<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 sec. 240.14a-11(c) or sec. 240.14a-12
MARINE DRILLING COMPANIES, 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)(l) 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> 2
[MARINE DRILLING LOGO]
MARINE DRILLING COMPANIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 1997
To the Stockholders:
Notice is hereby given that the annual meeting of stockholders of
Marine Drilling Companies, Inc. ("the Company") will be held at the Shoney's
Inn & Suites, 14444 Southwest Freeway, in Sugar Land, Texas on Friday, May 9,
1997 at 9:00 a.m. for the following purposes:
1. To elect seven (7) directors.
2. To consider and vote upon a proposal to approve and ratify the
Marine Drilling 1992 Long-Term Incentive Plan as amended and
restated.
3. To transact such other business as may properly be brought before
the meeting or any adjournment(s) thereof.
Stockholders of record of the Company's Common Stock at the close of
business on April 2, 1997 will be entitled to notice of and to vote at the
meeting or any adjournment(s) thereof. A list of such stockholders will be
available at the time and place of the meeting and at the Company's offices,
One Sugar Creek Center Blvd., Suite 600, Sugar Land, Texas 77478-3556, during
the ten days preceding the meeting.
By Order of the Board of Directors,
Joan R. Smith
Secretary
Sugar Land, Texas
April 9, 1997
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING,
WHETHER OR NOT YOU ARE ABLE TO ATTEND PERSONALLY. ACCORDINGLY, YOU ARE
REQUESTED TO SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED.
<PAGE> 3
PROXY STATEMENT
---------------
SOLICITATION AND REVOCABILITY OF PROXIES
This proxy statement is being furnished to the stockholders of Marine
Drilling Companies, Inc. (the "Company") in connection with the solicitation of
proxies by the Company's Board of Directors for use at the Annual Meeting of
Stockholders to be held at the Shoney's Inn & Suites, 14444 Southwest Freeway,
in Sugar Land, Texas on Friday, May 9, 1997 at 9:00 a.m. CDT and any
adjournment thereof. The approximate date on which this proxy statement and the
form of proxy are first being sent or given to stockholders of the Company is
April 14, 1997.
At the Annual Meeting, the holders of shares of common stock, par value
$.01 per share, of the Company (the "Common Stock") will be asked (i) to
consider and vote upon the election of seven persons to serve on the Board of
Directors of the Company, (ii) to consider and approve an amendment and
restatement (the "Restatement") of the Marine Drilling 1992 Long-Term Incentive
Plan and (iii) to consider and take action upon such other matters as may
properly come before the Annual Meeting.
All shares of Common Stock represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting, and not
revoked, will be voted at the Annual Meeting in accordance with the
instructions indicated on such proxies. If no instructions are indicated with
respect to any shares for which properly executed proxies have been received
and which are eligible to vote, such proxies will be voted FOR the Board of
Directors' nominees for directors and FOR the Restatement. If any other matters
are properly presented at the Annual Meeting for action, the persons named in
the proxies and acting thereunder will have discretion to vote on such matters
in accordance with their best judgment as to the best interests of the Company.
The Board of Directors of the Company does not know of any other matters to be
brought before the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by any
of the following actions: (i) filing with the Secretary of the Company, at or
before the Annual Meeting, but in any event prior to the vote on the matter as
to which revocation is sought, a written notice of revocation bearing a later
date than the proxy; (ii) duly executing and submitting a subsequent proxy
relating to the Annual Meeting; or (iii) voting in person at the Annual Meeting
(although attendance at the Annual Meeting will not, in and of itself,
constitute a revocation of a proxy). Any written notice revoking a proxy should
be sent to the Secretary of the Company at the Company's principal executive
offices, One Sugar Creek Center Blvd., Suite 600, Sugar Land, Texas 77478-3556.
The close of business on April 2, 1997 was the date fixed by the Board
of Directors for the determination of stockholders of record entitled to notice
of and to vote at the Annual Meeting and any adjournment thereof. On April 2,
1997, the Company had 51,398,288 outstanding shares of Common Stock,
constituting the only class of stock outstanding. The holders of a majority of
the outstanding shares of Common Stock as of April 2, 1997, present in person
or represented by proxy and eligible to vote, will constitute a quorum at the
Annual Meeting. A list of such stockholders will be available at the time and
place of the meeting and at the Company's offices, One Sugar Creek Center
Blvd., Suite 600, Sugar Land, Texas 77478-3556, during the ten days preceding
the meeting.
Each share of Common Stock is entitled to one vote at the Annual
Meeting with respect to each matter to be voted upon. The persons named in the
accompanying proxy will vote for the nominees named herein and for the
Restatement unless specifically instructed to the contrary.
1
<PAGE> 4
The Company's Annual Report for the year ended December 31, 1996, which
includes, among other things, the Company's audited consolidated balance sheets
at December 31, 1996 and 1995, respectively, and audited consolidated
statements of income and changes in financial position for each of the years
ended December 31, 1996, 1995 and 1994, respectively, will be mailed with this
Proxy Statement. Additional copies are available from the Company upon request.
The cost of this solicitation will be borne by the Company. It is
expected that the solicitation of proxies will be primarily by mail, telephone
and telegraph. The Company has arranged for American Stock Transfer & Trust
Company, 40 Wall Street, New York, New York 10005 to solicit proxies in such
manner at no cost other than out-of-pocket expenses. Proxies may also be
solicited personally by directors, officers, and other regular employees of the
Company in the ordinary course of business and at nominal cost. Proxy materials
will be provided for distribution through brokers, custodians, and other
nominees or fiduciaries to beneficial holders of the Common Stock. The Company
expects to reimburse such parties for their reasonable out-of-pocket expenses
incurred in connection therewith.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the shares of
Common Stock (the only class of securities of the Company) owned of record and
beneficially as of April 2, 1997, by (i) all persons who own of record or
are known by the Company to own beneficially more than 5% of the outstanding
shares of such class of stock, (ii) each current director of the Company, (iii)
each executive officer of the Company named in the Summary Compensation Table
included elsewhere herein and (iv) all directors and executive officers of the
Company as a group:
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------
NUMBER PERCENTAGE
OF OF COMMON
STOCKHOLDER SHARES (1) STOCK OWNED
- ----------- ----------- -----------
<S> <C> <C>
Nicholas-Applegate Capital Management (2)...................... 3,544,428 6.9%
600 West Broadway, 29th Floor
San Diego, CA 92101
AIM Management Group Inc. (3).................................. 3,341,600 6.5%
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
FMR Corp. (4).................................................. 2,814,900 5.5%
82 Devonshire Street
Boston, MA 02109
Hugh L. Adkins (5)............................................. 41,802 *
Robert L. Barbanell (6)........................................ 30,190 *
David A. B. Brown (7).......................................... 12,878 *
Howard I. Bull (8)............................................. 21,117 *
William H. Flores (9).......................................... 276,024 *
Gerald T. Greak (10)........................................... 128,416 *
Nathaniel A. Gregory (11)...................................... 21,497 *
Christopher M. Linneman (12)................................... 16,497 *
Jan Rask (13).................................................. 25,146 *
Danny R. Richardson (14)....................................... -- *
All executive officers and directors
as a group (10 persons) (15).................................. 573,567 1.1%
</TABLE>
+ Less than one percent
(see notes on following page)
3
<PAGE> 6
Footnotes:
(1) Includes shares of Common Stock held by the Marine Drilling Companies
401(k) Profit Sharing Plan for the accounts of the executive officers
as follows: Mr. Rask -- 146 shares; Mr. Flores -- 6,024 shares; Mr.
Greak -- 4,785 shares and Mr. Adkins -- 5,028 shares.
(2) Based on Schedule 13G filed by Nicholas-Applegate Capital Management on
February 3, 1997. Such Schedule13G indicates that Nicholas-Applegate
Capital Management is a California Limited Partnership and is the
beneficial owner of 3,544,428 shares with sole power to vote 2,890,154
of these shares, shared power to vote 6,200 of these shares and sole
dispositive power for all of these shares.
