<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the contrary 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:*
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:_________________________________________________
(2) Form, Schedule or Registration Statement No.:___________________________
(3) Filing Party:___________________________________________________________
(4) Date Filed:_____________________________________________________________
<PAGE>
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 1994
----------------
The 1994 Annual Meeting of the Stockholders of Tuboscope Vetco International
Corporation (the "Company") will be held at 10:00 a.m. local time, on May 10,
1994, at The Ritz Carlton Hotel, 1919 Briar Oaks Lane, Houston, Texas 77027,
for the following purposes:
1. To elect a board of nine directors for the ensuing year or until the
election and qualification of their respective successors.
2. To approve an amendment to the Company's Restated Certificate of
Incorporation, increasing the authorized number of shares of Common Stock
from 25,000,000 to 35,000,000, and thereby increasing the authorized number
of shares of all classes of capital stock from 30,000,000 to 40,000,000.
3. To ratify the selection of Ernst & Young as the Company's independent
auditors.
4. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on March 14, 1994 of the
Company's Common Stock, will be entitled to notice of, and to vote at, the 1994
Annual Meeting and any adjournment thereof.
By order of the Board of Directors,
/s/ JAMES F. MARONEY, III
James F. Maroney, III
Vice President, Secretary and
General Counsel
Houston, Texas
April 13, 1994
<PAGE>
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
2835 HOLMES ROAD
HOUSTON, TEXAS 77051
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 1994
----------------
PROXY STATEMENT
----------------
SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of the Board of Directors of
Tuboscope Vetco International Corporation (the "Company") for use at the Annual
Meeting of Stockholders (the "Meeting") to be held at The Ritz Carlton Hotel,
1919 Briar Oaks Lane, Houston, Texas 77027 on May 10, 1994 at 10:00 a.m. local
time, and at any and all adjournments or postponements thereof.
All shares represented by each properly executed, unrevoked proxy received in
time for the Meeting will be voted in the manner specified therein. If the
manner of voting is not specified in an executed proxy received by the Company,
the proxy will be voted FOR (i) the election of the nine nominees for election
to the Board of Directors listed in the proxy; (ii) approval of an amendment to
the Company's Restated Certificate of Incorporation, increasing the authorized
number of shares of Common Stock from 25,000,000 to 35,000,000, and thereby
increasing the authorized number of shares of all classes of capital stock from
30,000,000 to 40,000,000; and (iii) the ratification of the selection of Ernst
& Young as the Company's independent auditors.
Any stockholder has the power to revoke his or her proxy at any time before
it is voted. A proxy may be revoked by delivering a written notice of
revocation to the Secretary of the Company, by presenting at the meeting a
later-dated proxy executed by the person who executed the prior proxy, or by
attendance at the meeting and voting in person by the person who executed the
proxy.
This proxy statement is being mailed to the Company's stockholders on or
about April 14, 1994. The expense of soliciting proxies will be borne by the
Company. The solicitation will be by mail. Expenses include reimbursement paid
to brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the Meeting to beneficial owners of the
Company's Common Stock. Further solicitation of proxies may be made by
telephone or oral communication with stockholders by the Company's regular
employees who will not receive additional compensation for the solicitation and
by Morrow & Co., Inc., whose services to the Company will include the search
and distribution of materials as well as the solicitation of proxies from
brokers, banks and nominees for which it will receive payment of $3,500 plus
out of pocket expenses.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of record of the 18,410,053 shares of the Company's Common Stock
outstanding at the close of business on the record date, March 14, 1994, will
be entitled to notice of, and to vote at, the Meeting or any adjournment or
postponement thereof. On each matter to be considered at the Meeting, each
stockholder will be entitled to cast one vote for each share of the Company's
Common Stock held of record by such stockholder on March 14, 1994.
In order to constitute a quorum for the conduct of business at the Meeting, a
majority of the outstanding shares of the Common Stock of the Company entitled
to vote at the Meeting must be represented at the Meeting.
<PAGE>
Under the Company's bylaws and Delaware law, shares represented by proxies
that reflect abstentions or "broker non-votes" (i.e., shares held by a broker
or nominee which are represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Directors will be elected by a favorable
vote of a plurality of the shares of voting stock present and entitled to vote,
in person or by proxy, at the Meeting. Accordingly, abstentions or broker non-
votes as to the election of directors will not affect the election of the
candidates receiving the plurality of votes. All other proposals to come before
the Meeting require the approval of a majority of the shares of stock having
voting power present. Abstentions as to a particular proposal will have the
same effect as votes against such proposal. Broker non-votes, however, will be
treated as unvoted for purposes of determining approval of such proposal and
will not be counted as votes for or against such proposal.
VOTING SECURITIES AND CERTAIN HOLDERS THEREOF
The following table sets forth as of March 14, 1994, the amount and
percentage of the outstanding shares of the Common Stock of the Company which,
according to the information supplied to the Company, are beneficially owned by
(i) each of the directors of the Company and Tuboscope Vetco International
Inc., the Company's wholly-owned subsidiary ("TVI"), individually, each of whom
is also a nominee for election as a director of the Company, (ii) each of the
Named Officers (as defined on page 7), (iii) all directors and executive
officers of the Company and TVI as a group and (iv) each person or entity who
is known to the Company to be the beneficial owner of more than 5% of the
Company's outstanding Common Stock. Except to the extent indicated in the
footnotes to the following table, each of the persons or entities listed
therein has sole voting and sole investment power with respect to the shares
which are deemed beneficially owned by such person or entity.
<TABLE>
<CAPTION>
OUTSTANDING AGGREGATE PERCENT OF
OPTIONS OUTSTANDING SHARES OF
OUTSTANDING EXERCISABLE COMMON STOCK COMMON STOCK
COMMON WITHIN 60 BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER STOCK DAYS OWNED(1) OWNED(2)
- ------------------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
DIRECTORS:
Jerome R. Baier......... 741,029(3) 17,800 758,829(3) 4.1%
Martin G. Hubbard....... 50,000(4) 20,800 70,800(4) *
Robert A. Lahr.......... 0 8,800 8,800 *
William V. Larkin,
Jr.(5)................. 47,174 63,126 110,300 *
Eric L. Mattson......... 1,686,047(6) 0 1,686,047(6) 9.2%
Timothy M. Pennington
III.................... 1,305,064(7) 17,800 1,322,864(7) 7.2%
Martin R. Reid(5)....... 1,000 237,400 238,400 1.3%
James J. Shelton........ 61,781 17,800 79,581 *
Frederick J. Warren..... 1,305,064(7) 17,800 1,322,864(7) 7.2%
NAMED OFFICERS:
Gerhard A. Hage......... 0 9,750 9,750 *
Ronald L. Koons......... 0 29,000 29,000 *
Kenneth L. Nibling...... 0 7,150 7,150 *
ALL DIRECTORS AND EXECU-
TIVE OFFICERS AS A
GROUP
(14 PERSONS): 3,893,098(8) 465,209 4,358,307(8) 23.1%
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
OUTSTANDING AGGREGATE PERCENT OF
OPTIONS OUTSTANDING SHARES OF
OUTSTANDING EXERCISABLE COMMON STOCK COMMON STOCK
COMMON WITHIN 60 BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER STOCK DAYS OWNED(1) OWNED(2)
- ------------------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
OWNERS--5% OR MORE:
FMR Corp................ 2,336,680(9) 0 2,336,680(9) 12.7%
82 Devonshire Street
Boston, MA 02109-3614
State of Wisconsin
Investment Board....... 1,697,000(10) 0 1,697,000(10) 9.2%
121 East Wilson Street
Madison, WI 53707
Baker Hughes Incorporat-
ed..................... 1,686,047(11) 0 1,686,047(11) 9.2%
3900 Essex Lane, Suite
1200
Houston, TX 77027
Brentwood Associates IV,
L.P.................... 1,305,064 0 1,305,064 7.1%
Suite 1200
Los Angeles, CA 90025
Metropolitan Life
Insurance Company...... 1,205,000(12) 0 1,205,000(12) 6.5%
One Madison Avenue
New York, NY 10010
</TABLE>
- --------
* Represents ownership of less than 1.0%.
