SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
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 sec. 240.14a-11(c) or 240.14a-12
Adams
Resources & Energy, Inc.
(Name
of
Registrant as Specified in its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[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 of 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:
ADAMS
RESOURCES & ENERGY, INC.
4400
POST OAK PARKWAY, SUITE 2700
Houston,
Texas 77027
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
May
22, 2006
To
our
Stockholders:
Notice
is
hereby given that the Annual Meeting of Shareholders of Adams Resources
&
Energy, Inc. will be held at 4400 Post Oak Parkway, Suite 2700, Houston,
Texas,
on Monday, May 22, 2006 at 11:00 a.m., Houston time, for the following
purposes:
1. To
elect
a Board of seven Directors;
|
2.
|
To
transact such other business as may properly come before the
meeting or
any adjournments thereof.
|
Further
information regarding the
meeting and the above proposals is set forth in the accompanying Proxy
Statement. The close of business on April 3, 2006 has been fixed as the
record
date for the determination of shareholders entitled to receive notice of
and to
vote at the Annual Meeting or any adjournment(s) thereof.
By
Order
of the Board of Directors
David
B.
Hurst
Secretary
Houston,
Texas
April
3,
2006
IMPORTANT
YOU
ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. EVEN IF YOU PLAN
TO BE
PRESENT, YOU ARE URGED TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY.
THE
ENCLOSED RETURN ENVELOPE MAY BE USED FOR THAT PURPOSE. IF YOU ATTEND THE
MEETING, YOU CAN VOTE EITHER IN PERSON OR BY PROXY.
ADAMS
RESOURCES & ENERGY, INC.
4400
Post Oak Parkway, Suite 2700
Houston,
Texas 77027
PROXY
STATEMENT
2006
ANNUAL MEETING OF SHAREHOLDERS
To
Be Held May 22, 2006
This
Proxy Statement and accompanying proxy are being furnished to stockholders
in
connection with the solicitation of proxies by the Board of Directors of
Adams
Resources & Energy, Inc., a Delaware corporation (the “Company”), for use at
the 2006 Annual Meeting of Shareholders to be held at 4400 Post Oak Parkway,
Suite 2700, Houston, Texas, on Monday, May 22, 2006 at 11:00 a.m., Houston
time,
and any and all adjournments thereof, (such meeting or adjournment(s) thereof
referred to as the “Annual Meeting”), for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. This Proxy Statement
and
the accompanying proxy are being mailed to stockholders on or about April
7,
2006.
The
Company will pay the cost of solicitation of the proxies. In addition to
solicitation by mail, proxies may be solicited personally or by telephone
or
telegram by directors, officers and employees of the Company, and arrangements
may be made with brokerage houses or other custodians, nominees and fiduciaries
to send proxies and proxy material to their principals. Compensation and
expenses of any such firms, which are not expected to exceed $1,000, will
be
borne by the Company.
VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF
At
the
close of business on April 3, 2006, the record date of those entitled to
receive
notice of and to vote at the meeting, the Company had outstanding 4,217,596
shares of common stock, $0.10 par value per share ("Common Stock"). The
presences, in person or by proxy, of a majority of the outstanding shares
of
Common Stock on the record date is necessary to constitute a quorum at
the
Annual Meeting. Abstentions and broker non-votes are counted for purposes
of
determining the presence or absence of a quorum for the transaction of
business.
Each share is entitled to one vote on all issues requiring a stockholder
vote at
the Annual Meeting. Shareholders may not cumulate their votes for the election
of directors. Directors shall be elected by a majority of the votes of
the
shares present or represented by proxy and entitled to vote at the Annual
Meeting. Abstentions will have no effect on the outcome of the vote on
Item 1.
Broker non-votes will not be counted in the tabulations of the votes cast
on
Item 1 and will have no effect on the outcome of the vote.
All
shares represented by properly executed or submitted proxies, unless previously
revoked, will be voted at the Annual Meeting in accordance with the directions
on the proxies. If no direction is indicated, the shares will be voted
FOR
the
election as directors of the nominees listed herein, and in the discretion
of
the persons named in the proxy in connection with any other business that
may
properly come before the Annual Meeting. The enclosed proxy, even though
executed and returned, may nevertheless be revoked at any time before it
is
voted by the subsequent execution and submission of a revised proxy, by
written
notice of revocation to the Secretary of the Company or by voting in person
at
the meeting. However, simply attending the Annual Meeting and not voting
will
not revoke a proxy.
