SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(C) or ss.240.14A-12
OCEANEERING INTERNATIONAL, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(I)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rules
14a-6(I)(3).
[ ] Fee Computed on table below per Exchange Act Rules 14a-6(I)4 and O-11.
1) Title of each class of securities to which transaction applies: N/A.
2) Aggregate number of securities to which transaction applies: N/A .
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11: (1) N/A .
4) Proposed maximum aggregate value of transaction: N/A .
------------
(1) Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
O- 11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A.
2) Form, Schedule or Registration Statement No.: N/A.
3) Filing Party: N/A.
4) Date Filed: N/A, 1996.
<PAGE>
(LOGO)
OCEANEERING INTERNATIONAL, INC.
16001 Park Ten Place, Suite 600, Houston, Texas 77084
July 15, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of Shareholders of
Oceaneering International, Inc., which will be held at the Baker & Botts, L.L.P.
Conference Room, One Shell Plaza - Mall Level, 910 Louisiana Street, Houston,
Texas, on Friday, August 23, 1996 at 10:00 a.m. Houston time.
On the following pages you will find the Notice of Annual Meeting of
Shareholders and Proxy Statement giving information concerning the matters to be
acted upon at the meeting. A copy of the Annual Report to Shareholders
describing the Company's operations during the fiscal year ended March 31, 1996
is enclosed.
I hope you will be able to attend the meeting in person. Whether or not you
plan to attend, please sign and return the enclosed proxy card promptly. Your
shares will be voted at the meeting in accordance with your proxy.
If you have shares in more than one name, or if your stock is registered in
more than one way, you may receive more than one copy of the proxy material. If
so, please sign and return each of the proxy cards you receive so that all of
your shares may be voted. I look forward to seeing you at the 1996 Annual
Meeting of Shareholders.
Sincerely,
John R. Huff
Chairman, President and
Chief Executive Officer
<PAGE>
OCEANEERING INTERNATIONAL, INC.
16001 Park Ten Place, Suite 600, Houston, Texas 77084
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held August 23, 1996
---------------
To the Shareholders of Oceaneering International, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Oceaneering
International, Inc., a Delaware corporation (the "Company"), will be held at the
Baker & Botts, L.L.P. Conference Room, One Shell Plaza - Mall Level, 910
Louisiana Street, Houston, Texas on Friday, August 23, 1996 at 10:00 a.m.
Houston time, for the following purposes:
(1) To elect one director as a member of the Board of Directors to serve
until the 1999 Annual Meeting of Shareholders or until a successor is duly
elected and qualified (Proposal 1);
(2) To consider and act upon a proposal to adopt the 1996 Incentive Plan
(Proposal 2);
(3) To consider and act upon a proposal to ratify the appointment of Arthur
Andersen LLP as independent auditors of the Company for the fiscal year ending
March 31, 1997 (Proposal 3); and
(4) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on July 9, 1996 is the record date for the
determination of shareholders entitled to notice of, and to vote at, the meeting
or any adjournment thereof.
The Board of Directors welcomes the personal attendance of shareholders at
the meeting. Whether or not you expect to be present at the meeting, please fill
in, date and sign the enclosed proxy and return it to the Company promptly in
the enclosed envelope. If you attend the meeting, you may, if you so desire,
withdraw your proxy and vote in person.
By Order of the Board of Directors,
George R. Haubenreich, Jr.
Vice President, General Counsel
and Secretary
July 15, 1996
YOUR VOTE IS IMPORTANT
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AT THE MEETING, PLEASE
SIGN, DATE AND MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
OCEANEERING INTERNATIONAL, INC.
---------------------
PROXY STATEMENT
---------------------
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited on behalf of the Board of Directors of
Oceaneering International, Inc., a Delaware corporation (the "Company"), for use
at the Company's annual meeting of shareholders to be held at the time and place
set forth in the accompanying notice. The Company will pay all costs of
soliciting proxies. Solicitation of proxies will be primarily by mail. In
addition to solicitation by mail, officers, directors and employees of the
Company may solicit proxies in person or by telephone and facsimile
transmission, for which such persons will receive no additional consideration.
The Company has retained _____________ to solicit proxies at a fee estimated not
to exceed [$10,000] plus reasonable expenses. The Company will also reimburse
brokerage houses and other custodians, nominees or fiduciaries for their
reasonable expenses in forwarding proxy material to beneficial owners of Common
Stock.
The persons named as proxies were designated by the Board of Directors and are
officers or directors of the Company. All properly executed proxies will be
voted (except to the extent that authority to vote has been withheld), and where
a choice has been specified by the shareholder as provided in the proxy, the
proxy will be voted in accordance with the specification so made. Proxies
submitted without specification will be voted FOR Proposal 1 to elect the
nominee for director proposed by the Board of Directors, FOR Proposal 2 to adopt
the 1996 Incentive Plan, and FOR Proposal 3 to ratify the appointment of Arthur
Andersen LLP as independent auditors of the Company for the fiscal year ending
March 31, 1997.
Any shareholder may revoke his or her proxy at any time before it is voted at
the meeting by duly executing a proxy bearing a later date. A proxy may also be
revoked by any shareholder at any time before it is voted by filing with the
Secretary of the Company a written notice of revocation or by voting in person
at the meeting. The mailing address of the executive offices of the Company is
P.O. Box 218130, Houston, Texas 77218-8130. The requirement for a quorum at the
meeting is the presence in person or by proxy of holders of a majority of the
outstanding shares of Common Stock. There is no provision for cumulative voting.
Only shareholders of record at the close of business on July 9, 1996 will be
entitled to notice of, and to vote at, the meeting. As of such date, 23,3xx,xxx
shares of the Company's Common Stock, $.25 par value ("Common Stock"), were
outstanding. Each of such outstanding shares is entitled to one vote at the
meeting. This Proxy Statement and accompanying proxies are initially being
mailed to shareholders of the Company on or about July 15, l996.
ELECTION OF DIRECTORS
PROPOSAL 1
The Certificate of Incorporation of the Company divides the Board of
Directors, in respect to term of office, into three classes each consisting as
nearly as possible of one-third of the members of the whole Board. The members
of each class serve for three years following their election, with one class
being elected each year.
The Class I director is to be elected at the meeting. In accordance with the
Company's Bylaws, the director will be elected by a plurality of the votes cast.
2
The Class I director will serve until the 1999 Annual Meeting of Shareholders or
until a successor is duly elected and qualified. The directors in Classes II and
III, consisting of two members and one member respectively, will continue to
serve their terms of office, which will expire at the Annual Meeting of
Shareholders to be held in 1997 and 1998, respectively.
The name and certain information concerning the person nominated to be a
director by the Board of Directors at the meeting is set forth below. The
persons named in the accompanying proxy intend to vote such proxy in favor of
the election of the nominee named below, who is currently a director of the
Company, unless authority to vote for the director is withheld in the proxy.
Although the Board of Directors has no reason to believe that the nominee will
be unable to serve as a director, if the nominee withdraws or otherwise becomes
unavailable to serve, the persons named as proxies will vote for any substitute
nominee designated by the Board of Directors.
The following information table lists the name of the nominee, his business
experience during the past five years and certain other information as of June
1, 1996, relevant to your consideration of the nominee proposed by the Board of
Directors.
NOMINEE - CLASS I DIRECTOR:
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
D. Michael Hughes................................... 57 1970
Mr. Hughes is owner of Texas Wild Game Cooperative
and the Broken Arrow Ranch. Mr. Hughes has been
associated with the Company since its incorporation,
serving as Chairman from 1984 to 1990. He is
Chairman of the Nominating and Compensation
Committees and a member of the Audit and Strategic
Planning Committees of the Board.
CONTINUING DIRECTORS
The following table sets forth comparable information for those directors
whose terms will expire in 1997 and 1998.
1997 - CLASS II DIRECTORS:
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
Charles B. Evans .................................... 71 1980
Mr. Evans has been Chairman of ResTech Inc., an
oilfield service firm specializing in custom log data
processing, since 1982. He previously served from 1977
to 1979 as Executive Vice President of Schlumberger
Limited, an international oilfield evaluation and
services company, until his retirement in 1979 after
31 years of service. He is Chairman of the Audit
Committee and a member of the Compensation, Nominating
and Strategic Planning Committees of the Board.
John R. Huff ....................................... 50 1986
3
Mr. Huff has been Chairman of the Board of Directors
of the Company since August 1990. He has been a director
and Chief Executive Officer and President of the Company
since joining the Company in 1986. He served from 1980
until 1986 as Chairman and President of Western Oceanic
Inc., the offshore drilling subsidiary of The Western
Company of North America. He is also a director of BJ
Services Company, Triton Energy Limited and Production
Operators Corp. He is an ex-officio member of the Compensation,
Nominating and Strategic Planning Committees of the Board.
1998 - CLASS III DIRECTOR:
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
David S. Hooker..................................... 53 1973
Mr. Hooker has been Chairman of Gammel Kershaw & Co.
Ltd., managers of a marine syndicate at Lloyds, since
January 1996. Previously he served as Chairman of
Bakyrchik Gold PLC, a natural resources company, from
1993 to 1996. He was Managing Director of Aberdeen
Petroleum PLC, an oil and gas exploration and production
company, from 1988 to 1993. He is also a director of
Danka Business Systems PLC. He is a member of the Audit,
Compensation, Nominating and Strategic Planning Committees
of the Board.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the number of shares of Common Stock of the
Company owned as of June 1, 1996, by each director and nominee for director,
each of the current executive officers named in the Summary Compensation Table
on page x and all directors and officers as a group. Except as otherwise
indicated, each individual named has sole investment and voting power with
respect to the shares shown.
