<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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
DAWSON GEOPHYSICAL COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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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):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
DAWSON GEOPHYSICAL COMPANY
508 WEST WALL, SUITE 800
MIDLAND, TEXAS 79701
915-684-3000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 12, 1999
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of the Stockholders of
Dawson Geophysical Company will be held at the Petroleum Club of Midland, 501
West Wall, Midland, Texas 79701 at 10:00 a.m. on January 12, 1999 for the
following purposes:
1. Electing Directors of the Company;
2. Considering and voting upon a proposal to approve the Dawson
Geophysical Company 2000 Incentive Stock Plan;
3. Considering and voting upon a proposal to appoint KPMG Peat
Marwick LLP as independent public accountants of the Company for
the fiscal year ending September 30, 1999; and
4. Considering all other matters as may properly come before the
meeting.
The Board of Directors has fixed the close of business on November 13,
1998, as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting and at any adjournment or adjournments
thereof.
DATED this 13th day of November, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Paula W. Henry, Secretary
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE URGED TO
EXECUTE THE ACCOMPANYING PROXY CARD, WHICH REQUIRES NO POSTAGE, AND RETURN IT
PROMPTLY. ANY STOCKHOLDER GRANTING A PROXY MAY REVOKE SAME AT ANY TIME PRIOR TO
ITS EXERCISE. ALSO, WHETHER OR NOT YOU GRANT A PROXY, YOU MAY VOTE IN PERSON IF
YOU ATTEND THE MEETING.
<PAGE> 3
DAWSON GEOPHYSICAL COMPANY
508 WEST WALL, SUITE 800
MIDLAND, TEXAS 79701
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, JANUARY 12, 1999
SOLICITATION OF PROXY
The accompanying proxy is solicited on behalf of the Board of Directors of
Dawson Geophysical Company (the "Company") for use at the Annual Meeting of
Stockholders of the Company to be held on Tuesday, January 12, 1999, and at any
adjournment or adjournments thereof. In addition to the use of the mails,
proxies may be solicited by personal interview, telephone and telegraph by
officers, directors and other employees of the Company, who will not receive
additional compensation for such services. The Company may also request
brokerage houses, nominees, custodians and fiduciaries to forward the soliciting
material to the beneficial owners of stock held of record and will reimburse
such persons for forwarding such material. The Company will bear the cost of
this solicitation of proxies. Such costs are expected to be nominal. Proxy
solicitation will commence with the mailing of this Proxy Statement on or about
December 4, 1998.
Any stockholder giving a proxy has the power to revoke the same at any
time prior to its exercise by executing a subsequent proxy or by written notice
to the Secretary of the Company or by attending the meeting and withdrawing the
proxy.
PURPOSE OF MEETING
As stated in the Notice of Annual Meeting of Stockholders accompanying
this Proxy Statement, the business to be conducted and the matters to be
considered and acted upon at the annual meeting are as follows:
1. Electing Directors of the Company;
2. Considering and voting upon a proposal to approve the Dawson
Geophysical Company 2000 Incentive Stock Plan;
3. Considering and voting upon a proposal to appoint KPMG Peat
Marwick LLP as independent public accountants of the Company
for the fiscal year ending September 30, 1999; and
4. Considering all other matters as may properly come before the
meeting.
VOTING RIGHTS
The voting securities of the Company consist solely of common stock,
par value $0.33 1/3 per share ("Common Stock").
The record date for stockholders entitled to notice of and to vote at
the meeting is the close of business on November 13, 1998, at which time the
Company had outstanding and entitled to vote at the meeting 5,361,000 shares of
Common Stock. Stockholders are entitled to one vote, in person or by proxy, for
each share of Common Stock held in their name on the record date.
Stockholders representing a majority of the Common Stock outstanding
and entitled to vote must be present or represented by proxy to constitute a
quorum.
The election of directors will require the affirmative vote of a
majority of the Common Stock present or represented by proxy at the meeting and
entitled to vote thereon. Cumulative voting for directors is not authorized. The
affirmative vote of a majority of the Common Stock present or represented by
proxy at the meeting and entitled to vote thereon is required to approve the
Dawson Geophysical Company 2000 Incentive Stock Plan.
ELECTION OF DIRECTORS
At the Annual Meeting to be held on January 12, 1999, six persons are
to be elected to serve on the Board of Directors for a term of one year and
until their successors are duly elected and qualified. All of the current
Directors have announced that they will be available for election to the Board
of Directors. The Company's nominees for the six directorships are:
Calvin J. Clements Matthew P. Murphy
L. Decker Dawson Howell W. Pardue
Floyd B. Graham Tim C. Thompson
For information about each nominee, see "Directors and Executive Officers."
