AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MARCH 31, 1995
COMMISSION FILE NO.1-5471
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ]Confidential, for Use
of the Commission Only
(as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
GLOBAL MARINE INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14-a6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4)and 0-11.
(1) Title of each class of securities to which transaction
applies: N/A
(2) Aggregate number of securities to which transaction
applies: N/A
(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): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] 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: N/A
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(4) Date Filed: N/A
[LOGO] GLOBAL MARINE INC.
NOTICE OF MEETING
The Annual Meeting of Stockholders of Global Marine Inc. will be
held in the Texas Ballroom, Houston Marriott Westside Hotel,
13210 Katy Freeway, Houston, Texas on Wednesday, May 10, 1995 at
9:00 a.m. for the following purposes:
1. To elect three directors, each to serve for a term of
three years.
2. To ratify the appointment of independent certified
public accountants for the Company and its
subsidiaries.
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record of the Company's Common Stock at the close
of business on March 17, 1995 will be entitled to vote as set
forth in the accompanying Proxy Statement at the meeting and any
postponement or adjournment thereof.
JOHN G. RYAN
Secretary
Houston, Texas
March 31, 1995
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING,
WHETHER OR NOT YOU ARE ABLE TO ATTEND PERSONALLY. ACCORDINGLY,
YOU ARE REQUESTED TO SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED.
PROXY STATEMENT
This proxy statement is being furnished to the stockholders of
Global Marine Inc. in connection with the solicitation of proxies
by the Company's Board of Directors for use at the Annual Meeting
of Stockholders to be held on May 10, 1995 and any postponement
or adjournment thereof. The approximate date on which this proxy
statement and the form of proxy are first being sent or given to
stockholders of the Company is March 31, 1995.
At the Annual Meeting, the holders of shares of common stock,
par value $.10 per share, of the Company (the "Common Stock")
will be asked to consider and vote upon (i) the election of three
persons to serve on the Board of Directors of the Company, each
for a three-year term, and (ii) a proposal to ratify the Board of
Directors' appointment of Coopers & Lybrand L.L.P. as independent
certified public accountants for the Company and its subsidiaries
for fiscal year 1995.
All shares of Common Stock represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual
Meeting, and not revoked, will be voted at the Annual Meeting in
accordance with the instructions indicated on such proxies. If
no instructions are indicated with respect to any shares for
which properly executed proxies have been received, such proxies
will be voted FOR the Board of Directors' nominees for directors
and FOR the proposal to ratify the Board of Directors'
appointment of Coopers & Lybrand L.L.P. as independent auditors
for fiscal year 1995. If any other matters are properly
presented at the Annual Meeting for action, the persons named in
the proxies and acting thereunder will have discretion to vote on
such matters in accordance with their best judgment as to the
best interests of the Company. The Board of Directors of the
Company does not know of any other matters to be brought before
the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by
the person giving it at any time before it is voted. Proxies may
be revoked by any of the following actions: (i) filing with the
Secretary of the Company, at or before the Annual Meeting, but in
any event prior to the vote on the matter as to which revocation
is sought, a written notice of revocation bearing a later date
than the proxy; (ii) duly executing and submitting a subsequent
proxy relating to the Annual Meeting; or (iii) voting in person
at the Annual Meeting (although attendance at the Annual Meeting
will not, in and of itself, constitute a revocation of a proxy).
Any written notice revoking a proxy should be sent to the
Secretary of the Company at the Company's principal executive
offices, 777 North Eldridge Road, Houston, Texas 77079.
The close of business on March 17, 1995 is the date fixed by
the Board of Directors for the determination of stockholders of
record entitled to notice of and to vote at the Annual Meeting
and any adjournment thereof. On March 17, 1995, there were
issued and outstanding 164,881,034 shares of Common Stock,
constituting the only class of stock outstanding. The holders of
a majority of the outstanding shares of Common Stock as of March
17, 1995, present in person or represented by proxy, will
constitute a quorum at the Annual Meeting.
Each share of Common Stock is entitled to one vote at the
Annual Meeting with respect to each matter to be voted upon
except the election of directors. In the election of directors,
the holders of Common Stock are entitled to cumulate their votes,
with each share having a number of votes equal to the number of
directors to be elected, which votes may be cast for one
candidate or distributed among two or more candidates. The
individuals named in the accompanying proxy will have
discretionary authority to cumulate votes among candidates. A
stockholder giving and not rescinding the accompanying proxy will
not have the ability to direct that his votes be cumulated.
However, authorization of the individuals named as proxies to
cumulate votes, at their discretion, is solicited.
With regard to the election of directors, votes may be cast in
favor of or withheld; votes that are withheld will be excluded
entirely from the vote and will not be counted in favor of or
against any nominee. Abstentions may be specified on all
proposals (but not on the election of directors) and will be
counted as present for purposes of the item on which the
abstention is noted. Abstentions on the proposal to ratify the
appointment of independent auditors will have the effect of a
negative vote because approval requires the affirmative vote of a
majority of the shares represented in person or by proxy at the
meeting. Under applicable law of the state of Delaware, which is
the Company's state of incorporation, a broker non-vote (i.e.,
the shares are voted by the broker on at least one matter but not
on the matter in question) will have no effect on the outcome of
the election of directors but will have the same effect as a vote
against the proposal to ratify the appointment of independent
auditors. Also under Delaware law, for quorum purposes, the
total votes received, including abstentions, would be counted in
determining the number of shares present at the meeting, and
broker non-votes would not be relevant because, by definition,
those shares would have been voted on at least one matter and
therefore would be counted for quorum purposes.
The Company's Annual Report for the year ended December 31,
1994, which includes, among other things, the Company's audited
consolidated balance sheets at December 31, 1994 and 1993,
respectively, and audited consolidated statements of income and
cash flows for the three years ended December 31, 1994, 1993 and
1992, respectively, has been mailed to stockholders of record as
of March 17, 1995.
The cost of this solicitation will be borne by the Company. It
is expected that the solicitation of proxies will be primarily by
mail, telephone and facsimile. The Company has arranged for
Georgeson & Company Inc., Wall Street Plaza, New York, New York
10005 to solicit proxies in such manner at a cost of $7,500, plus
out-of-pocket expenses. Proxies may also be solicited personally
by directors, officers, and other regular employees of the
Company in the ordinary course of business and at nominal cost.
Proxy materials will be provided for distribution through
brokers, custodians, and other nominees or fiduciaries to
beneficial owners of the Common Stock. The Company expects to
reimburse such parties for their reasonable out-of-pocket
expenses incurred in connection therewith.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Listed below are the only persons who, to the knowledge of the
Company, may be deemed to be beneficial owners, as of March 17,
1995, of more than 5% of the Company's Common Stock.
<TABLE>
<CAPTION>
Name and Address Shares Percent
of Beneficial Owner Beneficially Owned of Class(1)
<S> <C> <C>
The Equitable Companies Incorporated (2) 16,714,100 10.14%
787 Seventh Avenue
New York, New York 10019
Merrill Lynch & Co. Inc. (3) 15,012,000 9.10%
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
</TABLE>
(1) The percentages are based on the number of issued and
outstanding shares of Common Stock at March 17, 1995.
(2) The number of shares indicated is based on a statement
on Schedule 13G, dated January 9, 1995, which was filed
jointly by five French mutual insurance companies (AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie
Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle, and Uni Europe Assurance
Mutuelle), as a group, AXA, the Equitable Companies
Incorporated and their subsidiaries. According to the
Schedule 13G, the shares are beneficially owned by
subsidiaries of The Equitable Companies Incorporated,
as follows: (i) 2,755,900 shares (1.67%) by The
Equitable Life Assurance Society of the United States,
(ii) 13,954,200 shares (8.46%) by Alliance Capital
Management L.P., and (iii) 4,000 shares (less than 1%)
by Donaldson, Lufkin & Jenrette Securities.
