<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
TranCoastal Marine Services, 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)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
TRANSCOASTAL MARINE SERVICES, INC.
2925 BRIARPARK DRIVE, SUITE 930
HOUSTON, TEXAS 77042
---------------------
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1998
---------------------
Dear Stockholder:
You are cordially invited to the Annual Meeting of Stockholders of
TransCoastal Marine Services, Inc. (the "Company") to be held on Wednesday, May
27, 1998. The meeting will be held at the Adam's Mark Hotel, 2900 Briarpark
Drive, Houston, Texas, 77042 at 9:00 a.m. local time.
As set forth in the accompanying Proxy Statement, the meeting will be held
for the following purposes:
1. To elect 10 directors of the Company to serve until the next annual
meeting or until his/her respective successor has been duly elected
and qualified;
2. To ratify the Board of Directors' appointment of Arthur Andersen LLP
as independent auditors of the Company for the fiscal year ending
December 31, 1998;
3. To approve an amendment to the 1997 Stock Option Plan; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 31, 1998,
as the record date for determination of stockholders who are entitled to notice
of and to vote either in person or by proxy at the 1998 Annual Meeting of
Stockholders and any adjournment thereof.
All stockholders are cordially invited to attend the meeting. STOCKHOLDERS
ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING, TO COMPLETE, DATE AND
SIGN THE ACCOMPANYING PROXY AND TO RETURN IT PROMPTLY IN THE POSTAGE-PAID RETURN
ENVELOPE PROVIDED. If a stockholder who has returned a proxy attends the meeting
in person, such stockholder may revoke the proxy and vote in person on all
matters submitted at the meeting.
By Order of the Board of Directors,
Allyson B. Fox
General Counsel and Secretary
Houston, Texas
April 24, 1998
<PAGE> 3
TRANSCOASTAL MARINE SERVICES, INC.
PROXY STATEMENT
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement and the accompanying proxy card are furnished to the
stockholders of TransCoastal Marine Services, Inc., a Delaware corporation (the
"Company"), in connection with the solicitation by and on behalf of the Board of
Directors of the Company of proxies for use at the 1998 Annual Meeting of
Stockholders of the Company ("Annual Meeting") to be held on Wednesday, May 27,
1998, at 9:00 a.m. local time, at the Adam's Mark Hotel, 2900 Briarpark Drive,
Houston, Texas, 77042 and any adjournment thereof. The Company will pay all
costs of soliciting proxies. Solicitation of proxies will be primarily by mail.
In addition to solicitation by mail, officers, directors and employees of the
Company may solicit proxies in person or by telephone and facsimile
transmission, for which such persons will receive no additional consideration.
The Company will reimburse brokerage houses, banks and other custodians,
nominees and fiduciaries for their reasonable expenses in forwarding proxy
material to beneficial owners of the Company's common stock, par value $.001 per
share ("Common Stock").
The persons named as proxies were designated by the Board of Directors and
are officers and directors of the Company. All properly executed proxies will be
voted (except to the extent that authority to vote has been withheld), and where
a choice has been specified by the stockholder as provided in the proxy, the
proxy will be voted in accordance with the specification so made. Proxies
submitted without specification will be voted FOR Proposal 1 to elect the
nominees for director proposed by the Board of Directors, FOR Proposal 2 to
ratify the Board of Directors' appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 1998, and FOR
Proposal 3 to amend the 1997 Stock Option Plan.
Any stockholder may revoke his or her proxy at any time before it is voted
at the meeting by duly executing a proxy bearing a later date. A proxy may also
be revoked by any stockholder at any time before it is voted by filing with the
Secretary of the Company a written notice of revocation or by voting in person
at the meeting. The mailing address of the executive office of the Company is
2925 Briarpark Drive, Suite 930, Houston, Texas 77042. The requirement for a
quorum at the meeting is the presence in person or by proxy of holders of a
majority of the outstanding shares of Common Stock. There is no provision for
cumulative voting.
Only stockholders of record at the close of business on March 31, 1998 will
be entitled to notice of, and to vote at, the meeting. As of such date,
8,898,441 shares of the Company's Common Stock were outstanding. Each of such
outstanding shares is entitled to one vote at the meeting. This Proxy Statement
and accompanying proxies are initially being mailed to stockholders of the
Company on or about April 24, 1998. The Annual Report of the Company for the
fiscal year ended December 31, 1997 is being mailed to stockholders under the
same cover as this Proxy Statement.
ELECTION OF DIRECTORS
PROPOSAL 1
The Board of Directors currently consists of ten directors, each of whom
will stand for reelection at the Annual Meeting. Subject to the foregoing, each
of the ten directors to be elected at the Annual Meeting will hold office for
the ensuing year and until his/her successor is elected and qualified. It is
intended that the accompanying proxy, if furnished, will be voted for the
election to the Board of Directors of the ten nominees named below. Although the
Board of Directors has no reason to believe that the nominees will be unable to
serve as directors, if a nominee withdraws or otherwise becomes unavailable to
serve, the persons named as proxies will vote for any substitute nominee
designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
NAMED BELOW.
<PAGE> 4
The following information with respect to each person nominated for
election as a director has been furnished to the Company by the nominees as of
March 31, 1998.
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BUSINESS EXPERIENCE AGE SINCE
---------------------------- --- --------
<S> <C> <C>
Bill E. Stallworth.......................................... 65 1997
Bill E. Stallworth has served as Chairman of the Board and
Chief Executive Officer of the Company since August 1997.
Mr. Stallworth served in various capacities with Brown &
Root, Inc. ("Brown & Root") from 1956 to 1986, including
the position of President of Brown & Root International,
Inc. and as a member of Brown & Root's Board of Directors
from 1981 to 1986. Mr. Stallworth founded an engineering
and construction consulting company in 1986, which
provides services in the international oil and gas and
construction industries. Mr. Stallworth is currently
serving on the Board of Directors of Fugro N.V., a
multi-national consulting company, and on the Texas A&M
Board of Advisors for the Center of International Business
Studies.
