<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Grey Wolf, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
GREY WOLF, INC.
10370 RICHMOND AVENUE, SUITE 600
HOUSTON, TEXAS 77042
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 2000
---------------------------
Notice is hereby given that the annual meeting of shareholders of Grey
Wolf, Inc. a Texas corporation (the "Company"), will be held at the Adam's Mark
Hotel, 2900 Briarpark Drive, Houston, Texas 77042 on May 9, 2000, at 8:30 a.m.,
Houston time, and any adjournment or postponement thereof, for the following
purposes:
1. To elect three (3) directors to serve until their terms
expire or until their successors are elected and qualified;
and
2. To consider and act upon such other business as may properly
be presented to the annual meeting or any adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on April 3,
2000, as the record date for determination of shareholders entitled to notice
of and to vote at the annual meeting and any adjournments or postponements
thereof. A shareholders' list will be available commencing APRIL 21, 2000, and
may be inspected during normal business hours prior to the annual meeting at
the offices of the Company, 10370 Richmond Avenue, Suite 600, Houston, Texas
77042.
Your vote is important. Whether or not you plan to attend the annual
meeting in person, we request that you sign, date and return the enclosed proxy
card promptly in the enclosed stamped envelope. The prompt return of proxies
will ensure a quorum and save the Company the expense of further solicitation.
By Order of the Board of Directors,
DAVID W. WEHLMANN,
Secretary
April 4, 2000
<PAGE> 3
GREY WOLF, INC.
10370 RICHMOND AVENUE, SUITE 600
HOUSTON, TEXAS 77042
PROXY STATEMENT
This proxy statement, the accompanying Notice of Meeting of
Shareholders and the enclosed proxy card are first being mailed to the
shareholders of Grey Wolf, Inc., a Texas corporation (the "Company"),
commencing on or about April 7, 2000, in connection with the solicitation by
the board of directors of the Company (the "Board of Directors") of proxies to
be voted at the annual meeting of shareholders to be held at the Adam's Mark
Hotel, 2900 Briarpark Drive, Houston, Texas 77042 on Tuesday, May 9, 2000, at
8:30 a.m., Houston, Texas time and at any adjournments or postponements thereof
(the "Meeting"), for the purposes set forth in the accompanying notice.
Proxies will be voted in accordance with the directions specified
thereon and otherwise in the discretion of the persons designated as proxies on
other matters properly brought before the Meeting. Any proxy on which no
direction is specified will be voted "FOR" the election of the nominees named
herein to Class I of the Board of Directors under Proposal 1.
A shareholder may revoke a proxy by:
o delivering to the Company written notice of revocation;
o delivering to the Company a signed proxy of a later date; or
o appearing at the Meeting and voting in person.
Votes will be tabulated and the results will be certified by election
inspectors who are required to resolve impartially any interpretive questions
as to the conduct of the vote.
VOTING AT MEETING
As of April 3, 2000, the record date for the determination of
shareholders entitled to vote at the Meeting, there were outstanding and
entitled to vote 165,527,591 shares of the Company's common stock, par value
$.10 per share (the "Common Stock"). Each share of Common Stock entitles the
holder to one vote on all matters presented at the Meeting. Holders of a
majority of the outstanding shares of Common Stock must be present, in person
or by proxy, to constitute a quorum for the transaction of business. The
election of directors requires a plurality of votes cast at the Meeting with
respect to the election of directors. Proxies that are marked "abstain" and
proxies relating to "street name" shares that are returned to the Company but
marked by brokers as "not voted" ("broker non-votes") will be treated as
present for purposes of determining whether a quorum is present, but will have
no effect on the election of directors.
If a quorum is not obtained the Meeting may be adjourned for the
purpose of obtaining additional proxies or votes or for any other purpose, and,
at any subsequent reconvening of the Meeting, all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Meeting (except for any proxies which have theretofore been revoked).
<PAGE> 4
ELECTION OF DIRECTORS
The Company's Bylaws provide for the classification of the Board of
Directors into three classes, as nearly equal in number as possible, with the
term of office for each class expiring on the date of the third annual
stockholders' meeting for the election of directors following the most recent
election of directors for such class.
GENERAL INFORMATION
The term of office of the Company's Class I Directors, William T.
Donovan, Thomas P. Richards and Ivar Siem, will expire at this year's Meeting.
Upon the nomination of the Board of Directors at its meeting on February 24,
2000, Messrs. Donovan and Richards are standing for reelection as Class I
Directors at this year's Meeting. In addition, Mr. Frank A. Brown has been
nominated as a Class I Director at this year's Meeting. Mr. Siem, a director of
the Company since 1995, will not stand for re-election at the Meeting. If
elected, each of Messrs. Brown, Donovan and Richards will hold office until the
Company's Annual Meeting in 2003 and until his successor is elected and
qualified.
The persons named as proxies in the enclosed Proxy have been
designated by the Board of Directors and, unless otherwise directed, intend to
vote for the election of the nominees. If any nominee should become unavailable
for election, the shares will be voted for such substitute nominee as may be
proposed by the Board of Directors. No circumstances are now known, however,
that would prevent any of the nominees from serving. Set forth below under
"Class II Directors" and "Class III Directors" are the names of the other
Directors of the Company currently in office. Class II Directors will continue
to serve until the Company's Annual Meeting of Stockholders in 2001 and Class
III Directors will continue to serve until the Company's Annual Meeting of
Stockholders in 2002. All Directors, or nominees for election, have been
elected previously as Directors by the shareholders, except Mr. Brown who is
standing for election as a Class I director for the first time this year.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
FOR ALL THREE NOMINEES TO CLASS I OF THE COMPANY'S BOARD
OF DIRECTORS.
