<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
POOL ENERGY SERVICES CO.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
March ___, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Pool
Energy Services Co. to be held on Thursday, May 2, 1996 at 10375 Richmond
Avenue, 2nd Floor, Houston, Texas, commencing at 10:00 a.m., Houston time.
Your Board of Directors and management look forward to greeting personally
those shareholders able to attend.
This year, in addition to electing two directors and ratifying the appointment
of independent auditors, you are being asked to approve a new Directors' Stock
Incentive Plan and to approve an increase in the Company's authorized shares of
Common Stock. These matters are discussed in greater detail in the
accompanying proxy statement.
Your Board of Directors recommends a vote FOR the election of directors, FOR
approval of the 1996 Directors' Stock Incentive Plan, FOR the increase in
authorized shares of Common Stock and FOR ratification of independent auditors.
Regardless of the number of shares you own or whether you plan to attend, it is
important that your shares are represented and voted at the meeting. You are
requested to sign, date and mail the enclosed proxy promptly.
Your interest and participation in the affairs of the Company are most
appreciated.
Sincerely,
J. T. Jongebloed
Chairman, President and
Chief Executive Officer
<PAGE> 3
POOL ENERGY SERVICES CO.
10375 Richmond Avenue
Houston, Texas 77042
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 1996
TO THE SHAREHOLDERS OF
POOL ENERGY SERVICES CO.: MARCH ___, 1996
The Annual Meeting of the Shareholders of Pool Energy Services Co.
(the "Company") will be held at 10375 Richmond Avenue, 2nd Floor, Houston,
Texas, on May 2, 1996, at 10:00 a.m., Houston time, for the following purposes:
1. To elect two Class II directors, each for a term of three
years.
2. To approve a new Directors' Stock Incentive Plan.
3. To approve a proposed amendment to the Company's Articles of
Incorporation to increase the number of authorized shares of
Common Stock.
4. To ratify the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the year 1996.
5. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 8, 1996 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
Geoffrey Arms
Corporate Secretary
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY PROMPTLY.
- --------------------------------------------------------------------------------
<PAGE> 4
POOL ENERGY SERVICES CO.
10375 Richmond Avenue
Houston, Texas 77042
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 1996
The following information is submitted concerning the enclosed form of
proxy and the matters to be acted upon under the authority thereof at the
Annual Meeting of Shareholders of the Company to be held at 10375 Richmond
Avenue, 2nd Floor, Houston, Texas, on the 2nd day of May, 1996, at 10:00 a.m.,
or any adjournment thereof, pursuant to the Notice of Meeting. This Proxy
Statement and the enclosed form of proxy are first being sent to holders of the
Company's Common Stock on or about March ___, 1996.
INFORMATION CONCERNING PROXY
Proxies are being solicited on behalf of the Board of Directors of the
Company from holders of the Company's Common Stock. Any proxy may be revoked
by a shareholder at any time prior to the exercise thereof by filing with the
Corporate Secretary of the Company a written revocation or a duly executed
proxy bearing a later date. The proxy shall be suspended if the shareholder is
present at the meeting and elects to vote in person.
All duly executed proxies will be voted in accordance with the
instructions given. Any duly executed proxies for which no instructions are
given (and which have not been revoked or suspended before they are voted) will
be voted FOR (1) the election of the two nominees for directors named below,
(2) approval of the 1996 Directors' Stock Incentive Plan, (3) approval of the
proposed amendment to the Company's Articles of Incorporation to increase the
number of authorized shares of Common Stock from 25 million shares to 40
million shares, and (4) ratification of the appointment of Deloitte & Touche
LLP as the Company's independent auditors for 1996. Such proxies will also be
voted in accordance with the recommendation of the Board of Directors as to any
other matters which may properly come before the meeting.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mail, employees of the Company, who will not receive
any additional compensation for their activities, may solicit proxies by
telephone or other means of communication. The Company has engaged D. F. King
& Co., Inc. to aid in the solicitation of proxies for which such firm will be
paid a fee of $5,000 plus out-of-pocket expenses. Upon request, the Company
will reimburse brokers, dealers, bankers, and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding proxy material to beneficial
owners of shares of the Company's Common Stock.
1
<PAGE> 5
VOTING SECURITIES
The securities of the Company entitled to vote at the Annual Meeting
consist, as of March 8, 1996 (the "Record Date"), of 14,083,858 shares of
common stock, no par value ("Common Stock"). Each outstanding share of Common
Stock is entitled to one vote on all matters to come before the meeting. The
proposal relating to amendment of the Company's Articles of Incorporation will
require for approval the affirmative vote of the holders of at least two-thirds
of the outstanding shares of the Company's Common Stock entitled to vote at the
meeting. Directors will be elected by a plurality of the votes cast. All
other matters to be considered at the meeting will be decided by the
affirmative vote of the holders of a majority of the shares present or
represented and entitled to vote. Only shareholders of record on the Record
Date will be entitled to vote at the meeting. The Articles of Incorporation of
the Company prohibit cumulative voting.
For purposes of a vote on any matter that requires for adoption the
affirmative vote of a majority of the shares present or represented and
entitled to vote: (i) shares as to which the holder abstains from voting
effectively will constitute a "no" vote because such shares are considered
present at the meeting, and (ii) shares held in "street name" by a broker or
other nominee who does not have discretionary voting authority to vote such
shares on the particular matter are not counted as shares entitled to vote on
such matter and, therefore, a "broker non-vote" will not affect the outcome of
the voting. In the case of the proposed amendment to the Articles of
Incorporation, both abstention and "broker non-votes" effectively will
constitute "no" votes.
1. ELECTION OF DIRECTORS
Pursuant to the Company's Bylaws, the Board of Directors is to consist
of at least two, but not more than ten directors, which number shall be
determined by the Board of Directors from time to time. The Board of Directors
currently consists of seven members. Following Mr. Preston M. Geren, Jr.'s
retirement from the Board in May 1996 and upon the election of the nominees for
director set forth herein, the Board of Directors will continue to consist of
seven members. The Bylaws of the Company provide for three classes of
directors, designated Class I, Class II and Class III. At the expiration of
the term of each class, the directors of that class are to be elected for a
term of three years and until their successors have been elected and qualified.
Class II directors are to be elected at the Annual Meeting, to serve for terms
expiring in 1999. Unless contrary instructions are set forth in the proxy, the
persons named in the proxy will vote all shares represented by proxies for the
election as directors of the two nominees named below. Should either or both
of the nominees named herein become unable or unwilling to accept nomination or
election, the persons acting under authority of the proxy will vote for the
election, in the nominee's stead, of such other person(s) as the Board of
Directors shall nominate. The Board of Directors has no reason to believe that
either of the nominees will be unable or unwilling to serve if elected.
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<PAGE> 6
NOMINEES FOR ELECTION AS DIRECTORS; CONTINUING DIRECTORS
The following table sets forth the name, age, and principal occupation
or employment during the past five years of each nominee for election as a
Class II director and of each continuing Class I and Class III director, as
well as certain other directorships held by each such person and the period
during which he has served as a director of the Company.
<TABLE>
<CAPTION>
Director
Continuously
CLASS II DIRECTOR NOMINEES Since
- -------------------------- ------------
<S> <C>
GARY D. NICHOLSON, 58. Mr. Nicholson is Chairman of the Board (New)
of Directors, President and Chief Executive Officer of Camco
International Inc. Mr. Nicholson joined Camco in October 1992
as Executive Vice President and Chief Operating Officer, became
President and Chief Executive Officer on January 1, 1993 and
Chairman of the Board of Directors in October 1994. Mr. Nicholson
was an independent consultant from 1991 to 1992 and was President
and Chief Executive Officer of LTV Energy Products Company, an
operating unit of LTV Corporation, Inc. from 1986 to 1991.
W. C. MCCORD, 67. Mr. McCord retired as Chairman and Chief 1990
Executive Officer of ENSERCH Corporation in 1993 and has been a
director of that company since 1970. From 1977 to 1991 he served
as Chairman, President and Chief Executive Officer of ENSERCH
Corporation. Mr. McCord is also a director of Lone Star
Technologies, Inc.
CLASS I CONTINUING DIRECTORS [Terms Expiring in 1998]
- ----------------------------
WILLIAM H. MOBLEY, 54. Dr. Mobley is a professor in the Graduate 1990
School of Business at Texas A&M University. From 1993 to 1994 he
was Chancellor of the Texas A&M University System. From 1988 to
1993 he was President of Texas A&M University. He is also a
director of DaVinci Scientific Corporation.
JOSEPH R. MUSOLINO, 59. Mr. Musolino has been Vice Chairman 1994
of NationsBank of Texas, N.A. for more than the last five years.
He also serves as a director of Justin Industries, Inc. and of
Paragon Group, Inc.
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C>
CLASS III CONTINUING DIRECTORS - [Terms Expiring in 1997]
- ------------------------------
J. T. JONGEBLOED, 54. Mr. Jongebloed has been Chairman of 1989
the Board of Directors since 1994 and President and Chief
Executive Officer of the Company since 1990. He was
President and Chief Operating Officer from 1989 to 1990. He
served Pool Company from 1978 to 1989 as Executive Vice
President, Western Hemisphere, President of Pool--Intairdril
and Group Vice President--International Operations.
JAMES L. PAYNE, 59. Mr. Payne has been Chairman of the Board, 1992
President and Chief Executive Officer and a director of Santa
Fe Energy Resources, Inc. since 1990. He was President of
Santa Fe Energy Company from 1986 to 1990, and prior to that
time served as its Senior Vice President--Exploration and Land.
Mr. Payne is also a director of Hadson Corporation.
DONALD D. SYKORA, 65. Mr. Sykora currently serves in the Office of the
Chairman of Houston Industries Incorporated. He was President and Chief
Operating Officer of Houston Industries from 1993 to 1995 and served as a
director of Houston Industries from 1982 to 1995. From 1982 to 1993 he
served as President and Chief Operating Officer of Houston Lighting & Power
Company. He is also a director of TransTexas Gas Corporation and Powell
Industries, Inc.
