SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
<PAGE>
[PRIDE PETROLEUM LOGO]
TO OUR SHAREHOLDERS,
1996 was a record year for Pride Petroleum Services in terms of financial
performance and appreciation in the value of our common stock. Pride's
aggressive growth and diversification strategy is producing positive results. We
have focused on making strategic acquisitions in both international and offshore
markets, deploying assets to more profitable markets and upgrading the
technological capabilities of our fleet. During 1996, the market price of
Pride's common stock increased 119%.
In 1996 Pride achieved record levels in revenues, net earnings and earnings
per share. Net earnings for 1996 totaled $22,728,000, or $.75 per share. This
represents a 53% increase over 1995 earnings of $15,359,000, or $.60 per share.
Revenues for the year increased 57% to $407,174,000 from $263,599,000 in 1995.
Pride has successfully transformed itself into one of the largest and most
diversified drilling contractors in the world. Soon, upon completion of
publishing and printing, we will forward to shareholders our 1996 annual report
providing more details about the "New Pride."
We request your vote in favor of changing the name of our company to PRIDE
INTERNATIONAL, INC. to reflect better our business today. Our Annual
Shareholders' Meeting will be held on Thursday, May 22, 1997, at 1:30 p.m., at
the Westchase Hilton in Houston. Please sign and date the enclosed proxy and
return it whether or not you expect to attend.
Sincerely,
/s/ RAY H. TOLSON
Ray H. Tolson
Chairman of the Board and
Chief Executive Officer
<PAGE>
PRIDE PETROLEUM SERVICES, INC.
------------------------
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 22, 1997
The Annual Meeting of Shareholders of Pride Petroleum Services, Inc. (the
"Company") will be held at the Westchase Hilton, 9999 Westheimer, Houston,
Texas 77042 on Thursday, May 22, 1997, at 1:30 p.m., Central Daylight Time, for
the following purposes:
(1) To approve a change in the Company's name to PRIDE INTERNATIONAL,
INC. to properly reflect the nature and scope of the Company's operations
that now concentrate on the international and offshore markets.
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as the
Company's independent accountants for 1997.
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Attached to this Notice is a Proxy Statement setting forth information with
respect to the above items and certain other information.
Shareholders of record at the close of business on April 15, 1997 are
entitled to notice of and to vote at the Annual 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
/s/ ROBERT W. RANDALL
ROBERT W. RANDALL, SECRETARY
April 30, 1997
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
1997 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the 1997 Annual Meeting of Shareholders of Pride Petroleum
Services, Inc. (the "Company") to be held on May 22, 1997, 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 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 change in the Company's name to Pride
International, Inc. and FOR the ratification of the appointment of Coopers &
Lybrand L.L.P. as the Company's independent public accountants for 1997.
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 such proxies are received in time for the meeting. Such proxies
and this Proxy Statement are being sent to shareholders on or about April 30,
1997.
QUORUM, VOTE REQUIRED AND REVOCATION OF PROXIES
The Board of Directors has established April 15, 1997 as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting. At the record date, there were outstanding 42,130,062 shares of
Common Stock, held by 2,001 shareholders of record. Each share of Common Stock
is entitled to one vote upon each matter to be voted on at the meeting. As of
April 15, 1997, 2,458,518 shares of Common Stock, or 5.6% of the total
outstanding, were beneficially owned by the directors and executive officers of
the Company. See also "Certain Relationships and Related-Party Transactions."
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock at the Annual Meeting is necessary to
constitute a quorum. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock represented in person or by proxy, and
constituting a quorum, is required to approve a change in the Company's name to
Pride International, Inc. and to ratify the appointment of Coopers & Lybrand
L.L.P. as the Company's independent public accountants for 1997. It is not
expected that any other matter will be brought before the Annual Meeting. If,
however, other matters are properly presented, the persons named as proxies will
vote in accordance with their judgment in respect to such matters.
Any holder of Common Stock of the Company has the right to revoke his or
her proxy at any time prior to the voting thereof at the Annual Meeting by (i)
filing a written revocation with the Secretary prior to the voting of such
proxy, (ii) giving a duly executed proxy bearing a later date or (iii) attending
the Annual Meeting and voting in person. Attendance by a shareholder will not
itself revoke his or her proxy.
