[LOGO]
PRIDE PETROLEUM SERVICES, INC.
-------------------------
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
May 16, 1996
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 Thursday, May 16, 1996, at 1:30 p.m.,
Central Daylight Time, for the following purposes:
(1) To act on proposal to approve Employee Stock Purchase
Plan.
(2) To act on proposal to ratify the selection of Coopers &
Lybrand L.L.P. as the Company's independent accountants for 1996.
(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 19, 1996 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, SECRETARY
April 8, 1996
Pride Petroleum Services, Inc.
1500 City West Boulevard, Suite 400
Houston, Texas 77042
1
PRIDE PETROLEUM SERVICES, INC.
1500 CITY WEST BOULEVARD, SUITE 400
HOUSTON, TEXAS 77042
----------------------
PROXY STATEMENT
FOR
1996 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation
of proxies for use at the 1996 Annual Meeting of Shareholders of Pride Petroleum
Services, Inc. (the "Company") to be held on May 16, 1996, 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 Company's Employee Stock Purchase 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 4,
1996.
The Company is a Louisiana corporation which was organized in 1988 as a
successor to a company incorporated in 1968.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors has established March 19, 1996 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 24,833,656 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
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 six 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 19, 1996, 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 (10) OWNED SINCE
- ----------------------------- ---------- ------------------ ------------------ ----------
<S> <C> <C> <C> <C>
Ray H. Tolson (1)(4)................................... 61 815,200 3.3% 1988
Chairman, President and Chief Executive
Officer of the Company
James B. Clement (1)(2)(3)(5).......................... 50 14,500 * 1993
President, Chief Executive Officer and
Director of Offshore Logistics, Inc.
Jorge E. Estrada M. (6)................................ 48 410,000 1.7% 1993
President and Chief Executive Officer of
JEMPSA Media & Entertainment
Thomas H. Roberts, Jr. (2)(7).......................... 71 357,813 1.4% 1988
Vice Chairman of the Executive
Committee of DEKALB Energy Company
James T. Sneed (1)(3)(8)............................... 64 17,500 * 1992
Retired from Mobil Corporation
Ralph D. McBride(1)(2)(3)(9)......................... 49 1,000 * 1995
Partner at Bracewell & Patterson, L.L.P.
</TABLE>
- ----------------------
* Less than 1%.
(1) 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 one meeting during 1995.
(FOOTNOTES CONTINUED ON FOLLOWING PAGES)
2
(2) 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 1995.
(3) 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
1995.
(4) 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. On
March 22, 1995, in exchange for a 1981 Beechcraft Aircraft, Mr. Tolson
was issued 35,200 shares of Common Stock with a fair market value of
$220,000. The purchase price was determined by mutual agreement between
the Company and Mr. Tolson based on the purchase price paid by Mr.
Tolson. The aggregate amount of Common Stock beneficially owned by Mr.
Tolson includes 731,000 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,
200,000 with an exercise price of $5.25 per share, and 100,000 with an
exercise price of $6.875 per share.
(5) 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: 10,000 with an exercise price of $6.75
per share, 3,000 with an exercise price of $5.00 per share and 1,500
with an exercise price of $8.375 per share.
(6) Jorge E. Estrada M. has been a director of the Company since October
1993. For more than five years, he has been 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 served as
President--Worldwide Drilling Division of Geosource, and Vice President
of Geosource Exploration Division--Latin America. In April 1995, the
Company issued to Mr. Estrada 87,000 shares of Common Stock (with a
market value at the time of $435,000) pursuant to the earnout
provisions of an acquisition agreement entered into in 1993 prior to
Mr. Estrada's election as a director. In June 1995, the Company entered
into an agreement with Mr. Estrada pursuant to which it issued him
203,000 additional shares of Common Stock in exchange for his remaining
contingent right to receive up to 73,000 shares of Common Stock and his
exercise of warrants to acquire an additional 500,000 shares of Common
Stock on a net basis. The market value of the additional shares issued
was $1,624,000.
(7) Thomas H. Roberts, Jr. has served as a director of the Company since
1988. He 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, 3,000 with
an exercise price of $5.00 per share, and 1,500 with an exercise price
of $8.375 per share.
(8) 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
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
3
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, 3,000 with an
exercise price of $5.00 per share, and 1,500 with an exercise price of
$8.375 per share.
(9) Ralph D. McBride was elected director of the Company in September 1995.
He is a partner with Bracewell & Patterson, L.L.P., a Houston - based
law firm with offices in Houston, Dallas, Austin, Washington, D.C. and
London. He serves on the Board of Directors of Sunbelt National Bank,
is a Trustee of the Good Samaritan Foundation, and serves as a Board
Member of The Memorial Foundation.
(10) Unless otherwise indicated, the beneficial owner has sole voting and
investment power with respect to all shares listed.
The Board of Directors of the Company held four meetings during 1995.
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.
The Board of Directors does not have a standing 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 $12,000
annually, plus $1,000 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 16,000 shares under the plan.
4
CERTAIN SHAREHOLDERS
The following table sets forth certain information as of March 19, 1996
(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 OF OWNER BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS
- ------------------------- -------------------- -------------------
George D. Bjurman & Associates (3) ........ 2,200,599 8.9%
10100 Santa Monica Blvd., Suite 1200
Los Angeles, CA ......................... 90067
Travelers Group, Inc. (1) ................. 1,957,334 7.9%
388 Greenwich Street
New York, NY ............................ 10013
John Hancock Advisers, Inc. (2) ........... 1,371,300 5.5%
101 Huntington Avenue
Boston, MA .............................. 02199
Paul A. Bragg ............................. 346,000(4) 1.2%
James W. Allen ............................ 300,000(4) 1.2%
Robert W. Randall ......................... 110,000(4) *
James J. Byerlotzer ....................... 60,500(4) *
All executive officers and
directors as a group (10 persons) ...... 2,422,013(4) 9.6%
- ------------
* Less than 1%
(1) Such company has filed a Schedule 13G under the Exchange Act, which
indicates that as of January 25, 1996 it owned such shares and held
shared voting and investment power with respect to all of such shares.
