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 Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use
of the Commission
Only (as permitted
[X] Definitive Proxy Statement by Rule 14a - 6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a - 11(c) or
Section 240.14a - 12
PETROLEUM HELICOPTERS, 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:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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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.
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PETROLEUM HELICOPTERS, INC.
2121 Airline Highway
Suite 400
Metairie, Louisiana 70001
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 29, 1998
To the Holders of Voting Common Stock of Petroleum Helicopters, Inc.:
The 1998 Annual Meeting of Shareholders of Petroleum
Helicopters, Inc. ("PHI") will be held at 2121 Airline
Highway, Metairie, Louisiana, 6th floor , on October
29, 1998, at 10:30 a.m., local time, to:
1. Elect directors.
2. Vote on a proposed directors stock compensation plan.
3. Transact such other business as may properly be brought
before the meeting or any adjournments thereof.
Only holders of record of PHI's voting common stock at the
close of business on August 31, 1998 are entitled to notice
of and to vote at the Annual Meeting.
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. A PROXY
MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTING THEREOF.
By Order of the Board of Directors
/s/ Robert D. Cummiskey, Jr.
-----------------------------------
Robert D. Cummiskey, Jr.
Secretary
New Orleans, Louisiana
September 15, 1998
PETROLEUM HELICOPTERS, INC.
2121 Airline Highway
Suite 400
Metairie, Louisiana 70001
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
OCTOBER 29, 1998
This Proxy Statement is furnished to holders of voting
common stock ("Voting Common Stock") of Petroleum
Helicopters, Inc. ("PHI") in connection with the
solicitation on behalf of its Board of Directors (the
"Board") of proxies for use at the Annual Meeting of
Shareholders of PHI (the "Meeting") to be held on October 29,1998
at the time and place set forth in the accompanying notice
and at any adjournments thereof.
Only stockholders of record of Voting Common Stock at
the close of business on Monday, August 31, 1998 (the
"Record Date") are entitled to notice of and to vote at the
Meeting. On that date, PHI had outstanding 2,800,886
shares of Voting Common Stock, each of which is entitled to
one vote.
The enclosed proxy may be revoked by the shareholder at
any time prior to its exercise by filing with PHI's
Secretary a written revocation or duly executed proxy
bearing a later date. A shareholder who votes in person at
the Meeting in a manner inconsistent with a proxy previously
filed on the shareholder's behalf will be deemed to have
revoked such proxy as it relates to the matter voted upon in
person.
This Proxy Statement is first being mailed to
shareholders on or about September 15, 1998. The cost of
preparing and mailing proxy materials as well as soliciting
proxies in the enclosed form will be borne by PHI. In
addition to the use of the mails, proxies may be solicited
by personal interview, telephone, fax, e-mail and telex.
Banks, brokerage houses and other nominees or fiduciaries
will be requested to forward the soliciting material to
their principals and to obtain authorization for the
execution of proxies, and PHI will, upon request, reimburse
them for their expenses in so acting.
ELECTION OF DIRECTORS
PHI's By-laws establish the number of directors to be
elected at the Meeting at four, and proxies cannot be voted
for a greater number of persons. Unless authority is
withheld, the persons named in the enclosed proxy will vote
the shares represented by the proxies received by them for
the election of the four persons named below to serve until
the next annual meeting and until their successors are duly
elected and qualified. In the unanticipated event that one
or more nominees cannot be a candidate at the Meeting, the
By-laws provide that the number of authorized directors will
be automatically reduced by the number of such nominees
unless the Board determines otherwise, in which case proxies
will be voted in favor of such other nominees as may be
designated by the Board.
The following table sets forth certain information as
of August 24, 1998 with respect to each nominee to be
proposed on behalf of the Board. Unless otherwise indicated,
each person has been engaged in the principal occupation
shown for the past five years.
Year First
Became a
Name and Age Principal Occupation Director
- ------------ -------------------- ----------
Carroll W. Suggs, 59 Chairman of the Board, 1989
President and
Chief Executive Officer of PHI(1)
Leonard M. Horner,71 Private Investments(2) 1992
James W. McFarland, 53 Dean, A.B. Freeman School 1996
of Business, Tulane University(3)
Bruce N. Whitman, 65 Executive Vice President and 1996
Director, FlightSafety International,
Inc. (aviation training and related
services) (4)
__________________________
(1) Mrs. Suggs became Chairman of the Board in March 1990, Chief
Executive Officer in July 1992 and President in October 1994. She
is also a director of Varco International, Inc., and Whitney
Holding Corporation.
(2) From 1974 to 1991, Mr. Horner served in various capacities with
Bell Helicopter Textron, Inc. (helicopter manufacturer), including
Chairman, President, Executive Vice President, Senior Vice President
- Marketing and Programs, and Vice President - Operations. Before
1974, he was employed with United Technologies Corp., Sikorsky
Aircraft Division (helicopter manufacturer) for 17 years.
(3) Dean McFarland is also a director of American Indemnity Financial
Corporation, Sizeler Property Investors, Inc. and Stewart
Enterprises, Inc.
(4) Mr. Whitman is also a director of Aviall, Inc., FlightSafety
Boeing Training International, LLC, and Megadata Corp.
During PHI's fiscal year ended April 30, 1998, the Board held six
meetings. Each incumbent director attended at least 75% of the
aggregate number of Board and Committee meetings of which he or she
was a member.
The Board has an Audit Committee (the "Audit Committee"), the
members of which are Messrs. Horner, Whitman, McFarland and Robert G.
Lambert. This committee, which held three meetings during fiscal 1998,
is responsible for making recommendations to the Board concerning the
selection and retention of independent auditors, reviewing the results
of audits by the independent auditors, discussing audit recommendations
with management and reporting the results of its reviews to the Board.
The Board also has a Compensation Committee (the "Compensation Committee"),
the members of which are Messrs. Horner, Whitman, McFarland, and Lambert.
This committee, which held two meetings during fiscal 1998, is responsible
for determining the compensation paid to officers and key employees and
administering PHI's Incentive Compensation Plans. The Board does not have
a nominating committee.
Each director receives an annual fee of $ 10,000 and a fee of $ 1,000
for each Board or Committee meeting he or she attends.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information
concerning the beneficial ownership of each class of
outstanding PHI equity securities as of August 31, 1998 by
(a) each director and nominee for director of PHI, (b) each
executive officer identified under the heading "Executive
Compensation and Certain Transactions - Summary of Executive
Compensation" ("Named Executive Officers"), and (c) all
directors and executive officers of PHI as a group,
determined in accordance with Rule 13d-3 of the Securities
and Exchange Commission (the "SEC"). Unless otherwise
indicated, the securities shown are held with sole voting
and investment power.
Class of Number of Percent
Beneficial Owner PHI Common Shares of
Stock Class(1)
---------------- ----------- ------ --------
Directors and Nominees
Carroll W. Suggs ...... Voting 1,444,260(2) 51.2%
Non-Voting 6,000 *
Leonard M. Horner ..... Voting 500 *
Non-Voting 100 *
Robert G. Lambert ..... Voting 1,000 *
Non-Voting 28 *
James W. McFarland .... Voting 100 *
Non-Voting 2,073 *
Bruce N. Whitman ...... Voting 1,000 *
Non-Voting - -
Named Executive
Officers(3)
Ben Schrick ........... Voting 560 *
Non-Voting 12,624(4) *
John H. Untereker ..... Voting - -
Non-Voting 39 *
Robert D. Cummiskey, Jr. Voting - -
Non-Voting 5,795(4) *
All Directors and
Executive
Officers as a Group
(14 persons) ........ Voting 1,447,420(5) 51.3%
Non-Voting 51,910(6) 2.1%
_____________________
Footnotes appear on following page.