4
NUMBER OF PERCENT
NAME SHARES (1) OF CLASS
T. Jay Collins 47,000 *
Charles B. Evans 13,900 *
F. Richard Frisbie 98,106 *
George R. Haubenreich, Jr. 45,800 *
David S. Hooker 12,000 *
John R. Huff 454,677 1.9
D. Michael Hughes 94,464 *
Marvin J. Migura 15,000 *
All directors and officers
as a group 15 persons) 1,108,125 4.7
- -----------------------------
* Less than 1%
(1) Includes the following shares subject to stock options exercisable within
60 days: Mr. Collins - 26,000, Mr. Evans - 12,000, Mr. Frisbie - 50,800,
Mr. Haubenreich - 27,800, Mr. Hooker - 12,000, Mr. Huff - 203,000, Mr.
Hughes - 12,000, Mr. Migura - 8,000, and all directors and officers as a
group - 441,900. Includes the following shares granted pursuant to a
restricted stock incentive award agreement with respect to which the
recipient has sole voting power and no dispositive power: Mr. Collins -
15,750, Mr. Frisbie - 13,500, Mr. Haubenreich - 13,500, Mr. Huff -
135,000, Mr. Migura - 7,000, all directors and officers as a group -
220,750. Also includes the following shares, which are fully vested, held
in trust pursuant to the Oceaneering Retirement Investment Plan
("Retirement Plan") for which the individual has no voting rights until
the shares are withdrawn from the Retirement Plan: Mr. Frisbie - 4,306,
Mr. Huff - 1,577, Mr. Hughes - 21,057, all directors and officers as a
group - 53,327.
The following table sets forth information as of June 1, l996, with respect to
the only persons known by the Company to be the beneficial owner of more than 5%
of the shares of the Company's Common Stock. Except as otherwise indicated, each
person named has sole investment and voting power with respect to the shares
shown. This information is based upon statements filed with the Securities and
Exchange Commission ("SEC") as furnished to the Company by such person.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
State of Wisconsin Investment
Board 2,249,900 9.6
P. O. Box 7842
Madison, Wisconsin 53707
Public Employees Retirement
System of Ohio 1,300,000 5.6
277 East Town Street
Columbus, Ohio 43215
T. Rowe Price Associates,
Inc. 1,188,000 (1) 5.1
100 East Pratt Street
Baltimore, Maryland 21202
- ----------------------------
(1) T. Rowe Price Associates, Inc. states it has voting power for 51,700
shares and that it expressly disclaims beneficial ownership of all the
shares.
5
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
The Company has standing Audit, Compensation and Nominating Committees of the
Board of Directors. The Audit Committee, which held two meetings during fiscal
1996, is composed of Messrs. Evans, Hooker and Hughes. The functions of the
Audit Committee are: (1) to recommend to the full Board the firm of independent
auditors to be employed as the Company's independent auditors for the ensuing
year; (2) to review with the independent auditors, internal auditors and
management the scope and results of annual audits; (3) to consult with the
independent auditors periodically with regard to the adequacy of internal
controls and other such considerations; and (4) to review actions by management
on recommendations of the independent and internal auditors. To promote
independence, the Audit Committee consults separately and jointly with
management, as well as the independent and internal auditors.
The Compensation Committee is composed of Messrs. Hughes, Evans and Hooker.
The Compensation Committee, which held two meetings during fiscal 1996,
considers and recommends to the full Board compensation plans under which
officers and directors are eligible to participate, as well as the salary for
the Chief Executive Officer. The Compensation Committee approves salaries for
all other executive officers of the Company. The Compensation Committee
administers the Company's annual bonus plans, the Company's 1990 Long-Term
Incentive Plan and the Company's Executive Retirement Plan ("Executive
Retirement Plan"), and reviews on a regular basis the Company's compensation
program. The Compensation Committee also recommends to the full Board a
successor to the Chief Executive Officer when a vacancy occurs.
The Nominating Committee is composed of Messrs. Hughes, Evans and Hooker. The
Nominating Committee, which held two meetings during fiscal 1996, considers and
recommends to the full Board nominees to fill Board vacancies and a director to
serve as Chairman of the Board. The Nominating Committee receives and evaluates
shareholder proposals for nominees to fill Board vacancies and recommends to the
Board candidates for membership on the committees of the Board. As to each
person whom a shareholder proposes to nominate for election or re-election as a
director, the notice of proposal shall include the name, age, business address,
residence address, principal occupation or employment, the class and number of
shares beneficially owned and any other information relating to such person that
is required by law to be disclosed, and include the written consent of the
person to be named in the proxy statement as a nominee and to serve as a
director if elected. The name and address of the shareholder making the proposal
as they appear on the Company's books and the class and number of shares of the
Company which are beneficially owned by such shareholder shall be included in
the notice. This information should be sent to the Secretary, Oceaneering
International, Inc., P.O. Box 218130, Houston, Texas 77218-8130, not less than
120 days prior to any meeting of shareholders called for the election of
directors.
During fiscal 1996, the Board of Directors held a total of four meetings. Each
member of the Board of Directors attended 100% of the aggregate of the total
number of Board meetings and meetings of any committee on which he served.
The Company pays its outside directors an $18,000 annual retainer, $1,000 for
each meeting attended, $800 for each committee meeting attended (if the meeting
is on a day other than the date of a Board meeting) and a consulting fee of $100
per hour up to a maximum of $800 per day for any consulting services. All
directors are reimbursed for their travel and other expenses involved in
attendance at Board and committee meetings.
Nonemployee directors are participants in the shareholder-approved 1990
Nonemployee Director Stock Option Plan. Under this plan, each nonemployee
director of the Company is automatically granted an option to purchase 2,000
shares of Common Stock on the date the director becomes a nonemployee director
of the Company, and each year thereafter, at an exercise price per share equal
to 50% of the fair market value of a share of Common Stock on the date the
option is granted. The options granted are not exercisable until the later to
occur of six months from the date of grant or the date the optionee has
completed two years of service as a director of the Company.
6
There are no family relationships between any director or executive officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Throughout fiscal 1996, the Compensation Committee consisted of nonemployee
directors. Mr. Hughes, a member of the Compensation Committee, was formerly an
officer of the Company, serving most recently as Chairman from 1984 to 1990.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers to file
with the SEC and the New York Stock Exchange initial reports of ownership and
reports of changes in ownership of Common Stock. Based solely on a review of the
copies of such reports furnished to the Company and representations that no
other reports were required, the Company believes that all its directors and
officers during the fiscal year ended March 31, 1996 complied on a timely basis
with all applicable filing requirements under Section 16(a) of the Exchange Act.
EXECUTIVE COMPENSATION
The following table sets forth information for the fiscal years shown, with
respect to the Chief Executive Officer and each of the other four most highly
compensated executive officers serving as such on March 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------------------
Annual Compensation Awards Payouts
------------------------------- ------------------------ ---------------------
Other All
Annual Securities Other
Name and Compen- Restricted Underlying LTIP Compen-
Principal sation Stock Options Payouts sation
Position Year Salary($) Bonus($) ($)(a) Awards (#) ($)(c) ($)(d)
<PAGE>
- ---------------------------- ----- --------- ---------- ----- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John R. Huff ...................... 1996 375,000 60,000 0 0 0 652,099 76,417
Chairman, President and ........... 1995 375,000 0 0 0 50,000 526,463 80,733
Chief Executive Officer ........... 1994 309,750 75,000 0 (b) 0 175,000 53,151
T. Jay Collins .................... 1996 176,500 30,000 0 0 0 52,458 19,810
Executive Vice President .......... 1995 156,250 0 0 0 30,000 39,868 8,479
Oilfield Marine Services (e) ...... 1994 75,000 25,000 0 (b) 50,000 0 74
Marvin J. Migura .................. 1996 132,152 20,000 0 (b) 40,000 0 216
Senior Vice President
and Chief Financial Officer (f)
F. Richard Frisbie ................ 1996 146,500 20,000 0 0 0 126,460 31,544
Senior Vice President ............. 1995 145,000 0 0 0 4,000 115,010 26,533
Marketing and Technology .......... 1994 143,750 12,000 0 (b) 0 78,750 22,492
George R. Haubenreich, Jr ......... 1996 161,500 25,000 0 0 0 116,460 25,380
Vice President, General ........... 1995 145,000 0 0 0 10,000 105,070 21,293
Counsel and Secretary ............. 1994 128,750 25,000 0 (b) 0 68,75 17,458
</TABLE>
- --------------
(a) Excludes the value of perquisites and other personal benefits for each
of the named executive officers because the aggregate amounts thereof
did not exceed the lesser of $50,000 or 10% of the total annual salary
and bonus reported for any named executive officer.
(b) Restricted stock awarded in fiscal 1996 to Mr. Migura and in fiscal
1994 to the other named executive officers under the Company's 1990
Long-Term Incentive Plan is subject to performance-based criteria. See
Compenstion Committee Report on Executive Compensation, Long-Term
Incentives. At March 31, 1996, the number and value of the restricted
stock holdings (based upon the closing market price on that date of
$13.625 per share) were as follows: Mr. Huff: 135,000 shares,
$1,839,375; Mr. Collins: 15,750 shares, $214,594; Mr. Migura 7,000
shares, $95,375; Mr. Frisbie: 13,500 shares, $183,937 and Mr.
Haubenreich: 13,500 shares, $183,937. Dividends, if any, are paid
7
on the restricted shares. The value of stock for which restrictions
were lifted in fiscal 1996 and 1995 are reported in the LTIP payouts
column in the table.
(c) For fiscal 1996 and 1995, the aggregate value of stock for which
restrictions were lifted and the associated tax assistance payment are
respectively as follows: Mr. Huff, $477,099 and $351,463; Mr. Collins,
$52,458 and $39,868; Mr. Frisbie, $47,710 and $36,260 and Mr.
