AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MARCH 26, 1997
COMMISSION FILE NO. 1-5471
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e) (2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GLOBAL MARINE INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
(2) Aggregate number of securities to which transaction apples:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO] GLOBAL MARINE INC.
NOTICE OF MEETING
The Annual Meeting of Stockholders of Global Marine Inc. will
be held in the Forest Room, The Houstonian Hotel and Conference
Center, 111 N. Post Oak Lane, Houston, Texas on Tuesday, May 6,
1997 at 9:00 a.m. for the following purposes:
1. To elect two directors, each to serve for a term of three
years.
2. To ratify the appointment of independent certified public
accountants for the Company and its subsidiaries.
3. To transact such other business as may properly come
before the meeting or any postponement or adjournment
thereof.
Stockholders of record of the Company's Common Stock at the
close of business on March 14, 1997 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 31, 1997
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.
<PAGE>
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 6, 1997 and any postponement or
adjournment thereof. The approximate date on which this proxy
statement and the form of proxy are first being sent or given to
stockholders of the Company is March 31, 1997.
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 two persons
to serve on the Board of Directors of the Company, each for a
three-year term, and (ii) a proposal to ratify the Board of
Directors' appointment of Coopers & Lybrand L.L.P. as independent
certified public accountants for the Company and its subsidiaries
for fiscal year 1997.
All shares of Common Stock represented at the Annual Meeting
by properly executed proxies received prior to or at the Annual
Meeting, and not revoked, will be voted at the Annual Meeting in
accordance with the instructions indicated on such proxies. If no
instructions are indicated with respect to any shares for which
properly executed proxies have been received, such proxies will be
voted FOR the Board of Directors' nominees for directors and FOR the
proposal to ratify the Board of Directors' appointment of Coopers
& Lybrand L.L.P. as independent auditors for fiscal year 1997. 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 14, 1997 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 14, 1997, there were issued and
outstanding 170,383,569 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 14, 1997, 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
<PAGE>
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 all proposals
(but not on the election of directors) and will be counted as
present for purposes of the item on which the abstention is noted.
Abstentions on the proposal to ratify the appointment of
independent auditors will have the effect of a negative vote
because approval of such 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 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,
1996, which includes, among other things, the Company's audited
consolidated balance sheets at December 31, 1996 and 1995,
respectively, and audited consolidated statements of operations and
cash flows for the three years ended December 31, 1996, 1995 and
1994, respectively, has been mailed to stockholders of record as of
March 14, 1997.
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.
<PAGE>
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 14,
1997, of more than 5% of the Company's Common Stock.
NAME AND ADDRESS SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS(1)
FMR Corp. 17,584,400 (2) 10.32%
82 Devonshire Street
Boston, Massachusetts 02109
Merrill Lynch & Co. Inc. 16,571,294 (3) 9.72%
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
__________________
(1) The percentages are based on the number of issued and
outstanding shares of Common Stock at March 14, 1997.
(2) The number of shares indicated is based on Amendment No. 2 to
a statement on Schedule 13G, dated February 14, 1997, 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.
(3) The number of shares indicated is based on Amendment No. 3 to
a statement on Schedule 13G, dated February 14, 1997, 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. The Fund is an investment
company registered under Section 8 of the Investment Company
Act of 1940. Each of ML&Co., ML Group and PSI disclaim
beneficial ownership of the shares.
<PAGE>
The following table sets forth, as of March 14, 1997, 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.
SHARES
BENEFICIALLY PERCENT
NAME OWNED (a) OF CLASS (b)
Donald B. Brown 25,216 (c) -
Edward J. Campbell 31,059 (c) -
Thomas W. Cason 9,500 (c) -
Peter T. Flawn 22,500 (c) -
John M. Galvin 26,000 (c) -
Gary L. Kott 487,495 (d) -
Lynn L. Leigh 38,664 (c) -
C. Russell Luigs 1,678,779 (d)(e) -
Jon A. Marshall 306,540 (d)(e) -
Jerry C. Martin 326,907 (d) -
Edward R. Muller 700
Paul J. Powers 8,000 (c) -
John G. Ryan 662,060 (d) -
William R. Thomas 25,460 (c) -
All of the above and other
executive officers as a
group (17 persons) 4,263,355 (c)(d)(e) 2.46%
_______________________
(a) Each person has sole voting and investment power with respect
to the shares listed, unless otherwise indicated.
