• |
Communications with the board. |
Code of ethics
We have adopted a code of ethics that applies to all of our
directors, executives and employees. We have filed a copy of our
code of ethics as Exhibit 14.1 to our annual report on
Form 10-K for the
year ended December 31, 2003. The code of ethics also is
posted on our website at www.giant.com. In addition, copies of
the code of ethics are available to all stockholders by calling
(480) 585-8888 or
by writing to: Kim H. Bullerdick, Corporate Secretary, at
our corporate headquarters located at
23733 N. Scottsdale Road, Scottsdale, AZ 85255. We
intend to report on
Form 8-K all
amendments to or waivers from the code of ethics that are
required to be reported by the rules of the Securities and
Exchange Commission.
Contacting The Board
If you wish to contact the board, you may do so by writing the
board at:
|
|
| |
Giant Industries, Inc. |
| |
23733 N. Scottsdale Rd. |
| |
Scottsdale, AZ 85255 |
| |
Attention: Corporate Secretary (Board Matters) |
If you wish to contact the presiding director of the
non-management directors or the non-management directors as a
group, you may do so by sending your correspondence to the
attention of the Corporate Secretary (Presiding Director) or to
the attention of the Corporate Secretary (Non-Management
Directors),
11
as appropriate. Our corporate secretary will forward your
correspondence to the appropriate members of the board.
Compensation of directors
Our non-employee directors receive the following compensation
for serving as a director for us:
|
|
|
| |
• |
$2,500 per month or portion of a month served as a director. |
| |
| |
• |
$1,500 for each in-person meeting of the board attended and
$1,000 for each telephonic meeting of the board in which the
director participates. |
| |
| |
• |
$1,250 for each in-person committee meeting attended and $1,000
for each telephonic committee meeting in which the director
participates. |
| |
| |
• |
$1,000 for each in-person or telephonic meeting of any special
committee in which the director participates. |
| |
| |
• |
$750 per month or portion of a month served as chairman of
the audit committee and $500 per month or portion of a
month served as chairman of the compensation committee or the
corporate governance and nominating committee. |
Our directors also are eligible to participate in our Deferred
Compensation Plan, which was adopted in 2005. In addition, we
made our company plane available to our directors on a limited
basis during 2005. There was, however, no incremental cost to us
for such use as the personal use was family members flying with
the directors in connection with otherwise required business
trips.
We also reimburse all directors for reasonable,
out-of-pocket expenses
that they incur to attend our board and committee meetings.
12
Executive Compensation
The following table sets forth the compensation we paid in the
last three years to our chief executive officer and our
four other most highly compensated executive officers. We will
refer to these five persons as our “named executive
officers”.
Summary Compensation Table
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Long-Term | |
|
|
| |
|
|
|
Compensation Awards | |
|
|
| |
|
Annual Compensation | |
|
| |
|
|
| |
|
| |
|
Restricted | |
|
Securities | |
|
|
| |
|
|
|
Other Annual | |
|
Stock | |
|
Underlying | |
|
All Other | |
| |
|
|
|
Salary | |
|
Bonus | |
|
Compensation | |
|
Awards | |
|
Options/ | |
|
Compensation | |
| Name and Principal Position |
|
Year | |
|
($)(1) | |
|
($)(1) | |
|
($) | |
|
($)(2) | |
|
SARS (#) | |
|
($)(3) | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Fred L. Holliger
|
|
|
2005 |
|
|
$ |
580,769 |
|
|
$ |
1,650,000 |
|
|
|
|
(4) |
|
$ |
243,000 |
|
|
|
-0- |
|
|
$ |
123,066 |
|
| |
Chairman of the Board and |
|
|
2004 |
|
|
|
503,077 |
|
|
|
825,000 |
|
|
|
|
(4) |
|
|
-0- |
|
|
|
-0- |
|
|
|
11,939 |
|
| |
Chief Executive Officer |
|
|
2003 |
|
|
|
420,923 |
|
|
|
295,000 |
|
|
|
|
(4) |
|
|
-0- |
|
|
|
40,000 |
|
|
|
10,592 |
|
|
Morgan Gust
|
|
|
2005 |
|
|
|
390,385 |
|
|
|
1,000,000 |
|
|
|
|
(4) |
|
|
162,000 |
|
|
|
-0- |
|
|
|
82,051 |
|
| |
President |
|
|
2004 |
|
|
|
350,000 |
|
|
|
500,000 |
|
|
|
|
(4) |
|
|
-0- |
|
|
|
-0- |
|
|
|
11,939 |
|
| |
|
|
|
2003 |
|
|
|
306,412 |
|
|
|
190,000 |
|
|
|
|
(4) |
|
|
-0- |
|
|
|
40,000 |
|
|
|
11,063 |
|
|
Mark B. Cox
|
|
|
2005 |
|
|
|
229,231 |
|
|
|
440,000 |
|
|
|
|
(4) |
|
|
97,200 |
|
|
|
-0- |
|
|
|
40,491 |
|
| |
Executive Vice President, Chief |
|
|
2004 |
|
|
|
197,846 |
|
|
|
220,000 |
|
|
|
|
(4) |
|
|
-0- |
|
|
|
-0- |
|
|
|
9,841 |
|
| |
Financial Officer and |
|
|
2003 |
|
|
|
169,616 |
|
|
|
90,000 |
|
|
$ |
47,915 |
(5) |
|
|
-0- |
|
|
|
-0- |
|
|
|
9,680 |
|
| |
Treasurer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Leroy Crow
|
|
|
2005 |
|
|
|
245,192 |
|
