==============================================================================
SCHEDULE 14A
(Rule 14a-6(m))
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of
the Commission Only
(as permitted by Rule 14a-
6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Reading & Bates Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
N/A
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] 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 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
===============================================================================
READING & BATES CORPORATION
901 Threadneedle, Suite 200
Houston, Texas 77079
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1996
The Annual Meeting of Stockholders of Reading & Bates Corporation, a
Delaware corporation (the "Company"), will be held in the Churchill Room,
Omni Houston Hotel, Four Riverway, Houston, Texas 77056 on Tuesday, May
14, 1996 at 11:00 a.m., for the following purposes:
(1) To elect three Class II directors for terms expiring in 1999;
(2) To act upon a proposal to ratify and approve the reappointment
of Arthur Andersen LLP as independent public accountants for
the Company for its fiscal year 1996; and
(3) To transact such other business as may properly be brought
before the meeting or any postponement or adjournment thereof.
Only holders of record of the Common Stock and Class A Stock at the
close of business on March 26, 1996 are entitled to notice of and to vote
at the meeting, or any postponement or adjournment thereof.
Please mark, sign, date and return the enclosed proxy card promptly,
whether or not you expect to attend the meeting. A return envelope is
enclosed for your convenience and requires no postage for mailing in the
United States.
By Order of the Board of Directors
Houston, Texas Wayne K. Hillin
March 29, 1996 Secretary
PLEASE MARK, SIGN AND DATE
THE ENCLOSED PROXY CARD AND MAIL IT AT
YOUR EARLIEST CONVENIENCE
===============================================================================
READING & BATES CORPORATION
901 Threadneedle, Suite 200
Houston, Texas 77079
__________________
PROXY STATEMENT
__________________
Annual Meeting of Stockholders
May 14, 1996
The enclosed form of proxy is solicited by the Board of Directors of
Reading & Bates Corporation (the "Company") for use at the Annual Meeting
of Stockholders to be held on Tuesday, May 14, 1996 at 11:00 a.m. in the
Churchill Room, Omni Houston Hotel, Four Riverway, Houston, Texas 77056.
This Proxy Statement and form of Proxy are being mailed to stockholders on
or about March 29, 1996.
At the Annual Meeting, stockholders will be asked to elect three
Class II directors for terms expiring in 1999 and to consider and vote
upon the following proposal (the "Proposal"):
(1) a proposal to ratify and approve the reappointment of Arthur
Andersen LLP as independent public accountants for the Company
for its fiscal year 1996.
__________________
The Board of Directors of the Company believes that election of its
director nominees and approval of the Proposal is advisable and in the
best interests of the Company and its stockholders and recommends to the
stockholders of the Company the approval of each of the nominees and the
Proposal.
____________________
The date of this Proxy Statement is March 29, 1996.
==============================================================================
TABLE OF CONTENTS
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP . . . . . . . . . . . . .
Principal Stockholders . . . . . . . . . . . . . . . . . . . . . . . .
Class A Stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . .
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management Ownership . . . . . . . . . . . . . . . . . . . . . . . . .
ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . .
CLASS II DIRECTOR NOMINEES - TERMS EXPIRING IN 1999 . . . . . . . . .
CLASS I CONTINUING DIRECTORS - TERMS EXPIRING IN 1998 . . . . . . . .
CLASS III CONTINUING DIRECTORS - TERMS EXPIRING IN 1997 . . . . . . .
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD . . . . . . . . . . . . .
The Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . .
The Compensation Committee . . . . . . . . . . . . . . . . . . . . . .
The Executive Committee . . . . . . . . . . . . . . . . . . . . . . .
The Pension (ERISA) Committee . . . . . . . . . . . . . . . . . . . .
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS . . . . . . . . . . . .
Compensation Committee Report on Executive Compensation . . . . . . .
Compensation Philosophy and Overall Objectives of
Executive Compensation Programs . . . . . . . . . . . . . . . .
Chief Executive Officer's Compensation and Corporate
Performance for Fiscal Year 1995 . . . . . . . . . . . . . . .
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 162(m) of the Internal Revenue Code . . . . . . . . . . . .
Compensation Committee Interlocks and Insider
Participation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . .
Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension Plan Table . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . .
Employment Contracts and Change-in-Control Arrangements . . . . . . .
Officer Agreements . . . . . . . . . . . . . . . . . . . . . . . .
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT . . . . . . . . . . . .
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . .
Board Recommendation . . . . . . . . . . . . . . . . . . . . . . . . .
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING . . . . . . . . . . . . .
===============================================================================
THE COMPANY
Reading & Bates Corporation is a Delaware corporation engaged in the
business of offshore contract oil drilling and providing floating
production and project management services to the upstream offshore oil
and gas industry worldwide, with principal executive offices located at
901 Threadneedle, Suite 200, Houston, Texas 77079, telephone (713) 496-
5000.
VOTING
Shares represented by duly executed and unrevoked proxies in the
enclosed form received by the Board of Directors will be voted at the
Annual Meeting in accordance with the specifications made in such proxies
by the stockholders, unless authority to do so is withheld. If no
specification is made, shares represented by duly executed and unrevoked
proxies in the enclosed form will be voted for the election as directors
of the nominees listed herein, for the Proposal, and with respect to any
other matter that may properly come before the meeting, in the discretion
of the persons voting the respective proxies. Any stockholder giving a
proxy may revoke it at any time before it is voted by filing with the
Secretary of the Company an instrument revoking it, by executing and
returning a proxy bearing a later date or by voting in person at the
meeting. The Company has employed Georgeson & Co., New York, New York, to
assist in the solicitation of proxies for a fee expected to be
approximately $10,000, plus reasonable expenses. In connection with its
engagement of such firm, the Company has also agreed to indemnify
Georgeson & Co. against certain liabilities arising from its engagement by
the Company. The cost of this solicitation will be borne by the Company.
Solicitation is being made by the use of the mails, but may also be made
by telephone, electronic transmission and personal interviews.
Only holders of record of the Common Stock and Class A Stock at the
close of business on March 26, 1996 (the "Record Date") will be entitled
to vote at the Annual Meeting. On March 15, 1996 there were outstanding
61,994,771 shares of Common Stock and 60 shares of Class A Stock.
Each share of Common Stock is entitled to one vote, and each share of
Class A Stock is entitled to four votes. Each holder of Class A Stock has
cumulative voting rights in the election of directors so that such holder
has four votes per share multiplied by the number of directors to be
elected and may cast all such votes for a single nominee or distribute
them among as many nominees as such holder may see fit.
Vote Required
The election of the director nominees requires a plurality of the votes
cast in respect of shares of Common Stock and Class A Stock that are
present in person or represented by proxy at the Annual Meeting, voting
together as a class (with the Common Stock having one vote per share per
nominee, and with the Class A Stock having cumulative voting rights
consisting of four votes per share multiplied by the number of nominees,
which votes may be cast all for a single nominee or distributed among the
nominees at the holder's discretion). Under Delaware law and the
Company's Restated Certificate of Incorporation (the "Charter") and By-
laws, shares as to which a stockholder withholds authority to vote on the
election of directors ("abstentions"), and shares as to which a broker
indicates that it does not have discretionary authority to vote ("broker
non-votes") on the election of directors, will not be counted as voting
thereon and therefore will not affect the election of the nominees
receiving a plurality of the votes cast.
The stockholders of the Company have no dissenters' or appraisal rights
in connection with the Proposal.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
Principal Stockholders
The table below sets forth certain information as to those persons
known to the Company to be beneficial owners (as determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of more than 5% of the outstanding Common Stock as of
March 15, 1996 (except where otherwise indicated). The percentage
ownership figures set forth in the table are calculated on the basis of
the number of shares of Common Stock outstanding as of such date. Unless
otherwise indicated, the entities named are believed to have sole voting
and investment power with respect to the shares listed.
Class A Stock
Substantially all of the original shares of the Company's Class A Stock
have been converted by the holders thereof at their option into Common
Stock in accordance with the terms of the Class A Stock. All cumulative
dividends payable on the Class A Stock have been declared and paid by the
Company through the first quarter of 1996. On March 15, 1996, there
remained outstanding 60 shares of Class A Stock convertible in the
aggregate into 81 shares of Common Stock. The record holders of the Class
A Stock on such date were James K. Boak and Robert J. Richmond, holding 50
and 10 shares, respectively.
