TEXAS PACIFIC LAND TRUST
1700 PACIFIC AVENUE
SUITE 1670
DALLAS, TEXAS 75201
May 18, 2006
To All Holders of Sub-share Certificates of
Proprietary Interest ("Sub-share Certificates"):
You are cordially invited to attend a special meeting of Holders of
Sub-share Certificates which will be held at Hotel Crescent Court, 400 Crescent
Court, Salon Room, Dallas, Texas 75201, on Wednesday, June 14, 2006, at 10:00
A.M., Dallas time. Official notice of the Special Meeting, Proxy Statement and
form of Proxy are enclosed with this letter. The purpose of the Special Meeting
is to elect a Trustee to the Texas Pacific Land Trust to succeed Mr. Joe R.
Clark, who has elected to retire.
The Trustees of the Texas Pacific Land Trust are only three in
number and they are selected until their resignation or death or removal for
cause. Thus, we have given very considerable time and thought to our suggestion
for a successor Trustee. We are gratified to have secured the consent of Mr.
James K. Norwood to become a candidate for Trustee.
Mr. Norwood was born in De Queen, Arkansas in 1941. He attended
Louisiana Polytechnic Institute and earned a Bachelor of Science Degree in
Forestry and then attended Louisiana State University and graduated with a
Master of Forestry Degree.
In 1965, Mr. Norwood began working for the Department of Defense and
later with the U. S. Army Corps of Engineers as a real estate appraiser. In
1973, he formed James K. Norwood, Inc., a real estate appraisal and consulting
firm located in Fort Worth, Texas.
Mr. Norwood is a designated member of the Appraisal Institute and
the American Society of Farm Managers and Rural Appraisers, the leading
organizations of professional real estate appraisers throughout the United
States. Mr. Norwood is a licensed real estate appraiser in the State of Texas
and specializes in the appraisal of large ranch and timberland properties. Mr.
Norwood is qualified as an expert witness in Texas District Courts and Federal
Courts.
Mr. Norwood served as President of the North Central Texas Chapter
of the Appraisal Institute and a member of the National Board of Directors of
the American Society of Farm Managers and Rural Appraisers. He also served as
Chairman of the Tarrant County, Texas Appraisal District Board of Directors.
If you cannot be present at the meeting, please complete, sign and
return the Proxy in the enclosed envelope so that your Sub-share Certificates
may be represented.
Maurice Meyer III
CHAIRMAN OF THE TRUSTEES
TEXAS PACIFIC LAND TRUST
---------------------
Notice of Special Meeting of Holders of
Sub-share Certificates of Proprietary Interest
("Sub-share Certificates") to be Held June 14, 2006
---------------------
To: The Holders of Sub-share Certificates
issued under a certain Declaration of
Trust made by Charles J. Canda, Simeon J. Drake
and William Strauss, dated February 1, 1888:
NOTICE IS HEREBY GIVEN that Mr. Joe R. Clark, one of the Trustees
under the Declaration of Trust, having resigned as such Trustee, the Trustees,
in accordance with the provisions of the Declaration of Trust, have called a
Special Meeting of the Holders of Sub-share Certificates to be held at Hotel
Crescent Court, 400 Crescent Court, Salon Room, Dallas, Texas 75201, on
Wednesday, June 14, 2006, at 10:00 A.M., Dallas time, for the purpose of
electing a Trustee in the place of Mr. Joe R. Clark, and transacting such other
business as may properly come before the meeting.
Notice of the meeting will be published as required by the
Declaration of Trust.
The record date for determining Holders of Sub-share Certificates
entitled to notice of or to vote at the special meeting is May 15, 2006.
Therefore, only Holders of Sub-share Certificates whose names shall have been
registered on May 15, 2006 will be entitled to vote.
If you do not intend to be present at the meeting in person, but wish
to vote upon the matters to come before the meeting, please sign the
accompanying proxy and return the same to Texas Pacific Land Trust, care of the
Bank of New York in the enclosed envelope to which no postage need be affixed if
mailed in the United States.
Maurice Meyer III
Joe R. Clark
John R. Norris III
As Trustees under the above-mentioned Declaration
of Trust
New York, New York
May 18, 2006
PLEASE DATE, SIGN AND RETURN THE ACCOMPANYING PROXY
TEXAS PACIFIC LAND TRUST
1700 PACIFIC AVENUE
SUITE 1670
DALLAS, TEXAS 75201
--------------------
PROXY STATEMENT
--------------------
GENERAL
Messrs. Maurice Meyer III, John R. Norris III and Joe R. Clark, the
Trustees under the Declaration of Trust dated February 1, 1888, made by Charles
J. Canda, Simeon J. Drake and William Strauss (hereinafter sometimes called the
Texas Pacific Land Trust), solicit a proxy from you for a Special Meeting of the
Holders of the Sub-share Certificates of Proprietary Interest ("Sub-share
Certificates") issued and outstanding under said Declaration of Trust to be held
at Hotel Crescent Court, 400 Crescent Court, Salon Room, Dallas, Texas 75201, on
June 14, 2006, at 10:00 AM, Dallas time. You may, if you should so desire,
revoke the proxy at any time before it shall have been taken into account or
voted by submitting a revised one at any time before the vote to which the proxy
relates or by submitting a ballot at the Special Meeting. All Sub-share
Certificates represented by proxies in the accompanying form will be voted.
Texas Pacific Land Trust has borne the cost of approximately $5,000
of preparing, assembling and mailing this proxy statement, the attached notice,
and the accompanying proxy and return envelope. We have engaged Georgeson
Shareholder Communications Inc. ("GSC") as paid solicitors in connection with
the Special Meeting. GSC will be paid to solicit proxies and distribute proxy
materials to nominees, brokers and institutions. The anticipated cost of such
service is approximately $6,500.
The record date for determining Holders of Sub-share Certificates
entitled to notice of or to vote at the special meeting is May 15, 2006.
Therefore, only Holders of Sub-share Certificates whose names shall have been
registered on May 15, 2006 will be entitled to vote.
As of May 15, 2006, there are 2,150,775 outstanding Sub-share
Certificates of the par value of $.16-2/3 each. The Sub-share Certificates are
entitled to one vote each.
