<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
SCHEDULE 14A INFORMATION
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Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by 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 Rules
14a-6(e)(2) and 14c-5(d)(2))
[X] Definitive Proxy/Information Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
CORE LABORATORIES N.V.
(Name of Registrant as Specified in its Charter)
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.
[ ] 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.
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<PAGE> 2
CORE LABORATORIES N.V.
HERENGRACHT 424
1017 BZ AMSTERDAM
THE NETHERLANDS
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 2000
---------------------
To The Shareholders:
The 2000 Annual Meeting of the Shareholders of Core Laboratories N.V. (the
"Company"), a limited liability company organized under the laws of The
Netherlands, will be held at the law offices of Nauta Dutilh, Weena 750, 3014 DA
Rotterdam, The Netherlands, on Thursday, May 25, 2000 at 10:00 a.m., local time,
for the following purposes:
1. To elect ten members to the Board of Supervisory Directors,
consisting of four Class I Supervisory Directors, three Class II
Supervisory Directors and three Class III Supervisory Directors, to serve
until the annual meeting of shareholders in 2003, 2002 and 2001,
respectively, and until their successors shall have been duly elected and
qualified;
2. To confirm and adopt the Dutch Statutory Annual Accounts of the
Company for the fiscal year ended December 31, 1999;
3. To approve the extension of the authority of the Management Board
of the Company to repurchase up to 10% of the outstanding share capital of
the Company until November 24, 2001;
4. To approve the extension of the authority of the Supervisory Board
to issue and/or to grant rights (including options to purchase) on common
and/or preferred shares of the Company until May 24, 2005;
5. To approve the extension of the authority of the Supervisory Board
to limit or exclude the preemptive rights of the holders of the common
shares of the Company until May 24, 2005;
6. To amend the Company's 1995 Long-Term Incentive Plan to increase
the number of common shares available for issuance under the plan by an
aggregate of 2,500,000 shares;
7. To amend the Company's 1995 Nonemployee Director Stock Option Plan
to increase the number of common shares available for issuance under the
plan by an aggregate of 500,000 shares;
8. To ratify and approve the appointment of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending
December 31, 2000; and
9. To transact such other business as may properly come before the
Annual Meeting or any adjournment(s) thereof.
Copies of the Annual Accounts, the report of the Management Board and the
list of nominees for the Supervisory Board are open for inspection at the
offices of the Company, located at Herengracht 424, 1017 BZ Amsterdam, The
Netherlands, Attention: Mr. Jacobus Schouten, by registered shareholders and
other persons entitled to attend meetings of shareholders of the Company. Such
copies will be open for inspection from the date hereof until the close of the
Annual Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
REGARDLESS OF WHETHER YOU PLAN TO ATTEND. THEREFORE, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY PROMPTLY. IF YOU ARE PRESENT AT THE ANNUAL MEETING AND
WISH TO DO SO, YOU MAY REVOKE THE PROXY AND VOTE IN PERSON.
By Order of the Board of Supervisory
Directors,
/s/ JACOBUS SCHOUTEN
Jacobus Schouten
Supervisory Director
April 18, 2000
Amsterdam, The Netherlands
<PAGE> 3
CORE LABORATORIES N.V.
HERENGRACHT 424
1017 BZ AMSTERDAM
THE NETHERLANDS
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PROXY STATEMENT
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SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is being solicited by and on behalf of the Board of
Supervisory Directors (the "Supervisory Board") of Core Laboratories N.V. (the
"Company") for use at the 2000 Annual Meeting of the Shareholders of the Company
(the "Annual Meeting") to be held at the law office of Nauta Dutilh, Weena 750,
3014 DA Rotterdam, The Netherlands, on Thursday, May 25, 2000 at 10:00 a.m.,
local time. If the accompanying proxy is properly executed and returned, the
shares it represents will be voted at the Annual Meeting in accordance with the
directions noted thereon, or, if no directions are indicated, it will be voted
in favor of the proposals described in this Proxy Statement. Any shareholder
giving a proxy has the power to revoke it by oral or written notice to the
Secretary of the Company at any time before it is voted.
The solicitation of proxies by the Supervisory Board will be conducted by
mail. In addition, certain members of the Supervisory Board (each, a
"Supervisory Director"), officers and regular employees of the Company may
solicit proxies in person or by facsimile, telex or telephone. The Company will
bear the cost of preparing and mailing proxy materials as well as the cost of
soliciting proxies. The Company will reimburse banks, brokerage firms,
custodians, nominees and fiduciaries for their expenses in sending proxy
materials to the beneficial owners of the common shares, par value NLG .03 per
share, of the Company (the "Common Shares").
At the close of business on March 20, 2000, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, there were 30,515,616 Common Shares outstanding, each of which is
entitled to one vote. The class of Common Shares is the only class of capital
stock of the Company outstanding and entitled to notice of and to vote at the
Annual Meeting. The presence, in person or by proxy, of at least a majority of
the outstanding Common Shares is required for a quorum. Common Shares abstaining
from voting will have the effect of a vote against a proposal. Broker non-votes
will not be counted to determine the shareholders entitled to vote on a
proposal, and will not affect the outcome of the vote on such matter.
A copy of the Company's Annual Report on Form 10-K, including the financial
statements, schedules and exhibits thereto, may be obtained without charge by
written request to John D. Denson, Secretary, in care of Core Laboratories,
Inc., 5295 Hollister Road, Houston, Texas 77040.
This Proxy Statement and the accompanying proxy were first mailed to
shareholders on or about April 18, 2000.
ITEM 1.
ELECTION OF SUPERVISORY DIRECTORS
The articles of association of the Company provide for one or more
Supervisory Directors. The Supervisory Directors are proposed by the Supervisory
Board and elected at each annual meeting of shareholders by the affirmative vote
of the holders of a majority of the Common Shares present in person or by proxy.
The shareholders may override the proposal of the Supervisory Board by a vote of
two-thirds of the votes cast at the meeting if more than one-half of the
outstanding share capital is present or represented. The Supervisory Board is
divided into Classes I, II and III, the terms of office of which are scheduled
to expire on the dates of the annual meeting of shareholders in 2003, 2002 and
2001, respectively.
<PAGE> 4
During 1999, the Supervisory Board consisted of eight directors. This year,
one of the Supervisory Directors, Mr. James A. Read, is not standing for
reelection and the Supervisory Board is proposing three new independent
Supervisory Directors for election to the Supervisory Board. Accordingly, the
Supervisory Board will consist of ten Supervisory Directors upon their election
at the Annual Meeting. Four of the nominees (David M. Demshur, Rene R. Joyce,
Timothy J. Probert and Jacobus Schouten) will be elected as Class I Supervisory
Directors for a term expiring 2003, three of the nominees (Bob G. Agnew, D. John
Ogren and Joseph R. Perna) will be elected as Class II Supervisory Directors for
a term expiring 2002 and three of the nominees (Richard L. Bergmark, Alexander
Vriesendorp and Stephen D. Weinroth) will be elected as Class III Supervisory
Directors for a term expiring 2001. At each future annual meeting of
shareholders, the successors to the class of Supervisory Directors whose terms
shall expire that year shall be elected to hold office for a term of three years
and until their respective successors shall have been duly elected and
qualified. All of the nominees for Supervisory Directors except Mr. Joyce, Mr.
Ogren and Mr. Vriesendorp are presently members of the Supervisory Board.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted for the election of the nominees listed below. If
at the time of or prior to the Annual Meeting any of the nominees should be
unable or decline to serve, the discretionary authority provided in the proxy
may be used to vote for a substitute or substitutes designated by the
Supervisory Board. The Supervisory Board has no reason to believe that any
substitute nominee or nominees will be required. No proxy will be voted for a
greater number of persons than the number of nominees named herein.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE NOMINEES
FOR SUPERVISORY DIRECTOR AS SET FORTH ABOVE, AND PROXIES EXECUTED AND RETURNED
WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
The following table sets forth the names, ages and titles of the persons
who have been nominated for election as Supervisory Directors:
CLASS I SUPERVISORY DIRECTORS
(TERM EXPIRES 2003)
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
David M Demshur................... 45 President, Chief Executive Officer
and Supervisory Director
Rene R. Joyce..................... 52 Supervisory Director
Timothy J. Probert................ 48 Supervisory Director
Jacobus Schouten.................. 45 Supervisory Director
</TABLE>
CLASS II SUPERVISORY DIRECTORS
(TERM EXPIRES 2002)
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Bob G. Agnew...................... 69 Supervisory Director
D. John Ogren..................... 56 Supervisory Director
Joseph R. Perna................... 56 Supervisory Director
</TABLE>
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<PAGE> 5
CLASS III SUPERVISORY DIRECTORS
(TERM EXPIRES 2001)
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Richard L. Bergmark............... 46 Executive Vice President, Treasurer
and Supervisory Director
Alexander Vriesendorp............. 47 Supervisory Director
Stephen D. Weinroth............... 61 Chairman of the Supervisory Board
and Supervisory Director
</TABLE>
Set forth below is a brief description of the business experience and
length of service of the Supervisory Directors.
Bob G. Agnew, until his retirement in 1994, was Manager of Drilling for
International Operations for Exxon Company International (a division of Exxon
Corporation) and a member of the Production Advisory Committee of Exxon
Production Research Company. Mr. Agnew is a member of the Society of Petroleum
Engineers and has served on its Drilling Technical Committee. He has served as a
Supervisory Director since 1995.