(2) Such company has filed a Schedule 13G under the Exchange Act, which
indicates that as of January 24, 1996 it owned such shares and held sole
voting and investment power with respect to all of such shares.
(3) Such company has filed a Schedule 13F under the Exchange Act, which
indicates that as of December 31, 1995 it owned such shares and held sole
voting and investment power with respect to 2,000,699 of such shares.
(4) The Common Stock shown as beneficially owned by Messrs. Bragg, Allen,
Randall, Byerlotzer and all executive officers and directors as a group
includes 300,000 shares, 300,000 shares, 110,000 shares, 60,500 shares,
and 2,422,013 shares, respectively, issuable upon exercise of stock
options exercisable within 60 days and as contingent shares and warrants.
Mr. Bragg has 15,000 warrants issued prior to his employment with the
Company and owns 31,000 shares of the Company's stock.
5
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table discloses compensation for the fiscal years ended
December 31, 1995, 1994 and 1993, for (I) the Chief Executive Officer and (ii)
the four other most highly compensated executive officers of the Company (the
"Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------- ----------------------------
BONUS OTHER SECURITIES
($) ANNUAL UNDERLYING ALL OTHER
SALARY COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)** ($)*** (#) ($)****
- --------------------------- --------- ----------- -------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Ray H. Tolson............................. 1995 259,629 513,846 N/A 100,000 350
Chairman, President and 1994 203,281 289,011 24,950 200,000 250
Chief Executive Officer 1993 170,874 95,961 24,800 31,000 250
Paul A. Bragg*............................ 1995 150,756 149,131 N/A 79,000 350
Vice President, 1994 130,195 92,926 N/A 150,000 250
Chief Financial Officer 1993 54,015 31,650 N/A 71,000 N/A
James W. Allen*........................... 1995 145,041 97,052 N/A 79,000 350
Sr. Vice President, 1994 122,547 73,331 N/A 150,000 250
Operations 1993 102,567 41,054 N/A 71,000 0
James J. Byerlotzer....................... 1995 102,565 76,038 N/A 0 0
Vice President, 1994 99,384 21,045 N/A 10,000 0
Domestic Operations 1993 97,219 34,231 N/A 13,000 N/A
Robert W. Randall......................... 1995 119,028 88,240 N/A 25,000 350
Vice President, 1994 109,471 58,411 N/A 50,000 250
General Counsel and Secretary 1993 105,333 20,264 N/A 35,000 250
</TABLE>
- ------------
* 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.
*** Consists of lease of airplane to the Company.
**** Represents Company matching contributions to the 401(k) plan.
OPTION GRANTS, EXERCISE AND VALUATION
During 1995, options were granted to the Named Officers under the
Company's Long-Term Incentive Plan as shown in the first table below. Shown in
the second table below is information with respect to option exercises during
1995 and unexercised options held at December 31, 1995 (all of which were
exercisable).
6
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS EMPLOYEES EXERCISE PRESENT
GRANTED(1) IN FISCAL PRICE EXPIRATION VALUE(2)
NAME (#) YEAR ($/SH) DATE ($)
- ---- --------------- ----------------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C>
Ray H. Tolson............................ 100,000 21.1% $6.875 2005 $682,155
Paul A. Bragg............................. 79,000 16.7% $6.875 2005 $538,902
James W. Allen............................ 79,000 16.7% $6.875 2005 $538,902
Robert W. Randall......................... 25,000 5.3% $6.875 2005 $170,539
James J. Byerlotzer . . . . . . . . . . . . -- -- -- -- --
</TABLE>
- ------------
(1) Each option becomes exercisable six months after grant date and permits
tax withholding to be paid by the withholding of shares of Common Stock
issuable upon exercise of the option.
(2) Present value was calculated using Black-Scholes option pricing model
which involves an extrapolation of future price levels based solely on
past performance. Calculations were made using the following assumptions:
time of exercise at the end of the ten-year option term, interest rate of
6.45%, no annual dividend yield, volatility of 161%. Use of this model
should not be viewed as a forecast of the future performance of the
Company's stock which will be determined by future events and unknown
factors.
AGGREGATED FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SHARES SECURITIES VALUE OF
ACQUIRED UNDERLYING UNEXERCISED
ON VALUE UNEXERCISED IN-THE-MONEY
EXERCISE REALIZED OPTIONS AT OPTIONS AT
NAME (1)# ($) FISCAL YEAR END (2)# FISCAL YEAR-END(3)$
- ---- ------ ----- -------------------------------------- ------------------------------
<S> <C> <C> <C> <C>
Ray H. Tolson -- -- 731,000 Exercisable 4,820,406 Exercisable
Paul A. Bragg -- -- 300,000 Exercisable 1,496,375 Exercisable
James W. Allen -- -- 300,000 Exercisable 1,473,875 Exercisable
Robert W. Randall -- -- 110,000 Exercisable 556,875 Exercisable
James J. Byerlotzer 10,000 68,996 60,500 Exercisable 340,125 Exercisable
</TABLE>
- ------------
(1) Value realized reflects market value at exercise less exercise price.
(2) Number of options shown includes all options (both in and out of the
money) at December 31, 1995.
