<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
WEATHERFORD INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[WEATHERFORD LOGO]
April 12, 1999
Dear Weatherford Stockholder:
You are cordially invited to join us at the 1999 Annual Meeting of
Stockholders of Weatherford International, Inc. to be held at 9:00 a.m. on May
6th in Houston, Texas. The Annual Meeting will be held at The Luxury Collection
Hotel of Houston located at 1919 Briar Oaks.
This year you will be asked to vote in favor of one proposal concerning the
election of eight directors. The proposal is more fully explained in the
attached proxy statement, which we encourage you to read.
Whether or not you plan to attend the Annual Meeting, we strongly encourage
you to designate the proxies shown on the enclosed proxy card to vote your
shares and return your signed proxy card at your earliest convenience.
Thank you for your cooperation.
Sincerely,
[DUROC-DANNER SIGNATURE]
Bernard J. Duroc-Danner
Chairman of the Board, President and
Chief Executive Officer
- --------------------------------------------------------------------------------
Weatherford International,
Inc. www.weatherford.com
515 Post Oak Blvd., Suite 600
Houston, Texas 77027
<PAGE> 3
[WEATHERFORD LOGO]
WEATHERFORD INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: Thursday, May 6, 1999
TIME: 9:00 a.m. (Houston time)
PLACE: The Luxury Collection Hotel of Houston
1919 Briar Oaks
Houston, Texas 77027
MATTERS TO BE VOTED ON:
1. Election of eight directors to hold office for a one-year term; and
2. Any other matters that may properly come before the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE ELECTION
OF THE EIGHT NOMINEES FOR DIRECTOR.
Your Board of Directors has set March 29, 1999, as the record date for the
Annual Meeting. Only those stockholders who were holders of record of our common
stock at the close of business on March 29, 1999, will be entitled to vote at
the Annual Meeting. A complete list of these stockholders will be available for
examination at the Annual Meeting and at our offices at 515 Post Oak Blvd.,
Suite 600, Houston, Texas for a period of ten days prior to the Annual Meeting.
You are cordially invited to join us at the Annual Meeting. However, to
ensure your representation at the Annual Meeting, we request that you return
your signed proxy card at your earliest convenience, whether or not you plan to
attend the Annual Meeting. Your proxy will be returned to you if you are present
at the Annual Meeting and request us to return your proxy card.
By Order of the Board of Directors
/s/ CURTIS W. HUFF
Curtis W. Huff
Corporate Secretary
Houston, Texas
April 12, 1999
<PAGE> 4
WEATHERFORD INTERNATIONAL, INC.
PROXY STATEMENT
ANNUAL MEETING: Date: Thursday, May 6, 1999
Time: 9:00 a.m. (Houston time)
Place: The Luxury Collection Hotel of Houston
1919 Briar Oaks
Houston, Texas 77027
AGENDA: One proposal, numbered as Item 1 on the proxy card, for
the election of eight nominees as directors of the
Company.
WHO CAN VOTE: All holders of record of our common stock at the close of
business on March 29, 1999, are entitled to vote. Holders
of the common stock are entitled to one vote per share at
the Annual Meeting. The common stock is the only class of
our securities that is entitled to vote at the Annual
Meeting.
PROXIES SOLICITED BY: Your vote and proxy is being solicited by our Board of
Directors for use at the Annual Meeting. This Proxy
Statement and enclosed proxy card is being sent on behalf
of our Board of Directors to all stockholders beginning
on April 14, 1999. By completing, signing and returning
your proxy card, you will authorize the persons named on
the proxy card to vote your shares according to your
instructions.
PROXIES: If you do not indicate how you wish to vote for one or
more of the nominees for director, the persons named on
the proxy card will vote FOR election of all the nominees
for director (Proposal 1). If you "withhold" your vote
for any of the nominees, this will be counted as a vote
AGAINST that nominee.
REVOKING YOUR PROXY: You can revoke your proxy by:
- writing to the Corporate Secretary (at 515 Post Oak
Blvd., Suite 600, Houston, Texas 77027) before the
Annual Meeting;
- voting again via mail; or
- casting your vote in person at the Annual Meeting.
Your last vote will be the vote that is counted.
QUORUM: As of March 29th, there were 97,220,856 shares of common
stock issued and outstanding and there were approximately
3,200 holders of record of common stock. The presence, in
person or by proxy, of stockholders entitled to cast at
least 48,610,429 votes constitutes a quorum for adopting
the proposals at the Annual Meeting. If you have properly
signed and returned your proxy card by mail, you will be
considered part of the quorum, and the persons named on
the proxy card will vote your shares as you have
instructed them. If a broker holding your shares in
"street" name indicates to us on a proxy card that the
broker lacks discretionary authority to vote your shares,
we will not consider your shares as present or entitled
to vote for any purpose.
MULTIPLE PROXY CARDS: If you receive multiple proxy cards it indicates that
your shares are held in more than one account, such as
two brokerage accounts, and are registered in different
names. You should vote each of the proxy cards to ensure
that all of your shares are voted.
COST OF PROXY
SOLICITATION: We have retained Georgeson & Company Inc. to solicit
proxies from stockholders at an estimated fee of $6,500,
plus expenses. This fee does not include the costs of
<PAGE> 5
preparing, printing, assembling, delivering and mailing the
Proxy Statement. Some of our directors, officers and
employees may also solicit proxies personally, without any
additional compensation, by telephone or mail. Proxy
materials also will be furnished without cost to brokers and
other nominees to forward to the beneficial owners of shares
held in their names.
QUESTIONS: You may call Georgeson & Company Inc. at 1-800-223-2064 if
you have any questions.
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
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<PAGE> 6
BOARD OF DIRECTORS
ELECTION OF DIRECTORS
ITEM NO. 1 ON THE PROXY CARD
Eight directors are to be elected at the Annual Meeting. Each director
elected will hold office until the 2000 Annual Meeting. All of the nominees for
director are now serving as directors. The nominees for election as director
are:
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
---- --- --------------
<S> <C> <C>
Bernard J. Duroc-Danner........................... 45 1988
Philip Burguieres................................. 55 1998
David J. Butters.................................. 58 1984
Sheldon B. Lubar.................................. 69 1995
William E. Macaulay............................... 53 1998
Robert B. Millard................................. 48 1989
Robert K. Moses, Jr............................... 58 1998
Robert A. Rayne................................... 50 1987
</TABLE>
The persons named on the proxy card will vote for all of the nominees for
director listed unless you withhold authority to vote for one or more of the
nominees. The nominees receiving a plurality of votes cast at the Annual Meeting
will be elected as directors. Abstentions and broker non-votes will not be
treated as a vote for or against any particular nominee and will not affect the
outcome of the election of directors.
All of our nominees have consented to serve as directors. Our Board of
Directors has no reason to believe that any of the nominees will be unable to
act as a director. However, if any director is unable to stand for re-election,
the Board will designate a substitute. If a substitute nominee is named, the
persons named on the proxy card will vote for the election of the substitute
nominee.
