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 INTERNATIONAL, 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 INTERNATIONAL, INC. LETTERHEAD]
April 27, 1999
To Our Shareholders:
We are pleased to invite you to attend the Annual Meeting of Shareholders
of PRIDE INTERNATIONAL, INC., which will be held at 1:30 p.m., Houston time, on
May 25, 1999, at 5847 San Felipe, Suite 1245, Houston, Texas.
The ratification of PricewaterhouseCoopers as our independent accountants
for 1999 is scheduled for consideration at this Meeting. The Meeting will
provide an opportunity to review with you our business and affairs during 1998
and give you a chance to meet our directors.
Whether or not you plan to attend, please sign, date and return the proxy
card in the accompanying envelope. Your vote is important no matter how many
shares you own. If you do attend the Meeting and desire to vote in person, you
may do so even though you have previously submitted your proxy.
We look forward to seeing you at the Meeting.
Sincerely,
Paul A. Bragg
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHIEF OPERATING OFFICER
<PAGE>
[LOGO] PRIDE INTERNATIONAL, INC.
------------------------
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 25, 1999
The Annual Meeting of Shareholders of Pride International, Inc. will be
held at 5847 San Felipe, Suite 1245, Houston, Texas 77057 on Tuesday, May 25,
1999, at 1:30 p.m., Houston Time, for the following purposes:
1. To ratify the appointment of PricewaterhouseCoopers LLP as Pride's
independent accountants for 1999.
2. 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.
The Board of Directors has established April 9, 1999 as the record date for
the determination of shareholders 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 card 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 27, 1999
5847 San Felipe, Suite 3300
Houston, Texas 77057
<PAGE>
PRIDE INTERNATIONAL, INC.
5847 SAN FELIPE, SUITE 3300
HOUSTON, TEXAS 77057
------------------------
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the 1999 Annual Meeting of Shareholders of Pride
International, Inc. (the "Company") to be held on May 25, 1999, 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.
All properly executed written proxies delivered pursuant to this
solicitation (and not later revoked) will be voted at the Annual Meeting in
accordance with the instructions given in the proxy. When voting, shareholders
may vote in favor of ratification or against ratification or may abstain from
voting. Shareholders should vote their shares on the enclosed proxy card. If
neither "for," "against" nor "abstain" is indicated, proxies that are
signed and returned will be voted "for" ratification of the appointment of
PricewaterhouseCoopers LLP as the Company's independent accountants for 1999.
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 the Secretary a later-dated proxy. All shares of the Company's
common stock represented by properly executed and unrevoked proxies will be
voted if such proxies are received in time for the meeting. Such proxies,
together with this Proxy Statement and the Company's Annual Report to
Shareholders, are being sent to shareholders on or about April 27, 1999.
QUORUM, VOTE REQUIRED AND REVOCATION OF PROXIES
The Board of Directors has established April 9, 1999 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 50,426,673 shares of
common stock held by 1,926 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
9, 1999, 1,649,021 shares of common stock, or 3.1% of the total outstanding,
were beneficially owned by the directors and executive officers of the Company.
See also "Certain Relationships and Related 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. Abstentions and broker non-votes (proxies submitted by
brokers that do not indicate a vote for a proposal because they do not have
discretionary voting authority and have not received instructions as to how to
vote on the proposal) are counted as present in determining whether the quorum
requirement is satisfied. If a quorum is present, the approval of the
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants for 1999 requires the affirmative vote of at least a
majority of the votes cast. Abstentions from voting will be included in the
voting tally and will have the same effect as a vote against a proposal.
Although broker non-votes are considered present for quorum purposes, they are
not considered entitled to vote with respect to a proposal. Accordingly, broker
non-votes will not affect the outcome of the voting.
The Company expects that no other matter will be brought before the Annual
Meeting. If other matters are properly presented, however, the persons named as
proxies will vote in accordance with their judgment with respect to such
matters.
1
<PAGE>
Any holder of common stock has the right to revoke his or her proxy at any
time prior to the voting thereof at the Annual Meeting by (1) filing a written
revocation with the Secretary prior to the voting of such proxy, (2) giving a
duly executed proxy bearing a later date or (3) attending the Annual Meeting and
voting in person. Attendance by a shareholder will not itself revoke his or her
proxy.