1
<PAGE> 4
DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors currently consists of three persons who are
employees of the Company and three persons who are not employees of the Company
(i.e., outside directors). Set forth below are the names, ages and positions of
the Company's Directors and executive officers as of November 13, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
L. Decker Dawson 78 President,
Director
Floyd B. Graham 70 Executive Vice President,
Director
Howell W. Pardue 62 Executive Vice President,
Director
Christina W. Hagan 43 Vice President,
Chief Financial Officer
Edward L. Huff 61 Vice President
C. Ray Tobias 41 Vice President
Stephen C. Jumper 37 Vice President
Paula W. Henry 41 Secretary
Calvin J. Clements 77 Director
Matthew P. Murphy 68 Director
Tim C. Thompson 64 Director
</TABLE>
The Board of Directors elects executive officers annually. Executive
officers hold office until their successors are elected and have qualified.
Set forth below are descriptions of the principal occupations during at
least the past five years of the Company's directors and executive officers.
L. Decker Dawson. Mr. Dawson founded the Company in 1952 and has served in
his present positions since that time. Prior thereto, Mr. Dawson was a
geophysicist with Republic Exploration Company, a geophysical company. Mr.
Dawson served as President of the Society of Exploration Geophysicists
(1989-1990) and received its Enterprise Award in 1997. He was Chairman of the
board of Directors of the International Association of Geophysical Contractors
(1981). He currently serves as a director and honorary life member of such
association. He was inducted into the Permian Basin Petroleum Museum's Hall of
Fame in 1997.
Floyd B. Graham. Mr. Graham joined the company in 1974 and has served in
his present positions since that time. Prior thereto, Mr. Graham was an
independent geophysical consultant for 14 years, and prior thereto was a
geophysicist for the predecessor of Exxon Company, U.S.A. for 10 years.
Howell W. Pardue. Mr. Pardue joined the Company in 1975 and has served in
his present positions since that time. Prior thereto, Mr. Pardue was employed in
data processing for 17 years by Geosource, Inc. and its predecessor geophysical
company.
Christina W. Hagan. Ms. Hagan joined the Company in 1988, and was elected
Chief Financial Officer in January 1997 and Vice President in September 1997.
Prior thereto, Ms. Hagan served the Company as Controller and Treasurer. Ms.
Hagan is a certified public accountant.
Edward L. Huff. Mr. Huff joined the Company in 1956, and was elected Vice
President in September 1997. Prior thereto, Mr. Huff served as instrument
operator, crew manager and field supervisor. He has managed the Company's field
operations since 1987.
C. Ray Tobias. Mr. Tobias joined the Company in 1990, and was elected Vice
President in September 1997. Mr. Tobias is responsible for maintaining client
relationships and submitting survey cost quotations to client companies. He is
presently serving on the Board of Directors of the International Association of
Geophysical Contractors and is Past President of the Permian Basin Geophysical
Society. Prior to joining the Company, Mr. Tobias was employed by Geo-Search
Corporation where he was responsible for pricing and bidding geophysical work to
major oil companies.
Stephen C. Jumper. Mr. Jumper, a geophysicist, joined the Company in 1985,
and was elected Vice President in September 1997. Mr. Jumper serves as manager
of technical services with an emphasis on 3-D processing. Mr. Jumper has served
the Permian Basin Geophysical Society as Second Vice President (1991), First
Vice President (1992), and as President (1993).
Paula W. Henry. Ms. Henry joined the Company in 1981 and has served in her
present position since 1989. Ms. Henry supervises administrative operations of
the Company.
Calvin J. Clements. Mr. Clements has served the Company as a director
since 1972. Prior thereto and until his retirement in 1987, Mr. Clements was
employed by the Company as vice president of the data acquisition operations.
Matthew P. Murphy. Mr. Murphy has served the Company as a director since
1993. Until his retirement in 1991, Mr. Murphy served as an executive of NCNB
Texas, now known as Nations Bank of Texas, N.A. (and predecessor banks), and
from 1986 to 1991, Mr. Murphy served the bank as District Director-West Texas.
Tim C. Thompson. Mr. Thompson has served the Company as director since
1995. Mr. Thompson, a management consultant since May 1993, was President and
Chief Executive Officer of Production Technologies International, Inc. from
November 1989 to May 1993.
2
<PAGE> 5
MEETINGS AND COMMITTEES OF DIRECTORS
During fiscal year ended September 30, 1998, six meetings of the Board of
Directors were held which all of the respective members attended.