DIRECTOR BIOGRAPHIES
BERNARD J. DUROC-DANNER joined the Company in May 1987 to initiate the
start-up of EVI, Inc.'s oilfield service and equipment business. He was elected
our President in January 1990 and Chief Executive Officer in May 1990. In
connection with the merger of EVI, Inc. with Weatherford Enterra, Inc.
("Weatherford Enterra") on May 27, 1998, Mr. Duroc-Danner was elected as our
Chairman of the Board. Mr. Duroc-Danner holds a Ph.D. in economics from Wharton
(University of Pennsylvania). In prior years, Mr. Duroc-Danner held positions
with Arthur D. Little and Mobil Oil Inc. Mr. Duroc-Danner is a director of
Parker Drilling Company (an oil and gas drilling company) and Cal Dive
International, Inc. (a company engaged in subsea services in the Gulf of
Mexico).
PHILIP BURGUIERES was elected to the Board as Chairman Emeritus on May 27,
1998. Mr. Burguieres served as a director of Weatherford Enterra from April 1991
until May 27, 1998, and as Chairman of the Board of Weatherford Enterra from
December 1992 until May 27, 1998. From April 1991 to October 1996, he also
served as President and Chief Executive Officer of Weatherford Enterra. Mr.
Burguieres serves as a director of Denali Incorporated (a provider of products
and services for handling critical fluids), McDermott International, Inc. (a
company engaged in the fabrication of oilfield equipment), Chase Bank of Texas,
N.A. (a national banking organization) and Newfield Exploration Company (an
independent oil and gas producer).
DAVID J. BUTTERS is a Managing Director of Lehman Brothers, Inc., an
investment banking company, where he has been employed for more than the past
five years. Mr. Butters is currently Chairman of the Board of Directors of
GulfMark Offshore, Inc., a director of Anangel-American Shipholdings, Ltd. and a
member of the Board of Advisors of Energy International, N.V.
SHELDON B. LUBAR has been the Chairman of Lubar & Co., a private investment
company, for more than the past five years. Until February 8, 1999, Mr. Lubar
served as Chairman and Chief Executive Officer of Christiana Companies, Inc., a
diversified holding company that held shares of our common stock and owned a
3
<PAGE> 7
company that was engaged in refrigerated and dry warehousing, transportation and
logistic services. We acquired Christiana in February of this year and control
of its warehousing, transportation and logistics business was sold to C2, Inc.
For more information about our recent acquisition of Christiana, see
Compensation Committee Interlocks and Insider Participation on page 14. Mr.
Lubar is a director of C2, Inc., Ameritech Corporation, Massachusetts Mutual
Life Insurance Company, Firstar Corporation, MGIC Investment Corporation and
Jefferies & Company, Inc. Mr. Lubar was initially appointed to the Board of
Directors in connection with our acquisition of Prideco, Inc. in June 1995.
WILLIAM E. MACAULAY has been the Chief Executive Officer of First Reserve
Corporation, a Connecticut-based corporation that manages various investment
company funds, for more than the past five years and has served as Chairman of
First Reserve Corporation since June 1998. He is a director of Maverick Tube
Corporation (a manufacturer of oilfield tubulars, line pipe and structural
steel), National-Oilwell, Inc. (a company engaged in the design, manufacture and
sale of machinery and equipment and the distribution of products used in oil and
gas drilling production), and Cal Dive International, Inc. (a company engaged in
subsea services in the Gulf of Mexico).
ROBERT B. MILLARD is a Managing Director of Lehman Brothers, where he has
been employed for more than the past five years. Mr. Millard is also a director
of GulfMark Offshore, Inc. and L-3 Communications Corporation.
ROBERT K. MOSES, JR. has been a private investor, principally in the oil
and gas exploration and oilfield services business in Houston, Texas, for more
than the past five years. He served as Chairman of the Weatherford Enterra Board
from May 1989 to December 1992.
ROBERT A. RAYNE has been an Executive Director of London Merchant
Securities plc (property investment and development with major investments in
leisure enterprises), a United Kingdom-listed public limited company, for more
than the past five years.
NOMINATION AGREEMENT
In connection with the Weatherford merger, each of Messrs. Burguieres,
Macaulay and Moses were elected to the Board of Directors. Under the terms of
the merger, we agreed to submit each of Messrs. Burguieres, Macaulay and Moses
as nominees for re-election to the Board of Directors at this Annual Meeting and
at the 2000 Annual Meeting, subject to the fiduciary duties of our Board of
Directors and the willingness of these individuals to serve as directors.
COMMITTEES AND MEETINGS OF THE BOARD
COMMITTEES
The Board of Directors has created the following committees:
- Audit
- Compensation
- Executive
The Board of Directors does not have a standing Nominating Committee.
NUMBER OF MEETINGS
During 1998, the Board of Directors met six times, the Compensation
Committee met one time and the Audit Committee met one time. The Executive
Committee did not meet. All of the directors attended at least 75% of all Board
of Directors and Committee meetings during 1998.
4
<PAGE> 8
AUDIT COMMITTEE
Messrs. Butters (Chair), Lubar and Rayne are the current members of the
Audit Committee. The primary functions of the Audit Committee under its charter
are:
- assessing the independence and performance of our independent and
internal auditors;
- recommending to the Board the selection and discharge of our independent
auditors; and
- evaluating the adequacy of our internal accounting controls.
COMPENSATION COMMITTEE
Messrs. Lubar, Moses (Chair) and Rayne are the current members of the
Compensation Committee. The primary functions of the Compensation Committee are:
- recommending to the Board the compensation to be paid to the directors,
officers and key employees; and
- subject to review and approval of certain matters by the full Board of
Directors, administering the compensation plans for the executive
officers.
EXECUTIVE COMMITTEE
Messrs. Duroc-Danner (Chair), Burguieres, Macaulay and Millard are the
current members of the Executive Committee. The primary function of the
Executive Committee is to act on behalf of the Board of Directors between
regularly scheduled meetings of the Board.
BOARD COMPENSATION
DIRECTORS' FEES
The directors who are not employees are paid the following fees:
- $1,000 for each Board and Committee meeting attended;
- $1,500 for the Committee Chairman for each Committee meeting attended;
and
- $7,000 for each quarter of the year in which the person serves as a
director.
Mr. Butters, who served as Chairman of the Board until May 27, 1998,
received an additional retainer of $6,250 per month while serving as Chairman of
the Board.
DEFERRAL PLAN FOR OUTSIDE DIRECTORS
Under our Non-employee Director Deferred Compensation Plan, each
non-employee director may elect to defer up to 7.5% of any fees paid by us. The
deferred fees are converted into non-monetary units representing shares of
common stock that could have been purchased with the deferred fees based on the
market price of the common stock at the time of the deferral. If a non-employee
director elects to defer at least 5% of his fees, we will make an additional
contribution to the director's account equal to the sum of (1) 7.5% of the
director's fees plus (2) the amount of fees deferred by the director. Our
directors may generally determine when the funds will be distributed from the
plan. The amount of the distribution will be equal to the number of shares in
the director's account multiplied by the market price of the common stock at the
time of distribution. Distributions may, at our election, be made in cash,
common stock or a combination of both. During 1998, we contributed $9,300,
$4,275, $1,200, $1,050 and $3,900 to the accounts of Messrs. Butters, Lubar,
Macaulay, Moses and Rayne, respectively, which represented 278, 170, 67, 59 and
154 shares allocated to their respective accounts.