(3) Value reflects those options in-the-money at December 31, 1995, based
on a closing price of $10.625 per share.
7
EMPLOYMENT AGREEMENTS
The Company has entered into written employment agreements with Messrs.
Tolson, Bragg 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 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 1996, the Compensation
Committee has set the target award for Messrs. Tolson, Bragg and Allen at
$280,000, $81,450 and $79,800, 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, McBride and Sneed (Chairman), 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.
Under the Committee's 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. Each of the named executives received base salary
increases effective October 1, 1995. As described above under "Employment
Agreements," the Company has employment agreements with Messrs. Tolson, Bragg
and Allen. The full impact of the increases will not be reflected in the summary
compensation table until 1996.
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
8
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
Byerlotzer, 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 1995, the Company achieved
EPS of $.60, exceeding the profit plan target EPS of $.48, resulting in
incentive awards of 100%. Due to the Company's ability to exceed its target
plan, this resulted in a bonus of $513,846 for Mr. Tolson which was calculated
on low fixed, high variable components established by the Compensation Committee
to increase incentive in performance.
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.
The Compensation Committee, with assistance of J.E. Stone & Associates,
Inc., developed a Supplemental Executive Retirement Plan ("Plan") for executives
that are selected from time to time by the Company's Chief Executive Officer and
approved by the Compensation Committee. The Board of Directors approved the
Company's Executive Retirement Plan which became effective January 1, 1996.
Currently, Messrs. Tolson, Bragg and Allen participate in the Plan.
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
Ralph D. McBride
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, Corrpro and Tuboscope Vetco 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 direct peer
comparison.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
PRIDE ............ 100 91.1 68.9 91.1 88.9 188.9
*POOL ............ 100 62.8 65.4 78.2 69.2 97.4
S&P 500 ............ 100 126.3 131.9 141.3 138.2 186.5
PEER GROUP ............ 100 94.0 87.5 109.7 102.8 143.6
* COMMENCED TRADING IN APRIL 1990.
10
PROPOSAL TO APPROVE EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has adopted, subject to shareholder approval,
the Pride Petroleum Services, Inc. Employee Stock Purchase Plan (the "Stock
Purchase Plan"). The description of the Stock Purchase Plan set forth below is
qualified by reference to the terms of the Stock Purchase Plan, a copy of which
is attached as Annex A to this Proxy Statement. The Purpose of the Stock
Purchase Plan is to encourage and assist employees of the Company to acquire an
equity interest in the Company through the purchase of shares of Common Stock. A
maximum of 500,000 shares of Common Stock (subject to certain anti-dilution
adjustments applicable in certain circumstances) may be purchased pursuant to
the Stock Purchase Plan. Assuming approval by the shareholders, the Stock
Purchase Plan will become effective July 1, 1996 and will terminate after all
Common Stock covered by the Stock Purchase Plan has been purchased, unless
terminated earlier by the Board or unless additional Common Stock is permitted
to be issued under the Stock Purchase Plan and is approved by the shareholders.
The Stock Purchase Plan will be administered by the Company's Compensation
Committee.
Under the Stock Purchase Plan, all full-time employees of the Company
(and of any Subsidiary of the Company that has, with the consent of the Board of
Directors of the Company, adopted the Plan) who have completed at least six
months of service and who do not own, or hold options to acquire 5% or more of
the total combined voting power or value of the Common Stock are eligible to
participate in the Stock Purchase Plan. As of March 31, 1996, approximately
2,120 employees of the Company would be eligible to participate in the Stock
Purchase Plan. Participants in the Stock Purchase Plan may purchase shares of
Common Stock through payroll deductions on an after-tax basis over a one-year
period beginning on each January 1 and ending on the following December 31 (the
"Plan Year") during the term of the Stock Purchase Plan, although the first Plan
Year will be in the six-month period beginning July 1, 1996 and ending December
31, 1996. A participant's right to participate in the Stock Purchase Plan
terminates immediately when a participant ceases to be employed by the Company.
An employee may elect to participate in the Stock Purchase Plan as of any
January 1 (or, with respect to the first Plan Year, as of July 1, 1996)
following his/her completion of six consecutive months of employment by the
Company. A participant may elect to make contributions each pay period in an
amount not less than the greater of $10 or 1% of his/her base earnings, subject
to an annual limitation equal to 10% of his/her base earnings or such other
amount established by the Compensation Committee, taking into account the
"Maximum Share Limitation". The "Maximum Share Limitation: is the number of
shares derived by dividing $25,000 by the fair market value (as defined below)
of the Common Stock determined as of the date of grant. The contributions will
be held in trust during a Plan Year, and interest will be credited to the
participant's account. Unless a participant elects otherwise, the dollar amount
in the participant's account at the end of the Plan Year will then be used to
purchase as many whole shares of Common Stock as the funds in his/her account
will allow. The purchase price for the stock will be 85% of the lesser of its
fair market value (defined in the average of the high and low sales price per
share of Common Stock on the NASDAQ National Market System on the applicable
date) on the first trading day of the Plan Year or its fair market value on the
last trading day of the Plan Year. Any dollars remaining in the participant's
account will be carried over to the next Plan Year. If the participant elects
not to purchase Common Stock at the end of the Plan Year, such participant will
receive a return of his/her payroll deductions during the Plan Year plus the
interest which has accrued on such deductions. At the end of each Plan Year,
participants will receive a statement of their account balance, including
interest earned and the number of whole shares of Common Stock purchased and in
their account. Any dividends on shares held in a participant's account will be
credited to his/her account.