The Audit Committee currently consists of Messrs. Clements, Murphy and
Thompson, all of whom are non-employee directors. The functions of the committee
are to determine whether management has established internal controls which are
sound, adequate and working effectively; to ascertain whether Company assets are
verified and safeguarded; to review and approve external audits; to review audit
fees and the appointment of independent public accountants; and to review
non-audit services provided by the independent public accountants. The Committee
met twice during fiscal year ended September 30, 1998. All members attended both
meetings.
The Compensation Committee currently consists of Messrs. Clements, Murphy
and Thompson, all of whom are non-employee directors. The Committee met twice
during fiscal year ended September 30, 1998. All members attended both meetings.
MANAGEMENT COMPENSATION
The compensation levels of the Company are believed to be competitive and
in line with those of comparable companies and to align the interests of the
Company's employees with those of its stockholders through potential stock
ownership.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the annual
and long-term compensation paid to or for (i) the Company's Chief Executive
Officer during the fiscal year ended September 30, 1998, and (ii) those of the
Company's four other most highly compensated executive officers whose total
annual salary and bonus exceeded $100,000 in 1998 (collectively, the "Named
Officers"), for services rendered to the Company during fiscal years 1996, 1997
and 1998.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------
ANNUAL COMPENSATION AWARDS
-------------------------------------- ---------------
SECURITIES
UNDERLYING
FISCAL OTHER ANNUAL OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) COMPENSATION (NO. OF SHARES)
- --------------------------- ------ ---------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
L. Decker Dawson 1998 $174,980 $ --- $ --- ---
President 1997 119,892 --- --- ---
1996 90,301 --- --- ---
Floyd B. Graham 1998 $125,000 $14,078 --- ---
Executive Vice President 1997 121,538 5,840 --- 5,000
1996 120,000 7,588 --- ---
Howell W. Pardue 1998 $125,000 $13,367 --- ---
Executive Vice President 1997 121,538 5,531 --- 5,000
1996 120,000 7,168 --- ---
Edward L. Huff(2) 1998 $105,923 $11,394 --- ---
Vice President 1997 102,302 4,603 --- 5,000
Stephen C. Jumper(2) 1998 $105,923 $ 8,419 --- ---
Vice President 1997 102,302 3,337 --- 5,000
</TABLE>
- ----------
(1) Any bonus that might be paid for fiscal 1998 is not yet calculable and, in
accordance with Securities and Exchange Commission regulations, will be
reported in the proxy statement for the annual meeting of stockholders on
January 11, 2000.
(2) Messrs. Huff and Jumper were each elected Vice President in September 1997.
3
<PAGE> 6
The following table sets forth certain information with respect to the
exercise of options to purchase Common Stock during the fiscal year ended
September 30, 1998, and unexercised options held at September 30, 1998, by each
of the named executive officers.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
9/30/98 OPTIONS AT
EXERCISABLE/ 9/30/98(1)
SHARES ACQUIRED VALUE UNEXERCISABLE EXERCISABLE/
NAME ON EXERCISE REALIZED (NO. OF SHARES) UNEXERCISABLE
---- --------------- -------- --------------- -------------
<S> <C> <C> <C> <C>
Floyd B. Graham --- $ --- 1,250/3,750 $---/$---
Howell W. Pardue --- --- 1,250/3,750 ---/ ---
Edward L. Huff --- --- 1,250/3,750 ---/ ---
Stephen C. Jumper --- --- 1,250/3,750 ---/ ---
</TABLE>
(1) The closing price per share on September 30, 1998, was $11.625 as reported
by the Nasdaq National Market.
Defined Benefit Plans and Other Arrangements. Long-term incentive
compensation for senior executive officers is not a policy of the Company.
Accordingly, no awards or payouts have been made. The Company has no retirement
or pension plan except for its Employee Stock Purchase Plan and its 1991
Incentive Stock Option Plan, both of which are described below.
Directors who are not also employees of the Company receive $1,000 per
month and 500 shares of Common Stock per year for serving as directors.
COMPENSATION PLANS
Stock Option Plan. The Dawson Geophysical Company 1991 Incentive Stock
Option Plan (the "1991 Plan") provides that 150,000 shares of the Company's
authorized but unissued Common Stock are reserved for issuance pursuant to the
1991 Plan and are subject to options granted to key employees during the
ten-year period through January 8, 2001.
An additional 500,000 shares will be reserved for issuance pursuant to a
new proposed plan to be known as the Dawson Geophysical Company 2000 Incentive
Stock Plan. The 2000 Plan will contain substantially the same terms as the
predecessor plan except up to 100,000 of such shares may be awarded and issued
as additional compensation to key employees, officers and non-employee members
of the Board of Directors of the Company with or without payment therefor. The
2000 Plan will cover a ten-year period through January 12, 2009. All outstanding
options under the original plan will not be affected by the proposed resolution.