(1) Beneficial ownership as of March 14, 1994, includes shares subject to 11150
Santa Monica Boulevard, options which are exercisable within 60 days after
March 14, 1994.
(2) Percentage of beneficial ownership as of March 14, 1994 for each person
includes shares subject to options held by such person, which options are
exercisable within 60 days after March 14, 1994, as if such shares were
outstanding on March 14, 1994.
(3) Mr. Baier is Director-Securities of The Northwestern Mutual Life Insurance
Company ("Northwestern"). See "Certain Transactions." Northwestern owns
741,029 shares and is a limited partner in Brentwood Associates IV, L.P.
("Brentwood"), which owns 1,305,064 shares. Mr. Baier has shared voting and
investment power with respect to the shares owned by Northwestern and
therefore he may be deemed to beneficially own Northwestern's shares, but
Mr. Baier disclaims beneficial ownership of such shares.
(4) Includes shares held by Hub Associates ("Hub"). Mr. Hubbard is a general
partner of Hub.
(5) Messrs. Larkin and Reid are also Named Officers.
(6) Includes shares which are beneficially owned by Baker Hughes Incorporated.
See Note 11 below.
(7) Messrs. Pennington and Warren are each one of seven general partners of
Brentwood Venture Partners, L.P., which is the general partner of
Brentwood. Brentwood owns all of these 1,305,064 shares. All of the general
partners of Brentwood Venture Partners, L.P. share voting and investment
power with respect to such shares and therefore may be deemed to
beneficially own such shares. Except to the extent of their individual
proportionate interests as general and limited partners of Brentwood
Venture Partners, each of Messrs. Pennington and Warren disclaims
beneficial ownership of such shares.
(8) Includes shares which may be deemed to be beneficially owned by Messrs.
Baier, Mattson, Pennington and Warren. See Notes (3), (6) and (7).
(9) According to the Schedule 13G filed by FMR Corp. ("FMR"). FMR has sole
disposition power with respect to all such shares and sole voting power
with respect to 732,700 of such shares.
3
<PAGE>
(10) According to the Schedule 13D filed by the State of Wisconsin Investment
Board, an independent agency of the State of Wisconsin whose
responsibilities include the management of funds contributed by employees
and employers of state agencies in the State of Wisconsin.
(11) According to Schedule 13D filed by Baker Hughes Incorporated ("BHI"). The
100,000 shares of Series A Convertible Preferred Stock owned by BHI may be
converted into shares of Common Stock at the option of BHI. Each share of
Series A Convertible Preferred Stock may initially be converted into
approximately 10 shares of Common Stock, subject to certain adjustments.
If each share of Series A Convertible Preferred Stock was converted into
10 shares of Common Stock, BHI would receive 1,000,000 shares of Common
Stock and would own 2,686,047 or 14% after the conversion. Eric L. Mattson
has been nominated by BHI to serve as a Director of the Company pursuant
to BHI's rights received in connection with the Vetco Services
acquisition. Eric L. Mattson, as Vice President and Chief Financial
Officer of BHI, has or may have in the future, from time to time, the
authority to exercise voting and/or investment power on behalf of BHI with
respect to all or part of these shares. (See "BHI Standstill".)
(12) According to the Schedule 13G filed by Metropolitan Life Insurance Company
("Metropolitan Life"). Metropolitan Life has sole disposition power with
respect to all such shares and sole voting power with respect to 840,000
of such shares. In addition, State Street Research & Management Company,
One Financial Center, 38th Floor, Boston, Massachusetts 02111-2690 ("State
Street"), a wholly-owned subsidiary of Metropolitan Life, filed a Schedule
13G for the same shares reported on Metropolitan Life's Schedule 13G.
State Street advised the Company that all securities reported in its
Schedule 13G are owned by certain of its clients and State Street
expressly disclaims beneficial ownership of the shares reported therein.
REGISTRATION RIGHTS
The Company, Brentwood, Hub (together with Brentwood, "BA"), the Management
Investors (as hereinafter defined), certain institutional and other investors
(collectively, the "Other Investors"), and certain other institutional and
other investors (the "Institutional Investors") who acquired shares of Common
Stock in connection with the initial capitalization of the Company, are parties
to a stockholders' agreement (the "Stockholders' Agreement"). The Stockholders'
Agreement provides for "demand" registration rights for each of BA and the
Other Investors, as a group, and the Institutional Investors, as a group. These
demands may be triggered at any time by the written request of holders of at
least 25% (with respect to the initial demand registration) or 50% (with
respect to any subsequent demand registration) of the shares of Common Stock
initially issued to either of such groups which remain privately held by
members of such groups. Such registration rights are subject to termination
under certain circumstances. The number of demand registrations which may be
instituted by each of BA and the Other Investors, as a group, and the
Institutional Investors, as a group, may not exceed two by each group. In the
case of a demand registration instituted by either group, the Stockholders'
Agreement provides "piggyback" registration rights to the other group, the
Company and any of the Company's other current stockholders which allow them to
sell all or part of their Common Stock as part of such demand registration
under certain circumstances and subject to certain restrictions. In addition,
the Stockholders' Agreement provides for certain "piggyback" registration
rights to BA, the Other Investors and the Institutional Investors when the
Company proposes to register shares of Common Stock (or securities convertible
or exchangeable for Common Stock) under the Securities Act of 1933, as amended
(the "Securities Act") for public sale, whether or not for its own account. The
Stockholders' Agreement provides that the Company will pay substantially all of
the expenses associated with the foregoing registration rights.
As partial consideration for the acquisition of substantially all of the
foreign operations of Baker Hughes Tubular Services, Inc. ("Vetco Services")
from BHI, the Company issued to BHI 100,000 shares of Series A Convertible
Preferred Stock and 1,686,047 shares of Common Stock. In connection therewith,
the Company granted to BHI certain "demand" registration rights which may be
triggered with respect to such shares of Common Stock or shares of Common Stock
which are issued by the Company upon conversion or exchange
4
<PAGE>
of the Series A Convertible Preferred Stock (the "BHI Registrable Securities")
by the written request of holders of at least 50% of the BHI Registrable
Securities who request that at least 25% of the BHI Registrable Securities be
registered, provided the expected price to the public is equal to or greater
than $8,000,000. Such registration rights are subject to termination under
certain circumstances and such holders may not request more than two demand
registrations. In addition, BHI received "piggyback" registration rights which
allow it to sell all or part of its shares as part of a proposed registration
by the Company under the Securities Act for the public sale of such shares of
Common Stock, whether or not for its own account, subject to certain conditions
and restrictions. The Company will pay substantially all of the expenses
associated with the above- mentioned registration rights.
BHI RIGHT OF FIRST REFUSAL
BHI is prohibited from selling or otherwise disposing of (except in privately
negotiated transactions) more than an aggregate of 3% of the Company's then
outstanding shares of Common Stock during any period of six months or less
without first offering the Company the opportunity to repurchase the number of
proposed shares to be sold which exceeds 3% of the total outstanding shares.
The Company has five business days after its receipt of notice of such proposed
sale to elect to repurchase the shares at a price per share equal to the
average of the market prices of the Common Stock over a ten-day period. If the
Company fails to make such election, then BHI may sell or so dispose of such
shares for a period of six months. BHI is also prohibited from selling or
otherwise disposing of more than an aggregate of 5% of the Company's then
outstanding shares of Common Stock in a privately negotiated transaction or
series of transactions without first offering such shares to the Company. The
Company has five business days after its receipt of notice of such proposed
sale to elect to repurchase either all such shares or any or all of such shares
in excess of 500,000 shares for the price and upon the terms specified in the
notice. If the Company fails to make such election, then BHI may sell or so
dispose of such shares for a period of 90 days at a price and on terms no more
favorable than was specified in the notice.
