<PAGE>
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
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Statute 240.14a-11(c) or Statute
240.14a-12
ENERGY SERVICE COMPANY, INC.
William S. Chadwick, Jr.
Vice President and Secretary
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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: <1>
4) Proposed maximum aggregate value of transaction:
[FN]
<F1> Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
ENERGY SERVICE COMPANY, INC.
2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
(214) 922-1500
April 11, 1994
Dear Fellow Stockholder:
On behalf of our Board of Directors, I cordially invite you to attend
the Energy Service Company, Inc. 1994 Annual Meeting of Stockholders. The
Annual Meeting will be held at 10:00 a.m. on Tuesday, May 24, 1994 in the
Crescent Ballroom of the Hotel Crescent Court, 400 Crescent Court, Dallas,
Texas. Your Board of Directors and Officers look forward to greeting
personally those stockholders able to attend.
At the Annual Meeting, stockholders will be asked to approve a reverse
stock split of the Company's common stock whereby each outstanding share of
common stock will be reclassified into 0.25 of a share of new common stock
of the Company. The reverse stock split is being recommended for approval
because the Board of Directors believes that ENSCO's stock would appeal to
a broader range of investors with fewer shares outstanding and an increased
stock price. Stockholders will also be asked to vote on the election of
two Class I Directors and to approve the appointment of the Company's
independent public accountants. Each of these matters to be considered at
the Annual Meeting is described in detail in the attached Proxy Statement
for the Annual Meeting. Your Board of Directors recommends that you vote
"For" the proposals on the agenda.
Your vote is important. Whether or not you are able to attend the
meeting, I hope you will promptly sign and date the enclosed proxy card and
return it in the enclosed postage prepaid envelope. This will save your
Company additional expenses of soliciting proxies as well as ensure that
your shares are represented. Please note that you may vote in person at
the meeting even if you have previously returned the proxy.
Sincerely,
Carl F. Thorne
Chairman of the Board
<PAGE>
ENERGY SERVICE COMPANY, INC.
2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
(214) 922-1500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 24, 1994
The Annual Meeting of Stockholders of Energy Service Company, Inc.
(the "Company") will be held at the Hotel Crescent Court, 400 Crescent
Court, Dallas, Texas 75201, at 10:00 a.m., Dallas time, on Tuesday, May
24, 1994, to consider and vote on:
1. The election of two Class I directors, each for a three-year
term;
2. The approval of a reverse stock split of the Company's common
stock whereby each outstanding share of common stock of the
Company will be reclassified into 0.25 of a share of new common
stock of the Company;
3. To approve the appointment of Price Waterhouse as the Company's
independent public accountants for 1994; and
4. Such other business as may properly come before the Meeting.
Stockholders of record at the close of business on April 5, 1994, are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. A list of all stockholders entitled to vote at the meeting is on
file at the executive offices of the Company, 2700 Fountain Place, 1445
Ross Avenue, Dallas, Texas 75202.
By Order of the Board of Directors
William S. Chadwick, Jr.
Vice President and Secretary
April 11, 1994
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY PROMPTLY.
<PAGE>
ENERGY SERVICE COMPANY, INC.
2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
(214) 922-1500
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 1994
The following information is submitted concerning the enclosed Proxy
and the matters to be acted upon under the authority thereof at the Annual
Meeting of Stockholders (the "Meeting") of Energy Service Company, Inc.
(the "Company") to be held at the Hotel Crescent Court, 400 Crescent Court,
Dallas, Texas 75201, on the 24th day of May, 1994 at 10:00 a.m., Dallas
time, or any adjournment thereof, pursuant to the enclosed Notice of said
Meeting. This Proxy Statement and the enclosed Proxy are first being sent
on or about April 13, 1994 to holders of the Company's shares of capital
stock entitled to vote at the Meeting (the "Stockholders").
VOTING AND PROXY
The enclosed Proxy is solicited on behalf of the Board of Directors of
the Company. It may be revoked by a Stockholder at any time prior to the
exercise thereof by filing with the Secretary of the Company a written
revocation or duly executed Proxy bearing a later date. The Proxy shall
also be revoked if a Stockholder is present at the Meeting and elects to
vote in person.
Unless contrary instructions are indicated, all shares represented by
validly executed Proxies received pursuant to this solicitation (and which
have not been revoked before they are voted) will be voted:
1. FOR the election of the Class I nominees for Directors named
herein;
2. FOR the approval of a reverse stock split (the "Reverse Stock
Split") of the Company's common stock whereby each outstanding
share of common stock of the Company, par value $.10 per share
("Existing Common Stock"), will be reclassified into 0.25 of a
share of new common stock of the Company, par value $.10 per
share ("New Common Stock");
3. FOR the approval of the appointment of Price Waterhouse as the
Company's independent public accountants for the year 1994; and
4. In accordance with the recommendation of management as to any
other matters which may properly come before the Meeting.
<PAGE>
In the event a Stockholder specifies a different choice by means of
the enclosed proxy, his shares will be voted in accordance with the
specification so made.
The cost of solicitation of proxies will be borne by the Company and,
upon request, the Company will reimburse brokers, dealers, banks and
trustees, or their nominees, for reasonable expenses incurred by them in
forwarding proxy material to and solicitation of proxies from beneficial
owners of shares of stock. In addition to the use of mail, regular
employees or agents of the Company may solicit proxies by telephone or
other means of communication. The Company has engaged D.F. King & Co.,
Inc., a firm of professional proxy solicitors, to solicit proxies in favor
of the proposals set forth in the notice attached hereto. The Company
anticipates that the costs it will incur for this service will be
approximately $4,000 plus expenses.
VOTING SECURITIES OUTSTANDING
The Stockholders entitled to vote at the Meeting are the holders of
record at the close of business on April 5, 1994 (the "Record Date") of the
224,061,280 outstanding shares of Existing Common Stock of the Company.
Each outstanding share of Existing Common Stock is entitled to one vote on
each matter to come before the Meeting. A list of all Stockholders
entitled to vote is on file at the executive offices of the Company, 1445
Ross Avenue, Suite 2700 Fountain Place, Dallas, Texas 75202. Only
Stockholders of record on the books of the Company on the record date will
be entitled to vote at the Meeting.
