United
States
Securities
and Exchange Commission
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No.)
Filed by
the Registrant
S
Filed by
a Party other than the Registrant
£
Check the
appropriate box:
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£
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Preliminary
Proxy Statement
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£
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Confidential,
for use of the Commission only (as permitted by Rule
14a-6(e)(2))
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S
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Definitive
Proxy Statement
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£
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Definitive
Additional Materials
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£
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Soliciting
Material Pursuant to
'
240.14a-11 (c) or
'
240.14a-12
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THE
RESERVE PETROLEUM COMPANY
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(Name
of Registrant as Specified in Its Charter)
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(Name
of Person(s) Filing Proxy Statement if Other than
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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£
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction
applies:
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3)
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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):
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4)
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Proposed
maximum aggregate value of
transaction:
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£
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Fee
paid with Preliminary Proxy
Statement
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£
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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 of its
filing.
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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement
No.:
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THE
RESERVE PETROLEUM COMPANY
Notice
of 2008
Annual
Meeting
and
Proxy
Statement
THE
RESERVE PETROLEUM COMPANY
6801
N. Broadway, Suite 300
Oklahoma
City, Oklahoma 73116-9092
April 18,
2008
Dear
Stockholder:
On behalf
of the Board of Directors, it is my pleasure to invite you to attend the 2008
Annual Meeting of Stockholders of The Reserve Petroleum Company on Tuesday, May
20, 2008, at 3:00 p.m. local time, in Oklahoma City,
Oklahoma. Information about the Annual Meeting is presented in the
following pages.
The
Annual Meeting will begin with a discussion and vote on the matters set forth in
the accompanying Notice of 2008 Annual Meeting of Stockholders and Proxy
Statement, followed by a discussion on any other business matters that are
properly brought before the Annual Meeting.
Your vote
is very important. We encourage you to read the Proxy Statement and
vote your shares as soon as possible. Whether or not you plan to
attend, you can be sure your shares are represented at the Annual Meeting by
promptly completing, signing, dating and returning your Proxy Card in the
enclosed envelope.
If you
will need special assistance at the Annual Meeting because of a disability,
please contact James L. Tyler, 2
nd
Vice
President, at (405) 848-7551.
Thank you
for your continued support of The Reserve Petroleum Company. We look
forward to seeing you on May 20
th
.
Sincerely,
/s/ Mason
McLain
Mason
McLain
Chairman
of the Board and President
TAB
LE
OF CONTENTS
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iii
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1
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1
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1
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1
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2
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6
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7
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8
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10
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10
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10
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11
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11
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THE
RESERVE PETROLEUM COMPANY
6801
N. Broadway, Suite 300
Oklahoma
City, Oklahoma 73116-9092
NOTICE
OF 2008
ANNUAL MEETING
OF STOCKHOLDERS
To The
Stockholders:
The 2008
Annual Meeting of Stockholders of The Reserve Petroleum Company (the “Company”)
will be held on Tuesday, May 20, 2008, at 3:00 p.m. local time, at the offices
of the Company at 6801 N. Broadway, Suite 300, Oklahoma City, Oklahoma for the
following purposes:
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1.
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Electing
nine (9) directors to serve for the next year and until their successors
are elected and qualified.
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2.
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Transacting
such other business as may properly be brought before the Annual Meeting
or any adjournment thereof.
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The Board
of Directors has fixed the close of business on April 14, 2008 as the record
date for the determination of stockholders entitled to notice of, and to vote
at, the Annual Meeting of Stockholders.
STOCKHOLDERS ARE
URGED TO VOTE, SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED PROXY CARD IN THE
ENCLOSED PREPAID ENVELOPE
.
It is
desirable
that as
many stockholders as possible be represented at the Annual
Meeting. Consequently, whether or not you now plan to attend in
person, please vote, sign, date and return the enclosed Proxy
Card. If you attend the Annual Meeting, you may vote your shares in
person even though you have previously signed and returned your Proxy
Card.
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By
Order of the Board of Directors,
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/s/
Mason McLain
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Mason
McLain, President
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PR
OXY
STATEMENT
GENE
R
AL
The
enclosed proxy is solicited on behalf of the Board of Directors (the “Board”) of
The Reserve Petroleum Company (“Company”, “we”, “our” or “us”) for the 2008
Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the
principal executive offices of the Company, 6801 N. Broadway, Oklahoma City,
Oklahoma 73116-9092, on Tuesday, May 20, 2008, at 3:00 p.m. local time, or
any adjournment thereof. This Proxy Statement and Proxy Card are
first being sent to the stockholders on or about April 18, 2008. The
proxy will be voted at the Annual Meeting if the signer of the Proxy Card was a
stockholder of record on April 14, 2008 (the “Record Date”).
