SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
OCEANEERING INTERNATIONAL, INC.
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
[OCEANEERING LOGO]
OCEANEERING INTERNATIONAL, INC.
11911 FM 529, HOUSTON, TEXAS 77041-3011
July 15, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of Oceaneering International, Inc. The meeting will be held on Friday, August
20, 1999, at 10:00 a.m. local time at the Baker & Botts, L.L.P. Conference Room,
One Shell Plaza - Mall Level, 910 Louisiana, Houston, Texas.
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. The Annual Report to Shareholders describing
Oceaneering's operations during the fiscal year ended March 31, 1999 is
enclosed.
I hope you will be able to attend the meeting in person. Whether or not you
plan to attend, please take the time to vote. In addition to using the enclosed
traditional paper proxy card to vote which you may sign, date and return in the
enclosed postage-paid envelope, this year we are offering two new alternate ways
to vote your shares, via the Internet or by telephone, by following the
instructions included in this package.
Thank you for your interest in Oceaneering.
Sincerely,
/s/JOHN R. HUFF
John R. Huff
Chairman of the Board and
Chief Executive Officer
<PAGE>
OCEANEERING INTERNATIONAL, INC.
11911 FM 529, HOUSTON, TEXAS 77041-3011
-------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 20, 1999
-------------------------------
To the Shareholders of Oceaneering International, Inc.:
The Annual Meeting of Shareholders of Oceaneering International, Inc., a
Delaware corporation ("Oceaneering"), will be held on Friday, August 20, 1999 at
10:00 a.m. local time at the Baker & Botts, L.L.P. Conference Room, One Shell
Plaza - Mall Level, 910 Louisiana, Houston, Texas, to consider and take action
on the following:
(1) Elect one Class I director as a member of the Board of Directors of
Oceaneering to serve until the 2002 Annual Meeting of Shareholders or
until a successor has been duly elected and qualified (Proposal 1);
(2) Adopt the 1999 Incentive Plan (Proposal 2);
(3) Ratify the appointment of Arthur Andersen LLP as independent auditors of
Oceaneering for the fiscal year ending March 31, 2000 (Proposal 3); and
(4) Transact such other business as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "IN FAVOR OF" ALL THREE PROPOSALS.
The close of business on July 8, 1999 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 welcomes your personal attendance at the meeting. Whether or not
you expect to attend the meeting, please submit a proxy form as soon as possible
so that your shares can be voted at the meeting. You may submit your proxy form
by filling in, dating and signing the enclosed proxy card and returning it in
the enclosed postage-paid envelope. Please refer to page 1 of the Proxy
Statement and the proxy card for instructions for proxy voting by telephone or
over the Internet.
By Order of the
Board of Directors,
/s/GEORGE R. HAUBENREICH, JR.
George R. Haubenreich, Jr.
Senior Vice President, General Counsel
and Secretary
July 15, 1999
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL
YOUR PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE BY
TELEPHONE OR OVER THE INTERNET IN ACCORDANCE WITH INSTRUCTIONS IN THIS PROXY
STATEMENT AND ON YOUR PROXY CARD.
<PAGE>
OCEANEERING INTERNATIONAL, INC.
--------------------------------------
PROXY STATEMENT
--------------------------------------
PROXIES AND VOTING AT THE MEETING
Only shareholders of record at the close of business on July 8, 1999 will be
entitled to notice of, and to vote at, the meeting. As of that date, 22,471,329
shares of Oceaneering's Common Stock, $.25 par value per share (the "Common
Stock") were outstanding. Each of those outstanding shares is entitled to one
vote at the meeting. This Proxy Statement and the accompanying proxy are
initially being mailed to these shareholders on or about July 15, 1999. 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.
SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of the Board of Directors (the
"Board of Directors" or the "Board") of Oceaneering International, Inc., a
Delaware corporation ("Oceaneering"), for use at Oceaneering's annual meeting of
shareholders to be held at the time and place set forth in the accompanying
notice. Oceaneering 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 Oceaneering may solicit proxies in person
or by telephone and facsimile transmission, for which such persons will receive
no additional consideration. Oceaneering has retained Corporate Investor
Communications, Inc. to solicit proxies at a fee estimated at $5,000 plus
reasonable expenses. Oceaneering will reimburse brokerage firms, banks and other
custodians, nominees and 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 and are officers
or directors of Oceaneering. 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
specified choices will be voted FOR PROPOSAL 1 to elect the nominee for director
proposed by the Board, FOR PROPOSAL 2 to adopt the 1999 Incentive Plan and FOR
PROPOSAL 3 to ratify the appointment of Arthur Andersen LLP as independent
auditors of Oceaneering for the fiscal year ending March 31, 2000.
METHODS OF VOTING
o VOTING BY MAIL. You may sign, date and return your proxy cards in the
pre-addressed, postage-paid envelope provided. If you return your proxy card
without indicating how you want to vote, the designated proxies will vote as
recommended by the Board.
o VOTING BY TELEPHONE OR THE INTERNET. If you have stock certificates issued
in your own name, you may vote by proxy by using the toll-free number or at
the Internet address listed on the proxy card.
The telephone and Internet voting procedures are designed to verify your
vote through the use of a Control Number that is provided on each proxy
card. The procedures also allow you to vote your shares and to confirm that
your instructions have been properly recorded. Please see your proxy card
for specific instructions.
If you hold shares through a brokerage firm, bank or other custodian, you
may vote by telephone or the Internet only if the custodian offers that
option.
1
<PAGE>
REVOKABILITY OF PROXIES
o REVOKING YOUR VOTING INSTRUCTIONS TO YOUR PROXY HOLDERS. If you have
certificates issued in your own name, and you vote by proxy, by mail, the
Internet or telephone, you may later revoke your proxy instructions by:
o sending a written statement to that effect to the Corporate Secretary at
P. O. Box 40494, Houston, Texas 72240-0494, the mailing address for the
executive offices of Oceaneering;
o submitting a proxy card with a later date signed as your name appears on
the stock account;
o voting at a later time by telephone or the Internet; or
o voting in person at the Annual Meeting (except for shares held through a
brokerage firm, bank or other custodian).
If you have shares held through a brokerage firm, bank or other custodian,
and you vote by proxy, you may later revoke your proxy instructions by informing
the custodian in accordance with any procedures it sets forth.
ELECTION OF DIRECTORS
PROPOSAL 1
The Certificate of Incorporation of Oceaneering divides the Board 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.