Preferred Stock
As of March 15, 1996, there were outstanding 2,985,000 shares of $1.625
Convertible Preferred Stock, par value $1.00 per share (the "Preferred
Stock"). A total of 2,990,000 shares of the Preferred Stock were issued
in a public offering by the Company in July 1993. The Preferred Stock is
convertible at the option of the holder into shares of the Company's
Common Stock at a conversion rate of 2.899 shares of Common Stock for each
share of Preferred Stock (equivalent to a conversion price of $8.625 per
share of Common Stock), subject to adjustment in certain events. Annual
dividends are $1.625 per share and are cumulative and are payable
quarterly commencing September 30, 1993. All cumulative dividends payable
on the Preferred Stock have been declared and paid by the Company through
the first quarter of 1996. The Preferred Stock is redeemable by the
Company at any time on or after September 30, 1996, at the option of the
Company, in whole or in part, at an initial redemption price of $26.1375
per share on September 30, 1996, and thereafter at prices decreasing
ratably annually to $25.00 per share on and after September 30, 2003, plus
accrued and unpaid dividends. The holders of the Preferred Stock do not
have any voting rights, except as required by applicable law, and except
that, among other things, whenever accrued and unpaid dividends on the
Preferred Stock are equal to or exceed the equivalent of six quarterly
dividends payable on the Preferred Stock, the holders of the Preferred
Stock will be entitled to elect two directors to the Board until the
dividend arrearage has been paid in full. The term of office of all
directors so elected will terminate immediately upon such payment. The
Preferred Stock has a liquidation preference of $25.00 per share, plus
accrued and unpaid dividends.
<TABLE>
Common Stock
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner Owner Class
-------------------------------- ------------ ----------
<S> <C> <C>
FMR Corp., Edward C. Johnson 3d; 5,165,000(1) 8.3%
Fidelity Management & Research
Company; Fidelity Magellan Fund
and Fidelity Management Trust
Company,
82 Devonshire Street, Boston,
Massachusetts 02109
John Hancock Mutual 3,909,924(2) 6.3%
Life Insurance Company,
John Hancock Place
P.O. Box 111
Boston, Massachusetts 02117
Attention: Bill Kinsley
AXA Assurances I.A.R.D. Mutuelle, 3,577,200(3) 5.8%
La Grande Arche, Pardi Nord,
92044 Paris La Defense France;
AXA Assurances Vie Mutuelle,
La Grande Arche, Pardi Nord,
92044 Paris La Defense France;
Alpha Assurances I.A.R.D. Mutuelle,
101-100 Terrasse Boieldieu,
92042 Paris La Defense France;
Alpha Assurances Vie Mutuelle,
101-100 Terrasse Boieldieu,
92042 Paris La Defense France;
Uni Europe Assurance Mutuelle,
24 Rue Drouot, 75009 Paris France;
AXA, 23, Avenue Matignon,
75008 Paris France; and
The Equitable Companies Incorporated,
787 Seventh Avenue, New York,
New York 10019
Nicholas-Applegate Capital
Management 3,531,056(4) 5.7%
600 West Broadway, 29th Floor
San Diego, California 92101
_______________________________
<FN>
(1) Based upon information contained in a Schedule 13G, as amended as of
February 14, 1996, filed by FMR Corp. Such Schedule 13G sets forth
the following information: FMR Corp., a Massachusetts corporation,
is the beneficial owner of 5,165,000 shares of Common Stock.
Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp. and an investment adviser registered under
the Investment Advisers Act of 1940, is the beneficial owner of
4,139,800 shares of the Common Stock as a result of acting as
investment adviser to several investment companies (the "Funds")
registered under the Investment Company Act of 1940. The Chairman
of FMR Corp., Edward C. Johnson 3d, FMR Corp., through its control
of Fidelity, and the Funds have power to dispose of 4,105,600 shares
of Common Stock listed in the table. Neither FMR Corp. nor Mr.
Johnson has the sole power to vote or direct the voting of the
shares owned directly by the Funds, which power resides with the
Funds' respective Boards of Trustees. Fidelity carries out the
voting of the shares under written guidelines established by the
Funds' Boards of Trustees. Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR Corp. and a bank as defined in
Section 3(a)(6) of the Exchange Act, is the beneficial owner of
1,025,200 shares of the Common Stock listed in the table as a result
of its serving as investment manager of several institutional
accounts. Mr. Johnson and FMR Corp., through its control of
Fidelity Management Trust Company, each has sole dispositive power
over 1,025,200 shares of Common Stock listed in the table and sole
power to vote or to direct the voting of 1,025,200 of such shares.
Mr. Johnson owns 12.0%, and Abigail P. Johnson owns 24.9%, of the
outstanding voting common stock of FMR Corp. Various Johnson family
members and trusts for the benefit of Johnson family members own FMR
Corp. voting common stock. These Johnson family members, through
their ownership of such common stock and a voting agreement, form a
controlling group with respect to FMR Corp.
(2) Based upon information contained in a Schedule 13G, as amended as of
February 7, 1996, filed by John Hancock Mutual Life Insurance
Company ("Hancock"). The Schedule 13G indicates that Hancock has
the sole power to direct the disposition of 3,097,924 of such shares
of Common Stock and the sole power to vote 3,097,924 of such shares
of Common Stock and that Hancock's indirect wholly-owned subsidiary,
John Hancock Advisors, Inc., has the sole power to direct the
disposition of 812,000 of such shares of Common Stock and the sole
power to vote 812,000 of such shares of Common Stock.
(3) Based upon information contained in a Schedule 13G, as amended
February 9, 1996, filed by Alpha Assurances I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle, and Uni Europe Assurance Mutuelle, as a
group (collectively, the "Mutuelles AXA"), AXA and the Equitable
Companies Incorporated (the "Equitable Companies") in the Equitable
Companies' capacity as a parent holding company with respect to the
holdings of its subsidiaries The Equitable Life Assurance Society of
the United States ("Life"), an insurance company, a broker-dealer
registered under Section 15 of the Exchange Act and an investment
adviser registered under Section 203 of the Investment Advisers Act
of 1940, and Alliance Capital Management L.P. ("Alliance"), an
investment adviser registered under Section 203 of the Investment
Advisers Act of 1940. The Schedule 13G indicates that the Mutuelles
AXA, AXA and the Equitable Companies have the sole power to direct
the disposition of such 3,577,200 shares of Common Stock (319,000 of
which are held by Life and 3,258,200 of which are held by Alliance)
and the sole power to vote 3,560,500 shares of such Common Stock
(319,000 of which are held by Life and 3,241,500 of which are held
by Alliance). Each of the Mutuelles AXA, as a group, and AXA
expressly declares that the filing of the Schedule 13G shall not be
construed as an admission that it is, for purposes of Section 13(d)
of the Exchange Act, the beneficial owner of any securities covered
by the Schedule 13G.
(4) Based upon information contained in a Schedule 13G dated February 7,
1996, filed by Nicholas-Applegate Capital Management ("Nicholas-
Applegate"). The Schedule 13G indicates that Nicholas-Applegate has
the sole power to direct the disposition of 3,531,056 of such shares
of Common Stock and the sole power to vote 2,824,359 of such shares
of Common Stock.
</TABLE>
Management Ownership
The following table indicates the total number of shares of Common
Stock and Preferred Stock beneficially owned as of March 15, 1996 by each
continuing director, director nominee and Named Executive (as hereinafter
defined), and by directors and executive officers as a group. Unless
otherwise indicated, all shares are owned directly and the owner has sole
voting and investment power with respect thereto.
<TABLE>
Common Stock and Preferred Stock
<CAPTION>
Shares of Percent of
Shares of Percent of Preferred Preferred
Individual or Common Stock Common Stock Stock Stock
Number of Owned Owned Owned Owned
Persons in Group Beneficially Beneficially Beneficially Beneficially
- ---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
A.L. Chavkin 15,000 (1)(2) *
C.A. Donabedian 15,760 (2) *
T. Kalborg 2,141,795 (2)(3) 3.5%
M.A.E. Laqueur 580,168 (2)(4) *
P.B. Loyd, Jr. 518,486 (5)(6)(11) * 900(7) *
J.W. McLean 17,400 (2)(8) *
C.K. Rhein, Jr. 2,779,694 (5)(9) 4.5%
R.L. Sandmeyer 15,020 (2) *
S.A. Webster 21,000 (2)(8) * 1,000(7) *
L.E. Voss, Jr. 111,435 (10)(11) * 1,000(7) *
W.K. Hillin 109,680 (8)(10)(11) *
T.W. Nagle 101,123 (10)(11) *
Directors and
Executive Officers
as a group
(including those
listed above -
14 persons) 6,591,780 (11) 10.6% 3,900(7) *
_____________
* Less than 1 percent.