1
<PAGE>
COST AND METHOD OF PROXY SOLICITATION
The Company will bear the cost of the solicitation of proxies. In addition
to solicitation by mail, directors, officers and employees of the Company may
solicit proxies from shareholders by telephone, telecopy or telegram or in
person. 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 doing so.
PROPOSED CHANGE IN THE COMPANY'S NAME
The Board of Directors has approved, subject to the approval of the
Company's shareholders, a change in the name of the Company from Pride Petroleum
Services, Inc. to PRIDE INTERNATIONAL, INC. The Board believes that the new name
will more properly reflect the nature and scope of the Company's operations and
its strategy for achieving future growth in revenue and earnings, both of which
are now concentrated on the more profitable international and offshore drilling
markets. With the sale of its domestic land-based well servicing operations in
February 1997, the Company has ceased to provide rig services onshore in the
United States. As a result of other recent strategic transactions, the Company
has transformed itself into one of the largest and most diversified drilling
contractors in the world. These transactions, which have essentially redefined
the nature and scope of the Company's operations, may be summarized as follows:
o QUITRAL-CO ACQUISITION. In April 1996, the Company acquired Quitral-Co
S.A.I.C. (now Pride International S.A.) from Perez Companc S.A. and others
for an aggregate purchase price of $140 million. Quitral-Co, the largest
drilling and workover contractor in Argentina, added 23 land-based drilling
and 57 land-based workover rigs in Argentina and seven land-based drilling
and 23 land-based workover rigs in Venezuela to the Company's existing
fleets in those countries.
o DIVESTITURE OF U.S. LAND-BASED OPERATIONS. In February 1997, the Company
completed the divestiture of its domestic land-based well servicing
operations, which included 407 workover rigs operating in Texas,
California, New Mexico and Louisiana, to Dawson Production Services, Inc.
for approximately $136 million in cash. The Company retained 14 of its
larger land-based rigs for redeployment to international markets, four of
which have since been redeployed. The divested operations generated the
Company's lowest operating margins.
o FORASOL-FORAMER ACQUISITION. In March 1997, the Company acquired the
operating subsidiaries of Forasol-Foramer N.V. for approximately $113
million in cash and 11.1 million shares of Common Stock. The transaction
provided entry into new international markets while contributing additional
capacity in the Company's existing Latin American markets, as well as a
deepwater asset base and expertise. Forasol-Foramer's subsidiaries provide
drilling, workover and engineering services in more than 15 countries,
including substantial operations in Latin America and West Africa, and
operate a diversified fleet of offshore rigs, including two semisubmersible
rigs, three jackup rigs, seven tender-assisted rigs, three lake barge rigs
and one swamp barge rig, as well as an international fleet of 29 land-based
rigs.
o PURCHASE OF NOBLE RIGS. In February 1997, the Company entered into a
definitive agreement to purchase 12 mat-supported jackup rigs and the hull
of an additional jackup rig from Noble Drilling Corporation and certain of
its subsidiaries for $265 million in cash. The purchase, which is subject
to completion by the Company of satisfactory financing arrangements, will
position the Company as the second largest operator in the Gulf of Mexico
of mat-supported jackup rigs capable of operating in water depths of 200
feet or greater.
o ADDITIONAL ACTIVITIES. In addition to the transactions described above,
since mid-1993 the Company has acquired six businesses with an aggregate of
62 land-based rigs serving international markets and a fleet of 22 platform
rigs serving the domestic offshore market. The Company has further expanded
international operations by deploying 35 rigs from its former U.S.
land-based fleet, primarily to
2
<PAGE>
Argentina and Venezuela, and by constructing new offshore rigs, including
two lake barge rigs operating in Venezuela and four offshore platform rigs
operating in the Gulf of Mexico.