(3) The number of shares indicated is based on Amendment
No. 1 to a statement on Schedule 13G, dated February
10, 1995, which was filed jointly by Merrill Lynch &
Co., Inc. ("ML&Co."), Merrill Lynch Group, Inc. ("ML
Group"), Princeton Services, Inc. ("PSI"), Merrill
Lynch Asset Management, L.P. ("MLAM"), and Merrill
Lynch Growth Fund for Investment & Retirement (the
"Fund"). Each of ML&Co., ML Group and PSI are parent
holding companies and PSI is general partner of MLAM.
MLAM is a registered investment advisor to registered
investment companies such as the Fund. Each of ML&Co.,
ML Group, PSI, MLAM and the Fund disclaim beneficial
ownership of the shares.
The following table sets forth, as of March 17, 1995, the
beneficial ownership of the Company's Common Stock by each
director and nominee, the Chief Executive Officer and the four
other most highly compensated executive officers and, as a group,
of such persons and all other current executive officers, from
information provided by such persons.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Name Owned (a) of Class (b)
<S> <C> <C> <C>
Patrick M. Ahern 17,713 (c) -
Donald B. Brown 19,216 (c) -
Edward J. Campbell 23,059 (c) -
Peter T. Flawn 22,500 (c) -
John M. Galvin 20,000 (c) -
Gary L. Kott 538,450 (d) -
Lynn L. Leigh 42,664 (c) -
C. Russell Luigs 1,439,711 (d) (e) -
Jon A. Marshall 379,166 (d) -
Jerry C. Martin 690,965 (d) -
John G. Ryan 676,286 (d) -
Sidney A. Shuman 20,829 (c) -
William R. Thomas 32,460 (c) -
William C. Walker 18,827 (c) -
All of the above and other
executive officers as a
group (18 persons) 4,803,722 (c) (d) (e) 2.84%
</TABLE>
(a) Each person has sole voting and investment power with
respect to the shares listed, unless otherwise
indicated.
(b) As of March 17, 1995, no director or executive officer
owned more than one percent of the Common Stock
outstanding.
(c) Includes shares that may be acquired within sixty days
of March 17, 1995 through the exercise of non-employee
director stock options, as follows: 17,500 shares each
for Messrs. Brown, Flawn, Galvin, Leigh, Shuman and
Thomas; 16,000 shares each for Messrs. Ahern, Campbell
and Walker; and 153,000 shares for the group.
(d) Includes shares that may be acquired within sixty days
of March 17, 1995 through the exercise of employee
stock options, as follows: Mr. Kott, 492,500; Mr.
Luigs, 1,308,750; Mr. Marshall, 348,400; Mr. Martin,
640,000; Mr. Ryan, 625,000; and the group, 4,218,500.
(e) Includes 26,996 shares attributable to Mr. Luigs'
account under the Company's 401(k) Savings Incentive
Plan at March 17, 1995.
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of eleven
directors divided into three classes serving staggered terms of
three years each. Seven of the Company's current directors are
serving in two classes with terms that continue beyond the 1995
Annual Meeting of Stockholders, and they are not subject to
election at this meeting. Four directors serve in a class with
terms that expire at the 1995 Annual Meeting of Stockholders, and
three of these directors are nominees for reelection at this
meeting. These nominees are Patrick M. Ahern, C. Russell Luigs
and William R. Thomas. William C. Walker's term will expire at
the 1995 Annual Meeting of Stockholders and he will not stand for
reelection. Each of the three directors to be elected at the
1995 Annual Meeting of Stockholders will serve a term of three
years to expire at the 1998 Annual Meeting of Stockholders or
until his successor is elected and qualifies. The candidates, up
to the number of directors to be elected, receiving the highest
number of votes cast by holders of the Common Stock, in person or
by proxy, will be elected.
It is intended that the proxies received from holders of the
Company's Common Stock, in the absence of contrary instructions,
will be voted at the 1995 Annual Meeting for the election of
Messrs. Ahern, Luigs and Thomas. Although the Company does not
contemplate that any of the nominees will be unable to serve,
decline to serve, or otherwise be unavailable as a nominee at the
time of the Annual Meeting, in such event the proxies will be
voted in accordance with the authority granted in the proxies for
such other candidate or candidates as may be nominated by the
Board of Directors.
Further information concerning the nominees for election as
directors at the 1995 Annual Meeting of Stockholders, including
their business experience during the past five years, appears
below.
NOMINEES - FOR TERMS OF OFFICE
EXPIRING AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS
Patrick M. Ahern, 54, is a private investor, and he is a senior
partner in Ahern and Partners, L.P., a private investment and
advisory partnership. He was first elected a director of the
Company in 1987.
C. Russell Luigs, 61, is Chairman of the Board, President and
Chief Executive Officer of the Company. Mr. Luigs was first
elected a director of the Company in 1977.
William R. Thomas, 74, is the Company's retired Senior Vice
President, Finance. He is also a director of Bank of the West
and AeroVironment Inc. Mr. Thomas was first elected a director
of the Company in 1978.
The members of the Board of Directors who are not subject to
election at the 1995 Annual Meeting are as follows.
CONTINUING DIRECTORS - WITH TERMS OF OFFICE
EXPIRING AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS
Edward J. Campbell, 67, was President of J. I. Case Company, a
wholly-owned subsidiary of Tenneco Inc., from January 1992 until
his retirement in April 1994. J. I. Case is a manufacturer of
farm and construction equipment. From 1979 through 1991, Mr.
Campbell was President and Chief Executive Officer of Newport
News Shipbuilding & Dry Dock Co., also a wholly-owned subsidiary
of Tenneco Inc. He is a director of Zurn Industries, Inc., Titan
Wheel International, Inc. and the American Bureau of Shipping
(ABS) Group of Companies. Mr. Campbell was first elected a
director of the Company in 1981.
Peter T. Flawn, 69, has been prominent in the field of geology
for many years as an academician, author and consultant, and he
is a former president of the University of Texas at Austin. He
is also a director of Harte-Hanks Communications, Inc.;
Input/Output, Inc.; Radian Corporation; and Tenneco Inc. Dr.
Flawn was first elected a director of the Company in 1989.
John M. Galvin, 62, has been a private investor and consultant
since his retirement in 1992 as Vice Chairman, a director and
Chief Financial Officer of The Irvine Company, a major, private
real estate development and investment company. He is a director
of Commercial Intertech Inc. and of Oasis Residential, Inc. Mr.
Galvin was first elected a director of the Company in 1979.
Lynn L. Leigh, 69, has been Senior Vice President of National-
Oilwell, a manufacturer and international supplier of oilfield
equipment and services, since October 1993, prior to which he had
been President and Chief Executive Officer of Hydril Company, a
manufacturer of high performance products for petroleum drilling
and production, since 1991. From 1988 to 1991, Mr. Leigh was a
consultant to the oil and gas industry. Mr. Leigh was first
elected a director of the Company in 1981.
CONTINUING DIRECTORS - WITH TERMS OF OFFICE
EXPIRING AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS
Donald B. Brown, 68, is an investor and a consultant to the
energy exploration and development industry. He was first
elected a director of the Company in 1982.