5
<PAGE> 9
STOCK OPTIONS FOR DIRECTORS
Until September 1998, we maintained an Amended and Restated Non-Employee
Director Stock Option Plan, under which each non-employee director was granted
an option to purchase 10,000 shares of common stock when the director was first
elected and each time he was re-elected as a director. During 1998, options to
purchase 10,000 shares of common stock were granted to each of Messrs. Macaulay
and Moses upon their election to the Board. Each option has a ten-year term and
is fully exercisable in one year. No further options will be granted under this
plan.
On September 8, 1998, we granted to each of the non-employee directors and
Mr. Burguieres an option or warrant to purchase 60,000 shares of common stock at
a purchase price per share equal to $18.125, which was the fair market value of
the common stock as of that day. These grants were issued under agreements
between us and the non-employee directors and Mr. Burguieres. Each option or
warrant has a 13-year term and becomes fully exercisable on September 8, 2001.
BURGUIERES EMPLOYMENT AGREEMENT
In June 1998, we entered into an employment agreement with Mr. Burguieres,
which has a term of ten years and provides for an annual salary of $120,000.
Under the terms of his employment agreement, Mr. Burguieres will be employed as
Chairman Emeritus of the Board of Directors. However, we are not obligated to
re-elect Mr. Burguieres as Chairman Emeritus and the Board of Directors is not
required to nominate Mr. Burguieres for re-election as a director upon the
expiration of his current term. If we terminate Mr. Burguieres' employment for
any reason other than for "cause" or as a result of death or disability, Mr.
Burguieres or his estate will be entitled to receive annual salary payments
through the term of the agreement and Mr. Burguieres and his eligible dependents
will continue to receive health and medical benefits. If we terminate his
employment for "cause", Mr. Burguieres will not be entitled to any further
salary payments or health and medical benefits. Under Mr. Burguieres' employment
agreement, "cause" is generally defined as (i) an act of dishonesty which
constitutes a felony or results in personal gain or enrichment at our expense,
(ii) willful and continued failure to substantially perform his duties after
written demand is made by the Board or (iii) Mr. Burguieres' ownership,
management or employment by any business which competes, in our reasonable
judgment, with any business conducted by us.
6
<PAGE> 10
STOCK OWNERSHIP
STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
This table shows the number and percentage of shares of common stock
beneficially owned by our directors and executive officers as of March 29, 1999.
Each person has sole voting and investment power for the shares shown below,
unless otherwise noted.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF SHARES BENEFICIALLY OWNED
-------------------------------------------------------
NUMBER OF PERCENT OF
NAME SHARES OWNED RIGHT TO ACQUIRE(1) OUTSTANDING SHARES
---- ------------ ------------------- ------------------
<S> <C> <C> <C>
Bernard J. Duroc-Danner....................... -- 830,000 *
Philip Burguieres(2).......................... 197,865 -- *
David J. Butters(3)........................... 102,160 10,000 *
Sheldon B. Lubar(4)........................... 746,969 30,000 *
William E. Macaulay(5)........................ 5,567,349 10,000 5.7%
Robert B. Millard(6).......................... 108,960 10,000 *
Robert K. Moses, Jr.(7)....................... 424,383 10,000 *
Robert A. Rayne(8)............................ -- 20,000 *
John C. Coble................................. -- 80,400 *
Randall D. Stilley(9)......................... 4,750 19,000 *
Robert F. Stiles.............................. 200 60,000 *
E. Lee Colley, III............................ -- -- *
Bruce F. Longaker, Jr.(10).................... -- -- *
Curtis W. Huff(11)............................ 76,000 -- *
Frances R. Powell............................. 953 41,000 *
Jon R. Nicholson(12).......................... 15,840 -- *
Donald R. Galletly(13)........................ 5,000 -- *
James G. Kiley(14)............................ -- 55,000 *
All officers and directors as a group (18
persons).................................... 7,250,429 1,175,400 8.6%
</TABLE>
- ---------------
* Less than 1%.
(1) Shares of common stock that can be acquired through stock options
exercisable through May 28, 1999.
(2) Includes (i) 409 shares held under our Employee Stock Purchase Plan, as to
which he has sole voting and no dispositive power, (ii) 421 shares held
under our 401(k) Savings Plan, as to which he has sole voting and no
dispositive power, (iii) 950 shares held by his wife, over which he has no
voting or dispositive power, and (iv) 475 shares held by his adult son
supported by him, over which Mr. Burguieres has sole voting and dispositive
power. Mr. Burguieres disclaims beneficial ownership of the shares held by
his wife and son.
(3) Includes 14,388 shares held by his wife, over which he has no voting or
dispositive power and as to which he disclaims beneficial ownership. Also
includes 41,160 shares held in trusts for his children, of which he is the
trustee and has voting and dispositive power. Excludes 3,598,832 shares
held by Lehman Brothers Holding Inc., an affiliate of Lehman Brothers, Inc.
(4) Includes 355,114 shares held by his wife, over which he has no voting or
dispositive power and as to which he disclaims beneficial ownership. Also
includes 27,342 shares held in trusts for his grandchildren, of which he is
the trustee and has voting and dispositive power.
(5) Includes 6,619 shares held by his wife, over which he has no voting or
dispositive power and as to which he disclaims beneficial ownership.
Includes 5,558,340 shares owned beneficially by First Reserve Corporation.
Mr. Macaulay is Chairman and Chief Executive Officer of First Reserve. Mr.
Macaulay disclaims beneficial ownership of the shares of common stock
beneficially owned by First Reserve.
(6) Excludes 3,598,832 shares held by Lehman Brothers Holding Inc., an
affiliate of Lehman Brothers, Inc.
(7) Includes an aggregate of 42,750 shares held in various trusts for Mr.
Moses' family, of which Mr. Moses is the trustee and has sole voting and
dispositive power. Excludes (i) an aggregate of 49,875 shares held
7
<PAGE> 11
in various trusts for Mr. Moses' children, (ii) 1,758 shares held in a
trust for Mr. Moses' son and (iii) 593 shares held by Mr. Moses' adult son.
Mr. Moses has no voting or dispositive power over these excluded shares.
Mr. Moses disclaims beneficial ownership of all of the above-described
shares.
(8) Excludes 400,000 shares beneficially owned by London Merchant Securities
plc, of which Mr. Rayne serves as Executive Director. Mr. Rayne disclaims
beneficial ownership of all of these shares.
(9) Includes 4,156 restricted shares which are subject to a vesting schedule,
forfeiture risk and other restrictions.
(10) Mr. Longaker became an executive officer in March 1999.
(11) Includes 75,000 restricted shares that vest over a four-year period through
June 2002.
(12) Includes (i) 2,494 restricted shares which are subject to a vesting
schedule, forfeiture risk and other restrictions and (ii) 1,039 shares held
under our 401(k) Savings Plan over which he has sole voting and no
dispositive power.
(13) Includes 1,000 shares held by his wife.
(14) Mr. Kiley ceased to be an executive officer as of March 1, 1999.
