<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:
[ X ] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec.
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:*
_________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________
* 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 identifying 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>
CARL F. THORNE
Chairman & Chief Executive Officer
April 13, 1995
Dear Fellow Stockholder:
On behalf of our Board of Directors, I cordially invite you to attend
the Energy Service Company, Inc. 1995 Annual Meeting of Stockholders. The
Annual Meeting will be held at 10:00 a.m. on Tuesday, May 23, 1995 at the
Fairmont Hotel, 1717 North Akard Street, 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 vote on the
election of three Class III Directors and to approve the amendment of the
Company's Certificate of Incorporation to provide for the change of the
name of the Company to ENSCO International Incorporated and the elimination
of the Company's currently authorized Convertible Common Stock.
Stockholders will also be asked to approve the appointment of the Company's
independent 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,
/s/ Carl F. Thorne
Carl F. Thorne
Chairman of the Board<PAGE>
ENERGY SERVICE COMPANY, INC.
2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202-2792
(214) 922-1500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 23, 1995
The Annual Meeting of Stockholders of Energy Service Company, Inc.
(the "Company") will be held at the Fairmont Hotel, 1717 North Akard
Street, Dallas, Texas, at 10:00 a.m., Dallas time, on Tuesday, May 23,
1995, to consider and vote on:
1. The election of three Class III directors, each for a three-year
term;
2. The approval of the amendment of the Company's Certificate of
Incorporation to provide for the change of the name of the
Company to ENSCO International Incorporated and the elimination
of the Company's currently authorized Convertible Common Stock;
3. To approve the appointment of Price Waterhouse LLP as the
Company's independent accountants for 1995; and
4. Such other business as may properly come before the Meeting.
Stockholders of record at the close of business on April 4, 1995, 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 75202-2792.
By Order of the Board of Directors
/s/ William S. Chadwick, Jr.
William S. Chadwick, Jr.
Vice President and Secretary
April 13, 1995
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY PROMPTLY.
1<PAGE>
ENERGY SERVICE COMPANY, INC.
PROXY STATEMENT
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 Fairmont Hotel, 1717 North Akard Street,
Dallas, Texas, on the 23th day of May, 1995 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 15, 1995 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 III nominees for Directors named
herein;
2. FOR the approval of the amendment of the Company's Certificate of
Incorporation to provide for the change of the name of the
Company to ENSCO International Incorporated and the elimination
of the Company's currently authorized Convertible Common Stock;
3. FOR the approval of the appointment of Price Waterhouse LLP as
the Company's independent accountants for 1995; and
4. In accordance with the recommendation of management as to any
other matters which may properly come before the Meeting.
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
2<PAGE>
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 4, 1995 (the "Record Date") of the
60,428,780 outstanding shares of Common Stock of the Company. Each
outstanding share of 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 75202-2792. 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 III 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
amendment of the Certificate of Incorporation (Proposal 2) will require
approval by holders of a majority of the shares of Common Stock outstanding
on the Record Date. The appointment of Price Waterhouse LLP (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 III Director nominee, in favor
of the amendment to the Certificate of Incorporation, and in favor of the
appointment of Price Waterhouse LLP 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 brokers due to lack of discretionary authority
will not be treated as votes cast with respect to such matters.
3<PAGE>
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 III Directors will expire at the 1995 Annual Meeting of Stockholders.
The current term for Class II and Class I Directors will expire at the 1996
and 1997 Annual Meetings of Stockholders, respectively.
Three Class III 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 III Directors. It is intended that each
validly executed proxy solicited hereby will be voted FOR the election of
the nominees for Class III Directors listed below, unless a contrary
instruction has been indicated on such proxy. If, at the time of the 1995
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 III DIRECTORS
The following individuals have been nominated for election as Class III
Directors of the Company.
ORVILLE D. GAITHER; age 67; 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
4<PAGE>
Stanford University. He lives in Houston, Texas. Mr. Gaither is a member
of the Audit Committee.
DILLARD S. HAMMETT; age 64; 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 holds a Bachelor of Science Degree in Civil
Engineering from the University of Oklahoma. He lives in Dallas, Texas.