BHI STANDSTILL
BHI has agreed that so long as it is the beneficial owner of the shares of
Common Stock acquired in connection with the Vetco Services acquisition, and in
any event until October 1993, it will not (a) acquire, offer to acquire, or
agree to acquire any shares of Common Stock (or rights to acquire Common
Stock), which would increase its percentage ownership of the outstanding Common
Stock to that greater than its percentage ownership immediately following the
acquisition; (b) make or participate in any solicitation of proxies to vote any
of the Company's voting securities; or (c) form, join in, or participate in a
voting group with respect to any of the Company's voting securities.
Notwithstanding the foregoing and subject to the provisions of the Company's
Restated Certificate of Incorporation, if, during the term of the standstill,
BHI beneficially owns restricted securities issued as part of the Vetco
Services acquisition which represent more than 5% of the Company's outstanding
Common Stock and BHI derives no greater than $2,000,000 of revenue from its
businesses in direct competition with the Company, then, at BHI's request, the
Company shall nominate at BHI's direction one person to the Company's Board of
Directors. In January 1994, BHI made such request and Eric L. Mattson was
appointed to the Company's Board of Directors at that time and is a nominee for
re-election to the Board by the stockholders. See "Proposal 1--Election of
Directors."
5
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names, ages and titles of the executive
officers of the Company and TVI as of March 14, 1994. Executive officers serve
in the same capacity for both the Company and TVI.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <S> <C>
Martin R. Reid 51 Chairman of the Board
William V. Larkin, Jr. 40 President and Chief Executive Officer
Ronald L. Koons 46 Executive Vice President, Chief Financial
Officer and Treasurer
Gerhard A. Hage 59 Senior Vice President--International
Operations
Martin I. Greenberg 54 Vice President, Controller, Assistant
Treasurer and Assistant Secretary
Kenneth L. Nibling 43 Vice President--Human Resources and
Administration
James F. Maroney, III 42 Vice President, Secretary and General
Counsel
</TABLE>
Set forth below are descriptions of the backgrounds of the executive officers
of the Company and TVI and their principal occupations for the past five years.
For a description of the background of Messrs. Reid and Larkin, see "Proposal
1--Election of Directors." The Company is not aware of any family relationships
among any of its directors and executive officers.
Ronald L. Koons has been Executive Vice President of the Company and TVI
since October 1993 and Chief Financial Officer and Treasurer of the Company and
TVI since November 1991. From August 1988 to November 1991, Mr. Koons served as
Vice President and Chief Financial Officer of Eastman Christensen Co. From June
1987 to August 1988, Mr. Koons was Controller of Eastman Christensen Co. From
September 1986 to June 1987, Mr. Koons served as Treasurer of Eastman
Christensen Co.
Gerhard A. Hage has been Senior Vice President-International Operations of
the Company and TVI since October 1991. From March 1989 to October 1991, Mr.
Hage served as Vice President-Eastern Hemisphere of Baker Hughes Tubular
Services, Inc. From 1985 to March 1989, Mr. Hage was President-Eastern and
Western Hemisphere of CE Vetco Services.
Martin I. Greenberg has been Vice President, Controller, Assistant Treasurer
and Assistant Secretary of the Company and TVI since November 1991. From June
1991 to November 1991, Mr. Greenberg was Vice President-Finance and Controller
of the Company and TVI. Mr. Greenberg served as Vice President-Controller and
Assistant Secretary of the Company and TVI from July 1990 to June 1991. Mr.
Greenberg was Assistant Controller of TVI from January 1974 to July 1990.
Kenneth L. Nibling has been Vice President-Human Resources and Administration
of the Company and TVI since December 1991. From July 1988 to November 1991,
Mr. Nibling was Director of Human Resources for Union Texas Petroleum Corp., an
international exploration and production company. From January 1984 to July
1988, Mr. Nibling was Manager, Compensation and Employment for Louisiana Land
and Exploration Company.
James F. Maroney, III has been Vice President of the Company and TVI since
May 1991, Secretary of the Company and TVI since January 1991 and General
Counsel of the Company and TVI since November 1989. Mr. Maroney was Assistant
Secretary of the Company and TVI from December 1989 to January 1991. Mr.
Maroney was Associate General Counsel and Head of Litigation for TransAmerican
Natural Gas Corporation, a gas production company, from 1987 to 1989. From 1985
to 1987, Mr. Maroney was in a private law practice specializing in commercial
litigation.
6
<PAGE>
EXECUTIVE COMPENSATION
No cash compensation has been paid or is anticipated to be paid to any of the
directors of the Company or TVI, or to any officers of the Company, in their
capacities as such, except that certain of such persons receive annual
compensation for membership on the Board of Directors plus compensation for
attending meetings of the Board of Directors or certain committees of the Board
of Directors of the Company and TVI. See "Proposal 1--Election of Directors."
The following table sets forth certain information regarding the annual and
long-term compensation for services in all capacities to TVI for the fiscal
years ended December 31, 1991, 1992 and 1993, of those persons who were at
December 31, 1993 either (i) chief executive officer or (ii) one of the other
four most highly compensated executive officers of TVI (the "Named Officers"):
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS OF
------------------------------------------- STOCK
NAME AND PRINCIPAL OTHER ANNUAL OPTIONS ALL OTHER
POSITION YEAR SALARY(2) BONUS COMPENSATION(3) (SHARES) COMPENSATION(4)
- ------------------ ---- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Martin R. Reid, 1993 $275,000 0 $60,326(6) 57,500 $ 6,338
Chairman of the Board(5) 1992 272,000 0 84,563(6) 0 6,857
1991 213,542 $275,000 -- 286,000 --
William V. Larkin, Jr., 1993 $211,979 0 0 37,500 5,469
President and Chief 1992 198,333 0 0 0 6,000
Executive Officer(7) 1991 145,000 68,000 -- 88,000 --
Gerhard A. Hage, 1993 $171,940 0 0 18,750 0
Senior Vice President-- 1992 178,481 0 0 0 0
International Operations 1991 43,119(8) 0 -- 15,000 --
Ronald L. Koons, 1993 $150,000 0 0 25,000 114,031(4)
Executive Vice Presi- 1992 150,000 0 0 40,000 2,250
dent, Chief 1991 15,385(9) 150,000 -- 20,000 --
Financial Officer
Kenneth L. Nibling, 1993 $104,000 0 0 13,750 2,795
Vice President--Human 1992 104,000 0 0 0 1,560
Resources and 1991 8,667(10) 0 -- 11,000 --
Administration
</TABLE>
- --------
(1) In accordance with the revised rules on compensation disclosure adopted by
the Securities and Exchange Commission, as informally interpreted by the
Commission's Staff, amounts of Other Annual Compensation and All Other
Compensation are excluded for the 1991 fiscal year.
(2) Includes amounts deferred by the Named Officers under the Company's 401(k)
Thrift Savings Plan.
(3) Includes (a) living, travel and other expense reimbursement, (b) Company
provided automobiles, and (c) club dues reimbursement, but only if such
payments exceed the lesser of $50,000 or 10% of the total annual salary
and bonus of the Named Officer.
(4) Represents matching contributions by the Company under the Company's
401(k) Thrift Savings Plan, except for Mr. Koons, where $4,031 represents
matching contributions and $110,000 represents a required payment under
his employment contract. See "Management Employment Agreements."
(5) Mr. Reid relinquished his position as Chief Executive Officer effective
October 1993.