STOCK OWNED BY "BENEFICIAL HOLDERS"
This table shows information for each person known by us to beneficially
own 5% or more of the outstanding shares of common stock as of March 29, 1999:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENT OF
BENEFICIAL OWNER NUMBER OF SHARES(1) OUTSTANDING SHARES
------------------- ------------------- ------------------
<S> <C> <C>
First Reserve Corporation(2)............... 5,558,340 5.7%
475 Steamboat Road
Greenwich, CT 06830
FMR Corp.(3)............................... 9,506,437 9.8%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) This information is based on information furnished by each stockholder or
contained in filings made with the Securities and Exchange Commission. The
persons listed have sole voting and dispositive power for their shares of
common stock, unless otherwise noted.
(2) Represents shares owned by the following funds (the "First Reserve Funds"),
for each of which First Reserve Corporation is the general partner: American
Gas & Oil Investors, Limited Partnership -- 1,252,000 shares; AmGO II,
Limited Partnership -- 807,500 shares; First Reserve Fund V, Limited
Partnership -- 2,160,000 shares; First Reserve Fund V-2, Limited
Partnership -- 608,000 shares; and First Reserve Fund VI, Limited
Partnership -- 698,602 shares. First Reserve, in its role as managing
general partner of the First Reserve Funds, has the power to cause each
First Reserve Fund to dispose of or vote shares of common stock held by each
fund. Also includes 32,238 shares owned directly by First Reserve. The
principal beneficial owners of the common stock of First Reserve are its
executive officers, including Mr. Macaulay, Chairman and Chief Executive
Officer of First Reserve, who is one of our directors.
(3) Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp. ("FMR") and a registered investment adviser, is the
beneficial owner of 8,690,319 shares as a result of acting as investment
adviser to various registered investment companies (the "Funds"). Fidelity
Management Trust Company ("FMTC"), a wholly owned subsidiary of FMR, is the
beneficial owner of 814,408 shares as a result of serving as investment
manager of various institutional accounts. Fidelity International Limited is
the beneficial owner of 1,710 shares and has sole voting and dispositive
power over all such shares. Edward C. Johnson 3d, FMR's Chairman and
principal stockholder, FMR, through its control of Fidelity, and the Funds
each has sole power to dispose of the 8,690,319 shares owned by the Funds
and Mr. Johnson and FMR, through its control of FMTC, each has sole power to
vote and dispose
8
<PAGE> 12
of 814,408 shares owned by the institutional accounts. The Funds' Board of
Trustees has sole power to vote all shares owned by the Funds. Fidelity
carries out the voting of the Funds' shares under written guidelines
established by the Funds' Board of Trustees. Additionally, Mr. Johnson and
FMR may be deemed to be the beneficial owner of an additional 18,750 shares
resulting from the assumed conversion of 30,000 of our 5% Convertible
Subordinated Preferred Equivalent Debentures. Members of the Mr. Johnson's
family and trusts for their benefit are the predominant owners of Class B
shares of common stock of FMR. Mr. Johnson owns 12.0% and Abigail P.
Johnson, Mr. Johnson's wife and a Director of FMR, owns 24.5% of the voting
stock of FMR. The Johnson family and all other Class B shareholders have
entered into a shareholders' voting agreement under which all Class B shares
will be voted in accordance with the majority vote of Class B shares.
Through their ownership of voting common stock and the shareholders' voting
agreement, members of the Johnson family may be deemed, under the Investment
Company Act of 1940, to form a controlling group as to FMR.
EXECUTIVE OFFICERS
In addition to Mr. Duroc-Danner, whose biography is shown on page 3, the
following persons are our executive officers. None of the executive officers or
directors have any family relationships with each other.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Bernard J. Duroc-Danner.............. 45 Chairman of the Board, President and Chief Executive
Officer
John C. Coble........................ 56 Senior Vice President and President -- Drilling
Products Division
Randall D. Stilley................... 45 Senior Vice President and President -- Completion &
Oilfield Services Division
Robert F. Stiles..................... 41 Senior Vice President and President -- Weatherford
Global Compression Services Division
E. Lee Colley, III................... 42 Senior Vice President and President -- Artificial Lift
Systems Division
Bruce F. Longaker, Jr. .............. 45 Senior Vice President, Chief Financial Officer and
Treasurer
Curtis W. Huff....................... 41 Senior Vice President, General Counsel and Secretary
Frances R. Powell.................... 44 Vice President -- Accounting and Controller
Donald R. Galletly................... 47 Vice President -- Communications and Investor Relations
Jon R. Nicholson..................... 56 Vice President -- Human Resources
</TABLE>
JOHN C. COBLE was elected Senior Vice President and President -- Drilling
Products Division on May 27, 1998. Mr. Coble joined the Company in July 1981 and
was elected Executive Vice President in March 1997. Mr. Coble has served as
President of Grant Prideco, Inc., one of our subsidiaries included in the
Drilling Products Division, since October 1995. From December 1991 to October
1995, he served as Chief Operating Officer.
RANDALL D. STILLEY was elected Senior Vice President and
President -- Completion & Oilfield Services Division on May 27, 1998. Prior to
that time, Mr. Stilley served as Senior Vice President and President of Services
of Weatherford Enterra since January 1998. Prior to joining Weatherford Enterra,
Mr. Stilley held various management positions with Halliburton Company from 1976
until 1998, serving as Vice President-Asia Pacific/China from 1995 until
December 1997.
ROBERT F. STILES was elected Senior Vice President on May 27, 1998, and
President -- Weatherford Global Compression Services Division in February 1999.
The Weatherford Global Compression Services Division is a joint venture that is
64% owned by us and 36% owned by GE Capital Corporation. Mr. Stiles joined us in
October 1992 and was elected a Vice President in March 1997. Mr. Stiles served
as President of our Artificial Lift Systems Division from January 1996 to
November 1998. Prior to that time, Mr. Stiles served as President of Production
Oil Tools, Inc., one of our subsidiaries included in our Artificial Lift
9
<PAGE> 13
Systems Division, from November 1993 to December 1995 and as Vice President of
Manufacturing of Grant Prideco from October 1992 to November 1993.
E. LEE COLLEY, III was elected Senior Vice President and
President -- Artificial Lift Systems Division in November 1998. Mr. Colley
joined us in March 1996 and has served in several positions including Vice
President/General Manager of the Artificial Lift Systems Division. Prior to that
time, Mr. Colley worked for over 20 years for Halliburton Company in various
manufacturing, sales and marketing managerial positions.
BRUCE F. LONGAKER, JR. was elected Senior Vice President, Chief Financial
Officer and Treasurer in March 1999. Prior to that time, Mr. Longaker was
employed by Camco International, Inc. for the last 18 years, where he last
served as Vice President -- Finance and Controller since 1992.
CURTIS W. HUFF was elected Senior Vice President, General Counsel and
Secretary on May 27, 1998. Prior to that time, Mr. Huff was a partner with the
law firm of Fulbright & Jaworski L.L.P., our counsel, and held that position for
more than five years. Mr. Huff continues to provide advisory services to
Fulbright & Jaworski L.L.P. We have retained Fulbright & Jaworski L.L.P. with
respect to various legal matters for which we pay usual and customary fees.