2
<PAGE> 5
NOMINEES FOR DIRECTOR
Set forth below is certain information (ages as of March 25, 2000)
regarding each nominee for election to the Board of Directors and each director
of the Company.
CLASS I NOMINEES
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BIOGRAPHY AGE SINCE
- ----------------------------------------------------------------------------------------- -------------- --------
<S> <C> <C>
Frank A. Brown served as Senior Vice President of ARCO Alaska, Inc. 55 -
since 1994 until his retirement in 1999. Prior to that Mr. Brown was President
of ARCO Long Beach Company from 1992 to 1994 and served as President of THUMS
Long Beach Company from 1990 to 1992. For eight years before joining THUMS, he
was Operations Manager of ARCO's Gulf of Mexico and Louisiana region. Mr. Brown
was employed for 29 years by ARCO and related companies, all of which were
engaged in the exploration and production of oil and gas.
William T. Donovan has been a director of the Company since 1997. Since 48 1997
1980, Mr. Donovan has been a Principal and Managing Director of Lubar & Co., a
private investment and venture capital firm. Mr. Donovan also serves as
Chairman of the Board and Chief Financial Officer of C2, Inc., a Wisconsin
corporation, which engages in various operating and investment activities and
as a director of various private industrial companies. Mr. Donovan previously
served as President, Chief Financial Officer, and was a director, of Christiana
Companies, Inc., prior to its merger with Weatherford International, Inc. in
February 1999. Prior to joining Lubar & Co., Mr. Donovan was an officer with
Manufacturers Hanover Trust Company from 1976 until 1980, where he specialized
in merger and acquisition financing.
Thomas P. Richards became a director of the Company on March 24, 1998 56 1998
and has been Chairman of the Board since November 1998. Mr. Richards joined the
Company in September 1996 as President and Chief Executive Officer. Mr.
Richards was with Diamond Offshore Drilling, Inc. ("Diamond Offshore") from
September 1990 until September 1996. He started as Senior Vice President of
Diamond M Corporation ("Diamond M"), a subsidiary of Diamond Offshore, in 1990
and was serving as Senior Vice President of Worldwide Operations when he left
Diamond Offshore in 1996. Mr. Richards served as Vice President--Land for
Penrod Drilling Corporation ("Penrod") from January 1989 until September 1990
when Diamond M purchased substantially all of Penrod's land drilling assets.
From February 1974 until December 1988, Mr. Richards owned and served as
President and Chief Executive Officer of Richards Drilling Company, a land
drilling contractor based in Bay City, Texas.
</TABLE>
3
<PAGE> 6
CLASS II DIRECTORS
<TABLE>
<CAPTION>
DIRECTOR
NAME AND BIOGRAPHY AGE SINCE
- ------------------------------------------------------------------------------- --- ---------
<S> <C> <C>
James K. B. Nelson has been a director of the Company since 1997. 72 1997
Prior to the acquisition of Grey Wolf Drilling Company ("GWDC") by the Company
in 1997, Mr. Nelson served as President and Chief Executive Officer of GWDC
since 1978. He joined GWDC in 1960 and began his career in the oil field
drilling industry as a roughneck in 1946.
Roy T. Oliver, Jr. has been director of the Company since April 1996. 47 1996
He has been the Chairman of the Board, President and Chief Executive Officer of
U.S. Rig & Equipment, Inc., an Oklahoma corporation ("USRE"), a worldwide
supplier of drilling equipment, since its organization in 1982.
CLASS III DIRECTORS
DIRECTOR
NAME AND BIOGRAPHY AGE SINCE
- -------------------------------------------------------------------------------- --- --------
Steven A. Webster has been a director of the Company since August 48 1996
1996. He was the Chairman of the Board and Chief Executive Officer of Falcon
Drilling Company, Inc., a marine oil and gas drilling contractor from 1988
until 1997. He was the President and Chief Executive Officer of R&B Falcon
Corporation, a marine oil and gas drilling contractor from 1998 until 1999. He
currently serves as Vice Chairman of R&B Falcon and is a Managing Director of
Donaldson, Lufkin & Jenrette's merchant banking group. He serves as a director
of Crown Resources Corporation (a mining company); Trust Manager of Camden
Property Trust; a general partner of Somerset Capital Partners, a New York
general partnership ("SCP"), the managing member of Somerset Drilling
Associates, L.L.C., a Delaware limited liability company ("SDA"); Chairman of
the Board of Carrizo Oil & Gas, Inc., an independent oil and gas exploration
company; a director of Ponder Industries, Inc., an oil service and rental tool
company; and a director of Geokinetics, Inc., a 3-D seismic acquisition and
geophysical services provider to the oil and gas industry.
William R. Ziegler has been a director of the Company since August 57 1996
1996 and is currently Vice Chairman of the Board of Directors. He has been a
partner of the law firm of Satterlee Stephens Burke & Burke LLP since September
1999. Prior to that time he was a partner in the law firm of Parson & Brown LLP
and a predecessor firm for over five years. Mr. Ziegler is a director of R&B
Falcon Corporation; a general partner of SCP, the managing member of SDA; a
director of Geokinetics, Inc., a 3-D seismic acquisition and geophysical
services provider to the oil and gas industry; a director of Ponder Industries,
Inc., an oil service and rental tool company; and a director of Flotek
Industries, Inc., an oil services equipment supplier.
