<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Ponder Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
PONDER INDUSTRIES, INC.
5005 Riverway Drive, Suite 550
Houston, Texas 77056
Telephone: (713) 965-0653
February 23, 1999
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 1999 Annual Meeting of the Stockholders of Ponder Industries, Inc. The
Annual Meeting will be held March 24, 1999, at 10:00 a.m. C.S.T. at the Holiday
Inn Crowne Plaza Hotel, 2222 West Loop South, Houston, Texas 77027. The formal
Notice of Annual Meeting is set forth in the enclosed material.
The matters expected to be acted upon at the meeting are described in
the attached Proxy Statement. Following the meeting, stockholders will have the
opportunity to ask questions and comment on Ponder Industries, Inc.'s
operations.
It is important that your views be represented whether or not you are
able to be present at the Annual Meeting. Please sign and return the enclosed
proxy card promptly.
We appreciate your investment in Ponder Industries, Inc. and urge you
to return your proxy card as soon as possible.
Sincerely,
Eugene L. Butler
President, Chief Executive Officer and
Chairman of the Board
<PAGE> 3
PONDER INDUSTRIES, INC.
5005 Riverway Drive, Suite 550
Houston, Texas 77056
Notice Of Annual Meeting Of Stockholders
To Be Held March 24, 1999
To the Stockholders of Ponder Industries, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Ponder Industries, Inc., a Delaware corporation (the "Company"), will be held at
the Holiday Inn Crowne Plaza Hotel, 2222 West Loop South, Houston, Texas 77027,
on March 24, 1999, at 10:00 a.m. C.S.T., for the following purposes:
(1) to elect seven directors to serve until the next annual
meeting and until their respective successors shall be duly elected and
qualified;
(2) to ratify the appointment of Arthur Andersen LLP as
independent public accountants for the Company for the fiscal year
ending August 31, 1999; and
(3) to transact such other business as may properly come
before the Annual Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on February 4,
1999, as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting. A list of all stockholders
entitled to vote at the meeting will be maintained at the principle offices of
the Company, 5005 Riverway Drive, Suite 550, Houston, Texas, and will be
available during ordinary business hours for a period of ten days prior to the
meeting. The list will be open to the examination by any stockholder for any
purpose germane to the meeting. The list will also be produced at the meeting
and will be open for the whole time thereof.
So that we may be sure your shares will be voted at the Annual Meeting,
please date, sign and return the enclosed proxy promptly. For your convenience,
a postpaid return envelope is enclosed for your use in returning your proxy. If
you attend the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors,
Eugene L. Butler
President and Chief Executive Officer
Houston, Texas
February 23, 1999
------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. EVEN
IF YOU PLAN TO BE PRESENT, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY
AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, YOU MAY VOTE EITHER
IN PERSON OR BY YOUR PROXY.
<PAGE> 4
PONDER INDUSTRIES, INC.
5005 Riverway Drive, Suite 550
Houston, Texas 77056
------------------------------
PROXY STATEMENT
------------------------------
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
The enclosed proxy is solicited on behalf of the Board of Directors
(the "Board") of Ponder Industries, Inc., a Delaware corporation (the
"Company"), for use at the 1999 Annual Meeting of Stockholders (the "Annual
Meeting") of the Company to be held on March 24, 1999, and at any adjournment or
postponement thereof.
The securities of the Company entitled to vote at the Annual Meeting
consist of shares of common stock, $0.01 par value ("Common Stock"). At the
close of business on February 4, 1999 (the "Record Date"), there were
outstanding and entitled to vote _______________________ shares of Common Stock.
The holders of record of Common Stock on the Record Date will be entitled to one
vote per share. The Company's Certificate of Incorporation does not permit
cumulative voting in the election of directors.
The Annual Report to Stockholders for the year ended August 31, 1998,
has been or is being furnished with this Proxy Statement, which is being mailed
on or about February 23, 1999, to the holders of record of Common Stock on the
Record Date. The Annual Report to Stockholders does not constitute a part of the
proxy materials.
VOTING AND PROXY PROCEDURES
Properly executed proxies received in time for the Annual Meeting will
be voted. Stockholders are urged to specify their choices on the proxy, but if
no choice is specified, eligible shares will be voted for Proposal No. 2 and the
election of the seven nominees for director named herein. At the date of this
Proxy Statement, management of the Company knows of no other matters which are
likely to be brought before the Annual Meeting. However, if any other matters
should properly come before the Annual Meeting, the persons named in the
enclosed proxy will have discretionary authority to vote such proxy in
accordance with their best judgment on such matters.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked by a later-dated proxy or by written notice filed with
the Secretary at the Company's executive offices at any time before the enclosed
proxy is exercised. Stockholders attending the Annual Meeting may revoke their
proxies and vote in person. The Company's executive offices are located at 5005
Riverway Drive, Suite 550, Houston, Texas 77056.