Based on the foregoing, your Board of Directors believes that the name
PRIDE INTERNATIONAL, INC. gives the Company an identity that more accurately
reflects its business activities. A change in the Company's name will require an
amendment to its Restated Articles of Incorporation. Such an amendment requires
the approval of the Company's shareholders by the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock represented in
person or by proxy and constituting a quorum at the Annual Meeting. As indicated
above, your Board of Directors recommends a vote "FOR" approval and adoption
of this amendment.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Cooper's & Lybrand L.L.P. has been appointed by the Board of Directors as
independent public accountants for the Company and its subsidiaries for the year
ending December 31, 1997. This appointment 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 appointment of Coopers & Lybrand L.L.P. will require
the affirmative vote of the holders of a majority of the outstanding shares of
Common Stock represented in person or by proxy and constituting a quorum at the
Annual Meeting. Your Board of Directors recommends a vote "FOR" such
ratification.
If 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. will be replaced in 1997. Such lack of approval will, however,
be considered by the Audit Committee in selecting the Company's independent
auditors for 1998.
3
<PAGE>
INFORMATION CONCERNING DIRECTORS OF THE COMPANY
The Board of Directors of the Company consists of the eight persons named
in the table below. The term of each director will continue until the annual
meeting of the Company's shareholders in 1998. Set forth below for each director
is his present principal occupation (which, unless otherwise indicated, has been
his principal occupation during the past five years), the number of shares of
Common Stock beneficially owned as of April 15, 1997, the percentage of
outstanding shares of Common Stock that such number of shares represents, and
the year such individual first became a director. Unless otherwise indicated,
the indicated owner has, or would have upon exercise of stock options, sole
voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
SERVED
NO. OF SHARES % OF AS
BENEFICIALLY OUTSTANDING DIRECTOR
NAME AND PRINCIPAL OCCUPATION AGE OWNED(10) SHARES SINCE
- ---------------------------------------- --- ------------- ----------- --------
<S> <C> <C> <C> <C>
Ray H. Tolson(1)........................ 62 903,631 2.1% 1988
Chairman of the Board and Chief
Executive Officer
of the Company
Remi Dorval............................. 46 70,000 * 1997
Vice Chairman of the Board of the
Company, Supervisory Director of
Soletanche Group(4)
Christian J. Boon Falleur............... 50 40,000 * 1997
Supervisory Director of Ackermans &
van Haaren
Group(5)
James B. Clement(1)(2)(3)............... 51 17,500 * 1993
Chairman of the Board, Chief Executive
Officer, President and director of
Offshore Logistics, Inc.(6)
Jorge E. Estrada M...................... 49 81,633 * 1993
President and Chief Executive Officer
of JEMPSA Media & Entertainment(7)
Ralph D. McBride(1)(2)(3)............... 50 13,500 * 1995
Partner, Bracewell & Patterson,
L.L.P., Attorneys at Law, Houston,
Texas
Thomas H. Roberts, Jr.(2)............... 72 339,313 * 1988
Retired(8)
James T. Sneed(1)(3).................... 65 20,500 * 1992
Retired(9)
</TABLE>
- ------------
* Less than 1%.
(1) Member of Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Mr. Dorval became a director and Vice Chairman of the Board of the Company
in connection with the acquisition by the Company of the operating
subsidiaries of Forasol-Foramer N.V. ("Forasol-Foramer"). For more than
five years prior to March 1997, Mr. Dorval was a Supervisory Director and
Chief Executive Officer of Forasol-Foramer and its predecessors. Since
1990, he has been a supervisory director of Soletanche Group, which was a
major shareholder of Forasol-Foramer, and is in charge of that firm's
interests in the oil and gas sector. See "Certain Shareholders" and
"Certain Relationships and Related-Party Transactions."
(5) Mr. Boon Falleur became a director of the Company in connection with the
acquisition by the Company of the operating subsidiaries of
Forasol-Foramer. For more than five years prior to March 1997, Mr. Boon
Falleur was a Supervisory Director of Forasol-Foramer and its predecessors.
Since 1972, he has been affiliated with the Belgian firm of Ackermans & van
Haaren Group, which was a major shareholder of Forasol-Foramer, and is
currently in charge of that firm's energy services and construction
sections. See "Certain Shareholders" and "Certain Relationships and
Related-Party Transactions."
4
<PAGE>
(6) Offshore Logistics, Inc. is a public company engaged in helicopter
transportation services.