(6) Includes living, travel and related expense reimbursement of $34,390 and
$51,790, respectively, and federal tax gross-up payments with respect
thereto of $22,547 or $23,268, respectively, for 1993 and 1992.
(7) Mr. Larkin was appointed Chief Executive Officer effective October 1993.
(8) Mr. Hage was appointed to his position upon the acquisition of Vetco
Services in October 1991.
(9) Mr. Koons was hired by the Company and appointed to his positions in
November 1991.
(10) Mr. Nibling was hired by the Company and appointed to his position in
December 1991.
7
<PAGE>
The following table sets forth certain information with respect to grants of
stock options pursuant to the Amended and Restated Stock Option Plan for Key
Employees of Tuboscope Vetco International Corporation (the "Company's Stock
Option Plan") during 1993 to the Named Officers.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL
PERCENTAGE REALIZABLE VALUE AT
OF TOTAL ASSUMED ANNUAL
OPTIONS EXERCISE RATES OF STOCK PRICE
GRANTED TO OR BASE APPRECIATION
OPTIONS EMPLOYEES PRICE FOR OPTION TERM
GRANTED IN FISCAL PER EXPIRATION ---------------------
NAME (SHARES) YEAR SHARE DATE 5% 10%
- ---- -------- ---------- -------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Martin R. Reid.......... 57,500 19.6% $6.00 01/04/03 $ 216,775 $ 549,700
William V. Larkin, Jr... 37,500 12.8% $6.00 01/04/03 141,375 358,500
Ronald L. Koons......... 25,000 8.5% $6.00 01/04/03 94,250 239,000
Gerhard A. Hage......... 18,750 6.4% $6.00 01/04/03 70,688 179,250
Kenneth L. Nibling...... 13,750 4.7% $6.00 01/04/03 51,838 131,450
</TABLE>
- --------
(1) All options granted become exercisable in five equal annual installments
beginning on the date of grant. Under the terms of the Company's Stock
Option Plan, the Stock Option Committee retains discretion, subject to
certain restrictions, to modify the terms of outstanding options and to
reprice outstanding options. Options are granted for a term of ten years,
subject to earlier termination in certain events. The exercise price is
equal to the closing price of the Company's Common Stock on the Nasdaq
National Market on the date of grant.
The following table sets forth certain information with respect to the
unexercised options to purchase the Company's Common Stock under the Company's
Stock Option Plan to the Named Officers and held by them at December 31, 1993.
No options were exercised by any of the Named Officers in 1993.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-MONEY
AT DECEMBER 31, 1993 OPTIONS AT DECEMBER 31, 1993(1)
-------------------------------- -------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Martin R. Reid.......... 150,400 253,100 0 $ 7,188
William V. Larkin, Jr... 42,220 94,982 $ 21,734 10,127
Ronald L. Koons......... 16,000 69,000 0 3,125
Gerhard A. Hage......... 6,000 27,750 0 2,344
Kenneth L. Nibling...... 4,400 20,350 0 1,719
</TABLE>
- --------
(1) Based on the closing price of the Company's Common Stock on the Nasdaq
National Market on December 31, 1993 ($6.125).
MANAGEMENT EMPLOYMENT AGREEMENTS
In July 1993, the Company (and TVI) and Mr. Reid amended and restated his
employment agreement (the "Reid Agreement"). The Reid Agreement continues until
December 31, 1998, employing Mr. Reid as Chairman of the Board (subject to
annual re-election to the Board) and chief executive officer. The Reid
Agreement provides that during each year in which Mr. Reid is chief executive
officer he shall receive an annual base salary of $275,000. Mr. Reid resigned
his position as chief executive officer effective October 1993. For the first
year following Mr. Reid's resignation as chief executive (i.e., fiscal 1994)
Mr. Reid shall be
8
<PAGE>
paid a base salary of $225,000, and for each year thereafter through the term
of the Reid Agreement, Mr. Reid shall be paid an annual base salary of
$200,000. Mr. Reid is also entitled (i) to participate in the Annual Incentive
Program, as outlined in the "Executive Committee Report on Compensation", (ii)
once Mr. Reid resigns as chief executive officer, to receive option grants
under the Company's Stock Option Plan in an amount which is proportionate to
the number of options granted to the chief executive officer based on the
respective salaries of Mr. Reid and the chief executive officer, (iii) to
reimbursement of certain living and travel expenses and (iv) to certain
payments to offset any untoward tax liabilities resulting from certain
provisions of the Reid Agreement. The Reid Agreement also provides that
following a termination without cause or by reason of death or disability, Mr.
Reid shall be entitled as applicable, to immediate vesting of, and extension of
exercise periods for, all of his unvested stock options, and to participation
in all benefit plans available to executives of the Company In addition, in the
event of termination without cause, Mr. Reid shall receive severance pay equal
to aggregate base salary and annual bonus payable for the remaining term of the
Reid Agreement, and following disability or death, Mr. Reid shall receive
prorated base salary and annual bonus. In the event of a change of control (as
defined in the Reid Agreement) and cessation of Mr. Reid's employment in
connection therewith, Mr. Reid shall be entitled to receive two and one-half
times the sum of his annual base salary and annual bonus in effect upon the
change in control, continued participation in certain insurance and benefit
plans for 30 months, ownership of a Company automobile or an allowance in lieu
thereof equal to two and one-half times Mr. Reid's car allowance in effect upon
the change in control, payment of excise tax on any deemed parachute payments
and a gross up amount for any income tax payment due on any of the foregoing
benefits. In addition, upon a change of control, all of Mr. Reid's outstanding
stock options vest, and the Company is required to pay Mr. Reid, in
cancellation of all unexercised options, the difference between fair market
value of the stock covered by such options and the exercise price for such
options.
The Company and TVI were parties to an employment agreement with Mr. Koons,
which terminated November 1993 (the "Koons Agreement"). The Koons Agreement
provided Mr. Koons with a base salary of $150,000 and the right to participate
in the Management Incentive Plan (as described under the "Executive Committee
Report on Compensation"), the Company's Stock Option Plan and various other
insurance plans and fringe benefits (including use of an automobile) generally
available to other executives in the Company. Also pursuant to the Koons
Agreement and in consideration of an employment agreement with his previous
employer, Mr. Koons was entitled to $110,000 for his continued employment with
the Company at November 1993. The Company paid this amount to Mr. Koons in
1994. The Koons Agreement also provided Mr. Koons with severance pay in the
event of a termination without cause or upon death prior to November 1992.
In connection with the appointment of Mr. Hage as Senior Vice President-
International Operations in October 1991, the Company assumed an existing
employment agreement with Mr. Hage. Under this agreement, Mr. Hage's annual
base salary is approximately $172,000 (the amount is paid in deutschemarks, and
thus fluctuates based on current exchange rates), and he is eligible to receive
other fringe benefits generally available to executives of TVI and to receive
an annual bonus under the Company's Operations Incentive Plan (as described
under the "Executive Committee Report on Compensation"). Mr. Hage's employment
agreement is for an indefinite period of time and can be terminated (except for
cause) only at the end of a quarter upon notice received six months prior to
the end of such quarter.
OTHER SEVERANCE ARRANGEMENTS
Each of Messrs. Larkin, Koons and Nibling are generally entitled to receive
severance pay equal to the greater of six months' base salary ($125,000 for Mr.
Larkin, $75,000 for Mr. Koons and $54,100 for Mr. Nibling as of March 14, 1994)
or one and one half weeks' base salary for each year of their employment with
TVI (or TVI's predecessor) (approximately $77,885 for Mr. Larkin, $8,654 for
Mr. Koons and $6,242 for Mr. Nibling as of March 14, 1994). Additionally, a pro
rata portion of Messrs. Larkin, Koons and Nibling's bonus and stock options
received pursuant to the Company's Stock Option Plan becomes immediately vested
and fully exercisable if his employment is terminated under certain
circumstances.