Haubenreich, $47,710 and $36,260. Fiscal 1994, 1995 and 1996 for
Messrs. Huff, Frisbie and Haubenreich, include the second, third and
last of four equal annual payments made pursuant to a performance-based
award granted in fiscal 1993.
(d) The amounts represent Company contributions under the Company's
Executive Retirement Plan, a nonqualified plan.
(e) Mr. Collins joined the Company in fiscal 1994.
(f) Mr. Migura joined the Company in fiscal 1996.
LONG-TERM INCENTIVE PLAN AND RETIREMENT PLANS
Under the shareholder-approved 1990 Long-Term Incentive Plan, the Compensation
Committee may grant options, stock appreciation rights, stock and cash awards to
employees and other persons (excluding nonemployee directors) having an
important business relationship with the Company.
The Company has in effect a Retirement Plan and an Executive Retirement Plan.
All employees of the Company and its United States subsidiaries who meet the
eligibility requirements may participate in the Retirement Plan. Certain key
management employees and executives of the Company and any subsidiary that has
adopted the plan, as approved by the Compensation Committee, are eligible to
participate in the Executive Retirement Plan.
Under the Retirement Plan, each participant directs the Company to defer
between 1% and 16% of the participant's base pay and contribute the deferred
compensation to the Retirement Plan, with such contributions being invested in
shares of Common Stock, mutual funds and guaranteed investments. A participant's
deferred compensation contributed to the plan is always fully vested. The
Company's contributions to this plan become vested to the participant in
percentage increments spaced over a six-year period, commencing with the
participant's date of employment, provided that the participant remains employed
by the Company. The Company is currently contributing an amount equal to the
deferred compensation of the participant who has elected to invest in Common
Stock up to the first 6% of the participant's base pay and 50% of the deferred
compensation of the participant who has elected to invest in the other
investments up to the first 6% of the participant's base pay. During the fiscal
year ended March 31, 1996, none of the executive officers listed in the Summary
Compensation Table made contributions into the Retirement Plan.
Under the Executive Retirement Plan, each participant directs the Company to
make a contribution of a percentage of the participant's base pay up to a
maximum percentage determined by the Compensation Committee for each participant
into an individually funded account established for each participant pursuant to
the plan. Currently those percentages range from 10% to 15%. With respect to
each participant, the Compensation Committee determines the appropriate rate,
not to exceed 100%, at which the Company matches employee contributions.
Currently the Company's matching rate is 100% for all participants. Employee and
Company matching contributions in the Executive Retirement Plan are invested
among several offered investment funds as directed by the employee. For the
first four years of an employee's participation in the plan, at the end of each
participation year, the employee becomes entitled to the Company's matching
contribution amount for each such year, at the cumulative rate of 25% per year.
At the end of each plan year for a participant under the Executive Retirement
Plan, the Company makes a cash payment to each participant, which is intended to
assist the employee in meeting the employee's federal income tax liability with
8
respect to any earnings on the employee's and the Company's matching
contributions in the account (excluding capital gains resulting from
distribution occasioned by termination of employment) and such cash payment.
The following table provides information concerning grants of stock options
made to the named executive officers during the fiscal year ended March 31,
1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at
Assumed Annual Rates
of Stock
Price Appreciation for
Individual Grants (A) Option Term (B)
--------------------------------------------------------- ------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration 5% 10%
Name Granted (#) Fiscal Year ($/Sh) Date ($) ($)
---- ----------- ------------- ----------- ---------- ----- --------
<S> <C>
John R. Huff .............................. 0 N/A N/A N/A N/A N/A
T. Jay Collins ............................ 0 N/A N/A N/A N/A N/A
Marvin J. Migura .......................... 40,000 100 10.25 5/21/05 257,847 654,434
F. Richard Frisbie ........................ 0 N/A N/A N/A N/A N/A
George R. Haubenreich, Jr ................. 0 N/A N/A N/A N/A N/A
- -------
</TABLE>
(a) Stock options are awarded at the fair market value of Common Stock at the
date of award and become exercisable at the rate of 20% per year for three
years beginning one year after award and fully exercisable four years
after award. Options generally expire at the earliest of 10 years after
award, one year after optionee's death, disability or retirement or at the
time of optionee's termination of employment.
(b) The amounts shown as potentially realizable values are based on
arbitrarily assumed rates of stock price appreciations of five percent and
ten percent over the full ten-year term of the options, as required by
applicable SEC regulations. The actual value of the option grants is
dependent on future performance of the Common Stock and overall market
conditions. There is no assurance that the values reflected in this table
will be achieved.
The following table provides information concerning each stock option
exercised during the fiscal year ended March 31, 1996 by each of the named
executive officers and the value of unexercised options held by such officers at
the end of the fiscal year.
9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options At Fy-end (#) In-the-money Options At Fy-end ($)
Acquired on Value ------------------------------ ----------------------------------
Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John R. Huff ............... 0 0 203,000 40,000 1,257,312 80,000
T. Jay Collins ............. 0 0 26,000 54,000 20,125 80,500
Marvin J. Migura ........... 0 0 0 40,000 0 147,500
F. Richard Frisbie ......... 10,000 52,500 75,800 3,200 542,537 6,400
George R. Haubenreich, Jr .. 0 0 27,800 8,000 81,487 16,000
</TABLE>
The following table shows information concerning long term incentive awards
made to named executive officers in the fiscal year ended March 31, 1996.
LONG TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
Performance or
Other Period Until
Number of Maturation or
Name Shares (#)(1) Payout (1)
John R. Huff 0 N/A
T. Jay Collins 0 N/A
Marvin J. Migura 7,000 6/25/93 - 6/21/96
F. Richard Frisbie 0 N/A
George R. Haubenreich, Jr. 0 N/A
- ---------------------------
(1) This grant of shares of restricted Common Stock is subject to earning
requirements on the basis of a percentage change between the price of
the Common Stock versus the average of the common stock price of a peer
group over a three-year time period. See Board Compensation Committee
Report on Executive Compensation. The grantee of such restricted stock
is the record owner during the restriction period and has all rights of
a stockholder, including the right to vote and receive dividends;
provided, however, that such grantee does not have the right to
transfer such restricted stock until the restrictions relating thereto
are removed upon achievement of the performance goals and vesting
requirements.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. Each member of the Committee
is a nonemployee director. The Committee is dedicated to the establishment of a
strong, positive link between the development and attainment of strategic goals,
which enhance shareholder values, and the compensation and benefit programs
needed to achieve those results.
OVERALL EXECUTIVE COMPENSATION POLICY
The Company's policy is designed to facilitate its mission of increasing the
net wealth of its shareholders by:
o Attracting, rewarding and retaining highly qualified and productive
individuals.
o Setting compensation levels that are externally competitive and internally
equitable.
o Interrelating annual executive compensation with the results of individual
performance, the individual's profit center performance and overall Company
performance.
10
o Motivating executives and key employees towards achieving long-term strategic
results by aligning employee and shareholder interests through the increased
value of the Company's stock.
There are three major components of the Company's executive compensation
program: Base Salary, Annual Incentives and Long-Term Incentive Awards. The
Committee considers all elements of compensation when determining individual
components.
BASE SALARY
A competitive salary is essential to support management development and career
orientation of executives. The Committee reviews annually the salary of
executive officers. In determining appropriate salary levels, the Committee
considers level and scope of responsibility and accountability, experience,
individual performance contributions, internal equity and market comparisons. No
specific weightings are assigned to these criteria. However, the Committee
manages base salaries for the executive group in a conservative fashion in order
to place more emphasis on incentive compensation.
ANNUAL INCENTIVES
The Committee administers an annual cash incentive bonus award plan to reward
executive officers and other key employees of the Company based upon individual
performance and the achievement of specific financial and operational goals
determined for the year. The award interrelates individual performance, an
individual's profit center performance and the Company's overall performance.
For fiscal 1996, the maximum annual bonus award established for executive
officers was within a range of 30-100 percent of base salary.
LONG-TERM INCENTIVES
Long-term incentive awards under the shareholder-approved 1990 Long-Term
Incentive Plan are designed to create a mutuality of interest between executive
officers (and other key employees), and shareholders, through stock ownership
and other incentive awards. In fiscal 1992, the Committee granted to executive
officers contingent cash incentive awards payable over a three-year period,
conditional upon the achievement of certain performance goals for the Common
Stock and continued employment. In fiscal 1993, the performance requirement was
met and in fiscal 1996, the last of four equal installments was paid.
To further achieve these objectives, the Committee granted restricted Common
Stock to executive officers and other key employees of the Company in fiscal
1994 and subsequently in fiscal 1996 to the Chief Financial Officer of the
Company in connection with his joining the Company. These grants of restricted
stock are subject to earning and vesting requirements during the three-year
performance period. Up to one third of the total grant made in fiscal 1994 may
be earned each year and the grant made in fiscal 1996 may be earned, depending
upon the Company's cumulative Common Stock performance from June 25, 1993 as
compared with the peer group's cumulative common stock performance from that
date, with any amount earned subject to vesting in four equal installments over
three years, conditional upon continued employment. The peer group is that
specified in the performance graph on page xx. If the performance of the
Company's Common Stock is less than 50% of the average of the performance of the
common stock of the peer group, no shares of restricted stock are earned. If the
performance of the Company's Common Stock is 50% - 87.5% or greater than the
average of the performance of the peer group, the amount of restricted stock
earned will range from 16% to 100% of the maximum achievable for this period. At
the time of each vesting, the participant receives a tax assistance payment
which must be reimbursed to the Company if the vested Common Stock is sold
within three years after the vesting date. At the end of fiscal 1996, two years
of the performance period had been completed and two-thirds of the total grant
made in fiscal 1994 was earned, subject to vesting requirements and none of the
grant made in fiscal 1996 was earned.
