<PAGE>
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Tuboscope 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:
___________________________________________________________________________
<PAGE>
TUBOSCOPE INC.
_________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 8, 1998
_________________
The 1998 Annual Meeting of the Stockholders of Tuboscope Inc. (the
"Company") will be held at 10:00 a.m. local time, on May 8, 1998, at The
Doubletree Hotel at 2001 Post Oak Blvd., Houston, Texas 77056, for the following
purposes:
1. To elect a board of six directors for the ensuing year or until the
election and qualification of their respective successors;
2. To approve an amendment to the Company's Qualified Stock Purchase Plan,
as amended, to increase the number of shares of the Company's common stock
available for issuance thereunder;
3. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors; and
4. To transact such other business as may properly come before the
meeting.
Only stockholders of record of the Company's common stock at the close of
business on April 1, 1998, the record date, will be entitled to notice of, and
to vote at, the 1998 Annual Meeting and any adjournment or postponement thereof.
By order of the Board of Directors,
[SIG]
James F. Maroney, III
Vice President, Secretary and General Counsel
Houston, Texas
April 13, 1998
<PAGE>
Tuboscope Inc.
2835 Holmes Road
Houston, Texas 77051
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
May 8, 1998
_________________
PROXY STATEMENT
_________________
SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of the Board of Directors of
Tuboscope Inc. (the "Company") for use at the 1998 Annual Meeting of
Stockholders to be held at The Doubletree Hotel at 2001 Post Oak Blvd., Houston,
Texas, 77056, on May 8, 1998 at 10:00 a.m. local time, and at any and all
adjournments or postponements thereof (the "Meeting").
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 six nominees to the Board of
Directors listed in the proxy; (ii) an amendment to the Company's Employee
Qualified Stock Purchase Plan, as amended (the "Plan") to increase the number of
shares of the Company's common stock available for issuance thereunder; and
(iii) the ratification of the selection of Ernst & Young LLP as the Company's
independent auditors. If any other matters are properly presented at the
Meeting for consideration, including, among other things, consideration of a
motion to adjourn the Meeting to another time or place, the persons named in the
enclosed form of proxy will have discretion to vote on such matters in
accordance with their best judgment.
Any stockholder has the power to revoke his or her proxy at any time before
it is voted. A proxy may be revoked (i) by delivering a written notice of
revocation to the Secretary of the Company at or before the taking of a vote at
the Meeting, (ii) by executing a later-dated proxy and delivering it to the
Secretary of the Company prior to the taking of the vote at the Meeting, or
(iii) by attending the Meeting and voting in person by the person who executed
the proxy (although attendance at the Meeting will not in and of itself
constitute a revocation of the proxy).
This proxy statement is being mailed to the Company's stockholders on or
about April 13, 1998. The expense of soliciting proxies will be borne by the
Company. 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 by the
Company's regular employees, who will not receive additional compensation for
such 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 44,913,911 shares of the Company's common
stock (the "Common Stock") outstanding at the close of business on the record
date, April 1, 1998, 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
Common Stock held of record by such stockholder on April 1, 1998.
1
<PAGE>
In order to constitute a quorum for the conduct of business at the Meeting,
a majority of the outstanding shares of the Common Stock entitled to vote at the
Meeting must be represented at the Meeting.
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.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of April 1, 1998, the amount and
percentage of the outstanding shares of the Common Stock which, according to the
information supplied to the Company, are beneficially owned by (i) each person
or entity who, to the knowledge of the Company, is the beneficial owner of more
than 5% of the outstanding Common Stock, (ii) each person who is currently a
director of the Company and Tuboscope Vetco International Inc., the Company's
wholly owned subsidiary ("TVI") (each of whom is also a nominee for election as
a director of the Company), (iii) each Named Executive Officer (as defined on
page 6 hereof) and (iv) all current directors and executive officers of the
Company and TVI as a group. Except to the extent indicated in the footnotes to
the following table, the person or entity listed has sole voting or dispositive
power with respect to the shares which are deemed beneficially owned by such
person or entity.
<TABLE>
<CAPTION>
Total Outstanding Percent of
Outstanding Options Common Stock Outstanding
Name and Address of Common Exercisable Within Beneficially Shares of
Beneficial Owner Stock (1) 60 Days Owned(1) Common Stock(2)
- ----------------------------------------------- ------------ ------------------ -------------------- ---------------
<S> <C> <C> <C> <C>
Directors/Nominees and Named Executive
Officers
L.E. Simmons(3)................................ 10,971,516 2,536,000 13,507,516 28.5%
Eric L. Mattson(4)............................. 3,186,047 1,261,000 4,447,047 9.6%
Jerome R. Baier(5)............................. 774,953 35,000 809,953 1.8%
John F. Lauletta............................... 66,037 72,729 138,766 *
Douglas E. Swanson............................. 1,000 0 1,000 *
Jeffery A. Smisek.............................. 0 0 0 *
James F. Maroney, III.......................... 21,152 47,860 69,012 *
Kenneth L. Nibling............................. 29,520 46,100 75,620 *
Clay C. Williams............................... 25,460 3,810 29,270 *
Joseph C. Winkler.............................. 54,086 38,348 92,434 *
All directors and executive officers as a
group (13 persons)(6)......................... 15,176,529 4,138,678 19,315,207 39.4%
5% Beneficial Holders
SCF-III, L.P.(7)............................... 4,200,000 2,533,000 6,733,000 14.2%
6600 Texas Commerce Tower
Houston, Texas 77002
DOS Partners, L.P.(8).......................... 5,366,417 0 5,366,417 11.9%
6600 Texas Commerce Tower
Houston, Texas 77002
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Total Outstanding Percent of
Outstanding Options Common Stock Outstanding
Name and Address of Common Exercisable Within Beneficially Shares of
Beneficial Owner Stock (1) 60 Days Owned(1) Common Stock(2)
- ----------------------------------------------- ------------ ------------------ -------------------- ---------------
<S> <C> <C> <C> <C>
Baker Hughes Incorporated(9)................... 3,186,047 1,250,000 4,436,047 9.6%
3900 Essex Lane, Suite 1200
Houston, Texas 77027
Kadoorie McAuley International Ltd.(10)........ 3,394,316 0 3,394,316 7.6%
23rd Floor, St. George's Building
2 Ice House Street, Central
Hong Kong
Actinium Holding Corporation(11)............... 3,254,967 0 3,254,967 7.2%
24th Floor, St. George's Building
2 Ice House Street, Central
Hong Kong
Pilgrim Baxter & Associates, Ltd.(12).......... 2,229,100 0 2,229,100 5.0%
825 Duportail Road
Wayne, Pennsylvania 19087
</TABLE>
_____________________________________
* Less than one percent.
(1) Except for the information based on Schedules 13G and 13D, as indicated in
the footnotes hereto, beneficial ownership is stated as of April 1, 1998
and includes shares exercisable within 60 days after April 1, 1998 held by
each person, as if such shares were outstanding on April 1, 1998.
(2) Beneficial ownership as of April 1, 1998 includes shares subject to options
which are exercisable within 60 days of April 1, 1998.
(3) Includes 5,366,417 shares which are beneficially owned by DOS Partners,
L.P. See footnote 8 below. The general partner of DOS Partners, L.P. is SCF
Partners, L.P. and the general partner of SCF Partners, L.P. is L.E.
Simmons & Associates, Incorporated, of which L.E. Simmons is the president,
a director and sole stockholder. Also includes 6,733,000 shares which are
beneficially owned by SCF-III, L.P. See footnote 7 below. The general
partner of SCF-III, L.P. is SCF-II, L.P. and the general partner of SCF-II,
L.P. is L.E. Simmons & Associates, Incorporated. Also includes 1,399,999
shares which are beneficially owned by FGSI Partners, L.P. The general
partner of FGSI Partners, L.P. is SCF Partners, L.P. and the general
partner of SCF Partners, L.P. is L.E. Simmons & Associates, Incorporated.
Mr. Simmons disclaims beneficial ownership of such securities except to the
extent of his pecuniary interest therein. Also includes 3,000 shares
subject to options exercisable by Mr. Simmons within 60 days of April 1,
1998.