Mr. Hammett is a member of the Nominating and Compensation Committee.
THOMAS L. KELLY II; age 36; General Partner of CHB Capital Partners
Mr. Kelly has been a director of the Company since September 1987. He
has been a General Partner of CHB Capital Partners since July 1994. From
May 1987 through June 1994, Mr. Kelly was a private investor. 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 Denver, Colorado. Mr. Kelly is a member of the Nominating and
Compensation Committee.
The Board of Directors recommends that Stockholders vote "FOR" the
election of each of the nominees for Class III Directors named above.
CONTINUING DIRECTORS
CLASS I DIRECTORS
GERALD W. HADDOCK; age 47, 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 chairman of the Audit Committee.
5<PAGE>
CARL F. THORNE; age 54; 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.
CLASS II DIRECTORS
CRAIG I. FIELDS; age 48; Vice Chairman, Alliance Gaming Corporation
Dr. Fields has been a director of the Company since March 1992. He
assumed his current position with Alliance Gaming Corporation in September
1994. From 1990 through August 1994, Dr. Fields was Chairman and Chief
Executive Officer of Microelectronics and Computer Technology Corp.
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 56; 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
chairman of the Nominating and Compensation Committee.
RICHARD A. WILSON; age 57; 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. Mr. Wilson holds a Bachelor of Science Degree in
Petroleum Engineering from the University of Wyoming. He lives in Dallas,
Texas.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors met four times during the year ended December
31, 1994, and acted numerous times by written consent. During 1994, no
incumbent director was absent from any of the meetings held by the Board
and the committees of which he was a member. The Board of Directors has
6<PAGE>
two standing committees: the Audit Committee and the Nominating and
Compensation Committee.
AUDIT COMMITTEE
The Company's Audit Committee recommends a firm of independent
accountants to examine the consolidated financial statements of the
Company, reviews the general scope of services to be rendered by the
independent 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 1994.
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 four times during 1994.
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
insurance premium costs is withheld from the quarterly payments of the
7<PAGE>
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 ENSCO 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 $3,000 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 1994. Thus, in 1994
Messrs. Fields, Gaither, Haddock, Hammett, Kelly and Meyerson each received
843 shares of Common Stock at an average price of between $11.78 and $17.44
per share. The shares granted pursuant to this provision are counted
against the limit of 125,000 shares which may be granted under the ENSCO
Incentive Plan to each non-employee director.
EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation,
including cash and other forms of remuneration, paid through April 4, 1995,
for services rendered in all capacities to the Company during 1994, to the
chief executive officer and the four other most highly compensated
executive officers of the Company as to whom the total cash compensation
paid through such date exceeded $100,000. The table also includes a
summary of all compensation, including cash and other forms of
remuneration, paid to these named individuals for the years 1993 and 1992.
8<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
LONG TERM LONG TERM LONG TERM
ANNUAL ANNUAL ANNUAL COMPENSATION COMPENSATION COMPENSATION
COMPEN- COMPEN- COMPEN- AWARDS: AWARDS: PAYOUTS: ALL
SATION: SATION: SATION: RESTRICTED OTHER
STOCK LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS OTHER AWARD OPTIONS PAYOUTS SATION
POSITION YEAR ($) ($) ($) <F1> ($) <F2> ($) <F3> ($) <F4> ($) <F5>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carl F. Thorne 1994 350,000 87,500 N/A N/A N/A N/A 8,032
President and 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
Richard A. Wilson 1994 175,833 36,000 N/A 313,750 12,000 N/A 6,786
Senior Vice President 1993 152,292 60,000 N/A N/A 25,000 N/A 5,228
and Chief Operating 1992 150,000 N/A N/A N/A 25,000 N/A 2,250
Officer
Marshall Ballard 1994 155,000 17,964 N/A N/A 9,000 N/A 5,033
Vice President - 1993 62,500 N/A N/A 150,000 25,000 N/A 4,466
Business Development 1992 N/A N/A N/A N/A N/A N/A N/A
C. Christopher Gaut 1994 141,667 25,375 N/A 156,875 9,000 N/A 3,811
Vice President - 1993 122,292 60,000 N/A N/A 22,500 N/A 2,730
Finance, Treasurer and 1992 120,000 N/A N/A N/A 20,000 N/A 251
Chief Financial Officer
William S. Chadwick, Jr. 1994 122,000 30,852 N/A 156,875 9,000 N/A 3,649
Vice President - 1993 111,913 N/A N/A N/A 12,500 N/A 2,602
Administration and 1992 110,000 N/A N/A N/A 22,500 N/A 592
Secretary
______________________________
N/A - Not Applicable.