The holders of a majority of the total shares of Common Stock issued
and outstanding at the close of business on the Record Date, whether present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. The affirmative vote of a plurality of the total
shares of Common Stock present in person or represented by proxy and entitled to
vote at the Annual Meeting is required for the election of directors and the
affirmative vote of a majority of the total shares of Common Stock present in
person or represented by proxy and entitled to vote at the Annual Meeting is
required for the ratification of the appointment of Arthur Andersen LLP as
independent public accountants and for any other matters which may come before
the Annual Meeting.
Abstentions are counted toward the calculation of a quorum but are not
treated as either a vote for or against a proposal. An abstention has the same
effect as a vote against the proposal. Any unvoted position in a brokerage
account will be considered as not voted and will not be counted toward
fulfillment of quorum requirements.
<PAGE> 5
The cost of solicitation of proxies will be paid by the Company. In
addition to solicitation by mail, proxies may be solicited by the directors,
officers and employees of the Company, without additional compensation, by
personal interview, telephone, telegram or otherwise. Arrangements will also be
made with brokerage firms and other custodians, nominees and fiduciaries who
hold the voting securities of record for the forwarding of solicitation
materials to the beneficial owners thereof. The Company will reimburse such
brokers, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith. The Company has hired
Corporate Investor Communications, Inc. to assist in obtaining proxies.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning any person who
was the beneficial owner of five percent or more of the Company's outstanding
Common Stock as of December 18, 1998. The table also shows information
concerning beneficial ownership by all directors and nominees, by each of the
executive officers named in the Summary Compensation Table and by all directors
and executive officers as a group. For purposes of this Proxy Statement,
beneficial ownership is defined in accordance with the rules of the Securities
and Exchange Commission (the "Commission"), to mean generally the power to vote
or dispose of shares, regardless of any economic interest therein. Unless
otherwise indicated, each person has the sole dispositive and voting power (or
shares such powers with his or her spouse) with respect to the shares set forth
in the following table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERSHIP OF CLASS#
-------------------- ---------
<S> <C> <C>
White Owl Capital Partners(1)(2)...................... 3,470,000 35.02%
20 Pine Brook Road
Bedford, New York 10506
Steven A. Webster(1)(2)............................... 3,468,000 35.00%
William R. Ziegler(1)(2).............................. 3,418,000 34.05%
Eugene L. Butler(3)................................... 153,960 1.63%
Rittie W. Milliman, Sr.(4)............................ 5,300 *
Joe R. Nemec(5)....................................... 33,209 *
John Roane(5)......................................... 13,153 *
John M. Le Seelleur(6)(7)............................. 19,767 *
Frank J. Wall(8)...................................... 30,223 *
Gerald A. Slaughter(9)................................ 41,680 *
All directors and executive officers as a group
(12 persons)(2)(6)(10) ............................... 3,800,027 37.44%
</TABLE>
- ----------
(#) Based on 9,297,810 shares of Common Stock issued and outstanding as of
December 18, 1998.
(*) Represents less than one percent
(footnotes on following page)
(1) White Owl Capital Partners ("White Owl") is a general partnership of Mr.
Webster and Mr. Ziegler. Mr. Ziegler and Mr. Webster are also general
partners of Somerset Capital Partners ("SCP").
(2) Includes (a) 2,000,000 shares of Common Stock held by White Owl Investors
L.L.C., of which White Owl is the managing member, (b) 608,000 shares of
Common Stock held by White Owl, (c) 200,000 shares of Common Stock
2
<PAGE> 6
held by SCP, (d) 608,000 shares of Common Stock issuable upon exercise of
certain warrants held by White Owl and (e) 4,000 shares of Common Stock
issuable upon exercise of options granted pursuant to the Company's 1998
Directors' Stock Option Plan.
(3) Includes 2,200 shares of Common Stock issuable upon exercise of options
granted pursuant to the 1994 Directors' Stock Option Plan, 2,000 shares of
Common Stock issuable upon exercise of options granted pursuant to the
Company's 1998 Directors' Stock Option Plan, 140,000 shares of Common Stock
issuable upon exercise of options granted to Mr. Butler on September 30,
1997 and 1,660 shares of Common Stock held in Mr. Butler's 401(k) Plan
account.