9
<PAGE>
In October 1993, E. Wayne Overman resigned his employment with the Company.
In connection therewith, Mr. Overman and the Company entered into a severance
agreement pursuant to which the Company agreed: to pay Mr. Overman $120,000 per
year until September 1995; to continue certain medical insurance benefits until
no later than September 1997 and certain life insurance benefits until no later
than 1995; to immediately vest all outstanding options held by Mr. Overman and
to extend the exercise date of such options until October 1, 1996; to pay
certain club dues until 1995; and to transfer title of his company car to Mr.
Overman. Also pursuant to this agreement, Mr. Overman agreed to perform certain
consulting duties for additional consideration and agreed to certain terms
limiting his ability to compete with the Company for a period of two years
following the termination of the agreement.
OTHER CHANGE OF CONTROL AGREEMENTS
All of the executive officers have written arrangements with the Company
which provide certain benefits upon a change in control (as defined therein) of
the Company. Immediately upon a change in control, all unvested stock options
and other applicable grants of long-term incentives, if any, will vest. In
addition, if during the two year period following a change of control, any
executive officer (i) is involuntarily terminated other than for cause (as
defined therein), (ii) is terminated for death or disability or (iii)
voluntarily terminates for good reason (as defined therein), such executive
officer will receive severance pay equal to two and one half times his annual
salary then in effect for a period of thirty months (the "Severance Period"),
an incentive bonus equal to two and one half times the annual bonus for the
Severance Period, ownership of a Company automobile or continuance of a car
allowance through the Severance Period, life and health insurance benefits
through the Severance Period, payment of excise tax on any deemed parachute
payments and a gross up amount for any income tax payment due on any additional
benefits which may be provided by individual employment agreements.
DEFINED BENEFIT PLAN
A German subsidiary of the Company offers a defined benefit plan for its
employees. Plan benefits are determined based on years of employment, a
percentage of annual compensation and a pension formula, and are subject to
certain national insurance rates. Mr. Hage participates in this plan and, based
on retirement at age 65, would receive a benefit equal to 129,000 deutschemarks
(or $77,445 based on current exchange rates).
EXECUTIVE COMMITTEE REPORT ON COMPENSATION
TO: THE BOARD OF DIRECTORS
The compensation policies of the Company are structured to link the
compensation of the executive officers of the Company with enhanced shareholder
value. Through the establishment of short- and long-term incentive plans, the
Company has aligned the financial interests of the executive officers with
those of its stockholders.
EXECUTIVE COMPENSATION PHILOSOPHY
In designing its compensation programs, the Company follows its belief that
compensation should reflect the value created for stockholders while supporting
the business strategies and long-range plans of the Company and the markets the
Company serves. In doing so, the compensation programs reflect the following
themes:
A compensation program that stresses the Company's financial performance
and the executive officers' individual performance.
An annual incentive plan, that supports a performance-oriented
environment and which generates a portion of compensation based on the
achievement of specific performance goals, with superior performance
resulting in total annual compensation above competitive levels.
10
<PAGE>
A long-term incentive plan that is designed to reward executive officers
for long-term strategic management of the Company and the enhancement of
stockholder value.
The Executive Committee (the "Committee") reviews and determines the
compensation of the executive officers of the Company with this philosophy on
compensation as its basis.
EXECUTIVE COMPENSATION COMPONENTS
The Company's executive compensation is based on three components, each of
which is intended to serve the overall compensation philosophy.
Base Salary. Base salary is intended to be set at a level competitive with
amounts paid to executive officers of similar business structure, size and
marketplace orientation. In determining appropriate salary levels, the
Committee considers the individual's scope of responsibility, experience and
performance. Salaries for executive officers are reviewed by the Committee on
an annual basis. In June 1993, the Committee raised Mr. Larkin's salary from
$200,000 to $225,000 per year in connection with Mr. Larkin's transition into
the position of chief executive officer of the Company and TVI.
Annual Management Incentive Compensation. Under the Company's Management
Incentive Plan, annual incentive awards are granted upon the achievement by the
executive officers of annual financial criteria established by the Committee at
the beginning of the fiscal year. External market data is reviewed periodically
to determine competitive incentive opportunities for individual executives. The
financial measure for the 1993 fiscal year was, and for the 1994 fiscal year
will be, growth in earnings per share and is stated in terms of target and
maximum goals as determined by the Committee. Under the plan as in effect
during 1993 and 1994, each executive officer is entitled to receive a
percentage of his salary in the event the Company meets targeted earnings per
share, and a higher percentage of his salary if the Company exceeds a higher
targeted earnings per share. Under the plan as in effect in 1993, Messrs. Reid,
Larkin, Koons and Nibling were entitled to receive 100%, 60%, 60% and 40%,
respectively, of their respective salaries if targeted earnings per share were
met, and 150%, 90%, 90% and 60%, respectively, of their respective salaries if
higher targeted earnings per share were exceeded. No bonuses were paid for
fiscal 1993. Under the plan as in effect for 1994, Messrs. Reid, Larkin, Koons
and Nibling are entitled to receive 75%, 100%, 75% and 40%, respectively, of
their respective salaries if targeted earnings per share are met, and 112.5%,
150%, 112.5% and 60%, respectively, of their respective salaries if higher
targeted earnings per share are exceeded. Bonuses are pro rated if the
Company's financial measure falls between the two targeted levels.
Targeted earnings are generally based on the previous year's actual earnings
per share plus projected increased earnings as a result of reasonably
anticipated improvements in operations; the higher targeted earnings are
generally based on the foregoing plus more aggressive projections concerning
improvements in operations, planned and potential special projects, and
expansion of certain of the Company's market segments.
The Company also has an Operations Incentive Plan, available for general
managers and operation managers. Mr. Hage participates in this Plan and is
entitled to receive a bonus, equal to a maximum of 50% of his salary in the
event the Company's eastern hemisphere operations achieve more than 80% and up
to 120% of (i) targeted operating profit margins and (ii) targeted days sales
outstanding. Targeted margins must be achieved in order for Mr. Hage to be
eligible for a bonus, and approximately 85% of Mr. Hage's bonus is based on
margin performance and approximately 15% is based on the days sales outstanding
performance (day sales outstanding is a measure of the speed of accounts
receivable collection and is thus critical to generation of cash flow).
Targeted operating profit margins for the Company's eastern hemisphere
operations are determined by the Board and are generally based on prior years
actual performance plus projected revenue growth, results from planned special
projects and cost containment. Targeted days sales outstanding is similarly
determined by the Board and based on prior years actual performance plus
projected improvements. Mr. Hage did not receive a bonus under this plan for
fiscal 1993.
11
<PAGE>
Stock Option Plan. The Company provides a stock option plan that is linked to
the long-term performance of the Company. Executive officers are eligible to
receive annual grants of non-qualified stock options pursuant to the Amended
and Restated Stock Option Plan for Key Employees of Tuboscope Vetco
International Corporation. The awards are intended to retain and motivate
executive officers to improve long-term stock market performance. Awards are
granted at the fair market value of the underlying common stock at the date of
grant. Stock options, generally, vest in installments over five years.
The Committee believes that the performance of the Company should be an
important element in determining the compensation of the Company's executive
officers and will continue to review salaries of executive officers in light of
the Company's performance.
Martin G. Hubbard
William V. Larkin, Jr.
Timothy M. Pennington
Martin R. Reid
James J. Shelton
Date: March 14, 1994
The above report of the Executive Committee will not be deemed to be
incorporated by reference into any filing by the Company under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent that
the Company specifically incorporates same by reference.
EXECUTIVE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Committee, which is responsible for the compensation policies
of the Company with respect to its executive officers, is comprised of Messrs.