(3) Based on Schedule 13G filed by AIM Management Group Inc. on February
12, 1997. Such Schedule 13G indicates that AIM Management Group Inc.
is the parent holding company for AIM Advisors, Inc. and AIM Capital
Management Inc. and is the beneficial owner of 3,341,600 shares with
shared power to vote or dispose of all of these shares
(4) Based on a Schedule 13G filed by FMR Corp. on February 14, 1997. Such
Schedule 13G indicates that Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp., is the beneficial owner of
1,890,900 shares as a result of acting as advisor to several
investment companies and that Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR Corp., is the beneficial owner of
924,000 shares as a result of its serving as investment manager of
institutional accounts. Edward C. Johnson 3rd, Chairman of FMR Corp.,
and Abigail P. Johnson each own 6.18% of the outstanding voting common
stock of FMR Corp.
(5) Mr. Adkins is Senior Vice President and Operations Manager of the
Company. Mr. Adkins holds options to purchase 112,500 shares of Common
Stock under the Company's 1992 Long-Term Incentive Plan, and as of
April 2, 1997, 36,250 shares were exercisable within sixty (60) days.
(6) Robert L. Barbanell has been a Director of the Company since June 23,
1995. Mr. Barbanell holds options to purchase 10,000 shares of Common
Stock under the 1995 Non-Employee Directors' Plan, and as of April 2,
1997, all shares were exercisable within sixty (60) days.
(7) David A. B. Brown has been a Director of the Company since June 23,
1995. Mr. Brown holds options to purchase 12,500 shares of Common
Stock under the 1995 Non-Employee Directors' Plan, and as of April 2,
1997, all shares were exercisable within sixty (60) days.
(8) Howard I. Bull has been a Director of the Company since June 23, 1995.
Mr. Bull holds options to purchase 12,500 shares of Common Stock under
the 1995 Non-Employee Directors' Plan, and as of April 2, 1997, all
shares were exercisable within sixty (60) days.
(9) Mr. Flores is a Director, Executive Vice President and Chief Financial
Officer of the Company. Mr. Flores holds options to purchase 320,000
shares of Common Stock under the Company's 1992 Long-Term Incentive
Plan, and as of April 2, 1997, 270,000 shares were exercisable within
sixty (60) days.
(10) Mr. Greak is Senior Vice President--Engineering of the Company. Mr.
Greak holds options to purchase 151,800 shares of Common Stock under
the Company's 1992 Long-Term Incentive Plan, and as of April 2, 1997,
120,550 shares were exercisable within sixty (60) days.
(11) Mr. Gregory has been a Director of the Company since June 23, 1995. All
of the shares indicated as owned by Mr. Gregory are owned directly by
The Gregory Family Foundation, a tax-exempt charitable foundation, of
which Mr. Gregory is President. Mr. Gregory holds options to purchase
12,500 shares of Common Stock under the 1995 Non-Employee Directors'
Plan, and as of April 2, 1997, all shares were exercisable within
sixty (60) days.
(notes continued on following page)
4
<PAGE> 7
(12) Mr. Linneman, a Managing Director of Chase Securities Inc., is a
Director of the Company. Mr. Linneman holds options to purchase 12,500
shares of Common Stock under the 1995 Non-Employee Directors' Plan, and
as of April 2, 1997, all shares were exercisable within sixty (60)
days.
(13) Mr. Rask is a Director, President and Chief Executive Officer of the
Company. Mr. Rask holds options to purchase 500,000 shares of Common
Stock under the Company's 1992 Long-Term Incentive Plan, and as of
April 2, 1997, no shares were exercisable within sixty (60) days.
(14) Included are 486,800 shares subject to options held by the executive
officers and directors which are exercisable within sixty (60) days of
the date of April 2, 1997.
5
<PAGE> 8
ITEM 1 - ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of seven directors.
Seven directors will be elected at the 1997 Annual Meeting of Stockholders to
serve until the next Annual Meeting of Stockholders or until the election and
qualification of their respective successors.
It is intended that the proxies received from holders of the Company's
Common Stock, in the absence of contrary instructions, will be voted at the
1997 Annual Meeting for the election of the nominees for director whose names
are set forth below. Although the Company does not contemplate that any of the
nominees will be unable to serve, decline to serve, or otherwise be unavailable
as a nominee at the time of the Annual Meeting, in such event the proxies will
be voted in accordance with the authority granted in the proxies for such other
candidate or candidates as may be nominated by the Board of Directors.
Each of the nominees named below has consented to being named in this proxy
statement and to serve if elected.
The affirmative vote of the holders of a majority of the shares of
Common Stock represented in person or by proxy and entitled to vote at the
Annual Meeting is required for the election of directors. Under Texas law, an
abstention would have the same legal effect as a vote against a director, but a
broker non-vote would not be counted for purposes of determining whether a
majority had been achieved. Shareholders may not cumulate their votes in the
election of directors.
NOMINEES FOR DIRECTOR
The following table sets forth certain information as of April 2,
1997 for each nominee for director, including his name, age, position with the
Company, and the year he became a director of the Company.
<TABLE>
<CAPTION>
Director
Name Age Position with the Company Since
---- --- ------------------------- --------
<S> <C> <C> <C>
Robert L. Barbanell................ 66 Director 1995
David A. B. Brown.................. 53 Director 1995
Howard I. Bull..................... 56 Director 1995
William H. Flores.................. 43 Executive Vice President, Chief
Financial Officer, Assistant Secretary
and Director 1990
Nathaniel A. Gregory............... 48 Director 1995
Christopher M. Linneman............ 37 Director 1994
Jan Rask........................... 41 President, Chief Executive Officer
and Director 1996
</TABLE>
Robert L. Barbanell has been a Director of the Company since June 1995
and served as its interim President from May 9, 1996 to July 18, 1996. Mr.
Barbanell has served as President of Robert L. Barbanell Associates, Inc., a
financial consulting firm since July 1994. Mr. Barbanell was employed by Bankers
Trust New York Corporation from June 1986 to June 1994 as Managing Director and
from December 1981 to June 1986 as Senior Vice President. He is also a Director
of Cantel Industries, Inc., Kaye Group, Inc. and Sentry Technology Corporation.
6
<PAGE> 9
David A. B. Brown has been a Director of the Company since June 1995.
Mr. Brown has served as President of The Windsor Group, Inc., a strategy
consulting firm, since 1984. Prior thereto, Mr. Brown was a partner of the
Braxton Group, a strategy consulting firm. He also served as Chairman of the
Board of the Comstock Group from 1988 to 1990. Mr. Brown is a Director of BTU
International Inc. and EMCOR Group, Inc.
Howard I. Bull has been a Director of the Company since June 1995. Mr.
Bull has served as President, Director and Chief Executive Officer of Dal-Tile
International Inc., a manufacturer and distributor of ceramic tile, since
February 1994. Prior thereto, Mr. Bull served as President of the Air
Conditioning Business Group of York International Corporation ("York") from May
1992 to February 1993 and as the President of the York Applied Systems Division
of York from January 1990 to May 1992. From February 1979 to November 1990, Mr.
Bull was employed by Baker Hughes, Inc. in several executive positions. Mr.
Bull is a Director of National Oilwell.
William H. Flores has been Executive Vice President, Chief Financial
Officer, Assistant Secretary and Director since June 1996 and served as Senior
Vice President, Chief Financial Officer, Assistant Secretary and Director since
March 1990. Prior thereto, Mr. Flores served as Vice President--Finance for
Keyes Offshore, Inc. since December 1986.
Nathaniel A. Gregory has been a Director of the Company since June
1995. Mr. Gregory has served as Chairman and Chief Executive Officer of
National Tank Company (Natco) since April 1993. Prior thereto, Mr. Gregory
served as a Managing Director of Smith Barney from September 1991 to April
1993.
Christopher M. Linneman has been a Director of the Company since 1994.
Mr. Linneman has served as Managing Director of Chase Securities Inc. since May
1994. Prior thereto, he served as a Vice President of E. M. Warburg, Pincus &
Co., Inc. from January 1992 to April 1994, and as an Associate thereof from
April 1990 to December 1991.