Options under the 2000 Plan will be granted at an exercise price equal to the
market price of the stock on the date of grant. Each option that is granted will
be exercisable after the period or periods specified in the option agreement,
but prior to the expiration of five years after the date of grant. Commencing
one year after date of grant, optionees may purchase up to one-fourth of the
shares covered by a particular grant, and each option becomes exercisable with
respect to an additional one-fourth of the shares covered in each of the next
three years. As the 1991 Plan will expire in 2001 and options have been issued
covering all shares reserved for such Plan, a resolution is proposed to the
shareholders for approval of a 2000 Incentive Stock Plan.
During fiscal 1998, no options to purchase shares of Common Stock were
granted to employees of the Company under the 1991 Plan. During fiscal 1998,
10,650 shares of the Common Stock were issued pursuant to the exercise of
options granted under the 1991 Plan. As of November 13, 1998, the total number
of shares covered by outstanding options was 52,000.
4
<PAGE> 7
Stock Purchase Plan. On November 1, 1982, the Board of Directors of the
Company adopted an Employee Stock Purchase Plan (the "Purchase Plan") effective
January 1, 1983, in which eligible employees may elect to purchase, through
payroll deductions, shares of the Company's Common Stock and thereby increase
their proprietary interest in the Company. Pursuant to the Purchase Plan, the
Company contributes one dollar (before Social Security and withholding taxes)
for each dollar contributed by an eligible employee to purchase Common Stock for
the employee's account up to 5% of the employee's annual salary. As of September
30, 1998, no named executive officers participated in the Purchase Plan. On a
bi-weekly basis, the Company matches the participants' contributions and directs
the purchase of shares of the Company's Common Stock. There are no vesting
requirements for the participants. The Company contributed $198,863, $217,723
and $254,582 to the Purchase Plan during the fiscal years 1996, 1997 and 1998,
respectively.
PROPOSED RESOLUTION TO APPROVE THE
DAWSON GEOPHYSICAL COMPANY 2000 INCENTIVE STOCK PLAN
In November 1998, the Board of Directors of the Company adopted the Dawson
Geophysical Company 2000 Incentive Stock Plan. The effect of the plan is to
extend the termination date of the existing stock option plan to January 12,
2009. The text of the plan is set forth in Exhibit A hereto.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE FOR THE PROPOSED
RESOLUTION.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF STOCK OF THE
COMPANY ENTITLED TO VOTE AT THE ANNUAL MEETING IS REQUIRED TO APPROVE THE
RESOLUTION.
BOARD REPORT ON EXECUTIVE COMPENSATION
Compensation for executive officers is based on the principles that
compensation must be competitive to enable the Company to motivate and retain
the talent needed to lead and grow the Company's business, and to provide
rewards which are closely linked to the Company and individual performance.
Executive compensation is based on performance against a combination of
financial and non-financial measures. In addition to business results, employees
are expected to uphold a commitment to integrity, maximizing the develpment of
each individual, and continually improving the environmental quality of its
services and operations. In upholding these financial and non-financial
objectives, executives not only contribute to their own success, but also help
ensure that the business, employees, stockholders and communities in which we
live and work will prosper.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee makes recommendations regarding
compensation subject to approval of the entire Board of Directors.
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total return of the
Company's Common Stock as compared with the S&P 500 Stock Index and a peer group
made up of companies in the Value-Line Oilfield Services Industry Index. The
Oilfield Services Index consists of far larger companies that perform a variety
of services as compared to land-based acquisition and processing of seismic data
performed by the Company.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG DAWSON GEOPHYSICAL COMPANY, THE S & P 500 INDEX
AND A PEER GROUP
[GRAPH]
* $100 INVESTED ON 9/30/93 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
Research Data Group Peer Group Total Return Worksheet
Dawson Geophysical Co (DWSN)
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------------------------------
9/93 9/94 9/95 9/96 9/97 9/98
<S> <C> <C> <C> <C> <C> <C>
DAWSON GEOPHYSICAL COMPANY 100.00 151.43 137.14 100.00 275.71 132.86
PEER GROUP 100.00 86.98 108.59 156.90 309.14 161.21
S & P 500 100.00 103.69 134.53 161.89 227.37 247.93
</TABLE>
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of November 13, 1998, by each of the
Company's Directors, by each of the Named Officers, by all executive officers
and Directors of the Company as a group, and by each person known to the Company
to be the beneficial owner of more than 5% of any class of the Company's
outstanding Common Stock. Unless otherwise indicated, the shareholders listed
possess sole voting and investment power with respect to the shares listed.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
- -------------- ------------------------ ----------------------- --------
<S> <C> <C> <C>
Common Stock L. Decker Dawson 485,992 9.07%
Common Stock Pebbleton Corporation N.V. 394,900(2) 7.37%
Common Stock Wellington Management Company, LLP 299,800(3) 5.59%
Common Stock Howell W. Pardue 75,500 1.41%
Common Stock Floyd B. Graham 60,425 1.13%
Common Stock Calvin J. Clements 51,626 *
Common Stock Stephen C. Jumper 22,302 *
Common Stock Christina W. Hagan 16,714 *
Common Stock Edward L. Huff 15,910 *
Common Stock C. Ray Tobias 15,519 *
Common Stock Tim C. Thompson 2,000 *
Common Stock Paula W. Henry 1,152 *
Common Stock Matthew P. Murphy 300 *
Common Stock Share ownership of directors and executive
officers as a group (11 persons) 747,440 13.94%
</TABLE>
* Indicates less than 1% of the outstanding shares of Common Stock.