Hubbard, Larkin, Pennington, Reid and Shelton. Mr. Reid was chief executive
officer of the Company through October 1993 and is currently the Chairman of
the Board of the Company and TVI. Mr. Larkin, the current President and Chief
Executive Officer of the Company and TVI, was appointed a member of the
Executive Committee on January 27, 1994. Neither of Messrs. Larkin or Reid
participate in compensation decisions concerning himself. Martin G. Hubbard, a
general partner of Hub, is a director of the Company and TVI. Hub and TVI were
previously parties to an agreement pursuant to which TVI paid Hub certain fees
in consideration of Hub providing acquisition and strategic planning services
to the Company and TVI. This agreement with Hub was terminated as of December
31, 1992 and there is currently no outstanding balance owed to Hub. The Company
and the general partners of Hub are parties to indemnification agreements which
provide that they shall be indemnified by the Company to the fullest extent
provided by law for all losses that may be incurred by them in connection with
any action, suit or proceeding in which they become involved by reason of their
serving as agents of the Company.
12
<PAGE>
PERFORMANCE GRAPH(1)
The following line graph compares the yearly percentage change in the
cumulative total shareowner return on the Company's Common Stock against the
cumulative total return of a peer index of 70 oil service companies prepared by
an independent third party, and the NASDAQ Composite Stock Index, each for the
period from March 13, 1990, the date the Company's Common Stock first traded on
the Nasdaq National Market, to December 31, 1993.
[GRAPH APPEARS HERE]
COMPARISON OF CUMULATIVE RETURN
AMOUNT TUBOSCOPE VETCO INTERNATIONAL CORPORATION,
SCI 70 UPSTREAM INDEX AND NASDAQ COMPOSITE
<TABLE>
<CAPTION>
COMPANY SCI 70
COMMON UPSTREAM NASDAQ
STOCK INDICES COMPOSITE
<S> <C> <C> <C>
March 13, 1990....... $100.0 $100.0 $100.0
June 30, 1990........ $111.3 $ 94.0 $100.7
September 30, 1990... $116.1 $ 98.2 $ 90.4
December 31, 1990.... $101.6 $ 93.8 $104.2
March 31, 1991....... $116.1 $ 94.1 $106.5
June 30, 1991........ $ 85.5 $ 87.3 $ 94.0
September 30, 1991... $109.7 $ 92.7 $100.3
December 31, 1991.... $ 90.3 $ 96.2 $111.9
March 31, 1992....... $ 61.3 $ 91.0 $ 95.3
June 30, 1992........ $ 85.5 $ 91.0 $ 96.3
September 30, 1992... $ 90.3 $108.0 $103.6
December 31, 1992.... $ 77.4 $ 96.1 $103.7
March 31, 1993....... $109.7 $110.5 $103.1
June 30, 1993........ $111.3 $ 98.4 $100.7
September 30, 1993... $106.5 $100.2 $102.9
December 31, 1993.... $ 79.0 $ 98.5 $103.2
</TABLE>
- --------
(1) Assumes $100 invested on March 13, 1990 and all dividends reinvested.
CERTAIN TRANSACTIONS
Jerome R. Baier, Director-Securities of Northwestern, is a director of the
Company and TVI. TVI is indebted to Northwestern in the approximate amount of
$4,000,000 by virtue of Northwestern's ownership of such aggregate principal
amount of 10 3/4% of Senior Subordinated Debentures of TVI. During 1993, the
Company redeemed approximately $22,617,000 of outstanding 14% Senior
Subordinated Debentures of TVI held by Northwestern.
Martin G. Hubbard, a director of the Company, is a general partner of Hub;
Hub had an agreement with the Company to provide, for certain fees, acquisition
and strategic planning services. This agreement was terminated as of December
31, 1992, although certain indemnification agreements relating thereto remain
in effect. See "Compensation Committee Interlocks and Insider Participation."
13
<PAGE>
Brentwood, Hub, Northwestern and certain other persons are parties to the
Stockholders' Agreement, pursuant to which they are granted registration rights
which are not available to other stockholders of the Company. See "Voting
Securities and Certain Holders Thereof--Registration Rights." Pursuant to the
terms of the Vetco Services acquisition, BHI was also granted certain
registration and other rights not generally available to other stockholders.
See "Voting Securities and Certain Holders Thereof--BHI Right of First Refusal,
and BHI Standstill."
The Company and BHI currently are engaged in discussions relating to various
indemnification provisions contained in the agreement governing the sale of
Vetco Services by BHI to the Company. Mr. Mattson, a director of the Company
and an executive officer of BHI, has advised the Company that a conflict of
interest exists and has requested that he be excused from further discussions
by the Board relating to this matter.
OTHER INFORMATION
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities (collectively,
"Insiders"), to file with the Securities and Exchange Commission (the
"Commission") initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Insiders are
required by regulation of the Commission to furnish the Company with copies of
all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, during the year ended December 31, 1993, all Section
16(a) filing requirements applicable to its Insiders were complied with, except
that as of the date hereof, each of the non-employee directors either failed to
file or failed to file on a timely basis the Form 5 filing reporting the exempt
grant of options under the Stock Option Plan for Non-Employee Directors, and
each of the executive officers of the Company either failed to file or failed
to file on a timely basis the Form 5 filing reporting exempt grants of options
under the Company's Stock Option Plan.
PROPOSAL 1
ELECTION OF DIRECTORS
GENERAL
Directors are elected at each Annual Meeting of Stockholders and hold office
until their successors are duly elected and qualified at the next Annual
Meeting of Stockholders. The Company's Restated Certificate of Incorporation
requires that there be a minimum of one and maximum of ten members of the Board
of Directors. In June 1993, the Board of Directors amended the Company's
Amended and Restated Bylaws (the "Bylaws") to authorize a Board of eight
directors, creating a vacancy thereby. Mr. Larkin was appointed to his position
as a director by the Board of Directors in June 1993 to fill such vacancy. In
January 1994, the Board of Directors amended the Bylaws to authorize a Board of
nine directors, creating a vacancy thereby, which vacancy was filled by the
Board's appointment of Eric L. Mattson as a director. Mr. Mattson's appointment
in 1994, and nomination at this 1994 Annual Meeting, is pursuant to certain
rights granted to BHI in connection with the Company's acquisition of Vetco
Services in 1992. See "Voting Securities and Certain Holders Thereof--BHI
Standstill."
Each of the Company's nine nominees for election to the Board of Directors is
currently serving as a director of the Company and each of the nominees, except
for Messrs. Larkin and Mattson, was elected to his present term of office by
the stockholders of the Company.
Set forth below are the names and descriptions of the backgrounds of the
directors of the Company and TVI (each of which is also a nominee for election)
and their principal occupations for the past five years. Each of the nominees
first became a director of the Company and TVI in the year set forth below and
has continually served as a director of the Company and TVI since that date.
14
<PAGE>
MARTIN R. REID, 51, has been Chairman of the Board of the Company and TVI
since October 1990. Mr. Reid was Chief Executive Officer of the Company and TVI
from May 1991 to October 1993. From 1990 through 1993, Mr. Reid was a general
partner in MDR Associates, a private investment concern. From September 1986 to
June 1990, Mr. Reid was Chief Executive Officer of Eastman Christensen Co., a
leading worldwide provider of directional and horizontal drilling systems to
the oil and gas industry. Mr. Reid was also Vice Chairman of Eastman
Christensen Co. from August 1989 to June 1990. Prior to September 1986, Mr.
Reid was Senior Vice President of Operations of Norton Christensen, the
predecessor to Eastman Christensen Co.
JEROME R. BAIER, 40, has been a director of the Company and TVI since June
1988. Mr. Baier is and has been Director-Securities of Northwestern since
October 1989. For more than five years prior to October 1989, Mr. Baier was
Associate Director-Securities of Northwestern.