(4) Includes 4,436,047 shares which are beneficially owned by Baker Hughes
Incorporated. See footnote 9 below. Eric L. Mattson is the Vice President
and Chief Financial Officer of Baker Hughes Incorporated and has the
authority to exercise voting or investment power on behalf of Baker Hughes
Incorporated with respect to all or part of these shares. However, Mr.
Mattson disclaims beneficial ownership of these shares. Also includes
11,000 shares subject to options exercisable by Mr. Mattson within 60 days
of April 1, 1998.
(5) Includes 774,953 shares beneficially owned by The Northwestern Mutual Life
Insurance Company. Mr. Baier is Managing Director of Northwestern
Investment Management Company and, as such, has shared voting and
investment power with respect to the shares owned by The Northwestern
Mutual Life Insurance Company. However, Mr. Baier disclaims beneficial
ownership of these shares.
(6) Includes shares which may be deemed to be beneficially owned by Messrs.
Simmons, Mattson and Baier. See footnotes (3), (4) and (5).
(7) According to schedule 13D filed by SCF-III, L.P. Includes 2,533,000 shares
that may be acquired upon exercise of warrants.
(8) According to Schedule 13D filed by DOS Partners, L.P.
(9) According to Schedule 13D filed by Baker Hughes Incorporated. Includes
1,250,000 shares which may be acquired upon exercise of certain warrants.
(10) According to Schedule 13D filed by Kadoorie McAuley International Ltd.
(11) According to Schedule 13D filed by Actinium Holding Corporation.
(12) According to Schedule 13D filed by Pilgrim Baxter & Associates, Ltd.
3
<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 April 1, 1998. Executive officers serve in
the same capacity for both the Company and TVI.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------- ------------ ---------------------------------------------------------------------------
<S> <C> <C>
L.E. Simmons 51 Chairman of the Board
John F. Lauletta 53 Director, President and Chief Executive Officer
Joseph C. Winkler 46 Executive Vice President, Chief Financial Officer and Treasurer
Martin I. Greenberg 58 Vice President--Controller, Assistant Secretary and Assistant Treasurer
James F. Maroney, III 46 Vice President--Secretary and General Counsel
Kenneth L. Nibling 47 Vice President--Human Resources and Administration
Haynes B. Smith, III 46 Vice President--Western Hemisphere Operations
Peter J. Stuart 40 Vice President--Eastern Hemisphere Operations
Clay C. Williams 35 Vice President--Corporate Development
</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. Simmons and
Lauletta, see "Proposal 1--Election of Directors." The Company is not aware of
any family relationships among any of its directors and executive officers.
Joseph C. Winkler. Mr. Winkler has been Executive Vice President, Chief
Financial Officer and Treasurer of the Company and TVI since April 1996. From
1993 to April 1996, Mr. Winkler served as the Chief Financial Officer of D.O.S.,
Ltd. ("Drexel"). Prior to joining Drexel, he was Chief Financial Officer of
Baker Hughes INTEQ and served in a similar role for various companies owned by
Baker Hughes Incorporated ("BHI"), including Eastman/Teleco and Milpark Drilling
Fluids. For ten years prior to joining BHI, Mr. Winkler held the position of
Chief Financial Officer of an independent oil and gas producer after having
spent several years with Arthur Young & Company.
Martin I. Greenberg. Mr. 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.
James F. Maroney, III. Mr. Maroney 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.
Kenneth L. Nibling. Mr. 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.
Haynes B. Smith, III. Mr. Smith has been Vice President--Western
Hemisphere Operations of the Company since February 1998 and of TVI since April
1996. From May 1991 to April 1996, Mr. Smith was Vice President and General
Manager of Inspection Services of the Company. From 1989 to May 1991, Mr. Smith
was
4
<PAGE>
Northeast Zone Manager of the Company. From June 1972 to 1989, Mr. Smith held
various sales and managerial positions with the Company and AMF Tuboscope Inc.
Peter J. Stuart. Mr. Stuart has been Vice President--Eastern Hemisphere
Operations of the Company since February 1998 and of TVI since April 1996. Mr.
Stuart has been Managing Director of Tuboscope (UK) Ltd. since January 1998 and
of Tuboscope Vetco (UK) Ltd. since April 1996. From March 1992 to April 1996,
Mr. Stuart was Managing Director of Drexel Equipment (UK) Ltd. From August 1985
to March 1992, Mr. Stuart was a Project Engineer, and latterly Operations
Manager, for Drexel's operations in the United Kingdom. From August 1979 to
July 1985, Mr. Stuart held engineering positions with Sparrows Offshore and
Halliburton in the United Kingdom.
Clay C. Williams. Mr. Williams has been Vice President--Corporate
Development of the Company and TVI since February 1997. From April 1996 to
February 1997, Mr. Williams was Director of Corporate Development of the Company
and TVI. From March 1996 to April 1996, Mr. Williams was Director of Corporate
Development of Drexel. Mr. Williams was an associate at SCF Partners from
December 1993 to March 1996. From July 1992 to December 1993, Mr. Williams was a
graduate student at the University of Texas business school. Mr. Williams was a
senior petrophysical engineer for Shell Oil Company from 1985 to July 1992.
5
<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 the Company for the
fiscal years ended December 31, 1995, December 31, 1996 and December 31, 1997 of
those persons who were either (i) the chief executive officer of the Company,
(ii) one of the other four most highly compensated executive officers of the
Company whose annual salary and bonuses exceeded $100,000 or (iii) any other
executive officer who would have qualified under sections (i) or (ii) of this
paragraph but for the fact that the individual was not serving as an executive
officer of the Company at the end of the 1997 fiscal year (collectively, the
"Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
----------------------------------------- -------------------------------- All Other
Restricted Stock Stock Options Annual Compen-
Name and Principal Position Year Salary(1) Bonus Other(2) Units(3) (Shares) sation(4)
- --------------------------- ---- --------- --------- ---------- ---------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
John F. Lauletta(5) 1997 $306,558 $352,700 $79,107(6) $1,298,414 49,107 $6,491
President and Chief 1996 164,014 206,250 71,849(7) 0 0 1,103
Executive Officer
Joseph C. Winkler(8) 1997 173,340 160,000 0 952,410 22,143 3,663
Executive Vice President, 1996 97,885 93,000 0 0 0 0
Chief Financial Officer and
Treasurer
James F. Maroney, III 1997 141,458 93,000 0 419,045 11,429 2,994
Vice President, Secretary 1996 127,292 72,800 0 0 22,000 1,910
and General Counsel 1995 125,000 50,000(9) 0 0 10,900 1,953
Kenneth L. Nibling 1997 132,725 87,240 0 557,693 11,429 2,809
Vice President - Human 1996 118,208 68,320 0 0 22,000 1,773
Resources and Administration 1995 115,000 18,400 0 0 10,900 1,747
Clay C. Williams(10) 1997 138,165 95,880 0 503,474 11,429 2,935
Vice President-Corporate
Development
</TABLE>
_______________________
(1) Includes amounts deferred by the Named Executive Officers under the
Company's 401(k) Thrift Savings Plan and Non-qualified Deferred
Compensation Plan.
(2) Includes (a) living, travel and other expense reimbursement, (b) the cost
of Company provided automobiles, and (c) club dues reimbursement, but only
if such payments to the Named Executive Officer exceed the lesser of
$50,000 or 10% of the total annual salary and bonus of the Named Executive
Officer.
(3) Reflects the value of the shares of Common Stock underlying the Restricted
Stock Units granted on June 30, 1997 in connection with the Company's Stock
Ownership Program. Restrictions on the Restricted Stock Units lapse 10% per
year for a period of ten years, subject to accelerated vesting in certain
circumstances, and are subject to the employee's continued ownership of
Common Stock in compliance with the Company's Stock Ownership Program.
Includes Restricted Stock Units awards in 1997 of 47,920 for Mr. Winkler,
21,084 for Mr. Maroney,
6
<PAGE>
28,060 for Mr. Nibling and 25,332 for Mr. Williams. Mr. Lauletta earned a
grant of a total of 65,329 Restricted Stock Units in fiscal 1997, 50,893 of
which were granted on June 30, 1997 with 14,436 deferred to January 2, 1998
due to certain restrictions in the Company's 1996 Equity Participation
Plan.