One Class I director is to be elected at the 1999 meeting. In accordance
with Oceaneering's Bylaws, the director will be elected by a plurality of the
votes cast. Accordingly, abstentions and broker "non-votes" marked on proxy
cards will not be counted in the election. The Class I director will serve until
the 2002 Annual Meeting of Shareholders or until a successor has been duly
elected and qualified. The directors of Classes II and III, consisting of two
members each, will continue to serve their terms of office, which will expire at
the Annual Meetings of Shareholders to be held in 2000 and 2001, respectively.
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
Oceaneering, unless authority to vote for the director is withheld in the proxy.
Although the Board 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.
Set forth below is certain information with respect to the nominee for
election as a director of Oceaneering.
NOMINEE - CLASS I DIRECTOR:
<TABLE>
<CAPTION>
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
------------------- --- --------
<S> <C> <C>
D. Michael Hughes....................................................................... 60 1970
Mr. Hughes is owner of Texas Wild Game Cooperative and the Broken Arrow Ranch.
He has been associated with Oceaneering since its incorporation,
serving as Chairman of the Board from 1984 to 1990.
</TABLE>
2
<PAGE>
CONTINUING DIRECTORS
Set forth below is comparable information for those directors whose terms
will expire in 2000 and 2001.
2000 - CLASS II DIRECTORS:
<TABLE>
<CAPTION>
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
------------------- --- --------
<S> <C> <C>
Charles B. Evans........................................................................ 74 1980
Mr. Evans has been a director of ResTech Inc., an oilfield service firm
specializing in custom log data processing, since 1982, having served
as Chairman through 1998. 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.
John R. Huff............................................................................ 53 1986
Mr. Huff has been Chairman of the Board of Directors of Oceaneering
since August 1990. He has been a director and Chief Executive Officer
of Oceaneering since joining Oceaneering in 1986. Mr. Huff 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
Suncor Energy Inc.
</TABLE>
2001 - CLASS III DIRECTORS:
<TABLE>
<CAPTION>
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
------------------- --- --------
<S> <C> <C>
David S. Hooker......................................................................... 56 1973
Mr. Hooker has been Chairman of Goshawk Insurance Holdings PLC, a marine
insurance group, 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 Shiega Resources Corporation and Aurex AB.
Harris J. Pappas........................................................................ 54 1996
Mr. Pappas joined the Board in November 1996. He has been President and
shareholder of Pappas Restaurants, Inc., a privately owned and operated
multi-state restaurant group, since 1983. He serves as a trustee of
Memorial Hermann Hospital in the Texas Medical Center in Houston.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the number of shares of Common Stock of
Oceaneering beneficially owned as of July 8, 1999, by each director and nominee
for director, each of the current executive officers named in the Summary
Compensation Table in this Proxy Statement 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.
3
<PAGE>
NUMBER OF PERCENT
NAME SHARES(1) OF CLASS
---- --------- --------
T. Jay Collins.................................... 163,021 *
Bruce L. Crager................................... 71,691 *
Charles B. Evans.................................. 27,900 *
George R. Haubenreich, Jr......................... 79,846 *
David S. Hooker................................... 26,000 *
John R. Huff...................................... 586,383 2.6
D. Michael Hughes................................. 93,363 *
Marvin J. Migura.................................. 74,950 *
Harris J. Pappas.................................. 12,000 *
All directors and officers as a group (21 persons) 1,464,823 6.5
* Less than 1%
(1) Includes the following shares subject to stock options exercisable within 60
days of July 8, 1999: Mr. Collins - 55,000, Mr. Crager - 23,150, Mr. Evans -
26,000, Mr. Haubenreich - 29,350, Mr. Hooker - 26,000, Mr. Huff - 165,000,
Mr. Hughes - 26,000, Mr. Migura - 39,350, Mr. Pappas - 12,000, and all
directors and officers as a group - 496,420. Includes the following shares
granted pursuant to restricted stock award agreements with respect to which
the recipient has sole voting power and no dispositive power: Mr. Collins -
43,747, Mr. Crager -25,215, Mr. Haubenreich - 19,860, Mr. Huff - 87,815, Mr.
Migura - 19,150, and all directors and officers as a group - 245,287. Also
includes the following shares, which are fully vested, held in trust
pursuant to the Oceaneering Retirement Investment Plan (the "Retirement
Plan") for which the individual has no voting rights until the shares are
withdrawn from the Retirement Plan: Mr. Collins - 10,621, Mr. Crager -
1,421, Mr. Huff - 1,577, Mr. Hughes - 21,057, and all directors and officers
as a group - 73,600.
Listed below are the only persons who to the knowledge of Oceaneering may be
deemed to be beneficial owners as of July 8, 1999 of more than 5% of the
outstanding shares of Common Stock. This information is based on statements
filed with the Securities and Exchange Commission ("SEC").
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS (1)
------------------- -------------------- -----------
<S> <C> <C>
SG Cowen Securities Corporation
1221 Avenue of the Americas
New York, NY 10020...................................................... 1,809,500 (2) 8.1
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158...................................................... 1,241,100 (3) 5.5
Thomson Horstmann & Bryant
Park 80 West Plaza Two
Saddle Brook, NJ 07663.................................................. 1,236,200 (4) 5.5
</TABLE>
4
<PAGE>
(1) The percentages are based on the number of issued and outstanding shares of
Common Stock at July 8, 1999.
(2) According to a Schedule 13G filed with the SEC and dated February 5, 1999,
SG Cowen Securities Corporation had sole voting and dispositive power over
42,000 shares and shared voting and dispositive power over 1,356,300 and
1,767,500 shares, respectively.
(3) According to a Schedule 13G filed with the SEC and dated February 8, 1999,
Neuberger Berman, LLC had sole voting power over 645,200 shares and shared
voting and dispositive power over 588,400 and 1,241,100 shares,
respectively.
(4) According to a Schedule 13G filed with the SEC and dated January 25, 1999,
Thomson Horstmann & Bryant had sole voting and dispositive power over
817,300 and 1,236,200 shares, respectively and shared voting power over
26,200 shares.
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
Oceaneering has standing Audit, Compensation and Nominating Committees of
the Board of Directors. The Audit Committee, which held two meetings during
fiscal year 1999, is comprised of Messrs. Hooker (Chairman), Hughes and Pappas.
