AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MARCH 27, 1996
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 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 14a-6(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
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(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 8, 1996 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 act upon a proposal to amend the Company's 1989 Stock
Option and Incentive Plan and approve performance-based
compensation in accordance with certain requirements
under Section 162(m) of the Internal Revenue Code.
3. To ratify the appointment of independent certified public
accountants for the Company and its subsidiaries.
4. 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 15, 1996 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
Corporate Secretary
Houston, Texas
March 29, 1996
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 8, 1996 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 29, 1996.
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, (ii) a proposal to amend the Company's 1989
Stock Option and Incentive Plan and approve certain performance-
based compensation to satisfy certain requirements under Section
162(m) of the Internal Revenue Code, and (iii) 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 1996.
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, FOR the
proposal to amend the Company's 1989 Stock Option and Incentive
Plan and approve certain performance-based compensation, and FOR
the proposal to ratify the Board of Directors' appointment of
Coopers & Lybrand L.L.P. as independent auditors for fiscal year
1996. 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 Corporate 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
Corporate Secretary of the Company at the Company's principal
executive offices, 777 North Eldridge Road, Houston, Texas 77079.
The close of business on March 15, 1996 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 15, 1996, there were issued and
outstanding 167,036,700 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 15, 1996, 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.
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 the two
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 either the proposal to amend the 1989
Stock Option and Incentive Plan and approve certain performance-based
compensation or the proposal to ratify the appointment of
independent auditors will have the effect of a negative vote
because approval of each proposal 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 amend the Company's 1989 Stock Option and
Incentive Plan and approve certain performance-based compensation
and 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,
1995, which includes, among other things, the Company's audited
consolidated balance sheets at December 31, 1995 and 1994,
respectively, and audited consolidated statements of income and
cash flows for the three years ended December 31, 1995, 1994 and
1993, respectively, has been mailed to stockholders of record as of
March 15, 1996.
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 15,
1996, 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>
Merrill Lynch & Co. Inc.(2) 16,319,400 9.77%
World Financial Center,
North Tower
250 Vesey Street
New York, New York 10281
FMR Corp.(3) 14,108,700 8.45%
82 Devonshire Street
Boston, Massachusetts 02109
The Equitable Companies
Incorporated(4) 8,527,600 5.11%
787 Seventh Avenue
New York, New York 10019
__________________
</TABLE>
(1) The percentages are based on the number of issued and
outstanding shares of Common Stock at March 15, 1996.
(2) The number of shares indicated is based on Amendment No. 2 to
a statement on Schedule 13G, dated February 13, 1996, 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 an
investment advisor registered under Section 203 of the
Investment Advisers Act of 1940. Each of ML&Co., ML Group,
PSI, MLAM and the Fund disclaim beneficial ownership of the
shares.
(3) The number of shares indicated is based on a statement on
Schedule 13G, dated February 14, 1996, which was filed jointly
by FMR Corp. ("FMR"), Edward C. Johnson 3d and Abigail P.
Johnson. FMR is the parent holding company of certain
investment companies and investment advisory and management
companies, some of which may also be deemed to be beneficial
owners of more than 5% of the Company's Common Stock by virtue
of their interest in some or all of the same shares reported
as being beneficially owned by FMR. Edward C. Johnson 3d is
Chairman of FMR and Abigail P. Johnson is a Director of FMR.
Through their ownership of voting stock in FMR and the
execution of a shareholders' voting agreement, members of the
Johnson family may be deemed to form a controlling group with
respect to FMR.
(4) The number of shares indicated is based on Amendment No. 1 to
a statement on Schedule 13G, dated January 9, 1996, 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 filing, the shares are beneficially owned by
subsidiaries of The Equitable Companies Incorporated, as
follows: (i) 806,500 shares (less than 1%) by The Equitable
Life Assurance Society of the United States and (ii) 7,721,100
shares (4.62%) by Alliance Capital Management L.P.
The following table sets forth, as of March 15, 1996, 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, such persons
and all other current executive officers, based on information
provided by such persons.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OWNED (a) OF CLASS (b)
<S> <C> <S>
Patrick M. Ahern 20,713(c) -
Donald B. Brown 22,216(c) -
Edward J. Campbell 28,059(c) -
Thomas W. Cason 3,000 -
Peter T. Flawn 19,500(c) -
John M. Galvin 23,000(c) -
Gary L. Kott 525,950(d) -
Lynn L. Leigh 45,664(c) -
C. Russell Luigs 1,494,016(d)(e) -
Jon A. Marshall 461,666(d) -
Jerry C. Martin 750,965(d) -
Paul J. Powers 1,500 -
John G. Ryan 664,618(d) -
Sidney A. Shuman 23,829(c) -
William R. Thomas 27,460(c) -
All of the above and other
executive officers as a
group (19 persons) 5,016,239(c)(d)(e) 2.93%
_______________________
</TABLE>
(a) Each person has sole voting and investment power with respect
to the shares listed, unless otherwise indicated.
(b) As of March 15, 1996, 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 15, 1996 through the exercise of non-employee director
stock options, as follows: 20,500 shares each for Messrs.
Brown, Galvin, Leigh and Shuman; 19,000 shares each for
Messrs. Ahern and Campbell; 14,500 shares for Mr. Flawn; 7,500
shares for Mr. Thomas; and 142,000 shares for the group.
(d) Includes shares that may be acquired within sixty days of
March 15, 1996 through the exercise of employee stock options,
as follows: Mr. Kott, 430,000; Mr. Luigs, 1,262,917; Mr.
Marshall, 430,900; Mr. Martin, 616,667; Mr. Ryan, 526,667; and
the group, 4,100,080.
(e) Includes 28,649 shares attributable to Mr. Luigs' account
under the Company's 401(k) Savings Incentive Plan at March 15,
1996.
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of twelve
directors divided into three classes serving staggered terms of
three years each. Eight of the Company's current directors are
serving in two classes with terms that continue beyond the 1996
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 1996 Annual Meeting of Stockholders, and
three of these directors are nominees for reelection at this
meeting. These nominees are Donald B. Brown, Thomas W. Cason and
Jerry C. Martin. The fourth director in this class, Sidney A.
Shuman, is retiring and will not stand for reelection at the 1996
Annual Meeting. Each of the three directors to be elected at the
1996 Annual Meeting of Stockholders will serve a term of three
years to expire at the 1999 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 1996 Annual Meeting for the election of
Messrs. Brown, Cason and Martin. 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 1996 Annual Meeting of Stockholders, including
their business experience during the past five years, appears
below.
NOMINEES - FOR TERMS OF OFFICE
EXPIRING AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS
Donald B. Brown, 69, is an investor and a consultant to the
energy exploration and development industry. He was first elected
a director of the Company in 1982.
Thomas W. Cason, 53, served as interim President and Chief
Operating Officer of Key Tronic Corporation during 1994 and 1995,
and continues to be associated with The Hiller Group, which has
been managing Key Tronic's turnaround. Key Tronic is the world's
largest independent producer of computer keyboards and other input
devices. Mr. Cason previously held various management positions
with Baker Hughes Incorporated, including senior executive
positions with Baker Hughes' Drilling Group, serving most recently
as Senior Vice President and Chief Financial Officer of Baker
Hughes. Mr. Cason is also a director of Key Tronic Corporation.
He was elected a director of the Company in August 1995.
Jerry C. Martin, 63, 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.
The members of the Board of Directors who are not subject to
election at the 1996 Annual Meeting are as follows.
CONTINUING DIRECTORS - WITH TERMS OF OFFICE
EXPIRING AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS
Patrick M. Ahern, 55, 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, 62, 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.
