SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
Amendment No. 1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
- -------
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
- -------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
Commission File Number 0-14488
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SEITEL, INC.
(Exact name of registrant as specified in charter)
Delaware 76-0025431
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
50 Briar Hollow Lane
West Building, 7th Floor
Houston, Texas 77027
-------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 881-8900
--------------
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, par value $0.01 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
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Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
----
The aggregate market value of the voting stock held by non-affiliates of the
registrant at March 27, 2000 was approximately $177,941,709. For these purposes,
the term "affiliate" is deemed to mean officers and directors of the registrant.
On such date, the closing price of the Common Stock on the New York Stock
Exchange was $8.125 and there were a total of 23,640,613 shares of Common Stock
outstanding.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The executive officers and directors of the Company and their ages (as
of April 1, 2000) and positions with the Company are as follows:
- --------------------------------------------------------------------------------
Name Age Position(s) with the Company Director Since
- -------------------- ----- ------------------------------ --------------
Herbert M. Pearlman 67 Chairman of the Board 1982
of Directors
Paul A. Frame 53 Chief Executive Officer, 1986
President and Director
Horace A. Calvert 46 Chief Operating Officer, 1987
Executive Vice President
and Director
David S. Lawi 64 Chairman of the Executive 1982
Committee and Director
Debra D. Valice 43 Chief Financial Officer, 1995
Executive Vice President
of Finance, Treasurer,
Corporate Secretary
and Director
Walter M. Craig, Jr. 45 Director 1987
William Lerner 66 Director 1985
John E. Stieglitz 68 Director 1989
Fred S. Zeidman 53 Director 1997
- --------------------------------------------------------------------------------
Herbert M. Pearlman, a co-founder of Seitel, Inc., has been a director
of the Company since 1982, and Chairman of the Company's Board of Directors
since 1987. Since March 1984, Mr. Pearlman has been Chairman of Intersystems,
Inc. ("Intersystems"), an American Stock Exchange listed company engaged in
providing services to the thermoplastic resins industry; he became President of
Intersystems in January 2000. Since June 1990, Mr. Pearlman has served as
Chairman of Unapix Entertainment, Inc. ("Unapix Entertainment"), an American
Stock Exchange listed company engaged in multi-media entertainment, and in
February 1999, he became Chief Executive Officer of Unapix. He has served as
President, Chief Executive Officer and a Director of Helm Resources, Inc.
("Helm"), a publicly-traded company with equity interests in diverse businesses,
since 1980, and in June 1984, he became Helm's Chairman of the Board.
Paul A. Frame has been Chief Executive Officer of the Company since
July 1992 and President since January 1987. He was Executive Vice President of
the Company from January 1985 until his appointment as President. He was hired
by the Company in August 1984 as Vice President of Marketing. From December 1996
to March 1999, Mr. Frame was a Director of Eagle Geophysical, Inc. ("Eagle"), a
former subsidiary of the Company engaged in providing seismic data acquisition
services to the oil and gas industry, and from August 1997 to March 1999, he was
Chairman of the Executive Committee of Eagle's board of directors. Eagle filed
bankruptcy under Chapter 11 of the Federal Bankruptcy Code in September 1999.
Horace A. Calvert has been Chief Operating Officer of the Company since
July 1992 and Executive Vice President since January 1987. In March 1993, Mr.
Calvert was appointed President of DDD Energy, Inc., a wholly-owned subsidiary
of the Company engaged in the exploration and development of oil and gas
reserves. From January 1985 until his appointment as Vice President in May 1986,
he was the Company's Chief Geophysicist.
David S. Lawi has been Chairman of the Company's Executive Committee
since March 1987. He also was Assistant Secretary of the Company from May 1986
<PAGE>
until June 1987 and from June 1989 until July 1993. Since March 1984, Mr. Lawi
has been a Director of Intersystems and, since 1985, he has been Chairman of
Intersystems' Executive Committee. Since June 1990, Mr. Lawi has been a Director
of Unapix Entertainment and, since January 1993, Chairman of its Executive
Committee. Mr. Lawi has been a Director of Helm since 1980, and Chairman of the
Executive Committee since 1997.
Debra D. Valice, CPA, is the Company's Chief Financial Officer,
Executive Vice President of Finance, Treasurer and Corporate Secretary. Ms.
Valice has been the Company's Chief Financial Officer since February 1987, and
was the Company's Chief Accounting Officer from March 1986 until February 1987.
