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 ss.240.14a-12
MEXCO 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth 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:
MEXCO ENERGY CORPORATION
214 W. Texas Ave., Suite 1101
Midland, Texas 79701
(432) 682-1119
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held September 14, 2006
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of the Stockholders of
MEXCO ENERGY CORPORATION ("the Company") will be held at the Petroleum Club of
Midland, 501 West Wall, Midland, Texas 79701, at 2:00 p.m. on September 14,
2006, for the following purposes:
1. Electing Directors of the Company.
2. Considering and voting upon a proposal to appoint Grant Thornton LLP
as independent registered public accountants of the Company for the
fiscal year ending March 31, 2007.
3. Considering all other matters as may properly come before the
meeting.
The Board of Directors has fixed the close of business on July 18, 2006,
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting and at any adjournment or adjournments thereof.
DATED this 12th day of July 2006.
BY ORDER OF THE BOARD OF DIRECTORS
DONNA GAIL YANKO, SECRETARY
IMPORTANT
Whether or not you expect to attend the meeting, you are urged to execute the
accompanying proxy card, which requires no postage, and return it promptly. Any
stockholder granting a proxy may revoke same at any time prior to its exercise.
Also, whether or not you grant a proxy, you may vote in person if you attend the
meeting.
1
MEXCO ENERGY CORPORATION
214 W. Texas Ave., Suite 1101
Midland, Texas 79701
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held Thursday, September 14, 2006
SOLICITATION OF PROXY
The accompanying proxy is solicited on behalf of the Board of Directors of
Mexco Energy Corporation (the "Company") for use at the Annual Meeting of
Stockholders of the Company to be held on Thursday, September 14, 2006, and at
any adjournment or adjournments thereof. In addition to the use of the mails,
proxies may be solicited by personal interview, telephone and telegraph by
officers, directors and other employees of the Company, who will not receive
additional compensation for such services. The Company may also request
brokerage houses, nominees, custodians and fiduciaries to forward the soliciting
material to the beneficial owners of stock held of record and will reimburse
such persons for forwarding such material. The Company will bear the cost of
this solicitation of proxies. Such costs are expected to be nominal. Proxy
solicitation will commence with the mailing of this Proxy Statement on or about
July 25, 2006.
Any stockholder giving a proxy has the power to revoke the same at any
time prior to its exercise by executing a subsequent proxy or by written notice
to the Secretary of the Company or by attending the meeting and withdrawing the
proxy.
PURPOSE OF MEETING
As stated in the Notice of Annual Meeting of Stockholders accompanying
this Proxy Statement, the business to be conducted and the matters to be
considered and acted upon at the annual meeting are as follows:
1. Electing Directors of the Company;
2. Considering and voting upon a proposal to appoint Grant Thornton LLP
as independent certified public accountants of the Company for the
fiscal year ending March 31, 2007; and
3. Considering all other matters as may properly come before the
meeting.
VOTING RIGHTS
The voting securities of the Company consist solely of common stock, par
value $0.50 per share ("Common Stock").
The record date for stockholders entitled to notice of and to vote at the
meeting is the close of business on July 18, 2006, at which time the Company had
outstanding and entitled to vote at the meeting 1,743,041 shares of Common
Stock. Stockholders are entitled to one vote, in person or by proxy, for each
share of Common Stock held in their name on the record date.
Stockholders representing a majority of the Common Stock outstanding and
entitled to vote must be present or represented by proxy to constitute a quorum.
The election of directors will require the affirmative vote of a majority
of the Common Stock present or represented by proxy at the meeting and entitled
to vote thereon. Cumulative voting for directors is not authorized.
Abstentions and broker non-votes (shares held by brokers or nominees as to
which they have no discretionary power to vote on a particular matter and have
received no instructions from the beneficial owners of such shares or persons
entitled to vote on the matter) will be counted for the purpose of determining
whether a quorum is present. Abstentions are counted in tabulations of votes
cast on proposals submitted to stockholders to determine the total number of
votes cast. Abstentions are not counted as votes for or against any such
proposal. Broker non-votes are not counted as votes cast for purposes of
determining whether a proposal has been approved and will have no effect on the
vote for any matter properly introduced at the Annual Meeting.