(1) Except as otherwise indicated, each shareholder shown in the table has sole
voting and investment power with respect to all shares listed as
beneficially owned by such shareholder.
(2) Pebbleton Corporation N.V. and its affiliate have filed with the Securities
and Exchange Commission a Schedule 13D reporting beneficial ownership of
such shares.
(3) Wellington Management Company, LLP ("WMC") is an investment adviser
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended. As of June 30, 1998, WMC in its capacity
as investment adviser, may be deemed to have beneficial ownership of
299,800 shares of common stock of Dawson Geophysical Company that are owned
by numerous investment advisory clients, none of which is known to have
such interest with respect to more than five percent of the class.
REPORTING OF SECURITIES TRANSACTIONS
Ownership of and transactions in the Company's stock by executive officers
and directors of the Company are required to be reported to the Securities and
Exchange Commission pursuant to Section 16(a) of the Securities and Exchange Act
of 1934. All reporting requirements have been filed in a timely manner except as
to all shares sold by the President of the Company in a public offering in 1997
which report has been subsequently filed.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick LLP for appointment
as independent public accountants for the Company for the fiscal year ending
September 30, 1999, subject to ratification by the stockholders. KPMG Peat
Marwick LLP served as independent public accountants for the Company for the
fiscal year ended September 30, 1998, and representatives of that firm are
expected to be present at the Annual Meeting of Stockholders. KPMG Peat Marwick
LLP will have an opportunity to make a statement if they desire to do so and
respond to appropriate questions.
NEXT ANNUAL MEETING
The next Annual Meeting of the Company's stockholders is scheduled to be
held on January 11, 2000. Appropriate proposals of stockholders intended to be
presented at the 2000 Annual Meeting must be received by Ms. Paula W. Henry,
Secretary, no later than August 18, 1999, in order to be included in the
Company's Proxy Statement and form of Proxy relating to such meeting.
6
<PAGE> 9
OTHER MATTERS
Management knows of no other business which will be presented at the Annual
Meeting other than as explained herein.
STOCKHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1998, BY WRITING TO THE SECRETARY, DAWSON GEOPHYSICAL COMPANY, 508
WEST WALL, SUITE 800, MIDLAND, TEXAS 79701.
BY ORDER OF THE BOARD OF DIRECTORS
Paula W. Henry, Secretary
7
<PAGE> 10
DAWSON GEOPHYSICAL COMPANY
2000 INCENTIVE STOCK PLAN
Dawson Geophysical Company, a Texas corporation, with principal offices
located in Midland, Midland County, Texas (the "Company") hereby adopts "DAWSON
GEOPHYSICAL COMPANY 2000 INCENTIVE STOCK PLAN."
1. PURPOSE
This Employee Incentive Stock Plan (the "Plan") is intended as an
incentive and to encourage stock ownership by certain officers and key executive
employees of Dawson Geophysical Company or of its subsidiary companies as that
term is defined in Article 3 below (the "Subsidiaries"), so that they may
acquire or increase their proprietary interest in the success of the Company and
Subsidiaries and to encourage them to remain in the employ of the Company or of
the Subsidiaries. It is further intended that options issued pursuant to this
Plan shall constitute "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as now or hereafter amended (the
"Code"), except as to those awards made pursuant to Article 11 of the Plan.