ELECTION
OF DIRECTORS
The
persons named as proxyholders in the enclosed proxy have been selected
by the
Board of Directors to serve as Proxies and will vote the shares represented
by
valid proxies at the Annual Meeting and any adjournments thereof. They
have
indicated that, unless otherwise specified in the proxy, they intend to
vote for
the election as director each of the persons named as a nominee listed
below
under “Nominees for Director” unless authority to vote in the election of
directors is withheld on each proxy. Each nominee is currently a member
of the
Board of Directors. Each duly elected director will hold office until the
2007
Annual Meeting of Shareholders or until his successor shall have been elected
and qualified. Although the Board of Directors of the Company does not
contemplate that a nominee will be unable to serve, if such a situation
arises
prior to the Annual Meeting, the persons named in the enclosed proxy will
vote
for the election of such other person as may be nominated by the Board
of
Directors. Proxies cannot be voted in the election of directors for more
than
seven persons, as that is the number of nominees named herein.
Nominees
for Director
The
Board of Directors unanimously recommends a vote FOR
the election of the nominees listed below.
For
each
of the Company’s directors, the following table sets forth their names, ages,
principal occupations, other directorships of public companies held by
them,
length of continuous service as a director and number of shares of Common
Stock
beneficially owned by each of them as of April 3, 2006. Except as otherwise
noted, each stockholder has sole voting and investment power with respect
to the
shares beneficially owned.
|
Common
Stock
|
|||
|
Principal
Occupation
|
Director
|
Owned
as of
|
|
|
Nominee
and Age
|
And
Directorship
|
Since
|
April
3, 2006
|
|
K.
S. Adams, Jr. (83)
|
Chairman
of the Board
|
1973
|
2,099,987(1)
|
|
and
Chief Executive
|
|||
|
Officer
of the Company
|
|||
|
E.
C. Reinauer, Jr. (70)
|
International
Project Manager
|
1973
|
7,873
|
|
Edward
Wieck (82)
|
Land
and Cattle
|
1976
|
12,000
|
|
E.
Jack Webster, Jr. (85)
|
Chairman
and CEO of Petrol
|
1985
|
15,189
|
|
Properties,
Inc.; Director United
|
|||
|
Missouri
Bancshares, Inc.
|
|||
|
Richard
B. Abshire (53)
|
Vice
President and Chief Financial Officer of the Company
|
1986
|
13,200
|
|
Frank
T. Webster (57)
|
President
and Chief Operating Officer of the Company
|
2004
|
5,000
|
|
William
B. Wiener III (54)
|
Director
--LECG, LLC
|
2004
|
1,200
|
________________________
| (1) |
Includes
1,644,275 shares owned by KSA Industries, Inc., 324,680 shares
owned by
Mr. Adams directly, 7,973 shares owned by Mrs. Adams, and 123,059
shares
held in trusts for Mr. Adams’ grandchildren, with Mr. Adams serving as
trustee.
|
All
of
the directors other than Mr. Adams own less than one percent of the class
of
shares outstanding. All of the directors have been engaged in the principal
occupations indicated above for the last five years except Mr. Frank T.
Webster
and Mr. Wiener. Mr. Frank T. Webster joined the Company as its President,
Chief
Operating Officer and Director in May 2004. From July 2002 until May 2004,
Mr.
Webster was engaged in private investments. From December 2000 through
July 2003
he served as Executive Vice President and Managing Director and also as
President and Chief Executive Officer of Duke Capital Partners, LLC, a
subsidiary of Duke Energy.
Since
May
2005, Mr. Wiener has been a Director at LECG, LLC, a global expert services
firm. Prior to joining LECG he was President of WBW Enterprises, a private
investment firm since 2003. From 2000 through 2003, Mr. Wiener was Senior
Vice
President and Chief Investment Officer of Duke Energy North America and
also
Chief Investment Officer of Duke Capital Partners, LLC.
During
2005, the Company’s Board of Directors also included Mr. R. H. Stevens, Jr. and
Mr. Vincent H. Buckley. Mr. Stevens was an independent director of the
Company
while Mr. Buckley was the Company’s Executive Vice President and General
Counsel. Mr. Stevens resigned from the Board in September 2005 upon entering
into a direct business relationship with the Company’s Chairman and Chief
Executive Officer. The resignation of Mr. Stevens was prompted by his no
longer
being an independent director under American Stock Exchange guidelines.
In
connection with Mr. Stevens’ resignation, Mr. Buckley also resigned as a
Director in order to maintain the makeup of the Board to include a majority
of
outside independent directors.
Meetings
and Committees of the Board
In
2005,
the Board met four times in person and had two additional telephonic meetings.