2
If the enclosed Proxy is properly executed and returned prior to the
Annual Meeting, the shares represented thereby will be voted as specified
therein. IF A SHAREHOLDER DOES NOT SPECIFY OTHERWISE ON THE RETURNED PROXY, THE
SHARES REPRESENTED BY THE SHAREHOLDER'S PROXY WILL BE VOTED FOR THE ELECTION OF
THE NOMINEES LISTED BELOW UNDER "ELECTION OF DIRECTORS", FOR THE APPOINTMENT OF
GRANT THORNTON LLP AND ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
ELECTION OF DIRECTORS
At the Annual Meeting to be held on September 14, 2006, seven persons are
to be elected to serve on the Board of Directors for a term of one year and
until their successors are duly elected and qualified. All of the current
Directors have announced that they are available for election to the Board of
Directors. The Company's nominees for the seven directorships are:
Thomas R. Craddick Jeffry A. Smith
Thomas Graham, Jr. Nicholas C. Taylor
Arden R. Grover Donna Gail Yanko
Jack D. Ladd
For information about each nominee, see "Directors and Executive
Officers."
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors currently consists of four persons who are
employees of the Company and three persons who are not employees of the Company
(i.e., outside directors). Since over 50% of the voting power of the Company is
held by an individual, pursuant to Section 121 of the American Stock Exchange
rules the Company has elected to utilize the exception to the American Stock
Exchange requirement in Section 802 that at least a majority of the directors on
the Board of Directors of each listed Company consist of independent directors
as defined in Section 121A of said rules.
Set forth below are the names, ages and positions of the Company's
Directors and executive officers as of July 12, 2006. The Board of Directors has
determined that each of these three outside directors, namely Messrs. Ladd,
Grover and Smith are independent in accordance with American Stock Exchange
rules and under the Exchange Act.
Director of the
Name Age Position with the Company Company Since
---- --- ------------------------- -------------
Thomas R. Craddick 62 Director 1998
Thomas Graham, Jr. 72 Director and Chairman of the Board 1997
Director 1990 to 1994
Arden R. Grover 80 Director 2001
Jack D. Ladd 56 Director 1998
Jeffry A. Smith 59 Director 2005
Nicholas C. Taylor 68 President and Director 1983
Donna Gail Yanko 62 Vice President, Secretary, Director 1990
The Board of Directors elects executive officers annually. Executive
officers hold office until their successors are elected and have qualified.
Set forth below are descriptions of the principal occupations during at
least the past five years of the Company's directors and executive officers.
THOMAS R. CRADDICK was elected to the Board of Directors of the Company in
March 1998. Since 1968 to the present, Mr. Craddick has served as a
Representative and in 2003 became Speaker of the House of Representatives of the
State of Texas. Throughout his tenure of the past 19 sessions of the
Legislature, Representative Craddick has served on various committees and
conferences. For more than the past eight years Mr. Craddick has been the sales
representative for Mustang Mud, Inc., as well as the owner of Craddick
Properties and owner and President of Craddick, Inc., both of which invest in
oil and gas properties and real estate.
3
THOMAS GRAHAM, JR. was appointed Chairman of the Board of Directors, by
the Directors of the Company in July 1997, having served as a director from 1990
through 1994. From July 1994 through July 1997, Mr. Graham served as a United
States Ambassador. For nearly fifteen years prior thereto, Mr. Graham served as
the General Counsel, United States Arms Control and Disarmament Agency, as well
as Acting Director and as Acting Deputy Director of such Agency successively, in
1993 and 1994. In these and prior positions he held a senior position in every
arms control negotiation in which the United States participated from 1970 -
1997. He is a board member of Thorium Power Inc. which is merging into Novastar
Resources, Inc. and will be Chairman of the Board of Novastar. He currently
serves as Chairman of the Board of the Cypress Fund for Peace and Security. He
is a Fellow at the Eisenhower Institute. In addition, he is a Board Member of
the United States Industry Coalition (helping U.S. business in Russia), Chairman
of the Bi-partisan Security Group (working with the U.S. Congress) and adjunct
professor at Stanford University and the University of Washington (Seattle). He
is the author of "Disarmament Sketches", University of Washington Press, 2002
and "Common Sense on Weapons of Mass Destruction", University of Washington
Press, 2004 and co-author of "Cornerstone of Security", University of Washington
Press, 2003.