</TABLE>
BOARD COMMITTEES
The Board of Directors has established the following standing
committees:
<TABLE>
<CAPTION>
Committee Current Members
----------------------- -------------------------------------------------------------------
<S> <C>
Audit/Finance Messrs. McCord (Chairman), Geren, Mobley and Musolino
Compensation Messrs. Sykora (Chairman), Geren, McCord and Payne
Directors' Nominating Messrs. Payne (Chairman), Sykora and Jongebloed
</TABLE>
The Audit/Finance Committee selects a firm of independent certified
public accountants whose duty is to examine the consolidated financial
statements of the Company, reviews the general scope of services to be rendered
by the independent public accountants, reviews the financial condition and
results of operations of the Company and makes inquiries as to the adequacy of
the Company's financial and accounting controls. The principal function of the
Compensation Committee is to review employee compensation matters and to
oversee the administration of the Company's employee benefit plans. The
function of the Directors' Nominating Committee is to recommend nominees for
election to the Board of Directors. The Directors' Nominating Committee will
consider one or more persons recommended by a shareholder as nominees for
election to the Board of Directors if such shareholder submits the name of each
such person in writing to the committee, in care of the Corporate Secretary of
the
4
<PAGE> 8
Company, together with a full statement of such person's qualifications and a
written consent indicating his or her willingness to serve. Any such
submission must be received no later than the date specified for submission of
shareholder proposals in "Information Concerning Shareholder Proposals"
hereinbelow.
MEETINGS OF THE BOARD AND BOARD COMMITTEES
The Board of Directors met nine times during the year ended December
31, 1995, and the Audit/Finance, Directors' Nominating and Compensation
committees met three, one, and three times, respectively. No incumbent
director attended fewer than 75 percent of the total number of meetings held by
the Board and by all Board committees of which he was a member.
COMPENSATION OF DIRECTORS
Current Structure. Each director who is not an employee of the Company
is currently compensated by an annual cash retainer fee of $20,000; prior to
February 1996 such retainer was $18,000. Such directors also receive $1,000 for
each Board or Board committee meeting attended. If more than one meeting is
held on the same day, full payment is made for only one meeting and compensation
for each additional meeting attended that day is $800. In addition, a $2,000
per annum fee is paid for service on a Board committee, with an additional
$1,500 per annum paid to the chairman of a Board committee. Directors who are
employed by the Company receive no additional compensation for services as
members of the Board or any committee of the Board. Under the Company's 1991
Directors' Stock Option Plan (the "1991 Plan") each director who is not a
full-time employee of the Company automatically receives an initial grant of an
option to purchase 5,000 shares of Common Stock (the "Initial Option Grant") on
the date he first achieves eligibility. Each director who receives an Initial
Option Grant and remains eligible will automatically receive an additional
option for 2,000 shares of Common Stock (the "Annual Option Grant") on the date
of each Annual Meeting of Shareholders after the year in which the Initial
Option Grant was received. The exercise price of the options is equal to the
fair market value per share on the date an option is granted. Options expire
ten years from the date of the grant. Each option becomes exercisable as to 50
percent of the shares covered thereby at the end of one year from the date of
grant and as to the remaining 50 percent at the end of two years from the date
of grant. If a participant's service as a director terminates by reason of
disability, death, the failure of the Board to nominate him for reelection other
than for "cause," as defined in the Plan, or his ineligibility for reelection
pursuant to the Company's Bylaws, his options may be exercised for up to one
year after the date of the disability, death or termination. If a director's
service terminates because he decides not to stand for reelection, or if he
becomes a full-time employee, his options may be exercised for up to three
months after such event, and, if his service terminates for any other reason,
except for "cause," his options may be exercised for up to five business days
after such termination. In the event a director's service terminates for
"cause" his options will become immediately null and void. Provision is made in
the Plan for adjustments of options in cases of mergers, stock splits and
similar capital reorganizations and for immediate vesting in the case of a
change in control of the Company.
5
<PAGE> 9
Proposed Changes. In February 1996, the Board adopted a revised
compensation structure for directors who are not full-time employees of the
Company. Under the revised structure the current $20,000 annual cash retainer
would be replaced by an annual retainer consisting of $12,000 in cash and 1,000
shares of Common Stock, which shares would be subject to a restriction period
during which they could not be sold or otherwise transferred. Additionally,
such directors would receive options to purchase increased amounts of shares of
Common Stock from the amounts currently provided for in the 1991 Plan--the
Initial Option Grant and the Annual Option Grant would be increased to 8,000
shares and 4,000 shares, respectively. This revised compensation structure, to
become effective, requires approval by the shareholders of the 1996 Directors'
Stock Incentive Plan, as hereinafter discussed. See "Approval of 1996
Directors' Stock Incentive Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Except for Mr. McCord, no member of the Compensation Committee of the
Board of Directors of the Company (i) was, during 1995, an officer or employee
of the Company or any of its subsidiaries, or (ii) was formerly an officer of
the Company or any of its subsidiaries or had any relationships required to be
disclosed by the Company under the rules of the Securities and Exchange
Commission. Mr. McCord was formerly an officer of Pool Company and various
other subsidiaries of the Company.
EXECUTIVE OFFICERS
The executive officers of the Company, their respective ages and
positions with the Company are:
<TABLE>
<CAPTION>
Name Age Position
--------------------- ----- ---------------------------------------------------------------------
<S> <C> <C>
J. T. Jongebloed 54 Chairman, President and Chief Executive Officer
W. J Myers 59 Group Vice President--U.S. Operations
R. G. Hale 47 Group Vice President--International Operations
E. J. Spillard 56 Senior Vice President, Finance
G. G. Arms 52 Vice President and General Counsel; Corporate Secretary
L. E. Dupre 49 Vice President, Human Resources
</TABLE>
Mr. Myers has been Group Vice President--U.S. Operations of the
Company since 1988. From 1985 to 1987 he was self employed, and from 1976 to
1985 he was the President and Chief Executive Officer of Anderson--Myers
Drilling Company in Denver, Colorado.
Mr. Hale has served in various management and executive positions with
the Company for more than the last 15 years. From 1985 to 1989 he served as
Vice President, Mid--East and Africa Region, International Operations. He
became Group Vice President--International Operations in 1989.
Mr. Spillard served from 1979 to 1981 as Controller of Pool Arabia,
Ltd. From 1981 to 1986, he held various executive positions with the Company.
He was Senior Vice President, Corporate Services, from 1986 to 1987 and has
been Senior Vice President, Finance of the Company since 1987.
6
<PAGE> 10
Mr. Arms has been Vice President and General Counsel of the Company
since 1985 and has been Corporate Secretary since 1990. He has served the
Company as an attorney in various other positions since 1978.
Mr. Dupre has been Vice President, Human Resources of the Company
since 1994. From 1986 to 1994, he served as the Company's Controller. He has
been an employee of the Company since 1978.
Officers each serve for a one-year term or until their successors are
elected and qualified to serve.
COMPENSATION OF EXECUTIVE OFFICERS
The Company's executive compensation is administered by the
Compensation Committee. The Committee is composed of four independent,
nonemployee directors.
COMPENSATION COMMITTEE REPORT
ON
EXECUTIVE COMPENSATION
This report of the Compensation Committee sets forth the Company's policy with
respect to executive officer compensation and describes the basis for 1995
compensation determinations made by the Committee with respect to the Chief
Executive Officer and other executive officers of the Company.
Compensation Philosophy
The Company's philosophy with regard to executive compensation is to:
- Provide a competitive total compensation package consistent with
industry practice that enables the Company to attract and retain key
executives.
- Structure incentive compensation so as to focus executive attention
and effort on the fulfillment of the Company's financial objectives,
and on the appreciation of the value of the Company's stock.
Compensation Program Elements
The elements of the Company's compensation program for executive officers are
as follows:
BASE SALARY - Base salary levels are largely determined
through comparisons with compensation paid to executives of companies of
similar size and complexity as the Company within the industry. The Committee
attempts to ensure that such pay levels are competitive within a range that the
Committee considers to be reasonable and necessary. The Committee utilizes for
this purpose surveys and assistance of outside consultants as well as market
7
<PAGE> 11
information from other sources and takes into consideration the Company's
performance both in absolute terms and in comparison with other companies in
the industry. With respect to the compensation of officers other than the
Chief Executive Officer, the Committee gives strong consideration to the
recommendations of the Chief Executive Officer which are based as to each such
executive officer largely on performance, longevity and responsibilities.
ANNUAL INCENTIVE COMPENSATION - The Company's executive
officers are eligible to participate in management bonus plans established from
time to time, typically on an annual basis, which provide for bonus awards
based on attaining or exceeding specified financial and other performance
objectives. Under the bonus plan that was in effect for 1995, bonus awards
were based on operating unit and consolidated net earnings goals, a cash
generation/preservation goal and a goal relating to performance of the
Company's stock price in comparison with the stocks of the peer group of
companies used in the Performance Graph set forth in the Proxy Statement for
the Company's 1995 Annual Meeting. The Committee's intention in approving the
establishment of such bonus plan was to deliver competitive levels of
compensation to executive officers and other participants for the attainment
of financial objectives that the Committee believed would favorably influence
the Company's stock price over time. Actual awards were subject to decreases
or increases on the basis of the Company's and/or the executive's performance,
although no such discretionary action was taken. The plan also provided that,
at the Committee's discretion, up to 50 percent of any bonuses payable for
1995 could be paid in Company stock. The Committee did not elect to have any
of the 1995 bonuses paid in Company stock.
STOCK INCENTIVE PLAN - The Company has an Employee Stock
Incentive Plan (the "Stock Incentive Plan") pursuant to which executive
officers and other employees, from time to time, may be granted nonqualified
options to purchase Company Common Stock. The exercise price of all such stock
options is the market price of the shares on the date the option is granted,
and the realization of any value is, therefore, totally dependent on future
stock price appreciation, which provides added incentive to work for the
continued growth and success of the Company. The Stock Incentive Plan also
permits the Committee to make awards to executive officers and other employees,
in lieu of cash compensation, of (i) Restricted Stock (shares of Common Stock
that are subject to such vesting requirements or other restrictions as the
Committee shall establish), and (ii) Bonus Stock (shares of Common Stock that
are not subject to vesting or other restrictions). The Committee believes that
compensating executive officers and other key personnel who have substantial
responsibility for the management and growth of the Company with Company stock,
and providing such persons with opportunities to benefit directly from
increases in the value of Company stock, will align their interests more
closely with those of other shareholders.
1995 Compensation
The base salary level approved by the Committee in 1995 for Mr. Jongebloed, as
Chairman, President and Chief Executive Officer, was established on the basis
of (i) personal performance, (ii) Company performance, and (iii) the estimated
1995 salaries for chief executive officers of
8
<PAGE> 12
several well-recognized companies in the same industry as the Company, as
reported by an outside consultant, William M. Mercer, Incorporated (the
"Mercer Report"). Such base salary level amounted to an 8.3 percent increase
over his previous base salary which had been in effect for 18 months. Mr.