|
|
440,000 |
|
|
|
|
(4) |
|
|
97,200 |
|
|
|
-0- |
|
|
|
16,700 |
|
| |
Executive Vice President |
|
|
2004 |
|
|
|
215,231 |
|
|
|
180,000 |
|
|
|
|
(4) |
|
|
-0- |
|
|
|
-0- |
|
|
|
11,911 |
|
| |
of Refining Group Strategic |
|
|
2003 |
|
|
|
198,462 |
|
|
|
55,000 |
|
|
|
|
(4) |
|
|
-0- |
|
|
|
-0- |
|
|
|
11,546 |
|
| |
Business Unit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack W. Keller
|
|
|
2005 |
|
|
|
201,885 |
|
|
|
380,000 |
|
|
|
|
(4) |
|
|
97,200 |
|
|
|
-0- |
|
|
|
34,065 |
|
| |
President of the Wholesale |
|
|
2004 |
|
|
|
186,123 |
|
|
|
170,000 |
|
|
|
|
(4) |
|
|
-0- |
|
|
|
-0- |
|
|
|
11,939 |
|
| |
Strategic Business Unit |
|
|
2003 |
|
|
|
183,692 |
|
|
|
90,000 |
|
|
|
|
(4) |
|
|
-0- |
|
|
|
-0- |
|
|
|
11,592 |
|
|
|
| (1) |
Includes compensation deferred at the election of the named
executive officer. |
| |
| (2) |
At December 30, 2005 (the last business day of the year),
the number and value of the restricted stock holdings of the
named executive officers was as follows: |
| |
|
|
|
|
|
|
|
|
| |
|
Number | |
|
Value | |
| |
|
| |
|
| |
|
Fred L. Holliger
|
|
|
4,500 |
|
|
$ |
233,820 |
|
|
Morgan Gust
|
|
|
3,000 |
|
|
|
155,880 |
|
|
Mark B. Cox
|
|
|
1,800 |
|
|
|
93,528 |
|
|
C. Leroy Crow
|
|
|
1,800 |
|
|
|
93,528 |
|
|
Jack W. Keller
|
|
|
1,800 |
|
|
|
93,528 |
|
|
|
| |
The restricted shares were awarded on December 6, 2005. The
restricted shares vest in five equal annual installments
beginning December 6, 2006. The named executive officers
will be entitled to receive dividends on the restricted shares
to the same extent dividends are paid to all stockholders. |
|
|
| (3) |
The amounts disclosed in this column for 2005 represent the
following: |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Description |
|
Holliger | |
|
Gust | |
|
Cox | |
|
Crow | |
|
Keller | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
401(k) match
|
|
$ |
12,600 |
|
|
$ |
12,600 |
|
|
$ |
12,600 |
|
|
$ |
12,600 |
|
|
$ |
12,600 |
|
|
Discretionary 401(k) contribution from us for 2004 made in 2005
|
|
$ |
4,100 |
|
|
$ |
4,100 |
|
|
$ |
4,100 |
|
|
$ |
4,100 |
|
|
$ |
4,100 |
|
|
Deferred compensation plan match
|
|
$ |
106,366 |
|
|
$ |
65,351 |
|
|
$ |
23,791 |
|
|
$ |
0 |
|
|
$ |
17,365 |
|
|
|
| |
The discretionary 401(k) contribution from us was made in the
form of shares of our stock. The amount reported in the table
above represents the value of the shares on the date of
contribution. |
13
|
|
| (4) |
No such compensation was paid other than perquisites and other
personal benefits that have not been included because their
aggregate value did not meet the reporting threshold of the
lesser of $50,000 or 10% of salary plus bonus. |
| |
| (5) |
Total for 2003 consists of perquisites and other personal
benefits provided to Mr. Cox, including $40,884, which
represents the incremental cost to us of the initiation fee and
monthly dues attributable to his personal use of a golf club
membership. |
Option Grants in Last Fiscal Year
During 2005, we did not make any grants of stock options to any
of our employees.
Aggregated Option/ SAR Exercises In Last Fiscal Year
And Fiscal Year-End Option Values
The following table provides information on option exercises
during 2005 by our named executive officers and the value of
their unexercised options at December 30, 2005 (the last
business day of the year).
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Number of Securities | |
|
Value of Unexercised | |
| |
|
|
|
|
|
Underlying Unexercised | |
|
In-the-Money | |
| |
|
Shares | |
|
|
|
Options/SARS at | |
|
Options/SARS at Fiscal | |
| |
|
Acquired on | |
|
|
|
Fiscal Year-End (#) | |
|
Year-End ($) | |
| |
|
Exercise | |
|
Value | |
|
Exercisable/ | |
|
Exercisable/ | |
| Name |
|
(#) | |
|
Realized ($) | |
|
Unexercisable | |
|
Unexercisable(1) | |
| |
|
| |
|
| |
|
| |
|
| |
|
Fred L. Holliger
|
|
|
61,000 |
|
|
$ |
2,279,680 |
|
|
|
56,000/-0- |
|
|
$ |
2,489,150/-0- |
|
|
Morgan Gust
|
|
|
50,000 |
|
|
$ |
1,515,076 |
|
|
|
37,000/-0- |
|
|
$ |
1,648,570/-0- |
|
|
Mark B. Cox
|
|
|
4,500 |
|
|
$ |
245,245 |
|
|
|
4,500/-0- |
|
|
$ |
220,995/-0- |
|
|
C. Leroy Crow
|
|
|
10,000 |
|
|
$ |
256,700 |
|
|
|
-0-/-0- |
|
|
$ |
-0-/-0- |
|
|
Jack W. Keller
|
|
|
12,000 |
|
|
$ |
301,463 |
|
|
|
-0-/-0- |
|
|
$ |
-0-/-0- |
|
|
|
| (1) |
Calculated based upon the difference between the closing market
price per share ($51.96) for our common stock on
December 30, 2005 (the last business day of the year), as
reported by the New York Stock Exchange, and the exercise price. |
Employment agreements
We have entered into employment agreements with
Mr. Holliger, Mr. Gust and Mr. Cox. The
employment agreements expire on December 11, 2006 but will
automatically extend for successive
one-year periods unless
we or the executive gives notice of termination.