Richard L. Bergmark joined Western Atlas International, Inc. ("Western
Atlas") as Treasurer in 1987. In 1991, he became the Area Manager for Finance
and Administration for Europe, Africa and the Middle East operations of Western
Geophysical. From 1994 until 1999, he served as Chief Financial Officer of the
Company and in 1999 he was appointed Executive Vice President. Mr. Bergmark
presently serves as Executive Vice President, Treasurer and a Supervisory
Director of the Company. He has served as a Supervisory Director since 1995.
David M. Demshur joined the Company in 1979 and has held various operating
positions since that date, including Manager of Geological Sciences, Vice
President of Europe, Africa and the Middle East in 1989, Senior Vice President
of Petroleum Services in 1991 and President in 1994. Mr. Demshur presently
serves as President, Chief Executive Officer and a Supervisory Director of the
Company. He has served as a Supervisory Director since 1994. Mr. Demshur is a
member of the Society of Petroleum Engineers, the American Association of
Petroleum Geologists, Petroleum Exploration Society of Great Britain and the
Society of Core Analysts Section of the Society of Professional Well Loggers
Association.
Rene R. Joyce served as President of Energy Services of Coral Energy, LLC
from its acquisition by Shell Oil Company in 1998 until his retirement at the
end of 1999. From 1980 until 1998, Mr. Joyce served as President of the
operating companies of Tejas Gas Corporation, Coral's predecessor, and a New
York Stock Exchange ("NYSE") listed company. Mr. Joyce is a member of the
Louisiana State Bar Association and recently served on the Boards of the
Southern Gas Association and Shell CO2 Company Ltd. He is also a member of other
industry associations.
D. John Ogren served as the President of Production Operators, Inc. from
1994 until 1999. Production Operators was listed on the Nasdaq Stock Market
prior to its acquisition by Camco Int. in 1997 and Schlumberger's acquisition of
Camco Int. in 1998. From 1992 until 1994, Mr. Ogren served as Senior Vice
President of Conoco Inc. Mr. Ogren is currently a director of Visual
Intelligence Systems, Inc. and an Advisory Director of Intrepid Energy (U.K.)
Ltd. He is a member of the Society of Petroleum Engineers and is a registered
professional engineer.
Joseph R. Perna joined the Company as General Manager in 1985. In 1991, he
was promoted to Senior Vice President, with responsibility for certain
laboratory services operations and the Technology Products Division, a position
he held until his retirement from the Company on March 31, 1998. Mr. Perna has
served as a Supervisory Director since 1995.
Timothy J. Probert has served as the President of Input/Output, Inc. since
March 2000. From September 1995 until December 1999, Mr. Probert served as
President of Baker Hughes Inteq (a business unit of Baker Hughes Inc., a
diversified oil service company ("Baker Hughes") and Vice President of Baker
3
<PAGE> 6
Hughes from March 1994 until December 1999. He joined Baker Hughes in 1972,
where he has held various management positions, including Vice President of
Drilling and Evaluation Technology for Baker Hughes Inteq, President of Eastman
Teleco, President of Milpark Drilling Fluids and Vice President of Marketing for
Baker Sand Control. Mr. Probert has served as a Supervisory Director since 1995.
Jacobus Schouten has been an executive officer of First Britannia since
1989. Mr. Schouten has served as a Supervisory Director of the Company since
1994, and he is a member of the board of directors of various European
companies, including CB Holdings SA.
Alexander Vriesendorp has been a principal since 1996 of Shamrock Partners
B.V. which serves as the manager for the Vreedenlust venture capital funds.
Since 1998, Mr. Vriesendorp has served as Chief Executive Officer of RMI Holland
B.V. in The Netherlands. From 1991 until 1995, he served as Chief Executive
Officer of the Nienhuis Group in The Netherlands. Mr. Vriesendorp serves on the
Supervisory Boards of various European companies. He is also a member of the
board of the Leiden University Fund.
Stephen D. Weinroth is a managing partner of Andersen, Weinroth & Co.,
L.P., an investment firm, and a managing director of First Britannia Mezzanine
N.V. ("First Britannia"). Mr. Weinroth has been a Supervisory Director of the
Company since 1994, the Chairman of the Supervisory Board since 1995 and is a
Director of Hovnanian Enterprises, Inc., a publicly held home builder and The
Central Asian-American Enterprise Fund, an instrumentality of the U.S.
Government funded by the Agency for International Development. He is also a
Director of Elig Media, a European internet content provider.
EXECUTIVE OFFICERS
The executive officers of the Company currently are David M. Demshur, Monty
L. Davis, Richard L. Bergmark, John D. Denson and Randall D. Keys. Biographical
information regarding Messrs. Demshur and Bergmark is set forth above. The
following biography describes the business experience of the remaining executive
officers. The executive officers are not Managing Directors of the Company for
purposes of Dutch law.
Monty L. Davis, who is 45 years of age, joined Western Atlas in 1977
holding various management positions including Atlas Wireline Division Financial
Controller for Europe, Africa and the Middle East, Core Laboratories N.V.
Division Vice President of Finance, and Atlas Wireline Division Vice President
of Finance and Administration. In 1993, Mr. Davis joined Bovar Inc. of Calgary,
Canada, as Chief Financial Officer, then Chief Operating Officer, and in 1995
President and Chief Executive Officer. Mr. Davis joined the Company as Senior
Vice President in 1998, and subsequently was promoted to Chief Operating
Officer.
John D. Denson joined Western Atlas as Division Counsel in 1992, with
responsibility for the Core Laboratories division. Mr. Denson, who is 42 years
of age, presently serves as Vice President, General Counsel and Secretary of the
Company. Mr. Denson is a member of the State Bar of Texas.
Randall D. Keys, who is 40 years of age, joined the Company as Chief
Financial Officer in July 1999, upon its acquisition of Coherence Technology
Company, Inc., where he had served as Chief Financial Officer since 1998. During
1998, Mr. Keys served as Chief Financial Officer of Consolidated Graphics, Inc.,
a NYSE-listed printing company. From 1997 to 1998, Mr. Keys was Chief Financial
Officer of 3DX Technologies, Inc. a NASDAQ-listed seismic technology company and
from 1994 to 1997 Mr. Keys was Treasurer for Norcen Explorer, Inc., a
Canadian-based exploration and production company. Mr. Keys is a certified
public accountant.
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information, as of December 31, 1999,
with respect to the Common Shares beneficially owned by (a) each person known by
the Company to own beneficially five percent or more of the Common Shares, (b)
each Supervisory Director and nominee for Supervisory Director, (c) each of the
4
<PAGE> 7
executive officers and (d) all Supervisory Directors, nominees for Supervisory
Director and executive officers as a group.
<TABLE>
<CAPTION>
COMMON SHARES OF PERCENTAGE OF
CORE LABORATORIES N.V. COMMON SHARES
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED OUTSTANDING
- --------------------------- ---------------------- -------------
<S> <C> <C>
First Britannia Mezzanine N.V.(2).......................... 4,202,534 13.8%
Lord, Abbett & Co.(3)...................................... 2,190,520 7.2%
Franklin Resource, Inc.(4)................................. 1,726,800 5.7%
Stephen D. Weinroth**(5)................................... 441,500 1.5%
David M. Demshur**......................................... 319,113 1.1%
Richard L. Bergmark**...................................... 197,219 *
Joseph R. Perna**.......................................... 116,744 *
John D. Denson**........................................... 54,909 *
Timothy J. Probert**....................................... 25,000 *
Bob G. Agnew**............................................. 24,600 *
Rene R. Joyce.............................................. 20,000 *
Monty L. Davis**........................................... 19,012 *
Randall D. Keys**.......................................... 1,234 *
D. John Ogren.............................................. 1,000 *
Jacobus Schouten........................................... -- *
Alexander Vriesendorp...................................... -- *
All Supervisory Directors, nominees for Supervisory
Director and executive officers as a group............... 1,220,406 4.0%
</TABLE>
- ---------------
* Represents less than 1%.
** Includes the following shares which may be acquired within 60 days through
the exercise of stock options: Mr. Weinroth, 44,000; Mr. Demshur, 88,750;
Mr. Bergmark, 102,000; Mr. Perna, 10,000; Mr. Denson, 33,000; Mr. Probert,
24,000; Mr. Agnew, 24,000; Mr. Davis, 15,000; Mr. Keys, 718; Total, 341,468.
(1) Unless otherwise indicated, each person has sole voting power and investment
power with respect to the Common Shares listed.
(2) The business address of First Britannia is de Ruyterkade 62, Curacao,
Netherlands Antilles.
(3) As reported on Schedule 13G dated February 2, 2000. The business address of
Lord, Abbett & Co. is 90 Hudson Street, Jersey City, NJ 07302.
(4) As reported on the Schedule 13G/A dated January 20, 2000, the shares
reported by Franklin Resource, Inc. ("Franklin Resource") are beneficially
owned by one or more open or closed-end investment companies or other
managed accounts which are advised by direct or indirect investment advisory
subsidiaries of Franklin Resource. Such advisory contracts grant to the
advisory subsidiaries all investment and/or voting power over the shares.
Charles B. Johnson and Rupert H. Johnson, Jr. (the "Principal Shareholders")
each own in excess of 10% of the outstanding common stock of Franklin
Resource and are the principal shareholders of Franklin Resource. Franklin
Resource and the Principal Shareholders may be deemed to be, for purposes of
Rule 13d-3 under the 1934 Act, the beneficial owner of securities held by
persons and entities advised by Franklin Resource subsidiaries. Franklin
Resource, the Principal Shareholders and each of the advisory subsidiaries
disclaim economic interest or beneficial ownership in any of the shares. The
business address of Franklin Resource is 777 Mariners Island Blvd, San
Mateo, CA 94404.