2. ADMINISTRATION
The Plan shall be administered by a committee appointed by the Board of
Directors of the Company (the "Committee"). The Committee shall consist of not
less than three members of the Company's Board of Directors. The Board of
Directors may from time to time remove members from or add members to the
Committee. Vacancies on the Committee, howsoever caused, shall be filled by the
Board of Directors. The Committee shall select one of its members as Chairman
and shall hold meetings at such times and places as it may determine. A majority
of the Committee at which a quorum is present or acts reduced to or approved in
writing by a majority of the members of the Committee shall be the valid acts of
the Committee. No director while a member of the Committee shall be eligible to
receive an option under the Plan. The Committee shall from time to time at its
discretion make recommendations to the Board of Directors with respect to the
key executive employees who shall be granted options and the amount of stock to
be optioned to each. All members of the Committee and majority of directors of
the Company shall be disinterested persons (as that term is hereinafter defined)
for purposes of administering the Plan and determining the employees and amount
of stock to be optioned to each. The term "disinterested person" for purposes of
the Plan shall mean an administrator of a Plan who is not at the time he or she
exercises discretion in administering the Plan eligible and has not at any time
within one year prior thereto been eligible for selection as a person to whom
stock options may be granted pursuant to the Plan.
The interpretation and construction by the Committee of any provisions
of the Plan or any option granted under it shall be final unless otherwise
determined by the Board of Directors. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
3. ELIGIBILITY
The persons who shall be eligible to receive options shall be such
executive and key employees (including officers, whether or not they are
directors) of the Company or its Subsidiaries existing from time to time as the
Board of Directors shall elect from time to time from among those nominated by
the Committee. An optionee may hold
A-1
<PAGE> 11
Dawson Geophysical Company
2000 Incentive Stock Plan
more than one option but only on the terms and subject to the restrictions
hereinafter set forth. No person shall be eligible to receive an option for a
larger number of shares than is recommended for him or her by the Committee. No
person owning more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company, its parent or subsidiary, shall be eligible
to receive an incentive stock option unless the option price is at least one
hundred ten percent (110%) of the fair market value of the optioned stock (as to
which see paragraph 5 below).
4. STOCK
The stock subject to the options shall be shares of the Company's
authorized but unissued or reacquired $0.33 1/3 par value per share common stock
hereinafter sometimes called the "Stock." The aggregate number of shares which
may be issued under options shall not exceed 500,000 shares of Stock. The
limitations established by the preceding sentence shall be subject to adjustment
as provided in Article 5(h) of the Plan.
If any outstanding option under the Plan for any reason expires or is
terminated, the shares of the Stock allocable to the unexercised portion of such
option may again be subjected to an option under the Plan.
The aggregate fair market value (determined at the time the option is
granted) of the Stock with respect to which options are exercisable for the
first time by any person eligible hereunder during any calendar year under this
Plan and any other plan qualifying under Section 422 of the Code which is
maintained by the Company, its Parent and/or its Subsidiaries shall not exceed
$100,000.
5. TERMS AND CONDITIONS OF OPTIONS
Stock options granted pursuant to the Plan shall be authorized by the
Board of Directors and shall be evidenced by agreements in such form as the
Committee shall from time to time recommend and the Board of Directors shall
from time to time approve, which agreements shall comply with and be subject to
the following terms and conditions:
(a) Optionee's Agreement. Each optionee shall agree to remain in the
employ of and to render to the Company or Subsidiaries his or her
services for a period of five years from the date of the option, but
such agreement shall not impose upon the Company or Subsidiaries any
obligation to retain the optionee in their employ for any period.
(b) Number of Shares. Each option shall state the number of shares to
which it pertains.
(c) Option Price. Each option shall state the option price, which shall
be not less than 100% of the fair market value of the shares of Stock
of the Company on the date of the granting of the option (110% in the
case of an over 10% shareholder, as to which see paragraph 3 above).
The fair market value per share shall be deemed to be the mean between
the highest price and the lowest price of which the Stock shall have
been sold, regular way, in the over-the-counter market or other
applicable market on the day the option is granted; or if no sale of
the Company's Stock shall have been made on any stock exchange on that
day, on the next preceding day on which there was a sale of such Stock.
(d) Medium and Time of Payment. The option price shall be payable in
United States dollars upon the exercise of the option and may be paid
in cash or by check or payment may be made with Stock of the Company.
(e) Term and Exercise of Options. Subject to other terms and provisions
herein contained, during the term of an option the shares with respect
to which that option may be exercised shall become exercisable to the
extent of 25% of the shares optioned on each of the four anniversaries
of the date of grant. Subject to the
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Dawson Geophysical Company
2000 Incentive Stock Plan
foregoing, each option shall be exercisable in whole or in part at any
time and from time to time during its term. Not less than one thousand
(1,000) shares may be purchased at any one time unless the number
purchased is the total number at the time purchasable under the option.
During the lifetime of the optionee, the option shall be exercisable
only by him or her and shall not be assignable or transferable by him
or her and no other person shall acquire any rights therein. An option
granted under the Plan must be exercised by the earlier of (a) five
years from the date of the grant, or (b) the applicable time limit
specified in paragraphs (f) and (g) of this Section 5. Any option not
exercised within the applicable aforementioned time period shall
automatically terminate at the expiration of such period.