(b) As of March 14, 1997, 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 14, 1997 through the exercise of non-employee director
stock options, as follows: 23,500 shares each for Messrs.
Galvin and Leigh; 22,000 shares for Mr. Campbell; 17,500
shares for Mr. Flawn; 13,500 shares for Mr. Brown; 10,500
shares for Mr. Thomas; 6,500 shares each for Messrs. Cason and
Powers; and 123,500 shares for the group.
(d) Includes shares that may be acquired within sixty days of
March 14, 1997 through the exercise of employee stock options,
as follows: Mr. Kott, 411,667; Mr. Luigs, 1,385,417; Mr. Marshall,
218,705; Mr. Martin, 56,346; Mr. Ryan, 502,917; and the group,
2,902,646.
(e) Includes shares attributable to accounts under the Company's
401(k) Savings Incentive Plan at March 14, 1997, as follows:
Mr. Luigs, 29,510; Mr. Marshall, 432; and 29,942 shares for the group.
<PAGE>
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of eleven
directors divided into three classes serving staggered terms of
three years each. Seven of the Company's current directors are
serving in two classes with terms that continue beyond the 1997
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 1997 Annual Meeting of Stockholders, and
two of these directors are nominees for reelection at this meeting.
These nominees are Edward J. Campbell and John M. Galvin. The
terms of Messrs. Peter T. Flawn and Lynn L. Leigh will expire at
the 1997 Annual Meeting of Stockholders and they will not stand for
reelection. Each of the two directors to be elected at the 1997
Annual Meeting of Stockholders will serve a term of three years to
expire at the 2000 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 1997 Annual Meeting for the election of
Messrs. Campbell and Galvin. Although the Company does not
contemplate that either 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 1997 Annual Meeting of Stockholders, including
their business experience during the past five years, appears
below.
NOMINEES - FOR TERMS OF OFFICE
EXPIRING AT THE 2000 ANNUAL MEETING OF STOCKHOLDERS
Edward J. Campbell, 69, was President of J. I. Case Company,
at the time a wholly-owned subsidiary of Tenneco Inc., from 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.
John M. Galvin, 64, 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 Corp., CUNO Incorporated and of Oasis
Residential, Inc. Mr. Galvin was first elected a director of the
Company in 1979.
<PAGE>
The members of the Board of Directors who are not subject to
election at the 1997 Annual Meeting are as follows.
CONTINUING DIRECTORS - WITH TERMS OF OFFICE
EXPIRING AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS
Donald B. Brown, 70, 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, 54, owns and manages an equipment business,
primarily related to the agricultural industry. Mr. Cason served
as interim President and Chief Operating Officer of Key Tronic
Corporation during 1994 and 1995, and continues to be associated
with Hiller Key Tronic Partners, L.P., 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 1995.
Jerry C. Martin, 64, 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.
CONTINUING DIRECTORS - WITH TERMS OF OFFICE
EXPIRING AT THE 1998 ANNUAL MEETING OF STOCKHOLDERS
C. Russell Luigs, 63, 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.
Edward R. Muller, 44, has been President and Chief Executive
Officer of Edison Mission Energy Company, a wholly-owned subsidiary
of Edison International (formerly SCEcorp), since 1993. Edison
Mission Energy Company is engaged in developing, owning and
operating independent power production facilities worldwide. Mr.
Muller was a Vice President, the General Counsel and the Secretary
of Whittaker Corporation, a diversified company, from 1985 to 1993.
From 1989 to 1992 he was also Whittaker's Chief Administrative
Officer. From 1992 to 1993, he was also Whittaker's Chief Financial
Officer. From 1991 to 1993, Mr. Muller was also Vice President,
General Counsel and Secretary of BioWhittaker, Inc., a
biotechnology firm. He is a Director of Whittaker Corp. and of
Oasis Residential, Inc. Mr. Muller was elected a director of the
Company in February 1997.