(4) Includes (i) matching contributions by the Company under the Company's
401(k) Thrift Savings Plan in the 1997, 1996 and 1995 amounts of $2,994,
$1,747 and $1,536, respectively, for Mr. Maroney, $1,718, $1,447 and
$1,342, respectively, for Mr. Nibling, in the 1997 and 1996 amounts of
$2,523 and $1,103, respectively, for Mr. Lauletta and $3,663 and $0,
respectively, for Mr. Winkler and in the 1997 amount of $2,935 for Mr.
Williams and (ii) matching contributions by the Company under the Company's
Non-qualified Deferred Compensation Plan in the 1997, 1996 and 1995 amounts
of $0, $163 and $417, respectively, for Mr. Maroney and $1,091, $326 and
$405, respectively, for Mr. Nibling, in the 1997 and 1996 amounts of $3,968
and $0, respectively, for Mr. Lauletta, and $0 and $0, respectively, for
Mr. Winkler, and in the 1997 amount of $0, for Mr. Williams.
(5) Mr. Lauletta became the President and Chief Executive Officer of the
Company on April 24, 1996, following the merger of Drexel with and into the
Company (the "Drexel Merger").
(6) Includes a grant of 5,806 shares of Common Stock under the Company's Equity
Participation Plan. The 5,806 shares of Common Stock were valued at the
fair market value of the Common Stock on April 10, 1997 ($13.625), the date
of grant.
(7) Includes a grant of 5,806 shares of Common Stock under the Company's Equity
Participation Plan. The 5,806 shares of Common Stock were valued at the
fair market value of the Common Stock on August 15, 1996 ($12.375), the
date of the grant.
(8) Mr. Winkler became the Executive Vice President, Chief Financial Officer
and Treasurer of the Company on April 24, 1996, following the closing of
the Drexel Merger.
(9) Includes a $30,000 special recognition bonus for Mr. Maroney.
(10) Mr. Williams became an executive officer of the Company on February 6,
1997. Compensation shown includes compensation over the full 1997 fiscal
year.
The following table sets forth certain information with respect to grants
of stock options during fiscal 1997 to the Named Executive Officers pursuant to
the 1996 Equity Participation Plan of the Company (the "Equity Participation
Plan").
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Percentage Realizable Value at
of Total Assumed Annual
Number of Options Exercise Rates of Stock Price
Securities Granted to or Base Appreciation
Underlying Employees Price for Option Term(2)
Options in Fiscal (per Expiration --------------------
Name Granted(1) Year Share) Date 5% 10%
- ---- ---------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John F. Lauletta.......... 49,107 14.5% $14.00 1-29-07 $432,436 $1,095,901
Joseph C. Winkler......... 22,143 6.5 14.00 1-29-07 194,991 494,143
James F. Maroney, III..... 11,429 3.4 14.00 1-29-07 100,644 255,050
Kenneth L. Nibling........ 11,429 3.4 14.00 1-29-07 100,644 255,050
Clay C. Williams.......... 11,429 3.4 14.00 1-29-07 100,644 255,050
</TABLE>
(1) Under the terms of the Equity Participation Plan, all options granted become
exercisable in three equal annual installments beginning on the first
anniversary of the date of the grant. 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 Common Stock on the New York Stock
Exchange on the date of the grant. The Compensation Committee retains
discretion, subject to certain restrictions, to modify the terms of
outstanding options and to reprice outstanding options.
(2) Assumes annual rates of stock price appreciation for illustrative purposes
only. Actual stock prices will vary from time to time based upon market
factors and the Company's financial performance. No assurance can be given
that such rates will be achieved.
7
<PAGE>
The following table sets forth certain information with respect to options
exercised during fiscal 1997 and exercisable and unexercisable options held by
the Named Executive Officers as of December 31, 1997.
Aggregated Option Exercises in Last Fiscal Year and Year-End Option Value
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired on Value Options at Options at
Exercise Realized(1) Fiscal Year End Fiscal Year End(2)
----------- ----------- --------------------------- ---------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John F. Lauletta........ 56,359 $1,066,142 56,360 140,304 $1,156,085 $2,357,153
Joseph C. Winkler....... 0 0 30,967 60,851 635,211 1,011,702
James F. Maroney, III... 0 0 67,650 11,429 1,207,328 115,004
Kenneth L. Nibling...... 25,360 542,777 42,290 11,429 764,978 115,004
Clay C. Williams........ 0 0 0 31,429 0 426,254
</TABLE>
(1) Determined by calculating the spread between the market value of the Common
Stock on the date of exercise and the exercise price of the options.
(2) Based on the closing sales price of the Common Stock ($24.0625) on the New
York Stock Exchange on December 31, 1997, minus the exercise price of the
option, multiplied by the number of shares to which the option relates.
Management Agreements
Severance Agreements. In June 1997, the Company adopted two new severance
programs in order to provide financial security to its Senior Management Team
and to match similar plans adopted by competitors in the Company's industry.
These plans are designed to retain and to motivate key employees of the Company.
One of the severance plans pertains to involuntary terminations (the "Standard
Severance Plan") and the other severance plan pertains to terminations following
a change of control (the "Change of Control Severance Plan"). The Chief
Executive Officer, all of the Named Executive Officers and other members of the
Company's Senior Management Team (currently numbering a total of 11) are
eligible for participation in the Standard Severance Plan and the Change of
Control Severance Plan.
. Standard Severance Plan. The Standard Severance Plan provides eligible
participants with continued compensation and benefits following
involuntary termination without "cause", as defined. Upon such an
involuntary termination, Mr. Lauletta is entitled to receive two full
years of his salary, Mr. Winkler is entitled to receive one and a half
years of his salary and Messrs. Maroney, Nibling and Williams (and all
other eligible participants) are entitled to receive one full year of
salary, payable on a regular payroll basis following such termination.
In the event a participant is re-employed during the severance pay-out
period at a salary greater than or equal to what the participant had
received at the Company, the participant would receive 50% of full
severance pay for the remainder of the severance pay-out period. If the
participant is re-employed during the severance pay-out period at a
salary less than what was received at the Company, the participant would
receive the difference in actual salary for the remainder of the
severance pay-out period, plus 50% of the aggregate severance pay
remaining that would have been paid throughout the severance pay-out
period. In addition to salary, Mr. Lauletta and Mr. Winkler would be
eligible to receive a full annual bonus in the year of a qualifying
involuntary termination, while all other participants would be eligible
to receive an annual bonus pro-rated to the date of involuntary
termination. All participants would also be eligible to receive a Value
Plan award through the date of termination and all Restricted Stock
Units would become 100% vested. See "Compensation Committee Report on
Executive Compensation."
. Change of Control Severance Plan. The Change of Control Severance Plan
provides income protection for eligible employees in the event of a
material and adverse change in the terms and conditions of employment
("Good Reason") resulting in termination of employment by the
participant or by the Company within two years following a Change of
Control of the Company. A "Good
8
<PAGE>
Reason" includes a material reduction in compensation or authority,
relocation to an office more than 50 miles away, or a change in
management personnel, ownership or control which the participant in good
faith determines has detrimentally and materially affected the terms and
conditions of his employment. In the event of a Good Reason termination
following a change of control, Mr. Lauletta would receive three full
years of salary, Mr. Winkler would receive two full years of salary and
Messrs. Maroney, Nibling and Williams (and all other participants) would
receive one and a half years of salary, all regardless of whether the
participant is re-employed. In addition, upon a qualifying termination
an eligible participant is entitled to a full annual bonus for each year
of the pay-out-period and all long term incentive compensation holdings
(stock options, restricted stock awards, non-qualified retirement
benefits and 401(k) Plan and Non-qualified Deferred Compensation Plan
holdings) become 100% vested upon such qualifying termination.
In addition to the foregoing, a participant would receive upon a qualifying
termination under each of the plans, full medical, dental and automobile
benefits throughout the pay-out period and outplacement services of up to 15% of
base salary. The Standard Severance Plan and Change of Control Severance Plan
are effective as of June 25, 1997, are specified in separate agreements with
each eligible participant and replace all previous severance and change of
control arrangements.