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 that they hold of record and will, upon request, reimburse them for their
reasonable expenses in doing so.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 1)
PricewaterhouseCoopers LLP has been appointed by the Board of Directors as
independent public accountants for the Company and its subsidiaries for the year
ending December 31, 1999. This appointment is being presented to the
shareholders for ratification. Representatives of PricewaterhouseCoopers LLP 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 PricewaterhouseCoopers LLP 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
PricewaterhouseCoopers LLP as the Company's independent accountants, it is not
anticipated that PricewaterhouseCoopers LLP will be replaced in 1999. Such lack
of approval will, however, be considered by the Audit Committee in selecting the
Company's independent accountants for 2000.
INFORMATION CONCERNING DIRECTORS OF THE COMPANY
The Board of Directors currently consists of the seven members named in the
table below. The term of each director will continue until the 2003 Annual
Meeting of Shareholders and until their respective successors are elected. Set
forth below for each director are the number of shares of the Company's common
stock beneficially owned as of April 9, 1999 and the percentage of outstanding
shares of common stock that such number of shares represents. 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>
NUMBER OF SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
NAME OWNED(1) SHARES
- ------------------------------------- ----------------- -------------
<S> <C> <C>
Paul A. Bragg........................ 316,250 *
James B. Clement..................... 30,167 *
Remi Dorval (2)...................... 38,167 *
Jorge E. Estrada M................... 50,000 *
Christian J. Boon Falleur (3)........ 58,167 *
Ralph D. McBride..................... 28,467 *
James T. Sneed....................... 33,267 *
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
2
<PAGE>
- ------------
* Less than 1% of issued and outstanding shares of the Company's common stock.
(1) Includes shares that may be acquired within 60 days of April 9, 1999 by
exercise of stock options as follows: Mr. Bragg -- 285,250; Mr.
Clement -- 30,167; Mr. Dorval -- 18,167; Mr. Boon Falleur -- 18,167; Mr.
McBride -- 24,167; and Mr. Sneed -- 30,167.
(2) Does not include 2,752,750 shares beneficially owned by Soletanche Group, of
which Mr. Dorval serves as a supervisory director. See "Certain
Shareholders" and "Certain Relationships and Related Transactions."
(3) Does not include 3,853,850 shares beneficially owned by Ackermans & van
Haaren Group, with which Mr. Boon Falleur is affiliated. See "Certain
Shareholders" and "Certain Relationships and Related Transactions."
PAUL A. BRAGG, 43, was appointed Chief Executive Officer and a director of
the Company in March 1999 upon the retirement of Ray H. Tolson. Mr. Bragg has
been President and Chief Operating Officer of the Company since February 1997.
He joined the Company in July 1993 as its Vice President and Chief Financial
Officer.
JAMES B. CLEMENT, 53, has been a director of the Company since November
1993. From 1977 until October 1997, he was an executive officer of Offshore
Logistics, Inc., a publicly traded company engaged in helicopter transportation
services, serving as its President, Chief Executive Officer and a director since
1988. He is currently serving as a consultant to Offshore Logistics and manages
personal investments. Mr. Clement serves on the Executive Committee, the Audit
Committee and the Compensation Committee of the Board of Directors. In March
1999, he was elected Chairman of the Board of the Company.
REMI DORVAL, 48, became a director of the Company in March 1997 in
connection with the acquisition by the Company of the operating subsidiaries of
Forasol-Foramer N.V. ("Forasol-Foramer"). See "Certain Relationships and
Related Transactions." From that time until March 1999, he served as Vice
Chairman of the Board of the Company. For more than five years prior to becoming
a director, 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, a privately held French company, and is in charge
of its interests in the oil and gas sector. Mr. Dorval serves on the Audit
Committee of the Board of Directors.
JORGE E. ESTRADA M., 51, has been a director of the Company since October
1993. For more than five years, Mr. Estrada has been President and Chief
Executive Officer of JEMPSA Media and Entertainment, a company specializing in
the Spanish and Latin American entertainment industry. Previously, Mr. Estrada
served as President -- Worldwide Drilling Division of Geosource and Vice
President of Geosource Exploration Division -- Latin America.
CHRISTIAN J. BOON FALLEUR, 51, became a director of the Company in March
1997 in connection with the Forasol-Former transaction. See "Certain
Relationships and Related Transactions." For more than five years prior to
becoming a director, Mr. Boon Falleur was a Supervisory Director and Executive
Vice President of Forasol-Foramer and its predecessors. He has been affiliated
since 1972 with Ackermans & van Haaren Group, a publicly traded company listed
on the Brussels Stock Exchange, and is currently in charge of its energy
services and construction sections. Mr. Boon Falleur serves on the Compensation
Committee of the Board of Directors.