11
A participant may elect to withdraw his/her entire contributions for
the current year from the Stock Purchase Plan at any time prior to the purchase
of Common Stock. Any participant who so elects will receive his/her entire
account balance, including interest and dividends, if any. A participant who
suspends his/her payroll deductions or withdraws contributions cannot resume
participation in the Stock Purchase Plan during that Plan Year and must
re-enroll in the Stock Purchase Plan the following year in order to participate.
A participant may also elect to withdraw the stock held in his/her account for
at least one year (eighteen months with respect to stock purchased during the
initial Plan Year) at any time. A participant may sell stock held in his/her
account at any time, including stock held for less than one year (or eighteen
months with respect to stock purchased during the initial Plan Year). In the
event of a participant's death, amounts credited to his/her account, including
interest and dividends, if applicable, will be paid in cash and a certificate
for any shares will be delivered to his/her designated beneficiaries or other
legal representative.
The Board of Directors of the Company may generally amend or terminate
the Stock Purchase Plan at any time, provided that approval of the Company's
shareholders must be obtained for any amendment to the Stock Purchase Plan (i)
if and to the extent required to continue the exemption provided for under Rule
16b-3 ("Rule 16b-3") under the Securities Exchange Act of 1934, as amended, or
(ii) if required under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). Rule 16b-3 currently requires shareholder approval of a
plan amendment affecting insiders if the amendment would (i) materially increase
the benefits accruing to participants under the plan, (ii) materially increase
the number of securities that may be issued under the plan, or (iii) materially
modify the requirements as to eligibility for participation in the plan. Section
423 of the Code currently requires shareholder approval of a plan amendment that
would (a) change the number of shares subject to the plan or (b) change the
class of employees eligible to participate in the plan.
The shares to be issued pursuant to the Stock Purchase Plan may be
authorized but unissued shares or previously issued shares that have been
reacquired and are held by the Company. On April 3, 1996, the last reported
sales price of the Common Stock on the NASDAQ National Market System was $14.00
per share.
It is intended that the Stock Purchase Plan constitute an "employee
stock purchase plan" under the provisions of Section 423 of the Code. For
participants subject to U.S. tax, no U.S. income is recognized upon the grant or
purchase of shares under the Stock Purchase Plan. However, such participants
will recognize taxable income upon disposition of the shares acquired under the
Stock Purchase Plan.
The Company is entitled to a deduction under Section 162 of the Code
only to the extent that ordinary income is realized by the participant as a
result of a disqualifying disposition.
The affirmative vote of the holders of a majority of the shares of
Common Stock present and entitled to vote is required to approve the Stock
Purchase Plan. Accordingly, abstentions will have the same effect as no votes,
and broker nonvotes applicable to shares represented at the meeting will have no
effect. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR APPROVAL AND
ADOPTION OF THE PRIDE PETROLEUM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN.
12
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, 1996. 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 1996. Such lack of approval
would, however be considered by the Audit Committee in selecting the Company's
independent auditors for 1997.
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR THE 1997 ANNUAL MEETING
Shareholder proposals submitted for presentation at the Annual Meeting
of Shareholders of the Company following the completion of fiscal year 1996 must
be received by the Company no later than December 9, 1996. 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.
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, 1995, 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, SECRETARY
13
ANNEX A
PRIDE PETROLEUM SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN
(Effective July 1, 1996)
1. PURPOSE
The Pride Petroleum Services, Inc. Employee Stock Purchase
Plan (the "Plan") is designed to encourage and assist all employees of Pride
Petroleum Services, Inc., a Louisiana corporation ("Pride") and Subsidiaries (as
defined in Section 3) (hereinafter collectively referred to as the "Company"),
where permitted by applicable laws and regulations, to acquire an equity
interest in Pride through the purchase of shares of common stock, no par value,
of Pride ("Common Stock"). It is intended that this Plan shall constitute an
"employee stock purchase plan" within the meaning of Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered and interpreted by the
Compensation Committee (the "Committee") appointed by the Board of Directors of
Pride (the "Board"), which Committee shall consist of at least two (2) persons.
The Committee shall supervise the administration and enforcement of the Plan
according to its terms and provisions and shall have all powers necessary to
accomplish these purposes and discharge its duties hereunder including, but not
by way of limitation, the power to (i) employ and compensate agents of the
Committee for the purpose of administering the accounts of participating
employees; (ii) construe or interpret the Plan; (iii) determine all questions of
eligibility; and (iv) compute the amount and determine the manner and time of
payment of all benefits according to the Plan.
The Committee may act by decision of a majority of its members
at a regular or special meeting of the Committee or by decision reduced to
writing and signed by all members of the Committee without holding a formal
meeting.
3. NATURE AND NUMBER OF SHARES
The Common Stock subject to issuance under the terms of the
Plan shall be shares of Pride's authorized but unissued shares, previously
issued shares reacquired and held by Pride or shares purchased on the open
market. The aggregate number of shares which may be issued under the Plan shall
not exceed five hundred thousand (500,000) shares of Common Stock. All shares
purchased under the Plan, regardless of source, shall be counted against the
five hundred thousand (500,000) share limitation.
1
In the event of any reorganization, stock split, reverse stock
split, stock dividend, combination of shares, merger, consolidation, offering of
rights or other similar change in the capital structure of Pride, the Committee
may make such adjustment, if any, as it deems appropriate in the number, kind
and purchase price of the shares available for purchase under the Plan and in
the maximum number of shares which may be issued under the Plan, subject to the
approval of the Board and in accordance with Section 19.
4. ELIGIBILITY REQUIREMENTS
Each "Employee" (as hereinafter defined), except as described
in the next following paragraph, shall become eligible to participate in the
Plan in accordance with Section 5 on the first "Enrollment Date" (as defined
therein) following employment by the Company. Participation in the Plan is
voluntary.