(4) Includes 3,300 shares of Common Stock issuable upon exercise of options
granted pursuant to the Company's 1994 Directors' Stock Option Plan and
2,000 shares of Common Stock issuable upon exercise of options granted
pursuant to the Company's 1998 Directors' Stock Option Plan.
(5) Includes 4,400 shares of Common Stock issuable upon exercise of options
granted pursuant to the Company's 1994 Directors' Stock Option Plan and
2,000 shares of Common Stock issuable upon exercise of options granted
pursuant to the Company's 1998 Directors' Stock Option Plan.
(6) Does not include 240,000 shares of the Company's Common Stock held by
Panther Oil Tools, Ltd., a Jersey, Channel Islands corporation ("Panther").
Mr. Le Seelleur is the owner of 70% of the outstanding capital stock of
Panther and may be deemed to be the beneficial owner of such shares.
(7) Includes 1,100 shares of Common Stock issuable upon exercise of options
held by Mr. Le Seelleur granted pursuant to the Company's 1994 Directors'
Stock Option Plan and 2,000 shares of Common Stock issuable upon exercise
of options granted pursuant to the Company's 1998 Directors' Stock Option
Plan.
(8) Includes 4,400 shares of Common Stock issuable upon exercise of options
granted pursuant to the Company's 1994 Directors' Stock Option Plan, 2,000
shares of Common Stock issuable upon exercise of options granted pursuant
to the Company's 1998 Directors' Stock Option Plan, 4,000 shares of Common
Stock issuable upon exercise of options granted to Mr. Wall on October 22,
1996, 16,000 shares of Common Stock issuable upon exercise of options
granted to Mr. Wall on September 30, 1997, and 3,351 shares of Common Stock
held in Mr. Wall's 401(k) Plan account.
(9) Includes 24,000 shares of Common Stock issuable upon the exercise of
options by Mr. Slaughter and 680 shares of Common Stock held in Mr.
Slaughter's 401(k) Plan account.
(10) Includes 238,600 shares of Common Stock issuable upon the exercise of
options held by officers and directors, 608,000 shares of Common Stock
issuable upon the exercise of warrants held by White Owl and 20,654 shares
of Common Stock held in officers' 401(k) Plan accounts.
3
<PAGE> 7
MATTERS TO COME BEFORE THE ANNUAL MEETING
PROPOSAL NO. 1: ELECTION OF DIRECTORS.
At the Annual Meeting of Stockholders, seven directors are to be
elected, each to hold office until the next annual meeting of stockholders and
until his successor is elected and qualified.
It is the intention of the persons named in the accompanying proxy that
proxies will be voted for the election of the seven nominees named in the
following table unless otherwise indicated thereon. Each of the nominees is now
a Director of the Company and is standing for reelection. The Board has no
reason to believe that any of the nominees will be unable to serve if elected to
office and, to the knowledge of the Board, the nominees intend to serve the
entire term for which election is sought. Should any nominee for the office of
director named herein become unable or unwilling to accept nomination or
election, the persons named in the proxy will vote for such other person as the
Board may recommend.
BOARD OF DIRECTOR NOMINEES
<TABLE>
<CAPTION>
Year First
Name Age Became Director
- ---- --- ---------------
<S> <C> <C>
Eugene L. Butler .................. 57 1996
Rittie W. Milliman, Sr. ........... 45 1994
John M. Le Seelleur ............... 48 1996
John Roane ........................ 69 1985
Joe R. Nemec ...................... 55 1986
Steven A. Webster ................. 47 1998
William R. Ziegler ................ 56 1998
</TABLE>
The business of the Company is managed by or under the direction of the
Board and its committees. The Board establishes corporate policies, approves
major business decisions and monitors the performance of the Company's
management. The day-to-day management functions and operating activities of the
Company are performed by the Company's full-time officers and executive
employees.
COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal 1998, the Audit Committee of the Board was composed of
two independent directors, Joe R. Nemec and John Le Seelleur. The Audit
Committee recommends the selection of and confers with the Company's independent
accountants regarding the scope and adequacy of annual audits, reviews reports
from the independent accountants and meets with the independent accountants and
with the Company's financial personnel to review the adequacy of the Company's
accounting principles, financial controls and policies. The entire Board
currently performs the nominating committee functions. When performing
nominating committee functions, the Board's duties include developing a policy
on the size and composition of the Board and criteria relating to candidate
selection, and identifying candidates for Board membership. During fiscal 1998,
the Compensation Committee was composed of two independent directors, John Roane
and Rittie W. Milliman, Sr. Generally, the Compensation Committee reviews the
Company's compensation philosophy and programs, exercises authority with respect
to the payment of direct salaries and incentive compensation to officers of the
Company and administers the Company's stock option plans.
