-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OXv/Rq7SAwq9Q/anO6CLUUZzPdynYx9J2h5Jq7K1dqMe97x0CYdbIf3WLwngotb/ v8w0ck3S/U4tkuddtneMOg== 0000899243-01-500219.txt : 20010501 0000899243-01-500219.hdr.sgml : 20010501 ACCESSION NUMBER: 0000899243-01-500219 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010622 FILED AS OF DATE: 20010430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARKEN ENERGY CORP CENTRAL INDEX KEY: 0000313478 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 952841597 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-10262 FILM NUMBER: 1615529 BUSINESS ADDRESS: STREET 1: 16285 PARK TEN PLACE SUITE 600 CITY: HOUSTON STATE: TX ZIP: 77084 BUSINESS PHONE: 2817171300 MAIL ADDRESS: STREET 1: 16285 PARK TEN PLACE STREET 2: STE 600 CITY: HOUSTON STATE: TX ZIP: 77084 FORMER COMPANY: FORMER CONFORMED NAME: HARKEN OIL & GAS INC DATE OF NAME CHANGE: 19890109 DEF 14A 1 ddef14a.txt DEFINITIVE PROXY MATERIALS =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 HARKEN ENERGY CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required [_] 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: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the 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.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: HARKEN ENERGY CORPORATION 16285 PARK TEN PLACE, SUITE 600 HOUSTON, TEXAS 77084 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 22, 2001 Notice is hereby given that the Annual Meeting of Stockholders (the "Annual Meeting") of Harken Energy Corporation, a Delaware corporation ("Harken"), will be held at the Waco Hilton, 113 South University Parks Drive, Waco, Texas on June 22, 2001 at 6:00 p.m. local time for the following purposes: (1) Election of three Class B Directors of Harken to hold office in accordance with Harken's Certificate of Incorporation until the 2004 Annual Meeting of Stockholders and until their respective successors shall be duly elected and qualified; and (2) Such other business as may properly be brought before the Annual Meeting or any adjournment or postponement thereof. The Board of Directors has fixed the close of business on April 27, 2001 as the date of record for determining the stockholders entitled to notice of and to vote, either in person or by proxy, at the Annual Meeting and any adjournment or postponement thereof. Harken's Annual Report on Form 10-K, a Proxy Statement containing information relating to the matters to be acted upon at the Annual Meeting and a form of Proxy accompany this Notice. You are cordially invited to attend the Annual Meeting. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. Your vote is important. The giving of such proxy does not affect your right to revoke it later or vote your shares in person if you should attend the Annual Meeting. IF YOU PLAN TO ATTEND THE MEETING, PLEASE NOTE THAT THIS IS A SHAREHOLDERS' MEETING AND ATTENDANCE WILL BE LIMITED TO SHAREHOLDERS OF HARKEN OR THEIR QUALIFIED REPRESENTATIVE. EACH SHAREHOLDER MAY BE ASKED TO PRESENT VALID PICTURE IDENTIFICATION, SUCH AS A DRIVER'S LICENSE OR PASSPORT. SHAREHOLDERS HOLDING STOCK IN BROKERAGE ACCOUNTS ("STREET NAME" HOLDERS) WILL NEED TO BRING A COPY OF A BROKERAGE STATEMENT REFLECTING STOCK OWNERSHIP AS OF THE RECORD DATE. QUALIFIED REPRESENTATIVES OF A SHAREHOLDER MUST HAVE IDENTIFICATION AS WELL AS A PROPERLY EXECUTED AND GUARANTEED PROXY FROM THE SHAREHOLDER THEY ARE REPRESENTING. CAMERAS, RECORDING DEVICES AND OTHER ELECTRONIC DEVICES WILL NOT BE PERMITTED AT THE MEETING. By Order of the Board of Directors /s/ LARRY E. CUMMINGS Larry E. Cummings Secretary Houston Texas April 30, 2001 HARKEN ENERGY CORPORATION 16285 PARK TEN PLACE, SUITE 600 HOUSTON, TEXAS 77084 PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 22, 2001 SOLICITATION OF PROXIES The accompanying proxy is solicited on behalf of the Board of Directors of Harken Energy Corporation, a Delaware corporation ("Harken"), in connection with the Annual Meeting of Stockholders (the "Annual Meeting"), which will be held at the Waco Hilton, 113 South University Parks Drive, Waco, TX on June 22, 2001 at 6:00 p.m. local time, and at any adjournments or postponements thereof, for the purposes set forth in the accompanying notice. This Proxy Statement and the accompanying Proxy was first mailed to stockholders of record on or about April 30, 2001. RECORD DATE AND VOTING SECURITIES