Jan Rask has been President, Chief Executive Officer and Director
since July 1996. Mr. Rask served as President and Chief Executive Officer of
Arethusa (Off-Shore) Limited from May 1993 until the acquisition of Arethusa by
Diamond Offshore Drilling, Inc. in April 1996. Mr. Rask joined Arethusa's
principal operating subsidiary in 1990 as its President and Chief Executive
Officer.
7
<PAGE> 10
BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors currently has seven members. During
1996, the Board of Directors held sixteen meetings. In addition, some decisions
made by the Board of Directors were formalized during 1996 through the
execution of one unanimous written consent. The Board has three standing
committees which are discussed below: (i) the Personnel and Compensation
Committee, (ii) the Audit Committee and (iii) the Executive Committee; however,
the Board does not have a nominating committee.
PERSONNEL AND COMPENSATION COMMITTEE -- The Personnel and Compensation
Committee of the Board of Directors of the Company (the "Compensation
Committee" currently consists of two members: David A. B. Brown (Chairman) and
Howard I. Bull. The purpose of the Compensation Committee is to ensure that the
Company has a broad plan of executive compensation that is competitive and
motivating to the degree that it will attract, hold and inspire performance of
managerial and other key personnel thereby enhancing the growth and
profitability of the Company. During 1996, the Compensation Committee held six
meetings.
AUDIT COMMITTEE -- The Company's Audit Committee currently consists of
three members: Robert L. Barbanell, Nathaniel A. Gregory and Christopher
Linneman (Chairman). The functions of the Audit Committee include reviewing and
examining monthly detailed reports submitted by the Chief Financial Officer of
the Company, evaluating internal controls and recommending the engagement and
continuation of independent auditors. During 1996, the Audit Committee held one
meeting.
EXECUTIVE COMMITTEE -- The Company's Executive committee currently
consists of three members: Robert L. Barbanell, David A. B. Brown and Jan Rask.
The Executive Committee was established to accelerate the process of reviewing
projects to be proposed to the full Board and to facilitate the consummation of
projects which have received prior Board approval. During 1996, the Executive
Committee held one meeting.
DIRECTOR COMPENSATION AND EXPENSES
Effective June 23, 1995, the Company's non-employee directors are paid
a $12,000 annual cash retainer plus a cash payment of $500 per board meeting
attended (whether by teleconference or otherwise) and a payment of $500 per
committee meeting attended (whether by teleconference or otherwise).
Non-employee directors who participate in a committee meeting or teleconference
which is held on the same date as a board meeting receive $250 per committee
meeting attended. Quarterly retainers to non-employee directors are also paid
as follows: (i) Chairman of the Board, $10,000 per quarter; (ii) members of the
Executive Committee (excluding the Chairman of the Board), $5,000 per quarter
and (iii) Chairman of both the Audit Committee and Personnel and Compensation
Committee, $500 per quarter for serving in such capacity. In addition, pursuant
to the Company's 1995 Non-Employee Directors' Plan (the "Directors' Plan"),
each non-employee director is entitled to an initial option to purchase 10,000
shares of the Company's Common Stock upon a non-employee director's initial
election to the Board of Directors (or effectiveness of the Directors' Plan),
and an option to purchase 2,500 shares of the Company's Common Stock upon each
successive election to the board of directors. In addition, the Directors' Plan
provides semi-annual awards to each non-employee director of a number of shares
of the Company's Common Stock having an initial market value of $6,000 per
grant.
8
<PAGE> 11
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth information with respect to the
executive officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------
ANNUAL COMPEMSATION AWARDS
----------------------------------- ----------
OTHER SECURITIES
ANNUAL UNDERLYING RESTRICTED ALL OTHER
NAME AND COMPEN- STOCK STOCK COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION OPTIONS AWARDS(1) SATION(2)
- -------------------- ---- ---------- ------------ ---------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. Barbanell(3) 1996 $ 18,976 $ -- $ -- -- $ 128,330 $ 1,575
Director, Chairman
of the Board &
President
William O. Keyes(4) 1996 200,016 -- 125,000 (5) -- -- 11,097
Director, Chairman 1995 200,016 -- -- 100,000 -- 22,851
of the Board, 1994 180,000 65,000 -- -- -- 18,840
President & CEO
Jan Rask(6) 1996 136,538 98,269 -- 500,000 -- 2,921
Director, President,
& CEO
William H. Flores 1996 183,337 94,675 -- -- -- 14,837
Director, EVP 1995 149,014 -- -- 100,000 -- 8,300
CFO & Asst. Secr. 1994 140,016 44,500 -- -- -- 7,756
Gerald T. Greak 1996 133,200 39,960 -- -- -- 11,800
SVP--Engineering 1995 126,432 -- -- 25,000 -- 10,033
1994 126,432 15,000 -- -- -- 9,395
Hugh L. Adkins 1996 135,000 67,500 -- -- -- 11,357
SVP--Operations Mgr 1995 126,480 -- -- 75,000 -- 8,332
1994 115,032 17,250 -- -- -- 8,527
Danny R. Richardson(7) 1996 62,494 31,197 -- 125,000 -- 937
VP--Marketing
</TABLE>
9
<PAGE> 12
Footnotes:
(1) Dollar values of restricted Common Stock awards ("Restricted Shares")
shown in the table are based on the closing price of the Common Stock
on the day preceding the grant date ($9-5/8 on May 9, 1996) and
represent 13,333 shares granted to Mr. Barbanell in recognition of his
service as the Company's interim President. One-half of these
Restricted Shares vested on May 10, 1996 and the other half vested
January 1, 1997.
(2) "All Other Compensation" includes the value of group life insurance
benefits provided on behalf of each respective executive officer,
benefits related to the Marine Drilling Companies 401(k) Profit Sharing
Plan including the value of the Company's matching contributions up to
5% of qualified compensation and accrued benefits related to the Marine
Drilling Companies, Inc. Executive Deferred Compensation Plan effective
December 31, 1994 including the value of the Company's matching
contributions up to 5% of qualified compensation. The amounts reported
are set forth in detail below:
<TABLE>
<CAPTION>
Deferred
Group Life 401(k) Compen-
Name Year Insurance Plan sation Plan
------------------- ---- ----------- --------- -----------
<S> <C> <C> <C> <C>
Robert L. Barbanell 1996 $ 1,575 $ -- $ --
William O. Keyes 1996 $ 6,930 $ 4,167 $ --
1995 11,340 7,500 4,011
1994 11,340 7,500 --
Jan Rask 1996 $ 421 $ 2,500 $ --
William H. Flores 1996 $ 969 $ 7,500 $ 6,368
1995 800 7,500 --
1994 755 7,001 --
Gerald T. Greak 1996 $ 3,142 $ 7,500 $ 1,158
1995 2,961 7,072 --
1994 1,895 7,500 --
Hugh L. Adkins 1996 $ 1,232 $ 7,500 $ 2,625
1995 1,145 7,187 --
1994 1,027 7,500 --
Danny R. Richardson 1996 $ 937 $ -- $ --
</TABLE>
(3) Mr. Barbanell served as interim President of the Company from
May 9, 1996 to July 18, 1996.
(4) Mr. Keyes served as CEO from January 1, 1996 to May 9, 1996.
(5) Amounts paid in 1996 pursuant to a post-employment consulting agreement.
(6) Mr. Rask became an officer of the Company on July 18, 1996.
(7) Mr. Richardson became an officer of the Company on July 15, 1996.
10
<PAGE> 13
OTHER MATTERS
EMPLOYMENT AGREEMENTS -- The Company has entered into Employment
Agreements with two executive officers, Jan Rask and William H. Flores. These
agreements generally provide that these persons will receive severance pay equal
to one year's base salary and benefits if their employment is terminated for any
reason other than a change in control as defined in the Company's 1992 Long-Term
Incentive Plan. In the event of a termination arising from a change in control,
each person will receive a termination payment equal to 200% of their then
current annual base salary. The agreements provide for (i) accelerated vesting
of all stock options in the event of a change in control and (ii) accelerated
vesting of all stock options in the event of termination of employment with
certain limited exceptions.