The approximate date on which this Proxy Statement and the form of
proxy included herewith are being first sent to Holders of Sub-share
Certificates is May 18, 2006.
ELECTION OF TRUSTEE
The Declaration of Trust provides for three Trustees. Since 2000,
these Trustees have been Messrs. Maurice Meyer III, John R. Norris III and Joe
R. Clark. The Trustees perform the duties usually performed by member of the
Board of Directors. They hold office until death, resignation or
disqualification. Mr. Meyer is currently Chairman of the Trustees. Mr. Roy
Thomas has been General Agent and Secretary of the Trust since January 1, 1995
and Chief Executive Officer since November 12, 2002. Mr. David M. Peterson has
been Assistant General Agent since January 1, 1997 and Chief Financial Officer
of the Trust since November 12, 2002.
Mr. Joe R. Clark has resigned as a Trustee of the Trust, effective
upon the election of his successor. The Declaration of Trust provides that in
the event of the death, resignation or disqualification of any of the Trustees a
successor Trustee shall be elected at a Special Meeting of the Holders of
Sub-share Certificates by a majority in the amount of the Holders of Sub-share
Certificates present in person or by proxy at such meeting whose names shall
have been registered in the books of the Trustees at least fifteen days before
such meeting. The Trustees decided that May 15, 2006 is the record date.
Accordingly, only Holders of Sub-share Certificates whose names are registered
on May 15, 2006 will be entitled to vote.
The Trustees and the persons named in the accompanying proxy intend
that if you execute and return your proxy with an affirmative response such
persons shall cast their votes for the election of Mr. James K. Norwood as a
Trustee.
INFORMATION ABOUT THE TRUSTEES AND MANAGEMENT
The Trustees of the Trust met twice in 2005 and once in 2006. All of
the Trustees attended all of those meetings.
Holders of Sub-share Certificates may contact a Trustee or the
Trustees as a group, by the following means:
Mail: Texas Pacific Land Trust
1700 Pacific Avenue, Suite 1670
Dallas, Texas 75201
Email: tplt1@swbell.net
Each communication should specify the applicable addressee or
addressees to be contacted as well as the general topic of the communication.
The Trust will initially receive and process communication before forwarding
them to the addressee. The Trust generally will not forward to the Trustees a
communication if it determines to be primarily commercial in nature, that
relates to an improper or irrelevant topic, or that requests general information
about the Trust.
The following tables and the notes appended hereto set forth
information with respect to each other person who is a Trustee or executive
officer of the Trust, the name of each such person, all positions and offices
with the Trust presently held, his present principal occupation or employment,
and the date on which he first became a Trustee or a officer.
(a) Trustees:
POSITION AND OFFICES PERIOD DURING WHICH
HELD PERSON HAS SERVED
NAME AGE WITH THE TRUST IN OFFICE
---- --- -------------------- --------------------
Maurice Meyer III 71 Trustee, Chairman of Trustee since
the February 28,
Trustees and Member of 1991; Chairman of
Audit Committee Trustees since May
28, 2003.
Joe R. Clark 79 Trustee, Vice Chairman Trustee since
of February 20, 1987;
the Trustees and Vice Chairman of
Chairman Trustees since May 28,
of Audit Committee 2003. Mr. Clark
served as
Chairman of the
Trustees
from June 7, 2000
through
May 27, 2003.
John R. Norris III 52 Trustee Trustee since June 7,
2000.
(b) Executive Officers:
POSITION AND OFFICES PERIOD DURING WHICH
HELD PERSON HAS SERVED
NAME AGE WITH REGISTRANT IN OFFICE
---- --- -------------------- --------------------
Roy Thomas 59 General Agent, Chief General Agent and
Executive Officer and Secretary of the
Secretary Trust since January
1, 1995 and Chief
Executive Officer
since November 12,
2002. Mr. Thomas
had previously
served as Assistant
General Agent from
December 1, 1992
through December
31, 1994.
David M. Peterson 40 Assistant General Agent Assistant General
and Chief Financial Agent
Officer since January 1,
1997 and Chief
Financial Officer
since November 12,
2002.
INFORMATION ABOUT THE COMMITTEES
The Trust has standing Audit, Pension and Nominating, Compensation and
Governance Committees.
The Audit Committee assists the Trustees of the Trust in discharging
and performing their duties and responsibilities with respect to the financial
affairs of the Trust, including reviewing: the financial reports and other
financial information provided by the Trust to any governmental body or the
public; the Trust's systems of internal controls regarding finance, accounting,
legal compliance and ethics that management and the Trustees have established;
and the Trust's auditing, accounting and financial reporting processes
generally. The Audit Committee is comprised of Mr. Clark and Mr. Meyer III, and
met twice in 2005 and once in 2006. Each member of the Audit Committee qualifies
as an "independent director" within the meaning of the rules of the New York
Stock Exchange and the Sarbanes-Oxley Act of 2002 ("SOX") and is free from any
relationship that may interfere with the exercise of his judgment independent
from management. The Trustees adopted a written charter for the Audit Committee
on February 24, 2004. A copy of such charter is attached to this Proxy Statement
as Appendix A.
The Pension Committee is comprised of the three Trustees, and met
once in 2005. The Pension Committee meets annually to oversee the administration
of pension benefits for the employees of the Trust.
The Nominating, Compensation and Governance Committee ("Nominating
and Compensation Committee") has been established by the Trustees to assist the
Trustees in discharging and performing the duties and responsibilities of the
Trustees with respect to corporate governance, management compensation,
succession planning and employee benefits. The Nominating and Compensation
Committee consists of the three Trustees and met once in 2005. Each member
qualifies as "independent" within the meaning of the rules of the New York Stock
Exchange. The Nominating and Compensation Committee adopted a written charter on
February 24, 2004. A copy of such charter is attached to this Proxy Statement as
Appendix B.
