SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
PRIDE PETROLEUM SERVICES, INC.
(Name of Registrant as Specified in Its Charter)
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or 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 transactions 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:
____________________________________________________________________
<PAGE>
PRIDE PETROLEUM SERVICES, INC.
------------
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1995
The Annual Meeting of Shareholders of Common Stock of Pride Petroleum
Services, Inc. (the "Company") will be held at the Westchase Hilton, 9999
Westheimer, Houston, Texas 77042 on Tuesday, May 16, 1995, at 1:30 p.m., Central
Daylight Time, for the following purposes:
(1) To approve an amendment to the Company's Long-Term Incentive Plan to
(i) increase the number of shares available for stock options and other
awards from 9% to 13% of outstanding shares and (ii) make certain changes to
conform with Section 162(m) of the Internal Revenue Code.
(2) To ratify the selection of Coopers & Lybrand L.L.P. as the
Company's independent accountants for 1995.
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Enclosed herewith is a Proxy Statement setting forth information with
respect to the above issues and certain other information.
Only shareholders holding shares of Common Stock of record at the close of
business on March 31, 1995, will be entitled to vote at the meeting.
Shareholders, whether or not they expect to be present at the meeting, are
requested to sign and date the enclosed proxy and return it promptly in the
envelope enclosed for that purpose. Any person giving a proxy has the power to
revoke it at any time, and shareholders who are present at the meeting may
withdraw their proxies and vote in person.
By Order of the Board of Directors
ROBERT W. RANDALL
Robert W. Randall, Secretary
April 10, 1995
Pride Petroleum Services, Inc.
1500 City West Boulevard, Suite 400
Houston, Texas 77042
<PAGE>
PRIDE PETROLEUM SERVICES, INC.
1500 CITY WEST BOULEVARD, SUITE 400
HOUSTON, TEXAS 77042
----------------
PROXY STATEMENT
FOR
1995 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the 1995 Annual Meeting of Shareholders of Pride Petroleum
Services, Inc. (the "Company") to be held on May 16, 1995, or at any adjournment
or adjournments thereof, at the time and place and for the purposes set forth in
the accompanying Notice of Annual Meeting of Shareholders. The principal
executive offices of the Company are located at 1500 City West Boulevard, Suite
400, Houston, Texas 77042.
The accompanying form of proxy is designed to permit each shareholder
entitled to vote at the Annual Meeting to vote for or against or to abstain from
voting on proposals 1 and 2 and in the discretion of the proxies with respect to
any other proposal brought before the Annual Meeting. When a shareholder's proxy
card specifies a choice with respect to a voting matter, the shares will be
voted accordingly. If no choice is specified, the shares represented thereby
will be voted FOR approval of the amendment of the Company's Long-Term Incentive
Plan and FOR the ratification of the appointment of Coopers & Lybrand L.L.P. as
the Company's independent public accountants.
The accompanying proxy is solicited on behalf of the Board of Directors of
the Company and is revocable at any time before it is exercised at the Annual
Meeting by written notice of termination given to the Secretary of the Company
or by filing with him a later dated proxy. All shares of the Company's Common
Stock, no par value, represented by properly executed and unrevoked proxies,
will be voted if said proxies are received in time for the meeting. Such proxies
and this Proxy Statement are being sent to shareholders on or about April 10,
1995.
The Company is a Louisiana corporation which was organized in 1988 as a
successor to a company incorporated in 1968. The Company was acquired by DEKALB
Energy Corporation in 1978 and was operated as a subsidiary until 1988, when
DEKALB effected a tax-free distribution of all the outstanding shares to the
DEKALB shareholders. As a result, Pride became an independent, publicly traded
company as of September 1, 1988.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors has established March 31, 1995 as the record date for
the determination of shareholders entitled to notice of and to vote at the
Annual Meeting. Only holders of Common Stock of record at the close of business
on the record date will be entitled to vote at the Annual Meeting. At the record
date, there were outstanding 24,227,652 shares of Common Stock. Each share of
Common Stock is entitled to one vote upon each matter to be voted on at the
meeting.
1
<PAGE>
COST AND METHOD OF PROXY SOLICITATION
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will supply banks, brokers, dealers and other
custodian nominees and fiduciaries with proxy materials to enable them to send a
copy of such material by mail to each beneficial owner of shares of the
Company's Common Stock which they hold of record and will, upon request,
reimburse them for their reasonable expenses in so doing.
INFORMATION CONCERNING DIRECTORS OF THE COMPANY
The Board of Directors of the Company consists of the five persons named in
the table below. The term of each director will continue until the annual
meeting of the shareholders of the Company in 1998. Set forth below for each
director is his present principal employment and his principal employment during
the past five years, the number of shares of Common Stock of the Company
beneficially owned as of March 31, 1995, the percentage of outstanding shares of
Common Stock that such number of shares represents, and the first year as a
director.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF OUTSTANDING SERVED
SHARES SHARES AS
BENEFICIALLY BENEFICIALLY DIRECTOR
NAME AND PRINCIPAL OCCUPATION AGE OWNED<F9> OWNED SINCE
--- ------------ ------------- --------
<S> <C> <C> <C> <C>
Ray H. Tolson<F1><F4>................ 60 680,000 2.8% 1988
Chairman, President and Chief
Executive Officer of the Company
James B. Clement<F1><F2><F3><F5>..... 49 6,500 * 1993
President, and Chief Executive
Officer and Director of Offshore
Logistics, Inc.
Jorge E. Estrada M.<F6>.............. 47 780,000 3.2% 1993
Vice President, Business
Development
Pride International, Ltd.