SEVERANCE AGREEMENTS -- The Company has entered into severance
agreements with six other officers and key personnel. These agreements generally
provide that the covered persons will receive severance pay equal to 100% to
200% of their then current base salary and specified employee benefits
(depending on the person) in the event of an involuntary termination as defined
in the agreements. The agreements also provide for the accelerated vesting of
stock options granted prior to December 31, 1995 in the event of an involuntary
termination and for the accelerated vesting of all stock options in the event of
a change in control.
DEFERRED COMPENSATION PLAN -- The Company adopted the Marine Drilling
Companies, Inc. Deferred Compensation Plan (the "Management Plan") effective
December 31, 1994. The Management Plan was amended and restated effective July
1, 1996. Eligibility for plan participation is determined by the plan's
administrative committee which consists of Mr. Adkins and Mr. Flores. At April
9, 1997, eleven of the Company's management employees were eligible to
participate in the plan, of which six were actively participating. Under the
Management Plan, the participating employees may elect (i) to defer up to 80%
of compensation after reaching the annual deferral limitations applicable to the
Company's 401(k) plan and (ii) to defer any excess Company matching
contributions refunded by the Company's 401(k) plan. The Company matches
participants' contributions to the Management Plan on a dollar-for-dollar basis
up to 5% of their eligible compensation. All participant deferrals and Company
matching contributions are deposited into a Rabbi trust established for the
Management Plan and administered by Merrill Lynch Trust Company of Texas who
also serves as trustee. As of December 31, 1996, the assets held by the
Management Plan totaled approximately $102,000. The assets held by the trust
on behalf of the Management Plan are subject to the claims of the Company's
creditors.
STOCK OPTIONS
The following table contains certain information with respect to stock
options granted to the named Executive Officers and Non-Employee Directors in
1996 under the Marine Drilling 1992 Long-Term Incentive Plan and the 1995
Non-Employee Directors' Plan:
STOCK OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT ASSUMED
TOTAL OPTIONS ANNUAL RATES OF STOCK PRICE
GRANTED TO EXERCISE OR APPRECIATION FOR OPTION TERM(2)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION -----------------------------------
NAME GRANTED(1) IN 1996 ($/SHARE) DATE 0% 5% 10%
---- ---------- ------------- --------- ---------- -- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Executive Officers --
William O. Keyes -- -- $ -- -- -- $ -- $ --
Jan Rask 500,000 61.5% 8.94 06/17/2006 -- 2,810,356 7,122,025
William H. Flores -- -- -- -- -- -- --
Hugh L. Adkins -- -- -- -- -- -- --
Gerald T. Greak -- -- -- -- -- -- --
Danny R. Richardson 125,000 15.4% 10.38 07/15/2006 -- 815,593 2,066,881
Non-Employee Directors --
Robert L. Barbanell -- N/A -- -- -- -- --
David A. B. Brown 2,500 N/A 9.63 05/09/2006 -- 15,132 38,349
Howard I. Bull 2,500 N/A 9.63 05/09/2006 -- 15,132 38,349
Nathaniel A. Gregory 2,500 N/A 9.63 05/09/2006 -- 15,132 38,349
Christopher M. Linneman 2,500 N/A 9.63 05/09/2006 -- 15,132 38,349
Gain for all shareholders
At Assumed Rates for
Appreciation(3) -- $634,699,854 $1,608,454,046
</TABLE>
11
<PAGE> 14
(1) Reflects options to purchase the indicated numbers of shares of the
Company's Common Stock. All options granted to the named executive
officers were granted under the Marine Drilling 1992 Long-Term
Incentive Plan at exercise prices equal to the closing market price of
the Common Stock on the date preceding the grant date and typically
vest over a three or four year period. All options granted to the named
Non-Employee Directors were granted under the Marine Drilling
Companies, Inc. Non-Employee Directors' Plan at exercise prices equal
to the closing market price of the Common Stock on the date preceding
the grant date and typically vest over a one year period. If a "change
in control" (as defined in the plans) occurs, all options then
outstanding shall become fully exercisable, and, unless otherwise
determined by the Compensation Committee, the value of outstanding
options (other than those granted within the prior six months to
persons subject to Section 16 of the Securities Exchange Act of 1934)
will be cashed out on the basis of the highest price paid (or offered)
during the preceding 60 day period.
(2) The dollar amounts under these columns are the result of calculations
at the 5% and 10% rates required by the SEC, and, therefore, are not
intended to forecast possible future appreciation, if any, of the
stock price. There can be no assurance that the amounts reflected in
this table will be achieved.
(3) Amounts were determined based on 51,262,519 shares of the Company's
Common Stock outstanding on December 31, 1996, using the Common Stock
closing price on December 31, 1996 ($19-11/16) as the base price.
The following table sets forth information with respect to each named
person concerning the exercise of options during the last fiscal year and the
number of shares covered by all exercisable and non-exercisable stock options
held by the named persons at the end of the fiscal year.
AGGREGATED 1996 OPTION EXERCISES
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
OPTIONS EXERCISED VALUE OF UNEXERCISED
------------------------ NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 12/31/96 12/31/96 (1)
ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Executive Officers --
William O. Keyes........... 300,000 $2,301,875 -- -- $ -- $ --
Jan Rask................... -- -- -- 500,000 -- 5,375,000
William H. Flores.......... 80,000 1,022,375 245,000 75,000 4,485,937 1,289,062
Gerald T. Greak............ 150,000 931,875 114,300 37,500 2,010,529 578,905
Hugh L. Adkins............. 188,020 980,800 37,500 75,000 691,406 1,223,436
Danny R. Richardson........ -- -- 25,000 100,000 232,812 931,250
Non-Employee Directors --
Robert L. Barbanell........ -- -- 10,000 -- 156,875 --
David A. B. Brown.......... -- -- 10,000 2,500 156,875 25,156
Howard I. Bull............. -- -- 10,000 2,500 156,875 25,156
Nathaniel A. Gregory....... -- -- 10,000 2,500 156,875 25,156
Christopher M. Linneman.... -- -- 10,000 2,500 156,875 25,156
</TABLE>
(1) This valuation represents the difference between $19-11/16, the closing
price of the Common Stock on the Nasdaq Stock Market on December 31, 1996,
and the respective exercise prices of the stock options.
12
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The directors and officers of the Company have no interlocking
relationships with the compensation committees (or their equivalent) of any
other entity.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires that the Company's directors and executive officers, and persons
who own more than ten percent of a registered class of the Company's equity
securities, file by specific dates with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors
and greater than ten percent stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. The
Company is required to report in this proxy statement any failure to file by
the relevant due date any of these reports during the preceding fiscal year.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than ten percent beneficial owners were timely satisfied.
13
<PAGE> 16
PERSONNEL AND COMPENSATION COMMITTEE REPORT
REGARDING EXECUTIVE COMPENSATION
COMPENSATION POLICY REGARDING EXECUTIVE OFFICERS
The Compensation Committee is responsible for the design of the
Company's compensation and incentive programs. The Compensation Committee is
composed of the undersigned individuals who are non-officer directors. The
Compensation Committee's goal is to develop and implement compensation and
incentive programs which cause the Company's officers and employees to focus on
increasing shareholder value as well as attracting, retaining and motivating
employees who are capable of furthering that goal.
The Compensation Committee has established a three-part program with
respect to employee compensation. The first component involves providing base
salaries which approximate the average for companies comprising the offshore
contract drilling industry. With respect to the establishment of compensation
for each executive officer, the Compensation Committee considers an
individual's past performance and skills, as well as the individual's ability
to enhance shareholder value. The second and third components are incorporated
into the design of the Marine Drilling 1992 Long-Term Incentive Plan (the
"Plan"). The second component provides for the payment of performance bonuses
which are based upon (i) the Company's financial performance as compared to a
peer group of publicly traded offshore drilling contractors, (ii) each
individual employee's performance in furtherance of the Company's financial
performance and the attainment of the Company's goals with respect to its
safety record, customer satisfaction and operational performance, and (iii)
each employee's achievement of individual objectives (as applicable). During
1996, the Company's executives received bonuses which reflected their
individual attainment of goals as described in (ii) and (iii) above, as well as
the Company's financial performance as described in (i). The third component
provides for the grant of long-term equity-based incentives through the
utilization of stock options, restricted stock and stock appreciation rights in
order to maintain a continuing emphasis on increasing shareholder value. In
1996, the Company awarded options for 625,000 shares of Common Stock to the
executives named herein.