(5) Mr. Weinroth is a Managing Director of First Britannia, and the numbers
above do not reflect any Common Shares owned by First Britannia.
5
<PAGE> 8
COMMITTEES OF THE SUPERVISORY BOARD
The Supervisory Board has two standing committees, the identities,
memberships and functions of which are described below.
Audit Committee. The members of the Audit Committee of the Supervisory
Board are Messrs. Agnew and Weinroth. The Audit Committee's functions include
making recommendations concerning the engagement of independent accountants,
reviewing with the independent accountants the plan and results of the auditing
engagement, approving professional services provided by the independent
accountants and reviewing the adequacy of the Company's internal accounting
controls.
Compensation Committee. The members of the Compensation Committee of the
Supervisory Board (the "Compensation Committee") are Messrs. Perna, Probert and
Weinroth. The Compensation Committee's functions include a general review of the
Company's compensation and benefit plans to ensure that they are properly
designed to meet corporate objectives. The Compensation Committee reviews the
Chief Executive Officer's recommendations on (a) compensation of the senior
executive officers of the Company, (b) granting of awards under the Company's
stock option and other benefit plans and (c) adopting and changing major
compensation policies and practices of the Company. In addition to reviewing the
compensation for the Chief Executive Officer, the Compensation Committee reports
its recommendations to the whole Supervisory Board for approval. The
Compensation Committee also oversees the Company's 1995 Long-Term Incentive
Plan, as amended (the "Incentive Plan") and the 1995 Nonemployee Directors Stock
Option Plan, as amended (the "Nonemployee Director Plan").
INFORMATION REGARDING MEETINGS
The Supervisory Board held four meetings in 1999, the Audit Committee held
two meetings in 1999 and the Compensation Committee held two meetings in 1999.
Each Supervisory Director attended at least 75% of the meetings of the
Supervisory Board and of the committees (if any) on which such person serves,
with the exception of Mr. Read, who attended no meetings.
DIRECTOR COMPENSATION
Each Supervisory Director who is not a full-time employee of the Company is
paid (a) an annual retainer of $24,000, payable semiannually in arrears, (b)
$1,000 per meeting of the Supervisory Board at which such individual is present
in person, (c) $750 per meeting of any committee thereof at which such
individual is present in person, (d) an additional $500 per meeting for each
committee meeting for which the individual is chairperson and (e) reimbursement
for all out of pocket expenses incurred in attending any meeting of the
Supervisory Board or any committee thereof. Supervisory Directors who are
full-time employees of the Company receive no compensation for serving as
Supervisory Directors.
The Nonemployee Director Plan provides for the issuance of up to 200,000
Common Shares to eligible Supervisory Directors of the Company. As of March 16,
2000, options exercisable for substantially all the approved amount of 200,000
Common Shares had been issued or awarded pursuant to the Nonemployee Director
Plan since 1995. If the amendment to the Nonemployee Director Plan proposed in
Item 7 is approved by the requisite number of shareholders, an additional
500,000 Common Shares will be available for issuance to eligible Supervisory
Directors. Under the Nonemployee Director Plan, each eligible director is
generally granted an option to acquire 1,000 Common Shares on the date such
individual first becomes an eligible director. In addition, an option to acquire
10,000 Common Shares will be granted yearly to each nonemployee Supervisory
Director and an option to acquire 20,000 Common Shares will be granted to the
Chairman of the Supervisory Board on the first date in the calendar year set by
the Supervisory Board for the issuance of stock options to more than 10
employees under the Company's 1995 Long-Term Incentive Plan. The options will be
exercisable for a period of up to ten years and will vest one year following the
date of grant. The exercise price of options granted under the Nonemployee
Director Plan equals the market price of the Common Shares on the date of grant.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table summarizes, with respect to the Company's Chief
Executive Officer and each of the four other most highly compensated executive
officers whose salary and bonus compensation from the Company exceeded $100,000
in 1999 (collectively, the "Named Executive Officers"), certain information
relating to the compensation earned for services rendered in all capacities
during fiscal years 1997 through 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
SECURITIES
ANNUAL COMPENSATION(1) UNDERLYING
FISCAL ----------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (NUMBER) COMPENSATION(2)
- --------------------------- ------ --------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
David M. Demshur................... 1999 $400,000 $ 65,000 80,000 $16,150
President and 1998 317,539 230,000 35,000 21,583
Chief Executive Officer 1997 246,529 252,800 55,000 16,431
Richard L. Bergmark................ 1999 $222,019 $ 30,000 40,000 $16,150
Executive Vice President and 1998 196,846 94,886 20,000 20,874
Treasurer 1997 171,019 130,300 96,000 15,428
Monty L. Davis..................... 1999 $214,039 $ 45,000 40,000 $18,317
Chief Operating Officer and 1998 145,730 90,573 30,000 17,592
Senior Vice President
John D. Denson..................... 1999 $184,039 $ 25,000 25,000 $17,632
Vice President, General Counsel 1998 156,692 51,750 10,000 21,876
and Secretary 1997 128,026 64,600 16,000 15,418
Randall D. Keys.................... 1999 $128,385 $ 20,000 10,000 $ 6,948
Chief Financial Officer(3) 1998 12,769 -- 2,875 --
</TABLE>
- ---------------
(1) During the years ending December 31, 1997, 1998 and 1999, perquisites for
each individual named in the Summary Compensation Table aggregated less than
10% of the total annual salary and bonus reported for such individual in the
Summary Compensation Table. Accordingly, no such amounts are included in the
Summary Compensation Table.
(2) Consists of matching contributions and contributions by the Company through
its retirement plans, amounts paid under certain insurance plans and a
transportation allowance.
(3) Includes amounts paid by Coherence Technology Company, Inc. ("Coherence")
which was acquired by the Company in July 1999. Mr. Keys joined Coherence in
November 1998.
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<PAGE> 10
STOCK OPTION GRANTS
The following table sets forth certain information with respect to stock
option grants made to the Named Executive Officers during 1999 under the
Incentive Plan.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------- AT ASSUMED ANNUAL RATE
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OF TERM(1)
OPTIONS EMPLOYEES BASE PRICE ---------------------------
NAME GRANTED IN 1999 ($/SH) EXPIRATION DATE 5% 10%
- ---- ---------- ---------- ----------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David M. Demshur......... 80,000 12.1 13.0625 April 7, 2009 1,702,195 2,710,461
Richard L. Bergmark...... 40,000 6.0 13.0625 April 7, 2009 851,097 1,355,230
Monty L. Davis........... 40,000 6.0 13.0625 April 7, 2009 851,097 1,355,230
John D. Denson........... 25,000 3.8 13.0625 April 7, 2009 531,936 847,019
Randall D. Keys.......... 10,000 1.5 14.0000 July 1, 2009 228,045 363,124
</TABLE>
- ---------------
(1) The dollar amounts under these columns represent the potential realizable
value of each grant of options assuming that the market price of Common
Shares appreciates in value from the date of grant at the 5% and 10% annual
rates prescribed by the SEC and therefore is not intended to forecast
possible future appreciation, if any, of the price of Common Shares.
1999 OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth for the Named Executive Officers in the
Summary Compensation Table above information regarding options held by them at
December 31, 1999.
<TABLE>
<CAPTION>
VALUE OF SECURITIES
SECURITIES UNDERLYING UNDERLYING UNEXERCISED
SHARES UNEXERCISED OPTIONS HELD AT OPTIONS HELD AT
ACQUIRED ON DECEMBER 31, 1999 DECEMBER 31, 1999(1)
EXERCISE VALUE --------------------------- ---------------------------
NAME OF OPTION REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David M. Demshur.......... -- -- 66,250 133,750 $743,571 $806,479
Richard L. Bergmark....... -- -- 73,000 103,00 834,737 843,807
Monty L. Davis............ -- -- 7,500 62,500 11,018 304,312
John D. Denson............ -- -- 26,500 40,500 316,928 272,307
Randall D. Keys........... -- -- 718 12,157 -- 58,440
</TABLE>
- ---------------
(1) Computed based on the difference between aggregate fair market value and
aggregate exercise price. The fair market value of the Common Shares on
December 31, 1999 was based on the average of the high and low sales prices
on the NYSE on such date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Supervisory Directors, executive officers and
persons who own more than ten percent of the Common Shares of the Company to
file initial reports of ownership and reports of changes in ownership (Forms 3,
4, and 5) of Common Shares with the SEC and the NYSE. Supervisory Directors,
executive officers and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all such forms that they file.
To the Company's knowledge based solely on its review of the copies of such
reports received by it and on written representations by certain reporting
persons that no reports on Form 5 were required, the Company believes that
during the fiscal year ending December 31, 1999, its Supervisory Directors,
executive officers and ten percent shareholders complied with the applicable
Section 16(a) filing requirements.
8
<PAGE> 11
TRANSACTIONS WITH MANAGEMENT AND CERTAIN SHAREHOLDERS
Set forth below is a description of certain transactions entered into
between the Company and certain of its Supervisory Directors and shareholders.
Transactions with Shareholders
The Company and the holders of Common Shares prior to the initial public
offering of the Company are parties to a Registration Rights Agreement, dated as
of September 15, 1995 (the "Registration Rights Agreement"). Upon the request
from one or more shareholders holding at least 15% of the then outstanding
Common Shares (the "Requesting Holders"), the Company is required to file a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") to register the Common Shares held by the requesting holders
and any other shareholders who are parties to the Registration Rights Agreement
and who desire to sell Common Shares. The holders of Common Shares who are
parties to the Registration Rights Agreement are subject to a maximum of two
requests in total as well as a maximum of one request in any three-month period.