The Nominating and Compensation Committee does not have a formal
policy with regard to the consideration of any Trustee candidates recommended by
Holders of Sub-share Certificates. The Trustees believe that such a formal
policy is unnecessary and that the issue is more appropriately dealt with on a
case-by-case basis. When there is a vacancy with respect to a Trustee, the
Nominating and Compensation Committee identifies individuals who are qualified
and available to serve as Trustees and evaluates many factors, including whether
such individuals are independent under the rules of the New York Stock Exchange,
the Securities and Exchange Commission ("SEC") and the SOX, and deemed
"non-employee directors" under Rule 16b-3 under the Securities Exchange Act of
1934, as amended, and "outside directors" under Section 162(m) of the Internal
Revenue Code of 1986 (the "Code"). The Nominating and Compensation Committee
recommends to the Trustees such nominees for election as Trustees to fill such
vacancy, with the goal of submitting the recommendation to the Holders of
Sub-share Certificates. Although there are no specific minimum qualifications
that the Nominating and Compensation Committee relies on when evaluating
candidates, such candidates should, among other things, possess high degrees of
integrity, honesty and literacy in financial and business matters.
REMUNERATION AND OTHER TRANSACTIONS WITH
MANAGEMENT AND TRUSTEES
(a) Executive Compensation:
The following table sets forth information concerning compensation
for services in all capacities awarded to, earned by, or paid to, the Trust's
Chief Executive Officer and its other most highly compensated executive officers
(collectively, the "Named Executive Officers").
ANNUAL COMPENSATION
OTHER ANNUAL ALL OTHER
BONUS COMPENSATION COMPENSATION
NAME AND POSITION YEAR SALARY($) ($) ($)(1) (2)
----------------- ---- --------- ------- ------------ -------------
Roy Thomas 2005 $175,417 $17,000 -- $ 10,525
General Agent, Chief 2004 $170,417 $17,000 -- $ 10,225
Executive 2003 $160,833 -- -- $ 9,650
Officer and Secretary
David M. Peterson 2005 $110,833 $10,000 -- $ 6,650
Assistant General Agent and 2004 $100,833 $10,000 -- $ 6,050
Chief Financial Officer 2003 $ 91,200 -- -- $ 5,472
------------------------
(1) The aggregate value of the perquisites and other personal benefits, if
any, received by the Named Executive Officers for all years presented have
not been reflected in this table because the amount was below the SEC's
threshold for disclosure (i.e., the lesser of $50,000 or 10% of the total
of annual salary and bonus for the Named Executive Officer for the year).
(2) Represents contributions by the Trust to the account of the Named
Executive Officer under the Trust's defined contribution retirement plan.
(b) Retirement Plans:
The Trust maintains the Texas Pacific Land Trust Employee's Pension
Plan, a non-contributory defined benefit plan qualified under Section 401 of the
Code in which the employees, excluding the Trustees, participate. The amount of
the Trust's contribution, payments or accruals with respect to Mr. Thomas and
Mr. Peterson are not and cannot readily be separately or individually calculated
by the regular actuaries for the Plan. Based upon the Plan formula of 1-1/2% for
each covered year times the average salary of the last five years, Mr. Thomas is
estimated to have retirement benefits of $65,360 per year upon retirement at age
65, and Mr. Peterson is estimated to have retirement benefits of $52,404 per
year upon retirement at age 65.
(c) Trustee Compensation:
The Chairman of the Trustees receives the sum of $4,000 per year as
compensation for his service, and each of the other two Trustees receive the sum
of $2,000 per year for their services.
REPORT OF THE NOMINATING AND COMPENSATION COMMITTEE
The Nominating and Compensation Committee has the sole authority to
determine the compensation of the General Agent and Chief Executive Officer. The
Nominating and Compensation Committee reviews and approves annually the goals
and objectives relevant to compensation of the General Agent. The compensation
of Mr. Thomas reflects the evaluation of the Nominating and Compensation
Committee on his performance against the goals and objectives of protecting and
maintaining the assets of the Trust. Mr. Thomas' compensation consists of salary
and cash bonus.
The Nominating and Compensation Committee reviews and approves, as
appropriate, annually the compensation of the other executive officers and
reviews compensation of other employees generally.
The Nominating and Compensation Committee obtains recommendations
from the General Agent and reviews and approves, as appropriate, specific annual
individual awards for officers and the aggregate amount of annual awards under
any applicable arrangements, plans, policies and programs.
Maurice Meyer III
Joe R. Clark
John R. Norris III
REPORT OF THE AUDIT COMMITTEE
The Audit Committee relies on the expertise and knowledge of
management, independent accountants, internal audit and other employees and
advisors in carrying out its oversight responsibilities. The Trustees have the
ultimate duty and responsibility to manage or direct the management of the
business and affairs of the Trust. The Trust's independent auditor Lane, Gorman,
Trubitt, L.L.P. ("LGT") is responsible for performing an independent audit of
the consolidated financial statements and expressing an opinion on the
conformity of those financial statements with accounting principles generally
accepted in the United States. LGT reports directly to the Audit Committee, and
is accountable to the Audit Committee and the Trustees, for its reviews and
audits of financial statements and all other services.
During the 2005 fiscal year, the Audit Committee fulfilled its
duties and responsibilities generally as outlined in its charter. Generally, the
Audit Committee, among other actions:
o Met and reviewed the LGT's assessment of the Trust's accounting policies
and reviewed the Trust's compliance with the procedures of disclosure and
internal control;
o Reviewed and discussed with LGT the Trust's financial statements.
In this context, the Audit Committee reviewed the audited financial statements
for 2005 with LGT and recommended, and the Trustees approved, that the audited
financial statements for 2005 be included in the Annual Report on Form 10-K for
the fiscal year ended December 31, 2005.
Maurice Meyer III
Joe R. Clark
INDEPENDENT AUDITOR
The Audit Committee has retained LGT as the Trust's independent
auditor for the current fiscal year. The Audit Committee has established a
policy requiring approval by it of all fees for audit and non-audit services to
be provided by the Trust's independent registered public accountants, prior to
commencement of such services. Consideration and approval of fees generally
occurs at the Audit Committee's regularly scheduled meetings or, to the extent
that such fees may related to other matters to be considered at special
meetings, at those special meetings. All professional services rendered by LGT
during 2005 and 2004 were furnished at customary rates. A summary of the fees
which LGT billed the Trust for services provided in 2005 and 2004 is set forth
below:
(a) Audit Fees:
LGT billed the Trust approximately $58,900 in 2005 and $60,025 in
2004 in connection with its audits of the financial statements and internal
controls over financial reporting of the Trust in 2005 and 2004.