For purposes of conducting the Meeting, the holders of at least a
majority of the stock issued and outstanding and entitled to vote thereat,
present at the Meeting, shall constitute a quorum. The Company's Bylaws
include provisions specifically addressing the treatment of abstentions and
non-votes by brokers. A holder of stock shall be treated as being present
at the Meeting if the holder of such stock is (i) present in person at the
Meeting or (ii) represented at the Meeting by a valid proxy, whether the
instrument granting such proxy is marked as casting a vote or abstaining,
is left blank or does not empower such proxy to vote with respect to some
or all matters to be voted upon at the Meeting. If a quorum is present at
the Meeting, the election of each nominee for Class I Director (Proposal 1)
will be approved if the votes cast in favor of the election of such nominee
exceed the votes cast opposing the election of such nominee. The Reverse
Stock Split (Proposal 2) will require approval by a majority of the shares
of Existing Common Stock that were outstanding on the Record Date. The
appointment of Price Waterhouse (Proposal 3) will be approved if a quorum
is present and the votes cast in favor of Proposal 3 exceed the votes cast
opposing Proposal 3.
As stated above, a validly executed proxy will be treated as a vote
cast in favor of the election of each Class I Director nominee, in favor of
the Reverse Stock Split and in favor of the appointment of Price
Waterhouse, unless contrary instructions are indicated on the Proxy. In
determining the number of votes cast, shares abstaining from voting on a
matter and shares that are indicated as not being voted on a matter by
<PAGE>
brokers due to lack of discretionary authority will not be treated as votes
cast with respect to such matters.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that
the Board of Directors of the Company, other than those members who may be
elected in specified circumstances by holders of preferred stock or
indebtedness having special rights to elect directors, is divided or
"classified", with respect to the time for which they individually hold
office, into three classes ("Classes I, II and III"), consisting of, as
nearly as possible, one third of the entire Board. The Company's Board of
Directors is currently fixed at eight members. Each director holds office
for a term ending on the date of the third annual meeting following the
annual meeting at which such director was elected. The current term for
Class I Directors will expire at the 1994 Annual Meeting of Stockholders.
The current term for Class III and Class II Directors will expire at the
1995 and 1996 Annual Meetings of Stockholders, respectively.
Two Class I Directors are to be elected at the Meeting. The Board of
Directors urges you to vote FOR the election of the individuals who have
been nominated to serve as Class I Directors. It is intended that each
validly executed proxy solicited hereby will be voted FOR the election of
the nominees for Class I Directors listed below, unless a contrary
instruction has been indicated on such proxy. If, at the time of the 1994
Annual Meeting of Stockholders, any of the nominees should be unable or
decline to serve, the discretionary authority provided in the proxy will be
used to vote for a substitute or substitutes as may be designated by the
Board of Directors. The Board of Directors has no reason to believe that
any substitute nominee or nominees will be required.
NOMINEES
CLASS I DIRECTORS
The following individuals have been nominated for election as Class I
Directors of the Company.
GERALD W. HADDOCK; age 46, President and Chief Operating Officer, Crescent
Real Estate Equities, Inc.
Mr. Haddock has been a director of the Company since December 1986.
He has been President and Chief Operating Officer of Crescent Real Estate
Equities, Inc. since December 1993. Between July 1990 and December 1993,
Mr. Haddock was a partner in the law firm of Jackson & Walker, L.L.P.
Prior to joining Jackson & Walker L.L.P., Mr. Haddock was a director and
shareholder in the law firm of Kelly, Hart & Hallman. Mr. Haddock is a
director of Wolverine Exploration Company. Mr. Haddock holds a Bachelor of
Business Administration Degree from Baylor University, a Juris Doctorate
Degree from Baylor University College of Law and a Master of Taxation
Degree from New York University. He lives in Fort Worth, Texas. Mr.
Haddock is a member of the Nominating and Compensation Committee and
chairman of the Audit Committee.
<PAGE>
CARL F. THORNE; age 53; Chairman, President and Chief Executive Officer of
the Company
Mr. Thorne has been a director of the Company since December 1986. He
was elected President and Chief Executive Officer of the Company in May
1987 and was elected Chairman of the Board of Directors in November 1987.
Mr. Thorne holds a Bachelor of Science Degree in Petroleum Engineering from
the University of Texas and a Juris Doctorate Degree from Baylor University
College of Law. He lives in Dallas, Texas.
The Board of Directors recommends that Stockholders vote "FOR" the
election of each of the nominees for Class I Directors named above.
CONTINUING DIRECTORS
CLASS II DIRECTORS
CRAIG I. FIELDS; age 47; Chairman and Chief Executive Officer,
Microelectronics and Computer Technology Corp.
Dr. Fields has been a director of the Company since March 1992. He
assumed his current position with Microelectronics and Computer Technology
Corp. in 1990. Between 1974 and 1990, Dr. Fields served the Defense
Advanced Research Projects Agency, a research division of the office of
Secretary of Defense, as a director. Dr. Fields holds a Bachelor of
Science Degree in Physics from the Massachusetts Institute of Technology
and a Ph.D. from Rockefeller University. He lives in Washington, D.C. Dr.
Fields is a member of the Audit Committee.
MORTON H. MEYERSON; age 55; Chairman and Chief Executive Officer, Perot
Systems
Mr. Meyerson has been a director of the Company since September 1987.
Mr. Meyerson assumed his present position with Perot Systems in May 1992.
From December 1986 to May 1992, Mr. Meyerson was a private investor. Mr.
Meyerson holds Bachelor of Arts Degrees in Economics and Philosophy from
the University of Texas. He lives in Dallas, Texas. Mr. Meyerson is a
member of the Audit Committee and chairman of the Nominating and
Compensation Committee.
RICHARD A. WILSON; age 56; Senior Vice President and Chief Operating
Officer of the Company
Mr. Wilson has been a director of the Company since June 1990. Mr.
Wilson joined the Company in July 1988 and was elected President of ENSCO
Drilling Company in August 1988. Mr. Wilson was elected Senior Vice
President - Operations of the Company in October 1989 and to his present
position in June 1991. Prior to joining the Company, Mr. Wilson served in
various capacities as an employee of Sedco-Forex, the contract drilling
division of Schlumberger Technology Corporation, most recently as an
Executive Vice President. Mr. Wilson holds a Bachelor of Science Degree in
Petroleum Engineering from the University of Wyoming. He lives in Dallas,
Texas.
<PAGE>
CLASS III DIRECTORS
ORVILLE D. GAITHER; age 66; President and Chief Executive Officer, Gaither
Petroleum Corporation and Chairman and Chief Executive Officer, Chemject
International
Mr. Gaither has been a director of the Company since March 1992. Mr.
Gaither has served Gaither Petroleum Corporation in his present capacity
since May 1991 and assumed his current position with Chemject International
in June 1991. Prior to May 1991, Mr. Gaither was employed by Amoco
Production Company for 42 years, most recently as President of the Africa
and Middle East Region, responsible for Amoco's petroleum operations in 17
countries. Mr. Gaither is a director of Walter International, an
international oil and gas exploration and production company. Mr. Gaither
holds a Bachelor of Science Degree in Mechanical Engineering from Rice
University, a Master of Science Degree in Petroleum Engineering from the
University of Houston and is a graduate of the Senior Executive Program of
Stanford University. He lives in Houston, Texas.