Thomas H. Roberts, Jr.<F2><F3><F7>... 70 336,313 1.4% 1988
Vice Chairman of the Executive
Committee of DEKALB Energy Company
James T. Sneed<F1><F2><F3><F8>....... 63 14,500 * 1992
Retired from Mobil Corporation
- - ------------
<FN>
* Less than 1%.
<F1>Member of Executive Committee. The Executive Committee may exercise all
power and authority of the Board of Directors subject to certain
limitations. The Executive Committee held two meetings during 1994.
<F2>Member of the Audit Committee. The Audit Committee has the power to oversee
the retention, performance and compensation of the independent public
accountants for the Company, and the establishment and oversight of such
systems of internal accounting and auditing control as it deems appropriate.
The Audit Committee held one meeting during 1994.
<F3>Member of the Compensation Committee. The Compensation Committee reviews,
recommends and approves employment agreements, salaries, incentive plans,
stock options and employee benefit plans for officers and key employees. The
Compensation Committee held two meetings during 1994.
<F4>Ray H. Tolson was elected Chairman of the Board in December 1993. He has
served as a director since August 1988 and as President and Chief Executive
Officer of the Company and its predecessor since 1975. The aggregate amount
of Common Stock beneficially owned by
2
Mr. Tolson includes 631,000 shares issuable upon exercise of employee stock
options that are exercisable within 60 days as follows: 343,750 with an
exercise price of $2.25 per share, 56,250 with an exercise price of $5.125
per share, 31,000 with an exercise price of $4.75 per share, and 200,000
with an exercise price of $5.25 per share.
<F5>James B. Clement was elected as a director of the Company in November 1993.
He is President and Chief Executive Officer and a director of Offshore
Logistics, Inc. The Common Stock beneficially owned by Mr. Clement consists
of shares issuable upon exercise of options that are exercisable within 60
days granted pursuant to the 1993 Directors' Stock Option Plan as follows:
5,000 with an exercise price of $6.75 per share and 1,500 with an exercise
price of $5.00 per share.
<F6>Jorge E. Estrada M. has been a director of the Company since October 1993.
From August 1993 to October 1994, he served as President of Pride Petrotech
S.A.M.P.I.C., the Company's Argentine subsidiary. In October 1994 he assumed
the role of Vice President, Business Development, Pride International, Ltd.
Mr. Estrada is also President and Chief Executive Officer of JEMPSA Media &
Entertainment, a company which he started that specializes in the Spanish
and Latin American entertainment industry, and serves as a director for
Production Operators, Inc. and the drilling and production services division
of The John Wood Group, PLC. Previously, Mr. Estrada was President --
Worldwide Drilling Division of Geosource, and Vice President of Geosource
Exploration Division -- Latin America. The aggregate amount of Common Stock
beneficially owned by Mr. Estrada includes (i) 300,000 shares issuable upon
exercise of stock purchase warrants, (ii) 160,000 shares that he has a
contingent right to receive based on certain performance criteria standards
being achieved by Pride Petrotech S.A.M.P.I.C. over a three-year period, and
(iii) 200,000 shares issuable upon exercise of additional stock purchase
warrants that he has a contingent right to receive based on the
aforementioned performance criteria. Of these warrants, 50% are exercisable
at $6.25 per warrant, and the other 50% are exercisable at $7.25 per
warrant.
<F7>Thomas H. Roberts, Jr. has served as a director of the Company since 1988.
He currently is Vice Chairman of the Executive Committee of DEKALB Energy
Company and is a director of IMC Fertilizer Group, Inc. The aggregate amount
of Common Stock beneficially owned by Mr. Roberts consists of shares
issuable upon exercise of options that are exercisable within 60 days
granted pursuant to the 1993 Directors' Stock Option Plan as follows: 10,000
with an exercise price of $4.25 per share and 1,500 with an exercise price
of $5.00 per share.
<F8>James T. Sneed has served as a director of the Company since October 1992.
Presently he is retired. He joined Mobil Oil Corporation ("Mobil") in August
1954 as an Engineer. Mr. Sneed held a variety of domestic and international
management positions with Mobil. Mr. Sneed's last two assignments were as
Exploration and Production Manager for the West Coast, Rocky Mountains,
Midwest and Oklahoma from 1983 until 1988, and Production Manager USA from
1988 until September 1991. The Common Stock beneficially owned by Mr. Sneed
consists of shares issuable upon exercise of options that are exercisable
within 60 days granted pursuant to the 1993 Directors' Stock Option Plan as
follows: 10,000 with an exercise price of $4.25 per share and 1,500 with an
exercise price of $5.00 per share.
<F9>Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to all shares listed.
</FN>
</TABLE>
3
The Board of Directors of the Company held four meetings during 1994. Each
director attended at least 75% of the aggregate of the total number of meetings
of the Board of Directors and the total number of meetings held by all
Committees of the Board on which he served. During 1994, Mr. William French, a
board member since 1993, resigned his position on the Board citing work
commitments that would limit his ability to attend meetings. Mr. French
forfeited his options to purchase 13,000 shares of the Common Stock of the
Company. At this time the Company has no plans to replace Mr. French. The
Company has no nominating committee.
Based upon a review of Forms 3 and 4 and amendments thereto furnished to the
Company during its most recent fiscal year and Form 5 and amendments thereto
furnished to the Company with respect to its most recent fiscal year and any
written representations furnished to the Company by any person subject to the
requirements of Section 16(a) of the Exchange Act, the Company is not aware of
any failure by any such person to comply with the requirements of Section 16(a)
of the Exchange Act.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid $6,000 annually,
plus $500 per day for attending meetings of the Board of Directors, meetings of
the committees of the Board of Directors or other meetings at the request of the
Company, plus expenses for attending meetings.