Paul J. Powers, 62, has been Chairman of the Board and Chief
Executive Officer of Commercial Intertech Corp. since 1987 and
Chairman of the Board and Chief Executive Officer of CUNO
Incorporated since 1996. Commercial Intertech is a multi-national
manufacturer of hydraulic systems, fluid purification systems,
Astron pre-engineered buildings and metal products, while CUNO is
a worldwide producer of fluid purification systems. Mr. Powers is
also a director of Ohio Edison Company and of Twin Disc, Inc. Mr.
Powers was elected a director of the Company in 1995.
<PAGE>
William R. Thomas, 76, is the Company's retired Senior Vice
President, Finance. He is also a director of Bank of the West and
of AeroVironment Inc. Mr. Thomas was first elected a director of
the Company in 1978.
DIRECTORS - WITH TERMS OF OFFICE
EXPIRING AT THE 1997 ANNUAL MEETING OF STOCKHOLDERS
Peter T. Flawn, 71, 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., El Paso Energy Corporation, and
Tenneco Inc. Dr. Flawn was first elected a director of the Company in 1989.
Lynn L. Leigh, 71, has been Senior Vice President of National-Oilwell,
a manufacturer and international supplier of oilfield equipment and
services, since 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. Mr. Leigh
was first elected a director of the Company in 1981.
BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors, which currently consists of
eleven members, has five standing committees. During 1996, the
Board of Directors held five 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 1996.
AUDIT COMMITTEE - The Company's Audit Committee consists of
four non-employee directors: Edward J. Campbell, Chairman, Thomas
W. Cason, Peter T. Flawn 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 1996, the
Audit Committee held four meetings.
COMPENSATION COMMITTEE - The Company's Compensation Committee
consists of five non-employee directors: Donald B. Brown, Chairman,
John M. Galvin, Lynn L. Leigh, Edward R. Muller and Paul J. Powers.
The Compensation Committee makes recommendations to the Board
regarding remuneration arrangements for senior management and
directors, adoption of compensation plans in which officers and
<PAGE>
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 1996.
FINANCE COMMITTEE - The Company's Finance Committee consists
of four non-employee directors: John M. Galvin, Chairman, 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 1996, 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, Edward R. Muller and Paul
J. Powers. The Nominating Committee, which held four meetings
during 1996, 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 1998
election of directors should be submitted in writing to the
Corporate Secretary of the Company at 777 North Eldridge Road,
Houston, Texas 77079.
During 1996, each director of the Company other than Mr.
Thomas 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.
On the date he first achieves eligibility, a director receives
an initial 10,000-share option, and he automatically receives an
additional 3,000-share option on the adjournment date of each
subsequent annual meeting of stockholders in each subsequent year
in which he remains eligible. Each such option has an exercise
price equal to the Common Stock's fair market value per share at the
date the option is granted. Upon adjournment of the annual meeting
in May 1996, Messrs. Brown, Campbell, Cason, Flawn, Galvin, Leigh,
Powers and Thomas each automatically received a grant of options
under the plan to purchase 3,000 shares of Common Stock at the per
<PAGE>
share exercise price of $10.25. Under the plan, new options may be
granted with respect to the shares covered by options that have
expired unexercised.
In general, each option becomes exercisable for fifty percent
of the shares covered thereby on the anniversary of the date of
grant and for the remaining fifty percent on the second anniversary
of the date of grant. Options are transferable in limited
circumstances to family members, pursuant to certain domestic
relations orders, and by will or the laws of descent and
distribution. The right to exercise all options remaining
unexercised under the plan shall accelerate, so that such options
will become immediately exercisable, upon a "change in control" as
defined in the plan.
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. 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" as defined in the plan. 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.
The Company has partially funded its obligations under the
Retirement Plan for Outside Directors by contributing to a trust
established for the plan. A "change of control" as defined in the
<PAGE>
trust would require the Company to fund the trust in full. 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, Muller and Powers had five full years of credited service as
of December 31, 1996 for purposes of determining the vested benefit
under the plan. Messrs. Cason and Powers have one full year of
credited service as of December 31, 1996 and Mr. Muller does not
have any full years of credited service as of December 31, 1996 for
purposes of determining the vested benefit.