Jerry C. Martin, 62, has been the Company's Senior Vice
President and Chief Financial Officer since 1985. Prior to 1985,
he held various positions with Global Marine Drilling Company,
the Company's major operating subsidiary. Mr. Martin was first
elected a director of the Company in 1993.
Sidney A. Shuman, 82, is a retired Corporate Vice President and
director of Baker International Corporation. Mr. Shuman was
first elected a director of the Company in 1977.
DIRECTOR - WITH TERM OF OFFICE
EXPIRING AT THE 1995 ANNUAL MEETING OF STOCKHOLDERS
William C. Walker, 71, is an independent management consultant
and a retired President of Mid-Continent Supply Company, a major
provider of oilfield equipment and services worldwide. He was
also with Loffland Brothers Company, an oil and gas drilling
contractor, for more than 20 years, eventually serving as
President. Mr. Walker is a director of Aztec Manufacturing
Company and of DI Industries, Inc. He was first elected a
director of the Company in 1986.
BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors currently consists of eleven
members and will consist of ten members following the 1995 Annual
Meeting of Stockholders. The Board has five standing committees.
During 1994, the Board of Directors held four meetings. Further
information concerning the Board's standing committees appears
below.
EXECUTIVE COMMITTEE - The Company's Executive Committee
consists of five directors: John M. Galvin, Chairman, Edward J.
Campbell, Lynn L. Leigh, C. Russell Luigs and William C. Walker.
The Executive Committee has the authority to exercise all the
powers of the Board which may be delegated legally to it by the
Board in the management and direction of the business and affairs
of the Company. The Executive Committee did not meet during
1994.
AUDIT COMMITTEE - The Company's Audit Committee consists of
four non-employee directors: Lynn L. Leigh, Chairman, Donald B.
Brown, Sidney A. Shuman and William C. Walker. Audit Committee
meetings are attended by members of the Committee, the Company's
independent auditors and the head of the Company's internal audit
staff. In addition, the Audit Committee meets privately with the
Company's independent auditors at least once a year. The
Committee recommends the firm of independent auditors for each
fiscal year, approves the nature of the professional services
provided by the independent auditors prior to performance of such
services, and reviews the independence of the auditors. The
Committee also reviews the scope of work and the reported results
of the Company's internal auditors and confers with management
from time to time on financial reporting and internal control
matters. During 1994, the Audit Committee held four meetings.
COMPENSATION COMMITTEE - The Company's Compensation Committee
consists of four non-employee directors: Patrick M. Ahern,
Chairman, Donald B. Brown, Edward J. Campbell and John M. Galvin.
The Compensation Committee makes recommendations to the Board
regarding remuneration arrangements for senior management and
directors, adoption of compensation plans in which officers and
directors are eligible to participate and the grant of stock
options or other benefits under any such plans. The Compensation
Committee held four meetings during 1994.
FINANCE COMMITTEE - The Company's Finance Committee consists of
five non-employee directors: Edward J. Campbell, Chairman,
Patrick M. Ahern, Peter T. Flawn, John M. Galvin and William R.
Thomas. The Committee reviews the Company's annual financial
plan, makes recommendations to the Board of Directors regarding
material capital expenditures, acquisitions and financings
contemplated by the Company and advises with respect to the
Company's external financial relationships. During 1994, the
Finance Committee held four meetings.
NOMINATING COMMITTEE - The Company's Nominating Committee
consists of five non-employee directors: William C. Walker,
Chairman, Peter T. Flawn, Lynn L. Leigh, Sidney A. Shuman and
William R. Thomas. The Nominating Committee, which held four
meetings during 1994, recommends to the Board of Directors those
persons it believes should be nominees for election as directors.
In this connection, the Committee considers the performance of
incumbent directors in determining whether they should be
nominated to stand for reelection. The Committee will consider
qualified nominees recommended by stockholders. Any such
recommendation for the 1996 election of directors should be
submitted in writing to the Secretary of the Company at 777 North
Eldridge Road, Houston, Texas 77079.
During 1994, each director of the Company attended at least 75%
of the meetings of the Board and committees of the Board on which
they served.
DIRECTOR COMPENSATION
Directors of Global Marine Inc. who are not employees of the
Company or any of its subsidiaries receive a retainer of $6,000
per quarter for their services as directors. They also receive
$900 plus expenses for each regular Board meeting attended,
$1,500 plus expenses for each special meeting of the Board
attended, and $500 plus expenses for each meeting of any
committee of the Board attended, in each case other than
telephonic meetings. Directors who are employees of the Company
do not receive directors' fees.
Non-employee directors are participants in the Retirement Plan
for Outside Directors. The Company believes this plan enables it
to attract and retain outside directors, who render necessary and
important services. Under the Retirement Plan for Outside
Directors, each participant vests in an annual retirement benefit
equal to a percentage of the highest annual basic retainer fee
for directors in effect at any time during the one-year period
preceding the termination of his Board service. The percentage,
which is based on the participant's full years of service as an
outside director during all periods on and after August 1, 1989,
is 20% after one year of service up to 100% after five years of
service. A participant becomes 100% vested upon termination of
service due to death or disability, and each participant then
serving as an outside director becomes 100% vested upon a "change
of control," which is defined as any acquisition of more than
fifty percent of the voting power of the Company's stock by any
entity or by any group acting in concert. A participant may
begin receiving his vested benefit upon his termination of
service due to disability or, if later, upon the later of his
attainment of age 65 or his termination of service as a director.
The benefit is payable to the participant or his beneficiary over
a period, up to a maximum of 15 years, equal to the period the
participant served as an outside director, provided that a
beneficiary, or a director who terminates his service due to
disability or within one year following a change of control, may
receive the benefit in a lump sum.
All of the Company's current directors except Messrs. Luigs and
Martin, who are employees of the Company, are participants in the
Retirement Plan for Outside Directors. Each participant had five
full years of credited service as of December 31, 1994 for
purposes of determining the vested benefit under the plan.
Under the Company's 1990 Non-Employee Director Stock Option
Plan, options to purchase shares of the Company's Common Stock
are granted to directors who, as of the date of grant, are not
employees of the Company or any of its subsidiaries and have not
been such employees for any part of the preceding fiscal year.
At present, all of the directors except Messrs. Luigs and Martin
are eligible non-employee directors. Option grants to non-
employee directors are in addition to and not in lieu of the
other compensation for their services as directors described
elsewhere in this proxy statement.
Each person who becomes eligible to receive a grant under the
plan receives an initial 10,000 share grant on the date he first
achieves such eligibility. Each person who receives an initial
10,000 share option grant and remains eligible automatically
receives an additional grant of options to purchase 3,000 shares
on the adjournment date of each subsequent annual meeting of
stockholders beginning with the first annual meeting following
the calendar year of the initial grant. During 1994, the nine
non-employee directors each automatically received a grant of
options under the plan to purchase 3,000 shares of Common Stock
at the per share exercise price of $4.1875. Upon the expiration
of unexercised options granted under the plan, new options may be
granted with respect to the shares covered by such expired
options.
The exercise price for each share of Common Stock subject to an
option granted under the plan is the fair market value per share
at the date the option is granted and must be at least equal to
the par value of the stock. Each option becomes exercisable for
fifty percent of the shares covered thereby after one year from
the date of grant and for the remaining fifty percent two years
from the date of grant. Options expire ten years from the date of
grant; provided, however, that if a participant's service as a
non-employee director terminates by reason of disability, death,
the failure of the Board to nominate him for reelection other
than for cause, or his ineligibility for reelection pursuant to
the Company's by-laws, any options that are then exercisable may
only be exercised for up to one year after the date of the
disability, death or termination. If his service terminates
because he decides not to stand for re-election, his options may
only be exercised for up to three months after the termination,
and, if his service terminates for any other reason, including
for cause as defined in the plan, his options may be exercised
for up to five business days after the termination. Options are
non-transferable otherwise than by will or the laws of descent
and distribution.