Subject to certain conditions and limitations, the Registration Rights Agreement
provides that holders of registrable Common Shares may participate in a
registration by the Company of any of its Common Shares in an underwritten
offering. In the case of both types of registration, the number of Common Shares
that may be registered is subject to limitation if the managing underwriter
determines that market conditions require such a limitation. The rights
conferred by the Registration Rights Agreement are transferable to transferees
of the Common Shares. The Company is generally required to bear all registration
expenses (other than underwriting discounts and commissions) in connection with
these registrations. No shareholder subject to the Registration Rights Agreement
owns greater than 15% of the Company's outstanding Common Shares.
During the year ended December 31, 1999, the Company purchased computer
equipment and software development and implementation services totaling
$1,127,000 from a company whose sole owner is a family member of an officer of
the Company. Services under this arrangement were completed during the third
quarter of 1999 and there were no amounts outstanding as of December 31, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, no executive officer served as (a) a member of the
Compensation Committee (or other board committee performing equivalent functions
or, in the absence of any such committee, the entire board of directors) of
another entity, one of whose executive officers served as a Supervisory Director
or (b) a director of another entity, one of whose executive officers served on
the Supervisory Board or the board of directors of a subsidiary of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's responsibilities are (a) to oversee the
development of the compensation program for the Company's officers and
managerial employees, (b) to administer the incentive and stock option plans,
including approval of grants and awards under these plans and (c) to establish
the compensation program for the Chief Executive Officer and the other executive
officers. During 1999, the Compensation Committee was comprised of the following
Supervisory Directors, all of whom were non-employee Supervisory Directors of
the Company: Joseph R. Perna, Timothy J. Probert and Stephen D. Weinroth.
Executive Compensation Philosophy
The objective of the compensation program for officers and managers is to
create strong financial incentives for corporate and division officers and
managers to increase profits, revenues and operating efficiency, which are
expected to lead to an increase in shareholder value. The following objectives
guide the Compensation Committee in its deliberations:
- Provide a competitive compensation program that enables the Company to
attract and retain key executives and Supervisory Board members.
9
<PAGE> 12
- Ensure a strong relationship between the performance results of the
Company and its divisions and the total compensation received.
- Balance both annual and longer term performance objectives of the
Company.
- Encourage executives to acquire and retain meaningful levels of Common
Shares.
- Work closely with the Chief Executive Officer to ensure that the
compensation program supports the management style, objectives and
culture of the Company.
In addition to normal employee benefits, the executive total compensation
program includes base salary, annual cash incentive compensation and longer term
stock-based grants and awards.
Market Comparisons. Primary market comparisons for executive compensation
are made to other oilfield service companies, adjusted for size and job
responsibilities. The companies used for market comparisons in the development
of the compensation program are broader than those used in the performance graph
presented elsewhere in this proxy statement and are used because they are more
representative of the market in which the Company competes for executive talent.
Data sources include oilfield industry surveys, national survey databases and
general trend data provided by consultants.
Variable Incentives. Variable incentives, both annual and longer term, are
major components of the program and are used to link pay with performance
results appropriate to each executive officer or manager. Variable incentive
awards and performance objectives are calibrated such that total compensation
will approximate the market 50th percentile when the Company's performance plans
are achieved and exceed the 50th percentile when the Company's performance plans
are exceeded.
Internal Revenue Code Section 162(m). Internal Revenue Code Section 162(m)
imposes a $1,000,000 limit, with certain exceptions, on the deductibility of
compensation paid to each of the five highest paid executive officers. In
particular, compensation that is determined to be "performance based" is exempt
from this limitation. To be "performance based", incentive payments must use
predetermined objective standards, limit the use of discretion in making awards
and be certified by the Compensation Committee made up of "outside directors."
The Compensation Committee will continue to monitor these issues and will take
appropriate action if it is warranted in the future.
EXECUTIVE COMPENSATION PROGRAM
The following is a discussion of each of the principal components of the
executive total compensation program.
Base Salary. The base salary program targets the median of the primary
comparison group for corporate and divisional officers and managers. Each
executive is reviewed individually on an annual basis. Salary adjustments are
based on the individual's experience and background, the individual's
performance during the prior year, the general movement of salaries in the
marketplace and the Company's financial position. As a result of these factors,
an executive's base salary may be above or below the targeted median at any
point in time.
Annual Incentive Compensation. The Company administers an annual incentive
plan for its corporate and divisional officers and managers. The goal of the
plan is to reward participants in proportion to (a) the performance of the
Company as a whole and the division for which they have direct responsibility
and (b) their individual contributions to the Company's success.
For 1999, corporate participants were measured on earnings before interest
and taxes ("EBIT") and earning per share, while division participants were also
measured on working capital management. In addition, a discretionary component
was included as part of the plan to recognize outstanding effort and dedication.
The measures were weighted substantially equally.
10
<PAGE> 13
If budgeted performance is achieved, the resulting incentive awards, in
combination with base salary, are targeted at the 50th percentile of the market.
The actual corporate performance results and executive total cash compensation
levels for 1999 were below this level.
Supplemental Executive Retirement Plans. The Company has adopted the Core
Laboratories Supplemental Executive Retirement Plan (the "Group SERP"),
effective January 1, 1998, and as amended July 29, 1999, for the benefit of
certain key employees and outside directors of the Company. The Group SERP was
established to provide additional retirement income to the participants and
death benefits to the participants' designated beneficiaries as a reward for the
participants' contributions to the success and growth of the Company. The four
participants in the Group SERP are Richard L. Bergmark, David M. Demshur, Joseph
R. Perna and Stephen D. Weinroth. Each participant is entitled to receive a
retirement benefit of $250,000 per year, which begins on the participant's
retirement date and is paid in annual installments until the participant's
death. If a participant dies on or after his retirement date and prior to
receiving 15 annual installments of his retirement benefit, then the
participant's designated beneficiary is entitled to receive $250,000 each year
until such payments have been made for an aggregate of 15 years to both the
participant and such designated beneficiary. If the participant dies before his
retirement date, the designated beneficiary of the deceased participant is
entitled to receive $225,000 each year for 15 years. Each participant's benefit
under the Group SERP is fully vested and fully accrued. Benefits under the Group
SERP may be forfeited only in the event of a participant's termination for
cause.
The Company has also adopted the Core Laboratories Supplemental Executive
Retirement Plan for Monty L. Davis and the Core Laboratories Supplemental
Executive Retirement Plan for John D. Denson, each as amended and effective
January 1, 1999 (the "Individual SERPs"). The Individual SERPs were established
to provide additional retirement income for Mr. Davis and Mr. Denson and death
benefits for their designated beneficiaries as a reward for Messrs. Davis' and
Denson's contributions to the success and growth of the Company. Each
participant in an Individual SERP is entitled to receive a retirement benefit
commencing on his retirement date. The amount of the participant's retirement
benefit under an Individual SERP is determined using a formula that takes into
consideration the participant's compensation, years of employment, and a five
year vesting schedule, and is paid in annual installments until the
participant's death. Vesting in this retirement benefit is accelerated upon a
"change in control." If a participant dies on or after his retirement date and
prior to receiving 15 annual installments of his retirement benefit, then the
designated beneficiary of the deceased participant is entitled to receive the
payments the deceased participant would have received if the participant's death
had not occurred. Such payments will continue until payments for an aggregate of
15 years have been made to both the participant and his designated beneficiary.
If a participant dies prior to his retirement date, the designated beneficiary
of the deceased participant is entitled to receive annual payments for 15 years,
and the amount of such payments is determined using a formula similar to that
described above. Benefits under an Individual SERP may be forfeited upon a
participant's termination for cause.
The Company has purchased insurance coverage on the lives of Messrs.
Bergmark, Davis, Denson, Demshur and Perna to assist it in providing benefits
under the Group SERP and Individual SERP's. The Company is the owner and
beneficiary of the insurance coverage. The Company is obligated to pay the total
premium of $319,500 and $82,191 each year for the Group SERP and the Individual
SERPs, respectively, until the policies are paid up (which is anticipated to be
in 2005). Based on actuarial calculations (including a 12% interest rate
assumption), the Company expects that the death benefits paid to the Company
under the insurance policies will be sufficient to cover the costs of the Group
SERP and Individual SERP's benefits and the policy premium payments. However, to
the extent the death benefits under the policies are insufficient to cover those
costs, the Company is obligated to pay the remainder out of its other general
assets and absorb any shortfall. In the event of a "change of control," the
Company is obligated to fully fund the amount of the retirement benefits and
death benefits of all six participants in the Group and Individual SERPs and
their designated beneficiaries. The amount of the "change of control"
contribution is the lesser of (i) the total amount due under the terms of the
Group and Individual SERPs, or (ii) the amount of unpaid premiums on any
insurance policies held by the trust through the seventh anniversary of the date
of the purchase of each such policy.
11
<PAGE> 14
Deferred Compensation Plan. Core Laboratories, Inc., a subsidiary of the
Company, has adopted a deferred compensation plan that allows certain officers,
including all of the Named Executive Officers, to defer a portion of their
salary, bonus, and commissions, as well as the amount of any reductions in their
deferrals under the Core Laboratories, Inc. Profit Sharing and Retirement Plan
(the "401(k) Plan") due to certain limitations imposed by the Internal Revenue
Code of 1986, as amended (the "Code"). The plan also provides for employer
contributions to be made on behalf of participants equal in amount to certain
forfeitures of, and/or reductions in, employer contributions that participants
could have received under the 401(k) Plan in the absence of certain limitations
imposed by the Code. These employer contributions vest gradually over a period
of five years. Discretionary employer contributions may also be made on behalf
of participants in the plan and are subject to discretionary vesting schedules
determined at the time of such contributions. Vesting in all employer
contributions is accelerated upon the death of the participant or a "change in
control." Employer contributions under the plan are forfeited upon a
participant's termination of employment to the extent they are not vested at
that time.