The Committee awards stock options to a broad group of executives and key
employees. There were no stock option grants to executive officers in fiscal
1996, with the exception of a stock option grant to the Chief Financial Officer
in connection with his joining the Company.
11
COMPENSATION OF CHIEF EXECUTIVE OFFICER
John R. Huff has been Chief Executive Officer and President of the Company
since August 1986 and Chairman since 1990. His compensation package has been
designed to encourage the enhancement of shareholder value. Mr. Huff's
compensation for fiscal 1996 included the same components and methodology of
salary and variable compensation as apply to other executive officers, with
regard to his highest level of accountability. A substantial portion of his
compensation is at risk in the form of performance bonuses and stock awards.
During fiscal 1995 and 1996, Mr. Huff's base annual salary rate was not
increased. In fiscal 1996, Mr. Huff received an annual bonus of $60,000
commensurate with the Company's improved financial performance during the year
and the last installment of the incentive cash award described above. In fiscal
1994, Mr. Huff was granted a restricted stock award of 180,000 shares of Common
Stock also described above, of which at the end of fiscal 1996, 45,000 shares
were vested and 75,000 shares were earned subject to vesting requirements. These
amounts and grants reflect the Committee's assessment of the Company's financial
performance compared to other oilfield service companies during the relevant
periods, Mr. Huff's leadership and significant personal contribution to the
business, and compensation data of competitive companies.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code generally disallows a deduction to
public companies to the extent of excess compensation over one million dollars
paid to the Chief Executive Officer or to any of the four other most highly
compensated executive officers, except for qualified performance-based
compensation. The Company had no non-deductible compensation expense for fiscal
1996. The Committee plans to review this matter as appropriate, make
recommendations to the Company's Board of Directors of actions as may be
necessary to preserve the deductibility of compensation payments to the extent
reasonably practical and consistent with the Company's compensation objectives.
Compensation Committee
D. M. Hughes, Chairman
C. B. Evans
D. S. Hooker
PERFORMANCE GRAPH
The following line graph compares the Company's total shareholder return to
the Standard & Poor's 500 Stock Index ("S&P 500") and with that of a peer group
over a five-year period ending on March 31, 1996. The peer group companies at
March 31, 1996 for this performance graph are Dresser Industries, Inc., which
replaced Baroid Corporation after their merger, Global Industries, Ltd.,
Halliburton Company, McDermott International, Inc., Nabors Industries, Inc.,
Offshore Logistics, Inc., J. Ray McDermott, Inc. which replaced Offshore
Pipelines, Inc. after their merger, Stolt Comex Seaway S.A., and Tidewater, Inc.
Hornbeck Offshore Services, Inc. was included in the peer group through March
1996 when it merged into Tidewater, Inc.
It is assumed in the graphs that (i) $100 was invested in the Company's Common
Stock, the S&P 500 and the peer group on March 31, 1991, except that with
respect to Global Industries, Ltd. and Stolt Comex Seaway S.A., it is assumed
the investment was made in February 1993 and May 1993, respectively, the first
month the stock for such companies was publicly available for purchase; and the
investment was made in Baroid Corporation through January 1994, and thereafter
in Dresser Industries, Inc., and in Offshore Pipelines, Inc. through January
1996, and thereafter in J. Ray McDermott, Inc., as a result of their mergers,
and in Hornbeck Offshore Services, Inc. through March 1996, when it merged with
Tidewater, Inc., (ii) the peer group investment is weighted based on the market
capitalization of each individual company within the peer group at the beginning
of each period and (iii) any dividends are reinvested. The Company has not
declared any dividends during the period covered by the graph. The shareholder
return shown on the graph is not necessarily indicative of future performance.
12
COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURN
FOR OCEANEERING INTERNATIONAL, INC., S&P 500 AND A SELECTED PEER GROUP
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------- ------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Oceaneering International, Inc. (OII) 100.00 96.81 119.15 104.26 84.04 115.96
Peer Group .......................... 100.00 69.29 99.14 89.14 103.20 156.35
Standard & Poors 500 (S&P 500) ...... 100.00 111.04 127.95 129.84 150.05 198.22
</TABLE>
EXECUTIVE EMPLOYMENT AGREEMENTS
Under a Senior Executive Severance Plan (the "Severance Plan") adopted by the
Board of Directors in January 1983, and as amended in March 1989, in the event
of a change in control of the Company (as defined) followed by termination of
employment within one year thereafter for any reason other than termination as a
consequence of death, disability or retirement, voluntary termination prior to
three months after a change of control, or termination for cause due to
commission of a felony related to employment with the Company, certain key
executives, as determined by the Board of Directors, will receive a payment
equal to 50% of one year's base salary, including bonuses, and all fringe
benefits for six months after termination of employment. In such an event, stock
options and other benefits of the executive will become immediately vested, and
the executive may elect to either exercise his outstanding stock options or
surrender them and be compensated for the spread between the exercise price and
the higher fair market value of the outstanding stock options. The executive
will also receive 25% of the amount of the spread between the exercise price and
the fair market value of all stock options exercised or surrendered by the
executive during the three-year period ending with the date of the executive's
termination of employment. The executive officers listed in the Summary
Compensation Table are participants in the Severance Plan.
The Company has entered into an employment agreement with no expiration date
with John R. Huff, which provides that, in the event of his termination from the
Company for any reason except voluntary resignation or cause, he will receive
compensation equivalent to one year's salary, inclusive of any amounts payable
under the Severance Plan. Medical coverage is to be provided to Mr. Huff, his
spouse and children during his employment with the Company and, under
circumstances specified therein, thereafter for life.
In March 1989, the Company also entered into an amended Supplemental Senior
Executive Severance Agreement ("Supplemental Agreement") with Mr. Huff, which
provides that, in the event of a change in control of the Company (as defined)
and termination of his employment for any reason (other than voluntary
resignation for nonpermissible reasons or termination for cause due to
commission of a felony related to employment with the Company), or reduction in
the scope of his position or total annual compensation, or if he is requested to
relocate, Mr. Huff may either elect to receive the benefits under the Severance
Plan, as described above, or the benefits under the Supplemental Agreement. If
he elects to receive the Supplemental Agreement benefits, Mr. Huff will receive
a payment equal to three years' base salary, including bonuses, and all fringe
benefits for six months after termination of employment, and his stock options
and other benefits will become immediately vested. Mr. Huff may elect either to
surrender his outstanding stock options and receive an amount equal to twice the
amount of the spread between the exercise price and the higher fair market value
of the outstanding stock options, or to exercise such stock options and receive
the amount of such spread. He will also receive 100% of the amount of the spread
between the exercise price and the fair market value of all stock options
exercised or surrendered by him during the three-year period ending with the
date of his termination of employment.
13
CERTAIN TRANSACTIONS
Except as set forth in this report, no director or executive officer of the
Company or nominee for election as a director of the Company, or holder of more
than 5% of its shares of Common Stock, and no member of the immediate family of
any such director, nominee, officer or security holder, to the knowledge of the
Company, had any material interest in any transaction since April 1, 1995 or has
any interest in any proposed transaction to which the Company or its
subsidiaries were or are a party in which the amount involved exceeds $60,000.
No director or executive officer of the Company who served in such capacity
since April 1, 1995 or any associate of any such director or officer, to the
knowledge of the executive officers of the Company, has any material interest in
any matter proposed to be acted upon at the 1996 Annual Meeting of Shareholders
other than as described in this Proxy Statement.
APPROVAL OF THE 1996 INCENTIVE PLAN
PROPOSAL 2
The Board of Directors recommends to Company shareholders that they approve
the proposal to adopt the 1996 Incentive Plan of Oceaneering International, Inc.
(the "Incentive Plan"). A copy of the Incentive Plan is attached hereto as
Exhibit A and is incorporated herein by reference. The following summary is
qualified by reference to the full text of the Incentive Plan.
INCENTIVE PLAN
GENERAL. The objectives of the Incentive Plan, which was approved by the
Company's Board of Directors on June 21, 1996 are (i) to attract and retain the
services of key employees and encourage the sense of proprietorship of such
employees, (ii) to attract other persons to have an important business
relationship or affiliation with the Company and (iii) to stimulate the active
interest of such persons in the development and financial success of the Company
by making awards ("Awards") designed to provide participants in the Incentive
Plan with a proprietary interest in the growth and performance of the Company.
The Company has reserved 1,165,000 shares of Common Stock for use in
connection with the Plan plus the number of shares, if any, repurchased in the
open market and otherwise with an aggregate price no greater than the cash
proceeds received by the Company from the sale of shares under the Incentive
Plan. On July xx, 1996, the last reported sale price of the Common Stock on the
NYSE was $xx.xxx per share. Shares subject to Awards that are forfeited or
terminated, exchanged for Awards that do not involve Common Stock, expire
unexercised or are settled in cash in lieu of Common Stock or otherwise such
that the shares covered thereby are not issued again become available for
Awards. Notwithstanding the foregoing, in no event may an Award be issued that
would bring the total of all outstanding awards under the Incentive Plan and all
other Company stock option or employee or long-term incentive plans to more than
9.9% of the total number of shares of Common Stock of the Company at the time
outstanding. Approximately 225,000 shares of Common Stock are available under
the Company's existing 1990 Long-Term Incentive Plan and 54,000 shares of Common
Stock are available under the 1990 Nonemployee Director Stock Option Plan of the
Company.