The Board of Directors has fixed the close of business on April 27, 2001 as the Record Date (herein so called) for determining the holders of common stock, $.01 par value per share, of Harken ("Common Stock") entitled to notice of and to vote, either in person or by proxy, at the Annual Meeting. The shares of Common Stock are the only shares of capital stock entitled to vote at the Annual Meeting. On April 27, 2001, Harken had 17,948,867 shares of Common Stock outstanding. RECOMMENDATIONS OF THE BOARD Unless a stockholder gives other instructions on the proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendation of the Board of Directors. The Board's recommendation is set forth together with the description of each item in this proxy statement. In summary the Board recommends a vote: . FOR election of the three Class B Director nominees who have previously served in this class as directors of Harken. QUORUM AND VOTING The presence, in person or represented by proxy, of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are counted for purposes of determining whether a quorum is present. If a quorum is not present or represented by proxy, the stockholders entitled to vote thereat, present in person or represented by proxy, have the power to adjourn the meeting from time to time, without notice other than an announcement at the meeting until a quorum is present or represented. At any such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally called. The affirmative vote of a plurality of the votes cast at the meeting is required for the election of directors. A properly executed proxy marked "Withhold Authority" with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for the purpose of determining whether there is a quorum. Abstentions and broker non-votes will have no effect on the election of nominees to the Board of Directors. In the election of Directors, each holder of Common Stock upon giving proper notice will be entitled to cumulate his, her or its votes by voting the total number of shares of Common Stock held by such stockholder at the close of business on April 27, 2001 multiplied by the number of Directors to be elected, as such stockholder may see fit. Any holder of Common Stock who intends to cumulate his, her or its votes is required to give written notice of such intention to the Secretary of Harken on or before thirty days preceding the election at which such holder intends to cumulate his, her or its votes. Notice may be given on the Proxy, if done so in a timely manner. All holders of Common Stock, including holders of proxies, may cumulate their votes if any holder has given such written notice. Discretionary authority to cumulate votes is being solicited only in the event an individual shareholder first elects to cumulate his, her or its votes. PROXY SOLICITATION The expense of the solicitation of proxies will be borne by Harken. Solicitation of proxies may be made in person or by mail, telephone or telegraph by directors, executive officers and other employees of Harken. Harken will request banking institutions, brokerage firms, custodians, nominees and fiduciaries to forward solicitation material to the beneficial owners of Common Stock held of record by such persons, and Harken will reimburse such entities for their reasonable out-of-pocket expenses. Harken has retained the services of ADP Investor Communication Services to solicit proxies by mail, telephone, telegraph or personal contact. The estimated cost, if any, of the professional solicitation will be approximately $1,000 plus out-of-pocket expenses. REVOCATION OF PROXY Any stockholder returning the accompanying proxy may revoke such proxy at any time prior to its exercise (a) by giving written notice to the Secretary of Harken of such revocation; (b) by voting in person at the meeting; or (c) by executing and delivering to the Secretary of Harken a later dated proxy. OWNERSHIP OF COMMON STOCK SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS As of April 27, 2001, there was no person known by Harken to beneficially own five percent (5%) or more of the outstanding shares of Common Stock. 2 SECURITY OWNERSHIP OF MANAGEMENT The following table sets forth information regarding the number of shares of Common Stock beneficially owned by each Director, each named executive officer, and all of Harken's Directors and executive officers as a group as of April 27, 2001.