Stock Based Compensation. Stock ownership by corporate and divisional
management is encouraged through the use of the Incentive Plan which provides
for the award of Common Share options and awards. The Compensation Committee and
management believe that widespread Common Share ownership by key employees is an
important means of encouraging superior performance and employee retention.
Common Share option grants are considered annually based on competitive
multiples of base salary. Senior executives typically have a higher multiple
and, as a result, have a greater portion of their total compensation linked to
the longer term success of the Company. In determining the appropriate grant
multiples, the Company targets the market median among publicly-held oilfield
service companies of similar size.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer, David M. Demshur, participates in the
executive compensation program described above. In establishing the base salary
for Mr. Demshur, the Compensation Committee assessed the pay levels for chief
executive officers in similar companies in the oilfield service industry and the
profit performance of the Company. In 1999, Mr. Demshur's base salary was
$400,000. He will also receive an annual incentive award of $65,000. This award
was granted on a discretionary basis by the Compensation Committee for his
extraordinary efforts in a challenging and difficult industry environment. Mr.
Demshur received 80,000 stock options in 1999.
COMPENSATION COMMITTEE
Timothy J. Probert
Joseph R. Perna
Stephen D. Weinroth
12
<PAGE> 15
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following performance graph compares the performance of the Common
Shares to the Standard & Poor's 500 Index and the Standard & Poor's Oil Well
Equipment and Services Index (the "New Peer Group") for the period beginning
September 20, 1995 and ending January 31, 1999 . Data for the Company's previous
peer group (which included Input/Output Inc., Newpark Resources, Inc., Baker
Hughes, Inc. and Varco International Inc.) is also presented (the "Old Peer
Group"). The Company is using a new index (the New Peer Group) that it believes
better reflects the overall performance of the industry in which the Company
competes. The graph assumes that the value of the investment in the Common
Shares and each index was $100 at September 20, 1995 (using the initial public
offering price of $6.00 for the Common Shares, after giving effect to the 2 for
1 stock split in December 1997) and that all dividends were reinvested. The
Common Shares began trading on the Nasdaq Stock Market in September 1995. In
July, 1998 the Common Shares ceased trading on the Nasdaq Stock Market and began
trading on the New York Stock Exchange. Prior to September 1995 there was no
market in the Common Shares and, accordingly, full five year data is
unavailable.
COMPARISON OF QUARTERLY CUMULATIVE RETURNS
AMONG CORE LABORATORIES N.V.,
PEER GROUP INDICES AND THE S&P 500 INDEX
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
9/20/95 12/21/95 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
------- -------- ------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Core Laboratories.
N.V. 100.00 100.00 102.08 120.45 129.07 135.42 141.39 187.87 222.49 225.70
Old Peer Group....... 100.00 131.98 145.36 158.77 152.07 146.90 150.20 167.89 198.54 194.20
New Peer Group....... 100.00 109.33 125.54 129.10 128.04 142.17 148.29 164.61 193.01 190.58
S&P 500 Index........ 100.00 104.97 109.77 113.66 116.15 123.93 126.14 143.05 150.07 152.51
<CAPTION>
3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Core Laboratories.
N.V. 260.65 249.37 229.13 240.00 231.84 211.55 245.93 252.24
Old Peer Group....... 190.08 155.47 118.26 107.65 131.70 155.94 146.39 123.12
New Peer Group....... 188.07 178.69 148.61 142.31 172.63 186.23 179.45 173.95
S&P 500 Index........ 166.04 164.59 152.35 173.84 184.45 191.16 184.61 199.15
</TABLE>
The foregoing stock price performance comparisons shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act or under the
Exchange Act, except to the extent that the Company specifically incorporates
this graph by reference, and shall not otherwise be deemed filed under such
acts.
There can be no assurance that the Common Share performance will continue
into the future with the same or similar trends depicted in the graph above. The
Company will not make or endorse any predictions as to future performance of the
Common Shares.
ITEM 2.
APPROVAL OF ANNUAL ACCOUNTS
At the Annual Meeting, the shareholders of the Company will be asked to
approve the Dutch Statutory Annual Accounts of the Company for the fiscal year
ending December 31, 1999, as required under Dutch law and the articles of
association. In accordance with Article 408 of the Dutch Civil Code, the Annual
Accounts are the annual accounts of the Company and its participation and do not
represent the consolidated accounts
13
<PAGE> 16
of the Company and all of its subsidiaries as presented in the Consolidated
Financial Statements contained in the Annual Report of the Company for the year
ending December 31, 1999.
The affirmative vote of the holders of a majority of the Common Shares
present or represented by proxy and entitled to vote at the Annual Meeting is
required to adopt the Annual Accounts.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ADOPTION
OF THE ANNUAL ACCOUNTS, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 3.
EXTENSION OF AUTHORITY OF MANAGEMENT BOARD UNTIL
NOVEMBER 24, 2001 TO REPURCHASE SHARES
Under Dutch law and the current articles of association, the Company,
subject to certain Dutch statutory provisions, may repurchase up to 10% of the
Company's outstanding share capital in open market purchases at any price not to
exceed $200.00 or its equivalent in other currencies. Any such purchases are
subject to the approval of the Supervisory Board and the authorization of
shareholders at the annual meeting of shareholders, which authorization may not
continue for more than 18 months. In connection with the initial public offering
of the Company's Common Shares in September 1995, the shareholders authorized
the Management Board to make such repurchases for a period of 18 months. At each
annual meeting of the shareholders subsequent to 1995, the shareholders have
extended the period such that the current period is set to expire on November
26, 2000.
At the Annual Meeting, the shareholders will be asked to approve a further
extension of this authority for an additional 18-month period from the date of
the Annual Meeting until November 24, 2001.
The affirmative vote of the holders of a majority of the Company's Common
Shares present or represented by proxy and entitled to vote at the Annual
Meeting is required to extend the authorization of the management board to
repurchase up to 10% of the outstanding share capital of the Company for an
additional 18-month period from the date of the Annual Meeting.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION
OF THE AUTHORITY OF THE MANAGEMENT BOARD TO REPURCHASE UP TO 10% OF THE
OUTSTANDING SHARE CAPITAL OF THE COMPANY UNTIL NOVEMBER 24, 2001 AT A PRICE OF
NOT MORE THAN $200.00 PER SHARE, AND PROXIES EXECUTED AND RETURNED WILL BE SO
VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 4.
EXTENSION OF AUTHORITY OF SUPERVISORY BOARD
TO ISSUE SHARES OF CORE LABORATORIES N.V. UNTIL MAY 24, 2005
Under Dutch law and the articles of association, the Company's Supervisory
Board has the power to issue shares of the Company's share capital if and
insofar as the Supervisory Board has been designated at the annual meeting of
shareholders as the authorized body for this purpose. A designation of the
Supervisory Board to issue shares may be effective for a specified period of up
to five years and may be renewed on an annual rolling basis. In connection with
the initial public offering of the Company's Common Shares in September 1995,
the shareholders authorized the Supervisory Board to issue shares and/or rights
on shares for five years. At each annual meeting of the shareholders subsequent
to 1995, the shareholders have extended the period such that the current period
is set to expire on May 26, 2004.
At the Annual Meeting, the shareholders will be asked to approve a further
extension of this authority for a five-year period from the date of the Annual
Meeting until May 24, 2005. The Company is listed on the NYSE and accordingly,
the issuance of additional shares will remain subject to the rules of the NYSE.
In particular, the NYSE requires shareholder approval for the issuance of shares
of common stock in excess of
14
<PAGE> 17
twenty percent of the outstanding shares except for public offerings for cash or
bona fide private offerings at a price greater than both the book and market
value of a company's common stock.
The affirmative vote of the holders of a majority of the Common Shares
present or represented by proxy and entitled to vote at the Annual Meeting is
required to extend the authority of the Supervisory Board to issue and/or to
grant rights (including options to purchase) on common and/or preferred shares
of the Company for a five-year period from the date of the Annual Meeting.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION
OF THE AUTHORITY OF THE SUPERVISORY BOARD TO ISSUE AND/OR TO GRANT RIGHTS
(INCLUDING OPTIONS TO PURCHASE) ON COMMON AND/OR PREFERENCE SHARES OF THE
COMPANY UNTIL MAY 24, 2005, AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 5.
EXTENSION OF AUTHORITY OF SUPERVISORY BOARD
TO LIMIT OR ELIMINATE PREEMPTIVE RIGHTS UNTIL MAY 24, 2005
Holders of Common Shares (other than employees of the Company and its
subsidiaries who are issued Common Shares pursuant to the exercise of options
granted under the Incentive Plan or the Nonemployee Director Plan) have a pro
rata preemptive right of subscription to any Common Shares issued for cash
unless such right is limited or eliminated. Holders of Common Shares have no pro
rata preemptive subscription right with respect to any Common Shares issued for
consideration other than cash. If designated for this purpose at the annual
meeting of shareholders, the Supervisory Board has the power to limit or
eliminate such rights. A designation may be effective for up to five years and
may be renewed for successive five-year periods. In connection with the initial
public offering of the Company's Common Shares in September 1995, the
shareholders authorized the Supervisory Board for a five-year period to limit or
eliminate from time to time the preemptive rights of holders of such Common
Shares. At each annual meeting subsequent to 1995, the shareholders have
extended the period such that the current period is set to expire on May 26,
2004.