(f) Termination of Employment Except Death. If an optionee shall cease
to be employed by the Company or Subsidiaries for any reason, other
than his or her death, and no longer shall be in the employ of any of
them, such optionee shall have the right to exercise the option at any
time within three months after such termination of employment (one year
if the optionee is disabled within the meaning of Section 22(e)(3) of
the Code) to the extent his or her right to exercise such option had
not previously been exercised at the date of such termination. Whether
authorized leave of absence or absence for military or governmental
service shall constitute termination of employment, for the purposes of
the Plan, shall be determined by the Committee, which determination,
unless overruled by the Board of Directors, shall be final and
conclusive.
(g) Death of Optionee and Transfer of Option. If the optionee shall die
while in the employ of the Company or a Subsidiary or within a period
of three months after the termination of his or her employment with the
Company and all Subsidiaries and shall not have fully exercised the
option, an option may be exercised, subject to the condition that no
option shall be exercisable after the expiration of one year from the
date it is granted to the extent that the optionee's right to exercise
such option had accrued pursuant to Article 5(e) of the Plan at the
time of his or her death and had not previously been exercised, at any
time within one year after the optionee's death, by the executors or
administrators of the optionee or by any person or persons who shall
have acquired the option directly from the optionee by bequest or
inheritance.
No option shall be transferable by the optionee otherwise than by will
or the laws of descent and distribution.
(h) Recapitalization. Subject to any required action by the
stockholders, the number of shares of Stock covered by each outstanding
option and the price per share thereof in each such option shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Stock of the Company resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on
the Stock) or any other increase or decrease in the number of such
shares effected without receipt of consideration by the Company.
Subject to any required action by the stockholders, if the Company
shall be the surviving company in any merger or consolidation, each
outstanding option shall pertain to and apply to the securities to
which a holder of the number of shares of Stock subject to the option
would have been entitled. A dissolution or liquidation of the Company
or a merger or consolidation in which the Company is not the surviving
company shall cause each outstanding option to terminate, provided that
each optionee shall, in such event, have the right immediately prior to
such dissolution or liquidation or merger or consolidation in which the
Company is not the surviving company to exercise his or her option in
whole or in part.
Upon a change in the Stock of the Company as presently constituted
which is limited to a change of all its authorized shares with par
value into the same number of shares with a different par value or
without par value, the shares resulting from any such change shall be
deemed to be the Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding
and conclusive, provided that each option continues to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
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Dawson Geophysical Company
2000 Incentive Stock Plan
Except as hereinbefore expressly provided in this Article 5(h), the
optionee shall have no rights by reason of any subdivisions or
consolidation of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of
shares of stock of any class or by reason of any dissolution,
liquidation, merger or consolidation or spin-off of assets or stock of
another company, and any issue by the Company of share of stock of any
class, or securities convertible into shares of stock of any class,
shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Stock subject to the
option.
The grant of an option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or
assets.
(i) Rights as a Stockholder. An optionee or a transferee of an option
shall have no rights as a stockholder with respect to any shares
covered by his or her option until the date of the issuance of a stock
certificate to him or her for such shares. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities
or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued,
except as provided in Article 5(g) hereof.
(j) Modification, Extension and Renewal of Options. Subject to the
terms and conditions and within the limitations of the Plan, the Board
of Directors may modify, extend or renew outstanding options granted
under the Plan, or accept the surrender of outstanding options (to the
extent not theretofore exercised) and authorize the granting of new
options in substitution therefor (to the extent not theretofore
exercised). The Board of Directors shall not, however, modify any
outstanding options so as to specify a lower price or accept the
surrender of outstanding options and authorize the granting of new
options in substitution therefor specifying a lower price.
Notwithstanding the foregoing, however, no modification of an option
shall, without the consent of the optionee, alter or impair any rights
or obligations under any option theretofore granted under the Plan.
(k) Investment Purpose. Each option under the Plan shall be granted on
the condition that the purchases of Stock thereunder shall be for
investment purposes and not with a view to resale or distribution
except that if the Stock subject to such option or distribution is
registered under the Securities Act of 1933, as amended, or if a resale
of such stock without such registration would otherwise be permissible,
such condition shall be inoperative if in the opinion of counsel for
the Company such condition is not required under the Securities Act of
1933 or any other applicable law, regulation, or rule of any
governmental agency.
(l) Other Provisions. The option agreements authorized under the Plan
shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the option, as the
Committee and the Board of Directors of the Company shall deem
advisable. Any such option agreement shall contain such limitations and
restrictions upon the exercise of the option as shall be necessary in
order that such option will be an "incentive stock option" as defined
in Section 422 of the Code or to conform to any change in the law.