(b) Audit-Related Fees:
LGT did not bill the Trust any amount for audit-related services in
either 2005 or 2004 not included in "Audit Fees", above.
(c) Tax Fees:
LGT did not bill the Trust for any tax fees in either 2005 or 2004.
(d) Other Fees:
LGT did not bill the Trust any other fees in either 2005 or 2004.
None of the fees described above under the captions "Audit-Related
Fees," "Tax Fees" and "Other Fees" were approved by the Audit Committee pursuant
to the "de minimis" exception set forth in Rule 2-0 (c)(7)(i)(C) under SEC
Regulation S-X.
A representative of LGT, independent auditor for the Trust for
fiscal 2005 and the current fiscal year, will not be present at the Special
Meeting, and therefore will not have an opportunity to make a statement, and
will not be available to respond to appropriate questions.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficiary Owners:
The following table sets forth information as to all persons known
to the Trust to be the beneficial owner of more than 5% of the Trust's Sub-share
Certificates as of April 14, 2006. As of April 14, 2006, 2,155,975 Sub-share
Certificates were outstanding.
NUMBER OF
SECURITIES PERCENT
BENEFICIALLY OF
NAME AND ADDRESS OWNED TYPE OF SECURITIES CLASS
---------------- ----------- ------------------ -----
Morgan Stanley Capital Services Inc.(1) 173,900 Sub-share 8.1%
1585 Broadway Certificates
New York, NY 10036
Mercury Real Estate Advisors L.L.C.(2) 125,150 Sub-share 5.8%
100 Field Point Road Certificates
Greenwich, CT 06830
-----------------------
(1) The information set forth herein with respect to the securities
beneficially owned by Morgan Stanley Capital Services Inc. is based on a
Schedule 13G filed by Morgan Stanley Capital Services Inc. with the SEC on
February 15, 2006.
(2) The information set forth herein with respect to the securities
beneficially owned by Mercury Real Estate Advisors L.L.C. ("Mercury") is
based on a Schedule 13D/A filed by Mercury with the SEC on February 2,
2006, together with David R. Jarvis and Malcolm F. MacLean IV.
(b) Security Ownership of Management:
The following table sets forth information as to the Sub-share
Certificates beneficially owned directly or indirectly by all Trustees, naming
them, and by all Trustees and executive officers of the registrant, as a group,
as of April 14, 2006. As of April 14, 2006, 2,155,375 Sub-share Certificates
were outstanding.
PERCENT
NAME OF AMOUNT AND NATURE OF
TITLE AND CLASS BENEFICIAL OWNER OF OWNERSHIP CLASS
--------------- ---------------- ------------ -------
Sub-share
certificates: Maurice Meyer III 14,950(1) *
Sub-share
certificates: Joe R. Clark 500 *
Sub-share
certificates: John R. Norris III 200 *
Sub-share
certificates: Roy Thomas 100 *
Sub-share
certificates: David M. Peterson -- --
Sub-share
certificates: All Trustees and Officers as
a group 15,750 .73%
------------------------------
*Indicates ownership of less than 1% of the class.
(1) Does not include 2,300 Sub-shares owned by the wife of Mr. Meyer in which
Mr. Meyer disclaims any beneficial ownership.
VOTING PROCEDURES
(a) Tabulation of Votes:
The voting of proxies will be tabulated by a representative of The
Bank of New York, which has been appointed as the Company's independent
inspector of election. The inspector of election will be present at the meeting
in order to tabulate the voting of any proxies returned and ballots cast at that
time.
(b) Effect of Abstention and Broker Non-Votes:
Abstention and broker non-votes are each included in the
determination of the number of shares present and voting for the purpose of
determining whether a quorum is present, and each is tabulated separately. In
determining whether a proposal has been approved, abstentions are counted in
tabulations of the vote cast on proposals presented to shareholders and have the
effect of a vote "against" the proposals.
OTHER MATTERS
The Trustees do not intend to bring before the meeting any matter
other than the election of a successor Trustee, and they have no present
knowledge that any other matters will or may be brought before the meeting by
others. However, if any other matters properly come before the meeting, the
Trustees and the persons named in the attached proxy intend that such persons
shall vote the proxy in accordance with their judgment upon such matters.
By Order of the Trustees,
Roy Thomas,
Secretary
May 18, 2006
New York, New York
APPENDIX A
AUDIT COMMITTEE OF THE TRUSTEES
OF
TEXAS PACIFIC LAND TRUST
CHARTER
I. PURPOSE
The primary function of the Committee is to assist the Trustees of the
Trust in discharging and performing their duties and responsibilities with
respect to the financial affairs of the Trust, including reviewing: the
financial reports and other financial information provided by the Trust to any
governmental body or the public; the Trust's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Trustees have established; and the Trust's auditing, accounting and
financial reporting processes generally. Consistent with this function, the
Committee should encourage continuous improvement of, and should foster
adherence to, the Trust's policies, procedures and practices at all levels. The
Committee's primary duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Trust's financial reporting process and internal control
system, including:
>> The identification, assessment and management of
financial risks and uncertainties.
>> The integrity of financial statements and
financial disclosures.
>> The compliance with legal and regulatory
requirements.
>> The improvement of financial systems.
o Review and appraise the qualifications, independence and
performance of the Trust's independent accountants and any
internal audit function.
o Provide a full and open avenue of communication with and
among the independent accountants, management, counsel,
employees, the Committee and the Trustees.
The Committee has the right to exercise any and all power and
authority of the Trustees with respect to matters within the scope of this
Charter, subject to the ultimate power and authority of the Trustees. The
Trustees shall continue to have the ultimate duty and responsibility to manage
or direct the management of the business and affairs of the Trust.
The Committee has the authority to conduct any and all
investigations it deems necessary or appropriate, to contact directly the
independent accountants, and internal audit and other employees and advisors and
require them to provide any and all information and advice it deems necessary or
appropriate, and to retain independent legal, accounting or other advisors it
deems necessary or appropriate.