<PAGE>
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 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation
Awards Payouts
Securities
Name and Underlying LTIP All Other
Principal Position Year Salary Bonus(1) Options(2) Payouts(3) Compensation(4)
($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
C. Russell Luigs, 1996 $500,000 $250,000 90,000 $1,556,250 $11,818
Chairman of the Board, 1995 $498,333 $200,000 200,000 $ 0 $11,178
President and Chief 1994 $478,750 $100,000 175,000 $ 0 $ 9,900
Executive Officer
John G. Ryan, 1996 $286,708 $125,000 65,000 $ 726,250 $ 4,746
Chairman and Chief Executive 1995 $270,652 $ 85,000 120,000 $ 0 $ 4,620
Officer, Global Marine Drilling 1994 $250,882 $ 70,000 100,000 $ 0 $ 4,494
Company, and Corporate Secretary
Jerry C. Martin, 1996 $285,855 $125,000 65,000 $ 726,250 $ 3,750
Senior Vice President and 1995 $273,333 $ 85,000 120,000 $ 0 $ 3,750
Chief Financial Officer 1994 $253,958 $ 70,000 100,000 $ 0 $ 3,750
Gary L. Kott, 1996 $240,000 $100,000 40,000 $ 415,000 $ 7,083
President and Chief Operating 1995 $239,417 $ 65,000 80,000 $ 0 $ 6,606
Officer, Global Marine 1994 $232,750 $ 40,000 75,000 $ 0 $ 6,174
Drilling Company
Jon A. Marshall, 1996 $234,167 $100,000 45,000 $ 518,750 $ 4,521
Group Vice President and 1995 $222,917 $ 75,000 90,000 $ 0 $ 4,377
President, 1994 $196,879 $ 70,000 75,000 $ 0 $ 4,239
Challenger Minerals Inc.
</TABLE>
(1) In order to further encourage stock ownership by
executive officers, bonuses based on service during 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
service during 1995 and 1996, 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 "LTIP Payouts" for 1996
consist of amounts earned under long-term incentive
awards granted in 1994 and paid in 1997, the payment
amounts being based on Company performance during the
period 1994 through 1996. Such amounts were paid in
shares of the Company's Common Stock, and the dollar
amounts included in the table are the stock's fair market
value (average of high and low market prices) on the date
payment was approved by the Compensation Committee of the
Company's Board of Directors.
(4) The amounts indicated under "All Other Compensation" for
1996 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. Ryan, $3,750; Mr. Martin, $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, $8,068; Mr. Ryan, $996; Mr. Kott, $3,333; and
Mr. Marshall, $771).
<PAGE>
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.
Ryan, Martin, Kott and Marshall.
Outstanding option agreements under the Company's 1989 Stock
Option and Incentive Plan provide that the dates options first
become exercisable 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, the vesting of retirement benefits
under the Company's Retirement Plan for Outside Directors, and the
funding of the trust established for the retirement plan can
accelerate upon the occurrence of certain events in connection with
a change-in-control as outlined in the discussion of those plans
under "Director Compensation," above.
<PAGE>
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 1996. 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>
<CAPTION>
OPTION GRANTS IN 1996
Individual Grants
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
for Option Term(2)
Number Percent
of Shares of Total Exercise
Underlying Options or Base
Options Granted to Price
Granted(1) Employees ($ per Expira- 0% 5% 10%
Name (#) in 1996 share) tion Date ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
C. R. Luigs 90,000 7.07% $9.3125 2-20-2006 $ 0 $ 527,092 $ 1,335,755
J. R. Ryan 65,000 5.10% $9.3125 2-20-2006 $ 0 $ 380,678 $ 964,712
J. C. Martin 65,000 5.10% $9.3125 2-20-2006 $ 0 $ 380,678 $ 964,712
G. L. Kott 40,000 3.14% $9.3125 2-20-2006 $ 0 $ 234,263 $ 593,669
J. A. Marshall 45,000 3.53% $9.3125 2-20-2006 $ 0 $ 263,546 $ 667,878
All Stockholders(3) N/A N/A $9.3125 N/A $ 0 $977,166,235 $2,476,331,241
</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 20, 1996. Each option granted during 1996 is
exercisable for 25% of the aggregate number of shares subject to
the option one year after grant, 50% two years after grant, 75%
three years after grant, and 100% four years after grant,
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. Certain options are transferable in
limited circumstances to family members and pursuant to certain
domestic relations orders. Options are not otherwise
transferable except 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.