DILLARD S. HAMMETT; age 63; Consultant
Mr. Hammett has been a director of the Company since September 1987.
From July 1987 to December 1991, Mr. Hammett was Vice President - Technical
and Marketing of the Company. In January 1992, Mr. Hammett took a leave of
absence from his Vice President position and retired from the Company in
December 1992. Mr. Hammett served as the Director of Energy for the State
of Texas from January 1987 until July 1987. He was a Senior Vice President
of Hunt Oil Company from July 1986 until January 1987. Mr. Hammett holds a
Bachelor of Science Degree in Civil Engineering from the University of
Oklahoma. He lives in Dallas, Texas.
THOMAS L. KELLY II; age 35; Private Investor
Mr. Kelly has been a director of the Company since September 1987. He
has been a private investor since May 1987 and was employed by the Company
on a part-time basis from September 1987 until December 1988 as Director of
Investment Banking. Mr. Kelly is a director of Enterra Corporation, which
sells and leases oilfield goods and equipment. Mr. Kelly holds a Bachelor
of Arts Degree in Economics and a Bachelor of Science Degree in
Administrative Science from Yale University and a Master of Business
Administration Degree from Harvard University. He lives in Irving, Texas.
Mr. Kelly is a member of the Audit Committee and the Nominating and
Compensation Committee.
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met six times during the year ended December
31, 1993, and acted numerous times by written consent. During 1993, no
incumbent director attended fewer than 75% of the meetings held by the
Board and the committees of which he was a member. The Board of Directors
has two standing committees: the Audit Committee and the Nominating and
Compensation Committee.
AUDIT COMMITTEE
The Company's Audit Committee recommends a firm of independent
certified public accountants to examine the consolidated financial
statements of the Company, reviews the general scope of services to be
rendered by the independent public accountants, reviews the financial
condition and results of operations of the Company and makes inquiries as
to the adequacy of the Company's financial and accounting controls. The
Audit committee met three times in 1993.
NOMINATING AND COMPENSATION COMMITTEE
The principal functions of the Nominating and Compensation committee
are to recommend officers of the Company, to select nominees for the Board
of Directors and committees of the Board and to review and approve employee
compensation matters, including matters regarding the Company's various
benefit plans. The names of potential Director candidates are drawn from a
number of sources, including recommendations from members of the Board,
management and stockholders. Stockholders wishing to recommend Board
nominees should submit their recommendations in writing to the Secretary of
the Company, with the submitting stockholder's name and address and
pertinent information about the proposed nominee similar to that set forth
for the nominees named herein. A stockholder intending to nominate an
individual as a director at an annual meeting, rather than recommend the
individual to the Company for consideration as a nominee, must comply with
the advance notice requirements set forth in the Company's Bylaws. The
Nominating and Compensation Committee met six times during 1993.
COMPENSATION OF NON-EMPLOYEE DIRECTORS
From January 1, 1992 until May 1, 1992, each non-employee director
received compensation based on a retainer of $24,000 per year, payable
quarterly, one-half in cash and one-half in shares of Common Stock, and
$1,000 in cash, per diem, for each director and committee meeting attended.
Any non-employee director that serves the Company as Chairman of the Board
of Directors, Chairman of the Nominating and Compensation Committee or
Chairman of the Audit Committee also receives an additional $500 in cash,
per diem, for each meeting at which the director acts as Chairman. In May
of 1992, because of declines in offshore rig and marine vessel utilization
and consequential reduction in revenues to the Company, the non-employee
directors voluntarily reduced by 10%, their annual retainer and fees for
attending board and committee meetings, as chairman or as a member.
Effective October 1, 1993, as a result of improvement in drilling rig and
marine vessel utilization and associated revenues, non-employee director
compensation was restored to its pre-May 1992 level. Non-employee
directors are also eligible to participate in the Company's group medical
and dental insurance plan on the same basis as full-time Company employees.
A non-employee director's contribution to group medical and dental
<PAGE>
insurance premium costs is withheld from the quarterly payments of the
above described director's retainer. Directors who are also employees of
the Company do not receive any additional compensation for their services
as directors.
In February 1991, the Board of Directors amended the Incentive Plan to
provide that, commencing January 1, 1991, the non-employee directors of the
Company shall receive shares of Existing Common Stock each year having a
value of $12,000. Effective May 1, 1992, the non-employee directors
voluntarily reduced by 10% their annual retainer. Effective October 1,
1993 the compensation of non-employee directors was restored to its pre-May
1992 level. Shares having a value of $2,700 per quarter, determined by the
average of the high and low prices of the Existing Common Stock on the AMEX
on the first business day of each calendar quarter, were issued to each of
the non-employee directors in 1993. Thus, in 1993 Messrs. Fields, Gaither,
Haddock, Hammett, Kelly and Meyerson each received 5,382 shares of Existing
Common Stock at an average price of between $1.09 and $3.47 per share. In
addition, shares having a value of $300 were issued to each of the above
directors during the first quarter of 1994 in respect of the restoration of
directors compensation to the pre-May 1992 level for the fourth quarter of
1993. The shares granted pursuant to this provision are counted against
the limit of 500,000 shares which may be granted under the Incentive Plan
to each non-employee director.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
executive officers of the Company:
NAME AGE POSITION WITH THE COMPANY
Carl F. Thorne 53 Chairman of the Board,
President, Chief Executive
Officer and Director
Richard A. Wilson 56 Senior Vice President, Chief
Operating Officer and Director
Marshall Ballard 51 Vice President - Business
Development
William S. 46 Vice President -
Chadwick, Jr. Administration and Secretary
C. Christopher 37 Vice President - Finance,
Gaut Treasurer and Chief Financial
Officer
Martin Oudshoorn 55 Vice President - Engineering
H.E. Malone 50 Controller and Chief
Accounting Officer
Set forth below is certain information concerning the executive
officers of the Company who are not also directors of the Company,
including the business experience of each during the past five years.
<PAGE>
MARSHALL BALLARD joined the Company in connection with the acquisition
of Penrod Holding Corporation and was elected Vice President of Business
Development in August 1993. From September 1977 through August 1993, Mr.
Ballard served in various capacities as an employee of Penrod Holding
Corporation, most recently as President. Mr. Ballard holds a Bachelor of
Arts Degree in History from the University of North Carolina and a Law
Degree from Tulane University.
WILLIAM S. CHADWICK, JR. joined the Company as Director of
Administration in June 1987, has been a Vice President of the Company
since July 1988 and was elected Secretary of the Company on May 12, 1993.