Persons eligible for Awards are employees holding positions of responsibility
with the Company or any of its subsidiaries and whose performance can have a
significant effect on the success of the Company ("Employees") and independent
contractors having an important business relationship or affiliation with the
Company. Nonemployee directors are not eligible to receive awards under the
Incentive Plan. For purposes of Section 16(b) of the Exchange Act, which could
impose so-called short-swing liabilities on the directors and executive officers
of the Company in connection with their purchases and sales of Common Stock
within any six-month period, grants under the Incentive Plan are intended to
qualify for the exemptions from that Section which are provided by Rule 16b-3
under the Exchange Act ("Rule 16b-3").
The Compensation Committee of the Company's Board of Directors (the
"Committee") will administer the Incentive Plan, and, to the extent required for
Rule 16b-3 exemption, the Committee will at all times consists of at least two
members of the Board who are "non-
14
employee directors" within the meaning of Rule 16b-3. The Committee has the
exclusive power to administer the Incentive Plan and take all actions
specifically contemplated thereby or necessary or appropriate in connection with
the administration thereof. The Committee also has the exclusive power to
interpret the Incentive Plan and to adopt such rules, regulations and guidelines
for carrying out its purposes as the Committee may deem necessary or proper in
keeping with the objectives thereof. The Committee may, in its discretion,
extend or accelerate the exercisability of, accelerate the vesting of or
eliminate or make less restrictive any restrictions contained in any Award,
waive any restriction or other provision of the Incentive Plan or in any Award
or otherwise amend or modify any Award in any manner that is either (i) not
adverse to that Employee holding the Award or (ii) consented to by that
Employee. The Committee also may delegate to the chief executive officer and
other senior officers of the Company its duties under the Incentive Plan, except
that no such delegation may be made in the case of actions respecting
participants subject to Section 16 of the Exchange Act. No termination date is
specified for the Incentive Plan.
AWARDS. Awards may be in the form of (i) rights to purchase a specified number
of shares of Common Stock at a specified price ("Options") which may be
denominated in one or both of Common Stock or units denominated in Common Stock,
(ii) rights to receive a payment, in cash or Common Stock, equal to the fair
market value or other specified value of a number of shares of Common Stock on
the rights exercise date over a specified strike price ("SARs"), (iii)
restricted or unrestricted grants of Common Stock or units denominated in Common
Stock ("Stock Awards"), (iv) grants denominated in cash ("Cash Awards") and (v)
grants denominated in cash, Common Stock, units denominated in Common Stock or
any other property which are made subject to the attainment of one or more
performance goals ("Performance Awards"). Subject to the limitations described
below, the Committee will determine the recipients of Awards and the terms,
conditions and limitations applicable to each Award, which conditions may, but
need not, include continuous service with the Company, achievement of specific
business objectives or goals, increases in specified indices or other comparable
measures of performance. The Committee may grant Awards (i) singly, (ii) in
combination or tandem with other Awards, (iii) in replacement of or as
alternatives to prior Awards or (iv) in combination or tandem with, in
replacement of or as alternatives to rights under any other employee plan of the
Company or any acquired entity. The exercise price of an Option may be paid with
cash or, according to methods determined by the Committee, with Common Stock or
any other Award the exerciser has owned for at least six months. Performance
Awards may include more than one performance goal, and a performance goal may be
based on one or more business criteria applicable to the grantee, the Company as
a whole or one or more of the Company's business units and may include any of
the following: increased revenue, net income, stock price, market share,
earnings per share, return on equity or assets or decreased costs or other
liabilities.
The Incentive Plan contains limitations respecting Awards, including the
following:
(i) an Option may be either an incentive stock option ("ISO") (not to exceed
ISOs covering a maximum of 1,165,000 shares of Common Stock under the Incentive
Plan) that qualifies, or a nonqualified stock option ("NSO") that does not
qualify, with the requirements of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), and must have an exercise price of not less than
the fair market value of a Common Stock share on the date of grant;
(ii) the Committee must establish the performance goal or goals for each
Performance Award prior to the earlier to occur of (a) 90 days after the
commencement of the performance measurement period for that Award and (b) the
lapse of 25% of that period, and in any event while it is substantially
uncertain whether the goal or goals will be met;
(iii) no employee may be granted, during any one-year period, (a) Options or
SARs covering more than 300,000 shares of Common Stock or (b) Stock Awards
covering or relating to more than 300,000 shares of Common Stock (the
limitations referred to in this clause (iii) being the "Stock Based Awards
Limitations"); and
(iv) no Employee may be granted Cash Awards (including Performance Awards
denominated in cash) having a value determined on the date of grant in excess of
$3,000,000 in any one-year period.
15
OTHER PROVISIONS. With the approval of the Committee, payments in respect of
Awards may be deferred, either in the form of installments or a future lump sum
payment, by any Employee. At the discretion of the Committee, an Employee may be
offered an election to substitute an Award for another Award or Awards of the
same or different type.
The Company will have the right to deduct applicable taxes from any Award
payment and withhold, at the time of delivery or vesting of cash or shares of
Common Stock under the Incentive Plan, an appropriate amount of cash or number
of shares of Common Stock, or combination thereof, for the payment of taxes. The
Committee may also (i) permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock previously owned by the holder of the Employee
Award for which withholding is required, or (ii) provide for loans, on either a
short-term or demand basis, from the Company to a participant to permit the
payment of taxes required by law.
The Board of Directors may amend, modify, suspend or terminate the Incentive
Plan for the purpose of addressing any changes in legal requirements or for any
other purpose permitted by law, except that (i) no amendment that would impair
the rights of any holder of an Award with respect to that Award may be made
without the consent of that holder and (ii) no amendment will be made to
increase the maximum number of shares subject to Awards (except stock splits,
recapitalizations and the like) without the approval of the Company's
shareholders.
If any subdivision or consolidation of outstanding shares of Common Stock,
declaration of a stock dividend payable in shares of Common Stock or other stock
split occurs, the Board will make appropriate adjustments to (i) the number of
shares of Common Stock reserved under the Incentive Plan, (ii) the number of
shares of Common Stock covered by outstanding Awards in the form of Common Stock
or units denominated in Common Stock, (iii) the exercise or other price in
respect of such Awards, (iv) the appropriate fair market value and other price
determinations for Awards, and (v) the Stock Based Awards Limitations in order
to reflect such transactions. Furthermore, in the event of any other
recapitalization or capital reorganization of the Company, any consolidation or
merger of the Company with another corporation or entity, the adoption by the
Company of any plan of exchange affecting the Common Stock or any distribution
to holders of Common Stock of securities or property (other than normal cash
dividends or stock dividends), the Company Board will make appropriate
adjustments to the amounts or other items referred to in clauses (ii), (iii),
(iv) and (v) above to give effect to such transactions, but only to the extent
necessary to maintain the proportionate interest of the holders of the Awards
and to preserve, without exceeding, the value thereof.
TAX IMPLICATIONS OF AWARDS. The following is a summary of the United States
federal income tax consequences to Employees and the Company as a result of the
grant and exercise of Awards under the Incentive Plan. This summary is based on
statutory provisions, Treasury regulations thereunder, judicial decisions, and
IRS rulings in effect on the date hereof and does not address the consequences
of the Incentive Plan under any other tax laws.
No grant of any Option or SAR will constitute realized taxable income to the
grantee. Each exerciser of an SAR or NSO will (i) recognize ordinary income
(subject to withholding by the Company) in an amount equal to the excess of (a)
the amount of cash and the fair market value of the Common Stock received over
(b) the exercise price (if any) paid therefor and (ii) generally will have a tax
basis in any shares of Common Stock received pursuant to the exercise of an SAR
or the cash exercise of an NSO which equals the fair market value of those
shares on the date of exercise. Subject to the discussion under "--Certain Tax
Code Limitations on Deductibility" below, the Company (or a subsidiary)
generally will be entitled to a deduction for U.S. federal income tax purposes
that corresponds as to timing and amount with the compensation income recognized
by the exerciser of an SAR or NSO.
An Employee will not have taxable income as a result of exercising an ISO, but
the excess of the fair market value of the shares of Common Stock received upon
exercise of the ISO ("ISO Stock") over the exercise price will increase the
alternative minimum taxable income of the Employee, which may cause the Employee
to incur alternative minimum tax ("AMT"). The payment of any AMT by an Employee
attributable to his exercise of an ISO would be allowed as
16
a credit against his regular tax liability in a later year to the extent his
regular tax liability is in excess of his AMT for that year.
On the disposition of ISO Stock that has been held for the requisite holding
period (generally, at least two years from the date of grant and one year from
the date of exercise of the ISO), the Employee generally will recognize capital
gain (or loss) equal to the difference between the amount received in the
disposition and the exercise price paid by the Employee for the ISO Stock. If an
Employee disposes of ISO Stock he has not held for the requisite holding period
(a "disqualifying disposition"), he will (i) recognize ordinary income to the
extent that the fair market value of the ISO Stock at the time of exercise of
the ISO (or, if less, the amount realized in the case of an arm's length
disqualifying disposition to an unrelated party) exceeds the exercise price paid
by the Employee for such ISO Stock and (ii) recognize capital gain to the extent
the amount realized in the disqualifying disposition exceeds the fair market
value of the ISO stock on the exercise date. If the exercise price paid for the
ISO Stock exceeds the amount realized in the disqualifying disposition (in the
case of an arm's-length disposition to an unrelated party), such excess
generally would constitute a capital loss.
The Company generally will not be entitled to any federal income tax deduction
on the grant or exercise of an ISO, unless the grantee makes a disqualifying
disposition of the underlying ISO Stock, in which event, the Company will then,
subject to the discussion below under "--Certain Tax Code Limitations on
Deductibility," be entitled to a tax deduction that corresponds as to timing and
amount with the compensation income recognized by the Employee.