NUMBER OF SHARES BENEFICIALLY PERCENT OF NAME Owned CLASS - ----------------------------------------- ------------------------- --------------------------- Michael M. Ameen, Jr. 16,350(1) (2) Larry Akers 4,250(3) (2) James Denny 4,250(3) (2) Mikel D. Faulkner 328,625(4) 1.83% Robert Gerrity 5,000 (2) Bruce N. Huff 128,250(5) (2) Dr. J. William Petty 2,750(3) (2) Guillermo Sanchez 72,451(6) (2) H. A. Smith 22,305(7) (2) Stephen C. Voss 128,250(8) (2) Dr. Gary B. Wood 51,233(9) (2) All Directors and Executive Officers 933,260(10) As a Group (22 Persons)
- ------------------ (1) Includes 14,250 shares issuable within 60 days upon exercise of options issued by Harken. (2) Less than one percent (1%). (3) Includes 1,250 shares issuable within 60 days upon exercise of options issued by Harken. (4) Includes 278,625 shares issuable within 60 days upon exercise of options issued by Harken. (5) Represents shares issuable within 60 days upon exercise of options issued by Harken. (6) Includes shares 70,500 issuable within 60 days upon exercise of options issued by Harken. (7) Includes 14,375 shares issuable within 60 days upon exercise of options issued by Harken. (8) Includes 127,250 shares issuable within 60 days upon exercise of options issued by Harken. (9) Includes 4,858 shares owned by Concorde Financial Corporation which is 90% owned by Dr. Wood, 8,500 shares owned by trusts established for the benefit of Dr. Wood's children, 10,000 shares held by trusts of which Dr. Wood is a primary or potential beneficiary, and 14,375 shares issuable within 60 days upon exercise of options issued by Harken. (10) Includes 777,926 shares issuable within 60 days upon exercise of options issued by Harken. 3 ITEM ONE: ELECTION OF DIRECTORS The number of directors constituting the full Board of Directors of Harken has been established as ten (10) in accordance with Harken's Bylaws. The Certificate of Incorporation provides that the Board of Directors be divided into Classes A, B and C, with staggered terms of three (3) years each. There are presently nine (9) members serving on the Board of Directors with an open seat existing in Class "C", which previously had four (4) Directors in that Class. Three Class B Directors will be elected at the Annual Meeting to hold office until the 2004 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified. NOMINEES FOR ELECTION AS CLASS B DIRECTORS:
DIRECTOR NAME, AGE AND BUSINESS EXPERIENCE SINCE - ------------------------------------------------------------------ ------------ LARRY G. AKERS (Age - 63) - From 1996 to the present, Mr. Akers 2000 has acted as an independent energy advisor/consultant. From 1978 to 1988, he served as Chairman, President and CEO of ESCO Energy, Inc. From 1969 to 1978, Mr. Akers served as exploration and development manager for Laclede Gas. MICHAEL M. AMEEN, JR. (Age - 77) - From 1989 to 1999, Mr. Ameen 1994 served as a part time consultant to Harken with regard to Middle Eastern exploration projects; Independent Consultant on Middle East Affairs for the past seven years; Director of American Near East Refugee Aid (a charitable organization); Past director of Amideast (a charitable organization); Past director of Middle East Institute; Past director of International College in Beirut, Lebanon; Past vice president of government relations and director of Washington office of Aramco; Past president of Mobil Middle East Development Corporation. H. A. SMITH (Age - 63) - From June 1991 to the present, Mr. Smith 1997 has served as a consultant to Smith International Inc., an oil field service company; previously Mr. Smith served as Vice President Customer Relations for Smith International, Inc.