<FN>
(1) Mr. Chavkin is President of Chemical Investments, Inc.
("Chemical"), an affiliate of Chemical Venture Partners and
Chemical Banking Corporation. Chemical is a stockholder of the
Company holding 1,527,809 shares of Common Stock as of March 15,
1996. No beneficial ownership amount is included in the table for
Mr. Chavkin with respect to Chemical's ownership of the Common
Stock and beneficial ownership is disclaimed by Mr. Chavkin.
(2) The number set forth in the table includes options to purchase
15,000 shares of Common Stock granted to non-employee directors
pursuant to the Company's 1995 Director Stock Option Plan (the
"Director Plan") at a price of $7.375 per share held by each of
Messrs. Chavkin, Donabedian, Kalborg, Laqueur, McLean, Sandmeyer
and Webster.
(3) As a result of a distribution from RBIP I (as defined in footnote
(9) below), in February 1994, Melton Shipping Ltd. and
International Shipping Investment Company Ltd., entities in which
Mr. Kalborg and other parties have interests, acquired 1,197,255
and 929,540 shares of Common Stock, respectively, which are
included in the above table. In both instances, the Company
believes that Mr. Kalborg does not have sole power to dispose of
the shares nor to direct the voting of the shares. See footnote
(9) below.
(4) The shares listed for Mr. Laqueur include those beneficially owned
by him through his control of Workships Intermediaries N.V.
("Workships"), a stockholder of the Company.
(5) The Company has granted Restricted Stock Awards under the Company's
1992 Long-Term Incentive Plan (the "1992 Plan") to each of Messrs.
Loyd and Rhein, of 120,000 shares and 90,000 shares of Common
Stock, respectively. Such shares awarded are restricted as to
transfer until vested pursuant to a schedule whereby 1/24th of the
total number of shares is vested per calendar quarter through March
31, 1998 (subject to certain conditions including the occurrence of
a change of control of the Company and/or continued employment).
The shares listed for Mr. Loyd include such 120,000 shares, net of
27,550 shares that Mr. Loyd has surrendered to the Company to
satisfy certain tax withholding obligations. Pursuant to an
agreement between the Company and RBIP I (as defined in footnote
(9) below), such 90,000 shares awarded to Mr. Rhein included in the
above table are payable to and beneficially owned by WHR (as
defined in footnote (9) below), and Mr. Rhein disclaims beneficial
ownership of such shares. See Footnote (9) below and "COMPENSATION
OF EXECUTIVE OFFICERS AND DIRECTORS -- Compensation Committee
Report on Executive Compensation".
(6) The shares of Common Stock listed for Mr. Loyd include those
reported as beneficially owned by Greenwing Investments, Inc.
("Greenwing") and Greenwing Ltd. ("Ltd."). Mr. Loyd controls
Greenwing and Ltd. and may be deemed to have voting and dispositive
power with respect to the 25,220 and 494,780 shares of Common Stock
beneficially owned by Greenwing and Ltd., respectively, as of March
15, 1996.
(7) Each share of Preferred Stock is currently convertible into 2.899
shares of Common Stock. The shares of Common Stock listed in the
table do not include shares of Common Stock beneficially owned in
the form of Preferred Stock. Mr. Loyd disclaims beneficial
ownership of 200 of the 900 shares of Preferred Stock owned
directly by his son and daughter, which are included in the above
table.
(8) The shares listed for Mr. McLean and Mr. Webster include 1,200 and
4,000 shares, respectively, directly owned by their spouses. The
shares listed for Mr. Hillin include 44 shares directly owned by
his spouse and 16 shares directly owned by his son and daughter.
Mr. Hillin disclaims beneficial ownership of such 16 shares.
(9) The shares listed for Mr. Rhein include those reported in a
Schedule 13D, as amended as of October 23, 1995, filed by WHR
Management Company, L.P. ("WHR"), as general partner of R&B
Investment Partnership, L.P. ("RBIP I"), R&B Investment Partnership
II, L.P. ("RBIP II") and Whitman Heffernan & Rhein Workout Fund,
L.P. ("Workout") as beneficially owned by RBIP I, RBIP II, Workout,
WHR and the other persons named in such Schedule 13D. Martin J.
Whitman, James P. Heffernan and C. Kirk Rhein, Jr. are general
partners of WHR. Mr. Rhein serves as Vice Chairman and director of
the Company. Each of Messrs. Whitman, Heffernan and Rhein
disclaims beneficial ownership of the Common Stock held by RBIP I,
RBIP II and Workout. Pursuant to an agreement between the Company
and RBIP I, certain compensation and benefits (including an award
of 90,000 shares of restricted Common Stock to Mr. Rhein under the
1992 Plan) are payable to WHR. Such restricted stock award shares
are included in the shares listed for such firm in the table above,
and Mr. Rhein disclaims beneficial ownership of such shares. The
shares listed for Mr. Rhein also include 5,920 shares of Common
Stock owned by a trust for the benefit of Mr. Rhein's children.
Mr. Rhein disclaims beneficial ownership of such 5,920 shares. See
footnote (5) above and "COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS -- Compensation Committee Report on Executive
Compensation".
(10) The shares listed for Mr. Voss, Mr. Hillin and Mr. Nagle include
approximately 1,164 shares, 2,474 shares and 282 shares,
respectively, held by a trustee under the Company's savings plan.
(11) The Company has granted options to purchase and restricted shares
of Common Stock to certain key employees pursuant to its 1990 Stock
Option Plan (the "1990 Plan") and its 1995 Long-Term Incentive Plan
(the "1995 Plan") and options to purchase Common Stock to non-
employee directors pursuant to its Director Plan (see footnote (2)
above). The shares listed for Mr. Voss, Mr. Hillin and Mr. Nagle
each include 80,000 shares, the beneficial ownership of which each
such officer has the right to acquire pursuant to currently
exercisable options granted under the 1990 Plan and restricted
stock awards of 24,000, 19,000 and 20,000 shares, respectively,
under the 1995 Plan which vest on December 5, 1998. The shares
listed for Mr. Loyd and directors and executive officers as a group
do not include options to purchase 900,000 shares granted to him in
1995 under the 1992 Plan and the 1995 Plan. See "Option Grants in
Last Fiscal Year" and "COMPENSATION OF EXECUTIVE OFFICERS AND
DIRECTORS -- Compensation Committee Report on Executive
Compensation". The shares listed for directors and executive
officers as a group include a total of 460,000 shares, the
beneficial ownership of which such directors and officers have the
right to acquire pursuant to currently exercisable options granted
under the 1990 Plan and the Director Plan.
</TABLE>
ELECTION OF DIRECTORS
The Charter and By-laws of the Company currently require the number
of directors on the Board to be not less than three nor more than eighteen
(as fixed from time to time by resolution of a majority of the Board) and
require the division of the Board into three separate classes with
staggered terms of three years each. The number of directors constituting
the entire Board is currently fixed at nine. At the Annual Meeting, three
Class II directors are to be elected. Messrs. Kalborg, Laqueur and McLean
are nominees for Class II director. Each of Messrs. Kalborg, Laqueur and
McLean is currently a Class II director whose term expires in 1996.
It is the intention of the persons designated as proxies in the
enclosed proxy card, unless the proxy card is marked with contrary
instructions, to vote for the election of Messrs. Kalborg, Laqueur and
McLean as Class II directors to serve until the 1999 Annual Meeting of
Stockholders and until their successors have been duly elected and
qualified. The persons designated as proxies will have discretion to cast
votes for other persons in the event that any nominee for Class II
director is unable to serve. At present, it is not anticipated that any
of the nominees will be unable to serve.
The following table and accompanying footnotes set forth certain
information concerning each Class II director nominee and the continuing
Class I and Class III directors. Unless otherwise indicated, each nominee
and continuing director has served in the positions set forth for more
than five years.
CLASS II DIRECTOR NOMINEES - TERMS EXPIRING IN 1999
TED KALBORG, 45 Director of the Company since April 1991.