FRANCES R. POWELL was elected our Vice President -- Accounting in May 1994,
Controller in November 1991 and has been employed by us since 1990. From 1986 to
1990, she served as Controller for and held other managerial positions with
GulfMark Offshore, Inc.
DONALD R. GALLETLY was elected our Vice President -- Communications and
Investor Relations in June 1998. Prior to that time, he worked for Dresser
Industries, Inc. as Vice President of Communications and Investor Relations from
October 1997 to May 1998 and as Vice President of Investor and Public Relations
from February 1993 to October 1997.
JON R. NICHOLSON was elected our Vice President -- Human Resources on May
27, 1998. Prior to that time, Mr. Nicholson worked for Weatherford Enterra as
Vice President -- Human Resources from October 1995 to May 1998 and as Director
of Human Resources from February 1993 to October 1995.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors and the Compensation Committee of the Board of
Directors is pleased to present this report on the compensation policies for our
executive officers for 1998. This report sets forth the major components of
executive compensation and the basis by which 1998 compensation determinations
were made by the Board of Directors and the Compensation Committee for the
executive officers.
On May 27, 1998, EVI, Inc. merged with Weatherford Enterra. Following the
merger, a number of new officers and a new compensation committee, consisting of
Messrs. Lubar, Moses and Rayne, were appointed. The Compensation Committee
decided to use EVI's former compensation policies and guidelines as a basis for
determining compensation, with certain exceptions made for prior employees of
Weatherford Enterra who were under certain contractual commitments.
COMPENSATION POLICY AND GUIDELINES
The goal of our compensation policy and practices is to provide a
competitive compensation package designed to attract and retain key executive
officers and to offer compensation programs that align executive remuneration
levels both with the interests of stockholders and with the Company's overall
performance. Our compensation programs have historically stressed stock-based
compensation as a means of providing incentives to executive officers to achieve
growth in the value of the common stock. With this objective in mind, our
executive compensation program has included a combination of reasonable base
salaries and various long and short-term incentive programs linked to the
Company's financial and stock performance. In making compensation decisions, the
Compensation Committee's decisions have typically also taken into account the
cyclical nature of the industry and the Company's progress toward achieving
strategic objectives.
10
<PAGE> 14
COMPENSATION PROGRAM COMPONENTS
Our compensation programs are generally administered by or under the
direction of the Compensation Committee and are reviewed on an annual basis to
ensure that remuneration levels and benefits are competitive and reasonable in
light of the Company's overall performance. Our stock-based compensation
decisions for the executive officers are approved by our full Board of Directors
following recommendations by the Compensation Committee.
The Compensation Committee was charged with reviewing and recommending the
specific base and bonus compensation of the President and Chief Executive
Officer (the "Principal Executive"). The Board of Directors and Compensation
Committee has delegated to Mr. Duroc-Danner, as our Chief Executive Officer, the
authority to review and adjust the base and cash bonus compensation for the
other executive officers. His decisions are reviewed by the Compensation
Committee.
Decisions on stock options and other long-term incentive plans are made by
the Board after consideration of the Company's results and discussion with and
recommendations from Mr. Duroc-Danner as to the executive officers under his
supervision.
The particular elements of the compensation programs for the Principal
Executive and other executive officers are explained in more detail below.
Base Salary -- Base salary levels have primarily been determined based on
market factors, including the market for similar executives and the desire by us
to recruit and retain key executive officers. Our analysis has also included
comparisons with companies in the same industry and of similar size and
complexity as the Company, including a number of companies in the Dow Jones
Oilfield Equipment and Services Index in the performance graph set forth herein.
Salary levels are based on individual skills and performance and market
comparisons. Adjustments made during 1998 to the compensation of various
officers were based on various factors, including their individual scope of
responsibility, tenure, and overall performance.
Annual Performance Compensation -- Annual performance compensation has
historically been provided to the executive officers in the form of cash and
non-cash bonuses relating to financial and operational achievements. The amount
and form of bonuses for 1998 were determined by the Compensation Committee in
the case of Mr. Duroc-Danner and by Mr. Duroc-Danner in the case of the other
executive officers, subject to approval of the Board of Directors as to grants
of stock options or other non-cash bonuses.
The decision to award an annual bonus has historically been based primarily
upon a subjective analysis of the executive officer's job performance and the
specific accomplishments of the executive officer during the preceding twelve
month period after giving consideration to other compensation received by the
officer.
The decision-making process for the granting of bonuses has typically
occurred in May of each year following the annual meeting of stockholders and
has involved the consideration of the prior year's results as well as
achievements and results through such time. Various bonuses were paid to the
executive officers in the first quarter of 1998 in recognition of those officers
assistance in achieving the Company's growth in 1997 and the first part of 1998,
including assistance in completing numerous acquisitions and the Weatherford
merger, and other factors. The decisions on the amounts of such bonuses were
based on subjective factors.
Following the merger of EVI, Inc. and Weatherford Enterra, we have begun
the process of combining the bonus programs of the two companies. Both companies
considered financial performance in the bonus determinations, including whether
specific targets were met during the year. Given the extreme downturns that
occurred in our industry in 1998 and the impact of our merger, the targets
established by both companies were not met. We, however, did consider the
individual accomplishments of our executive officers during 1998 in
repositioning our Company for future growth and concluded cash bonuses for their
efforts were merited. We also were required to pay certain contractual bonuses
under the terms of the employment agreements with those officers who were
previously with Weatherford Enterra. We believe that the bonuses paid were
reasonable in light of the significant work performed by our officers in 1998.
Deferred Compensation Plan -- We maintain an executive deferred
compensation plan that provides our key employees with long-term incentive
compensation through benefits that are directly linked to future
11
<PAGE> 15
increases in the value of the common stock and that may only be realized upon
the employee's retirement, termination or death. Under this plan, eligible
employees receive a tax deferred contribution under the plan equal to 7.5% of
their annual compensation through a credit to an account that is converted into
non-monetary units representing the number of shares of common stock that the
contributed funds could purchase in the market at the time of the contribution.
In addition, in an effort to provide incentive to the participants to invest in
the common stock, a portion of the compensation that they would otherwise
receive from the Company, the participating employees are offered the
opportunity to defer up to 7.5% of their compensation to their account under
this plan, in which case we will make a matching contribution equal to the
amount of the deferral by the employee. Mr. Duroc-Danner and other executive
officers have all elected to defer 7.5% of their compensation under this plan.
This plan provides for a five-year vesting period with respect to the Company's
contributions and the ultimate value of benefits under the plan to the
participant are wholly dependent upon the price of the common stock at the time
the employee retires, terminates his employment or dies. We believe that this
plan is an important component of the stock-based compensation program and
provides and serves the purpose of aligning management's interest with those of
the Company's stockholders.
Stock Option Program -- The use of stock options is considered to be an
important incentive to our executive officers for working toward the Company's
long-term growth. We believe that options provide our officers with a benefit
that will increase only to the extent that the value of the common stock
increases. Accordingly, we have from time to time granted to the executive
officers options to purchase shares of common stock. The number of shares
granted is determined based on the level and contribution of the officer and has
generally taken into account stock ownership and other options held by the
officer. Stock options are subject to vesting over a number of years and have
exercise prices equal to the market price of the common stock at the date of
grant.