Each of the nominees for election as directors has agreed to serve if elected. Harken knows of no reason why any of the nominees for election as directors would be unable to serve. Should any of the nominees be unable to serve, all proxies returned to Harken will be voted in accordance with the best judgment of the persons named as proxies except where a contrary instruction is given. The Board of Directors recommends a vote FOR the re-election of Messrs. Akers, Ameen and Smith to the Board of Directors. VOTE REQUIRED TO BE ELECTED AS A DIRECTOR To be elected a Director, each nominee must receive the affirmative vote of a plurality of the votes duly cast at the Annual Meeting. 4 DIRECTORS CONTINUING IN OFFICE:
DIRECTOR TERM NAME, AGE AND BUSINESS EXPERIENCE SINCE EXPIRES - ---------------------------------------------------------------- -------------- ------------ Mikel D. Faulkner (Age - 51) - Chairman of the Board of Harken 1982 2003 since February 1991; CEO of Harken since 1982, and President of Harken from 1982 until February 1993. BRUCE N. HUFF (Age - 50) - President and Chief Operating 1996 2003 Officer of Harken since March 1998 and Chief Financial Officer from February 1999 to June 2000; Senior Vice President and Chief Financial Officer of Harken from 1990 to March 1998. ROBERT GERRITY (Age - 49) - From 1996 to present he has been 2000 2002 involved in private investments. Founder and former CEO of Gerrity Oil and Gas from 1983 to 1996. DR. J. WILLIAM PETTY (Age - 58) - Professor of Finance and the 2000 2003 W.W. Caruth Chairholder of Entrepreneurship at Baylor University from 1990 to the present; Served as dean of the Business School at Abilene Christian University from 1979 to 1990; served as a subject matter expert on a best-practices study by the American Productivity and Quality Center on the topic of shareholder value based management; served on a research team for the Australian Department of Industry to study the feasibility of establishing a public equity market for small and medium-sized enterprises in Australia. GARY B. WOOD, PH.D. (Age - 50) - Founder and Chief Executive 1995 2002 Officer of Concorde Companies (Concorde Financial Corporation; Concorde Capital Corporation; Concorde Funds; and OmniMed Corporation), a private investment management and mutual funds group he founded in 1981 in Dallas, Texas. Serves on the boards of several private and public companies: International Hospital Corporation (Chairman), Eoriginal, Inc. (Vice-Chairman), and Positron Corporation (OTC). He also serves on the boards of several civic organizations: Society of International Business Fellows (Chairman), the Health Industry Council of the Dallas/Fort Worth Region (past Chairman), Parkland Health and Hospital System, and the Ronald McDonald House (finance committee). STEPHEN C. VOSS (Age - 51) - Vice Chairman of the Board of 1997 2002 Harken since May 15, 2000; from September 1998 to May 15, 2000, he served as Executive Vice President and Chief Operating Officer of Harken and from 1990 to September 1998, as Senior Vice President of Harken.
5 DIRECTORS' MEETINGS AND COMMITTEES During 2000, the Board of Directors held five meetings, which included two regularly scheduled meetings and three special meeting. The Board of Directors also acted by unanimous written consent eleven times. During 2000, each current member of the Board of Directors attended or acted upon at least seventy-five percent (75%) of the total number of meetings of the Board of Directors and Committees on which he served. The Board of Directors has standing Audit, Compensation and Nominating Committees, which are described below. Audit Committee The Audit Committee is comprised of Messrs. Smith, Wood and Petty. The functions of the Audit Committee and its activities, including review of the financial statements of Harken and receipt of reports and other communications from Harken's independent auditors, are described below under the heading Report of the Audit Committee. During 2000 the Audit Committee held four meetings. Compensation Committee The Compensation Committee is comprised of Messrs. Ameen, Akers and Gerrity . The Compensation Committee is responsible for making and setting compensation for the chief executive officer of Harken. During 2000, the Compensation Committee held one meeting. Nominating Committee The Nominating Committee is comprised of Messrs. Wood and Ameen. The Nominating Committee considers nominations for the Board of Directors, develops and reviews background information for candidates, and makes recommendations to the Board of Directors with respect to candidates for directors proposed by shareholders. Any shareholder wishing to recommend a candidate for consideration by the Board can do so in writing to the Secretary of Harken at its corporate offices in Houston, Texas, giving the candidate's name, biographical data and qualifications. Any such recommendation must be submitted before the deadline for receipt of shareholder proposals and must be accompanied by a written statement from the individual of his or her consent to be named as a candidate and, if nominated and elected, to serve as a director. The Nominating Committee held no meetings during 2000. COMPENSATION OF DIRECTORS In 2000, each non-employee Director of Harken received an annual retainer of $20,000 plus $2,000 for attendance at each regular meeting. In addition, Directors serving on Committees received $4,000 for chairmanship and $1,000 per Committee meeting attended. Non-employee Directors do not receive any additional fees for meetings attended. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Mr. Larry Akers provides consulting services to the Company with respect to a variety of matters relating to oil and gas exploration and production. During fiscal 2000, the Company paid Mr. Akers an aggregated of $123,250 for these services. 6 COMPENSATION OF EXECUTIVE OFFICERS The following table sets forth certain information regarding the compensation paid during fiscal years 2000, 1999 and 1998 to Harken's Chief Executive Officer and Harken's four most highly compensated executive officers other than the Chief Executive Officer (the "named executive officers"). SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation - ----------------------------------------------------------------------------------------------------------------------------------- Securities Name and Principal Fiscal Other Annual All Other Underlying Other Position Year Salary Bonus Compensation Compensation Options/SAR's(#) Compensation - ----------------------------------------------------------------------------------------------------------------------------------- Mikel D. Faulkner 2000 $255,000 $ 25,000 $ 1,915(1) $10,858(2) 200,000 Chairman and Chief 1999 $264,808(3) $ 84,904 $ 2,616(1) $10,000(4) 73,000 -- Executive Officer 1998 $300,673(5) $200,000 $ 13,244(1) $ 5,000(4) 35,000 -- - ----------------------------------------------------------------------------------------------------------------------------------- Bruce N. Huff 2000 $213,750(6) $ 17,700 $ 39,112(7) $10,858(2) 95,000 -- President and Chief 1999 $206,250(8) $ 55,000 $ 7,875(1) $60,725(9) 460,000 -- Operating Officer 1998 $229,327(10) $120,000 $ 12,000(1) $ 5,000(4) 205,000 -- - ---------------------------------------------------------------------------------------------------------------------------------- Stephen C. Voss 2000 $205,000 $ 10,347 $ 30,936(11) $10,858(2) Vice Chairman 1999 $195,000 $ 55,000 $ 12,000(1) $10,000(4) 460,000 -- 1998 $225,000 $120,000 $ 12,000(1) $ 5,000(4) 205,000 -- - --------------------------------------------------------------------------------------------------------------------------------- James Denny 2000 $151,442 $ 30,000 $ 3,000(1) $10,789(12) 60,000 -- Executive Vice 1999 President 1998 - --------------------------------------------------------------------------------------------------------------------------------- Guillermo Sanchez 2000 $176,640 $ 11,143(13) President of Harken 1999 $169,399(14) $ 11,500 $ 10,000(4) 160,000 -- International, Ltd. 1998 $159,255(15) $ 40,000 $ 5,000(4) 100,000 -- - ---------------------------------------------------------------------------------------------------------------------------------
______________________ (1) Relating to use of a company car. (2) Includes $10,500 of 401(k) matching and $358 in group term life premiums. (3) Includes $9,808 for unused vacation time. (4) Relating to 401(k) matching. (5) Includes $5,673 for unused vacation time. (6) Includes $3,750 for unused vacation time. (7) Includes $13,745 relating to use of a company car and debt forgiveness in the amount of $25,367. (8) Includes $11,250 for unused vacation time. (9) Includes $10,000 relating to 401(k) matching and $50,725 relating to relocation expenses. (10) Includes $4,327 for unused vacation time. (11) Includes $15,716 relating to use of a company car and debt forgiveness in the amount of $15,220. (12) Includes $10,500 of 401(k) matching and $289 in group term life premiums. (13) Includes $10,500 of 401(k) matching and $643 in group term life premiums. (14) Includes $6,394 for unused vacation time. (15) Includes $3,005 for unused vacation time. 7 OPTION/SAR GRANTS IN LAST FISCAL YEAR
Number of % of Total Securities Options/SAR's Underlying Granted to Exercise Basis Grant Date Options/SAR's Employees in Price Expiration Present Name Granted Fiscal Year ($/sh) Date Value(1) - -------------------------------------------------------------------------------------------------------------------------------- Mikel D Faulkner 200,000 40.04% $3.3125 12/13/10 $46,000 Bruce N. Huff 95,000 19.01% $3.3125 12/13/10 $21,850 Stephen C. Voss 75,000 15.01% $3.3125 12/13/10 $17,250 James Denny 60,000 12.01% $3.3125 12/13/10 $13,800 Guillermo Sanchez 10,000 2 % $3.3125 12/13/10 $ 2,300 - --------------------------------------------------------------------------------------------------------------------------------