Thad "Bo" Smith............................................. 56 1997
Thad "Bo" Smith has served as President and Chief
Operating Officer of the Company since August 1997. From
January 1997 to August 1997, he worked as an independent
consultant in the areas of business strategy and product
development. From 1967 to 1996, Mr. Smith held various
positions with Brown & Root, where his last position was
President of Brown & Root's Worldwide Service, Civil and
Environmental Business. Mr. Smith was with Brown & Root's
Marine Division from 1967 to 1986 serving in various
positions including Senior Vice President, with
responsibilities for its European and African offshore oil
and gas construction business. Mr. Smith is currently
serving on the University of Houston College of Business
Dean's Executive Advisory Board and is a Director for the
Houston Area Research Council.
Nathan M. Avery............................................. 63 1997
Mr. Avery became a director of the Company on the closing
of the initial public offering (the "Offering") in
November 1997. Since 1972, Mr. Avery has served as
Chairman of the Board, President and Chief Executive
Officer of Galveston-Houston Company, a company
specializing in manufacturing oilfield service products.
He has been active in the oil and gas industry since the
1960s. Mr. Avery is currently a director and member of the
Executive Committee of Daniel Industries, Inc. and a
director of Prime Cable. He is also an advisory director
of Cooper Cameron Corporation. Mr. Avery was Chairman of
the Board of the Board of Directors of Bettis Corporation
until December 1996.
Patrick B. Collins.......................................... 69 1997
Mr. Collins was elected to the Board of Directors in
September 1997. From 1967 to 1991, Mr. Collins was a
partner with Coopers & Lybrand LLP. Since 1991, Mr.
Collins has been an independent business consultant
specializing in financial and accounting matters. Mr.
Collins is currently serving on the Board of Directors of
HCC Insurance Holdings, Inc., a property and casualty
insurance company based in Houston, Texas.
Beldon E. Fox, Jr. ......................................... 61 1997
Mr. Fox became a director of the Company in November 1997.
He served as Chief Operating Officer of The Red Fox
Companies of New Iberia, Inc., one of the founding
companies, from November 1989 until the closing of the
Offering, at which time he assumed the position of
President.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BUSINESS EXPERIENCE AGE SINCE
---------------------------- --- --------
<S> <C> <C>
Daniel N. Hargett, Sr. ..................................... 58 1997
Mr. Hargett became a director of the Company on the
closing of the Offering in November 1997. He served as
Chief Executive Officer of CSI, one of the founding
companies, from 1963 through March 1998. In 1981, Mr.
Hargett founded Hargett Mooring & Marine, Inc., a supplier
of vessels providing marine construction support.
H. Daniel Hughes II......................................... 38 1997
Mr. Hughes became a director of the Company on the closing
of the Offering in November 1997. Mr. Hughes served as the
President of HBH, one of the founding companies of the
Company, from 1993 through March 1998 and served as its
Vice President from 1991 to 1993. Prior to joining HBH, he
held various positions in related entities since 1981,
including service as President of Dixie Machine Welding
and Metalworks, Inc., a topside ship repair and industrial
fabrication company.
Clifford E. McFarland....................................... 42 1997
Mr. McFarland was elected to the Board of Directors in
September 1997. In November 1991, Mr. McFarland co-founded
McFarland, Grossman & Company, Inc., a Houston,
Texas-based investment banking and financial advisory
firm, and has served as its Managing Director and
President since that time. Mr. McFarland is currently
serving on the Board of Directors of Teletouch
Communications, Inc. of Tyler, Texas.
D. Glenn Richardson......................................... 54 1997
Mr. Richardson was elected to the Board of Directors in
September 1997. Mr. Richardson founded Falcon Drilling
Company, Inc. of Houston, Texas, for which he served as a
director and as President and Chief Operating Officer from
1990 until his retirement in June 1996. Mr. Richardson
founded Glendel Drilling Company, Inc., a barge drilling
rig operator based in Abbeville, Louisiana, and served as
its President from 1980 to 1989. Mr. Richardson currently
owns and operates a cattle ranch in Louisiana.
Jean Savoy.................................................. 49 1997
Mr. Savoy was elected to the Board of Directors in
September 1997. Mr. Savoy is a member and manager of J&D
Capital, L.C., a consulting and financial services company
based in Lafayette, Louisiana. For more than the past 25
years, Mr. Savoy has served as an independent directional
and horizontal drilling consultant for independent and
major oil and gas companies and various directional
drilling concerns.
</TABLE>
<PAGE> 6
DIRECTORS AND COMMITTEES
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
On October 27, 1997, the Board of Directors established an Executive
Committee, an Audit Committee, and a Compensation Committee. The Executive
Committee advises the Board of Directors on matters relating to the senior
management of the Company. The Executive Committee consists of Messrs.
Stallworth, Hargett, Savoy, McFarland and Avery. The Audit Committee recommends
the appointment of auditors and oversees the accounting and audit functions of
the Company. The Audit Committee consists of Messrs. Collins, McFarland and
Savoy. The Compensation Committee determines executive officers' and key
employees' salaries and bonuses and administers the 1997 Stock Option Plan (the
"Plan"). During 1997, Messrs. Richardson, Avery and Savoy served as members of
the Compensation Committee. On January 29, 1998, the Board of Directors approved
the increase in the number of directors on the Compensation Committee from three
to four, and elected Patrick Collins to membership on the Compensation
Committee.
The Board of Directors held two meetings during 1997, and the Executive
Committee met one time during 1997. No meetings of the Audit or Compensation
Committees were held during 1997, although such committees did meet in 1998.
Each of the directors attended at least 75% of the meetings of the Board of
Directors and any committee on which they served during 1997.
DIRECTOR COMPENSATION
During 1997, each member of the Board of Directors who was not a full-time
employee of the Company (a "non-employee director") was paid (i) $1,250,
representing a quarterly installment of an annual retainer of $5,000, and (ii)
$500 per meeting of the Board of Directors or any committee thereof (unless held
on the same day as a Board meeting) at which the director was present. Directors
who are officers of or employed by the Company or any of its subsidiaries do not
receive additional compensation for serving as directors of the Company or
attending Board of Directors or committee meetings. All directors are reimbursed
for all ordinary and necessary expenses incurred in attending any meeting of the
Board of Directors or any committee thereof, or otherwise incurred in their
capacity as directors.