In addition to the cash compensation described above, each director who is
not an employee of the Company is entitled to receive stock options in
accordance with the provisions of the Company's 1993 Directors' Stock Option
Plan. A maximum of 200,000 shares of the Company's Common Stock are available
for purchase upon exercise of options granted pursuant to the plan. Under the
terms of the plan, each eligible director automatically receives an initial
option of 10,000 shares upon becoming a director and, as long as the director
remains eligible, automatically receives an additional option grant for 3,000
shares on the date of each annual meeting of shareholders of the Company
following the calendar year in which such Director receives the initial grant.
Persons who were eligible directors on the date the plan was adopted received
their initial option grants for 10,000 shares each at that time. The exercise
price of options is the fair market value per share on the date the option is
granted. Options expire ten years from the date of grant. Each option becomes
exercisable as to 50% of the shares covered at the end of one year from the date
of grant and the remaining 50% at the end of two years from the date of grant.
Provision is made in the plan for adjustments of options in cases of mergers,
stock splits and similar capital reorganizations and for immediate vesting in
the case of a change in control of the Company. Messrs. Clement, Roberts, and
Sneed have each been granted options to purchase 13,000 shares under the plan.
4
CERTAIN SHAREHOLDERS
The following table sets forth certain information as of March 31, 1995
(unless otherwise noted), with respect to the beneficial ownership of the
Company's Common Stock (i) by each shareholder of the Company who is known by
the Company to be a beneficial owner of more than 5% of the Company's Common
Stock and (ii) to the extent not set forth under "Information Concerning
Directors of the Company," by the executive officers of the Company named under
"Compensation of Executive Officers." Unless otherwise indicated, all such stock
is owned directly, and the indicated person or entity has sole voting and
investment power.
NAME AND ADDRESS PERCENTAGE
OF OWNER BENEFICIAL OWNERSHIP OF CLASS
---------------- -------------------- -----------
The Travelers, Inc.(1)............... 2,242,000 9.3%
65 East 55th Street
New York, NY 10022
Paul A. Bragg........................ 267,000(2) 1.1%
Dexter R. Polk....................... 241,000(2) *
James W. Allen....................... 221,000(2) *
Robert W. Randall.................... 85,000(2) *
All executive officers and directors 2,631,313(2) 10.9%
as a group (9 persons).............
- - ------------
* Less than 1%
(1) Such company has filed a Schedule 13G under the Exchange Act, which
indicates that as of February 13, 1995 it owned such shares and held sole
voting and investment power with respect to all of such shares.
(2) The Common Stock shown as beneficially owned by Messrs. Bragg, Polk, Allen,
and Randall and all executive officers and directors as a group includes
236,000 shares, 240,000 shares, 221,000 shares, 85,000 shares, and 2,102,500
shares, respectively, issuable upon exercise of stock options exercisable
within 60 days and as contingent shares and warrants (see Note 6 on page 3).
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table discloses compensation for the fiscal years ended
December 31, 1994, 1993 and 1992, for (i) the Chief Executive Officer and (ii)
the four other most highly compensated executive officers of the Company (the
"Named Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($)** ($) ($)*** (#) ($)****
------------------ ----- --------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Ray H. Tolson........................ 1994 203,281 289,011 24,950 200,000 250
Chairman, President 1993 170,874 95,961 24,800 31,000 250
and Chief Executive 1992 171,996 0 24,205 0 267
Officer
Dexter R. Polk....................... 1994 132,801 95,822 N/A 65,000 250
Sr. Vice President, 1993 124,053 41,645 N/A 20,000 250
Domestic Operations 1992 124,156 0 N/A 0 267
Paul A. Bragg*....................... 1994 130,195 92,926 N/A 150,000 250
Vice President, 1993 54,015 31,650 N/A 71,000 0
Chief Financial Officer 1992 N/A N/A N/A N/A N/A
and Treasurer
James W. Allen*...................... 1994 122,547 73,331 N/A 150,000 250
Sr. Vice President 1993 102,567 41,054 N/A 71,000 0
International Operations 1992 N/A N/A N/A N/A N/A
Robert W. Randall.................... 1994 109,471 58,411 N/A 50,000 250
Vice President, 1993 105,333 20,264 N/A 35,000 250
General Counsel and 1992 105,315 0 N/A 0 267
Secretary
- - ---------------
<FN>
* Mr. Bragg was hired in July 1993 and Mr. Allen was hired in January 1993.
** Includes salary deferrals deposited into the Company's 401(k) plan and the
Restoration Plan.
*** Consists of lease of airplane to the Company.
**** Represents Company matching contributions to the 401(k) plan.
</FN>
</TABLE>
6
<PAGE>
OPTION GRANTS, EXERCISE AND VALUATION
During 1994, options were granted to the Named Officers under the Company's
Long-Term Incentive Plan as shown in the first table below. During 1994, none of
the Named Officers exercised any options to purchase the Company's Common Stock.
Shown in the second table below is information with respect to unexercised
options held at December 31, 1994 (all of which were exercisable).