* Less than one percent.
(1) Shares subject to options currently exercisable are deemed
to be outstanding for purposes of computing the percent of
class owned by such person and by all directors and
executive officers as a group.
(2) Includes 1,423,780 shares held by the Suggs Family Partnership,
LLC, of which Mrs. Suggs is the sole manager, and 26,480 shares
that she has the right to acquire pursuant to currently
exercisable stock options.
(3) Information regarding Mrs. Suggs appears in this table under
the caption "Directors and Nominees."
(4) Includes the following shares that the named individual has
the right to acquire pursuant to currently exercisable
stock options: Non-Voting Common Stock - Mr. Schrick, 10,150
and Mr. Cummiskey, 4,920.
(5) Includes an aggregate of 20,480 shares which executive
officers have the right to acquire pursuant to currently
exercisable stock options.
(6) Includes an aggregate of 43,452 shares which executive
officers have the right to acquire pursuant to currently
exercisable stock options.
____________________
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following, to PHI's knowledge, are the only
beneficial owners of more than 5% of the outstanding voting
common stock, determined in accordance with Rule 13d-3 of
the SEC, other than Carroll W. Suggs, 2121 Airline Highway,
Suite 400, Metairie, Louisiana 70001, whose beneficial
ownership of the voting common stock is shown under the
heading "Stock Ownership of Directors and Executive
Officers." Unless otherwise indicated, all shares shown as
beneficially owned are held with sole voting and investment
power.
Common Number Percent
Beneficial Owner Stock of of
Shares Class(1)
(1)
---------------- ------- -------- --------
David L. Babson & Co., Inc. Voting 243,300 8.68%
One Memorial Drive
Cambridge, MA 02142-1300
First Union Corporation Voting 187,000 6.68%
One First Union Center
Charlotte, NC 28288-0137
Woodbourne Partners, L.P Voting 165,200 7.10%
200 N. Broadway, Suite 825
St. Louis, MO 63102
FMR Corp. Voting 204,300 7.29%
82 Devonshire Street
Boston, MA 02142-1300
____________________
(1) Based solely on information furnished in Schedule 13Gs
filed with the SEC by such persons.
DIRECTOR'S STOCK COMPENSATION PLAN
General
- -------
On August 24, 1998, the Board of Directors of PHI
unanimously adopted the Directors Stock Compensation Plan
(the "Plan") to (i) substitute for the annual cash retainer
to non-employee directors ("Directors") an annual award of
its non-voting common stock ("Common Stock"), and (ii)
provide for the automatic annual grant to Directors of
options to purchase 2,000 shares of Common Stock. The Plan
also provides for the voluntary deferral of all or a portion
of the stock awards or fees otherwise payable annually to
each Director. All non-employee members of the Board of
Directors of PHI participate in the Plan. As of September
15, 1998, three directors were participants in the Plan.
The Plan must be approved by the affirmative vote of a
majority of the voting power present or represented at the
meeting. Abstentions will be included but broker nonvotes
will be excluded in calculating the voting power present or
represented at the meeting for purposes of approving the
Plan. The following description of the Plan is qualified in
its entirety by reference to the full text of the Plan,
included as Exhibit A to this Proxy Statement.
Up to 150,000 shares of Common Stock may be issued
under the Plan, subject to adjustment in the event of any
recapitalization, stock dividend, stock split, combination
of shares or other change in the Common Stock. The number
of shares of Common Stock subject to issuance pursuant to
the Plan represented approximately 3% of the outstanding
shares of Common Stock as of September 1, 1998.
The Plan is administered by the Board of Directors
through the Compensation Committee (the "Committee"). The
Committee possesses authority to interpret the Plan, to
establish rules and regulations relating to the Plan, and to
make any other determination that it believes necessary or
advisable for the proper administration of the Plan. Awards
and options under the Plan relating to Common Stock are made
as described below and are not subject to the discretionary
administration of the Committee.
Features of the Plan
- ---------------------
Stock Awards. Stock awards consist of the annual
transfer by PHI to a non-employee director of shares of
Common Stock, without payment, as retainer compensation for
his services as a member of the Board of Directors. Shares
of Common Stock are transferred annually on the day of the
annual stockholders meeting (the "Stock Transfer Date") to
each Director elected on such date. The number of shares
transferred will be the quotient of the director's annual
retainer fee (currently $12,000) divided by the mean between
the closing bid and asked prices of the Common Stock on the
Stock Transfer Date. The shares so transferred may not be
sold, transferred, assigned, pledged, mortgaged, or
otherwise disposed of for a period of six months and one day
after the Stock Transfer Date. The Plan permits Directors
to defer the receipt of stock awards in the form of credits
representing shares of Common Stock under the same terms and
conditions that fees can be deferred, as described below.
The following table sets forth on a pro forma basis
the benefits to be received by the Directors under the Stock
Awards feature of the Plan in 1998. Values are based on the
mean of the closing bid and asked prices of Common Stock as
quoted on the NASDAQ as of August 17, 1998. The last sales
price of Common Stock on August 17, 1998, was $16.00. As no
awards will be made until the day of the Meeting, the actual
number of shares will be determined as of the day of the
Meeting.
DIRECTORS' STOCK AWARDS
PARTICIPANTS NO. OF DOLLAR VALUE
IN PLAN SHARES OF SHARES
- -------------- ------- -------------
Leonard M. Horner 701 $ 12,000
James McFarland 701 12,000
Bruce N. Whitman 701 12,000
Deferral of Fees. The Plan permits each Director to
elect annually to defer the receipt of all or a portion of
the cash fees otherwise payable to him. The amount of such
deferred fees is credited to a bookkeeping account
maintained by PHI for the benefit of each Director (an
"Account"). The amount of deferred fees will bear interest
at a rate equal to PHI's borrowing costs.
Benefits under the Plan are distributed as of the date
designated by each Director, generally after the date he
ceases to serve as a member of the Board of Directors.
Benefits are equal to the amount credited to a Director's
Account at the time of distribution. Distributions are made
in the form of a single-sum payment or substantially equal
annual installment payments over a period not in excess of
ten years. Benefits are distributed in cash, except that
amounts allocated to credits representing shares of Common
Stock are distributed in the form of Common Stock. Any
balance in a Director's Account as of the date of his death
will be distributed in cash to his designated beneficiaries.
Although there is no requirement that PHI establish a
trust or other mechanism to accumulate the amounts necessary
to fund benefits payable under the Plan, PHI may establish a
"rabbi" trust for such purpose. Assets held in such trust
would be earmarked for the payment of benefits under the
Plan but will remain subject to the claims of PHI's general
creditors in the event of PHI's bankruptcy or insolvency.
Stock Options. Options will be automatically granted
on the annual stockholders meeting date on each calendar
year to any Director that will entitle the Director to
purchase up to 2,000 shares of Common Stock at the Fair
Market Value on the date of grant. The option price is
payable (i) in cash at the time of exercise, (ii) by the
actual or constructive transfer to PHI of nonforfeitable,
unrestricted shares of Common Stock owned by the Director
having a value at the time of exercise at least equal to the
option price, or (iii) by a combination of such payment
methods. The Plan permits deferred payment of the option
price from the proceeds of sale through a bank or broker of
some or all of the shares of Common Stock to which the
exercise relates.