Mr. Kalborg is an investor and investment banker
specializing in international asset-intensive
acquisitions and other transactions. He is
Chairman and Managing Director of Tufton Oceanic
Ltd., a private merchant banking group in London
and a director of North Sea Assets, a small public
company in London which provides energy related
services. See "PRINCIPAL STOCKHOLDERS AND
MANAGEMENT OWNERSHIP -- Management Ownership".
MACKO A. E. LAQUEUR, 50 Director of the Company since April 1995. Mr.
Laqueur is a senior partner and one of the two
founders of Venture Capital Investors, a private
investment company located in Amsterdam, The
Netherlands. Prior to starting Venture Capital
Investors in 1980, Mr. Laqueur was Managing
Director of Van Rietschoten Holding S.A., a
private investment company involved in venture
capital investments in both The Netherlands and
the United States. Mr. Laqueur received his
Bachelors Degree in law at the Erasmus University
in Rotterdam and his MBA from the Rotterdam
School of Management in 1972. Mr. Laqueur holds
board positions with Thermae Holding, a large
resort owner and operator, with Van Heek-Ten Cate
N.V., a holding company of four textile
manufacturers in The Netherlands, and with
Sanadome Holding N.V., a newly-established
medical spa facility. Mr. Laqueur and Venture
Capital Investors have interests in a large number
of companies involved in the offshore industry
owning service, supply and heavy lift vessels.
Mr. Laqueur is one of the controlling persons of
Workships, a stockholder of the Company. See
"PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP -
- Management Ownership".
J. W. McLEAN, 73 Director of the Company from 1956 to 1987 and
since February 1988. Mr. McLean was formerly
Chairman and Chief Executive Officer of Banks of
Mid-America, Inc. and Liberty National Bank &
Trust Company prior to his retirement in April
1987.
CLASS I CONTINUING DIRECTORS - TERMS EXPIRING IN 1998
CHARLES A.
DONABEDIAN, 53 Director of the Company since 1989. Since 1990,
Mr. Donabedian has been Chairman and Chief
Executive Officer of Triad Partners, Inc., which
provides product development, marketing and sales
consulting and services to the financial service
industry. Since May 1992, Mr. Donabedian has also
been Chairman and Chief Executive Officer of:
Winston Financial Incorporated (formerly Winston
Midwest Marketing, Inc.), which provides product
development, marketing and sales consulting and
services to the financial services industry;
Winston Advisors, Inc. (of which Mr. Donabedian is
also a director) which provides financial advice
for individuals and small companies; and Winston
Brokerage, Inc., a broker/dealer. Prior to
October 1990, he was President and Chief Executive
Officer of USF&G Marketing Services Company, Inc.,
a subsidiary of USF&G Corporation, an insurance
company.
C. KIRK RHEIN, JR., 43 Vice Chairman of the Company since May 1991 and
Director of the Company since March 1991. Mr.
Rhein has also been President, Chief Executive
Officer and Director of Danielson Holding
Corporation, a financial services holding company,
since 1990, and a director of National American
Insurance Company of California, an insurance
company, since 1987. Since 1987 he has been a
Managing Director of Whitman Heffernan Rhein &
Co., Inc. Since 1989 he has been a general
partner of WHR, which manages RBIP I, RBIP II and
Workout (see "PRINCIPAL STOCKHOLDERS AND
MANAGEMENT OWNERSHIP--Management Ownership").
Prior to April 1, 1987, he was a partner in the
law firm of Anderson Kill Olick & Oshinsky, P.C.
ROBERT L. SANDMEYER, 66 Director of the Company since September 1988.
Dr. Sandmeyer has been Dean of the College of
Business Administration at Oklahoma State
University and Professor of Economics since at
least 1987.
CLASS III CONTINUING DIRECTORS - TERMS EXPIRING IN 1997
ARNOLD L. CHAVKIN, 44 Director of the Company since August 1991; general
partner of Chemical Venture Partners, a general
partnership which invests in leveraged buyouts,
recapitalizations, growth equities and venture
situations, since January 1992 and President of
Chemical, an affiliate of Chemical Venture
Partners, since March 1991. Chemical Venture
Partners and Chemical are affiliates of Chemical
Banking Corporation. Chemical is a stockholder of
the Company (see footnote (1) to the table under
the caption "PRINCIPAL STOCKHOLDERS AND MANAGEMENT
OWNERSHIP--Management Ownership"). Mr. Chavkin is
also a director of American Radio Systems,
Forcenergy, Bell Sports Corporation, and
Envirotest Systems Corporation. Previously for
six years, Mr. Chavkin was a specialist in
investment and merchant banking at Chemical Bank.
PAUL B. LOYD, JR., 49 Chairman and Chief Executive Officer of the
Company since June 1991, Director of the Company
since April 1991 and President of the Company
since October 1993. Mr. Loyd controls Greenwing
and Ltd., stockholders of the Company (see
"PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP -
- Management Ownership"), and has been President
of Loyd & Associates, Inc., a financial consulting
firm, since 1989. Mr. Loyd was Chief Executive
Officer and a director of Chiles-Alexander
International, Inc. from 1987 to 1989, President
and a director of Griffin-Alexander Drilling
Company, from 1984 to 1987, and prior to that, a
director and Chief Financial Officer of Houston
Offshore International, all of which are companies
in the offshore drilling industry.
STEVEN A. WEBSTER, 44 Director of the Company since August 1991;
Chairman and Chief Executive Officer of Falcon
Drilling Company Inc., a domestic-based drilling
company, since 1988. Since 1984, Mr. Webster has
also been a general partner of Cerrito Partners
and Cerrito Investments Limited Partnership, both
investment funds with a portfolio of private
company investments in various industries, and a
general partner of Equipment Asset Recovery Fund,
an investment fund that owns and operates a heavy
crane rental company. Mr. Webster is also a
director of Crown Resources Corporation, which is
in the business of mining precious metals, and
Camden Property Trust, a real estate investment
trust.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors met thirteen times (including telephonic
meetings) during 1995 and each director attended at least 75% of the total
number of meetings of the Board of Directors, and all of the committees of
the Board of Directors on which such director served, except for Dr.
Cordia (who resigned for health reasons), Mr. Chavkin and Mr. Donabedian.
The Board of Directors has standing Audit, Compensation, Executive
and Pension (ERISA) Committees. There is no nominating committee.
The Audit Committee
The members of the Audit Committee are Arnold L. Chavkin, Macko A.
E. Laqueur, Charles A. Donabedian, Ted Kalborg, J.W. McLean and Robert L.
Sandmeyer. The Audit Committee held four meetings in 1995.
The Audit Committee meets with the Company's independent public
accountants and internal auditor to review the Company's accounting
policies, internal controls and other accounting and auditing matters;
makes recommendations to the Board as to the engagement of independent
public accountants; and reviews the letter of engagement relating to the
scope of the annual audit and special audit work which may be recommended
or required by the independent public accountants.
The Compensation Committee
The members of the Compensation Committee are J. W. McLean, Robert
L. Sandmeyer and Steven A. Webster. The Compensation Committee held four
meetings in 1995.
The Compensation Committee reviews the nature and amount of
compensation of officers of the Company and its subsidiaries and
recommends changes thereto.
The Executive Committee
The members of the Executive Committee are Paul B. Loyd, Jr. and C.
Kirk Rhein, Jr. The Executive Committee held four meetings in 1995.
The Executive Committee reviews and develops strategies and policies
of the Company and recommends changes thereto.
The Pension (ERISA) Committee
The members of the Pension (ERISA) Committee are Charles A.
Donabedian, J. W. McLean and R. L. Sandmeyer. The Pension (ERISA)
Committee held five meetings in 1995.
The Pension (ERISA) Committee is responsible for monitoring the
Company's compliance with the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), in connection with its employee benefit plans;
for supervising the administration of the Company's Pension Plan,
including selection of investment managers, determination of the
investment guidelines within which they operate, review of performance and
amending the Pension Plan; and for supervising the administration of the
Company's Savings Plan.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors of the Company
(the "Committee") has furnished the following report on executive
compensation. The Committee report documents the components of the
Company's executive officer compensation programs and describes the basis
on which 1995 compensation determinations were made by the Committee with
respect to the executive officers of the Company, including the Chief
Executive Officer and the four other executive officers that are named in
the compensation tables who are currently employed by the Company (the
"current Executives").
Compensation Philosophy and Overall Objectives of Executive Compensation
Programs
It is the philosophy of the Company to ensure that executive
compensation be directly linked to continuous improvements in corporate
performance and increases in stockholder value. The following objectives
have been adopted by the Committee as guidelines for compensation
decisions:
- Provide a competitive total compensation package that enables the
Company to attract and retain key executives.