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 and a
pension formula, and are subject to certain national insurance rates. The
pension formula provides that payment of the pension benefits will be based on
an average of the employee's annual salary for the last three years (the
"Average Annual Salary"). That portion of the employee's Average Annual Salary
up to the average social security contribution ceiling for the last three years
is multiplied by 0.5% and the remaining Average Annual Salary is multiplied by
1.65%. The products of the two calculations are then added together, and the
resulting amount is multiplied by the years of employment to determine the plan
benefits to be received by the employee. None of the Named Executive Officers
participate in this plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of your Board of Directors is
pleased to present its annual report which is intended to update stockholders on
the development of the Company's executive compensation program. This report
summarizes the responsibilities of the Committee, the compensation policy and
objectives that guide the development and administration of the executive
compensation program, each component of the program, and the basis on which the
compensation for the chief executive officer, corporate officers and other key
executives was determined for the calendar year ended December 31, 1997.
During the 1997 fiscal year, the Committee was comprised of the following
Board Members, all of whom were non-employee directors of the Company: Eric L.
Mattson, Chair, Martin R. Reid and L.E. Simmons. The Committee's
responsibilities were to oversee the development and administration of the total
compensation program for corporate officers and key executives, and administer
the executive incentive and stock plans. During the fiscal year, the Committee
met five times (including actions by unanimous written consent). In June 1996,
the Committee retained J.E. Stone & Associates, an executive compensation and
benefits consulting firm, to undertake a comprehensive review and restructuring
of the executive compensation program following the merger of the Company and
Drexel. Throughout 1997 the Committee adopted resolutions which incorporated
the various recommendations of J.E. Stone & Associates and revised the total
compensation packages awarded to the Company's executives and management.
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
9
<PAGE>
the markets the Company serves. The Committee reviews and determines the
compensation of the executive officers of the Company based on a compensation
program that reflects the following themes:
. A compensation program that stresses the Company's annual financial
performance and increase in value.
. A compensation program that strengthens the relationship between pay and
performance by providing variable, at-risk compensation based on
predetermined objective performance measures.
. A compensation program that will attract, motivate and retain high
quality employees who will enable the Company to achieve its strategic
and financial performance goals.
. An annual incentive plan that supports a performance-oriented
environment with superior performance resulting in total annual
compensation above competitive levels.
. A long-term incentive plan that is designed to require executive
officers and certain senior management to own significant portions of
the Company's stock and reward executive officers for the long-term
strategic management of the Company and the enhancement of stockholder
value.
Section 162(m) of the Internal Revenue Code of 1986, as amended, currently
imposes a $1 million limitation on the deductibility of certain compensation
paid to the Company's five highest paid executives. Excluded from the
limitation is compensation that is "performance based." For compensation to be
performance based, it must meet certain criteria, including being based on
predetermined objective standards approved by stockholders. The Committee
intends to design the Company's compensation to conform to IRC Section 162(m)
and related regulations so that total compensation paid to any employee will not
exceed $1 million in any one year, except for compensation payments which
qualify as "performance based." The Company may, however, pay compensation
which is not deductible in limited circumstances when sound management of the
Company so requires.
Executive Compensation Components
On an annual basis the Committee, in conjunction with executive management,
assesses the effectiveness of the overall program and compares the compensation
levels of its executives and the performance of the Company to the compensation
received by executives and the performance of similar companies. For 1997, the
primary market comparisons were made to a broad group of oilfield manufacturing
and service companies, adjusted for size and job responsibilities. Data sources
include industry survey groups, national survey databases, proxy disclosures and
general trend data which are updated annually.
The following is a discussion of the principal components of the executive
compensation program for fiscal 1997, each of which is intended to serve the
Company's overall compensation philosophy.
Base Salary. The base salary program targets the median of the primary
comparison group. Each executive's salary is reviewed individually on an annual
basis. Salary adjustments are based on the individual's experience and
background, performance during the prior year, the general movement of salaries
in the marketplace, and the Company's financial position. Due to these factors,
an executive's base salary may be above or below the primary comparison group
median at any point in time. Overall, the base salaries of the corporate
officers and key executives established in 1997 were set at the 55th percentile
of the primary comparison group.
Performance Incentive Compensation. The Committee administers management
incentive plans for executive officers, general managers, operations and sales
managers and sales representatives. The goal of the management incentive plans
is to reward participants in proportion to the performance of the Company and/or
the business unit/region for which they have direct impact. Each of the plans
reward participants according to predetermined objective performance standards.
. Annual Performance Incentive Plan. In 1997, the Committee adopted an
Annual Performance Incentive Plan which rewards eligible employees for
achievement of objective measurable financial
10
<PAGE>
performance of the Company as a whole, and, in certain circumstances, on
a business unit or regional or divisional basis. The Annual Performance
Incentive Plan is available to senior executives and management team
members. The level of award is a variable of the targeted performance of
the Company or business or regional unit compared to the actual
performance of the Company or business or regional unit. The current
performance measurements are the Company's earnings per share, and the
business unit or regional pretax profit margins, with the exact
performance measurement specifically tailored to the level of eligible
employee. For corporate employees, the measure of corporate performance
is solely earnings per share. For business unit and regional employees,
the performance measures also include business unit and/or regional
pretax profit margin. The resulting performance incentive award is a
percentage of the participant's base salary, depending on the level of
employee and how close to target the Company, unit or division
performed.
. Intermediate Term Value Plan for Senior Management. The Committee
adopted a Value Plan in 1997 which is an incentive award program based
on the intermediate term performance of the Company. This program is
designed to encourage and reward sustained growth of profits over the
intermediate term that are reflected in stockholder returns. Members of
the Senior Management Team (currently totaling 11 members) are eligible
for awards under the Value Plan, with an opportunity to earn up to 1.25
times base salary at the beginning of the performance period. The
initial performance period commenced January 1, 1997 and will end on
December 31, 1999, and new three-year performance periods will commence
each January 1 thereafter. The amount of the performance award is
determined at the end of the three year performance period based on the
Company's actual three year cumulative earnings per share compared to
targeted cumulative earnings per share and the Company's total
shareholder return ranking as compared to the peer companies shareholder
return during the performance period. The initial peer group of
companies includes five comparable oil service companies of similar
size.
Long Term Incentive Compensation. The primary purpose of the Company's
long-term incentive compensation is to encourage and facilitate personal stock
ownership by the executive officers and thus strengthen their personal
commitments to the Company and provide a longer-term perspective in their
managerial responsibilities. This component of an executive officer's
compensation directly links the officer's interests with those of the Company's
other stockholders. In addition, long-term incentives encourage management to
focus on the long-term development and prosperity of the Company in addition to
annual operating profits. The Company's primary forms of long term incentive
compensation are stock options and the recently adopted Stock Ownership Program.
. Stock Option Awards. The goal of the stock option program is to provide
a compensation program that is competitive within the industry while
directly linking a significant portion of the executive's compensation
to the enhancement of stockholder value. The ultimate value of any stock
option is based solely on the increase in value of the shares over the
grant price. Accordingly, stock options have value only if the stock
price appreciates from the date of grant. This at-risk component of
compensation focuses executives on the creation of stockholder value
over the long-term and encourages equity ownership in the Company. The
Company grants stock options to its key executives based on competitive
multiples of base salary. Senior executives typically receive a higher
multiple and, as a result, have a greater portion of their total
compensation linked to increases in stockholder value. In determining
the appropriate grant multiples, the Company compares itself to publicly
traded oilfield manufacturing and service companies of comparable size
and targets awards between the market median and 75th percentile. Senior
executives and managers are eligible to receive stock options annually
with other key managers becoming eligible on a discretionary basis.
Eligibility for an award does not ensure receipt of a stock option
award. Options are granted at the then current market price and vest
over a three year period with one-third of the options granted vesting
each year.
. Officer Stock Ownership Requirements. In 1997, the Committee
established a Stock Ownership Program, pursuant to which members of the
Company's Senior Management Team are required to
11
<PAGE>
achieve and maintain specific levels of ownership of the Company's
Common Stock. The Committee has adopted minimum ownership goals equal to
300% of base salary for the Chief Executive Officer, 200% of base salary
for the Executive Vice President, and 100% of base salary for all other
corporate officers, division presidents and operations vice presidents-
general managers who report directly to the Chief Executive Officer.