Jongebloed's bonus compensation for 1995 was calculated and paid pursuant to
the Company's 1995 Management Bonus Plan and was based on the Company's
attaining (i) a cash generation/preservation goal, and (ii) a net income as
compared to budget goal. The bonus earned was approximately 19 percent of the
maximum bonus attainable under the Plan.
The Committee approved base salary levels in 1995 for other executive officers
based on recommendations by the Chief Executive Officer, the Mercer Report, the
time elapsed since the last previous salary action, and the performance of the
executives involved. Bonuses for 1995 were paid to executive officers pursuant
to the terms of the Company's 1995 Management Bonus Plan and were determined
totally on the Company's financial performance for the year. Each of the
executive officers received a bonus on the basis of attainment of the cash flow
and net income goals mentioned above. These bonuses were on average
approximately 20 percent of the maximum bonuses attainable under the Plan.
Stock option grants pursuant to the Stock Incentive Plan were made to Mr.
Jongebloed and other executive officers in 1995, as reflected in the Option
Grants Table, principally on the basis of each executive's personal
performance, the desire to link Company performance to compensation, and
recommendations in the Mercer Report.
Compliance with Internal Revenue Code Section 162(m)
No formal policy has been adopted by the Company with respect to qualifying
compensation paid to its executive officers for an exemption from the
limitation on deductibility imposed by Section 162(m) of the Internal Revenue
Code. The Company anticipates that all compensation paid to its executive
officers during 1996 will qualify for deductibility because no executive's
compensation is expected to exceed the dollar limitations of such provision.
COMPENSATION COMMITTEE
D. D. Sykora, Chairman
P. M. Geren, Jr.
W. C. McCord
J. L. Payne
9
<PAGE> 13
SUMMARY COMPENSATION TABLE
The following table sets forth information relating to the
compensation paid to the Chief Executive Officer and to each of the other four
most highly compensated executive officers of the Company for services rendered
in all capacities to the Company for the years ended December 31, 1995, 1994
and 1993:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------- -------------------- -------
OTHER RESTRICTED
ANNUAL STOCK STOCK LTIP ALL OTHER
SALARY BONUS COMPENSATION(1) AWARDS OPTIONS PAYOUTS COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- --------------------------- ---- ------ ----- --------------- ---------- ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. T. Jongebloed 1995 376,961 47,250 -- -0- 40,890 -0- 250
Chairman, President and 1994 360,000 78,750 -- -0- 23,000 -0- 250
Chief Executive Officer 1993 336,750 219,891 -- -0- -0- -0- 250
W. J Myers 1995 230,654 12,657 -- -0- 20,000 -0- 250
Group Vice President-- 1994 225,000 28,126 -- -0- 10,000 -0- 250
U.S. Operations 1993 213,750 101,488 -- -0- -0- -0- 250
E. J. Spillard 1995 185,937 16,875 -- -0- 20,000 -0- 250
Senior Vice President, 1994 180,000 28,126 -- -0- 10,000 -0- 250
Finance 1993 169,250 79,741 -- -0- -0- -0- 250
R. G. Hale 1995 177,653 29,563 -- -0- 20,000 -0- 250
Group Vice President-- 1994 172,000 32,250 -- -0- 10,000 -0- 250
International Operations 1993 161,000 77,324 -- -0- -0- -0- 250
G. G. Arms 1995 133,392 12,188 -- -0- 15,000 -0- 250
Vice President and 1994 130,000 16,250 -- -0- 8,000 -0- 250
General Counsel; 1993 125,667 58,960 -- -0- -0- -0- 250
Corporate Secretary
</TABLE>
- ------------------------------
(1) Perquisites and other personal benefits paid in each year to each of the
persons listed in the compensation table above did not exceed the lesser
of $50,000 or ten percent of such individual's total salary and bonus.
(2) Reflects the amount contributed by the Company to each individual's 401(k)
Plan account in such year.
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES
The following table sets forth information with respect to stock option
exercises during 1995, and unexercised stock options held, as of the end of
1995, by the persons named in the Summary Compensation Table above:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT 12-31-95 AT 12-31-95
SHARES ACQUIRED VALUE (#) ($)
ON EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. T. Jongebloed -0- -0- 130,610 69,390 100,125 90,599
W. J Myers -0- -0- 81,868 32,500 45,938 42,813
E. J. Spillard -0- -0- 72,728 32,500 45,938 42,813
R. G. Hale -0- -0- 58,755 35,000 59,438 50,313
G. G. Arms -0- -0- 43,630 22,625 14,625 25,500
</TABLE>
10
<PAGE> 14
OPTION GRANTS TABLE
OPTION GRANTS IN 1995
The following table sets forth information with respect to grants of stock
options during 1995 to the persons named in the Summary Compensation Table
above:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK PRICE
OPTIONS APPRECIATION FOR OPTION
GRANTED TO EXERCISE TERM (5)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED (#)(1)(2)(3) 1995 ($/SH)(4) DATE 5% 10%
- ---- -------------------- ------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. T. Jongebloed 40,890 21.2 8.125 5/04/05 $208,948 $529,485
W. J Myers 20,000 10.4 8.125 5/04/05 102,200 258,980
E. J. Spillard 20,000 10.4 8.125 5/04/05 102,200 258,980
R. G. Hale 20,000 10.4 8.125 5/04/05 102,200 258,980
G. G. Arms 15,000 7.8 8.125 5/04/05 76,650 194,235
------- ---- ----- ------- ----------- ------------
TOTAL 115,890 60.0 $592,198 $1,500,660
All Shareholders (6) N/A N/A N/A N/A $69,334,728 $175,697,730
Named Executives' Gain as N/A N/A N/A N/A 0.85% 0.85%
% of all Shareholders' Gain
</TABLE>
- ------------------------------
(1) Options granted in 1995 are exercisable beginning 12 months after the
grant date, with 25 percent of the award becoming exercisable at that time
and an additional 25 percent of the award becoming exercisable on each of
the next three succeeding anniversary dates. Vesting may be accelerated
by a change in control of the Company.
(2) Under the terms of the Employee Stock Incentive Plan, the Compensation
Committee and/or the Board of Directors retains discretion, subject to
plan limits, to modify the terms of outstanding options.
(3) The options were granted for a term of ten years, subject to earlier
termination in certain events related to termination of employment.
(4) The exercise price and tax withholding obligations arising in connection
with exercise may be paid by delivery of already-owned shares or by offset
of the shares issuable upon exercise, subject to certain limitations.
(5) The dollar amounts under these columns are the result of calculations at
the five percent and ten percent rates required by SEC regulations and
therefore are not intended to forecast possible future appreciation, if
any, of the Company's stock price.
(6) Potential shareholder gain is calculated assuming all outstanding shares
were purchased at a price of $8.125 per share on May 4, 1995, the date of
the 1995 option grants.
RETIREMENT PLAN. The Company has a defined benefit retirement plan
for its employees with different benefit formulas for salaried and hourly
employees. The normal monthly retirement benefit payable at age 65, or later
if employment continues beyond age 65, for salaried employees is equal to one
percent of the monthly average of the participant's highest rate of base
compensation determined as of each January 1 of any five consecutive years
during the ten consecutive years preceding retirement, plus 0.6 percent of the
excess of compensation
11
<PAGE> 15
as so determined over the monthly average of the maximum taxable wage base used
to calculate old-age benefits under the Federal Social Security Act for the 35
years ending with the year in which the participant will attain his normal
retirement age under the Federal Social Security Act, multiplied by years and
fractions thereof of credited service after May 1, 1990, up to 35 years. The
plan provides for actuarially reduced benefits for early retirement. Although
the normal form of benefit for married participants is a joint and 50 percent
survivor annuity and, for unmarried participants, a life only annuity, the plan
permits other forms of benefit payment. At December 31, 1995, credited service
under the plan for Messrs. Jongebloed, Myers, Spillard, Hale and Arms was 5.67
years each, and the highest average annual compensation recognized by the plan
for each of them was $150,000, $150,000, $146,000, $146,000, and $119,400,
respectively.
The table below illustrates the amount of annual pension benefit
payable under the plan on a straight life annuity basis beginning at age 65 to
a person in a specified average salary and years of service classification
using, for all years, the 1995 maximum taxable wage base used to calculate
old-age benefits under the Federal Social Security Act:*
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------
Remuneration 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000 . . . . . . . . . . . . . $ 18,492 $ 24,656 $ 30,820 $ 36,984 $ 43,148
125,000 . . . . . . . . . . . . . 24,492 32,656 40,820 48,984 57,148
150,000 . . . . . . . . . . . . . 30,492 40,656 50,820 60,984 71,148
175,000 . . . . . . . . . . . . 30,492 40,656 50,820 60,984 71,148
200,000 . . . . . . . . . . . . . 30,492 40,656 50,820 60,984 71,148
225,000 . . . . . . . . . . . . . 30,492 40,656 50,820 60,984 71,148
250,000 . . . . . . . . . . . . 30,492 40,656 50,820 60,984 71,148
300,000 . . . . . . . . . . . . . 30,492 40,656 50,820 60,984 71,148
</TABLE>
- ---------------------------
* In accordance with the applicable provisions of the Internal Revenue Code of
1986, annual compensation above $150,000 is disregarded in calculating
benefits, and the benefits payable under the plan are limited to $120,000
annually. Both limits are subject to adjustment by the Secretary of the
Treasury to reflect cost-of-living increases and are included in the above
table.
SUPPLEMENTARY EXECUTIVE RETIREMENT PLAN. The Company has a
supplementary executive retirement plan which provides retirement benefits for
certain senior level management personnel equal to two percent of the average
of the participant's salary and annual bonus compensation for each of the five
years for which such compensation was highest out of the last ten consecutive
years of employment, multiplied by years of credited service of employment
with the Company, Pool Company and ENSERCH Corporation, up to 35 years, minus
(i) social security benefits and (ii) retirement benefits payable to the
participant pursuant to, or resulting from his participation in, any other
plans of the Company, Pool Company or ENSERCH Corporation. The benefit thus
determined is payable in an actuarial equivalent lump sum amount. Messrs.
Jongebloed, Myers, Spillard, Hale and Arms are eligible for benefits under
such plan. At December 31, 1995, credited service under the plan for Messrs.