From December 1984 through June 1987, Mr. Chadwick served in various
capacities as an employee of Sedco-Forex, the contract drilling division of
Schlumberger Technology Corporation, including Manager of Administration of
North and South America, Manager - Special Projects and Manager of
Administration for Europe and West Africa. Mr. Chadwick holds a Bachelor
of Science Degree in Industrial Management from the University of
Pennsylvania.
C. CHRISTOPHER GAUT joined the Company in December, 1987 and was
elected Treasurer and Chief Financial Officer in February 1988 and Vice
President - Finance in January 1991. From December 1986 to December 1987,
Mr. Gaut was a partner in Pacific Asset Holdings, a mezzanine financing
partnership. Mr. Gaut holds a Bachelor of Arts Degree in Engineering
Science from Dartmouth College and a Master of Business Administration
Degree in Finance from The Wharton School of the University of
Pennsylvania.
MARTIN OUDSHOORN joined the Company as Manager of Engineering in
February 1991 and was elected Vice President - Engineering in February
1994. From June 1964 through January 1991, Mr. Oudshoorn was employed by
Sedco-Forex, the contract drilling division of Schlumberger Technology
Corporation, and served in various capacities including Assistant Vice
President of Engineering. Mr. Oudshoorn holds a Degree in Mechanical
Engineering from the Municipal Technical College in The Hague, Holland. In
October 1990, Mr. Oudshoorn became a naturalized citizen of the United
States.
H. E. MALONE joined the Company in August 1987 and was elected
Controller and Chief Accounting Officer in February 1988. From December
1984 until August 1987, Mr. Malone was employed by Sedco-Forex, the
contract drilling division of Schlumberger Technology Corporation, as
Controller for Europe and Africa Operations. Mr. Malone holds Bachelor of
Business Administration Degrees from the University of Texas and Southern
Methodist University and a Master of Business Administration Degree from
the University of North Texas.
Officers each serve for a one year term or until their successors are
elected and qualified to serve. Mr. Thorne and Mr. Malone are brothers-in-
law.
EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation,
including cash and other forms of remuneration, paid through April 5, 1994,
for services rendered in all capacities to the Company, to the chief
executive officer and the four other most highly compensated executive
<PAGE>
officers of the Company as to whom the total cash compensation paid through
such date exceeded $100,000. The table also includes a summary of all
compensation, including cash and other forms of remuneration, paid to these
named individuals for the years 1992 and 1991.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
OTHER ALL
ANNUAL RESTRICTED OTHER
COMPEN- STOCK LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARD OPTIONS PAYOUTS SATION
POSITION YEAR ($) ($) ($) <F1> ($) <F2> (#) <F3> ($) <F4> ($) <5>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carl F. Thorne 1993 254,375 150,000 N/A N/A N/A N/A 7,708
Chief Executive Officer 1992 256,667 N/A N/A N/A N/A N/A 2,695
1991 275,000 N/A N/A N/A N/A N/A 2,880
Richard A. Wilson 1993 152,292 60,000 N/A N/A 100,000 N/A 5,228
Senior Vice President 1992 150,000 N/A N/A N/A 100,000 N/A 2,250
1991 150,000 N/A N/A N/A N/A N/A 1,440
C. Christopher Gaut 1993 122,292 60,000 N/A N/A 90,000 N/A 2,730
Chief Financial Officer 1992 120,000 N/A N/A N/A 80,000 N/A 251
1991 120,000 N/A N/A N/A N/A N/A 251
William S. Chadwick, Jr. 1993 111,913 N/A N/A N/A 50,000 N/A 2,602
Vice President 1992 110,000 N/A N/A N/A 90,000 N/A 592
1991 110,000 N/A N/A N/A N/A N/A 347
H. E. Malone 1993 101,833 N/A N/A N/A 30,000 N/A 2,972
Chief Accounting Officer 1992 100,000 N/A N/A N/A 60,000 N/A 522
1991 100,000 N/A N/A N/A N/A N/A 522
(NA - Not Applicable.)
<FN>
<F1> The aggregate amount of perquisites and other personal
benefits for any named executive does not exceed $50,000 or
10% of the total annual salary and bonus for any such named
executive and is, therefore, not reflected in the table.
<F2> The amounts disclosed in this column, if any, represent the
value of restricted common stock awards on the date of
grant. The restricted stock awards have vesting schedules
<PAGE>
of either five or ten years and vest based on the passage of
time and the continued employment of the named executive.
The total number of shares of restricted stock held as of
December 31, 1993, and the value of such shares at the end
of 1993 is as follows: Mr. Thorne, 2,100,000 shares
($7,087,500), all of which vest at the rate of 300,000
shares per year, Mr. Wilson, 75,000 shares ($253,125), 5,000
shares of which vest at the rate of 5,000 shares per year,
40,000 shares of which vest at the rate of 20,000 shares per
year and 30,000 shares of which vest a the rate of 15,000
shares per year; Mr. Gaut, 54,000 shares ($182,250), 5,000
shares of which vest at the rate of 5,000 shares per year
and 49,000 shares of which vest at the rate of 7,000 shares
per year, Mr. Chadwick, 15,000 shares ($50,625), all of
which vest at the rate of 5,000 shares per year, Mr. Malone,
21,000 shares ($70,875), all of which vest at the rate of
3,000 shares per year. The Company does not pay dividends
on its common stock.
<F3> Amounts in this column represent options to acquire shares
of the Company's Common Stock. The Company does not have
SARs.
<F4> The Company does not maintain any long term incentive plans.
<F5> The amount in this column for 1991 and 1992 represents the
Company's premiums paid for group term life insurance for
the named executives. For 1993, the amounts include the
Company's premium paid for group term life insurance and
Company contributions to the ENSCO Savings Plan as follows:
Mr. Thorne, $5,139; Mr. Wilson, $2,870; Mr. Gaut, $2,463;
Mr. Chadwick; $1,982; and Mr. Malone $2,050.
</TABLE>
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
<CAPTION>
Potential
Realizable
Value at Assumed
Annual Rates
Number of % of Total of Stock Price
Securities Options Exercise or Appreciation for
Underlying Granted to Base Price Option Term
Option Employees in ($ per Expiration 5% 10%
Granted Fiscal Year Share)<1> Date ($) <2> ($) <3>
<S> <C> <C> <C> <C> <C> <C>
Carl F. Thorne N/A N/A N/A N/A N/A N/A
Richard A. Wilson 100,000 8.4% $3.00 August 13, 1998 83,000 183,000
C. Christopher Gaut 90,000 7.6% $3.00 August 13, 1998 74,700 164,700
William S. Chadwick, Jr. 50,000 4.2% $3.00 August 13, 1998 41,500 91,500
H.E. Malone 30,000 2.5% $3.00 August 13, 1998 24,900 54,900
(N/A - Not applicable.)