Ms. Valice was elected as a director of the Company in November 1995.
Walter M. Craig, Jr. is a member of the Company's Audit Committee.
Since 1993, he has been President of Mezzanine Financial Fund, L.P. which is
engaged in providing structured capital to small and mid-market companies based
on the value of their assets. He served as Executive Vice President and Chief
Operating Officer of Helm from August 1992 through 1999. From 1984 to 1992, he
was Senior Vice President of Business and Legal Affairs of Helm. Since April
1993, Mr. Craig has been a Director of Unapix Entertainment and Intersystems.
William Lerner is Chairman of the Company's Audit Committee and
Co-Chairman of the Company's Compensation and Stock Option Committee. Since
January 1990, Mr. Lerner has been engaged in the private practice of law. From
May 1990 until December 1990, he was General Counsel to Hon Development Company,
a California real estate development company. From June 1986 until December
1989, Mr. Lerner was Vice President and General Counsel of The Geneva Companies,
Inc., a financial services company engaged in counseling privately owned
middle-market companies. Since 1985, he has been a Director of Helm. Mr. Lerner
is also a Director of Rent-Way, Inc., a New York Stock Exchange listed company
headquartered in Pennsylvania that operates the second-largest chain of
rental-purchase stores in the United States, and Micros-to-Mainframes, Inc., a
NASDAQ listed company headquartered in New York that provides advanced
technology communications products and systems integration and internet services
to Fortune 2000 companies.
John E. Stieglitz is Co-Chairman of the Company's Compensation and
Stock Option Committee and a member of the Company's Audit Committee. He is
Chairman Emeritus of Conspectus, Inc., a privately held company, formed in 1976,
engaged in providing services in the area of executive recruitment. He served as
President of Conspectus, Inc. from 1976 to 1996. Mr. Stieglitz is also a
Director of Helm and Intersystems.
Fred S. Zeidman is a member of the Company's Compensation and Stock
Option Committee. Mr. Zeidman has been a Director of Intersystems since July
1993. He served as President and Chief Executive Officer of Intersystems from
July 1993 until its sale in December 1999. He also served as President of
Interpak Terminals, Inc., a wholly-owned subsidiary of Helm engaged in the
packaging and distribution of thermoplastic resins, from July 1993 until its
sale in July 1997. Mr. Zeidman served as Chairman of Unibar Energy Services
Corporation, one of the largest independent drilling fluids companies in the
United States, from 1985 to 1991. From April 1992 to July 1993, Mr. Zeidman
served as President of Service Enterprises, Inc., which is primarily engaged in
plumbing, heating, air conditioning and electrical installation and repair. From
1983 to 1993, Mr. Zeidman served as President of Enterprise Capital Corporation,
a federally licensed small business investment company specializing in venture
capital financing. Mr. Zeidman also serves as a Director of Heritage Bank.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who own
more than 10% of the Company's common stock to file reports of ownership and
changes in ownership concerning the common stock with the Securities and
Exchange Commission and to furnish the Company with copies of all Section 16(a)
forms they file. Based upon the Company's review of the Section 16(a) filings
that have been received by the Company, the Company believes that all filings
required to be made under Section 16(a) during 1999 were timely made.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
The following table sets forth certain summary information concerning
the compensation awarded to, earned by or paid to the Chief Executive Officer of
the Company and each of the four most highly compensated executive officers of
the Company other than the Chief Executive Officer (collectively, the "named
executive officers") for the years indicated.