</TABLE>
BOARD AND COMMITTEE ACTIVITY, STRUCTURE AND COMPENSATION
The Board of Directors has several standing committees, including an
Audit Committee, a Compensation Committee, an Executive Committee and a
Nominating Committee.
Audit Committee. During 1999, the Audit Committee was composed of
Messrs. Donovan, Nelson and Siem. During 1999, the Audit Committee met twice.
The functions of the Audit Committee include (i) reviewing the accounting
principles and practices employed by the Company; (ii) meeting with the
Company's independent accountants to review their report and discuss matters
pertaining to their audit; and (iii) recommending annually to the Board of
Directors the appointment of the Company's independent auditors.
4
<PAGE> 7
Compensation Committee. The Compensation Committee is currently
composed of Messrs. Nelson, Siem and Webster. During 1999, the Compensation
Committee met once. The Compensation Committee (i) recommends to the Board the
compensation for the Company's officers; (ii) administers and makes awards
under the Company's compensation plans; and (iii) monitors and makes
recommendation with respect to the Company's various employee benefit plans.
Executive Committee. The Executive Committee is currently composed of
Messrs. Donovan, Richards and Ziegler. During 1999, the Compensation Committee
met twice. The Executive Committee exercises the powers of the Board of
Directors when the Board is not in session, except for specific authority
retained by the Board. The Board has retained authority relating to, among
other things, (i) amendments to the Articles of Incorporation and Bylaws; (ii)
mergers, consolidations, sales or exchanges involving substantially all of the
Company's assets; (iii) declarations of dividends; and (iv) issuances of stock.
Nominating Committee. The Nominating Committee is currently composed
of Messrs. Donovan, Oliver and Ziegler. During 1999, the Nominating Committee
met once. The Nominating Committee recommends to the Board of Directors
nominees for election to the Company's Board of Directors. Shareholders who
desire to recommend nominees for election as directors should forward any such
recommendation, together with the proposed nominee's qualifications and consent
to be considered as a nominee, to the Secretary of the Company.
During 1999, there were five meetings of the Board of Directors. Each
director attended at least 75% or more of the aggregate number of meetings of
the Board and each committee on which he served during 1999.
Each director who is not an employee of the Company is paid an annual
fee of $10,000 plus travel expenses, if any. Directors are not compensated for
service on committees of the Board.
EXECUTIVE OFFICERS
The executive officers of the Company serve at the pleasure of the
Board of Directors and are subject to annual appointment by the Board of
Directors at its first meeting following the annual meeting of shareholders. In
addition to Messrs. Richards and Ziegler, who are listed in the foregoing
table, the Company's executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- --------------------- --- ------------------------------------------------------------
<S> <C> <C>
Edward S. Jacob, III 47 Senior Vice President--Marketing
Gary D. Lee 54 Senior Vice President--Human Resources
Ronnie E. McBride 50 Senior Vice President--Domestic Operations
David W. Wehlmann 41 Senior Vice President, Chief Financial Officer and Secretary
Merrie S. Costley 40 Vice President and Controller
Donald J. Guedry, Jr. 43 Vice President and Treasurer
</TABLE>
Edward S. Jacob, III joined the Company's operating subsidiaries as
Vice President--Marketing in January 1999 and was appointed Senior Vice
President--Marketing of the Company in November 1999. He served as Vice
President--Operations of Bayard Drilling Technologies, Inc. from December 1996
until June 1997, at which time he was promoted to Executive Vice President of
Bayard and served at this position until January 1999. Prior to December 1996,
Mr. Jacob served in various operational and marketing positions with Helmerich
& Payne International Drilling for 13 years.
Gary D. Lee joined the Company in March 1997 as Vice President--Human
Resources and was appointed Senior Vice President--Human Resources in February
2000. Prior to joining the Company, he was with Diamond Offshore from 1982
until 1997, where he served as Vice President--Human Resources from 1990 until
March 1997.
Ronnie E. McBride joined the Company in September 1996 as Senior Vice
President--Domestic Operations. Mr. McBride was the Vice President of Turnkey
Services at Diamond Offshore from December 1995 until September 1996. He served
as Operational Manager of Diamond M from October 1991 until March 1993, at
which time he was promoted to Vice President--Onshore Operations and served in
this position until December 1995.
5
<PAGE> 8
Prior to October 1991, Mr. McBride was Vice President--Operations for Harkins &
Company for four years until it was acquired by Diamond M.
David W. Wehlmann joined the Company in July 1996 as Vice President
and Controller. He was promoted to Senior Vice President, Chief Financial
Officer and Secretary in February 1998. From November 1994 until he joined the
Company, Mr. Wehlmann was Vice President and Chief Accounting Officer of
EnerVest Management Company, L.C., a privately-held oil and gas property
acquisition and management company. Mr. Wehlmann was Controller of Convest
Energy Corporation, a publicly traded oil and gas exploration and production
company, from April 1991 until November 1994. Mr. Wehlmann is a certified
public accountant.