4
<PAGE> 8
COMPENSATION OF DIRECTORS
For each meeting the Board of Directors attended, non-employee
directors receive $500 compensation. In addition, directors are entitled to
receive options to acquire 2,000 shares of the Company's Common Stock as of each
annual stockholders' meeting date pursuant to the Company's 1998 Directors'
Stock Option Plan. The Company also reimburses its directors for expenses
incurred in attending each Board meeting.
ATTENDANCE AT MEETINGS
In fiscal 1998, the Board met six (6) times and took action on four (4)
occasions by unanimous written consent, the Audit Committee met one (1) time,
and the Compensation Committee met two (2) times. All directors attended 75
percent or more of the aggregate number of meetings of the Board and of the
respective committees of which they are members.
The seven nominees receiving the highest number of affirmative votes of
the shares present in person or represented by proxy and entitled to vote shall
be elected as directors. All shares to be voted by proxy will be voted, or not
voted, as specified on each proxy.
THE BOARD UNANIMOUSLY RECOMMENDS THE STOCKHOLDERS
VOTE FOR THE ELECTION OF THE NOMINEES PROPOSED.
PROPOSAL NO. 2: PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS.
The Board desires to obtain stockholders' ratification of the Board's
appointment of Arthur Andersen LLP as the Company's independent public
accountants to audit the financial statements of the Company for the year ending
August 31, 1999. Representatives of Arthur Andersen LLP will be present at the
meeting to respond to appropriate questions from stockholders and will be given
the opportunity to make a statement should they desire to do so.
The proposal will be approved if approved by the vote of a majority of
the shares present in person or by proxy at the meeting, provided that the total
shares present at the meeting constitute a quorum. With respect to the proposal
to ratify the approval of Arthur Andersen LLP as the Company's independent
accountants, all such shares will be voted FOR or AGAINST, or not voted, as
specified on each proxy. If no choice is indicated, a proxy will be voted FOR
the proposal to ratify the approval of Arthur Andersen LLP as the Company's
independent accountants.
THE BOARD UNANIMOUSLY RECOMMENDS THE STOCKHOLDERS
VOTE FOR THE ADOPTION OF THIS PROPOSAL.
5
<PAGE> 9
FURTHER INFORMATION
BOARD OF DIRECTORS
The following table sets forth certain information with respect to the
nominees for director:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
---- --- -------- --------
<S> <C> <C> <C>
Eugene L. Butler 57 President, Chief Executive Officer and 1996
Chairman of the Board
John M. Le Seelleur 48 Director 1996
Rittie W. Milliman, Sr. 45 Director 1994
Joe R. Nemec 55 Director 1986
John Roane 69 Director 1985
William R. Ziegler 56 Director 1998
Steven A. Webster 47 Director 1998
</TABLE>
There are no family relationships among any director listed. In
connection with the Company's acquisition of Panther Oil Tools, Ltd., Mr.
Le Seelleur was elected to serve as a Director of the Company. In connection
with the Securities Purchase Agreement between the Company, White Owl Capital
Partners and others dated October 15, 1997, and the Securities Purchase and
Exchange Agreement between the Company, White Owl Investors L.L.C. and others
dated January 12, 1998, Messrs. Ziegler and Webster were elected to serve as
directors. Except for Messrs. Le Seelleur, Ziegler and Webster, there are no
arrangements or understandings pursuant to which any of the nominees were
elected as directors. Officers are elected annually by the Board at its first
meeting following the annual meeting of stockholders, each to hold office until
the corresponding meeting of the Board in the next year or until his successor
shall have been elected or shall have been qualified.
EUGENE L. BUTLER joined the Company in February 1996, became Executive Vice
President, Chief Financial Officer and Director in April 1996, and was elected
President, Chief Executive Officer and Chairman of the Board in April 1997. Mr.