<PAGE>
(3) Based on 166,849,265 shares of the Company's Common Stock
outstanding on February 20, 1996, using the $9.3125 average of
the stock's high and low market prices on that date as the
base price.
OPTION EXERCISES AND YEAR-END VALUES
The following table shows option exercises by the named
executive officers during 1996, as well as the number of shares
underlying all exercisable and non-exercisable stock options held
by the named executive officers as of December 31, 1996. Also
reported are the year-end values for their unexercised "in-the-money"
options, which are the positive spread between the exercise
price of such options and the year-end market price of the Common
Stock.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END OPTION VALUES
Number of Securities
Number of Underlying Unexercised Value of Unexercised In-the-
Shares Options at Year-End Money Options at Year-End
Underlying (#) ($)
Options Value
Exercised Realized(1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
C. R. Luigs 0 $ 0 1,262,917 190,000 $22,444,772 $2,718,125
J. G. Ryan 100,000 $1,670,625 426,667 125,000 $ 7,084,068 $1,755,312
J. C. Martin 642,318 $8,563,906 7,682 125,000 $ 124,368 $1,755,312
G. L. Kott 68,333 $1,163,015 361,667 80,000 $ 5,948,131 $1,132,500
J. A. Marshall 268,445 $3,085,194 162,455 90,000 $ 2,833,458 $1,274,062
</TABLE>
(1) The value realized is 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 1996, 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, 1998 as
measured by three long-term performance criteria: cumulative
earnings before interest, taxes, depreciation and amortization;
earnings per share in 1998; 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
<PAGE>
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>
<CAPTION>
1996 LONG-TERM INCENTIVE AWARDS
Estimated Future Payouts
Under
Number of Shares, Performance or Non-Stock Price-Based Plans(1)
Units or Other Period
Other Rights Until Maturation Target/
Name (#) or Payout Threshold Maximum
(#) (#)
<S> <C> <C> <C> <C>
C. R. Luigs 50,000 3 Years 12,500 50,000
J. G. Ryan 25,000 3 Years 6,250 25,000
J. C. Martin 25,000 3 Years 6,250 25,000
G. L. Kott 12,500 3 Years 3,125 12,500
J. A. Marshall 12,500 3 Years 3,125 12,500
</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.
<PAGE>
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service
Remuneration 15 20 25 30 35
<C> <C> <C> <C> <C> <C>
$150,000 $ 75,000 $ 75,000 $ 75,000 $ 83,124 $ 97,698
$200,000 $100,000 $100,000 $100,000 $112,698 $132,698
$250,000 $125,000 $125,000 $125,000 $142,698 $167,698
$300,000 $150,000 $150,000 $150,000 $172,698 $202,698
$350,000 $175,000 $175,000 $175,000 $202,698 $237,698
$400,000 $200,000 $200,000 $200,000 $232,698 $272,698
$450,000 $225,000 $225,000 $225,000 $262,698 $307,698
$500,000 $250,000 $250,000 $250,000 $292,698 $342,698
$550,000 $275,000 $275,000 $275,000 $322,698 $377,698
$600,000 $300,000 $300,000 $300,000 $352,698 $412,698
$650,000 $325,000 $325,000 $325,000 $382,698 $447,698
</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, 1996 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, 19 years; Mr. Ryan, 14 years;
Mr. Martin, 17 years; Mr. Kott, 18 years; and Mr. Marshall, 17
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, 1996 for
purposes of determining the benefit under that plan for individuals
named in the Summary Compensation Table are: Mr. Luigs, 19 years;
Mr. Ryan, 10 years; Mr. Martin, 11 years; Mr. Kott, 18 years; and
Mr. Marshall, 4 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.
<PAGE>
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 tied to operating, financial
and/or strategic goals established each year; and
* Provides the ability to attract and retain the quality of executives
needed, by providing compensation levels competitive for the drilling
industry.