The following Employees are not eligible to participate in the
Plan:
(i) Employees who would, immediately upon enrollment in the
Plan, own directly or indirectly, or hold options or rights to acquire,
an aggregate of five percent (5%) or more of the total combined voting
power or value of all outstanding shares of all classes of the Company
or any subsidiary (in determining stock ownership of an individual, the
rules of Section 424(d) of the Code shall be applied, and the Committee
may rely on representations of fact made to it by the employee and
believed by it to be true);
(ii) Employees who are customarily employed by the Company
less than twenty (20) hours per week or less than five (5) months in
any calendar year; and
(iii) Employees who have not completed at least six (6) months
of service with the Company as of an Enrollment Date.
"Employee" shall mean any individual employed by Pride or any
Subsidiary (as hereinafter defined). "Subsidiary" shall mean any corporation (a)
which is in an unbroken chain of corporations beginning with Pride if, on or
after the Effective Date, each of the corporations other than the last
corporation in the chain owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other
corporations in the chain and (b) which has adopted the Plan with the approval
of the Board.
5. ENROLLMENT
Each eligible Employee of Pride or any Subsidiary as of
July 1, 1996 (the "Effective Date" herein) may enroll in the Plan as of the
Effective Date. Each other eligible Employee of Pride or a participating
Subsidiary who thereafter becomes eligible to participate may enroll in the Plan
on the first January 1 following the date he first meets the eligibility
requirements of Section 4. Any
2
eligible Employee not enrolling in the Plan when first eligible may enroll in
the Plan on the first day of January of any subsequent calendar year. Any
eligible Employee may enroll or re-enroll in the Plan on the dates hereinabove
prescribed or such other specific dates established by the Committee from time
to time ("Enrollment Dates"). In order to enroll, an eligible Employee must
complete, sign and submit the appropriate form to the person designated by the
Committee.
6. METHOD OF PAYMENT
Payment for shares is to be made as of the applicable
"Purchase Date" (as defined in Section 9) through payroll deductions on an
after-tax basis (with no right of prepayment) over the Plan's designated
purchase period (the "Purchase Period"), with the first such deduction
commencing with the first payroll period ending after the Enrollment Date. Each
Purchase Period under the Plan shall be a period of twelve (12) calendar months
beginning on January 1 and ending on the following December 31 or such other
period as the Committee may prescribe; provided, however, that the Purchase
Period beginning on the Effective Date shall commence on the Effective Date and
end on December 31, 1996. Each participating Employee (hereinafter referred to
as a "Participant") will authorize such deductions from his pay for each month
during the Purchase Period and such amounts will be deducted in conformity with
his employer's payroll deduction schedule.
Each Participant may elect to make contributions each pay
period in amounts not less than the greater of $10 or one percent (1%) of
"Compensation," not to exceed an annual contribution equal to ten percent (10%)
of "Compensation" (or such other dollar amounts and percentages as the Committee
may establish from time to time before an Enrollment Date for all purchases to
occur during the relevant Purchase Period). "Compensation" shall mean the
Participant's base earnings or salary, or bonuses, including paid time off for
vacations, holidays, sick leave and elective qualified contributions by the
Participant to employee benefit plans maintained by the Company, but excluding
overtime pay, shift differentials, commissions and deferred compensation during
such pay period. In establishing other dollar amounts and percentages of
permitted contributions, the Committee may take into account the "Maximum Share
Limitation" (as defined in Section 9). The rate of contribution shall be
designated by the Participant in the enrollment form.
A Participant may elect to increase or decrease the rate of
contribution effective as of the first day of the Purchase Period by giving
prior written notice to the person designated by the Committee on the
appropriate form. A Participant may not elect to increase or decrease the rate
of contribution during a Purchase Period. A Participant may suspend payroll
deductions at any time during the Purchase Period, by giving prior written
notice to the person designated by the Committee on the appropriate form. If a
Participant elects to suspend his payroll deductions, such Participant's account
will continue to accrue interest and will be used to purchase stock at the end
of the Purchase Period. A Participant may also elect to withdraw his entire
contributions for the current year at any time by giving prior written notice to
the person designated by the Committee on the appropriate form. Any Participant
who withdraws his contributions will receive, as soon as practicable, his entire
account balance, including interest and dividends, if any. Any Participant who
suspends payroll deductions or withdraws contributions during any Purchase
Period cannot resume payroll deductions
3
during such Purchase Period and must re-enroll in the Plan in order to
participate in the next Purchase Period.
Except in case of cancellation of election to purchase, death,
resignation or other terminating event, the amount in a Participant's account at
the end of the Purchase Period will be applied to the purchase of the shares.
7. CREDITING OF CONTRIBUTIONS, INTEREST AND DIVIDENDS
Contributions shall be credited to a Participant's account as
soon as administratively feasible after payroll withholding. Unless otherwise
prohibited by laws and regulations, Participant contributions will receive
interest at a rate realized for the investment vehicle or vehicles designated by
the Committee for purposes of the Plan. Interest will be credited to a
Participant's account from the first date on which such Participant's
contributions are deposited with the investment vehicle until the earlier of (i)
the end of the Purchase Period or (ii) in the event of cancellation, death,
resignation or other terminating event, the last day of the month prior to the
date on which such contributions are returned to the Participant. Dividends on
shares held in a Participant's account in the Plan will also be credited to such
Participant's account. Any such contributions, interest and dividends shall be
deposited in or held by a bank or financial institution designated by the
Committee for this purpose (the "Custodian").