Butler has approximately 29 years industry experience. Since 1991, Mr. Butler
has also served as Chairman of the Board and Chief Executive Officer of
Intercoastal Terminal, Inc., a company engaged in operating a petrochemical
storage and terminal facility. Mr. Butler has served as a director of Powell
Industries, Inc. since March 1990. From 1974 through 1991, Mr. Butler served in
various executive capacities for Weatherford/Enterra, Inc., a multinational
energy corporation now known as Weatherford International, Inc., including
director, president, chief executive officer and chief operating officer. Mr.
Butler received his degree in accounting from Texas A&M University in 1963, and
is a Certified Public Accountant.
RITTIE W. MILLIMAN, SR. was elected a Director in August 1994. He is President
of the Milliman Group, Inc., an oilfield services and equipment firm. From March
1992 to February 1996, Mr. Milliman served as the Company's Vice-President of
Wireline Operations. From 1984 to 1993 he was an independent consultant and
equipment supplier for wireline logging and perforating of wells.
JOE R. NEMEC has been a Director of the Company since 1986 and is an original
shareholder of the Company. Since September 1995, he has served as director of
Norwest Bank Texas, Alice. From 1987 through 1995 Mr. Nemec served as Secretary
of the Company. Mr. Nemec is a Certified Public Accountant and has owned his own
accounting practice since 1972.
JOHN ROANE has been a Director of the Company since March 1985. He was a fishing
tool supervisor for the Company from 1981 until his retirement in 1996. Mr.
Roane is an original shareholder of the Company. Prior to
6
<PAGE> 10
joining the Company in 1981, Mr. Roane was a fishing tool supervisor for Wilson
Downhole. His experience includes all aspects of the drilling and production of
oil and gas, as a consultant and drilling superintendent.
JOHN M. LE SEELLEUR has been a Director of the Company since October 1996 and is
the owner of Petresearch International, Inc., an oil exploration joint venture
and farm-out advisory firm headquartered in Aberdeen, Scotland. Mr. Le Seelleur
is the former chairman of Panther Oil Tools, Ltd., a wholly-owned subsidiary of
the Company. Mr. Le Seelleur has over 22 years of experience in oilfield
operations and management throughout the North Sea and Middle East. Mr.
Le Seelleur holds a diploma in business studies from Kingston College, London.
WILLIAM R. ZIEGLER has been a partner of the law firm of Parson & Brown LLP
since June 1994. Prior to that time he was a partner in the law firm of Whitman
Breed Abbott & Morgan and a predecessor firm for over five years. Mr. Ziegler is
a director of R&B Falcon Corporation, a director and Vice Chairman of the Board
of Grey Wolf, Inc., a director of Flotek Industries, Inc., and a director of
Geokinetics, Inc., which provides 3-D seismic acquisition and geophysical
services to the oil and gas industry.
STEVEN A. WEBSTER has been the Chief Executive Officer of R&B Falcon
Corporation, a marine oil and gas drilling contractor, since January 1, 1998,
and prior to that was the Chairman of the Board and Chief Executive Officer of
Falcon Drilling Company, Inc., which is now a wholly-owned subsidiary of R&B
Falcon Corporation, since 1991. He serves as a director of Crown Resources
Corporation, (a mining company), a director of Grey Wolf, Inc., Trust Manager of
Camden Property Trust, Chairman of the Board of Carrizo Oil & Gas, Inc., an
independent oil and gas exploration company, and a director of Geokinetics,
Inc., which provides 3-D seismic acquisition and geophysical services to the oil
and gas industry.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for fiscal 1998, 1997 and
1996 with respect to the cash compensation awarded to, earned by, or paid to the
Company's Chief Executive Officer and the remaining most highly compensated
executive officers (the "named executive officers") of the Company whose total
annual salary and bonus for the fiscal year ended August 31, 1998, was at least
$100,000.
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Other ------------
Name and -------------------- Annual Stock All Other
Principal Position Year Salary Bonus Compensation Options(#) Compensation($)
------------------ ---- -------- ------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Eugene L. Butler
Chairman of the Board, 1996 $ 30,000 -- $ 3,600(1) 1,100(3) $ 20,000(5)
Chief Executive Officer 1997 $128,333 $ 6,000 $ 6,800(1) 1,100(3) $ 5,200(6)
and President 1998 $153,300 $ 60,000 $ 8,600(2) 202,000(4) $ 9,600(6)
Frank J. Wall
Senior Vice President 1996 $ 80,039 -- $ 7,600(1) 1,100(3) --
Operations 1997 $106,667 $ 6,500 $ 7,400(1) 11,100(7) $ 10,495(9)
Administration 1998 $116,500 $ 20,000 $ 8,000(2) 42,000(8) $ 4,093(6)
Gerald A. Slaughter 1996 $ 27,967 -- $ 3,300(2) -- --
Senior Vice President 1997 $ 65,000 $ 4,000 $ 7,200(2) 10,000(10) $ 2,640(6)
Chief Financial Officer 1998 $101,800 $ 30,000 $ 8,000(2) 50,000(11) $ 6,108(6)
</TABLE>
(1) Includes vehicle allowance and director's fees.