SOLICIT
ATIO
N OF PROXIES
The
Company will bear the costs of solicitation, which are estimated to be
approximately $28,500, of which amount approximately $21,500 has been spent to
date. Solicitation of proxies may be made by personal interview,
mail, telephone or telegram by Directors, officers, and regular employees of the
Company. Copies of proxy material and of the Company’s 2007 Annual
Report on Form 10-KSB may also be supplied to holders of record, as well as to
brokers, dealers, banks and voting trustees, or their nominees, for the purpose
of soliciting proxies from the beneficial owners, and the Company will reimburse
such holders for their reasonable forwarding expenses.
VOTING
RIGHTS
AND OUTSTANDING
SHARES
Voting
rights are vested exclusively in the holders of the Company’s common stock, par
value $.50 per share, with each share entitled to one (1) vote on each matter
coming before the Annual Meeting. Only stockholders of record at the
close of business on the Record Date will be entitled to receive notice of and
to vote at the Annual Meeting. On the Record Date, there were
162,367.64 shares of common stock of the Company outstanding and entitled to be
voted.
The
presence, in person or by proxy, of the holders of a majority of the outstanding
shares of common stock of the Company entitled to vote is necessary to
constitute a quorum at the Annual Meeting. The shares represented by
any and all proxies received by the Company will be counted towards a quorum,
notwithstanding that any such proxies contain thereon an abstention or a broker
non-vote. Notwithstanding the Record Date specified above, the
Company’s stock transfer books will not be closed and shares may be transferred
subsequent to the Record Date. However, all votes must be cast in the
names of the stockholders of record on the Record Date.
All votes
will be tabulated by the Inspector of Election appointed for the Annual Meeting,
who will separately tabulate affirmative votes, abstentions and broker
non-votes. The election of the nominees to the Board requires the
affirmative vote of a majority of the shares of common stock represented at the
Annual Meeting and entitled to vote, provided a quorum is
present. Proxies specifying “withheld” authority will have the same
effect as a vote “against” the nominees, while a broker non-vote will have no
effect.
If
sufficient shares are not present to provide a quorum on May 20
th
, the
Annual Meeting, after the lapse of at least half an hour, will be adjourned by
those present or represented and entitled to vote. Those stockholders
entitled to receive notice of and to vote at the Annual Meeting will be sent
written notice of an adjournment meeting to be held with a quorum of those
present in person or by proxy at such meeting. Under the Restated
Bylaws of the Company, any number of stockholders, in person or by proxy, will
constitute a quorum at the adjournment meeting.
A list of
the stockholders entitled to vote at the Annual Meeting will be available for
inspection during ordinary business hours at the offices of the Company for a
period of ten (10) days preceding the Annual Meeting and at the Annual Meeting
for purposes relating to the Annual Meeting.
You can
ensure that your shares are voted at the Annual Meeting by submitting your
instructions by completing, signing, dating and returning the enclosed Proxy
Card in the envelope provided. Submitting your instructions by Proxy
Card will not affect your right to attend the Annual Meeting and
vote. A stockholder who gives a proxy may revoke it at any time
before it is exercised by voting in person at the Annual Meeting, by delivering
a subsequent proxy, or by notifying James L. Tyler, the Inspector of Election,
in writing of such revocation.
A
stockholder of record on the Record Date may vote in one of the following
ways:
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·
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by
completing and mailing the Proxy Card;
or
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·
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by
written ballot at the Annual
Meeting.
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Your
shares will be voted as you indicate on your Proxy Card. If you
return your Proxy Card, but you do not indicate your voting preferences, the
proxies will vote your shares FOR the nominees for Directors and in their
discretion for such other matters as may come before the Annual
Meeting.
If your
shares are held in a brokerage account in your broker’s name (this is called
street name), you should follow the voting directions provided by your broker or
nominee. You may complete and mail a voting instruction card to your
broker or nominee. Your shares should be voted by your broker or nominee as you
have directed.
The
Company will pass out written ballots to anyone who wants to vote at the Annual
Meeting.
For
additional information concerning the manner of proxy solicitation and voting,
please see “Additional Information” beginning on page 11 of this Proxy
Statement.
INFORMATION RELATING
TO DIRECTORS, NOMINEES AND EXECUTIVE
OFFICERS
Directors
and Director Nominees
The nine
(9) persons named below are nominees for election as Directors of the Company to
serve until the next annual meeting of stockholders and until their respective
successors are elected and qualified. If any nominee is unable to
serve, which the Company has no reason to expect, the persons named in the
accompanying Proxy Card intend to vote for the balance of those named and, if
they deem it advisable, for a substitute nominee. Each nominee is
currently a Director and each has served continuously as a
Director since the date of his first election or appointment to the
Board. The Board had determined that the following Directors are
independent, as independence is defined in Rule 4200(a)(15) of the NASDAQ
listing standards: Jerry Crow, Marvin E. Harris, William M. (Bill) Smith and
Doug Fuller.
The
Board recommends a vote FOR each nominee for Director set forth
below.
The
following information and the information set forth in “Executive Officers”
pertains to each person’s (i) age as of April 14, 2008, (ii) principal
occupations for at least the past five years, and (iii) directorships in other
companies.