The Company's executive compensation program includes base salary,
annual management incentive awards, and stock option and other long-term
incentive awards, each of which is tied to individual performance, but none
of which is determined by any specific formula or weighing of factors in the
case of any individual. 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
<PAGE>
required to preserve the tax deductibility of executive pay under Section
162(m) of the Internal Revenue Code, and to consider tax deductibility in
making future awards to senior executives. The Committee is advised
periodically by Towers Perrin, a nationally recognized, independent
executive compensation consulting firm, on competitive salary levels,
bonus practices, and stock programs of leading drilling contractors.
In evaluating competitive compensation levels of senior executives, 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 Transocean Offshore Inc. The Committee reviews the
compensation of the five highest paid executives in the Company and in each
of the peer group companies. The Committee reviews a "Total Compensation
Analysis" prepared by Towers Perrin, which includes salaries and annual
bonuses earned by each executive, the estimated value of options granted
(using the "Black-Scholes" value of recent grants), plus the expected
value from other long-term incentive awards. An analysis of 1996 proxies
of the Company and the peer group companies indicated that Global Marine's
total compensation levels in 1995 were less than the competitive median
for the five highest paid executives as a group, and the Chief Executive
Officer's total compensation was less than 60% of the total compensation
provided by other peer group companies.
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, giving 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.
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. The total
amount available for such bonus awards is based on the Company's
performance in relation to goals established at the outset of each year.
For 1996, the total amount was based on consolidated pretax profit; 6%
of consolidated pretax profit in excess of a $40 million threshold was
reserved for the Plan, subject to a limit of 50% of annual base salary
as the maximum payout to any one participant. For 1996, the consolidated
pretax profit exceeded $40 million, so incentive awards were granted.
<PAGE>
The individual performance of the 154 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 1996 service, the Compensation
Committee considered both Company performance (discussed below under
"Compensation of the Chief Executive Officer") and each officer's
contributions to that performance, and considered the accomplishments
of each senior executive officer in his area of responsibility.
Based on these reviews, and with consideration given to competitive peer
group total compensation levels, incentive bonus awards to senior officers
were approved by the Committee.
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 competitive practices, continuing
progress of the Company, and individual performance. All stock option
awards shown in the Summary Compensation Table for the past three years
were made with option exercise prices equal to the fair market value of
the underlying stock 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 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, and net
income per share increased from $.01 to $.30. Based on this overall
continuing progress, the Compensation Committee approved annual stock
option grants to executive officers and other key employees, including
the five named in the Summary Compensation Table. The 1996 option awards
were made to 112 employees and covered approximately 945,000 shares of
underlying common stock. The performance of individual executive officers
and other key employees was considered in allocating 1996 stock option
grants, which were recommended by the Chief Executive Officer and approved
by the Committee.
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
<PAGE>
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 1997, the Committee certified that the goals
established for the long-term incentive awards granted in 1994 had been
exceeded and, accordingly, the maximum amount under these grants was paid
out in February 1997. The long-term incentive awards granted in 1994 and
paid out in February 1997 do not qualify as "performance-based
compensation" under Section 162(m) of the Internal Revenue Code and,
therefore, to the extent compensation to any of the officers named in
the Summary Compensation Table exceeds $1 million, it is not deductible.
In February 1995 and 1996, the Committee approved grants of long-term
incentive awards based on Company performance for the three-year
periods ending December 31, 1997 and 1998, respectively. 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 1996 are dependent on Company
performance for the three-year period ending December 31, 1998, as measured
by three long-term performance criteria: cumulative earnings before
interest, taxes, depreciation and amortization; earnings per share in
1998; 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 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 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 reasons for the Committee's
decisions regarding the Chief Executive Officer's 1996 compensation are
described below.
In February 1996 the Compensation Committee determined that Mr. Luigs'
salary should not be increased from the $500,000 minimum level established
in the employment agreement with Mr. Luigs entered into in February 1995.