MARTIN G. HUBBARD, 56, has been a director of the Company and TVI since March
1988 and May 1988, respectively. Mr. Hubbard was also Secretary and Treasurer
of the Company from May 1988 to February 1989. Mr. Hubbard is, and has been
since January 1987, a general partner in Hub, a private investment firm
specializing in leveraged management buyouts. From 1980 to 1990, Mr. Hubbard
was also a general partner in Hub Energy Associates, a general partnership
formed with Brentwood Associates to investigate and pursue investments in the
oil service industry. Mr. Hubbard was President of Kobe Inc., an oil well pump
and process equipment subsidiary of Baker Oil Tools a predecessor of BHI, from
1976 to 1980.
ROBERT A. LAHR, 67, has been a director of the Company and TVI since May
1988. Mr. Lahr served as President and Chief Executive Officer of the Company
from May 1988 to May 1991 and President and Chief Executive Officer of TVI from
1969 to May 1991.
WILLIAM V. LARKIN, JR., 40, has been a director of the Company and TVI since
June 1993. Mr. Larkin also has been President of the Company and TVI since May
1991 and Chief Executive Officer of the Company and TVI since October 1993. Mr.
Larkin was Chief Operating Officer of the Company and TVI from May 1991 to
October 1993, Senior Vice President-International and Specialty Services of TVI
from December 1989 to May 1991 and Senior Vice President of the Company from
May 1988 to May 1991. From 1984 to December 1989, Mr. Larkin was Vice
President- Specialty Services of TVI.
ERIC L. MATTSON, 42, has been a director of the Company since January 1994.
Mr. Mattson is and has been Vice President and Chief Financial Officer of BHI
since July 1993. For more than five years prior to 1993, Mr. Mattson was Vice
President and Treasurer of BHI.
TIMOTHY M. PENNINGTON III, 53, has been a director of the Company and TVI
since May 1988. Mr. Pennington served as Chairman of the Board of the Company
from January 1990 to October 1990 and Chairman of the Board of TVI from June
1988 to October 1990. Mr. Pennington is, and has been since prior to 1984, a
partner in various partnerships specializing in leveraged management buyouts
and growth oriented venture capital investments sometimes collectively referred
to as "Brentwood Associates."
JAMES J. SHELTON, 76, has been a director of the Company and TVI since May
1988. Mr. Shelton has been retired but has been engaged in certain private
investment concerns since 1984. Prior to 1981, Mr. Shelton was employed by
Baker Oil Tools and at various times during that period served as the Vice
President of Corporate Development, an Operating Group President, and as a
director of its parent company. Mr. Shelton is also a director of EIP
Microwave.
FREDERICK J. WARREN, 53, has been a director of the Company and TVI since May
1988. Mr. Warren is, and has been since 1984, a partner in Brentwood
Associates. Mr. Warren is also a director of Graphic Controls Corp. and Digital
Sound Corp.
The Company is not aware of any family relationships among any of the
foregoing directors and its executive officers. The Restated Certificate of
Incorporation and Bylaws of the Company contain provisions eliminating or
limiting the personal liability of directors for violations of a director's
fiduciary duty to the extent permitted by the Delaware General Corporation Law.
15
<PAGE>
COMMITTEES
The Board of Directors held six meetings during the fiscal year ended
December 31, 1993. Each director attended at least 75% of the aggregate of the
total number of meetings of the Board of Directors held during such period and
the total number of meetings held during such period by all committees of the
Board of Directors on which that director served.
The Company has standing Audit, Stock Option and Executive Committees but has
not established a Nominating Committee. Messrs. Shelton, Baier and Lahr
comprise the Audit Committee. The Audit Committee met once during the fiscal
year ended December 31, 1993. The Audit Committee's responsibilities include
recommending the selection of the Company's independent auditors to the Board
of Directors, reviewing the (i) scope and results of the audit engagement with
the independent auditors and management, (ii) adequacy of the Company's
internal accounting control procedures, (iii) independence of the independent
auditors and (iv) range of audit and non-audit fees charged by the independent
auditors. Messrs. Warren, Hubbard and Pennington comprise the Stock Option
Committee, which met three times during the fiscal year ended December 31,
1993. The Stock Option Committee is responsible for administration of the
Company's Stock Option Plan. Throughout 1993, Messrs. Hubbard, Reid, Pennington
and Shelton comprised the Executive Committee. The Executive Committee met
twice during the fiscal year ended December 31, 1993. The Executive Committee's
responsibilities include reviewing and approving the compensation of the
Company's directors, officers and employees and performing other related
functions upon request of the Board of Directors.
DIRECTOR COMPENSATION AND STOCK OPTION PLAN
Each of the directors of the Company who is neither an employee nor otherwise
subject to an agreement to provide services to the Company (a "Qualified
Director") received and shall receive $10,000 per year as compensation for
membership on the Board of Directors plus $1,000 for each regular and special
meeting of the Board of Directors attended by him. In addition, if a Qualified
Director is a member of such committee, he received and shall receive an
attendance fee of $1,000 for each Executive Committee meeting and an attendance
fee of $300 for each meeting of the Audit Committee or Stock Option Committee
attended by him. Certain directors may be granted options under the terms of
the Stock Option Plan.
Under the terms of the Stock Option Plan for Non-Employee Directors of the
Company, each director of the Company who was not an employee of the Company
was automatically granted an initial option to purchase 20,000 shares of the
Company's Common Stock on March 30, 1992. Any newly appointed or elected non-
employee director will be granted an initial option to purchase 4,000 shares of
Common Stock. In addition, each non-employee director of the Company is granted
automatically options to purchase an additional 4,000 shares on the date of the
Annual Meeting of Stockholders each year following the initial grant,
commencing with the 1993 Annual Meeting.
VOTE
Directors will be elected by a favorable vote of a plurality of the shares of
voting stock present and entitled to vote, in person or by proxy, at the
Meeting. Accordingly, abstentions or broker non-votes as to the election of
directors will not affect the election of the candidates receiving the
plurality of votes. Unless instructed to the contrary, the shares represented
by the proxies will be voted FOR the election of the eight nominees named above
as directors. Although it is anticipated that each nominee will be able to
serve as a director, should any nominee become unavailable to serve, the
proxies will be voted for such other person or persons as may be designated by
the Company's Board of Directors.
16
<PAGE>
PROPOSAL 2
ADOPTION OF AN AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
Presently, the Company's authorized capital stock consists of 25,000,000
shares of Common Stock, par value $.01 per share, and 5,000,000 shares of
Preferred Stock, par value $.01 per share. As of the Record Date, (i) the
Company had outstanding 18,410,053 shares of Common Stock and 100,000 shares of
Series A Convertible Preferred Stock, and (ii) a total of 2,571,964 shares of
Common Stock were reserved for issuance upon the exercise of options granted
pursuant to employee and non-employee director stock option and stock purchase
plans and programs and the conversion of the Series A Convertible Preferred
Stock.
In March 1994, the Board of Directors of the Company authorized an amendment
to Article Fourth of the Restated Certificate of Incorporation to increase the
authorized number of shares of Common Stock from 25,000,000 to 35,000,000,
thereby increasing the total authorized number of shares of all classes of
capital stock from 30,000,000 to 40,000,000, all subject to stockholder
approval. The text of Article IV as so amended is set forth in Appendix A to
this Proxy Statement.