Pursuant to the agreements, Mr. Holliger, Mr. Gust and
Mr. Cox currently receive base salary at an annual rate as
follows: Mr. Holliger — $600,000,
Mr. Gust — $400,000 and Mr. Cox —
$235,000. The amounts are subject to increase during the terms
of the agreements as the board deems appropriate with respect to
Mr. Holliger and Mr. Gust, and as the chief executive
deems appropriate and the compensation committee approves with
respect to Mr. Cox. The base salary for each executive may
only be reduced in connection with an
across-the-board
reduction applicable to all of our senior executives. Each
agreement provides that the executive is entitled to participate
in any bonus or benefit plans that we make available to our
senior executives.
The following is a summary of the amounts or benefits each
executive or his estate will receive from us if he is terminated
under the circumstance noted. The complete agreements have been
filed as exhibits to our Annual Report on
Form 10-K for the
year ended December 31, 2003.
(1) Employment of the executive is terminated
(1) because of the executive’s death or disability,
(2) by the executive without good reason, or (3) by us
with cause, in each case either prior to a change of control or
more than three years following a change in control (two years
for Mr. Cox):
|
|
|
| |
• |
Any unpaid base salary as of the termination date. |
14
|
|
|
| |
• |
Reimbursement in accordance with our policies then in effect of
any expenses incurred prior to termination. |
| |
| |
• |
Accrued and vested benefits due under our benefit plans. |
| |
| |
• |
Any discretionary bonus for a prior year that has been earned
but not paid. |
| |
| |
• |
The right for one year following termination to exercise all
vested stock options outstanding on the termination date. |
(2) Employment of the executive is terminated
(1) within three years of a change of control
(two years for Mr. Cox) or by the executive with good
reason, or (2) upon the expiration of the term of the
agreement within three years of a change of control
(two years for Mr. Cox):
|
|
|
| |
• |
The amounts and benefits described in paragraph 1 above
except the stock option benefit. |
| |
| |
• |
An amount equal to three times (two times for Mr. Cox) the
sum of: (1) the base salary in effect at the time of
termination, and (2) the average annual bonuses paid to the
executive for the last three years (two years for
Mr. Cox), but in no event less than 25% of the
executive’s base salary. |
| |
| |
• |
Unless expressly prohibited under the terms of the plan(s)
pursuant to which the awards were made, all unvested stock
options or other stock awards owned by the executive shall vest
on the termination date, and the executive shall have the right
for one year following termination to exercise all stock options
outstanding on the termination date. |
| |
| |
• |
Reimbursement for certain taxes incurred by the executive as a
result of receiving the above amounts. |
(3) Employment of the executive is terminated (1) by
the executive for good reason, (2) by us without cause, or
(3) because we gave notice of our intention not to renew
the agreement when it expires, in each case either prior to a
change of control or more than three years following a
change of control (two years for Mr. Cox):
|
|
|
| |
• |
The amounts and benefits described in paragraph 1 above. |
| |
| |
• |
A lump sum equal to the executive’s base salary in effect
at the time of termination. |
15
Compensation Committee Report on Executive Compensation
The following report of the compensation committee of the
board on executive compensation shall not be deemed to be
“soliciting material” or to be “filed” with
the Securities and Exchange Commission nor shall this
information be incorporated by reference into any future filing
made by us with the Securities and Exchange Commission, except
to the extent that we specifically incorporate it by reference
into any filing.
The functions of the compensation committee include overseeing
the administration of our compensation programs, setting the
compensation for our chief executive officer and president,
reviewing and approving the compensation of executive officers,
preparing any report on executive compensation required by the
rules and regulations of the Securities and Exchange Commission,
and addressing any further compensation matters requested by the
board. The compensation committee currently consists of five
members of the board, each of whom the board has determined is
independent.
Our annual bonus plans generally include criteria for cash
bonuses for key personnel who, by the nature and scope of their
positions, significantly impact our overall results and success.
We also have a stock incentive plan — the 1998 Stock
Incentive Plan. The purpose of the plan is to attract, retain
and motivate officers and other key employees and consultants
and to provide these persons with incentives and rewards for
superior performance linked to our profitability and increases
in stockholder value.
The committee considers the following major elements in
establishing compensation for our executive officers:
|
|
| |
(1) The level of compensation paid to executive officers in
similar positions by other companies. To determine whether pay
is competitive, the committee, from time to time, compares our
total compensation and benefits packages with those of other
companies in the same or similar industries or with other
similar attributes such as size or capitalization. Some, but not
all, of these companies are included in the S&P Industrials
Index and the S&P 500 Energy Composite Index that are
used for comparative purposes in the total return graph which
follows this report. Many of the companies used in these indexes
are engaged in different businesses than us and almost all are
larger. The committee recognizes that our asset and business mix
is rather unique given our relatively small size, making direct
comparisons of compensation difficult. The committee also
recognizes, however, that total compensation for similar
positions must be competitive to attract and retain competent
executives. |
| |
| |
(2) The individual performance of each executive officer.