(2) Includes vehicle allowance.
(3) Issued pursuant to the Company's 1994 Directors' Stock Option Plan.
(4) Represents 200,000 options granted by the Board of Directors on
September 30, 1997, and 2,000 options granted pursuant to the Company's
1998 Directors' Stock Option Plan.
(5) Represents fees paid to Mr. Butler before his employment and not as an
employee for consulting services for the Company.
(6) Represents the Company's contribution to employee's 401(k) Plan account.
(7) Represents 1,100 options granted pursuant to the Company's 1994
Directors' Stock Option Plan and 10,000 options granted by the Board of
Directors on October 22, 1996.
(8) Represents 40,000 options granted by the Board of Directors on September
30, 1997, and 2,000 options granted pursuant to the Company's 1998
Directors' Stock Option Plan.
(9) Represents the Company's contribution to Mr. Wall's 401(k) Plan account
in the amount of $2,162 and $8,333 in relocation pay.
(10) Represents options granted by the Board of Directors on October 22,
1996.
(11) Represents options granted by the Board of Directors on September 30,
1997.
8
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information concerning grants of stock options
by the Company to the named executive officers in fiscal 1998. The Company has
not granted any stock appreciation rights.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
- -------------------------------------------------------------------------------------------- AT ASSUMED ANNUAL RATES
PERCENTAGE OF OF STOCK PRICE APPRECIATION
TOTAL OPTIONS FOR THE OPTION TERM
GRANTED TO ----------------------------------
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION 5% 10%
Name GRANTED (#) FISCAL YEAR ($/SHARE) DATE ---- ----
---- ----------- ----------- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Eugene L. Butler(1) 2,000 0.4% $6.10 5/12/98 -0- -0-
100,000 19.3% $2.50 9/30/07 $30,170 $196,124
100,000 19.3% $2.50 9/30/07 $30,170 $196,124
Frank J. Wall(2) 2,000 0.4% $6.10 5/12/98 -0- -0-
40,000 7.7% $2.50 9/30/07 $12,068 $78,449
Gerald A. Slaughter 50,000 9.6% $2.50 9/30/07 $15,085 $98,062
</TABLE>
- ------------------
(1) Mr. Butler received 39% of the total options granted to employees in fiscal
1998.
(2) Mr. Wall received 8.1% of the total options granted to employees in fiscal
1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal 1998
by the named executive officers and the value of such officers' unexercised
options at August 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY
ACQUIRED AT FISCAL YEAR-END (#) AT FISCAL YEAR-END(1)
ON EXERCISE VALUE ---------------------------- ---------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eugene L. Butler -0- -0- 144,200 60,000 -0- -0-
Frank J. Wall -0- -0- 26,400 30,000 -0- -0-
Gerald A. Slaughter -0- -0- 24,000 36,000 -0- -0-
</TABLE>
- -----------------
(1) The "value" of any option set forth in the table above is determined by
subtracting the amount which must be paid upon exercise of the options from
the market value of the underlying Common Stock as of August 31, 1998
(based on the closing sales price as reported by the NASDAQ SmallCap
Market).
9
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1998 the Compensation Committee has been comprised of Mr.
Roane and Mr. Milliman.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
holders of more than ten percent of the Common Stock to file with the Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. The Company believes that through
the end of its fiscal year ended August 31, 1998, its officers, directors and
holders of more than ten percent of the Common Stock complied with the Section
16(a) filing requirements.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following reports and the Performance Graph
shall not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
During fiscal 1998, the Company had no formal compensation policies
with respect to executive officers. Because there are no formal compensation
policies in place, the compensation of executive officers was determined by the
Compensation Committee based generally on the qualifications and prior
experience of the executive officers. The following paragraph sets forth the
basis of the compensation paid in fiscal 1998 to Eugene L. Butler.
In April 1997, the Board elected Eugene L. Butler as Chairman of the
Board, President and Chief Executive Officer of the Company. At that time, the
Board established Mr. Butler's salary at $130,000 per year for the remainder of
fiscal 1997. Effective March 1, 1998, the Board increased Mr. Butler's salary to
$175,000 per year. The Board set Mr. Butler's compensation package based on the
key role he was to hold within the Company and in view of competitive
compensation packages offered to his peer group in the industry.