Currently there are 11 participants in the program. All goals must be
achieved by December 31, 1999. Participants were given the option of
choosing between achieving the minimum ownership goal or a higher target
ownership goal with a matching award by the Company. The targeted goals
were 500%, 400% and 300% of base salary for the Chief Executive Officer,
Executive Vice President and other participants, respectively. Those
participants who chose the target ownership goal received a one time
matching award from the Company on June 30, 1997 of Restricted Stock
Units in an amount equal to the shares of Common Stock owned by such
participant as of such date, but not to exceed 100% of the target
ownership goal. As a result, the Company issued an aggregate of 342,327
Restricted Stock Units on June 30, 1997 under the Equity Participation
Plan. The restrictions on the Restricted Stock Units lapse 10% per year
for ten years, subject to acceleration in certain events, and require
that the employee maintain ownership of shares of Common Stock in an
amount equal to the number of Restricted Stock Units granted. In
addition, the Company authorized interest-free loans to those
participants who chose the target ownership goal option. These loans
were to be used solely for the purchase of the Common Stock in the open
market. The Company issued an aggregate of $652,957 to a total of six
eligible employees in interest free loans pursuant to this program. All
such loans had a term which expired on January 31, 1998 and have been
paid in full.
Compensation of the Chief Executive Officer. The Chief Executive Officer,
Mr. John Lauletta, participates in the executive compensation programs described
in this report. For 1997, Mr. Lauletta's base salary was increased from
$275,000 to $352,700, effective as of July 1, 1997. Mr. Lauletta's salary was
based on the factors discussed above in "Base Salary," including a review of
market pay trends and his efforts following the merger between the Company and
Drexel. Mr. Lauletta received an incentive award for 1997 of $352,700, a grant
under the Company's Equity Participation Plan of 5,806 shares of Common Stock of
the Company, 49,107 stock options and 65,329 Restricted Stock Units.
Eric L. Mattson
Martin R. Reid
L. E. Simmons
Date: December 31, 1997
The above report of the Compensation Committee will not be deemed to be
incorporated by reference to 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1997, the Compensation Committee, which is responsible for the
compensation policies of the Company with respect to its executive officers, was
comprised of Messrs. Mattson, Reid and Simmons, and met five times (including
actions by written consent) in 1997. On February 19, 1998, Mr. Reid resigned
from the Board of Directors and as a member of the Compensation Committee and
Jeffery E. Smisek was appointed to the Board of Directors and to the
Compensation Committee in February 1998. See "Proposal 1- Election of
Directors-Committees." Mr. Simmons is the Chairman of the Board of the Company
and TVI; however, Mr. Simmons does not receive any compensation from the Company
as an executive officer.
12
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on the Common Stock against the cumulative
total return of a peer index of 75 oil service companies prepared by Simmons &
Company International, an independent third party, the Nasdaq Composite Stock
Index and the Standard & Poor's 500 Stock Index, each for the period from
December 31, 1992 to December 31, 1997. The Nasdaq Composite Stock Index has
historically been the broad equity index against which the Common Stock has been
measured because, prior to 1997, the Common Stock was quoted on the Nasdaq
National Market. During the fiscal year 1997, the Company listed the Common
Stock on the New York Stock Exchange and quotation of the Common Stock on the
Nasdaq National Market was terminated. The Company has included the Standard &
Poor's 500 Stock Index in this and future proxy statements because the Common
Stock is no longer quoted on the Nasdaq National Market, but is currently listed
on the New York Stock Exchange, where the companies which comprise the Standard
& Poor's 500 Stock Index are listed for trading.
Assumes $100 invested in the Common Stock of the Company, the peer index of
75 oil service companies prepared by Simmons & Company International (the "SCI
Upstream Index"), the Standard & Poor's 500 Stock Index and the Nasdaq Composite
Stock Index on December 31, 1992 and the reinvestment of any and all dividends.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
SCI Company
Measurement NASDAQ Upstream Common
Period S&P 500 Index Index Stock
<S> <C> <C> <C> <C>
12/31/92 100.0 100.0 100.0 100.0
12/31/93 107.1 114.8 131.6 102.2
12/31/94 105.4 111.1 137.6 100.0
12/31/95 141.3 155.4 198.2 94.8
12/31/96 170.0 190.7 315.0 258.3
12/31/97 222.7 232.0 486.7 401.0
</TABLE>
* Assumes $100 invested in the Common Stock of the Company, the peer index of
75 oil service companies prepared by Simmons & Company International, the
Standard & Poor's 500 Stock Index and the Nasdaq Composite Stock Index on
December 31, 1992 and the reinvestment of any and all dividends.
13
<PAGE>
CERTAIN TRANSACTIONS
Loans to Executive Officers
In 1997 the Company adopted a Stock Ownership Program which established
minimum and target Common Stock ownership levels for members of the senior
management team. In order to facilitate compliance with the Stock Ownership
Program, the Company offered interest free loans to eligible participants. The
proceeds from the interest free loans offered by the Company could only be used
to purchase Common Stock on the open market in order to comply with the Stock
Ownership Program. Each of the loans issued by the Company pursuant to the
Stock Ownership Program bore no interest and had a term which expired on January
31, 1998.
Each of John F. Lauletta, the President and Chief Executive Officer of the
Company, Joseph C. Winkler, the Executive Vice President and Chief Financial
Officer of the Company, Kenneth L. Nibling, the Vice President of Human
Resources and Administration of the Company and James F. Maroney, III, the Vice
President, Secretary and General Counsel of the Company participated in this
loan program. In 1997, the Company loaned, at no interest, $96,164, $112,909,
$193,279 and $193,279, respectively, to Messrs. Lauletta, Winkler, Nibling and
Maroney. All of the funds advanced by the Company were used solely to purchase
Common Stock on the open market in order to comply with the Stock Ownership
Program. None of the four above described interest free loans is currently
outstanding.
Product Sales to BHI
During 1997, the Company, primarily through its Hydra Rig division, a
subsidiary of TVI, sold goods and services in the aggregate amount of
approximately $5.2 million to BHI, the employer of Mr. Mattson, a director. Mr.
Mattson is the Senior Vice President and Chief Financial Officer of BHI. As of
April 1, 1998, BHI beneficially owned 9.6% of the Company's Common Stock. The
Company's sales of goods and services to BHI represented approximately 1% of
total sales of the Company during 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's directors and executive officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission (the "SEC") and the New York Stock Exchange.
Such persons are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on its review of copies of such
reports received by the Company or written representations from certain
reporting persons that no other reports were required, during the year ended
December 31, 1997, all of the Company's directors and executive officers and
persons who own more than 10% of the Common Stock have complied with the
reporting requirements of Section 16(a) except certain of the Company's
directors and executive officers failed to timely file or incorrectly reported
certain information on Forms 3, 4 and 5. All of such late or incorrect reports
were ultimately filed or were corrected in subsequent filings. The following
executive officers and directors filed the indicated number of late or incorrect
reports with respect to the indicated number of transactions: Martin R. Reid
(two late reports, four transactions); L.E. Simmons (one report, one
transaction); Joseph C. Winkler (one report, one transaction); Martin I.
Greenberg (three reports, four transactions); James F. Maroney, III (two
reports, three transactions); Kenneth L. Nibling (three reports, five
transactions); and Clay C. Williams (one report, one transaction).
14
<PAGE>
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 Certificate of Incorporation requires
that there be a minimum of one and a maximum of ten members of the Board of
Directors. The authorized number of directors is currently fixed at six.
Set forth below are the names and descriptions of the backgrounds of the
nominees for election as directors of the Company. Each of the Company's
nominees for election to the Board of Directors currently serves as a director
of the Company and of TVI and was elected to his present term of office pursuant
to the Bylaws of the Company or was appointed by the Board of Directors. In May
1997, J. S. Dickson Leach resigned from the Board of Directors and Douglas E.
Swanson was appointed to the Board of Directors in October 1997 to fill the
vacant directorship. In addition, in February 1998 Martin R. Reid resigned from
the Board of Directors and Jeffery E. Smisek was appointed to the Board of
Directors in February 1998 to fill the vacant directorship. Each nominee first
became a director of the Company in the year set forth below and has continually
served as a director of the Company since then.
The directors of the Company are as follows:
NAME AGE
---- ---
L.E. Simmons 51
John F. Lauletta 53
Jerome R. Baier 45
Eric L. Mattson 46
Douglas E. Swanson 59
Jeffery A. Smisek 43
L.E. Simmons. Mr. Simmons has been a director and Chairman of the Board of
the Company since April 1996. Mr. Simmons has for more than five years served as
President and a director of L.E. Simmons & Associates, Incorporated, which,
through an affiliate, manages private institutional investment partnerships. Mr.