At the Annual Meeting, the shareholders will be asked to approve a further
extension of this authority for a five-year period from the date of the Annual
Meeting until May 24, 2005. As long as the Company remains listed on the NYSE,
the issuance of Common Shares by the Company will remain subject to the rules of
the NYSE including limitations on the ability of the Company to issue shares
without shareholder approval. See Item 4 for a discussion of the NYSE rules
regarding stock issuance.
The affirmative vote of the holders of a majority of the Common Shares
present or represented by proxy and entitled to vote at the Annual Meeting is
required to extend the authority of the Supervisory Board to limit or eliminate
the preemptive rights of holders of Common Shares for a five-year period from
the date of the Annual Meeting.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE EXTENSION
OF THE AUTHORITY OF THE SUPERVISORY BOARD TO LIMIT OR ELIMINATE PREEMPTIVE
RIGHTS OF HOLDERS OF COMMON SHARES UNTIL MAY 24, 2005, AND PROXIES EXECUTED AND
RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 6.
AMENDMENT TO THE 1995 LONG-TERM INCENTIVE PLAN
At the Annual Meeting, the shareholders will be asked to approve an
amendment to the Incentive Plan to increase the number of Common Shares that may
be issued pursuant to the Incentive Plan by 2,500,000 shares. As of March 16,
2000, substantially all the previously approved amount of 2,900,000 Common
Shares had been issued since 1995. The increase in Common Shares sought
represents approximately 8% of the Company's outstanding shares on a fully
diluted basis. The Supervisory Board approved the amendment on February 24,
2000, subject to shareholder approval at the Annual Meeting. Set forth below is
a summary of the principal features of the Incentive Plan. The summary, however,
does not purport to be a
15
<PAGE> 18
complete description of all the provisions of the Incentive Plan. Any
shareholder of the Company who wishes to obtain a copy of the actual plan
document may do so upon written request at the Company's principal offices at
Herengracht 424, 1017 BZ Amsterdam, The Netherlands, Attention: Mr. Jacobus
Schouten.
GENERAL
The Incentive Plan is designed to retain selected employees of the Company
and its subsidiaries and reward them for making significant contributions to the
success of the Company and its subsidiaries. These objectives are to be
accomplished by making awards under the Incentive Plan and thereby providing
participants with a proprietary interest in the growth and performance of the
Company and its subsidiaries. Accordingly, the Incentive Plan provides for
granting (a) "incentive stock options" as defined in Section 422 of the Code,
(b) stock options that do not constitute incentive stock options ("nonqualified
stock options") and (c) "restricted shares" that are either (1) Common Shares
that are restricted or subject to forfeiture provisions or (2) a credit of units
to a bookkeeping account maintained by the Company evidencing accrual to a
participant of unsecured and unfunded conditional rights to acquire Common
Shares.
NUMBER OF SHARES SUBJECT TO THE INCENTIVE PLAN
Currently, the aggregate maximum number of Common Shares authorized to be
issued under the Incentive Plan pursuant to grants of stock options and
restricted shares is 2,900,000 Common Shares. As of March 16, 2000,
substantially all of the previously approved amount of 2,900,000 Common Shares
had been issued or awarded since 1995. If the proposed amendment to the
Incentive Plan is approved by the requisite vote of the shareholders, a maximum
of 2,500,000 additional Common Shares will be authorized to be issued pursuant
to grants of stock options and restricted shares under the Incentive Plan. In
each case, these numbers may be adjusted upon a reorganization, stock split,
recapitalization, or other change in the Company's capital structure. Common
Shares related to awards under the Incentive Plan that are forfeited or
terminated or that expire unexercised will again become available for the
granting of awards under the Incentive Plan. Additionally, subject to adjustment
upon a reorganization, stock split, recapitalization, or other change in the
Company's capital structure, the number of Common Shares that may be the subject
of awards granted under the Incentive Plan to any one individual during any
calendar year may not exceed 1,600,000 Common Shares.
ADMINISTRATION
The Incentive Plan is administered by a committee (the "Committee") of, and
appointed by, the Supervisory Board, and such committee must be comprised solely
of two or more directors who are both (a) outside directors (within the meaning
of Section 162(m) of the Code) and (b) nonemployee directors (within the meaning
of Rule 16b-3 under the Exchange Act). No member of the Committee is eligible to
receive an award under the Incentive Plan. The Compensation Committee currently
serves as the Committee.
The Committee has full authority, subject to the terms of the Incentive
Plan, to establish rules and regulations for the proper administration of the
Incentive Plan, to select the persons to whom awards are granted and to set the
date of grant and the other terms of the awards.
The Committee may delegate to the Chief Executive Officer and to other
senior officers of the Company its duties under the Incentive Plan pursuant to
such conditions or limitations as the Committee may establish, except that the
Committee may not delegate to any person the authority to grant awards to, or
take other action with respect to, participants in the Incentive Plan who are
subject to Section 16 of the Exchange Act.
ELIGIBILITY
All of the employees of the Company and its subsidiaries (including an
employee who may also be an officer or director of any such company) are
eligible to participate in the Incentive Plan. The selection of employees, from
among those eligible, who will receive awards under the Incentive Plan is within
the discretion of the Committee.
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<PAGE> 19
EFFECTIVE DATE; AMENDMENT AND TERMINATION OF THE INCENTIVE PLAN
The Incentive Plan was originally effective as of September 1, 1995. The
Incentive Plan was amended and restated effective as of May 29, 1997. No further
incentive stock options may be granted under the Incentive Plan on or after May
29, 2007. The Supervisory Board may from time to time amend, modify, suspend or
terminate the Incentive Plan for any purpose except that (a) no amendment or
alteration that would impart the rights of a holder of an award under the
Incentive Plan may be made without the holder's consent, (b) no amendment or
alteration will be effective prior to approval of the shareholders of the
Company, to the extent such approval is then required pursuant to Rule 16b-3
under the Exchange Act or to the extent shareholder approval is otherwise
required by applicable law, and (c) no amendment which materially modifies the
requirements as to eligibility for participation in the Incentive Plan or that
increases the total number of Common Shares authorized or available under the
Incentive Plan may be adopted without the prior approval of the shareholders of
the Company.
STOCK OPTIONS
Option Contract; Status of Option; Term. All options will be evidenced by a
written contract containing provisions consistent with the Incentive Plan and
such other provisions as the Committee deems appropriate. The status of each
grant of an option as an incentive stock option or a nonqualified stock option
will be designated by the Committee at the time of grant. The term of each
option will be as specified by the Committee at the date of grant (but not more
than ten years in the case of incentive stock options). The effect of an
employee's termination of employment will be controlled by the terms of the
option contract that evidences each option grant.
Size of Grant; Option Price. The number of shares for which an option is
granted to an employee will be determined by the Committee. The option price
will also be determined by the Committee, and, in the case of an incentive stock
option, such option price will be no less than the fair market value of the
Common Shares on the date that the option is granted. The option price upon
exercise may be paid by an employee in cash, or, at the discretion of the
Committee, in other Common Shares owned by the employee, by surrendering all or
part of that or any other award under the Incentive Plan, or by any combination
thereof.
RESTRICTED SHARES
An award of restricted shares may consist of Common Shares or may be
denominated in units of Common Shares. All or part of any such award may be
subject to conditions established by the Committee and set forth in the written
agreement evidencing such award, which conditions may include, but are not
limited to, (a) the attainment of one or more performance targets established by
the Committee that are based on (1) the price of a Common Share, (2) the
Company's earnings before interest, taxes, depreciation, and amortization, (3)
the Company's earnings per share, (4) the total return to holders of Common
Shares based upon price appreciation and dividends paid, (5) the Company's
market share, (6) the market share of a business unit of the Company designated
by the Committee, (7) the Company's sales, (8) the sales of a business unit of
the Company designated by the Committee, (9) the Company's cash flow or (10) the
return on shareholders' equity achieved by the Company; (b) the award
recipient's continued employment with the Company and its subsidiaries for a
specified period of time; (c) the occurrence of any event or the satisfaction of
any other condition specified by the Committee in its sole discretion; or (d) a
combination of any of the foregoing. Each award of restricted shares may have
different conditions and restrictions, in the discretion of the Committee.
Dividends or dividend equivalent rights may be extended to and made part of any
award denominated in Common Shares or units of Common Shares, subject to such
terms, conditions and restrictions as the Committee may establish.
TRANSFERABILITY
Unless otherwise determined by the Committee and provided in an award
agreement, awards under the Incentive Plan are generally not transferable except
(i) by will or the laws of descent and distribution, (ii) pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee
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<PAGE> 20
Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules
thereunder (a "QDRO") or (iii) with the consent of the Committee. The preceding
sentence notwithstanding, no award of an incentive stock option under the
Incentive Plan will be assignable or otherwise transferable, except by will or
the laws of descent and distribution or pursuant to a QDRO.
CHANGE IN CONTROL
The Incentive Plan provides that each stock option will become fully
exercisable and the restrictions on restricted shares will lapse upon a change
in control of the Company. A "change in control" is generally deemed to have
occurred if (a) an event occurs that requires reporting under Regulation 14A of
the Exchange Act, (b) any person other than a Supervisory Director or any person
controlled by a Supervisory Director becomes a beneficial owner, directly or
indirectly, of equity securities of the Company representing 51% or more of the
combined voting power of the Company's then outstanding voting securities
without prior approval of at least two-thirds of the members of the Supervisory
Board, (c) the Company is a party to a merger, consolidation, sale of assets or
other reorganization, or a proxy contest, as a consequence of which members of
the Supervisory Board immediately prior to such transaction or event constitute
less than a majority of the Supervisory Board thereafter or (d) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Supervisory Board (or who were subsequently elected with the
approval of at least two-thirds of the members of the Supervisory Board still in
office who were members at the beginning of the period) cease for any reason to
constitute at least a majority of the Supervisory Board. Under certain
circumstances, participants may be entitled to additional payments from the
Company under the Incentive Plan in order to keep them whole with respect to
certain golden parachute excise taxes imposed by the Code.