Option prices and the number and kinds of shares covered by the
Non-Employee Director Stock Option Plan and by options under the
plan are subject to adjustments in the event of a merger,
consolidation, reorganization, recapitalization, stock dividend,
stock split, split-up, split-off, spin-off, combination of
shares, exchange of shares, or other like changes in the
Company's capital structure. In addition, the right to exercise
all options remaining unexercised under the plan shall
accelerate, so that such options will become immediately
exercisable, upon (i) any acquisition of more than fifty percent
of the voting power of the Company's stock by any person or
persons acting as a group for purposes of acquiring such stock,
(ii) the occurrence of a change in the membership of the Board of
Directors during any consecutive two-year period, excluding
changes due to death or disability, so that individuals who
constitute the Board at the beginning of such period cease to
constitute a majority of the Board, (iii) the shares subject to
options becoming subject to delisting by the New York Stock
Exchange or a successor exchange in respect of the number of
publicly held shares or the number of stockholders holding one
hundred shares or more, (iv) approval by the Board of Directors
of the sale of all or substantially all of the Company's assets,
or (v) approval by the Board of any merger, consolidation,
issuance of securities or purchase of assets which would result
in an event described in (i), (ii) or (iii) above. However, the
Board's Compensation Committee, as constituted prior to any such
occurrence, may, upon such occurrence, in general determine that
the options shall terminate and that the holders thereof shall be
paid cash in an amount equal to the difference between the option
exercise price and the fair market value of the stock before the
occurrence.
The 1990 Non-Employee Director Stock Option Plan is
administered by the Compensation Committee of the Board of
Directors, which consists of non-employee members of the Board.
However, the Committee's administrative functions are ministerial
in view of the plan's explicit provisions, including those
relating to eligibility for option grants and predetermination of
the timing, amounts and exercise price of such grants.
The termination date of the plan is May 8, 2001. The Board of
Directors may at any time amend, suspend or terminate the plan,
but options granted before any termination or suspension may
continue to be exercised according to their terms. Rights and
obligations under any option granted under the plan may not be
adversely affected by any amendment without the consent of the
option holder. In addition, no amendment may be made without the
approval of the Company's stockholders that will increase the
total number of shares available for options under the plan,
change the manner of determining the option exercise price,
increase the ten-year maximum term of the options, modify the
plan's eligibility provisions, or materially increase the
benefits accruing to participants, unless such stockholder
approval is not required in order for options granted under the
plan to continue to be exempt from the operation of Section 16(b)
of the Securities Exchange Act of 1934.
EXECUTIVE COMPENSATION
The following table sets forth information concerning
compensation for services in all capacities to the Company and
its subsidiaries during each of the last three years of those
persons who were the Company's Chief Executive Officer and its
other four most highly compensated executive officers during
1994:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM
COMPENSATION
AWARDS
NAME AND ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) COMPENSATION(3)
($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
C. Russell Luigs, Chairman 1994 $478,750 $100,000 175,000 $9,900
of the Board, President 1993 $463,750 $ 80,000 200,000 $9,665
and Chief Executive Officer 1992 $448,750 $100,000 250,000 $8,515
Jerry C. Martin, Senior 1994 $253,958 $ 70,000 100,000 $3,750
Vice President and Chief 1993 $241,250 $ 57,000 150,000 $4,607
Financial Officer 1992 $226,667 $ 70,000 150,000 $4,443
John G. Ryan, 1994 $250,882 $ 70,000 100,000 $4,494
Chairman and Chief 1993 $235,000 $ 59,500 150,000 $5,243
Executive Officer, Global 1992 $216,250 $ 70,000 150,000 $4,874
Marine Drilling Company,
and Corporate Secretary
Gary L. Kott, 1994 $232,750 $ 40,000 75,000 $6,174
President and Chief 1993 $229,167 $ 35,000 100,000 $6,569
Operating Officer, Global 1992 $259,167 $ 30,000 100,000 $6,103
Marine Drilling Company
Jon A. Marshall, President, 1994 $196,879 $ 70,000 75,000 $4,239
Applied Drilling Techonology 1993 $184,167 $ 45,000 100,000 $4,745
Inc. and Challenger 1992 $157,685 $ 43,000 162,500 $4,077
Minerals Inc.
</TABLE>
(1) In order to preserve cash and to further encourage
stock ownership by executive officers, bonuses based on
service during the years indicated were paid to
executive officers, including the five named in the
table, in shares of the Company's Common Stock under
the Company's Stock Option and Incentive Plan, net of
the required tax withholdings (with the exception of
$3,000 of Mr. Marshall's 1992 bonus, which amount was
paid in cash for services rendered during 1992 before
Mr. Marshall became an executive officer). Bonuses
based on service during each year were awarded in the
following year, and the dollar amounts indicated in the
table in respect of stock are the stock's fair market
values (average of high and low market prices) on the
respective award dates.
(2) Expressed in terms of the numbers of shares of the
Company's Common Stock underlying options granted
during the years indicated.
(3) The amounts indicated under "All Other Compensation"
for 1994 consist of (a) amounts contributed by the
Company to match a portion of the employees'
contributions under the Company's 401(k) Savings
Incentive Plan (Mr. Luigs, $3,750; Mr. Martin, $3,750;
Mr. Ryan, $3,750; Mr. Kott, $3,750; and Mr. Marshall,
$3,750), plus (b) insurance premiums paid by the
Company with respect to term life insurance for the
benefit of the named executive officers (Mr. Luigs,
$6,150; Mr. Ryan, $744; Mr. Kott, $2,424; and Mr.
Marshall, $489).
EMPLOYMENT AGREEMENTS AND SEVERANCE AND CHANGE-IN-CONTROL
ARRANGEMENTS
In February 1995, the Company entered into an employment
agreement with Mr. Luigs that terminates in April 1998. The
agreement specifies a minimum annual base salary of $500,000.
In the event Mr. Luigs is removed from his position as
Chief Executive Officer for reasons other than willful and
material misconduct deliberately harmful to the Company, or in
the event of a substantial alteration in the nature of his
position, termination of his employment agreement, or termination
due to disability, Mr. Luigs would be entitled to salary
continuation and retirement benefit accrual for a period of two
years, and he would be entitled to group insurance continuation
until the sooner of two years or such time as similar benefits
are provided through other employment. Mr. Luigs would also be
entitled to the foregoing benefits upon his termination or
resignation within one year following the acquisition of
securities representing, or other control of, 35% or more of the
voting power of the Company by any person or group of persons
working in concert. In the case of a termination due to
disability, the amount of salary to be continued would be reduced
by an amount equal to certain disability benefits.
The Company also has severance agreements with certain
key executive officers. The agreements provide for a severance
payment if employment is terminated by the Company for reasons
other than misconduct harmful to the Company. The payment would
also be made if employment is terminated by the individual within
six months following a reduction in his base salary, a
substantial alteration in the nature of his position, or his
office being moved from Houston, Texas without his consent, or
within one year following the acquisition of 35% or more of the
voting power of the Company by any person or group of persons
acting in concert, or in the event of termination due to
disability, in which case the amount would be reduced by an
amount equal to certain disability benefits. The payment would
consist of salary continuation and the continuation of medical,
dental and life insurance benefits for a period of two years
following such termination of employment, based on the
individual's highest base salary and benefits at any time within
the nine months immediately preceding such termination. Among
the executive officers covered by such agreements are Messrs.