During 2005, all directors attended at least 75% of the meetings of the
Board
and the committees on which they served for the period in which they held
office. It is the Company’s policy that all persons nominated for election to
the Board at the time of the annual meeting be present at such meeting.
All
directors attended the 2005 annual meeting except Mr. E. Jack Webster was
unable
to attend due to an injury. The Board has three standing committees. The
duties
of each committee are described below.
|
Summary
of
|
Committee
|
Meetings
in
|
|
|
Committees
of the Board
|
Responsibilities
|
Members
|
2005
|
|
Audit
|
Retains
independent accountants and pre-approves their services. Reviews
and
approves financial statements and internal controls.
|
Reinauer,
Jr.*
Wieck
E.
Jack Webster, Jr.
Wiener
III**
|
Six
|
|
Compensation
|
Evaluates
the performance of the Chief Executive Officer and
establishes
the compensation of the Chief Executive Officer and other executive
officers.
|
Reinauer,
Jr.*
Wieck
E.
Jack Webster, Jr.
Wiener
III
|
Two
|
|
Nominating
|
Identifies,
considers and recommends to the Board nominees for directors.
|
Reinauer,
Jr.*
Wieck
E.
Jack Webster, Jr.
Wiener
III
|
Two
|
_______________________________
| *Indicates Committee chair |
| **Mr. Wiener has been designated as the Company's Audit Committee financial expert under Item 401(h) of Regulation S-K. |
The
responsibilities of the Audit Committee, Compensation Committee and Nominating
Committee are described in each of the committees’ respective charters, which
were adopted by the respective committees and the Board. These committee
charters are available on the website at www.adamsresources.com.
The
Audit Committee charter has also been included as Appendix A to this Proxy
Statement. Copies may also be obtained by writing to Investor Relations,
Adams
Resources & Energy, Inc., 4000 Post Oak Parkway, Suite 2700, Houston TX
77027.
Independence
The
Company’s Board of Directors is comprised of a majority of independent directors
as defined under American Stock Exchange listing standards. There are no
family
relationships among any of the directors or executive officers of the Company.
The directors determined by the Board to be independent are Mr. Reinauer,
Mr.
Wieck, Mr. Jack Webster, Jr. and Mr. Wiener. The Board has determined that
none
of the designated independent directors has any relationship that, under
American Stock Exchange rules, would preclude their service on any of the
standing committees of the Board. In addition, the Board requires each
of its
members and each of the director nominees to disclose in an annual questionnaire
any relationship he or she or his or her family members have had with the
Company, its subsidiaries, its independent accountants, directors and officers
within the past five years. The Board considers any such relationship in
making
its determination.
Nomination
Policy
The
Nominating Committee of the Board of Directors consists of Messrs. Reinauer,
Jack Webster, Jr., Wieck and Wiener. Each of the members of the Nominating
Committee is independent, as defined in Section 121A of the listing standards
of
the American Stock Exchange.
The
Nominating Committee identifies and recommends to the Board nominees for
directors to be considered at the annual meeting of shareholders. The Committee
also considers nominees submitted by stockholders to the Secretary of the
Company in accordance with the procedures set forth in the Company’s Bylaws. You
may obtain a copy of the Bylaws by writing to Adams Resources & Energy,
Inc., 4400 Post Oak Parkway, Suite 2700, Houston TX 77027, Attention: Corporate
Secretary, David Hurst. The Company’s Bylaws can also be found on the Company’s
website at www.adamsresources.com.
In
identifying and evaluating candidates for nomination to the Board, the
Nominating Committee considers several factors, including education, experience,
knowledge, expertise, independence and availability to effectively carry
out the
duties of a Board member. The qualifications and backgrounds of prospective
candidates are reviewed in the context of the current composition of the
Board
to ensure the Board maintains the proper balance of knowledge, experience
and
diversity to effectively manage our business for the long-term interests
of the
shareholders.
In
connection with the Annual Meeting, the Nominating Committee has recommended
the
Directors listed in this proxy.
Communications
with the Board
You
may
contact our Board, a committee of our Board, or an individual director
by
writing to them at Adams Resources & Energy, Inc., 4400 Post Oak Parkway,
Suite 2700, Houston TX 77027, Attention: Corporate Secretary-Board
Communication. All communications will be compiled by the Secretary and
submitted to the presiding member of the Board, a committee chair, or an
individual director, as applicable, on a periodic basis. The Secretary
will
respond to letters to take other actions in accordance with instructions
from
the applicable Board contact.