The functions of the Audit Committee are: (1) to recommend to the full Board the
firm of independent auditors to be employed as Oceaneering'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 related matters; 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 comprised of Messrs. Evans (Chairman) and
Pappas, both of whom are nonemployee directors and are not former officers of
Oceaneering. The Compensation Committee, which held two meetings during fiscal
year 1999, establishes and reports to the full Board with respect to
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
Oceaneering. The Compensation Committee administers Oceaneering's annual bonus
plans, Oceaneering's long-term incentive plans and Oceaneering's supplemental
executive retirement plan (the "Supplemental Executive Retirement Plan"), and
reviews on a regular basis Oceaneering's overall 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 comprised of Messrs. Hughes (Chairman), Evans
and Hooker. The Nominating Committee, which held two meetings during fiscal year
1999, 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 Oceaneering's books and the
class and number of shares of Oceaneering which are beneficially owned by such
shareholder shall be included in the notice. This information should be sent to
the Corporate Secretary, Oceaneering International, Inc., P. O. Box 40494,
Houston, Texas 77240-0494.
During fiscal year 1999, the Board of Directors held a total of four
meetings. Each member of the Board attended all Board meetings and meetings of
any committee on which he served.
Oceaneering pays its outside directors a $10,000 annual retainer, $1,000 for
each Board 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 $800 per day for any consulting services.
All directors are reimbursed for their travel and other expenses involved in
attendance at Board and committee meetings.
5
<PAGE>
Nonemployee directors are participants in a 1990 Nonemployee Director Stock
Option Plan. Under this plan, as amended, each person who was a nonemployee
director of Oceaneering in June 1998 was granted an option to purchase 10,000
shares of Common Stock at an exercise price per share equal to the fair market
value of a share of Common Stock on the date the option was granted. All these
options granted are now exercisable.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Oceaneering's directors and executive officers to file
with the SEC and the New York Stock Exchange initial reports of ownership and
reports of changes in ownership of Common Stock. Based solely on a review of the
copies of such reports furnished to Oceaneering and representations that no
other reports were required, Oceaneering believes that all its directors and
executive officers during the fiscal year ended March 31, 1999 complied on a
timely basis with all applicable filing requirements under Section 16(a) of the
Exchange Act.
EXECUTIVE COMPENSATION
The following table sets forth information for the fiscal years shown, with
respect to the Chief Executive Officer and each of the other four most highly
compensated executive officers of Oceaneering serving as such during the year
ended March 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------------------------
ANNUAL COMPENSATION(A) AWARDS PAYOUTS
------------------------------------ ------------------------- -------------------------
ALL
SECURITIES OTHER
RESTRICTED UNDERLYING LTIP COMPEN-
NAME AND STOCK OPTIONS PAYOUTS SATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS($)(B) AWARDS (#) ($)(D) ($)(E)
-------------------- ---- ---------- ----------- ---------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Huff 1999 435,000 235,000 0 40,000 1,150,603 174,000
Chairman and 1998 420,000 200,000 0 30,000 1,364,504 110,925
Chief Executive Officer 1997 400,000 240,000 (c) 20,000 1,154,590 127,241
T. Jay Collins 1999 225,000 139,000 0 20,000 214,111 68,750
President and 1998 210,000 140,000 0 15,000 159,192 54,342
Chief Operating Officer 1997 195,000 120,000 (c) 10,000 134,701 39,170
Marvin J. Migura 1999 185,000 75,000 0 15,000 107,055 44,400
Senior Vice President and 1998 177,000 60,000 0 8,000 53,064 37,187
Chief Financial Officer 1997 175,000 80,000 (c) 6,000 44,900 9,301
Bruce L. Crager (f) 1999 185,000 60,000 0 15,000 168,309 40,700
Senior Vice President 1998 177,000 50,000 0 10,000 136,450 46,939
George R. Haubenreich, Jr. 1999 185,000 65,000 0 15,000 145,488 44,400
Sr. Vice President, General 1998 177,000 60,000 0 8,000 136,450 14,992
Counsel and Secretary 1997 175,000 90,000 (c) 6,000 115,458 37,636
</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.
6
<PAGE>
(b) In fiscal years 1999, 1998 and 1997, Messrs. Huff, Collins, Migura and
Haubenreich elected to receive all or part of their bonus awards in
restricted stock. Mr. Crager made the same election in fiscal year 1999. The
bonus amounts stated for fiscal years 1999, 1998 and 1997 include the
following restricted stock grants valued on the basis of the closing market
prices of $16.5625, $17.937 and $14.625 per share on the date of award: Mr.
Huff - 14,188, 11,148 and 16,400 shares, Mr. Collins - 8,392, 7,804 and
8,204 shares, Mr. Migura - 2,400, 1,200 and 4,000 shares, Mr. Haubenreich
-1,200, 3,344 and 6,152 shares, and in fiscal year 1999, Mr. Crager - 3,620
shares. Twenty-five percent of these restricted stock awards vested in June
of the calendar year awarded, with the remainder vesting over three years
from the vesting date, conditional upon continued employment. At the time of
each vesting, a tax assistance payment is made to the award recipients which
must be reimbursed to Oceaneering if the vested stock related thereto is
sold within three years after the vesting date.
(c) At March 31, 1999, the number and value of the long-term incentive
restricted stock holdings which have not vested (based on the closing market
price on that date of $15.125 per share) under restricted stock awards were
as follows: Mr. Huff - 97,500 shares, $1,474,687; Mr. Collins - 40,250
shares, $608,781; Mr. Migura - 21,000 shares, $317,625; Mr. Crager - 29,000
shares, $438,625; and Mr. Haubenreich - 20,750 shares, $313,843. Dividends,
if any, are paid on the restricted shares. The value of such stock for which
restrictions were lifted in fiscal years 1999, 1998 and 1997 is reported in
the LTIP payouts column in the table.
(d) Amounts represent the aggregate value of long-term incentive restricted
stock for which restrictions were lifted and the associated tax assistance
payment.
(e) In fiscal years 1998 and 1997 the amounts represent Oceaneering
contributions under a nonqualified executive retirement plan, which
terminated in fiscal year 1998. In fiscal year 1999, the amounts represent
amounts accrued for each executive under a successor and nonqualified
Supplemental Executive Retirement Plan which are subject to vesting over a
three year period.
(f) Mr. Crager has been employed by Oceaneering during each of the last three
years but was not appointed an executive officer until fiscal year 1998.
EXECUTIVE EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL AGREEMENTS
Oceaneering has entered into an employment agreement with no expiration date
with John R. Huff, which provides that, in the event of his termination from
Oceaneering for any reason except voluntary resignation or cause, he will
receive compensation equivalent to one year's salary, inclusive of any amounts
payable under a Senior Executive Severance Plan (the "Severance Plan"). The
employment agreement also provides that Oceaneering will provide medical
coverage to Mr. Huff, his spouse and children during his employment with
Oceaneering and, under circumstances, thereafter for life.