Simmons also serves as a director of Zions Bancorporation and CE Franklin Ltd.
John F. Lauletta. Mr. Lauletta has been the President and Chief Executive
Officer and a director of the Company and TVI since April 1996. From 1993 to
April 1996, Mr. Lauletta was the President and Chief Executive Officer of
Drexel. From 1973 until 1993, Mr. Lauletta was with BHI, holding several
executive positions, including President of Exlog/TOTCO, President of Milpark
Drilling Fluids and Vice President of Baker Hughes INTEQ.
Jerome R. Baier. Mr. Baier has been a director of the Company since 1988.
Mr. Baier is and has been a Managing Director of Northwestern Investment
Management Company since January 1998. From October 1996 to December 1997, Mr.
Baier was Vice President-Securities of Northwestern Mutual Life Insurance
Company ("Northwestern"). From October 1989 to October 1996, Mr. Baier was
Director--Securities of Northwestern. For more than five years prior to October
1989, Mr. Baier was Associate Director-Securities of Northwestern.
Eric L. Mattson. Mr. Mattson has been a director of the Company since
January 1994. Mr. Mattson is and has been Senior 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. Mr. Mattson also
serves as a director of Rental Service Corporation.
Douglas E. Swanson. Mr. Swanson has been a director of the Company since
his appointment in October 1997. Mr. Swanson is and has been the President,
Chief Executive Officer and Chairman of the Board of Cliffs
15
<PAGE>
Drilling Company since 1992. From 1978 to 1992, Mr. Swanson was an Executive
Vice President of Cliffs Drilling Company.
Jeffery A. Smisek. Mr. Smisek has been a director of the Company since his
appointment in February 1998. Mr. Smisek has been Executive Vice President,
General Counsel and Secretary of Continental Airlines since November 1996, and
was previously Senior Vice President, General Counsel and Secretary of
Continental Airlines. Prior to joining Continental Airlines in 1995, Mr. Smisek
was a partner of Vinson & Elkins L.L.P., a law firm, for more than five years.
The Company is not aware of any family relationships among any of the
foregoing directors and its executive officers. The 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 General Corporation Law of the
State of Delaware.
Agreement with BHI
In connection with the Company's acquisition from BHI of substantially all
of the foreign operations of Baker Hughes Tubular Services, Inc. ("Vetco
Services"), 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 it will not (i) 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, (ii) make or
participate in any solicitation of proxies to vote any of the Company's voting
securities or (iii) 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 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.
Meetings and Committees
The Board of Directors held eight meetings (including those held by written
consent) during the fiscal year ended December 31, 1997. 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 for which he served as a director) 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 currently has standing Audit, Executive and Compensation
Committees but has not established a Nominating Committee. Until May 1997, the
Audit Committee was comprised of Jerome R. Baier and J.S. Dickson Leach. In May
1997, Mr. Leach resigned from the Board of Directors and was replaced in October
1997 on both the Board of Directors and the Audit Committee by Mr. Swanson. The
Audit Committee met three times during the fiscal year ended December 31, 1997.
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.
The Compensation Committee, during the fiscal year ended December 31, 1997,
was comprised of Messrs. Mattson, Reid and Simmons. On February 19, 1998, Mr.
Reid resigned from the Board of Directors and was replaced by Mr. Smisek on the
Board of Directors and on the Compensation Committee. The Compensation Committee
met five times (including those held by written consent) during the fiscal year
ended December 31, 1997. The Compensation 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.
16
<PAGE>
The Executive Committee was comprised of Messrs. Simmons, Lauletta and
Mattson during the fiscal year ended December 31, 1997. The Executive Committee
met one time during the fiscal year ended December 31, 1997. The Executive
Committee is a general advisory committee which reviews ongoing operations of
the Company and performs other functions at the request of the Board of
Directors.
Board Compensation and Benefits
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") is entitled to receive $15,000 per year as compensation
for membership on the Board of Directors, plus $1,500 for each regular and
special meeting of the Board of Directors. In addition, if a Qualified Director
is a member of a standing committee, he is entitled to receive an attendance fee
of $1,000 for each committee meeting attended in person and $500 for each
committee meeting attended telephonically.
Under the terms of the 1996 Equity Participation Plan of the Company, each
director of the Company who was not then an employee of the Company was
automatically granted an initial option to purchase 4,000 shares of the Common
Stock on April 24, 1996. Each non-employee director who is first appointed or
elected to the Board after April 24, 1996 is automatically granted an initial
option to purchase 4,000 shares of Common Stock on the date of such appointment
or election to the Board of Directors. In addition, each non-employee director
of the Company is granted automatically options to purchase an additional 4,000
shares on the date of each Annual Meeting of stockholders following the initial
grant during which such person continues as a non-employee director of the
Company. All options are granted with an exercise price equal to the fair
market value of the Common Stock on the date of grant, and vest 25% per year
beginning on the first anniversary of the date of the grant. On May 19, 1997,
Messrs. Simmons, Dickson Leach, Reid, Mattson and Baier were each granted
options to purchase 4,000 shares of Common Stock at an exercise price of $15.125
per share and on September 24, 1997 Mr. Swanson was granted options to purchase
4,000 shares at an exercise price of $28.75 per share. In addition, upon his
appointment to the Board of Directors in February 1998, Mr. Smisek was granted
4,000 options to purchase Common Stock on February 19, 1998 at an exercise price
of $21.00 per share.
In connection with the Drexel Merger, each of the agreements evidencing the
outstanding options under the Company's Stock Option Plan for Non-Employee
Directors of the Company and held by the then current non-employee directors of
the Company were amended to accelerate the vesting of the 112,000 in the
aggregate unvested options and extend the exercise period for all of the
outstanding options held by such directors, so that such options are exercisable
in accordance with the provisions of each option agreement until April 24, 2001.
Vote and Recommendation
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. 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 six 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL SIX NOMINEES.
Proposal 2
AMENDMENT OF THE COMPANY'S EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
-----------------------------------------------------------------
Proposed Amendment
The Company's Employee Qualified Stock Purchase Plan, as amended (the
"Plan") was originally adopted by the Board of Directors on March 23, 1993 and
was approved by the stockholders on May 11, 1993. The Plan
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<PAGE>
was subsequently amended on March 10, 1994, September 25, 1996 and April 24,
1997. The Plan provides that 100,000 shares of the Common Stock are authorized
for issuance and sale. On February 19, 1998, the Board of Directors approved,
subject to stockholder approval, an amendment to the Plan to increase the number
of authorized shares of Common Stock available for issuance thereunder from
100,000 to 500,000. The text of the amendment to the Plan is attached as Exhibit
A.
In general, the Plan authorizes the Company to sell options to purchase
shares of its Common Stock (through payroll deductions) to employees of the
Company and its subsidiaries at a purchase price of 85% of the fair market value
of such shares and without commissions and other charges. Over the past five
years the Company has encouraged participation in the Plan in order to improve
the Company's financial performance by aligning more employees with the
interests of the stockholders. As a result, the number of shares originally
reserved under the Plan appears insufficient over the life of the Plan. The
amendment being presented for voting by the stockholders increases the number of
shares available for issuance under the Plan.
The Board of Directors believes that it is in the best interests of the
Company and its stockholders to approve the fourth amendment to Plan because the
ability to sell additional shares of the Common Stock to employees at a discount
from the then current market price and without commissions and other charges
will assist the Company in attracting and retaining experienced and capable
persons who can make significant contributions to the further growth and success
of the Company. Moreover, the Board of Directors believes that offering the
employees of the Company and its subsidiaries the opportunity to become owners
of capital stock of the Company will help to further identify their interests
with those of the Company's stockholders generally.
Terms of the Plan
A maximum of 100,000 shares of the Common Stock were initially reserved for
issuance under the Plan. If approved by the stockholders, a total of 500,000
shares of Common Stock may be issued under the Plan As of April 1, 1998,
128,221 shares had been issued under the Plan. The Plan provides for
appropriate adjustment in the number and kind of shares for which options may be
granted and the number and kind of shares of stock which may be sold pursuant to
the Plan in the event of a stock split, stock dividend, reorganization or other
specified changes in the capitalization of the Company.