No option will be exercisable more than ten years from
the date of grant. A period of two years continuous service
on the Board is necessary before the option will become
exercisable.
Amendment of the Plan
- ---------------------
The Board of Directors may amend or discontinue the
Plan at any time. However, no such amendment (except for
amendments adopted for the purpose of causing the Plan to
comply with the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934 or discontinuance may change
or impair without the consent of each Director the value of
such Director's Account maintained under the Plan in
connection with the deferral of fees or the previous award
of Common Stock, or the options previously granted.
Further, no such amendment (except for amendments adopted
for the purpose of causing the Plan to comply with the
requirements of Rule 16b-3) or discontinuance may, without
the consent of PHI's shareholders, (a) increase the maximum
number of shares of Common Stock which may be issued to all
Directors under the Plan, (b) change or expand the types of
benefits related to Common Stock that may be granted or
otherwise made available under the Plan, (c) change the
class of persons eligible to receive benefits under the
Plan, or (d) materially increase the benefits accruing to
Directors under the Plan.
Nontransferability of Awards
- -----------------------------
Amounts credited to an Account under the Plan are not
subject to assignment, transfer, pledge, encumbrance or
other disposition prior to distribution from the Plan.
Options are not subject to disposition except by will or
intestate succession.
Federal Income Tax Consequences
- -------------------------------
Under existing Federal income tax law, the taxation of
fees or stock awards deferred under the Plan will be
postponed until distribution. At that time, a Director will
recognize ordinary income in an amount equal to the benefits
distributed, and PHI will be entitled to a deduction equal
to the amount the Director is required to treat as ordinary
income; provided, however, that the fair market value of
Common Stock distributed from a Director's Account will be
recognized as ordinary income when the restrictions on the
sale of such shares under Section 16(b) of the Act expires
and PHI's deduction with respect to such amount will be
deferred until such expiration.
A Director who receives an award under the Plan
consisting of shares of Common Stock will recognize ordinary
income when the restrictions on the sale of such shares
under Section 16(b) of the Act expire, and PHI will be
entitled to a deduction equal to the amount the Director is
required to treat as ordinary income.
Under current federal income tax laws, grants of
options under the Plan will have the following consequences.
In general, (i) no income will be recognized by a Director
at the time an option is granted, (ii) at the time of
exercise of an option, ordinary income will be recognized by
the Director in an amount equal to the difference between
the option price paid for the shares and the fair market
value of such shares, if unrestricted, on the date of
exercise, and (iii) at the time of sale of shares acquired
pursuant to the exercise of an option, appreciation (or
depreciation) in value of the shares after the date of
exercise will be treated as either short-term or long-term
capital gain (or loss) depending on the time period the
shares have been held. Such long-term capital gain may be
eligible for reduced rates if applicable holding period
requirements are satisfied.
This summary of federal income tax consequences of
deferred fees, stock awards, and nonqualified stock options
does not purport to be complete. Reference should be made
to the applicable provisions of the Internal Revenue Code.
There also may be state and local income tax consequences
applicable to the grant, exercise and sale of stock acquired
under the Plan.
Recommendation of Board of Directors
- ------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE DIRECTOR'S STOCK COMPENSATION PLAN.
EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS
Summary of Executive Compensation
The following table summarizes, for each of the fiscal
years ended April 30, 1998, 1997 and 1996, compensation of
PHI's Chief Executive Officer and each other executive
officer of PHI whose annual compensation was in excess of
$100,000 in all capacities in which they served:
<TABLE>
<CAPTION>
Long-term
Compensation
Awards
---------------------
Annual Restricted Securities
Compensation Stock Underlying All other
Name and --------------------
Principal Position Year Salary Bonus(1) Awards(2) Options(3) Compensation(4)
- ------------------ ---- ------ -------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
($) ($) (#) (#) ($)
Carroll W. Suggs 1998 $321,738 $ 9,271 - 4,000 125,800(6)
Chairman of the 1997 317,385 7,512 - 4,000 124,856
Board, President 1996 317,384 13,327 - 20,480 123,042
and Chief Executive
Officer
Ben Schrick 1998 213,514 6,157 1,578 - 4,800
Chief Operating 1997 210,631 4,989 846 - 4,681
Officer 1996 197,291 8,851 - 10,150 5,261
John H. Untereker(5) 1998 206,071 5,969 896 - 4,800
Chief Financial 1997 203,332 4,836 784 - 4,732
Officer and Treasurer 1996 203,332 8,580 - 8,240 5,591
Robert D.Cummiskey,Jr.1998 106,102 3,067 448 - 3,116
Director of Risk 1997 104,562 2,485 224 - 3,379
Management
and Secretary 1996 106,204 4,409 - 4,920 5,838
</TABLE>
____________________
(1) Represents a cash bonus of 2.83% of base pay in 1998, a
cash bonus of one week and one day of base pay for
1997, and a cash bonus of two weeks and one day of base
pay for 1996 pursuant to programs in which all eligible
employees of the Company participated.
(2) Fiscal 1998 awards vested in July 1998 based on
performance criteria for fiscal 1998; fiscal 1997
awards vested in July 1997 based on performance
criteria for fiscal 1997. Dividend income, if any,
will be paid on the restricted stock at the same rate
as paid to all stockholders. Restrictions on 1997 and
1998 stock will lapse on 7/31/2000 and 7/31/2001,
respectively. As of April 30, 1998, the number and
fair market value of the shares of restricted stock
held by executive officers were: Mr. Schrick, 2,424
shares, $54,540; Mr. Untereker, 1,680 shares, $37,800;
and Mr. Cummiskey, 672 shares, $15,120.
(3) For additional information, please refer to the two
tables below.
(4) Unless otherwise indicated, reflects amounts paid by
PHI on behalf of the named executive officer pursuant
to the PHI 401(k) Retirement Plan.
(5) Mr. Untereker resigned his position with PHI effective
August 3, 1998.
(6) Includes directors fees of $16,000, $ 15,000, and
$ 13,600 in 1998, 1997 and 1996, respectively and life
insurance premiums for the benefit of Mrs. Suggs of
$ 105,000 in 1998, 1997 and 1996.
____________________
1998 Stock Option Grants
The following table contains information concerning the
grant of stock options to the Named Executive officers
during the fiscal year ended April 30, 1998.
<TABLE>
<CAPTION>
Potential
% of Total Realizable Value
No. of Options At Assumed
Shares Granted to Annual Rates of Stock
Underlying Employees Exercise Price Appreciation
Options in Fiscal or Base Expiration For Option Term(2)
-------------------
Name Granted(1) 1998 Price Date 5% 10%
---- ---------- ----------- ------------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Carroll W. Suggs 4,000 100% $16.31 July 31, 2007 $41,029 $103,973
</TABLE>
____________________
(1) Options were awarded at the fair market value of the
stock on the effective date of grant.
(2) The SEC requires disclosure of the potential realizable
value of each grant, assuming the options will be held
for the full ten-year term prior to exercise. The
options may be exercised prior to the end of such ten-
year term, and the actual value, if any, an executive
officer may realize will depend upon the excess of the
stock price over the exercise price on the date the
option is exercised. There is no assurance that the
stock price will appreciate at the rates shown in the
table.
____________________
Option Exercises and Holdings
The following table contains information with respect
to the Named Executive Officers concerning the exercise of
options during fiscal 1998 and unexercised options held as
of April 30, 1998.
