AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
MARCH 26, 1999
COMMISSION FILE NO. 1-5471
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Check the appropriate box:
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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) Filling Proxy Statement,
if other than Registrant)
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[X] No fee required.
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0-11.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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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:
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<PAGE>
[LOGO]
GLOBAL MARINE INC.
777 N. ELDRIDGE PARKWAY
HOUSTON, TEXAS 77079-4493
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 6, 1999
9:00 A.M., CENTRAL TIME
THE HOUSTONIAN HOTEL
THE FOREST ROOM
111 N. POST OAK LANE
HOUSTON, TEXAS
You are cordially invited to attend the 1999 Global Marine
Inc. Annual Meeting of Stockholders to:
1. Elect four directors;
2. Ratify the appointment of independent
accountants; and
3. Transact other business properly brought
before the meeting.
Stockholders of record at the close of business on March 12,
1999, will be entitled to vote. YOUR VOTE IS IMPORTANT. WHETHER
YOU PLAN TO ATTEND OR NOT, I HOPE YOU WILL VOTE AS SOON AS
POSSIBLE. YOU MAY VOTE OVER THE INTERNET, BY TELEPHONE, OR BY
MAILING THE ENCLOSED PROXY CARD. PLEASE REVIEW THE INSTRUCTIONS
IN THE PROXY STATEMENT AND ON YOUR PROXY CARD OR VOTING FORM
REGARDING EACH OF THESE VOTING OPTIONS.
ALEXANDER A. KREZEL
Corporate Secretary
Houston, Texas
March 26, 1999
<PAGE>
TABLE OF CONTENTS
Page
Proxies and Voting at the Meeting .. . .. . .. . .. . .. . . 1
Election of Directors . .. . .. . .. . .. . .. . .. . .. . . 2
Board Committees . .. . .. . .. . .. . .. . .. . .. . .. . . 4
Director Compensation . .. . .. . .. . .. . .. . .. . .. . . 5
Security Ownership of Certain Beneficial Owners. .. . .. . . 6
Security Ownership of Directors and Executive Officers.. . . 7
Compensation Committee Report on Executive Compensation. . . 8
Executive Compensation. .. . .. . .. . .. . .. . .. . .. . .12
Summary Compensation Table . .. . .. . .. . .. . .. . .12
Option Grants in 1998 . .. . .. . .. . .. . .. . .. . .13
Aggregated Option Exercises in 1998 and
Year-End Option Values. .. . .. . .. . .. . .. . .14
1998 Long-Term Incentive Awards . .. . .. . .. . .. . .14
Pension Plan Table .. . .. . .. . .. . .. . .. . .. . .15
Employment Agreements and Termination Arrangements. . .. . .16
Cumulative Total Shareholder Return. . .. . .. . .. . .. . .17
Ratification of Appointment of Independent Accountants.. . .18
Other Matters .. . .. . .. . .. . .. . .. . .. . .. . .. . .18
Voting Via the Internet or By Telephone.. . .. . .. . .. . .19
YOUR VOTE IS IMPORTANT
You can vote any one of three ways: via the Internet, by
telephone, or by mail. Please refer to VOTING VIA THE INTERNET
OR BY TELEPHONE in the proxy statement for further details on
voting via the Internet or by telephone. Please note that there
are separate Internet and telephone voting arrangements depending
upon whether shares are registered in your name or in the name of a
bank or a broker or are held in a Global Marine 401(k) account. To
vote by mail, please sign, date and return the enclosed proxy card in
the envelope provided.
<PAGE>
GLOBAL MARINE INC.
777 N. ELDRIDGE PARKWAY
HOUSTON, TEXAS 77079-4493
______________
PROXY STATEMENT
______________
This proxy statement and the form of proxy are being mailed
beginning approximately on March 26, 1999. Global Marine Inc.'s
Board of Directors is soliciting proxies for use at the Annual
Meeting of Stockholders to be held on May 6, 1999, and any
postponement or adjournment of the meeting.
PROXIES AND VOTING AT THE MEETING
VOTING
Each of your shares 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,
you have the right to cumulate your votes, with each share having
a number of votes equal to the number of directors to be elected.
If you vote in person at the meeting, you may cast votes for one
candidate or distribute votes among two or more candidates. The
individuals named in the accompanying proxy will have
discretionary authority to cumulate votes among candidates. If you
give the accompanying proxy and do not revoke it, you will not have the
ability to direct that your votes be cumulated.
All shares represented at the Annual Meeting by properly
executed proxies will be voted in accordance with the instructions
indicated on the proxies. If no instructions are indicated, the
proxies will be voted FOR the Board of Directors' nominees for
directors and FOR the proposal to ratify the Board of Directors'
appointment of PricewaterhouseCoopers LLP as independent auditors
for fiscal year 1999. If any other matters are properly
presented at the Annual Meeting for action, the proxies will have
discretion to vote. The Board of Directors of the Company does
not know of any other matters to be brought before the Annual Meeting.
QUORUM
At the close of business on March 12, 1999, the record date
for the meeting, there were issued and outstanding 173,500,811
shares of common stock, all of one class. If at least a majority
of the outstanding shares as of the record date are present in
person or by proxy at the meeting, a quorum will exist.
Abstentions and broker non-votes are counted as present for
establishing a quorum. A broker non-vote occurs when a broker
votes on some matters on the proxy card but not on others,
usually because he does not have the authority to do so. A broker
non-vote will have no effect on the outcome of either proposal.
Votes may be cast in favor of or withheld in the election of directors.
Votes withheld will be excluded from the vote. Abstentions on
the proposal to ratify the appointment of independent auditors will
have the effect of a negative vote.
<PAGE>
ELECTION OF DIRECTORS
STRUCTURE
The Company's Board of Directors is divided into three
classes. Stockholders elect one class at each annual meeting to
serve a three-year term. Directors elected at the 1999 Annual
Meeting of Stockholders will serve a term of three years to
expire in 2002. Except as you otherwise specify in your proxy, your
proxy will be voted for the election of the nominees named below.
The candidates, up to the number of directors to be elected,
receiving the highest number of votes cast by stockholders will be
elected.
If any of the nominees become unable or otherwise unavailable
to serve, 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. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF MESSRS. CASON,
MARTIN, ROSE, AND WHITMIRE.
Further information concerning the nominees for election and
the other directors appears below.
NOMINEES FOR TERMS EXPIRING IN 2002
Thomas W. Cason, 56, 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. He was
elected a director of the Company in 1995.
Jerry C. Martin, 66, served as the Company's Senior Vice
President and Chief Financial Officer from 1985 until his
retirement in June 1997. Prior to 1985, he held various
positions with Global Marine Drilling Company, the Company's domestic
dayrate drilling subsidiary. Mr. Martin was first elected a director of
the Company in 1993.