Jongebloed, Myers, Spillard, Hale and Arms was 17.3, 7.9, 16.0, 24.1 and 20.2
years each, respectively, and the highest average annual compensation
recognized by the plan for each of them was $309,200, $206,000, $161,000,
$156,800 and $119,400, respectively.
12
<PAGE> 16
The table below illustrates the amount of annual pension benefit that
would be payable under the supplemental plan on a straight life annuity basis
beginning at age 65 to a person in a specified average salary and years of
service classification using for all years the maximum Social Security primary
insurance amounts for a worker retired at age 65 in 1996 and estimated
retirement benefits payable under the Company's current defined benefit
retirement plan:*
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------
Remuneration 15 20 25 30 35
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000 . . . . . . . . . . . . . $ -0- $ 368 $ 4,204 $ 8,040 $11,876
125,000 . . . . . . . . . . . . . -0- 2,368 6,704 11,040 15,376
150,000 . . . . . . . . . . . . . -0- 4,368 9,204 14,040 18,876
175,000 . . . . . . . . . . . . . 7,032 14,368 21,704 29,040 36,376
200,000 . . . . . . . . . . . . . 14,532 24,368 34,204 44,040 53,876
225,000 . . . . . . . . . . . . . 22,032 34,368 46,704 59,040 71,376
250,000 . . . . . . . . . . . . . 29,532 44,368 59,204 74,040 88,876
300,000 . . . . . . . . . . . . . 44,532 64,368 84,204 104,040 123,876
400,000 . . . . . . . . . . . . . 74,532 104,368 134,204 164,040 193,876
</TABLE>
- ------------------------------
* The annual benefits shown in the table have been reduced by the amount of
(i) any retirement benefits payable pursuant to other plans of the Company,
and (ii) social security benefits. The benefits shown in the table would be
subject to further reduction by the amount of any benefits payable under any
applicable ENSERCH Corporation retirement plan (see text above).
POOL COMPANY RETIREMENT PLAN. Pool Company had two retirement plans
which were merged into the ENSERCH Corporation Retirement and Death Benefit
Program prior to the Company's acquisition of Pool Company. Pool Company's
retirement plan for salaried employees was a defined benefit plan that provided
for a fixed benefit upon retirement at age 65. Participants who were employees
of the Company ceased to accrue further benefits thereunder on the completion
of the Company's acquisition of Pool Company. Pursuant to the terms of such
plan, Messrs. Jongebloed, Myers, and Spillard are entitled to annuity payments
of $19,635, $3,299, and $12,226, respectively, per annum for life commencing
upon normal retirement at age 65. Messrs. Hale and Arms were not participants
in such plan.
CHANGE IN CONTROL AGREEMENTS
Messrs. Jongebloed, Myers, Spillard, Hale and Arms each have change in
control agreements (the "Agreements") with the Company that set forth certain
benefits that the Company will provide in the event their employment is
terminated subsequent to a "change in control" of the Company, as defined in
the Agreements. The Agreements continue in effect until terminated by the
Company upon specified notice and continue for three years following a change
in control of the Company. The Agreements each provide that if the officer is
terminated or if the officer elects to terminate employment under certain
circumstances defined as "good reason" within three years following a change in
control of the Company, the officer shall be entitled to a lump sum severance
payment equal to (i) three times the officer's annual base salary (but not in
excess of the aggregate base salary that could be earned up to the officer's
normal retirement date), (ii) an amount equal to the largest bonus paid to him
during the preceding three years, prorated for the current year, and (iii) the
value over exercise price of unexercised stock options. In addition, the
officer shall be entitled to a three-year continuation of certain employee
benefits, two additional years of service credit under the Company's retirement
program, and reimbursement of certain legal fees, expenses, and any applicable
excise taxes.
13
<PAGE> 17
Comparison of Five Year Cumulative Total Return*
Among Pool Energy Services Co.,
Peer Group Indexes and Standard & Poor's 500**
[Performance Graph appears here. Plot points are listed below]
<TABLE>
<CAPTION>
YEARS ENDING
- ------------------------------------------------------------------------------------------------------------
COMPANY NAME/INDEX DEC.90 DEC.91 DEC.92 DEC.93 DEC.94 DEC.95
- ------------------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Pool Energy Services Co. 100 62.82 65.38 78.21 69.23 97.44
S&P 500 Index 100 130.47 140.41 154.56 156.60 215.45
Old Peer Group 100 58.59 63.77 101.53 88.03 153.92
New Peer Group 100 68.56 72.70 92.48 82.79 131.19
</TABLE>
Assumes $100 invested on December 31, 1990 in each of Pool Energy Services Co.
Common Stock, the Standard & Poor's 500 index and two peer groups. The Old Peer
Group is composed of the same companies that composed the peer group for the
Performance Graph in the Proxy Statement for the 1995 Annual Meeting and
consists of the following ten companies: Atwood Oceanics, Inc., Energy Service
Company, Inc., Global Marine Inc., Noble Drilling Corporation, Parker Drilling
Company, Pride Petroleum Services, Inc., Rowan Companies, Inc., Tuboscope Vetco
International Corporation, Weatherford International Incorporated and The
Western Company of North America ("Western"). The New Peer Group is the same as
the Old Peer Group except that it excludes Western, which was acquired by
another company in 1995, and it includes Baker Hughes Incorporated. Both peer
group returns have been weighted according to market capitalization.
* Total Return Assumes Reinvestment of Dividends
** Fiscal Year Ending December 31
14
<PAGE> 18
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning the
number of shares of the Company's Common Stock owned beneficially as of
December 31, 1995 by each person known to the Company to own more than five
percent of the outstanding shares of Common Stock, and as of March 8, 1996 by
(i) each director of the Company, (ii) each executive officer listed in the
Summary Compensation Table, and (iii) all directors and executive officers of
the Company as a group. No shares of any other class of equity securities are
outstanding.
<TABLE>
<CAPTION>
Beneficial Ownership
-----------------------------
Percent
Name of Beneficial Owner Shares of Total
- ------------------------------------------------------------------------- ---------- --------
<S> <C> <C>
Merrill Lynch Asset Management, L.P., Merrill Lynch & Co., Inc.,
Princeton Services, Inc., Merrill Lynch Group, Inc. and Merrill Lynch
Growth Fund for Investment and Retirement (1)(4) . . . . . . . . . . . 1,335,043 9.5%
Brinson Holdings, Inc., Brinson Trust Company, Brinson Partners, Inc.,
SBC Holding (USA), Inc. and Swiss Bank Corporation (2)(4) . . . . . . . 1,222,801 9.0%
Nabors Industries, Inc.(3) . . . . . . . . . . . . . . . . . . . . . . . 867,500 6.2%
J. T. Jongebloed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,811 (5) *
Preston M. Geren, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . 32,854 (6) *
W. C. McCord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,745 (7)(8) *
William H. Mobley . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,200 (7) *
Joseph R. Musolino . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,500 (9) *
James L. Payne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000 (10) *
Donald D. Sykora . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000 (7) *
G. G. Arms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,505 (11) *
R. G. Hale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,755 (12) *
W. J Myers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,420.164 (13) *
E. J. Spillard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,272.691 (14) *
All directors and executive officers as a group (12 persons) . . . . . . 597,537.855 (15) 4.1%
</TABLE>
- ------------------------------
* Less than 1%
(1) Merrill Lynch Asset Management, L.P. ("MLAM") is a registered investment
advisor and Merrill Lynch Growth Fund for Investment and Retirement
("Merrill Lynch Growth") is a registered investment management company.
Both companies are located at 800 Scudders Mill Road, Plainsboro, NJ
08536. Merrill Lynch & Co., Inc. ("Merrill Lynch"), Merrill Lynch
Group, Inc. ("ML Group") located at World Financial Center, North Tower,
250 Vesey Street, New York, NY and Princeton Services, Inc. located at
800 Scudders Mill Road, Plainsboro, NJ 08536 are parent holding
companies, through affiliates, of both MLAM and Merrill Lynch Growth and
may therefore be deemed to be the beneficial owner of the shares held by
Merrill Lynch Growth. The number of shares listed, of which 1,335,000
are held in Merrill Lynch Growth client accounts, is the aggregate held
in client accounts of Merrill Lynch Growth, ML Group or Merrill Lynch as
to which Merrill Lynch Growth, ML Group or Merrill Lynch have shared
disposition and voting authority. MLAM acts as Investment Advisor to
Merrill Lynch Growth and therefore may be deemed the beneficial owner of
such shares. Merrill Lynch, MLAM and certain other subsidiaries of
Merrill Lynch disclaim beneficial ownership of the shares held by
Merrill Lynch Growth.
(2) Brinson Holdings, Inc. ("BHI") is the parent company of Brinson
Partners, Inc. ("BPI,") which is a registered investment adviser. BPI
is the parent company of Brinson Trust Company ("BTC"), a bank. BHI,
BPI and BTL are located at 209 South LaSalle, Chicago, IL. SBC Holding
(USA) Inc. ("SBCUSA") located at 222 Broadway, New York, NY 10038 is the
parent company of BHI. Swiss Bank Corporation ("SBC") located at
Auschenplatz 6 CH-4002, Basel, Switzerland, is the parent company of
SBCUSA. The shares listed consist of 322,306 owned by BTC and 900,495
owned by BPI. BHI, SBCUSA and SBC may be deemed to be the beneficial
owners of all such shares through their ownership of BPI and BTC.
(3) Nabors Industries, Inc. is a Delaware corporation located at 515 West
Greens Road, Suite 1200, Houston, TX. The information reported is
derived from that company's most recent Schedule 13D filed with the
Securities and Exchange Commission on May 26, 1994.
15
<PAGE> 19
(4) Based upon the most recent amended Schedule 13G delivered to the Company
by such person.
(5) Includes 146,082 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
(6) Includes 4,000 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
(7) Includes 13,000 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
(8) Includes 40,000 shares held by Mr. McCord's wife; Mr. McCord disclaims
beneficial ownership of such shares.
(9) Includes 5,500 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
(10) Includes 11,000 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
(11) Includes 49,005 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
(12) Includes 68,755 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
(13) Includes 89,368 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
(14) Includes 80,228 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
(15) Includes 504,313 shares which may be acquired through the exercise of
stock options that are currently exercisable or will become exercisable
within 60 days after March 8, 1996.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers, and persons who own more than 10 percent of a
registered class of the Company's equity securities (collectively, the
"Reporting Persons"), to file with the Securities and Exchange Commission
initial reports of beneficial ownership and reports of changes in beneficial
ownership of Common Stock and other equity securities of the Company. To the
Company's knowledge, based on review of copies of such reports and on written
representations, all of the reports required to be filed by the Reporting
Persons under Section 16(a) during or in respect of the year 1995 were filed on
a timely basis.