ARDEN R. GROVER* was elected to the Board of Directors of the Company in
September 2001. Mr. Grover has been an independent oil and gas producer for more
than 40 years and is the managing partner of Grover Family L.P., an oil and gas
producing company. He is a Director of Glencoe Resources Ltd., Calgary, Alberta,
Canada and an advisory Director of Caithness Resources Inc., a geothermal energy
company. Mr. Grover is a past President of the Permian Basin Petroleum
Association.
JACK D. LADD* was elected to the Board of Directors of the Company in
March 1998. In September 2004 Mr. Ladd was appointed Director of the John Ben
Shepherd Leadership Institute of the University of Texas. Previously for 25
years, Mr. Ladd was a shareholder of the law firm of Stubbeman, McRae, Sealy,
Laughlin & Browder, Inc., Midland, Texas. Mr. Ladd was a partner in various real
estate partnerships and is an arbitrator for the National Association of
Securities Dealers, and a mediator certified by the Attorney Mediation
Institute. Mr. Ladd also serves as director for Map Resources, Inc., a company
that invests in oil and gas minerals and royalties. In 2002, Mr. Ladd was
appointed by the Governor of Texas as a member of the State Securities Board to
serve a six year term and in 2004 to serve as Chairman thereof, and in 2003, the
Select Committee on Education of the State of Texas.
JEFFRY A. SMITH* was appointed to the Board of Directors of the Company in
March 2005. For the past approximately 7 years, Mr. Smith has been a geological
consultant for several major and independent oil companies. Previously, he had
served as Vice President of Exploration for two independent oil companies. He
served as an exploration geologist for Mobil Oil Corporation, Midwest Oil
Corporation and Burma Oil and Gas Corporation in the early years of his career.
Mr. Smith is a certified geologist of the Texas Board of Professional
Geoscientists. He is a member of AAPG, PBS-SEPM and Sipes and his publications
include: "Development in West Texas and Eastern New Mexico in 1975: AAPG Bull,
V. 60, No. 8" and "Introductory Paper to 1977 Gas Field Symposium - WTGS
Publisher".
NICHOLAS C. TAYLOR was elected President, Treasurer and Director of the
Company in April 1983 and continues to serve as President and Director on a part
time basis, as required. Mr. Taylor served as Treasurer until March 1999. From
July 1993 to the present, Mr. Taylor has been involved in the independent
practice of law and other business activities including independent oil and gas
exploration and production. For more than the prior 19 years, he was a director
and shareholder of the law firm of Stubbeman, McRae, Sealy, Laughlin & Browder,
Inc., Midland, Texas, and a partner of the predecessor firm. In 1995, he was
appointed by the Governor of Texas to the State Securities Board through January
2001. In addition to serving as chairman for four years, he continued to serve
as a member of such board to 2004. He began serving as a Commissioner of the
Texas State Ethics Commission in November 2005.
DONNA GAIL YANKO has served as Vice President part-time and as a Director
of the Company since 1990. She has also served as Corporate Secretary of the
Company since 1992 and from 1986 to 1992 was Assistant Secretary of the Company.
From 1986 to the present, on a part-time basis, she has assisted the President
of the Company in his personal business activities.
TAMMY L. MCCOMIC joined the Company in 2001, and was elected Chief
Financial Officer and Vice President in 2003. Prior thereto, Ms. McComic served
the Company as Controller, Treasurer and Assistant Secretary. From 1994 to 2001
Ms. McComic was Regional Controller and Credit Manager for Transit Mix Concrete
& Materials Company, a subsidiary of Trinity Industries, Inc. Ms. McComic is a
certified public accountant.
*Indicates independence has been determined by the Board of Directors in
accordance with the American Stock Exchange rules.
4
MEETINGS AND COMMITTEES OF DIRECTORS
During fiscal year ended March 31, 2006, The Board of Directors held five
meetings. All of the Directors attended these meetings, except that one member
of the Board of Directors was absent from one meeting.