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money Options at
on Value Options at April 30, 1998 April 30,1998(1)
-------------------------- ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carroll W. Suggs 0 0 20,480 4,000 $267,530 $26,012
Ben Schrick 0 0 19,150 0 205,100 0
John H. Untereker 0 0 8,240 0 115,360 0
Robert D. 6,000 $26,850 4,920 0 68,880 0
Cummiskey, Jr.
</TABLE>
____________________
(1) Reflects the difference between closing prices of the
Common Stock on April 30, 1998 and the respective
exercise prices of the options.
____________________
Supplemental Executive Retirement Plan
PHI maintains a supplemental executive retirement plan
("SERP") to supplement the retirement benefits otherwise
available to PHI's officers and certain key employees
pursuant to the PHI 401(k) Retirement Plan. The SERP
provides an annual benefit, generally equivalent to 35% of
each such participant's salary at the date of adoption in
1994 up to $ 200,000 of salary plus 50% of such salary in
excess of $ 200,000, for a period of 15 years following
retirement at age 65 or older. Similar benefits are also
provided upon death or disability of the participant. The
estimated annual benefits payable upon retirement at normal
retirement age for Mrs. Suggs and Messrs. Schrick and
Cummiskey are $ 123,500, $ 69,600, and $ 34,400,
respectively.
Compensation Committee Interlocks and Insider Participation
in Compensation Decisions
The Compensation Committee is composed of Leonard M.
Horner, Bruce N. Whitman, James W. McFarland, and Robert G.
Lambert. No member of the Compensation Committee has ever
been an officer or employee of PHI or any of its
subsidiaries.
During fiscal 1998, PHI paid Aviall, Inc. ("Aviall")
approximately $ 323,000 for parts and component repair
services. Mr. Lambert, a member of the Compensation
Committee and director of PHI since 1994, is
currently a member of the Board of Directors of Aviall and
was the Chairman of the Board of Directors of Aviall
from December 1993 to December 1997. He also served as Aviall's
Chief Executive Officer from December 1995 to December 1996.
PHI paid FlightSafety International ("FlightSafety")
approximately $ 636,000 for pilot training services during
fiscal 1998. Mr. Whitman, a member of the Compensation
Committee and director of PHI since 1996 and a nominee for
director at the Meeting, is a director and an Executive Vice
President of FlightSafety.
During fiscal 1998, PHI paid approximately $ 86,000 for
consulting services to James W. McFarland, a director since
July 1996 and a nominee for director at the Meeting.
The Compensation Committee's Report on Executive
Compensation
General. The functions of the Compensation Committee
are to determine compensation paid to officers and key
employees and to administer the 1992 Non-Qualified Stock
Option and Stock Appreciation Rights Plan and the 1995
Incentive Compensation Plan. The Compensation Committee is
composed entirely of Board members who are not employees of
PHI. The Compensation Committee retained an outside
consultant in fiscal 1993 to assist it in obtaining relevant
information on pay practices at comparable organizations,
and in fiscal 1993 and 1996 to assist in developing
compensation programs that are consistent with the
Committee's compensation philosophy and objectives.
The Compensation Committee's overall policy regarding
executive compensation is to ensure PHI's compensation
programs will provide competitive salary levels and short-
term and long-term incentives in order to attract and retain
individuals of high quality and ability, promote individual
recognition for favorable performance by PHI and support the
short and long range business objectives and strategies of
PHI.
Under the Omnibus Budget Reconciliation Act ("OBRA"),
which was enacted in 1993, publicly held companies may be
prohibited from deducting as an expense for federal income
tax purposes total compensation in excess of $ 1 million
paid to certain executive officers in a single year.
However, OBRA provides an exception for "performance based"
compensation, including stock options and restricted stock
awards such as those granted to PHI executive officers and
other key employees in May 1995 and July 1996. The
Compensation Committee expects to keep "non-performance
based" compensation within the $1 million limit so that all
executive compensation will be fully deductible.
PHI's executive compensation consists of three
principal components: salary, annual cash bonuses and stock
based compensation.
Salary. In fiscal 1993, an outside consultant was
retained primarily to develop a range of salaries consistent
with salaries paid for similar positions at comparable
publicly-held companies. For these purposes, a sample of
companies was selected from the oilfield services industry
based on total revenues and number of employees. Salaries
paid by certain companies that are included in the Oil and
Gas Field Services Index in the graph set forth under the
heading "Performance Graph" were among those considered.
Because certain of these companies had either revenues or
total employees substantially exceeding those of PHI,
salaries of PHI executives were set at the lower end of the
ranges.
During fiscal 1998 an outside consultant was retained
to analyze all employee group's compensation as it related
to the market place (similar companies to PHI). The results
of this study were reported to executive management resulting
in a pay increase for most employee groups during 1998.
In fiscal 1998, compensation decisions were made by the
Chief Executive Officer and the Compensation Committee,
except in the case of the Chief Executive Officer, whose
performance was evaluated, and salary established, by the
Compensation Committee. Short-term performance incentives
were provided pursuant to PHI's Target Incentive Plan, which
provides cash bonuses to all eligible employees, including
executive officers, to the extent that predesignated pretax
earnings goals are achieved. A bonus of 2.83% of base salary
was paid to each eligible employee of PHI, including the
Named Executive Officers, following fiscal 1998, based upon
the achievement of these goals during fiscal 1998.
Stock Option Grants and Restricted Stock Awards. In
fiscal 1998 performance based stock options and restricted
shares and were granted to provide an additional incentive,
to promote a longer term perspective and commitment by
executives, and to maximize shareholder value by linking the
financial interests of management and shareholders. The
number of options and shares of restricted stock granted to
each executive officer was based upon the officer's salary
level and responsibilities and the attainment of fiscal 1998
company wide, individual and, in certain cases, business
unit goals.
Stock options have value to the executives only if
there is an increase in PHI's stock price. Stock options
granted in fiscal 1998 were made at 100% of the market value
of the stock on the date of the grant, and the options
become exercisable 50% per year beginning one year after the
award. The options granted in fiscal 1998 expire 10 years
after the date of the grant.
Chief Executive Officer Compensation. Mrs. Suggs'
fiscal 1998 salary increased due to a 4% company-wide
general wage increase in January 1998. Her bonus for 1998
under the PHI Target Incentive Plan was equal to 2.83% of
base salary, which was the equivalent bonus awarded to all
eligible employees, based upon the achievement of designated
goals tied to fiscal 1998 pretax earnings. Mrs. Suggs was
awarded options to acquire up to 4,000 shares of Common
Stock, which were based on company wide and individual
performance during fiscal 1998.
The Compensation Committee believes that the
compensation of the Chief Executive Officer and other
executive officers is competitive with or below the
comparable companies described more fully above, but is
consistent with the Compensation Committee's policy of
providing an appropriate balance between short and long
range individual and corporate performance.
By the Members of the Compensation Committee.
Leonard M. Horner, Robert G. Lambert
Chairman
Bruce N. Whitman James W. McFarland
Performance Graph
The following Performance Graph compares PHI's
cumulative total shareholder return on its Voting Common
Stock for the last five years with the cumulative total
return on the Russell 2000 Index and the Oil and Gas Field
Services Index, assuming the investment of $ 100 on May 1,
1993, at closing prices on April 30, 1993, and reinvestment
of dividends. The Russell 2000 Index consists of a broad
range of publicly-traded companies with smaller market
capitalizations and is published daily in the Wall Street
Journal. The Oil and Gas Field Services Index consists of 84
publicly-held companies in the oil field service industry
and is published by Media General Financial Services Inc.