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Position
Held
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Position/Office
Held
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Continuously
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Name
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Age
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With Company
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Since
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(1)
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Mason
McLain
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81
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President
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May
3, 1955
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(1)
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Robert
T. McLain
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78
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1st
Vice President
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May
2, 1972
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Robert
L. Savage
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60
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None
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May
6, 1975
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(1)
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Jerry
L. Crow
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71
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None
(Retired December 31, 2003)
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May
4, 1982
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Marvin
E. Harris, Jr.
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56
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None
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May
7,
1991
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William
M. (Bill) Smith
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49
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None
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May
5, 1998
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Doug
Fuller
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50
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None
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May
2, 2000
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Cameron
R. McLain
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49
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Exploration
Manager
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May 9,
1982
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Kyle
L. McLain
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53
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Production
Manager
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May
12, 1984
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(1)
Member of Executive Committee
Executive
Officers
The
persons named below are the executive officers of the Company:
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Office
Held
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Position/Office
Held
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Continuously
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Name
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Age
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With Company
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Since
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Mason
McLain
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81
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President
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May
6, 1969
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Robert
T. McLain
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78
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1st
Vice President
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May
4, 1976
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James
L. Tyler
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60
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2nd
Vice President,
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January
1, 2004
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Secretary/Treasurer
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Mason
McLain, Director and President, and Robert T. McLain, Director and Vice
President, are brothers. Cameron R. McLain, Director and Exploration
Manager, and Kyle L. McLain, Director and Production Manager, are sons of Mason
McLain.
Mason McLain
became President
of the Company on May 6, 1969. He had previously served as 1
st
Vice
President since May 3, 1966, and as 2
nd
Vice
President since May 6, 1958. Mr. McLain devotes substantially all of
his time to the affairs of the Company, although he is permitted to and does
devote part of his time and efforts to the activities of affiliated and family
organizations. These organizations are Mesquite Minerals, Inc.
(formerly Royalty Pooling Company), Mid-American Oil Company, Lochbuie Holding
Company and Lochbuie Limited Partnership, all of which are engaged in varying
aspects of the oil and gas industry. Mr. McLain holds a Bachelors
degree in Petroleum Engineering from the University of Oklahoma. Mr.
McLain is also a director of Webber Investment Company, Mid-American Oil
Company, Mesquite Minerals, Inc. and Lochbuie Holding Company.
Robert T. McLain
has served as
1
st
Vice President of the Company since May 4, 1976. Prior to that
date, he was Secretary-Treasurer of the Company from May 2, 1972. He
is Chairman of the Board of the Mull Corporation. He had previously
served as Chairman and Chief Executive Officer of Bunte
¢
Candies, Inc. from 1972 to
1991. He devotes only a small portion of his time to the affairs of
the Company. Mr. McLain holds a Bachelor of Science degree in
Business Administration and a Bachelor of Law degree from the University of
Oklahoma. Mr. McLain is also a director of Mid-American Oil Company,
Mesquite Minerals, Inc. and Lochbuie Holding Company.
Robert L. Savage
is President
of Leonard Securities, Inc., a NASD Broker Dealer, which he
formed. He is also President of Leonard Agency, Inc. and Leonard
Investment Advisors, Inc. He was Vice President with Century
Investment Group, Inc., from May, 1994 to October, 1997. He was
previously employed as an Account Executive with Park Avenue Securities, Inc.
from January, 1989 to May 1994. Mr. Savage has a Bachelors degree in
Business Administration from Trinity University, San Antonio, Texas, and a
Master of Business Administration degree from Southern Methodist University,
Dallas, Texas.
Jerry L. Crow
was employed by
the Company from April 7, 1976, until he retired December 31,
2003. He served as Secretary-Treasurer and 2
nd
Vice
President during his employment. Mr. Crow holds a Bachelors and
Masters degree in Business Administration from West Texas A&M University and
is a Certified Public Accountant in both Texas and Oklahoma. Mr. Crow
is also a director of Mid-American Oil Company and Mesquite Minerals,
Inc.
Marvin E. Harris, Jr.
is
President of Tetron Software, a computer software company which he formed on
January 3, 1994. Until that date he had been employed as President of
RDA Services, Inc., a computer software company, since April 15,
1991. He was previously employed by Intel Corporation from 1984 until
his resignation in 1991. Mr. Harris holds a Bachelor of Science
degree from the University of Alabama, a Master of Science degree from the
University of Alabama in Birmingham and a Master of Business Administration
degree from Southern Methodist University.
William M. (Bill)
Smith
has served as Manager of Geology at Bracken Operating,
LLC since 1994, and is also a part owner. He joined Bracken
Exploration Co. as an Exploration Geologist in 1981, and became Vice President
of Geology until 1986. In 1986, he assisted in forming Bracken Energy
Company, for whom he is an employee and a part owner. Mr. Smith
earned a Bachelor of Science degree in Geology from the University of Oklahoma
in 1980 and was employed by Samedan Oil Corporation from 1980 through
1981.