Eligible Persons
All employees of the Company or any subsidiary corporation (i) who do not,
immediately after an option is granted under the Plan, own stock possessing 5%
or more of the total combined voting power or value of all classes of stock of
the Company or any parent corporation or subsidiary of the Company, (ii) who
have been employed by the Company or any subsidiary of the Company for at least
six months, (iii) whose customary employment is for more than 20 hours per week
and (iii) whose customary employment is for more than five months in any
calendar year are eligible to receive options to purchase stock under the Plan.
Under certain circumstances, employees may be given credit for service with an
entity that has been acquired by the Company or a Subsidiary Corporation. No
participant may be granted an option under the Plan which permits him rights to
purchase stock under the Plan and under all other employee stock purchase plans
of the Company or any parent or subsidiary corporation of the Company to accrue
at a rate which exceeds $25,000 of the fair market value of such stock for any
calendar year. Directors of the Company or any subsidiary of the Company who do
not render services to the Company in the status of an employee within the
meaning of the Internal Revenue Code of 1986 (the "Code") are not eligible to
receive options under the Plan.
Option Price
The purchase price of each share of Common Stock covered by an option is
equal to 85% of the lesser of the fair market value of a share of the Common
Stock on the last day of the offering period in which the option was granted or
the fair market value of a share of the Common Stock on the first day of the
offering period (i.e., date of grant of the option). For purposes of the Plan,
the fair market value of a share of the Common Stock on any date is considered
to be (i) the closing price of a share of the Common Stock on the principal
exchange on which such stock is then trading, if any, on such date, or, if
shares were not traded on such date, then on the next preceding
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trading day during which a sale occurred; (ii) if the Common Stock is not traded
on an exchange but is quoted on the Nasdaq National Market or a successor
quotation system, (1) the last sales price (if the stock is then listed as
the National Market Issue under the Nasdaq National Market) or (2) the mean
between the closing representative bid and asked prices (in all other cases) for
a share of the Common Stock on such date, or, if shares were not traded on such
date, then on the next preceding trading day during which a sale occurred, as
reported by the Nasdaq National Market or such successor quotation system; (iii)
if the shares of the Common Stock are not publicly traded on an exchange and not
quoted on the Nasdaq National Market or a successor system, the mean between the
closing bid and asked prices for a share of the Common Stock on such date, or,
if shares were not traded on such date, then on the next preceding trading day
during which a sale occurred, as determined in good faith by the Compensation
Committee of the Board of Directors; or (iv) if the Common Stock is not publicly
traded, the fair market value of a share of the Common Stock established by the
Compensation Committee acting in good faith.
On March 31, 1998, the last day of the latest offering period, the market
value of a share of Common Stock was $19.00 per share.
Grant of Option
The Company offers nontransferable options under the Plan to all eligible
employees in successive six-month offering periods which will continue until the
earlier of (i) the date when the number of shares of the Common Stock available
under the Plan have been sold or (ii) the date when the Plan is terminated.
Options will be granted to each participant in the Plan on April 1 and October 1
of each year and such other date or dates as the Compensation Committee may from
time to time determine. The options are granted on the first day of the six-
month offering period, and are generally automatically exercised on the last day
of the six-month offering period.
Exercise of Option
Each participant in the Plan automatically and without any act on such
participant's part is deemed to have exercised such participant's option on the
last day of the offering period to the extent that the balance in the
participant's account under the Plan is sufficient to purchase at the applicable
option price whole shares of the Common Stock subject to the option. No
fractional shares of Common Stock are to be issued under the Plan. Any excess
balance in a participant's account after the purchase of whole shares shall be
carried forward and credited to such Participant's account for the next offering
period. Each option expires on the last day of each offering period immediately
after the automatic exercise of the option as described above.
Election to Participate
Each eligible employee participates in the Plan by means of a payroll
deduction. The eligible employee is required to deliver to the Company no later
than five working days before the date of commencement of the offering period a
completed and executed written payroll deduction authorization. The authorized
payroll deduction may be in amounts not less than $10 on each payday and shall
not exceed 10% of such participant's base pay. The cash compensation payable to
each participant during any offering period is reduced on each payday through
the payroll deduction in an amount equal to the stated percentage of base pay
specified in the authorization and such amount is credited to the participant's
account under the Plan.
Withdrawal from the Plan
Any participant may withdraw from participation under the Plan at any time
except that no participant may withdraw during the last ten days of any offering
period. Upon withdrawal, the balance in the participant's account under the
Plan will be refunded without interest. A participant who withdraws from the
Plan and who is still an eligible employee is eligible to participate again the
Plan as of the beginning of any subsequent offering period by delivering to the
Company an authorization setting forth such participant's election to
participate in the Plan.
Termination of Participation
Except in the case of death of the participant, the participant's
participation in the Plan automatically terminates on the date of termination of
the participant's employment with the Company. Upon such termination,
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<PAGE>
the balance in the participant's account will be refunded without interest. In
the case of death, the participant's estate is required to notify the Company of
such participant's estate's desire to have the balance of the participant's
account under the Plan refunded. Upon receipt of such notice, the participant's
payroll deduction authorization, interest in the Plan and option under the Plan
terminate and the Company is required to refund the balance in the participant's
account, without interest. If the Company does not receive such notice prior tot
he next date of the exercise under the Plan, the participant's option is deemed
to have been exercised on such date of exercise.
Non-Transferability of Options
Options are not transferable by the participants other than by will or the
laws of descent and distribution and are exercisable during a participant's
lifetime only by the participant.
Administration
The Plan is administered by the Compensation Committee. The Compensation
Committee has the full power to interpret the Plan and to establish and amend
rules for its administration. Action by the Compensation Committee is taken by
a majority vote or written consent of a majority of its members.
Amendment and Termination of the Plan
The Board of Directors may amend, suspend or terminate the Plan at any time
and from time to time; provided, however, that the approval by a vote of the
holders of more than 50% of the outstanding shares of the Company's capital
stock entitled to vote is required to amend the Plan (i) to change the number of
shares of the Common Stock reserved for sale pursuant to options under the Plan,
(ii) to decrease the purchase price of shares of Common Stock upon exercise of
the options below that provided in the Plan, (iii) to alter the requirements for
eligibility to participate in the Plan or (iv) in any manner that would cause
the Plan to no longer be an "employee stock purchase plan" within the meaning of
Section 423(b) of the Code. No option may be granted during any period of
suspension of the Plan or after termination of the Plan.
Merger, Consolidated or Reorganization of the Company
In the event of the merger or consolidation of the Company into another
corporation, the acquisition by another corporation of all or substantially all
of the Company's assets or 50% or more of the Company's then outstanding voting
stock, the liquidation or dissolution of the Company or any other reorganization
of the Company, the date of exercise with respect to outstanding options shall
be the business day immediately preceding the effective date of such merger,
consolidation, acquisition, liquidation, dissolution, or reorganization unless
the Compensation Committee shall, in its sole discretion, provide for the
assumption or substitution of such options in a manner complying with Section
424(a) of the Code.
Rights as Stockholder
No participant will have any rights as a stockholder as to the shares of
Common Stock covered by an option until such shares have been issued and
delivered to the participant or his or her account following the exercise of
such employee's option. No adjustment will be made for dividends or
distributions or other rights for which the record date is prior to the date of
such issuance.
Certain Restrictions on Resale
Employees, officers and directors who are "affiliates" of the Company
within the meaning of the rules and regulations under the Securities Act may not
offer or sell the shares of Common Stock they acquire upon exercise of options
under the Plan unless such offers and sales are made pursuant to an effective
registration statement under the Securities Act or pursuant to an appropriate
exemption from the registration requirements of the Securities Act or, if
available to the selling stockholder, within the limitations and subject to
conditions set forth in Rule 144 promulgated under the Securities Act. Upon
such offers and sales, any of such persons may be deemed to be an "underwriter"
as that term is defined in Section 2(11) of the Securities Act. Persons through
whom any of such persons may sell may also be deemed to be underwriters.
20
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Federal Income Tax Consequences
The Company intends that the Plan qualify as an "employee stock plan"
within the meaning of Section 423 of the Code and that the tax consequences set
forth below will be realized upon exercise of options and disposition of shares
under the Plan.