The increase in authorized shares of Common Stock is recommended by the Board
of Directors in order to provide a sufficient reserve of such shares for the
future growth and needs of the Company. If approved by the stockholders of the
Company, such additional authorized Shares would be available for future
issuance for various corporate purposes at the discretion of the Board of
Directors and without further authorization by the stockholders (subject to the
requirements of the Nasdaq National Market). Such purposes might include,
without limitation, the issuance and sale of Common Stock (i) as part or all of
the consideration required to be paid for acquisition of ongoing business or
other assets, (ii) in public or private offerings as a means of obtaining
additional capital to strengthen the Company and expand its business, (iii) to
satisfy any current or future obligation of the Company, whether or not
relating to financings, (iv) in connection with the exercise of options,
warrants, rights, or the conversation of convertible securities of the Company,
(v) in public or private exchange offers for other securities of the Company,
(vi) as part or all of the consideration to repay or retire any debt of the
Company, (vii) in connection with stock splits and dividends, or (viii) with
respect to existing or new benefit, option or stock ownership plans or
employment agreements. The proposed increase in the number of authorized shares
of Common Stock will not change the number of shares of stock outstanding or
the rights of the holders of such stock. Stockholders do not have preemptive
rights to acquire the common stock authorized by this amendment.
Although the Board of Directors will issue Common Stock only when it
considers such issuance to be in the best interest of the Company, the issuance
of additional shares of Common Stock may have, among others, a dilutive effect
on earnings per share of Common Stock and on the equity and voting rights of
holders of shares of Common Stock. In addition, authorized but unissued shares
of Common Stock could be issued in the future by the Board of Directors in ways
that would make more difficult a change in control of the Company, for instance
through a private sale to purchasers allied with management, thereby diluting
the stock ownership of the person seeking to gain control of the Company, or
through adoption and implementation of a "stockholders rights" plan. While the
Company currently has no intention to adopt any such plan or to make any such
sales, any such action could have the effect of deterring an offer for the
Company's outstanding stock at a substantial premium over its then current
market price, even if such an offer were favored by a majority of the Company's
stockholders. The Board of Directors, however, believes that the benefits of
providing the flexibility to issue shares without delay for any business
purpose, including as an alternative to an unsolicited business combination
opposed by the Board of Directors, outweigh these possible disadvantages.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the Company's Common
Stock present or represented at the Annual Meeting voting as a single class is
required to approve the amendment. Abstentions as to a
17
<PAGE>
particular proposal will have the same effect as votes against such proposal.
Broker non-votes, however, will be treated as unvoted for purposes of
determining approval of such proposal and will not be counted as votes for or
against such proposal. Properly executed, unrevoked proxies will be voted FOR
the Proposal unless a vote against the Proposal or abstention is specifically
indicated in the proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE AMENDMENT TO THE
COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The firm of Ernst & Young, the Company's independent auditors for the fiscal
year ended December 31, 1993, was selected by the Board of Directors, upon
recommendation of the Audit Committee (see "Proposal 1--Election of
Directors"), to act in the same capacity for the fiscal year ending December
31, 1994, subject to ratification by the stockholders pursuant to this Proposal
3. Neither the firm nor any of its members has any relationship with the
Company or any of its affiliates except in the firm's capacity as the Company's
auditor.
Representatives of Ernst & Young are expected to be present at the Meeting
and will have the opportunity to make statements if they so desire and respond
to appropriate questions from the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF
ERNST & YOUNG AS THE COMPANY'S INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
All proposals of stockholders intended to be presented at the Company's 1995
Annual Meeting of Stockholders must be directed to the attention of the
Secretary of the Company, at the address of the Company set forth on the first
page of this Proxy Statement, by December 11, 1994 if they are to be considered
for possible inclusion in the Proxy Statement and form of proxy used in
connection with such meeting.
OTHER MATTERS
As of the date of this Proxy Statement the Board of Directors knows of no
other matters which may be presented for consideration at the Meeting. However,
if any other matter is presented properly for consideration and action at the
Meeting, or any adjournment or postponement thereof, it is intended that the
Proxies will be voted with respect thereto in accordance with the best judgment
and in the discretion of the proxy holders.
By Order of the Board of Directors,
/s/ JAMES F. MARONEY, III
James F. Maroney, III,
Vice President, Secretary and
General Counsel
Dated: April 13, 1994
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<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
TUBOSCOPE VETCO INTERNATIONAL CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
Tuboscope Vetco International Corporation.
2. The Restated Certificate of Incorporation of the Company shall be amended
in the following manner:
A. Article FOURTH of the Restated Certificate of Incorporation of the
Company is amended and restated in its entirety as follows:
"FOURTH: The Company shall be authorized to issue two classes of shares
of stock to be designated respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the Company shall have authority
to issue is 40,000,000. The total authorized number of shares of Common
Stock shall be 35,000,000 and each such share shall have a par value of
$.01. The total authorized number of shares of Preferred Stock shall be
5,000,000 and each such share shall have a par value of $.01.
The shares of Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby vested with authority to fix
by resolution or resolutions the designations and preferences, powers, and
relative, participating, optional or other rights and restrictions thereof,
including without limitation, the dividend rate, conversion rights, voting
rights, redemption price and liquidation preference, on any series of
shares of Preferred Stock, and fix the number of shares constituting any
such series, and to increase or decrease the number of shares of any such
series (but not below the number of shares thereof then outstanding.) If
the number of shares of any such series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to
the adoption of the resolution or resolutions originally fixing the number
of shares of such series."
3. The amendment of the Restated Certificate of Incorporation herein
certified has been duly adopted in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware.
Signed and attested to on May , 1994.
-------------------------------------
Martin R. Reid, Chairman of the
Board
Attest:
- -------------------------------------
James F. Maroney, III, Secretary
A-1
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TUBOSCOPE VETCO INTERNATIONAL CORPORATION
2835 Holmes Road, Houston, Texas 77051
Proxy for Annual Meeting of Stockholders on May 10, 1994
THIS PROXY IS SOLICITED BY AND ON BEHALF OF
THE BOARD OF DIRECTORS OF TUBOSCOPE VETCO INTERNATIONAL CORPORATION.
The undersigned hereby appoints Ronald L. Koons and James F. Maroney, III as
Proxies, each of them with full power to act without the other and to appoint
his substitute, and hereby authorizes the Proxies to represent and to vote, as
designated on the reverse side, all the shares of Common Stock of Tuboscope
Vetco International Corporation held of record by the undersigned on March 14,
1994 at the Annual Meeting of Stockholders to be held on May 10, 1994, or any
adjournment or postponement thereof.
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" all nominees listed under proposal 1 and "FOR" proposals 2 and 3.
(Continued and to be signed on reverse)
PLEASE MARK BOXES [_] OR [X] IN BLUE OR BLACK INK.
<TABLE>
<S> <C>
[_] ______________________________________________ _______________________________
ACCOUNT NUMBER COMMON
1. Election of Directors WITHHOLD (INSTRUCTION: To withhold authority to vote for any individual
FOR all nominees AUTHORITY nominee, draw a line through (or otherwise strike out) the
listed at the right to vote for all nominee's name in the list below.
(except as marked nominees list
to the contrary at right Jerome R. Baier; Martin G. Hubbard; Robert A. Lahr;
William V. Larkin, Jr.; Eric L. Mattson; Timothy M. Pennington,
[_] [_] III; Martin R. Reid; James J. Shelton; Frederick J. Warren
</TABLE>
<TABLE>
<S> <C> <C>
2. Proposal to amend Restated 3. Ratification of the selection of 4. In their discretion, the Proxies are
Certificate of Incorporation, Ernst & Young as the company's authorized to vote upon such other
increasing authorized number of shares independent auditors. business as may properly come before
Annual Meeting of Stockholders as or
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN any adjournment thereof.
[_] [_] [_] [_] [_] [_]
</TABLE>
Please sign exactly as name appears
below. When shares are held by joint
tenants both must sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporaiton, please
sign in full corporate name by the
President or other authorized officer.
If a partnership, please sign in
partnership name by authorized person.
Dated: , 1994
----------------------------
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Signature