At the Compensation Committee's recommendation, the Company modified
the base salary and bonus components of its compensation program for 1995 and
subsequent years. Base salaries were set at levels which approximate the
average for energy service companies of similar size based upon a formal
outside review conducted in late 1994 and updated in late 1996. In addition, in
late 1995, the Company modified its bonus program for 1995 and subsequent
years. Bonuses are now based upon the Company's financial performance as
compared to a peer group of publicly traded offshore drilling companies. For
this purpose, the financial performance of each company are determined by
calculating the amount of each company's earnings before interest,
depreciation, amortization and taxes ("EBITDA") and dividing the Company's
EBITDA by the fair market value of its operating assets. The respective
percentages of each company are then ranked and converted to a percentile
format. The Company must achieve a percentile ranking of 50% or more for
bonuses to be awarded. At the 50th percentile, bonuses equal to twelve percent
(12%) of base salary would be eligible to be awarded. The maximum bonus amount
eligible to be awarded under this program is equal to 50% of base salary and is
payable if the Company's financial performance is in the 90th percentile or
better. All amounts eligible to be awarded are adjusted to reflect each
employee's respective performance.
14
<PAGE> 17
The Omnibus Budget Reconciliation Act of 1993 (the "Act") imposes a
limit of $1 million on the amount that a publicly held corporation may deduct
in any year for the compensation paid or accrued with respect to each of its
five most highly compensated officers, subject to certain exceptions. While the
Compensation Committee cannot predict with certainty how the Company's
executive compensation might be affected in the future by the Act or
regulations issued thereunder, the Compensation Committee intends to try to
preserve the tax deductibility of all executive compensation while maintaining
the Company's executive compensation program as described in this report. The
Restatement described in Item 2 herein is intended to help achieve this
objective.
DISCUSSION REGARDING COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Compensation Committee established the 1996 base salary of the
Company's Chief Executive Officer at $300,000, a level which it believes is
approximately average for companies of comparable size in the offshore drilling
industry. During 1996, the Company granted Mr. Rask stock options of
significant size (500,000 shares) which its believes will maintain a close
alignment between Mr. Rask's performance and the shareholder value of the
Company. Mr. Rask was paid a performance bonus in 1997 pursuant to the Plan in
the amount of $98,269 as determined by the Company's 1996 financial performance
and Mr. Rask's contributions to the Company's attainment of its performance
objectives for that year. The Compensation Committee believes that Mr. Rask's
experience, reputation, performance and impact on the Company's performance
justify and reaffirm his compensation and incentive package.
April 9, 1997 The Personnel and Compensation Committee
David A. B. Brown
Howard I. Bull
15
<PAGE> 18
CUMULATIVE TOTAL SHAREHOLDER RETURN OR
COMPARATIVE STOCK PERFORMANCE
The line graphs on the following page compare the changes in the
cumulative total shareholder returns from the beginning of January 1992 through
the end of 1996 of (i) the Company, (ii) the CRSP Total Return Index for the
NASDAQ Stock Market (the "NASDAQ Index"), (iii) the Simmons & Company
International Offshore Drillers Index (the "SCI Index") and (iv) the Peer Group
defined below. Due to the significant change in the Company's capital structure
pursuant to the Recapitalization and its financial results since that time, the
Company has also included a graph illustrating its performance since December
31, 1992 as compared to the NASDAQ Index, the SCI Index and the Peer Group.
The companies that comprise the SCI Index include the Company; Atwood
Oceanics, Inc.; Cliffs Drilling Company; Diamond Offshore Drilling, Inc.; ENSCO
International, Inc.; Falcon Drilling Company, Inc.; Global Marine, Inc.; Noble
Drilling Corporation; Reading & Bates Corporation; Rowan Companies, Inc.;
Smedvig a.s.; and Transocean Offshore Inc. In connection with the Company's
proxy statement dated April 4, 1996, the Company created a new peer group (the
"Peer Group") against which to compare its relative shareholder returns in lieu
of using the SCI Index. The Company created the Peer Group in response to the
widening variances in the market conditions for the two primary rig types
operated by the companies in the SCI Index. The principal rig types applicable
to these companies included (i) bottom supported rigs (primarily jack-up rigs)
and (ii) deepwater rigs (primarily semi-submersibles and drillships). During
late 1995 and early 1996, market conditions for deepwater rigs had improved
considerably more than the market for bottom supported rigs. Later, during 1996
and early 1997, however, the following events occurred - (i) the bottom
supported rig market began to show significant improvement, (ii) the Company
elected to begin competing in the deepwater sector, (iii) two of the companies
in the Peer Group elected to enter the deepwater sector, (iv) one of the
companies in the Peer Group was acquired by another in that group and (v) a
company not originally included in the Peer Group elected to enter the bottom
supported drilling sector. In light of the foregoing, the Company has elected
to continue using the SCI Index as its peer group index, and, accordingly, will
discontinue using the Peer Group for future years. The graphs on the following
page assume that $100 was invested in each of these categories on December 31,
1991 or December 31, 1992, and that all dividends were re-invested. The Company
has not paid any cash dividends during the periods covered by the graphs.
16
<PAGE> 19
COMPARISON OF TOTAL RETURNS AMONG THE COMPANY,
THE NASDAQ INDEX, THE SCI INDEX AND PEER GROUP
[GRAPH]
<TABLE>
<CAPTION>
- ------------------- --------- --------- --------- ---------- --------- ---------
DEC 91 DEC 92 DEC 93 DEC 94 DEC 95 DEC 96
- ------------------- --------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
THE COMPANY 100 32 147 77 131 504
- ------------------- --------- --------- --------- ---------- --------- ---------
NASDAQ INDEX 100 116 134 131 185 227
- ------------------- --------- --------- --------- ---------- --------- ---------
SCI INDEX 100 104 174 143 275 653
- ------------------- --------- --------- --------- ---------- --------- ---------
PEER GROUP 100 116 208 160 297 701
- ------------------- --------- --------- --------- ---------- -------- ---------
</TABLE>
[GRAPH]
<TABLE>
<CAPTION>
- ------------------- --------- --------- --------- --------- ----------
DEC 92 DEC 93 DEC 94 DEC 95 DEC 96
- ------------------- --------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
THE COMPANY 100 460 240 410 1575
- ------------------- --------- --------- --------- --------- ----------
NASDAQ INDEX 100 115 112 159 195
- ------------------- --------- --------- --------- --------- ----------
SCI INDEX 100 168 138 266 630
- ------------------- --------- --------- --------- --------- ----------
PEER GROUP 100 179 138 256 602
- ------------------- --------- --------- --------- --------- ----------
</TABLE>
17
<PAGE> 20
DESCRIPTIONS FOR COMPARATIVE GRAPHS IN
1997 PROXY TO BE USED FOR EDGARIZED DOCUMENT
Graph 1 (page 17, upper left)
The value of $100.00 invested in the Company at December 31, 1991 was $32.00,
$147.00, $77.00, $131.00 and $504.00 as of December 31, 1992, 1993, 1994, 1995
and 1996, respectively.
The value of $100.00 invested in the stocks represented by the NASDAQ Index
(including reinvestment of dividends) as of December 31, 1991 was $116.00,
$134.00, $131.00, $185.00 and $227.00 as of December 31, 1992, 1993, 1994, 1995
and 1996, respectively.
The value of $100.00 invested in the stocks represented by the SCI Index
(including reinvestment of dividends) as of December 31, 1991 was $104.00,
$174.00, $143.00, $275.00 and $653.00 as of December 31, 1992, 1993, 1994, 1995
and 1996, respectively.