Director
Compensation
Directors
who are employees of the Company do not receive fees or any other compensation
for their services as directors. Directors who are not employees receive
an
annual retainer of $20,000, plus Mr. Wiener receives an additional $10,000
to
serve in his capacity as the Company’s designated financial expert. In addition,
non-employee directors are reimbursed for expenses, including travel, they
incur
in connection with attending meetings.
EXECUTIVE
OFFICERS
The
following table provides information regarding the executive officers of
the
Company as of March 30, 2006. The officers of the Company serve at the
discretion of the Board of Directors of the Company.
|
Name
|
Age
|
Position
|
|
K.
S. Adams, Jr.
|
83
|
Chairman
and Chief Executive Officer
|
|
F.
T. Webster
|
57
|
President
and Chief Operating Officer
|
|
Richard
B. Abshire
|
53
|
Vice
President and Chief Financial
Officer
|
K.
S.
"Bud" Adams, Jr. founded
the Company's predecessor, Ada Oil Company, in 1947 with its primary
interest
involving oil and gas exploration and production. Mr. Adams' personal
holdings
in oil and gas properties and real estate became the basis of the Company
when
it made its initial public offering in 1974. In addition to his involvement
with
Adams Resources & Energy, Inc., Mr. Adams' other business interests include
farming, ranching and automobile dealerships, and he owns the National
Football
League franchise Tennessee Titans.
F.
T.
“Chip” Webster was
elected President and Chief Operating Officer of the Company in May 2004.
Mr.
Webster was previously President and Chief Executive Officer of Duke Capital
Partners, a business unit of Duke Energy. Prior to joining Duke, he was
a
partner and managing director of Andersen’s energy corporate finance group. He
also spent 20 years in energy and corporate banking with First City Bank-Houston
where he was Executive Vice President. He is a member of the Independent
Petroleum Association of America and the Houston Producers’ Forum.
Richard
B. Abshire joined the Company in 1985 and was previously employed by Arthur
Andersen & Co. Mr. Abshire is a Certified Public Accountant in the State of
Texas and he serves as the Company’s principal financial and accounting
officer.
In
addition to the above named officers, Mr. Vincent H. Buckley served the
Company
as Executive Vice President and General Counsel from August 2002 until
his death
in January 2006.
Employment
Agreements
Mr.
F. T.
Webster entered into an employment agreement with the Company in May 2004.
He is
to serve as President and Chief Operating Officer of the Company and will
receive $350,000, $367,000 and $385,000 as base salary from May 14, 2004
to May
13, 2005, May 14, 2005 to May 13, 2006 and May 13, 2006 to May 14, 2007,
respectively. In addition to his salary, Mr. F. T. Webster is entitled
to
receive a one-time bonus in the amount of $100,000 less applicable withholding
and deductions. Pursuant to the terms of his employment agreement, the
entire
amount of the bonus was used by Mr. Webster to purchase stock of the Company
in
his name and for his own account. Mr. F. T. Webster is eligible to participate
in any leave, insurance and other employee benefit plans of the Company
that may
be in effect from time to time for management-level employees. In addition,
he
is eligible to earn annual performance bonuses at the sole discretion of
the
Board of Directors based on year-over-year increases in the profitability
of the
Company and the recommendation of the Chairman of the Board. In the event
Mr. F.
T. Webster’s employment is terminated due to his death, his estate will be
entitled to receive: (i) any earned and unpaid salary accrued through the
date
of his death; (ii) any benefits due to applicable plans and programs of
the
Company; and (iii) if applicable, any benefits due under or pursuant to
workers
compensation. In the event Mr. F. T. Webster becomes disabled to the extent
that
he is unable to perform his duties and responsibilities under his employment
agreement and such disability continues for a period of 90 days or an aggregate
of 120 days during any calendar year, the Company will have the right to
terminate the employment agreement upon 10 days’ prior written notice. In the
event Mr. F. T. Webster’s employment is terminated due to his disability, Mr.
Webster will be entitled to receive: (i) any earned and unpaid salary accrued
through the date of termination; (ii) any benefits due to applicable plans
and
programs of the Company; and (iii) any benefits available to him pursuant
to
applicable law. In the event Mr. F. T. Webster is terminated for cause
he will
be entitled to receive; (i) any earned and unpaid salary accrued through
the
date of termination of his employment; (ii) any benefits due to applicable
plans
and programs of the Company; and (iii) any benefits available to him pursuant
to
applicable law. In the event Mr. F. T. Webster voluntarily resigns, he
will be
entitled to receive only any earned and unpaid salary accrued through the
actual
date of acceptance of his resignation by the Board of Directors. In the
event
Mr. F. T. Webster’s employment is terminated without cause, he will be entitled
to receive the balance of his salary due under the employment agreement
subject
to offset for amounts which he receives due to any other employment or
work. If
there is a change of control of the Company and as a result of such change
of
control Mr. F. T. Webster’s employment agreement is terminated, then he will
receive the greater of: (i) the remaining salary due to him under his employment
agreement and (ii) a sum equal to $385,000 less applicable withholdings
and
deductions. Mr. F. T. Webster’s employment agreement will terminate May 13,
2007. The contract was amended on May 18, 2005 to extend the termination
date to
May 13, 2008 with all other terms remaining unchanged.