Paul J. Powers, 61, has been Chairman of the Board and Chief
Executive Officer of Commercial Intertech Corporation since 1987.
Commercial Intertech is a multi-national manufacturer of hydraulic
systems, fluid purification systems, Astron pre-engineered
buildings and metal products. Mr. Powers is also a director of
Acme-Cleveland Corp., Ohio Edison Company and Twin Disc, Inc. Mr.
Powers was elected a director of the Company in August 1995.
William R. Thomas, 75, 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.
CONTINUING DIRECTORS - WITH TERMS OF OFFICE
EXPIRING AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS
Edward J. Campbell, 68, was President of J. I. Case Company,
at the time a wholly-owned subsidiary of Tenneco Inc., from January
1992 until his retirement in 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 also 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, 70, 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., National Instruments Corp., and Tenneco Inc. Dr. Flawn was
first elected a director of the Company in 1989.
John M. Galvin, 63, 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, 70, 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.
DIRECTOR - WITH TERM OF OFFICE
EXPIRING AT THE 1996 ANNUAL MEETING OF STOCKHOLDERS
Sidney A. Shuman, 83, is a retired Corporate Vice President
and director of Baker International Corporation. Mr. Shuman was
first elected a director of the Company in 1977.
BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors currently consists of twelve
members and will consist of eleven members following the 1996
Annual Meeting of Stockholders. The Board has five standing
committees. During 1995, 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: Lynn L. Leigh, Chairman, Edward J.
Campbell, Peter T. Flawn, John M. Galvin and C. Russell Luigs. 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 1995.
AUDIT COMMITTEE - The Company's Audit Committee consists of
five non-employee directors: Edward J. Campbell, Chairman, Thomas
W. Cason, Peter T. Flawn, Lynn L. Leigh and William R. Thomas.
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 1995, the Audit Committee held four
meetings.
COMPENSATION COMMITTEE - The Company's Compensation Committee
consists of five non-employee directors: Donald B. Brown, Chairman,
Patrick M. Ahern, John M. Galvin, Paul J. Powers and Sidney A.
Shuman. 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 1995.
FINANCE COMMITTEE - The Company's Finance Committee consists
of five non-employee directors: John M. Galvin, Chairman, Patrick
M. Ahern, Edward J. Campbell, Thomas W. Cason 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 1995, the Finance Committee held
four meetings.
NOMINATING COMMITTEE - The Company's Nominating Committee
consists of five non-employee directors: Peter T. Flawn,
Chairman, Donald B. Brown, Lynn L. Leigh, Paul J. Powers and Sidney
A. Shuman. The Nominating Committee, which held four meetings
during 1995, 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 1997
election of directors should be submitted in writing to the
Corporate Secretary of the Company at 777 North Eldridge Road,
Houston, Texas 77079.
During 1995, each director of the Company attended at least
75% of the meetings of the Board and committees of the Board on
which he 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.
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.
Each person who becomes eligible to receive a grant of stock
options under the Non-Employee Director Stock Option Plan receives
an initial 10,000 share option on the date he first achieves such
eligibility. Each person who receives an initial 10,000 share
option and remains eligible automatically receives additional
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.
All such options have an exercise price equal to the fair market
value per share at the date the option is granted. Upon joining
the Board in August 1995, Messrs. Cason and Powers each
automatically received an initial grant of options under the plan
to purchase 10,000 shares of Common Stock at the per share exercise
price of $5.625, and, upon adjournment of the annual meeting in May
1995, Messrs. Ahern, Brown, Campbell, Flawn, Galvin, Leigh, Shuman
and Thomas 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 $4.5625. 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 Non-Employee Director Stock Option 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 on the anniversary of the date of grant in the
first calendar year after the year of grant and for the remaining
fifty percent on the anniversary of the date of grant in the second
calendar year after the year of grant, or, if earlier by not more
than ten days, on the day before the annual meeting of stockholders
in each such year. 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 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 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. In no event, however, may options
under the plan be exercised after their expiration, which is not later
than ten years from the date of grant. 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 Non-Employee Director Stock Option
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.
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. The Board of Directors may at any time amend, suspend or
terminate the plan. However, a participant's accrued rights under
the plan may not be adversely affected by any such amendment,
suspension or termination without the participant's consent.
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 other
than Messrs. Cason and Powers had five full years of credited
service as of December 31, 1995 for purposes of determining the
vested benefit under the plan. Messrs. Cason and Powers do not
have any full years of credited service as of December 31, 1995 for
purposes of determining the vested benefit.
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 the Company's
Chief Executive Officer and its other four most highly compensated
executive officers during 1995:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
SECURITIES
NAME AND ANNUAL COMPENSATION UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) OPTIONS(2) COMPENSATION(3)
($) ($) (#) ($)
<S> <C> <C> <C> <C> <C>
C. Russell Luigs, 1995 $498,333 $200,000 200,000 $11,178
Chairman of the Board, 1994 $478,750 $100,000 175,000 $ 9,900
President and Chief 1993 $463,750 $ 80,000 200,000 $ 9,665
Executive Officer
Jerry C. Martin, 1995 $273,333 $ 85,000 120,000 $ 3,750
Senior Vice President and 1994 $253,958 $ 70,000 100,000 $ 3,750
Chief Financial Officer 1993 $241,250 $ 57,000 150,000 $ 4,607
John G. Ryan, 1995 $270,652 $ 85,000 120,000 $ 4,620
Chairman and Chief 1994 $250,882 $ 70,000 100,000 $ 4,494
Executive Officer, Global 1993 $235,000 $ 59,500 150,000 $ 5,243
Marine Drilling Company,
and Corporate Secretary
Gary L. Kott, 1995 $239,417 $ 65,000 80,000 $ 6,606
President and Chief 1994 $232,750 $ 40,000 75,000 $ 6,174
Operating Officer, Global 1993 $229,167 $ 35,000 100,000 $ 6,569
Marine Drilling Company
Jon A. Marshall, 1995 $222,917 $ 75,000 90,000 $ 4,377
Group Vice President and 1994 $196,879 $ 70,000 75,000 $ 4,239
President, Challenger 1993 $184,167 $ 45,000 100,000 $ 4,745
Minerals Inc.
</TABLE>
(1) In order to further encourage stock ownership by executive
officers, bonuses based on service during 1993 and 1994 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. For bonuses based on 1995 service,
executive officers could elect between payment in cash or such
shares of Common Stock. Bonuses based on service during each
year were awarded in the following year, and the dollar
amounts included 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 1995
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, $7,428; Mr. Ryan, $870; Mr.
Kott, $2,856; and Mr. Marshall, $627).
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 his 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
exercisable, 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. The occurrence of a
change of control as defined in the trust established for the
Executive Supplemental Retirement Plan requires that the Company
fund the trust in full as discussed under "Retirement Plans," below.
In addition, the vesting of outstanding options under the Company's
1990 Non-Employee Director Stock Option Plan and the vesting of
retirement benefits under the Company's Retirement Plan for Outside
Directors 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 1995. 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 1995
<CAPTION>
Individual Grants
Number of Percent
Shares of Total Potential Realizable Value at Assumed
Underlying Options Exercise Annual Rates of Stock Price Appreciation for
Options Granted to or Base Option Term(2)
Granted(1) Employees Price Expira- 0% 5% 10%
Name (#) in 1995 ($ per share) tion Date ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
C. R. Luigs 200,000 9.33 % $3.625 2-14-2005 $ 0 $ 455,949 $ 1,155,463
J. C. Martin 120,000 5.60 % $3.625 2-14-2005 $ 0 $ 273,569 $ 693,278
J. G. Ryan 120,000 5.60 % $3.625 2-14-2005 $ 0 $ 273,569 $ 693,278
G. L. Kott 80,000 3.73 % $3.625 2-14-2005 $ 0 $ 182,379 $ 462,185
J. A. Marshall 90,000 4.20 % $3.625 2-14-2005 $ 0 $ 205,177 $ 519,958
All Stockholders(3) N/A N/A $3.625 N/A $ 0 $375,817,425 $952,395,141
</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 14, 1995. Each option granted during 1995
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 164,850,784 shares of the Company's Common Stock
outstanding on February 14, 1995, using the $3.625 average of
the stock's high and low market prices on that date as the
base price.