Under an Employee Stock Purchase Plan, no taxable income results to a
participant at the time of the grant of the option or upon its exercise. A
participant will only have taxable income in the year of disposition of a share
acquired under the Plan, or in certain cases in the year of death if the share
is owned at death. Generally, disposition for this purpose includes any
transfer of legal title, including a transfer by sale, exchange or gift, but
does not include a transfer into joint ownership with right of survivorship
where the participant remains one of the joint owners, a pledge or a transfer by
bequest or inheritance. A participant will incur applicable income and
employment taxes upon base pay and commissions deducted from the participant's
payroll for purchase of shares under the Plan.
If the shares purchased are not disposed of during the prescribed holding
period (two years from the date of grant and one year from the date of purchase)
the lesser of (1) the excess of the fair market value of the shares at the time
of disposition over the option price, or (2) the excess of the fair market value
of the shares at the time the option was granted over the option price
(determined assuming the option were exercised on the date of grant) will be
reportable as ordinary income in the year of disposition. This amount of
ordinary income is to be added to the purchase price for the purpose of
determining any additional long-term capital gain on disposition. No capital
loss will be realized unless the stock is sold for less than the purchase price.
There will be no corresponding tax deduction to the Company.
If the shares are disposed of before the end of the prescribed holding
period (a "disqualifying disposition"), the employee must report as ordinary
income in the year of disposition, and the Company may deduct the excess of the
fair market value of the shares on the date of exercise over the option price.
This amount of ordinary income is to be added to the option price for the
purpose of determining any additional capital gain or loss. The gain or loss
will be short-term or long-term, depending on whether the twelve (12) month
holding period for long-term capital gain or loss is satisfied. Upon a
disqualifying disposition, it is possible for an employee to have both ordinary
income and capital loss.
Shares Issued Under The Plan
Since the inception of the Plan, Mr. Lauletta has acquired a total of 1,093
shares of Common Stock at a weighted average exercise price of $11.58, Mr.
Winkler has acquired a total of 998 shares of Common Stock at a weighted average
exercise price of $11.58, Mr. Maroney has acquired a total of 399 shares of
Common Stock at a weighted average exercise price of $6.31, Mr. Nibling has
acquired a total of 1,539 shares of Common Stock at a weighted average exercise
price of $7.02, and Mr. Williams has acquired a total of 207 shares of Common
Stock at a weighted average exercise price of $11.53, under the Plan. All
executive officers as a group have acquired a total of 4,337 shares of Common
Stock at a weighted average exercise price of $9.47 under the Plan since its
inception. Since participation in the Plan is at the election of the individual
and dependent upon the Company's then current stock price, it is not possible to
determine the number of shares of Common Stock that will be acquired by these
persons in the future under the Plan.
Vote and Recommendation
The affirmative vote of holders of a majority of the shares of the
Company's Common Stock present or represented at the Meeting and entitled to
vote at the Meeting is required to approve this Proposal 2. Abstentions and
non-votes will have the effect of votes against this proposal. Unless
instructed to the contrary, the shares represented by the proxies will be voted
FOR the amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE PLAN
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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, 1997, 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,
1998, 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 affirmative vote of a majority of the outstanding shares of the
Company's Common Stock present or represented at the Meeting and entitled to
vote is required to ratify the selection of Ernst & Young as the Company's
independent auditors. Unless instructed to the contrary, the shares represented
by the proxies will be voted FOR ratification of the selection of Ernst & Young
as the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION
OF ERNST & YOUNG AS THE COMPANY'S INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
All proposals of stockholders intended to be presented at the Company's
1999 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 January 7, 1999, if they are to be considered
for possible inclusion in the Proxy Statement and form of proxy used in
connection with such meeting. The 1999 Annual Meeting is expected to be held on
or about May 7, 1999.
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,
[SIG]
James F. Maroney, III
Vice President, Secretary and General Counsel
Dated: April 13, 1998
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<PAGE>
EXHIBIT A
FOURTH AMENDMENT TO THE
TUBOSCOPE INC.
EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
--------------------------------------
This Fourth Amendment to the Tuboscope Inc. Employee Qualified Stock
Purchase Plan (the "Plan"), is adopted by Tuboscope Inc., a Delaware corporation
(the "Company") effective as of February 19, 1998.
RECITALS
--------
A. The Plan was adopted by the Board of Directors of the Company on
March 23, 1993 and was approved by the stockholders of the Company on
May 11, 1993.
B. The Board of Directors of the Company previously amended the Plan
on March 10, 1994, September 25, 1996 and April 24, 1997.
C. On February 19, 1998, the Board of Directors of the Company
approved the following amendment to the Plan, subject to stockholder
approval.
AMENDMENT
---------
1. Section 1(e) of the Plan is hereby amended to read in its entirety as
follows:
Section 1(e) Plan
-----------------
"Plan" means the Tuboscope Inc. Employee Qualified Stock Purchase
Plan, as amended from time to time.
2. Section 2 of the Plan is hereby amended to read in its entirety as
follows:
Section 2 - Stock Subject to Plan
---------------------------------
Subject to the provisions of Section 9 hereof (relating to adjustments
upon changes in Stock) and Section 11 hereof (relating to amendments
of the Plan), the Stock which may be sold pursuant to Options granted
under the Plan shall not exceed in the aggregate 500,000 shares, and
may be unissued shares or treasury shares or shares bought on the
market for purposes of the Plan.
3. Section 1(i) of the Plan is hereby amended by adding the following
sentence at the end thereto:
"Notwithstanding any other provision of this Plan, any employee who
becomes an employee of the Company or any Subsidiary Corporation
following an acquisition by the Company or any Subsidiary Corporation
of such entity where the seniority is retained pursuant to the terms
of that acquisition shall have all prior years of service with such
entity credited and treated as years of service with the Company
and/or its Subsidiary Corporation which employed such employee for
purposes of eligibility for the Plan.
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The undersigned, James F. Maroney, III, Vice President, Secretary and
General Counsel of the Company, hereby certifies that the Board of Directors of
the Company approved the foregoing Fourth Amendment to the Plan effective as of
February 19, 1998, and the stockholders of the Company approved the Fourth
Amendment to the Plan effective as of May 8, 1998.
TUBOSCOPE INC.,
a Delaware corporation
By:_______________________________
James F. Maroney III,
Vice President, Secretary and
General Counsel
24
<PAGE>
TUBOSCOPE INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 8, 1998
The undersigned hereby appoints Joseph C. Winkler and James F. Maroney III,
and each of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes either of them to act and to vote at the annual meeting of
stockholders of Tuboscope Inc. (the "Company") to be held on May 8, 1998, and at
any adjournments thereof, as indicated upon all matters referred to on this
proxy card and described in the Proxy Statement for the Annual Meeting, and, in
their discretion, upon any other matters which may properly come before the
meeting.
Shares represented by all properly executed proxies will be voted in
accordance with instructions appearing on this proxy card and in the discretion
of the proxy holders as to any other matter that may properly come before the
meeting. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED FOR
PROPOSALS 1, 2 and 3.
v FOLD AND DETACH HERE v
YOUR VOTE AS
INDICATED IN [X]
THIS EXAMPLE
Elect members of the Board of Directors of Tuboscope.
<TABLE>
<S> <C> <C>
[_] FOR ALL nominees listed to the right [_] WITHHOLD AUTHORITY to vote for [_] Jerome R. Baier, John F. Lauletta,
(except as marked to the contrary) all nominees listed to the right Eric L. Mattson, L.E. Simmons, Jeffery A.
Smisek, Douglas E. Swanson,
</TABLE>
(Instruction: To WITHHOLD AUTHORITY to vote for any nominee, draw a line through
(or otherwise strike out) the nominee's name in the list above.
2. Approval of an amendment to the Company's Qualified Stock Purchase Plan as
amended to increase the number of shares of Company Common Stock available for
issuance thereunder.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To Ratify the selection of Ernst & Young LLP as the Company's independent
auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
Signature _________________________ Signature __________________ Date __________
Please sign as name(s) appears on this proxy card, and date this proxy card. If
a joint account, each joint owner must sign. If signing for a corporation or
partnership as agent, attorney or fiduciary, indicate capacity in which you are
signing.
v FOLD AND DETACH HERE v