Pursuant to an October 1997 action of the Board of Directors and under the
terms of the 1997 Stock Option Plan, the Company approved Non-qualified Options
for each of the initial non-employee directors as follows (the "non-employee
director awards"): (i) the automatic grant to each of the initial non-employee
directors (including those elected to begin service upon completion of the
Offering) of options to purchase 5,000 shares, effective as of the date of the
Offering, at an exercise price of $18.00 per share, (ii) the automatic grant to
each non-employee director elected after the completion of the Offering of
options to purchase 5,000 shares, effective on the date of such person's initial
election as a director, at an exercise price equal to the fair market value of
the Common Stock on the date of such grant, and (iii) the automatic grant to
each non-employee director of options to purchase 5,000 shares at each annual
meeting of stockholders thereafter at which such director is re-elected or
remains a director, unless such annual meeting is held within three months
following such person's election as a director, at an exercise price equal to
the fair market value of the Common Stock on the date of such grant. The Company
has reserved 100,000 shares of Common Stock for issuance pursuant to the
non-employee directors awards; however, the Board of Directors may revoke at any
time the next automatic grant of options otherwise provided for pursuant to the
non-employee director awards. Each option granted pursuant to the non-employee
director awards shall be exercisable in full six months after the date of grant
and shall expire ten years after the date of grant, unless sooner exercised or
cancelled due to termination of service or death.
During March 1998, the Board of Directors approved the following changes to
non-employee director compensation: (i) an increase in the annual retainer from
$5,000 to $18,000, and (ii) an increase in the per meeting compensation for the
Board of Directors from $500 to $1,000. Compensation for committee meetings was
retained at $500 per meeting for meetings held on days other than Board
meetings. Additionally, members of the Board of Directors are entitled to
receive either in full or in part, Common Stock Options in lieu of the annual
retainer, based on the market value of the Common Stock at the time of the
Annual Meeting.
<PAGE> 7
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
PROPOSAL 2
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Arthur Andersen LLP, Certified Public Accountants, as the Company's
independent accountants for the fiscal year ended December 31, 1998, subject to
ratification of this appointment by the stockholders of the Company. Arthur
Andersen LLP performed audit services in connection with the examination of the
financial statements of the Company and its subsidiaries for the fiscal year
ended December 31, 1997, and is considered by management of the Company to be
well qualified. Representatives of Arthur Andersen LLP will be present at the
Annual Meeting and will have an opportunity to make a statement if they desire
to do so and to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
BOARD OF DIRECTORS' APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
OF THE COMPANY FOR THE YEAR ENDED DECEMBER 31, 1998.
AMENDMENT TO 1997 STOCK OPTION PLAN
PROPOSAL 3
In August 1997, the Board of Directors and the stockholders of the Company
approved the 1997 Stock Option Plan (the "Plan"). The Plan provides for the
granting of stock options ("Options") to directors, executive officers, certain
other employees and certain non-employee consultants of the Company. Within
certain limitations provided by the Plan, such Options may include provisions
regarding vesting, exercise price, the amount of each grant and other terms as
shall be approved by the Board of Directors or by a committee designated by the
Board. Options granted under the Plan may be either options that qualify as
"incentive stock options," within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") ("Incentive Options"), or those
that do not qualify as such ("Non-qualified Options"). The Plan, which permits
up to 750,000 shares of Common Stock to be issued, terminates in August 2007.
The Company has reserved 100,000 of these shares to be issued pursuant to
non-employee director awards.
THE AMENDMENT
The Board of Directors has adopted and proposes that the stockholders
approve an amendment to the Plan that will permit the number of shares of the
Company's Common Stock reserved for awards to be increased from 750,000 shares
to 1,050,000 shares. The Board of Directors believes that such approval is
essential to enable the Company to continue to attract and retain key employees
in an extremely competitive industry.
GENERAL
The Plan is administered by the Board of Directors upon recommendation by
the Compensation Committee of the Board, which committee, to the extent
required, will be constituted so as to qualify for certain exemptions under Rule
16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and, to satisfy the requirements of Section 162(m) of the Code. Subject to the
terms of the Plan, the Board of Directors, upon recommendation by the
Compensation Committee, determines the persons to whom Options are granted and
the terms and the number of shares covered by each Option. The term of each
Option may not exceed ten years from the date the Option is granted, or five
years in the case of an Incentive Option granted to a holder of more than 10% of
the fully diluted capital stock of the Company. Non-qualified Options and
Incentive Options may become exercisable six months after the date of grant and
may continue to be exercisable, in whole or in part, up to ten years after the
date of grant (with the exception of Incentive Options granted to a holder of
more than 10% of the fully diluted capital stock of the Company), as determined
by the Board or the Compensation Committee.
<PAGE> 8
The Plan provides that all Non-qualified Options and Incentive Options
which are not exercisable on the date of termination of an Optionholder's
employment generally expire when the optionee ceases to be affiliated with the
Company; however, the Board of Directors, upon recommendation by the
Compensation Committee, may, in its discretion, permit the holder to exercise
unvested Options following such termination for specified periods of time if the
six-month waiting period has been satisfied. Options may not be transferred
other than by will or the laws of descent and distribution, and during the
lifetime of an optionee may be exercised only by the optionee. The Plan provides
that each stock option agreement with respect to any Non-qualified Option or
Incentive Option shall specify the effects of termination of employment or
consulting on exercisability of such options.
The Plan contains a provision accelerating the exercisability of Options
upon the occurrence of specified events, including merger, consolidation,
dissolution or liquidation of the Company. The acceleration of vesting of
Options in the event of a merger or other similar event may be seen as an
anti-takeover provision and may have the effect of discouraging a proposal for
merger, a takeover attempt or other efforts to gain control of the Company.