Under current rulings, if a holder of an Option uses shares of Common Stock he
already owns (other than ISO Stock that has not been held for the requisite
holding period) to pay all or any part of the exercise price of that Option, (i)
he will recognize income respecting the Common Stock received in the manner
described above, (ii) no additional gain will be recognized as a result of the
transfer of shares used as payment and (iii) shares so received, up to the
number of shares so used, will have a tax basis that equals, and a holding
period that includes, the tax basis and holding period of the shares of Common
Stock surrendered in satisfaction of that exercise price. Any additional shares
of Common Stock received on exercise will have a tax basis that equals the
amount of cash (if any) paid by the exerciser.
An Employee will recognize ordinary compensation income upon receipt of cash
pursuant to a Cash Award or Performance Award or, if earlier, at the time such
cash is otherwise made available for the Employee to draw upon it. An Employee
will not have taxable income upon the grant of a Stock Award in the form of
units denominated in Common Stock ("Stock Unit Award"), but rather will
generally recognize ordinary compensation income at the time the Employee
receives Common Stock or cash in satisfaction of such Stock Unit Award in an
amount equal to the fair market value of the Common Stock or cash received. In
general, an Employee will recognize ordinary compensation income as a result of
the receipt of Common Stock pursuant to a Stock Award or Performance Award in an
amount equal to the fair market value of the Common Stock when such stock is
received; provided, however, that if the stock is not transferable and is
subject to a substantial risk of forfeiture when received, the Employee will
recognize ordinary compensation income in an amount equal to the fair market
value of the Common Stock when it first becomes transferable or is no longer
subject to a substantial risk of forfeiture, unless the Employee makes an
election to be taxed on the fair market value of the Common Stock when such
stock is received.
An Employee will be subject to withholding for federal, and generally for
state and local, income taxes at the time the Employee recognizes income under
the rules described above with respect to Common Stock or cash received pursuant
to a Cash Award, Performance Award, Stock Award or Stock Unit Award. Dividends
that are received by an Employee prior to the time that the Common Stock is
taxed to the Employee or Nonemployee Director under the rules described in the
preceding paragraph are taxed as additional compensation, not as dividend
income. The tax basis of an Employee in the Common Stock received will equal the
amount recognized by the Employee as compensation income under the rules
described in the preceding paragraph, and the Employee's holding period in such
shares will commence on the date income is so recognized.
17
CERTAIN TAX CODE LIMITATIONS ON DEDUCTABILITY. In order for the amounts
described above to be deductible by the Company (or a subsidiary), such amounts
must constitute reasonable compensation for services rendered or to be rendered
and must be ordinary and necessary business expenses. The ability of the Company
(or a subsidiary) to obtain a deduction for future payments under the Incentive
Plan could also be limited by Section 280G of the Code, which prevents the
deductibility of certain excess parachute payments made in connection with a
change in control of an employer. The ability of the Company (or a subsidiary)
to obtain a deduction for amounts paid under the Incentive Plan could also be
affected by Section 162(m) of the Code, which limits the deductibility, for U.S.
federal income tax purposes, of compensation paid to certain employees of the
Company to $1 million with respect to any such employee during any taxable year
of the Company. However, certain exceptions apply to this limitation in the case
of performance-based compensation. It is intended that the description of the
Incentive Plan contained herein will satisfy certain of the requirements for the
performance-based exception and that the Company will be able to comply with the
requirements of the Code and the Treasury Regulation Section 1.162-27 with
respect to the grant and payment of certain performance-based awards (including
certain options and SARs) under the Incentive Plan so as to be eligible for the
performance-based exception. However, it may not be possible in all cases to
satisfy all of the requirements for the exception and the Company may, in its
sole discretion, determine that in one or more cases it is in its best interests
to not satisfy all of the requirements for the performance-based exception.
THE BOARD OF DIRECTORS URGES THE SHAREHOLDERS TO VOTE FOR ADOPTING THE
INCENTIVE PLAN.
APPOINTMENT OF AUDITORS
PROPOSAL 3
Subject to ratification by the shareholders, the Board of Directors has
appointed Arthur Andersen LLP, independent certified public accountants, as
independent auditors of the Company for the fiscal year ending March 31, 1997,
pursuant to the recommendation of the Audit Committee of the Board. Arthur
Andersen LLP has served as the Company's independent auditors for 25 years.
Representatives of Arthur Andersen LLP will be present at the meeting, will be
given the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions of any shareholders.
The persons named in the accompanying proxy intend to vote such proxy in favor
of the ratification of the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending March 31, 1997, unless a
contrary choice is set forth thereon.
THE BOARD OF DIRECTORS URGES THE SHAREHOLDERS TO VOTE FOR THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR
ENDING MARCH 31, 1997.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 1996 Annual Meeting of Shareholders of the
Company must be received at the Company's principal executive offices, 16001
Park Ten Place, Suite 600, Houston, Texas 77084, addressed to the Chairman of
the Board, no later than March 18, 1997.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware of
any matters other than those set forth herein and in the Notice of Annual
Meeting of Shareholders that will come before the meeting. Should any other
matters requiring the vote of shareholders arise at the meeting, it is intended
that proxies will be voted in respect thereto in accordance with the judgment of
the person or persons voting the proxies.
Please return your proxy as soon as possible. Unless a quorum consisting of a
majority of the outstanding shares entitled to vote is represented at the Annual
Meeting, no business can be transacted. Therefore, please be sure to date and
sign your proxy exactly as your name appears on your stock certificate and
return it in the enclosed postage prepaid return
18
envelope. Please act promptly to ensure that you will be represented at this
important meeting.
THE COMPANY WILL PROVIDE WITHOUT CHARGE ON THE WRITTEN REQUEST OF ANY PERSON
SOLICITED HEREBY A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE COMPANY'S FISCAL YEAR ENDED
MARCH 31, 1996. WRITTEN REQUESTS SHOULD BE MAILED TO GEORGE R. HAUBENREICH, JR.,
SECRETARY, OCEANEERING INTERNATIONAL, INC., P.O. Box 218130, HOUSTON, TEXAS
77218-8130.
By Order of the Board of Directors,
George R. Haubenreich, Jr.
Vice President, General
July 15, 1996 Counsel and Secretary
19
EXHIBIT A
1996 INCENTIVE PLAN
OF
OCEANEERING INTERNATIONAL, INC.
1. PLAN. This 1996 Incentive Plan of Oceaneering International, Inc.
(the "Plan") was adopted by the Board of Directors of Oceaneering International,
Inc. to reward certain corporate officers and key employees of Oceaneering
International, Inc. and other persons having an important business relationship
or affiliation with the Company by enabling them to acquire shares of Common
Stock, par value $.25 per share, of Oceaneering International, Inc.
2. OBJECTIVES. This Plan is designed to attract and retain key
employees of the Company and its Subsidiaries (as hereinafter defined), to
encourage the sense of proprietorship of such employees, to attract other
persons to have an important business relationship or affiliation with the
Company, and to stimulate the active interest of such persons in the development
and financial success of the Company and its Subsidiaries. These objectives are
to be accomplished by making Awards (as hereinafter defined) under this Plan and
thereby providing Participants (as hereinafter defined) with a proprietary
interest in the growth and performance of the Company and its Subsidiaries.
3. DEFINITIONS. As used herein, the terms set forth below shall have
the following respective meanings:
"Authorized Officer" means the Chairman of the Board or the Chief
Executive Officer of the Company (or any other senior officer of the Company to
whom either of them shall delegate the authority to execute any Award
Agreement).
"Award" means the grant of any Option, SAR, Stock Award, Cash Award or
Performance Award, whether granted singly, in combination or in tandem, to a
Participant pursuant to such applicable terms, conditions and limitations as the
Committee may establish in order to fulfill the objectives of the Plan.
"Award Agreement" means a written agreement between the Company and a
Participant setting forth the terms, conditions and limitations applicable to an
Award.
"Board" means the Board of Directors of the Company.
"Cash Award" means an award denominated in cash.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" means the Compensation and Benefits Committee of the Board
or such other committee of the Board as is designated by the Board to administer
the Plan.
"Common Stock" means the Common Stock, par value $.25 per share, of
the Company.
"Company" means Oceaneering International, Inc., a Delaware
corporation.
"Dividend Equivalents" means, with respect to shares of Restricted
Stock that are to be issued at the end of the Restriction Period, an amount
equal to all dividends and other distributions (or the economic equivalent
thereof) that are payable to stockholders of record during the Restriction
Period on a like number of shares of Common Stock.
"Effective Date" has the meaning set forth in paragraph 18 hereof.
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"Employee" means an employee of the Company or any of its
Subsidiaries.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" of a share of Common Stock means, as of a
particular date, (i) if shares of Common Stock are listed on a national
securities exchange, the mean between the highest and lowest sales price per
share of Common Stock on the consolidated transaction reporting system for the
principal national securities exchange on which shares of Common Stock are
listed on that date, or, if there shall have been no such sale so reported on
that date, on the last preceding date on which such a sale was so reported, (ii)
if shares of Common Stock are not so listed but are quoted on the Nasdaq
National Market, the mean between the highest and lowest sales price per share
of Common Stock reported by the Nasdaq National Market on that date, or, if
there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported, (iii) if the Common Stock
is not so listed or quoted, the mean between the closing bid and asked price on
that date, or, if there are no quotations available for such date, on the last
preceding date on which such quotations shall be available, as reported by the
Nasdaq National Market, or, if not reported by the Nasdaq National Market, by
the National Quotation Bureau Incorporated or (iv) if shares of Common Stock are
not publicly traded, the most recent value determined by an independent
appraiser appointed by the Company for such purpose.
"Incentive Option" means an Option that is intended to comply with the
requirements set forth in Section 422 of the Code.
"Independent Contractor" means a person (other than a Director)
determined by the Committee as having an important business relationship or
affiliation with the Company.
"Nonqualified Stock Option" means an Option that is not an Incentive
Option.