<PAGE>
<FN>
<F1> All options are granted at fair market value (average of the high
and low stock price for the Company's common stock as reported on
the American Stock Exchange on the date of grant). All options
granted become exercisable in 25% increments over a four year
period with the options being 100% exercisable four years after
the date of grant.
<F2> If the stock price appreciates at a rate of 5% per year from the
date of grant to the end of the option term, it would increase
from $3.00 to $3.83 and the market value of the Company's
currently outstanding Common Stock would appreciate by
$185,915,680.
<F3> If the stock price appreciates at a rate of 10% per year from the
date of grant to the end of the option term, it would increase
from $3.00 to $4.83 and the market value of the Company's
currently outstanding Common Stock would appreciate by
$409,910,475.
</TABLE>
<PAGE>
The following table sets forth information regarding aggregated option
exercises in 1993, the number of unexercised options divided into those
that were exercisable and those that were unexercisable, and the value of
the in-the-money options divided into those that were exercisable and those
that were unexercisable at December 31, 1993.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
December 31, December 31,
Shares 1993 1993
Acquired on Realized Exercisable/ Exercisable/
Exercise (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Carl F. Thorne N/A N/A 550,000/0 $343,750/0
Richard A. Wilson 125,000 24,688 25,000/175,000 $ 54,688/201,563
C. Christopher Gaut N/A N/A 42,500/157,500 $ 64,844/172,031
William S. Chadwick, Jr. N/A N/A 60,000/130,000 $ 84,375/178,125
H.E. Malone N/A N/A 37,500/ 82,500 $ 53,906/116,719
(N/A - Not Applicable.)
</TABLE>
<PAGE>
The Company does not maintain a long term incentive plan based on
performance goals for executive officers. Therefore, the summary table of
Long Term Incentive Plan Awards in Last Fiscal Year as required under the
executive compensation disclosure rules of the Securities and Exchange
Commission has not been included. Also, the Company does not maintain a
defined benefit or actuarial pension plan for any of the named executive
officers. Therefore a table on Pension Plan Benefits has not been
included.
REPORT OF THE NOMINATING AND COMPENSATION COMMITTEE
COMPENSATION PHILOSOPHY AND OBJECTIVES. The philosophy of the
Company's compensation program is to employ, retain and reward executives
capable of leading the Company in achieving its business objectives. These
objectives include the preservation of a strong financial posture,
increasing the assets of the Company, positioning the Company's assets and
business segments in geographic and industry markets offering long term
growth opportunities, the enhancement of stockholder value, and the near
term survival and long term security of the Company. The accomplishment of
these objectives is measured against the conditions characterizing the
industry within which the Company operates. Such conditions, while
improving somewhat during 1993, continue to reflect depressed business
activity levels in most areas of the world, and a highly competitive market
environment.
EXECUTIVE OFFICER COMPENSATION. In addition to their regular salary,
executive officers of the Company may be compensated in the form of cash
bonus awards, incentive stock grants and stock options under the ENSCO
Incentive Plan, and profit sharing awards, in cash or stock, under the
ENSCO Savings Plan. Executive officers are also eligible to participate,
on the same basis as other employees, in the employer matching provision of
the ENSCO Savings Plan, whereby employees may save for their future
retirement on a tax-deferred basis through the Section 401 (k) savings
feature of the plan with the Company contributing an additional percentage
of the amount saved by each employee up to a maximum of 6% of salary. In
the past, the Committee has utilized all of the foregoing forms of
compensation, except for profit sharing stock grants, to retain, reward and
provide incentives to the executive officers of the Company.
Performance of the Company was a key consideration in the
deliberations of the Committee regarding executive compensation for 1993.
The Committee recognizes that stock price is one measure of performance,
but also that other factors, including industry business conditions and the
Company's success in achieving short term and long term goals and
objectives must be evaluated in arriving at a meaningful analysis of
performance. Accordingly, the Committee also gave consideration to the
Company's achievement of specified business objectives when determining
1993 executive officer compensation. An additional long-standing objective
of the Committee has been to reward executive officers with equity
compensation in addition to salary in keeping with the Company's overall
compensation philosophy of placing equity in the hands of its employees in
an effort to further instill stockholder considerations and values in the
actions of all employees and executive officers.
<PAGE>
The 1993 compensation paid to executive officers of the Company was
based upon a company-wide salary structure administered for consistency for
each position relative to its authority and responsibility and in
comparison to industry peers. Generally, the base salaries of the
Company's executive officers for 1993 were below the mid-range executive
officer salaries of the Company's competitors included in the Dow Jones Oil
Drilling Index. Although the financial results achieved by the Company
improved significantly in 1993, base salary compensation of executive
officers for 1993 was generally increased only nominally. Should the
Company continue to realize improved financial results, further adjustments
to executive officer compensation are anticipated during 1994.
The Company made two cash bonus awards during 1993 to executive
officers other than the CEO, in recognition of the Company's return to
profitability as well as substantial personal contributions to the
finalization of the acquisition of Penrod and the major expansion of the
Company's business in Venezuela. Both of these developments have a
significant impact on the Company's profitability and security.
Incentive stock option awards were used in 1993 to reward and provide
incentives to executive officers and to retain them through the potential
of capital gains and equity buildup in the Company. The number of stock
options granted was determined by the Committee's evaluation of the
performance criteria mentioned above, along with the Committee's subjective
evaluation of each executive's ability to influence the Company's long term
growth and profitability. All stock options were issued at the current
market price of the Company's common stock on the date of grant. Because
the value of the options should, over time, bear a direct relationship to
the Company's stock price, the Committee believes the award of options
represents an effective incentive to create value for the stockholders.
One incentive stock grant was issued during 1993 to the former
President of Penrod, who became an employee of the Company in connection
with the Penrod acquisition. This award was made in keeping with the
Committee's philosophy of putting equity into the hands of key individuals
so as to encourage to the greatest extent possible their focus on
stockholder interests.
CEO COMPENSATION. In May 1992 in recognition of the depressed state
of the industry and as a statement of his personal commitment to the
Company, the CEO voluntarily reduced his salary by 10% from $275,000 to
$247,500 per annum. In October 1993, following the Company's return to
profitability and after evaluating the CEO's performance in light of the
performance criteria discussed above, the Committee restored the CEO's base
salary to the level of $275,000 per annum for the remainder of 1993.
Upon evaluation by the Committee of the Company's success in meeting
its goals and performance objectives established in November 1992, the
Committee awarded the CEO a one time cash bonus of $150,000 in December
1993. These specific goals and objectives included the improvement of the
cash position and earnings potential of the Company, the reduction of
certain expenses, the expansion of the offshore capability of the Company's
Drilling Division, continued growth while restricting capital commitments,
and the geographic rationalization of the Company's operations. In
<PAGE>
granting such bonus to the CEO, the Committee also considered the
substantial improvement in the Company's stock price during 1993.