9<PAGE>
<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 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 unvested restricted stock held as of
December 31, 1994, and the value of such shares at the end of 1994
is as follows: Mr. Thorne, 450,000 shares ($5,568,750), all of
which vest at the rate of 75,000 shares per year; Mr. Wilson, 28,750
shares ($355,781), 8,750 shares of which vest at the rate of 8,750
shares per year and 20,000 shares of which vest a the rate of 2,000
shares per year; Mr. Ballard, 10,000 shares ($123,750), all of which
vest at the rate of 2,500 shares per year; Mr. Gaut, 20,500 shares
($253,688),10,500 shares of which vest at the rate of 1,750 shares
per year and 10,000 shares of which vest at the rate of 1,000 shares
per year; Mr. Chadwick, 11,250 shares ($139,219), of which 1,250
shares vest at the rate of 1,250 shares per year and 10,000 shares
which vest at the rate of 1,000 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 amounts in this column for 1992 represent the Company's premiums
paid for group term life insurance for the named executives. For
1993, the amounts include the Company's premiums paid for group term
life insurance, Company contributions to the ENSCO Savings Plan as
follows: Mr. Thorne, $5,139; Mr. Wilson, $2,870; Mr. Gaut, $2,463;
and Mr. Chadwick, $1,982, and Company contributions to the Penrod
Thrift Plan for the benefit of Mr. Ballard of $3,750. For 1994, the
amounts include the Company's premiums paid for group term life
insurance and Company contributions to the ENSCO Savings Plan as
follows: Mr. Thorne, $5,463; Mr. Wilson, $4,086; Mr. Ballard,
$3,530; Mr. Gaut, $3,502; and Mr. Chadwick, $2,971.
</TABLE>
10<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NUMBER OF % OF TOTAL POTENTIAL REALIZED VALUE AT
SECURITIES OPTIONS ASSUMED RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE OR APPRECIATION FOR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE 5% 10%
NAME GRANTED # FISCAL YEAR ($ PER SHARE)<F1> EXPIRATION DATE ($) <F2> ($) <F3>
<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 12,000 5.6% $15.69 June 13, 1999 51,960 114,960
Marshall Ballard 9,000 4.2% $15.69 June 13, 1999 38,970 86,220
C. Christopher Gaut 9,000 4.2% $15.69 June 13, 1999 38,970 86,220
William S. Chadwick, Jr. 9,000 4.2% $15.69 June 13, 1999 38,970 86,220
_______________________________________
N/A - Not Applicable.
11<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 $15.69
to $20.02 and the market value of the Company's currently outstanding
Common Stock would appreciate by $261,952,718.
<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
$15.69 to $25.27 and the market value of the Company's currently
outstanding Common Stock would appreciate by $578,847,284.
</TABLE>
12<PAGE>
The following table sets forth information regarding aggregated
option exercises in 1994, the number of unexercised options divided into
those that were exercisable and those that were unexercisable, and the
value of the in-the-money options divided into those that were exercisable
and those that were unexercisable at December 31, 1994.
13<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
VALUE OF VALUE OF
NUMBER OF NUMBER OF UNEXERCISED UNEXERCISED
UNEXERCISED UNEXERCISED IN-THE-MONEY IN-THE-MONEY
OPTIONS AT OPTIONS AT OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
ACQUIRED ON VALUE 1994 1994 1994 1994
EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Carl F. Thorne 137,500 638,000 0 0 $ 0 $ 0
Richard A. Wilson N/A N/A 18,750 43,250 97,656 102,344
Marshall Ballard N/A N/A 6,250 27,750 2,344 7,031
C. Christopher Gaut 5,625 47,138 17,500 35,875 83,281 82,578
William S. Chadwick, Jr. N/A N/A 26,875 29,625 119,766 89,297
__________________________________________
N/A - Not Applicable.