Under 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
Oceaneering (as defined in the Severance Plan) 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 Oceaneering, 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 difference between the exercise price
and any higher fair market value of the outstanding stock options. The executive
will also receive 25% of the amount of the difference between the exercise price
and any higher 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.
In March 1989, Oceaneering 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 Oceaneering (as
defined in the Supplemental Agreement) 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
Oceaneering), or reduction in the scope of his position or total annual
compensation, or if he is requested to relocate,
7
<PAGE>
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 difference between the exercise price and any higher fair market value of
the outstanding stock options, or to exercise such stock options and receive the
amount of the difference. He will also receive 100% of the amount of the
difference 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.
LONG-TERM INCENTIVE PLANS AND RETIREMENT PLANS
Under Oceaneering's 1990 and 1996 Long-Term Incentive Plans, 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 Oceaneering.
Oceaneering has in effect a Retirement Plan and a Supplemental Executive
Retirement Plan. All employees of Oceaneering and its United States subsidiaries
who meet the eligibility requirements may participate in the Retirement Plan.
Certain key management employees and executives of Oceaneering and its
subsidiaries, as approved by the Compensation Committee, are eligible to
participate in the Supplemental Executive Retirement Plan, which was implemented
in fiscal year 1998.
Under the Retirement Plan, each participant directs Oceaneering 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 fully vested. Oceaneering's
contributions to this plan become vested to the participant in percentage
increments over a six-year period, commencing with the participant's date of
employment, provided that the participant remains employed by Oceaneering.
Oceaneering is currently contributing an amount equal to the deferred
compensation of each 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 each participant who has elected to invest in the other investments up to the
first 6% of the participant's base pay. During fiscal year 1999, none of the
executive officers listed in the Summary Compensation Table made contributions
to the Retirement Plan.
As of each July 1, Oceaneering may establish an amount to be accrued
pursuant to the Supplemental Executive Retirement Plan for the following
12-month period ("Plan Year") as it determines in its discretion and the amounts
accrued may be different for each participant. No separate fund is maintained
for the Supplemental Executive Retirement Plan. Amounts accrued pursuant to the
Supplemental Executive Retirement Plan are adjusted for earnings and losses as
if they were invested in one or more investment vehicles selected by the
participant from those designated as alternatives by the Compensation Committee.
The account balances vest in one-third increments on the close of the first,
second and third years of continuous employment beginning with and including
July 1 of the Plan Year with respect to which they are accrued. The account
balances vest in any event upon ten years of continuous employment after
becoming a participant, the date that the sum of the participants' attained age
and years of participation equal 65, termination of employment by reason of
death or disability or within two years of a change of control, or termination
of the plan. A participant's interest in the plan is generally distributable
upon termination of employment.
The following table provides information concerning grants of stock options
made to the named executive officers during the fiscal year ended March 31,
1999.
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
OPTIONS EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE ($) ($)
- - - ---- ----------- ----------- -------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Huff 40,000 9.0 10.22 8/20/03 112,944 658,376
T. Jay Collins 20,000 4.5 10.22 8/20/03 56,472 329,188
Marvin J. Migura 15,000 3.4 10.22 8/20/03 42,352 246,892
Bruce L. Crager 15,000 3.4 10.22 8/20/03 42,352 246,892
George R. Haubenreich, Jr. 15,000 3.4 10.22 8/20/03 42,352 246,892
</TABLE>
8
<PAGE>
(a) Stock options have exercise prices equal to the fair market value of a share
of Common Stock at the date of award and become exercisable over four years
after the date of award. Options generally expire at the earliest of five
years after the date of the award, one year after optionee's death,
disability or retirement, or at the time of the 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 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 the value of unexercised
options held by each of the named executive officers at the end of the 1999
fiscal year. None of these officers exercised any stock options during the
fiscal year ended March 31, 1999.
FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FY-END (#) FY-END ($)
------------------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John R. Huff 149,000 76,000 434,125 222,700
T. Jay Collins 57,000 38,000 163,312 111,350
Marvin J. Migura 18,000 41,000 72,850 163,725
Bruce L. Crager 17,400 29,000 34,412 82,825
George R. Haubenreich, Jr. 24,000 25,000 44,225 81,725
</TABLE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Oceaneering's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). 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
Oceaneering'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 Oceaneering performance.
o Motivating executives and key employees toward achieving long-term
strategic results by aligning employee and shareholder interests through
the increased value of Oceaneering's stock.
There are three major components of Oceaneering's executive compensation
program: Base Salary, Annual
9
<PAGE>
Incentives and Long-Term Incentive Awards. The Committee considers all elements
of compensation when determining individual components.
BASE SALARY
The Committee believes 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 Oceaneering 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 Oceaneering's overall performance.
For fiscal year 1999, the maximum annual bonus award established for executive
officers was within a range of 30-100 percent of base salary.
LONG-TERM INCENTIVE AWARDS
Long-term incentive awards under shareholder-approved Long-Term Incentive
Plans are designed to create a mutuality of interest between executive officers
(and other key employees) and shareholders through stock ownership and other
incentive awards.
To achieve these objectives, the Committee granted restricted Common Stock
to executive officers and other key employees of Oceaneering in fiscal year
1997. Those awards are subject to earning requirements during the three-year
performance period and subsequent vesting requirements. Up to one-third of the
total grant may be earned each year, depending upon Oceaneering's cumulative
Common Stock performance from June 28, 1996 as compared with a specified peer
group's cumulative common stock performance from that date, with any amount
earned subject to vesting in four equal installments over three years commencing
one year after earning, conditional upon continued employment. If the
performance of Oceaneering'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 Oceaneering'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 Oceaneering if the vested Common
Stock is sold within three years after the vesting date. At the end of fiscal
year 1999, two-thirds of the total grant was earned, subject to vesting
requirements.
The Committee awards stock options to a broad group of executives and key
employees. Stock option grants were made to all executive officers in fiscal
year 1999.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
John R. Huff has been Chief Executive Officer of Oceaneering since August
1986 and Chairman of the Board since 1990. His compensation package has been
designed to encourage the enhancement of shareholder value. Mr. Huff's
compensation for fiscal year 1999 included the same components and methodology
of salary and variable compensation as apply to other executive officers, with
regard to his high level of accountability. A substantial portion of his
compensation is at risk in the form of performance bonuses and stock awards. In
fiscal year 1999, Mr. Huff's base annual salary was increased by 3.5% to
$435,000 and he was awarded an annual bonus of $235,000. This bonus is
commensurate with Oceaneering's financial performance during the year which
generated a record high net income. These amounts reflect the Committee's
assessment of Oceaneering's financial performance compared to other oilfield
service companies during the relevant periods, Mr. Huff's leadership and
significant personal contribution to Oceaneering's business, and compensation
data of competitive companies.