- Integrate all pay programs with the Company's annual and long-term
business objectives and strategy, and focus executive behavior on
the fulfillment of these objectives.
- Provide variable compensation opportunities that are directly linked
with the performance of the Company.
Cash compensation -- cash compensation includes base salary and annual
incentive award programs. The base salary of each of the Company's
executive officers is determined by an evaluation of the responsibilities
of that position and by comparison to the median level of salaries paid in
the competitive market in which the Company competes for comparable
executive ability and experience. Annually, the performance of each
executive officer is reviewed by the Committee in the case of the
Company's Chief Executive Officer and Vice Chairman (with the officer
whose performance is being evaluated not participating), and by the Chief
Executive Officer in the case of the other executive officers, taking into
account the Company's operating and financial results for that year, the
contribution of each executive officer to such results, the achievement of
goals established for each such executive officer at the beginning of each
year, and competitive salary levels for persons in those positions in the
markets in which the Company competes. To assist in its deliberations,
the Committee is provided a report from William M. Mercer Incorporated, a
recognized independent compensation consultant, setting out comparable
salary and incentive compensation information for a number of
representative companies in the offshore drilling industry selected by
William M. Mercer, Incorporated including Global Marine, Rowan Companies,
Sonat Offshore Drilling, Energy Service Co., Nabors Industries, Pool
Energy Services, Noble Drilling and Dual Drilling, for comparison
purposes. Following its review of the performance of the Company's
executive officers, the Committee reports its recommendations for salary
increases and incentive awards to the Company's Board of Directors. In
1995 annual base salary increases were recommended by the Committee and
approved by the Company's Board of Directors for all of the executive
officers (other than the Vice Chairman) and incentive compensation awards
were approved for all of the executive officers (other than the Vice
Chairman). See - "Summary Compensation Table" and "Chief Executive
Officer's Compensation and Corporate Performance for Fiscal Year 1995".
The Committee believes the recommended salary increases and incentive
awards were warranted and consistent with the performance of such
executives during 1995 based on the Committee's evaluation of each
individual's overall contribution to accomplishing the Company's 1995
corporate goals and of each individual's achievement of individual goals
during the year. Such goals related to ongoing operational and business
matters, such as maintaining high utilization of the Company's fleet,
improvement of the Company's customer and investor relationships,
improvement of the Company's safety and operations programs, development
of new business opportunities and strengthening the Company's capital
structure.
Stock-Based Incentives -- The Committee believes that it is essential to
align the interests of the executives and other management personnel
responsible for the growth of the Company with the interests of the
Company's stockholders. The Committee believes this alignment is best
accomplished through the provision of stock-based incentives. Therefore,
pursuant to the recommendation of the disinterested members of the
Committee, the Company's Board of Directors and stockholders: (i)
approved the 1990 Plan on November 29, 1990, and at a special meeting on
March 26, 1991, respectively, (ii) approved the 1992 Plan on March 19,
1992 and May 20, 1992, respectively and (iii) approved the 1995 Plan on
February 7, 1995 and May 2, 1995, respectively. Under the 1992 Plan
1,000,000 shares of the Company's Common Stock (restated for the October
1992 one-for-five reverse stock split) were available for award to
executive officers and other employees. During 1992, 120,000 shares,
90,000 shares and 90,000 shares of restricted Common Stock were awarded to
each of Messrs. Loyd, Angel (who resigned in 1993) and Rhein,
respectively. Restrictions as to one/twenty-fourth (1/24th) of the shares
lapse on each June 30, September 30, December 31 and March 31 beginning in
1992 and ending March 31, 1998. During 1993 and 1994, no further awards
of restricted Common Stock were made to Messrs. Loyd, Angel or Rhein under
the 1992 Plan; however, restrictions on shares previously awarded to the
current Executives lapsed in accordance with the foregoing schedule.
During 1995 awards of options with respect to an aggregate of 900,000
shares of Common Stock (300,000 shares under the 1992 Plan and 600,000
shares under the 1995 Plan) were made to Mr. Loyd. The option price for
such shares is $13.875 per share, based on the closing price appearing on
the New York Stock Exchange Composite Transactions List, as published in
The Wall Street Journal on the date preceding the date of grant of the
awards. The options vest with respect to 300,000 shares on each December
5 of 1996, 1997 and 1998. The Committee continues to review stock-based
incentives and make recommendations, where it deems appropriate, to the
Company's Board of Directors, from time to time, to assure the Company's
executive officers and other key employees are appropriately motivated and
rewarded by stock-based incentives. See "PRINCIPAL STOCKHOLDERS AND
MANAGEMENT OWNERSHIP -- Management Ownership".
Chief Executive Officer's Compensation and Corporate Performance for
Fiscal Year 1995
In determining the compensation of Mr. Paul B. Loyd, Jr., the
Chairman, President and Chief Executive Officer, the Committee (with Mr.
Loyd not participating) considered the Company's operating and financial
results for fiscal year 1995, evaluated his individual performance and
substantial contribution to those results (including, among others, the
Company's dramatic improvement in operating results for 1995) and
considered the compensation range for other chief executive officers of
companies in the energy service sector. Based on that review and
assessment, the Committee (with Mr. Loyd not participating) recommended,
and the Company's Board of Directors approved (with Mr. Loyd abstaining),
an increase in Mr. Loyd's salary of $50,000 per year effective January 1,
1996 and an incentive award to Mr. Loyd of $250,000, which represented
62.5% of his base salary for 1995.
Summary
Based on its review of all existing programs, the Committee believes
that the total compensation program for executive officers of the Company
is competitive with the compensation programs provided by other
corporations with which the Company competes. The Committee also believes
that the stock-based incentives provide opportunities to participants that
are consistent with the returns that are generated on the behalf of the
Company's stockholders.
Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") disallows a corporation's deduction for remuneration paid to its
chief executive officer and its four other highest compensated officers in
excess of $1,000,000 per person effective January 1, 1994. As neither the
Company's chief executive officer or any of its four other highest
compensated officers has received remuneration in excess of such
limitation in 1995 or is anticipated to receive remuneration in excess of
such limitation in 1996, the Committee continues to defer making any
recommendation to the Company's Board of Directors as to what policy the
Company should adopt with respect to remuneration of the current
Executives in excess of such limitation, until such time as it appears
reasonably foreseeable that such limitation may be exceeded.
Compensation Committee
of the Board of Directors
-------------------------
J. W. McLean
Robert L. Sandmeyer
Steven A. Webster
Compensation Committee Interlocks and Insider Participation
Mr. Webster is Chairman and Chief Executive Officer of Falcon
Drilling Company, Inc. During 1995, Mr. Loyd served as a director of
Falcon Drilling Company, Inc., but did not serve on such company's
compensation committee.
Summary Compensation Table
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the years
ended December 31, 1995, 1994 and 1993, of (i) the chief executive officer
during 1995 and (ii) the other four most highly compensated executive
officers of the Company who were serving as executive officers at December
31, 1995 (collectively, the "Named Executives"):
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual
Compensation Long Term Compensation
----------------- -----------------------------------
Name and Restricted Securities All Other
Principal Stock Underlying Compensation
Position Year Salary Bonus Award(s)(1) Options(2) (3)
- -------- ---- -------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
P.B. Loyd, Jr. 1995 $400,000 $250,000 $ 0 900,000 $254,767
Chairman, President 1994 300,000 125,000 0 0 223,084
and Chief Executive 1993 300,000 150,000 0 0 68,493
Officer
C.K. Rhein, Jr.(4) 1995 220,000 0 0 0 90,403
Vice Chairman 1994 220,000 0 0 0 100,900
1993 220,000 0 0 0 27,687
L.E. Voss, Jr. 1995 240,000 95,000 333,000 0 4,620
Vice President 1994 220,000 32,560 0 0 4,620
Operations 1993 180,000 44,180 0 80,000 4,497
T.W. Nagle 1995 200,000 75,000 277,500 0 4,620
Executive Vice 1994 175,000 34,040 0 0 4,620
President, Finance 1993 150,000 37,400 0 80,000 4,497
and Administration
W.K. Hillin 1995 190,000 50,000 263,625 0 4,620
Senior Vice 1994 180,000 16,560 0 0 4,620
President, 1993 167,000 21,870 0 80,000 4,497
General Counsel
and Secretary
____________
<FN>
(1) On December 5, 1995, the Company granted a Restricted Stock Award
of 24,000, 20,000 and 19,000 shares of the Company's Common Stock
to Mr. L.E. Voss, Jr., Mr. T.W. Nagle and Mr. W.K. Hillin,
respectively. The shares of Common Stock were issued under the
1995 Plan and are restricted as to transfer until fully vested
three years from the date of grant. The amounts shown reflect the
value of such awards based on the market price of $13.875 on the
date of grant. The stock awards entitle the beneficiaries to all
rights as a stockholder from the date of grant (including the right
to receive dividends when, as and if declared) other than the right
to transfer the shares. The total number of shares of Common Stock
which have not vested, and the value thereof, based on the closing
price of the Common Stock on the NYSE on December 29, 1995 (the
final trading day of 1995), held by Messrs. Voss, Nagle and Hillin
were as follows:
Shares Value
------ --------
Mr. Voss 24,000 $360,000
Mr. Nagle 20,000 $300,000
Mr. Hillin 19,000 $285,000
On April 1, 1992, the Company granted a Restricted Stock Award of
120,000 and 90,000 shares of the Company's Common Stock (restated
for the October 1992 one-for-five reverse stock split of the Common
Stock) to Mr. P.B. Loyd, Jr. and Mr. C.K. Rhein, Jr., respectively.