</TABLE>
14<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, and the enhancement of stockholder value through
superior long term profitability relative to the Company's competitors.
The accomplishment of these objectives is measured against the conditions
characterizing the industry within which the Company operates. Such
conditions continued to reflect a highly competitive market environment
during 1994, with weak crude oil and natural gas prices resulting in low
levels of rig utilization in the North Sea and Gulf of Mexico.
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,
subject to regulatory limitations on tax deferred compensation, 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 1994.
The Committee recognizes that stock price is one measure of performance,
and therefore reviewed the historical performance of the Company's Common
Stock reflected in the five year performance graph set forth below. The
Committee also reviewed the performance of the Common Stock over the last
three years, and a separate three year performance graph is also set forth
below reflecting performance over this time period. In addition, the
Committee recognizes 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
15<PAGE>
analysis of performance. Accordingly, in determining 1994 executive
officer compensation, the Committee made a subjective evaluation of the
Company's overall success in achieving its overall business objectives. In
this regard the Committee considered the Company's substantially improved
operating margins and record level earnings and cash flow, which were
substantially above levels achieved by competitors. The Committee also
noted continued improvement in the utilization of assets and the continuing
expansion of the Company's offshore drilling capability, both through the
acquisition of additional equipment as well as the carefully planned
enhancement of existing units.
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.
The 1994 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. Prior to 1994, the base salaries and total
cash compensation of the Company's executive officers were below the mid-
range executive officers' salaries of the Company's competitors included in
the Dow Jones Oil Drilling Index. In recognition of the Company's improved
financial performance during 1993 and 1994, base salary compensation of
executive officers was increased in 1994 to levels generally in the mid-
range of that paid by competitors.
The Company also paid cash bonuses to executive officers during 1994,
in recognition of the Company's substantially improved financial
performance, based upon the Committee's subjective evaluation of the
personal contribution made by each executive officer toward achievement of
the Company's specified business objectives. The amounts of such bonuses
were generally below the mid-range of comparable incentive payments made by
the Company's competitors included in the Dow Jones Oil Drilling Index.
Incentive stock options and incentive stock grants were also used in
1994 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 and grant awards 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 award. Because the value of the options and
grants should, over time, bear a direct relationship to the Company's stock
price, the Committee believes the award of options and grants represents an
effective incentive to create value for the stockholders.
CEO COMPENSATION. In May 1992, in recognition of the depressed state
of the industry and as a statement of his personal commitment to the
16<PAGE>
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 a subjective evaluation of 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. Effective January 1, 1994, in recognition of the Company's
continued improved financial and stock price performance and its progress
in achieving specified business objectives, and having reviewed the CEO's
salary in comparison to those of other CEO's of companies in the Dow Jones
Oil Drilling Index, the Committee increased the CEO's base salary to
$350,000 per annum. The Committee believes this salary level to be fair
and appropriate for the most senior executive officer of the Company.
Pursuant to the Committee's evaluation of the Company's success in
meeting its goals and performance objectives during 1994, the Committee
awarded the CEO a discretionary cash bonus of $87,500. The specific
accomplishments considered by the Committee in granting this bonus included
improved earnings and cash flow, better utilization of assets, continued
modification and enhancement of existing assets while maintaining strict
control of cost and the continued expansion of the offshore capability of
the Company's Drilling Division.
No incentive stock grants or stock options were granted to the CEO in
1991, 1992, 1993 or 1994. 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 an 87,500 share (adjusted for reverse stock split)
immediately vested incentive stock grant and a 750,000 share (adjusted for
reverse stock split) restricted incentive stock grant. The 750,000 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 (resigned from Committee May 24, 1994)
Dillard S. Hammett (elected to Committee May 24, 1994)
Thomas L. Kelly II
February 21, 1995
17<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. In
1989, Mr. Meyerson, chairman of the Nominating and Compensation Committee,
purchased 168,750 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 1994
the Company forgave Mr. Meyerson $56,295 of unpaid accrued interest.