In 1998, options to purchase a total of 1,287,000 shares of common stock
were granted to the executive officers. These options are subject to three-year
cliff-vesting so that an officer will not be entitled to the options if he or
she elected to leave. We believe that this type of vesting provides strong
incentives for creating the long-term value for the Company. We believe that the
number of stock options granted by us to our executive officers during 1998 was
consistent with industry standards and our objectives to emphasizing stock-based
compensation at the senior executive officer level.
DISCUSSION OF 1998 COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
In fixing the compensation of Mr. Duroc-Danner for 1998, the Compensation
Committee determined that it would be appropriate to increase Mr. Duroc-Danner's
base compensation from $400,000 to $550,000 and award him a bonus of $700,000 in
the first quarter of 1998 in recognition of his past services to and
accomplishments for the Company. Mr. Duroc-Danner also received a bonus of
$430,000 in the first quarter of 1999 in recognition of his efforts to expand
and grow the Company's businesses, his defining and implementing the Company's
growth strategy in 1998 and his general accomplishments in implementing the
Weatherford merger.
The increase in Mr. Duroc-Danner's base salary was intended to make his
compensation more competitive with those of similar officers in competing
companies, including a number of companies included in the Dow Jones Oilfield
Equipment and Services Index in the performance graph set forth herein. During
1998, Mr. Duroc-Danner also received options to purchase 350,000 shares of
common stock. The number of shares subject to the options was fixed at that
level in order to provide Mr. Duroc-Danner with material incentives to increase
the value of the common stock in the future. In reviewing Mr. Duroc-Danner's
compensation for 1998, the Compensation Committee also sought to reward Mr.
Duroc-Danner for his substantial achievements in bringing growth to the Company,
as well as provide incentive for the future through stock option grants. No
single factor was considered determinative in this decision.
COMPENSATION DEDUCTION LIMITATIONS
Section 162(m) of the Internal Revenue Code of 1986, as amended, currently
imposes a $1 million limitation on the deductibility of certain compensation
paid to five highest paid executives. Excluded from the
12
<PAGE> 16
limitation is compensation that is "performance based". For compensation to be
performance based, it must meet certain criteria, including being based on
predetermined objective standards approved by the Company's stockholders. We
believe that maintaining the discretion to evaluate the performance of our
management is an important part of our responsibilities and benefits the
Company's stockholders. We intend to take into account the potential application
of Section 162(m) on incentive compensation awards and other compensation
decisions.
SUMMARY
We believe that the executive compensation program followed by us in 1998
was consistent with the compensation programs provided by other companies that
are comparable in size and complexity to the Company and with which the Company
competes, including many of the companies in the Dow Jones Oilfield Equipment
and Services Index in the performance graph on page 18. We further believe that
the compensation program is necessary to retain the services of officers and
employees who are essential to the continued success and development of the
Company and to compensate those officers and employees for their efforts and
achievements. The Board and Compensation Committee intend to review the
compensation policies on an ongoing basis to assure that compensation paid
appropriately reflects corporate and individual performance, yielding awards
that are reflective of the annual financial and operational results of the
Company. Finally, we believe that the deferred compensation plan and stock
option program provide significant incentives to our key employees to enhance
stockholder value by providing financial opportunities to them that are
consistent with and dependent upon the returns that are generated on behalf of
the Company's stockholders.
Philip Burguieres
David J. Butters
Bernard J. Duroc-Danner
Sheldon B. Lubar*
William E. Macaulay
Robert B. Millard
Robert K. Moses, Jr.*
Robert A. Rayne*
* Members of the Compensation Committee
13
<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
COMPENSATION DETERMINATIONS
The full Board of Directors currently approves all stock grants, with
Messrs. Duroc-Danner and Burguieres, both employee directors of the Company,
abstaining from voting with respect to the matters. Mr. Duroc-Danner does make
recommendations to the Compensation Committee and the full Board of Directors
for compensation and stock grants to our employees.
OTHER AFFILIATIONS
Messrs. Butters and Millard are employed by Lehman Brothers. During 1998,
Lehman Brothers received a fee of $3 million from us for the assistance rendered
by Lehman Brothers in connection with the Weatherford merger.
In February 1999, we completed a tax-free merger with Christiana and C2,
Inc., under which approximately 4.4 million shares of our common stock were
issued to the stockholders of Christiana. Prior to the merger, Christiana
transferred its warehousing, transportation and logistics business to C2. Mr.
Lubar was Chairman and Chief Executive Officer of Christiana and owned
approximately 18.8% of the total outstanding shares of Christiana common stock.
Under the terms of the Christiana merger, Mr. Lubar and members of his family
received a total of approximately 2,322,340 shares of common stock and aggregate
cash consideration of approximately $10,872,000.
14
<PAGE> 18
SUMMARY COMPENSATION TABLE
This table shows the total compensation paid for the years ended December
31, 1998, 1997 and 1996, to Mr. Duroc-Danner and the four most highly
compensated executive officers during 1998:
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ---------------------
AWARDS
OTHER ANNUAL --------------------- ALL OTHER
NAME AND SALARY BONUS COMPENSATION RESTRICTED COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($)(2)(3) STOCK($) OPTIONS ($)(4)
------------------ ---- ------- ------- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bernard J. Duroc-Danner................. 1998 525,000 430,000 183,750 -- 350,000 11,056
Chairman of the Board, President 1997 391,667 700,000 133,750 -- 50,000 9,233
and Chief Executive Officer 1996 340,000 500,000 66,000 -- 400,000 10,472
John C. Coble(5)........................ 1998 296,108 150,000 103,366 -- 100,000 9,413
Senior Vice President and 1997 250,000 385,800 69,660 -- 40,000 7,241
President -- Drilling Products 1996 -- -- -- -- -- --
James G. Kiley(6)....................... 1998 270,833 137,500 85,625 -- 100,000 871
Former Chief Financial Officer, 1997 241,667 300,000 47,000 -- 50,000 --
Senior Vice President and Treasurer 1996 183,333 150,000 23,250 -- 100,000 --
Robert F. Stiles(7)................ 1998 260,339 135,000 59,258 -- 100,000 6,399
Senior Vice President and President -- 1997 200,000 134,750 30,997 -- 60,000 5,636
Weatherford Global Compression 1996 -- -- -- -- -- --
Curtis W. Huff(8)....................... 1998 204,167 175,000 875 2,625,000(9) 200,000 562
Senior Vice President, General 1997 -- -- -- -- -- --
Counsel and Secretary 1996 -- -- -- -- -- --
</TABLE>
- ---------------
(1) Salary and bonus compensation include amounts deferred by each executive
officer under our Executive Deferred Compensation Stock Ownership Plan (the
"Executive Deferred Plan") described in Note 2 below. The bonus amounts were
earned in the year in which they are shown in the table but were paid in the
first half of the following year.