<TABLE>
SUMMARY COMPENSATION TABLE
- --------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Compensation
---------------------------------------------- Long-Term All Other Compensation
Other Compensation ----------------------------
Eagle Annual Awards Other Tax
Name and Principal Year Salary Bonus Bonus Compensation Stock Options/ Compensation Reimbursement
Position ($) ($)(1)<F1> ($)(2)<F2> ($)(3)<F3> SARs (#) ($) ($)(5)<F5>
- -------------------------- ------ -------- ---------- ----------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul A. Frame 1999 $444,878 $1,161,351 $(377,899) $1,128,581 197,538 $83,213 (4)<F4> $463,164
Chief Executive Officer 1998 $444,878 $1,809,077 -- $1,180,450 1,190,798 $104,001 --
and President 1997 $144,878 $905,099 $2,282,500 $1,301,809 932,160 $104,764 --
Horace A. Calvert 1999 $444,878 $1,061,351 $(377,899) $1,074,656 -- $83,218 (4)<F4> $266,276
Chief Operating 1998 $444,878 $1,809,077 -- $1,180,450 625,418 $104,001 --
Executive Vice 1997 $144,878 $903,598 $1,455,811 $1,301,809 378,882 $104,764 --
Herbert M. Pearlman 1999 $428,437 $1,151,689 $(472,374) $71,801 -- $83,340 (4)<F4> $300,774
Chairman of the 1998 $428,437 $1,961,347 -- -- 690,582 $104,123 --
Board of Directors 1997 $128,438 $1,183,947 $1,819,763 -- 393,874 $104,764 --
David S. Lawi 1999 $214,219 $575,845 $(236,187) -- -- $83,218 (4)<F4> $271,426
Chairman of the 1998 $214,219 $980,673 -- -- 505,726 $104,001 --
Executive Committee 1997 $64,892 $591,975 $909,881 -- 293,874 $104,764 --
Debra D. Valice 1999 $214,583 $391,726 -- $467,500 -- $56,619 (4)<F4> $116,497
Executive Vice 1998 $155,853 $437,064 -- -- 172,412 $69,449 --
of Finance, Treasurer 1997 $138,583 $270,833 $502,713 -- 142,762 $70,816 --
Corporate Secretary
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)<F1> Includes contractual bonuses based on the Company's pre-tax profits
and includes a discretionary bonus for Ms. Valice of $266,726 in 1999.
(2)<F2> Amounts in 1999 reflect a reduction in contractual bonuses as a result
of the impairment recorded in 1999 due to the dividend distribution of
Eagle stock. Amounts in 1997 include contractual bonuses based on the
Company's pre-tax profits related to the spin-off of Eagle in 1997 for
Messrs. Frame, Calvert, Pearlman, and Lawi, an additional bonus for
Mr. Frame of $826,690 related to the spin-off of Eagle, and a
discretionary bonus for Ms. Valice of $502,713 related to the spin-off
of Eagle.
(3)<F3> Includes commissions based on sales for Messrs. Frame and Calvert of
$1,074,656 in 1999. Amount in 1999 for Mr. Frame includes other
compensation of $53,925 of which $22,036 represents compensation due
to the below market interest rate on loans from the Company for the
purchase of stock and $17,330 for disability insurance premiums.
Amount in 1999 for Mr. Pearlman includes other compensation of $71,801
of which $50,577 relates to life insurance premiums. Includes a bonus
based on placement of senior notes for Ms. Valice in 1999.
(4)<F4> Includes amounts paid pursuant to a program (the "Incentive
Compensation Program") whereby between 2-1/2% and 5% of the revenue
generated annually by seismic creation programs that have fully
recouped their direct costs is distributed to certain officers and key
employees, and amounts contributed by the Company to its 401(k)
Savings Plan (the "401(k) Plan") on behalf of such named executive
officers as discretionary and matching contributions. Includes $78,340
contributed by the Company pursuant to its Incentive Compensation
Program for Messrs. Frame, Calvert, Pearlman and Lawi, and $51,619 for
Ms. Valice. Also includes 401(k) Plan matching contributions made by
the Company of $4,873 for Mr. Frame, $4,878 for Messrs. Calvert and
Lawi and $5,000 for Mr. Pearlman and Ms. Valice.
<PAGE>
(5)<F5> Includes amounts paid pursuant to a program ("the Tax Equalization
Program") whereby 10% of the profits (defined as net revenue less
costs incurred) generated by oil and gas projects, whose capital costs
were funded by proceeds from the employee's exercise of Company common
stock purchase warrants, are distributed to employees as compensation
for the ordinary Federal income taxes paid in excess of Federal taxes
computed at the capital gains rate on the warrants exercised.
</FN>
</TABLE>
The following table sets forth certain information with respect to
options to purchase common stock granted during the year ended December 31, 1999
to each of the named executive officers.