[PERFORMANCE GRAPH]
Cumulative Total Returns as of April 30
Index 1993 1994 1995 1996 1997 1998
------ ---- ---- ---- ---- ---- ----
PHI 100.0 68.6 60.6 93.9 124.3 158.0
Russell 2000 100.0 113.4 119.5 156.4 154.0 210.4
Oil and Gas Field 100.0 88.6 102.4 153.6 184.8 281.9
Services
There can be no assurance that PHI's stock performance
will continue into the future with the same or similar
trends depicted in the graph above. PHI will not make or
endorse any predictions as to future stock performance.
____________________
Certain Transactions
Aviall routinely provides aviation parts and component
repair services to PHI and in fiscal 1998 was paid
approximately $ 323,000 for these parts and services by PHI.
Robert G. Lambert is currently a member of the Board of
Directors of Aviall and was the Chairman of the Board of
Directors of Aviall from December 1993 to December 1997. He
also served as Aviall's Chief Executive Officer from
December 1995 to December 1996.
FlightSafety International, Inc. ("FlightSafety")
provides aviation training to PHI and in fiscal 1998 was
paid approximately $ 636,000 for these services by PHI.
Bruce N. Whitman, a director since August 1996 and a nominee
for director at the Meeting, is Executive Vice President and
a Director of FlightSafety.
During fiscal 1998, PHI paid approximately $ 86,000 for
consulting services to James W. McFarland, a director since
July 1996 and a nominee for director at the Meeting.
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
PHI's consolidated financial statements for the year
ended April 30, 1998 were audited by the firm of KPMG Peat
Marwick LLP, which firm will remain as PHI's auditors until
replaced by the Board upon the recommendation of the Audit
Committee. Representatives of KPMG Peat Marwick LLP are
expected to be present at the Meeting, with the opportunity
to make any statement they desire at that time, and will be
available to respond to appropriate questions.
OTHER MATTERS
Quorum and Voting of Proxies
The presence, in person or by proxy, of a majority of
the outstanding shares of Voting Common Stock is necessary
to constitute a quorum. Shareholders voting, or abstaining
from voting, by proxy on any issue will be counted as
present for purposes of constituting a quorum. If a quorum
is present, the election of directors will be determined by
plurality vote and the Plan must be approved by the
affirmative vote of a majority of the voting power present
at the meeting.
A broker or nominee holding shares registered in its
name, or in the name of its nominee, that are beneficially
owned by another person and for which it has not received
instructions as to voting from the beneficial owner has the
discretion to vote the beneficial owner's shares with
respect to the election of directors. With respect to any
matter other than the election of directors that is properly
brought before the meeting, an abstention will effectively
count as a vote against the proposal, and broker non-votes
will be counted as not present with respect to such matter.
All proxies received by PHI in the form enclosed will
be voted as specified and, in the absence of instructions to
the contrary, will be voted for the election of the nominees
named herein and in favor of the Plan. The Board does not
know of any matters to be presented at the Meeting other
than those described herein and in favor of the Plan.
However, if any other matters properly come before the
Meeting, it is the intention of the persons named in the
enclosed proxy to vote the shares represented by them in
accordance with their best judgment.
Shareholder Proposals
Eligible shareholders who desire to present a proposal
qualified for inclusion in the proxy materials relating to
the 1999 annual meeting of shareholders must forward such
proposal to the Secretary of PHI at the address set forth on
the first page of this Proxy Statement in time to arrive at
PHI prior to May 13, 1999.
By Order of the Board of Directors
Robert D. Cummiskey, Jr.
Secretary
New Orleans, Louisiana
September 15, 1998
[Front of Proxy Card]
PETROLEUM HELICOPTERS, INC.
Proxy Solicited on Behalf of the Board of Directors
for the Annual Meeting of Shareholders on October 29, 1998
The undersigned hereby appoints Carroll W. Suggs and Leonard
M. Horner, or either of them, proxies for the undersigned,
with full power of substitution, to vote all shares of
Voting Common Stock of Petroleum Helicopters, Inc. ("PHI")
that the undersigned is entitled to vote at the annual
meeting of shareholders to be held October 29, 1998, and any
adjournments thereof.
1. Election of Directors:
Nominees: Carroll W. Suggs, Leonard M. Horner, James W.
McFarland, Bruce N. Whitman.
2. Directors Stock Compensation Plan.
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
Please specify your choices by marking the appropriate boxes
on the reverse side. IF NO SPECIFIC DIRECTIONS ARE GIVEN,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE.
[Back of Proxy Card]
[ X ] Please mark your
votes as in this
example.
To withhold authority to vote for any individual
nominee(s) mark the FOR box in proposal 1 and write that
nominee's name(s) on the space provided below the boxes.
The Board of Directors recommends a vote for all
nominees listed on the reverse side.
FOR WITHHOLD
1. Election of
Directors [ ] [ ]
(see reverse)
FOR, except vote WITHHELD from the following nominee(s):
--------------------------------------------
2. Directors Stock Compensation Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, to transact such other business as
may properly come before the meeting and any adjournments thereof.
Check this box
to note change [ ]
of address
NOTE: Please sign exactly as name appears hereon.
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If a corporation,
please sign in full corporate name by
president or other authorized officer. If
a partnership, please sign in partnership
name by authorized persons.
__________________________________________
__________________________________________
SIGNATURE(S) DATE
Exhibit A
----------
PETROLEUM HELICOPTERS, INC.
DIRECTORS STOCK AND DEFERRED COMPENSATION PLAN
INDEX
PAGE
ARTICLE I - DEFINITIONS
1.1 Affiliate 1
1.2 Beneficiary 1
1.3 Benefit Commencement Date 1
1.4 Deferral Election 1
1.5 Deferred Benefit Account 1
1.6 Determination Date 1
1.7 Fair Market Value 1
1.8 Fees 1
1.9 Plan Committee 2
1.10 Plan Year 2
1.11 Schedule A 2
1.12 Other Definitions 2
ARTICLE II - PARTICIPATION 2
ARTICLE III - COMMON STOCK 2
3.1 Shares 2
3.2 Adjustment 2
ARTICLE IV - TRANSFER OF COMMON STOCK 2
4.1 Time of Transfer 2
4.2 Number of Shares 3
4.3 Restrictions on Transfer 3
4.4 Deferral 3
ARTICLE V - DEFERRALS 3
5.1 Deferrals 3
5.2 Deferred Benefit Accounts 3
5.3 Investment of Accounts 4
5.4 Common Stock Credits 4
5.5 Valuation of Accounts 4
ARTICLE VI - PAYMENTS 4
6.1 Special Definitions 4
6.2 Service Benefits 4
6.3 Director's Death Before Benefit Commencement Date 5
6.4 Director's Death After Benefit Commencement Date 5
6.5 Form of Payment 5
6.6 Early Payments 5
ARTICLE VII - STOCK OPTION GRANTS 6
ARTICLE VIII - ADMINISTRATIVE 8
ARTICLE IX - GENERAL PROVISIONS 8
9.1 Effective Date and Term 8
9.2 Additional Conditions 8
9.3 Restrictions on Transfer 9
ARTICLE X - MISCELLANEOUS 9
10.1 Termination of Plan 9
10.2 Inurement 9
10.3 Amendment 9
10.4 Transfer of Rights 9
10.5 Governing Law 10
10.6 Funding 10
PETROLEUM HELICOPTERS, INC.