COMPENSATION COMMITTEE
Rittie W. Milliman, Sr.
John Roane
10
<PAGE> 14
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock to the NASDAQ Stock Market (US Companies) and to a Peer Group of other
public companies. The information was provided by Media General Services, Inc.
The Peer Group Index is comprised of NASDAQ-listed Oil and Gas Field Service
companies. The graph assumes that the value of the investment in the Common
Stock and each Index was 100 at August 30, 1993, and that all dividends were
reinvested.
[INSERT GRAPH]
<TABLE>
<CAPTION>
Total Returns Index For: 1993 1994 1995 1996 1997 1998
- ------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ponder Industries, Inc. 100.00 95.13 26.83 87.80 42.68 13.42
Peer Group 100.00 88.49 71.67 87.91 205.73 95.66
Nasdaq Stock Market (US 100.00 104.10 140.21 158.07 220.54 209.80
Companies)
</TABLE>
Notes:
A. No trading activity was recorded for the Company from 01/23/93 to
01/26/93.
B. The peer group is made up of securities of the following companies:
Cal Dive Internat Inc., Cheniere Energy Inc., Cirque Energy Corp.,
Coflexip Stena Offshore, Computalog Ltd., Dailey Internat Inc.,
Dawson Geophysical Co., Eagle Geophysical Inc., ERC Industries Inc.,
FX Energy Inc., Global Industries Ltd., Golden Triangle Inds Inc.,
Gulf Island Fabrication, ICO Inc., Infinity Inc., Lufkin Industries
Inc., Middle Bay Oil Co. Inc., Petrominerals Corp., Pool Energy
Services Co., Sheridan Energy Inc., Superior Energy Svcs Inc.,
Tatham Offshore Inc., Tesco Corp., Trico Marine Services and Venture
Seismic Ltd.
11
<PAGE> 15
EMPLOYMENT AGREEMENTS
Eugene L. Butler, President, Chief Executive Officer and Chairman of
the Board of the Company, and the Company are parties to a three year employment
agreement, dated effective December 1, 1998, pursuant to which Mr. Butler will
receive an initial base salary of $175,000 per annum and is eligible to receive
an annual bonus at the sole discretion of and in an amount determined by the
Compensation Committee. The employment agreement also provides that in the event
Mr. Butler's employment is terminated by the Company within the 12 months
following a "change of control" of the Company, for any reason other than
"cause" or, in the event of a voluntary termination of employment by Mr. Butler,
"good reason upon change of control," then (i) the Company shall pay Mr. Butler,
at his election, either his salary until the expiration of his employment
agreement or a lump-sum payment equal to the amount of his salary until the
expiration of his employment agreement and (ii) all of Mr. Butler's outstanding
stock options shall immediately vest and become fully exercisable. Each of
"cause," "change of control" and "good reason upon change of control" are
defined in Mr. Butler's employment agreement.
Gerald A. Slaughter, Senior Vice President and Chief Financial Officer
of the Company, and the Company are parties to a two year employment agreement,
dated effective December 1, 1998, pursuant to which Mr. Slaughter will receive
an initial base salary of $120,000 per annum and is eligible to receive an
annual bonus at the sole discretion of and in an amount determined by the
Compensation Committee. The employment agreement also provides that in the event
Mr. Slaughter's employment is terminated by the Company within the 12 months
following a "change of control" of the Company, for any reason other than
"cause" or, in the event of a voluntary termination of employment by Mr.
Slaughter, "good reason upon change of control," then (i) the Company shall pay
Mr. Slaughter, at his election, either his salary until the expiration of his
employment agreement or a lump-sum payment equal to the amount of his salary
until the expiration of his employment agreement and (ii) all of Mr. Slaughter's
outstanding stock options shall immediately vest and become fully exercisable.
Each of "cause," "change of control" and "good reason upon change of control"
are defined in Mr. Slaughter's employment agreement.
Other than as set forth above, there are no compensatory plans or
arrangements with respect to any individual named in the Summary Compensation
Table above or otherwise which would result from the resignation, retirement or
any other termination of such individual's employment with the Company or a
change in the individual's responsibilities following a change in control.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Ziegler and Mr. Webster are general partners of White Owl Capital
Partners, a general partnership ("White Owl") and Somerset Capital Partners
("SCP"). White Owl is the managing member of White Owl Investors L.L.C. ("WOI").