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS GRANT DATE
OPTIONS GRANTED TO EXERCISE PRESENT
GRANTED<F1> EMPLOYEES IN FISCAL PRICE EXPIRATION VALUE<F2>
NAME (#) YEAR ($/SH) DATE ($)
------------ ----------- ------------------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Ray H. Tolson........................ 200,000 25.5% $5.25 2004 $623,620
Dexter R. Polk....................... 65,000 8.3% $5.25 2004 $202,677
Paul A. Bragg........................ 150,000 19.1% $5.25 2004 $467,715
James W. Allen....................... 150,000 19.1% $5.25 2004 $467,715
Robert W. Randall.................... 50,000 6.4% $5.25 2004 $155,905
- - ------------
<FN>
<F1>Each option becomes exercisable six months after grant date and permits tax
withholding to be paid by the withholding of shares of Common Stock issuable
upon exercise of the option.
<F2>Present value was calculated using Black-Scholes option pricing model which
involves an extrapolation of future price levels based solely on past
performance. Calculations were made using the following assumptions: time of
exercise at the end of the ten year option term, interest rate of 7.25%, no
annual dividend yield, volatility of 30%. Use of this model should not be
viewed as a forecast of the future performance of the Company's stock which
will be determined by future events and unknown factors.
</FN>
</TABLE>
AGGREGATED FISCAL YEAR-END OPTION VALUE
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NAME FISCAL YEAR END(1)# FISCAL YEAR-END(2)$
---- --------------------- --------------------
Ray H. Tolson................... 631,000 Exercisable $953,063 Exercisable
Dexter R. Polk.................. 240,000 Exercisable $348,750 Exercisable
Paul A. Bragg................... 221,000 Exercisable $ 15,000 Exercisable
James W. Allen.................. 221,000 Exercisable $ 2,500 Exercisable
Robert W. Randall............... 85,000 Exercisable $ 5,000 Exercisable
- - ------------
(1) Number of options shown include all options (both in and out of the money)
at December 31, 1994.
(2) Value reflects those options in-the-money at December 31, 1994, based on a
closing price of $5.00 per share.
7
EMPLOYMENT AGREEMENTS
The Company has entered into written employment agreements with Messrs.
Tolson, Bragg, Polk and Allen. Each employment agreement provides for a two-year
term ending July 31, 1996 with automatic renewals for successive one-year terms
until either party terminates the contract effective upon an anniversary date,
with one year's advance notice. The contract provides for 1995 base salaries of
$250,000 (Mr. Tolson), $145,000 (Mr. Bragg), $143,500 (Mr. Polk) and $140,000
(Mr. Allen). The agreement provides that if the executive is terminated
involuntarily for reasons not associated with change in control and not due to
cause (as defined), the executive will receive one full year (two full years for
Mr. Tolson) of base salary (not less than the highest annual base during the
preceding three years); one year (two years for Mr. Tolson) of life, health,
accident and disability insurance benefits for himself and dependents; and an
amount equal to the target award (two times the target award for Mr. Tolson) for
the Company's annual bonus plan. For 1995, the Compensation Committee has set
the target award for Messrs. Tolson, Bragg, Polk and Allen at $250,000, $72,500,
$71,750, and $70,000, respectively. The agreements treat death, disability,
certain constructive terminations of an executive or the Company's failure to
renew an agreement at the end of its term as an involuntary termination of the
executive.
The agreement also provides for compensation due to involuntary termination
following a Change in Control. Change in Control is defined to include the
acquisition by a person of 20% or more of the Company's voting power, certain
changes in a majority of the Board of Directors, a merger resulting in existing
shareholders having less than 50% of voting power in surviving company and sale
or liquidation of the Company. In the case of Mr. Tolson, his involuntary
removal from the Board of Directors or his failure to be reelected to the Board
of Directors would also constitute a Change in Control. In the event of a Change
in Control, the term of the agreements will be extended for a period of two
years (three years in the case of Mr. Tolson) from the date of the Change in
Control. In the event of a termination during the extended term of the agreement
(including certain voluntary resignations by the executive), the executive will
be entitled to receive salary and benefits equal to two full years of
compensation (three full years in the case of Mr. Tolson), bonus equal to two
times (three times for Mr. Tolson) the maximum award for the year of
termination, and life, health and accident and disability insurance continued
for two years (three years for Mr. Tolson) or until reemployment. The agreements
also provide that the Company shall reimburse the executive for certain taxes
incurred by the executive as a result of payments following a Change in Control.
In addition, each executive's contract provides a noncompete clause for one
year after termination (voluntary or involuntary) assuming that it was not due
to a change in control. In the event of Change in Control, the noncompete clause
is void.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") consists of three outside
directors, Messrs. Clement, Roberts and Sneed, and meets semi-annually to
review, recommend and approve employment agreements, salaries, incentive plans,
stock options and employee benefit plans for officers and key employees. During
1994, this Committee hired J.E. Stone & Associates, Inc. to provide
recommendations regarding executive compensation. The goal of the study was to
determine the fairness of the existing compensation structure when compared to
other executives in the oilfield services industry, keeping with the underlying
objective to tie executive compensation closely to the financial performance of
the Company. The recommendation of the study was the basis of the 1994 executive
compensation.
Under the adopted plan the base salary for the executive officers and other
key employees is established to position the individual between the twenty-fifth
percentile and the median salary level for the executive's peers in the oilfield
service sector. Historically, the Company paid below these levels, so each of
the named executives received base salary increases effective August 1, 1994.
As a
8
result of the new standard, Mr. Tolson's base salary was increased from $170,000
to $250,000 annually. As described above under "Employment Agreements," the
Company has entered into employment agreements with Messrs. Tolson, Bragg, Polk
and Allen providing for these salary increases. The full impact of the increases
will not be reflected in the summary compensation table until 1995.