Individual performance includes any specific accomplishments of
the executive officer, demonstration of job knowledge and
skills, teamwork and demonstration of our core values. |
| |
| |
(3) The responsibility and authority of each position
relative to other positions within our organization. |
| |
| |
(4) Corporate performance. Corporate performance is
evaluated both subjectively and objectively. Subjectively, the
committee discusses and makes its own determination of how we
performed relative to the opportunities and difficulties we
encountered during the year and relative to the performance of
our competitors and business conditions. Objectively, corporate
performance is measured by earnings, cash flow, and other
financial results compared to budgeted results. |
| |
| |
(5) Incentives for executive officers to make decisions and
take actions that will increase the market value of our stock
over the long-term and that encourage our officers to remain
with us as long-term employees. |
In the case of base salary and awards granted under the stock
plan to executive officers, the application and weight given
each of these factors is not done mechanically or
quantitatively, but rather the committee uses its discretion,
best judgment and the experience of its members to examine the
totality of all of the relevant factors. In exercising this
discretion, the committee believes that it generally tends to
give greater weight to factors (1), (2), and (3) above in
fixing base salary and any merit/cost of living increase and to
factor (5) in making awards under the stock plan. In
applying factor (1), the committee believes that total
compensation is similar to amounts paid to equally competent
employees in similar positions at other
16
companies after giving effect to the belief that we have
historically granted fewer stock based awards than appears to be
the historical practice at other companies.
In applying the foregoing compensation policies to the salaries
of the chief executive officer (“CEO”) and the
president during 2005, the committee authorized an increase in
the CEO’s salary of $50,000, resulting in his base salary
being increased from $550,000 per year to $600,000 per
year, and an increase in the president’s salary of $25,000,
resulting in his base salary being increased from
$375,000 per year to $400,000 per year, both effective
May 7, 2005. The committee authorized these increases after
considering the foregoing compensation policies, information on
executive compensation paid by other companies, and various
other information relating to compensation.
For our executive officers, as well as for certain other key
management employees, we adopted the 2005 Management
Discretionary Bonus Plan. As to our CEO and president, the plan
is administered by the compensation committee. As to all other
eligible employees, the plan is administered by an
administrative committee consisting of our CEO, president, and
vice president of human resources.
The plan provided for the accrual during 2005 of a pool of money
from which bonuses could be paid. To consider the payment of any
bonuses, we had to meet a pre-tax earnings threshold for 2005.
As our performance exceeded this level during the year, the
accrual was increased.
Cash bonuses awarded to plan participants under the plan were
based on an evaluation of individual performance and
accomplishments and the participant’s contributions to and
support of our achievement of our 2005 goals for:
(1) pre-tax earnings, cash flow, and capital expenditure
targets; (2) raw materials supply and low sulfur motor fuel
compliance; (3) strategic growth; and (4) maintenance
of our Sarbanes-Oxley 404 compliance status.
The actual bonus recommended, if any, was within the complete
and sole discretion of the participant’s supervisor, and
was subject to the final approval of the administrative
committee. In recommending a bonus award, supervisors could
utilize measurable performance goals and achievements,
commitment to our core values, and other incentive or
performance measurement criteria as applicable to the
individual’s area of responsibility. To receive a bonus,
the participant had to be employed by us at the time the funds
were awarded, which was January 13, 2006.
In reviewing the administrative committee’s proposed
bonuses for our executive officers, and determining the bonuses
to be paid to our CEO and president, the compensation committee
reviewed and discussed information on executive compensation
paid by other companies as well as various other materials and
matters regarding the payment of bonuses to the
Corporation’s executive officers. These included:
(1) the elements and criteria considered by the
compensation committee in setting executive compensation
discussed above; (2) the application of the provisions of
the plan regarding the award of bonuses, including how our
results of operations for 2005 compared to our goals and
objectives; (3) the performance and contribution of the
executive officers; (4) Section 162(m) of the Internal
Revenue Code; and (5) the terms of the employment
agreements with the CEO and the president.
In connection with the compensation committee’s discussion
of the 2005 performance and contribution of both our CEO and
president, the compensation committee took note of the
leadership role that they had played in the achievement of our
goals and objectives, including: (1) year-end financial
performance that exceeded the plan’s pre-tax earnings and
cash flow goals; (2) the substantial potential impact on
our Four Corners operations resulting from the August 2005
acquisition of an idle crude oil pipeline system that originates
near Jal, New Mexico and is connected to a company-owned
pipeline network that directly supplies crude oil to the Ciniza
and Bloomfield refineries; (3) the successful issuance of
one million shares of our stock in March 2005 and the associated
redemption of approximately $18,828,000 of our outstanding
11% senior subordinated notes; (4) the amendment and
restatement of our revolving credit facility in June 2005;
(5) the successful issuance of an additional one million
shares of our common stock in September 2005; (6) the
acquisition of Dial Oil Co. in July 2005; (7) significant
developments in the employment area during 2005 resulting in
improved employee quality and knowledge base, such as
developments in the information systems
17
and internal auditing areas; (8) changes made to our
compensation structure in 2005 that should assist us in
attracting and retaining employees; and (9) certain other
matters related to our strategic goals.