<TABLE>
OPTION/SAR GRANTS IN 1999
- -------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Individual Grants
---------------------------------------------------------
Percent Potential Realizable Value
Number of of Total at Assumed Annual Rates of
Securities Options/SARs Stock Price Appreciation
Underlying Granted to Exercise for Option Term (3)<F3>
Options/SARs Employees or Base Expiration ---------------------------------------
Name Granted (#) in 1999 Price($/Sh) Date 0 Percent($) 5 Percent($) 10 Percent($)
- ------------------ ----------- -------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul A. Frame 100 (1)<F1> 0.01 $16.12500 10/02/03 ($31) $342 $781
4,400 (1)<F1> 0.52 $15.68750 10/02/03 ($79) $16,164 $35,203
8,600 (1)<F1> 1.02 $15.62500 10/02/03 $1,182 $33,113 $70,539
5,650 (1)<F1> 0.67 $15.75000 10/02/03 $51 $21,024 $45,607
18,750 (1)<F1> 2.22 $16.50000 10/02/03 $7,031 $81,281 $168,247
21,000 (2)<F2> 2.49 $16.00625 05/20/04 ($131) $92,699 $205,000
10,000 (2)<F2> 1.18 $16.12500 05/20/04 ($1,250) $42,955 $96,432
45,000 (2)<F2> 5.33 $16.00000 05/20/04 - $198,923 $439,567
6,100 (2)<F2> 0.72 $16.00000 05/21/04 - $26,965 $59,586
57,038 (2)<F2> 6.76 $16.12500 05/21/04 ($7,130) $245,007 $550,027
20,900 (2)<F2> 2.48 $16.18750 05/21/04 ($3,919) $88,470 $200,236
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)<F1> These common stock purchase warrants were granted under the terms of
the Company's 1998 Employee Stock Purchase Plan upon the exercise of
the same number of previously issued warrants subject to the reload
provision of the 1998 Employee Stock Purchase Plan. The common stock
purchase warrants were fully exercisable on the date of grant and will
expire on the expiration date indicated, subject to certain events
related to termination of employment.
(2)<F2> These options were granted under the Company's 1993 Incentive Stock
Option Plan pursuant to the terms of the Company's 1995 Warrant Reload
Plan upon the exercise of the same number of previously granted
warrants subject to the Warrant Reload Plan. These options were fully
exercisable on the date of grant and will expire on the expiration
date indicated, subject to certain events related to termination of
employment.
<PAGE>
(3)<F3> The values shown are based on the indicated assumed annual rates of
appreciation compounded annually. The actual value an executive may
realize will depend on the extent to which the stock price exceeds the
exercise price of the options or warrants on the date the option or
warrant is exercised. Accordingly, the value, if any, realized by an
executive will not necessarily equal any of the amounts set forth in
the table above. These calculations are not intended to forecast
possible future appreciation, if any, of the price of the Company's
common stock.
</FN>
</TABLE>
The following table sets forth certain information with respect to the
exercise of options during the year ended December 31, 1999, and unexercised
options held at December 31, 1999, and the value thereof, by each of the named
executive officers.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN 1999
AND 12/31/99 OPTION/SAR VALUES
- ------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised In-the
Shares Options/SARs Money Options/SARs at
Acquired at 12/31/99 (#) 12/31/99 ($)
on Value ------------------------------- ---------------------------------
Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ------------ --------------- ------------- --------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Frame 225,562 $1,174,838 1,255,798 160,000 $0 $0
Horace A. Calvert 28,024 $329,515 955,798 160,000 $85,597 $0
Herbert M. Pearlman 0 $0 705,582 160,000 $0 $0
David S. Lawi 0 $0 550,726 80,000 $0 $0
Debra D. Valice 0 $0 263,205 35,000 $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT ARRANGEMENTS
- -----------------------
Agreements with Messrs. Frame, Calvert, Pearlman and Lawi
- ---------------------------------------------------------
The Company has employment agreements with Herbert M. Pearlman, Paul A.
Frame, Horace A. Calvert and David S. Lawi (the "Executives"), for service in
their respective capacities set forth in the listing of directors and executive
officers, that provide for compensation in accordance with the 1998 Executive
Compensation Plan that was approved by stockholders in 1997. Messrs. Pearlman,
Frame, Calvert and Lawi receive an annual base salary of $428,437, $444,878,
$444,878, and $214,219, respectively, under these employment agreements.