The Company entered into a Securities Purchase Agreement (the "Securities
Purchase Agreement") with White Owl and certain other individuals on October 15,
1997, pursuant to which the Company, for the aggregate consideration of
$2,500,000, made convertible promissory notes in the amount of $2,500,000, which
were convertible in the aggregate into 800,000 shares of Common Stock, (the
"Convertible Notes"), and granted warrants to purchase an additional 800,000
shares of Common Stock. Pursuant to the terms of the agreement, White Owl
received a convertible promissory note from the Company in the amount of
$1,900,000 (the "White Owl Note"), which was convertible into 608,000 shares of
Common Stock, and a warrant for the purchase of 608,000 shares of Common Stock.
On January 12, 1998, the Company entered into a Securities Purchase and Exchange
Agreement (the "Exchange Agreement") with WOI, SCP and certain other
individuals, pursuant to which the Company sold 2,200,000 shares of Common Stock
to WOI and SCP for an aggregate purchase price of $11,000,000, and the
Convertible Notes, including the White Owl Note, were converted into an
aggregate of 800,000 shares of Common Stock. Pursuant to the terms of the
Securities Purchase Agreement and the Exchange Agreement, the Company agreed to
elect three nominees selected by White Owl as directors of the Company, and to
nominate such nominees for reelection at the Annual Meeting. White Owl partially
exercised this right by nominating Mr. Ziegler and Mr. Webster as directors and
the Company elected them as directors of the Company effective January 12, 1998.
White Owl has not exercised its rights as to nominating a third director.
12
<PAGE> 16
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The deadline for submission for stockholder proposals pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended ("Rule 14a-8"), for
inclusion in the Company's Proxy Statement for its 2000 Annual Meeting of
Stockholders is October 26, 1999. After January 9, 2000, notice to the Company
of a stockholder proposal submitted otherwise than pursuant to Rule 14a-8 will
be considered untimely, and the persons named in the proxies solicited by the
Board of Directors of the Company for its 2000 Annual Meeting of Stockholders
may exercise discretionary authority voting power with respect to any such
proposal as to which the Company does not receive timely notice.
MATTERS NOT DETERMINED AT THE TIME OF SOLICITATION
The Board is not aware of any matters to come before the meeting other
than those set forth above. If any other matter should come before the meeting,
then the persons named in the enclosed form of proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
By Order of the Board of Directors
EUGENE L. BUTLER
President, Chief Executive Officer
and Chairman of the Board
Houston, Texas
Dated: February 4, 1999
13
<PAGE> 17
PONDER INDUSTRIES, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- March 24, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please mark, sign, date and return in the enclosed envelope.
The undersigned stockholder of Ponder Industries, Inc. (the
P "Company") hereby appoints Eugene L. Butler and Gerald A.
R Slaughter, or each of them, proxies of the undersigned with full
O power of substitution to vote at the Annual Meeting of
X Stockholders of the Company to be held on Wednesday, March 24,
Y 1999, at 10:00 a.m., Central Standard Time, at the Holiday Inn
Crowne Plaza Hotel, 2222 West Loop South, Houston, Texas, and
at any adjournment thereof, the number of votes which the
undersigned would be entitled to cast if personally present:
(1) ELECTION OF DIRECTORS
FOR [ ] WITHHOLD AUTHORITY [ ]
all nominees listed below to vote for all nominees
(except as marked below) listed below
William R. Ziegler Eugene L. Butler
John M. Le Seelleur Steven A. Webster
Rittie W. Milliman, Sr. John Roane
Joe R. Nemec
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, DRAW A LINE THROUGH OR STRIKE OUT THAT
NOMINEE'S NAME AS SET FORTH ABOVE.
(2) Proposal to ratify the appointment of Arthur Andersen LLP as
the Company's Independent Public Accountants for the fiscal
year ending August 31, 1999
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 18
(3) To consider and act upon any other matter which may properly
come before the meeting or any adjournment thereof;
all as more particularly described in the Proxy Statement dated
February 23, 1999, relating to such meeting, receipt of which is hereby
acknowledged.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made,
this proxy will be voted FOR the nominees listed in Proposal 1 and FOR
Proposal 2.
--------------------------------------
--------------------------------------
Signature of Stockholder(s)
Please sign your name exactly as it
appears hereon. Joint owners must each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title
as it appears hereon.
Dated __________________________, 1999.