18<PAGE>
PERFORMANCE GRAPHS - COMPARISON OF FIVE YEAR AND
THREE YEAR CUMULATIVE TOTAL RETURNS
The chart below presents a comparison of the five year cumulative
total return, assuming $100 invested on December 31, 1989 and 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.
1989 1990 1991 1992 1993 1994
Energy Service Company, Inc. 100 57 31 26 77 71
S&P 500 100 97 126 136 150 152
D J Oil Drilling 100 83 53 59 82 70
The chart below presents a comparison of the three year cumulative
total return, assuming $100 invested on December 31, 1991 and 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.
1991 1992 1993 1994
Energy Service Company, Inc. 100 82 245 225
S&P 500 100 108 118 120
D J Oil Drilling 100 111 155 131
19<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 4, 1995, by
(i) each person known to the Company to own more than 5 percent of the
Company's Common Stock (the only class of voting securities outstanding);
(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.
20<PAGE>
<TABLE>
BENEFICIAL OWNERSHIP <F1>
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT PERCENTAGE
<S> <C> <C>
Merrill Lynch Asset Management, Inc. 6,000,023 <F2> 9.9
800 Scudders Mill Road
Plainsboro, NJ 08536
Richard E. Rainwater 3,754,250 <F3> 6.2
777 Main Street, Suite 2700
Fort Worth, TX 76102
Natural Gas Partners, L.P. 3,693,400 <F4> 6.1
115 East Putnam Avenue
Greenwich, CT 06830
MacKay-Shields Financial Corporation 3,179,950 <F5> 5.3
9 West 57th Street
New York, NY 10019
Carl F. Thorne 987,046 <F6> 1.6
Morton H. Meyerson 290,808 <F7> 0.5
Thomas L. Kelly II 89,383 <F8> 0.2
Dillard S. Hammett 70,670 <F9> 0.1
Richard A. Wilson 73,520 <F10> 0.1
Gerald W. Haddock 62,398 <F11> 0.1
Orville D. Gaither 6,441 -- <F12>
Craig I. Fields 16,441 -- <F12>
Marshall Ballard 18,473 <F13> -- <F12>
C. Christopher Gaut 52,598 <F14> -- <F12>
William S. Chadwick, Jr. 40,723 <F15> -- <F12>
All Directors and Executive Officers 1,755,650 <F16> 2.9
as a Group (13 persons, including
those named above)
_______________________________________
21<PAGE>
<FN>
<F1> At April 4, 1995, there were 60,428,780 shares of Common Stock
outstanding. Unless otherwise indicated, each person or group has
sole voting and dispositive power with respect to all shares.
<F2> Based upon a Schedule 13G dated as of February 10, 1995, filed with
the Commission, Merrill Lynch Asset Management may be deemed to be
the beneficial owner of 6,000,023 shares (9.9 percent) of the Common
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.
<F3> 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 3,754,250 shares (6.2 percent) of the Common
Stock. Includes 553,280 shares held by Trusts for the benefit of
Mr. Rainwater's children, as to all of which Mr. Rainwater disclaims
beneficial ownership.
<F4> 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.
<F5> Based upon a Schedule 13G dated as of February 10, 1995, filed with
the Commission, MacKay-Shields Financial Corporation may be deemed
to be the beneficial owner of 3,179,950 shares (5.3 percent) of the
Common Stock.
<F6> Includes 450,000 shares of restricted stock which vest at the rate
of 75,000 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.
<F7> Includes 168,750 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 70,000 shares of Common
Stock beneficially owned by various Trusts as to all of which Mr.
Meyerson disclaims beneficial ownership.
<F8> Includes 81,250 shares immediately issuable upon exercise of
options.
<F9> Includes 56,250 shares immediately issuable upon exercise of
options.
<F10> Includes 18,750 shares immediately issuable upon exercises of
options and 23,750 shares of restricted stock of which 3,750 shares
vest at the rate of 3,750 shares per annum, which commenced May 1,
22<PAGE>
1990, and 20,000 shares which vest at the rate of 2,000 shares per
annum, which commenced June 13, 1994.