(7) JEMPSA Media & Entertainment, a company founded by Mr. Estrada, specializes
in the Spanish and Latin American entertainment industry.
(8) Mr. Roberts held a variety of management positions with DEKALB Energy
Company until his retirement in 1996. Mr. Roberts is currently a director
of IMC Global Inc., a public company engaged in the production and
distribution of crop nutrients and related products.
(9) Mr. Sneed held a variety of domestic and international management positions
with Mobil Oil Corporation until his retirement in 1991 after 37 years of
service.
(10) The number of shares beneficially owned includes shares that may be
acquired within 60 days of April 15, 1997 by exercise of stock options as
follows: Mr. Tolson -- 817,667; Mr. Clement -- 17,500; Mr.
McBride -- 11,500; Mr. Roberts -- 17,500; Mr. Sneed -- 17,500.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid $12,000 to $17,000
annually, depending on whether they serve on a committee of the Board or as a
chairman of a Board committee. In addition, 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 grant of 10,000
shares upon becoming a director and, as long as the director remains eligible,
automatically receives an additional option grant of 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
of 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. The plan provides 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. The current eligible directors collectively have been granted
options to purchase 90,000 shares under the plan.
ORGANIZATION OF THE BOARD OF DIRECTORS
The Board of Directors is responsible for the overall affairs of the
Company. To assist it in carrying out its duties, the Board has delegated
certain authority to an Executive Committee, an Audit Committee and a
Compensation Committee. During 1996, the Board of Directors of the Company held
four meetings. Each director attended at least 75% of the total number of
meetings of the Board of Directors and of the total number of meetings held by
each Committee of the Board on which he served. The Board does not have a
standing nominating committee.
The Executive Committee, comprised of Messrs. Tolson, Clement, McBride and
Sneed, may exercise the power and authority of the Board of Directors, subject
to certain limitations, when the Board is not in session. The Executive
Committee held three meetings during 1996.
The Audit Committee, comprised of Messrs. Clement, McBride and Roberts, has
the authority and power to oversee the retention, performance and compensation
of the independent public accountants of the Company, and the establishment and
oversight of such systems of internal accounting and auditing control as it
deems appropriate. The Audit Committee met once during 1996.
The Compensation Committee, comprised of Messrs. Clement, McBride and
Sneed, recommends and approves employment agreements, salaries and incentive
plans, stock options and employee benefit plans for officers and key employees.
The Compensation Committee met twice during 1996.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership of the Company's Common
5
<PAGE>
Stock with the Securities and Exchange Commission and, pursuant to rules
promulgated under Section 16(a), such individuals are required to furnish the
Company with copies of Section 16(a) reports they file. Based solely on a review
of the copies of such reports furnished to the Company, the Company is not aware
of any failure by any of its executive officers or directors to comply with the
Section 16(a) reporting requirements during 1996.
CERTAIN SHAREHOLDERS
The following table sets forth certain information as of April 15, 1997
(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, (ii) the executive officers of the Company named under "Compensation of
Executive Officers" and (iii) all executive officers and directors of the
Company as a group. Unless otherwise indicated, all of such stock is owned
directly, and the indicated person or entity has sole voting and investment
power.
NO. OF SHARES
NAME AND ADDRESS OF OWNER BENEFICIALLY OWNED(2) % OF CLASS
- ------------------------------------- --------------------- ----------
Ackermans & van Haaren Group(1)...... 3,303,300 7.3%
Begijnenvest 113
B-2000 Antwerpen
Belgium
Soletanche Group(1).................. 3,303,300 7.3%
6, rue de Watford
92000 Nanterre
France
Ray H. Tolson........................ 903,631 2.1%
Paul A. Bragg........................ 411,000 1.0%
James W. Allen....................... 365,182 .9%
Robert W. Randall.................... 127,078 .3%
James J. Byerlotzer.................. 68,182 .2%
All executive officers and directors
as a group (12 persons)............ 2,458,518 5.6%
- ------------
(1) Ackermans & van Haaren Group and Soletanche Group acquired their beneficial
ownership of the Company's Common Stock on March 10, 1997 in connection with
the acquisition by the Company of the operating subsidiaries of
Forasol-Foramer. See "Proposed Change in the Company's Name." Ackermans &
van Haaren Group is a publicly traded company listed on the Brussels Stock
Exchange. Soletanche Group is a privately held French company, a major
shareholder of which is GTN Entrepose S.A., a publicly traded company listed
on the Paris Stock Exchange. Ackermans & van Haaren Group and Soletanche
Group are not affiliated with each other. See "Certain Relationships and
Related-Party Transactions."