(2) Other Annual Compensation includes (i) the vested portion of the amount
contributed by us under the Executive Deferred Plan equal to 7.5% of each
annual officer's compensation for each year, plus (ii) the vested portion of
our matching contribution under the Executive Deferred Plan equal to 100% of
the amount deferred by the officer. Each officer can defer up to 7.5% of his
or her total salary and bonus compensation each year. Our contributions vest
over a five-year period on the basis of 20% per year for each year of
service by an officer with us after the later of January 1, 1992 or the date
of initial participation in the Executive Deferred Plan. Under the Executive
Deferred Plan, the compensation deferred by each officer and our
contributions are converted into non-monetary units equal to the number of
shares of common stock that could have been purchased by the amounts
deferred and contributed at a market-based price. Distributions are made
under the Executive Deferred Plan after an officer retires, terminates his
employment or dies. The amount of the distribution under the Executive
Deferred Plan is based on the number of vested units in the officer's
account multiplied by the market price of the common stock at that time.
Distributions under the Executive Deferred Plan may, at our election, be
made in cash, stock, or combination of both. Our obligations with respect to
the Executive Deferred Plan are unfunded. However, we have established a
grantor trust, that is subject to the claims of our creditors, into which
funds are deposited with an independent trustee that purchases shares of
common stock for the Executive Deferred Plan. As of December 31, 1998,
Messrs. Duroc-Danner, Coble, Kiley, Stiles and Huff had 52,454, 33,863,
15,609, 18,164 and 891 units allocated to their respective accounts.
(3) Excludes the total amount of all perquisites and other benefits that were
less than the lesser of $50,000 or 10% of the total of annual salary and
bonus of each executive officer.
(4) Represents matching contributions of $1,920 made by us in 1998 under our
401(k) Savings Plan for each of Messrs. Duroc-Danner, Coble and Stiles and
life insurance premiums of $9,136, $7,493, $871, $4,479 and $562 paid by us
in 1998 for each of Messrs. Duroc-Danner, Coble, Kiley, Stiles and Huff,
respectively.
15
<PAGE> 19
(5) Information for Mr. Coble is not presented for 1996 because he was not an
executive officer.
(6) Mr. Kiley ceased to be the Chief Financial Officer, Senior Vice President
and Treasurer on March 1, 1999.
(7) Information for Mr. Stiles is not presented for 1996 because he was not an
executive officer.
(8) Mr. Huff joined us in June 1998.
(9) Mr. Huff was granted 75,000 shares of restricted common stock on June 15,
1998, as a sign-on incentive bonus in connection with his employment by us.
The closing market price of the common stock on June 15th was $35 per share.
The restricted shares vest at 25% per year over a four-year period as long
as we employ Mr. Huff. Mr. Huff may vote the restricted shares and receive
dividends. As of December 31, 1998, Mr. Huff held 75,000 shares of
restricted common stock, which had a value of $1,453,125 based on the
closing market price of $19.375 per share on that date.
OPTIONS GRANTED IN 1998
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS
GRANTED TO GRANT DATE
OPTIONS EMPLOYEES EXERCISE PRICE PRESENT
NAME GRANTED IN 1998(%) (PER SHARE)($) EXPIRATION DATE VALUE($)
---- ------- ---------- -------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Bernard J. Duroc-Danner..... 350,000(1) 8.4 18.125 September 7, 2011 3,762,850(2)
James G. Kiley.............. 100,000(1) 2.4 18.125 September 7, 2011 1,075,100(2)
John C. Coble............... 100,000(1) 2.4 18.125 September 7, 2011 1,075,100(2)
Robert F. Stiles............ 100,000(1) 2.4 18.125 September 7, 2011 1,075,100(2)
Curtis W. Huff.............. 100,000(1) 2.4 18.125 September 7, 2011 1,075,100(2)
100,000(3) 2.4 35.00 June 14, 2008 1,896,500(4)
</TABLE>
- ---------------
(1) The options become fully exercisable on September 8, 2001.
(2) Based upon Black-Scholes option valuation model. The calculation assumes
volatility of 52%, a risk free rate of 5.02%, a seven year expected life, no
expected dividends and option grants at $18.125 per share. The actual value,
if any, of any option will depend on the amount, if any, by which the stock
price exceeds the exercise price on the date the option is exercised. Thus,
this valuation may not be a reliable indication as to value and there is no
assurance the value realized will be at or near the value estimated by the
Black-Scholes model.
(3) The option granted to Mr. Huff vests over a three-year period in one-third
increments per year.
(4) Based upon Black-Scholes option valuation model. The calculation assumes
volatility of 43.6%, a risk free rate of 5.40%, a seven year expected life,
no expected dividends and an option grant at $35 per share. The actual
value, if any, of any option will depend on the amount, if any, by which the
stock price exceeds the exercise price on the date the option is exercised.
Thus, this valuation may not be a reliable indication as to value and there
is no assurance the value realized will be at or near the value estimated by
the Black-Scholes model.
16
<PAGE> 20
AGGREGATED OPTION EXERCISES IN 1998
AND DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SHARES OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1998 DECEMBER 31, 1998 ($)(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bernard J. Duroc-Danner....... -- -- 830,000 350,000 6,700,000 437,500
James G. Kiley................ 100,000 2,396,875 55,000 100,000 31,563 125,000
John C. Coble................. -- -- 80,400 100,000 450,650 125,000
Robert F. Stiles.............. -- -- 60,000 100,000 -- 125,000
Curtis W Huff................. -- -- -- 200,000 -- 125,000
</TABLE>
- ---------------
(1) The value is based on difference in the closing market price of the common
stock on December 31, 1998 ($19.375), and the exercise price of the options.
The actual value, if any, of the unexercised options will be depend on the
market price of the common stock at the time of exercise of the options.
EMPLOYMENT CONTRACTS
We have entered into employment agreements with each of our executive
officers. Each employment agreement provides for a term of three years and is
renewable annually. Under the terms of the employment agreements, if we
terminate an executive's employment for any reason other than "cause" or
"disability" or by the executive for "good reason", as defined in the employment
agreements, the executive will be entitled to receive (1) an amount equal to
three times the executive's current base compensation plus the highest bonus
paid to the executive during the three years prior the year of termination, (2)
any accrued salary or bonus (pro-rated to the date of termination), (3) an
amount payable if all retirement plans were vested, (4) the amount that would
have been contributed as our match under the 401(k) Savings Plan and the
Executive Deferred Plan for three years and (5) the executive's car allowance
for three years. Under the employment agreements, "cause" is defined as the
willful and continued failure to perform the executive's job, after written
demand is made by the Chief Executive Officer or the Board, or the willful
engagement in illegal conduct or gross misconduct. Termination by the executive
for "good reason" is generally defined as (1) a material reduction in title
and/or responsibilities of the executive, (2) certain relocations of the
executive or (3) any material reduction in the executive's benefits. In
addition, under such circumstances, all stock options and restricted stock
granted to the executive will automatically vest. The executive also would have
the right to surrender for such cash all such options unless to do so would
cause a transaction otherwise eligible for pooling of interests accounting
treatment under Accounting Principles Board Opinion No. 16 to be ineligible for
such treatment, in which case the executive would receive shares of common stock
equal in value to the cash he or she would have received. All health and medical
benefits would also be maintained after termination for a period of three years
provided the executive makes his or her required contribution. Under the Deficit
Reduction Act of 1984, certain severance payments that exceed a certain amount
could subject both us and the executive to adverse U.S. federal income tax
consequences. Each of the employment agreements provides that we would be
required to pay the executive a "gross up payment" to insure that the executive
receives the total benefit intended by the employment agreement. The base
compensation payable to Messrs. Duroc-Danner, Coble, Stiles and Huff under the
Employment Agreements are $550,000, $300,000, $270,000 and $350,000,
respectively.