Compensation Committee
Charles B. Evans, Chairman
Harris J. Pappas
10
<PAGE>
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 annual 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. Oceaneering had no nondeductible compensation expense for fiscal
year 1999. Oceaneering plans to review this matter as appropriate and take
action as may be necessary to preserve the deductibility of compensation
payments to the extent reasonably practical and consistent with Oceaneering's
compensation objectives.
PERFORMANCE GRAPH
The following line graph compares Oceaneering'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, 1999. The peer group companies at
March 31, 1999 for this performance graph are Dresser Industries, Inc., 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 Oceaneering's
Common Stock, the S&P 500 and the peer group on March 31, 1994, except that the
investment was made in Offshore Pipelines, Inc. through January 1996, and
thereafter in J. Ray McDermott, Inc., as a result of their merger, 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. Oceaneering has not
declared any dividends during the period covered by the graph. The shareholder
return shown is not necessarily indicative of future performance.
COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURN
FOR OCEANEERING, S&P 500 AND A SELECTED PEER GROUP
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Oceaneering 100.00 80.61 111.22 127.55 161.22 123.47
Peer Group 100.00 123.35 176.61 222.08 322.72 228.71
S&P 500 100.00 115.57 152.67 182.93 270.74 320.72
</TABLE>
11
<PAGE>
APPROVAL OF THE 1999 INCENTIVE PLAN
PROPOSAL 2
The Board of Directors recommends to Oceaneering's shareholders that they
approve the proposal to adopt the 1999 Incentive Plan of Oceaneering
International, Inc. (the "Incentive Plan"). A copy of the Incentive Plan is
attached hereto as Appendix 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
Oceaneering's Board of Directors on June 18, 1999, are to attract and retain the
services of key employees, qualified directors, consultants and other
independent contractors, to encourage the sense of proprietorship of such
persons and to stimulate the active interest of such persons in the development
and financial success of Oceaneering and its subsidiaries by making awards
("Awards") designed to provide such persons with a proprietary interest in the
growth and performance of Oceaneering.
Oceaneering has reserved 1,450,000 shares of Common Stock for use in
connection with the Incentive Plan, no more than 900,000 of which may be
available for Incentive Options and no more than 550,000 of which may be
available for Awards other than Options or SARs. On July 8, 1999, the last
reported sale price of the Common Stock on the NYSE was $16.94 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. Approximately 43,700 shares of Common Stock
are available for awards under Oceaneering's existing 1990 Nonemployee Director
Stock Option Plan, 1990 Long-Term Incentive Plan and 1996 Incentive Plan on a
combined basis.
Persons eligible for Awards are, respectively, (i) key employees (including
those individuals who have agreed to become employees of Oceaneering or its
subsidiaries within the next six months and actually become an employee within
such time) holding positions of responsibility with Oceaneering or any of its
subsidiaries and whose performance can have a significant effect on the success
of Oceaneering ("Employees"), (ii) nonemployee directors of Oceaneering and its
subsidiaries ("Directors"), and (iii) independent contractors providing services
to, or who will provide services to, Oceaneering or its subsidiaries
("Independent Contractors"). Employees, Directors, and Independent Contractors
who are granted Awards are referred to below as Participants.
The Compensation Committee of Oceaneering's Board of Directors (the
"Committee") will administer the Incentive Plan. 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 (i) not adverse to
the Participant holding the Award, (ii) consented to by that Participant, or
(iii) authorized in connection with a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation. The
Committee also may delegate to the Chief Executive Officer and other senior
officers of Oceaneering its duties under the Incentive Plan. No termination date
is specified for the Incentive Plan.
EMPLOYEE AWARDS. Employee 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 excess of 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
12
<PAGE>
performance goals ("Performance Awards"). The term of an Option shall not exceed
five years from date of grant. Subject to the limitations described below, the
Committee will determine the recipients of Employee Awards and the terms,
conditions and limitations applicable to each Employee Award, which conditions
may, but need not, include continuous service with Oceaneering, achievement of
specific business objectives or goals, increases in specified indices or other
comparable measures of performance. The Committee may grant Employee Awards (i)
singly, (ii) in combination or tandem with other Employee Awards, (iii) in
replacement of or as alternatives to prior Employee Awards or (iv) in
combination or tandem with, in replacement of or as alternatives to rights under
any other employee plan of Oceaneering or any acquired entity, but the Committee
may not (x) grant, in exchange for an Option, a new Option having a lower
exercise price, (y) provide for the automatic grant of a new Option upon the
exercise of an Option or (z) reduce the exercise price of an Option. 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, Oceaneering as a whole or one or more of
Oceaneering's business units and may include any of the following: revenues,
income from operations, net income, stock price, market share, earnings per
share, return on equity, assets or invested capital, economic value added,
market value added, decrease in costs or achievement of balance sheet, income
statement or cash flow objectives.
The Incentive Plan contains limitations respecting Employee Awards,
including the following:
(i) an Option may be either an incentive stock option ("ISO") (not to
exceed ISOs covering a maximum of 900,000 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.
INDEPENDENT CONTRACTOR AWARDS. Independent Contractors may not be granted
Incentive Options. Otherwise, the Committee may make any form of Award to
Independent Contractors as could be made to Employees. The Employee Award
limitations in subparagraphs (ii) through (iv) above shall be inapplicable to
Independent Contractor Awards.
DIRECTOR AWARDS. On or after the effective date of his or her first
appointment or election to the Board of Directors, a Director shall
automatically be granted a Director Option that provides for the purchase of
10,000 shares of Common Stock. In addition, on the first business day of the
month next succeeding the date upon which the annual meeting of shareholders of
Oceaneering is held in each year, each Director shall automatically be granted a
Director Option that provides for the purchase of 10,000 shares of Common Stock.