Doug Fuller
has been employed
as Membership Director with Leadership Oklahoma since May 7, 2007. He
was previously employed as Sr. Vice President, Director of Business Banking for
Western Oklahoma, with the Bank of Oklahoma from 1992 until May
2007. Before that, he was Executive Vice President, Manager of
Commercial Lending, Private Banking and Special Assets with Founders
Bank. Mr. Fuller has a Bachelor of Business Administration degree in
Finance from the University of Oklahoma and a Masters of Business Administration
degree from Oklahoma City University.
Cameron R. McLain
was employed
by the Company on May 9, 1982 as Exploration Manager and has served in that
capacity continuously since his employment. Mr. McLain devotes
substantially all of his time to Company affairs; however, he devotes a part of
his time and efforts to the activities of affiliated
organizations. Mr. McLain was previously employed from May, 1980 to
May 1982 as a Southern Oklahoma exploration geologist for Cities Service Oil and
Gas Company. Mr. McLain has a Bachelor of Science degree in Geology
from the University of Oklahoma and a Master of Business Administration degree
from Oklahoma City University. Mr. McLain is also a director of
Mid-American Oil Company and Mesquite Minerals, Inc.
Kyle McLain
was employed as
Production Manager for the Company on May 12, 1984 and continues to serve in
that capacity. Mr. McLain devotes substantially all of his time to
the affairs of the Company, although he spends a part of his time and efforts on
the activities of affiliated organizations. Mr. McLain was previously
employed as a reservoir engineer for Gulf Oil Corporation from May, 1980 to May,
1984. Mr. McLain has a Bachelor of Science degree in Petroleum
Engineering from the University of Oklahoma. Mr. McLain is also a
director of Mid-American Oil Company and Mesquite Minerals, Inc.
James L. Tyler
was employed by
the Company on August 1, 2003, and was elected 2nd Vice President and
Secretary-Treasurer effective January 1, 2004 to replace Jerry L.
Crow. Mr. Tyler devotes substantially all of his time to the affairs
of the Company, although he devotes a part of his time and efforts to the
activities of the affiliated organizations. Mr. Tyler was previously
employed as Vice-President, Controller for Grace Petroleum Corporation from May,
1979 to May, 1994 and Controller for MCNIC Oil & Gas, Inc. from June, 1994
to April, 1999. From May, 1999 until March, 2003, he was employed as
Controller for Express Ranches and Accounting Manager for Bison Drilling
Company. Mr. Tyler holds a Bachelor of Science degree in Accounting
from the University of Central Oklahoma, Edmond, Oklahoma and is a Certified
Public Accountant in Oklahoma.
Certain
Relationships and Related Transactions
The
Company is affiliated by common management and ownership with Mesquite Minerals,
Inc., (“Mesquite”), Mid-American Oil Company (“Mid-American”), Lochbuie Limited
Partnership (“LLTD”) and Lochbuie Holding Company (“LHC”). The
Company also owns interests in certain producing and non-producing oil and gas
properties as tenants in common with Mesquite, Mid-American and
LLTD. Mason McLain and Robert T. McLain, Directors and officers of
the Company, are directors of Mesquite and Mid-American. Jerry Crow,
a Director of the Company, is a director of Mesquite and
Mid-American. Kyle McLain and Cameron R. McLain are sons of Mason
McLain, who is a more than 5% owner of the Company, and are Directors and
employees of the Company. Both are directors and officers of Mesquite and
Mid-American. Mason McLain and Robert T. McLain, who are brothers,
each own an approximate 32% limited partner interest in LLTD and a 33.33%
ownership in LHC, Mason McLain is president of LHC, the general partner of
LLTD. Robert T. McLain is not an employee of any of the above
entities, and devotes only a small amount of time conducting their
business.
The above
named officers, Directors and employees as a group beneficially own
approximately 30% of the common stock of the Company, approximately 32% of the
common stock of Mesquite, and approximately 17% of the common stock of
Mid-American. These three corporations each have only one class of
stock outstanding. Item 7, “Notes to Financial Statements,” Note 12
to the Company’s Form 10-KSB for the fiscal year ended December 31, 2007
includes additional disclosures regarding these relationships. See
“Additional Information”.
SECURITY
OW
NE
RSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security
Ownership of Certain Beneficial Owners
The
following table sets forth information regarding the only persons known by the
Company to be beneficial owners of more than 5% of the Company’s common stock as
of April 14, 2008:
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Name
and Address
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Amount
& Nature
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Percent
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of
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of
Beneficial
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of
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Beneficial Owner
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Ownership
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Class (3)
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Mason
McLain (1) (2)
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17,005 (4)
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10.47
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6801
N. Broadway, Suite 300
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Oklahoma
City, OK 73116-9092
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Robert
T. McLain (1) (2)
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12,149 (5)
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7.48
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6403
N. Grand, #203
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Oklahoma
City OK 73116
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Norma
Moe (1) (2)
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11,949 (6)
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7.36
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3100
Brush Creek Road
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Oklahoma
City OK 73120
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(1)
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Mason
McLain, Robert T. McLain and Norma Moe are
siblings.