8. GRANT OF RIGHT TO PURCHASE SHARES ON ENROLLMENT
Enrollment in the Plan by an Employee on an Enrollment Date
will constitute the grant by the Company to the Participant of the right to
purchase shares of Common Stock under the Plan. Re-enrollment by a Participant
in the Plan will constitute a grant by the Company to the Participant of a new
opportunity to purchase shares on the Enrollment Date on which such
re-enrollment occurs. A Participant who has not (a) terminated employment, (b)
withdrawn his contributions from the Plan, or (c) notified the Company in
writing, by such date as the Committee shall establish (which date shall not be
later than December 31), of his election to withdraw his payroll deductions plus
interest as of December 31 will have shares of Common Stock purchased for him on
the applicable Purchase Date, and he will automatically be re-enrolled in the
Plan on the Enrollment Date immediately following the Purchase Date on which
such purchase has occurred, unless each Participant notifies the person
designated by the Committee on the appropriate form that he elects not to
re-enroll.
Each right to purchase shares of Common Stock under the Plan
during a Purchase Period shall have the following terms:
(i) the right to purchase shares of Common Stock during a
particular Purchase Period shall expire on the earlier of: (A) the
completion of the purchase of shares on the Purchase Date occurring in
the Purchase Period, or (B) the date on which participation of such
Participant in the Plan terminates for any reason;
4
(ii) payment for shares purchased will be made only through
payroll withholding and the crediting of interest and dividends, if
applicable, in accordance with Sections 6 and 7;
(iii) purchase of shares will be accomplished only in
accordance with Section 9;
(iv) the price per share will be determined as provided in
Section 9;
(v) the right to purchase shares (taken together with all
other such rights then outstanding under this Plan and under all other
similar stock purchase plans of Pride or any Subsidiary) will in no
event give the Participant the right to purchase a number of shares
during a Purchase Period in excess of the number of shares of Common
Stock derived by dividing $25,000 by the fair market value of the
Common Stock (the "Maximum Share Limitation") on the applicable Grant
Date determined in accordance with Section 9;
(vi) shares purchased under this Plan may not be sold within
one (1) year of the Purchase Date (eighteen (18) months with respect to
shares purchased as of December 31, 1996), unless such shares are sold
through the Custodian in accordance with Section 10; and
(vii) the right to purchase shares will in all respects be
subject to the terms and conditions of the Plan, as interpreted by the
Committee from time to time.
9. PURCHASE OF SHARES
The right to purchase shares of Common Stock granted by the
Company under the Plan is for the term of a Purchase Period. The fair market
value of the Common Stock ("Fair Market Value") to be purchased during such
Purchase Period will be determined by averaging the highest and lowest sales
prices per share of the Common Stock in the NASDAQ National Market System on the
first trading day of the calendar month of January or such other trading date
designated by the Committee (the "Grant Date"). The Fair Market Value of the
Common Stock will again be determined in the same manner on the last trading day
of the calendar month of December or such other trading date designated by the
Committee (the "Purchase Date"); however, in no event shall the Committee, in
the exercise of its discretion, designate a Purchase Date beyond twenty-seven
(27) months from the related Enrollment Date or otherwise fail to meet the
requirements of Section 423(b)(7) of the Code. These dates constitute the date
of grant and the date of exercise for valuation purposes of Section 423 of the
Code.
5
As of the Purchase Date, the Committee shall apply the funds
then credited to each Participant's account to the purchase of whole shares of
Common Stock. The cost to the Participant for the shares purchased during a
Purchase Period shall be the lower of:
(i) eighty-five percent (85%) of the Fair Market Value of
Common Stock on the Grant Date; or
(ii) eighty-five percent (85%) of the Fair Market Value of
Common Stock on the Purchase Date.
Certificates evidencing shares purchased shall be delivered to
the Custodian or to any other bank or financial institution designated by the
Committee for this purpose or delivered to the Participant (if the Participant
has elected by written notice to the Committee to receive the certificate) as
soon as administratively feasible after the Purchase Date; however, certificates
shall not be delivered to the Participant within one (1) year (eighteen (18)
months with respect to shares purchased as of December 31, 1996) of the Purchase
Date of the underlying shares, except as otherwise provided herein.
Notwithstanding the foregoing, Participants shall be treated as the record
owners of their shares effective as of the Purchase Date. Shares that are held
by the Custodian or any other designated bank or financial institution shall be
held in book entry form. Any cash equal to less than the price of a whole share
of Common Stock shall be credited to a Participant's account on the Purchase
Date and carried forward in his account for application during the next Purchase
Period. Any Participant (i) who purchases stock at the end of a Purchase Period
and is not re-enrolled in the Plan for the next Purchase Period or (ii) who
withdraws his contributions from the Plan prior to the next Purchase Date will
receive a certificate for the number of shares held in his account for at least
one (1) year (eighteen (18) months with respect to shares purchased as of
December 31, 1996) as of the most recent Purchase Date and any cash, dividends
or interest remaining in his account. Such Participant may elect to receive a
certificate for the remaining number of shares held in his account one (1) year
(eighteen (18) months with respect to shares purchased as of December 31, 1996)
after such shares were purchased or, if earlier, upon such Participant's
termination of employment. Any Participant who terminates employment will
receive a certificate for the number of shares held in his account and a cash
refund attributable to amounts equal to less than the price of a whole share,
and any accumulated contributions, dividends and interest. If for any reason the
purchase of shares with a Participant's allocations to the Plan exceeds or would
exceed the Maximum Share Limitation, such excess amounts shall be refunded to
the Participant as soon as practicable after such excess has been determined to
exist.