Each Director Option shall have a term of 5 years from the date of grant,
notwithstanding any earlier termination of the status of the holder as a
Director. The purchase price of each share of Common Stock subject to a Director
Option shall be equal to the fair market value of the Common Stock on the date
of grant. No Director Option may be issued in exchange for the cancellation of a
Director Option with a higher exercise price, nor may the exercise price of any
Director Option be reduced. All Director Options shall become fully exercisable
six months following the date of grant. All Director Options that have not
previously become exercisable shall be forfeited if the Director resigns as a
Director without the consent of a majority of the other
13
<PAGE>
Directors. Director Awards shall not be made in any year in which a sufficient
number of shares of Common Stock are not available to make such Awards under the
Plan.
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. Except as provided in the Employee Awards paragraph above, at the
discretion of the Committee, an Employee or Independent Contractor may be
offered an election to substitute an Award for another Award or Awards of the
same or a different type.
Oceaneering will have the right to deduct applicable taxes from any Award
payment to an Employee 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 Oceaneering of shares of Common Stock previously owned by the holder
of the Award for which withholding is required, or (ii) provide for loans, on
either a short-term or demand basis, from Oceaneering to an Employee or
Independent Contractor 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 or alteration shall be
effective prior to its approval by the shareholders of Oceaneering to the extent
such approval is otherwise required by applicable legal requirements.
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, (v) the Stock Based Awards Limitations, and (vi) the
number of shares of Common Stock to be covered by Director Options automatically
granted under the Incentive Plan in order to reflect such transactions.
Furthermore, in the event of any other recapitalization or capital
reorganization of Oceaneering, any consolidation or merger of Oceaneering with
another corporation or entity, the adoption by Oceaneering 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), Oceaneering Board will make appropriate adjustments to the amounts
or other items referred to in clauses (ii), (iii), (iv), (v), and (vi) 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.
In the event of a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation, the Board may make such
adjustments to Awards or other provisions for the disposition of Awards as it
deems equitable, and shall be authorized, in its discretion, (i) to provide for
the substitution of a new Award or other arrangement (which, if applicable, may
be exercisable for such property or stock as the Board determines) for an Award
or the assumption of the Award, (ii) to provide, prior to the transaction, for
the acceleration of the vesting and exercisability of, or lapse of restrictions
with respect to, the Award and, if the transaction is a cash merger, provide for
the termination of any portion of the Award that remains unexercised at the time
of such transaction or (iii) to provide for the acceleration of the vesting and
exercisability of an Award and the cancellation thereof in exchange for such
payment as shall be mutually agreeable to the Participant and the Board.
TAX IMPLICATIONS OF AWARDS. The following is a summary of the United States
federal income tax consequences to Employees and Oceaneering as a result of the
grant and exercise of Awards under the Incentive Plan. The tax consequences to
Participants who are Independent Contractors or Directors are the same as the
tax consequences described for Employees, except that no ISOs are granted to
those Participants and no withholding applies to those Participants. 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.
14
<PAGE>
No grant of any Option or SAR will constitute realized taxable income
to the Employee. Each exerciser of an SAR or NSO will (i) recognize ordinary
income (subject to withholding by Oceaneering) 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, Oceaneering (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 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.
Oceaneering generally will not be entitled to any federal income tax
deduction on the grant or exercise of an ISO, unless the Employee makes a
disqualifying disposition of the underlying ISO Stock, in which event,
Oceaneering 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 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 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 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 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
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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 under the rules
described in the preceding paragraph are taxed as additional ordinary income,
not as dividend income. The tax basis of an Employee in the Common Stock
received will equal the amount recognized by the Employee as 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.
CERTAIN TAX CODE LIMITATIONS ON DEDUCTIBILITY. In order for the amounts
described above to be deductible by Oceaneering (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 Oceaneering
(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 Oceaneering (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
Oceaneering to $1 million with respect to any such employee during any taxable
year of Oceaneering. 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 Oceaneering 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 Oceaneering 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.
Approval of the Incentive Plan requires the affirmative vote of a majority
of the shares represented in person or by proxy and entitled to vote on such
matter.
THE BOARD OF DIRECTORS URGES THE SHAREHOLDERS TO VOTE FOR ADOPTING THE INCENTIVE
PLAN.
RATIFICATION OF 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 Oceaneering for the fiscal year ending March 31, 2000,
pursuant to the recommendation of the Audit Committee of the Board. Arthur
Andersen LLP has served as Oceaneering's independent auditors for 28 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.
In accordance with Oceaneering's Bylaws, the approval of the proposal to
ratify the appointment of Arthur Andersen LLP as independent auditors of
Oceaneering for the fiscal year ending March 31, 2000 requires the affirmative
vote of a majority of the shares of Common Stock present in person or by proxy
at the meeting. Accordingly, abstentions and broker "non-votes" marked on proxy
cards will count as votes "against" this proposal.
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 Oceaneering for the fiscal year ending March 31, 2000,
unless a contrary choice is set forth thereon or unless an abstention or broker
"non-vote" is indicated thereon.
THE BOARD OF DIRECTORS URGES THE SHAREHOLDERS TO VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF OCEANEERING
FOR THE FISCAL YEAR ENDING MARCH 31, 2000.
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SHAREHOLDER PROPOSALS
In order to be included in the Proxy Statement for the 2000 Annual Meeting
of Shareholders of Oceaneering, Shareholder proposals must be received at
Oceaneering's principal executive offices, 11911 FM 529, Houston, Texas
77041-3011, addressed to the Corporate Secretary, no later than March 17, 2000.
Otherwise, in order to be considered at the 2000 Annual Meeting, Shareholder
proposals must be received no later than 120 days prior to the meeting.
TRANSACTION OF OTHER BUSINESS
Should any other matter 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 of Shareholders, 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-paid return envelope or vote
by telephone or over the Internet by following the instructions included in this
package. Please act promptly to ensure that you will be represented at this
important meeting.
OCEANEERING WILL PROVIDE WITHOUT CHARGE ON THE WRITTEN REQUEST OF ANY PERSON
SOLICITED HEREBY A COPY OF OCEANEERING'S ANNUAL REPORT ON FORM 10-K AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR OCEANEERING'S FISCAL YEAR ENDED
MARCH 31, 1999. WRITTEN REQUESTS SHOULD BE MAILED TO GEORGE R. HAUBENREICH, JR.,
SECRETARY, OCEANEERING INTERNATIONAL, INC., P. O. BOX 40494, HOUSTON, TEXAS
77240-0494.
By Order of the Board of Directors,
/s/GEORGE R. HAUBENREICH, JR.
George R. Haubenreich, Jr.
Senior Vice President, General Counsel
and Secretary
July 15, 1999
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APPENDIX A
1999 INCENTIVE PLAN
OF
OCEANEERING INTERNATIONAL, INC.