Merrie S. Costley joined the Company in January 1997 as Assistant
Controller. She was promoted to Vice President and Controller in February 1998.
She served as Financial Reporting Manager of Transworld Mortgage Corp., a
mortgage service company, from February 1996 until December 1996 and at Arthur
Andersen LLP from June 1988 until February 1996, most recently as Audit
Experienced Manager. Ms. Costley is a certified public accountant.
Donald J. Guedry, Jr. has been the Company's Treasurer since October
1996 and was appointed Vice President in November 1997. During the seven years
prior to joining the Company, Mr. Guedry served in various treasury management
positions for Weatherford Enterra, Inc. and a predecessor company.
6
<PAGE> 9
OWNERSHIP BY MANAGEMENT AND CERTAIN SHAREHOLDERS
Management
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock by (i) all directors of the Company,
(ii) the chief executive officer and each of the other executive officers, and
(iii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
AT MARCH 15, 2000
-----------------------------
NUMBER(1) PERCENT
------------- --------
<S> <C> <C>
Thomas P. Richards...................................................... 1,659,080(2) 1.0
William R. Ziegler...................................................... 9,703,849(3) 5.9
William T. Donovan...................................................... 660,938(4) *
James K. B. Nelson...................................................... 4,769,091(5) 2.9
Roy T. Oliver, Jr....................................................... 11,437,329(6) 6.9
Ivar Siem............................................................... 575,000(7) *
Steven A. Webster....................................................... 9,699,849(8) 5.9
Edward S. Jacob, III.................................................... 20,000(12) *
Gary D. Lee............................................................. 146,173(9) *
Ronnie E. McBride....................................................... 363,999(10) *
David W. Wehlmann....................................................... 121,520(12) *
Merrie S. Costley....................................................... 35,000(12) *
Donald J. Guedry, Jr.................................................... 47,156(11) *
Directors and Executive Officers as a group
(12 persons named above)........................................... 29,615,135 17.6
</TABLE>
- ------------------------------------
* Indicates less than one percent.
(1) Each person has sole voting and investment power with respect to the
shares of Common Stock listed, except as otherwise specified.
(2) Includes 859,080 shares of Common Stock underlying currently
exercisable options, 400,000 shares of Common Stock and 400,000 shares
of Common Stock underlying currently exercisable options owned by a
limited partnership controlled by Mr. Richards for the benefit of his
children.
(3) Includes 5,000 shares of Common Stock owned by Mr. Ziegler, 75,000
shares of Common Stock underlying currently exercisable options and
9,623,849 shares of Common Stock beneficially owned by SCP, of which
Mr. Ziegler is a general partner.
(4) Includes 317,278 shares of Common Stock owned by Mr. Donovan, 75,000
shares of Common Stock underlying currently exercisable options, and
268,660 shares of Common Stock beneficially owned through Cambridge
Associates, L.P., a Wisconsin limited partnership ("Cambridge"), of
which Mr. Donovan is a general partner. Mr. Donovan disclaims
ownership of 214,056 shares owned by Cambridge.
(5) Includes 4,695,091 shares of Common Stock owned by Mr. Nelson and
75,000 shares of Common Stock underlying currently exercisable
options.
(6) Includes 9,545,462 shares of Common Stock owned by Mr. Oliver, 75,000
shares of Common Stock underlying currently exercisable options,
1,127,079 shares of Common Stock beneficially owned through U.S. Rig &
Equipment, Inc., an entity that is wholly-owned and controlled by Mr.
Oliver, 35,876 shares of Common Stock beneficially owned through Mr.
Oliver's minor children and 653,912 shares of Common Stock owned by
the Oliver Family Trust for the benefit of Mr. Oliver's children. Mr.
Oliver disclaims beneficial ownership of shares of Common Stock owned
by U.S. Rig and Equipment, his children and the trust.
(7) Includes 575,000 shares of Common Stock underlying currently
exercisable options.
7
<PAGE> 10
(8) Includes 1,000 shares of Common Stock owned by Mr. Webster, 75,000
shares of Common Stock underlying currently exercisable options, and
9,623,849 shares of Common Stock beneficially owned through SCP, of
which Mr. Webster is a general partner.
(9) Includes 1,000 shares of Common Stock owned by Mr. Lee, 143,440 shares
currently exercisable options and 1,733 shares of Common Stock held in
the Grey Wolf Drilling Company 401(k) Plan (the "401 (k) Plan").
(10) Includes 362,000 shares of Common Stock underlying currently
exercisable option and 1,999 shares of Common Stock held in the 401(k)
Plan.
(11) Includes 1,000 shares of Common Stock owned by Mr. Guedry, 45,000
shares of Common Stock underlying currently exercisable option and
1,156 shares of Common Stock held in the 401(k) Plan.
(12) Except as otherwise, represents shares of Common Stock underlying
currently exercisable options.
Certain Shareholders
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock by each person, other than Company
directors or executive officers, who is known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock. See
"Ownership by Management" for information regarding beneficial ownership of the
Company's directors and executive officers.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
AT MARCH 15, 2000
--------------------------------
NAME AND ADDRESS OF BENEFICIAL
OWNER, IDENTITY OF GROUP NUMBER PERCENT
- ---------------------------------------------------- --------------- -----------
<S> <C> <C>
Somerset Capital Partners (1)....................... 9,779,849(1) 5.9%
69 Delaware Avenue
Buffalo, New York 14202
Thomas H. O'Neill, Jr.......................... 9,623,849(2) 5.8%
Crabbe Huson Group, Inc............................. 10,265,974(3) 6.2%
James E. Crabbe
121 SW Morrison, Suite 1400
Portland, Oregon 97204
</TABLE>
- ----------------
(1) As reported on Schedule 13D (Amendment No. 3) dated June 17, 1999.
