<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
DAILEY INTERNATIONAL INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
N/A
4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
N/A
2) Form, Schedule or Registration Statement No.:
N/A
3) Filing Party:
N/A
4) Date Filed:
N/A
<PAGE> 2
DAILEY INTERNATIONAL INC.
One Lawrence Centre
2507 North Frazier
P.O. Box 2866
Conroe, Texas 77305-2866
________________________________________________________________________________
NOTICE OF ANNUAL MEETING
________________________________________________________________________________
The 1998 Annual Meeting of Stockholders (the "Meeting") of Dailey
International Inc., a Delaware corporation (the "Company"), will be held at the
Grove Park Inn Resort, Roosevelt "K" Room, 290 Macon Ave., Asheville, North
Carolina at 10:00 a.m. on June 2, 1998, for the following purposes:
1. to elect two Class II directors for a three-year term to expire at
the 2001 Annual Meeting of Stockholders of the Company;
2. to ratify the appointment of Ernst & Young LLP as the Company's
auditors for the fiscal year ended December 31, 1998; and
3. to take action upon any other matters which may properly come before
the Meeting.
Stockholders of record at the close of business on April 20, 1998, are
entitled to notice of and to vote at the Meeting and any adjournment thereof.
It is important that your shares be represented at the Meeting. I urge
you to sign, date and promptly return the enclosed proxy card in the enclosed
postage paid envelope.
BY ORDER OF THE BOARD OF DIRECTORS
William D. Sutton,
Secretary
May 6, 1998
<PAGE> 3
DAILEY INTERNATIONAL INC.
One Lawrence Centre
2507 North Frazier
P.O. Box 2866
Conroe, Texas 77305-2866
________________________________________________________________________________
PROXY STATEMENT
________________________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 1998
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Dailey International Inc., a Delaware
corporation (the "Company"), of proxies to be voted at the Company's 1998
Annual Meeting of Stockholders (the "Meeting") to be held at The Grove Park Inn
Resort, Roosevelt "K" Room, 290 Macon Avenue, Asheville, North Carolina on June
2, 1998, at 10:00 a.m. local time, and at any adjournment thereof. This Proxy
Statement and the accompanying proxy are being mailed to the Company's
stockholders on or about May 6, 1998.
Properly executed proxies received in time for the Meeting will be
voted as directed therein, unless revoked in the manner provided hereafter. As
to any matter for which no choice has been specified in a proxy, the shares
represented thereby will be voted by the persons named in the proxy (i) "FOR"
the election of the nominees to the Board of Directors; (ii) "FOR" approval of
Ernst & Young LLP as the Company's independent auditors for the year ended
December 31, 1998; and (iii) in the discretion of such persons, "FOR" or
"AGAINST" any other proposals which may be submitted at the Meeting. A
stockholder giving a proxy may revoke it at any time before the proxy is voted
by giving written notice to the Secretary of the Company, by executing and
delivering a proxy bearing a later date, or by attending the Meeting and voting
in person.
PERSONS MAKING THE SOLICITATION
This Proxy Statement solicits proxies on behalf of the Board of
Directors of the Company. The total expense of such solicitation, including
the cost of preparing, assembling, and mailing the proxy materials to
stockholders, will be borne by the Company. It is anticipated that
solicitations of proxies for the Meeting will be made only by use of the mails;
however, the Company may use the services of its directors, officers and
employees to solicit proxies personally or by telephone, without additional
salary or compensation to them. Brokerage houses, custodians, nominees and
fiduciaries will be required to forward the proxy soliciting materials to the
beneficial owners of the Company's shares held of record by such persons and
the Company will reimburse such persons for their reasonable out-of-pocket
expenses incurred in that connection.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record at the close of business on April 20, 1998,
are entitled to notice of and to vote at the Meeting or any adjournment
thereof. Holders of the Company's Class A Common Stock, $.01 par value ("Class
A Common Stock"), are entitled to one vote per share. Holders of the Company's
Class B Common Stock, $.01 par value ("Class B Common Stock" and together with
the Class A Common Stock, the "Common Stock"), are entitled to seven votes per
share. All actions submitted to a vote of stockholders are voted on by holders
of Class A Common Stock and Class B Common Stock voting together as a single
class, except as otherwise required by law. Holders of the Company's Common
Stock are not entitled to cumulative voting in the election of directors. On
April 20, 1998, there were issued and outstanding 5,703,655 shares of Class A
Common Stock, entitled to cast an aggregate of 5,703,655 votes on all matters
subject to a vote at the Meeting, and 5,000,000 shares of Class B Common Stock,
entitled to cast an aggregate 35,000,000 votes on all matters subject to a vote
at the Meeting. A list of stockholders entitled to notice of and to vote at
the Meeting will be made available during regular business hours at the offices
of the Company, One Lawrence Centre, 2507 North Frazier, P.O. Box 2866,
<PAGE> 4
Conroe, Texas 77305-2866 from May 21, 1998, through June 1, 1998, and at the
Meeting, for inspection by any stockholder for any purpose regarding the
Meeting.
Stockholders present in person or represented by proxy at the Meeting
holding a majority of the votes of all of the shares of Common Stock issued and
outstanding on the Record Date will constitute a quorum for the transaction of
business at the Meeting. The votes underlying shares held by each stockholder
who signs and returns the enclosed form of proxy will be counted for purposes
of determining the presence of a quorum at the Meeting.
The enclosed form of proxy provides a means for stockholders to vote for
both of the director nominees listed herein, to withhold authority to vote for
one of such nominees or to withhold authority to vote for both of such
nominees. All proxies that are properly executed and received by the Company
prior to the Meeting will be voted in accordance with the choices indicated.
Any stockholder may be represented and may vote at the Meeting by a proxy or
proxies appointed by an instrument in writing. In the event that any such
instrument in writing shall designate two or more persons to act as proxies, a
majority of such persons present at the Meeting, or, if only one shall be
present, then that one shall have and may exercise all of the powers conferred
by such written instrument upon all of the persons so designated unless the
instrument shall otherwise provide. Any stockholder giving a proxy may revoke
it at any time prior to its use at the Meeting by filing with the Secretary of
the Company a revocation of the proxy, by delivering to the Company a duly
executed proxy bearing a later date, or by attending the Meeting and voting in
person.
The ratification of Ernst & Young LLP as the Company's auditors requires
the affirmative vote of stockholders holding a majority of the votes of the
shares of Common Stock entitled to vote on the proposal and present in person
or represented by proxy at the Meeting. Broker non-votes, i.e. shares held in
the name of brokers for which discretionary authority is not permitted under
the rules of the NASDAQ National Market, will not be considered entitled to
vote on such proposals or counted in determining the number of shares voted in
favor of any proposal. Accordingly, broker non-votes will have no effect on
the vote for approval of the ratification of Ernst & Young LLP. The votes of
stockholders that are represented at the Meeting but abstain from voting on
such proposals will be counted as votes on such proposals and will have the
same effect as a vote against such proposals. The withholding of authority by
a stockholder will have no effect on the results of the election of directors
for whom authority to vote is withheld because the Company's bylaws provide
that directors are elected by a plurality of votes cast at the Meeting.