UNITED STATES FEDERAL INCOME TAX ASPECTS OF THE INCENTIVE PLAN
Nonqualified Stock Options. As a general rule, no federal income tax is
imposed on the optionee upon the grant of a nonqualified stock option such as
those granted under the Incentive Plan, and the Company is not entitled to a tax
deduction by reason of such a grant. Generally, upon the exercise of a
nonqualified stock option, the optionee will be treated as receiving
compensation taxable as ordinary income in the year of exercise in an amount
equal to the excess of the fair market value of the shares on the date of
exercise over the option price paid for such shares. Upon the exercise of a
nonqualified stock option, and subject to the application of Section 162(m) of
the Code as discussed below, the Company may claim a deduction for compensation
paid at the same time and in the same amount as compensation income is
recognized to the optionee, assuming any federal income tax reporting
requirements are satisfied. Upon a subsequent disposition of the shares received
upon exercise of a nonqualified stock option, any appreciation after the date of
exercise should qualify as capital gain. If the shares received upon the
exercise of a nonqualified stock option are transferred to the optionee subject
to certain restrictions, then the taxable income realized by the optionee,
unless the optionee elects otherwise, and the Company's tax deduction (assuming
any federal income tax reporting requirements are satisfied) should be deferred
and should be measured at the fair market value of the shares at the time the
restrictions lapse. The restrictions imposed on officers, directors and 10%
shareholders by Section 16(b) of the Exchange Act is such a restriction during
the period prescribed thereby if other shares have been purchased by such an
individual within six months of the exercise of a nonqualified stock option.
Incentive Stock Options. The incentive stock options under the Incentive
Plan are intended to constitute "incentive stock options" within the meaning of
Section 422 of the Code. Incentive stock options are subject to special federal
income tax treatment. No federal income tax is imposed on the optionee upon the
grant or the exercise of an incentive stock option if the optionee does not
dispose of shares acquired pursuant to the exercise within the two-year period
beginning on the date the option was granted or within the one-year period
beginning on the date the option was exercised (collectively, the "holding
period"). In such event, the Company would not be entitled to any deduction for
federal income tax purposes in connection with the grant or exercise of the
option or the disposition of the shares so acquired. With respect to an
incentive stock option, the difference between the fair market value of the
shares on the date of exercise and the exercise price must
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<PAGE> 21
be included in the optionee's alternative minimum taxable income. However, if
the optionee exercises an incentive stock option and disposes of the shares
received in the same year and the amount realized is less than the fair market
value of the shares on the date of exercise, the amount included in alternative
minimum taxable income will not exceed the amount realized over the adjusted
basis of the shares.
Upon disposition of the shares received upon exercise of an incentive stock
option after the holding period, any appreciation of the shares above the
exercise price should constitute capital gain. If an optionee disposes of shares
acquired pursuant to his or her exercise of an incentive stock option prior to
the end of the holding period, the optionee will be treated as having received,
at the time of disposition, compensation taxable as ordinary income. In such
event, and subject to the application of Section 162(m) of the Code as discussed
below, the Company may claim a deduction for compensation paid at the same time
and in the same amount as compensation is treated as received by the optionee.
The amount treated as compensation is the excess of the fair market value of the
shares at the time of exercise (or in the case of a sale in which a loss would
be recognized, the amount realized on the sale if less) over the exercise price;
any amount realized in excess of the fair market value of the shares at the time
of exercise would be treated as short-term or long-term capital gain, depending
on the holding period of the shares.
Restricted Shares. An employee who has been granted restricted shares under
the Incentive Plan consisting of Common Shares that are subject to forfeiture
provisions will not realize taxable income at the time of grant, and the Company
will not be entitled to a deduction at that time, assuming that the forfeiture
provisions constitute a substantial risk of forfeiture for federal income tax
purposes. Upon expiration of the forfeiture restrictions (i.e., as shares become
vested), the employee will realize ordinary income in an amount equal to the
excess of the fair market value of the shares at such time over the amount, if
any, paid for such shares, and, subject to the application of Section 162(m) of
the Code as discussed below, the Company will be entitled to a corresponding
deduction. Dividends paid to the holder during the period that the forfeiture
restrictions apply will also be compensation to the employee and deductible as
such by the Company. Notwithstanding the foregoing, the recipient of such
restricted shares may elect to be taxed at the time of grant of the restricted
shares based upon the fair market value of the shares on the date of the award,
in which case (a) subject to Section 162(m) of the Code, the Company will be
entitled to a deduction at the same time and in the same amount, (b) dividends
paid to the recipient during the period the forfeiture restrictions apply will
be taxable as dividends and will not be deductible by the Company and (c) there
will be no further federal income tax consequences when the forfeiture
restrictions lapse.
An employee who has been granted restricted shares under the Incentive Plan
consisting of a credit of units to a bookkeeping account maintained by the
Company evidencing accrual to such employee of unsecured and unfunded
conditional rights to acquire Common Shares will not realize taxable income at
the time of grant, and the Company will not be entitled to a deduction at that
time. Upon expiration of the restrictions applicable to such restricted shares,
the employee will realize ordinary income in an amount equal to the excess of
the fair market value of the property distributed to the employee by the Company
at that time over the amount, if any, paid by the employee for such property,
and, subject to the application of Section 162(m) of the Code as discussed
below, the Company will be entitled to a corresponding deduction.
Section 162(m) of the Code. Section 162(m) of the Code precludes a public
corporation from taking a deduction for annual compensation in excess of $1
million paid to its chief executive officer or any of its four other
highest-paid officers. However, compensation that qualifies under Section 162(m)
of the Code as "performance-based" is specifically exempt from the deduction
limit. Based on Section 162(m) of the Code and the regulations issued
thereunder, the Company believes that the income generated in connection with
the exercise of stock options granted by the Committee under the Incentive Plan
that have an option exercise price that is at least equal to the fair market
value of the shares subject to the option on the date of grant should qualify as
performance-based compensation, and, accordingly, the Company's deductions for
such compensation should not be limited by Section 162(m) of the Code. However,
Section 162(m) of the Code could limit the Company's deduction with respect to
compensation income generated in connection with the exercise of an option
granted by the Committee that had an option exercise price less than the fair
market value of the shares on the date of grant. The Incentive Plan has been
designed to provide flexibility with respect to whether restricted shares
awarded by the Committee will qualify as performance-based compensa-
19
<PAGE> 22
tion under Section 162(m) of the Code. The Company believes that certain awards
of restricted shares by the Committee under the Incentive Plan will so qualify
and the Company's deductions with respect to such awards should not be limited
by Section 162(m). However, certain awards of restricted shares made by the
Committee and all awards of options and restricted shares made by a delegate of
the Committee will not qualify as performance-based compensation, and,
therefore, the Company's compensation expense deductions relating to such awards
will be subject to the Section 162(m) deduction limitation.
The Incentive Plan is not qualified under section 401(a) of the Code.
The comments set forth in the above paragraphs are only a summary of
certain of the United States federal income tax consequences relating to the
Incentive Plan. No consideration has been given to the effects of foreign,
state, local, or other tax laws on the Incentive Plan or award recipients, or
the application of Dutch tax law to the Company.
INAPPLICABILITY OF ERISA
Based upon current law and published interpretations, the Company does not
believe the Incentive Plan is subject to any of the provisions of ERISA.
The affirmative vote of holders of a majority of the Common Shares present
or represented by proxy and entitled to vote at the Annual Meeting is required
to approve the proposed amendment of the Long-Term Incentive Plan.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE PROPOSED AMENDMENT TO THE 1995 LONG-TERM INCENTIVE PLAN, AND PROXIES
EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS ARE
INDICATED THEREON.
ITEM 7.
AMENDMENT TO THE 1995 NONEMPLOYEE DIRECTOR
STOCK OPTION PLAN
At the Annual Meeting, the shareholders will be asked to approve an
amendment to the Nonemployee Director Plan, to increase the number of Common
Shares that may be issued pursuant to the Nonemployee Director Plan from 200,000
to 700,000. The Supervisory Board approved the amendment on February 24, 2000,
subject to shareholder approval at the Annual Meeting. Set forth below is a
summary of the principal features of the Nonemployee Director Plan. The summary,
however, does not purport to be a complete description of all the provisions of
the Nonemployee Director Plan. Any shareholder of the Company who wishes to
obtain a copy of the actual plan document may do so upon written request at the
Company's principal offices at Herengracht 424, 1017 BZ Amsterdam, The
Netherlands, Attention: Mr. Jacobus Schouten.
OPTION GRANTS
Pursuant to the Nonemployee Director Plan, each Supervisory Director who is
not an employee of the Company is automatically granted nonqualified options
("Director Options") to purchase 1,000 Common Shares, generally on the date such
person first becomes a nonemployee Supervisory Director. In addition, an option
to acquire 10,000 Common Shares will be granted yearly to each nonemployee
Supervisory Director and an option to acquire 20,000 Common Shares will be
granted to the Chairman of the Supervisory Board on the first date in the
calendar year set by the Supervisory Board for the issuance of stock options to
more than 10 employees under the Incentive Plan. The purchase price of each
Common Share that is subject to a Director Option granted pursuant to the
Nonemployee Director Plan is equal to 100% of the fair market value of a Common
Share on the date the Director Option is granted, which, so long as the Common
Shares are quoted on the NYSE, will be the final closing sales price per Common
Share on the date of the grant. The exercise price of the Director Options is
payable in cash or in previously owned Common Shares held by the
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<PAGE> 23
optionee for more than six months, valued at fair market value on the date of
exercise, or any combination thereof.