Includes shares owned of record and shares underlying outstanding
options owned by Messrs. Ziegler and Webster. See Notes 3 and 8 under
the caption "Ownership by Management."
(2) Includes 9,623,849 shares of Common Stock owned by SCP. Mr. O'Neill is
a general partner of SCP.
(3) As reported on Schedule 13G dated February 3, 2000. Such filing
indicates that 10,265,974 shares of Common Stock are beneficially
owned by the Crabbe Huson Group, Inc. (the "Crabbe Huson"). Crabbe
Huson disclaims beneficial ownership of such shares.
8
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following tables reflects the
compensation for services to the Company for the years ended December 31, 1999,
1998, and 1997 for (i) the Chief Executive Officer of the Company, (ii) the
four most highly compensated executive officers of the Company, other than the
Chief Executive Officer and (iii) a former executive officer (the "Named
Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------------------------
OTHER
ANNUAL
SALARY BONUS COMPENSATION(1)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)
- ----------------------------- ----- ------- ------- --------------
<S> <C> <C> <C> <C>
Thomas P. Richards........... 1999 375,000 -- --
Chairman, President and 1998 375,000 -- --
Chief Executive Officer 1997 300,000 200,000 --
Ronnie E. McBride............ 1999 200,000 -- --
Senior Vice President-- 1998 200,000 -- --
Operations 1997 162,500 80,000 --
Forrest M. Conley, Jr (1)(3).. 1999 152,500 -- 17,687
Vice President-- 1998 180,000 -- --
Ark-La-Tex Division 1997 146,250 54,000 --
David W. Wehlmann............ 1999 165,000 -- --
Senior Vice President, 1998 165,000 -- --
Chief Financial Officer 1997 109,550 33,000 --
and Secretary
Edward S. Jacob, III (1)..... 1999 145,625 -- 16,316
Senior Vice President -
Marketing
Gary D. Lee.................. 1999 150,000 -- --
Vice President-- 1998 150,000 -- --
Human Resources 1997 107,917 47,500 --
</TABLE>
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------------
AWARDS PAYOUTS
-------------------------- ---------
RESTRICTED ALL OTHER
STOCK LTIP COMPENSATION(2)
NAME AND PRINCIPAL POSITION AWARD(S) OPTIONS PAYOUTS ($)
- ----------------------------- ---------- ------- ------- --------------
<S> <C> <C> <C> <C>
Thomas P. Richards........... -- 500,000 -- 8,994
Chairman, President and -- 147,700 -- 9,300
Chief Executive Officer -- -- -- 8,229
Ronnie E. McBride............ -- 200,000 -- 6,528
Senior Vice President-- -- 80,000 -- 5,196
Operations -- -- -- 6,341
Forrest M. Conley, Jr (1)(3).. -- 169,000 -- 6,781
Vice President-- -- 61,600 -- 5,652
Ark-La-Tex Division -- -- -- 6,639
David W. Wehlmann............ -- 169,000 -- 6,855
Senior Vice President, -- 114,300 -- 8,351
Chief Financial Officer -- -- -- 4,782
and Secretary
Edward S. Jacob, III (1)..... -- 100,000 -- 441
Senior Vice President -
Marketing
Gary D. Lee.................. -- 144,000 -- 7,102
Vice President-- -- 61,600 -- 4,152
Human Resources -- 150,000 -- 2,845
</TABLE>
- -----------------
(1) Consists of cash amounts paid to the employee for relocation allowance.
(2) Consists of cash amounts contributed by the Company to match a portion of
the executive's contributions under the 401(k) Plan and group term life
insurance provided to employees.
(3) Mr. Conley, who had been the Senior Vice President - International
Operations since September 1996, effective February 1, 1999 became an
officer of one of the Company's operating subsidiaries and is no longer an
executive officer of the Company.
EMPLOYEE OPTIONS
Under the Company's 1982 Stock Option and Long-Term Incentive Plan for
Key Employees (the "1982 Employee Plan") and 1996 Employee Stock Option Plan
(the "1996 Employee Plan"), shares of Common Stock may be granted to executive
officers and other employees. As of December 31, 1999, an aggregate of
4,719,525 options to purchase Common Stock were outstanding under the 1982
Employee Plan and 1996 Employee Plan and 4,940,975 options to purchase Common
Stock remained available for future grant under these plans. During 1999,
options to purchase 1,282,000 shares of Common Stock were granted to the Named
Executive Officers under the 1996 Employee Plan.
During 1999, no options to purchase shares of Common Stock were
granted to the Named Executive Officers under the 1982 Employee Plan. The Board
of Directors suspended the 1982 Employee Plan in March 1999. The suspension of
the 1982 Employee Plan will not impair the rights of a holder of an outstanding
option granted under the 1982 Employee Plan.