The value of $100.00 invested in the stocks represented by the Peer Group
(including reinvestment of dividends) as of December 31, 1991 was $116.00,
$203.00, $157.00, $290.00 and $689.00 as of December 31, 1992, 1993, 1994, 1995
and 1996, respectively.
Graph 2 (page 17, lower right)
The value of $100.00 invested in the Company at December 31, 1992 was $460.00,
$240.00, $410.00 and $1,575.00 as of December 31, 1993, 1994, 1995 and 1996,
respectively.
The value of $100.00 invested in the stocks represented by the NASDAQ Index
(including reinvestment of dividends) as of December 31, 1992 was $115.00,
$112.00, $159.00 and $195.00 as of December 31, 1993, 1994, 1995 and 1996,
respectively.
The value of $100.00 invested in the stocks represented by the SCI Index
(including reinvestment of dividends) as of December 31, 1992 was $168.00,
$138.00, $266.00 and $630.00 as of December 31, 1993, 1994, 1995 and 1996,
respectively.
The value of $100.00 invested in the stocks represented by the Peer Group
(including reinvestment of dividends) as of December 31, 1992 was $179.00,
$138.00, $256.00 and $602.00 as of December 31, 1993, 1994, 1995 and 1996,
respectively.
<PAGE> 21
ITEM 2 - AMENDMENT AND RESTATEMENT OF
THE COMPANY'S 1992 LONG-TERM INCENTIVE PLAN
At the Annual Meeting, the shareholders will be asked to approve an
amendment and restatement (the "Restatement") of the 1992 Long-Term Incentive
Plan (the "Incentive Plan"). The primary purposes of the Restatement are to (i)
qualify income generated in connection with the exercise of certain stock
options and stock appreciation rights as "performance-based" for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
(ii) eliminate certain restrictions and limitations that were originally
included because of requirements of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended ("Rule 16b-3"), that are no longer applicable and (iii)
extend the term of the Incentive Plan from September 14, 2002 to May 8, 2007.
The Incentive Plan originally became effective on September 14, 1992.
The Restatement was unanimously approved by the Board of Directors on February
26, 1997, subject to shareholder approval at the Annual Meeting. If the
Restatement is not approved by the shareholders of the Company at the Annual
Meeting, then no further awards will be granted under the Incentive Plan from
and after the date of the Annual Meeting.
SUMMARY OF THE INCENTIVE PLAN
The following general description of certain features of the Incentive
Plan, as amended and restated by the Restatement, is qualified in its entirety
by reference to Annex A. Annex A is marked to reflect the proposed changes to
the Incentive Plan as originally adopted.
General. The Incentive Plan authorizes the compensation committee of
the Board of Directors or another designated committee of the Board of
Directors (the "Compensation Committee") to grant to eligible employees of the
Company (including its subsidiaries and affiliates) (i) stock options, (ii)
stock appreciation rights ("SARs"), (iii) restricted stock and (iv) performance
awards payable in cash. The Incentive Plan provides that the members of the
Compensation Committee shall be both Non-Employee Directors meeting the
requirements of Rule 16b-3 and outside directors within the meaning of Section
162(m) of the Code.
Pursuant to the terms of the Incentive Plan, an aggregate of
10,000,000 shares (subject to the restrictions described herein) of Common
Stock were originally available for distribution pursuant to stock options,
SARs and restricted stock. The number of shares of Common Stock available for
distribution under the Incentive Plan is further limited to the extent that no
stock options, SARs or restricted stock may be issued if immediately after such
issuance the number of shares subject to stock options, SARs and restricted
stock awards would exceed 5% of the shares of Common Stock then outstanding.
Awards aggregating 3,927,413 shares of Common Stock have been previously
awarded under the Incentive Plan, of which, awards aggregating 1,899,630 shares
of Common Stock were outstanding as of April 2, 1997. The Restatement does not
increase the number of shares of Common Stock available for award under the
Incentive Plan. Notwithstanding any provision in the Incentive Plan to the
contrary, the maximum number of shares of Common Stock that may be subject to
stock options and SARs granted to any one individual during any calendar year
may not exceed 750,000 shares. The limitation set forth in the preceding
sentence shall be applied in a manner which will permit compensation generated
in connection with stock options and SARs awarded under the Incentive Plan by
the Compensation Committee to constitute "performance-based" compensation for
purposes of Section 162(m) of the Code, including, without limitation, counting
against such maximum number of shares, to the extent required under Section
162(m) of the Code and applicable interpretive authority thereunder, any shares
subject to stock options and SARs that are canceled or repriced. The
18
<PAGE> 22
shares of Common Stock subject to any stock option or SAR that terminates
without a payment being made would again become available for distribution
pursuant to the Incentive Plan.
Eligibility. Officers and other employees of the Company and its
subsidiaries and affiliates who are responsible for or contribute to the
management, growth and profitability of the Company (currently approximately
100 persons) are eligible to receive stock options, SARs, restricted stock and
performance awards under the Incentive Plan. The amount and timing of future
awards under the Incentive Plan are within the discretion of the Compensation
Committee and are not presently determinable.
Administration. The Incentive Plan is administered by the Compensation
Committee. The Compensation Committee has full power to select, from among the
officers and other employees and persons eligible for awards, the individuals
to whom awards are granted, to make any combination of awards to any
participant and to determine the specific terms of each grant, subject to the
provisions of the Incentive Plan. The Incentive Plan permits the Compensation
Committee to delegate to an officer of the Company the authority, subject to
guidelines prescribed by the Committee and approved by the Board and subject to
applicable law, to grant stock options, SARs and restricted stock to employees
who are not "executive officers" of the Company and to make certain
determinations with respect to such grants.
Performance Awards. The Compensation Committee is also authorized to
grant performance awards under the Incentive Plan. Such awards will be earned
only if corporate or individual performance objectives over designated periods
("Performance Periods") are met. Performance objectives may vary from
participant to participant, group to group and period to period. Unless
otherwise determined by the Compensation Committee, performance awards
generally are paid out on a prorated basis in the event of termination due to
Retirement (as hereinafter defined), death or disability and will be forfeited
in the event of other types of termination. The Incentive Plan defines
"Retirement" as retirement from active employment at or after age 55 under
circumstances that the Compensation Committee, in its sole discretion, deems
equivalent to retirement. Performance awards will be payable in cash currently
or on a deferred basis with such interest as the Compensation Committee shall
determine.
Stock Options. The Incentive Plan permits the granting of incentive
stock options, within the meaning of Section 422 of the Code ("ISOs"), and
options which do not constitute ISOs ("Non-Qualified Options"). The option
exercise price for each share covered by an option, unless a higher price is
determined by the Compensation Committee, is generally the fair market value of
each share on date of grant, except with respect to options issued in a
transaction to which Section 424(a) of the Code applies. As of April 9, 1997,
the last sale price of the Common Stock as reported on the Nasdaq National
Market was $17 1/2 per share.
The term of each option is fixed by the Compensation Committee but may
not exceed 10 years from date of grant. The Compensation Committee determines
at which time or times each option may be exercised. Options may be made
exercisable in installments, and the exercisability of options may be
accelerated by the Compensation Committee. Stock options are evidenced by
option agreements, the terms and provisions of which may differ. No stock
option is transferable by the optionees other than by will or by the laws of
descent or distribution or, in the case of a Non-Qualified Option, with the
consent of the Compensation Committee or pursuant to a qualified domestic
relations order.
The option exercise price must be paid in full in cash or, if the
Compensation Committee so determines, in full or in part by delivery of
unrestricted shares of Common Stock valued at their fair market value on the
exercise date.
19
<PAGE> 23
In the event of termination of employment by reason of Retirement,
long-term disability or death, an option may thereafter be exercised (to the
extent it was then exercisable) for such periods as the Compensation Committee
shall determine at the time of grant or until the expiration of the stated term
of the option whichever period is shorter. If any optionee whose employment is
terminated by reason of Retirement or long-term disability dies while the
option is still exercisable, the option will be exercisable for one year
following death, subject to the stated term of the option. The Compensation
Committee will be permitted at or after date of grant to provide for
acceleration of the exercisability of options upon termination of employment by
reason of Retirement, disability or death.