OPTION EXERCISES AND YEAR-END VALUES
The following table shows option exercises by the named
executive officers during 1995, as well as the number of shares
underlying all exercisable and non-exercisable stock options held
by the named executive officers as of December 31, 1995. Also
reported are the year-end values for their unexercised "in-the-money"
options, which represent the positive spread between the exercise price
of any such options and the year-end market price of the Common Stock.
<TABLE>
AGGREGATED OPTION EXERCISES IN 1995
AND YEAR-END OPTION VALUES
<CAPTION>
Number of
Shares
Underlying Number of Securities Underlying Value of Unexercised In-The-
Options Value Unexercised Options at Year-End Money Options at Year-End
Exercised Realized(1) (#) ($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
C. R. Luigs 233,333 $1,267,707 1,075,417 287,500 $6,530,445 $1,429,688
J. C. Martin 100,000 $ 690,625 540,000 170,000 $3,055,000 $ 846,250
J. G. Ryan 208,333 $1,380,728 416,667 170,000 $2,150,523 $ 846,250
G. L. Kott 140,000 $ 958,125 352,500 117,500 $1,717,813 $ 583,438
J. A. Marshall 0 $ 0 348,400 127,500 $2,097,725 $ 634,688
</TABLE>
(1) The value realized reflects the spread between the exercise
price of such options and the sale price of the shares of
common stock received upon exercise if such shares were sold
in an exercise/sell transaction or the spread between the
exercise price of such options and the fair market value of
the shares of common stock received upon exercise if such
shares were held following exercise.
LONG TERM INCENTIVE AWARDS
The following table provides details regarding long term
incentive awards to the named executive officers in 1995, 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, 1997 as
measured by cumulative earnings before interest, taxes,
depreciation and amortization, earnings per share in 1997, 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>
1995 LONG-TERM INCENTIVE AWARDS
<CAPTION>
Estimated Future Payouts Under
Number of Shares Performance or Non-Stock Price-Based Plans(1)
Units or Other Period Target/
Other Rights Until Maturation Threshold Maximum
Name (#) or Payout (#) (#)
<S> <C> <C> <C> <C>
C. R. Luigs 100,000 3 Years 25,000 100,000
J. C. Martin 50,000 3 Years 12,500 50,000
J. G. Ryan 50,000 3 Years 12,500 50,000
G. L. Kott 25,000 3 Years 6,250 25,000
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
<C> <C> <C> <C> <C> <C>
$150,000 $ 75,000 $ 75,000 $ 75,000 $ 83,367 $ 98,034
$200,000 $100,000 $100,000 $100,000 $113,034 $133,034
$250,000 $125,000 $125,000 $125,000 $143,034 $168,034
$300,000 $150,000 $150,000 $150,000 $173,034 $203,034
$350,000 $175,000 $175,000 $175,000 $203,034 $238,034
$400,000 $200,000 $200,000 $200,000 $233,034 $273,034
$450,000 $225,000 $225,000 $225,000 $263,034 $308,034
$500,000 $250,000 $250,000 $250,000 $293,034 $343,034
$550,000 $275,000 $275,000 $275,000 $323,034 $378,034
$600,000 $300,000 $300,000 $300,000 $353,034 $413,034
$650,000 $325,000 $325,000 $325,000 $383,034 $448,034
</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" and "Bonus" 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 thirty-six month
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 Company has contributed a portion of its anticipated
obligation under the nonqualified supplemental plans to trusts
established for those plans. The trusts are so-called "rabbi
trusts," the assets of which are available to pay claims of Company
creditors in the event of the Company's insolvency or bankruptcy.
The trust for the Executive Supplemental Retirement Plan requires
that the Company fund the trust in full upon a "change of control"
as defined in the trust.
The full years of credited service as of December 31, 1995 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, 18 years; Mr. Martin, 16 years;
Mr. Ryan, 13 years; Mr. Kott, 17 years; and Mr. Marshall, 16 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, 1995 for purposes
of determining the benefit under that plan for individuals named in
the Summary Compensation Table are: Mr. Luigs, 18 years; Mr.
Martin, 10 years; Mr. Ryan, 9 years; Mr. Kott, 17 years; and Mr.
Marshall, 3 years. The Pension Plan Table assumes that years of
service for a particular individual are the same under all plans
and that thirty-six month 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 oversight and
administration of:
1) the Company's compensation policies and programs,
and
2) specific salary, incentive, stock option and long
term incentive 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
compensation 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 individual 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,
other than long-term incentive awards granted in 1994 and
1995, 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, consisting of ENSCO
International Incorporated, Nabors Industries, Inc., Noble
Drilling Corporation, Parker Drilling Company, Reading &
Bates Corporation, Rowan Companies, Inc., 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 of the
total of salary, bonus and stock vesting rather than
attempting to match compensation on a
component-by-component basis. An executive compensation
analysis in 1995 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
third-lowest among all peer group companies, and the total
salary, bonus and stock vesting of the second-highest paid
executive was also below the average of the peer group.
ANNUAL COMPENSATION
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.
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 1995, the Plan was based on operating
cash contribution: 6% of operating cash contribution in
excess of a $57 million threshold was reserved for the
Plan, subject to an overall maximum of $3.5 million and an
additional limit of 40% of salary as the maximum payout to
any one participant. For 1995, the operating cash
contribution exceeded $57 million, so incentive awards
were granted. The individual performance of the 129
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
1995 service, the Compensation Committee:
1. reviewed the individual performance of each
officer, giving particular weight to the
Company's strategic achievements discussed below
under "Compensation of Chief Executive Officer"
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 the Company's common stock, or in a combination
thereof. As with base salary, incentive bonus awards are
not guaranteed.
LONG-TERM COMPENSATION
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 1995, 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 1995 option awards were made to 90 employees
and covered approximately 1.65 million shares of
underlying common stock, which was up from the
approximately 1.48 million shares covered by the 1994
annual grants. The increase in total, although not tied to
any formula, was based on substantial improvements in
operating results during 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
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 1995
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: In 1994, 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 an initial grant of long-term incentive
awards under the Company's 1989 Stock Option and Incentive
Plan based on Company performance for the three-year
period ending December 31, 1996. In February 1995, the
Committee approved grants of long-term incentive awards
based on Company performance for the three-year period
ending December 31, 1997. 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 option grants.
The long-term incentive awards granted in 1995 are
dependent on Company performance for the three-year period
ending December 31, 1997, as measured by three long-term
performance criteria: cumulative earnings before
interest, taxes, depreciation and amortization; earnings
per share in 1997; 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 1997 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 maximum amount of the award will be earned only if
target level performance is achieved for all three
performance criteria.
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 decisions regarding the Chief Executive
Officer's 1995 compensation are described below.
In February 1995 the Compensation Committee
determined that Mr. Luigs' salary should be increased
$20,000 (or 4.2%), from $480,000 to $500,000 based on the
Company's substantial improvements in 1994 operating
results as compared to 1993, which are discussed above
under "Stock Options." At the same time, the Compensation
Committee approved a new employment agreement with Mr.