9
<PAGE> 12
OPTION GRANTS TABLE. Options granted in 1999 vest in equal
installments of one-fifth on the first through the fifth anniversaries of the
date of grant and expire 10 years from the date of grant. The following table
provides information concerning stock options granted to the Named Executive
Officers during the year ended December 31, 1999.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
---------------------------------------------------- ---------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES
OPTIONS IN EXERCISE EXPIRATION
GRANTED FISCAL YEAR PRICE DATE 5% 10%
---------- ----------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Thomas P. Richards .................. 500,000 21.9% .9375 02/15/09 $294,797 $747,047
Ronnie E. McBride ................... 200,000 8.8% .9375 02/15/09 117,919 298,819
Forrest M. Conley, Jr ............... 169,000 7.4% .9375 02/15/09 99,641 252,502
David W. Wehlmann ................... 169,000 7.4% .9375 02/15/09 99,641 252,502
Edward S. Jacob III ................. 100,000 4.4% .8750 01/18/09 55,029 139,449
Gary D. Lee ......................... 144,000 6.3% .9375 02/15/09 84,902 215,150
</TABLE>
OPTION EXERCISES AND YEAR-END OPTION VALUES. The following table sets
forth information with respect to options exercised by each of the Named
Executive Officers during 1999 and the value at December 31, 1999 of
unexercised options by such individuals. The value of unexercised options
reflects the increase in market value of Common Stock from the date of grant
through December 31, 1999 (when the fair market value of Common Stock was
$2.875 per share). The actual value realized upon option exercise will depend
on the value of the Common Stock at the time exercised.
<TABLE>
<CAPTION>
OPTIONS EXERCISED NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
DURING 1999 OPTIONS HELD AT YEAR END MONEY OPTIONS AT YEAR END
------------------------ -------------------------------- --------------------------------
SHARES VALUE
ACQUIRED REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas P. Richards .. 0 $ -- 1,259,080(1) 888,620(2) $1,706,250 $1,325,000
Ronnie E. McBride ... 0 -- 362,000 288,000 465,000 420,000
Forrest M. Conley, Jr 0 -- 268,440 282,160 204,238 320,700
David W. Wehlmann ... 0 -- 121,520 231,780 89,863 278,200
Edward S. Jacob III . 0 -- 20,000 80,000 40,000 160,000
Gary D. Lee ......... 0 -- 143,440 212,160 55,800 223,200
</TABLE>
- ---------------------
(1) Includes 400,000 exercisable options owned by a limited partnership
controlled by Mr. Richards for the benefit of his children.
(2) Includes 200,000 unexercisable options owned by a limited partnership
controlled by Mr. Richards for the benefit of his children.
10
<PAGE> 13
COMPENSATION COMMITTEE REPORT
TO OUR SHAREHOLDERS
The compensation committee of the Board of Directors (the "Committee")
exists to develop executive compensation policies that support the Company's
strategic business objectives and values. The duties of this committee include:
o Review and approval of the design of executive compensation
programs and all salary arrangements that Company executives
receive;
o Assessment of the effectiveness of the programs in light of
compensation policies; and
o Evaluation of executive performance.
COMPENSATION PHILOSOPHY
The Committee adheres to an executive compensation philosophy that
supports the Company's business strategies. These strategies are to:
o Increase stockholder value;
o Strengthen cash flow; and
o Be the leading provider of products and services within our
markets.
The Committee's philosophy for executive compensation is to:
o Emphasize at-risk compensation, while balancing short-term
and long-term compensation to support the Company's business
and financial strategic goals;
o Reflect positive, as well as negative, Company and individual
performance in pay;
o Encourage equity-based compensation to reinforce management's
focus on shareholder value; and
o Provide competitive pay opportunities that will attract,
retain, and develop executive talent.
Company executives participate in a comprehensive compensation program
that is built around this four- pronged philosophy. The key components of this
program include base salary, annual bonus opportunities and long-term stock
based incentives.
Each of these components is reviewed by the Committee. The ensure the
Company's pay is comparable to market practices, competitive market data is
collected from multiple external sources on comparable drilling companies. This
market information, which is reviewed annually by the Committee, is used for
assessing all components of the Company executives' pay.
BASE SALARY
Generally, salaries reflect an individual's level of responsibility,
prior experience, breadth of knowledge, personal contributions (past and
future), position within the Company's executive structure, and market pay
practices. Overall, salaries are targeted at the median of the market practice,
with annual adjustments based upon performance. When making annual adjustments,
a qualitative assessment of performance is conducted, which considers many
factors including individual performance, both past and present. The factors
used in making this evaluation may vary by position.
Mr. Richards' 1998 annual base salary was $375,000. For 1999, Mr.
Richards did not receive any increase in base salary. However, as discussed
below, Mr. Richards did receive options to purchase Common Stock for his
guidance and service to the Company during the recent downturn. Mr. Richards'
total compensation package remains heavily weighted toward equity based
incentives in the form of stock options.
11
<PAGE> 14
ANNUAL BONUS
To support its short-term financial focus, the Company provides annual
bonus opportunities. For fiscal year 1999, as in the prior year, annual bonuses
were based on the achievement of a minimum level of Company financial
performance as well as the Committee's evaluation of the Named Executives'
performance. The Committee believes the goals associated with bonus payments
are achievable yet require considerable effort and innovation on the part of
each executive. Named Executives only receive payments under the plan if the
minimum level of financial performance is reached. If the minimum level of
financial performance is exceeded, bonus payments are increased. Bonus awards
are considered when the Committee reviews the Company's financial performance
after the close of the fiscal year.