Robert E. Rose, 60, has been the Company's President and Chief
Executive Officer since re-joining the Company in May 1998. He
began his professional career with Global Marine in 1964 and left
the Company in 1976. Mr. Rose then held executive positions with
other offshore drilling companies, including more than a decade
as President and Chief Executive Officer of Diamond Offshore
Drilling, Inc. and its predecessor, Diamond M Company. He resigned from
Diamond Offshore in April 1998 and served as President and Chief
Executive Officer of Cardinal Services, Inc., an oil services
company, before re-joining the Company. Mr. Rose remains a
director of Cardinal Services, Inc. He was elected a director of
the Company in May 1998.
John Whitmire, 58, retired in 1998 as Chairman and Chief
Executive Officer of Union Texas Petroleum. Prior to joining
Union Texas in 1996, Mr. Whitmire's career spanned over 30 years at
Phillips Petroleum Company, where he held senior management
positions in Phillips' worldwide exploration and production
operations. He served as Executive Vice President-Exploration
and Production of Phillips and was a member of Phillips' board of
directors. Mr. Whitmire previously served on the board of MAPCO.
Mr. Whitmire was elected a director of the Company in February
1999.
<PAGE>
The members of the Board of Directors who are not subject to
election at the 1999 Annual Meeting are as follows.
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2001
C. Russell Luigs, 65, has been the Company's Chairman of the
Board since 1982, and he was the Company's Chief Executive
Officer from the time he joined the Company in 1977 until May 1998. He
also served as President of the Company from 1977 to May 1997.
Mr. Luigs was first elected a director of the Company in 1977.
Edward R. Muller, 47, 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 is also a Director of Whittaker Corp. He was elected a
director of the Company in 1997.
Paul J. Powers, 64, has been Chairman of the Board and Chief
Executive Officer of Commercial Intertech Corp. since 1987 and
Chairman of the Board of CUNO Incorporated since 1996. Commercial
Intertech is a multi-national manufacturer of hydraulic systems,
Astron pre-engineered buildings and metal products. CUNO is a
worldwide producer of fluid purification systems. Mr. Powers is
also a director of First Energy Corp. and Twin Disc, Inc. Mr.
Powers was elected a director of the Company in 1995.
John G. Ryan, 46, who joined the Company in 1982, was the
Company's President and Chief Operating Officer from May 1997 to
May 1998. Previously, Mr. Ryan was Chairman and Chief Executive
Officer of Global Marine Drilling Company, the Company's domestic
dayrate drilling subsidiary, as well as the Company's Corporate
Secretary, since 1993, prior to which he was the Company's Senior
Vice President, General Counsel and Secretary. He is presently
an employee of the Company on medical leave. He was first elected a
director of the Company in 1997.
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2000
Edward A. Blair, 63, was President of BHP Petroleum
(Americas), Inc. from 1994 until his retirement in April 1998.
Previously, he was President of Hamilton Brothers Oil and Gas
Limited until its acquisition by BHP Petroleum in 1991, after
which he served as President of the Europe, Russia, Africa and Middle
Eastern Region of BHP Petroleum. Mr. Blair was elected a director
of the Company in November 1998.
Edward J. Campbell, 71, 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 Titan 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, 66, 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. and CUNO Incorporated. Mr. Galvin
was first elected a director of the Company in 1979.
<PAGE>
Ben G. Streetman, 59, is Dean of the College of Engineering
and a Professor of Electrical and Computer Engineering at The
University of Texas at Austin. Dr. Streetman is also a director
of National Instruments, Inc. and Custom Tracks, Inc. He was first
elected a director of the Company in 1997.
DIRECTOR WITH TERM EXPIRING IN 1999
Donald B. Brown, 72, is an investor and a consultant to the
energy exploration and development industry. He was first
elected a director of the Company in 1982. Mr. Brown will not stand for
reelection in accordance with the mandatory retirement provisions
for directors in the Company's By-laws.
BOARD COMMITTEES
During 1998, the Board of Directors held four meetings. The
Board of Directors has five standing committees. During 1998,
each director of the Company attended at least 75% of the meetings of
the Board and committees of the Board on which he served.
EXECUTIVE COMMITTEE - The Company's Executive Committee
consists of five directors: Edward J. Campbell, Chairman, Thomas
W. Cason, John M. Galvin, C. Russell Luigs and Paul J. Powers. 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 1998.
AUDIT COMMITTEE - The Company's Audit Committee consists of
four non-employee directors: Thomas W. Cason, Chairman, Edward J.
Campbell, Jerry C. Martin and Ben G. Streetman. Members of the
Committee, the Company's independent auditors, and the head of
the Company's internal audit staff attend Committee meetings. 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 1998, the Audit Committee held four meetings.
COMPENSATION COMMITTEE - The Company's Compensation Committee
consists of six non-employee directors: John M. Galvin, Chairman,
Edward A. Blair, Donald B. Brown, Edward R. Muller, Paul J.
Powers, and John Whitmire. The Compensation Committee recommends to the
Board remuneration arrangements for senior management and
directors, the adoption of compensation plans in which officers
and directors are eligible to participate, and the grant of benefits
under compensation plans, and it approves stock option grants and
certain other compensation. The Compensation Committee held five
meetings during 1998.
FINANCE COMMITTEE - The Company's Finance Committee consists
of five non-employee directors: Paul J. Powers, Chairman, Edward
A. Blair, Thomas W. Cason, John M. Galvin and Jerry C. Martin. The
Committee reviews the Company's annual financial plan, recommends
to the Board material capital expenditures, acquisitions and
financings, and advises with respect to the Company's external
financial relationships. During 1998, the Finance Committee held
four meetings.
NOMINATING COMMITTEE - The Company's Nominating Committee
consists of five non-employee directors: Donald B. Brown,
Chairman, Edward J. Campbell, Edward R. Muller, Ben G. Streetman
<PAGE>
and John Whitmire. The Nominating Committee, which held four
meetings during 1998, recommends to the Board nominees for
election as directors. The Committee considers the performance of
incumbent directors in determining whether they should be nominated to
stand for reelection. The Committee also considers qualified nominees
recommended by stockholders. Any recommendation for the 2000
election of directors should be submitted in writing to the
Corporate Secretary of the Company at 777 North Eldridge Parkway,
Houston, Texas 77079.