Luigs specifying a minimum annual base salary of $500,000.
The Committee also approved annual stock option grants to
employees, including an option grant to Mr. Luigs covering
200,000 shares. The Committee also reviewed plans for
1995 and established goals for the 1995 Management
Incentive Award Plan, with goals stated in terms of
operating cash contribution. Finally, the Committee also
approved the grant of performance-based long-term
incentive awards in 1995 for six senior executive
officers, including the five named in the Summary
Compensation Table as discussed above under "Long-Term
Incentive Awards." Mr. Luigs was given the opportunity to
earn up to a maximum of 100,000 shares of the Company's
common stock over the three-year performance cycle ending
December 31, 1997, if all long-term performance targets
are achieved.
In February 1996, the Committee noted the following
improvements in operating results for 1995 as compared to
1994: revenue increased 30% to $468 million, operating
income increased 131% to $60 million, net income increased
from $1 million to $52 million, and net income per share
increased from $.01 to $.30. The Committee determined
that the Chief Executive Officer made significant
contributions to these results. Based on these results
and considering the Chief Executive Officer's role in
achieving them, the Compensation Committee approved an
incentive bonus award for Mr. Luigs of $200,000, or 40% of
base salary. This award was paid in shares of the
Company's common stock, net of the required tax
withholdings.
Donald B. Brown, Chairman Patrick M. Ahern
Edward J. Campbell John M. Galvin
Paul J. Powers Sidney A. Shuman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Messrs. Ahern, Brown, Campbell, Galvin, Powers and
Shuman served as Members of the Company's Compensation
Committee during all or part of 1995. 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 1995 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 1990 through the end of
1995, 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:
ENSCO International Incorporated; Nabors Industries, Inc.;
Noble Drilling Corporation; Parker Drilling Company;
Reading & Bates Corporation; Rowan Companies, Inc.; and
SONAT Offshore Drilling Inc. 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, 1990
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, 1990, divided by such
per share price at December 31, 1990. The Company has not
declared any dividends during the period covered by the
graph.
<TABLE>
COMPARISON OF 1991-95 CUMULATIVE TOTAL RETURN*
AMONG GLOBAL MARINE INC., S&P 500 INDEX & INDUSTRY INDEX
<CAPTION>
DECEMBER 31,
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Global Marine Inc. 100 60 57 110 97 233
S&P 500 Index 100 130 140 154 156 215
Industry Peer Index 100 67 65 94 79 147
</TABLE>
* Assumes $100 invested on December 31, 1990 in Global
Marine Inc. stock, S&P 500 Index and an Industry
Index of peer companies. Reflects month-end
dividend reinvestment and annual reweighting of the
Industry Peer Index portfolio.
PROPOSAL TO AMEND 1989 STOCK OPTION AND INCENTIVE PLAN AND
APPROVE PERFORMANCE-BASED COMPENSATION
The Board of Directors believes that the 1989 Stock
Option and Incentive Plan has been important in securing
for the Company and its stockholders the benefits arising
from ownership of its Common Stock by employees. The plan
constitutes an important part of the compensation program
for employees, providing them with an opportunity to
acquire a proprietary interest in the Company and giving
them an additional incentive to use their best efforts for
the Company's long-term success. As of March 15, 1996,
120 persons held awards granted under the plan.
The plan became effective February 28, 1989. At that
time, the plan provided for a maximum of 7,000,000 shares
of the Company's Common Stock as to which awards could be
granted. At the 1991 Annual Meeting of Stockholders, the
Company's stockholders approved an amendment to the plan
which increased by 4,750,000 the maximum number of shares
as to which awards could be granted, to a total of
11,750,000 shares. At the 1993 Annual Meeting of
Stockholders, the Company's stockholders approved an
amendment to the plan which increased by 6,000,000 the
maximum number of shares as to which awards could be
granted, to the current total of 17,750,000 shares.
For purposes of satisfying the requirements under
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the plan has been amended, subject
to stockholder approval, to provide that no participant
may be granted options, stock appreciation rights or
incentive share purchase opportunities to acquire, in the
aggregate, more than 20% of the total number of shares
authorized under the plan, which, for example, would
currently result in a limit of 3,550,000 shares. Also for
purposes of satisfying the requirements of Section 162(m),
the amendment clarifies that any member of the
Compensation Committee serving as Administrator under the
Plan must satisfy the requirements of an "outside
director," as such term is described in the Code and
accompanying regulations. Finally, the amendment provides
that any opportunities to acquire shares which are awarded
prior to the termination date of the plan shall remain in
existence under their terms after the termination of the
plan (the plan currently only so provides with respect to
stock options).
Based on the provisions of the plan and assuming that
stockholders approve the proposed plan amendment, the
Company expects that all options (provided that the
exercise price is at least equal to the fair market value
of the Common Stock at date of grant) and related stock
appreciation rights under the 1989 Stock Option and
Incentive Plan will qualify as performance-based
compensation under Section 162(m). Also intended to
qualify as performance-based compensation under Section
162(m) are incentive share purchase opportunities granted
under the Plan in 1996 and thereafter that are contingent
upon the attainment during stated performance periods of
goals based on any one or more of the performance criteria
listed below ("Long-Term Incentive Awards"). Under
Section 162(m), the performance criteria on which goals
are based, as well as the employees eligible to receive
such compensation, and the terms of the compensation to be
paid must also be approved by the Company's stockholders.
Accordingly, the Company is proposing for stockholder
approval the terms of the Long-Term Incentive Awards as
described below.
The Board of Directors has adopted certain
performance criteria on which Company goals will be based,
the attainment of which will be the basis for permitting
the purchase of stock subject to a Long-Term Incentive
Award. The criteria by which the Company's performance
will be measured for the purpose of awarding performance-based
compensation are: (i) earnings before interest,
taxes, depreciation and amortization, (ii) earnings per
share, (iii) stock price growth, (iv) net income (before
or after taxes), (v) cash flow, and (vi) total shareholder
return. Goals may be based on any one or more of these
criteria, may be cumulative, annual or end-of-performance
period goals, and may be relative to a peer group or be
based on increases or changes relative to stated values.
Performance-based compensation is to be paid under the
1989 Stock Option and Incentive Plan and may be paid to
any employee eligible to participate in the plan. The
plan provides that all officers and key employees of the
Company and subsidiary corporations are eligible to
participate.
Each Long-Term Incentive Award performance period
will be from three to five years and will run from January
1 of the initial year of the performance period through
December 1 of the final year of the performance period.
At the end of the performance period, the stock subject to
a Long-Term Incentive Award may be purchased only to the
extent the pertinent goals have been attained, as
determined by the Compensation Committee. The shares
subject to a Long-Term Incentive Award may be purchased by
payment of the par value of the Company's Common Stock,
which is $.10 per share.
Compensation paid to covered employees that
constitutes "qualified performance-based compensation" as
defined under Section 162(m) of the Code would not be
subject to the deduction limitation of Section 162(m).
The grants of long-term incentive awards made by the
Company in 1994 and 1995 will not constitute "qualified
performance-based compensation" for purposes of Section
162(m).
Subject to stockholder approval of the performance
criteria listed above, the Compensation Committee granted
Long-Term Incentive Awards in February 1996 to the
Company's six senior executive officers, including the
five named in the Summary Compensation Table. The
following table shows the Long-Term Incentive Awards
granted in 1996 to the Company's Chief Executive Officer,
the other four most highly compensated executive officers,
and all current executive officers as a group.