In connection with the retention of Mr. Huff as Senior Vice President,
General Counsel and Secretary, we granted to Mr. Huff a sign-on incentive bonus
of 75,000 shares of restricted common stock and an option to purchase 100,000
shares of common stock.
As of March 1, 1999, James G. Kiley ceased serving us as Chief Financial
Officer and his employment agreement was amended to reflect his current status.
Under the amended agreement, Mr. Kiley will continue as an employee until
February 2002 and will receive $575,000 per year for the remainder of his
agreement. All of Mr. Kiley's options were amended to expire as of February
2003. Also, 60,000 of the 100,000 options granted to Mr. Kiley in September 1998
were canceled. Mr. Kiley's employment will terminate on his death
17
<PAGE> 21
and may be terminated by Mr. Kiley after a change of control (as defined in the
agreement) of the Company. If his employment is so terminated, he or his estate
will receive the remainder of his salary through February 2002 and the amount of
his accounts under the 401(k) Savings Plan and the Executive Deferred Plan.
FIVE-YEAR PERFORMANCE GRAPH
This graph compares the yearly cumulative return on the common stock with
the cumulative return on the Dow Jones Global-U.S. Equity Index and the Dow
Jones Other Oilfield Equipment & Services Index (which consists of Baker Hughes
Inc., Halliburton Company, McDermott International, Inc. and Schlumberger
Limited) for the last five years. The graph assumes the value of the investment
in the common stock and each index was $100 on December 31, 1993, and that all
dividends are reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
DOW JONES
DOW JONES OTHER OILFIELD
MEASUREMENT PERIOD GLOBAL-US EQUIPMENT &
(FISCAL YEAR COVERED) WEATHERFORD EQUITY INDEX SERVICES
<S> <C> <C> <C>
12/31/93 100 100 100
12/31/94 97 101 92
12/31/95 202 139 127
12/31/96 407 171 176
12/31/97 828 229 276
12/31/98 310 294 161
1997
1998
</TABLE>
OTHER INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP, independent public accountants, served as
our auditors for the fiscal year ended December 31, 1998. Arthur Andersen LLP
has served as our auditors since our inception in 1972. A representative of
Arthur Andersen LLP will be present at the Annual Meeting to respond to any
stockholder questions and will be given an opportunity to make a statement if he
or she so desires.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
All of our executive officers and directors are required to file initial
reports of stock ownership and reports of changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange pursuant to
Section 16(a) of the Securities Exchange Act of 1934.
We have reviewed these reports, including any amendments, and written
representations from the current executive officers and directors of the
Company. Based on this review, we believe that, except as set forth below, all
filing requirements were met during 1998. The Form 3, reporting initial stock
ownership, filed for each of Messrs. Macaulay and Moses inadvertently omitted an
option to buy 10,000 shares of common stock.
18
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The option was granted on May 27, 1998, when they were elected to the Board of
Directors. An amended Form 3 reporting the option was filed for each of Messrs.
Macaulay and Moses on August 6, 1998.
PROPOSALS BY STOCKHOLDERS
Stockholder proposals for our Annual Meeting to be held in 2000 must be
received by us by December 14, 1999, to be considered for inclusion in our proxy
statement for that year. Any stockholder proposal must be sent to our Corporate
Secretary at our principal executive offices and must comply with the form and
substance requirements established by applicable laws and regulations to be
included in the proxy statement.
OTHER BUSINESS
We know of no other business that will be brought before our Annual
Meeting. If any other matters are properly presented, the persons named on the
enclosed proxy card will vote the proxies as they deem advisable.
ADDITIONAL INFORMATION AVAILABLE
We have filed an Annual Report on Form 10-K for 1998 with the Securities
and Exchange Commission. A complete copy of our Annual Report on Form 10-K is
available on the SEC's website at www.sec.gov. We also will provide to any
stockholder a copy of our Annual Report on Form 10-K without charge upon written
request. Copies of any exhibits to our Annual Report on Form 10-K also are
available upon written request subject to a charge for copying and mailing. If
you wish to obtain a paper copy of our Annual Report on Form 10-K or have any
other questions about us, please contact our Investor Relations Department in
writing (515 Post Oak Blvd., Suite 600, Houston, Texas 77027) or by telephone
((713) 693-4000) or visit our website at www.weatherford.com.
By Order of the Board of Directors
/s/ CURTIS W. HUFF
Curtis W. Huff
Corporate Secretary
Houston, Texas
April 12, 1999
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[WEATHERFORD LOGO]
WEATHERFORD INTERNATIONAL, INC.
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
MAY 6, 1999
9:00 A.M. (HOUSTON TIME)
THE LUXURY COLLECTION HOTEL OF HOUSTON
1919 BRIAR OAKS
HOUSTON, TEXAS 77027
<PAGE> 24
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WEATHERFORD INTERNATIONAL, INC.
PROXY FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
stockholder of Weatherford International, Inc. ("Weatherford") hereby appoints
Bernard J. Duroc-Danner and Curtis W. Huff, or either of them, as proxies, each
with power to act without the other and with full power of substitution, for the
undersigned to vote the number of shares of Common Stock of Weatherford that the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of Weatherford to be held on May 6, 1999, at 9:00 a.m.,
Houston time, at The Luxury Collection Hotel of Houston, 1919 Briar Oaks,
Houston, Texas, and at any adjournment or postponement thereof, on the following
matters that are more particularly described in the Proxy Statement dated April
12, 1999:
(1) Election of the following Nominees as Directors, as set forth in the
Proxy Statement:
Philip Burguieres, David J. Butters, Bernard J. Duroc-Danner,
Sheldon B. Lubar, William E. Macaulay, Robert B. Millard,
Robert K. Moses, Jr. and Robert A. Rayne
FOR All Nominees listed WITHHOLD
above (except as marked All Nominees
to the contrary below) listed above
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any Nominee, write that
Nominee's name in the space provided below
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(2) To consider and take action upon any other matter which may properly
come before the meeting or any adjournment(s) or postponement(s)
thereof.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
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<PAGE> 25
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This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" ALL OF THE NOMINEES FOR DIRECTOR LISTED ON THE OTHER SIDE HEREOF
UNDER PROPOSAL 1.
Receipt of the Proxy Statement dated April 12, 1999, and the Annual Report of
Weatherford for the year ended December 31, 1998, is hereby acknowledged.
---------------------------------------------
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Signature of Stockholder(s)
Please sign your name exactly as it appears
hereon. Joint owners must each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give your full
title as it appears thereon. If signer is a
corporation, execute in full corporate name by
authorized officer.
Date: , 1999.
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PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY USING THE ENCLOSED ENVELOPE.
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