RALPH D. MCBRIDE, 52, has been a director of the Company since September
1995. Mr. McBride has been a partner with the law firm of Bracewell & Patterson,
L.L.P. in Houston, Texas, since 1980. Bracewell & Patterson, L.L.P. provides
legal services to the Company from time to time. Mr. McBride serves on the
Executive Committee, the Audit Committee and the Compensation Committee of the
Board of Directors. In March 1999, he was elected Vice Chairman of the Board of
the Company.
JAMES T. SNEED, 67, has been a director of the Company since October 1992.
In 1991 he retired after 37 years of employment with Mobil Oil Corporation where
he was Production Manager USA. Mr. Sneed serves on the Executive Committee and
the Compensation Committee of the Board of Directors.
3
<PAGE>
COMPENSATION OF DIRECTORS
The annual retainer for each outside director is $7,000 per quarter, or
$28,000 annually, except for Mr. Clement, the Chairman of the Board, who
receives $14,000 per quarter, or $56,000 annually. Each outside director also
receives a fee of (i) $1,000 ($2,000 for Mr. Clement) for each Board meeting
attended and (ii) $1,000 ($2,000 for Mr. Clement) for each committee meeting
attended that is not on the date of a Board meeting or $500 ($1,000 for Mr.
Clement) for each committee meeting attended that is on the date of a Board
meeting.
In addition, each director who is not an employee of the Company has
received stock options under the Company's 1993 Directors' Stock Option Plan. A
maximum of 400,000 shares of common stock is available for purchase upon
exercise of options granted under 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,
may receive one grant annually as determined by the Board of Directors or the
Executive Committee 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 directors collectively have
been granted options to purchase 161,665 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 1998, the Board of Directors of the Company held
13 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, currently comprising Messrs. 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 five meetings during 1998.
The Audit Committee, currently comprising Messrs. Clement, McBride and
Dorval, 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 held two meetings during
1998.
The Compensation Committee, currently comprising Messrs. Clement, McBride,
Boon Falleur 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 held five meetings during 1998.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), 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 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 1998.
4
<PAGE>
CERTAIN SHAREHOLDERS
The following table sets forth certain information as of April 9, 1999
(unless otherwise noted) with respect to the beneficial ownership of the
Company's common stock by (1) 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, (2) the persons named in the "Summary Compensation Table" below and (3)
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.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED(1) OF CLASS
- ------------------------------------- --------------------- ---------
<S> <C> <C>
Ackermans & van Haaren Group (2)..... 3,853,850 7.6%
Begijnenvest 113
B-2000 Antwerpen
Belgium
Soletanche Group (2)................. 2,752,750 5.5%
6, rue de Watford
92000 Nanterre
France
Neuberger & Berman LLC (3)........... 2,974,100 5.9%
605 Third Avenue
New York, New York 10158
Ray H. Tolson (4).................... 434,571 *
Paul A. Bragg (5).................... 316,250 *
James W. Allen (5)................... 459,121 *
Gerard Godde (5)..................... 177,995 *
John O'Leary (5)..................... 127,902 *
All current executive officers and
directors as a group (13
persons)........................... 1,649,021 3.1%
</TABLE>
- ------------
* Less than 1% of issued and outstanding shares of the Company's common stock.
(1) The number of shares beneficially owned by the named executive officers
includes shares that may be acquired within 60 days by exercise of stock
options or warrants as follows: Mr. Bragg -- 285,250; Mr. Allen -- 457,750;
Mr. Godde -- 175,200; and Mr. O'Leary -- 127,902.
(2) Ackermans & van Haaren Group and Soletanche Group acquired their beneficial
ownership of the Company's common stock in March 1997 in connection with the
Forasol-Foramer acquisition. 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 Transactions."
(3) The Schedule 13G, as amended, filed by Neuberger Berman, LLC and Neuberger
Berman Management Inc. (collectively "Neuberger") under the Exchange Act
indicates that, as of February 8, 1999, Neuberger beneficially owned an
aggregate of 2,974,100 shares of the Company's common stock. According to
the Schedule 13G, Neuberger had sole voting power with respect to 1,369,300
shares, shared voting power with respect to 1,583,400 shares and shared
investment power with respect to 2,974,100 shares.
(4) Effective March 1999, Mr. Tolson retired as the Chairman of the Board and
Chief Executive Officer of the Company. His business address is HC12 Box
64R, Fredericksburg, Texas 78624.