The Committee has the authority to set aside for payment, pay and
direct the payment of the independent accountants for their reviews and audits
of financial statements and all other services as well as such legal, accounting
and other advisors.
The independent accountants shall report directly to the Committee,
and shall be accountable to the Committee and the Trustees, for their reviews
and audits of financial statements and all other services.
II. COMPOSITION
The Committee shall be comprised of the Trustees. Each member of the
Committee shall be a trustee that qualifies as an "independent director" within
the meaning of the rules of the NYSE and the Sarbanes-Oxley Act of 2002 and
shall be free from any relationship that may interfere with the exercise of his
or her judgment independent from management.
A member of the Committee may not, other than in his or her capacity
as a member of the Committee, the Trustees or any other committee of the
Trustees, accept any consulting, advisory or other compensatory fee from the
Trust or be affiliated with the Trust.
Each member of the Committee shall serve until the earlier of his or
her termination as a member of the Committee by the Trustees, the election and
qualification of his or her successor as a member of the Committee or his or her
death, resignation or removal. Unless a Chair is elected by the Trustees, the
members of the Committee may designate a Chair by a majority vote.
III. MEETINGS
The Committee shall meet in regular sessions at least two times
annually, or more frequently as circumstances dictate. Committee members are
expected to attend meetings and to spend the time needed to properly discharge
their responsibilities.
The Committee shall meet at least once annually with management,
outside counsel and the independent accountants in separate executive sessions
to discuss any matters that the Committee or any of them believe should be
discussed privately. In addition, the Committee or the Chairman of the Trustees
should meet with the independent accountants and management quarterly to review
the Trust's financials.
A majority of the members of the Committee shall constitute a quorum
for the transaction of business. The act of a majority of the members present at
any meeting at which there is a quorum shall be the act of the Committee.
The Committee shall keep minutes of its meetings and other
proceedings. The Committee may participate in any meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other.
IV. PROCEDURES
The Committee shall determine its meeting schedule, the agenda for
each meeting, the information to be provided to it before or at each meeting and
all other matters relating to the conduct of its meetings and other activities.
The Chair of the Committee shall establish and distribute (or
request the Secretary to distribute) to each Committee member prior to each
meeting an agenda for the meeting. Each Committee member is free to raise at any
meeting subjects that are not on the agenda for that meeting.
Information that is important to understanding the business to be
conducted at a meeting should generally be distributed to the Committee members
as soon as practicable before the meeting, and Committee members should review
these materials before the meeting.
It is the sense of the Trustees that, subject to Section V below,
the activities and procedures of the Committee should remain flexible so that it
may appropriately respond to changing circumstances.
V. RESPONSIBILITIES AND DUTIES
Without limiting the scope of the preceding provisions of this
Charter, the Committee shall:
CORPORATE GOVERNANCE
1. Report on its meetings, proceedings and other activities at each meeting
of the Trustees (or periodically or whenever requested to do so).
2. Review and assess the adequacy of this Charter at such intervals as the
Committee or the Trustees determine. Submit suggested changes, if any, to
this Charter to the Trustees for approval.
3. Conduct an annual self-assessment to determine whether the Committee is
functioning effectively, including evaluating the Committee's
contributions to the Trust, with a specific emphasis on areas in which
such contributions could be improved.
4. Review, evaluate and, as appropriate, approve all transactions with
affiliates, related parties, trustees and executive officers.
5. Direct the establishment of procedures for the receipt and retention of,
and the response to, complaints received regarding accounting, internal
control or auditing matters.
6. Direct the establishment of procedures for the confidential and anonymous
submission of reports of actual or potential violations of the Code of
Conduct and Ethics or other Trust policies or procedures, including
submission by employees of concerns regarding questionable accounting
matters, and confidential anonymous submission of suggested changes to the
Code of Conduct and Ethics or other Trust policies or procedures.
7. Review and assess periodically the adequacy of the Trust's Code of Conduct
and Ethics, including codes relating to ethics, integrity, conflicts of
interest, confidentiality, public disclosure and insider trading. Adopt
appropriate changes.
8. Ensure that the Code of Conduct and Ethics has been distributed and that
employees have been educated about their responsibilities under the Code.
Identify persons who will have the responsibility for ongoing compliance
training for employees (and monitoring the training conducted by such
persons).
PUBLIC REPORTING
9. Cause this Charter to be included in the Form 10-K at least once every
three years in accordance with the rules of the SEC.
10. Prepare and review annually the report to certificate holders to be
included in each annual report on Form 10-K as required by the rules of
the SEC.
11. Review, prior to filing, all annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K to be filed with the
SEC. Discuss with management and the independent accountants, prior to
filing, the financial statements (including the notes thereto) and the
disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
12. Review, prior to public dissemination, all press releases related to
historical or prospective earnings or financial performance, including the
use of "pro forma" or "adjusted" information, as well as information
related thereto provided to analysts, ratings agencies, lenders (if any),
equityholders or others.
13. Obtain from the General Agent (chief executive officer) and Assistant
General Agent (chief financial officer) assurances that such persons are
meeting their obligations to the Committee, the independent accountants
and the public under certification requirements established by the SEC,
the NYSE and the Sarbanes-Oxley Act of 2002.
INDEPENDENT ACCOUNTANTS
14. Select, retain, evaluate and, as appropriate, terminate and replace the
independent accountants (and the Committee shall have the sole authority
to take any such action).
15. Obtain and review, at least once annually, a report by the independent
accountants describing (i) any material issues raised by the most recent
internal quality control review or peer review or by any inquiry or
investigation by any governmental or professional authority within the
preceding five years, in each case with respect to one or more independent
audits carried out by them, (ii) all material steps taken to deal with any
such issues and (iii) all relationships between them and the Trust.
16. Review annually the independence of the independent accountants by (i)
receiving from the independent accountants information delineating all
relationships between the independent accountants and the Trust in
accordance with ISB No. 1, (ii) discussing with the independent
accountants all disclosed relationships between the independent
accountants and the Trust and all other disclosed relationships that may
impact the objectivity and independence of the independent accountants and
(iii) discussing with management its evaluation of the independence of the
independent accountants.