DIRECTOR COMPENSATION
NON-EMPLOYEE DIRECTOR COMPENSATION
Board members that are not salaried employees receive separate
compensation for Board service. That compensation includes:
Annual Retainer . . . . . . . . . . . . . . $ 28,000
Board Attendance Fee (regular meeting). . . . . $ 1,000
Board Attendance Fee (special meeting
attended in person) . . . . . . . . . . $ 1,500
Board Attendance Fee (special meeting
attended by phone) . . . . . . . . . . $ 1,000
Committee Attendance Fee . . . . . . . . . . $ 500
Annual Option Grant . . . . . . . . . . . . . 3,000 shares
DIRECTOR OPTIONS
Options to purchase shares of common stock are granted to
directors who, as of the date of grant, are not employees and
have not been employees for any part of the preceding fiscal year.
Each option grant, vesting in equal installments over two years and
having a ten-year term, has an exercise price equal to the fair
market value of the common stock on the date of grant. At
present, all of the directors except Messrs. Luigs, Martin, Rose and
Ryan are eligible non-employee directors. The earliest Mr. Martin,
who is a former employee, could become eligible to participate is May
1999.
A director receives an initial 10,000-share option on the
date he first achieves eligibility. He automatically receives an
additional 3,000-share option on the adjournment date of each
annual meeting of stockholders in each subsequent year in which
he remains eligible. Mr. Blair received an initial option grant for
10,000 shares at a per share exercise price of $13.00 when he
joined the Board in November 1998, and Mr. Whitmire received an
initial option grant for 10,000 shares at a per share exercise
price of $7.6875 when he joined the Board in February 1999. In
May 1998, Messrs. Brown, Campbell, Cason, Galvin, Muller, Powers, and
Dr. Streetman each received a 3,000- share option at the per
share exercise price of $25.3125.
DIRECTOR RETIREMENT PLAN
Non-employee directors participate in a retirement plan for
outside directors. Each participant vests in an annual retirement
benefit equal to a percentage of the highest annual retainer fee in
effect at any time during the one-year period preceding termination
of his Board service. The percentage is 20% after one year of
service up to 100% after five years of service. 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. All directors except Messrs. Luigs, Rose
and Ryan participate in the plan. Credited years of service at
December 31, 1998 are as follows: Messrs. Brown, Campbell and
Galvin, 15 years; Messrs. Cason and Powers, 3 years; Messrs. Martin
and Muller and Dr. Streetman, 1 year; and Messrs. Blair and
Whitmire, 0 years.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Listed below is the only person who, to the knowledge of the
Company, may be deemed to be a beneficial owner, as of the record
date, of more than 5% of the Company's common stock.
NAME AND ADDRESS SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF
CLASS(1)
Merrill Lynch & Co., Inc. 14,500,000(2) 8.36%
World Financial Center,
North Tower
250 Vesey Street
New York, N.Y. 10381
________________
(1) The percentages are based on the number of issued and
outstanding shares of common stock at March 12, 1999.
(2) The number of shares indicated is based on a statement
on Schedule 13G, dated February 14, 1999, which was filed
jointly by Merrill Lynch & Co., Inc. ("ML&Co.") (on behalf
of Merrill Lynch Asset Management Group ("AMG")) and Merrill
Lynch Growth Fund (the "Fund"). ML&Co. is a parent holding
company. AMG is an operating division of ML&Co. consisting of
ML&Co.'s indirectly owned asset management subsidiaries,
including Merrill Lynch Asset Management, L.P. which holds
shares of the Company's common stock and is an investment advisor
registered under Section 203 of the Investor's Advisor's Act of
1940. AMG disclaims beneficial ownership of the shares.
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 12, 1999, the beneficial
ownership of the Company's common stock by each director and nominee, the
executive officers named in the Summary Compensation Table, 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)
Edward A. Blair 0 -
Donald B. Brown 24,653 (c) -
Edward J. Campbell 37,059 (c) -
Thomas W. Cason 20,500 (c) -
John M. Galvin 32,000 (c) -
C. Russell Luigs 1,509,807 (d)(e) -
Jon A. Marshall 313,203 (d)(e) -
Jerry C. Martin 203,817 (d) -
James L. McCulloch 119,586 (d) -
Edward R. Muller 12,500 (c) -
Paul J. Powers 19,000 (c) -
Robert E. Rose 126,500 (d) -
John G. Ryan 454,600 (d) -
BenG. Streetman 8,500 -
Douglas K. Vrooman 161,750 (d) -
John Whitmire 0 -
Marion M. Woolie 110,609 (d)(e) -
All of the above and other
executive officers as a
group (20 persons) 3,349,664 (c)(d)(e) 1.9%
_______________________
(a) Each person has sole voting and investment power with
respect to the shares listed, unless otherwise indicated.
(b) As of March 12, 1999, 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 12, 1999, through the exercise of non-employee
director stock options, as follows: Mr. Brown, 10,500;
Mr. Campbell, 22,500; Mr. Cason, 17,500; Mr. Galvin, 29,500;
Mr. Muller, 11,500; Mr. Powers, 17,500; Dr. Streetman, 6,500;
and the group, 115,500.
(d) Includes shares that may be acquired within sixty days
of March 12, 1999, through the exercise of employee stock
options, as follows: Mr. Luigs, 1,174,167; Mr. Marshall,
283,705; Mr. Martin, 32,596; Mr. McCulloch, 18,750; Mr. Rose,
125,000; Mr. Ryan, 195,588; Mr. Vrooman, 116,250; Mr. Woolie,
55,500; and the group, 2,069,314.
(e) Includes shares attributable to accounts under the Company's
401(k) Savings Incentive Plan at March 12, 1999, as follows:
Mr. Luigs, 31,587; Mr. Marshall, 2,457; Mr. Woolie, 9,109;
and the group, 43,153.
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION POLICIES AND PROGRAMS
The Compensation Committee sets the compensation of the
Chief Executive Officer and his direct reports, including the
senior executive officers named in the Summary Compensation
Table. The Committee's goals are to develop and maintain compensation
programs that preserve and enhance stockkholder value. The
Committee has designed the Company's executive compensation
program so that it:
* Motivates executives to increase stockholder value;
* Rewards effective, efficient management; and
* Attracts and retains quality executives.
The executive compensation program consists of four
elements: base salary, annual management incentive awards, stock
options, 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. Under the program, a high proportion of the
compensation of these officers is "at risk," specifically annual
incentive awards, stock options, and long-term incentive awards.
Annual incentive awards permit the Committee to recognize
individual performance on an annual basis. These awards are
based to a large degree on an officer's contribution to Company
performance for a given year. Stock options and long-term
incentive awards tie long-term compensation directly to stock
price appreciation, cumulative earnings and earnings per share, each of
which benefits all Company stockholders.