(5) The business address of each named executive officer other than Mr. Tolson
is c/o Pride International, Inc., 5847 San Felipe, Suite 3300, Houston,
Texas 77057.
5
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FORASOL-FORAMER ACQUISITION. In accordance with the purchase agreement
pursuant to which the Company acquired the operating subsidiaries of
Forasol-Foramer, until March 2002, each of Ackermans & van Haaren Group and its
affiliates (collectively, the "AVH Group") and Soletanche Group and its
affiliates (collectively, the "Soletanche Group") are entitled to nominate one
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
acquired pursuant to the purchase agreement. Christian J. Boon Falleur is the
director nominee of the AVH Group, and Remi Dorval is the director nominee of
the Soletanche Group.
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, (1) participate in any
unsolicited offer to acquire control of the Company or in any election contest
relating to the Company; (2) 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);
(3) 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; (4) 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
(5) enter into any discussions, 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.
RETIREMENT OF RAY H. TOLSON. In connection with the retirement of Ray H.
Tolson in March 1999 as the Company's Chairman of the Board and Chief Executive
Officer, the Company made severance payments of $5.0 million to Mr. Tolson and
$3.0 million to his deferred compensation account, which will be paid to him in
ten substantially equal annual installments. As consideration for such payments,
Mr. Tolson agreed to, among other things, (1) the immediate termination of his
employment agreement with the Company, (2) the cancellation of all options to
purchase the Company's common stock held by him, (3) the cancellation of an
airplane lease between Mr. Tolson as lessor and the Company as lessee having a
remaining term of approximately four years, and (4) a five-year non-competition
agreement.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table discloses compensation for the fiscal years ended
December 31, 1998, 1997 and 1996 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
---------------------- UNDERLYING
NAME AND PRINCIPAL POSITION(1) YEAR SALARY(2) BONUS OPTIONS
- ---------------------------------------- ----- --------- ---------- ------------
<S> <C> <C> <C> <C>
Ray H. Tolson(3)........................ 1998 $ 422,677 $ 277,536 307,139
Chairman of the Board and 1997 366,154 732,307 175,000
Chief Executive Officer 1996 301,888 603,076 180,000
Paul A. Bragg(4)........................ 1998 319,838 158,072 198,750
President and 1997 272,154 408,231 150,000
Chief Operating Officer 1996 178,973 178,623 135,000
James W. Allen.......................... 1998 274,377 90,057 175,000
Senior Vice President -- 1997 224,807 224,807 125,000
Operations 1996 175,458 175,108 135,000
Gerard Godde............................ 1998 197,000 108,504 129,850
Senior Vice President -- 1997 142,397 77,980 187,700
Forasol Operations(5) 1996 -- -- --
John O'Leary............................ 1998 196,462 49,499 145,201
Vice President -- 1997 148,356 101,467 171,200
International Marketing(5) 1996 -- -- --
</TABLE>
- ------------
(1) As of December 31, 1998.
(2) Includes matching contributions deposited into the Company's 401(k) plan and
salary deferrals into the Company's restoration plan.
(3) In March 1999, Mr. Tolson retired as Chairman of the Board and Chief
Executive Officer, and the options held by him were cancelled in partial
consideration of certain severance payments. See "Certain Relationships and
Related Transactions."
(4) In March 1999, Mr. Bragg was appointed to the additional position of Chief
Executive Officer.
(5) Messrs. Godde and O'Leary became executive officers of the Company in March
1997 in connection with the Forasol-Foramer acquisition.
OPTION GRANTS, EXERCISE AND VALUATION
During 1998, options were granted 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 such options were granted at fair market value on the
grant date. Such options generally are exercisable as to one-fifth of the shares
covered thereby six months after the grant date, one-fifth on the first
anniversary of the grant date and one-fifth on each successive 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, 1998.
7
<PAGE>
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED(#) 1998 ($ PER SHARE) DATE 5% 10%
- ---------------------- ---------- ------------ ------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Ray H. Tolson(2)...... 93,750 4.6% 8.00 09/09/08 $ 471,671 $ 1,195,307
137,500 6.8% 9.69 10/21/08 837,923 2,123,463
75,889 3.8% 10.44 10/23/08 498,166 1,262,450
Paul A Bragg.......... 86,250 4.3% 8.00 09/09/08 433,937 1,099,682
112,500 5.6% 9.69 12/02/08 685,574 1,737,379
James W. Allen........ 75,000 3.7% 8.00 09/09/08 377,337 956,245
100,000 4.9% 9.69 12/02/08 609,399 1,544,336
Gerard Godde.......... 36,000 1.8% 8.00 09/09/08 181,122 458,998
93,850 4.6% 9.69 12/02/08 571,921 1,449,360
John O'Leary.......... 75,000 3.7% 8.00 09/09/08 377,337 956,245
70,201 3.5% 9.69 12/02/08 427,804 1,084,140
</TABLE>
- ------------
(1) The amounts under these columns result from calculations assuming 5% and 10%
annual growth rates through the actual option term as set by the Securities
and Exchange Commission and are not intended to forecast future price
appreciation of the Company's common stock. The gains reflect a future value
based upon growth at these prescribed rates.