During late 1993 and early 1994, the Committee reviewed the CEO's
salary in comparison to those of other CEO's of Companies in the Dow Jones
Oil Drilling Index, with consideration to the Company's stock price
performance and financial results for 1993, as well as its progress towards
achieving specified business objectives. Following such review, the
Committee determined to increase the CEO's compensation to $350,000 per
annum in 1994. Based on the foregoing considerations, the Committee
believes this salary level to be fair and appropriate for the most senior
executive officer of the Company.
No incentive stock grants or stock options were granted to the CEO in
1991, 1992 or 1993. In 1990, in connection with an evaluation of the CEO's
compensation arrangement, termination of the CEO's employment agreement and
the cancellation of certain stock options held by the CEO, the CEO was
awarded a 350,000 share immediately vested incentive stock grant and a
3,000,000 share restricted incentive stock grant. The 3,000,000 share
grant was ratified by the stockholders in June 1990 and shares awarded
under such grant are subject to vesting over a 10 year period. The award
of such grants was consistent with the Committee's philosophy of placing
equity in the hands of employees in order to align the interests of the
employees with those of the stockholders.
The Committee has adopted a policy that any future compensation in
excess of $1 million must be performance based. The Committee does not
intend to pay compensation which is not deductible for federal tax
purposes.
NOMINATING AND COMPENSATION COMMITTEE
Morton H. Meyerson, Chairman
Gerald W. Haddock
Thomas L. Kelly II (elected to Committee December 14, 1993)
Orville D. Gaither (resigned from Committee December 14, 1993)
February 22, 1994
<PAGE>
PERFORMANCE GRAPH - COMPARISON OF FIVE
YEAR CUMULATIVE TOTAL RETURN
The chart below presents a comparison of the five year cumulative
total return, assuming the reinvestment of dividends, for the Company's
Common Stock, the Standard & Poor's 500 Stock Price Index and the Dow Jones
Oil Drilling Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ENERGY SERVICE COMPANY, INC., THE S & P 500 INDEX
AND THE DOW JONES OIL DRILLING INDEX
AS OF DECEMBER 31,
1988 1989 1990 1991 1992 1993
Energy Service Company 100 219 125 69 56 169
S&P 500 Index 100 132 128 166 179 197
Dow Jones Oil Drilling Index 100 191 159 102 113 157
* $100 INVESTED ON 12/31/88 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS. <PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1989, Mr. Meyerson, chairman of the Nominating and Compensation
Committee and a member of the Audit Committee, purchased 675,000 shares of
Common Stock from the company pursuant to a note in the amount of $675,000.
In February 1991, the Board of Directors approved the forgiveness of unpaid
interest accrued on the note through March 1991, and agreed that future
interest on the note shall be waived so long as Mr. Meyerson is a director.
Pursuant to that arrangement, for 1993 the Company forgave Mr. Meyerson
$56,295 of unpaid accrued interest.
Mr. Haddock, chairman of the Audit Committee and a member of the
Nominating and Compensation Committee, was, in 1993, a partner in the law
firm of Jackson & Walker, L.L.P. to which the Company paid $369,399 of
legal fees in 1993.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
number of shares of Common Stock owned beneficially as of April 5, 1994, by
(i) each person known to the Company to own more than 5 percent of any
class of the Company's voting securities; (ii) each director of the
Company; (iii) the three other most highly compensated executive officers
of the Company who are not also directors and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL BENEFICIAL
NAME AND ADDRESS OWNERSHIP<1> OWNERSHIP<1>
OF BENEFICIAL OWNER TITLE OF CLASS<2> AMOUNT PERCENTAGE
<S> <C> <C> <C>
FMR Corporation Common Stock 28,575,204<3> 12.8
82 Devonshire Street
Boston, MA 02109
Merrill Lynch Asset Management, Inc Common Stock 10,004,440<4> 8.9
800 Scudders Mill Road
Plainsboro, NJ 08536
Richard E. Rainwater Common Stock 15,017,000<5> 6.9
777 Main Street, Suite 2700
Fort Worth, TX 76102
Natural Gas Partners, L.P. Common Stock 14,773,600<6> 6.6
115 East Putnam Avenue
Greenwich, CT 06830
The Goldman Sachs Group, L.P. Common Stock 11,640,468<7> 5.2
85 Broad Street
New York, NY 10004
Carl F. Thorne Common Stock 4,525,367<8> 2.0
<PAGE>
Morton H. Meyerson Common Stock 939,884<9> 0.4
Thomas L. Kelly, II Common Stock 354,184<10> 0.2
Dillard S. Hammett Common Stock 279,330<11> 0.1
Richard A. Wilson Common Stock 181,334<12> ---<13>
Gerald W. Haddock Common Stock 246,218<14> 0.1
Orville D. Gaither Common Stock 22,416 ---<13>
Craig I. Fields Common Stock 12,416 ---<13>
C. Christopher Gaut Common Stock 136,431<15> ---<13>
William S. Chadwick, Jr. Common Stock 82,459<16> ---<13>
H. E. Malone Common Stock 70,980<17> ---<13>
All Directors and Executive Common Stock 6,925,047<18> 3.1
Officers as a Group (13
persons, including those
named above)
<FN>
<F1> At April 5, 1994, there were 224,061,280 shares of Common Stock outstanding. Unless otherwise indicated,
each person or group has sole voting and dispositive power with respect to all shares.
<F2> All of such share amounts represent Existing Common Stock of the Company.
<F3> Based upon a Schedule 13G dated as of February 11, 1994, filed with the Commission, FMR Corporation may be
deemed to be the beneficial owner of 27,327,846 shares (12.2 percent) of the Existing Common Stock of which
the Fidelity Magellan Fund holds 16,874,800 shares (7.5 percent). In addition, 1,247,358 shares may be
acquired upon conversion of 174,700 shares of the $1.50 Preferred Stock.
<F4> Based upon a Schedule 13G dated as of February 16, 1994, filed with the Commission, Merrill Lynch Asset
Management may be deemed to be the beneficial owner of 20,004,440 shares (8.9 percent) of the Existing Common
<PAGE>
Stock. All of the shares as to which Merrill Lynch Asset Management may be deemed to be the beneficial owner
of are held by the Merrill Lynch Growth Fund for Investment and Retirement. Merrill Lynch Asset Management
disclaims beneficial ownership of all of the shares.
<F5> Based upon a Schedule 13D dated as of September 22, 1993, filed with the Commission, Richard E. Rainwater may
be deemed to be the beneficial owner of 15,017,000 shares (6.7 percent) of the Existing Common Stock.
Includes 2,213,120 shares held by Trusts for the benefit of Mr. Rainwater's children, as to all of which Mr.