Audit Committee. The Audit Committee is a standing committee of the Board
of Directors and currently consists of Messrs. Ladd, Grover and Smith, all of
whom are non-employee directors and "independent", as defined in Section 121 A
of the American Stock Exchange rules and the Exchange Act. The Board of
Directors has determined that Mr. Ladd, who currently serves as the Chairman of
the Audit Committee, is an "audit committee financial expert" (as that term is
defined under the applicable SEC rules and regulations) based on the Board's
qualitative assessment of Mr. Ladd's level of knowledge, experience and formal
education. The functions of the Committee are to determine whether management
has established internal controls which are sound, adequate and working
effectively; to ascertain whether Company assets are verified and safeguarded;
to review and approve external audits; to review audit fees and the appointment
of the Company's independent public accountants; and to review non-audit
services provided by the independent public accountants. The Audit Committee
held four meetings during fiscal year ended March 31, 2006. All members of the
Audit Committee attended these meetings. The Audit Committee operates under a
written charter adopted and approved by the Board of Directors in fiscal 2004, a
copy of which may be accessed on the internet at www.sec.gov. The report of the
Audit Committee for fiscal year 2006 is included in this proxy statement below.
Compensation Committee. The Compensation Committee currently consists of
Messrs. Grover, Chairman, Ladd, and Smith, all of whom are non-employee
directors and "independent" as defined in Section 121 A of the American Stock
Exchange rules and the Exchange Act. The primary function of the Compensation
Committee is to determine compensation for the officers of the Company that is
competitive and enables the Company to motivate and retain the talent needed to
lead and grow the Company's business. The Compensation Committee held two
meetings after the fiscal year ended March 31, 2006. All members of the
Compensation Committee attended such meetings. The report of the Compensation
Committee for fiscal year 2006 is included in this proxy statement below.
The Compensation Committee currently operates under a written charter
adopted and approved by the Board of Directors as of June 15, 2005, a copy of
which may be accessed on the internet at www.sec.gov.
Nominating Committee. The Nominating Committee currently consists of
Messrs. Grover, Chairman, Ladd and Smith, all of whom are non-employee directors
and "independent" as defined in Section 121 A of the American Stock Exchange
rules and the Exchange Act. The Nominating Committee held two meetings after the
fiscal year ended March 31, 2006, at which all members of the Nominating
Committee were present. The primary function of the Nominating Committee is to
determine the slate of Director nominees for election to the Company's Board of
Directors. The Nominating Committee considers candidates recommended by security
holders, directors, officers and outside sources and considers criteria such as
business experience, ethical standards and personal qualifications in evaluating
all such nominees. Stockholders who wish to have their nominees for election to
the Board of Directors considered by the Nominating Committee may submit such
nomination to the Secretary of the Company for receipt not less than 80 days
prior to the date of the next Annual Meeting of stockholders and include (i) the
name and address of the stockholder making the nomination, (ii) information
regarding such nominee as would be required to be included in the proxy
statement, (iii) a representation of the stockholder, and the stockholder's
intent to appear in person or by proxy at the meeting to propose such
nomination, and (iv) the written consent of the nominee to serve as a director
if so elected.
The Nominating Committee currently operates under a written charter
adopted and approved by the Board of Directors as of June 15, 2005, a copy of
which may be accessed on the internet at www.sec.gov.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
To the Stockholders of Mexco Energy Corporation:
The Company's Compensation Committee makes recommendations regarding
compensation of the Company's executive officers, including the CEO, subject to
approval of the entire Board of Directors.
Compensation for executive officers is based on the principle that
compensation must be competitive to enable the Company to motivate and retain
the talent needed to lead and grow the Company's business, and to provide
rewards which are closely linked to the Company and individual performance.
5
Executive compensation for all executive officers, including the CEO, is
based on the performance against a combination of financial and non-financial
measures. In addition to business results, employees are expected to uphold a
commitment to integrity, maximize the development of each individual, and
continue to improve the environmental quality of the Company's operations. In
upholding these financial and non-financial objectives, executives not only
contribute to their own success, but also help ensure that the business,
employees, stockholders and communities in which we live and work will prosper.