The second component of the plan is the annual incentive compensation plan
which has been amended to provide the executive with the opportunity to reach
the seventy-fifth percentile compensation level as compared with his peers when
the Company attains outstanding financial performance in terms of earnings per
share ("EPS") as measured against the annual profit plan adopted at the start of
the year by the Committee and the Board of Directors. The annual profit plan
process involves each unit submitting its expectations for the year to the
Board. The incentive compensation award is earned 25% at the threshold level,
which equals 80% of the target profit plan. The next 25% of the award is earned
equally between the threshold level and the target profit plan, while the final
50% is earned equally between target profit plan and the maximum level, which
equals 120% of target profit plan. For Messrs. Allen and Polk, their annual
incentive is based 60% on their areas of direct responsibility and 40% on
Company EPS while the incentives for Messrs. Tolson, Bragg and Randall are based
100% on Company EPS. For 1994, the Company achieved EPS of $.30, exceeding the
profit plan target EPS of $.27, resulting in incentive awards of 71%. For Mr.
Tolson, this resulted in a bonus of $289,011.
The final component of the Executive Compensation Plan is the Company's
Long-Term Incentive Plan ("Incentive Plan"), whereby the Committee can grant
stock options in an effort to provide long-term incentives to executives. The
Committee grants key employees, including the named officers, awards under the
Incentive Plan, which provides the flexibility to grant longer term incentives
in the form of stock options. The Committee currently views stock options as the
best long-term incentive vehicles to ally the interests of management and
shareholders. In awarding stock options, the Committee reviews and approves
individual recommendations made by the Chief Executive Officer ("CEO"). The
Committee in turn determines the award for the CEO.
Factors used in determining individual award size are competitive practice
(awards needed to attract and retain management talent), rank within the Company
(internal equity), responsibility for asset management (size of job) and ability
to affect profitability. In each individual case, previous option and
performance unit grants are considered in determining the size of new awards.
Taking into account these factors the Committee makes a subjective determination
as to the level of the award.
Section 162(m) of the Internal Revenue Code (the "Code") denies a
compensation deduction for federal income tax purposes for certain compensation
in excess of $1 million paid to specified individuals. "Performance based"
compensation meeting specified standards is deductible without regard to the $1
million cap. The Company believes that options granted under the Incentive Plan
currently meet the requirements for "performance based" compensation.
The Committee believes its practices are fair and equitable for both its
executive officers as well as for the shareholders of the Company.
Compensation Committee
James B. Clement
Thomas H. Roberts, Jr.
James T. Sneed
9
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly change in the Company's
Common Stock against the S&P 500 Index, Pool Energy Services Company, and the
SCI Production/Well Service Group Index ("Peer Group") provided by Simmons &
Company International (which includes BJ Services, ICO, Key Energy Group, Nowsco
Well Service, Petrolite, Pool Energy Services Company, Production Operators,
Service Fracturing, Corrpro, Tuboscope Vetco and Western Company of North
America) for the last five years. Pool Energy Services Company is indicated on
the graph to signify how a company with similar services as the Company has
traded over time and as a representative peer comparison.
(LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW)
1989 1990 1991 1992 1993 1994
---- ---- ----- ----- ----- -----
Pride ................ 100 88.2 64.7 60.8 80.4 78.4
*Pool ................. 100 88.6 55.7 58.0 69.3 61.4
S&P 500 .............. 100 96.9 126.4 136.1 149.8 151.7
Peer Group ........... 100 89.8 84.4 78.5 98.5 92.3
*Commenced trading in April 1990.
10
AMENDMENT TO LONG-TERM INCENTIVE PLAN
INTRODUCTION
In 1988, the Company and its sole shareholder adopted and approved the Pride
Petroleum Services, Inc. Long-Term Incentive Plan (the "Incentive Plan"). The
Incentive Plan is intended to advance the interest of the Company, its
shareholders and its subsidiaries by attracting, retaining and stimulating the
performance of officers and other key employees and to give such individuals the
opportunity to acquire and retain a proprietary interest in the Company. The
Incentive Plan provides that it is administered by the Compensation Committee
(the "Committee"), which may grant or award to eligible officers and other key
employees stock options ("Options"), restricted stock ("Restricted Stock"),
stock appreciation rights ("SARs") and stock indemnification rights ("SIRs")
under the Incentive Plan, may determine the number of shares of Common Stock to
be subject to each Option, SAR, SIR or Restricted Stock award and has the
authority to make all other determinations necessary or advisable in the
administration of the Incentive Plan. Each grant of an Option, SAR or SIR and
each award of Restricted Stock under the Incentive Plan shall be on such terms
and provisions consistent with the Incentive Plan as the Committee may
determine. As of March 31, 1995, approximately 30 persons held awards under the
Incentive Plan.
As adopted in 1988, the maximum number of shares of the Company Common Stock
authorized and reserved for issuance under the Incentive Plan is equal to the
greater of 1,000,000 shares or 9% of the total shares of Common Stock
outstanding from time to time, subject to adjustment in the event of certain
changes in the Company's corporate structure or capital stock. If an Option or
SAR terminates for any reason without being wholly exercised or if Restricted
Stock is forfeited for any reason, the number of shares subject to such Option
or SAR and not purchased pursuant to such Option or SAR or the number of shares
of such forfeited Restricted Stock shall become available for future grants
under the Incentive Plan. As of March 31, 1995, the last reported price of the
Common Stock on the NASDAQ NMS was $6 7/8 per share.