The Committee makes awards and takes actions under the
programs considering the overall costs and benefits to the
Company. Specifically, the Committee considers the costs and benefits
of preserving potential tax deductibility of executive pay under
Section 162(m) of the Internal Revenue Code in making awards. The
Committee is advised periodically by a nationally recognized,
independent executive compensation consulting firm on competitive
salary levels, bonus practices, and stock programs of leading
drilling contractors.
PEER GROUP COMPARISON
To evaluate competitive compensation levels, the Committee
reviews the compensation provided by a peer group composed of
ENSCO International Incorporated; Nabors Industries, Inc.; Noble
Drilling Corporation; R&B Falcon Corporation; Rowan Companies, Inc.;
Transocean Offshore Inc.; and Diamond Offshore Drilling, Inc.
Diamond Offshore Drilling Inc. replaces Parker Drilling Company
in the peer group used for competitive compensation to provide a
truer peer group than that used in the cumulative total shareholder
return graph. Diamond has not been used in the total shareholder
return graph because it has not been publicly-traded over the
period reflected in the table and a majority of its shares are
privately held. The Committee compares the compensation of the
five highest paid executives in the Company and in each of the
peer group companies. The Committee also reviews an "Executive
Compensation Analysis" prepared by its compensation consulting
firm. The analysis examines salaries and annual bonuses earned
by each executive, the estimated value of recent option grants
(using the "Black-Scholes" value), and the values of other recent
long-term incentive awards. The analysis reviewed in 1998 indicated
<PAGE>
that the Company's total compensation levels in 1997 were less than
the competitive median for the five highest paid executives as a
group, and Mr. Luigs' total compensation was approximately 80% of the
average total compensation for the Chief Executive Officer
provided by other peer group companies.
ANNUAL COMPENSATION
BASE SALARY: The 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 Committee evaluates the performance of each
officer focusing on business results in the officer's area of
responsibility and his particular contribution to overall Company
performance, but also considering advancements in the executive's
managerial skills.
In February 1998, the Committee noted the following
improvements in operating results for 1997 as compared to 1996:
revenue increased 57% to $1,067 million, operating income
increased 117% to $305 million, and, excluding non-recurring tax credits
in 1996 and 1997 and an extraordinary loss on debt extinguished in
1997, net income increased 145% to $270 million and net income
per share increased from $.66 to $1.58. Based on improved Company
performance and an evaluation of each officer's performance, in
February 1998 the Committee awarded salary increases to senior
executive officers averaging 7%. In February 1999, the Committee
reviewed the deteriorating industry conditions and operating
results for 1998 as compared to 1997 and determined that officers
would not receive salary increases in 1999.
INCENTIVE AWARDS: In 1998, as in prior years, incentive
awards for the Chief Executive Officer and his direct reports
were to be determined by the Committee at year-end based on review of
both Company performance and performance of each individual
executive. In February 1999, the Committee reviewed overall
Company results for 1998 as compared to 1997 and determined that
senior executive officers, including the Chief Executive Officer,
would not receive incentive awards for 1998.
LONG-TERM COMPENSATION
STOCK OPTIONS: The Compensation Committee believes that
stock options are critical in motivating and rewarding the
creation of long-term stockholder value. 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 are made with option
exercise prices equal to the fair market value of the underlying stock
at the time of grant. Holders benefit only when and to the extent
the stock price increases after the option grant.
In February 1998, the Compensation Committee approved annual
stock option grants to executive officers and other key employees,
as recommended by the Chief Executive Officer. Option awards were
made to approximately 170 employees and officers and covered
approximately 1,090,000 shares of underlying common stock. The
Committee considered the performance of the individual executive
officers and other key employees in allocating 1998 stock option
grants.
<PAGE>
LONG-TERM INCENTIVE AWARDS: The Committee utilizes long-term
incentive awards directly tied to Company performance to provide
competitive compensation to senior executives and to motivate them
towards effective long-term strategic management of the Company's
assets and operations. The long-term incentive awards are based on
Company performance for a three-year period and directly tie
compensation to stockholder interests. The total amount of these
awards and their allocation among senior executive officers is
based on competitive practices, continuing progress of the
Company, and individual performance.
Long-term incentive awards granted in 1998 depend on Company
performance for the three-year period ending December 31, 2000,
measured by three long-term performance criteria: cumulative
earnings before interest, taxes, depreciation and amortization;
earnings per share in 2000; 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 2000
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.
When the threshold level of performance has been achieved, 25% of the
shares allocated to that criteria are earned, and the amount of the
award for that criterion increases up to that criterion's full
allocated amount if the pre-established "target" level of
performance is achieved. The full amount of the award will be
earned only if target level performance is achieved for all three
performance criteria.
In February 1999, the Committee certified that the threshold
established for the long-term incentive awards granted in 1996
had been exceeded, and 84% of the full amount under these grants was
paid out in February 1999. The long-term incentive awards paid out
in February 1999 qualify as "performance-based compensation"
under section 162(m) of the Internal Revenue Code.
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 compensation
of Mr. Luigs and Mr Rose, each of whom served as the Chief Executive
Officer during part of 1998, are described below.
Mr. Luigs served as Chief Executive Officer until May 5, 1998,
when Mr. Rose was elected. In February 1998, the Committee
determined that Mr. Luigs' salary should be increased $25,000
(4.8%) from $525,000 to $550,000 based on the competitive
compensation levels of peer group companies. The Committee also
approved annual stock option grants to employees, including an
option grant to Mr. Luigs covering 150,000 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 1997 as compared to 1996. Finally, the Committee
approved the grant of performance-based long-term incentive
awards in 1998 for a group of senior executive officers, including
those named in the Summary Compensation Table other than Mr. Woolie
who was not a senior executive officer at the time of the grant.
Mr. Luigs was given the opportunity to earn up to a maximum of 75,000
shares of the Company's stock over the three-year performance cycle
ending December 31, 2000, if all long-term performance targets are
achieved.
<PAGE>
Mr. Rose was elected President and Chief Executive Officer on
May 5, 1998. Mr. Rose's annual salary was set at $525,000 after
consideration of competitive compensation levels of peer group
companies. The Committee also approved an option grant to Mr. Rose
covering 500,000 shares. This grant was based on the Committee's
review of competitive stock option grant levels in peer group
companies and negotiations with Mr. Rose in connection with his
employment. Finally, the Committee approved a grant of
performance-based long-term incentive awards to Mr. Rose on the
same terms as the awards granted to other senior executive officers
in February 1998. Mr. Rose was given the opportunity to earn up
to a maximum of 75,000 shares of the Company's common stock over the
three-year performance cycle ending December 31, 2000, if all
long-term performance targets are achieved. The long-term incentive
award granted to Mr. Rose is intended to be deductible under
section 162(m) of the Internal Revenue Code.