__________________________ (1) The grant date present value of these options was calculated based upon the Black-Scholes valuation method which calculated such present value as $0.23 per each option with a grant date market price of $3.3125. This analysis took into consideration the grant date market prices of the Common Stock of $3.3125 per share on December 13, 2000, and assumed a four-year life of such options and a risk free rate of return of 5.0%. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
Number of Securities Value of Unexercised Number of Underlying Unexercised In-The-Money Shares/SAR's Options/SAR's at Option/SAR's at Acquired on Value Fiscal Year End Fiscal Year End (1) - ---------------------------------------------------------------------------------------------------------------------------- Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable - ---------------------------------------------------------------------------------------------------------------------------- Mikel D. Faulkner --- --- 278,625 266,000 $ --- $ --- - ------------------------------------------------------------------------------------------------------------------------ Bruce N. Huff --- --- 128,250 135,750 $ --- $ --- - ------------------------------------------------------------------------------------------------------------------------ Stephen C. Voss --- --- 127,250 115,750 $ --- $ --- - ------------------------------------------------------------------------------------------------------------------------ Jim Denny --- --- 1,250 63,750 $ --- $ --- - ------------------------------------------------------------------------------------------------------------------------ Guillermo Sanchez --- --- 70,500 25,500 $ --- $ --- - ------------------------------------------------------------------------------------------------------------------------
__________________________ (1) The closing price for the Common Stock as reported on the American Stock Exchange as of December 31, 2000 was $3.375. Value was calculated on the basis of the difference between the option exercise price and such closing price multiplied by the number of shares of Common Stock underlying the option. 8 AUDIT COMMITTEE REPORT The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein. April 12, 2001 To the Board of Directors of Harken Energy Corporation: The Audit Committee of the Board of Directors, which is composed of three independent non-employee directors, reviews and discusses with Harken's auditors and management Harken's audited financial statements. During 2000, the Audit Committee developed a charter, which was approved by the full Board on June 13, 2000. The complete text of the new charter, which reflects standards set forth in new SEC regulations and American Stock Exchange rules, is reproduced in the appendix to this proxy statement. The Audit Committee has implemented procedures to ensure that during the course of each fiscal year it devotes the attention that it deems necessary or appropriate to each of the matters assigned to it under its Charter. The Audit Committee has reviewed and discussed with management the Company's audited financial statements as of and for the year ended December 31, 2000. It has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants. We have received and reviewed the written disclosures and the letter from the independent auditors required by Independence Standard No. 1, Independence Discussions with Audit Committees, as amended, by the Independence Standards Board, and have discussed with the auditors the auditors' independence. Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the financial statements referred to above be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. By: H. A. Smith J. William Petty Gary B. Wood 9 COMPENSATION COMMITTEE REPORT ON CHIEF EXECUTIVE COMPENSATION This following report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent it shall be specifically incorporated by reference; and shall not otherwise be deemed filed under such Acts. To the Board of Directors of Harken Energy Corporation: The Compensation Committee of the Board of Directors (the "Committee"), which is composed of three independent non-employee directors, develops and oversees Harken's compensation strategy. The strategy is implemented through policies designed to support the achievement of Harken's business objectives and the enhancement of stockholder value. The Committee reviews the annual compensation package on an ongoing basis throughout the year and reports regularly to the Board of Directors. The Company's compensation policies and programs are designed to align the annual compensation with the annual and long- term performance of Harken and to maintain a significant portion of that total compensation at risk, tied primarily to the creation of stockholder value. The Committee annually reviews and sets the base salary of the Chief Executive Officer ("CEO"). In establishing annual compensation for the chief executive officer, the Compensation Committee takes into consideration many factors in making a determination of aggregate compensation. Such factors during 2000 included: (i) the financial results of Harken during