The shares of Common Stock were issued under the 1992 Plan at a
price of $7.50 per share (the market price on the date of grant
adjusted for such reverse stock split). Restrictions as to
one/twenty-fourth (1/24th) of the Common Stock lapse on each June
30, September 30, December 31 and March 31 in each of 1992, 1993,
1994, 1995, 1996, 1997 and through March 31, 1998. The stock
awards entitle the beneficiaries to all rights as a stockholder
from the date of grant (including the right to receive dividends
when, as and if declared). The total number of shares of Common
Stock as to which restrictions have not lapsed, and the value
thereof, based on the closing price of the Common Stock on the NYSE
on December 29, 1995 (the final trading day of 1995), held by
Messrs. Loyd and Rhein were as follows:
Shares Value
------ --------
Mr. Loyd 45,000 $675,000
Mr. Rhein 33,750 $506,250
(2) The stock options awarded in 1993 represent such stock options
awarded pursuant to the 1990 Plan which were repriced pursuant to
the repricing proposal approved by the Company's stockholders at
the 1993 Annual Meeting. The stock options awarded in 1995
represent such stock options awarded pursuant to the 1995 Plan and
1992 Plan. See "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS -
- Compensation Committee Report on Executive Compensation" and
footnote (11) to the table under "PRINCIPAL STOCKHOLDERS AND
MANAGEMENT OWNERSHIP --Management Ownership".
(3) For 1993, 1994 and 1995, the All Other Compensation column includes
i) the amount of the Company's contribution for each Named
Executive under the Reading & Bates Savings Plan, except Mr. Rhein
who has waived his right to participate in such Plan, ii) accrued
termination benefits of $42,915, $197,086 and $226,338,
respectively for Mr. Loyd and $27,687, $100,900 and $90,403,
respectively for Mr. Rhein. See "Employment Contracts and Change-
in-Control Arrangements", and iii) in the case of Mr. Loyd, NOK
150,000 per annum for serving as Chairman and a member of the board
of directors of Arcade Drilling AS, a majority-owned subsidiary of
the Company (amounts shown in the table reflect exchange rates
prevailing during each such year).
(4) Pursuant to the agreement referred to in footnote (9) to the table
under "PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP --Management
Ownership" above, the compensation payable to Mr. Rhein is paid to
and beneficially owned by WHR.
</TABLE>
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
Potential Realizable
Individual Grants Value at Assumed
--------------------------------------- Annual Rates of Stock
% of Total Price Appreciation for
Number of Options Option Term (3)
Securities Granted to -----------------------
Underlying Employees
Options in Fiscal Exercise Expiration
Name Granted (1) Year (2) Price Date 5% 10%
- ---- ----------- -------- ------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
P. B. Loyd, Jr. 900,000 69% $13.875 12/05/05 $7,853,322 $19,901,859
C. K. Rhein, Jr. 0 0 0 0 0 0
L. E. Voss, Jr. 0 0 0 0 0 0
T. W. Nagle 0 0 0 0 0 0
W. K. Hillin 0 0 0 0 0 0
<FN>
(1) In 1995, the Company granted Mr. Loyd 900,000 stock options under the
1992 Plan and 1995 Plan. The option price is $13.875, the market
price on the date of grant. The options vest with respect to 300,000
shares on each December 5 of 1996, 1997 and 1998 and expire on
December 5, 2005.
(2) A total of 1,300,000 options were granted to employees, excluding
non-employee directors, during 1995.
(3) The potential realizable value of the option grant was computed by
multiplying (a) the difference between: (i) the market price at the
time of grant times the sum of 1 plus the appreciation rate over the
term of ten years, and (ii) the exercise price of the option, and (b)
the number of options underlying the grant at yearend. The actual
value, if any, that may be realized will depend on the excess of the
stock price over the exercise price on the date the option is
exercised, so there can be no assurance that the value realized will
be at or near the value estimated.
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised Options In-the-Money Options
at Fiscal Year-End(1) at Fiscal Year-End(1)
---------------------- -------------------------
Shares
Acquired Value Un- Un-
Name on Realized Exercisable exercisable Exercisable exercisable
- ------- Exercise -------- ----------- ----------- ----------- -----------
--------
<S> <C> <C> <C> <C> <C> <C>
P.B. Loyd, Jr. 0 0 0 900,000 $ 0 $1,012,500
C.K. Rhein, Jr. 0 0 0 0 0 0
L.E. Voss, Jr. 0 0 80,000 0 610,000 0
T.W. Nagle 0 0 80,000 0 610,000 0
W.K. Hillin 0 0 80,000 0 610,000 0
________________________
<FN>
(1) The stock options granted during 1991 pursuant to the 1990 Plan
were granted at an option price of $1.93125 per share; after the
October 1992 one-for-five reverse stock split of the Common Stock
the option price was adjusted to $9.65625. On May 18, 1993, the
option price was further adjusted to $7.375. The number of
unexercised stock options at December 31, 1993 reflects such
reverse stock split. The Value of Unexercised In-the-Money Options
At Fiscal Year-End reflects the difference between the option price
and the closing price of the Common Stock on the NYSE on December
29, 1995, the last trading day of the year.
</TABLE>
Performance Graph
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER
RETURN AMONG READING & BATES CORPORATION,
S&P 500 INDEX AND A PEER GROUP INDEX
[Graph appears here. A copy of the graph has
been couriered to Letty G. Lynn, Branch Chief.]
The above graph assumes $100 invested on December 31, 1990 in the stock of
Reading & Bates, the S&P 500 index and the composite peer indexes and
shows the value of such investment, assuming reinvestment of dividends on
December 31 of each year indicated. The New Peer Group (10 stocks)
reflects certain changes, as described below, from the old peer group used
in the Company's 1995 Proxy Statement (which was labelled "New Peer Group
(9 Stocks)" in the 1995 Proxy Statement) and is comprised on the following
companies: Arethusa (Off-Shore) Ltd., Atwood Oceanics Inc., Dual Drilling
Company, Energy Services Inc., Global Marine Inc., Noble Drilling
Corporation, Rowan Companies Inc., Sonat Offshore Drilling Inc., and the
Western Company of North America (through September 1993). The tenth
stock added to the New Peer Group in October 1995 was Diamond Offshore as
this company had their initial public offering in October 1995.
Further, peer weightings for both peer groups have been adjusted for
changes as follows: Dual Drilling Company was added to the peer group
indexes in August 1993 as this company had its initial public offering in
August 1993; Chiles Offshore Corporation was dropped and Noble Drilling
Corporation was added to the peer group indexes in September 1994 as
these two companies merged during September 1994 and the Western Company
of North America was removed from the peer group indexes as of September
30, 1993 as that company sold its drilling assets in October 1993. The
following table shows the values that are displayed on the graph:
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Reading & Bates $100 $81 $42 $70 $60 $150
S&P 500 $100 $130 $140 $155 $157 $215
Old Peer Group (9 Stocks) $100 $51 $59 $99 $85 $175
New Peer Group (10 Stocks) $100 $51 $59 $99 $85 $178
</TABLE>
Pension Plan Table
Assuming that an employee is entitled to an annual social security
benefit of $14,388 at normal retirement date and has an annual social
security covered compensation amount of $25,920, the Pension Plan Table
illustrates the amount of annual pension benefits payable by the Company
under a single-life annuity basis to a person in specified average
compensation and years-of-service classifications.