<PAGE>
In February 1999, the Committee determined that senior
executive officers, including Mr. Luigs and Mr. Rose, would not
receive incentive bonuses based on overall Company results for
1998 as compared to 1997. In addition, the Committee certified that
each of the three threshold criteria for the long-term incentive
awards granted in 1996 had been exceeded and approved 84% of the
full target level payout under these awards to senior executive
officers, including Messrs. Luigs, Ryan and Marshall. Mr. Luigs
received 42,028 shares of the Company's common stock as payout
under his 1996 long-term incentive award.
John M. Galvin, Chairman Edward A. Blair
Donald B. Brown Edward R. Muller
Paul J. Powers John Whitmire
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
Annual Compensation
Awards Payouts
Securities
Name and Underlying LTIP All Other
Principal Position Year Salary Bonus(1) Options(2) Payouts(3) Compensation
($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Robert E. Rose(5) 1998 $346,022 $ 0 500,000 $ 0 $ 0
President and Chief
Executive Officer
C. Russell Luigs,(6) 1998 $547,917 $ 0 150,000 $ 323,090 $17,354
Chairman of the Board and 1997 $522,171 $525,000 75,000 $2,493,750 $12,475
Chief Executive Officer 1996 $500,000 $250,000 90,000 $1,556,250 $11,818
John G. Ryan,(7) 1998 $357,083 $ 0 75,000 $ 161,545 $ 9,038
President and Chief 1997 $314,496 $200,000 57,500 $1,246,875 $ 5,109
Operating Officer 1996 $286,708 $125,000 65,000 $ 726,250 $ 4,746
Jon A. Marshall, 1998 $310,113 $ 0 100,000 $ 80,773 $ 8,868
Executive Vice President 1997 $261,856 $160,000 35,000 $ 623,438 $ 4,914
and Chief Operating Officer 1996 $234,167 $100,000 45,000 $ 518,750 $ 4,521
Douglas K. Vrooman(8) 1998 $202,083 $ 0 35,000 $ 0 $ 8,824
President, Applied Drilling 1997 $169,167 $105,000 12,500 $ 0 $ 5,631
Technology Inc.
Marion M. Woolie(9) 1998 $201,136 $ 0 58,500 $ 0 $ 8,437
President, Global Marine
Drilling Company
James L. McCulloch 1998 $173,250 $ 0 30,000 $ 0 $ 7,982
Vice President, General 1997 $153,250 $ 80,000 7,500 $ 0 $ 4,625
Counsel and Assistant 1996 $147,213 $ 73,000 15,000 $ 0 $ 3,933
Secretary
</TABLE>
(1) Excluding Mr. Vrooman's 1997 bonus, bonuses based on
service during each year were awarded in the
following year and executive officers could elect
between payment in cash or shares of common stock.
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. Mr. Vrooman received a quarterly cash
bonus based on the performance of Applied Drilling
Technology Inc. for each quarter of 1997.
(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" consist
of amounts earned under long-term incentive awards
granted in 1994, 1995 and 1996 and paid in 1997,
1998, and 1999, the payment amounts being based on
Company performance during the periods 1994 through
1996, 1995 through 1997, and 1996 through 1998.
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.
(4) The amounts indicated under "All Other Compensation"
for 1998 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. Rose, $0; Mr. Luigs, $8,854;
Mr. Ryan, $7,706; Mr. Marshall, $7,713; Mr.
Vrooman, $7,168; Mr. Woolie, $7,098; and Mr.
McCulloch, $7,022); plus (b) insurance premiums
paid by the Company with respect to term life
insurance for the benefit of the named executive
officers (Mr. Rose, $0; Mr. Luigs, $8,500; Mr. Ryan,
$1,332; Mr. Marshall, $1,155; Mr. Vrooman, $1,656;
Mr. Woolie, $1,339; and Mr. McCulloch, $960).
footnotes continued on next page
<PAGE>
footnotes (cont.)
(5) Mr. Rose was elected President and Chief Executive
Officer on May 5, 1998.
(6) Mr. Luigs served as Chairman and Chief Executive
Officer until May 5, 1998. Thereafter, Mr. Luigs
continued as Chairman and remained an employee of
the Company.
(7) Mr. Ryan resigned as President and Chief Operating
Officer on May 5, 1998. Mr. Ryan continued as an
employee of the Company on medical leave.
(8) Mr. Vrooman has been employed by a subsidiary of the
Company during each of the last three years but was
not appointed an executive officer until 1997.
(9) Mr. Woolie has been employed by a subsidiary of the
Company during each of the last three years but was
not appointed an executive officer until 1998.
<TABLE>
OPTION GRANTS IN 1998
<CAPTION>
Individual Grants
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation for
Option Term(2)
Number Percent
of shares of Total
Underlying Options Exercise or
Options Granted to Base Price
Granted(1) Employees ($ per Expira-
Name (#) in 1998 share) tion Date 0% 5% 10%
($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. E. Rose 500,000 24.54% $25.3125 5-05-2008 $ 0 $ 7,959,448 $ 20,170,803
C. R. Luigs 150,000 7.36% $24.9375 2-10-2008 $ 0 $ 2,352,459 $ 5,961,593
J. G. Ryan 75,000 3.68% $24.9375 2-10-2008 $ 0 $ 1,176,229 $ 2,980,796
J. A. Marshall 50,000 2.45% $24.9375 2-10-2008 $ 0 $ 784,153 $ 1,987,198
50,000 2.45% $25.3125 5-05-2008 $ 0 $ 795,945 $ 2,017,080
D. K. Vrooman 35,000 1.72% $24.9375 2-10-2008 $ 0 $ 548,907 $ 1,391,038
M. M. Woolie 13,000 0.64% $24.9375 2-10-2008 $ 0 $ 203,880 $ 516,671
45,000 2.21% $25.3125 5-05-2008 $ 0 $ 716,350 $ 1,815,372
J. L. McCulloch 30,000 1.47 % $24.9375 2-10-2008 $ 0 $ 470,492 $ 1,192,319
All Stockholders(3) N/A N/A $24.9375 N/A $ 0 $2,707,054,090 $6,860,206,560
</TABLE>
(1) All options granted to the named officerswere granted on
February 10 and May 5, 1998, at exercise prices equal to
the average of the high and low per share market prices
of the common stock on the date of grant. Each option
vests in equal installments over four years. The right
to exercise unexercised options is subject to acceleration
in certain circumstances as described under "Employment
Agreements and Termination Arrangements," below, and upon death,
disability and certain non-cause terminations of employment.