SUMMARY
COMPENSATION TABLE
The
following table sets forth the total compensation of the Company’s Chief
Executive Officer and each of the Company’s other executive officers during the
three fiscal years ended December 31, 2005, 2004 and 2003. There were no
pension
plans, stock options or shares of restricted stock granted by the registrant
during the periods presented.
|
Name
and
|
Annual
Compensation
|
|||
|
Principal
Position
|
Year
|
Salary
|
Bonus
|
Other
(1)
|
|
K.
S. Adams, Jr.
|
2005
|
$175,000
|
$150,000
|
$6,320
|
|
Chairman
and Chief
|
2004
|
$155,703
|
$75,000
|
$7,154
|
|
Executive
Officer
|
2003
|
$150,406
|
$-
|
$5,394
|
|
F.
T. Webster(2)
|
2005
|
$360,135
|
$225,000
|
$12,145
|
|
President
and
|
2004
|
$210,000
|
$100,000
|
$-
|
|
Chief
Operating Officer
|
||||
|
Vincent
H. Buckley
|
2005
|
$175,000
|
$75,000
|
$9,127
|
|
Executive
Vice President
|
2004
|
$155,384
|
$50,000
|
$6,154
|
|
and
General Counsel
|
2003
|
$150,000
|
$ -
|
$-
|
|
Richard
B. Abshire
|
2005
|
$220,000
|
$150,000
|
$13,200
|
|
Vice
President and
|
2004
|
$204,307
|
$75,000
|
$13,200
|
|
Chief
Financial Officer
|
2003
|
$200,000
|
$-
|
$12,908
|
________________________
|
(1)
|
Includes
car allowance and employer matching contributions to the Company's
401(k)
savings plan.
|
|
(2)
|
Mr.
Webster joined the Company in May 2004.
|
REPORT
OF COMPENSATION COMMITTEE
Compensation
Philosophy
The
Company’s compensation philosophy has the following objectives and executive
compensation levels are determined in consideration thereof.
| · |
Establish
and maintain a level of compensation that is competitive within
the
Company’s industry.
|
| · |
Provide
an incentive mechanism for favorable
results.
|
| · |
Provide
a level of executive compensation that is consistent with the
level of
compensation for non-executive
personnel.
|
| · |
Maintain
a compensation system that is consistent with the objectives
of sound
corporate governance.
|
Elements
of Compensation
The
Company’s executive compensation program is comprised of the following
elements.
| · |
Base
salary
|
| · |
Discretionary
bonus
|
| · |
Benefits
|
Base
salaries are initially determined based on negotiations occurring at the
time of
the executive joining the Company. In subsequent years, such levels may
be
adjusted based on current competitive conditions. Discretionary bonuses
are used
as an incentive for favorable results. The discretionary bonus may also
serve as
a supplement to base salary levels, while allowing the Board to avoid such
expense during a year when earnings do not meet expectation. A pre-defined
formula bonus system is not utilized. This is because the discretionary
approach
is believed to better align management with the long-term interest of the
Company rather than toward a set short-term formula target.
The
determination of a discretionary bonus generally originates with a
recommendation from executive officers based on the Company’s compensation
philosophy. An important consideration for the recommended amount is the
level
of salaries and bonuses paid to the Company’s non-executive officer employees.
The Company has a diverse group of non-executive employees with levels
of
compensation consistent with industry practices and varying responsibilities.
Recommended bonus amounts are consistent with the bonus amounts and concepts
applied to non-executive employees. The Compensation Committee retains
final
approval authority over such recommended amounts.
The
Company also provides employee benefits, which primarily consist of a 401
(k)
Plan and an employer sponsored medical plan. The benefits provided the
executive
officer group are no different than those offered to non-executive employees.
The Company does not provide stock options or other common stock incentives.
The
Company does not offer a defined benefit pension plan.
Chairman
and Chief Executive Officer Compensation
Mr.