17. Review and, as appropriate, approve, prior to commencement, all audit
services (including comfort letters in connection with securities
underwritings and tax services) and all non-audit services to be provided
by the independent accountants.
18. Review with the independent accountants annually all compensation to the
independent accountants for all audit and non-audit services.
19. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness and accuracy of the
Trust's financial statements.
20. Consider periodically evaluating whether and the extent to which to
undertake one or more of the following activities:
Obtaining and reviewing written reports issued with respect to the results
of inspections of the independent accountants conducted by the Public
Company Accounting Oversight Board.
Reviewing the experience and qualifications of the senior members of the
audit team of the independent accountants, and the extent to which
accountants other than the independent accountants are used (and the
reasons for such use).
Obtaining from and reviewing with the independent accountants a report on
the assessment made by management as to the effectiveness of the
internal control structure and procedures as required pursuant to
Section 404 of the Sarbanes-Oxley Act of 2002.
Obtaining from the independent accountants assurances that:
>> They comply with all auditing, quality control and
independence standards to be established by the Public
Company Accounting Oversight Board.
>> They will inform management concerning any information
coming to their attention indicating that an illegal act has
or may have occurred.
>> No person associated with the independent accountants and
engaged in providing any service to the Trust is under
suspension from being associated with a registered public
accounting firm pursuant to Section 105 of the
Sarbanes-Oxley Act of 2002.
>> The independent auditors have not performed and will not
perform any non-audit services prohibited by Section 10A(g)
of the Securities Exchange Act of 1934 (and have not and
will not violate the conflict of interest provisions set
forth in Section 10A(l) of the Securities Exchange Act of
1934).
>> The lead audit partner has been and will be rotated at least
once every five years in accordance with Section 10A(j) of
the Securities Exchange Act of 1934.
AUDITS AND ACCOUNTING
21. Review with the independent accountants annually the plan, scope, staffing
and timing of their audit.
22. After completion of the audit of the financial statements, review with
management and the independent accountants the audit report, the
management letter relating to the audit report, all significant
questions (resolved or unresolved) that arose and all significant
difficulties that were encountered during the audit, the disposition
of all audit adjustments identified by the independent accountants,
all significant financial reporting issues encountered and judgments
made during the course of the audit (including the effect of different
assumptions and estimates on the financial statements) and the
cooperation afforded or limitations (including restrictions on scope
or access), if any, imposed by management on the conduct of the audit.
23. Review with management and the independent accountants all reports
delivered by the independent accountants in accordance with Section 10A(k)
of the Securities Exchange Act of 1934 with respect to critical accounting
policies and practices used, alternative treatments of financial
information available under GAAP and other written communications
(including letters under SAS No. 50) between the independent accountants
and management, together with their ramifications and the preferred
treatment by the independent accountants.
24. Review all items that must be communicated to the independent accountants
in accordance with SAS No. 61.
25. Review with management and the independent accountants at least once
annually all correspondence with regulatory authorities and all employee
complaints or published reports that raise material issues regarding the
financial statements or accounting policies.
26. Review regularly with the independent accountants significant
disagreements between the independent accountants and management and
resolve or direct the resolution of all material disagreements between
management and the independent accountants regarding accounting and
financial reporting.
INTERNAL AUDITS
27. Consider periodically evaluating whether to:
Review the resources, plans, activities and staffing of any internal audit
function of the Trust, and all audits and reports prepared by any
internal audit function.
Review with management and the independent accountants the adequacy of
financial reporting and internal control systems, the scope and results
of any internal audit program and the cooperation afforded or
limitations, if any, imposed by management on the conduct of any
internal audit program.
LEGAL COMPLIANCE
28. Review, with the Trust's counsel, legal compliance matters including
insider trading policies, and any other legal matter that could have a
significant impact on the Trust's financial performance or condition.
29. Review with management and counsel the procedures for monitoring
compliance with laws and policies on business integrity, ethics and
conflicts of interest, and compliance with applicable laws.
OTHER
30. Review contingencies that could have a significant impact on financial
performance or condition.
31. In consultation with the independent accountants, review the integrity of
the Trust's financial reporting processes, both internal and external.
32. Consider periodically evaluating whether to:
Establish and review policies for hiring by the Trust of employees or
former employees of the independent accountants (and reports on
expenses of executive officers and trustees) to ensure independence;
Review auditing, internal control and financial reporting principles,
policies and practices, and presentation of financial statements;
Review the effect on auditing, internal control and financial reporting
principles, policies and practices of pronouncements and initiatives of
the Securities Exchange Commission, the Public Company Accounting
Oversight Board, other regulatory authorities and the accounting
profession;
Review the adequacy of auditing, accounting, financial reporting and
internal control resources;
Review with management financial planning policies and practices and
financial objectives;
Review with management and the independent accountants (a) market,
operational and financial risk assessment and management policies and
practices and (b) financial condition, liquidity and funding
requirements;
Review with management and the accountants, (a) adopted or proposed
changes in auditing, internal control and financial reporting
principles, policies and practices, and the impact on the financial
statements, (b) the extent to which recommended changes to or
improvements in auditing, accounting, financial reporting and internal
control systems have been implemented (which review should be conducted
at an appropriate time subsequent to implementation of changes or
improvements, as decided by the Committee) and (c) at least annually,
(i) all significant accounting estimates, (ii) all significant off
balance sheet financing arrangements and their effect on the financial
statements and (iii) all significant valuation allowances and
liability, restructuring and other reserves, and
VI. DISCLAIMER
Notwithstanding anything contained herein to the contrary, the
duties and responsibilities of the Committee and each of its members is one of
oversight and neither the Committee nor any of its members shall have any duty
or responsibility to:
o plan, conduct or provide resources for audits;
o determine that financial statements have been properly prepared or financial
disclosures are full and complete;
o guarantee or provide other assurance that there are no financial risks
or uncertainties or that such risks or uncertainties have been reduced
or eliminated;
o assure compliance with laws and regulations or the Trust's Code of Conduct
and Ethics; or
o act as an expert or provide guarantees, representations, warranties,
professional or other certifications or assurance with respect to, or
verify, any matter within the scope of this Charter.