Rainwater disclaims beneficial ownership.
<F6> Pursuant to Schedule 13D dated October 22, 1993, filed by Natural Gas Partners, L.P. ("NGP"), G.F.W. Energy,
L.P. ("GFW") is the sole general partner of NGP and R. Gamble Baldwin is the sole general partner of GFW.
<F7> Based upon a Schedule 13D dated as of October 15, 1993, filed with the Commission, The Goldman Sachs Group,
L.P. may be deemed to be the beneficial owner of 11,640,468 shares (5.2 percent) of the Existing Common
Stock.
<F8> Includes 550,000 shares immediately issuable upon exercise of options and 2,100,000 shares of restricted
stock which vest at the rate of 300,000 shares per annum over a 10-year term, which commenced November 19,
1990. The restricted stock grant was approved by the Stockholders at the Annual Meeting held on June 5,
1990.
<F9> Includes 675,000 shares that were purchased by Mr. Meyerson pursuant to a currently outstanding note to the
Company, payable July 1997, in the amount of $675,000. Also includes 100,000 shares of Common Stock
beneficially owned by Trusts for the benefit of Mr. Meyerson's children, as to all of which Mr. Meyerson
disclaims beneficial ownership.
<F10> Includes 325,000 shares immediately issuable upon exercise of options.
<F11> Includes 225,000 shares immediately issuable upon exercise of options.
<F12> Includes 25,000 shares immediately issuable upon exercises of options and 55,000 shares of restricted stock
which vest at the rate of 40,000 shares per annum over varying 5-year terms, which commenced August 15, 1989,
February 15, 1990, and May 1, 1990.
<F13> Ownership is less than 0.1% of the Common Stock outstanding.
<F14> Includes 225,000 shares immediately issuable upon exercises of options, and 8,400 shares held by Mr. Haddock
as custodian for his children and in respect of which Mr. Haddock disclaims beneficial ownership.
<PAGE>
<F15> Includes 42,500 shares immediately issuable upon exercises of options, 5,000 shares of restricted stock which
vest at the rate of 5,000 shares per annum over a 5-year term, which commenced August 15, 1989, 49,000 shares
of restricted stock which vest at the rate of 7,000 shares per annum over a 10 year term, which commenced
December 24, 1990, and 2,142 shares which may be acquired upon conversion of 300 shares of $1.50 Preferred
Stock.
<F16> Includes 60,000 shares immediately issuable upon exercises of options and 10,000 shares of restricted stock
which vest at the rate of 10,000 shares per annum over varying 5-year terms, which commenced August 15, 1989
and February 15, 1990.
<F17> Includes 37,500 shares immediately issuable upon exercises of options and 21,000 shares of restricted stock
which vest at the rate of 3,000 shares per annum over a 10-year term, which commenced December 24, 1990.
<F18> Includes all shares owned individually by the above named officers and directors, including 100,000 shares
beneficially owned by Trusts for the benefit of Mr. Meyerson's children, 8,400 shares held in custodial
accounts for Mr. Haddock's children, 2,142 shares which may be acquired upon conversion of 300 shares of
$1.50 Preferred Stock, 1,512,500 shares immediately issuable upon exercises of options and 2,290,000 shares
of restricted stock.
</TABLE>
The Company has 2,839,110 outstanding shares of $1.50 Cumulative
Convertible Exchangeable Preferred Stock (the "$1.50 Preferred Stock").
Based upon a Schedule 13G dated as of February 9, 1993, filed with the
Commission, Dane, Falb, Stone & Company, Inc. may be deemed to be the
beneficial owner of 155,800 shares (5.5 percent) of the $1.50 Preferred
Stock. Dane, Falb, Stone & Company, Inc. disclaims beneficial ownership of
all of the shares.
<PAGE>
PROPOSAL 2
THE REVERSE STOCK SPLIT
The intent of the Reverse Stock Split is to increase the
marketability of the common stock of the Company. If the Reverse Stock
Split is approved by the stockholders of the Company at the Annual Meeting
of Stockholders, the Reverse Stock Split will be effected as soon as
reasonably practicable.
The Board of Directors believes that the current per-share market
price of the Existing Common Stock may impair the acceptability of the
common stock to certain institutional investors and other members of the
investing public. Theoretically, the number of shares outstanding should
not, by itself, affect the marketability of the stock, the type of investor
who acquires it, or the Company's reputation in the financial community.
In practice this is not necessarily the case, as certain investors view
low-priced stock as unattractive or, as a matter of policy, are precluded
from purchasing low-priced stock because of the greater trading volatility
sometimes associated with such securities. There can be no assurance that
the Reverse Stock Split will not adversely impact the market price of the
common stock, that the marketability of the common stock will improve as a
result of approval of the Reverse Stock Split or that the approval of the
Reverse Stock Split will otherwise have any of the effects described
herein.
The Company had 224,061,280 shares of Existing Common Stock
outstanding at April 5, 1994. If the Reverse Stock Split is approved and
implemented, each share of Existing Common Stock shall automatically be
reclassified into 0.25 of a fully paid and nonassessable share of New
Common Stock without any further action on the part of the Stockholders.
Assuming no change in the number of outstanding shares prior to approval of
the Reverse Stock Split, the currently outstanding shares of Existing
Common Stock will be converted into approximately 56,000,000 shares of New
Common Stock. If the Reverse Stock Split is approved, the Company's
Certificate of Incorporation will be amended to reflect the Reverse Stock
Split, and it will also be amended to change the authorized common stock of
the Company from the 500,000,000 shares of Existing Common Stock currently
authorized to the 125,000,000 shares of New Common Stock that will be
authorized after the Reverse Stock Split.
After approval of the Reverse Stock Split, each holder of an
outstanding certificate theretofore representing Existing Common Stock will
receive from American Stock Transfer & Trust Company as the exchange agent
(the "Exchange Agent") instructions for the surrender of such certificate
to the exchange agent. Such instructions will include a form of
Transmittal Letter to be completed and returned to the exchange agent with
such certificate. As soon as practicable after the surrender to the
Exchange Agent of any certificate which prior to the Reverse Stock Split
represented shares of Existing Common Stock, together with a duly executed
<PAGE>
Transmittal Letter and any other documents the Exchange Agent may specify,
the Exchange Agent shall deliver to the person in whose name such
certificate has been issued certificates registered in the name of such
person representing the number of full shares of New Common Stock into
which the shares of Existing Common Stock previously represented by the
surrendered certificate shall have been reclassified. Until surrendered as
contemplated by the preceding sentence, each certificate which immediately
prior to the Reverse Stock Split represented any shares of Existing Common
Stock shall be deemed at and after the Reverse Stock Split to represent the
number of full shares of New Common Stock contemplated by the preceding
sentence. No service charges, brokerage commissions or transfer taxes
shall be payable by any holder of any certificate which prior to approval
of the Reverse Stock Split represented any shares of Existing Common Stock,
except that if any certificates for New Common Stock are to be issued in a
name other than that in which the certificates for shares of Existing
Common Stock surrendered are registered, it shall be a condition of such
issuance that (i) the person requesting such issuance shall pay to the
Company any transfer taxes payable by reason thereof (or prior transfer of
such surrendered certificate, if any) or establish to the satisfaction of
the Company that such taxes have been paid or are not payable, and (ii)
such surrendered certificate shall be properly endorsed and otherwise be in
proper form for transfer.