In addition to cash bonuses, during 2005, certain of our
officers and key employees, including the CEO and the president,
were awarded restricted stock. In awarding the restricted stock,
the compensation committee considered, among other things:
(1) the contributions of each of the recipients to our
success during 2005, and (2) the motivation that the awards
may create for the recipients to make decisions that will
increase the market value of our stock over the long term and
encourage these individuals to remain with us as long-term
employees.
During 2005, we also adopted a Deferred Compensation Plan (the
“Plan”). Participation in the Plan is limited to
certain highly compensated members of our management team,
including the named executive officers, and the members of our
board of directors. Under the Plan, the participants may defer a
portion of their annual salary and/or bonus to future years.
They effectively may invest the deferred compensation in a
variety of investment fund choices. At our discretion, we also
will match a portion of the amounts deferred on a basis similar
to matches in our 401(k) plan, but without regard to the annual
caps in the 401(k) plan. The amounts matched in 2005 for the
named executive officers are identified in the summary
compensation plan.
Section 162 of the Internal Revenue Code includes a
provision limiting tax deductions for certain executive
compensation in excess of $1,000,000 for each executive. The
committee has analyzed the impact of this tax law on our
compensation policies, and has decided for the present to not
modify our compensation policies based on this tax law. The
committee will periodically reconsider its decision as
circumstances dictate.
|
|
| |
Compensation Committee: |
| |
| |
Larry L. DeRoin (Chairman) |
| |
George M. Rapport |
| |
Brooks J. Klimley |
| |
Anthony J. Bernitsky |
| |
Donald M. Wilkinson |
18
Comparison of Cumulative Total Return Among the Company,
S&P Industrials Index, and S&P 500 Energy
Composite Index(1)
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Base |
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Period |
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|
| Company Index |
|
|
Dec 00 |
|
|
Dec 01 |
|
|
Dec 02 |
|
|
Dec 03 |
|
|
Dec 04 |
|
|
Dec 05 |
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| |
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|
|
| |
|
|
Giant Industries, Inc.
|
|
|
$ |
100.00 |
|
|
|
$ |
126.22 |
|
|
|
$ |
40.34 |
|
|
|
$ |
163.83 |
|
|
|
$ |
362.53 |
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|
|
$ |
710.56 |
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S&P Industrials
|
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$ |
100.00 |
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|
$ |
88.33 |
|
|
|
$ |
67.39 |
|
|
|
$ |
86.49 |
|
|
|
$ |
95.20 |
|
|
|
$ |
98.98 |
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S&P 500 Energy
|
|
|
$ |
100.00 |
|
|
|
$ |
89.60 |
|
|
|
$ |
79.63 |
|
|
|
$ |
100.04 |
|
|
|
$ |
131.60 |
|
|
|
$ |
172.87 |
|
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| |
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|
| (1) |
Assumes $100 invested on December 31, 2000, and dividends
reinvested. Historical performance does not necessarily predict
future results. |
Compensation Committee Interlocks and Insider
Participation
During 2005, our compensation committee was comprised of
Larry L. DeRoin (Chairman), Anthony J. Bernitsky,
Brooks J. Klimley, George M. Rapport, and
Donald M. Wilkinson. Mr. Wilkinson was added to the
committee on August 24, 2005. No member of our compensation
committee is or ever was an officer or employee of ours. In
addition, during 2005, there were no compensation committee
interlock relationships required to be disclosed under the
federal securities laws.
19
Security Ownership of Management
The following table sets forth information concerning the
beneficial ownership of our common stock as of February 28,
2006 (unless otherwise noted) by (1) each director and
nominee for director, (2) each named executive officer, and
(3) all executive officers and directors as a group. Except
as otherwise indicated, to our knowledge, all persons listed
below have sole voting and investment power with respect to
their shares, except to the extent that authority is shared by
spouses under applicable law. Our only outstanding class of
equity securities is our common stock.
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|
Options | |
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|
|
|
|
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|
|
Exercisable | |
|
|
|
|
|
|
| |
|
|
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Within | |
|
|
|
Total | |
|
|
| |
|
|
|
60 Days of | |
|
|
|
Beneficially | |
|
Percent | |
| Name |
|
Common Stock(1) | |
|
February 28 | |
|
401(k)(2) | |
|
Owned | |
|
of Class | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Fred L. Holliger