Martin, Ryan, Kott, and Marshall.
Outstanding option agreements under the Company's 1989
Stock Option and Incentive Plan provide that the right to
exercise all options remaining unexercised under such agreements
shall accelerate, so that such options will become immediately
exerciseable, upon any acquisition of more than 50% of the voting
power of the Company's stock by any entity or group acting in
concert for purposes of acquiring such stock. In addition, the
vesting of retirement benefits under the Company's Retirement
Plan for Outside Directors and of outstanding options under the
Company's 1990 Non-Employee Director Stock Option Plan can
accelerate upon the occurrence of certain events in connection
with a change-in-control as outlined in the discussion of those
plans under "Director Compensation," above.
OPTION GRANTS
The following table provides details regarding the stock
options indicated in the Summary Compensation Table as having
been granted to the named executive officers in 1994. In
addition, in accordance with Securities and Exchange Commission
rules, there are shown hypothetical gains or "option spreads"
that could be realized for the respective options, based on
arbitrarily assumed rates of annual compound stock price
appreciation of 0%, 5% and 10% from the date the options were
granted over the full ten-year term of the options. For
comparative purposes, also shown are the total gains that could
be realized over a ten-year period by the Company's stockholders.
No gain to the optionees is possible without an increase in the
stock price which will benefit all stockholders proportionately.
<TABLE>
OPTION GRANTS IN 1994
<CAPTION>
Individual Grants
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
for Option Term(2)
Percent of Exercise
Number of Shares Total Options or Base
Underlying Granted to Price
Options Granted(1) Employees ($ per Expira- 0% 5% 10%
Name (#) in 1994 share) tion Date ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
C. R. Luigs 175,000 11.15% $4.125 2-8-2004 $ 0 $ 453,983 $ 1,150,483
J. C. Martin 100,000 6.37% $4.125 2-8-2004 $ 0 $ 259,419 $ 657,419
J. G. Ryan 100,000 6.37% $4.125 2-8-2004 $ 0 $ 259,419 $ 657,419
G. L. Kott 75,000 4.78% $4.125 2-8-2004 $ 0 $ 194,564 $ 493,064
J. A. Marshall 75,000 4.78% $4.125 2-8-2004 $ 0 $ 194,564 $ 493,064
All
Stockholders(3) N/A N/A $4.125 N/A $ 0 $422,634,581 $1,071,039,007
</TABLE>
(1) All options granted to the named officers were granted
at exercise prices equal to the average of the high and
low per share market prices of the Company's Common
Stock, $.10 par value per share, on the date of grant.
All options were granted on February 8, 1994. Each
option granted during 1994 first became exercisable one
year after its date of grant as to 50% of the
underlying shares and first becomes exercisable two
years after its date of grant as to the remaining 50%.
The right to exercise unexercised options is subject to
acceleration in certain circumstances as described
under "Employment Agreements and Severance and Change-
in-Control Arrangements," above. The Company's Board
of Directors or the Compensation Committee of the Board
may from time to time adjust or reduce the exercise
prices of outstanding options, provided that the
exercise price must be at least equal to the par value
of the underlying stock. Options are non-transferable
other than by will or the laws of descent and
distribution.
(2) These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock
option exercises or stock holdings are dependent on the
future performance of the stock and overall stock
market conditions. There can be no assurance that the
amounts reflected in this table will be achieved.
(3) Based on 162,915,795 shares of the Company's Common
Stock outstanding on February 8, 1994, using the $4.125
average of the stock's high and low market prices on
that date as the base price.
OPTION EXERCISES AND YEAR-END VALUES
The following table shows option exercises by the named
executive officers during 1994, as well as the number of shares
underlying all exercisable and non-exercisable stock options held
by the named executive officers as of December 31, 1994. Also
reported are the year-end values for their unexercised "in-the-
money" options, which represent the positive spread between the
exercise price of any such options and the year-end market price
of the Common Stock.
<TABLE>
AGGREGATED 1994 OPTION EXERCISES
AND YEAR-END OPTION VALUES
<CAPTION>
Number of Number of Unexercised Options Value of Unexercised In-the-
Shares at Year-End Money Options at Year-End
Underlying (#) ($)
Options Value
Exercised Realized
Name (#) ($) Exerciseable Unexerciseable Exerciseable Unexerciseable
<S> <C> <C> <C> <C> <C> <C>
C. R. Luigs 0 0 1,121,250 275,000 $1,937,891 $ 62,500
J. C. Martin 0 0 515,000 175,000 $ 700,937 $ 46,875
J. G. Ryan 0 0 500,000 175,000 $ 670,312 $ 46,875
G. L. Kott 0 0 405,000 125,000 $ 469,375 $ 31,250
J. A. Marshall 0 0 260,900 125,000 $ 342,187 $ 31,250
</TABLE>
LONG TERM INCENTIVE AWARDS
The following table provides details regarding long term
incentive awards to the named executive officers in 1994, which
are discussed in the Report of the Compensation Committee of the
Board of Directors on Executive Compensation in this Proxy
Statement. The table includes the number of shares underlying
each award, the time period until payout of the award, and the
number of shares of the estimated payout. Awards are dependent
on the performance of the Company for the three-year period
ending December 31, 1996 as measured by cumulative earnings
before interest, taxes, depreciation and amortization, earnings
per share in 1996, and stock price growth. Shares of the
Company's Common Stock underlie each award and are allocated
among the performance criteria. A portion of the award allocated
to each criterion will be earned only if a pre-established
threshold level of performance is achieved. After reaching the
threshold, the amount of the award increases up to the full
amount of the award allocated to that criterion if a pre-
established target level of performance is achieved.
<TABLE>
1994 LONG-TERM INCENTIVE AWARDS
<CAPTION>
Estimated Future Payouts
Under
Number of Shares, Performance or Non-Stock Price-Based Plans(1)
Units or Other Period
Other Rights Until Maturation Threshold Target
Name (#) or Payout (#) (#)
<S> <C> <C> <C> <C>
C. R. Luigs 75,000 3 Years 18,750 75,000
J. C. Martin 35,000 3 Years 8,750 35,000
J. G. Ryan 35,000 3 Years 8,750 35,000
G. L. Kott 20,000 3 Years 5,000 20,000
J. A. Marshall 25,000 3 Years 6,250 25,000
</TABLE>
(1) Expressed in terms of numbers of shares of the Company's
Common Stock. Estimated future payout amounts assume threshold
or target levels of performance are achieved under all
performance criteria. Although twenty percent of each award is
based on stock price growth, the shares underlying that portion
of each award are included in the estimated future payouts
columns in order to report total estimated future payouts under
the plan.
RETIREMENT PLANS
The following table shows the estimated annual pension benefits
payable on a single straight life annuity basis to a covered
participant at normal retirement age (age 65), including both
benefits payable under the Company's qualified defined benefit
pension plan (the Retirement Plan for Employees) and benefits
payable under the Company's nonqualified supplemental defined
benefit pension plans (the Benefit Equalization Retirement Plan
and the Executive Supplemental Retirement Plan), which cover the
five executive officers named in the Summary Compensation Table.