No certificates or scrip representing fractional shares of New
Common Stock shall be issued in connection with the Reverse Stock Split.
Instead, stockholders holding a number of shares of Existing Common Stock
not evenly divisible by four, and stockholders holding less than four
shares of Existing Common Stock, upon surrender of their old certificates,
will receive cash in lieu of fractional shares of common stock. The price
payable by the Company will be determined by multiplying the fraction of a
share of New Common Stock by the closing price for one share of Existing
Common Stock on the effective date of the Reverse Stock Split for which
transactions in the common stock are reported, as reported by the American
Stock Exchange. The delivery of cash in lieu of fractional shares of
common stock will not affect the obligations of the Company as a reporting
company pursuant to the Securities Exchange Act of 1934.
Approval of the Reverse Stock Split will require approval by a
majority of the shares of Existing Common Stock that were outstanding on
the Record Date. Accordingly, the Reverse Stock Split will be approved if
at least 112,030,641 shares of Existing Common Stock are voted in favor of
the Reverse Stock Split.
The Board of Directors recommends a vote "FOR" approval of the Reverse
Stock Split.
<PAGE>
PROPOSAL 3
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of
Directors has approved the appointment of Price Waterhouse as the Company's
independent public accountants for the year ending December 31, 1994.
Representatives of Price Waterhouse will attend the Meeting and will
be provided with the opportunity to make a statement if they so desire and
to respond to appropriate questions.
In connection with the Company's acquisition of Penrod Holding
Corporation ("Penrod") in 1993, the Board of Directors determined that it
would be in the best interest of the Company to evaluate proposals for
audit and tax services from both Deloitte & Touche, the Company's
independent auditors for 1992, and Price Waterhouse, Penrod's independent
accountants. After review of such proposals, the Audit Committee
recommended the appointment of Price Waterhouse as the Company's
independent accountants for 1993. The Board of Directors ratified the
appointment of Price Waterhouse as the Company's independent accountants
for 1993 and the termination of Deloitte & Touche's engagement by the
Company, effective July 1, 1993. During the Company's two most recent
fiscal years and the subsequent interim periods prior to July 1, 1993, the
Company has had no disagreements with Deloitte & Touche on any matter of
accounting principles or practice, financial statement disclosure, or audit
scope or procedure, and Deloitte & Touche's reports on the financial
statements of the Company have contained no adverse opinion or disclaimer
of opinion, or qualification or modification as to uncertainty, audit scope
or accounting principles.
The Board of Directors recommends a vote "FOR" approval of the appointment
of Price Waterhouse as independent public accountants.
GENERAL AND OTHER MATTERS
The Company believes that Proposals 1, 2 and 3 are the only matters
that will be brought before the Meeting. However, if other matters are
properly presented at the Meeting, it is intended that the persons named in
the accompanying Proxy will vote in accordance with their best judgment on
such matters.
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT
The Company's executive officers and directors are required under
the Securities Exchange Act of 1934 to file reports of ownership and
changes in ownership in the company's common stock with the Securities and
Exchange Commission and the American Stock Exchange. Copies of those
reports must also be furnished to the Company.
<PAGE>
Based solely on a review of the copies of reports furnished to the
Company and written representations that no other reports were required,
the Company believes that during the preceding year all filing requirements
applicable to executive officers and directors have been complied with.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
A holder of the Company's securities intending to present a proposal
at the 1995 Annual Meeting must deliver such proposal, in writing, to the
Company's principal executive offices no later than December 12, 1994. The
proposal should be delivered to the Company by Certified Mail-Return
Receipt Requested.
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 1993 has been, or is being, mailed to Stockholders with
the Proxy Statement. The Annual Report to Stockholders does not constitute
a part of the proxy soliciting material.
Whether or not you intend to be present at the Meeting, you are
urged to return your Proxy promptly. If you are present at the Meeting and
wish to vote your stock in person, your Proxy shall, at your request, be
returned to you at the Meeting.
By Order of The Board of Directors
William S. Chadwick, Jr.
Vice President and Secretary
<PAGE>
PROXY
ENERGY SERVICE COMPANY, INC.
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 24, 1994
The undersigned hereby appoint(s) Carl F. Thorne and C. Christopher
Gaut, and each or either of them, lawful attorneys and proxies of the
undersigned with full power of substitution, for and in the name, place and
stead of the undersigned to attend the Annual Meeting of Stockholders of
Energy Service Company, Inc. to be held at the Hotel Crescent Court,
400 Crescent Court, Dallas, Texas 75201 on May 24, 1994, at 10:00 a.m.,
Dallas time, and any adjournment(s) thereof, with all powers the
undersigned would possess if personally present and to vote, thereat, as
provided below, the number of votes the undersigned would be entitled to
vote if personally present.
1. Election of Class I Directors
FOR all nominees listed below
(except as marked to the contrary below) [ ]
AGAINST [ ] ABSTAIN [ ]
(INSTRUCTION: To vote against any individual nominee, strike a line
through the nominee's name in the list below)
Gerald W. Haddock Carl F. Thorne
2. The approval of a reverse stock split of the Company's common stock
whereby each outstanding share of common stock of the Company will be
reclassified into 0.25 of a share of new common stock of the Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the appointment of Price Waterhouse as the Company's
independent public accountants for 1994.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
(over)
<PAGE>
(Continued from reverse side)
THIS PROXY, when properly executed, will be voted in the manner directed
hereon by the undersigned stockholder, and in the discretion of said
attorneys and proxies on such other matters not known at the time of
solicitation of this proxy as may properly come before the meeting. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 and 3. Any
prior proxy is hereby revoked.
Signature: [ ]
Signature if held jointly:[ ]
[ ]
Date: [ ], 1994
Note: Please sign exactly as name appears
hereon. Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title
as such. PLEASE MARK, SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Change of Address / Comments
[ ]
[ ]
[ ]
[ ]
<PAGE>
APPENDIX TO PROXY STATEMENT
LISTING GRAPHIC MATERIAL
The narrative discussion of the Performance Graph Comparison of Five Year
Cumulative Return is set forth on page 14 of the Proxy Statement.
<PAGE>