DIRECTORS STOCK AND DEFERRED COMPENSATION PLAN
The PETROLEUM HELICOPTERS, INC. DIRECTORS STOCK AND
DEFERRED COMPENSATION PLAN (the "Plan") is designed so that
each member of the board of directors who is not an employee
("Director") of Petroleum Helicopters, Inc. ( "PHI")
receives, as his or her annual retainer for board service,
shares of PHI non-voting common stock of the Corporation
(the "Common Stock"), receives options to buy Common Stock
and may defer stock and cash compensation.
ARTICLE I - Definitions
1.1 Affiliate. A corporation with respect to which PHI
---------
owns (within the meaning of Section 425(f) of the Internal
Revenue Code) 50% or more of the total combined voting power
of all classes of stock.
1.2 Beneficiary. The person designated by a Director in writing
-----------
to receive Death Benefits payable under the Plan, or if no
designated beneficiary survives the Director, to the
Director's estate. A Director shall be entitled to amend
the designation of a Beneficiary at any time, effective when
it is received by the Plan Committee.
1.3 Benefit Commencement Date. The date on which the payment of
-------------------------
a Director's Service Benefit under the Plan is paid or first
commences, determined in accordance with Paragraph 6.2.
1.4 Deferral Election. An Election by a Director to defer Fees
-----------------
or the receipt of Common Stock, which election shall be made
in writing in accordance with the provisions of Article V.
1.5 Deferred Benefit Account. An account maintained on PHI's
------------------------
books with respect to each Director's Deferral Election.
1.6 Determination Date. The last day of each calendar quarter.
------------------
Annual Determination Date means December 31st.
1.7 Fair Market Value. The mean of the closing bid and asked
-----------------
prices of Common Stock as quoted on the NASDAQ Stock Market
as of the date on which Fair Market Value is to be
determined; if no Common Stock is traded on such date, then
the Fair Market Value shall be determined using the mean of
the closing bid and asked prices on the date Common Stock
last traded.
1.8 Fees. The aggregate amount payable in cash to a Director by
----
PHI for service as a member of the board of directors or
committee thereof.
1.9 Plan Committee. The Plan Committee is the administrator of
--------------
this Plan, the members of which are the members of the
Compensation Committee of the Board of Directors.
1.10 Plan Year. The twelve-month period beginning each January
---------
1st and ending each December 31st. The first Plan Year of
this Plan shall commence as of the Effective Date (as
defined herein) and shall end as of December 31, 1998.
1.11 Schedule. A written schedule which provides for, among
--------
other things, the deferral of Fees, the designation of a
Benefit Commencement Date, the election of the form of
benefit payment, and the designation of a Beneficiary.
1.12 Other Definitions. The terms "Stock Transfer Date," Tax
------------------
Adjustment," "Service Benefit," "Death Benefit," "Common
Stock Credits," "Adverse Determination," "Cause," and
"Effective Date" shall have the respective meanings set
forth below.
ARTICLE II - Participation
Directors shall participate in this Plan; unless
otherwise set forth herein, such persons shall include past,
present or future members of the Plan Committee or of any
committee administering any other stock option, stock
appreciation, stock bonus or other form of discretionary
stock-related compensation plan maintained by PHI or any
Affiliate.
ARTICLE III - Common Stock
3.1 Shares. The maximum number of shares of Common Stock which
------
may be delivered under the Plan shall be 150,000 shares.
Common Stock delivered under the Plan may be authorized and
unissued shares, previously issued shares reacquired by the
Corporation and held as treasury shares, or shares acquired
on the open market.
3.2 Adjustment. In the event of a merger, consolidation or
----------
reorganization of the Corporation with any other entity,
there shall be substituted for Common Stock then subject to
the Plan the number and kind of shares of stock or other
securities to which the holders of Common Stock will be
entitled pursuant to the terms of the transaction. In the
event of a recapitalization, stock dividend, stock split,
combination of shares or other change in the Common Stock,
the number of shares of Common Stock then subject to the
Plan shall be adjusted in proportion to the change in
outstanding shares of Common Stock.
ARTICLE IV - Transfer of Common Stock
4.1 Time of Transfer. Common Stock shall be transferred to each
----------------
Director or subject to a Deferral Election by a Director in
an amount determined in accordance with Paragraph 4.2 hereof
as of the date of the annual stockholders meeting of the
Corporation (the "Stock Transfer Date"), provided the
recipient thereof is elected or reelected a director as of
such date.
4.2 Number of Shares. The number of shares of Common Stock
----------------
transferred by the Corporation to each Director for receipt
or deferral hereunder as of each Stock Transfer Date shall
be a number of shares equal to the annual retainer for
board service determined from time to time by the Board of
Directors divided by the Fair Market Value of a share of
Common Stock on the Stock Transfer Date, which amount shall
be subject to adjustment, from time to time, as provided in
Paragraph 3.2.
4.3 Restrictions on Transfer. Common Stock acquired under this
------------------------
Article IV shall not be subject to sale, transfer,
assignment, pledge, mortgage or other disposition by a
Director for a period of six months and one day after the
applicable date of transfer.
4.4 Deferral. In lieu of the receipt of Common Stock hereunder,
--------
a Director may execute a Deferral Election with respect to
such shares. Any such election shall comply with the
provisions of Paragraph 5.1 hereof. Common Stock deferred
pursuant to such an election shall be allocated to each
affected Director's Deferred Benefit Account in the form of
Common Stock Credits and shall be subject to the rules
otherwise applicable to such accounts and credits.
ARTICLE V - Deferrals
5.1 Deferrals. The Corporation shall defer all or any portion
---------
of the Fees and Common Stock otherwise payable to a
Director, if specified by such Director on a Schedule. A
Director may revoke or modify any such Deferral Election by
executing a new Schedule. Except as provided in this
Paragraph 5.1, any such Deferral Election (whether a new
election or a revocation or a modification) shall apply
solely to Fees payable or Common Stock subject to transfer
after the date such election is received and accepted by the
Plan Committee.
During the 30-day period commencing as of the Effective
Date, each Director shall be entitled to enter into a
Deferral Election. Such Deferral Election shall apply to
the deferral of Fees as of the first day of the calendar
quarter after the Effective Date and to the deferral of the
receipt of Common Stock as of the Stock Transfer Date
immediately following the Effective Date. A Deferral
Election hereunder shall continue until modified or revoked
as provided in this Paragraph 5.1.
5.2 Deferred Benefit Accounts. Fees or the receipt of Common
-------------------------
Stock deferred pursuant to a Deferral Election shall be
credited by PHI to a Deferred Benefit Account established
for each Director, as of each Determination Date. Any
Deferred Benefit Account established hereunder shall be a
bookkeeping entry only. The establishment and maintenance of
any such account in accordance with the terms of this Plan
shall not be deemed to constitute a trust, create any other
form of fiduciary relationship between PHI and any Director
or Beneficiary or otherwise create, for the benefit of any
Director or Beneficiary, an ownership interest in or
expectation of any specific asset of PHI.
5.3 Investment of Accounts. Any deferred Fees shall bear
----------------------
interest at a rate equal to the rate on PHI's borrowing, as
determined and applied from time to time by PHI's Chief
Financial Officer, whose determination shall be final.