Lawrence Industries, Inc. ("Lawrence"), which beneficially owned
5,000,000 shares of the Class B Common Stock (constituting 100% of all Class B
Common Stock and 46.7% of all Common Stock and representing 86% of the voting
power of all Common Stock) on the Record Date, controls sufficient votes to
determine the outcome of any of the proposals being voted upon by the
stockholders. Lawrence has advised the Company that it intends to vote the
shares owned by it "for" election of the two nominees named herein and "for"
the ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ended December 31, 1998.
PROPOSAL NO. 1
ELECTION OF CLASS DIRECTORS
The Company's Board of Directors currently is comprised of seven members.
The Company's Restated Certificate of Incorporation provides for the
classification of the Board of Directors into three classes of directors, with
the term of each class expiring at successive annual stockholders meetings. At
and after the Meeting, all nominees of the class standing for election will be
elected for three-year terms.
Two directors will be elected at the Meeting to serve as Class II
directors for three-year terms ending at the 2001 Annual Meeting of
Stockholders or until such person's successor shall be duly elected and
qualified. The Board of Directors recommends the election of Mr. Al Kite and
Mr. John W. Sinders, Jr. as the Class II Directors to serve for such three-year
terms. Mr. Kite currently is a director of the Company. Mr. Sinders, who
served as an advisory director of the Company during the past year, is being
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<PAGE> 5
nominated to fill the board seat previously held by Mr. Bernard Duroc-Danner,
who has not sought re-election to the Company's Board.
Unless contrary instructions are set forth in the proxies, it is intended
that the persons executing a proxy will vote all shares represented by such
proxy for the election as director of both Mr. Kite and Mr. Sinders. Should
either Mr. Kite or Mr. Sinders become unable or unwilling to accept nomination
or election, it is intended that the person acting under the proxy will vote
for the election of such other person as the Board of Directors of the Company
may recommend. Management has no reason to believe that either Mr. Kite or Mr.
Sinders will be unable or are unwilling to serve if elected.
There are currently two Class II directorships up for election. Proxies
cannot be voted for other than such directorships. Pursuant to the Company's
bylaws, directors are elected to serve for three-year terms and until their
successors are elected or their earlier resignation or removal. Class I
directors' terms expire at the Meeting, Class III directors' terms expire at
the Company's 1999 Annual Meeting of Stockholders and Class I directors' terms
expire at the Company's 2000 Annual Meeting of Stockholders.
Set forth below is the name, age as of the date of this Proxy Statement,
and position of each of the current directors of the Company and the year of
expiration of his term of office as well as the nominees for director.
<TABLE>
<CAPTION>
YEAR TERM
AS DIRECTOR
NAME AGE POSITION WILL EXPIRE
- --------------------------------- ----- ------------------------------- -----------
<S> <C> <C> <C>
J. D. Lawrence . . . . . . . . 52 Chairman of the Board of Directors 1999
James F. Farr (1)(2) . . . . . 41 President, Chief Executive Officer 1999
and Director
William D. Sutton (1)(2) . . . 44 Senior Vice President, General 2000
Counsel, Secretary and Director
David T. Tighe (2) . . . . . . 46 Senior Vice President--Finance, 2000
Chief Financial Officer, Treasurer
and Director
Bernard J. Duroc-Danner
(1)(3). . . . . . . . . . . . . 44 Director 1998
Marvin Gearhart . . . . . . . . 71 Director 1999
Al Kite (1)(3) . . . . . . . . 65 Director 1998
John W. Sinders, Jr. . . . . . 44 Nominee
</TABLE>
- -----------------------------
(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Executive Committee of the Board of Directors.
(3) Member of the Compensation Committee of the Board of Directors.
J. D. Lawrence has been a director of the Company since 1973 and Chairman
of the Board of Directors since June 1989. He has been employed by the Company
since 1968, serving as its President from 1982 to 1989 and as a Vice President
from 1973 to 1982. Mr. Lawrence is the President and sole director of
Lawrence.
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<PAGE> 6
James F. Farr has been President of the Company since December 1990, its
Chief Executive Officer since August 1991, and a director of the Company since
September 1991. As International Manager from October 1989 to December 1990,
he was responsible for all international activities, including the marketing,
distribution and sale of the Company's products and services, and developing
and maintaining the Company's relationships with its agents. From August 1988
to October 1989, Mr. Farr served as Managing Director of Dailey Energy
Services, Inc., the Company's wholly-owned subsidiary, and as Regional Manager
for Europe/West Africa, with responsibility for the Company's facilities in the
United Kingdom as well as marketing operations in Europe/West Africa. From
1975 to August 1988, he served the Company in various managerial, marketing and
operating capacities.
William D. Sutton has been Senior Vice President, General Counsel and
Secretary since 1984 and a director of the Company since September 1991. He
has served as the Company's Secretary and General Counsel since 1980. He also
served as a director of the Company from 1979 to 1990, and as a Vice President
from 1982 to 1984. Prior to joining the Company in 1979, Mr. Sutton was an
attorney in private practice.
David T. Tighe has been Senior Vice President--Finance and Treasurer of
the Company since May 1988 and Chief Financial Officer of the Company since
June 1996. He became a director of the Company in September 1991. From 1985
to April 1988, he served as Corporate Controller. From 1984 to 1985, he was
the Company's Assistant Controller. Prior to joining the Company in 1984, Mr.
Tighe, a certified public accountant, was Controller of Carolina International,
Inc. from 1982 to 1984 and Tandem Industries, Inc. from 1980 to 1982.
Bernard J. Duroc-Danner became a director of the Company in September
1996. Mr. Duroc-Danner is Chief Executive Officer of EVI, Inc. In prior
years, Mr. Duroc-Danner was with Arthur D. Little Inc., a management consulting
firm in Cambridge, Massachusetts. He has held management positions with Mobil
Oil, Inc. (New York), Anheuser Busch Center for Management Science
(Philadelphia) and Lambert Freres & Co., (Paris). Mr. Duroc-Danner holds a
Ph.D. in economics from the University of Pennsylvania and an MBA in finance
from The Wharton School. Due to the pending merger of EVI, Inc. with
Weatherford International, Inc., Mr. Duroc-Danner will not be seeking
re-election to the Company's Board of Directors at the meeting.
Marvin Gearhart became a director of the Company in April 1998. Mr.
Gearhart currently is, and has been since 1989, the Chief Executive Officer of
Rockbit International. From 1955 until 1988, Mr. Gearhart was the Chairman,
President and Chief Executive Officer of Gearhart Industries, Inc. Mr.