July 12, 2006 Compensation Committee
Arden R. Grover
Jack D. Ladd
Jeffry A. Smith
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was formed as of June 15, 2005 and Messrs.
Ladd, Grover and Smith were appointed members thereof. No member of the
Compensation Committee is an officer or employee of the Company. None of the
Company's executive officers served on the board of directors or the
compensation committee of any other entity, for which any officers of such other
entity served either on our Board of Directors or the Compensation Committee.
The Company's Compensation Committee makes recommendations regarding
compensations subject to approval of the entire Board of Directors.
REPORT OF THE AUDIT COMMITTEE
To the Stockholders of Mexco Energy Corporation:
It is the responsibility of the members of the Audit Committee to
contribute to the reliability of the Company's Financial Statements. In keeping
with this goal, the Board of Directors adopted a written charter to govern the
Audit Committee. The Audit Committee is satisfied with the adequacy of the
charter based upon its evaluation of the charter during fiscal 2006. The Audit
Committee met four times during fiscal 2006. The current members of the Audit
Committee are independent directors.
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management. It has also discussed with the independent
auditors the matters required to be discussed by Statement on Accounting
Standards No. 61, Communication with Audit Committees, as amended, by the
Auditing Standards Board of the American Institute of Certified Public
Accountants. Additionally, the Audit Committee has received the written
disclosures and the letter from the independent accountants at Grant Thornton
LLP, as required by Independent Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and has discussed with the independent
accountants that firm's independence from the Company and its management. The
Audit Committee has concluded that on-audit services provided by Grant Thornton
LLP do not result in conflict in maintaining that firm's independence.
Audit fees billed to the Company by Grant Thornton LLP for the audit of
the Company's annual financial statements and the review of those financial
statements included in the Company's quarterly reports on Form 10-Q totaled
$75,168 during the Company's 2006 fiscal year and $60,151 during the Company's
2005 fiscal year. There were no fees for audit related services for fiscal years
ending March 31, 2006 and March 31, 2005. The Company has obtained no other
services from Grant Thornton LLP.
Based on reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the financial statements for fiscal
2006 be included in the Company's Annual Report on Form 10-K.
July 12, 2006 Audit Committee
Jack D. Ladd
Arden R. Grover
Jeffry A. Smith
6
MANAGEMENT COMPENSATION
The compensation levels of the Company are believed to be competitive and
in line with those of comparable companies and to align the interests of the
Company's employees with those of its stockholders through potential stock
ownership.
The following table sets forth information concerning annual and long-term
compensation paid or accrued to executive officers for services in all
capacities to the Company for the fiscal year ended March 31, 2006.
SUMMARY COMPENSATION TABLE
Securities All
Name and Underlying Other
Principal Position Year Salary Bonus Options Compensation
--------------------------------- ---- ----------- ---------- ----------- ------------
Nicholas C. Taylor 2006 $ - $ - - $ 6,100
President & CEO 2005 $ - $ - - $ 500
2004 $ - $ - - $ 1,100
Donna Gail Yanko 2006 $ 21,165 $ 3,000 - $ 6,000
Vice President & 2005 $ 20,400 $ 2,500 - $ -
Secretary 2004 $ 18,750 $ 2,500 5,000 $ -
Tamala L. McComic 2006 $ 92,326* $ 12,500 - $ -
Vice President, 2005 $ 85,475* $ 10,000 - $ -
Treasurer & Asst Sec. 2004 $ 75,400 $ 7,500 20,000 $ -
Thomas Graham, Jr. 2006 $ 24,000 $ - - $ 6,000
Chairman 2005 $ 24,000 $ - 30,000 $ -
2004 $ 24,000 $ - - $ -
Thomas R. Craddick 2006 $ 4,800 $ - - $ -
Director 2005 $ 1,200 $ - - $ -
2004 $ 1,200 $ - - $ -
o All other compensation is comprised of director fees. There are no
employment agreements or retirement benefit plans. Effective July 1,
2005 directors fees are paid at the rate of $1,500 per director
quarterly. Prior to July 1, 2005, non-employee directors were paid
$100 per meeting. The sole compensation received by the President
and CEO of the Company for such period consisted of director's fees.