The agreements also provide for the Executives to receive bonus
payments based on the annual Pre-Tax Profits (the "PTP") of the Company and its
majority-owned subsidiaries ("Subsidiaries"). The PTP must exceed $10 million
for fiscal 1999 and each of the three years thereafter, $12 million for fiscal
2003 and each of the four years thereafter, and $14 million for fiscal 2008 and
thereafter (the "PTP Threshold"). If the PTP exceeds the PTP Threshold, the
Executives will receive the following bonuses based on the annual PTP of the
Company and its Subsidiaries:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Percentage up to Percentage above
$50 Million PTP $50 Million PTP
------------------------ ----------------------
<S> <C> <C>
Herbert M. Pearlman*<F1> 5.0% 5.30%
Paul A. Frame 4.0% 4.25%
Horace A. Calvert 4.0% 4.25%
David S. Lawi*<F1> 2.5% 2.65%
- --------------------------------------------------------------------------------
<FN>
*<F1> The annual bonus payments to Messrs. Pearlman and Lawi are reduced by
$300,000 and $150,000, respectively.
</FN>
</TABLE>
<PAGE>
The agreements further provide for Messrs. Frame and Calvert to receive
annual bonuses equal to 1% of the annual sales of the Company and its
Subsidiaries in excess of $30 million, provided that the PTP exceeds the PTP
Threshold.
Each of the agreements with Messrs. Frame and Calvert provide that if
at any time during the term of such agreement, (i) the employment agreements of
Messrs. Pearlman or Lawi are terminated by the Company prior to the stated term
thereof, or (ii) Messrs. Pearlman and Lawi resign from the Company's Board of
Directors prior to the expiration of the term of their employment agreements, or
(iii) the majority of the members of the Company's Board of Directors is no
longer nominated and supported by a majority of Messrs. Frame, Calvert, Pearlman
and Lawi (each a "Change in Control"), the employee shall have the right to
terminate the agreement immediately and receive from the Company all
compensation required to be paid during the unexpired term thereof as well as
the severance payment described below without any obligation to perform
consulting services as described below. The Company believes that the Change in
Control provisions in these agreements may tend to discourage attempts to
acquire a controlling interest in the Company and may also tend to make the
removal of management more difficult.
Each of the agreements for Messrs. Pearlman and Frame is for a term of
five years, renewable each year for an additional year unless either party to
the agreement gives notice to the contrary. The agreements for Messrs. Calvert
and Lawi were for a term of five years, renewable each year for an additional
year unless either party to the agreement gave notice to the contrary. In
October 1999, the Company's Board of Directors voted to not renew the employment
contracts of Messrs. Calvert and Lawi; these contracts will now expire on
December 31, 2003. Each of these agreements provides that if it is not renewed,
the Company will pay the employee for two additional years' compensation
including his then current base salary plus the average of all bonuses paid to
the employee for the then prior three years. The severance payments are
contingent upon the employee remaining available to perform consulting services
for the benefit of the Company.
Each agreement also provides for monthly salary continuation payments
for one year upon the employee's death, so long as the agreement is in full
force and effect at the time of the employee's death. The annual salary
continuation amount will equal the employee's base salary at his date of death
plus an average of the bonuses paid for the three previous calendar years.
Each agreement provides for certain noncompetition and nondisclosure
covenants of the employee and for certain Company-paid fringe benefits such as
an automobile allowance, disability insurance and inclusion in pension, deferred
compensation, profit sharing, stock purchase, savings, hospitalization and other
benefit plans in effect from time to time.
Agreement with Ms. Valice
- -------------------------
Effective as of January 1, 1993, the Company entered into an employment
agreement with Ms. Valice for service in her capacities set forth in the listing
of directors and executive officers. In 1999, Ms. Valice received an annual
salary base of $214,583 under her employment agreement. The agreement also
provides for an annual bonus of 2% of the Company's pre-tax profits up to
$125,000, plus an additional amount as determined by the Board of Directors of
the Company.
The agreement includes the same Charge in Control provision as
described above for the Frame and Calvert agreements, and is for a term of five
years, renewable each year for an additional year unless either party to the
agreement gives notice to the contrary. The agreement provides that if it is not
renewed, the Company will pay Ms. Valice for two additional years' compensation
including her then current base salary plus the average of all bonuses paid to
<PAGE>
her for the then prior three years. The severance payments are contingent upon
Ms. Valice remaining available to perform consulting services for the benefit of
the Company. The agreement also provides for monthly salary continuation
payments for one year upon Ms. Valice's death, so long as the agreement is in
full force and effect at the time of her death. The annual salary continuation
amount will equal Ms. Valice's base salary at her date of death plus an average
of the bonuses paid for the three previous calendar years.