5.4 Common Stock Credits. The number of Common Stock Credits
--------------------
allocated to a Director's Deferred Benefit Account shall be
based upon the Fair Market Value of Common Stock as of each
applicable Stock Transfer Date. An amount equal to
dividends payable with respect to Common Stock represented
by the Common Stock Credits allocated to a Director's
Deferred Benefits Account shall be credited to such account,
in the form of additional Common Stock Credits. The amount
of such credits shall be based upon the Fair Market Value of
Common Stock as of the dividend payment date. Any stock
dividend, stock split, or other recapitalization shall be
reflected in the Common Stock Credits made to a Director's
Deferred Benefit Account.
Common Stock Credits to a Director's Deferred Benefit
Account shall not entitle such Director to exercise the
rights of a stockholder of the Corporation.
5.5 Valuation of Accounts. As of each Determination Date, any
---------------------
interest attributable to each Deferred Benefit Account, any
charge or expense to be paid by any Director, and any
distributions or withdrawals, all determined since the
immediately preceding Determination Date, shall be allocated
or charged against each Director's account.
ARTICLE VI - Payments
6.1 Special Definitions. For purposes of this Article VI, the
-------------------
term Service Benefit means a benefit payable to a Director
in accordance with Paragraph 6.2 hereof. The term Death
Benefit shall mean a benefit payable in accordance with
Paragraph 6.3 or 6.4 hereof; such benefit shall be payable
in lieu of, and not in addition to, any Service Benefit
otherwise payable under the Plan.
6.2 Service Benefits. A Director's Service Benefit shall be
----------------
paid as follows:
a. Time of Payment. A Director's Service Benefit shall be
---------------
payable as of such Director's Benefit Commencement Date
which shall be the first day of the seventh calendar month
following the date designated by the Director on the
Schedule.
b. Amount. A Director's Service Benefit shall equal the
------
number of Common Stock Credits and the amount credited to
such Director's Deferred Benefit Account, determined as of
the last day of the calendar month immediately preceding
such Director's Benefit Commencement Date.
c. Method of Distribution. A Service Benefit hereunder shall
----------------------
be payable in accordance with the Director's election on the
Schedule, in the form of Common Stock with respect to Common
Stock Credits or, with respect to Fees and interest earned
thereon, in cash in (i) a single-sum payment, or (ii)
substantially equal annual installments over a period
designated by the Director not in excess of ten years. Each
Director shall designate the method of payment on a Schedule
as of the initial date on which Fees or Common Stock are
deferred hereunder, and such designation shall be
irrevocable.
d. Special Rules for Installment Payments. If a Director elects
--------------------------------------
installment payments in accordance with Paragraph 6.2c, such
installment payments shall be made annually, as of the
Director's Benefit Commencement Date and each anniversary
thereof. Pending distribution, amounts held in such
Director's Deferred Benefit Account shall continue to be
credited with interest or earnings in accordance with
Paragraphs 5.3 and 5.4.
6.3 Director's Death Before Benefit Commencement Date. If a
-------------------------------------------------
Director dies before his Benefit Commencement Date, a
"Death Benefit" shall be distributed to his Beneficiary as
follows:
a. Amount. The amount of the Death Benefit shall equal
------
the number of Common Stock Credits and amount of such
Director's Deferred Benefit Account, determined as of the
last day of the calendar month preceding the date of
distribution.
b. Form. A Death Benefit payable under this Paragraph
-----
6.3 shall automatically be distributed to the Director's
Beneficiary in the form of a single-sum cash payment. In
the case of Common Stock Credits, the number of such credits
shall be multiplied by the Fair Market Value of a share of
Common Stock on the date of the Director's death, and the
amount so determined shall be part of the single-sum cash
payment.
c. Time of Payments. A Death Benefit payable hereunder
----------------
shall be distributed as of the first day of the seventh
calendar month following the date of the Director's death.
6.4 Director's Death After Benefit Commencement Date. If a
------------------------------------------------
Director dies after his Benefit Commencement Date, the
balance of his Deferred Benefit Account, if any, shall be
distributed as a Death Benefit hereunder to his Beneficiary
in accordance with the manner of distribution in effect as
of the date of the Director's death.
6.5 Form of Payment. Except as provided in Paragraph 6.3, if
---------------
any portion of a Director's Deferred Benefit Account is
allocated to Common Stock Credits, such amount shall be
distributed in the form of Common Stock, with cash
distributed in lieu of any fractional share based upon Fair
Market Value as of the date of distribution.
6.6 Early Payments. Notwithstanding any provision of this Plan
--------------
to the contrary, the Plan Committee shall direct the trustee
of any trust established pursuant to Paragraph 9.6 hereof,
to distribute to any Director (or Beneficiary) in the form
of an immediate single-sum payment all or any portion of the
amount then credited to a Director's affected Deferred
Benefit Account or Accounts, as the case may be, if an
Adverse Determination is made with respect to such Director.
For this purpose, the term "Adverse Determination" shall
mean that, based upon Federal tax or revenue law, a
published or private letter ruling or similar announcement
issued by the Internal Revenue Service, a regulation issued
by the Secretary of the Treasury, a decision by a court of
competent jurisdiction, a closing agreement made under
Section 7121 of the Code that is approved by the Internal
Revenue Service and involves such Director or a determination
of counsel, a Director has or will recognize income for
Federal income tax purposes with respect to any amount that
is or will be payable under this Plan before it is otherwise
to be paid hereunder.
Notwithstanding the provisions of this Paragraph 6.6,
any payment on account of an Adverse Determination shall be
made in accordance with an opinion of counsel that such
payment complies with any restrictions or limitations
imposed under applicable Federal or state securities laws.
ARTICLE VII - Stock Option Grants
A. On the date of each annual meeting of
shareholders, each Eligible Director shall be automatically
granted rights to purchase 2,000 shares of Common Stock at a
purchase price per share payable on exercise (the "Option
Price") equal to the Fair Market Value per share of Common
Stock on the Grant Date. Each such Option Right granted
under the Plan shall expire 10 years from the Grant Date and
shall be subject to earlier termination as hereinafter
provided. Such Option Rights shall be subject to the
following additional terms and conditions:
(i) Each such Option Right shall become
exercisable in full after two years from the Date of
Grant, so long as the Director has served continuously
as a director during the intervening period, and shall
become exercisable in full immediately in the event of
a Change in Control.
(ii) In the event of the termination of service on
the Board by the holder of any such Option Rights other
than by reason of disability or death, the then
outstanding Option Rights of such holder may be
exercised to the extent then exercisable on the date
that is six months and one day after the date of such
termination and shall expire six months and one day
after such termination, or on their stated expiration
date, which ever occurs first.
(iii) In the event of the death or disability
of the holder of any such Option Rights, each of the
then outstanding Option Rights of such holder shall
become exercisable in full and may be exercised at any
time within one year after such death or disability,
but in no event after the expiration date of the term
of such Option Rights.
(iv) If a director subsequently becomes an
employee of the Company while remaining a member of the
Board, any Option Rights held under the Plan by such
individual at the time of such commencement of
employment shall not be affected thereby.
(v) Option Rights may be exercised by a Director
only upon payment to PHI in full of the Option Price of
the shares of Common Stock to be delivered. Such
payment shall be made (a) in cash or by check
acceptable to PHI, (b) by the actual or constructive
transfer to PHI of shares of Common Stock or shares of
voting common stock then owned by the Director for at
least six months having a value at the time of exercise
equal to the total Option Price, or having a value at
the time of exercise equal to the total Option Price,
or (c) by a combination of such methods of payment. In
addition, deferred payment of the Option Price may be
made from the proceeds of sale through a bank or broker
on a date satisfactory to PHI of some or all of the
shares to which such exercise relates.