NUMBER OF SHARES SUBJECT TO THE NONEMPLOYEE DIRECTOR PLAN
Currently a maximum of 200,000 Common Shares may be issued pursuant to
Director Options, subject to certain antidilution adjustments. As of March 16,
2000, options exercisable for substantially all the approved amount of 200,000
Common Shares had been issued or awarded pursuant to the Nonemployee Director
Plan since 1995. If the proposed amendment to the Nonemployee Director Plan is
approved by the requisite vote of shareholders, an additional 500,000 Common
Shares will be available for issuance pursuant to Director Options, subject to
certain antidilution adjustments. Additionally, Common Shares subject to
Director Options that are forfeited or terminated or expire unexercised without
the issuance of Common Shares to a nonemployee Supervisory Director will again
become available for grant.
VESTING OF OPTIONS; CHANGE IN CONTROL
Director Options are exercisable commencing on the first anniversary date
following the date of grant. Upon a change in control of the Company, all
outstanding Director Options will become immediately exercisable in full. A
"change in control" is generally deemed to have occurred if (a) an event occurs
that requires reporting under Regulation 14A of the Exchange Act, (b) any person
other than a Supervisory Director or any person controlled by a Supervisory
Director becomes a beneficial owner, directly or indirectly, of equity
securities of the Company representing 51% or more of the combined voting power
of the Company's then outstanding voting securities without prior approval of at
least two-thirds of the members of the Supervisory Board, (c) the Company is a
party to a merger, consolidation, sale of assets or other reorganization, or a
proxy contest, as a consequence of which members of the Supervisory Board
immediately prior to such transaction or event constitute less than a majority
of the Supervisory Board thereafter or (d) during any period of two consecutive
years, individuals who at the beginning of such period constituted the
Supervisory Board (or who were subsequently elected with the approval of at
least two-thirds of the members of the Supervisory Board still in office who
were members at the beginning of the period) cease for any reason to constitute
at least a majority of the Supervisory Board.
STATUS AND TRANSFERABILITY OF OPTIONS
None of the Director Options may be exercised after ten years from the date
of grant. Director Options are not transferable other than by will or by the
laws of descent and distribution, pursuant to a QDRO or with the consent of the
Supervisory Board. In the event of termination of service as a Supervisory
Director, the outstanding Director Options held by the Supervisory Director will
expire one year after termination and may be exercised only to the extent that
they were exercisable on the date of termination.
EFFECTIVE DATE; AMENDMENT AND TERMINATION OF THE NONEMPLOYEE DIRECTOR PLAN
The Nonemployee Director Plan was originally effective as of September 1,
1995, and was amended effective as of May 29, 1997, and January 1, 1998. The
proposed amendment to the Nonemployee Director Plan will be effective as of the
date of the Annual Meeting if it is approved by the shareholders. The
Supervisory Board has the right to amend, alter or discontinue the Nonemployee
Director Plan at any time, except that (i) without the consent of the affected
optionee, no amendment or alteration may be made that would impair the rights of
any optionee under any Director Option theretofore granted and (ii) no amendment
will be effective prior to approval of the shareholders of the Company, to the
extent such approval is then required pursuant to Rule 16b-3 under the Exchange
Act or to the extent shareholder approval is otherwise required by applicable
legal requirements.
Director Options are intended to be nonqualified stock options for U.S.
federal income tax purposes. For a description of the federal income tax
consequences of nonqualified stock options, see "United States Federal Income
Tax Aspects of the Incentive Plan -- Nonqualified Stock Options" above which
provides a summary of certain U.S. federal income tax consequences applicable to
the Nonemployee Director Plan. No
21
<PAGE> 24
consideration has been given to the effects of foreign, state, local or other
tax laws on the Nonemployee Director Plan or award recipients, or the
application of Dutch tax law to the Company.
The affirmative vote of holders of a majority of the Common Shares present
or represented by proxy and entitled to vote at the Annual Meeting is required
to approve the proposed amendment to the Nonemployee Director Plan.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL
OF THE PROPOSED AMENDMENT TO THE 1995 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN,
AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED UNLESS CONTRARY INSTRUCTIONS
ARE INDICATED THEREON.
ITEM 8.
RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR 2000
The Supervisory Board has appointed the firm of Arthur Andersen LLP as the
Company's independent public accountants for the year ending December 31, 2000
subject to ratification by the shareholders. Arthur Andersen LLP has acted as
the Company's auditors since inception.
The affirmative vote of holders of a majority of the Common Shares present
or represented by proxy and entitled to vote at the Annual Meeting is required
to ratify the appointment of Arthur Andersen LLP as the Company's independent
public accountants for 2000.
In the event the appointment is not ratified, the Supervisory Board will
consider the appointment of other independent accountants. The Supervisory Board
may terminate the appointment of Arthur Andersen LLP as the Company's
independent accountants without the approval of the shareholders of the Company
whenever the Supervisory Board deems such termination necessary or appropriate.
Representatives of Arthur Andersen LLP are not expected to be present at the
Annual Meeting.
THE SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF ARTHUR ANDERSEN LLP'S APPOINTMENT AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR 2000 AND PROXIES EXECUTED AND RETURNED WILL BE SO VOTED
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED THEREON.
ITEM 9.
OTHER MATTERS
The Supervisory Board does not know of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matters
properly come before the Annual Meeting or any adjournment(s) thereof, it is
intended that the enclosed proxy will be voted in accordance with the judgment
of the persons voting the proxy.
22
<PAGE> 25
SHAREHOLDER PROPOSALS
Any proposals of holders of the Company's Common Shares intended to be
presented at the Annual Meeting of shareholders of the Company to be held in
2001 must be received by the Company, addressed to the Secretary of the Company
at its principal executive offices, no later than December 18, 2000 to be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
By Order of the Board of Supervisory
Directors
/s/ JACOBUS SCHOUTEN
Jacobus Schouten
Supervisory Director
Amsterdam, The Netherlands
April 18, 2000
23
<PAGE> 26
CORE LABORATORIES N.V.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF SUPERVISORY
DIRECTORS OF CORE LABORATORIES N.V. FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON THURSDAY, MAY 25, 2000.
P The undersigned hereby constitutes and appoints Jacobus Schouten and
John D. Denson, and each or either of them, his true and lawful
attorneys and proxies with full power of substitution, for and in the
name, place and stead of the undersigned, to attend the Annual
R Meeting of Shareholders of Core Laboratories N.V. to be held at the
at the law offices of Nauta Dutilh, Weena 750, 3014 DA Rotterdam, The
Netherlands, on May 25, 2000 at 10:00 a.m., local time, and any
adjournment(s) thereof, with all powers the undersigned would possess
O if personally present and to vote thereof, as provided on the reverse
side of this card, the number of shares the undersigned would be
entitled to vote if personally present. IN ACCORDANCE WITH THEIR
X DISCRETION, SAID ATTORNEYS AND PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER GUISES AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
Y
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF SUPERVISORY DIRECTORS.
THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY
WILL BE VOTED FOR THE TEN NOMINEES AND FOR PROPOSALS 2, 3, 4, 5, 6, 7 AND 8.
(To be signed and continued on the reverse side.)
<PAGE> 27
Please mark your
vote as in this
[X] example.
<TABLE>
<S> <C> <C> <C>
FOR WITHHELD Supervisory Directors
1. Election of Supervisory Directors. [ ] [ ] Recommended: A vote for
election of the following
Supervisory Directors:
Nominees:
David M. Demshur
Rene R. Joyce
Timothy J. Probert
Jacobus Schouten
Bob G. Agnew
D. John Ogren
Joseph R. Perna
Richard L. Bergmark
Alexander Vriesendorp
Stephen D. Weinroth
For, except vote withheld from the following nominee(s)
- -----------------------------
FOR AGAINST ABSTAIN
2. Approval of Annual Accounts. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
3. Approval of extension of authority of [ ] [ ] [ ]
Management Board to repurchase up to 10%
of the outstanding share capital of the
Company until November 24, 2001.
FOR AGAINST ABSTAIN
4. Approval of extension of authority of [ ] [ ] [ ]
Supervisory Board to issue and/or to
grant rights (including options to
purchase) on common and/or preference
shares of the Company until May 24,
2005.
</TABLE>
<PAGE> 28
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
5. Approval of extension of authority of [ ] [ ] [ ]
Supervisory Board to limit or eliminate
preemptive rights of holders of common
shares until May 24, 2005.
FOR AGAINST ABSTAIN
6. Approval of Amendment to the Company's [ ] [ ] [ ]
1995 Long-Term Incentive Plan to
increase the number of common shares
available for issuance under the plan by
an aggregate of 2,500,000 shares.
FOR AGAINST ABSTAIN
7. Approval of Amendment to the Company's [ ] [ ] [ ]
1995 Nonemployee Director Stock Option
Plan to increase the number of common
shares available for issuance under the
plan by an aggregate of 500,000 shares.
FOR AGAINST ABSTAIN
8. Ratification of Appointment of Arthur [ ] [ ] [ ]
Andersen LLP as independent public
accountants of the Company for 2000.
NOTE: SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF SHALL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF
THE ATTORNEYS AND PROXIES APPOINTED HEREBY.
SIGNATURE: DATE: SIGNATURE:
---------------------------- --------------- --------------------------------
DATE:
------------------
NOTE: Please sign exactly as name appears thereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
</TABLE>