(2) The number of shares beneficially owned by the named executive officers of
the Company includes shares that may be acquired within 60 days by exercise
of stock options or warrants as follows: Mr. Tolson -- 817,667; Mr.
Bragg -- 380,000; Mr. Allen--365,000; Mr. Randall -- 126,667.
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
Pursuant to the Purchase Agreement dated as of December 16, 1996 whereunder
the Company acquired the operating subsidiaries of Forasol-Foramer, the Board of
Directors of the Company was increased as of March 10, 1997 from six to eight
members. Ackermans & van Haaren Group and its affiliates (collectively, the
"AVH Group") are entitled to designate one of the two additional directors and
Soletanche Group and its affiliates (collectively, the "Soletanche Group") are
entitled to designate the other additional director. Christian J. Boon Falleur
is the current designated director of the AVH Group and Remi Dorval is the
current designated director of the Soletanche Group. Mr. Dorval has also been
elected
6
<PAGE>
Vice Chairman of the Board of Directors in accordance with the Purchase
Agreement. See "Information Concerning Directors of the Company." Until March
2002, the AVH Group and the Soletanche Group shall each be entitled to nominate
a director to the Board of Directors of the Company; provided that the AVH Group
on the one hand and the Soletanche Group on the other hand continue to own,
directly or indirectly, at least 50% of the shares of the Company's Common Stock
shown in the table under "Certain Shareholders."
So long as the Board of Directors of the Company includes a person
designated by the AVH Group or the Soletanche Group (or either of them has
participated in the designation of such person), and for a period of not less
than 90 days after the Board of Directors of the Company ceases to include any
person so designated, such designating shareholder may not, either directly or
indirectly, individually or as a member of any group, (i) participate in any
unsolicited offer to acquire control of the Company or in any election contest
relating to the Company; (ii) vote any of the shares of Common Stock shown in
the table under "Certain Shareholders" in the election of directors of the
Company for any person other than the persons nominated by the Board of
Directors of the Company (including those nominated pursuant to the agreements
described above); (iii) vote in favor of any business combination or any other
transaction with a third party that has not been approved by at least a majority
of the members of the Company's Board of Directors; (iv) increase its ownership
in the Company such that either the AVH Group or the Soletanche Group or both of
them together would own or control more than 20% of the Company's outstanding
voting securities; or (v) enter into any discussion, negotiations, arrangements
or understandings with any third party with a view to taking, or advising,
aiding, abetting, soliciting, inducing or encouraging, any action prohibited by
any of the foregoing.
In connection with the Forasol-Foramer acquisition, Christian J. Boon
Falleur received 40,000 shares of the Company's Common Stock and Remi Dorval
received 70,000 shares of the Company's Common Stock, in both cases as severance
benefits upon their resignations as executive officers of Forasol-Foramer and
its subsidiaries and their surrender of options to purchase an equal number of
shares of capital stock of Forasol-Foramer.
In April and June 1995, the Company issued an aggregate 290,000 shares of
Common Stock to Jorge E. Estrada M., a director of the Company, in settlement of
certain contingent rights, including earnout rights and warrants, held by Mr.
Estrada under an acquisition agreement between him and the Company entered into
in 1993 prior to his election as a director of the Company. The aggregate market
value of the shares of Common Stock issued to Mr. Estrada pursuant to the
settlement was, at the time of issuance, approximately $2.1 million.
In March 1995, the Company purchased an aircraft from Ray H. Tolson,
Chairman of the Board and Chief Executive Officer of the Company, for 35,200
shares of Common Stock, which at the time had a market value of approximately
$220,000. The purchase price was determined by mutual agreement between Mr.