LONG-TERM INCENTIVE AWARDS
MAXIMUM
NUMBER OF SHARES
NAME SUBJECT TO AWARD
C. R. Luigs 50,000
J. C. Martin 25,000
J. G. Ryan 25,000
G. L. Kott 12,500
J. A. Marshall. 12,500
All current executives officers
as a group (9 persons) 131,250
No employee or director who is not an executive officer
has been granted Long-Term Incentive Awards.
The number of shares that can be purchased under the
Long-Term Incentive Awards granted in 1996 is dependent on
Company performance for the three-year period ending
December 31, 1998, under three long-term performance
criteria: cumulative earnings before interest, taxes,
depreciation and amortization ("EBITDA"); earnings per
share in 1998; and stock price growth. The shares that
can be purchased are allocated 40% to cumulative EBITDA,
40% to 1998 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 under that criterion 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 maximum amount
of the award will be earned only if target level performance
is achieved for all three performance criteria.
The last reported sales price for the Company's
Common Stock as reported on the New York Stock Exchange
Composite Transactions Tape on March 15, 1996 was $9.75
per share.
SUMMARY OF STOCK OPTION AND INCENTIVE PLAN. Under
the 1989 Stock Option and Incentive Plan, options may be
granted to purchase shares of the Company's Common Stock,
shares of such Common Stock may be sold at incentive
prices below the market price at the time of sale, and
stock appreciation rights may be granted. The plan is
administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"), which is
made up entirely of Board members who are not employees of
the Company and, therefore, are not eligible to
participate in the plan. The Committee selects the
participants and determines the number of shares to be
optioned or sold to each participant. Participants who
may be granted awards under the plan include all officers
and key employees of the Company and subsidiary
corporations.
The Committee determines, in connection with each
option, the exercise price, whether that price is payable
in cash or shares of the Company's Common Stock, the terms
and conditions of exercise, whether the option will
qualify as an incentive stock option (an "Incentive Stock
Option") under the Code, or a non-qualified stock option
(a "Non-Qualified Stock Option"), restrictions on transfer
of the option, and other provisions not inconsistent with
the plan. The option price that the Committee can set for
each share subject to an option depends on whether the
option is a Non-Qualified Stock Option or an Incentive
Stock Option. Under a Non-Qualified Stock Option, the
price must be at least 50% of the fair market value of
such share on the date the option is granted. Under an
Incentive Stock Option, the price must be 100% of such
fair market value. In each case, the exercise price of
the option must be at least equal to the par value of the
underlying Common Stock. Within such limits, the
Committee may from time to time adjust or reduce the
option prices of outstanding options. The Company
presently anticipates that future grants of options under
the plan will be for 10-year terms at exercise prices not
less than the fair market value of the Common Stock on the
date of grant. Upon the expiration of options, any shares
which have not been purchased by the optionees may be
subjected to newly issued options. Under Section 162(m),
the maximum number of shares available to any employee
under the plan will be reduced by the number of shares
subject to options awarded to the employee that expire or
that are subject to a reduction in the exercise price.
As noted above, shares of the Company's Common Stock
may be sold under the plan at incentive prices below the
market price at the time of sale ("Incentive Stock"). The
Committee is authorized to determine such incentive
prices; however, Incentive Stock may not be sold under the
plan at a purchase price less than the par value of the
shares sold. Incentive Stock forms the basis of the Long-Term
Incentive Awards.
The Committee is authorized to grant stock
appreciation rights ("SARs") to plan participants, either
concurrently with the grant of options or in relation to
options previously granted. Every SAR relates to a
particular option (and is thus referred to as a "tandem
right") and entitles the participant, upon simultaneous
exercise of the option and the stock appreciation right,
to receive in cash an amount equal to the difference
between the exercise price of the option and the market
value of the shares covered thereby. A participant
holding an option with a tandem SAR may elect to receive
this cash amount in lieu of the shares he would otherwise
receive upon payment of the exercise price of the option.
SARs generally may be exercised only at such times and to
the extent the options to which they relate are
exercisable, and in any event may not be exercised for six
months after the date of grant. There are no currently
outstanding SARs, and the Company has no plans to grant
SARs in the future. In addition to SARs payable in cash,
the Committee is authorized to provide in any stock option
agreement that the holder may elect to receive Common
Stock equal to the appreciation in value of the stock
underlying each option.
The number and kind of shares covered by the plan and
by outstanding options under the plan are subject to
adjustment in the event of any reorganization,
recapitalization, reclassification, stock dividend, stock
split or reverse stock split. In addition, outstanding
option agreements under the plan provide that the right to
exercise all options remaining unexercised under such
agreements shall accelerate, so that such options will
become immediately exercisable, upon 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 for purposes of acquiring such stock.
Although the plan authorizes the Board of Directors
to act on all matters with respect to which the Committee
may act, as a matter of practice the Committee and not the
Board acts with respect to all such matters. The Company
presently expects to continue this practice indefinitely.
The termination date of the plan is February 28,
1999. The Board of Directors may at any time amend,
suspend or terminate the plan. However, the aggregate
number of shares subject to the plan may not be increased
(except as a result of adjustments required by changes in
the Company's capitalization), and the provisions
regarding eligibility for participation in the plan may
not be changed, without prior approval by the Company's
stockholders.
FEDERAL INCOME TAX CONSEQUENCES. The following is a
summary of the general rules of present federal income
tax law relating to the tax treatment of Incentive Stock
Options, Non-Qualified Stock Options, SARs, Incentive
Stock and Long-Term Incentive Awards issued under the 1989
Stock Option and Incentive Plan. The discussion is
general in nature and does not take into account a number
of considerations which may apply based on the
circumstances of a particular participant under the plan.
OPTIONS. Some of the options issuable under the plan
may constitute "incentive stock options" within the
meaning of Section 422 of the Code, while other options
granted under the plan will be non-qualified stock
options. The Code provides for tax treatment of stock
options qualifying as incentive stock options which may be
more favorable to employees than the tax treatment
accorded non-qualified stock options. Generally, upon the
exercise of an incentive stock option, the optionee will
recognize no income for U.S. federal income tax purposes.
However, the difference between the exercise price of the
incentive stock option and the fair market value of the
stock at the time of exercise is an item of tax preference
that may require payment of an alternative minimum tax.
On the sale of shares acquired by exercise of an incentive
stock option (assuming that the sale does not occur within
two years of the date of grant of the option or within one
year from the date of exercise), any gain will be taxed to
the optionee as long-term capital gain. In contrast, upon
the exercise of a non-qualified option, the optionee
recognizes taxable income (subject to withholding) in an
amount equal to the difference between the fair market
value of the shares on the date of exercise and the
exercise price. Upon any sale of such shares by the
optionee, any difference between the sale price and the
fair market value of the shares on the date of exercise of
the non-qualified option will be treated generally as
capital gain or loss. No deduction is available to the
Company upon the grant or exercise of an incentive stock
option (although a deduction may be available if the
employee sells the shares acquired upon exercise before
the applicable holding period expires), whereas upon
exercise of a non-qualified stock option, the Company is
entitled to a deduction in an amount equal to the income
recognized by the employee. Except in the case of the
death or disability of an optionee, an optionee has three
months after termination of employment in which to
exercise an incentive stock option and retain favorable
tax treatment at exercise. An option exercised more than
three months after an optionee's termination of employment
other than upon death or disability of an optionee cannot
qualify for the tax treatment accorded incentive stock
options. Such option would be treated as a non-qualified
stock option instead.