1. PLAN. This 1999 Incentive Plan of Oceaneering International, Inc. (the
"Plan") was adopted by Oceaneering International, Inc. (the "Company") to reward
certain corporate officers and key employees of the Company and certain
independent consultants by enabling them to acquire shares of common stock of
the Company.
2. OBJECTIVES. This Plan is designed to attract and retain key employees of
the Company and its Subsidiaries, to attract and retain qualified directors of
the Company, to attract and retain consultants and other independent
contractors, to encourage the sense of proprietorship of such employees,
directors and independent contractors 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 under
this Plan and thereby providing Participants 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:
"Annual Director Award Date" means the first business day of the month next
succeeding the date upon which the annual meeting of stockholders of the Company
is held in such year.
"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 an Employee Award, a Director Award or an Independent
Contractor Award.
"Award Agreement" means any Employee Award Agreement, Director Award
Agreement or Independent Contractor Award Agreement.
"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 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 $0.25 per share, of the
Company.
"Company" means Oceaneering International, Inc., a Delaware corporation.
"Director" means an individual serving as a member of the Board.
"Director Award" means the grant of a Director Option.
"Director Award Agreement" means a written agreement between the Company and
a Participant who
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is a Nonemployee Director setting forth the terms, conditions and limitations
applicable to a Director Award.
"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.
"Employee" means an employee of the Company or any of its Subsidiaries and
an individual who has agreed to become an employee of the Company or any of its
Subsidiaries and actually becomes such an employee within the following six
months.
"Employee 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 who is an Employee pursuant to such applicable terms, conditions and
limitations as the Committee may establish in order to fulfill the objectives of
the Plan.
"Employee Award Agreement" means a written agreement between the Company and
a Participant who is an Employee setting forth the terms, conditions and
limitations applicable to an Employee Award.
"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 Stock
Market, or, if not reported by the Nasdaq Stock 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 providing services to the Company or
any of its Subsidiaries except an Employee or Nonemployee Director.
"Independent Contractor Award" means the grant of any Nonqualified Stock
Option, SAR, Stock Award, Cash Award or Performance Award, whether granted
singly, in combination or in tandem, to a Participant who is an Independent
Contractor pursuant to such applicable terms, conditions and limitations as the
Committee may establish in order to fulfill the objectives of the Plan.
"Independent Contractor Award Agreement" means a written agreement between
the Company and a Participant who is an Independent Contractor setting forth the
terms, conditions and limitations applicable to an Independent Contractor Award.
"Nonemployee Director" has the meaning set forth in paragraph 4(b) hereof.
"Nonqualified Stock Option" means an Option that is not an Incentive Option.
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"Option" means a right to purchase a specified number of shares of Common
Stock at a specified price.
"Participant" means an Employee, Director 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 an Employee or Independent Contractor, which Award 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.
"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.
"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.
(a) EMPLOYEES. Key Employees eligible for Employee 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, including those individuals who
are expected to become employees within six months.
(b) DIRECTORS. Directors eligible for Director Awards under this Plan
are those who are not employees of the Company or any of its Subsidiaries
("Nonemployee Directors").
(c) INDEPENDENT CONTRACTORS. Independent Contractors eligible for
Independent Contractor Awards under this Plan are those Independent
Contractors providing services to, or who will provide services to, the
Company or any of its Subsidiaries.
5. COMMON STOCK AVAILABLE FOR AWARDS. Subject to the provisions of paragraph
15 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 1,450,000 shares of Common Stock. No
more than 900,000 shares of Common Stock shall be available for Incentive
Options. No more than 550,000 shares of Common Stock shall be available under
this Plan for Awards other than Options or SARs. 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
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for Awards hereunder. 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. 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 (i) not adverse to
the Participant to whom such Award was granted, (ii) consented to by such
Participant or (iii) authorized by paragraph 15(c). The Committee may make
an Award to an individual who it expects to become an employee of the
Company or any of its Subsidiaries within the next six months, with such
Award being subject to the individual's actually becoming an employee within
such time period, and subject to such other terms and conditions as may be
established by the Committee. 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.
8. EMPLOYEE AND INDEPENDENT CONTRACTOR AWARDS.
(a) The Committee shall determine the type or types of Employee 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 Employee Award
may be embodied in an Employee 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
Employee Award is made and by an Authorized Officer for and on behalf of the
Company. Employee Awards may consist of those listed in this paragraph 8(a)
hereof and may be granted singly, in combination or in tandem. Employee
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; provided that, except as contemplated in paragraph
15, no Option may be issued in exchange for the cancellation of an Option
with a higher exercise price nor may the exercise price of any Option be
reduced. All or part of an Employee 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
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performance. Upon the termination of employment by a Participant who is an
Employee, any unexercised, deferred, unvested or unpaid Employee Awards
shall be treated as set forth in the applicable Employee Award Agreement.
(i) STOCK OPTION. An Employee 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 Option shall be not less
than the Fair Market Value of the Common Stock on the date of grant. The
term of an Option shall not exceed 5 years from the date of grant.
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 Employee 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.
(iii) STOCK AWARD. An Employee 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 Employee 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
Employee Awards that may be made under the other provisions of this
Plan, an Employee 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:
revenues, income from operations, net income, stock price, market share,
earnings per share, return on equity, assets or invested capital,
economic value added, market value added, decrease in costs or
achievement of balance sheet, income statement or cash flow objectives.
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 Employee Awards made hereunder:
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(i) no Participant may be granted, during any one-year period,
Employee 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,
Stock Awards 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 Employee Awards consisting of
cash or in any other form permitted under this Plan (other than Employee
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) The Committee shall have the sole responsibility and authority to
determine the type or types of Independent Contractor Awards to be made
under this Plan and may make any such Awards as could be made to an
Employee, other than Incentive Options; provided that the limitations
described in paragraph 8(b) shall be inapplicable to Independent Contractor
Awards.
9. DIRECTOR AWARDS. Each Nonemployee Director of the Company shall be
granted Director Awards in accordance with this paragraph 9 and subject to the
applicable terms, conditions and limitations set forth in this Plan and the
applicable Director Award Agreement. Notwithstanding anything to the contrary
contained herein, Director Awards shall not be made in any year in which a
sufficient number of shares of Common Stock are not available to make such
Awards under this Plan.