<TABLE>
<CAPTION>
Years of Service
36-Month Average --------------------------------------------------
Remuneration 15 20 25 30 35
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 50,000 12,824 17,099 21,373 25,648 29,923
100,000 28,246 37,662 47,077 56,493 65,908
150,000 43,669 58,225 72,781 87,338 101,894
200,000 59,091 78,788 98,485 118,182 137,880
250,000 74,514 99,351 124,188 149,027 173,865
300,000 89,936 119,915 149,893 179,872 209,851
350,000 105,358 140,478 175,597 210,717 245,836
400,000 120,781 161,041 201,301 241,562 281,822
450,000 136,203 181,604 227,005 272,406 280,794
500,000 151,626 202,168 252,709 303,251 353,793
</TABLE>
Retirement benefits under the Reading & Bates Pension Plan (the
"Domestic Plan") are based on an employee's highest average monthly base
compensation for 36 consecutive months of credited service, integrating a
portion of the primary social security benefit payable to the employee.
The benefit is based on the higher of three formulas, A, B and C, as
outlined below. Formula A is based on pay, service and primary social
security benefit frozen at December 31, 1988, while Formulas B and C are
based on pay, service and social security covered compensation as of the
date of termination of employment. Formula A is as follows: 2.75% of an
employee's average monthly compensation multiplied by the number of years
of credited service for the first 20 years; plus 2% of an employee's
average monthly compensation multiplied by the number of years of credited
service from 21 through 25 years; plus 1.50% of an employee's average
monthly compensation multiplied by the number of years of credited service
from 26 through 30 years; plus 1% of an employee's average monthly
compensation multiplied by the number of years of credited service from 31
through 35 years; plus .50% of an employee's average monthly compensation
multiplied by the number of years of credited service from 36 through 40
years; minus 50% of an employee's primary social security benefit.
Formula B is as follows: 2.4% of an employee's average monthly
compensation multiplied by the number of years of credited service through
December 31, 1991 (up to a maximum of 35 years); minus .65% of an
employee's social security covered compensation multiplied by the number
of years of credited service through December 31, 1991 (up to a maximum of
35 years); plus an amount determined under Formula C based solely on the
number of years credited service which accrued after December 31, 1991.
Formula C is as follows: 2.0% of an employee's average monthly
compensation multiplied by the number of years of credited service for the
first 35 years; minus .65% of an employee's social security covered
compensation multiplied by the number of years of credited service for the
first 35 years. This benefit structure is the result of a plan amendment
effective January 1, 1989. The formula in effect prior to this date was
Formula A, based on pay, service and primary social security benefit at
date of retirement. Compensation covered by the Domestic Pension Plan
consists of base wages to the maximum extent allowed under current laws
but not to exceed $145,000 (or an amount equal to the difference between
$200,000 for 1989 and succeeding years (as adjusted at the same time an
manner provided under Code Section 415(d)) and $100,000, or the maximum
annual compensation limit provided for in Code Section 401(a)(17)).
Messrs. Loyd, Voss, Hillin and Nagle respectively, have 3.997, 27.283,
23.935 and 19.997 years of credited service under the Domestic Plan.
Mr. Rhein has waived his right to participate in the Pension Plan. The
Named Executives, except Mr. Rhein, will be entitled to receive the
estimated annual benefits based upon their 1995 salary amounts set forth
under "Salary" in the Summary Compensation Table.
Assuming that an employee is entitled to an annual social security
benefit of $14,388 at normal retirement date and has an annual social
security covered compensation amount of $25,920, the Pension Plan Table
illustrates the amount of annual pension benefits payable by the Company
under the Domestic Plan and the Retirement Benefit Replacement Plan
(described below) under Formula C on a single life annuity basis to a
person in specified average compensation and years-of-service
classifications.
The maximum pension benefit allowable under current laws for persons
who retired at age 65 in 1996 is $120,000. The Domestic Plan limits the
annual compensation that is considered for plan purposes to $150,000 for
1996. Retirement benefits based on pay in excess of the foregoing
limitations will be paid pursuant to the Reading & Bates Retirement
Benefit Replacement Plan, which was adopted by the Company's Board of
Directors in 1978. The Retirement Benefit Replacement Plan is designed to
restore to affected employees the dollar amount of pension and pension-
related benefits which could no longer be provided under the Domestic Plan
as a result of the compensation limitation contained in the Domestic Plan
and benefit limitations imposed on the Domestic Plan by ERISA. The
Pension Plan Table includes aggregate benefits payable under both the
Domestic Plan and the Retirement Benefit Replacement Plan.
Retirement benefits under the Reading & Bates Offshore Pension Plan
(the "Offshore Plan") are determined under formulas similar to those
detailed above as the Domestic Plan's Formulas A and C. Formula A under
the Offshore Plan is identical to Formula A under the Domestic Plan except
that pay, service and primary social security benefit are frozen at
December 31, 1990; plus an amount determined under Formula C based solely
on the number of years of credited service which accrued after December
31, 1990 is added to the benefit determined. Formula C for the Offshore
Plan is identical to Formula C under the Domestic Plan. Compensation
covered under the Offshore Plan is the same as that covered by the
Domestic Plan without the monetary limits. The Pension Plan Table can
also be used to illustrate the amount of annual pension benefits payable
by the Company under Formula C of the Offshore Plan.
Director Compensation
Each non-employee director is paid a fee of $18,000 per year ($4,500
per quarter). Mr. Loyd is paid a fee of NOK 150,000 per annum ($23,809 at
exchange rates prevailing during 1995) for serving as Chairman and a
member of the board of directors of Arcade Drilling AS, a majority-owned
subsidiary of the Company. The Company pays each director an additional
fee of $500 for each meeting (other than telephonic meetings) attended by
that director. In addition, each non-employee director is paid for
attending each committee meeting at the rate of $700 for committee
chairmen and $500 for other committee members. The Company also
reimburses its directors for travel, lodging and related expenses they may
incur attending board and committee meetings. Non-employee directors who
are not executive officers of the Company are provided life insurance
coverage. No other benefits under the Company's employee benefit plans
are payable to or on behalf of these directors.
On February 7, 1995 each of the existing non-employee directors
received an award of stock options with respect to 15,000 shares of the
Company's Common Stock under the Director Plan. The options are
exercisable at $7.375 per share and expire ten years from the date of
grant. On April 19, 1995 Mr. Macko A. E. Laqueur was appointed a director
to replace Dr. Willem Cordia (who resigned for health reasons) and
automatically received a similar award, except that under the terms of
such plan, Mr. Laqueur's award vests 33 1/3% on April 19, 1996, 33 1/3 %
on April 19, 1997 and the remaining 33 1/3 % on April 19, 1998. The
Director Plan was approved by the Company's stockholders at the Annual
Meeting of Stockholders held May 2, 1995.
Employment Contracts and Change-in-Control Arrangements
Officer Agreements. The Company has entered into employment
agreements with Messrs. Loyd, Rhein, Voss, Hillin and Nagle. The
agreements with Messrs. Loyd, Rhein, Voss, Hillin and Nagle provide that
for a continuing three-year employment period (ending currently on March
31, 1999) the officers will receive annual base salaries of not less than
$450,000, $220,000, $260,000, $205,000 and $240,000, respectively, and,
except in the case of Mr. Rhein, will participate in other benefit plans
and programs of the Company.
Each of such employment agreements was amended effective as of
October 1, 1993 by agreement between the Company and each executive. As
amended, each of such agreements provides that if the officer terminates
his employment for good reason or during the 180-day period following a
change of control of the Company, the Company will (a) make a lump sum
payment to him of salary earned through the date of termination and a
bonus based on the highest annual bonus paid him during the preceding
three-year period prorated in accordance with the period in the current
year prior to the termination, (b) make a lump sum payment to him of the
amount determined by multiplying 1.25 times the sum of the highest
aggregate annual base salary and annual bonus (or equal to such salary and
bonus if such termination occurs after October 31, 1997) paid to the
officer with respect to any one fiscal year ending within the three-year
period ending on the date of termination times three, (c) in the case of
Messrs. Loyd and Rhein, deliver to such executive the shares under the
1992 Plan free of restrictions and (d) except in the case of Mr. Rhein,
continue to provide certain welfare plan and other benefits for a period
of three years or as long as such plan or benefits allow.