Gearhart is a member of the Board of Directors of Justin Industries, Inc.
Al Kite became a director of the Company in September 1996. Mr. Kite was
President of Halliburton Drilling Systems from 1993 to 1994 and President of
Eastman Christensen from 1986 to 1990. He has served as International Manager
in London and Executive Vice President of Operations for Smith/Servco,
President of Worldwide Operations at Eastman Christensen and Senior Vice
President Eastern Hemisphere for Smith International. Mr. Kite is retired but
maintains several industry interests.
John W. Sinders, Jr. has served as an Advisory Director of the Company
since August 1997, and in such capacity, was entitled to notice of and to
attend all meetings of the Board of Directors but was not entitled to vote on
any matters coming before the Board of Directors. Mr. Sinders has served as an
Executive Vice President of Jefferies & Company, Inc. ("Jefferies") since
February 1997, and from 1993 to 1997, served as a Managing Director of
Jefferies. Mr. Sinders also is a member of the Board of Directors of The Shaw
Group Inc.
MEETINGS AND COMMITTEES OF THE BOARD
On July 7, 1995, the Board of Directors changed the Company's fiscal year
end from April 30 to December 31. Therefore, information contained in this
Proxy Statement relates to the eight-month transition period beginning May 1,
1997 and ending December 31, 1997 (the "Transition Period"). The Board of
Directors held five meetings during the Transition Period. Each director
attended at least 75% of the total combined number of meetings held by the
Board for which he was eligible and by the committees on which each director
served for which he was eligible. Pursuant to the Company's Bylaws,
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<PAGE> 7
the Board has established standing Audit, Executive and Compensation
Committees. The Company does not have a nominating or other similar committee.
The Audit Committee is currently comprised of Messrs. Sutton,
Duroc-Danner and Kite and is charged with the duties of recommending the
appointment of the independent certified public accountants, reviewing their
fees, ensuring that proper guidelines are established for the dissemination of
financial information, meeting periodically with the independent auditors, the
Board of Directors and certain officers of the Company and its subsidiaries to
ensure the adequacy of internal controls and reporting, reviewing consolidated
financial statements and performing any other duties or functions deemed
appropriate by the Board of Directors. Two Audit Committee meetings were held
during the Transition Period.
The Executive Committee is currently comprised of Messrs. Farr, Sutton
and Tighe and is responsible for assisting with the general management of the
business and affairs of the Company during intervals between meetings of the
Board of Directors. No meetings of the Executive Committee were held during
the Transition Period.
The Compensation Committee is currently comprised of Messrs. Duroc-Danner
and Kite and recommends to the Board the compensation to be paid to the
Company's senior executive officers and administers the Company's 1996 Employee
Stock Plan (the "1996 Plan") and the 1997 Long Term Incentive Plan (the "1997
Incentive Plan"). Four meetings of the Compensation Committee were held during
the Transition Period.
COMPENSATION OF DIRECTORS
Employee directors of the Company do not receive any additional
compensation for their services as a director of the Company. The Company pays
an annual retainer of $15,000 to each non-employee director and Mr. Sinders as
an advisory director. In addition, each non-employee director receives $1,000
for each Board of Directors meeting attended and $750 for each committee
meeting attended. The Company also pays reasonable out-of-pocket expenses
incurred by non-employee directors and advisory directors to attend Board of
Directors and committee meetings. For 1997, this amount was paid in shares of
Class A Common Stock valued at approximately $8.25 per share (the market price
on the date of grant). Non-employee directors also are entitled to receive
options pursuant to the 1996 Non-Employee Director Stock Plan (the "1996
Director Plan"). Under the 1996 Director Plan, an aggregate of 100,000 shares
of Class A Common Stock have been reserved for grant of options to purchase
Class A Common Stock. To date, options to acquire 50,000 shares of Class A
Common Stock at an exercise price equal to the fair market value of the Class A
Common Stock on the date of grant have been granted pursuant to the 1996
Director Plan. In addition, under such plan, options to acquire 10,000 shares
automatically will be granted after each annual meeting of stockholders to each
non-employee director who served as a director during the preceding six months
and who will continue to serve as a director and options to purchase 10,000
shares of Common Stock will be granted to each director upon his initial
election to the Board of Directors.
Effective April 23, 1997, the Board of Directors granted to each of
Messrs. Duroc-Danner and Kite, additional options to purchase 10,000 shares of
Class A Common Stock at an exercise price equal to the fair market value of the
Common Stock on the date of grant. In addition, on October 7, 1997, Mr.
Sinders was granted options to purchase 10,000 shares of Common Stock at an
exercise price equal to the fair market value of the Common Stock on the date
of grant pursuant to the Company's 1997 Long-Term Incentive Plan in his
capacity as an advisory director of the Company.
PROPOSAL NO. 2
RATIFICATION OF AUDITORS
The firm of Ernst & Young LLP, Certified Public Accountants, has been
appointed by the Board of Directors to audit the accounts and records of the
Company for the fiscal year ending December 31, 1998.
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<PAGE> 8
It is proposed that the appointment of Ernst & Young LLP be submitted to the
stockholders for ratification.
Stockholder ratification of this appointment is not required. If the
proposal is not approved, management may reconsider the appointment for the
fiscal year ending December 31, 1998. The affirmative vote of stockholders
holding a majority of the votes of the shares of Common Stock entitled to vote
on the proposal and present in person or represented by proxy at the Meeting is
required for stockholder ratification of the appointment of the auditors. The
Board of Directors recommends that the stockholders vote "FOR" this proposal.
In the absence of an indication to the contrary, the proxies intend to vote
shares represented by proxies furnished to them for this proposal.
Ernst & Young LLP has served as the Company's independent accountants for
at least the past six years.
It is anticipated that a representative of Ernst & Young LLP will be
present at the Meeting. Such representative will be given the opportunity to
make a statement should he so desire and will be available to answer
appropriate questions.
EXECUTIVE OFFICERS
Set forth below is certain information concerning the present executive
officers of the Company. There is no family relationship between any of these
individuals or any of the Company's directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- --- ------------------------------------------------------
<S> <C> <C>
J. D. Lawrence . . . . . . 52 Chairman of the Board of Directors
James F. Farr . . . . . . . 41 President, Chief Executive Officer and Director
William D. Sutton . . . . . 44 Senior Vice President, General Counsel, Secretary and
Director
David T. Tighe . . . . . . 46 Senior Vice President--Finance, Chief Financial Officer,
Treasurer and Director
John W. Sinders, Jr. . . . 44 Advisory Director
</TABLE>
For information concerning Messrs. Lawrence, Farr, Sutton, Tighe and
Sinders, see "Directors" above.