Tolson and disinterested representatives of the Company based upon the fair
market value of the aircraft.
See also "Compensation of Executive Officers -- Employment Agreements."
7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table discloses compensation for the fiscal years ended
December 31, 1996, 1995 and 1994 for (i) the Chief Executive Officer and (ii)
the four other most highly compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
--------------------------------- SHARES
SALARY UNDERLYING
NAME AND PRINCIPAL POSITION YEAR (1) BONUS OPTIONS
- ---------------------------------------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Ray H. Tolson........................... 1996 $ 301,888 $ 603,076 180,000
Chairman of the Board, 1995 259,979 513,846 100,000
President and 1994 203,531 289,011 200,000
Chief Executive Officer(2)
Paul A. Bragg........................... 1996 178,973 178,623 135,000
Vice President, 1995 151,106 149,131 79,000
Chief Financial Officer(2) 1994 130,445 92,926 150,000
James W. Allen.......................... 1996 175,458 175,108 135,000
Sr. Vice President, 1995 145,391 97,052 79,000
Operations 1994 122,797 73,331 150,000
Robert W. Randall....................... 1996 132,542 99,144 35,000
Vice President, General 1995 119,378 88,240 25,000
Counsel and Secretary 1994 109,721 58,411 50,000
James J. Byerlotzer..................... 1996 126,615 73,630 65,000
Vice President 1995 102,565 76,038 0
Domestic Operations (3) 1994 99,384 21,045 10,000
</TABLE>
- ------------
(1) Includes matching contributions and salary deferrals deposited into the
Company's 401(k) plan.
(2) Mr. Bragg was elected President and Chief Operating Officer of the Company
in February 1997. Mr. Tolson continues to serve as Chairman of the Board and
Chief Executive Officer.
(3) Mr. Byerlotzer resigned as an executive officer of the Company in February
1997 to accept a similar position with Dawson Production Services, Inc. when
it purchased the Company's domestic well-servicing operations.
8
<PAGE>
OPTION GRANTS, EXERCISE AND VALUATION
During 1996, options were granted under the Company's Long-Term Incentive
Plan to the Chief Executive Officer and the four other most highly compensated
executive officers of the Company as shown in the first table below. All options
were granted at fair market value on the grant date. One-third of the options
granted vest on the grant date and become exercisable six months after the grant
date, one-third vest and become exercisable upon the first anniversary of the
grant date, and the remaining one-third vest and become exercisable upon the
second anniversary of the grant date. Each option permits tax withholding to be
paid by the withholding of shares of Common Stock issuable upon exercise of the
option. Shown in the second table below is information with respect to
unexercised options held at December 31, 1996.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZED
INDIVIDUAL GRANTS VALUE AT ASSUMED ANNUAL
--------------------------------------------------------- RATES OF STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS OPTION TERM
UNDERLYING GRANTED TO EXERCISE OR ------------------------
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME GRANTED # FISCAL YEAR ($ PER SHARE) DATE ($)(3) ($)(4)
- ---------------------- ---------- ------------ ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ray H. Tolson......... 80,000(1) 8.7% $ 9.125 2006 $ 459,106 $ 1,163,448
100,000(2) 10.8% 14.125 2006 888,326 2,251,177
Paul A. Bragg......... 60,000(1) 6.5% 9.125 2006 344,332 872,590
75,000(2) 8.1% 14.125 2006 666,248 1,688,387
James W. Allen........ 60,000(1) 6.5% 9.125 2006 344,332 872,590
75,000(2) 8.1% 14.125 2006 666,248 1,688,387
Robert W. Randall..... 15,000(1) 1.6% 9.125 2006 86,093 218,159
20,000(2) 2.2% 14.125 2006 177,675 450,248
James J.
Beyerlotzer......... 40,000(1) 4.3% 9.125 2006 229,559 581,732
25,000(2) 2.7% 14.125 2006 222,091 562,806
</TABLE>
- ------------
(1) These options were granted February 26, 1996.
(2) These options were granted August 29, 1996.