* Includes $3,952 in accrued vacation not taken and sold back to the
Company.
Employee Incentive Stock Option Plans
The Company adopted an employee incentive stock plan effective September
14, 2004 supplementing the prior plan adopted September 15, 1997. Under the 1997
plan, 350,000 shares were available for distribution. Awards, granted at the
discretion of the compensation committee of the Board, included stock options
and restricted stock. Stock options were incentive stock options or
non-qualified stock options. The exercise price of each option was not to be
less than the market price of the Company's stock on the date of grant. The
maximum term of the options is ten years. Restricted stock was to be granted
with a condition to attain a specified goal. The purchase price was to be at
least $5.00 per share of restricted stock. The awards of restricted stock were
to be accepted within sixty days and vest as determined by agreement. Holders of
restricted stock were to have all rights of a shareholder of the Company. At
March 31, 2006, no restricted stock had been granted under either plan.
The Mexco Energy Corporation 2004 Incentive Stock Plan is to replace,
modify and extend the termination date of the existing stock option plan to
September 14, 2009. The Plan provides for the award of stock options up to
375,000 shares of which 125,000 may be the subject of stock grants without
restrictions and without payment by the recipient and stock awards of up to
125,000 shares with restrictions including payment for the shares and employment
of not less than three years from the date of the award. The terms of the stock
options are similar to those of the Company's Stock Option Plan except that the
term of the Plan is five years from the date of its adoption.
The following table sets forth certain information with respect to the
exercise of options to purchase Common Stock during the fiscal year ended March
31, 2006, and unexercised options held at March 31, 2006 by each of the named
executive officers.
7
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2006
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at
Acquired Options at March 31, 2006 March 31, 2006
On Value ---------------------------- ------------------------------
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
-------- -------- ----------- ------------- ----------- -------------
Thomas R. Craddick 0 $0 27,500 2,500 $ 79,000 $ 11,500
Thomas Graham, Jr. 0 $0 47,500 22,500 $ 87,075 $ 46,725
Tamala L. McComic 0 $0 27,500 12,500 $ 106,500 $ 37,500
Nicholas C. Taylor 0 $0 10,000 0 $ 33,500 $ 0
Donna Gail Yanko 0 $0 42,500 2,500 $ 78,000 $ 6,500
(1) The closing price per share on March 31, 2006, was $8.60 as reported by
the American Stock Exchange.
Defined Benefit Plans and Other Arrangements. Long-term incentive
compensation for senior executive officers is not included in the Company
policy. Accordingly, no awards or payouts have been made. The Company has no
retirement or pension plan except for its 1997 and 2004 Incentive Stock Plans.
These plans are described above.
OPTION GRANTS IN LAST FISCAL YEAR TABLE
No options were granted for the fiscal year ending March 31, 2006.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 2004, the Company with a team of Russian and U.S. experts began a
preliminary study for exploration and development of oil and natural gas
reserves in Russia. In connection therewith the Company organized OBTX, LLC, a
Delaware limited liability company, in which Mexco owns a 90% interest with the
remaining 10% interest split equally among three individuals, one of whom is
Arden Grover, a director of the Company. OBTX, LLC, plans to participate in any
Russian ventures entered into and own a 50% interest. Mr. Grover serves as a
member of the board of directors of both OBTX, LLC and its 50% owned Russian
subsidiary GazTex, LLC. Since inception of this venture Mr. Grover has invested
$19,389 as his share of 3 1/3% ownership of OBTX, LLC.
PERFORMANCE GRAPH
The following graph shows how an initial investment of $100 in the
Company's Common Stock would have compared to an equal investment in the S&P 500
Index or in an index of Peer Group Competitors over a five-year period beginning
March 31, 2001 and ending March 31, 2006. The selected Peer Group consists of
several larger independent oil and gas producers: Noble Affiliates, Inc., Pogo
Producing Company, Anadarko Petroleum Corporation, Apache Corporation, and
Parallel Petroleum Corporation. This group of companies is used by the Company
for certain comparisons.