VII. DISCLOSURE AS TO AVAILABILITY
The Trust will undertake in its Form 10-K to provide a copy of this
Charter to any person without charge on request (or will file this Charter as an
exhibit to the Form 10-K), and will otherwise comply with the disclosure, filing
and posting requirements relating to this Charter.
VIII. TRUST INSTRUMENT TO PREVAIL
This Charter is subject to the provisions of the Declaration of
Trust dated February 1, 1888 (the "TRUST INSTRUMENT"), and in the event of any
conflict between this Charter and the Trust Instrument, the provisions of the
Trust Instrument shall prevail.
APPENDIX B
NOMINATING, COMPENSATION AND GOVERNANCE COMMITTEE
OF THE TRUSTEES
OF
TEXAS PACIFIC LAND TRUST
CHARTER
I. PURPOSE AND POWER
The Committee has been established by the Trustees to assist the
Trustees in discharging and performing the duties and responsibilities of the
Trustees with respect to corporate governance, management compensation,
succession planning and employee benefits, including:
o The identification and recommendation to the Trustees of individuals
qualified to become or continue as Trustees, subject to the provisions
of the Declaration of Trust dated February 1, 1888 (the "TRUST
INSTRUMENT").
o The continuous improvement in corporate governance policies and
practices.
o The annual self-assessment of the performance of the Trustees.
o The assessment and compensation of the General Agent (chief executive
officer) and Assistant General Agent (chief financial officer).
o The assessment of compensation arrangements, plans, policies and
programs, and benefit and welfare plans and programs.
o The assessment of organizational systems and plans, including those
relating to management development and succession planning.
o The production of any compensation committee report on executive
compensation required by the Securities and Exchange Commission to be
included in the proxy statement or Form 10-K.
The Committee has the right to exercise any and all power and
authority of the Trustees with respect to matters within the scope of this
Charter, subject to the ultimate power and authority of the Trustees, subject to
the provisions of the Trust Instrument. The Trustees shall continue to have the
ultimate duty and responsibility to manage or direct the management of the
business and affairs of the Trust.
The Committee has the authority to conduct any and all
investigations it deems necessary or appropriate, to contact directly officers,
employees and advisors and require them to provide any and all information and
advice it deems necessary or appropriate, and to retain executive search, legal,
accounting, human resource or other advisors it deems necessary or appropriate.
The Committee has the authority to set aside for payment, pay
and direct the payment of such executive search, legal, accounting, human
resource and other advisors.
The advisors retained by the Committee shall report directly
to the Committee, and shall be accountable to the Committee and the Trustees,
for their services.
II. COMPOSITION
The Committee shall be comprised of the Trustees. Each member
of the Committee shall be a Trustee that qualifies as a "non-employee director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and
an "outside director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986. Each member of the Committee also shall be a Trustee that
qualifies as "independent" within the meaning of the rules of the New York Stock
Exchange.
Each member of the Committee shall serve until the earlier of
his or her termination as a member of the Committee by the Trustees, the
election of his or her successor as a member of the Committee or his or her
death, resignation or removal. Unless a Chair is elected by the Trustees, the
members of the Committee may designate a Chair by a majority vote.
III. MEETINGS
The Committee shall meet in regular sessions at least two
times annually and in special sessions as circumstances warrant. Committee
members are expected to attend meetings and to spend the time needed to properly
discharge their responsibilities.
A majority of the members of the Committee shall constitute a
quorum for the transaction of business. The act of a majority of the members
present at any meeting at which there is a quorum shall be the act of the
Committee.
The Committee shall keep minutes of its meetings and other
proceedings.
IV. PROCEDURES
The Committee shall determine its meeting schedule, the agenda
for each meeting, the information to be provided to it before or at each meeting
and all other matters relating to the conduct of its meetings and other
activities.
The Chair of the Committee shall establish and distribute (or
request the Secretary to distribute) to each Committee member prior to each
meeting an agenda for the meeting. Each Committee member is free to raise at any
meeting subjects that are not on the agenda for that meeting.
Information that is important to understanding the business to
be conducted at a meeting should generally be distributed to the Committee
members as soon as practicable before the meeting, and Committee members should
review these materials before the meeting.
It is the sense of the Trustees that, subject to Section V
below, the activities and procedures of the Committee should remain flexible so
that it may appropriately respond to changing circumstances.
V. PRIMARY ACTIVITIES
Without limiting the scope of its responsibilities, duties and
authority set forth above, the Committee shall:
GENERAL
1. Periodically review and assess the adequacy of this Charter, and submit
suggested changes to this Charter, if any, to the Trustees for approval.
2. Conduct a periodic self-assessment to determine whether the Committee is
functioning effectively, including evaluating the Committee's
contributions to the Trust, with a specific emphasis on areas in which
such contributions could be improved.
3. Report on its meetings, proceedings and other activities at each meeting
of the Trustees.
NOMINATIONS
4. When necessary to fill a vacancy, identify individuals who are
qualified and available to serve as Trustees, as applicable (including
whether such individuals are independent under the rules of the New
York Stock Exchange, the Securities and Exchange Commission and the
Sarbanes-Oxley Act of 2002, and deemed "non-employee directors" under
Rule 16b-3 under the Securities Exchange Act of 1934 and "outside
directors" under Section 162(m) of the Internal Revenue Code of 1986),
and recommend to the Trustees nominees for election as Trustees to
fill such vacancy on the Trustees, with the goal of submitting the
recommendation to the Trust's equityholders, all subject to the
provisions of the Trust Instrument.
5. Review candidates for nomination for election as Trustees.
6. Review periodically whether the existing Trustees are independent and
considered "non-employee directors" and "outside directors" within the
meanings specified in Item 4 above.
7. Select, retain, evaluate and, as appropriate, terminate and replace any
executive search firm with respect to the identification of candidates for
nomination for election as Trustees (and the Committee shall have the sole
authority to take any such actions).
8. Coordinate with management the planning for development and succession of
management.
COMPENSATION
9. Prepare any compensation committee report to equityholders on compensation
then required by the rules of the SEC to be included in the proxy
statement or Form 10-K.
10. Review and approve annually the goals and objectives relevant to
compensation of the General Agent (chief executive officer), evaluate his
or her performance in light of those goals and objectives and set his or
her compensation based on such evaluation (and the Committee shall have
the sole authority to determine the compensation of the General Agent
(chief executive officer) based on its evaluation of such performance in
light of such goals and objectives).