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<PAGE> 9
The following table sets forth information concerning compensation for
the fiscal years ended April 30, 1997 and 1996 and the Transition Period earned
by or paid to the Company's Chief Executive Officer, the other executive
officers of the Company and the two other individuals who would have been
included in such table had they been executive officers of the Company as of
December 31, 1997 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
RESTRICTED SECURITIES
OTHER STOCK UNDERLYING ALL OTHER
NAME AND ANNUAL AWARDS OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION ($)(1) SARS(#) (2)
- ------------------------- ------ ---------- ------- -------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
J. D. Lawrence . . . . . 1997T $ 69,370(3) -- * -- $1,396
Chairman of the Board 1997 $221,022 -- $29,203(4) -- -- 924
1996 296,532 -- * -- -- 2,326
James F. Farr . . . . . . 1997T 215,597 -- * $1,275,00 -- 494
President and Chief 1997 258,958 93,240 49,131(5) 0 97,912 924
Executive Officer 1996 248,651 55,500 * -- -- 571
960,000
William D. Sutton . . . . 1997T 170,943 -- * 828,750 -- 494
Senior Vice President 1997 223,936 75,819 36,973(5) 960,000 97,912 924
General Counsel and 1996 230,896 55,260 * _ -- 824
Secretary
David T. Tighe . . . . . 1997T 138,600 -- * 828,750 -- 843
Senior Vice President-- 1997 186,852 59,940 35,675(6) 960,000 97,912 924
Finance, Chief Financial 1996 148,671 54,960 21,723(7) -- -- 901
Officer and Treasurer
Chaman Malhotra . . . . .(9) 1997T 142,060 10,310 -- -- 20,000 --
President of Air Drilling
Services (subsidiary of
the Company
Martin Lyons . . . . . . 1997T 95,502 15,331 15,828(9)(10) -- 20,000 --
Vice President of 1997 117,710 10,037 * -- 19,199 162
North American Options 1996 87,622 680 * -- -- 456
</TABLE>
_______________________
* Amounts exclude the value of perquisites and personal benefits because
the aggregate amount thereof did not exceed the lesser of $50,000 or
10% of the total annual salary and bonus reported for each Executive
Officer.
(1) Effective upon closing of the Company's initial public offering in
August 1996 (the "1996 IPO"), each of Messrs. Farr, Sutton and Tighe
were granted 120,000 shares of restricted stock, which were subject to
vesting requirements that were extinguished during 1997. The value of
such restricted stock awards as of April 30, 1997, was $840,000 each.
During the Transition Period, Messrs. Farr, Sutton and Tighe were
granted an additional 100,000, 65,000 and 65,000 shares of restricted
stock, respectively, which had a value at December 31, 1997 of
$1,087,500, $706,875 and $706,875, respectively. These awards do not
begin vesting for two years, and then vest in one-quarter annual
installments over four years. Messrs. Farr, Sutton and Tighe are
entitled to receive dividends, to the extent declared on the Common
Stock, on unvested shares of restricted stock.
-7-
<PAGE> 10
(2) Represents payments for premiums for group term life insurance on
behalf of such individual.
(3) Effective upon the closing of the 1996 IPO, Mr. Lawrence's annual
salary was reduced to $100,000, subject to subsequent adjustment
upward in the discretion of the Compensation Committee of the Board of
Directors. Although Mr. Lawrence did not receive $100,000 in annual
salary and bonus during the Transition Period, he is included in the
summary compensation table due to the fact he would have received at
least $100,000 over a twelve month period. See "-- Employment
Agreements" below.
(4) Relates to payments for a car allowance and a charge for usage of
Company assets.
(5) Includes $26,923 related to accrued vacation cashed rather than taken
during the year and $22,208 related to a Company auto allowance.
(6) Includes $17,514 related to accrued vacation cashed rather than taken
during the year and $19,459 related to a Company auto allowance.
(7) Includes $17,308 related to accrued vacation cashed rather than taken
during the year and $18,367 related to a Company auto allowance.
(8) Includes $16,618 related to accrued vacation cashed rather than taken
during the year and $5,105 related to a Company automobile.
(9) Mr. Malhotra became an employee of the Company following the Company's
purchase of Air Drilling International Inc. in June 1997.
(10) Includes $5,889 for accrued vacation cashed rather than taken during
the year and $9,940 relating to a Company automobile.
The following chart summarizes information relating to options granted
to the Named Executive Officers during the Transition Period.
OPTION/SAR GRANTS IN TRANSITION PERIOD
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
NUMBER OF OPTIONS/SARS FOR OPTION TERM
SECURITIES GRANTED TO EXERCISE OR -----------------------
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION
NAME OPTIONS/SARS FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------- ------------ ------------ ----------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. D. Lawrence . . -- -- -- -- -- --
James F. Farr . . . -- -- -- -- -- --
William D. Sutton . -- -- -- -- -- --
David T. Tighe . . -- -- -- -- -- --
Chaman Malhotra . . 20,000 13% $6.375 11/17/07 $80,184 $203,202
Martin Lyons . . . 20,000 13% 6.375 11/17/07 80,184 203,202
</TABLE>
-8-
<PAGE> 11
The following chart summarizes certain information relating to the
value of options held by the Named Executive Officers at December 31, 1997.
AGGREGATED OPTION/SAR EXERCISES IN THE TRANSITION PERIOD
AND VALUE TABLE AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS/SARS AT OPTIONS/SARS
ACQUIRED ON REALIZED DECEMBER 31, 1997 AT FY-END (1)
NAME EXERCISE ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------ ------------ ---------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
J. D. Lawrence . . . -- -- -- $ 208,063/$0
208,063/0
William D. Sutton -- -- 97,912/0 208,063/0
David T. Tighe . . . -- -- 97,912/0 208,063/0
Chaman Malhotra . . . -- -- 0/20,000 0/90,000
Martin Lyons . . . . -- -- 19,199/20,000 55,197/90,000
</TABLE>
- -----------------------
(1) Utilizing the closing price for the Class A Common as reported by the
NASDAQ Stock Market, Inc. on December 31, 1997.
EMPLOYEE STOCK PLANS
The Company has established its 1996 Key Employee Stock Plan (the
"1996 Plan"), pursuant to which incentive and non-qualified options to purchase
shares of Class A Common Stock and awards of restricted shares of Class A
Common Stock are available for future grants. Under the 1996 Plan, options to
purchase Class A Common Stock and restricted stock awards up to an aggregate of
900,000 shares of Class A Common Stock may be granted by the Compensation
Committee. As of the date of this Proxy Statement, the Company has less than
1,000 shares available for grant under such plan. In addition, the Company has
adopted the 1997 Plan pursuant to which incentive and non-qualified options,
restricted shares, stock appreciation rights and other performance-based awards
may be granted to key employees of the Company. The 1997 Plan initially has
720,000 shares of Class A Common Stock available for issuance. The number of
shares of Class A Common Stock available for issuance under the 1997 Plan is
subject to adjustment as of January 1 of each year if the total number of
shares of Class A Common Stock issued and outstanding exceeds the number of
shares of Class A Common Stock outstanding as of January 1 of the preceding
year. In such case, the number of shares available for issuance will be
increased by an amount such that the total number of shares available for
issuance under the 1997 Plan equals 7.85% of the total number of shares of
Class A Common Stock outstanding, not including shares issued pursuant to the
1997 Plan. To date, the Company has granted under the 1997 Plan options to
purchase 220,000 shares of Class A Common Stock and 236,000 shares of
restricted Class A Common Stock.