|
|
|
38,427 |
|
|
|
56,000 |
|
|
|
11,468 |
|
|
|
105,895 |
|
|
|
* |
|
|
Morgan Gust
|
|
|
8,500 |
(3) |
|
|
37,000 |
|
|
|
140 |
|
|
|
45,640 |
|
|
|
* |
|
|
Mark B. Cox
|
|
|
1,800 |
|
|
|
4,500 |
|
|
|
2,770 |
|
|
|
9,070 |
|
|
|
* |
|
|
C. Leroy Crow
|
|
|
1,800 |
|
|
|
0 |
|
|
|
2,669 |
|
|
|
4,469 |
|
|
|
* |
|
|
Jack W. Keller
|
|
|
1,800 |
|
|
|
0 |
|
|
|
140 |
|
|
|
1,940 |
|
|
|
* |
|
|
Anthony J. Bernitsky
|
|
|
26,175 |
(4) |
|
|
0 |
(5) |
|
|
0 |
(5) |
|
|
26,175 |
|
|
|
* |
|
|
Donald M. Wilkinson
|
|
|
2,000 |
|
|
|
0 |
(5) |
|
|
0 |
(5) |
|
|
2,000 |
|
|
|
* |
|
|
George Rapport
|
|
|
1,000 |
|
|
|
0 |
(5) |
|
|
0 |
(5) |
|
|
1,000 |
|
|
|
* |
|
|
Larry DeRoin
|
|
|
1,000 |
|
|
|
0 |
(5) |
|
|
0 |
(5) |
|
|
1,000 |
|
|
|
* |
|
|
Brooks Klimley
|
|
|
0 |
|
|
|
0 |
(5) |
|
|
0 |
(5) |
|
|
0 |
|
|
|
* |
|
|
Executive Officers and Directors as a Group
(15 Persons)
|
|
|
91,012 |
|
|
|
97,500 |
|
|
|
27,477 |
|
|
|
215,989 |
|
|
|
1.47 |
% |
|
|
| (1) |
Includes holdings of restricted stock, if any. |
| |
| (2) |
The amount listed is the approximate number of our shares
allocated to the Giant Stock Fund portion of the
individual’s account in the Giant Industries, Inc. and
Affiliated Companies 401(k) Plan (the “401(k)”) as of
December 31, 2005. The Giant Stock Fund is composed
primarily of our common stock and a small amount (approximately
5%) of short-term money market funds. Ownership in the Giant
Stock Fund is measured in units rather than shares of common
stock. Each 401(k) participant has the right to direct the
401(k) trustee to vote the participant’s proportionate
share of the common stock underlying the units in the Giant
Stock Fund. We determine a participant’s proportionate
share by multiplying the total number of underlying shares held
in the Giant Stock Fund by a fraction, the numerator of which is
the number of underlying shares allocated to the participant and
the denominator of which is the number of underlying shares
allocated to all participants’ accounts as of the record
date. The 401(k) trustee and the participants have shared
dispositive power with respect to the underlying shares
allocated to a participant’s account. |
| |
| (3) |
5,500 shares are held in a trust in which Mr. Gust and
his spouse are settlors, co-trustees and beneficiaries. |
| |
| (4) |
Shares are held in a living trust in which Mr. Bernitsky
and his spouse are settlors, co-trustees and beneficiaries. |
| |
| (5) |
To date, non-employee directors have not participated in our
stock incentive plans or the 401(k). |
20
Shares Owned By Certain Shareholders
The following table sets forth information concerning the
beneficial ownership of our common stock as of February 28,
2006 (unless otherwise noted) by each stockholder who is known
by us to own beneficially in excess of 5% of our outstanding
common stock. Except as set forth below, no other person or
entity is known by us to beneficially own more than 5% of our
outstanding common stock.
| |
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|
|
|
|
|
|
|
|
| |
|
Amount and | |
|
|
| |
|
Nature of | |
|
|
| |
|
Beneficial | |
|
Percent | |
| Name and Address of Beneficial Owners |
|
Ownership | |
|
of Class | |
| |
|
| |
|
| |
|
Barclays entities
|
|
|
1,515,024 |
(1) |
|
|
10.4% |
|
|
Batterymarch Financial Management, Inc.
|
|
|
1,038,495 |
(2) |
|
|
7.1% |
|
| |
200 Clarendon Street
Boston, Massachusetts 02116 |
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors Inc.
|
|
|
890,890 |
(3) |
|
|
6.1% |
|
| |
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 |
|
|
|
|
|
|
|
|
|
Putnam, LLC dba Putnam Investments
|
|
|
856,105 |
(4) |
|
|
5.9% |
|
| |
One Post Office Square
Boston, Massachusetts 02109 |
|
|
|
|
|
|
|
|
|
|
| (1) |
As reported on a Schedule 13G, dated February 10,
2006. In the Schedule 13G, the following entities reported
ownership of our shares: |
| |
|
|
|
|
|
|
|
Barclays Global Investors, NA
|
|
|
1,344,767 |
|
| |
45 Fremont Street |
|
|
|
|
| |
San Francisco, California 94105 |
|
|
|
|
|
Barclays Global Fund Advisors
|
|
|
170,257 |
|
| |
|
|
|
| |
45 Fremont Street |
|
|
|
|
| |
San Francisco, California 94105 |
|
|
|
|
| |
|
Total
|
|
|
1,515,024 |
|
| |
|
|
|
|
|
|
Each of the entities has sole voting and dispositive power with
respect to the shares noted except that Barclays Global
Investors, NA has sole voting power only as to
1,256,786 shares, and Barclays Global Fund Advisors
has sole voting power only as to 169,709 shares. |
|
|
| (2) |
As reported on a Schedule 13G, dated February 14,
2006, filed by Batterymarch Financial Management, Inc. The
Schedule 13G states that various accounts managed by the
filer have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of our
shares. No account owns more than 5% of the shares outstanding. |
| |
| (3) |
As reported on a Schedule 13G, dated February 1, 2006,
filed by Dimensional Fund Advisors Inc.