[LINE GRAPH]
3/01 3/02 3/03 3/04 3/05 3/06
---- ---- ---- ---- ---- ----
MEXCO 100 94 116 141 189 249
S&P 500 100 99 73 97 102 112
PEER GROUP 100 97 95 99 135 144
8
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MEXCO ENERGY CORPORATION, THE S & P 500 INDEX
AND A PEER GROUP
2001 2002 2003 2004 2005 2006
---- ---- ---- ---- ---- ----
MEXCO ................. $ 92 $ 86 $106 $129 $159 $249
S&P 500 ............... $ 77 $ 77 $ 57 $ 75 $ 79 $112
PEER GROUP ............ $128 $124 $122 $127 $173 $144
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of July 12, 2006, by each of the
Company's Directors, by each of the Named Officers, by all executive officers
and Directors of the Company as a group, and by each person known to the Company
to be the beneficial owner of more than 5% of any class of the Company's
outstanding Common Stock.
Number of Shares Percent
of Common Stock of
Beneficially Owned (1) Class
---------------------- -----
BENEFICIAL OWNERS OF MORE THAN 5% OF COMMON STOCK
Howard E. Cox, Jr., Box 2217, 800 Winter St., #300, Waltham, MA 02451 213,400 12.24
SECURITY OWNERSHIP OF MANAGEMENT
Thomas R. Craddick 30,000 1.69
Tamala L. McComic 36,880 2.07
Thomas Graham, Jr. 137,500 (3) 7.66
Arden R. Grover (4) 25,900 1.48
Jack D. Ladd (4) 29,675 1.68
Jeffry A. Smith (4) 9,300 0.53
Nicholas C. Taylor 888,811 50.70
Donna Gail Yanko 75,362 (2) 4.17
Officers and directors as a group
(8 persons) 1,233,428 62.40
----------
(1) Included in the number of shares of Common Stock Beneficially Owned are
shares that such persons have the right to acquire within 60 days of July
12, 2006, pursuant to options to purchase such Common Stock (Mr. Craddick,
30,000; Ms. McComic, 35,000; Mr. Smith, 5,000; Mr. Graham, 52,500; Mr.
Grover, 10,000; Mr. Ladd, 27,500; Mr. Taylor, 10,000 and Ms. Yanko,
43,750).
(2) Of these shares, Ms. Yanko's spouse owns 944 shares and the right to
acquire 20,000 shares pursuant to options to purchase such Common Stock.
(3) Of these shares, Mr. Graham's spouse owns 7,000 shares.
(4) Denotes a non-employee Director.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10 percent of the Company's outstanding
Common Stock, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock held by such persons. These persons are
also required to furnish the Company with copies of all forms they file under
this regulation.
Based on our records and other information, the Company believes that
during the fiscal year ended March 31, 2006 all applicable Section 16(a) filing
requirements were met, except that, due to an administrative oversight, one late
filing of Form 4 was made for Mr. Craddick.
9
FEES TO INDEPENDENT REGISTERED ACCOUNTANTS
Audit Fees. The aggregate fees billed for the fiscal years 2005 and 2006
for professional services rendered by the principal independent accountant,
Grant Thornton LLP, for the audit of the Company's annual financial statements
and review of the Company's quarterly reports on Form 10-Q are $60,151 and
$75,168, respectively.
Audit Related Fees. There were no fees billed for each of the last two
fiscal years for assurance and related services by the principal independent
accountant, Grant Thornton LLP, that are reasonably related to the performance
of the audit or review of the Company's financial statements and are not
reported under the caption "Audit Fees" above.
Tax Fees. There were no fees billed for the fiscal years 2005 and 2006 for
professional services rendered by the principal independent accountant, Grant
Thornton LLP, for tax compliance, tax advice and tax planning.
All Other Fees. There were no other fees billed in each of the last two
fiscal years for products or services provided by the principal independent
accountant, Grant Thornton, LLP, other than those reported under the captions
"Audit Fees" above.