This decision was based on Mr. Luigs' having reached the maximum salary
for his salary grade under the Hay System, which is the Company's salary
administration system for its employees. The Committee also approved
<PAGE>
annual stock option grants to employees, including an option grant to
Mr. Luigs covering 90,000 shares. The Committee approved this award
based on its review of competitive stock option grant levels of peer
group companies, as well as the Company's performance for 1995 as
compared to 1994, as discussed above under "Stock Options." Finally,
the Committee approved the grant of performance-based long-term incentive
awards in 1996 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 50,000 shares of the Company's common stock over the
three-year performance cycle ending December 31, 1998, if all long-term
performance targets are achieved.
1996 COMPANY PERFORMANCE AND CHIEF EXECUTIVE OFFICER BONUS: In
February 1997, the Committee noted the following improvements in
the Company's operating results for 1996 as compared to 1995: revenue
increased 45% to $681 million, operating income increased 133% to $141
million, and, excluding a non-cash tax credit in 1996, net income increased
112% to $110 million and net income per share increased from $.30 to $.65.
The Committee also noted that the Company's stock far outperformed both the
index of peer group companies and the S&P 500 Index. 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 $250,000, or 50% of
base salary. In addition, the Committee certified that each of the
three criteria for the long-term incentive awards granted in 1994 had been
exceeded and approved the maximum payout under this plan to the six senior
executive officers, including the five named in the Summary Compensation
Table. Mr. Luigs received 75,000 shares of the Company's common stock
as payment under his 1994 long-term incentive award.
Donald B. Brown, Chairman John M. Galvin
Lynn L. Leigh Edward R. Muller
Paul J. Powers Sidney A. Shuman
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Brown, Campbell, Galvin, Leigh and Powers served as Members
of the Company's Compensation Committee during all or part of 1996.
Patrick M. Ahern, who resigned from the Company's Board of Directors in May
1996, and Sidney A. Shuman, who retired from the Company's Board of
Directors in May 1996, also served as members of the Company's Compensation
Committee during part of 1996. 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 1996 or any prior year.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) during 1996, Forms 5
and amendments thereto furnished to the Company with respect to 1996,
and written representations that no Form 5 was required for 1996, no
director, officer or beneficial owner of more than 10 percent of the
Common Stock failed to file a report on a timely basis.
<PAGE>
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
1991 through the end of 1996, 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 Transocean Offshore Inc. (formerly
SONAT Offshore Drilling Inc.). The returns of each 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, 1991 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, 1991, divided by such per share
price at December 31, 1991. The Company has not declared any dividends
during the period covered by the graph.
<TABLE>
<CAPTION>
COMPARISON OF 1992-96 CUMULATIVE TOTAL RETURN*
AMONG GLOBAL MARINE INC., S&P 500 INDEX & INDUSTRY INDEX
12/91 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Global Marine Inc. $100 $ 94 $183 $161 $389 $917
S&P 500 Index $100 $108 $118 $120 $165 $203
Industry Index $100 $ 97 $141 $118 $221 $416
</TABLE>
* Assumes $100 invested on December 31, 1991 in Global Marine Inc. stock,
S&P 500 Index and an Industry Index of peer companies. S&P 500 and
Industry indices reflect month-end dividend reinvestment and annual
reweighting.
<PAGE>
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 1997. It is intended that such appointment
be submitted to the stockholders for ratification at the 1997 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 1998 and otherwise eligible
must be received at the Company's principal executive offices no later than
December 1, 1997. 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 31, 1997
<PAGE>
APPENDIX I
[FORM OF PROXY CARD]
GLOBAL MARINE INC.
Proxy Solicited By The Board of Directors
For the Annual Meeting of Stockholders -- May 6, 1997
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 Houstonian Hotel and Conference Center, 111 N. Post Oak Lane,
Houston, Texas on Tuesday, May 6, 1997 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 SPECIFED 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. Campbell and Galvin. 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. 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.
<PAGE>
[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 6, 1997
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 14, 1997 and attributable to the undersigned's Plan
account at the Annual Meeting of Stockholders of GLOBAL MARINE INC. to be held
at The Houstonian Hotel and Conference Center, 111 N. Post Oak Lane, Houston,
Texas on Tuesday, May 6, 1997 at 9:00 a.m., and at any postponements or
adjournments of that meeting, as set forth below, and, in its discretion, to
authorize the voting of said shares upon any other business that may properly
come before the meeting.
THE TRUSTREE 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.
Campbell and Galvin. 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. 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.