Adams’ base salary, discretionary bonus and benefits for each of the past three
years is presented in the table above. The methodology for establishing
such
levels of compensation is consistent with the methodology utilized for
other
executive officers. As the major shareholder of the Company, Mr. Adams
is
acutely aware of the need to balance the goal of reinvesting available
cash flow
to build the Company’s equity base with the need to attract and retain key
employees.
Internal
Revenue Code 162(m) Considerations
Section
162(m) of the Internal Revenue Code, as amended, limits a company’s ability to
deduct compensation paid in excess of $1 million to the Chief Executive
Officer
and the next four highest paid officers in any year, unless the compensation
meets certain performance requirements. The Company has no officers receiving
compensation in excess of $1 million.
Conclusion
We
strive
to maintain an executive compensation program that aligns executive awards
with
the long-term goals of the Company and financial returns to shareholders.
We
believe our compensation methodology and levels of compensation are consistent
with these objectives.
E.
C.
Reinauer, Jr. Chairman
E.
Jack
Webster, Jr.
Edward
Wieck
William
B. Wiener III
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The
members of the Compensation Committee of the Board of Directors during
the year
ending December 31, 2005 were Messrs. Reinauer (Chairman), Jack Webster,
Jr.,
Wieck and Wiener. None of the members of the Compensation Committee was
an
officer or employee of the Company or any of its subsidiaries, or was formerly
an officer of the Company of any of its subsidiaries or had any relationship
requiring disclosure by the Company during the year ended December 31,
2005. No
executive officer of the Company served as a member of the compensation
committee (or other board committee performing equivalent functions) of
another
entity that had an executive officer serving as a member of the Company’s Board
of Directors or the Compensation Committee.
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Deloitte
& Touche LLP performed the audit of the Company’s consolidated financial
statements for the year ended 2005. The scope and all fees associated with
audit
and other services performed by Deloitte and Touche are pre-approved by
the
Audit Committee on an annual basis. The aggregate fees billed for 2005
and 2004
are set forth below:
|
2005
|
2004
|
||||||
|
Audit
Fees:
|
|||||||
|
Audit
of Consolidated Financial Statements
|
$
|
323,100
|
$
|
348,800
|
|||
|
Subsidiary
Company audit
|
15,000
|
10,000
|
|||||
|
Audit
Related Fees -
|
|||||||
|
Internal
control advisory
|
160,600
|
2,560
|
|||||
|
Total
Audit fees and Audit Related Services
|
498,700
|
361,360
|
|||||
|
Tax
Fees
|
11,300
|
-
|
|||||
|
All
Other Fees
|
-
|
-
|
|||||
|
Total
|
$
|
510,000
|
$
|
361,360
|
|||
The
Audit
Committee has the responsibility to assist the Board of Directors in fulfilling
its fiduciary responsibilities as to accounting policies and reporting
practices
of the Company and its subsidiaries and the sufficiency of the audits of
all
Company activities. This committee is the Board's agent in ensuring the
integrity of financial reports of the Company and its subsidiaries, and
the
adequacy of disclosures to stockholders. The Audit Committee is the focal
point
for communication between other directors, the independent auditors and
management as their duties relate to financial accounting, reporting and
controls. The Audit Committee is also responsible for reviewing the financial
transactions of the Company involving any related parties.
Audit
Committee Pre-Approval Policies
The
Audit
Committee has established a policy intended to clearly define the scope
of
services performed by the Company’s independent registered public accountants
for non-audit services. This policy relates to audit services, audit-related
services, tax and all other services which may be provided by the Company’s
independent registered public accountants and is intended to assure that
such
services do not impair the auditor’s independence. The policy requires the
pre-approval by the Audit Committee of all services to be provided by the
Company’s independent registered public accountants. Under the policy, the Audit
Committee will annually review and pre-approve the services that may be
provided
by the independent registered public accountants. The Audit Committee may
delegate pre-approval authority to one or more of its members. The member
or
members to whom such authority is delegated is required to report to the
Audit
Committee at its next meeting any services which such member or members
has
approved. The policy also provides that the Audit Committee will pre-approve
the
fee levels for all services to be provided by the independent registered
public
accountants. Any proposed services exceeding these levels will require
pre-approval by the Audit Committee.
All
of
the services provided by the Company’s principal accounting firm described in
the table above were approved in accordance with this policy and the Audit
Committee has determined that the independent registered public accountants’
independence has not been compromised as a result of providing these services
and receiving the fees for such services as noted above.