B. A "Change in Control" shall mean any of the
following events:
(i) PHI is merged or consolidated or reorganized
into or with another corporation or other legal person,
and as a result of which less than a majority of the
combined voting power of the then outstanding
securities of such corporation or person immediately
after such transaction are held in the aggregate by the
holders of securities entitled to vote generally in the
election of directors immediately prior to such
transaction;
(ii) PHI sells or otherwise transfer all or
substantially all of its assets to any other
corporation or other legal person, and less than a
majority of the combined voting power of the then
outstanding securities of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of shares of Common Stock
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D
or Schedule 14D-1 (or any successor schedule, form or
report), each as promulgated pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), disclosing
that any person (as used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial
owner (as defined under Rule 13d-3 or any successor
rule or regulation under the Exchange Act) of
securities representing 20% or more of the total votes
relating to the then outstanding securities entitled to
vote generally in the election of directors (the
"Voting Power");
(iv) PHI files a report or proxy statement with
the Securities and Exchange Commission pursuant to the
Exchange Act disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of PHI has or
may have occurred or will or may occur in the future
pursuant to any then existing contract or transaction;
or
(v) If during any period of two consecutive
years, individuals who at the beginning of any such
period constitute the directors cease for any reason to
constitute at least a majority thereof, unless the
election, or the nomination for election by PHI's
stockholders, of each director first elected during
such period was approved by a vote of at least two-
thirds of the directors then still in office who were
directors at the beginning of any such period.
Notwithstanding the foregoing provisions of Paragraphs
(iii) and (iv) of this Paragraph B, a "Change in Control"
shall not be deemed to have occurred for purposes of this
Plan (x) solely because (a) PHI; (b) a Subsidiary; or (c)
any PHI-sponsored employee stock ownership plan or other
employee benefit plan of PHI either files or becomes
obligated to file a report or proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form 8-K or
Schedule 14A (or any successor schedule, form or report or
item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares, whether in excess of 20% of the
voting Power or otherwise, or because PHI reports that a
change of control of PHI has or may have occurred or will or
may occur in the future by reason of such beneficial
ownership or (y) solely because of a change in control of
any Subsidiary. For purposes of this Paragraph B, a
"Subsidiary" means corporation, company or other entity (i)
more than 50 percent of whose outstanding shares or
securities (representing the right to vote generally in the
election of directors or other managing authority) are, or
(ii) which does not have outstanding shares or securities
(as may be the cases in a partnership, joint venture or
unincorporated association), but more than 50 percent of
whose ownership interest representing the right generally to
make decisions for such other entity is, now or hereafter,
owned or controlled, directly or indirectly, by PHI.
ARTICLE VIII - Administrative
The Plan Committee shall have the power and authority
to interpret the Plan, to establish rules and regulations
relating to the Plan, and to make any other determination
which it believes necessary or desirable in connection with
the administration of the Plan. Decisions by the Plan
Committee concerning matters relating to the Plan shall be
final and conclusive on PHI, its Affiliates and all
Directors and Beneficiaries hereunder.
ARTICLE IX - General Provisions
9.1 Effective Date and Term. This Plan shall become effective
-----------------------
(the "Effective Date") upon its approval by the affirmative
vote of the holders of a majority of the voting common stock
of PHI present at a meeting of its stockholders. No Common
Stock shall be transferred, Common Stock Credits allocated
to any Deferred Benefit Account, or Options granted, prior
to the Effective Date. Unless earlier terminated under
Paragraph 9.1 hereof, the Plan shall remain in effect until
the earlier of the date on which (a) all shares of Common
Stock subject to the Plan have been issued hereunder, or
(b) ten years from the Effective Date.
9.2 Additional Conditions. Notwithstanding any provision of the
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Plan to the contrary:
a. PHI may, at the time of the issuance of
shares of Common Stock, require a Director to deliver to PHI
a written representation of present intent to hold or
acquire shares of Common Stock solely for the account of the
Director for investment purposes and not for distribution;
and
b. If at any time PHI determines, in its sole
discretion, that (i) the listing, registration or
qualification (or any updating of any such document) of
shares of Common Stock is necessary on any securities
exchange or under any federal or state securities or blue
sky law, or (ii) the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of,
or in connection with, issuance of shares of Common Stock,
such shares shall not be issued unless such listing,
registration, qualification, consent or approval is effected
or obtained free of any conditions not acceptable to PHI.
ARTICLE X - Miscellaneous
10.1 Termination of Plan. The Board of Directors, upon written
-------------------
notice to all Directors and the Plan Committee, shall have
the right, at any time, to terminate this Plan. Such
termination shall become effective when authorized by the
Board of Directors and when written notice is given to all
Directors.
In the event of any such termination, the deferral of
Fees hereunder shall immediately cease. Each Director shall
receive the value of his Deferred Benefit Account as of the
Determination Date which is at least six months after the
date of termination. Such distribution shall be made in the
form of an immediate single-sum payment, and amounts
allocated to Common Stock Credits shall be distributed in
the form of Common Stock, with cash distributed in lieu of a
fractional share.
10.2 Inurement. This Plan shall be binding upon and shall inure
---------
to the benefit of the PHI and each Director and their
respective heirs, executors, administrators, successors and
assigns.
10.3 Amendment. The Board of Directors may amend the Plan at any
---------
time to cause the Plan to comply with the requirements of
Rule 16b-3 of the Exchange Act or in any other manner that
shall change, impair or adversely affect shares of Common
Stock previously transferred to any Director or Option
Rights without such Director's prior consent. Further, no
such amendment shall (a) increase the maximum number of
shares of Common Stock which may be issued to all or any
Director under the Plan, (b) expand the types of benefits
under the Plan, (c) change the class of persons eligible to
receive benefits under the Plan, or (d) materially increase
the benefits accruing to Directors under the Plan, without
the consent of PHI's shareholders.
10.4 Transfer of Rights. No interest or expectancy in the Plan,
------------------
including the anticipation of the transfer of Common Stock
or Option Rights, shall be subject to transfer, pledge or
assignment, other than by will or the laws of descent and
distribution and in accordance with the terms of the Plan,
and PHI shall not recognize any such assignment, pledge or
transfer. During a Director's lifetime, Common Stock shall
be transferred only to a Director (or guardian or legal
representative of such Director).
10.5 Governing Law. This Plan is governed by the laws of the
-------------
State of Louisiana, in all respects, including matters of
construction, validity and performance.
10.6 Funding. PHI may, in its discretion, establish a trust in
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connection with the adoption of this Plan. Each year during
the continuance of this Plan, PHI may contribute amounts to
such trust in order to fund its obligations hereunder.
The property comprising the assets of any such trust
shall, at all times, remain the property of such trust. The
trustee of any such trust shall distribute the assets
comprising such trust in accordance with the provisions of
this Plan and the trust agreement, as instructed by the Plan
Committee, but in no event shall such trustee distribute the
assets of any such trust to or for the benefit of PHI,
except as provided in any applicable trust agreement.
No Director (or any Beneficiary) shall have any right
to, or claim under or against, the assets held in trust to
help defray the cost incurred in providing benefits under
this Plan. Any such property shall be, and remain, a
general, unpledged asset of the Corporation or the trust, as
the case may be.
EXECUTED as of this 24th day of August, 1998.
PETROLEUM HELICOPTERS, INC.
By: ____________________________________
Approved by the Shareholders: October ___, 1998.