the prior year; (ii) the performance of the Common Stock in the public market; (iii) compensation of chief executive officers employed by companies comparable to Harken; (iv) the achievements of management in completing significant projects during the year; and (v) management's dedication and commitment in support of Harken. The Committee exercises its judgement based upon the above criteria and does not apply a specific formula or assign a weight to each factor considered. In setting the CEO's compensation for 2000, the Committee took note of the fact that Harken achieved significant success in 2000 toward implementing its overall business strategy and accomplishing goals that had been set by the Board. Harken completed certain key objectives which increased Harken's domestic oil and gas reserve base and expanded its areas of emphasis in the domestic United States. The CEO's base salary remained unchanged in 2000 compared to his base salary for 1999. A cash bonus of $25,000 was granted to the CEO. Harken's long-term incentive compensation consists of Harken's Stock Option Plans. The Committee views the granting of stock options and restricted stock awards as a significant method of aligning management's long-term interests with those of the stockholders. The Committee encourages executives, individually and collectively, to maintain a long-term ownership position in Harken's Common Stock. The Committee also granted the CEO options to purchase 200,000 shares of Common Stock. In granting these options, the Committee took into consideration, among other factors the Committee found relevant, the amount, terms and values of the options already held. The exercise price of these stock options granted was at or above the closing price of Common Stock on the date of grant and all stock options granted vest incrementally over a four-year period. FEDERAL INCOME TAX CONSIDERATIONS In 1993, the Internal Revenue Code was amended to place a $1.0 million cap on the deductibility on compensation paid to individual executives of publicly held corporations. The Committee took this into account, however, upon review of the available regulations and interpretations, decided that it would not make the deductibility of Harken's compensation for federal income tax purposes a criterion to be used in establishing compensation of the named executives during the present review cycle. The Committee took into consideration the belief that the current 10 compensation levels of the CEO, would not be subject to the cap. The Committee continues to recognize that compensation should meet standards of reasonableness and necessity, which have been part of the Internal Revenue Code for many years. By: Michael M. Ameen, Jr. Robert Gerrity Larry Akers PERFORMANCE OF THE COMMON STOCK The following performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference the proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Harken specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. The graph below compares the cumulative total stockholder return on the Common Stock for the last five fiscal years with the cumulative total return on the S&P 500 Index and the Dow Jones Secondary Oils Stock Index over the same period (assuming the investment of $100 in the Common Stock, the S&P 500 Index and the Dow Jones Secondary Oils Stock Index on December 31, 1995 and reinvestment of all dividends). [GRAPH] 1995 1996 1997 1998 1999 2000 ----- ----- ----- ----- ----- ----- Harken Energy Corp. $ 100 $ 171 $ 400 $ 114 $ 46 $ 19 S&P 500 Index 100 123 164 211 255 232 Dow Jones Secondary Oils Stock Index 100 124 129 94 104 162
11 INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP has served as independent public accountants for Harken since fiscal year 1979. A representative of Arthur Andersen LLP will be invited to attend the Annual Meeting and to make a statement if such representative desires to do so, and, if in attendance, will be available to respond to appropriate questions. Audit Fees In addition to performing the audit of the company's consolidated financial statements, Arthur Andersen LLP provided various other services during 2000. The aggregate fees billed for 2000 for each of the following categories of services are set forth below: Audit and review of the Company's 2000 financial statements $175,800 All other services $139,500 Arthur Andersen did not provide any services related to financial information systems design and implementation during 2000. "All other services" includes (i) tax planning and the preparation of tax returns of the company and (ii) evaluating the effects of various accounting issues and changes in professional standards. Harken has not selected independent public accountants for fiscal year 2001. Selection of independent public accountants for fiscal year 2001 will be made by the Board of Directors, based upon the recommendations of the Audit Committee. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires Harken's Directors and executive officers, and any persons who own more than ten percent of a registered class of Harken's equity securities, to file with the Securities and Exchange Commission (the "SEC") initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of Harken. Directors, executive officers and greater than ten-percent stockholders are required by SEC regulations to furnish Harken with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms and written representations from certain reporting persons, Harken believes that all filing requirements applicable to its Directors and executive officers have been complied with during 2000. 12 STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING Under the SEC's proxy rules, stockholder proposals that meet certain conditions may be included in Harken's proxy statement and form of proxy for a particular annual meeting. Stockholders that intend to present a proposal at Harken's 2002 Annual Meeting of Stockholders must send the proposal to Harken so that it is received at Harken's principal executive offices no later than December 31, 2001 to be considered for inclusion in the proxy statement and form of proxy related to the 2002 Annual Meeting of Stockholders. Stockholders that have an intention to present a proposal that will not be included in the proxy statement and the form of proxy, must give notice to Harken no later than March 15, 2002 of the specific intention to do so. Any and all such proposals and notices should be sent to the attention of the Secretary of Harken. Any and all such proposals must comply should with applicable Securities and Exchange Commission regulations in order to be included in Harken's proxy materials or to be presented at the Annual Meeting. By Order of the Board of Directors /s/ LARRY E. CUMMINGS ----------------------------------- Larry E. Cummings, Secretary Houston, Texas April 30, 2001 13 HARKEN ENERGY CORPORATION VOTE BY MAIL - C/O PROXY SERVICES Mark, sign, and date your proxy card and P.O. BOX 9141 return it in the postage-paid envelope we FARMINGDALE, NY 11735 have provided or return it to Harken Energy Corporation, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: HARKEN KEEP THIS PORTION FOR YOUR RECORDS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. - ------------------------------------------------------------------------------------------------------------------------------------ HARKEN ENERGY CORPORATION FOR WITHHOLD FOR ALL To withhold authority to vote, mark PROPOSAL ONE: Election of three Class A directors ALL ALL EXCEPT: "For All Except" and write the nominee's of Harken, to hold office in accordance with Harken's number on the line below. Certificate of Incorporation and Bylaws until the 2003 [_] [_] [_] Annual Meeting of Stockholders. _________________________________________ 01) Larry G. Akers 02) Michael M. Ameen 03) H. A. Smith NOTE: Please sign exactly as name appears hereon; joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. __________________________________________________________ ___________________________________________________________ ========================================================== =========================================================== Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date ====================================================================================================================================
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ==================================================================================================================================== HARKEN ENERGY CORPORATION PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 22, 2001 The undersigned hereby (1) acknowledges receipt of the Notice of Annual Meeting of Stockholders of Harken Energy Corporation ("Harken") to be held at Waco Hilton, 113 South University Parks Drive, Waco, Texas, on June 22, 2001, at 6:00 p.m., and (2) constitutes and appoints Larry E. Cummings and Karen Kerr-Johnson, and each of them, attorneys and proxies of the undersigned, with full power of substitution to each, for and in the name, place, and stead of the undersigned, to vote, and to act in accordance with the instructions set forth on the reverse side with respect to, all of the shares of Common Stock of Harken standing in the name of the undersigned or with respect to which the undersigned is entitled to vote and act at that meeting and at any meetings to which that meeting is adjourned. In their discretion, the proxies may vote upon such other matters as may properly come before the meeting. You are encouraged to specify your choices by marking the appropriate boxes (SEE REVERSE SIDE), but you need not mark any boxes if you wish to vote in accordance with the Board of Directors' recommendations. This Proxy will be voted as specified. If no specification is made this Proxy will be voted FOR the proposal. Your shares cannot be voted unless you sign and return this card. ===================================================================================================================================
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