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(2)
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Lochbuie
Holding Company (LHC) is an “S” Corporation and owns 2,352 shares of
common stock. Each sibling owns one-third of
LHC.
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(3)
|
Calculations
of percent of class are based on the number of shares of common stock
outstanding as of April 14, 2008, excluding shares held by or for the
Company.
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(4)
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16,221
owned directly; 784 shares owned indirectly by
LHC.
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(5)
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8,032
owned directly; 3,333 owned by wife; 784 shares owned indirectly by
LHC.
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(6)
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11,165
owned directly; 784 shares owned indirectly by
LHC.
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Security
Ownership of Management
The
following table sets forth information regarding the Company’s common stock
beneficially owned by its executive officers and Directors as of April 14,
2008:
|
|
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Title
of
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|
Amount
& Nature of
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|
Percent
|
|
|
Name
|
|
Class
|
|
Beneficial Ownership
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|
of Class
|
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Mason
McLain
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Common
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17,005
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(1)
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10.47
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Robert
T. McLain
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Common
|
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12,149
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(2)
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7.48
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Robert
L. Savage
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Common
|
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1,269
|
Owned
Directly
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|
.78
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Jerry
L. Crow
|
|
Common
|
|
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5,379
|
Owned
Directly
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3.31
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Cameron
R. McLain
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Common
|
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6,440
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Owned
Directly
|
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3.97
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Kyle
L. McLain
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Common
|
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|
6,440
|
Owned
Directly
|
|
|
3.97
|
|
|
All
Directors
|
|
|
|
|
48,682
|
|
|
|
29.98
|
|
|
All
Directors and Executive Officers as a Group (10 persons)
|
|
|
|
|
48,682
|
|
|
|
29.98
|
|
|
|
(1)
|
16,221
owned directly; 784 shares owned indirectly by
LHC
|
|
|
(2)
|
8,032
owned directly; 3,333 owned by wife; 784 shares owned indirectly by
LHC.
|
INFORMATION
RELATED TO THE
BOARD
OF DIRECTORS AND
COMMITTEES
Meetings
The Board
held three meetings during the Company’s fiscal year ended December 31,
2007. All Directors were present at all meetings, except November 20,
2007 when Robert T. McLain was absent. It is the Board’s policy that
Directors should attend the Company’s annual meeting of
stockholders. Last year, all Directors attended the annual meeting of
stockholders.
Committees
In
General
.
The Company does
not have standing audit and compensation committees of the Board, or committees
performing similar functions. The Company is a small business issuer
whose securities are not quoted on NASDAQ or listed on any
exchange. The Company’s stock is traded by private transactions or
over the counter. Over the counter bid information is quoted in the
Pink Sheet Electronics Quotation Service, in the Pink Sheets OTC Market Report,
and in the OTC Bulletin Board under the symbol “RSRV”.
Audit
Committee
.
The Company does
not have a separately-designated standing Audit Committee. The entire
Board acts as the Company’s Audit Committee. The Board has determined
that Mr. Crow is an “audit committee financial expert” as that term is defined
in Item 401(e)(2) of Regulation S-B. Since December 31, 2006, Mr.
Crow is considered “independent” as that term is used in Item 7(d)(3)(iv) of
Schedule 14A under the Exchange Act.
Nominating
Committee
.
The Board has
adopted the Company’s Statement of Governance Principles and Nominating
Committee Charter. Minimum qualifications for Director nominees are
detailed in the Statement of Governance Principles along with procedures for
stockholders to recommend Director candidates for consideration by the
Nominating Committee. These two documents can be viewed on the SEC
website as Appendix A and B to the Company’s 2006 Proxy
Statement. See “Additional Information”. The Company will
provide a copy of these documents to any person without charge, upon written
request addressed to the Company’s Secretary.
The Board
has designated a Nominating Committee which consists of Mason McLain, Doug
Fuller and Bill Smith. Both Mr. Fuller and Mr. Smith are
“independent” as defined in Rule 4200(a)(15) of the NASDAQ listing
standards. The Nominating Committee makes recommendations to the
Board regarding individuals for nomination as Director and, in addition, may
consider other matters relating to corporate governance. The
Nominating Committee met once in March, 2008 and recommended that the current
Directors be nominated to serve another one year term on the
Board. In addition, they reviewed the Company’s Statement of
Governance Principles and decided no changes were currently
needed.
The
Nominating Committee evaluates qualified nominees for Director using the same
process regardless of whether the nominee is recommended by an officer, Director
or stockholder.
Director
Compensation
Directors
are compensated on a per meeting basis and only for those Board meetings
attended. The amount of compensation is set by a vote of the
Directors at each Board meeting. In the year ended December 31, 2007,
the Directors were compensated in the amount of $1,000 for each of the meetings
attended. All committee meetings are held just prior to the Board
meetings or by telephone conference and Directors or officers of the Company who
are also Directors receive no additional compensation for committee
meetings.