"Option" means a right to purchase a specified number of shares of
Common Stock at a specified price.
"Participant" means an Employee or Independent Contractor to whom an
Award has been made under this Plan.
"Performance Award" means an award made pursuant to this Plan to a
Participant who is subject to the attainment of one or more Performance Goals.
"Performance Goal" means a standard established by the Committee to
determine in whole or in part whether a Performance Award shall be earned.
"Restricted Stock" means any Common Stock that is restricted or
subject to forfeiture provisions.
"Restriction Period" means a period of time beginning as of the date
upon which an Award of Restricted Stock is made pursuant to this Plan and ending
as of the date upon which the Common Stock subject to such Award is no longer
restricted or subject to forfeiture provisions.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or
any successor rule.
"SAR" means a right to receive a payment, in cash or Common Stock,
equal to the excess of the Fair Market Value or other specified valuation of a
specified number of shares of Common Stock on the date the right is exercised
over a specified strike price, in each case, as determined by the Committee.
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"Stock Award" means an award in the form of shares of Common Stock or
units denominated in shares of Common Stock.
"Subsidiary" means (i) in the case of a corporation, any corporation
of which the Company directly or indirectly owns shares representing more than
50% of the combined voting power of the shares of all classes or series of
capital stock of such corporation which have the right to vote generally on
matters submitted to a vote of the stockholders of such corporation and (ii) in
the case of a partnership or other business entity not organized as a
corporation, any such business entity of which the Company directly or
indirectly owns more than 50% of the voting, capital or profits interests
(whether in the form of partnership interests, membership interests or
otherwise).
4. ELIGIBILITY. Key Employees eligible for Awards under this Plan are
those who hold positions of responsibility and whose performance, in the
judgment of the Committee, can have a significant effect on the success of the
Company and its Subsidiaries and those Independent Contractors selected by the
Committee.
5. COMMON STOCK AVAILABLE FOR AWARDS. Subject to the provisions of
paragraph 14 hereof, there shall be available for Awards under this Plan granted
wholly or partly in Common Stock (including rights or options that may be
exercised for or settled in Common Stock) an aggregate of 1,165,000 shares of
Common Stock plus the number of shares repurchased in the open market and
otherwise with an aggregate price no greater than the cash proceeds received by
the Company from the sale of shares under this Plan. The number of shares of
Common Stock that are the subject of Awards under this Plan, that are forfeited
or terminated, expire unexercised, are settled in cash in lieu of Common Stock
or in a manner such that all or some of the shares covered by an Award are not
issued to a Participant or are exchanged for Awards that do not involve Common
Stock, shall again immediately become available for Awards hereunder.
Notwithstanding the foregoing, (i) in no event may an Award be issued that would
bring the total of all outstanding awards under this Plan, and all other Company
stock option or employee or long-term incentive plans to more than 9.9% of the
total number of shares of Common Stock of the Company at the time outstanding
and (ii) no more than 1,165,000 shares of Common Stock may be the subject of
Incentive Options. The Committee may from time to time adopt and observe such
procedures concerning the counting of shares against the Plan maximum as it may
deem appropriate. The Board and the appropriate officers of the Company shall
from time to time take whatever actions are necessary to file any required
documents with governmental authorities, stock exchanges and transaction
reporting systems to ensure that shares of Common Stock are available for
issuance pursuant to Awards.
6. ADMINISTRATION.
(a) This Plan shall be administered by the Committee. To the extent
required in order for Awards to be exempt from Section 16 of the Exchange Act
by virtue of the provisions of Rule 16b-3, the Committee shall consist of at
least two members of the Board who meet the requirements of the definition of
"non-employer director" set forth in Rule 16b-3(b)(3)(i) promulgated under the
Exchange Act.
(b) Subject to the provisions hereof, the Committee shall have full
and exclusive power and authority to administer this Plan and to take all
actions that are specifically contemplated hereby or are necessary or
appropriate in connection with the administration hereof. The Committee shall
also have full and exclusive power to interpret this Plan and to adopt such
rules, regulations and guidelines for carrying out this Plan as it may deem
necessary or proper, all of which powers shall be exercised in the best
interests of the Company and in keeping with the objectives of this Plan. The
Committee may, in its discretion, provide for the extension of the
exercisability of an Award, accelerate the vesting or exercisability of an
Award, eliminate or make less restrictive any restrictions contained in an
Award, waive any restriction or other provision of this Plan or an Award or
otherwise amend or modify an Award in any manner that is either (i) not
adverse to the Participant to whom such Award was granted or (ii) consented to
by such
A-3
Participant. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any Award in the manner and to
the extent the Committee deems necessary or desirable to further the Plan
purposes. Any decision of the Committee in the interpretation and
administration of this Plan shall lie within its sole and absolute discretion
and shall be final, conclusive and binding on all parties concerned.
(c) No member of the Committee or officer of the Company to whom the
Committee has delegated authority in accordance with the provisions of
paragraph 7 of this Plan shall be liable for anything done or omitted to be
done by him or her, by any member of the Committee or by any officer of the
Company in connection with the performance of any duties under this Plan,
except for his or her own willful misconduct or as expressly provided by
statute.
7. DELEGATION OF AUTHORITY. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish, except that the Committee may not delegate to any person the
authority to grant Awards to, or take other action with respect to, Participants
who are subject to Section 16 of the Exchange Act.
8. AWARDS.
(a) Subject to paragraphs 8(b) and (c), the Committee shall determine
the type or types of Awards to be made under this Plan and shall designate
from time to time the Employees who are to be the recipients of such Awards.
Each Award may be embodied in an Award Agreement, which shall contain such
terms, conditions and limitations as shall be determined by the Committee in
its sole discretion and shall be signed by the Participant to whom the Award
is made and by an Authorized Officer for and on behalf of the Company. Awards
may consist of those listed in this paragraph 8 hereof and may be granted
singly, in combination or in tandem. Awards may also be made in combination or
in tandem with, in replacement of, or as alternatives to, grants or rights
under this Plan or any other employee plan of the Company or any of its
Subsidiaries, including the plan of any acquired entity. An Award may provide
for the grant or issuance of additional, replacement or alternative Awards
upon the occurrence of specified events, including the exercise of the
original Award granted to a Participant. All or part of an Award may be
subject to conditions established by the Committee, which may include, but are
not limited to, continuous service with the Company and its Subsidiaries,
achievement of specific business objectives, increases in specified indices,
attainment of specified growth rates and other comparable measurements of
performance. Upon the termination of employment by a Participant, any
unexercised, deferred, unvested or unpaid Awards shall be treated as set forth
in the applicable Award Agreement.
(i) STOCK OPTION. An Award may be in the form of an Option. An
Option awarded pursuant to this Plan may consist of an Incentive
Option or a Nonqualified Option. The price at which shares of Common
Stock may be purchased upon the exercise of an Incentive Option shall
be not less than the greater of the Fair Market Value of the Common
Stock on the date of grant or its par value. The price at which shares
of Common Stock may be purchased upon the exercise of a Nonqualified
Option shall be not less than the greater of the Fair Market Value of
the Common Stock on the date of grant or its par value. Subject to the
foregoing provisions, the terms, conditions and limitations applicable
to any Options awarded pursuant to this Plan, including the term of
any Options and the date or dates upon which they become exercisable,
shall be determined by the Committee.
(ii) STOCK APPRECIATION RIGHT. An Award may be in the form of an
SAR. The terms, conditions and limitations applicable to any SARs
awarded pursuant to this Plan, including the term of any SARs and the
date or dates upon which they become exercisable, shall be determined
by the Committee.
A-4
(iii) STOCK AWARD. An Award may be in the form of a Stock Award.
The terms, conditions and limitations applicable to any Stock Awards
granted pursuant to this Plan shall be determined by the Committee.
(iv) CASH AWARD. An Award may be in the form of a Cash Award. The
terms, conditions and limitations applicable to any Cash Awards
granted pursuant to this Plan shall be determined by the Committee.
(v) PERFORMANCE AWARD. Without limiting the type or number of
Awards that may be made under the other provisions of this Plan, an
Award may be in the form of a Performance Award. A Performance Award
shall be paid, vested or otherwise deliverable solely on account of
the attainment of one or more pre-established, objective Performance
Goals established by the Committee prior to the earlier to occur of
(x) 90 days after the commencement of the period of service to which
the Performance Goal relates and (y) the lapse of 25% of the period of
service (as scheduled in good faith at the time the goal is
established), and in any event while the outcome is substantially
uncertain. A Performance Goal is objective if a third party having
knowledge of the relevant facts could determine whether the goal is
met. Such a Performance Goal may be based on one or more business
criteria that apply to the individual, one or more business units of
the Company, or the Company as a whole, and may include one or more of
the following: increased revenue, net income, stock price, market
share, earnings per share, return on equity, return on assets or
decrease in costs. Unless otherwise stated, such a Performance Goal
need not be based upon an increase or positive result under a
particular business criterion and could include, for example,
maintaining the status quo or limiting economic losses (measured, in
each case, by reference to specific business criteria). In
interpreting Plan provisions applicable to Performance Goals and
Performance Awards, it is the intent of the Plan to conform with the
standards of Section 162(m) of the Code and Treasury Regulation ss.
1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions. Prior to the
payment of any compensation based on the achievement of Performance
Goals, the Committee must certify in writing that applicable
Performance Goals and any of the material terms thereof were, in fact,
satisfied. Subject to the foregoing provisions, the terms, conditions
and limitations applicable to any Performance Awards made pursuant to
this Plan shall be determined by the Committee.