Unless otherwise determined by the Compensation Committee, if an
optionee's employment terminates for any reason other than Retirement,
disability or death, his or her options will terminate, except that such
options, to the extent then exercisable or on such accelerated basis as the
Compensation Committee may determine, may be exercised for the lesser of one
year from termination of employment or the balance of such option's term. If
the optionee whose employment is terminated under these circumstances dies
while the option is still exercisable, the option will be exercisable for one
year following death or until the expiration of the stated term of the option,
whichever is shorter.
The Incentive Plan also permits the Compensation Committee to cash out
all or a portion of the shares of Common Stock for which an option is being
exercised and to settle the value of such option in the form of cash or Common
Stock.
To qualify as ISOs, options must meet additional Federal income tax
requirements. Under current law, these requirements include a limitation on the
value of ISOs that become exercisable for the first time in a calendar year
with respect to any optionee.
No taxable income will be realized by an optionee upon the grant or
exercise of an ISO. The optionee however, must include in alternative minimum
taxable income the excess of the fair market value of shares acquired upon
exercise of an ISO over the exercise price paid for such shares. If the
optionee exercises and disposes of the shares in the same year and the amount
realized is less than the fair market value on the exercise date, the amount
included in alternative minimum taxable income will not exceed the amount
realized over the adjusted basis in the shares. If shares of Common Stock are
issued to an optionee pursuant to the exercise of an ISO and if no disposition
of such shares is made within two years after date of grant or within one year
after the transfer of such shares to such optionee, then, upon the sale of such
shares, any amount realized in excess of the exercise price will be taxed to
such optionee as a long-term capital gain and any loss sustained will be a
long-term capital loss and no deduction will be allowed to the optionee's
employer for Federal income tax purposes.
If shares of Common Stock acquired upon the exercise of an ISO are
disposed of prior to the expiration of either holding period described above,
the optionee in most instances will realize ordinary income in the year of such
disqualifying disposition in an amount equal to the excess (if any) of the fair
market value of the shares at exercise (or, if less, the amount realized on the
disposition of the shares) over the exercise price thereof and the optionee's
employer will be entitled to deduct such amount. Any additional gain realized
by the participant will be taxed as short term or long-term capital gain, as
the case may be, and will not result in any deduction by the employer.
If an ISO is exercised at a time when it no longer qualifies as an
ISO, the option will be treated as a Non-Qualified Option. Subject to certain
exceptions for disability or death, an ISO generally will not be eligible for
the tax treatment described above if it is exercised more than three months
following the termination of employment.
20
<PAGE> 24
No income will be realized by an optionee at the time a Non-Qualified
Option is granted. In most instances, ordinary income will be realized by the
optionee upon exercise in an amount equal to the difference between the fair
market value of the shares on the date of exercise and the exercise price (the
amount paid for the shares) and the optionee's employer will be entitled to a
tax deduction in the same amount. At disposition, appreciation (or
depreciation) after the date of exercise will be treated as either short term
or long-term capital gain (or loss) depending on how long the shares have been
held.
Stock Appreciation Rights. The Compensation Committee may also grant
non-transferable SARs in conjunction with options, entitling the holder upon
exercise to receive an amount in any combination of cash and/or Common Stock
(as determined by the Compensation Committee) equal in value to the increase
since date of grant in the fair market value of the shares covered by such
right.
Restricted Stock. The Compensation Committee is also authorized to
award shares of Common Stock that are subject to certain conditions set forth
in the Incentive Plan and such other conditions and restrictions as the
Compensation Committee may determine, which may include the attainment of
performance goals. The Compensation Committee may or may not require the
payment of any consideration in connection with restricted stock awards.
Prior to the lapse of restrictions on shares of restricted stock, the
participant will have all rights of a shareholder with respect to the shares,
subject to the conditions and restrictions generally applicable to restricted
stock or specifically set forth in the participant's restricted stock
agreement.
The Company will deliver to each recipient of a restricted stock award
a restricted stock agreement, setting forth the restrictions to which the
shares are subject and date or dates on which the restrictions will lapse. The
Compensation Committee may permit such restrictions to lapse in installments
within the restricted period and may accelerate or waive such restrictions at
any time. Shares of restricted stock will be non-transferable, and, if a
participant to whom shares of restricted stock are granted terminates
employment for any reason prior to the lapse or waiver of the restrictions, the
Compensation Committee will have the right to cause the forfeiture of the
shares. If the Compensation Committee determines that special hardship
circumstances have occurred with respect to a participant whose employment is
terminated for any reason, it may waive, in whole or in part, any remaining
restrictions with respect to the restricted stock.
Section 162(m) of the Code. Section 162(m) of the Code precludes a
public corporation from taking a deduction for annual compensation in excess of
$1 million paid to its chief executive officer or any of its four other
highest-paid officers. However, compensation that qualifies under Section
162(m) of the Code as "performance-based" is specifically exempt from the
deduction limit. Based on Section 162(m) of the Code and regulations issued
thereunder, the Company believes that the income generated in connection with
the exercise of stock options and SARs granted by the Compensation Committee
under the Incentive Plan should qualify as performance-based compensation and,
accordingly, the Company's deductions for such compensation should not be
limited by Section 162(m) of the Code. Other awards granted under the Incentive
Plan will not qualify as performance-based compensation, and accordingly, the
Company's compensation expense deductions relating to such awards will be
subject to the Section 162(m) deduction limitations.
"Unfunded" Status. It is presently intended that the Incentive Plan
constitute an "unfunded" plan for incentive compensation. The Compensation
Committee may authorize the creation of trusts and other arrangements to
facilitate or ensure payment of the Company's
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obligations, provided that such trusts and arrangements are consistent with the
"unfunded" status of the Incentive Plan (unless the Compensation Committee
otherwise determines).
Amendment and Termination. The Board is permitted to terminate or
suspend the Incentive Plan at any time, but without the participant's consent,
such termination or suspension shall not affect adversely any stock options,
SARs, restricted stock awards or performance awards then outstanding. The Board
will be permitted to amend the Incentive Plan but, without the prior approval
of the shareholders, will not be permitted to make any amendment that would
increase the number of shares that may be issued under the Incentive Plan or
change the class of individuals eligible to receive performance awards,
restricted stock, stock options, or SARs under the Incentive Plan. The
Compensation Committee may amend the term of any award or option theretofore
granted, retroactively or prospectively, but no such amendment shall impair the
rights of any holder without the holder's consent.
Change in Control Provisions. The Incentive Plan provides that in the
event of a "Change in Control" (as defined in the Incentive Plan), all stock
options and SARs will become immediately exercisable, the restrictions
applicable to outstanding restricted stock awards will lapse, and, unless
otherwise determined by the Compensation Committee, the value of outstanding
stock options, SARs and restricted stock awards will be cashed out on the basis
of the highest price paid (or offered) during the preceding 60-day period. In
addition, outstanding performance awards will be vested and paid out on a
prorated basis, based on the target values of such awards and the number of
months elapsed compared to the total number of months in the Performance
Period. At any time prior to or after a Change in Control, the Compensation
Committee may accelerate awards and waive conditions and restrictions on any
awards to the extent it deems appropriate.
Term of Plan. No stock option or SAR shall be granted or award of
restricted stock made on or after May 8, 2007, but any such awards granted
prior to such date may extend beyond such date. There shall be no time
limitation with respect to the granting of performance awards.
Required Vote. The affirmative vote of the holders of a majority of
the Common Stock present or represented at the Annual Meeting is required for
approval of the Incentive Plan. Under Texas law, an abstention would have the
same effect as a vote against approval of the Incentive Plan, but a broker
non-vote would not be counted for purposes of determining whether a majority
had been achieved. If shareholder approval is not obtained, the Restatement
will not become effective and the Company will not grant any further awards
under the Incentive Plan from and after the date of the Annual Meeting.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
None.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP has been selected as Auditor of the
Company for the 1997 calendar year. That firm served as Auditor of the Company
for the 1996 calendar year. A representative of KPMG Peat Marwick LLP will be
in attendance at the Annual Meeting with the opportunity to make a statement
and to be available to respond to appropriate questions.