The nonqualified supplemental plans provide benefits that would
otherwise be denied participants by reason of certain Internal
Revenue Code limitations on qualified plan benefits. The
estimated benefits shown are based on remuneration covered by the
plans and years of service with the Company and its subsidiaries.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Years of Service
Remuneration 15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$150,000 $ 75,000 $ 75,000 $ 75,000 $ 83,529 $ 98,262
$200,000 $100,000 $100,000 $100,000 $113,262 $133,262
$250,000 $125,000 $125,000 $125,000 $143,262 $168,262
$300,000 $150,000 $150,000 $150,000 $173,262 $203,262
$350,000 $175,000 $175,000 $175,000 $203,262 $238,262
$400,000 $200,000 $200,000 $200,000 $233,262 $273,262
$450,000 $225,000 $225,000 $225,000 $263,262 $308,262
$500,000 $250,000 $250,000 $250,000 $293,262 $343,262
$550,000 $275,000 $275,000 $275,000 $323,262 $378,262
$600,000 $300,000 $300,000 $300,000 $353,262 $413,262
$650,000 $325,000 $325,000 $325,000 $383,262 $448,262
</TABLE>
Under the Company's pension plans, annual retirement benefits
are based on a participant's average annual compensation (for
executive officers, the amounts shown under "Salary," "Bonuses"
and "Other Annual Compensation" in the Summary Compensation
Table) during the period of five consecutive years in which
an employee's compensation is greatest during the fifteen years
prior to such employee's retirement (in the case of the
Retirement Plan for Employees and the Benefit Equalization
Retirement Plan) and during the three-year period during which an
employee's compensation is greatest (in the case of the Executive
Supplemental Retirement Plan). The benefits shown in the Pension
Plan Table reflect an offset as provided for under the Benefit
Equalization Retirement Plan for Social Security benefits.
The full years of credited service as of December 31, 1994
for purposes of determining the entitlement to retire with a
benefit under all plans and for purposes of determining the
benefit under the Retirement Plan for Employees and the Benefit
Equalization Retirement Plan for each of the individuals named in
the Summary Compensation Table are: Mr. Luigs, 17 years; Mr.
Martin, 15 years; Mr. Ryan, 12 years; Mr. Kott, 16 years; and Mr.
Marshall, 15 years. Mr. Luigs has declined participation in the
Benefit Equalization Retirement Plan and has waived all rights to
receive benefits under such plan. The full years of employment
under the Executive Supplemental Retirement Plan as of December
31, 1994 for purposes of determining the benefit under that plan
for individuals named in the Summary Compensation Table are: Mr.
Luigs, 17 years; Mr. Martin, 9 years; Mr. Ryan, 8 years; Mr.
Kott, 16 years; and Mr. Marshall, 2 years. The Pension Plan
Table assumes that years of service for a particular individual
are the same under all plans and that three-year and five-year
average annual compensation are the same.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following report concerning the specific factors, criteria
and goals underlying decisions on awards and payments of
compensation to each of the executives named in the Summary
Compensation Table is provided by the Compensation Committee of
the Company's Board of Directors.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee, composed entirely of outside
directors, is responsible for making recommendations to
the Board of Directors with regard to:
1) the Company's compensation policies and
programs, and
2) specific salary, incentive and stock option
awards to senior executive officers,
including the Chief Executive Officer and all
of his direct reports, which include the
other four officers named in the Summary
Compensation Table.
COMPENSATION POLICIES AND PROGRAMS
The Compensation Committee s goals are to develop
and maintain compensation programs that preserve and enhance
shareholder value. The Compensation Committee therefore has
designed the Company s executive compensation program so that
it:
* Motivates executives toward effective long-
term strategic management of the Company s
assets and operations through stock programs
which focus executives attention on
increasing shareholder value as measured by
the Company's stock price, stock performance
relative to the peer group, and earnings
performance;
* Rewards effective, efficient ongoing
management of Company operations through
annual incentives which are tied to
operating, financial and strategic goals
established each year; and
* Provides the ability to attract and retain
the quality of executives needed, through
competitive salary levels.
The Company's executive compensation program includes base
salary, annual management incentive awards, stock options, and
long-term incentive awards, each of which is tied to performance.
The Committee intends to make awards and take actions under these
programs considering the overall costs and benefits to the Company.
Specifically, the Committee intends to take actions required to
preserve the tax deductibility of executive pay under Section 162(m)
of the Internal Revenue Code, and to consider tax deductibility in
making future awards to senior executives. The Committee is advised
periodically by a nationally recognized, independent compensation
consultant on competitive salary levels, bonus practices, and stock
programs of leading drilling contractors.
In evaluating competitive compensation levels, the
Committee uses a peer group comprised of the same companies
used for comparison in the Cumulative Total Shareholder Return
graph, including Energy Service Company, Nabors Industries,
Noble Drilling, Parker Drilling, Reading & Bates, Rowan
Companies, and SONAT Offshore Drilling Inc. In evaluating
competitive pay, the Committee evaluates company performance,
salary levels, bonus levels and annual vesting of options
and/or restricted stock in the long-term incentive plans of
competing drilling contractors. The Committee has established
a goal of matching the industry average where earned in total
salary, bonus and stock vesting rather than attempting to match
compensation on a component-by-component basis. An executive
compensation analysis in 1994 by the Company's independent
compensation consultant indicated that the total of the Chief
Executive Officer's salary, bonus and value of stock vesting
was second-lowest among all peer group companies, and the total
salary, bonus and stock vesting of the second-highest paid
executive was below the average of the peer group. In
addition, the compensation analysis indicated that while other
executive officers' total salaries and bonuses were above
average, the value of stock vesting, as well as total
compensation, were below the peer group average.
BASE SALARY: The Compensation Committee reviews the
performance of each senior executive officer individually
with the Chief Executive Officer and, considering the Chief
Executive Officer's recommendation, determines an appropriate
salary level for each officer. No specific mathematical
formula or weighing of factors is used in evaluating officer
salaries. The Committee does, however, give primary weight to
Company performance and industry conditions. If overall
Company performance warrants officer salary increases, the
performance of each officer is evaluated, considering primarily
business results in his area of responsibility and his
particular contribution to overall Company performance, but
also considering advancements in the executive s managerial
skills. For a given year, the Company's achievements that are
given the most weight are those that will benefit the Company's
long-term financial performance. The Committee notes that
salaries of individual officers may be, and in recent years
have been, reduced based on this evaluation.
ANNUAL MANAGEMENT INCENTIVE AWARDS: The Compensation
Committee has designed an Annual Management Incentive Award
Plan to reward executives and managers, other than a group of
six senior executive officers that includes the five named in
the Summary Compensation Table. Bonus awards under the Plan
are based on the Company's performance in relation to goals
established at the outset of each year. For 1994, the Plan
was based on operating cash contribution: 6% of operating cash
contribution in excess of a $48 million threshold was reserved
for the Plan, subject to an overall maximum of $2.5 million and
an additional limit of 35% of salary as the maximum payout to
any one participant. For 1994, the operating cash contribution
exceeded $48 million, so incentive awards were granted. The
individual performance of the 110 eligible employees was
considered in allocating the awards.
The Compensation Committee also granted incentive
bonus awards to those senior officers who are not covered by
the Plan, such awards approximating the same percentage of
salary as the average percentage of salary of awards under the
Plan. In allocating individual incentive bonus awards to these
senior executive officers in respect of 1994 service, the
Compensation Committee:
(1) reviewed the individual performance of each
officer, giving particular weight to the
Company's strategic achievements discussed
below under "Company Performance" and the
officer's contributions to those
achievements; and
(2) considered the accomplishments of each senior
executive officer in his area of
responsibility.
Based on these reviews, which did not involve any specific
formula or weighing of factors, and with consideration given to
competitive peer group total compensation levels, incentive
bonus awards were approved by the Committee.