2. APPROVAL OF 1996 DIRECTORS' STOCK INCENTIVE PLAN
At the Annual Meeting shareholders will be asked to approve the Pool
Energy Services Co. 1996 Directors' Stock Incentive Plan (the "1996 Plan" or
the "Plan").
On February 23, 1996, the Board adopted a revised compensation
structure for directors who are not full-time employees of the Company. Under
the revised structure the current $20,000 annual cash retainer would be
replaced by an annual retainer consisting of $12,000 in cash and 1,000 shares
of Common Stock, which shares would be subject to a restriction period during
which they could not be sold or otherwise transferred. Additionally, such
directors would receive awards of options to purchase increased amounts of
shares of Common Stock from the option awards currently provided for in the
Company's 1991 Directors' Stock Option Plan (the "1991 Plan"). This revised
compensation structure, to become effective, would require approval by the
shareholders of the 1996 Plan. The Board adopted the 1996 Plan in order to
provide a means for directors of the Company to receive part of their
compensation in the form of Company stock as well as increased opportunity to
benefit from increases in the value of the Company's stock through option
grants. The Board believes that the 1996 Plan will help the Company in
attracting qualified individuals to serve as directors and in providing such
persons additional motivation for superior performance.
16
<PAGE> 20
The 1991 Plan originally provided for options to be granted with
respect to up to 150,000 shares of Common Stock, and of this amount there are
about 63,000 shares currently remaining available for grant. The 1996 Plan
would cover up to 200,000 shares. If the 1996 Plan is approved by the
shareholders, no further grants of options under the 1991 Plan will be made.
The 200,000 share maximum provided for in the 1996 Plan is subject to
adjustment in certain events, such as stock splits or recapitalizations.
The following description of the material terms of the 1996 Plan is
qualified in its entirety by the specific terms of the Plan, a copy of which is
attached to this Proxy Statement as Exhibit A.
PURPOSE. The purpose of the 1996 Plan is to provide the Company a means to
compensate its directors with stock of the Company and options to purchase
stock of the Company, in order to (i) provide such directors a direct interest
in the Company's attainment of its financial goals, (ii) align their interests
more closely with the interests of other shareholders of the Company, and (iii)
provide a financial incentive that will assist the Company in attracting and
retaining the most qualified individuals as directors. The Company believes
that this purpose will be furthered under the Plan by the payment of directors'
compensation partially with shares of Common Stock which are subject to
restrictions that require such shares to be held for a specified period of time
before they may be sold or otherwise transferred ("Restricted Stock"), and by
the granting of options to purchase shares of Common Stock ("Options"). The
granting of Options and the awarding of Restricted Stock under the Plan occur
automatically in accordance with the terms set forth in the Plan. Options
granted under the Plan may only be nonqualified options, i.e., options that do
not constitute incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended. Grants of Options and awards of
Restricted Stock are referred to herein as "Awards."
ADMINISTRATION. The Compensation Committee of the Board or such other
committee as the Board may appoint to administer the Plan (the "Committee") is
authorized to interpret the Plan and may from time to time adopt or rescind
such rules and regulations, not inconsistent with the provisions of the Plan,
as it may deem advisable to carry out the Plan and to make all other
determinations necessary or advisable for administering the Plan. The
Committee has no discretion or authority, however, to (i) grant Awards other
than as provided in the Plan, (ii) modify the terms of any Awards (subject to
certain specified exceptions), or (iii) exercise any discretion which would be
inconsistent with the intent that the Plan meet the requirements of Rule 16b-3
under the Securities Exchange Act of 1934.
ELIGIBILITY. Awards under the Plan may only be made to directors who are not
also full-time employees of the Company or any of its subsidiaries.
RESTRICTED STOCK. The Plan provides that 1,000 shares of Restricted Stock shall
be automatically awarded to each eligible director on an annual basis, subject
to a restriction period during which such shares may not be sold, or otherwise
transferred. This award of Restricted Stock would take the place of a portion
of the director's annual cash retainer. A director
17
<PAGE> 21
receiving such Restricted Stock would be the record owner of such shares and
would have the right to vote such shares, but any dividends or other
distributions with respect to such shares would be accrued but not paid until
the restriction period elapses.
The restriction period applicable to shares of Restricted Stock
awarded to a director would end at the earlier of one year from the date of the
award or the date of the Company's Annual Meeting in the year following that in
which the award occurred. The restriction period would also end in the event of
a change in control of the Company or upon the director's death, disability or
retirement from the Board. A change in control under the Plan means, generally,
the acquisition by a person or entity of 30 percent or more of the Company's
outstanding Common Stock, certain reorganizations, mergers or consolidations of
the Company or a change in the composition of a majority of the Board within a
two-year period. If a director to whom Restricted Stock has been awarded ceases
to serve as a director for any reason other than death, disability or retirement
prior to the expiration of the restriction period, the Restricted Stock and all
accrued rights to dividends or other distributions in respect thereof are
thereupon forfeited.
OPTIONS. The Plan provides that eligible directors shall receive automatic
grants of Options as follows: (i) eligible persons first elected as a director
after the effective date of the Plan would receive an Option for 8,000 shares
of Common Stock (the "Initial Grant"), and (ii) each eligible director would
receive an additional Option grant for 4,000 shares on the date of the
Company's Annual Meeting of Shareholders in each year following the year in
which the Initial Grant occurred. The exercise price of each Option granted
under the Plan is equal to the market price of the Common Stock on the date of
the grant, as determined in accordance with the Plan. No Option may be
exercised sooner than six months after the date of grant nor later than ten
years after the date of grant. Options granted under the Plan become
exercisable at the earlier of one year from the date of grant or the date of
the Company's Annual Meeting in the year following that in which the grant
occurred, except that upon an optionee's death, disability or retirement from
the Board, or upon a change in control of the Company, Options become 100
percent vested and are exercisable immediately in full.
To exercise an Option granted under the Plan, the optionee must
deliver to the Company payment in full for the shares being purchased, which
payment must either be in cash, or by check, or through delivery to the Company
of shares of Common Stock that have been owned by the optionee for more than
six months. Optionees do not have any rights as shareholders of the Company
with respect to shares that are subject to an Option until such time as the
Option has been exercised and the optionee shall have become the holder of
record of such shares.
After an optionee's service as a director ceases, the Plan provides
certain periods of time within which Options may be exercised: if the
optionee's service terminates by reason of his death or disability, his Options
may be exercised not later than one year thereafter; if the optionee's service
terminates due to retirement, his Options may be exercised not later than five
years thereafter; if the optionee's service terminates for any other reason,
his Options may be exercised, but only to the extent then vested, not later
than ninety days thereafter, except that if the termination of service is for
"cause" his Options immediately become null and void. However, in no event may
an Option be exercised after the expiration of its term, which is ten years
from the date of the grant.
18
<PAGE> 22
On March 1, 1996, the closing price for Common Stock as quoted on the
NASDAQ National Market System was $9 7/8 per share.
AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any time suspend or
terminate the Plan. Options or Restricted Stock shall not be granted while the
Plan is suspended or after it is terminated. Rights and obligations with
respect to any Option or Restricted Stock shall not be altered or impaired by
suspension or termination of the Plan, except with the consent of the director
affected. The Board has limited authority to amend the Plan. No amendment to
the Plan can be made without shareholder approval if such amendment would (i)
materially increase the benefits accruing to participants under the Plan, (ii)
materially increase the number of shares of Common Stock which may be issued
under the Plan or (iii) materially modify the requirements as to eligibility
for participation in the Plan.
WITHHOLDING FOR TAXES. A participant receiving Common Stock pursuant to an
Option exercise or grant of Restricted Stock is required to pay or to make
appropriate arrangements satisfactory to the Company for the payment of any tax
amounts required by law to be withheld or paid by the Company with respect
thereto. Such arrangements may, at the discretion of the Company, include
allowing the participant to tender to the Company shares of Common Stock owned
by such person, or to request the Company to withhold a portion of the Common
Stock being issued pursuant to the Award. Tax withholding requirements would
not be applicable with respect to Awards under the Plan except in the case of
an optionee or grantee who was employed by the Company, but not on a full-time
basis.
FEDERAL INCOME TAXES. Summarized below are the material federal income tax
consequences of the Plan, based on applicable provisions of the federal income
tax laws and regulations as currently in effect. As a general rule, no income
will be recognized by grantees of Restricted Stock or Options upon the grant of
such awards. Upon the removal of the restrictions with respect to Restricted
Stock, a grantee will generally recognize ordinary income equal to the fair
market value of the shares of Common Stock when the restrictions lapse.
However, a grantee may elect within 30 days of the grant of the Restricted
Stock to treat the grant, rather than the lapse of the restrictions, as the
taxable event. In this case, the grantee will recognize ordinary income equal
to the fair market value of the shares of Common Stock (determined without
regard to the restrictions) when the Restricted Stock is granted. Upon the
exercise of an Option, the optionee will be treated as receiving taxable income
in an amount equal to the excess of the fair market value of the shares at the
time of exercise over the exercise price paid for the shares. The Company
generally will be entitled to a tax deduction in the same amount as, and at the
same time as, the recipient of Restricted Stock or Options recognizes income.
In addition, in order to be deductible, the compensation must be ordinary and
necessary and must be "reasonable." Upon a subsequent disposition of the
shares received under an Award, any difference between the recipient's basis
and the amount realized on the disposition would be eligible for treatment as
long-term capital gain or loss if the shares were held for more than the
requisite period and were capital assets in the hands of the recipient.
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<PAGE> 23
OUTSTANDING AWARDS. As of the date hereof, no Awards have been made under the
1996 Plan. All Awards to be made in the future will be in accordance with the
formula set forth in the Plan.
Approval of the 1996 Plan requires the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock present or represented
and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF
THE 1996 DIRECTORS' STOCK INCENTIVE PLAN.
3. APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
The Board of Directors has unanimously authorized, subject to
shareholder approval, an amendment to Article Four of the Articles of
Incorporation (the "Amendment") to increase the number of authorized shares of
Common Stock, no par value, from 25 million shares to 40 million shares.
If the proposed amendment is approved by the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the Company's
Common Stock entitled to vote at the Annual Meeting, such amendment will become
effective upon the filing thereof with the Secretary of State of the State of
Texas, which filing would occur shortly after such shareholder approval.