(3) If the stock price appreciates at a rate of 5% per year from the date of
grant to the end of the option term, the potential realized value would
increase from $9.125 to $14.86 and from $14.125 to $23.01 for the February
26, 1996 and August 29, 1996 grants, respectively. The market value of the
Company's currently outstanding Common Stock would appreciate by
$241,776,872 and $374,252,395, respectively.
(4) If the stock price appreciates at a rate of 10% per year from the date of
grant to the end of the option term, the potential realized value would
increase from $9.125 to $23.67 and from $14.125 to $36.64 for the February
26, 1996 and August 29, 1996 grants, respectively. The market value of the
Company's currently outstanding Common Stock would appreciate by
$612,701,670 and $948,422,334, respectively.
9
<PAGE>
AGGREGATED FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR END(1) FISCAL YEAR-END(2)
---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ray H. Tolson........................ 817,667 93,333 $15,106,781 $ 985,000
Paul A. Bragg........................ 365,000 70,000 6,077,000 738,750
James W. Allen....................... 365,000 70,000 6,054,500 738,750
Robert W. Randall.................... 126,667 18,333 2,147,708 192,292
James J. Byerlotzer.................. 95,500 30,000 1,559,896 304,417
</TABLE>
- ------------
(1) Number of options shown includes all options (both in and out of the money)
at December 31, 1996. In connection with the Company's divestiture of its
domestic land-based well servicing operations in February 1997, all of Mr.
Byerlotzer's options became immediately exercisable.
(2) Value reflects those options in-the-money at December 31, 1996, based on a
closing price of $23.25 per share.
EMPLOYMENT AGREEMENTS
The Company is a party to employment agreements with Messrs. Tolson, Bragg
and Allen. Each employment agreement is currently for a term ending July 31,
1998, subject to automatic renewals for successive one-year terms until either
party terminates the contract effective upon a July 31 anniversary date, with at
least one year's advance notice. Each agreement provides that if the executive
is terminated involuntarily for reasons not associated with a 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 incentive compensation plan described below.
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.
Each 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 the voting power in
the 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 terms 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 a 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 of 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.
10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") consists of three outside
directors, Messrs. Clement, McBride and Sneed (Chairman), who neither are
officers or employees of the Company nor are eligible to participate in any of
the compensation programs the Committee administers. The Committee meets
semiannually to review, recommend and approve employment agreements, salaries,
incentive plans, stock options and employee benefit plans for officers and key
employees. The key elements of the Committee's compensation program are base
salary, annual incentive awards and long-term incentive awards.
BASE SALARY. Under the Committee's program, the base salary for executive
officers and other key employees is established to position the individual
between the twenty-fifth percentile and the median salary level for the
individual's peers in the contract drilling and well servicing industry.
Specific compensation for individual executives will vary within this target
range as a result of the subjective judgment of the Committee. The Company has
employment agreements with Messrs. Tolson, Bragg and Allen, which are more fully
described above under "Employment Agreements." Such executives, as well as the
other named executive officers, received base salary increases effective October
1, 1996, the full impact of which will not be reflected in the Summary
Compensation Table until 1997.
ANNUAL INCENTIVE COMPENSATION. The second component of the program is the
annual incentive compensation plan. This plan provides each executive officer
with the opportunity to reach a compensation level in the seventy-fifth
percentile of his peers in the Company's industry when the Company achieves
outstanding financial performance in terms of earnings per share ("EPS") as
measured against the annual profit plan adopted each year by the Committee and
the Board of Directors. Each year, the Committee establishes the maximum
incentive compensation award for each executive officer and key employee. The
Committee and the Board of Directors then establish a target EPS for the Company
for the year. Based on this target, the Company awards incentive compensation of
25% of the maximum award at the threshold level, which equals 80% of the target
EPS. Another 25% is awarded incrementally between the threshold level and the
target, while the final 50% is awarded incrementally between the target and the
maximum level, which equals 120% of the target. For 1996, the annual incentive
for Mr. Byerlotzer was based 60% on his area of responsibility and 40% on EPS
while the incentives for Messrs. Allen, Bragg and Randall were based 100% on
EPS. For 1996, the Company achieved EPS of $.75, which equaled more than 120% of
the target EPS of $.58, resulting in incentive awards of 100% of the maximum.