The agreement provides for certain noncompetition and nondisclosure
covenants of Ms. Valice and for certain Company-paid fringe benefits such as an
automobile allowance, disability insurance and inclusion in pension, deferred
compensation, profit sharing, stock purchase, savings, hospitalization and other
benefit plans in effect from time to time.
Directors Compensation
- ----------------------
Outside directors receive an annual fee of $50,000 for serving on the
board and are reimbursed for out of pocket expenses for meeting attendance. No
additional fees are paid for serving on committees, except that committee chairs
receive an additional $5,000 annually or 10,000 options to purchase the
Company's common stock. On July 25, 1996, the Company's Board of Directors
adopted the Non-Employee Directors' Deferred Compensation Plan which permits
each non-employee director to elect to receive annual director fees in the form
of stock options and to defer receipt of any directors' fees in a deferred cash
account or as deferred shares. Currently, each non-employee director has elected
to receive $20,000 of his annual fee in the form of deferred shares. As of
December 31, 1999, 60,000 shares have been reserved for issuance under this plan
and directors (including former directors) have accumulated 7,067 deferred
shares in their accounts of which 656 shares have been distributed and 6,411
will be distributed in future years. Directors who are also employees receive no
separate compensation for their services as directors.
Non-employee directors also participate in the Non-Employee Directors'
Stock Option Plan (the "Stock Option Plan"), which was approved by Company
Shareholders at the 1994 annual meeting. Under the terms of the Stock Option
Plan, each non-employee director receives on the date of each annual meeting
during the term of the Stock Option Plan an option to purchase 2,000 shares of
common stock at an exercise price equal to the fair market value of the common
stock on the date of grant. In addition, each non-employee director who is
elected or appointed to the Board of Directors for the first time is granted on
the date of such election or appointment an option to purchase 10,000 shares of
common stock at an exercise price equal to the fair market value of the common
stock on the date of grant. Options granted under the Stock Option Plan become
exercisable one year after the date of grant. All options expire at the earlier
of five years after the date of grant, twelve months after the optionee ceases
to serve as a director due to death, disability, or retirement at or after age
65, or sixty days after the optionee otherwise ceases to serve as a director of
the Company. If a director ceases to serve as such for any reason other than
death, disability, or retirement at or after age 65, the option may be exercised
only if it was exercisable at the date of such cessation of service. During
1999, William Lerner and John E. Stieglitz were granted 12,000 options each
(including 10,000 for chairing a board committee), at an exercise price of
$14.75. In addition, Fred S. Zeidman and Walter M. Craig, Jr. each received
2,000 options at an exercise price of $14.75.
In 1999, the Company's Board of Directors adopted the Non-Employee
Directors' Retirement Plan (the "Retirement Plan"). Under the terms of the
Retirement Plan, each non-employee director with 10 or more years continuous
service is eligible to receive a retirement benefit. The retirement benefit
consists of two credits. The first credit is equal to $5,000 times each
participating non-employee director's years of continuous service as an Outside
Director, as defined in the Retirement Plan. The second credit is equal to the
increase, if any, in the fair market value of 15,000 shares of the Company's
common stock from the initial date of participation in the Retirement Plan to
the last day of the Company's fiscal year ending five years after the
participant's initial participation date. The retirement benefit vests 10% on
each January 1 following the participant's initial participation date. During
1999, Messrs. Craig, Lerner and Stieglitz were credited with a retirement
benefit totaling $5,000, $70,000 and $50,000, respectively.
<PAGE>
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Company's Compensation and Stock Option Committee is composed
of William Lerner, John E. Stieglitz and Fred S. Zeidman.
No member of the Compensation Committee of the Board of Directors of
the Company was, during 1999, an officer or employee of the Company or any of
its subsidiaries, or was formerly an officer of the Company or any of its
subsidiaries, or had any relationship requiring disclosure pursuant to
applicable rules and regulations of the Securities and Exchange Commission.