As of the date hereof, out of the 25 million shares of Common Stock
currently authorized, there are less than 4 million shares of Common Stock
available for general corporate purposes, after taking into account the number
of shares issued and outstanding and shares currently reserved or required to be
reserved in the future for issuance pursuant to the Company's stock option and
stock incentive plans (including the 1996 Directors' Stock Incentive Plan, if
approved) and shareholder rights plan. Under the terms of the shareholder rights
plan, each share of Common Stock issued in the future will be coupled with a
right to purchase an additional one-third of one share of Common Stock.
Effectuation of the Amendment will not result in the issuance of any
additional shares of Common Stock. The increase in the authorized number of
shares is intended to ensure that there will be sufficient authorized but
unissued shares available to meet a variety of possible business needs as they
may arise from time to time. Consistent with the Company's strategic plan,
additional authorized shares of Common Stock may be needed for potential
expansion of the Company through acquisitions of assets and business entities.
Other business needs may include public offerings or private placements of
Common Stock, stock dividends and other corporate purposes. Approval of the
Amendment will permit the Board to issue additional shares of Common Stock,
without further approval of shareholders, upon such terms and at such times as
it may determine unless shareholder approval is required by applicable law or
NASDAQ requirements. Holders of the Company's Common Stock do not have
preemptive rights.
20
<PAGE> 24
Possible Dilution and Other Considerations. Although the Board of
Directors will issue shares of Common Stock only when it considers such action
to be in the best interests of the Company, the issuance thereof may have a
dilutive effect on earnings per share and on the equity and voting power of
existing holders of Common Stock. In addition, shares of Common Stock,
including shares approved in the Amendment, could be issued by the Board in
ways that could make more difficult a change in control of the Company (e.g.,
to deter an unsolicited business combination that the Board determines is not
in the best interests of the Company). This could occur, for instance, through
a private sale of Common Stock which would dilute the stock ownership of a
person or group seeking to gain control of the Company.
Provisions contained in the Company's governing documents that may be
deemed, whether or not intended for that purpose, to be anti-takeover in nature
are (i) the existence of nearly 4 million shares of the Company's
Common Stock that are authorized but unissued (and not presently reserved for
issuance, or anticipated to be reserved under the Company's benefit plans and
shareholder rights plan); (ii) a provision in the Company's Articles of
Incorporation prohibiting cumulative voting for the election of directors; (iii)
a provision in the Company's Bylaws providing for the existence of a classified
Board of Directors divided into three classes, with the members of each class
serving for a period of three years; (iv) a provision in the Articles of
Incorporation reserving to the directors the power to amend the Bylaws of the
Company and a Bylaw provision requiring a two-thirds vote of the Board to
authorize certain such amendments; (v) provisions in the Company's Bylaws
providing that a director may be removed only for cause and only by the
affirmative vote of at least two-thirds of the shares entitled to vote with
respect to the election of directors; and (vi) an existing shareholder rights
plan providing special acquisition rights and other features designed to deter
any unfair or abusive takeover attempt. The Board has no present intention to
propose other amendments to the Articles of Incorporation that may be deemed to
have an anti-takeover effect in future proxy solicitations, but may in the
future deem it advisable to recommend such action. The Board is not presently
aware of any proposal to effect a change in control or takeover of the Company.
The Board of Directors believes the Amendment would be of substantial
benefit in providing the Company enhanced ability to take advantage of
acquisition and financing opportunities that may arise that require prompt
action when favorable market conditions exist, and, accordingly, that it is in
the best interests of the Company and its shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO INCREASE THE COMPANY'S AUTHORIZED COMMON STOCK.
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<PAGE> 25
4. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit/Finance Committee of the Board of Directors has appointed
Deloitte & Touche LLP as independent certified public accountants to audit and
express an opinion on the Company's financial statements for the year ending
December 31, 1996. Deloitte & Touche LLP have served as the Company's
independent auditors since 1988. Ratification of the appointment of Deloitte &
Touche LLP will require the affirmative vote of the holders of a majority of
the shares present or represented and entitled to vote at the Annual Meeting.
A representative of Deloitte & Touche LLP will attend the Annual
Meeting and will have the opportunity to make a statement if he desires to do
so and to respond to appropriate questions.
In the event the shareholders fail to ratify the appointment of
Deloitte & Touche LLP as the Company's independent auditors, it is not
anticipated that Deloitte & Touche LLP would be replaced in 1996. Such lack of
approval would, however, be considered by the Audit/Finance Committee in
selecting the Company's independent auditors for 1997.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS.
5. OTHER MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING
The Company knows of no matters other than those stated above which
are to be brought before the Annual Meeting. It is intended that the persons
named in the proxy will vote all of the shares of Common Stock represented by
such proxy in accordance with their best judgment if any other matters do
properly come before the Annual Meeting.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
A shareholder intending to present a proposal at the 1997 Annual
Meeting of Shareholders scheduled to be held on May 1, 1997 and who desires
that such proposal be included in the Company's Proxy Statement and Proxy Card
relating to the meeting, must deliver such proposal, along with any supporting
statement, in writing to the Corporate Secretary at the Company's principal
offices no later than December 4, 1996.
A copy of the Annual Report for 1995 is being mailed to shareholders
with this Proxy Statement. The Annual Report is not to be regarded as
proxy-soliciting material or a communication by means of which any solicitation
is to be made.
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<PAGE> 26
Whether or not you intend to be present at this meeting, you are urged
to execute and return promptly the enclosed form of proxy. If you are present
at the meeting and wish to vote your stock in person, you may do so.
By Order of the Board of Directors,
Geoffrey Arms
Corporate Secretary
DATED: March ___, 1996
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<PAGE> 27
EXHIBIT A
POOL ENERGY SERVICES CO.
1996 DIRECTORS' STOCK INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of this Plan is to provide a means for Pool Energy
Services Co. (the "Company") to compensate members of its Board of Directors
who are not full-time employees of the Company or any of its subsidiaries with
stock of the Company and to afford them options to purchase stock of the
Company, in order to (i) provide such Directors a direct interest in the
Company's attainment of its financial goals, (ii) align their interests more
closely with the interests of other shareholders of the Company, and (iii)
provide a financial incentive that will assist the Company in attracting and
retaining the most qualified individuals as Directors. The Plan is intended to
meet the requirements of Rule 16b-3 under the Securities Exchange Act of 1934,
as amended.
SECTION 2. DEFINITIONS
Unless the context otherwise requires, the following words as used
herein shall have the following meanings:
(a) "Award" means a grant of an Option or Restricted Stock
pursuant to the Plan.
(b) "Beneficial Owner" shall be defined by reference to Rule 13d-3
under the Exchange Act; provided, however, and without limitation, any
individual, corporation, partnership, group, association or other person or
entity which has the right to acquire any voting stock at any time in the
future, whether such right is contingent or absolute, pursuant to any
agreement, arrangement or understanding or upon exercise of conversion rights,
warrants or options, or otherwise, shall be the Beneficial Owner of such voting
stock.
(c) "Board" means the Board of Directors of the Company as the
same may be constituted from time to time.
(d) "Change in Control" occurs if: (i) any "person" (defined as
such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act, as
amended) is or becomes the Beneficial Owner, as herein defined, directly or
indirectly, of securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company's outstanding securities then
entitled to vote for the election of Directors in any transaction or series of
related transactions not approved by the Board; or (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constituted the Board cease for any reason to
<PAGE> 28
constitute at least a majority thereof (excluding for purposes of this
calculation any Director who dies or ceases to be a Director due to disability
or reaching the maximum age for eligibility to serve as a Director during such
period); or (iii) the Board shall approve the sale of all or substantially all
of the assets of the Company; or (iv) the Board shall approve any merger,
consolidation, issuance of securities or purchase of assets, the result of
which would be the occurrence of any event described in clause (i) or (ii) of
this paragraph.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the Compensation Committee of the Board, as
the same may be constituted from time to time, or such other committee as the
Board may appoint to administer the Plan.
(g) "Common Stock" means the common stock, no par value, of the
Company.
(h) "Company" means Pool Energy Services Co., a Texas corporation.
(i) "Director" means a member of the Board who is not a full-time
employee of the Company or any of its subsidiaries.
(j) "Disability" means, with respect to a Director, an inability
as determined by the Committee to perform duties and services as a director of
the Company by reason of a medically determinable physical or mental
impairment, supported by medical evidence, that can be expected to last for a
continuous period of not less than six (6) months.
(k) "Disinterested Person" means a person who is a disinterested
person within the meaning of Rule 16b-3 promulgated under the Exchange Act.
(l) "Effective Date" means February 23, 1996.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, with respect to a Share, the fair
market value thereof as determined by the Committee in good faith; provided,
however that (i) if the Common Stock is listed on a securities exchange
registered under the Exchange Act, the Fair Market Value of a Share shall be
the average of the reported high and low sales prices on the date in question
(or if there was no reported sale on such date, on the last preceding date on
which any reported sale occurred) on the principal securities exchange on which
the Common Stock is listed or admitted to trading, and (ii) if the Common Stock
is not listed or admitted to trading on any such exchange but is traded
over-the-counter and reported on the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or any similar system then
in use, the Fair Market Value of a Share shall be the closing sale price on the
date in question reported (or if there was no reported sale on such date, on
the last preceding date on which any reported sale occurred) on such system.
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<PAGE> 29
(o) "Option" means an option to purchase Shares pursuant to the
Plan and which does not qualify as an incentive stock option under Section 422
of the Code.
(p) "Optionee" means a person who has been granted an Option under
the Plan.
(q) "Participant" means a person who has been granted an Award
under the Plan.
(r) "Plan" means this Pool Energy Services Co. 1996 Directors'
Stock Incentive Plan, as amended from time to time.
(s) "Restricted Stock" means Shares that are issued subject to a
Restriction Period.
(t) "Restriction Period" means the period of time during which
Restricted Stock is subject to forfeiture pursuant to the Plan.
(u) "Retirement" means ceasing to be a member of the Board as a
result of not being eligible to stand for re-election due to his having reached
the maximum age for Directors, as provided in the Company's Bylaws.
(v) "Securities Act" means the Securities Act of 1933, as amended.
(w) "Share" means a share of Common Stock, and any share or
shares of capital stock or other securities of the Company hereafter issued or
issuable in respect of or in substitution or exchange for each such share of
Common Stock.