Incentive bonus awards may be paid in cash or in shares of
Company stock, or in a combination thereof. Commencing with
the awards for services rendered in 1991, the Company has paid
incentive bonus awards to most recipients, including the five
executive officers named in the Summary Compensation Table, in
shares of the Company s common stock, net of the required tax
withholdings, in order to preserve cash and to further encourage
stock ownership. As with base salary, incentive bonus awards are
not guaranteed.
STOCK OPTIONS: The Compensation Committee believes that
stock options are critical in motivating and rewarding the
creation of long-term shareholder value, and the Committee has
established a policy of awarding stock options each year based
on the continuing progress of the Company as well as on individual
performance. All stock option awards shown in the Summary
Compensation Table for the past three years were made at fair
market value at the time of grant so that holders will benefit
from such options only when, and to the extent the stock price
increases after the option grant.
In February 1994, the Compensation Committee approved annual
stock option grants to executive officers and other key employees,
including the five named in the Summary Compensation Table. In
making these awards, the Committee considered the amount and
terms of prior stock option awards. The 1994 option awards were
made to 79 employees and covered approximately 1.48 million shares
of underlying common stock, which was less than the approximately
1.61 million shares covered by the 1993 annual grants. The decrease
in the total number of shares, although not tied to any formula,
consisted of decreases in awards to the six senior executive officers
in order to motivate these executives to improve operating results,
which the Committee felt could be better accomplished by tying the
amount of the officers' awards more directly to performance under
the new long-term incentive arrangements discussed below.
In approving the 1994 stock option grants, the
Committee noted the Company's successful implementation of
several key strategic decisions during 1993 that were expected
to benefit financial performance in future years: the Company
acquired three 300-foot jackup drilling rigs, reached an
agreement to acquire two more 300-foot jackup rigs, and
completed the mobilization of several rigs to stronger drilling
markets. The Company's financial condition had also improved
in 1993, including a decrease in the Company's debt-to-equity
ratio from 1.6 to 1 at December 31, 1992 to 1.1 to 1 at
December 31, 1993, and an increase in the Company's cash by $20
million during the same period. The Committee recognized the
role of the executive officers and other key employees in
accomplishing these results, all of which had important long-
term implications for the Company.
The performance of individual executive officers and
other key employees was considered in allocating 1994 stock
option grants, which were recommended by the Chief Executive
Officer and approved by the Committee. In allocating
individual stock option grants to senior executive officers,
the Chief Executive Officer and the Compensation Committee
reviewed and considered essentially the same areas of
individual performance mentioned above with respect to
incentive awards, taking into account the areas of Company
performance discussed above, and each individual's
contributions.
LONG-TERM INCENTIVE AWARDS: After reviewing a comprehensive
analysis of stock plans utilized by peer group companies, which
was provided to the Committee by the Company's independent
compensation consultant, the Compensation Committee determined
that, in order to provide competitive compensation and to
motivate senior executives towards effective long-term strategic
management of the Company's assets and operations, the Company
should utilize long-term incentive awards more directly tied to
performance for its six senior executive officers, including the
five named in the Summary Compensation Table. Accordingly, in
May 1994 the Committee approved the grant of long-term incentive
awards under the Company's 1989 Stock Option and Incentive Plan.
The total amount of these awards and their allocation among the
six senior executive officers were based on the same considerations
discussed above with respect to stock options grants.
The long-term incentive awards granted in 1994 are
dependent on Company performance for the three-year period
ending December 31, 1996, as measured by three long-term
performance criteria: cumulative earnings before interest,
taxes, depreciation and amortization; earnings per share in
1996; and stock price growth. Shares of the Company's common
stock underlie each award and are allocated among the three
criteria: 40% to cumulative earnings, 40% to 1996 earnings per
share, and 20% to stock price growth. No portion of the amount
allocated to a criterion will be earned unless a pre-
established "threshold" level of performance is achieved. Once
the threshold level of performance has been achieved, the
amount of the award for that criterion increases up to that
criterion's full allocated amount if the pre-established
"target" level of performance is achieved. The full amount of
the award will be earned only if target level performance is
achieved for all three performance criteria. The Committee
intends to provide incentives in the form of performance-based
long-term incentive awards over future performance cycles as
well.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee assesses the Company's
progress and performance in connection with the compensation of
all executive officers and approves salary adjustments,
incentive bonus awards, stock option awards and performance-
based long-term incentive awards as deemed appropriate in each
officer's situation. The bases for the Committee's decision
with regard to the Chief Executive Officer's 1994 compensation
were as follows:
COMPANY PERFORMANCE: The Committee noted the substantial
improvements in the Company's operating results in 1994 as
compared to 1993, despite a difficult market. Revenues
increased 33% (to a total of $359 million) and net income
increased by $27.8 million, producing year-end net income of
$1.3 million. The Company's balance sheet, which had been
improved dramatically over the prior eighteen months, remained
strong in 1994, particularly as evidenced by the Company's
debt-to-equity ratio and cash position discussed above under
"Stock Options." The Committee determined that the Chief
Executive Officer made significant contribution to these
results.
CEO COMPENSATION ADJUSTMENTS: Based on the Company's
successful results, in February 1994 the Compensation
Committee determined that Mr. Luigs' salary should be increased
$15,000 (or 3.2%), from $465,000 to $480,000. This salary
exceeded the minimum annual base salary established by Mr.
Luigs' employment agreement. The Committee also approved
annual stock option grants to employees, including an option
grant to Mr. Luigs covering 175,000 shares. At the same time,
the Committee reviewed plans for 1994 and established goals for
the 1994 Management Incentive Award Plan, with goals stated in
terms of operating cash contribution. Based on actual Company
performance during 1994, and considering the Chief Executive
Officer's role in achieving the Company performance described
above, the Compensation Committee approved an incentive bonus
award for Mr. Luigs of $100,000, or 20.8% of base salary. This
award was paid in shares of the Company's common stock, net of
the required tax withholdings.
As discussed above under "Long-Term Incentive Awards,"
the Committee approved the grant of performance-based
long-term incentive awards in 1994 for six senior executive
officers, including the five named in the Summary Compensation
Table. Mr. Luigs was given the opportunity to earn up to a
maximum of 75,000 shares of the Company's common stock over the
three-year performance cycle ending December 31, 1996, if all
long-term performance targets are achieved.
Patrick M. Ahern, Chairman Donald B. Brown, Member
Edward J. Campbell, Member John M. Galvin, Member
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Ahern, Brown, Campbell, and Galvin served as Members of
the Company's Compensation Committee during all of 1994. No
current or former officer or employee of the Company serves on
the Company's Compensation Committee or served on that committee
at any time during 1994 or any prior year.
CUMULATIVE TOTAL SHAREHOLDER RETURN
The following line graph compares the changes in the
cumulative total shareholder returns as of the end of each
calendar year from the end of 1989 through the end of 1994, of
(i) the Company, (ii) the Standard & Poor's 500 Stock Index, and
(iii) a weighted index of a group of other companies in the
Company's industry. The group of other companies in the same
industry is comprised of: Energy Service Company, Inc.; Nabors
Industries, Inc.; Noble Drilling Corporation; Parker Drilling
Company; Reading & Bates Corporation; Rowan Companies, Inc.; and
SONAT Offshore Drilling Inc. The Western Company of North
America, which appeared in the weighted index of other companies
in the Cumulative Total Shareholder Return graph in the Company's
Proxy Statements relating to the 1993 and 1994 Annual Meetings of
Stockholders, no longer appears in the index. The Western
Company of North America divested itself of substantially all of
its drilling rigs and is no longer in the same line of business
or industry as the other companies comprising the industry index.