INCENTIVE BONUS PLAN
In December 1997, the Compensation Committee of the Board of Directors
of the Company approved the Dailey Incentive Compensation Plan (the "Incentive
Plan"). The purpose of the Incentive Plan is to promote the long-term success
of the Company for the benefit of the Company's shareholders by encouraging and
rewarding maximum beneficial performance from its executive officers, senior
management, key managers, operations and sales personnel, including certain key
employees in staff positions, by providing annual performance based incentives
for these employees. The Company believes that participating under the
Incentive Plan will provide this group of employees an additional incentive to
perform more effectively and will assist Dailey in attracting and retaining
people of outstanding training, experience and ability. The Incentive Plan
will be administered by the Compensation Committee.
-9-
<PAGE> 12
All executive officers, senior management, key managers, operations
and sales personnel, including certain key professional employees in staff
positions, are eligible to participate in the Incentive Plan. Eligible
employees who are designated to participate ("Participants") will receive,
prior to or at the beginning of the Incentive Plan year, an announcement letter
("Letter") outlining the terms of the performance objectives and the range of
the possible bonus payment, including the target bonus, which could become
payable if the performance objective are attained.
Awards under this Incentive Plan may be based on a level of various
financial performance criteria, including operating income, and functional
performance objectives, tailored to the job or personalized to the Participant,
which will be captured in a performance guide. The Compensation Committee will
establish criteria for the Company's executive officers and responsible
management and the Executive Committee will assign weightings and approve the
recommended objectives for other employees of the Company. A bonus under the
Incentive Plan shall become payable based upon attainment of the specified
goals during the measurement period.
After the end of each measurement period, the Committee shall
determine the extent to which the performance goals in each Award were met and
the bonus payment due. Each bonus due under an award shall be paid to the
Participant in cash.
If a Participant voluntarily terminates his employment with the
Company or is terminated for cause (as defined in the Incentive Plan) at any
time when a bonus among due or possibly due him under the Incentive Plan;
however, if during any measurement period, a Participant dies, retires under a
then approved plan of the Company, or is terminated by reason of disability (as
defined in the Participant's employment agreement, if applicable) or is
terminated without cause, he shall be entitled to a pro rata portion (based on
time employed during the measurement period) of any bonus under an award which
would have been earned had he remained employed for the duration of such
measurement period.
401(K) PLAN
The Company's domestic employees are eligible to participate in a
defined contribution retirement plan that complies with Section 401(k) of the
Internal Revenue Code (the "Code") and that was adopted by Lawrence prior to
the 1996 IPO for its employees and the employees of its subsidiaries. Pursuant
to the plan, the Company provides matching contributions equal to 50% of the
employee's contribution, subject to a maximum matching contribution equal to 3%
of the employee's compensation.
EMPLOYMENT CONTRACTS WITH EXECUTIVE OFFICERS
Each of Messrs. Lawrence, Farr, Sutton and Tighe (collectively, the
"Executive Officers") has entered into an employment agreement (collectively,
the "Executive Employment Agreements") with the Company. Each of the Executive
Employment Agreements has an initial term through December 31, 2000, except the
Executive Employment Agreement with Mr. Lawrence, which has an initial term
through December 31, 1999. The Executive Employment Agreements provide for a
minimum annual salary during the term of the Executive Employment Agreements of
approximately $100,000, $370,000, $273,000 and $216,000 for Messrs. Lawrence,
Farr, Sutton and Tighe, respectively. The Executive Employment Agreements also
provide for certain automobile allowances, employee benefits, vacation and
reimbursement of expenses.
The Executive Employment Agreements may be terminated by the Company
with or without cause (as hereinafter defined) or by the Executive Officer at
any time for any reason.
If the Company terminates the Executive Employment Agreement for any
reason other than for "cause" and such termination is not within one year of a
change in control (as defined in the Executive Employment Agreements), the
Company is required to pay to the Executive Officer an amount equal to the
greater of his total base salary for the remainder of the employment period (as
defined in the Executive Employment Agreement) or one month of base salary for
each full year of service completed with the Company as of the date of
termination (or, in the case of Mr. Lawrence, three months of his base salary,
if greater) and, with the exception of Mr. Lawrence, (i) to pay an amount equal
to the Executive Officer's most recent annual bonus and (ii) to cause the
Executive Officer to become fully
-10-
<PAGE> 13
vested in any stock options and stock grants held by him. If the Company
terminates the Executive Employment Agreement with Mr. Lawrence for any reason
other than for "cause" and such termination occurs within one year of a change
in control, or if Mr. Lawrence terminates the Agreement for good cause (as
defined in the Executive Employment Agreement) and such termination occurs
within one year of a change in control, the Company is required to pay to Mr.
Lawrence an amount equal to the greater of (i) his total base salary for the
remainder of the employment period; (ii) two times the greater of (a) his
annualized base salary in effect upon the occurrence of the change in control
or (b) his annualized base salary in effect on the date notice of termination
is received; or (iii) one month of base salary for each full year of service
completed with the Company as of the date of termination. If the Company
terminates the Executive Employment Agreement of Messrs. Farr, Sutton or Tighe
for any reason other than for "cause" and such termination occurs within one
year of a change in control, or if the Executive Officer terminates the
agreement for good cause (as defined in the Executive Employment Agreement) and
such termination occurs within one year of a change of control, the Company is
required (i) to pay the Executive Officer 2.99 times his annualized base salary
in effect upon the occurrence of the change in control, (ii) to pay the
Executive Officer an amount equal to 2.99 times the greater of his most recent
annual bonus or a target bonus of $243,000, $50,000 and $50,000 for Messrs.
Farr, Sutton and Tighe, respectively, and (iii) to cause the Executive Officer
to become fully vested in any stock options and stock grants held by him.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
GENERAL POLICY
The Company's executive compensation program is designed to attract,
motivate and retain talented management personnel and to reward management for
successful performance of their duties and improving stockholder value.