The
Company provides no stock or stock option awards compensation, non-equity
incentive compensation or deferred compensation to any of our
Directors
The
following table provides information relating to total compensation amounts paid
to non-employee Directors:
Director
Compensation Table
|
|
|
|
|
Fees
Earned or
|
|
|
|
|
|
Name
|
|
Year
|
|
Paid in Cash (1)
|
|
|
Total
|
|
|
Robert
T. McLain
|
|
2007
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
|
Each
other director (2)
|
|
2007
|
|
$
|
3,000
|
|
|
$
|
3,000
|
|
|
|
(1)
|
Amounts
represent fees for attending Board meetings during the year at $1,000 per
meeting.
|
|
|
(2)
|
William
M.(Bill) Smith, Robert Savage, Jerry Crow, Marvin E. Harris and Doug
Fuller.
|
EX
E
CUT
IVE
COMPENSATION
Overview
As
indicated earlier, the Company does not have a standing compensation committee
of the Board or a committee performing a similar function. We are a small
business issuer whose securities are not quoted on NASDAQ or listed on any
exchange. The Company has a total of only eight employees, two of whom are
classified as executive officers and two who are classified as “Significant
Employees,” as defined in Reg. S-B. Item 401(b), and make significant
contributions to the business. The third executive officer in not an employee
and receives no compensation other than Director’s fees for the Board meetings
he attends. Non-employee Directors’ compensation was discussed in the previous
section.
Compensation
Philosophy and Objectives
Because
we are so small, our compensation philosophy and objectives are to provide
compensation that is fair and reasonable for all employees at a competitive
level that will allow us to attract and retain qualified personnel necessary to
operate the Company at the most efficient level possible. At the same time, we
strive to comply with all the operational and financial rules and regulations
required of any public company and specifically those relating to the oil and
gas exploration and production (E&P) industry. In addition, we try to
maintain compensation at a level that is competitive with other companies in
this industry. Our philosophy and objectives for compensation of executive
officers are no different from the other employees.
Compensation
levels for all employees, including executive officers, are reviewed annually in
early November by the President, Exploration Manager and Production Manager.
This review process includes reviews of salary and wage surveys primarily for
the oil and gas E&P industry and informal performance evaluations provided
by supervisors. Compensation levels for the next fiscal year are determined
during this review process and presented to the entire Board for approval at its
meeting on the third Tuesday in November each year.
Elements
of Compensation
Elements
of our executive compensation and benefits package are as follows:
|
|
·
|
a
bonus equal to one or two month’s base salary, paid in early December each
year, and
|
|
|
·
|
Company
sponsored employee benefits, such as life and health insurance benefits
and a qualified savings plan (401k)
|
These
elements are no different than those provided to all employees.
The
Company provides no incentive bonus compensation, stock or stock option awards
compensation, non-equity incentive compensation or deferred compensation to the
executive officers or to any of our other employees.
The
following table sets forth summary information regarding the compensation paid
to Mason McLain, our President and Chief Executive
Officer. Information as to the compensation of the other executive
officer is not presented because that person’s combined annual salary and bonus
did not exceed $100,000 during the year ended December 31, 2007.
Summary
Compensation Table
|
Name
and
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
|
|
|
|
Principal Position
|
|
Year
|
|
Salary (1)
|
|
|
Bonus
|
|
|
Compensation
|
|
|
Total
|
|
|
Mason
McLain
|
|
2007
|
|
$
|
71,904
|
|
|
$
|
11,984
|
|
|
$
|
8,033 (2)
|
|
|
$
|
91,921
|
|
|
President
and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
________________________
|
|
(1)
|
Includes
amounts earned but deferred at the election of Mr. McLain pursuant to our
401(k) employee savings plan.
|
|
|
(2)
|
Includes
Director Fees of $3,000 paid in 2007 and matching contributions made under
our 401(k) employee savings plan in the amount of
$5,033.
|
CODE
OF ET
HIC
S FOR SENIOR OFFICERS
The
Company has adopted a Code of Ethics for Senior Officers (the “Code of Ethics”)
that applies to its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions meeting the criteria set forth in Item 406 of Regulation
S-B. The Company will provide to any person without charge, upon
written request addressed to the Company’s Secretary, a copy of the Code of
Ethics. This document can also be viewed at the SEC website as
Exhibit 14 to the Company’s 2005 Form 10-KSB. See “Additional
Information”.
INFORMATION
REGARD
ING
COMMUNICATIONS WITH AUDITORS
As
required by the Securities and Exchange Commission Regulation S-B, Item
407(d)(3)(i), the Board has:
|
|
1.
|
Reviewed
and discussed the audited financial statements of the Company for the year
ended December 31, 2007 with
management.
|
|
|
2.
|
Discussed
with the Company’s independent auditors, Murrell, Hall, McIntosh, &
Co., the matters required to be discussed by the statement on Auditing
Standards No. 61, as amended (AICPA
Professional Standards)
as adopted by the Public Company Accounting Oversight
Board.
|
|
|
3.
|
Received
the written disclosures and letter from Murrell, Hall, McIntosh, & Co
required by Independence Standards Board Standard No. 1, (
Independence Discussions with
Audit
Committees
) as adopted
by the Public Company Accounting Oversight Board, and discussed with the
independent accountant the independent accountant’s
independence.
|
Based on
the above noted review and discussions, the Board approved the inclusion of the
Company’s audited financial statements, for and as of the fiscal year ended
December 31, 2007, in the Company’s Annual Report on Form 10-KSB for the fiscal
year ended December 31, 2007, for filing with the Securities and Exchange
Commission.