For purposes of the employment agreements, "good reason" includes
(i) a change in the officer's position, authority, duties or
responsibilities, (ii) changes in the office or location at which he is
based without his consent (such consent not to be unreasonably withheld),
(iii) certain breaches of the agreement and (iv) in the case of Messrs.
Loyd and Rhein, (x) any determination by such executive that termination
of his employment with the Company is, in his sole opinion, in the best
interests of the Company or Messrs. Loyd or Rhein and in such event (A)
the date of termination is not less than 180 days (or such shorter period
as may be mutually agreed between such executive and the Company)
following the giving of notice of termination as provided in the
employment agreements and (B) Greenwing and Workout, respectively, shall
have disposed of (including, without limitation, by means of a
distribution to its stockholders) not less than 50% of the Company's
Common Stock beneficially owned, directly or indirectly, by such entity as
of October 11, 1993 and (y) the occurrence of October 11, 2003. A "change
of control" for purposes of the agreements with Messrs. Voss, Hillin and
Nagle would occur if a person or group (other than (i) such officer, (ii)
the Company or any of its subsidiaries or affiliates, (iii) any person
subject as of the date of the agreement to the reporting or filing
requirements of Section 13(d) of the Exchange Act with respect to the
securities of the Company or any affiliates, (iv) any trustee or other
fiduciary holding or owning securities under an employee benefit plan of
the Company, (v) any underwriter temporarily holding or owning securities
of the Company, or (vi) any corporation owned directly or indirectly by
the current stockholders of the company in substantially the same
proportion as their then ownership of stock of the Company) becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of
the Company's then outstanding securities. A "change of control" for
purposes of the agreements with Messrs. Loyd and Rhein would occur if any
person or group (subject to the same exceptions described in the change of
control provisions above for the agreements with Messrs. Voss, Hillin and
Nagle) becomes the beneficial owner, directly or indirectly, of securities
of the Company representing twenty-two and one-half percent (22.5%) or
more of the combined voting power of the Company's then outstanding
securities.
The same benefits payable to each officer under the agreement if he
terminates his employment for good reason or following a change of control
would also be payable to him if the Company terminates his employment
other than for cause (as defined in the agreement) or if he dies or
becomes disabled under the terms of the agreement. "Cause" for purposes
of the agreements with Messrs. Loyd and Rhein includes (i) dishonesty by
such executive which results in substantial personal enrichment at the
expense of the Company or (ii) demonstratively willful repeated violations
of such executive's obligations under the employment agreements which are
intended to result in material injury to the Company. "Cause" for
purposes of the agreements with Messrs. Voss, Hillin and Nagle includes
(i) dishonesty by such executive which results in substantial personal
enrichment at the expense of the Company, (ii) such executive's willful
engagement in conduct which is materially injurious to the business or
reputation of the Company, or (iii) such executive's failure substantially
to perform his duties with the Company in a reasonably satisfactory
manner, in each case as determined in good faith by the affirmative vote
of at least two-thirds of the members of the Board. For purposes of the
employment agreements with Messrs. Loyd, Rhein, Voss, Hillin and Nagle, no
act or failure to act on the part of such executives shall be deemed
"willful" unless done or admitted to be done by such executive not in good
faith and without reasonable belief that his action or omission was in the
best interests of the Company.
The agreements provide that if any payment to one of the covered
officers will be subject to any excise tax under Code Section 4999, a
"gross-up" payment would be made to place the officer in the same net
after-tax position as would have been the case if no excise tax had been
payable. Based on their current compensation levels, the amount of income
which the officers could recognize under the agreements (together with any
other compensation payable by reason of a change of control) before
payment of an excise tax would be required and such a tax gross-up payment
would be payable by the Company would be approximately $1,876,000 in the
case of Mr. Loyd, $1,074,000 in the case of Mr. Rhein, $661,000 in the
case of Mr. Voss, $556,000 in the case of Mr. Hillin, and $553,000 in the
case of Mr. Nagle. The aggregate present value of the benefits payable
under the respective agreements in the event their provisions became
operative is approximately $2,527,000 in the case of Mr. Loyd, $818,000 in
the case of Mr. Rhein, $1,288,000 in the case of Mr. Voss, $919,000 in the
case of Mr. Hillin, and $1,079,000 in the case of Mr. Nagle, assuming that
such provisions became operative on April 1, 1996 and based solely on the
provisions of the agreements relating to payments respecting salary and
bonus. Provisions of the agreements relating to payments respecting other
benefits would increase the amounts payable. Based on these assumptions,
20% excise tax payments would be imposed under Code Section 4999 with
respect to the present value of all benefits payable by reason of a change
of control in excess of $544,000 in the case of Mr. Loyd, $213,000 in the
case of Mr. Rhein, $216,000 in the case of Mr. Voss, $148,000 in the case
of Mr. Hillin and $181,000 in the case of Mr. Nagle, and the Company would
be required to make gross-up payments so as to place the officers in the
same respective net after-tax positions as would have been the case if no
excise tax had been payable.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors
and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Directors, officers and
greater than ten percent shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no
other reports were required, during the fiscal year ended December 31,
1995 all reports required by Section 16(a) to be filed by its directors,
officers and greater than ten percent beneficial owners were filed on a
timely basis except that: Mr. Laqueur filed late one Form 4 with respect
to a single transaction.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has approved the Proposal which involves the
ratification of the Board's reappointment of Arthur Andersen LLP as the
independent public accountants for the Company for its fiscal year 1996.
The Board of Directors appointed Arthur Andersen LLP as independent
public accountants for the Company for its 1994 and 1995 fiscal years and
the stockholders voted to ratify and approve such appointments at the
Company's 1994 and 1995 Annual Meetings.
Representatives of Arthur Andersen LLP will attend the Annual
Meeting, will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
Board Recommendation
The Board recommends a vote FOR the approval of the Proposal.
STOCKHOLDER PROPOSALS
The date by which proposals of stockholders intended to be presented
at the 1997 Annual Meeting of Stockholders must be received by the Company
for inclusion in the Company's Proxy Statement and form of Proxy relating
to that meeting is November 25, 1996.
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
Management does not intend to bring any other matters before the
Annual Meeting nor does it know of any matters which other persons intend
to bring before the Annual Meeting. However, if any other matters
properly come before the Annual Meeting, the persons named in the
accompanying Proxy will be authorized to vote thereon pursuant to
discretionary authority.
This Proxy Statement is accompanied by a copy of the Company's
Annual Report with respect to the 1995 fiscal year.
=======================================================================
PROXY CARD
READING & BATES CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS -- MAY 14, 1996
The undersigned hereby appoints Paul B. Loyd, Jr., C. Kirk Rhein,
Jr. and T. W. Nagle, or any of them, as proxies and attorneys with several
powers of substitution, hereby revoking any prior Proxy, and hereby
authorizes any of them to represent the undersigned and to vote as
designated below all the shares of Common Stock and all of the shares of
Class A (Cumulative Convertible) Capital Stock of Reading & Bates
Corporation (the "Company") held of record by the undersigned on March 26,
1996 at the Annual Meeting of Stockholders to be held on May 14, 1996, or
any postponement or adjournment thereof.
The Board of Directors recommends a vote FOR:
1. Election of the following nominees as Class II directors for terms
expiring in 1999: Ted Kalborg, Macko A. E. Laqueur and J.W. McLean.
[] FOR [] WITHHOLD [] FOR, except
withhold from:____________
2. Approval and adoption of the Company's Proposal, as set forth in the
Proxy Statement:
[] FOR [] AGAINST [] ABSTAIN
3. In their discretion on any other matter that may properly come
before the meeting.
You may specify your votes by marking the appropriate boxes above. You
need not mark any boxes, however, if you wish to vote all items in
accordance with the Board of Directors' recommendations. If your votes
are not specified, your shares will be voted FOR the election of the
nominees for director and FOR the approval and adoption of the Proposal.
DATED: ____________________, 1996
_________________________________
(Signature)
(NOTE: in the case of a joint
ownership, each such owner should
sign. Executors, Administrators,
guardians, trustees, etc. should add
their title as such, and where more
than one executor, etc. is named, a
majority must sign. If the signer is
a corporation, please sign the full
corporation name by a duly authorized
officer.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
IN THE ENCLOSED ENVELOPE