(2) In March 1999, Mr. Tolson retired as Chairman of the Board and Chief
Executive Officer, and the options held by him were cancelled in partial
consideration of certain severance payments. See "Certain Relationships and
Related Transactions."
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END(1) FISCAL YEAR-END(2)
ACQUIRED VALUE ---------------------------- ----------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ray H. Tolson(3)..................... 343,750 $2,921,875 605,750 444,639 $ 561,922 $ --
Paul A. Bragg........................ -- -- 214,000 273,750 14,813 --
James W. Allen....................... -- -- 389,000 275,000 286,688 --
Gerard Godde......................... -- -- 137,950 179,600 -- --
John O'Leary......................... -- -- 90,652 194,951 -- --
</TABLE>
- ------------
(1) Number of options shown includes all options (both in and out of the money)
at December 31, 1998.
(2) Value reflects those options in-the-money based on a closing price of
$7 1/16 per share at December 31, 1998, less the option exercise price.
Options are in-the-money if the market value of the shares covered thereby
exceeds the option exercise price.
(3) In March 1999, Mr. Tolson retired as Chairman of the Board and Chief
Executive Officer, and the options held by him were cancelled in partial
consideration of certain severance payments. See "Certain Relationships and
Related Transactions."
EMPLOYMENT AGREEMENTS
The Company is a party to employment agreements with Messrs. Bragg, Allen
and O'Leary, each for a term ending February 4, 2001. Each agreement is subject
to automatic renewals for successive one-year terms until either party
terminates the contract effective upon a February 4 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
8
<PAGE>
(1) two full years of base salary (not less than the highest annual base salary
during the preceding three years); (2) two years of life, health, accident and
disability insurance benefits for himself and dependents; (3) an amount equal to
two times the target award for the Company's annual incentive compensation plan
described below under "Report of the Compensation Committee on Executive
Compensation"; and (4) immediate vesting of the executive's options and awards.
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 event of a
Change in Control, the term of the agreements will be extended for a period of
three years 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 (1) salary and benefits equal to three full years of compensation; (2)
bonus equal to three times the maximum award for the year of termination; (3)
life, health and accident and disability insurance continued for three years or
until reemployment; and (4) immediate vesting of the executive's options and
awards. 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 two
years after termination (voluntary or involuntary) assuming that it was not due
to a Change in Control. In the event of a Change in Control, the noncompete
clause is void.
In connection with the acquisition of the operating subsidiaries of
Forasol-Foramer, the Company entered into a severance agreement with Mr. Godde.
This agreement provides that, if he is terminated other than for reasons of
misconduct, resignation, death, disability or the attainment of 65 years of age,
he will receive one month of gross salary (as defined) for each year of service
with Forasol-Foramer and the Company. In addition, the Company will provide him
and his dependents 18 months of coverage under the Company's retirement and
benefit plans.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") consists of four outside
directors, Messrs. Clement, McBride, Boon Falleur and Sneed (Chairman), who
neither are officers or employees of the Company nor eligible to participate in
any of the compensation programs the Committee administers. The Committee meets
at least 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 the
executive officers and other key employees is established to position the
individual in the median to upper salary level for the individual's peers in the
contract drilling 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 seven executive officers.
These executives received base salary increases ranging from 6.3% to 15.5%
(equal to a weighted average of 9.2%) effective October 1998.
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 between the median and high
end 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. The annual profit plan is developed after management submits to
the Board of Directors its expectations for the year. The Committee establishes
the maximum incentive compensation award for each executive officer and key
employee. The
9
<PAGE>
Committee and the Board of Directors then establish a target EPS for the Company
for the year. For 1998, the annual incentive for Mr. Godde was based 60% on his
area of responsibility and 40% on EPS while the incentives for Messrs. Tolson,
Bragg, Allen and O'Leary were based 100% on EPS. For 1998, the Company's actual
EPS was 13% below the target EPS, resulting in awards of 36% of the maximum
incentive award for such individuals.