As of February 28, 1995, the Company had 24,027,652 shares of Common Stock
outstanding, so that the total number of shares subject to the Incentive Plan
was 2,162,488 shares. At such date, a total of 193,600 shares had been
previously issued under the Incentive Plan and Options to purchase an additional
1,936,350 shares were outstanding, leaving only 32,538 shares available for
awards. The Board of Directors has approved an amendment to the Incentive Plan
that would (i) increase the number of shares of Common Stock subject to the plan
from 9% to 13% of the total shares of Common Stock outstanding and (ii) in order
to satisfy certain provisions of Section 162(m) of the Code, provide that no
optionee may be granted Options to purchase more than 1,000,000 shares during
the life of the Incentive Plan. The Company believes the amendment will enable
the Incentive Plan to continue to advance the interests of the Company and its
shareholders by providing deferred stock incentives to key employees.
On March 29,1995, the Compensation Committee granted, subject to shareholder
approval of the proposed amendment, non-qualified options to purchase a total of
483,000 shares of Common Stock to 12 employees. The options have an exercise
price of $6 7/8 per share and become exercisable in full six months after the
grant date. The following table sets forth the number of options granted to each
of the Named Officers:
11
NUMBER OF SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION OPTIONS GRANTED
--------------------------- -------------------------------
Ray H. Tolson.................................. 100,000
Chairman, President and Chief
Executive Officer
Dexter R. Polk................................. 60,000
Sr. Vice President, Domestic
Operations
Paul A. Bragg.................................. 79,000
Vice President, Chief Financial
Officer and Treasurer
James W. Allen................................. 79,000
Sr. Vice President, International
Operations
Robert W. Randall.............................. 25,000
Vice President, General Counsel and
Secretary
All executive officers as a group.............. 343,000
Except as set forth above, the amount and type of awards to be granted in
the future to the named officers, to all executive officers as a group and to
all other employees are not currently determinable. The Incentive Plan does not
permit the grant of awards to directors who are not employees.
Approval of the amendment to the Incentive Plan will require the affirmative
vote of a majority of the shares of Common Stock present or represented at the
Annual Meeting. Accordingly, abstentions and broker nonvotes applicable to
shares represented at the meeting will have the same effect as no votes. The
persons named on the accompanying proxy will vote in accordance with the choice
specified thereon, or, if no choice is properly indicated, in favor of the
approval of the amendment to the Incentive Plan. The Board of Directors
recommends a vote FOR such ratification.
OTHER PROVISIONS OF THE INCENTIVE PLAN
OPTIONS, SIRS AND SARS. The Incentive Plan provides for the granting of
Options through either incentive stock options as defined under Section 422 of
the Code ("ISOs") or non-qualified stock options.
The per share exercise price of Common Stock subject to Options will be
determined by the Committee, but such price shall not be less than the "Fair
Market Value" of a share of Common Stock, which is generally the last price per
share at which the Common Stock is sold regular way on NASDAQ on the day the
Option is granted, or, in the absence of any reported sales on such day, the
first preceding day on which there were such sales.
The Incentive Plan provides that the Committee may grant an SAR with respect
to an Option (concurrently with the grant of such Option or at a later time and
as to all or any portion of the shares subject to such Option) or alone. An SAR
is a right to receive, without payment to the Company, a number of shares of
Common Stock or cash or any combination thereof (as determined by the Committee)
having a value equal to the excess of the Fair Market Value of the shares of
Common Stock subject to the SAR on the exercise date over the strike price of
the SAR.
The term of each Option or SAR granted shall be determined by the Committee,
provided that (i) except as otherwise provided in the Incentive Plan, the
Committee may, in its discretion, terminate outstanding Options or SARs or
accelerate the exercise dates thereunder, upon 60 days written notice to the
participant, (ii) the period during which each ISO shall be exercised shall not
be later than ten years from the date such ISO is granted and (iii) the term of
each SAR shall not exceed ten years and one day from the date of grant.
Options and SARs may not be exercised unless and until the participant has
remained in the employ of the Company or its subsidiaries for six months (or
such longer term as may be established by the Committee) from the date of grant,
except in the case of the participant's death, retirement on or after his
sixty-fifth birthday or permanent and total disability of the participant within
such six-month period. If a participant dies at any time after his Option or SAR
is granted and while in the
12
employ of the Company or its subsidiaries or within 60 days after termination of
such employment, the executor or administrator of such participant's estate or a
permitted transferee shall have the right, for a one-year period after the date
of the participant's death, to exercise the Option or SAR, subject to the
provisions described in the preceding paragraph. If a participant dies within 60
days after the date of termination of his employment, the Option or SAR may be
exercised within such period only to the extent it was exercisable at the
termination of employment and not exercised. If a participant retires on or
after his sixty-fifth birthday or becomes permanently and totally disabled at
any time after an Option or SAR is granted, the participant shall have the
right, during the one-year period after such retirement or disability, to
exercise the Option or SAR, subject to the provisions described in the preceding
paragraph.
If, on or after six months from the date of grant of an Option or SAR (or
such longer time as may be established by the Committee), the participant's
employment is terminated for any reason other than death, retirement on or after
his sixty-fifth birthday, permanent and total disability or serious misconduct,
the participant shall have the right, during the 60-day period after such
termination, to exercise the Option or SAR to the extent it was exercisable and
not exercised prior to the date of such termination. If a participant's
employment with the Company or its subsidiaries is terminated for serious
misconduct (including, but not limited to, embezzlement or misappropriation of
corporate funds, other acts of dishonesty, significant activities harmful to the
reputation of the Company or its subsidiaries, a significant violation of
Company or subsidiary policy, willful refusal to perform, or substantial
disregard of, the duties properly assigned to the participant, or a significant
violation of any contractual, statutory or common law duty of loyalty to the
Company or its subsidiaries), the right to exercise the Option or SAR shall
immediately terminate and all rights thereunder shall cease.