Payment on the exercise of an Option may be in cash, by check or, at the
discretion of the Board, by delivery of shares of Common Stock with a "fair
market value," as defined in the Plan, equal to the aggregate exercise price, or
by means of a "cashless exercise" involving the sale of shares by, or a loan
from, a broker.
FEDERAL INCOME TAX CONSEQUENCES OF THE 1997 STOCK OPTION PLAN
Incentive Stock Options. An employee who has been granted an incentive
stock option will not realize taxable income at the time of the grant or
exercise (but in some circumstances may be subject to an alternative minimum tax
as a result of the exercise) of such option and the Company will not be entitled
to a deduction at either such time. If the employee makes no disposition of
shares acquired pursuant to an incentive stock option within two years from the
date of the grant of such option, or within one year of the transfer of such
shares to him or her, any gain or loss realized on a subsequent disposition of
such shares will be treated as a long-term capital gain or loss. Under such
circumstances, the Company will not be entitled to any deduction for federal
income tax purposes. If the foregoing holding period requirements are not
satisfied, a portion of any gain in the year of disposition will be taxable to
the employee as ordinary income, and the Company will be entitled to a
corresponding deduction. The Company will not be entitled to any deduction in
connection with any loss to the employee or the portion of any gain that is
taxable to the employee as short-term or long-term capital gain.
Nonqualified Stock Options. Nonqualified stock options (options that are
not incentive stock options) will not qualify for special federal income tax
treatment. No tax is imposed on the optionee upon the grant of a nonqualified
stock option. Upon exercise of a nonqualified stock option, the employee will
realize ordinary income in an amount measured by the excess, if any, of the fair
market value of the shares on the date of exercise over the option exercise
price and the Company will be entitled to a corresponding deduction, provided
the Company withholds income tax with respect to such amount. However, 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 withholding requirements are
satisfied) should be deferred and should be measured based upon the fair market
value of the shares at the time the restrictions lapse. The restrictions imposed
on officers, directors, and 10% stockholders by Section 16(b) of the Securities
Exchange Act of 1934, as amended, are restrictions during such period prescribed
thereby if other shares have been purchased by such an individual within six
months of the exercise of a nonqualified stock option. Ordinary income realized
upon the exercise of a nonqualified stock option is not an adjustment for
alternative minimum tax purposes.
Withholding. The company has the right to deduct from any or all awards any
taxes required by law to be withheld and to require any payments necessary to
enable it to satisfy its withholding obligations.
Deductibility. As discussed in the Compensation Committee Report, the 1997
Stock Option Plan (the "Plan") has been designed to meet the requirements in
Section 162(m) of the Internal Revenue Code for
<PAGE> 9
stock options, including the requirements that all options have an exercise
price that is no less than the fair market value of the Common Stock on the
grant date and that the plan state the maximum number of shares that can be
issued during a specified period to an individual employee under the Plan. Thus,
the provisions of Section 162(m) should not limit the Company's ability to
deduct all of the compensation income generated in connection with the exercise
of stock options granted under the Plan.
BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of the shares represented at the 1998
Annual Meeting of Stockholders in person or by proxy will be needed to approve
the amendment. The Board of Directors believes that such approval is essential
to enable the Company to continue to attract and retain key employees in an
extremely competitive industry.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE 1997 STOCK
OPTION PLAN.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of March 31, 1998 as to (i) each
person or entity known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock (a "5% Stockholder"), (ii) each of the
Company's current directors, (iii) each of the executive officers of the
Company, and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY BENEFICIALLY
STOCKHOLDER OWNED(1) OWNED(1)
- ----------- ------------ ------------
<S> <C> <C>
Jean Savoy(2)(3)(6)......................................... 742,500 8.3%
G. Darcy Klug(2)(3)......................................... 737,500 8.3%
J&D Capital, L.C.(2)(3)..................................... 737,500 8.3%
The Succession of Herbert D. Hughes......................... 500,000 5.6%
Louis Woodson............................................... 483,333 5.4%
Daniel N. Hargett, Sr. ..................................... 444,444 5.0%
Bill E. Stallworth.......................................... 109,000 1.2%
Thad "Bo" Smith(4).......................................... 101,100 1.1%
Johnnie W. Domingue......................................... 76,200 *
Beldon E. Fox, Jr.(3)....................................... 75,000 *
Clifford E. McFarland(5)(6)................................. 45,000 *
Patrick B. Collins(6)....................................... 8,750 *
H. Daniel Hughes II......................................... -- *
D. Glenn Richardson(6)...................................... 5,000 *
Nathan M. Avery(6).......................................... 5,000 *
All executive officers and directors as a group (11
persons).................................................. 1,611,994 18.1%
</TABLE>
- ---------------
* Less than one percent of the Company's Common Stock.
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rule, beneficial ownership includes any shares as to which the
individual or entity has voting power or investment power and any shares
which the individual has the right to acquire within 60 days of March 31,
1998 through the exercise of any stock option or other right. Unless
otherwise indicated in the footnotes, each person or entity has sole voting
and investment power (or shares such powers with his spouse) with respect
to the shares shown as beneficially owned.
<PAGE> 10
(2) Shares shown include 737,500 shares held by J&D Capital, L.C., of which Mr.
Klug owns 73.75% and Mr. Savoy owns 26.25% of the membership interests.
(3) The indicated holders are parties to an exchange agreement whereby they
agreed, in participation with one other stockholder, to exchange an
aggregate of 250,000 shares of Common Stock for an equal number of shares
of Restricted Common Stock. The indicated shares beneficially owned have
not been reduced by the individual participation in this share exchange.
(4) Includes 100 shares of Common Stock held by Mr. Smith's daughter for which
he disclaims beneficial ownership.
(5) Shares shown reflect a warrant to purchase 10,000 shares of Common Stock
owned directly by Mr. McFarland, and a warrant to purchase 30,000 shares of
Common Stock held indirectly through McFarland, Grossman & Company, Inc., an
investment banking and financial advisory firm for which Mr. McFarland
serves as Managing Director and President.
(6) Includes the right to acquire 5,000 shares of Common Stock within 60 days
upon the exercise of outstanding stock options.