STOCK APPRECIATION RIGHTS. The amount of any cash or
the fair market value of any stock received by the holder
upon the exercise of stock appreciation rights under the
plan will be subject to ordinary income tax in the year of
receipt, and the Company will be entitled to a deduction
for such amount.
INCENTIVE STOCK. A participant is not subject to any
income tax upon the grant, contingent or otherwise, of a
right to purchase shares under the plan at an incentive
price below the shares' market value at the time of
purchase. Upon the purchase of Incentive Stock, whether
such purchase is pursuant to a Long-Term Incentive Award
or otherwise, a participant generally recognizes ordinary
income in an amount equal to the excess of (i) the fair
market value of the shares at the time they are
transferred over (ii) the price paid for the shares. Upon
a sale of Incentive Stock, any difference between the
sales price and the fair market value on the date of
transfer of the Incentive Stock will be treated generally
as capital gain or loss.
OTHER. In general, a federal income tax deduction is
allowed to the Company in an amount equal to the ordinary
income recognized by a participant with respect to awards
under the plan, provided that such amount constitutes an
ordinary and necessary business expense of the Company,
that such amount is reasonable, that the qualified
performance-based compensation requirements of Section
162(m) of the Code are satisfied, and that the Company
satisfies any tax reporting obligation that it has with
respect to such income.
A participant's tax basis in shares purchased under
the plan is equal to the sum of the price paid for the
shares, if any, and the amount of ordinary income
recognized by the participant on the transfer of the
shares. The participant's holding period for the shares
begins just after the transfer of the shares. If a
participant sells shares, any difference between the
amount realized in the sale and the participant's tax
basis in the shares is taxed as long- or short-term
capital gain or loss (provided the shares are held as a
capital asset on the date of sale), depending on the
participant's holding period for the shares.
REQUISITE VOTE. The affirmative vote of the majority
of the shares of Common Stock present or represented and
entitled to vote at the Annual Meeting is required for
approval of the amendment to the plan and the performance-based
compensation If such a vote is not obtained, the amendment and
the Long-Term Incentive Awards granted in 1996 will not become
effective. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
PROPOSED AMENDMENT AND PERFORMANCE- BASED COMPENSATION, AND DULY
EXECUTED PROXIES WILL BE VOTED FOR APPROVAL UNLESS OTHERWISE INDICATED
THEREON.
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 1996.
It is intended that such appointment be submitted to the
stockholders for ratification at the 1996 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 1997 and otherwise eligible must be received at the
Company's principal executive offices no later than
November 29, 1996. They may be addressed to the Corporate
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.
GLOBAL MARINE INC.
By JOHN G. RYAN
Corporate Secretary
Houston, Texas
March 29, 1996
APPENDIX I
[FORM OF PROXY CARD]
GLOBAL MARINE INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS - - MAY 8, 1996
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 8, 1996 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.
Brown, Cason and Martin. The nominees will serve for a
term of three years, as indicated in the proxy statement.
FOR WITHHELD FOR ALL EXCEPT [A line follows]
( ) ( ) ( )
2. Amendment of the Company's 1989 Stock Option and
Incentive Plan and approval of performance-based
compensation.
FOR AGAINST ABSTAIN
( ) ( ) ( )
3.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 8, 1996
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 15, 1996 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 8, 1996 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.Brown, Cason
and Martin. The nominees will serve for a term of three years, as
indicated in the proxy statement.
FOR WITHHELD FOR ALL EXCEPT [A line follows]
( ) ( ) ( )
2.Amendment of the Company's 1989 Stock Option and Incentive
Plan and approval of performance-based compensation.
FOR AGAINST ABSTAIN
( ) ( ) ( )
3.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.
APPENDIX II
GLOBAL MARINE INC.
1989 STOCK OPTION AND INCENTIVE PLAN
1. THE PLAN. There is hereby established the Global Marine Inc.
1989 Stock Option and Incentive Plan (the "Plan"), under which options
may be granted to purchase shares of the common stock, $.10 par value,
of Global Marine Inc. (the "Company"), under which shares of such common
stock may be sold at incentive prices below the market price at the time
of sale, and under which stock appreciation rights may be granted.
2. AMOUNT OF STOCK. An aggregate of seven million (7,000,000)
shares of common stock may be issued upon exercises of options, stock
appreciation rights, or upon purchases at such incentive prices, or both.
Such shares may be authorized but unissued shares, or shares held in the
treasury or outstanding shares purchased from their owners, on the
market or otherwise. If the outstanding shares of the Company's common
stock are from time to time increased, decreased, changed into or
exchanged for a different number or kind of shares of the Company
through reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, an appropriate and
proportionate adjustment shall be made in the number and kind of shares
which may be issued upon exercise of options granted or upon purchase
under the Plan. If any option granted under the Plan shall terminate
for any reason or expire before such option is exercised in full, or
if any shares sold under the Plan are reacquired by the Company by
reason of any right to reacquire such shares established at the time
the shares were initially sold, the shares previously reserved for
issuance upon exercise of such option or the shares so reacquired shall
again become available for purposes of the Plan. The aggregate fair
market value of the stock subject to one or more incentive stock options
(within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended) first exercisable by any individual in any calendar
year under this Plan (or under all such plans of Global Marine Inc. and
its subsidiary corporations) shall not exceed $100,000, determined as
of the time the option is granted.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board or Directors of the
Company or by a Committee appointed by the Board of Directors which shall
include not less than three Directors of the Company, each of whom shall
be a "disinterested person" within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended. The Board of
Directors may from time to time remove members from or add members to
the Committee. Vacancies on the Committee, however caused, shall be
filled by the Board of Directors. Acts of the Committee may be
authorized by a vote of the members if (i) at a meeting, held at a time
and place and in accordance with rules adopted by the Committee, at
which a majority of the members of the Committee are present and acting,
or (ii) reduced to and approved in writing by a majority of the members
of the Committee.
(b) Subject to the express terms and conditions of the Plan, the
Board of Directors, and the Committee, if it exists, shall have full
power to construe the Plan, to prescribe, amend and rescind rules and
regulations relating to it and to make all other determinations necessary
or advisable for its administration, and the exercise of these powers
by the Board of Directors or the Committee, as the case may be, shall
be conclusive and binding upon all participants in the Plan, present,
past and future.
(c) The Board of Directors or the Committee may from time to time
determine to which officers or other employees eligible for selection as
participants in the Plan, if any, options shall be granted or shares sold
under the Plan, the number of shares which may be issued upon exercise
of any such option, or which may be sold to each participant, the purchase
price or prices per share, and the means of payment for the shares.
(d) The Board of Directors or the Committee may from time to time,
with the consent of the participant, adjust or reduce the option price
of options held by such participant by cancellation of such options and
granting of options to purchase the same or a lesser number of shares
at lower option prices or by modification, extension or renewal of such
options, as those terms are defined in Section 425(h) of the Internal
Revenue Code of 1986, as amended, and the applicable regulations
thereunder.
(e) The Board of Directors or the Committee shall report in
writing to the Secretary of the Company the names of the officers or
other employees selected as participants in the Plan, and the terms and
conditions of the options granted or the shares sold to each of them.
4. ELIGIBILITY FOR PARTICIPATION. All officers and key employees
of the Company and subsidiary corporations (including officers or
employees who are members of the Company's Board of Directors, but
excluding directors who are not officers or employees) shall be eligible
for selection as participants in the Plan. For this purpose, a
"subsidiary corporation" is a corporation so defined under Section 425(f)
of the Internal Revenue Code of 1986, as amended.