SECTION 3. ADMINISTRATION
(a) The Plan shall be administered by, and the decisions
concerning the Plan shall be made solely by the Committee. Each member of the
Committee shall be appointed by and shall serve at the pleasure of the Board.
The Board shall have the sole continuing authority to appoint members of the
Committee.
(b) The Committee is authorized to interpret and construe the Plan
and all Awards and to make all other determinations necessary or advisable for
administering the Plan. The Committee may from time to time adopt, amend and
rescind such rules and regulations, not inconsistent with the provisions of the
Plan, as it may deem advisable to carry out the Plan.
(c) All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon all
Participants, the Company, and other interested persons. Neither the Company,
any member of the Board, any member of the Committee, or any other individual
shall be liable, personally or otherwise, for any action, determination or
interpretation taken or made in good faith with respect to the Plan or Awards
made hereunder, and each member of the Board, each member of the Committee and
each other
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<PAGE> 30
individual involved in the administration and interpretation of the Plan shall
be entitled to indemnification and reimbursement by the Company in respect of
any claim, loss, damage or expenses (including counsel fees) arising therefrom
to the full extent permitted by law and under any directors' and officers'
liability or similar insurance coverage that may be in effect from time to
time.
(d) Notwithstanding anything contained in the Plan to the
contrary, the Committee shall have no discretion or authority to (i) grant
Awards other than as provided in the Plan, (ii) modify the terms of any Awards
(except as provided in Section 9 hereof), or (iii) exercise any discretion
which would be inconsistent with the intent that the Plan meet the requirements
of Rule 16b-3 under the Exchange Act.
SECTION 4. SHARES SUBJECT TO THE PLAN
(a) The total number of Shares that may be issued pursuant to
exercises of Options or issued as Restricted Stock under the Plan shall not
exceed a maximum of 200,000 Shares in the aggregate; such maximum shall be
increased or decreased, however, as provided in Section 9 hereof.
(b) Awards shall be made in accordance with the provisions of the
Plan until the maximum number of Shares shall be exhausted or the Plan is
sooner terminated.
(c) Shares subject to an Option that expires or terminates prior
to exercise and Shares granted as Restricted Stock that are subsequently
forfeited shall be available for the granting of Awards under the Plan. Any
Shares withheld pursuant to Section 10 of the Plan shall not be available for
future Awards. In the event that the number of Shares available for Options
under the Plan is insufficient to make all automatic Awards specified in the
Plan on the applicable date, then all Directors who are entitled to an Award on
such date shall share ratably in the number of Shares then available for grant
under the Plan (Restricted Stock grants shall be made first, then Option
grants), and shall have no rights to receive any Award with respect to the
deficiency in the available Shares.
(e) Shares issued under the Plan may be either previously
authorized but unissued Shares or treasury stock or both.
SECTION 5. ELIGIBILITY
Only Directors shall be eligible to receive Awards under the Plan.
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<PAGE> 31
SECTION 6. AUTOMATIC AWARDS
Subject to the provisions of Section 11, the eligibility provisions of
Section 5, and the availability of Shares as provided for in Section 4:
(a) Each person who is elected or appointed a Director for the
first time after the Effective Date shall thereupon be automatically granted an
Option to purchase 8,000 Shares (the "Initial Grant"). No person shall receive
more than one Initial Grant.
(b) Each person who is a Director as of the close of business on
the day of final adjournment of the Company's Annual Meeting of Shareholders in
each calendar year commencing with the Annual Meeting in the calendar year next
following that in which such Director received an Initial Grant shall thereupon
be automatically granted an Option to purchase 4,000 Shares.
(c) Each person who is a Director as of the close of business on
the day of final adjournment of each Annual Meeting of Shareholders of the
Company shall thereupon be automatically awarded 1,000 shares of Restricted
Stock.
SECTION 7. PROVISIONS RELATING TO OPTIONS
(a) The exercise price for each Share covered by an Option shall
be equal to the Fair Market Value of such Share at the date of grant of such
Option.
(b) Options shall not be exercisable except to the extent they are
vested. Each Option shall vest and become exercisable on the first anniversary
of the date of grant, provided, however, that, with respect to Options granted
on the date of the Company's Annual Meeting of Shareholders, vesting shall
occur on the earlier of the first anniversary of the date of grant or the date
of the Annual Meeting of Shareholders held in the first calendar year
subsequent to the calendar year in which the Option was granted. Options shall
become fully vested and immediately exercisable upon (i) death, Disability or
Retirement, or (ii) the occurrence of a Change in Control. No further vesting
shall occur after the date an Optionee's service as a Director ceases for any
reason other than those set forth in the preceding sentence.
(c) Anything to the contrary herein notwithstanding, Options shall
not be exercisable for a period of at least six (6) months from the date of
grant (except in the event of death or Disability of the Optionee or in the
event of a Change in Control).
(d) Each Option shall expire ten (10) years from the date of grant
thereof, subject, however, to earlier termination as follows: (i) if an
Optionee's service as a director of the Company is terminated by reason of
Disability or death, the Optionee, his legal representative, or legatee, as the
case may be, may exercise such Option not later than one (1) year from the date
of such cessation of service as a director; (ii) if an Optionee's service as a
director of the
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<PAGE> 32
Company is terminated by reason of Retirement, the Optionee may exercise such
Option not later than five (5) years from the date of such Retirement; (iii) if
an Optionee's service as a director of the Company is terminated for any other
reason, the Optionee may exercise such Option, but only to the extent such
Option is vested as of the date the Optionee's service as a Director ceases,
not later than ninety (90) days from the date of such cessation of service as a
Director, except that in the event of termination of service as a director of
the Company for Cause, as defined in the Company's Bylaws, each such Option
shall immediately become null and void for all purposes.
(e) Each Option shall be evidenced by a written agreement, in
substantially the form attached hereto. In the event of any conflict or
inconsistency between provisions of the Plan and any Option agreement, the Plan
shall control.
(f) No Option shall be transferable by the Optionee other than by
will or the applicable laws of descent and distribution.
(g) During the lifetime of an Optionee, only such Optionee or his
guardian or legal representative may exercise an Option granted to the
Optionee. If an Option granted hereunder shall be exercised by a legal
representative of a deceased Optionee or by a person who acquired an Option
granted hereunder by bequest or inheritance by reason of death of the Optionee,
written notice of such exercise shall be accompanied by a certified copy of
letters testamentary or equivalent proof of right of such legal representative
or other person to exercise such Option.
(h) At any time, and from time to time, during the period when any
Option or a portion thereof is exercisable, such Option or portion thereof may
be exercised in whole or in part.
(i) Each exercise of an Option, or a portion thereof, shall be
effected by means of a notice in writing to the Company, in form satisfactory
to the Company, accompanied by payment in full of the exercise price of the
Shares then being purchased. Payment in full shall mean payment of the full
amount of the exercise price for the Shares (i) in cash, by certified check,
cashier's check, or other check deemed acceptable by the Company's Corporate
Secretary, or (ii) with unrestricted Shares owned by the Optionee for more than
six months, in either case together with such additional payment in such form
as the Company shall approve as shall be necessary to meet tax withholding
requirements in accordance with Section 10 hereof, if applicable.
(j) No Shares shall be issued upon exercise of an Option until
full payment therefor has been received by the Company, and an Optionee shall
have none of the rights of a shareholder until Shares are issued to him.
(k) As promptly as may be practicable after an Option, or a
portion thereof, has been exercised, the Company shall deliver or cause to be
delivered one or more certificates for the appropriate number of Shares.
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<PAGE> 33
(l) Nothing herein or in any Option agreement shall require the
Company to issue any Shares upon exercise of an Option if such issuance would,
in the opinion of counsel for the Company, constitute a violation of the
Securities Act or any other applicable statute or regulation then in effect.
Unless the Shares delivered to the Optionee upon exercise of an Option have
been registered under the Securities Act, the Optionee shall give the Company
satisfactory written evidence that he is acquiring such Shares for the purposes
of investment only and not with a view to their distribution.
SECTION 8. PROVISIONS RELATING TO RESTRICTED STOCK
(a) Each Award of Restricted Stock shall be subject to a
Restriction Period which shall expire on the earliest to occur of the
following: (i) the expiration of twelve (12) months from the date of grant
thereof, (ii) the Annual Meeting of Shareholders in the calendar year next
following that in which the grant occurred, (iii) the Participant's death,
Retirement or Disability, or (iv) the occurrence of a Change in Control.
(b) If a Participant ceases to be a member of the Board for any
reason other than death, Retirement or Disability, any such Restricted Stock as
to which the Restriction Period has not expired shall thereupon be forfeited.
(c) Upon being awarded Restricted Stock, a Participant shall be
the record owner of such Shares and shall have the right to vote such Shares,
but any dividends and other distributions in respect of such Restricted Stock
shall be accrued during the Restriction Period applicable thereto but shall be
paid to the Participant only upon expiration of the Restriction Period.
(d) Each certificate representing Restricted Stock shall be
registered in the name of the Participant to whom it is awarded and, during the
Restriction Period applicable thereto, shall be left on deposit with the
Company, together with a stock power endorsed in blank.
(e) Upon expiration or early termination of the Restriction
Period, the certificate or certificates representing the Shares shall be
delivered to the Participant, or, in the case of a Participant who dies during
the Restriction Period, to the representative of the person's estate.
(f) Nothing herein shall require the Company to issue any
Restricted Stock if such issuance would, in the opinion of counsel for the
Company, constitute a violation of the Securities Act or any other applicable
statute or regulation then in effect. Unless the Shares of Restricted Stock
issued to a Participant pursuant to the Plan have been registered under the
Securities Act, the Participant shall give the Company satisfactory written
evidence that he is acquiring such Shares for the purposes of investment only
and not with a view to their distribution.
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<PAGE> 34
SECTION 9. CHANGES IN SHARES AND CERTAIN CORPORATE TRANSACTIONS
(a) If at any time while the Plan is in effect there shall be any
increase or decrease in the number of issued and outstanding Shares of the
Company effected without receipt of consideration therefor by the Company,
through the declaration of a stock dividend or any stock split or combination
of Shares, then and in each such event:
(i) An appropriate adjustment shall be made in the
maximum number of Shares available for Awards under the Plan, to the
end that the same proportion of the Company's issued and outstanding
Shares shall continue to be available for Awards;
(ii) The Committee shall make an appropriate adjustment in
the number of Shares (i) issuable upon the exercise of any Option (and
if appropriate in the exercise price per Share of such Option) or (ii)
comprising any award of Restricted Stock, to the end that the same
proportion of the Company's issued and outstanding Shares in each such
instance shall remain subject to purchase at the same aggregate
exercise price, in the case of an Option, or comprise such Award, in
the case of Restricted Stock.