The Incentive Plan provides that a participant, whether or not his Options
are exercisable, shall, in the sole discretion of the Committee (determined
either at the date of grant of an Option or thereafter), be entitled to receive
a cash payment from the Company, as and when cash dividends are payable to
holders of Common Stock, in an amount equal to the cash dividend which would be
paid to such participant in respect of all shares subject to such Options were
such participant the holder of such shares on the record date for such cash
dividend.
The Incentive Plan provides that the Committee may grant SIRs to
participants in the Incentive Plan who, upon exercise of a related Option, would
acquire shares of Common Stock which are subject to a holding period restriction
that (by operation of securities laws, contractual provisions or other
limitations, including internal Company policies) prevents the participants from
selling such shares during a holding period or selling such shares and retaining
a profit during the six months following the Option exercise. The term of an SIR
shall begin on the date the related Option is exercised and shall end either six
months from the date of exercise or upon the expiration of the longest
applicable holding period restriction, whichever is applicable. The Incentive
Plan provides that if an SIR is granted, the Company shall, at the later of the
end of the term of the SIR or the date the participant transfers the shares of
Common Stock subject to the SIR to a nonaffiliate (but in no event more than
five years after the related Option was exercised), pay to the holder of the SIR
cash in an amount equal to the product of (i) the decline, if any, in the Fair
Market Value of Common Stock during the term of the SIR minus the gain, if any,
in the Fair Market Value of Common Stock that occurred subsequent to the
expiration of such term and prior to the date of the transfer of the shares
subject to the SIR (but in no event more than five years after the related
Option was exercised), and (ii) the number of shares acquired through the
exercise of the related Option which were transferred. Options, SARs and SIRs
are not transferable except by will or the laws of descent and distribution.
RESTRICTED STOCK
The Incentive Plan provides that the Committee may grant awards of shares of
Restricted Stock in such amounts and on such terms and conditions as it may
determine. In addition to the restrictions
13
on transfer described below, the Committee may impose other restrictions on
shares of Restricted Stock, including restrictions under federal and state
securities laws and under the requirements of any stock exchange or association
on which the Common Stock is then listed.
Shares of Restricted Stock may not be sold, transferred, pledged, assigned
or otherwise alienated or hypothecated for such period of time, not exceeding
ten years, as the Committee shall determine (the "Restricted Period"), subject
to earlier satisfaction of other conditions as specified by the Committee. If
the holder of Restricted Stock retires on or after his sixty-fifth birthday or
if the holder's employment terminates during the Restricted Period because of
his death or permanent and total disability, the Restricted Period shall lapse
and, except for any other restrictions imposed on the Restricted Stock by the
Committee, the shares of Restricted Stock shall be free of restrictions and
freely transferable. If a holder of Restricted Stock terminates his employment
during the Restricted Period for any reason other than as described in the
preceding sentence, any shares of Restricted Stock subject to restrictions at
the date of such termination shall be forfeited and returned to the Company. If
a holder of Restricted Stock is involuntarily terminated by the Company other
than for serious misconduct, the Committee may waive the automatic forfeiture of
any or all shares of Restricted Stock.
GENERAL
The Board of Directors may amend, modify or terminate the Incentive Plan,
provided that no such amendment, modification or termination may be made without
the approval of the shareholders of the Company that (i) increases the total
number of shares of Common Stock subject to the Incentive Plan (except as
provided by certain terms of the Incentive Plan), (ii) changes the manner of
determining the Option or SAR price, (iii) withdraws the administration of the
Incentive Plan from the Committee or the Board of Directors, (iv) extends the
maximum period or reduces the minimum period during which Options or SARs may be
exercised or the maximum Restricted Period, or (v) changes the class of persons
who may become participants in the Incentive Plan. Further, no amendment,
modification or termination of the Incentive Plan may affect any Option, SAR or
SIR theretofore granted or Restricted Stock theretofore awarded without the
consent of the affected participant.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion of tax considerations relating to options describes
only certain U.S. federal income tax matters relating to Options. The discussion
is general in nature and does not take into account a number of considerations
which may apply in light of the particular circumstance of an optionee.