The Audit Committee's policy on pre-approval of audit and audit related
fees requires the Chairman of the Audit Committee to sign all engagement letters
of the principal independent accountant prior to commencement of any audit or
audit related services, all of which was performed in connection with the last
two fiscal years of the Company by the principal independent accountants, Grant
Thornton, LLP, full-time, permanent employees.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Board of Directors has selected Grant Thornton LLP for appointment as
independent registered public accountants for the Company for the fiscal year
ending March 31, 2007, subject to ratification by the stockholders. Grant
Thornton LLP served as independent registered public accountants for the Company
for the fiscal year ended March 31, 2006. A representative of that firm will not
be present at the Annual Meeting, but will be available by telephone, and have
an opportunity to make a statement if they desire to do so and respond to
appropriate questions.
STOCKHOLDERS PROPOSALS FOR NEXT ANNUAL MEETING
The next Annual Meeting of the Company's stockholders is scheduled to be
held on September 14, 2006. Appropriate proposals of stockholders intended to be
presented at the 2007 Annual Meeting must be received by Ms. Donna Gail Yanko,
Secretary, no later than March 12, 2007, in order to be included in the
Company's Proxy Statement and form of Proxy relating to such meeting.
In addition, the Company's policy has established advance notice
procedures to shareholders proposals not included in the Company's proxy
statement, to be brought before an Annual Meeting. In general, the Secretary of
the Company must receive notice of any such proposal not less than 80 days prior
to the date of the Annual Meeting at the address of the Company's principal
executive offices above. Such notice must include the information which would be
required to be included in the proxy statement filed pursuant to the rules of
the Securities and Exchange Commission had the proposal been made by the Board
of Directors.
OTHER MATTERS
Management knows of no other business which will be presented at the
Annual Meeting other than as explained herein.
STOCKHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
MARCH 31, 2006, THROUGH THE PUBLIC REGISTER'S ANNUAL REPORT SERVICE AT
HTTP://WWW.PRARS.COM. A COPY OF THE REPORT ALSO MAY BE OBTAINED FROM THE
INTERNET AT www.sec.gov.
BY ORDER OF THE BOARD OF DIRECTORS
Donna Gail Yanko, Secretary
10
ANNUAL MEETING
September 14, 2006
2:00 P.M.
Petroleum Club of Midland
501 West Wall, Midland, TX 79701
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
Please return this proxy card which requires no postage if mailed in the U.S.A.
The undersigned stockholder of Mexco Energy Corporation hereby appoints Nicholas
C. Taylor, Thomas Graham, Jr. and Jack D. Ladd or any one or more of them,
attorneys, agents and proxies of the undersigned, with full power of
substitution to each of them, to vote all the shares of Common Stock which the
undersigned would be entitled to vote at the Annual Meeting of Stockholders to
be held September 14, 2006, and at any adjournment or adjournments thereof, with
all the powers the undersigned would possess if personally present and voting
thereat, (A) as instructed below with respect to the stated matter and (B) in
their discretion upon other matters which properly come before the meeting.
UNLESS A CONTRARY INSTRUCTION IS SPECIFIED BELOW, THIS PROXY WILL BE VOTED FOR
ALL ITEMS.
A Election of Directors
1. The Board of Directors recommends a vote FOR the following nominees:
FOR WITHHOLD FOR WITHHOLD
THOMAS R. CRADDICK [ ] [ ] DONNA GAIL YANKO [ ] [ ]
THOMAS GRAHAM, JR. [ ] [ ] JACK D. LADD [ ] [ ]
ARDEN R. GROVER [ ] [ ] NICHOLAS C. TAYLOR [ ] [ ]
JEFFRY A. SMITH [ ] [ ]
B Issue
The Board of Directors recommends a vote FOR the following proposal:
2. Proposal to ratify the selection of For Against Abstain
Grant Thornton LLP as independent public |_| |_| |_|
accountants of the Company for the fiscal
year ended March 31, 2007.
C Authorized Signatures - Sign Here - This section must be completed for your
instructions to be executed.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement of the Company dated July 12, 2006.
Please date and sign exactly as name appears on this proxy. Joint owners should
each sign. If the signer is a corporation, please sign full corporation name by
duly authorized officer. Executors, administrators, trustees, etc., should give
full title as such.
Dated
----------------------------------------
Signature 1
----------------------------------
Signature 2
----------------------------------