If as of any Purchase Date the shares authorized for purchase
under the Plan are exceeded, enrollments shall be reduced proportionately to
eliminate the excess. Any funds that cannot be applied to the purchase of shares
due to excess enrollment shall be refunded as soon as administratively feasible,
including interest determined in accordance with Section 7. The Committee in its
discretion may also provide that excess enrollments may be carried over to the
next Purchase Period under this Plan or any successor plan according to the
regulations set forth under Section 423 of the Code.
6
10. WITHDRAWAL OF SHARES AND SALE OF SHARES
(a) WITHDRAWAL OF SHARES. A Participant may elect to withdraw
at any time (without withdrawing from participation in the Plan) shares
which have been held in his account for at least one (1) year (eighteen
(18) months with respect to shares purchased as of December 31, 1996)
by giving notice to the person designated by the Committee on the
appropriate form. Upon receipt of such notice from the person
designated by the Committee, the Custodian, bank or other financial
institution designated by the Committee for this purpose will arrange
for the issuance and delivery of such shares held in the Participant's
account as soon as administratively feasible.
(b) SALE OF SHARES. Notwithstanding anything in the Plan to
the contrary, a Participant may sell shares which are held in his
account, including shares which have been held in his account for less
than one (1) year (eighteen (18) months with respect to shares
purchased as of December 31, 1996), by giving notice to the person
designated by the Committee on the appropriate form. Upon receipt of
such notice from the person designated by the Committee, the Custodian,
bank or other financial institution designated by the Committee for
this purpose will arrange for the sale of such Participant's shares.
Any sale will be deemed to occur on the last business day of the month
in which the Participant provides such notice to the person designated
by the Committee, or at such other time as the Committee shall
establish.
11. TERMINATION OF PARTICIPATION
The right to participate in the Plan terminates immediately
when a Participant ceases to be employed by the Company for any reason
whatsoever (including death, unpaid disability or when the Participant's
employer ceases to be a Subsidiary) or the Participant otherwise becomes
ineligible. Participation also terminates immediately when the Participant
voluntarily withdraws his contributions from the Plan. Participation terminates
immediately after the Purchase Date if the Participant is not re-enrolled in the
Plan for the next Purchase Period or if the Participant has suspended payroll
deductions during any Purchase Period and has not re-enrolled in the Plan for
the next Purchase Period. As soon as administratively feasible after termination
of participation, the Committee shall pay to the Participant or his beneficiary
or legal representative all amounts credited to his account, including interest
and dividends, if applicable, determined in accordance with Section 7, and shall
cause a certificate for the number of shares held in his account to be delivered
to the Participant, subject to the restrictions in Section 9. For purposes of
the Plan, a Participant is not deemed to have terminated his employment if he
transfers employment from Pride to a Subsidiary, or vice versa, or transfers
employment between Subsidiaries.
7
12. UNPAID LEAVE OF ABSENCE
Unless the Participant has voluntarily withdrawn his
contributions from the Plan, shares will be purchased for his account on the
Purchase Date next following commencement of an unpaid leave of absence by such
Participant, provided such leave does not constitute a termination of
employment. The number of shares to be purchased will be determined by applying
to the purchase the amount of the Participant's contributions made up to the
commencement of such unpaid leave of absence plus interest on such contributions
and dividends, if applicable, both determined in accordance with Section 7. If
the Participant's unpaid leave of absence both commences and terminates during
the same Purchase Period and he has resumed eligible employment prior to the
Purchase Date related to that Purchase Period, he may also resume payroll
deductions immediately, and shares will be purchased for him on such Purchase
Date as otherwise provided in Section 9.
13. DESIGNATION OF BENEFICIARY
Each Participant may designate one or more beneficiaries in
the event of death and may, in his sole discretion, change such designation at
any time. Any such designation shall be effective upon receipt by the person
designated by the Committee and shall control over any disposition by will or
otherwise.
As soon as administratively feasible after the death of a
Participant, amounts credited to his account, including interest and dividends,
if applicable, determined in accordance with Section 7, shall be paid in cash
and a certificate for any shares shall be delivered to the Participant's
designated beneficiaries or, in the absence of such designation, to the
executor, administrator or other legal representative of the Participant's
estate. Such payment shall relieve the Company of further liability to the
deceased Participant with respect to the Plan. If more than one beneficiary is
designated, each beneficiary shall receive an equal portion of the account
unless the Participant has given express contrary instructions.
14. ASSIGNMENT
Except as provided in Section 13, the rights of a Participant
under the Plan will not be assignable or otherwise transferable by the
Participant, other than by will or the laws of descent and distribution or
pursuant to a "qualified domestic relations order," as defined in Section 414(p)
of the Code. No purported assignment or transfer of such rights of a Participant
under the Plan, whether voluntary or involuntary, by operation of law or
otherwise, shall vest in the purported assignee or transferee any interest or
right therein whatsoever, but immediately upon such assignment or transfer, or
any attempt to make the same, such rights shall terminate and become of no
further effect. If this provision is violated, the Participant's election to
purchase Common Stock shall terminate, and the only obligation of the Company
remaining under the Plan will be to pay to the person entitled thereto the
amount then credited to the Participant's account. No Participant may create a
lien on any funds, securities, rights or other property held for the account of
the Participant under the Plan, except to the extent that there has been a
designation of beneficiaries in accordance
8
with the Plan, and except to the extent permitted by will or the laws of descent
and distribution if beneficiaries have not been designated. A Participant's
right to purchase shares under the Plan shall be exercisable only during the
Participant's lifetime and only by him.
15. COSTS
All costs and expenses incurred in administering this Plan
shall be paid by the Company. Any brokerage fees for the sale of shares
purchased under the Plan shall be paid by the Participant.