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 arbitrarily assumed rates
of annual compound stock price appreciation from the
date of grant over the full ten-year term of the option.
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) For comparative purposes, shown are the total gains that
could be realized over a ten-year period by stockholders
based on 172,610,073 shares of common stock outstanding
on February 10, 1998, and using the $24.9375 average of
the stock's high and low market prices on that date as
the base price.
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN 1998
AND YEAR-END OPTION VALUES
<CAPTION>
Number of Securities
Number of Underlying Exercised Value of Unexercised In-the-
Shares Options at Year-End Money Options at Year-End(2)
Underlying (#) ($)
Options Value
Exercised Realized(1)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
R. E. Rose 0 $ 0 0 500,000 $ 0 $ 0
C. R. Luigs 0 $ 0 1,426,667 251,250 $ 8,130,497 $ 0
J. G. Ryan 75,758 $1,532,319 146,213 150,625 $ 412,761 $ 0
J. A. Marshall 0 $ 0 238,705 148,750 $ 1,160,862 $ 0
D. K. Vrooman 0 $ 0 98,125 56,875 $ 362,813 $ 0
M. M. Woolie 18,000 $ 354,966 33,250 78,750 $ 91,750 $ 0
J. L. McCulloch 24,614 $ 557,725 5,625 43,125 $ 0 $ 0
</TABLE>
(1) Represents the spread between the exercise price and the
sale price of the shares received upon exercise if such
shares were sold following exercise or the spread between
the exercise price and the fair market value of the shares
received if such shares were held following exercise.
(2) Represents the positive spread between the exercise price
and the year-end fair market value of $8.875.
<TABLE>
1998 LONG-TERM INCENTIVE AWARDS
<CAPTION>
Estimated Future Payouts
Under
Number of Shares Performance or Non-Stock Price-Based Plans(2)
Units or Other Period
Other Rights(1) Until Maturation Target/
Name (#) or Payout Threshold Maximum
(#) (#)
<S> <C> <C> <C> <C>
R. E. Rose 75,000 3 Years 18,750 75,000
C. R. Luigs 75,000 3 Years 18,750 75,000
J. G. Ryan 50,000 3 Years 12,500 50,000
J. A. Marshall 30,000 3 Years 7,500 30,000
D. K. Vrooman 20,000 3 Years 5,000 20,000
M. M. Woolie 0 - - -
J. L. McCulloch 15,000 3 Years 3,750 15,000
</TABLE>
(1) Awards depend on the performance of the Company for the
three-year period ending December 31, 2000, as measured by
the following performance criteria: cumulative earnings
before interest, taxes, depreciation and amortization;
earnings per share in 2000; and stock price growth. Shares
of common stock underlie each award and are allocated among
the performance criteria. If a pre-established threshold
level of performance is achieved for a criterion, twenty-
five percent of the award allocated to the criterion will be
earned. After reaching the threshold, the amount of the
award increases up to the full amount of the award if a pre-
established target level of performance is achieved.
(2) Expressed in terms of numbers of shares of common stock
and ignores fractional shares. 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 columns for estimated future payouts under non-stock
price-based plans in order to report total estimated future
payouts under the plan.
<PAGE>
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Years of Service
Remuneration 15 20 25 30 35
<C> <C> <C> <C> <C> <C>
$ 200,000 $100,000 $100,000 $100,000 $112,218 $132,218
$ 300,000 $150,000 $150,000 $150,000 $172,218 $202,218
$ 400,000 $200,000 $200,000 $200,000 $232,218 $272,218
$ 500,000 $250,000 $250,000 $250,000 $292,218 $342,218
$ 600,000 $300,000 $300,000 $300,000 $352,218 $412,218
$ 700,000 $350,000 $350,000 $350,000 $412,218 $482,218
$ 800,000 $400,000 $400,000 $400,000 $472,218 $552,218
$ 900,000 $450,000 $450,000 $450,000 $532,218 $622,218
$ 1,000,000 $500,000 $500,000 $500,000 $592,218 $692,218
$ 1,100,000 $550,000 $550,000 $550,000 $652,218 $762,218
$ 1,200,000 $600,000 $600,000 $600,000 $712,218 $832,218
$ 1,300,000 $650,000 $650,000 $650,000 $772,218 $902,218
</TABLE>
Annual retirement benefits are based on a participant's
average annual salary and bonus. Amounts payable pursuant
to a nonqualified benefit equalization defined benefit plan
and a nonqualified executive supplemental defined benefit
plan are included. The benefits shown are computed based on
a single straight life annuity at normal retirement age and
reflect an offset for Social Security benefits under the
qualified defined benefit pension plan.
The full years of credited service as of December 31, 1998
for purposes of determining the entitlement to retire with a
benefit under all plans and for purposes of determining the
benefit under the qualified plan and the nonqualified
benefit equalization plan for each of the individuals named
in the Summary Compensation Table are: Mr. Rose, 13 years;
Mr. Luigs, 21 years; Mr. Ryan, 16 years; Mr. Marshall, 19
years; Mr. Vrooman, 4 years; Mr. Woolie, 16 years; and Mr.
McCulloch, 15 years. Messrs. Luigs, Ryan, Marshall, Woolie
and McCulloch each have the maximum of 15 full years of
employment under the nonqualified executive supplemental
plan as of December 31, 1998. Mr. Vrooman has 4 years of
employment under the plan. Under the terms of Mr. Rose's
employment agreement, he will be credited with three years
of employment under the nonqualified executive supplemental
plan for each actual year of service after May 5, 1998. The
Pension Plan Table assumes that years of service and annual
compensation for a particular individual are the same under
all plans.
<PAGE>
EMPLOYMENT AGREEMENTS AND TERMINATION ARRANGEMENTS
EMPLOYMENT AGREEMENTS
On May 5, 1998, the Company entered into an employment
agreement with Mr. Rose that terminates in October 2003.
The agreement specifies a minimum annual base salary of
$525,000. In the event Mr. Rose is terminated without
cause, including constructive termination by Mr. Rose due to
material change in his title or duties, a liquidation,
dissolution, consolidation or merger of the Company unless
the successor assumes the agreement, or following a change
in control, among other things, he will be entitled to
salary continuation for the greater of the remainder of the
term of the agreement or 24 months. A change in control is
defined as the acquisition of securities representing 35% or
more of the combined voting power of the Company by any
person or group acting in concert without Board approval,
the change in a majority of the Company's Board of Directors
following certain corporate transactions not approved by the
Board then in office, or the change in at least a majority
of the Board over a two year period. Upon his termination
due to disability, Mr. Rose will be entitled to three times
his annual salary. Mr. Rose's employment contract contains
a covenant not to compete that extends to one year after his
termination without cause or his voluntary or constructive
termination and extends for the term of the agreement in all
other cases.