Compensation and incentives are provided through a combination of cash salaries
and bonuses and stock-based awards. The Company's overall compensation package
is intended to provide the Company's executive officers with compensation
indicative of their results and performance, with an emphasis on compensation
that rewards the executive for actions that have demonstrably benefited the
long-term interests of the Company. Decisions with respect to compensation for
any particular executive officer are based on a number of subjective and
objective factors, including the individual's performance and contribution to
the future growth of the Company, the financial and operational results of the
Company and industry and market conditions.
Prior to the 1996 IPO, the Company entered into employment agreements
with its then-existing executive officers, including the Company's Chief
Executive Officer. Compensation levels contained in such employment agreements
were established by the Board of Directors, which was comprised entirely of
Messrs. Lawrence, Farr, Sutton and Tighe at such time. These individuals also
established stock-based compensation for the Company's executive officers prior
to the 1996 IPO. Following the 1996 IPO, compensation decisions relating to
the Company's executive officers, including Mr. Farr, have been made by the
Compensation Committee. During 1997, the Compensation Committee initiated a
study by KPMG Peat Marwick LLP (the "KPMG Study"), an internationally
recognized accounting firm, to develop an independent analysis of the
compensation paid to the Company's executive officers and other employees and
recommend objective processes for the determination of future compensation
levels for such employees.
As part of the KPMG Study, KPMG formulated, and the Compensation
Committee adopted, the Incentive Plan in order to provide objective criteria
for the award of bonuses to the Company's executive officers. The Incentive
Plan is designed to replace the Company's historical practices of awarding
executive bonuses based predominately on subjective factors with parameters
that are more objectively tied to corporate performance measures. As part of
the KPMG Study, the Compensation Committee also requested that KPMG review the
stock-based compensation provided to the Company. It is expected that KPMG's
review of this component of executive compensation will be completed during the
first half of 1998. An analysis of the various components of the Company's
compensation structure follows:
-11-
<PAGE> 14
BASE SALARY
The Compensation Committee adjusts annual base salaries based upon its
review of past and present corporate and individual performance based upon the
Compensation Committee's assessment of what is competitive in the industry for
companies of comparable size and past and expected performance in the future
and various other subjective factors. The Compensation Committee, however, has
not completed a formal survey of such other companies. The employment
agreements between the Company and each executive officer require that such
employee's salaries equal or exceed certain base amounts.
During the Transition Period, the Compensation Committee increased the
base salaries of Mr. Farr, the Chief Executive Officer, from $280,000 to
$370,000 per year and Mr. Sutton's and Mr. Tighe's base salaries were increased
to $273,222 and $216,000, respectfully, from $227,685 and $180,000,
respectively. The determination to increase the annual salaries was based
primarily on the Compensation Committee's determination of the past and
expected performance of these individuals. Although the Compensation Committee
believes that Mr. Farr's annual salary is consistent with companies of
comparable size in the industry, it has not done a formal survey of such
companies.
BONUS COMPENSATION
During the Transition Period, the Compensation Committee established
the Incentive Plan, which will provide the basis for granting bonuses to the
Company's executive officers in the future. No bonuses were granted to Mr.
Farr or the other executive officers of the Company during the Transition
Period due to the fact that the Incentive Plan was not complete until December
1997. The Incentive Plan was designed by KPMG at the request of the
Compensation Committee to provide objective criteria for the establishment of
bonuses paid to the Company's executive officers in the future. The
Compensation Committee believes that the Incentive Plan will allow annual
bonuses to be more closely tied to objective measures of corporate performance.
LONG-TERM INCENTIVE COMPENSATION
The Board of Directors also believes that long-term incentive
compensation is an important component of the Company's compensation program
and that the value of long-term incentive compensation should be directly
related to increases in stockholder value. Thus, in addition to base salaries
and bonuses, the Company provides long-term incentive compensation to its
executive officers through stock options and restricted stock awards under the
Company's long-term incentive stock plans.
During the Transition Period, the Compensation Committee granted
Messrs. Farr, Sutton and Tighe 100,000, 65,000 and 65,000 shares of restricted
stock (the "1997 Restricted Stock Grants"). Such shares do not begin vesting
for a period of two years, and then vest in one-quarter increments until they
are completely vested following the sixth anniversary of the original date of
grant. Such vesting is based solely on continued employment with the Company.
In making the 1997 Restricted Stock Grants, the Compensation Committee took
into account KPMG's initial assessment that the level of stock ownership in the
Company by the Company's executive officers was significantly below executive
officer ownership of other companies in the industry. Although KPMG did not
analyze the level of the 1997 Restricted Stock Grants, the Compensation
Committee has requested that KPMG perform an analysis to determine the
necessity and level of grants of restricted stock and stock options in the
future. The Compensation Committee did not grant any additional stock options
to the executive officers during the Transition Period.
COMPENSATION DEDUCTION
Section 162(m) of the Code currently imposes a $1 million limitation
on the deductibility of certain compensation paid to the Company's Chief
Executive Officer and next four highest paid executives. Compensation that
satisfies the definition of "performed based" under the Code is excluded from
this limitation. For compensation to be performance based, it must meet
certain criteria, including being based on predetermined objective standards
approved by the stockholders of the Company. The 1997 Plan and the Incentive
Plan are designed to allow various awards to be granted under such plans to be
excluded from the $1 million limitation under certain circumstances when the
plans are administered by a committee comprised of at least two persons who
would qualify as "outside directors" under Section 162(m). The Company
believes that grants of options, SARs and restricted stock
-12-
<PAGE> 15
conditioned upon the attainment of performance goals by the Compensation
Committee under the Incentive Plan will be considered "performance-based"
compensation under the Code. The Company also believes that bonuses paid under
the Incentive Plan also will be considered "performance-based" compensation
under the Code. The Board of Directors and the Compensation Committee intend
to take into account the potential application of Section 162(m) with respect
to incentive compensation awards and other compensation decisions made by it in
the future.
Bernard J. Duroc-Danner
Al Kite
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PRINCIPAL STOCKHOLDER
Lease Agreements. The Company maintains executive offices in a
building located in Conroe, Texas and occupies four adjacent manufacturing and
maintenance research and development, and storage facilities, all of which are
owned by Lawrence. During the Transition Period, the Company incurred rent
expense of $671,000 relating to such properties. The rental rates under these
new lease agreements were determined by the Company and Lawrence based upon a
survey of rental rates prepared by an independent firm. Based upon this survey,
the Company believes that the rental rates and other terms under these lease
agreements are comparable to those that would be obtained in an arm's-length
transaction with an independent third party.
The Office Lease Agreement is for a five-year term effective as of May
1996, and covers all of the 64,368 square feet of office space in the Conroe
building, as well as the use of access roads and an adjacent outdoor parking
lot. Rent is payable monthly at the rate of $48,276 per month for the first two
years of the lease, $51,226 per month for the third year, $52,781 per month for
the fourth year and $54,390 per month for the fifth year.