The
Members of the Board are Mason McLain, Robert T. McLain, Robert L. Savage, Jerry
L. Crow, Marvin E. Harris, Jr., William M. Smith, Doug Fuller, Cameron McLain
and Kyle McLain.
SECTION
16(a)
BENEFICIAL OWNERSHIP
REPORTING
COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires executive officers,
directors and persons beneficially owning more than 10% of the Company’s stock
to file initial reports of ownership and reports of changes in ownership with
the Securities and Exchange Commission and with the Company. Based
solely on a review of the Forms 3 and 4 and any amendments thereto furnished to
the Company and written representations from the executive officers and
Directors, the Company believes that all of these persons complied with their
Section 16(a) filing obligations.
INDEPENDENT PUBLIC
ACCOUNTANTS
In
General
For the
year 2008 the executive officers will recommend to the Board that it approve
Murrell, Hall, McIntosh, & Co., PLLP as the Company’s independent
accountants. Murrell, Hall, McIntosh, & Co., PLLP served in that
capacity for the year ended December 31, 2007 as discussed above.
Representatives
of Murrell, Hall, McIntosh, & Co., PLLP are not expected to be at the Annual
Meeting; however, if questions arise which require their comments, arrangements
have been made to solicit their response.
Audit Fees
The
aggregate fees billed for professional services rendered for the audit of the
Company’s annual financial statements by Murrell, Hall, McIntosh, & Co.,
PLLP for the fiscal years ended December 31, 2007 and 2006, and the reviews of
the financial statements included in the Company’s Form 10-QSB for those years
totaled $50,000 for 2007 and $45,000 for 2006.
Audit
– Related Fees
No fees
were billed for audit related services rendered by Murrell, Hall, McIntosh &
Co., PLLP for either 2007 or 2006.
Tax
Fees
The
aggregate fees billed for tax services rendered by Murrell, Hall, McIntosh &
Co., PLLP were $9,500 for 2007 and $8,500 for 2006. All such fees were for
Federal and state income tax return preparation.
All
Other Fees
None
ADDITION
AL
INFORMATION
Communications
Between Stockholders and the Board
The Board
has designated Mr. Harris to be the independent Director to receive
communications from stockholders seeking to communicate directly with the
Company’s independent Directors. Anyone who has a concern about the
Company’s conduct, or about the Company’s accounting, internal accounting
controls or auditing matters, may communicate that concern directly to the
Company’s Secretary. Those communications may be confidential or
anonymous. All such concerns will be forwarded to Mr. Harris for
review. The Board is committed to good governance
practices.
Deadline
for Stockholders for Inclusion in Next Year’s Proxy Statement
Stockholder
proposals intended to be presented at the 2009 Annual Meeting of Stockholders,
which is scheduled for May 19, 2009, and included in the Company’s proxy
statement and form of proxy relating to that meeting pursuant to Rule 14a-8
under the Securities Exchange Act of 1934 must be received in writing by the
Company at the Company’s principal executive offices by Friday, December 31,
2008. Proposals should be addressed to James L. Tyler, Secretary, The
Reserve Petroleum Company, 6801 N. Broadway, Suite 300, Oklahoma City, Oklahoma
73116-9092.
Other
Stockholder Proposals for Presentation at Next Year’s Annual
Meeting
For any
stockholder proposal that is not submitted to the Company for inclusion in next
year’s proxy statement, but is instead sought to be presented by the stockholder
directly at the 2009 Annual Meeting, Rule 14a-4(c) under the Securities Exchange
Act of 1934 permits management to vote proxies in its discretion if the Company:
(1) receives written notice of the proposal before the close of business on
Thursday, March 5, 2009, and advises stockholders in the 2009 Proxy Statement
about the nature of the matter and how management intends to vote on the matter,
or (2) does not receive written notice of the proposal before the close of
business on Thursday, March
5,
2009. Notices of intention to present proposals at the 2009 Annual
Meeting should be addressed to James L. Tyler, Secretary, The Reserve Petroleum
Company, 6801 N. Broadway, Suite 300, Oklahoma City, Oklahoma
73116-9092.
Voting
Securities
Stockholders
of record at the close of business on April 14, 2008, will be eligible to vote
at the Annual Meeting. The voting securities of the Company consist
of its $0.50 par value common stock, of which 162,367.64 shares
were outstanding on April 14, 2008. Each share outstanding on the
Record Date will be entitled to one vote. Treasury shares are not
voted. Individual votes of stockholders are kept private, except as
appropriate to meet legal requirements. Access to proxies and other
individual stockholder voting records is limited to the Inspector of Election
and certain employees of the Company and its agents who must acknowledge in
writing their responsibility to comply with this policy of
confidentiality.