In March 1999, the Company entered into a two-year
employment agreement with Mr. Ryan providing for salary and
benefit continuation if employment is terminated by the
Company for reasons other than fraud, dishonesty or other
misconduct harmful to the Company. In the event Mr. Ryan is
terminated without cause, including constructive termination
by Mr. Ryan within 12 months following a change of control,
he will be entitled to salary and benefit continuation for
the remainder of the term. A change of control is defined
as the acquisition of securities representing 35% or more of
the voting power of the Company by any person or group
acting in concert. In the event of termination due to
death, Mr. Ryan's estate or designated beneficiary will be
entitled to salary continuation for the remainder of the
term. Mr. Ryan's agreement contains a covenant not to
compete that extends to two years following termination of
employment.
SEVERANCE AGREEMENTS
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. Marshall, McCulloch, Vrooman and
Woolie. Each severance agreement, other than
Mr. Marshall's, contains a covenant not to compete that
extends to two years from termination of employment.
CHANGE IN CONTROL ARRANGEMENTS
The Company's non-employee director stock option plan
and outstanding option agreements under the Company's other
stock option plans provide that the right to exercise all
<PAGE>
options remaining unexercised shall accelerate, so that such
options will become immediately exercisable, upon a change
in control. In addition, the vesting of retirement benefits
under the Company's retirement plan for outside directors
accelerates upon the occurrence of a change-in-control.
Change in control for these purposes is the 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.
CUMULATIVE TOTAL SHAREHOLDER RETURN
The following line graph compares the changes in the
cumulative total shareholder returns of (i) the Company,
(ii) the Standard & Poor's 500 Stock Index, and (iii) a peer
group comprised of a weighted index of a group of other
companies in the Company's industry. The peer group is
comprised of: ENSCO International Incorporated; Nabors
Industries, Inc.; Noble Drilling Corporation; Parker
Drilling Company; R & B Falcon Corporation; Rowan Companies,
Inc.; and Transocean Offshore Inc. The graph assumes that
$100 was invested on December 31, 1993 in each of the
Company's common stock, the S&P 500 and the peer group
index, and that all dividends were reinvested.
<TABLE>
<CAPTION>
December December December December December December
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Global Marine Inc. $100 $ 88 $212 $500 $595 $218
S&P 500 Index $100 $101 $139 $171 $229 $294
Industry Index $100 $ 83 $155 $291 $434 $165
</TABLE>
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed
PricewaterhouseCoopers LLP as independent certified public
accountants for the Company and its subsidiaries for fiscal
year 1999. The Board seeks ratification of the appointment
by the stockholders. PricewaterhouseCoopers LLP 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, the Board of Directors will
reconsider its selection of independent accountants if this
appointment is not ratified by the stockholders. The vote
required for ratification is a majority of the shares
represented and voted at the meeting.
Representatives of PricewaterhouseCoopers LLP will be
present at the meeting to make a statement if they desire to
do so and to respond to appropriate questions. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
OTHER MATTERS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Blair, Brown, Galvin, Muller and Powers served
as members of the Company's Compensation Committee during
all or part of 1998. 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
1998 or any prior year.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Federal securities laws require the Company's
executive officers and directors, and persons who own more
than ten percent of the Company's common stock, to file initial
reports of ownership and reports of changes in ownership of
the Company's equity securities with the Securities and
Exchange Commission and the New York Stock Exchange. Based
solely on a review of such reports furnished to the Company
and written representations that no report on Form 5 was
required for 1998, the Company believes that no director,
officer or beneficial owner of more than ten percent of the
Common Stock failed to file a report on a timely basis
during 1998, except that Ben G. Streetman, a director, filed
one Form 4 late covering a an open market purchase of common
stock through a broker, and Robert E. Rose, the Company's
President and Chief Executive Officer and a director, filed
one Form 4 late covering an open market purchase of common
stock through a broker.
SOLICITATION
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 owners of
the common stock. The Company expects to reimburse such
parties for their reasonable out-of-pocket expenses incurred
in connection therewith.
<PAGE>
REVOCATION OF PROXIES
You may revoke your proxy at any time before it is
voted by any of the following actions: (i) notifying the
Corporate Secretary in writing any time before it is voted;
(ii) submitting a subsequent proxy; or (iii) voting in
person at the Annual Meeting (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 at the Company's principal
executive offices, 777 North Eldridge Parkway, Houston,
Texas 77079.
STOCKHOLDERS' PROPOSALS
The federal securities laws provide stockholders with
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 2000 and
otherwise eligible must be directed to the Corporate
Secretary of the Company at 777 North Eldridge Parkway,
Houston, Texas 77079, and must be received no later than
November 26, 1999.
If a stockholder desires to bring a matter before an
annual meeting or nominate a person to be a director which
is not the subject of a proposal timely submitted for
inclusion in the Company's proxy statement, the stockholder
must follow the procedures outlined in the Company's By-
laws. The By-laws require timely notice in writing of the
matter, and receipt of the written notice by the Corporate
Secretary not later than the close of business on the 90th
day and not earlier than the 120th day prior to the first
anniversary of the preceding year's annual meeting. The
deadline for delivery and receipt of such notices for the
2000 annual meeting of stockholders is the close of business
on February 4, 2000. A copy of the Company's By-laws is
available upon request from the Corporate Secretary of the
Company at 777 North Eldridge Parkway, Houston, Texas 77079.
OTHER MATTERS TO BE PRESENTED
The Board of Directors does not know of any other
matters to be presented for action at the meeting. If any
other matters should properly come before the Annual
Meeting, the proxy holders intend to vote on such matters in
accordance with their best judgment.
VOTING VIA THE INTERNET OR BY TELEPHONE
SHARES REGISTERED DIRECTLY IN THE NAME OF THE STOCKHOLDER;
401(k) SHARES
If your shares are registered directly with Harris Bank
or are held through the Global Marine Savings Incentive Plan,
you may vote telephonically by calling the toll-free telephone
number listed on your proxy card or voting instruction form. You
may also vote via the Internet at the following address on the
World Wide Web:
www.harrisbank.com/wproxy
SHARES REGISTERED IN THE NAME OF A BROKERAGE FIRM OR BANK
If your shares are registered with a brokerage firm or
bank, you may be eligible to vote via the Internet or to
vote telephonically by calling the telephone number
referenced on your broker's or bank's voting form. A number
of brokerage firms participate in a program provided through
ADP Investor Communication Services that offers telephone
and Internet voting options. This program is different from
<PAGE>
the program provided by Harris Bank for shares registered
directly in the name of the stockholder. If your shares are
held in an account at a brokerage firm or bank participating
in the ADP program, you may vote those shares telephonically
by calling the telephone number referenced on your voting
form or you may vote electronically via the Internet at the
following address on the World Wide Web:
www.proxyvote.com
You should understand that the usual charges you bear for
accessing the Internet may apply to your voting via the Internet.