For fiscal years 1998 and 1999, neither Mr. Richards nor any other
Named Executive received an annual bonus. The absence of annual bonuses reflect
the overall depressed market conditions in the land drilling industry. This
does not reflect the performance of Mr. Richards or any other Named Executive.
LONG-TERM INCENTIVES
The Company's 1996 Employee Stock Option Plan provides executives with
equity-based opportunities to earn additional compensation based upon Company
and stock performance over the mid- to long-term. Use of such incentives
focuses management on the long-term interest of shareholders. The Committee
considers multiple factors when determining award sizes.
Stock options are granted to Company executives to provide and
equity-based incentive component to their compensation. Under the Company's
1996 Employee Stock Option Plan, stock options are granted at exercise prices
equal to fair market value of the underlying Common Stock on the date of grant.
Executives do not realize value unless the stock price rises above the price on
the date of grant. This reflects the Company's focus on increasing shareholder
value.
During the fiscal year 1999, Mr. Richards received a grant of options
to acquire 500,000 shares of Common Stock at the exercise price of $0.9375 per
share. In fiscal 1998, Mr. Richards was granted options to purchase 147,700
shares of Common Stock. As discussed above, annual bonuses were not awarded
based on current industry and market conditions, however, Mr. Richards and the
other Named Executives received larger option grants for their continued
service to, and guidance of, the Company during the industry downturn. This
option grant was priced at fair market value of the underlying common stock on
the date of grant, and reflect the Committee's continued focus on the "at risk"
component of Mr. Richards' and the Named Executives total compensation.
CONCLUSION
The Committee believes these executive compensation policies and
programs serve the interests of shareholders and the Company effectively. The
various pay vehicles offered are appropriately balanced to provide increased
motivation for executives to contribute to the Company's overall future
success, thereby enhancing the value of the Company for the shareholders'
benefit.
We will continue to monitor the effectiveness of the Company's total
compensation programs to meet the current needs of the Company.
12
<PAGE> 15
COMPOSITION OF THE COMMITTEE.
Non-management members of the Committee owned, controlled or
represented an aggregate of 15,043,940 shares, or approximately 9.1% of the
Common Stock outstanding and, accordingly, also maintain a substantial interest
in the Company's financial performance.
Compensation Committee
James K.B. Nelson
-----------------------------------------
Ivar Siem
-----------------------------------------
Steven A. Webster
-----------------------------------------
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Of the members of the Committee, who are identified in the preceding
paragraph, none have ever been an employee of the Company except Ivar Siem, who
was acting President and Chief Executive Officer of the Company from April 1996
through August 1996. Mr. Siem has also served as Chairman of the Board of
Directors from August 1995 to November 1998.
EMPLOYMENT AGREEMENTS
Messrs. Richards, McBride, Conley and Lee were employed under
agreements pursuant to which each received (i) an annual salary of $275,000,
$150,000, $140,000, and $130,000, respectively, and (ii) a bonus at the sole
discretion of the Board of Directors. In October 1997, the Board of Directors
approved increases in the annual salaries of Messrs. Richards, McBride, Conley
and Lee to $375,000, $200,000, $180,000, and $150,000, respectively. In
February 1998, the Company entered into an employment agreement with Mr.
Wehlmann by which he would receive (i) an annual salary of $165,000 and (ii) a
bonus at the sole discretion of the Board of Directors. Effective February 1,
1999, Mr. Conley's salary was decreased to $150,000 as a result of his change
in job duties and responsibilities. Each of these employment agreements also
provided for the grant of options to purchase Common stock as set forth above
under "--Employee Options." The employment agreement for Mr. Richards was
renewed by its terms for a period of three years in September 1999. The
employment agreements for each of Messrs. McBride and Conley were renewed by
their terms for a period of one year in September 1999. The employment
agreements for Messrs. Wehlmann and Lee were renewed by their terms for a
period of one year in February and March 2000, respectively. Mr. Jacob was
employed under an agreement pursuant to which he would receive (i) an annual
salary of $150,000 and (ii) a bonus at the sole discretion of the Board of
Directors. The Board of Directors approved an increase in salary to $165,000 in
November 1999 and the agreement was renewed for a period of one year in January
2000. Pursuant to the employment agreements, in the event of a "Change in
Control" (as defined) or other termination if without cause, each of these
executives shall be paid the greater of (i) his annual salary and bonus for the
number of months remaining under the term of the employment agreement, and (ii)
his annual salary for a period of one year (three years in the case of Mr.
Richards).
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, the Company's directors, executive officers, and shareholders who own
more than 10% of the Common Stock, are required to file reports of stock
ownership and changes in ownership with the Securities and Exchange Commission
and the American Stock Exchange (the "AMEX") and to furnish the Company with
copies of all such reports they file. The Company believes that during 1999,
all filing requirements applicable to its directors, executive officers and
greater than 10% shareholders were complied with.