The address of each 5% Stockholder is as follows:
<TABLE>
<CAPTION>
5% STOCKHOLDER ADDRESS
-------------- -------
<S> <C>
J&D Capital, L.C. 217 West University
Jean Savoy Lafayette, Louisiana 70506
G. Darcy Klug
The Succession of Herbert D. Hughes The Succession of Herbert D. Hughes
c/o Elizabeth DePass, Executrix
Diversified Group, Inc.
5801 Citrus Boulevard
Harahan, Louisiana 70123
Louis Woodson 205 Shannon Road
Lafayette, Louisiana 70503
Daniel N. Hargett, Sr. 116 Shannon Road
Lafayette, Louisiana 70501
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of reports on Forms 3 and 4 and amendments
thereto furnished to the Company during its most recent fiscal year and reports
on Form 5 and amendments thereto furnished to the Company with respect to its
most recent fiscal year, and written representations from certain reporting
persons that no Form 5 was required, the Company believes that all filing
requirements applicable to its officers, directors and beneficial owners under
Section 16(a) of the Exchange Act were complied with during fiscal 1997.
EXECUTIVE OFFICERS
Set forth below is the age (as of March 31, 1998), positions held with the
Company and certain other business experience information for each of the
Company's executive officers.
Bill E. Stallworth, 65, has served as Chairman of the Board and Chief
Executive Officer of the Company since August 1997. Mr. Stallworth served in
various capacities with Brown & Root, Inc. ("Brown & Root") from 1956 to 1986,
including the position of President of Brown & Root International, Inc. and as a
member of Brown & Root's Board of Directors from 1981 to 1986. Mr. Stallworth
founded an engineering and construction consulting company in 1986, providing
services in the international oil and gas and construction industries.
<PAGE> 11
Thad "Bo" Smith, 56, has served as President and Chief Operating Officer of
the Company since August 1997. From January 1997 to August 1997, he worked as an
independent consultant in the areas of business strategy and product
development. From 1967 to 1996, Mr. Smith held various positions with Brown &
Root, where his last position was President of Brown & Root's Worldwide Service,
Civil and Environmental Business. Mr. Smith was with Brown & Root's Marine
Division from 1967 to 1986 serving in various positions including Senior Vice
President, with responsibilities for its European and African offshore oil and
gas construction business.
Johnnie W. Domingue, 51, has served as Senior Vice President, Chief
Financial Officer and Treasurer of the Company since May 1997. From 1996 to
1997, Mr. Domingue was Vice President and Chief Financial Officer of Ankle &
Foot Centers of America, a start-up venture for the consolidation of foot and
ankle specialists. From 1988 to 1995, he was employed by Community Health
Computing Corp., a computer software and service company, in various positions
including President and Chief Executive Officer. In 1995, Community Health
Computing Corp. and Community Health Computing, Inc., one of its subsidiaries,
were reorganized under bankruptcy proceedings pursuant to Chapter 11 of the
United States Bankruptcy Code.
EXECUTIVE COMPENSATION
The following table sets forth the annual salary, bonus, and other
compensation for the fiscal year ended December 31, 1997 awarded to or earned by
the Company's executive officers (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
------------------------------ COMPENSATION AWARDS
OTHER -----------------------
ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION COMPEN- STOCK UNDERLYING COMPEN-
WITH THE COMPANY YEAR SALARY BONUS(1) SATION(2) AWARDS OPTIONS SATION(3)
- -------------------------------- ---- ------- -------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Bill E. Stallworth.............. 1997 $63,515 $115,000 $-- -- 27,778 $28,117
Chairman of the Board and
Chief Executive Officer
Thad "Bo" Smith................. 1997 $63,515 $130,000 $-- -- 27,778 $36,000
President and Chief Operating
Officer
Johnnie W. Domingue............. 1997 $90,098 $100,000 $-- -- 25,000 $ 6,825
Senior Vice President, Chief
Financial Officer and
Treasurer
</TABLE>
- ---------------
(1) Represents bonuses received upon closing of the Offering.
(2) Perquisites and other personal benefits received during the year by each
executive officer were individually less than (a) $50,000 and (b) 10% of the
sum of salaries and bonuses paid to the executive officer.
(3) Represents amounts received pursuant to consulting agreements with the
Company prior to joining the Company as employees.
<PAGE> 12
OPTION GRANTS IN 1997
The following table sets forth, as to the Named Officers, information
concerning stock options granted during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(4)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED(1) 1997(2) PER SHARE DATE(3) 5% 10%
- ---- ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bill E. Stallworth.............. 27,778 6.25% $ 18.00 10/29/2007 $314,450 $796,878
Thad "Bo" Smith................. 27,778 6.25% $ 18.00 10/29/2007 $314,450 $796,878
Johnnie W. Domingue............. 25,000 5.63% $ 18.00 10/29/2007 $283,003 $717,184
</TABLE>
- ---------------
(1) The options in this table are incentive stock options granted under the 1997
Stock Option Plan and have exercise prices equal to the fair market value of
the Company's Common Stock on the date of grant. All such options have
10-year terms and vest over a period of 5 years at a rate of 20% of the
shares per year.
(2) The Company granted options to purchase 444,325 shares of Common Stock to
employees, including executive officers, during 1997.
(3) The options in this table may terminate before their expiration as a result
of the termination of optionee's status as an employee or upon the
optionee's disability or death.
(4) Under rules promulgated by the SEC, the amounts in these columns represent
the hypothetical gain or "option spread" that would exist for the options in
this table based on assumed stock price appreciation from the date of grant
until the end of such options' 10-year term at assumed annual rates of 5%
and 10%. The 5% and 10% assumed annual rates of appreciation are specified
in SEC rules and do not represent the Company's estimate or projection of
future stock price growth. There can be no assurance that the actual stock
price appreciation over the 10-year option term will be at the assumed 5%
and 10% annual rates of compounded stock appreciation or at any other
defined rate.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, as to the Named Officers, certain stock
option information concerning the number of shares subject to both exercisable
and unexercisable stock options and the value of such options as of December 31,
1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Bill E. Stallworth............................ -- 27,778 -- --
Thad "Bo" Smith............................... -- 27,778 -- --
Johnnie W. Domingue........................... -- 25,000 -- --
</TABLE>
- ---------------
(1) Based on the fair market value of the Company's Common Stock at fiscal
year-end less the exercise price payable for such shares.