<F11> Includes 56,250 shares immediately issuable upon exercises of
options, and 2,100 shares held by Mr. Haddock as custodian for his
children and in respect of which Mr. Haddock disclaims beneficial
ownership.
<F12> Ownership is less than 0.1% of the Common Stock outstanding.
<F13> Includes 6,250 shares immediately issuable upon exercises of
options, 10,000 shares of restricted stock which vest at the rate of
2,500 shares per annum over a 5-year term, which commenced August
12, 1993, and 750 shares owned by Mr. Ballard's wife and in respect
of which Mr. Ballard disclaims beneficial ownership.
<F14> Includes 17,500 shares immediately issuable upon exercises of
options, 10,500 shares of restricted stock which vest at the rate of
1,750 shares per annum over a 10-year term, which commenced December
24, 1990 and 10,000 shares of restricted stock which vest at the
rate of 1,000 shares per annum over a 10-year term, which commenced
June 13, 1994.
<F15> Includes 26,875 shares immediately issuable upon exercises of
options and 10,000 shares of restricted stock which vest at the rate
of 1,000 shares per annum over a 10-year term, which commenced June
13, 1994.
<F16> Includes all shares owned individually by the above named officers
and directors, including 25,000 shares beneficially owned by various
Trusts established by Mr. Meyerson, 2,100 shares held in custodial
accounts for Mr. Haddock's children, 750 shares owned by Mr.
Ballard's wife, 303,750 shares immediately issuable upon exercises
of options and 528,750 shares of restricted stock.
</TABLE>
23<PAGE>
PROPOSAL 2
AMENDMENT OF CERTIFICATE OF INCORPORATION
AMENDMENT OF ARTICLE ONE - NAME OF THE CORPORATION
Article One of the Certificate of Incorporation would be amended to
change the name of the corporation to ENSCO International Incorporated from
Energy Service Company, Inc. The Board of Directors has recommended this
amendment in order to improve name identification for the Company by
including in its corporate name the word "ENSCO." Each of the Company's
operating subsidiaries includes the "ENSCO" name, and this is the name by
which the Company is generally known among its customers, suppliers and
others in the business community in which it operates. The new name also
reflects the international scope of the Company's operations.
The name change will not affect the validity or transferability of
stock certificates presently outstanding, the capital structure of the
Company or the listing of any of its securities on any national securities
exchange. The Company's stockholders will not be required to surrender for
exchange any certificates presently held by them.
AMENDMENT OF ARTICLE FOUR - ELIMINATION OF CONVERTIBLE COMMON STOCK
Article Four of the Certificate of Incorporation would be amended to
remove the Board of Directors' authorization to issue 6,624,372 shares of
Convertible Common Stock. There are currently no shares of Convertible
Common Stock outstanding, and the Board of Directors has determined that
there is no foreseeable future need for a separate class of Convertible
Common Stock.
The stockholders of the Company authorized the Convertible Common
Stock at the Company's 1993 Annual Meeting in order to facilitate the
acquisition by the Company of the remaining interest in Penrod Holding
Corporation ("Penrod") that it did not then own. One of Penrod's
stockholders required that its interests in Penrod be exchanged for
securities that were not registered under the Securities Exchange Act of
1934 or listed or traded on an exchange, and the Convertible Common Stock
was authorized in order to satisfy this requirement. All of the
Convertible Common Stock issued in connection with the Penrod acquisition
was converted into Common Stock in October 1993.
The Board of Directors recommends a vote "FOR" approval of
the amendment of the Certificate of Incorporation.
24<PAGE>
PROPOSAL 3
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of
Directors has approved the appointment of Price Waterhouse LLP as the
Company's independent accountants for the year ending December 31, 1995.
Representatives of Price Waterhouse LLP 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.
The Board of Directors recommends a vote "FOR" approval of
the appointment of Price Waterhouse LLP
as independent 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.
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 1996 Annual Meeting must deliver such proposal, in writing, to the
Company's principal executive offices no later than December 14, 1995. The
proposal should be delivered to the Company by Certified Mail-Return
Receipt Requested.
25<PAGE>
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 1994 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
/s/ William S. Chadwick, Jr.
William S. Chadwick, Jr.
Vice President and Secretary
26<PAGE>