16. REPORTS
At the end of each Purchase Period, the Company shall provide
or cause to be provided to each Participant a report of his contributions,
including interest earned, and the number of whole shares of Common Stock
purchased with such contributions by that Participant on each Purchase Date.
17. EQUAL RIGHTS AND PRIVILEGES
All eligible Employees shall have equal rights and privileges
with respect to the Plan so that the Plan qualifies as an "employee stock
purchase plan" within the meaning of Section 423 or any successor provision of
the Code and related regulations. Any provision of the Plan which is
inconsistent with Section 423 or any successor provision of the Code shall
without further act or amendment by the Company be reformed to comply with the
requirements of Section 423. This Section 17 shall take precedence over all
other provisions in the Plan.
18. RIGHTS AS SHAREHOLDERS
A Participant will have no rights as a stockholder under the
election to purchase until he becomes a stockholder as herein provided. A
Participant will become a stockholder with respect to shares for which payment
has been completed as provided in Section 9 at the close of business on the last
business day of the Purchase Period.
19. MODIFICATION AND TERMINATION
The Board may amend or terminate the Plan at any time insofar
as permitted by law, except that any provisions of the Plan that constitute a
formula award for purposes of Rule 16b-3 under the Securities Exchange Act of
1934 ("Rule 16b-3") may not be amended more than once every six (6) months,
other than to comport with changes in the Code or the rules thereunder, unless
otherwise permitted under Rule 16b-3. No amendment shall be effective unless
within one (1) year after it is adopted by the Board it is approved by the
holders of Pride's outstanding shares:
9
(i) if and to the extent such amendment is required to be
approved by shareholders to continue the exemption provided for in
Rule 16b-3 (or any successor provision); or
(ii) if and to the extent such amendment is required to be
approved by shareholders in order to cause the rights granted under the
Plan to purchase shares of Common Stock to meet the requirements of
Section 423 of the Code (or any successor provision).
The Plan shall terminate after all Common Stock issued under
the Plan has been purchased, unless terminated earlier by the Board or unless
additional Common Stock is issued under the Plan with the approval of the
shareholders. In the event the Plan is terminated, the Committee may elect to
terminate all outstanding rights to purchase shares under the Plan either
immediately or upon completion of the purchase of shares on the next Purchase
Date, unless the Committee has designated that the right to make all such
purchases shall expire on some other designated date occurring prior to the next
Purchase Date. If the rights to purchase shares under the Plan are terminated
prior to expiration, all funds contributed to the Plan which have not been used
to purchase shares shall be returned to the Participants as soon as
administratively feasible, including interest and dividends, if applicable,
determined in accordance with Section 7.
20. BOARD AND SHAREHOLDER APPROVAL; EFFECTIVE DATE
This Plan was approved by the Board on April 3, 1996. The Plan
will become effective as of July 1, 1996, after receiving approval by the
holders of a majority of the shares of outstanding Common Stock of Pride
present, or represented, and entitled to vote at the 1996 Annual Meeting of
Shareholders.
21. GOVERNMENTAL APPROVALS OR CONSENTS
This Plan and any offering or sale made to Employees under it
are subject to any governmental approvals or consents that may be or become
applicable in connection therewith. Subject to the provisions of Section 19, the
Board may make such changes in the Plan and include such terms in any offering
under the Plan as may be desirable to comply with the rules or regulations of
any governmental authority.
22. LISTING OF SHARES AND RELATED MATTERS
If at any time the Board or the Committee shall determine,
based on opinion of legal counsel, that the listing, registration or
qualification of the shares covered by the Plan upon any national securities
exchange or reporting system or under any state or federal law is necessary or
desirable as a condition of, or in connection with, the sale or purchase of
shares under the Plan, no shares will be sold, issued or delivered unless and
until such listing, registration or qualification shall
10
have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to legal counsel.
23. EMPLOYMENT RIGHTS
The Plan shall neither impose any obligation on Pride or on
any Subsidiary to continue the employment of any Participant, nor impose any
obligation on any Participant to remain in the employ of Pride or of any
Subsidiary.
24. WITHHOLDING OF TAXES
The Committee may make such provisions as it may deem
appropriate for the withholding of any taxes which it determines is required in
connection with the purchase of Common Stock under the Plan.
25. GOVERNING LAW
The Plan and rights to purchase shares that may be granted
hereunder shall be governed by and construed and enforced in accordance with the
laws of the state of Texas.
26. USE OF GENDER
The gender of words used in the Plan shall be construed to
include whichever may be appropriate under any particular circumstances of the
masculine, feminine or neuter genders.
27. OTHER PROVISIONS
The agreements to purchase shares of Common Stock under the
Plan shall contain such other provisions as the Committee and the Board shall
deem advisable, provided that no such provision shall in any way be in conflict
with the terms of the Plan.
ADOPTED effective July 1, 1996.
PRIDE PETROLEUM SERVICES, INC.
11
PRIDE PETROLEUM SERVICES, INC.
PROXY - ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1996
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated April 1, 1996. 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 Service, Inc., a Louisiana
corporation (the "Company"), to be held at the Westchase Hilton, 9999
Westheimer, Houston, Texas on May 16, 1996 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
(1) Approval and adoption of the Pride Petroleum Services, Inc. Employee
Stock Purchase Plan.
For[ ] Against[ ] Abstain[ ]
(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 1996.
For[ ] Aginst[ ] Abstain[ ]
(3) In their discretion upon any other business that may properly come
before the meeting or adjournment thereof.
For[ ] Aginst[ ] Abstain[ ]
(Continued, and to be signed, on the other side)
REVERSE
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 PROPOSAL (1)
AND, AS TO PROPOSAL (2), 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.