5. TERMS AND CONDITIONS OF OPTIONS. The terms and conditions of
each option granted under the Plan shall be evidenced by a Stock Option
Agreement executed by the Company and the participant, which shall
contain the following provisions, if applicable:
(a) The number of shares which may be issued upon exercise of
the option, the exercise price or prices per share, and the means of
payment for the shares.
(b) Such terms and conditions of exercise as may be determined
by the Board of Directors or the Committee.
(c) That the option is not transferable other than by will or
the laws of descent and distribution and that it is exercisable during
the grantee's lifetime only by him or his guardian or legal representative.
(d) In addition to the restrictions set forth in (c) above, such
restrictions on transfer of the option, and such restrictions on transfer
of the shares acquired upon exercise of the option, as may be determined
by the Board of Directors or the Committee.
(e) Such other terms and conditions not inconsistent with the
Plan as may be determined by the Board of Directors or the Committee.
(f) In the discretion of the Board of Directors or the Committee,
any option granted hereunder may provide that such option may be exercised
by the holder's surrender of all or part of such option to the Company
in exchange for a number of shares of the Company's common stock having
a total market value, as of the date of surrender, equal to the excess of
(i) the market value of the number of shares to which such option is
surrendered, as of the date of surrender, over (ii) the aggregate
exercise price which would otherwise be paid to the Company upon a normal
exercise of the option as to the number of shares surrendered. In the
event the foregoing calculation would require the issuance of a
fractional share, the Company shall, in lieu thereof, pay cash in an
amount equal to the market value of such fraction as of the date of
surrender.
(g) The Board of Directors or the Committee may, in its
discretion, grant stock appreciation rights to participants who are
concurrently being granted, or previously have been granted, options
under the Plan. A stock appreciation right shall be related to a
particular option (either an option previously granted to a participant
or an option granted concurrently with the stock appreciation right)
and shall entitle the participant, at such time or times as the related
option is exercisable, and upon surrender of the then exercisable option,
or part thereof, and exercise of the stock appreciation right, to
receive payment of an amount determined pursuant to subparagraph (ii)
of the following paragraph.
Stock appreciation rights shall be subject to the following
terms and conditions, to the terms of subsection (c) above regarding
transferability, and to such other terms and conditions not inconsistent
with this Plan as the Board of Directors or Committee may approve:
(i) A stock appreciation right shall be exercisable by a
a participant at such time or times, and to the extent, that the
option to which it relates shall be then exercisable; provided,
however, that a stock appreciation right may be exercised for
cash only during the period beginning on the third business day
following the date of release for publication by the Company of
quarterly or annual summary statements of earnings and ending on
the twelfth business day following such date and that the
Committee may impose such other conditions on exercise as may be
required to satisfy the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934 (or any successor provision in
effect at that time).
(ii) Upon exercie of the stock appreciation right and
surrender of an exercisable portion of the related option, a
participant shall be entitled to receive payment of an amount
determined by multiplying:
(1) the difference obtained by subtracting the
option exercise price per share of common stock subject
to the related option from the fair market value of a
share of common stock of the Company on the date of exercise
of the stock appreciation right, by
(2) the number of shares subject to the related
option with respect to which the stock appreciation
right shall have been exercised.
(iii) Payment of the amount determined under subparagraph
(ii) above generally shall be made one-half in cash and one-half
in shares of common stock of the Company valued at fair market
value on the date of exercise of the stock appreciation right,
provided, however, that the Board of Directors or the Committee,
in its sole discretion, may settle such stock appreciation right
solely in such shares, solely in cash, or in some other proportion
of shares and cash, and provided further, however, that in any
event cash shall be paid in lieu of fractional shares.
(iv) A stock appreciation right shall in no event be
exercisable unless and until six months have elapsed from the date
of grant of such stock appreciation right.
(v) The shares and/or cash delivered or paid to a
participant on the exercise of the stock appreciation right shall
be issued or paid in consideration of services performed for the
Company or for its benefit by the participant.
6. LIMITATION ON PRICE FOR SHARES. No option shall be granted
under the Plan, and no stock shall be sold under the Plan, at an
exercise price in the case of options or a purchase price in the case
of direct sales of stock less than the par value of the shares optioned
or sold.
7. PROCEEDS FROM SALES OF SHARES. The proceeds from the sale of
shares under the Plan, upon exercise of options or directly, shall be
added to the general funds of the Company and may thereafter be used
from time to time for such corporate purposes as the Board of Directors
may determine and direct.
8. AMENDMENT, SUSPENSION OR TERMINATION OF PLAN. The Board of
Directors may at any time amend, suspend or terminate the Plan. However,
no such action by the Board of Directors may be taken without the approval
of the stockholders of the Company if such action increases the aggregate
number of shares subject to the Plan (other than pursuant to Section 2
of the Plan), changes the provisions regarding eligibility for
participation in the Plan or materially increases the benefit accruing
to participants under the Plan and no amendment, suspension or
termination of the Plan shall alter or impair any rights or obligations
under any outstanding Stock Option Agreement without the consent of
the participant.
9. PROVISIONS FOR EMPLOYEES OF SUBSIDIARIES. In connection with
the granting of any option or the sale of any shares to a participant
who is an employee of a subsidiary corporation, as defined in Section 4
of the Plan, the Company may sell the shares to be optioned or sold to
such employee to the subsidiary corporation which is his employer, at
a price which shall be not less than the option exercise price or the
purchase price of the shares to such participant, but which may be
more, so that such participant's option under the Plan may be granted,
or his shares under the Plan may be sold, to him directly by his
employer corporation.
10. EFFECTIVE DATE AND TERMINATION OF THE PLAN.
(a) The Plan shall be submitted to the creditors and stockholders
of the Company in accordance with the requirements of the U.S. Bankruptcy
Code as part of a plan of reorganization (the "Plan of Reorganization")
in the chapter 11 case of the Company in the U.S. Bankruptcy Court for
the Southern District of Texas, Houston Division (the "Court").
Confirmation of the Plan of Reorganization by order of the Court will
constitute approval of the Plan by the stockholders of the Company, and
the Plan shall become effective upon effectiveness of the Plan of
Reorganization.
(b) Unless sooner terminated by the Board of Directors, the Plan
shall terminate on the date ten years after the effective date of the
Plan of Reorganization, and thereupon no further options may be granted
or shares sold (other than on exercise of previously granted options
under the Plan) without thereby affecting any options granted or shares
sold prior to the Plan's termination.
GLOBAL MARINE INC.
1989 STOCK OPTION AND INCENTIVE PLAN
FIRST AMENDMENT
The Global Marine Inc. 1989 Stock Option and Incentive
Plan (the "Plan") is hereby amended, effective November 1, 1990,
as follows:
1. Paragraph (c) of Section 3 of the Plan is hereby
amended entirety to read as follows:
"(c) The Board of Directors or the Committee
may from time to time determine to which
officers or other employees eligible for
selection as participants in the Plan, if
any, options shall be granted or shares
sold under the Plan, the number of shares
that may be issued upon exercise of any
such option, or that may be sold to each
such participant, the purchase price or
prices per share, and the means of
payment for the shares, determined in
each case in accordance with the
provisions of the Plan and any other
applicable provisions."