<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee, which is composed only of outside directors,
administers the compensation program for executive officers of the Company. The
Compensation Committee, with the aid of internal staff and independent
compensation consultants, reviews and evaluates the Company's compensation
program to determine its effectiveness in attracting, motivating and retaining
highly skilled executive officers.
COMPENSATION PHILOSOPHY. The objectives of the Company's executive
compensation policies are to attract, retain and reward highly-skilled executive
officers who contribute to the Company's success, to align the financial
interests of executive officers with the performance of the Company, to
strengthen the relationship between executive pay and stockholder value, to
motivate executive officers to achieve the Company's business objectives and to
reward individual performance. The Board of Directors believes that a
substantial portion of the annual compensation of each executive officer should
be influenced by the performance of the Company, as well as the individual
contribution of each executive officer and the responsibility and authority of
each position relative to other positions within the Company.
COMPENSATION COMPONENTS. During 1997, the Company used base salary and
stock option grants under the Plan to achieve the objectives outlined above.
Subsequent to the Offering, the Company employed independent consultants to
design an appropriate compensation plan for all management employees, including
executive officers. A critical component of the entire compensation plan, namely
the cash performance bonus plan, was approved by the Board of Directors during
the first quarter of 1998 and is effective for the 1998 fiscal year.
Consequently, the cash bonus component of the approved compensation plan, as
outlined below, was not in effect for the fiscal year ended December 31, 1997.
The Company's executive compensation program has three primary components:
base salary, cash performance bonus and long-term incentives. Each of these
three components is described below.
Base Salary Program. The level of base salary paid to executive officers is
determined on the basis of performance, experience and such other factors as may
be appropriately considered by the Compensation Committee. Based upon a review
of comparable organizations, including certain of the companies in the Company's
peer group index used for the performance graph contained elsewhere herein, the
base salaries were negotiated and established for the executive officers prior
to the Offering.
Cash Performance Bonus Program. The cash performance bonus plan (the "Bonus
Plan") is an annual incentive plan commencing January 1, 1998. The purpose of
the Bonus Plan is to encourage participants to think in broad business and
managerial terms to: (1) encourage the profitability of the Company as a whole,
(2) encourage the cooperation and support of the leadership and employees of the
founding companies, (3) emphasize the need for each participant to strive to
achieve the Company's business strategies, and (4) emphasize the necessity of
integrity, safety, and quality in all of the Company's operations.
The individuals chosen for participation in the Bonus Plan are selected
annually by management and supported by the Compensation Committee of the Board
of Directors. The goals and plans for each plan year shall be communicated to
participants not later than the end of the first quarter of each calendar year.
The plan year shall mean the calendar year ending December 31, 1998, and each
subsequent calendar year thereafter. Key management selected to participate in
1998 may or may not be selected in future years. If after the beginning of the
plan year, a person is newly hired, promoted, or transferred into a key
position, management may designate such person as a participant in the Bonus
Plan for the balance of the year, on a prorated basis.
The Bonus Plan is based on three principal components, the Company's
overall financial performance, the financial performance of each business unit,
and the performance of the individual employee.
Long-Term Incentive Plan. In August 1997, the Board of Directors and the
stockholders of the Company approved the 1997 Stock Option Plan (the "Plan").
The Plan provides for the granting of stock options to directors, executive
officers, certain other employees and certain non-employee consultants of the
Company. During the year ended December 31, 1997, 444,325 stock options were
granted at the initial public offering price of $18.00 per share, including
80,556 stock options granted to executive officers.
<PAGE> 14
DEDUCTIBILITY. Internal Revenue Code Section 162(m) precludes a public
corporation from taking a compensation deduction in excess of $1 million for its
chief executive officer or its four other highest paid officers.
Performance-based compensation meeting criteria in Section 162(m), however, is
specifically exempt from the deduction limit. The Company's long-term incentive
grants to executive officers have all been designed to qualify as exempt
performance-based compensation. The Company has not taken actions necessary to
qualify its annual cash incentive plan for the exclusion to Section 162(m),
because no executive officer's annual cash compensation exceeded the Section
162(m) limit in fiscal 1997. While the Company intends to pursue a strategy of
maximizing the deductibility of compensation paid to executive officers in
fiscal 1998, it also intends to maintain the flexibility to take actions that it
considers to be in the Company's best interests and to take into consideration
factors other than tax deductibility.
COMPENSATION POLICIES FOR THE CHIEF EXECUTIVE OFFICER. Bill E. Stallworth
has served as the Chief Executive Officer of the Company since August 1997. From
August 1997 through the Offering, Mr. Stallworth was compensated at an annual
salary rate of $120,000. Mr. Stallworth's base salary was increased to $200,000
simultaneous with the closing of the Offering in November 1997. Mr. Stallworth
received a $115,000 bonus upon the closing of the Offering. At the time of the
Offering, Mr. Stallworth received a grant of options under the 1997 Stock Option
Plan for 27,778 shares of Common Stock. The options awarded Mr. Stallworth were
based upon a uniform formula (determined in reference to salary and the initial
public offering price of $18.00) utilized for all key employees at the time of
the Offering. Future compensation of the Chief Executive Officer will be a
function of performance and competitive industry factors as determined by the
Committee with the aid of independent compensation consultants.