The Service Center Lease Agreement is for a five-year term effective
as of May 1996. This lease covers the combined square feet of the district
facility building, 31,316 square feet; the manufacturing building, 31,373
square feet; the open storage building, 17,000 square feet and the separator
building, 1,530 square feet. The use of access roads and immediately
surrounding grounds is also included. Rent is $28,000 per month for all four
buildings in the aggregate.
Relationship Agreement Under the terms of a relationship agreement
between the Company and Lawrence (the "Relationship Agreement"), the Company
has agreed to provide to Lawrence and its affiliates, upon their request and on
an as-available basis, various administrative and management services including
cash management, accounting, tax, data processing, human resources and legal
services. Lawrence pays for such services at rates calculated to recover the
Company's reasonable costs of providing such services. The Relationship
Agreement also provides that Lawrence will render to the Company technical
consulting services when requested by the Company. In return, the Company will
pay Lawrence approximately $250,000 per year for the term of the Relationship
Agreement. The Relationship Agreement commenced upon the closing of the 1996
IPO and terminates on April 30, 1999. In addition, under the Relationship
Agreement, Lawrence and the Company have agreed to reimburse each other for the
costs of certain insurance policies purchased by one party on behalf of the
other. As of December 31, 1997, Lawrence owed the Company approximately
$136,000, for products and services rendered pursuant to the Relationship
Agreement.
Registration Rights Agreement. Pursuant to the terms of a
registration rights agreement with Lawrence (the "Lawrence Registration Rights
Agreement"), upon the request of Lawrence (or certain assignees) for a period
of ten years (beginning in 1996), the Company has agreed to register, on up to
two occasions, the sale of a minimum of 500,000 shares and up to all 5,000,000
shares of Class B Common Stock beneficially owned by Lawrence that Lawrence (or
such assignees) requests to be registered under the Securities Act and
applicable state securities laws. The Company will become obligated to register
the sale of the Class B Common Stock on one additional occasion if Mr. Lawrence
dies during the term of the Lawrence Registration Rights Agreement and Lawrence
previously has exhausted its two demand
-13-
<PAGE> 16
registrations. The Company also is obligated to offer Lawrence and certain
assignees the right to include shares of the Class B Common Stock owned by it
in certain registration statements filed by the Company. The Company is
obligated to pay all expenses incidental to such registrations, excluding fees
of counsel to Lawrence, underwriters' discounts and commissions, and transfer
fees.
OTHER
In January 1997, the Company loaned Mr. Farr $250,000 pursuant to a
five-year promissory note. Interest accrues at the prime rate and is payable
monthly by Mr. Farr. The note is secured by a pledge of 36,000 shares of Class
A Common Stock held by Mr. Farr.
In August 1997, John W. Sinders, Jr., and Executive Vice President of
Jefferies, accepted his appointment as a non-voting advisory director of the
Board of Directors of the Company. Jefferies has provided investment banking
services to the Company in the past, including serving as lead underwriter in
the Company's initial public offering and as the initial purchaser in the sale
and issuance of $115 million principal amount of the Company's 9 3/4% Senior
Notes due 2007 (the "Old Notes") in August 1997, for which Jefferies has
received usual and customary fees. In February 1998, Jefferies sold the Old
Notes to the Company contemporaneously with the closing of the issuance of the
Company's 9 1/2% Senior Notes due 2008 (the "Outstanding Notes") at an
aggregate price of 111% of their principal amount, plus accrued and unpaid
interest up to, but not including, the date of payment. Jefferies also acted
as the initial purchaser in the sale of the Outstanding Notes, for which it
received usual and customary fees. Pursuant to a letter agreement between the
Company and Jefferies, Jefferies has acted and will continue to act as a
financial advisor to the Company in connection with the acquisition of, merger
or other combination with certain potential acquisition targets. If the Company
completes a transaction with any such target, the Company will pay Jefferies
certain usual and customary fees for such services. Except for usual and
customary fees paid in connection with the acquisitions of Directional Wireline
Services, Inc., DAMCO Services, Inc. and DAMCO Tong Services, Inc. and $1.0
million in connection with other financial advisory services, the Company has
not paid Jefferies and is not obligated to pay Jefferies any compensation for
services rendered under this agreement or otherwise to date. Jefferies may
provide additional investment banking and financial advisory services to the
Company in the future.
-14-
<PAGE> 17
PERFORMANCE GRAPH
The following graph compares the cumulative stockholder return on the
Common Stock of the Company, for the period from August 14, 1996, the date on
which the Company's Class A Common Stock was first registered under Section 12
of the Securities Exchange Act of 1934, as amended, through December 31, 1997,
with the cumulative total return of the NASDAQ Stock Market (U.S.) Index and
the S&P Oil & Gas (Drilling & Equip) Index. The graph assumes investment of
$100 on August 14, 1996 and reinvestment of all dividends.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------------
8/15/96 4/31/97 12/31/97
------- ------- --------
<S> <C> <C> <C>
Dailey International Inc. 100 84.85 131.82
Nasdaq Stock Market (U.S.) 100 116.33 146.39
SP Oil and Gas (Drilling & Equipment) 100 131.82 191.16
</TABLE>
-15-
<PAGE> 18
The foregoing graph is based on historical data and is not necessarily
indicative of future performance. This graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to the Regulations of 14A or 14C under the Exchange Act
or to the liabilities of Section 18 under such act.
-16-
<PAGE> 19
SECURITY OWNERSHIP OF MANAGEMENT AND
PRINCIPAL STOCKHOLDER
The following table sets forth certain information regarding the
beneficial ownership of the Class A Common Stock and Class B Common Stock on
the Record Date, by (i) each director and director nominee of the Company, (ii)
each Named Executive Officer, (iii) each person known or believed by the
Company to own beneficially 5% or more of either the Class A Common Stock or
Class B Common Stock and (iv) all directors and executive officers as a group.
Unless otherwise indicated, each person has sole voting and dispositive power
with respect to such shares.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
----------------------------
CLASS A CLASS B PERCENT(2)
NAME AND ADDRESS OF COMMON PERCENT COMMON PERCENT VOTING
BENEFICIAL OWNER STOCK CLASS A STOCK CLASS B POWER
------------------- ------- ------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Lawrence(3) . . . . . . . . . . . . . . . -- -- 5,000,000 100% 86.0%
J.D. Lawrence(3). . . . . . . . . . . . . -- -- 5,000,000 100% 86.0%
3i Group plc (4) . . . . . . . . . . . . 450,873 7.9% -- -- 1.1%
Robertson, Stephens & Co. Investment 292,400 5.1 -- -- *
Management L.P. (5) . . . . . . . . . .