(“Dimensional”). The Schedule 13G states that
Dimensional, a registered investment advisor, furnishes
investment advice to four registered investment companies, and
serves as investment manager to other commingled group trusts
and separate accounts (as used in this paragraph only,
collectively, the “Funds”). The Schedule 13G
further states that in its role as investment advisor or
manager, Dimensional possesses voting and/or investment power
over our stock owned by the Funds, and may be deemed to be
beneficial owner of our stock held by the Funds. The
Schedule 13G states that all of our stock reported in the
Schedule 13G is owned by the Funds, and that Dimensional
disclaims beneficial ownership of these securities. |
| |
| (4) |
As reported on Schedule 13G, dated February 3, 2006,
filed by Putnam, LLC dba Putnam Investments
(“PI”). The Schedule 13G states that PI, which is
a wholly-owned subsidiary of Marsh & McLennan
Companies, Inc. (“MMC”), wholly owns two registered
investment advisers: Putnam Investment Management, LLC., which
is the investment adviser to the Putnam family of mutual funds,
and The Putnam Advisory Company, LLC., which is the investment
adviser to Putnam’s institutional clients. Both |
21
|
|
|
subsidiaries have dispository power over the shares as
investment managers, but each of the mutual fund’s trustees
have voting power over the shares held by each fund, and The
Putnam Advisory Company, LLC. has shared voting power over the
shares held by the institutional clients. Pursuant to
Rule 13d-4, MMC
and PI declare that the filing of the Schedule 13G shall
not be deemed an admission by either or both of them that they
are, for the purposes of Section 13(d) or 13(g), the
beneficial owner of any securities covered by the
Schedule 13G, and further state that neither of them have
any power to vote or dispose of, or direct the voting or
disposition of, any of the securities covered by the
Schedule 13G. |
Section 16(a) Beneficial Ownership Reporting
Compliance
The federal securities laws require our officers and directors,
and persons who own more than 10 percent of our common
stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the New York
Stock Exchange. These individuals also are required to furnish
us with copies of all reports they file. Based solely upon a
review of the filings provided to us during 2005, or with
respect to 2005, or written representations that no filings were
required, we believe that each person who at any time during
2005 was a director, officer, or greater than 10 percent
beneficial owner filed the required reports on a timely basis.
Audit Committee Report
The following report of the audit committee shall not be
deemed to be “soliciting material” or to be
“filed” with the Securities and Exchange Commission
nor shall this information be incorporated by reference into any
future filings made by us with the Securities and Exchange
Commission, except to the extent that we specifically
incorporate it by reference into any filing.
In accordance with the written charter adopted by the board, the
committee assists the board in fulfilling its responsibility for
oversight of the quality and integrity of our accounting,
auditing and financial reporting practices. During 2005, our
audit committee met nine times. Each member of the committee is
independent under the standards maintained by the New York Stock
Exchange and under applicable federal law.
In discharging its oversight responsibility as to the audit
process, the audit committee: (1) obtained from the
independent auditors a formal written statement describing all
relationships between the auditors and us that might bear on the
auditors’ independence consistent with Independence
Standards Board Standard No. 1, “Independence
Discussions with Audit Committees,” (2) discussed with
the auditors any relationships that may impact their objectivity
and independence, and (3) satisfied itself as to the
auditors’ independence. The committee also discussed with
management and the independent auditors the quality and adequacy
of our internal controls.
The committee discussed and reviewed with the independent
auditors all communications required by generally accepted
auditing standards, including those described in Statement on
Auditing Standards No. 61, as amended, “Communication
with Audit Committees” and, with and without management
present, discussed and reviewed the results of the independent
auditors’ audit of the financial statements.
The committee reviewed and discussed our audited financial
statements as of and for the year ended December 31, 2005
with management and the independent auditors. Our management has
the responsibility for preparing the financial statements and
the independent auditors have the responsibility for auditing
those statements.
Based on the review and discussions with management and the
independent auditors described in the preceding three
paragraphs, the committee recommended to the board that our
audited financial statements
22
be included in our Annual Report on
Form 10-K for the
year ended December 31, 2005, for filing with the
Securities and Exchange Commission. The committee also decided
to reappoint the independent auditors.
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Audit Committee: |
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George M. Rapport (Chairman) |
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Anthony J. Bernitsky |
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Larry L. DeRoin |
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Brooks J. Klimley |
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Donald M. Wilkinson |
Audit Fees
The following table sets forth fees for services
Deloitte & Touche LLP provided to us during 2005 and
2004:
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2005 | |
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2004 | |
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Audit fees(1)
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$ |
1,432,975 |
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$ |
1,759,500 |
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Audit-related fees(2)
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42,450 |
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118,525 |
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Tax fees(3)
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13,000 |
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103,535 |
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All other fees
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-0- |
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-0- |
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Total
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$ |
1,488,425 |
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$ |
1,981,560 |
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| (1) |
Represents aggregate fees for services in connection with the
audit of our annual financial statements and review of our
quarterly financial statements, attestation procedures on
internal controls over financial reporting, and services related
to Securities and Exchange Commission matters and filings. |
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| (2) |
Represents aggregate fees for services in connection with
employee benefit plan audits. The amounts for 2004 also include
fees for agreed-upon procedures and Sarbanes-Oxley Act
Section 404 advisory services. |
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| (3) |
Represents fees for services provided in connection with our tax
returns and tax compliance and consulting. The amounts for 2004
also include fees for alternative fuel tax credit services. |
The audit committee has determined that the provision of certain
non-audit services by Deloitte & Touche LLP is
compatible with maintaining their independence. Except as noted
below, the audit committee approves in advance all audit and
non-audit services provided by Deloitte & Touche LLP.
The chairman, or in his absence, any other member of the audit
committee also has delegated authority from the committee to
pre-approve services provided by Deloitte & Touche LLP.
In this case, the member pre-approving the services must report
the pre-approval to the audit committee at its next meeting. In
addition, as permitted by SEC rules, our chief financial
officer, chief accounting officer, or controller may approve
permitted non-audit services having a value of less than $5,000
in certain limited circumstances. During 2005, all services
provided by Deloitte & Touche LLP were approved in
accordance with this policy.