During 1999, no executive officer of the Company served as (i) a member of the
compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served on the
Compensation Committee of the Company, (ii) a director of another entity, one of
whose executive officers served on the Compensation Committee of the Company, or
(iii) a member of the compensation committee (or other board committee
performing equivalent functions) of another entity, one of whose executive
officers served as a director of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The following table sets forth certain information regarding the
beneficial ownership of the common stock, as of April 15, 2000, by (i) persons
known to the Company to be beneficial owners of more than 5% of the common
stock, (ii) each of the Company's directors, (iii) each of the named executive
officers, and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Amount and Nature
Name and Address of Beneficial Percentage
of Beneficial Owner Ownership(1)<F2>(2)<F3> of Class
- -------------------- ------------------- ------------
Horace A. Calvert 1,528,177 (3)<F4> 6.2%
50 Briar Hollow Lane,
7th Floor West
Houston, TX 77027
Paul A. Frame, Jr. 1,502,730 (4)<F5> 6.0%
50 Briar Hollow Lane,
7th Floor West
Houston, TX 77027
Driehaus Capital
Management, Inc. 1,241,170 5.3%
25 East Erie Street
Chicago, IL 60611
Lord, Abbett & Co. 1,234,080 5.2%
90 Hudson Street
Jersey City, NJ 07302
Herbert M. Pearlman 1,078,827 (5)<F6> 4.4%
537 Steamboat Road
Greenwich, CT 06830
David S. Lawi 730,394 (6)<F7> 3.0%
537 Steamboat Road
Greenwich, CT 06830
Debra D. Valice 394,892 (7)<F8> 1.7%
50 Briar Hollow Lane,
7th Floor West
Houston, TX 77027
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Amount and Nature
Name and Address of Beneficial Percentage
of Beneficial Owner Ownership(1)<F2>(2)<F3> of Class
- -------------------- ------------------- ------------
<S> <C> <C>
Walter M. Craig, Jr. 75,562 (8)<F9> *<F1>
1011 HWY 7
Spring Lake, NJ 07762
William Lerner 37,170 (9)<F10> *<F1>
423 East Beau Street
Washington, PA 15301
John E. Stieglitz 37,085 (9)<F10> *<F1>
Conspectus, Inc.
222 Purchase Street
Rye, NY 10580
Fred S. Zeidman 21,200 (10)<F11> *<F1>
2104 Chilton
Houston, TX 77019
All directors and
executive officers
as a group (9 persons) 5,406,037 (11)<F12> 19.7%
- --------------------------------------------------------------------------------
<FN>
*<F1> Less than 1%
(1)<F2> Except as otherwise noted, each named holder has, to the best of the
Company's knowledge, sole voting and investment power with respect to
the shares indicated.
(2)<F3> Includes shares that may be acquired within 60 days by any of the
named persons upon exercise of any right.
(3)<F4> Includes 415,380 and 540,418 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $12.37 to $13.73 per share, and the exercise prices of the
common stock purchase warrants range from $6.43 to $13.73 per share.
(4)<F5> Includes 410,398 and 845,400 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $12.37 to $16.19 per share, and the exercise prices of the
common stock purchase warrants range from $11.57 to $16.50 per share.
(5)<F6> Includes 338,456 and 322,126 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $12.37 to $13.73, and the exercise prices of the common
stock purchase warrants range from $11.57 to $13.73 per share.
(6)<F7> Includes 288,456 and 187,270 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $12.37 to $13.73, and the exercise prices of the common
stock purchase warrants range from $11.57 to $13.73 per share.
<PAGE>
(7)<F8> Includes 170,745 and 92,460 shares which may be acquired from the
Company within 60 days upon exercise of options and common stock
purchase warrants, respectively. The exercise prices of the options
range from $12.37 to $13.73 per share, and the exercise prices of the
common stock purchase warrants range from $11.57 to $13.36 per share.
(8)<F9> Includes 67,554 shares which may be acquired from the Company within
60 days upon exercise of common stock purchase warrants. The exercise
prices of the common stock purchase warrants range from $11.57 to
$16.00 per share.
(9)<F10> Includes 28,000 shares which may be acquired from the Company within
60 days upon exercise of options. The exercise prices of the options
range from $13.54 to $19.82 per share.
(10)<F11> Includes 12,000 shares which may be acquired from the Company within
60 days upon exercise of options. The exercise prices of the options
range from $13.54 to $20.32 per share.
(11)<F12> Includes an aggregate of 3,746,663 shares which may be acquired from
the Company within 60 days upon exercise of 1,691,435 options and
2,055,228 common stock purchase warrants, respectively, by the group
of nine persons which comprises all executive officers and directors.
The exercise prices of the options range from $12.37 to $20.32 per
share, and the exercise prices of the common stock purchase warrants
range from $6.43 to $16.50 per share.