Vote
Required for Approval
The
election of a nominee to the Board requires the affirmative vote of a majority
of the shares of common stock represented at the Annual Meeting in person or by
proxy. All other matters also require the affirmative vote of a
majority of the shares of common stock voted at the Annual Meeting in person or
by proxy. Abstentions, if any, will not be counted as votes
cast. Therefore, they will have no effect on the outcome of the other
matters to be voted on at the Annual Meeting. A broker non-vote
occurs when a nominee holding shares for a beneficial holder does not have
discretionary voting power and does not receive voting instructions from the
beneficial owner. Broker non-votes will not be treated as shares
present and entitled to vote on a voting matter and will have no effect on the
outcome of the vote.
Manner
for Voting Proxies
The
shares represented by all valid proxies received by mail will be voted in the
manner specified. Where specific choices are not indicated, the
shares represented by all valid proxies received will be voted for the
nominees for Director named in this Proxy Statement. Should any
matter not described above be properly presented at the Annual Meeting, the
person or persons named in the Proxy Card will vote in accordance with their
judgment.
Other
Matters to be Presented
The Board
knows of no other matters which may be presented at the Annual
Meeting. If any other matters properly come before the Annual
Meeting, including any adjournment or adjournments thereof, proxies received in
response to this solicitation will be voted upon such matters in the discretion
of the person or persons named in the Proxy Card.
Electronic
Access to Proxy Statement and Annual Report
A copy of
the Company’s 2007 Annual Report on Form 10-KSB will be furnished without
charge to stockholders beneficially or of record at the close of business on
April 14, 2008, on request to James L. Tyler, Secretary, at (405) 848-7551
Ext. 303. This Proxy Statement and the Company’s 2007 Annual Report
on Form 10-KSB are also available on the SEC’s website
www.sec.gov
under the
“Filings & Forms (EDGAR)” then “Search for Company Filings”
heading.
THE
RESERVE PETROLEUM COMPANY
PROXY
FOR ANNUAL MEETING OF STOCKHOLDERS
May
20, 2008
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW
ALL MEN BY THESE PRESENTS:
That the
undersigned holder(s) of common stock of The Reserve Petroleum Company, a
Delaware corporation, does hereby constitute and appoint Mason McLain and Robert
T. McLain as true and lawful attorneys and proxies for the undersigned, each
with full power of substitution and revocation, to vote for and in the name,
place and stead of the undersigned at the 2008 Annual Meeting of Stockholders of
the Company to be held at 6801 N. Broadway, Suite 300, Oklahoma City, Oklahoma,
on Tuesday, May 20, 2008, at 3:00 p.m., local time, and any adjournment thereof,
all of the stock of the Company which the undersigned would be entitled to vote
if then personally present, hereby revoking any Proxy heretofore
given.
This
Proxy will confer discretionary authority to vote upon matters incidental to the
conduct of the Annual Meeting, matters not known to management prior to the date
of the Proxy Statement which are presented to the meeting and the approval of
the form of minutes of the 2007 Annual Stockholders’ Meeting.
|
|
|
Election
of Directors
|
|
|
|
|
|
WITHHOLD
|
|
|
|
VOTE FOR
|
|
AUTHORITY TO VOTE
|
|
NOMINEE
|
|
(
)
|
|
(
)
|
|
Mason
McLain
|
|
(
)
|
|
(
)
|
|
Robert
T. McLain
|
|
(
)
|
|
(
)
|
|
Jerry
L. Crow
|
|
(
)
|
|
(
)
|
|
Robert
L. Savage
|
|
(
)
|
|
(
)
|
|
Marvin
E. Harris, Jr.
|
|
(
)
|
|
(
)
|
|
William
M. (Bill) Smith
|
|
(
)
|
|
(
)
|
|
Doug
Fuller
|
|
(
)
|
|
(
)
|
|
Cameron
R. McLain
|
|
(
)
|
|
(
)
|
|
Kyle
McLain
|
(Continued
and to be signed on other side)
(Continued
from other side)
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES.
This
Proxy may be revoked at any time before the authority granted therein is
exercised; otherwise, it shall remain in full force and effect.
IN
WITNESS WHEREOF the undersigned has executed this Proxy on the ____day of
_______________2008.
|
|
Signature
|
|
|
|
|
|
Signature
if held jointly
|
|
|
|
|
|
|
|
|
Address
|
Please
sign your name(s) exactly as it appears on your stock certificate and return
this Proxy Card promptly to save the Company additional mailing
expense. Executors, administrators, trustees, guardians and others
signing in a representative capacity please give their full titles. When shares
are held by joint tenants both should sign. If a corporation, please
sign full corporate name by the President or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
Must arrive
in this office by May 19, 2008 to be counted.
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