Ratification of Appointment of Auditors
We have selected Deloitte & Touche LLP, independent
auditors, to audit our consolidated financial statements for
2006. Deloitte & Touche LLP has served as our
independent auditors since we became a public company in 1989.
We are asking our stockholders to ratify the appointment of
Deloitte & Touche as independent auditors for 2006.
In the event stockholders fail to ratify the appointment, the
audit committee may reconsider this appointment. Even if the
appointment is ratified, the audit committee, in its discretion,
may direct the appointment of a different independent accounting
firm at any time during the year if the audit committee
determines that such a change would be in our stockholders’
best interests.
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The audit committee has approved all services provided by
Deloitte & Touche LLP. A member of Deloitte &
Touche LLP will be present at the meeting, will have the
opportunity to make a statement, and will be available to
respond to appropriate questions you may ask.
The board of directors recommends a vote FOR
ratification of the appointment of Deloitte & Touche
LLP as independent auditors.
Stockholders’ Proposals
We welcome comments or suggestions from our stockholders. In the
event that you desire to have a proposal formally considered at
the 2007 annual meeting of stockholders, and evaluated by the
board for inclusion in the proxy statement for that meeting, the
proposal must be received in writing by our corporate secretary
at the address on the first page of this proxy statement on or
before November 1, 2006.
In the event you desire to present a proposal at our 2007 annual
meeting without seeking to have the proposal included in our
proxy statement, our proxies will not be allowed to use their
discretionary voting authority in connection with the proposal
if you provide a written statement to us telling us that you
intend to deliver a proxy statement and form of proxy to holders
of at least the percentage of our voting shares required under
applicable law to carry the proposal. The statement must be
provided to us within the time period specified in our bylaws
for the receipt of stockholder notices. Our bylaws provide that
notice of your proposal must be delivered to or mailed and
received at our principal executive offices not less than
90 days nor more than 120 days prior to the annual
meeting. In the event, however, that less than
100 days’ notice or prior public disclosure of the
date of the meeting is given or made to stockholders, to be
timely, your notice must be received by us not later than the
close of business on the 10th day following the day on
which the notice of the date of the meeting was mailed or public
disclosure was made, whichever first occurs. Your notice to us
must set forth as to each matter you propose to bring before the
meeting:
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A brief description of the business desired to be brought before
the meeting. |
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The reasons for conducting the business at the meeting. |
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In the event that the business includes a proposal to amend
either our certificate of incorporation or bylaws, the language
of the proposed amendment. |
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Your name and address as they appear on our books. |
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The number of our shares you own. |
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Any material interest you have in the business. |
You also must include the statement in your filed proxy
materials. Immediately after you solicit the percentage of
stockholders required to carry the proposal, you must also
provide us with a statement from a solicitor or other person
with knowledge confirming that the necessary steps have been
taken to deliver a proxy statement and form of proxy to holders
of at least the percentage of our voting shares required under
applicable law to carry the proposal. All statements should be
sent in writing to our corporate secretary at the address set
forth on the first page of this proxy statement.
Other Matters
We are not aware of any other matters to be presented at the
annual meeting. If any other matter proper for action at the
annual meeting should be properly presented, the proxy holders
will vote the shares represented by the proxy on the matter in
accordance with their best judgment. If any matter not proper for
24
action at the annual meeting should be presented, the proxy
holders will vote against consideration of the matter or action
on the matter.
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By Order of the Board of Directors |
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Secretary, Senior Vice President and General Counsel |
Scottsdale, Arizona
March 1, 2006
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| PROXY
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GIANT INDUSTRIES, INC.
23733 North Scottsdale
Road
Scottsdale, Arizona 85255
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PROXY |
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF GIANT INDUSTRIES, INC.
Mark B. Cox and Kim H. Bullerdick, and each of them, are appointed proxies, with full
power of substitution, to vote all of the stock of the undersigned shown on the reverse side hereof
at the Annual Meeting of Stockholders of Giant Industries, Inc. to be held on Monday, April 10,
2006, or at any postponement or adjournment thereof, with the same effect as if the undersigned
were present and voting the stock on all matters set forth in the Notice of Annual Meeting of
Stockholders, dated March 1, 2006, and the Proxy Statement, dated March 1, 2006, as directed on the
reverse side hereof.
This proxy when properly executed will be voted in the manner directed herein by the
undersigned stockholder. Unless otherwise directed, or if no direction is given, this Proxy will be
voted FOR all of the nominees in Item 1, FOR Item 2, and in accordance with the best judgment of
the proxies or any of them on any other matters which may properly come before the meeting.
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED PREPAID ENVELOPE.
(Continued and to be signed on the other side.)
Giant Industries, Inc.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. n
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The Board of Directors recommends a vote FOR the nominees listed below and FOR Item 2. |
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Election of Directors
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FOR ALL
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WITHHOLD ALL
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FOR ALL EXCEPT |
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Nominees:
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Fred L. Holliger |
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Brooks J. Klimley
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[ ]
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(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the “For All Except” box and write that nominee’s name in the space provided below.) |
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| 2. |
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Ratification of the appointment of Deloitte & Touche LLP by the Audit Committee as the
independent auditors of the Company and its subsidiaries for the fiscal year ending December 31, 2006. |
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[ ] FOR [ ] AGAINST [ ] ABSTAIN
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| 3. |
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In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting. |
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The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement. |
Please date and sign exactly as your name or
names appear herein. Persons signing in a
fiduciary capacity or as corporate officers
should so indicate.
PLEASE COMPLETE, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED PREPAID ENVELOPE.