LONG-TERM INCENTIVE COMPENSATION. The final component of the Committee's
compensation program is the Company's 1998 Long-Term Incentive Plan. Under the
plan, the Committee is authorized to grant key employees, including the named
executive officers, stock options and other stock and cash awards 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 or modifies 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 each award.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Committee applies the executive
compensation program described above in determining the Chief Executive
Officer's total compensation. In 1998, the Committee reviewed Mr. Tolson's base
salary, comparing it to the salary of his peers in the international contract
drilling industry, and recommended to the Board of Directors that his base
salary be increased to $430,000. For 1998, 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's EPS was 13% below the target for the year, the Company awarded Mr.
Tolson an incentive bonus of $277,536, which represented an incentive
compensation award of 66% of Mr. Tolson's base salary. In addition, the
Committee awarded options to Mr. Tolson to purchase an additional 307,139 shares
of the Company's common stock (at the market value of such stock on the date of
the award). These options were among those cancelled in March 1999 in connection
with Mr. Tolson's retirement. See "Certain Relationships and Related
Transactions."
SUPPLEMENTAL RETIREMENT PLAN. The Committee has implemented 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. Currently,
Messrs. Bragg and Allen participate in the Plan.
LIMIT ON DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal
Revenue Code of 1986 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 1998 or 1999 in excess of what is
deductible under Section 162(m), and believes that options granted under the
1998 Long-Term Incentive Plan currently meet the requirements for "performance
based" compensation.
The Committee believes its practices are fair and equitable for both the
executive officers and the shareholders of the Company.
Respectfully submitted,
Christian J. Boon Falleur
James B. Clement
Ralph D. McBride
James T. Sneed
10
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Presented below is a line graph comparing for the last five years the
yearly change in the Company's common stock against the SCI Index (which
includes all 82 upstream oil service and equipment companies in the February
1999 SCI Monthly Performance & Valuation Guide), the SCI Offshore Drillers Index
(which includes, among others, the Company, Atwood Oceanics, Inc., Diamond
Offshore Drilling, Inc., ENSCO International Incorporated, Global Marine Inc.,
Marine Drilling Companies, Inc., Noble Drilling Corporation, R&B Falcon
Corporation and Rowan Companies, Inc.) and the S&P 500 Index.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1993 1994 1995 1996 1997 1998
------- ------- ------- ------- ------- -------
PRIDE .............. 100.0 97.6 207.3 453.7 492.7 137.8
SCI ................ 100.0 105.5 164.3 261.5 395.1 169.4
SCI OFFSHORE ....... 100.0 82.0 158.1 375.1 482.0 176.4
S&P 500 ............ 100.0 101.3 139.4 171.4 228.6 293.9
11
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR THE 2000 ANNUAL MEETING
To be included in the proxy materials for the 2000 Annual Meeting of
Shareholders, shareholder proposals submitted for presentation at the annual
meeting must be received by the Company no later than December 28, 1999. Proxies
granted in connection with that annual meeting may confer discretionary
authority to vote on any shareholder proposal if notice of the proposal is not
received by the Company by March 13, 2000. 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 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. If any other matters requiring a vote of the
shareholders arises, the proxies in the enclosed form shall be deemed to 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, 1998, as filed with the Securities and Exchange
Commission, are available without charge to shareholders upon request to Earl W.
McNiel, Chief Financial Officer, Pride International, Inc., 5847 San Felipe,
Suite 3300, Houston, Texas 77057.
By Order of the Board of Directors
ROBERT W. RANDALL, SECRETARY
12
<PAGE>
PRIDE INTERNATIONAL, INC.
PROXY -- 1999 ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 1999
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated April 27, 1999. Paul A. Bragg and Robert
W. Randall, 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 International, Inc. (the "Company") to be
held at 5847 San Felipe, Suite 1245, Houston, Texas on May 25, 1999 at 1:30
p.m., Houston 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. Ratification of the appointment of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as the
Company's independent accountants
(Continued, and to be signed, on the other side)
This proxy is revocable. The undersigned hereby revokes any proxy or proxies
to vote or act with respect to such shares heretofore given by the undersigned.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL
BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS SPECIFIED ABOVE AND, IN THE ABSENCE
OF SUCH SPECIFICATIONS, WILL BE VOTED "FOR" ITEM 1. IF ANY OTHER BUSINESS
PROPERLY COMES BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF, THIS PROXY 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 held jointly)
______________________________________
(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.