THE COMPENSATION COMMITTEE
Nathan M. Avery
Jean Savoy
D. Glenn Richardson
Patrick B. Collins
AGREEMENTS WITH EXECUTIVE OFFICERS
On April 14, 1997, the Company entered into an agreement for consulting
services ("Executive Services Agreement") with Stallworth, Frankhouser &
Associates, a Houston-based business consulting firm ("SFA"), pursuant to which
Bill E. Stallworth and Thad Smith have provided executive services to the
Company in connection with its formation, the acquisitions of the founding
companies (the "Acquisitions") and the Offering. Under the Executive Services
Agreement, SFA was entitled to receive (i) $10,000 per month for the services
provided by Mr. Stallworth so long as he provided a minimum of 85 hours of
services per month to the Company and (ii) $250 per hour for the services
provided by Mr. Smith, with a maximum daily charge of $2,000 per day. Either the
Company or SFA could terminate the Executive Services Agreement by providing the
other party 30 days' prior notice. The Executive Services Agreement was amended
to provide for termination of consulting services effective August 1, 1997, and
to provide for the payment of cash bonuses, payable upon the closing of the
Offering, to Mr. Stallworth and Mr. Smith in the amount of $115,000 and
$130,000, respectively. Effective August 1, 1997, the Company entered into
employment agreements with Mr. Stallworth and Mr. Smith under which each
received a base salary of $10,000 per month prior to the closing of the
Offering.
On April 21, 1997, the Company executed a memorandum agreement with Johnnie
W. Domingue, providing the terms of Mr. Domingue's employment with the Company
in connection with its formation, the Acquisitions and the Offering. Under that
agreement, Mr. Domingue received a base salary of $10,000 per month. Mr.
Domingue received a success bonus of $100,000 on the closing of the Offering.
Either party could terminate the agreement on 30 days' written notice.
<PAGE> 15
From March 1997 to April 1997, the Company also sold a total of 275,000
shares of Common Stock at $.001 per share to various members of management as
follows: Mr. Stallworth -- 100,000 shares; Mr. Smith -- 100,000 shares; and Mr.
Domingue -- 75,000 shares.
During 1997, the Company entered into stock repurchase agreements with each
of Messrs. Stallworth, Smith and Domingue, pursuant to which the Company is
entitled to repurchase, for $.001 per share, a portion of the shares of Common
Stock previously issued to each of them, in the event such individual (i) is
terminated from his employment with the Company for cause (as defined in the
agreements) or (ii) voluntarily resigns from his employment with the Company
within 18 months of the closing of the Offering. All shares of Common Stock held
by such persons on the closing of the Offering will initially be subject to the
repurchase rights and that number will be reduced pro rata each month thereafter
until the end of that 18-month period, when no shares will be subject to
repurchase by the Company. Messrs. Stallworth, Smith and Domingue may not sell
any shares of Common Stock so long as they remain subject to the repurchase
rights.
During August 1997, the Company entered into separate employment agreements
with Messrs. Stallworth, Smith and Domingue. Two of the agreements were
effective August 1, 1997 and one upon the closing of the Offering. Each such
employment agreement provides for an annual base salary in an amount not less
than the initial specified amount and entitling the employee to participate in
all of the Company's compensation plans (as defined) in which other executive
officers of the Company participate. Each of these agreements has a three-year
term and continues thereafter on a year-to-year basis on the same terms and
conditions existing at the time of renewal, subject to the right of the Company
and the employee to terminate the employee's employment at any time. If the
employee's employment is terminated by the Company without cause (as defined),
the employee will be entitled, for 12 months following the effective date of
such termination, to (i) periodic payments equal to his annual cash base salary
(as defined) from the Company, including bonuses, if any, and (ii) continued
participation in all of the Company's compensation plans (other than the
granting of new awards under the 1997 Stock Option Plan or any other
performance-based plan) during such period. If a change of control (as defined)
of the Company occurs and the terms of the employment agreement are not adopted,
the employee will be entitled to receive an amount equal to 36 months of his
then-current base salary under the agreement, payable semimonthly. The
employment agreements contain or will contain covenants limiting competition
with the Company during the term of the employment agreement and for additional
periods up to two years after the termination of employment.
CERTAIN TRANSACTIONS
In connection with its formation, the Company issued 600,000 shares of its
Common Stock to J&D Capital, L.C. ("J&D") for an aggregate cash consideration of
$600 (62,500 of which shares were subsequently sold to unrelated third parties).
G. Darcy Klug and Jean Savoy own 73.75% and 26.25% of the membership interests
of J&D, respectively. Jean Savoy is a director of the Company. The Company also
issued, in connection with its formation, 300,000 shares of Common Stock to Mr.
Klug, individually (200,000 of which shares were subsequently contributed by Mr.
Klug to J&D and 100,000 of which shares were subsequently sold to James B.
Thompson, Jr.), and 75,000 shares of Common Stock to Beldon E. Fox, Jr., each
for cash consideration equal to $.001 per share. On closing of the Offering, the
holders of these 975,000 shares of Common Stock agreed to exchange an aggregate
of 250,000 shares for an equal number of shares of Restricted Common Stock to
the extent required to ensure that shareholders of the Woodson companies, one of
the Founding Companies, became, collectively, the largest holder of the
Company's voting stock immediately following the Acquisitions.
Effective February 19, 1997, the Company and J&D entered into a consulting
agreement pursuant to which J&D provided certain consulting and financial
services to the Company. Under the consulting agreement, J&D was to receive a
consulting fee of $12,500 per month, payable on the closing of the Offering, at
which time the agreement would terminate. On September 24, 1997, the Company and
J&D amended the consulting agreement, so that, following the completion of the
Offering, J&D would provide the Company with financial advisory and related
services in connection with its acquisition program. J&D would receive a
<PAGE> 16
consulting fee of $23,500 per month and Non-Qualified Options under the 1997
Stock Option Plan to purchase 36,667 shares for an exercise price equal to the
initial offering price to the public which was $18.00 per share. The options
were to vest at the rate of 20% per year, commencing on the first anniversary of
the closing of the Offering, and were to expire at the earlier of ten years from
the date of grant or three months following termination of the consulting and
financial services agreement. In addition, J&D would also be eligible to receive
annual performance-based bonuses. J&D made advances to the Company pursuant to
the J&D Loan Agreement to enable the Company to pay various professional and
administrative expenses in connection with its formation and the Offering. Such
advances were repaid with proceeds from the Offering.