LONG-TERM INCENTIVE COMPENSATION. The final component of the Committee's
compensation program is the Company's Long-Term Incentive Plan ("LTIP"). Under
the LTIP, the Committee grants key employees, including the named executive
officers, stock options in an effort to provide long-term incentives to such
executives. The Committee currently views stock options as the most effective
way to tie the long-term interests of management directly to those of the
shareholders. In awarding stock options to executives other than the Chief
Executive Officer, the Committee reviews and approves recommendations made by
the Chief Executive Officer.
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.
Considering these factors, the Committee makes a subjective determination as to
the level of the award.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Committee applies the executive
compensation program described above in determining Mr. Tolson's total
compensation. In 1996, the Committee reviewed Mr. Tolson's base salary,
comparing it to the salary of his peers in the industry, and recommended to the
Board of Directors that his base salary be increased to $350,000. For 1996, Mr.
Tolson's annual incentive award was based solely on EPS and calculated on low
fixed, high variable components established by the Committee to increase
incentive in performance. Because the Company achieved EPS in excess of 129% of
the target for the year, the Company awarded Mr. Tolson an incentive bonus of
$603,076, which represented an incentive compensation award of 200% of Mr.
Tolson's base salary.
11
<PAGE>
SUPPLEMENTAL RETIREMENT PLAN. The Committee, with assistance of J.E. Stone
& Associates, Inc., developed a supplemental Executive Retirement Plan for
executives that are selected from time to time by the Company's Chief Executive
Officer and approved by the Committee. The Board of Directors approved the
Executive Retirement Plan effective as of January 1, 1996. Currently Messrs.
Tolson, Bragg and Allen participate in the Plan.
LIMIT ON DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal
Revenue 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 Committee does not anticipate any
payment of compensation in 1996 or 1997 in excess what is deductible under
Section 162(m), and 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
12
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing for the last five years 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. 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]
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
Pride 100.0 75.2 99.5 97.1 206.3 451.5
Pool 100.0 104.1 124.5 110.2 155.1 241.0
S&P 500 100.0 104.5 111.8 110.1 147.7 177.6
Peer Group 100.0 93.1 116.7 109.4 152.7 264.7
As a result of recent strategic transactions described above under
"Proposed Change in the Company's Name," the Company has transformed itself
into one of the largest and most diversified drilling contractors in the world.
The Company believes, therefore, that the Peer Group, which includes companies
that provide primarily land-based well maintenance services, no longer
represents a group of companies offering similar services as the Company. The
Company expects its peer group to consist of other offshore drilling contractors
and international land-based drilling contractors in future periods.
13
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR THE 1998 ANNUAL MEETING
Shareholder proposals submitted for presentation at the Annual Meeting of
Shareholders of the Company following the completion of fiscal year 1997 must be
received by the Company no later than December 30, 1997. 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 that 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 for 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, 1996, as filed with the Securities and Exchange Commission, are
available without charge to shareholders upon request to Earl W. McNiel, Chief
Financial Officer, Pride Petroleum Services, Inc., 1500 City West Blvd., Suite
400, Houston, Texas 77042.
By Order of the Board of Directors
/s/ ROBERT W. RANDALL
ROBERT W. RANDALL, SECRETARY
14
<PAGE>
FRONT SIDE OF PROXY
PRIDE PETROLEUM SERVICES, INC.
PROXY -- 1997 ANNUAL MEETING OF SHAREHOLDERS
MAY 22, 1997
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated April 30, 1997. 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. (the "Company"), to
be held at the Westchase Hilton, 9999 Westheimer, Houston, Texas on May 22, 1997
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 that the
undersigned is entitled to vote:
FOR AGAINST ABSTAIN
(1) Approval of the change in the [ ] [ ] [ ]
Company's name to Pride
International, Inc.
(2) Ratification of the appointment of [ ] [ ] [ ]
Coopers & Lybrand L.L.P. as the
Company's independent public
accountants for 1997.
(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)
- --------------------------------------------------------------------------------
BACK SIDE OF PROXY
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 ON
THE REVERSE SIDE 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.