13
<PAGE> 16
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder returns
on the Common Stock, the AMEX market value index and a Peer Group Index. The
graph assumes that $100 was invested on December 31, 1994, in the Common Stock
and in each index and that any cash dividends were reinvested. The Company has
not declared any dividends during the period covered by this graph.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG GREY WOLF, INC., THE AMEX MARKET VALUE INDEX AND A PEER GROUP
[GRAPH]
<TABLE>
<CAPTION>
DEC-94 DEC-95 DEC-96 DEC-97 DEC-98 DEC-99
<S> <C> <C> <C> <C> <C> <C>
Grey Wolf, Inc. $ 100.00 $ 100.00 $ 375.00 $ 725.00 $ 100.00 $ 383.33
Peer Group (1) $ 100.00 $ 142.49 $ 256.72 $ 381.49 $ 160.06 $ 307.59
AMEX Market Value $ 100.00 $ 126.42 $ 134.50 $ 163.13 $ 165.96 $ 214.80
</TABLE>
(1) Consists of Nabors Industries, Inc., Parker Drilling Company, UTI
Energy Corp., Helmerich & Payne, Precision Drilling Corporation and
Patterson Energy, Inc. All of the members of the Peer Group are
providers or contract oil and gas land drilling services, with
revenues comparable to the Company.
This graph depicts the past performance of the Common Stock and in no
way should be used to predict future performance. The Company does not make or
endorse any predictions as to future share performance.
The foregoing price performance comparisons shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to
the extent that the Company specifically incorporates this graph by reference,
and shall not otherwise be deemed filed under such acts.
INDEPENDENT ACCOUNTANTS
KPMG LLP, certified public accountants, have served as the independent
auditors of the Company since October 1996. It is not proposed that any formal
action be taken at the Meeting with respect to the continued employment of KPMG
LLP, inasmuch as no such action is legally required. Representatives of KPMG
LLP plan to
14
<PAGE> 17
attend the Meeting and will be available to answer questions, and will have an
opportunity to make a statement if they so desire, although it is not expected
that any statement will be made.
DISTRIBUTION OF ANNUAL REPORTS TO SHAREHOLDERS
The annual report to shareholders covering the fiscal year ended
December 31, 1999, has been mailed to each shareholder entitled to vote at the
Meeting.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to submit a proposal for action to be
included in the proxy statement and form of proxy relating to the Company's
2000 annual meeting of shareholders is required to submit such proposals to the
Company on or before December 8, 2000.
Shareholders that intend to present a proposal that will not be
included in the proxy statement for the Company's 2000 Meeting must give
written notice of a shareholder's intent to submit such a proposal on or after
December 8, 2000 but not later than February 6, 2001. The notice submitted by a
shareholder should include a statement that the proponent intends to solicit
the necessary percentage of shareholder votes to carry the proposal supported
by evidence that the stated percentage will actually be solicited.
COST OF SOLICITING PROXIES
The cost of soliciting proxies will be borne by the Company. In
addition to solicitations by mail, a number of regular employees of the Company
may, if necessary to assure the presence of a quorum, solicit proxies in person
or by telephone for which they will receive no additional compensation.
Brokerage houses, banks and other custodians, nominees will be reimbursed for
their customary out-of-pocket and reasonable expenses incurred in forwarding
proxy materials to their clients who are beneficial owners of Common Stock.
By Order of the Board of Directors,
DAVID W. WEHLMANN,
Secretary
April 4, 2000
15
<PAGE> 18
(FRONT SIDE OF PROXY CARD)
PROXY GREY WOLF, INC. PROXY
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 2000 ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON TUESDAY, MAY 9, 2000
The undersigned shareholder of Grey Wolf, Inc., a Texas corporation (the
"Company"), hereby appoints Thomas P. Richards, David W. Wehlmann, and each of
them, with full power of substitution, the attorneys and proxies of the
undersigned to vote all of the shares of common stock, par value $.10 per share,
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of the Company to be held at the Adam's Mark Hotel, 2900
Briarpark Drive, Houston, Texas 77042 on May 9, 2000 at 8:30 a.m., Houston time,
and at any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
THE CLASS I NOMINEES AS SET FORTH ON THE REVERSE AS DIRECTORS NOMINEES AND FOR
EACH OF THE OTHER PROPOSALS.
THIS PROXY IS TO BE VOTED AS DIRECTED. IN THE ABSENCE OF SPECIFIC DIRECTION,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF FRANK A. BROWN, WILLIAM T. DONOVAN
AND THOMAS P. RICHARDS AS CLASS I DIRECTORS.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
PLEASE DATE, SIGN AND MAIL YOUR PROXY CARD
BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
GREY WOLF, INC.
MAY 9, 2000
<PAGE> 19
(REVERSE SIDE OF PROXY CARD)
A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
<TABLE>
<S> <C> <C> <C> <C>
1. Election of FOR (except as WITHHOLD Nominees: Frank A. Brown
Class I marked to the VOTE William T. Donovan
Directors contrary below) Thomas P. Richards
[ ] [ ]
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee,
print that nominee's name on the line below.)
- -----------------------------
2. As such proxies may in their discretion determine upon such other matters
(including procedural and other matters relating to the conduct of the meeting),
as may properly be presented to the annual meeting and any adjournments or
postponements thereof.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS AND THE PROXY STATEMENT FURNISHED HEREWITH. PLEASE SIGN, DATE AND
RETURN THIS PROXY PROMPTLY IN THE ENCLOSED, PRE-ADDRESSED STAMPED ENVELOPE.
Signature(s) of Shareholder Dated this
-----------------------------------
day of , 2000.
- ------------- -----------------------
Note: Please sign exactly as your name appears on your stock certificate.
When signing as executor, administrator, trustee or other
representative, please give your full title. All joint owners should
sign.