Payments totaling $192,864 were paid to J&D during 1997. During the first
quarter of 1998, the consulting agreement with J&D was terminated in exchange
for the payment to J&D of approximately $.8 million. Concurrent with the
termination of the consulting agreement, the 36,667 options held by J&D expired.
In February 1997, the Company engaged McFarland, Grossman & Company, Inc.
("MGCO") to provide financial advisory services for a period of six months in
connection with the Acquisitions and related financings. Mr. McFarland is a
director of the Company and the Managing Director and President of MGCO. Under
the terms of the engagement letter between the Company and MGCO, as amended on
June 25, 1997 (the "MGCO Engagement Letter"), the Company paid MGCO an initial
financial advisory fee of $15,000, plus monthly fees aggregating $30,000, and
reimbursed MGCO for its out-of-pocket expenses relating to the services
provided. In connection with the MGCO engagement letter, the Company issued a
warrant to MGCO for $100 in cash. The warrant provided for the purchase of up to
50,000 shares of Common Stock, at an exercise price of $8.00 per share. The
warrant could be exercised in whole or, from time to time, in part, at any time
during the five-year period beginning on the issuance date of the warrant. The
Company granted certain registration rights to MGCO with respect to the shares
of Common Stock issuable upon exercise of the warrant. During December 1997, the
warrant was re-issued in separate warrants to the following parties in the share
allocation indicated parenthetically: (1) Clifford E. McFarland (10,000 shares),
(2) McFarland, Grossman & Company, Inc. (30,000 shares), and (3) Cary M.
Grossman (10,000 shares).
MGCO received a $400,000 success fee upon the closing of the Acquisitions
and a senior debt placement fee of $800,000 upon the initial funding under the
Company's credit agreement.
<PAGE> 17
STOCK PERFORMANCE GRAPH
The following performance graph compares the cumulative total return to
stockholders on the Company's Common Stock to the cumulative total return of the
Standard & Poor's 500 Composite Stock Index (the "S&P 500") and with that of a
peer group. The peer group companies for this performance graph are J. Ray
McDermott, S.A., Global Industries, Ltd., Oceaneering International, Inc.,
Friede Goldman International, Inc., Universal Fabricators, Inc., Cal-Dive
International, Inc., Gulf Island Fabrication, Inc., Bouygues Offshore S.A., and
American Oilfield Divers, Inc. The graph assumes that $100 was invested on
October 30, 1997 (the date upon which the Common Stock first began public
trading) in the Company's Common Stock, the S&P 500 and the peer group,
including reinvestment of dividends. No dividends have been declared or paid on
the Company's Common Stock. Note that historic stock performance is not
necessarily indicative of future stock price performance.
<TABLE>
<CAPTION>
TransCoastal
Measurement Period Marine
(Fiscal Year Covered) Services, Inc. Peer Group S&P 500
<S> <C> <C> <C>
10/30/97 100 100 100
10/31/97 135 103 101
11/30/97 108 86 106
12/31/97 79 89 108
</TABLE>
PROPOSALS OF STOCKHOLDERS
Pursuant to the Company's Bylaws, proposals of stockholders intended to be
presented at the 1999 Annual Meeting of Stockholders must be received by the
Secretary of the Company by December 26, 1998 to be considered for inclusion in
the proxy statement and form of proxy relating to the 1999 Annual Meeting.
The Annual Report of the Company for the year ended December 31, 1997,
including audited financial statements, is enclosed with the proxy statement but
does not constitute a part of the proxy soliciting material. Additional copies
of the Annual Report are available without charge, upon request.
The Company will furnish a copy of its Annual Report on Form 10-K for the
year ended December 31, 1997, without exhibits, without charge to each person
who forwards a written request to Johnnie W. Domingue, Senior Vice President,
Chief Financial Officer, and Treasurer, TransCoastal Marine Services, Inc., 2925
Briarpark Drive, Suite 930, Houston, Texas 77042.
<PAGE> 18
OTHER MATTERS
Management does not intend to bring any other matters before the meeting
and has not been informed that any other matters are to be presented to the
meeting by others. If other matters properly come before the meeting or any
adjournments thereof, the persons named in the accompanying proxy and acting
thereunder intend to vote in accordance with their best judgment.
THE BOARD OF DIRECTORS
Houston, Texas
April 24, 1998
<PAGE> 19
TRANSCOASTAL MARINE SERVICES, INC.
Proxy for Annual Meeting of Stockholders on May 27, 1998
The undersigned hereby appoints Bill E. Stallworth and Thad "Bo" Smith or
either of them, proxies, with full power of substitution and with discretionary
authority, to represent and vote, as designated below, all shares of Common
Stock of TransCoastal Marine Services, Inc. (the "Company") held of record by
the undersigned on March 31, 1998, at the Annual Meeting of Stockholders to be
held on May 27, 1998 or any adjournment thereof. The undersigned instructs said
proxies to vote as indicated on each of the following items proposed by the
Board of Directors of the Company:
(TO BE SIGNED ON REVERSE SIDE.)
<PAGE> 20
[X] Please mark your
votes as in this
example.
1. Election of FOR WITHHELD
Directors [ ] [ ]
Nominees: Bill E. Stallworth
Thad "Bo" Smith
Nathan M. Avery
Patrick B. Collins
Beldon E. Fox, Jr.
Daniel N. Hargett, Sr.
H. Daniel Hughes II
Clifford E. McFarland
D. Glenn Richardson
Jean Savoy
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------------------------------
2. Proposal to ratify the Board of FOR AGAINST ABSTAIN
Directors' appointment of Arthur [ ] [ ] [ ]
Andersen LLP as independent auditors
of the Company for the fiscal year
ending December 31, 1998.
3. Proposal to approve an amendment to [ ] [ ] [ ]
the 1997 Stock Option Plan.
4. To transact such other business as
may properly come before the meeting
or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY
WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED
FOR THE TEN NOMINEES FOR ELECTION, AND FOR PROPOSALS 2 AND 3.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED
STATES.
SIGNATURE(S)________________________________________________ DATE ______________
NOTE: Please sign exactly as name or names appear on stock certificate (as
indicated hereon).