Some of the Options granted under the Incentive Plan may constitute
"incentive stock options" within the meaning of Section 422 of the Code, while
other options granted under the Incentive Plan will be non-qualified stock
options. The Code provides for tax treatment of stock options qualifying as
incentive stock options that may be more favorable to employees than the tax
treatment accorded non-qualified stock options. Generally, upon the exercise of
an incentive stock option, the optionee will recognize no income for U.S federal
income tax purposes. The difference between the exercise price of the incentive
stock option and the fair market value of the stock at the time of exercise is
an item of tax preference that may require payment of an alternative minimum
tax. On the sale of shares acquired by exercise of an incentive stock option
(assuming that the sale does not occur within two years of the date of grant of
the option or within one year from the date of exercise), any gain will be taxed
to the optionee as long-term capital gain. In contrast, upon the exercise of a
non-qualified option, the optionee recognizes taxable income (subject to
withholding) in an amount equal to the difference between the fair market value
of the shares on the date of exercise and the exercise price. Upon any sale of
such shares by the optionee, any difference between the sale price and the fair
market value of the shares on the date of exercise of the non-qualified option
will be treated generally
14
as capital gain or loss. No deduction is available to the employer corporation
upon the grant or exercise of an incentive stock option (although a deduction
may be available if the employee sells the shares so purchased before the
applicable holding period expires), whereas upon exercise of a non-qualified
stock option, the employer corporation is entitled to a deduction in an amount
equal to the income recognized by the employee. Except with respect to death, an
optionee has three months after termination of employment in which to exercise
an incentive stock option and retain favorable tax treatment at exercise. An
option exercised more than three months after an optionee's termination of
employment other than upon death cannot qualify for the tax treatment accorded
incentive stock options. Such option would be treated as a non-qualified stock
option instead. Based on the provisions of the Incentive Plan, the Company
expects that the Incentive Plan will comply with the requirements of Section
162(m) of the Code, provided that the grant is made by a qualified compensation
committee.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand L.L.P. have been selected by the directors as Independent
Public Accountants for the Company and its subsidiaries for the year ending
December 31, 1995. This selection is being presented to the shareholders for
ratification. Representatives of Coopers & Lybrand L.L.P. are expected to be
present at the Annual Meeting and will be provided an opportunity to make
comments with respect to the Company's financial statements and to respond to
appropriate inquiries from shareholders.
Ratification of the Board of Directors' selection of Coopers & Lybrand
L.L.P. will require the affirmative vote of the holders of a majority of the
number of shares of Common Stock eligible to vote that are present in person or
by proxy at the Annual Meeting. Because abstentions and broker nonvotes will be
considered in the determination of the number of shares present in person or by
proxy at the Annual Meeting, abstentions and broker nonvotes will have the same
effect as a vote against ratification. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" SUCH RATIFICATION.
In the event the shareholders fail to ratify the appointment of Coopers &
Lybrand L.L.P. as the Company's independent auditors, it is not anticipated that
Coopers & Lybrand L.L.P. would be replaced in 1995. Such lack of approval would,
however, be considered by the Audit Committee in selecting the Company's
independent auditors for 1996.
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR THE 1996 ANNUAL MEETING
Shareholder proposals submitted for presentation at the Annual Meeting of
Shareholders of the Company following the completion of fiscal year 1995 must be
received by the Company no later than December 29, 1995. It is suggested that
proponents submit their proposals by certified mail, return receipt requested.
Detailed information for submitting resolutions will be provided upon written
request to the Secretary of the Company. No shareholder proposals have been
received for inclusion in this Proxy Statement.
15
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the Annual Meeting any
matters other than those disclosed in the Notice of Annual Meeting of
Shareholders, and it does not know of any business which persons, other than
management, intend to present at the meeting. Should any other matters requiring
a vote of the shareholders arise, the proxies in the enclosed form confer upon
the person or persons entitled to vote the shares represented by such proxies
discretionary authority to vote the same in respect of any such other matter in
accordance with their best judgment. Copies of the Company's Annual Report on
Form 10-K for the year ended December 31, 1994, as filed with the Securities
Exchange Commission are available without charge to shareholders upon request to
Paul A. Bragg, Chief Financial Officer, Pride Petroleum Services, Inc., 1500
City West Blvd., Suite 400, Houston, Texas 77042.
By Order of the Board of Directors
ROBERT W. RANDALL
Robert W. Randall, Secretary
16
<PAGE>
[FORM OF PROXY, FRONT SIDE]
PRIDE PETROLEUM SERVICES, INC.
PROXY- ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1995
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated April 10, 1995. Ray H. Tolson and Paul A.
Bragg, each with full power of substitution, and acting alone, are hereby
constituted proxies of the undersigned and authorized to attend the Annual
Meeting of Shareholders of Pride Petroleum Services, Inc., a Louisiana
corporation (the "Company"), to be held at the Westchase Hilton, 9999
Westheimer, Houston, Texas on May 16, 1995 at 1:30 p.m., Central Daylight Time,
or any adjournment of such meeting, and to represent and vote all shares of
Common Stock of the Company which the undersigned is entitled to vote:
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
For Against Abstain
(1) With respect to approval of an amendment to the [ ] [ ] [ ]
Company's Long-Term Incentive Plan to (i) increase
the number of shares available for stock options and
other awards from 9% to 13% of outstanding shares and
(ii) make certain changes to conform with Section
162(m) of the Internal Revenue Code.
(2) With respect to the ratification of the Board of [ ] [ ] [ ]
Directors' appointment of Coopers & Lybrand L.L.P.
independent public accountants, as the Company's
auditors for the year ending 1995.
(3) In their discretion upon any other business that may [ ] [ ] [ ]
properly come before the meeting or any adjournment
thereof.
(Continued, and to be signed, on the other side)
<PAGE>
[FORM OF PROXY, BACK SIDE]
This proxy is revocable. The undersigned hereby revokes any proxy or proxies
to vote or act with respect to such shares heretofore given by the undersigned.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS SPECIFIED ABOVE
AND, IN THE ABSENCE OF SUCH SPECIFICATIONS, WILL BE VOTED FOR PROPOSALS (1) AND
(2), AND, AS TO PROPOSAL (3), WILL BE VOTED IN THE DISCRETION OF THE PROXIES
NAMED HEREIN.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
DATED:_____________________________
___________________________________
(Signature)
___________________________________
(Signature if jointly held)
___________________________________
(Printed Name)
PLEASE SIGN EXACTLY AS YOUR STOCK IS
REGISTERED. JOINT OWNERS SHOULD EACH
SIGN PERSONALLY. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC.
SHOULD SO INDICATE WHEN SIGNING.