</FN>
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
On July 21, 1992, the Company granted ten-year loans at an interest
rate of 4% to most of its employees for the purchase of 800,000 shares of the
Company's common stock at the then market price of $2.6875 per share. Payments
of 5% of the original principal balance plus accrued interest are due annually
on August 1, with a balloon payment of the remaining principal and accrued
interest due August 1, 2002. The Company recorded compensation expense due to
the below market interest rate on these loans of $38,000 in 1999. The stock
certificates are held by the Company as collateral until payment is received.
Loans in excess of $60,000 were made to Messrs. Frame and Calvert and Ms.
Valice, amounting to $537,500, $537,500 and $134,375, respectively. The largest
aggregate amounts of principal and interest outstanding on such loans during
1999 were approximately $391,000, $391,000 and $98,000, respectively. As of
April 15, 2000, the aggregate amounts of principal and interest outstanding on
such loans were approximately $359,000, $359,000 and $90,000, respectively.
On October 2, 1998, the Company granted five-year loans at an interest
rate of 4% to most of its employees for the purchase from the Company of 794,300
shares of the Company's common stock and options to purchase a like number of
shares of the Company's common stock at an exercise price of $11.75 per share.
Payment of 60% of the loan amount plus accrued interest is being made in equal
monthly, quarterly or annual payments, as applicable, and a balloon payment of
the remaining 40% is due on October 2, 2003. The Company recorded compensation
expense due to the below market interest rate on these loans of $76,000 in 1999.
The stock certificates are held by the Company as collateral until payment is
received. Loans in excess of $60,000 were made to Messrs. Frame, Calvert,
Pearlman and Lawi amounting to $773,438 each and to Ms. Valice amounting to
$515,625. The largest aggregate amounts of principal and interest outstanding on
such loans during 1999 were approximately $786,000 for each of Messrs. Frame,
Calvert, Pearlman and Lawi and $524,000 for Ms. Valice. As of April 15, 2000,
the aggregate amounts of principal and interest outstanding on such loans were
approximately $661,000 for each of Messrs. Frame, Calvert, Pearlman and Lawi and
$440,000 for Ms. Valice.
The Company guarantees borrowings up to $750,000 made by Paul Frame
under a line of credit. The Company is only obligated to make payment in the
event of default by Mr. Frame. The Company has a contractual right of offset
against any salary, bonus, commission or other amounts due from the Company to
Mr. Frame for any amounts paid by the Company pursuant to this guaranty. At
December 31, 1999, $700,000 was outstanding on this line of credit, which
represented the maximum amount outstanding on this line of credit for the year.
The Company did not make any payments under this guaranty during 1999.
<PAGE>
On August 11, 1997, the Company's wholly-owned seismic data acquisition
crew subsidiary, Eagle Geophysical, Inc., completed an initial public offering
("Offering") in which the Company sold 1,880,000 of its 3,400,000 shares of
Eagle common stock as a selling stockholder. On April 22, 1999, the Board of
Directors of Seitel, Inc. declared to its common stockholders a dividend
consisting of the remaining 1,520,000 shares of the common stock of Eagle owned
by the Company. The dividend was declared at the rate of approximately 0.064
shares of Eagle common stock for each share of Seitel, Inc. common stock owned
as of the close of business on the record date of May 18, 1999. The Company
incurred charges of $58,594,000 for the seismic data acquisition services of
Eagle for the year ended December 31, 1999, $27,735,000 of which were incurred
during the four months ended April 30, 1999, the period that Eagle was
considered a related party. Costs incurred for these services were based on
agreed upon contractual amounts and terms similar to contracts with third party
contractors.
Paul Frame, the Chief Executive Officer, President and Director of the
Company, was a Director of Eagle and Chairman of the Executive Committee of
Eagle's Board of Directors until March 1999. In addition to his duties as a
director of Eagle, Mr. Frame was responsible for strategic planning, marketing,
and domestic and international growth of Eagle's business pursuant to a bonus
agreement with Eagle, which was terminated in March 1999 when he resigned as a
director of Eagle. The Board of Directors of the Company had agreed to allow Mr.
Frame to devote 20% of his time to Eagle until December 31, 1999.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on the 26th of April, 2000.
SEITEL, INC.
By: /s/Paul A. Frame
---------------------------------------
Paul A. Frame
President and Chief Executive Officer