On or after the effective date of his or her first appointment or election
to the Board f Directors, a Nonemployee Director shall automatically be granted
a Director Option that provides for the purchase of 10,000 shares of Common
Stock. In addition, on each Annual Director Award Date, each Nonemployee
Director shall automatically be granted a Director Option that provides for the
purchase of 10,000 shares of Common Stock. Each Director Option shall have a
term of 5 years from the date of grant, notwithstanding any earlier termination
of the status of the holder as a Nonemployee Director. The purchase price of
each share of Common Stock subject to a Director Option shall be equal to the
Fair Market Value of the Common Stock on the date of grant. No Director Option
may be issued in exchange for the cancellation of a Director Option with a
higher exercise price, nor may the exercise price of any Director Option be
reduced. All Director Options shall become fully exercisable 6 months following
the date of grant. All Director Options that have not previously become
exercisable shall be forfeited if the Nonemployee Director resigns as a Director
without the consent of a majority of the other Directors.
Any Award of Director Options shall be embodied in a Director Award
Agreement, which shall contain the terms, conditions and limitations set forth
above and shall be signed by the Participant to whom the Director Options are
granted and by an Authorized Officer for and on behalf of the Company.
10. AWARD PAYMENT; DIVIDENDS; SUBSTITUTION.
(a) GENERAL. Payment of Employee Awards or Independent Contractor 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 Employee Award or Independent
Contractor Award is made in the form of Restricted Stock, the applicable
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.
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(b) DEFERRAL. With the approval of the Committee, amounts payable in
respect of Awards may be deferred and paid either in the form of
installments or as a 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 Employee Award or Independent
Contractor 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 Employee Awards or Independent
Contractor 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 who is an Employee or Independent Contractor may be offered an
election to substitute an Employee Award or Independent Contractor Award for
another Employee Award or Independent Contractor Award or Employee Awards or
Independent Contractor Awards of the same or different type.
11. 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 Participant, the Participant 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 who are Employees or Independent Contractors to tender Common Stock
or other Employee Awards or Independent Contractor Awards; provided that any
Common Stock that is or was the subject of an Employee Award or Independent
Contractor 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 Employee Award or Independent Contractor
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.
12. TAXES. The Company shall have the right to deduct applicable taxes from
any Employee 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
Employee Award with respect to which withholding is required. If shares of
Common Stock are used to 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 who is an Employee or Independent Contractor
to permit the payment of taxes required by law.
13. 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 or
alteration shall be effective prior to its approval by the stockholders of the
Company to the extent stockholder approval is otherwise required by applicable
legal requirements.
14. ASSIGNABILITY. Unless otherwise determined by the Committee and provided
in the Award Agreement, no Award or any other benefit under this Plan shall be
assignable or otherwise transferable. Any attempted
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assignment of an Award or any other benefit under this Plan in violation of this
paragraph 14 shall be null and void.
15. 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.
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(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, (v) the number of shares of Common Stock
covered by Director Options automatically granted pursuant to paragraph 9(a)
hereof and (vi) 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, (iv) the number of shares of Common
Stock covered by Director Options automatically granted pursuant to
paragraph 9(a) hereof and (v) 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.
(c) In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Board may
make such adjustments to Awards or other provisions for the disposition of
Awards as it deems equitable, and shall be authorized, in its discretion,
(i) to provide for the substitution of a new Award or other arrangement
(which, if applicable, may be exercisable for such property or stock as the
Board determines) for an Award or the assumption of the Award, regardless of
whether in a transaction to which Section 424(a) of the Code applies, (ii)
to provide, prior to the transaction, for the acceleration of the vesting
and exercisability of, or lapse of restrictions with respect to, the Award
and, if the transaction is a cash merger, provide for the termination of any
portion of the Award that remains unexercised at the time of such
transaction or (iii) to provide for the acceleration of the vesting and
exercisability of an Award and the cancellation thereof in exchange for such
payment as shall be mutually agreeable to the Participant and the Board.
16. 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 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.
17. 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
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Committee shall be required to give any security or bond for the performance of
any obligation that may be created by this Plan.
18. 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.
19. EFFECTIVENESS. This Plan shall be effective as of June 18, 1999 (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, 1999. 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.
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OCEANEERING INTERNATIONAL, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
John R. Huff and George R. Haubenreich, Jr., and each of them, with
P full power of substitution, are hereby appointed proxies to vote the stock
of the undersigned in Oceaneering International, Inc., held of record by
R the undersigned on July 8, 1999, at the Annual Meeting of Shareholders on
August 20, 1999, to be held at the Baker & Botts, L.L.P. Conference Room,
O One Shell Plaza-Mall Level, 910 Louisiana, Houston, Texas 77002, and at
any adjournment thereof.
X
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
Y BOXES ON THE REVERSE SIDE. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU
SIGN AND RETURN THIS CARD.
----------------
SEE REVERSE SIDE
----------------
<PAGE>
PLEASE MARK YOUR
[X] VOTES AS IN THIS 1616
EXAMPLE.
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. Each of the proposals has been proposed by
the Board of Directors of Oceaneering International, Inc. ("Oceaneering").
Management of Oceaneering 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: 01. D. Michael Hughes
FOR AGAINST ABSTAIN
2. Adopt Oceaneering's 1999 Incentive Plan. [ ] [ ] [ ]
3. Ratify the appointment of Arthur Andersen [ ] [ ] [ ]
LLP as independent auditors for Oceaneering
for the fiscal year ending March 31, 2000.
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 your 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
_ Fold and Detach Here _
<PAGE>
OCEANEERING INTERNATIONAL, INC.
Now Offers Telephone or Internet Voting
24 hours a day, 7 days a week
Voting by telephone or Internet eliminates the need to return this proxy card.
Your vote authorizes the proxies named on the reverse of this card to vote your
shares to the same extent as if you marked, signed, dated and returned the proxy
card. Before voting, read the proxy statement and voting instruction form.
Follow the steps listed. Your vote will be immediately confirmed and posted.
Thank you for voting!
TO VOTE BY TELEPHONE
1. On a touch-tone telephone call toll free 1-877-PRX-VOTE
(Outside the US and Canada call 1-201-536-8073).
2. Enter the control number from the box above, just below the perforation.
3. Enter the last four digits from your U.S. taxpayer identification number.
4. You then have two options:
Option 1 To vote as the Board of Directors recommends on all items
Option 2 To vote on each proposal separately.
TO VOTE BY INTERNET
1. Log on to the Internet and type http://www.eproxyvote.com/oii
2. Enter the control number from the box above, just below the perforation.
3. Follow the instructions.
IF YOU CHOOSE TO VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL BACK YOUR PROXY
CARD.