GLOBAL MARINE INC.
By ALEXANDER A. KREZEL
Corporate Secretary
Houston, Texas
March 26, 1999
<PAGE>
[FORM OF PROXY CARD]
GLOBAL MARINE INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDER -- MAY 6, 1999
R. E. Rose, W. M. Ralls, and J. L. McCulloch, 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, 111 N. Post Oak Lane, Houston, Texas on
Thursday, May 6, 1999, 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.)
Dear Stockholder:
On the reverse side of this card are
instructions on how to vote your shares for
the election of directors and all other
proposals by telephone or over the Internet.
Please consider voting by telephone or over
the Internet. Your vote is recorded as if you
mailed in your proxy card. We believe voting
in this way is convenient.
Thank you for your attention to these
matters.
Global Marine Inc.
<PAGE>
(CONTINUED FROM OTHER SIDE)
GLOBAL MARINE INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK
ONLY ( )
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR 1-2.
1. Election of the following nominees as directors:
01-Thomas W. Cason, 02-Jerry C. Martin,
03-Robert E. Rose and 04-John Whitmire
___________________________________
Except nominee(s) written above
FOR WITHHELD FOR ALL
EXCEPT
( ) ( ) ( )
2. Ratification of appointment of PricewaterhouseCoopers
LLP as independent certified public accountants
for the Company and its subsidiaries
FOR WITHHELD 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.
DETACH PROXY CARD HERE
CONTROL NUMBER [Logo]
NOW YOU CAN VOTE YOUR SHARES BY TELEPHONE OR INTERNET!
QUICK EASY IMMEDIATE AVAILABLE 24 HOURS A DAY 7 DAYS A WEEK
GLOBAL MARINE INC. encourages you to take advantage of the new and
convenient ways to vote your shares. If voting by proxy, this year you
may vote by mail, or choose one of the two methods described below.
Your telephone or Internet vote authorizes the named proxies to vote
your shares in the same manner as if you marked, signed, and returned
your proxy card. To vote by telephone or Internet, read the accompanying
proxy statement and then follow these easy steps:
TO VOTE BY PHONE
Call toll free 1-888-215-6478 in the United States or Canada any time on a
touch tone telephone. There is NO CHARGE to you for the call.
Enter the 6-digit CONTROL NUMBER located above.
Option #1: To vote as the Board of Directors recommends for ALL proposals:
Press 1
When asked, please confirm your vote by pressing 1.
Option #2: If you choose to vote on each proposal separately, Press 0 and
follow the simple recorded instructions.
TO VOTE BY INTERNET
Go to the following website: www.harrisbank.com/wproxy
Enter the information requested on your computer screen, including your
6-digit CONTROL NUMBER located above.
Follow the simple instructions on the screen.
If you vote by telephone or the Internet, DO NOT mail back the proxy
card.
THANK YOU FOR VOTING!
<PAGE>
[FORM OF VOTING INSTRUCTION CARD, 401(k) PLAN]
[401(k) PLAN]
GLOBAL MARINE INC.
CONFIDENTIAL VOTING DIRECTIONS
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- MAY 6, 1999
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 12, 1999, 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, 111 N. Post
Oak Lane, Houston, Texas on Thursday, May 6, 1999, 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.
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. IF YOUR DIRECTIONS ARE NOT RECEIVED
BY APRIL 30, 1999, THE SHARES ATTRIBUTABLE TO YOUR ACCOUNT WILL NOT
BE VOTED.
(PLEASE INDICATE YOUR DIRECTIONS, SIGN AND DATE ON REVERSE SIDE
AND RETURN PROMPTLY.)
Dear Stockholder:
On the reverse side of this card are
instructions on how to vote your shares for the
election of directors and all other proposals by
telephone or over the Internet. Please consider
voting by telephone or over the Internet. Your
vote is recorded as if you mailed in your proxy
card. We believe voting in this way is
convenient.
Thank you for your attention to these
matters.
Global Marine Inc.
<PAGE>
[CONTINUED FROM OTHER SIDE)
GLOBAL MARINE INC.
[401(k) PLAN]
PLEASE MARK DIRECTIONS IN OVAL IN THE FOLLOWING MANNER USING DARK
INK ONLY ( )
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR 1-2.
1. Election of the following nominees as directors:
01-Thomas W. Cason, 02-Jerry C. Martin,
03-Robert E. Rose and 04-John Whitmire.
___________________________________
(Except nominee(s) written above)
FOR WITHHELD FOR ALL
EXCEPT
( ) ( ) ( )
2. Ratification of appointment of PricewaterhouseCoopers
LLP 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.
______________________ __________________
Signature Date
PLEASE INDICATE YOUR DIRECTIONS, DATE, AND SIGN EXACTLY AS YOUR NAME
APPEARS ON THIS CARD.
PROMPTLY RETURN USING THE ENCLOSED ENVELOPE.
DETACH PROXY CARD HERE
CONTROL NUMBER [Logo]
NOW YOU CAN VOTE YOUR SHARES BY TELEPHONE OR INTERNET!
QUICK EASY IMMEDIATE AVAILABLE 24 HOURS A DAY 7 DAYS A WEEK
GLOBAL MARINE INC. encourages you to take advantage of the new and
convenient ways to vote your shares. If voting by proxy, this year you
may vote by mail, or choose one of the two methods described below.
Your telephone or Internet vote authorizes the named proxies to vote
your shares in the same manner as if you marked, signed, and returned
your proxy card. To vote by telephone or Internet, read the accompanying
proxy statement and then follow these easy steps:
TO VOTE BY PHONE
Call toll free 1-888-698-8071 in the United States or Canada any time on
a touch tone telephone. There is NO CHARGE to you for the call.
Enter the 6-digit CONTROL NUMBER located above.
Option #1: To vote as the Board of Directors recommends for ALL proposals:
Press 1
When asked, please confirm your vote by pressing 1.
Option #2: If you choose to vote on each proposal separately, Press 0 and
follow the simple recorded instructions.
TO VOTE BY INTERNET
Go the following website: www.harrisbank.com/wproxy
Enter the information requested on your computer screen, including your
6-digit CONTROL NUMBER located above.
Follow the simple instructions on the screen.
If you vote by telephone or the Internet, DO NOT mail back the proxy card.
THANK YOU FOR VOTING!