2. Paragraph (a) of Section 5 of the Plan
is hereby amended in its entirety to read as follows:
"(a) The number of shares that may be issued upon exercise of
the option, the purchase price or prices per share, and the
means of payment for the shares; provided, however, that,
notwithstanding any other provision of the Plan to the contrary, the
purchase price or prices of each share of the Company's common stock
subject to any option under the Plan shall be determined as follows:
(i) The price of each share subject to an
incentive stock option (within the meaning of Section 422A of
the Internal Revenue Code of 1986, as amended) under the Plan
shall be 100% of the fair market value of such share on the
date the option is granted. The purchase price of each share
subject to a nonquaiified stock option under the Plan shall be
determined by the Board of Directors or the Committee prior to
granting the option. The Board of Directors or the Committee shall
set the purchase price for each share subject to a nonquaIified
stock option at either the fair market value of each share
on the date the option is granted, or at such other price as the
Board of Directors or the Committee in its sole discretion shall
determine; provided, however, that in no event shall the purchase
price of a share subject to a nonqualified stock option under the
Plan be less than 50% of the fair market value of such share on
the date the option is granted.
(ii) The fair market value of a share on a particular
date shall be deemed to be the average (mean) of the reported
"high" and "low" sales prices for such shares as reported in
The Wall Street Journal's NYSE-Composite Transactions listing
for such day (corrected for obvious typographical errors), or,
if such shares are not reported in such listing, then the
average of the reported "high" and "low" sales prices on
the largest national securities exchange (based on the aggregate
dollar value of securities listed) on which such shares are
listed or traded, or, if such shares are not listed or traded on
any national securities exchange, then the average of the reported
"high" and "low" sales prices for such shares in the over-the-
counter market, as reported on the National Association of
Securities Dealers Automated Quotations System, or, if such
prices shall not be reported thereon, the average between the
closing bid and asked prices so reported, or, if such prices
shall not be reported, then the average closing bid and asked
prices reported by the National Quotation Bureau Incorporated,
or, in all other cases, the value established by the Board of
Directors or the Committee in good faith."
(3) Terms used in this Amendment and not defined herein are
used herein as they are defined in the Plan. References in the Plan to
"this Plan" (and indirect references such as "hereof' and "herein")
are amended to refer to the Plan as amended by this Amendment.
(4) Except as expressly amended hereby, the Plan shall remain
in full force and effect.
GLOBAL MARINE INC.
1989 STOCK OPTION AND INCENTIVE PLAN
SECOND AMENDMENT
The Global Marine Inc. 1989 Stock Option and Incentive
Plan, as heretofore amended by the First Amendment thereto (the
"Plan"), is hereby further amended as follows, effective upon
approval of this Amendment by the stockholders of Global Marine
Inc. at said company's 1991 Annual Meeting of Stockholders or any
adjournment thereof:
1. The first sentence of Section 2 of the Plan is hereby
amended in its entirety to read as follows:
"An aggregate of eleven million seven hundred fifty
thousand (11,750,000) shares of common stock may be
issued upon exercises of options or stock appreciation
rights, or upon purchases at such incentive prices, or
both."
2. Terms used in this Amendment and not defined herein are
used herein as they are defined in the Plan. References in the Plan
to "this Plan" (and indirect references such as "hereof" and
"herein") are amended to refer to the Plan as amended by this
Amendment.
3. Except as expressly amended hereby, the Plan shall
remain in full force and effect.
GLOBAL MARINE INC.
1989 STOCK OPTION AND INCENTIVE PLAN
THIRD AMENDMENT
The Global Marine Inc. 1989 Stock Option and Incentive
Plan, as heretofore amended by the First Amendment and the Second
Amendment thereto (the "Plan"), is hereby further amended as
follows, effective upon approval of this Amendment by the
stockholders of Global Marine Inc. at said company's 1993 Annual
Meeting of Stockholders or any adjournment thereof:
1. The first sentence of Section 2 of the Plan is hereby
amended in its entirety to read as follows:
"An aggregate of seventeen million seven hundred fifty
thousand (17,750,000) shares of common stock may be
issued upon exercises of options or stock appreciation
rights, or upon purchases at such incentive prices, or
both."
2. Terms used in this Amendment and not defined herein are
used herein as they are defined in the Plan. References in the
Plan to "this Plan" (and indirect references such as "hereof" and
"herein") are amended to refer to the Plan as amended by this
Amendment.
3. Except as expressly amended hereby, the Plan shall
remain in full force and effect.
GLOBAL MARINE INC.
1989 STOCK OPTION AND INCENTIVE PLAN
FOURTH AMENDMENT
The Global Marine Inc. 1989 Stock Option and Incentive
Plan, as heretofore amended (the "Plan"), is hereby further amended
as follows, effective February 14, 1995:
1. Section 5 of the Plan is hereby amended by adding
subsection (h) thereto, said subsection (h) to be and read as
follows:
"(h) The Company may require any participant
exercising an option or stock appreciation right or
purchasing shares of common stock hereunder to
reimburse the Company for any taxes required by any
government to be withheld or otherwise deducted and
paid by the Company in respect thereof. The Board of
Directors or the Committee may, in its discretion,
permit or require the participant to satisfy such
obligation to reimburse the Company by (i) making a
cash payment to the Company, (ii) having the Company
deduct the required amount from any cash compensation
that the Company or any of its subsidiaries may owe the
participant, (iii) having the Company withhold from
shares issuable in the related transaction, or
surrendering the right to acquire, either a specified
number of shares or shares having a specified value, in
each case with a value not in excess of the
participant's related tax liability, (iv) tendering
shares previously issued pursuant to the Plan or other
shares of the Company's common stock owned by the
participant, or (v) combining any or all of the
foregoing in any fashion."
2. Terms used in this Amendment and not defined herein are
used herein as they are defined in the Plan. References in the
Plan to "this Plan" (and indirect references such as "hereof" and
"herein") are amended to refer to the Plan as amended by this
Amendment.
3. Except as expressly amended hereby, the Plan shall
remain in full force and effect.
GLOBAL MARINE INC.
1989 STOCK OPTION AND INCENTIVE PLAN
FIFTH AMENDMENT
The Global Marine Inc. 1989 Stock Option and Incentive
Plan, as heretofore amended by the First through Fourth Amendments
thereto (the "Plan"), is hereby further amended as follows,
effective upon approval of this Amendment by the stockholders of
Global Marine Inc. at said Company's 1996 Annual Meeting of
Stockholders or any adjournment thereof:
1. The first sentence of Paragraph (a) of Section 3 of the
Plan is amended in its entirety to read as follows:
"The Plan shall be administered by the Board of
Directors of the Company or by a Committee
appointed by the Board of Directors which shall
include not less than three Directors of the
Company, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3
promulgated under the Securities Exchange Act of
1934, as amended, and an "outside director" within
the meaning of Treasury Regulation Section 1.162-27(e)(3)."
2. A new Paragraph (i) is added to Section 5 of the Plan
to read as follows:
"(i) Notwithstanding anything herein to the
contrary, no participant may be granted options or
other rights to purchase, in the aggregate, more
than 20% of the shares of common stock authorized
under the Plan, subject to adjustment as provided
in Section 2. In the event of an increase in the
number of shares authorized under the Plan, the
20% limitation will apply to the increased number
of shares authorized."
3. Paragraph (b) of Section 10 of the Plan shall be
amended in its entirety, to read as follows:
"(b) Unless sooner terminated by the Board of
Directors, the Plan shall terminate on the date
ten years after the effective date of the Plan of
Reorganization, and thereupon no further options
may be granted or shares sold (other than on
exercise of previously granted options under the
Plan or under previously granted opportunities,
whether conditional or not, to acquire shares
under the Plan) without thereby affecting any
options or other opportunities to acquire shares
granted or shares sold prior to the Plan's
termination."
4. Terms used in this Amendment and not defined herein are
used herein as they are defined in the Plan. References in the
Plan to "this Plan" (and indirect references such as "hereof" and
"herein") are amended to refer to the Plan as amended by this
Amendment.
5. Except as expressly amended hereby, the Plan shall
remain in full force and effect.