11. Review and approve, as appropriate, annually the compensation of the other
executive officers and review compensation of other employees generally,
it being understood that the Trustees' compensation is fixed by the Trust
Instrument.
12. Review and approve, as appropriate, the bonus and incentive compensation
arrangements, plans, policies and programs, as applicable.
13. Obtain recommendations from the General Agent and review and approve, as
appropriate, specific annual individual awards for officers and the
aggregate amount of annual awards under such arrangements, plans, policies
and programs.
14. Review periodically and approve, as appropriate, policies on management
perquisites. Where necessary, review management's determination of whether
particular perquisites are business-related or personal. Advise the Audit
Committee as to such policies.
15. Review compliance with prohibitions on personal loans to Trustees and
executive officers.
16. Review any compensation or other benefit received by any Trustee or
executive officer from any affiliated entities to confirm compliance with
the Trust's Code of Conduct and Ethics and applicable law.
17. Select, retain, evaluate and, as appropriate, terminate and replace any
executive search firm or compensation consulting firm with respect to the
selection and compensation of the General Agent (chief executive officer);
and the Committee shall have the sole authority to take any such action.
18. Administer all such programs as may be designated by the Trustees, subject
to any limitations prescribed by the Trustees.
19. Review compliance with laws governing retirement and benefit plans.
20. Review creation, modification, termination and funding of compensation,
retirement, benefit and welfare arrangements, plans, policies and programs
for management and other employees generally.
21. Search for, select and review annually the performance of investment
managers for qualified and non-qualified retirement and benefit plans.
22. Review recommendations relating to actuarial assumptions applicable to and
funding for retirement and benefit plans, as applicable.
23. Review periodically financial and investment policies and objectives of
qualified and non-qualified retirement and benefit plans.
24. Foster continuous improvement in those systems, plans, arrangements,
policies and practices at all levels within the enterprise to attract and
retain qualified employees, align interests of equityholders and
employees, incent employees to improve performance and reward employees
for improvements in performance.
25. Provide for open communication among management and the Trustees.
26. Conduct periodic reviews of the process of establishing salaries and wages
of the Trust's employees.
27. Review periodically employee relations policies generally.
28. Review periodically equal opportunity employment and sexual harassment
prevention policies. Monitor compliance with such policies and applicable
laws.
GOVERNANCE
29. Review periodically the quality, sufficiency and timeliness of information
furnished by management to the Trustees in connection with meetings of the
Trustees and its committees and other activities of the Trustees.
30. Review periodically policies and procedures relating to document
retention.
31. Review periodically "directors and officers" insurance policies (including
so called "Side-A" coverage for Trustees and officers individually) and
indemnification agreements, if any. Direct changes as appropriate.
32. Except to the extent that such advancement and indemnification is required
by law, by the Declaration of Trust or by contract, review and, as
appropriate, determine whether costs and expenses (including attorneys'
fees) should be advanced and indemnification should be provided to
Trustees and senior management in connection with claims and litigation
arising out of their activities on behalf of the Trust.
VI. DISCLOSURE AS TO AVAILABILITY OF CHARTER
The Trust will undertake in its Form 10-K to provide a copy of
this Charter to any person without charge on request (or will file this Charter
as an exhibit to the Form 10-K), and will otherwise comply with the disclosure,
filing and posting requirements relating to this Charter.
VII. TRUST INSTRUMENT TO PREVAIL
This Charter is subject to the provisions of the Trust
Instrument, and in the event of any conflict between this Charter and the Trust
Instrument, the provisions of the Trust Instrument shall prevail.
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES
TEXAS PACIFIC LAND TRUST
PROXY FOR SPECIAL MEETING OF HOLDERS OF SUB-SHARE CERTIFICATES OF
PROPRIETARY INTEREST ("SUB-SHARE CERTIFICATES") TO BE HELD JUNE 14, 2006
KNOW ALL MEN BY THESE PRESENTS, that the undersigned does hereby
make, constitute and appoint JOHN R. NORRIS III, MAURICE MEYER, III and DAVID E.
BARRY, or any of them (with full power of substitution) his true and lawful
attorneys for him and in his name, place and stead to vote as his proxy at the
Special Meeting of the Holders of Sub-share Certificates issued under a certain
Declaration of Trust made by Charles J. Canda, Simeon J. Drake and William
Strauss, dated February 1, 1888, to be held at Hotel Crescent Court, 400
Crescent Court, Salon Room, Dallas, Texas 75201, on June 14, 2006, at 10:00 AM,
Dallas time or any adjournment or adjournments thereof, (1) for the election of
Mr. James K. Norwood as a successor Trustee in the place and stead of Mr. Joe R.
Clark and (2) upon such other matters as may properly come before the meeting;
according to the number of votes that the undersigned would be entitled to vote
if personally present, hereby giving and granting unto said attorneys, or any
one or more of them, or his or their substitute or substitutes, full power and
authority to do any and all acts and things necessary or proper in the premises,
as fully and effectively as the undersigned might or could do if personally
present.
Please Date and Sign on Reverse Side and Mail in Enclosed Envelope
TEXAS PACIFIC LAND TRUST
P.O. BOX 11411
NEW YORK, N.Y. 10203-0411
Please mark, sign, date and return this proxy card promptly using the enclosed
envelope
[x] Votes must be indicated (x) in Black or Blue ink.
The undersigned hereby confers upon said attorneys and proxies, or any one or
more of them, or his or their substitute or substitutes, discretionary authority
to vote with respect to the election of the following nominee as a successor
Trustee.
JAMES K. NORWOOD FOR [ ] WITHHOLD AUTHORITY [ ]
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Holders of Sub-share Certificates of Proprietary Interest dated May 18, 2006 and
the proxy statement furnished therewith.
Dated:
-----------------------, 2006
-----------------------------------------
IMPORTANT: Please sign exactly as your
name or names appear hereon, and when
signing as attorney, executor,
administrator, trustee or guardian, give
your full title as such. If the signatory
is a corporation, sign the full corporate
name by duly authorized officer.