REPORT
OF THE AUDIT COMMITTEE
April
3,
2006
To
the
Board of Directors:
The
Audit
Committee of the Board of Directors consists of Messrs. Reinauer, Jack
Webster,
Jr., Wieck and Wiener. The duties and responsibilities of the Audit Committee
are set forth in a written charter adopted by the Board of Directors and
attached to this Proxy Statement as Appendix A. Each of the members of
the Audit
Committee is independent, as defined in Section 121A of the listing standards
of
the American Stock Exchange.
We
have
reviewed and discussed with management the Company’s audited consolidated
financial statements as of and for the year ended December 31,
2005.
We
have
discussed with the independent auditors the matters discussed by Statement
of
Auditing Standards No. 61, Communication
with Audit Committees,
as
amended, by the Auditing Standards Board of the American Institute of Certified
Public Accountants.
We
have
had discussions with the independent auditors about the items required
by
Independence Standard No. 1, Independence
Discussions with Audit Committees,
as
amended, by the Independence Standards Board. We have also discussed with
the
auditors the auditors’ independence and have reviewed the written disclosures
and the formal letter from the independent auditors required by Independence
Standard No. 1.
Based
on
the reviews and discussions referred to above, we recommend to the Board
of
Directors that the financial statements referred to above be included in
the
Company’s Annual Report on Form 10-K for the year ended December 31,
2005.
E.
C.
Reinauer, Jr., Chairman
E.
Jack
Webster, Jr.
Edward
Wieck
William
B.Wiener III
PERFORMANCE
GRAPH
The
performance graph shown below was prepared under the applicable rules of
the
Securities and Exchange Commission based on data supplied by Standard &
Poor’s Compustat. The purpose of the graph is to show comparative total
stockholder returns for the Company versus other investment options for
a
specified period of time. The graph was prepared based upon the following
assumptions:
1. $100.00
was
invested on December 31, 2000 in the Company's common stock, the S&P 500
Index, and the
S&P
500 Integrated Oil and Gas Index.
2.
Dividends are reinvested on the ex-dividend dates.
Note:
The
stock price performance shown on the graph below is not necessarily indicative
of future price performance.
|
INDEXED
RETURNS
|
||||||
|
Base
|
Years
Ending
|
|||||
|
Period
|
||||||
|
Company
/ Index
|
Dec00
|
Dec01
|
Dec02
|
Dec03
|
Dec04
|
Dec05
|
|
ADAMS
RESOURCES & ENERGY INC
|
100
|
56.72
|
39.11
|
102.66
|
135.90
|
178.90
|
|
S&P
500 INDEX
|
100
|
88.11
|
68.64
|
88.33
|
97.94
|
102.75
|
|
S&P
500 INTEGRATED OIL & GAS
|
100
|
94.25
|
82.75
|
104.86
|
135.09
|
158.91
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based
solely upon a review of Forms 3 and 4 and amendments thereto furnished
to the
Company during its most recent fiscal year and Forms 5 and amendments thereto
furnished to the Company with respect to its most recent fiscal year, and
written representations from reporting persons that no Form 5 was required,
the
Company believes that all required Form 3, 4 and 5 reports for transactions
occurring in 2005 were timely filed.
TRANSACTIONS
WITH RELATED PARTIES
Mr.
K. S.
Adams, Jr., Chairman and Chief Executive Officer, and certain of his family
partnerships and affiliates have participated as working interest owners
with
the Company’s subsidiary, Adams Resources Exploration Corporation. Mr. Adams and
such affiliates participate on terms no better than those afforded the
non-affiliated working interest owners. In recent years, such related party
transactions tend to result after the Company has first identified oil
and gas
prospects of interest. Due to capital budgeting constraints, typically
the
available dollar commitment to participate in such transactions is greater
than
the amount management is comfortable putting at risk. In such event, the
Company
first determines the percentage of the transaction it wants to obtain,
which
allows a related party to participate in the investment to the extent there
is
excess available. Such related party transactions are individually reviewed
and
approved by the Audit Committee comprised of the independent directors
on the
Company’s Board of Directors. As of December 31, 2005, the Company owed a
combined net total of $112,800 to these related parties. In connection
with the
operation of certain oil and gas properties, the Company also charges such
related parties for administrative overhead primarily as prescribed by
the
Council of Petroleum Accountants Society Bulletin 5. Such overhead recoveries
totaled $147,000 in 2005.
In
August
2000, the Company was approached by a third party to join in an acquisition
of
certain producing oil and gas reserves in Escambia County, Alabama. The
Company’s share of the acquisition would have been approximately $12 million.