(b) Notwithstanding anything to the contrary contained in this Plan,
the following limitations shall apply to any Awards made hereunder:
(i) no Participant may be granted, during any one-year period,
Awards consisting of Options or SARs that are exercisable for more
than 300,000 shares of Common Stock;
(ii) no Participant may be granted, during any one-year period,
Awards consisting of shares of Common Stock or units denominated in
such shares (other than any Awards consisting of Options or SARs)
covering or relating to more than 300,000 shares of Common Stock (the
limitation set forth in this clause (ii), together with the limitation
set forth in clause (i) above, being hereinafter collectively referred
to as the "Stock Based Awards Limitations"); and
(iii) no Participant may be granted Awards consisting of cash or
in any other form permitted under this Plan (other than Awards
consisting of Options or SARs or otherwise consisting of shares of
Common Stock or units denominated in such shares) in respect of any
one-year period having a value determined on the date of grant in
excess of $3,000,000.
(c) Independent Contractors may not be granted Incentive Options.
A-5
9. PAYMENT OF AWARDS.
(a) GENERAL. Payment of Awards may be made in the form of cash or
Common Stock, or a combination thereof, and may include such restrictions as
the Committee shall determine, including, in the case of Common Stock,
restrictions on transfer and forfeiture provisions. If payment of an Award is
made in the form of Restricted Stock, the Award Agreement relating to such
shares shall specify whether they are to be issued at the beginning or end of
the Restriction Period. In the event that shares of Restricted Stock are to be
issued at the beginning of the Restriction Period, the certificates evidencing
such shares (to the extent that such shares are so evidenced) shall contain
appropriate legends and restrictions that describe the terms and conditions of
the restrictions applicable thereto. In the event that shares of Restricted
Stock are to be issued at the end of the Restricted Period, the right to
receive such shares shall be evidenced by book entry registration or in such
other manner as the Committee may determine.
(b) DEFERRAL. With the approval of the Committee, payments in respect
of Awards may be deferred, either in the form of installments or a future
lump-sum payment. The Committee may permit selected Participants to elect to
defer payments of some or all types of Awards in accordance with procedures
established by the Committee. Any deferred payment of an Award, whether
elected by the Participant or specified by the Award Agreement or by the
Committee, may be forfeited if and to the extent that the Award Agreement so
provides.
(c) DIVIDENDS AND INTEREST. Rights to dividends or Dividend
Equivalents may be extended to and made part of any Award consisting of shares
of Common Stock or units denominated in shares of Common Stock, subject to
such terms, conditions and restrictions as the Committee may establish. The
Committee may also establish rules and procedures for the crediting of
interest on deferred cash payments and Dividend Equivalents for Awards
consisting of shares of Common Stock or units denominated in shares of Common
Stock.
(d) SUBSTITUTION OF AWARDS. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for another
Award or Awards of the same or different type.
10. STOCK OPTION EXERCISE. The price at which shares of Common Stock
may be purchased under an Option shall be paid in full at the time of exercise
in cash or, if elected by the optionee, the optionee may purchase such shares by
means of tendering Common Stock or surrendering another Award, including
Restricted Stock, valued at Fair Market Value on the date of exercise, or any
combination thereof. The Committee shall determine acceptable methods for
Participants to tender Common Stock or other Awards; provided that any Common
Stock that is or was the subject of an Award may be so tendered only if it has
been held by the Participant for six months. The Committee may provide for
procedures to permit the exercise or purchase of such Awards by use of the
proceeds to be received from the sale of Common Stock issuable pursuant to an
Award. Unless otherwise provided in the applicable Award Agreement, in the event
shares of Restricted Stock are tendered as consideration for the exercise of an
Option, a number of the shares issued upon the exercise of the Option, equal to
the number of shares of Restricted Stock used as consideration therefor, shall
be subject to the same restrictions as the Restricted Stock so submitted as well
as any additional restrictions that may be imposed by the Committee.
11. TAX WITHHOLDING. The Company shall have the right to deduct
applicable taxes from any Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock under this Plan, an appropriate amount
of cash or number of shares of Common Stock or a combination thereof for payment
of taxes required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for withholding of such taxes.
The Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the Award
with respect to which withholding is required. If shares of Common Stock are
used to
A-6
satisfy tax withholding, such shares shall be valued based on the Fair Market
Value when the tax withholding is required to be made. The Committee may provide
for loans, on either a short-term or demand basis, from the Company to a
Participant to permit the payment of taxes required by law.
12. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law, except that (i) no amendment or alteration that would adversely affect
the rights of any Participant under any Award previously granted to such
Participant shall be made without the consent of such Participant and (ii) no
amendment will be made to increase the maximum number of shares subject to
Awards (except as provided in paragraph 14) without the approval of the
Company's stockholders.
13. ASSIGNABILITY. The Committee may prescribe and include in
applicable Award Agreements restrictions on transfer. Any attempted assignment
of an Award or any other benefit under this Plan in violation of this paragraph
13 shall be null and void.
14. ADJUSTMENTS.
(a) The existence of outstanding Awards shall not affect in any manner
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
capital stock of the Company or its business or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock (whether or not such issue is prior to, on a parity with or junior to
the Common Stock) or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding of any kind, whether or not of a character similar
to that of the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock, declaration of a dividend payable in shares of Common
Stock or other stock split, then (i) the number of shares of Common Stock
reserved under this Plan, (ii) the number of shares of Common Stock covered by
outstanding Awards in the form of Common Stock or units denominated in Common
Stock, (iii) the exercise or other price in respect of such Awards, (iv) the
appropriate Fair Market Value and other price determinations for such Awards
and (v) the Stock Based Awards Limitations shall each be proportionately
adjusted by the Board to reflect such transaction. In the event of any other
recapitalization or capital reorganization of the Company, any consolidation
or merger of the Company with another corporation or entity, the adoption by
the Company of any plan of exchange affecting the Common Stock or any
distribution to holders of Common Stock of securities or property (other than
normal cash dividends or dividends payable in Common Stock), the Board shall
make appropriate adjustments to (i) the number of shares of Common Stock
covered by Awards in the form of Common Stock or units denominated in Common
Stock, (ii) the exercise or other price in respect of such Awards, (iii) the
appropriate Fair Market Value and other price determinations for such Awards
and (iv) the Stock Based Awards Limitations to give effect to such transaction
shall each be proportionately adjusted by the Board to reflect such
transaction; provided that such adjustments shall only be such as are
necessary to maintain the proportionate interest of the holders of the Awards
and preserve, without exceeding, the value of such Awards. In the event of a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board shall be authorized to issue or
assume Awards by means of substitution of new Awards, as appropriate, for
previously issued Awards or to assume previously issued Awards as part of such
adjustment.
15. RESTRICTIONS. No Common Stock or other form of payment shall be
issued with respect to any Award unless the Company shall be satisfied based on
the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities
A-7
laws. Certificates evidencing shares of Common Stock delivered under this Plan
(to the extent that such shares are so evidenced) may be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under
the rules, regulations and other requirements of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed or to which it is admitted for quotation and any
applicable federal or state securities law. The Committee may cause a legend or
legends to be placed upon such certificates (if any) to make appropriate
reference to such restrictions.
16. UNFUNDED PLAN. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this Plan, any such accounts shall be
used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock
or rights thereto, nor shall this Plan be construed as providing for such
segregation, nor shall the Company, the Board or the Committee be deemed to be a
trustee of any cash, Common Stock or rights thereto to be granted under this
Plan. Any liability or obligation of the Company to any Participant with respect
to an Award of cash, Common Stock or rights thereto under this Plan shall be
based solely upon any contractual obligations that may be created by this Plan
and any Award Agreement, and no such liability or obligation of the Company
shall be deemed to be secured by any pledge or other encumbrance on any property
of the Company. Neither the Company nor the Board nor the Committee shall be
required to give any security or bond for the performance of any obligation that
may be created by this Plan.
17. GOVERNING LAW. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Delaware.
18. EFFECTIVENESS. This Plan shall be effective as of June 21, 1996,
(the "Effective Date"), the date on which it was approved by the Board of
Directors of the Company. Notwithstanding the foregoing, the adoption of this
Plan is expressly conditioned upon the approval by the holders of a majority of
shares of Common Stock present, or represented, and entitled to vote at a
meeting of the Company Stockholders held on or before December 31, 1996. If the
Stockholders of the Company should fail to so approve this Plan prior to such
date, this Plan shall terminate and cease to be of any further force or effect
and all grants of Awards hereunder shall be null and void.
A-8
<PAGE>
PRELIMINARY PROXY CARD
OCEANEERING INTERNATIONAL, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
John R. Huff and D. Michael Hughes, and each or any of them, with full
power of substitution, are hereby appointed proxies to vote the stock of the
undersigned in Oceaneering International, Inc., held of record by the
undersigned on July 9, 1996, at the Annual Meeting of Shareholders on August 23,
1996, to be held at the Baker & Botts, L.L.P. Conference Room, One Shell
Plaza-Mall Level, 910 Louisiana Street, Houston, Texas 77002, and at any
adjournment thereof.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON
THE REVERSE SIDE.
SEE REVERSE
SIDE
(FRONT)
<PAGE>
[X] Please mark you votes
as in this sample
This Proxy when properly executed will be voted as directed. If no
direction is made, this Proxy will be voted FOR the election of the director
nominee and FOR Proposals 2 and 3.
MANAGEMENT RECOMMENDS THAT YOU VOTE FOR AUTHORITY ON PROPOSAL 1 AND FOR THE
BOARD'S PROPOSALS 2 AND 3.
1. Election of Director
FOR [ ] WITHHELD [ ]
Nominee: D. Michael Hughes
2. Proposal to adopt the 1996 Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to approve the appointment of Arthur Andersen LLP as
independent auditors for the fiscal year ending March 31, 1997.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof,
including procedural and other matters relating to the conduct of the
meeting.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
-----------------------------------------------
------------------------------------------------
Signature(s) Date
(BACK)