(b) In case of any corporate reorganization, or any consolidation
or merger of another corporation into the Company in which the Company is the
surviving corporation, in which there is a reclassification, change (including
a change to the right to receive cash or other property) or exchange of the
Shares (other than as a result of a subdivision or combination of the Shares,
but including any change in such Shares into two or more classes or series of
Shares), the Committee in its sole discretion may provide that each outstanding
Option shall be replaced with an Option to purchase the kind and amount of
shares of stock and other securities (including those of any new direct or
indirect parent of the Company), property, cash or any combination thereof that
the holder of such Option would have received as a holder of Shares had he
exercised the Option immediately prior to such reorganization, consolidation or
merger.
(c) Except as is otherwise expressly provided herein, the issuance
by the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection
with a direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to the maximum number
of Shares available for Awards under the Plan or with respect to Shares then
subject to Awards under the Plan. Furthermore, the existence of outstanding
Awards granted under the Plan shall not affect in any manner the right or power
of the Company to make, authorize or consummate (i) any adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business; (ii) any merger or consolidation of the Company;
(iii) any issuance by the Company of debt securities or preferred stock that
would rank above the Shares subject to outstanding Awards under the Plan; (iv)
the dissolution or liquidation of the Company; (v) any other corporate act or
proceeding, of a similar character or otherwise.
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<PAGE> 35
SECTION 10. WITHHOLDING TAXES
A Participant exercising an Option or receiving Restricted Stock
granted hereunder shall be required to pay to the Company amounts to cover any
taxes required by law to be withheld or otherwise deducted and paid by the
Company in respect of the issuance or or delivery of the Shares relating to
such Option exercise or Restricted Stock grant. In lieu thereof, the Company
shall have the right to withhold the amount of such taxes from any other sums
due or to become due from the Company to the Participant upon such terms and
conditions as the Committee shall prescribe. At any time that a withholding
obligation becomes applicable with respect to the exercise of an Option or the
issuance of Restricted Stock, the Company may, if it so elects, allow such
withholding obligation to be satisfied, in whole or in part, by withholding
Shares otherwise issuable to the Participant or by the delivery to the Company
of unrestricted Shares owned by the Participant for at least six (6) months.
SECTION 11. SHAREHOLDER APPROVAL
The Plan shall be effective on February 23, 1996, the date of its
adoption by the Board, but shall be submitted to the shareholders of the
Company for approval and ratification at the next regular or special meeting of
shareholders to be held within twelve (12) months after the Board shall have
adopted the Plan. If at such a meeting of the shareholders of the Company a
quorum is present, the Plan shall be presented for approval and ratification,
and unless at such meeting the Plan is approved and ratified by the affirmative
vote of a majority of the outstanding shares of Common Stock of the Company
present in person or by proxy and entitled to vote, the Plan and all then
outstanding Options shall become null and void and of no further force or
effect. No Awards of Restricted Stock shall be made prior to the approval and
ratification of the Plan by shareholders in accordance with this Section 11.
SECTION 12. AMENDMENT, SUSPENSION OR TERMINATION
The Board may at any time amend, suspend or terminate the Plan,
provided, however, that no amendment shall be made to the Plan which would
cause any Director to cease to be a Disinterested Person, and no amendment
shall become effective without shareholder approval if such amendment would (i)
materially increase the benefits accruing to Participants under the Plan, (ii)
materially increase the number of Shares which may be issued under the Plan or
(iii) materially modify the requirements as to eligibility for participation in
the Plan. The Plan shall terminate ten years after the Effective Date.
Options or Restricted Stock shall not be granted while the Plan is suspended or
after it is terminated. Rights and obligations with respect to any Option or
Restricted Stock shall not be altered or impaired by suspension or termination
of the Plan, except upon the consent of the Participant. The power of the
Committee to construe and administer the Plan with respect to any Options or
Restricted Stock granted prior to the termination or suspension of the Plan
under Section 3 shall continue after such termination or during such
suspension.
-9-
<PAGE> 36
SECTION 13. MISCELLANEOUS
(a) All expenses incident to the administration of the Plan,
including, but not limited to, legal and accounting fees, shall be paid by the
Company.
(b) If any provision of the Plan or any Agreement is held to be
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the Plan or such Agreement, as the case may
be, but such provision shall be fully severable and the Plan or such Agreement,
as the case may be, shall be construed and enforced as if the illegal or
invalid provision had never been included herein or therein.
(c) The titles and headings of Sections and paragraphs are
included for convenience of reference only and are not to be considered in the
construction of the provisions hereof.
(d) All questions arising with respect to the provisions of the
Plan shall be determined by application of the laws of the State of Texas,
except to the extent Texas law is preempted by Federal law.
# # # #
-10-
<PAGE> 37
POOL ENERGY SERVICES CO.
STOCK OPTION AGREEMENT
(1996 DIRECTORS' STOCK INCENTIVE PLAN)
Pool Energy Services Co. (the "Company"), desiring to afford an
opportunity to the grantee identified below (the "Grantee") to purchase shares
of the Company's common stock, no par value ("Common Stock"), and to provide
the Grantee with a proprietary interest in the Company, has granted to the
Grantee, and the Grantee hereby accepts, an option (the "Option") under the
Company's 1996 Directors' Stock Incentive Plan (the "Plan") to purchase the
number of shares of Common Stock, during the term, at the price, and subject to
and upon the terms and conditions set forth below. The Option is a
non-qualified stock option and is not subject to incentive stock option
treatment under the Internal Revenue Code or applicable regulations thereunder.
1. Details of Option.
(a) The date of the Option (the "Date of Grant") is
___________________________.
(b) The name of the Grantee is
_______________________________________.
(c) The number of shares of Common Stock for which the Option is
exercisable is ___________________, subject to adjustment as
provided in the Plan.
(d) Subject to acceleration as set forth in the Plan, the Option
shall become exercisable on the first anniversary of the Date
of Grant, provided, however, that, if the Date of Grant
coincides with the date of the Company's Annual Meeting of
Shareholders, the Option shall become exercisable on the
earlier of (i) the first anniversary of the Date of Grant or
(ii) the date of the Annual Meeting of Shareholders held in
the first calendar year following the calendar year of the
Date of Grant.
(e) The exercise price of the Option is $_________________ per
share of Common Stock, subject to adjustment as provided in
the Plan.
(f) The term of the Option is ten years beginning on the date of
of grant of the Option; upon the expiration of such term, or
earlier termination thereof as provided in the Plan, the
Option shall expire and may not be exercised.
2. The Plan. The Option is subject to, and the Company and the Grantee
agree to be bound by, all of the terms and conditions of the Plan, as the same
shall have been amended from time to time in accordance with the terms thereof,
provided that no such amendment shall deprive the
<PAGE> 38
Grantee, without his consent, of this Option or any rights hereunder. All of
the terms and provisions of the Plan are hereby incorporated into this
Agreement, including, without limitation, the provisions of the Plan relating
to eligibility, payment, terms and limitations on the right of exercise,
transferability, termination of service, adjustment of option shares and/or
exercise price and taxes. A copy of the Plan in its current form has been
furnished to the Grantee. In the event of any conflict or inconsistency
between provisions of the Plan and this Agreement, the Plan shall control.
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date stated above.
POOL ENERGY SERVICES CO.
BY
------------------------------------
ACCEPTED:
- ----------------------------------------
(GRANTEE)
<PAGE> 39
DETACH HERE
POOL ENERGY SERVICES CO.
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 2, 1996
P
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O
X The undersigned hereby appoints J.T. Jongebloed and W.C. McCord and
Y each of them, attorneys and agents, with full power of substitution, to
vote as proxies all the shares of Common Stock of Pool Energy Services Co.
standing in the name of the undersigned at the Annual Meeting of
Shareholders to be held at 10375 Richmond Avenue, 2nd Floor, Houston, Texas
at 10:00 a.m., Houston time, on Thursday, May 2, 1996, and at any
adjournment thereof, in accordance with the instructions noted on the
reverse side, and with discretionary authority with respect to such other
matters, not known or determined at the time of the solicitation of this
proxy, as may properly come before said meeting or any adjournment thereof.
-----------
SEE REVERSE
SIDE
-----------
(Continued and to be signed on reverse side)
<PAGE> 40
DETACH HERE
[X] Please mark
votes as in
this example.
<TABLE>
<S> <C>
Receipt of the Notice of Meeting and Proxy Statement is hereby acknowledged.
The undersigned hereby revokes any proxies heretofore given and directs said attorneys to act or vote as
follows:
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS 2. PROPOSAL TO APPROVE 1996 [ ] [ ] [ ]
DIRECTORS' STOCK INCENTIVE
Nominees: Gary D. Nicholson, W.C. McCord PLAN.
FOR WITHHELD MARK HERE 3. AMENDMENT TO ARTICLES TO [ ] [ ] [ ]
IF YOU PLAN [ ] INCREASE THE COMPANY'S
[ ] [ ] TO ATTEND AUTHORIZED COMMON STOCK.
THE MEETING
4. PROPOSAL TO RATIFY THE [ ] [ ] [ ]
[ ] MARK HERE APPOINTMENT OF DELOITTE &
--------------------------------------- FOR ADDRESS [ ] TOUCHE LLP AS INDEPENDENT
For both nominees except as noted above CHANGE AND AUDITORS FOR THE YEAR 1996.
NOTE BELOW
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS AND WILL BE VOTED IN ACCORDANCE WITH THE
SHAREHOLDER'S SPECIFICATIONS HEREON. IN THE ABSENCE
OF SUCH SPECIFICATION, THIS PROXY WILL BE VOTED IN
FAVOR OF EACH NOMINEE FOR DIRECTOR, "FOR" APPROVAL
OF THE 1996 DIRECTORS' STOCK INCENTIVE PLAN, "FOR"
APPROVAL OF THE INCREASE IN THE AUTHORIZED SHARES OF
THE COMPANY'S COMMON STOCK AND "FOR" THE PROPOSAL TO
RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
Joint owners must EACH sign. Please sign EXACTLY as your
names(s) appear(s) on this card. When signing as an
attorney, trustee, executor, adminstrator, guardian or
corporate officer, please give your FULL TITLE.
Signature: Date: Signature: Date:
--------------------------------- ---------------- --------------------------------- -----------------
</TABLE>