The returns of each component company in the industry index have
been weighted according to the respective company's stock market
capitalization at the beginning of each measurement period. The
percentage change in the cumulative total shareholder return for
a given year for the Company and each other company represented
in the graph equals cumulative dividends declared from December
31, 1989 through the end of the calendar year in question
(assuming reinvestment of dividends) plus the difference between
such company's per share stock price at the end of the calendar
year and at December 31, 1989, divided by such per share price at
December 31, 1989. The Company has not declared any dividends
during the period covered by the graph.
<TABLE>
COMPARISON OF 1990-1994 CUMULATIVE TOTAL RETURN*
AMONG GLOBAL MARINE INC., S&P 500 INDEX & INDUSTRY INDEX
<CAPTION>
December 31,
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Global Marine Inc. $100 $103 $ 62 $ 59 $114 $100
S&P 500 Index $100 $ 97 $126 $136 $150 $152
Industry Index $100 $ 87 $ 57 $ 54 $ 79 $ 66
</TABLE>
* Assumes $100 invested on December 31, 1989 in Global Marine
Inc. Common Stock, S&P 500 Index & Industry Index. Total
return assumes reinvestment of dividends.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand L.L.P.
as independent certified public accountants for the Company and
its subsidiaries for fiscal year 1995. It is intended that such
appointment be submitted to the stockholders for ratification at
the 1995 Annual Meeting of Stockholders. Coopers & Lybrand
L.L.P. has served as the Company's auditors since the Company's
formation and has no investment in the Company or its
subsidiaries.
Although the submission of this matter to the stockholders is
not required by law, the Board of Directors will reconsider its
selection of independent accountants if this appointment is not
ratified by the stockholders. Ratification will require the
affirmative vote of the majority of the shares of Common Stock
represented at the meeting, in person or by proxy.
It is expected that representatives of Coopers & Lybrand L.L.P.
will be present at the meeting with an opportunity to make a
statement should they desire to do so and to respond to
appropriate questions from stockholders.
STOCKHOLDERS' PROPOSALS
Pursuant to the Securities Exchange Act of 1934, as amended,
and regulations thereunder, individual stockholders have a
limited right to propose for inclusion in the proxy statement a
single proposal for action to be taken at the Annual Meeting of
Stockholders. Proposals intended to be presented at the Annual
Meeting to be held in 1996 must be received at the Company's
principal executive offices no later than December 4, 1995. They
may be addressed to the Secretary of the Company at 777 North
Eldridge Road, Houston, Texas 77079.
OTHER MATTERS
While management has no reason to believe that any other
business will be presented, if any other matters should properly
come before the Annual Meeting and any postponements or
adjournments thereof, the proxies will be voted as to such
matters in accordance with the best judgment of the proxy
holders. The approval of such other matters will require the
affirmative vote of the majority of the shares of Common Stock
represented at the meeting, in person or by proxy.
GLOBAL MARINE INC.
By JOHN G. RYAN
Secretary
Houston, Texas
March 31, 1995
APPENDIX
[FORM OF PROXY CARD]
GLOBAL MARINE INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- MAY 10, 1995
C. R. Luigs, J. C. Martin, and J. G. Ryan, and each or any of them,
with full power of substitution and revocation in each, are hereby
appointed as Proxies authorized to represent the undersigned, with
all powers which the undersigned would possess if personally
present, to vote the Common Stock of the undersigned at the Annual
Meeting of Stockholders of GLOBAL MARINE INC. to be held at the
Houston Marriott Westside Hotel, 13210 Katy Freeway, Houston, Texas
on Wednesday, May 10, 1995 at 9:00 a.m., and at any postponements
or adjournments of that meeting, as set forth below, and in their
discretion upon any other business that may properly come before
the meeting.
This proxy will be voted as specified or, if no choice is
specified, will be voted FOR the election of the nominees named and
FOR each of the other proposals specified herein.
(PLEASE VOTE, SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY.)
(continued from other side)
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK
ONLY ( )
1. Election of the following nominees as directors: Messrs. Ahern,
Luigs and Thomas. The nominees will serve for a term of three
years, as indicated in the proxy statement.
FOR WITHHELD For all nominees, except vote
all from all withheld from the following
nominees nominees nominee(s): [A line follows]
( ) ( ) ( )
2. Ratification of appointment of Coopers & Lybrand L.L.P. as
independent certified public accountants for the Company and its
subsidiaries.
FOR AGAINST ABSTAIN
( ) ( ) ( )
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
POSTPONEMENTS OR ADJOURNMENTS THEREOF FOR A VOTE OF THE COMMON
STOCK.
Sign exactly as your name appears on this proxy card. Joint owners
should each sign personally. If acting as attorney, executor,
trustee, or in a representative capacity, sign name and indicate
title.
Signature Date
Signature Date
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
[FORM OF VOTING INSTRUCTION CARD, 401(k) PLAN ACCOUNTS]
GLOBAL MARINE INC. [401(k) PLAN]
CONFIDENTIAL VOTING DIRECTIONS
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- MAY 10, 1995
The undersigned hereby directs Fidelity Management Trust Company,
as Trustee under the Global Marine Savings Incentive Plan, to
execute a proxy or proxies authorizing the voting of all shares of
Global Marine Inc. Common Stock held in the Plan on March 17, 1995
and attributable to the undersigned's Plan account at the Annual
Meeting of Stockholders of GLOBAL MARINE INC. to be held at the
Houston Marriott Westside Hotel, 13210 Katy Freeway, Houston, Texas
on Wednesday, May 10, 1995 at 9:00 a.m., and at any postponements
or adjournments of that meeting, as set forth below, and, in their
discretion, to authorize the voting of said shares upon any other
business that may properly come before the meeting.
THE TRUSTEE WILL AUTHORIZE THE VOTING OF THE SHARES IN THE MANNER
SPECIFIED OR, IF NO CHOICE IS SPECIFIED, WILL AUTHORIZE VOTING THE
SHARES FOR THE ELECTION OF THE NOMINEES NAMED AND FOR EACH OF THE
OTHER PROPOSALS SPECIFIED HEREIN.
(PLEASE INDICATE YOUR DIRECTIONS, SIGN AND DATE ON REVERSE SIDE AND
RETURN PROMPTLY.)
(continued from other side)
PLEASE MARK DIRECTIONS IN OVAL IN THE FOLLOWING MANNER USING DARK
INK ONLY ( )
1. Election of the following nominees as directors: Messrs.
Ahern, Luigs and Thomas. The nominees will serve for a
term of three years, as indicated in the proxy statement.
FOR WITHHELD For all nominees, except vote
all from all withheld from the following
nominees nominees nominee(s): [A line follows]
( ) ( ) ( )
2. Ratification of appointment of Coopers & Lybrand L.L.P.
as independent certified public accountants for the
Company and its subsidiaries.
FOR AGAINST ABSTAIN
( ) ( ) ( )
IN ITS DISCRETION, THE TRUSTEE MAY AUTHORIZE THE VOTING OF SAID
SHARES UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING AND ANY POSTPONEMENTS OR ADJOURNMENTS THEREOF FOR A VOTE
OF THE COMMON STOCK.
Sign exactly as your name appears on this card. If acting as
attorney, executor, trustee, or in a representative capacity, sign
name and indicate title.
Signature Date
PLEASE INDICATE YOUR DIRECTIONS, DATE, AND SIGN EXACTLY AS YOUR
NAME APPEARS ON THIS CARD.
PROMPTLY RETURN USING THE ENCLOSED ENVELOPE.