Due to capital constraints at the time, the Company decided against direct
participation, but rather promoted Mr. Adams for a 15 percent back-in interest
after payout. In October 2005, Mr. Adams elected to sell his purchased
interest
causing the property to achieve payout status. The Company’s resulting share of
the gain was $942,000, which Mr. Adams paid in cash to the Company.
David
B.
Hurst, Secretary of the Company, is a partner in the law firm of Chaffin
&
Hurst. The Company has been represented by Chaffin & Hurst since 1974 and
plans to use the services of that firm in the future. Chaffin & Hurst
currently leases office space from the Company. Transactions with Chaffin
&
Hurst are on the same terms as those prevailing at the time for comparable
transactions with unrelated entities.
The
Company also enters into certain transactions in the normal course of business
with other affiliated entities. These transactions with affiliated companies
are
on the same terms as those prevailing at the time for comparable transactions
with unrelated entities.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the number of shares of
Common
Stock of the Company held of record on April 3, 2006, by beneficial owners
of
more than five percent of the Common Stock, and by all officers and directors
as
a group. Unless otherwise indicated, each person named below has sole voting
and
investment power over all shares of Common Stock indicated as beneficially
owned.
|
Name
and address
|
Beneficial
|
Percent
|
|||||
|
Of
Beneficial Owner
|
Ownership
|
Of
Class
|
|||||
|
K.
S. Adams, Jr.
|
2,099,987(1)
shares
|
49.8
|
%
|
||||
|
4400
Post Oak Parkway, Suite 2700
|
|||||||
|
Houston,
TX 77027
|
|||||||
|
FMR
Corp.
|
421,800(2)
shares
|
10.0
|
%
|
||||
|
82
Devonshire St.
|
|||||||
|
Boston,
MA 02109
|
|||||||
|
Officers
and Directors
|
2,154,449
shares
|
51.1
|
%
|
||||
|
as
a group (7 persons)
|
|||||||
|
(1)
|
Includes
1,644,275 shares owned by Mr. Adams directly, 7,973 shares owned
by Mrs.
Adams and 123,059 shares held in trusts for Mr. Adams’ grandchildren, with
Mr. Adams serving as trustee.
|
|
(2)
|
Based
on information contained in a Schedule 13G filed October 10,
2002 as
amended. Beneficial owners associated with FMR Corp. include
Fidelity
Management & Research Company, Fidelity Low-Priced Stock Fund, Edward
C. Johnson 3d and Abigail P.
Johnson.
|
CODE
OF ETHICS
The
Company has adopted a code of ethics (the “Code of Ethics”) that applies to all
officers, directors and employees, including the Company’s principal executive
officer, principal financial officer, principal accounting officer and
persons
performing similar functions (the “Principal Financial Officers”). A copy of the
Company’s Code of Ethics is posted on the Company’s Internet website at
www.adamsresources.com
and the
Company intends to satisfy the disclosure requirement under Item 5.05 of
Form
8-K regarding an amendment to, or waiver from, a provision of its Code
of Ethics
with respect to its Principal Officers by posting such information on this
Internet website.
ADDITIONAL
INFORMATION
Appointment
of Auditors
The
present intention of the Audit Committee of the Board of Directors is to
appoint
Deloitte & Touche LLP, independent registered public accountants, to audit
the financial statements of the Company for the year ending December 31,
2006.
Deloitte & Touche LLP was first appointed as the Company’s auditors in 2002.
A representative of Deloitte & Touche LLP will be present at the Annual
Meeting of Stockholders and will be given an opportunity to make a statement
if
they so desire and will be available to respond to appropriate
questions.
Shareholders
Proposals
Any
stockholder may communicate with the Board of Directors, any committee
of the
Board, or any director, by sending written communications addressed to
the Board
of Directors of Adams Resources & Energy, Inc., a Board committee or such
individual director or directors, c/o Investor Relations Manager, Adams
Resources & Energy, Inc., 4400 Post Oak Parkway, Suite 2700, Houston, Texas
77027. All communications will be forwarded to the Board, the Board committee
or
such individual director or directors in accordance with the request of
the
stockholder.
Any
proposal to be presented by any stockholder at the 2007 Annual Meeting
of
Stockholders must be received by the Company prior to December 1,
2006.
Other
Matters
The
Company knows of no matters to be presented for consideration at the meeting
other than those described above. If other matters are properly presented
to the
meeting for action, it is intended that the persons named in the accompanying
proxy, and acting pursuant to authority granted thereunder, will vote in
accordance with their best unanimous judgment on such matters.
By
Order
of the Board of Directors
David
B.
Hurst
Secretary
Houston,
Texas
April
3,
2006