6. TERM OF PLAN
Options may be granted pursuant to the Plan from time to time within a
period of ten years from the date the Plan is adopted, or the date the Plan is
approved by the stockholders, whichever is earlier.
7. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection with the defense of any
action, suit or
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Dawson Geophysical Company
2000 Incentive Stock Plan
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party be reason of any action taken or failure to act under or in
connection with the Plan or any option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his or her duties; provided that within 60 days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the Company
the opportunity, at its own expense, to handle and defend the same.
8. AMENDMENT OF THE PLAN
The Board of Directors of the Company may, insofar as permitted by law,
from time to time, with respect to any shares at the time not subject to
options, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever except that, without approval of the stockholders no such revision or
amendment shall change the number of shares subject to the Plan, change the
designation of the class of employees eligible to receive options, decrease the
price at which options may be granted, remove the administration of the Plan
from the Committee, or render any member of the Committee eligible to receive an
option under the Plan while serving thereon. Furthermore, the Plan may not,
without the approval of the stockholders, be amended in any manner that will
cause options issued under it to fail to meet the requirements of incentive
stock options as defined in Section 422 of the Code, except as to those shares
awarded under Article 11 of this Plan.
9. APPLICATION OF FUNDS
The proceeds received by the Company from the sale of Stock pursuant to
options will be used for general corporate purposes.
10. NO OBLIGATION TO EXERCISE OPTION
The granting of an option shall impose no obligation upon the optionee
to exercise such option.
11. STOCK AWARDS
The Committee may award to officers, directors and employees of the
Company shares of capital stock out of the 500,000 shares of Stock provided for
in Article 4 of the Plan for the purpose of additional compensation for
outstanding achievement and to encourage ownership of the Stock. These awards,
in the discretion of the Committee, may be made with or without payment therefor
by any officer, director or employee to whom such capital stock award is made
under such terms and conditions as the Committee may in its sole discretion
provide. Such awards shall not constitute incentive stock options within the
meaning of Section 422 of the Code and shall be limited to up to 100,000 shares
of Stock of the 500,000 shares of Stock provided for under Article 4 of the
Plan. Any shares not awarded under this Article 11 of the Plan may be the
subject of incentive stock options under the Plan.
12. EFFECTIVE DATE
Adoption of this Plan and shareholders' approval shall be effective
January 12, 1999.
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PROXY
PLEASE SIGN
AND RETURN
PROMPTLY.
ANNUAL MEETING
JANUARY 12, 1999
10:00 A.M.
PETROLEUM CLUB OF MIDLAND
501 WEST WALL, MIDLAND, TX 79701
THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS
OF THE COMPANY
Please return this proxy card
which requires no postage if mailed
in the U.S.A.
DAWSON GEOPHYSICAL COMPANY [LOGO]
The undersigned stockholder of Dawson Geophysical Company hereby appoints L.
Decker Dawson, Floyd B. Graham, and Matthew P. Murphy or any one or more of
them, attorneys, agents and proxies of the undersigned, with full power of
substitution to each of them, to vote all the shares of Common Stock which the
undersigned would be entitled to vote at the Annual Meeting of Stockholders to
be held January 12, 1999, and at any adjournment or adjournments thereof, with
all the powers the undersigned would possess if personally present and voting
thereat, (A) as instructed below with respect to the following matters and (B)
in their discretion upon other matters which properly come before the meeting.
UNLESS A CONTRARY INSTRUCTION IS SPECIFIED BELOW, THIS PROXY WILL BE VOTED FOR
ALL ITEMS.
<TABLE>
<S> <C>
1. Election of Directors:
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Calvin J. Clements, L. Decker Dawson, Floyd B. Graham, Matthew P. Murphy, Howell W. Pardue and
Tim C. Thompson. (INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below):
2. Proposal to approve the Dawson Geophysical Company 2000 Incentive Stock Plan.
[ ] For [ ] Against
3. Proposal to ratify the selection of KPMG Peat Marwick LLP as independent public accountants of the
Company for the fiscal year ended September 30, 1999.
[ ] For [ ] Against
The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement
of the Company dated November 13, 1998.
Please date and sign exactly as name appears on this proxy. Joint owners should each sign. If the signer is a
corporation, please sign full corporate name by duly authorized officer. Executors, administrators, trustees,
etc., should give full title as such.
Dated
------------------------------
------------------------------
------------------------------
(Signature of Stockholder)
</TABLE>
[ ] Approved
[ ] Approved with indicated Corrections
[ ] Show Revised proof
- ------------------------------------------
Signature
NOTE: Customer assumes all responsibility
when proof has been submitted for his approval.
PLEASE RETURN ORIGINAL
COPY WITH THIS PROOF