James F. Farr (6) . . . . . . . . . . . . 233,912 4.1 -- -- *
William D. Sutton (6) . . . . . . . . . . 210,912 3.6 -- -- *
David T. Tighe (6) . . . . . . . . . . . 214,912 3.7 -- -- *
Bernard J. Duroc-Danner (7) . . . . . . . 21,819 * -- -- *
Marvin Gearhart (8) . . . . . . . . . . . 3,000 * -- -- *
Al Kite (7) . . . . . . . . . . . . . . . 21,819 * -- -- *
John W. Sinders (8) . . . . . . . . . . . 1,819 * -- -- *
Martin Lyons (9) . . . . . . . . . . . . 19,199 * -- -- *
Chaman Malhotra (9) . . . . . . . . . . . -- -- -- -- --
All executive officers and directors as a 767,392 12.7 5,000,000 100% 87.2
group (7 Persons) (3), (6), (7)
and (8) . . . . . . . . . . . . . . . .
</TABLE>
- ----------
* Less than 1%.
(1) The Commission has defined beneficial ownership to include sole or
shared voting or investment power with respect to a security or the
right to acquire beneficial ownership of a security within 60 days.
The number of shares indicated are owned with sole voting and
investment power unless otherwise noted.
(2) Percent based upon both Class A Common Stock and Class B Common Stock,
combined.
(3) Represents shares owned by Dailey Holdings Inc. ("Dailey Holdings"), a
wholly-owned subsidiary of Lawrence. The executive offices of Dailey
Holdings and Lawrence are located at 2507 North Frazier, Conroe, Texas
77305. Mr. Lawrence and trusts for his children own all of the voting
stock of Lawrence. Because of these relationships, Mr. Lawrence may be
deemed to be the beneficial owner of all shares of Class B Common
Stock owned by Lawrence.
(4) 3i Group plc acquired its shares in connection with the Company's
recent acquisition of Integrated Drilling Services Limited. Amounts
exclude shares held in escrow pursuant to such transaction. 3i Group
plc's address is 91 Waterloo Road, London SE1 8XP.
(5) Based solely on a Schedule 13D and all amendments thereto (the
"Schedule 13D") filed on behalf of the Robertson Stephens Orphan Fund,
Robertson, Stephens & Company Investment Management, L.P. ("RS&Co.,
L.P."), Bayview Investors, Ltd., The Robertson Stephens & Company
Global Natural Resources Fund (the "Natural Resources Fund"), The
Robertson Stephens Partners Fund (the "Partners Fund"), Robertson,
Stephens & Company, Inc. ("RS&Co. Inc.") and RS&Co., Inc.'s five
shareholders, Messrs. Sanford R. Robertson, Paul H. Stephens, Michael
G. McCaffery, G. Randy Hecht, and Kenneth R. Fitzsimmons
(collectively, the "Robertson
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<PAGE> 20
Shareholders"). Based on the Schedule 13D, RS&Co., L.P., as general
partner of the Natural Resources Fund and the Partners Fund,
beneficially owns the 161,400 shares and 131,000 shares of Class A
Common Stock owned by the Natural Resources Fund and Partners Fund,
respectively. RS&Co, Inc., as general partner of RS&Co., L.P. is
deemed to beneficially own the 292,400 shares of Class A Common Stock
beneficially owned by RS&Co., L.P. Based on the Schedule 13D, the
Robertson Shareholders disclaim any ownership of the shares of Common
Stock beneficially owned by RS&Co., Inc.
(6) Includes presently exercisable options to purchase 97,912 shares of
Class A Common Stock.
(7) Includes presently exercisable options to purchase 20,000 shares of
Class A Common Stock. Excludes options to purchase 10,000 shares of
Class A Common Stock that are not exercisable within 60 days.
(8) Excludes options to purchase 10,000 shares that are not exercisable
within 60 days.
(9) Excludes option to purchase 20,000 shares that are not exercisable
within 60 days. In the case of Mr. Lyons, includes presently
exercisable options to purchase 19,199 shares.
-18-
<PAGE> 21
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who beneficially own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten-percent stockholders are
required by the regulations promulgated under Section 16(a) to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the Transition
Period, all filing requirements applicable to officers, directors, and greater
than ten-percent stockholders were complied with.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was
not aware of any matter to be presented at the Meeting other than as set forth
herein. If any other matters are properly brought before the Meeting, however,
the shares represented by valid proxies will be voted with respect to such
matters in accordance with the judgment of the persons voting them.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING.
Any proposal by a Stockholder to be presented at the Company's 1998
Annual Meeting of Stockholders must be received at the offices of the Company,
One Lawrence Centre, 2507 North Frazier, P.O. Box 1863, Conroe, Texas
77305-2866 not later than January 31, 1999.
ANNUAL REPORT
The Company has elected to satisfy its obligation to furnish an Annual
Report to stockholders by providing stockholders with a copy of its Transition
Report on Form 10-K for the Transition Period ended December 31, 1997, as filed
with the Securities and Exchange Commission, less exhibits. The financial
statements and related information contained therein are incorporated by
reference into this Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
William D. Sutton
Secretary
May 6, 1998
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<PAGE> 22
THIS PROXY IS BEING SOLICITED BY THE BOARD OF
DIRECTORS OF DAILEY
INTERNATIONAL INC.
PROXY
DAILEY INTERNATIONAL INC.
The undersigned hereby appoints James
F. Farr and David T. Tighe, and each of them, as proxies with full power
of substitution in each, to vote all the shares of Dailey International
Inc. of the undersigned at the Annual Meeting of Stockholders to be held
on Tuesday, June 2, 1998 at 10:00 a.m. at The Grove Park Inn Resort,
Roosevelt "K" Room, 290 Grove Park Inn Resort, 290 Macon Avenue,
Asheville, North Carolina 28804-3799 and any adjournment thereof as
specified on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
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<PAGE> 23
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
DAILEY INTERNATIONAL INC.
JUNE 2, 1998
Please Detach and Mail in the Envelope Provided
<TABLE>
<S> <C> <C>
[X] PLEASE MARK YOUR
A VOTES AS INDICATED
IN THIS EXAMPLE
AUTHORITY
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of NOMINEES: 2. Ratify the appointment of
Directors [ ] [ ] Al Kite Ernst & Young LLP as the [ ] [ ] [ ]
John W. Sinders, Jr. Company's auditors for the
fiscal year ended December 31,
1998.
3. Other Business.
In their discretion,the proxies are authorized to vote upon
such other business as may properly comes before the
[ ] meeting. The Board of Directors at present knows of no
other formal business to be brought before the meeting.
Instruction: To withhold authority for one of the
nominees listed at right, write that nominee's name on
the line above.
Signature: Date: Signature: Date:
---------------------------------- ---------------------- --------------------------- ------------------
Important: Please sign exactly as name appears here on. Administrators, Guardians, Attorneys or any other representative should
give full title. Corporate stockholders sign with full corporate name by a duly authorized officer. If a partnership,
sign partnership name by authorized person.
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