STOCKHOLDERS' PROPOSALS
Pursuant to the Securities Exchange Act of 1934, as amended, and
regulations thereunder, individual stockholders have a limited right to propose
for inclusion in the proxy statement a single proposal for action to be taken
at the Annual Meeting of Stockholders. Proposals intended to be presented at
the Annual Meeting to be held in 1998 must be received by the Company's
principal executive offices no later than December 31, 1997. They may be
addressed to the Secretary of the Company at One Sugar Creek Center Blvd.,
Suite 600, Sugar Land, Texas 77478-3556.
OTHER MATTERS
While management has no reason to believe that any other business will
be presented, if any other matters should properly come before the Annual
Meeting, the proxies will be voted as to such matters in accordance with the
best judgment of the proxy holders. The approval of such other matters will
require the affirmative vote of the majority of the shares of Common Stock
represented at the meeting and eligible to vote thereon, in person or by proxy.
MARINE DRILLING COMPANIES, INC.
By Joan R. Smith
Secretary
Sugar Land, Texas
April 9, 1997
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ANNEX A
THE MARINE DRILLING 1992 LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective as of May 9, 1997)
Section 1. Purpose; Definitions.
The purpose of the Plan is to give the Company a significant advantage in
attracting, retaining and motivating key employees and to provide the Company
with the ability to provide incentives more directly linked to the profitability
of the Company's businesses and increases in stockholder value. The Plan as set
forth herein constitutes an amendment and restatement of the Plan as previously
adopted by the Company, and shall supersede and replace in its entirety such
previously adopted plan. This amendment and restatement of the Plan shall be
effective as of May 9, 1997, provided this amendment and restatement of the Plan
is approved by the stockholders of the Company on such date at the Company's
1997 Annual Meeting of Stockholders. If this amendment and restatement of the
Plan is not so approved by the stockholders, then no Performance Awards,
Restricted Stock, Stock Options, or Stock Appreciation Rights shall be granted
under the Plan on or after May 9, 1997.
For purposes of the Plan, the following terms are defined as set forth below:
a. "Board" means the Board of Directors of the Company.
b. "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
c. "Commission" means the Securities and Exchange Commission or any
successor agency.
d. "Committee" means the Committee referred to in Section 2.
e. "Company" means Marine Drilling Companies, Inc., a corporation
organized under the laws of the State of Texas, or any successor
corporation.
f. "Disability" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.
g. "Disinterested Person" means a member of the Board who qualifies as a
Non-Employee Director as defined in Rule 16b-3.
h. "Exercise Period" means the 60-day period from and after a Change in
Control (as defined in Section 9(b)).
i. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
j. "Fair Market Value" means, as of any given date, the mean between the
highest and lowest reported sales prices of the Stock on the Nasdaq
Stock Market or, if no such sale of Stock occurs on such date, the fair
market value of the Stock as determined by the Committee in good faith.
k. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section
422 of the Code.
l. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
m. "Outside Director" means a member of the Board who qualifies as an
outside director as defined in Section 162(m) of the Code and
applicable interpretive authority thereunder.
<PAGE> 28
n. "Performance Award" means an award made by the Committee pursuant to
Section 4.
o. "Performance Period" means the one-year or greater period during which
a Performance Award can be earned as determined by the Committee
pursuant to Section 4(a).
p. "Plan" means The Marine Drilling 1992 Long-Term Incentive Plan, as set
forth herein and as hereinafter amended from time to time.
q. "Restricted Stock" means an award made by the Committee pursuant to
Section 8.
r. "Restriction Period" means the period set by the Committee pursuant to
Section 8(c)(i) during which the recipient of a Restricted Stock Award
may not sell, assign, transfer, pledge or otherwise encumber shares of
Restricted Stock.
s. "Retirement" means termination of employment at or after age 55 under
circumstances which the Committee, in its sole discretion, deems
equivalent to retirement.
t. "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.
u. "Spread Value" means with respect to a share of Stock subject to a
Stock Option an amount equal to the excess of the Fair Market Value
over the option price.
v. "Stock" means the Common Stock, $.01 par value, of the Company.
w. "Stock Appreciation Right" means a right granted by the Committee
pursuant to Section 7.
x. "Stock Option" means an option granted by the Committee pursuant to
Section 6.
In addition, the terms "Change in Control", "Change in Control Price",
"Incumbent Board", "Merger", "Outstanding Company Stock", "Outstanding Company
Voting Securities", "Person" and "Triggering Event" have the meanings set forth
in Section 9.
Section 2. Administration.
The Plan shall be administered by the Compensation Committee of the Board or
such other committee of the Board (the "Committee"), composed of not less than
two Disinterested Persons, who shall be appointed by the Board and who shall
serve at the pleasure of the Board. The members of the Committee shall also
qualify as Outside Directors. If at any time no Committee shall be in office,
the functions of the Committee specified in the Plan shall be exercised by those
members of the Board who qualify as Disinterested Persons and Outside Directors.
The Committee shall have plenary authority to grant to employees, pursuant to
the terms of the Plan, Performance Awards, Stock Options, Stock Appreciation
Rights and Restricted Stock. In particular, the Committee shall have the
authority, subject to the terms of the Plan:
(a) to select the employees to whom Performance Awards, Stock Options, Stock
Appreciation Rights and Restricted Stock may from time to time be granted;
(b) to determine whether and to what extent Performance Awards, Incentive
Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights and
Restricted Stock or any combination are to be granted hereunder;
(c) to determine and adjust the performance goals and measurements
applicable to Performance Awards granted pursuant to the Plan;
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(d) to determine the extent to which Performance Awards have been earned
and by whom;
(e) to determine to what extent and under what circumstances amounts earned
with respect to a Performance Award shall be deferred;
(f) to determine the number of shares to be covered by each award of Stock
Options, Stock Appreciation Rights and Restricted Stock;
(g) to determine the terms and conditions of any Stock Options granted
pursuant to the Plan, including, but not limited to, the option price
(subject to Section 6(a)), any restriction or limitation and any vesting
acceleration or forfeiture waiver regarding any Stock Option, based on
such factors as the Committee shall determine.
(h) to determine under what circumstances a Stock Option may be settled in
cash pursuant to the first paragraph of Section 6(k); and
(i) to determine the terms and conditions of vesting of Restricted Stock
awards.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines, practices, and procedures governing the Plan
as it shall, from time to time, deem advisable, to interpret the terms and
provisions of the Plan and any award issued under the Plan (and any agreement
relating thereto) and to otherwise supervise the administration of the Plan. The
Committee may also adopt sub-plans, consistent with the Plan, to conform to
applicable state or foreign securities or tax laws.
The Committee may act only by a majority of its members then in office, except
that the members thereof may delegate to the Chief Executive Officer of the
Company or such other officer as may be designated by the Committee, the
authority to make decisions pursuant to Sections 1(s), 6(c), (f), (g), (h) and
(i) and 8(c)(i) and (iv), the authority, subject to guidelines prescribed by the
Committee and approved by the Board and to applicable Texas law, to grant Stock
Options, Stock Appreciation Rights and Restricted Stock to employees who are not
then subject to the provisions of Section 16 of the Exchange Act and to
determine the number of shares to be covered by any such Stock Option, Stock
Appreciation Right and Restricted Stock award and the terms and conditions of
such Stock Option in accordance with the provisions of clause (g) of this
Section 2 and may authorize any one or more of their number or any officer of
the Company to execute and deliver documents on behalf of the Committee.
Any determination made by the Committee or pursuant to delegated authority in
accordance with the provisions of the Plan with respect to any award shall be
made in the sole discretion of the Committee or such delegate at the time of the
grant of the award or, unless in contravention of any express term of the Plan,
at any time thereafter. All decisions made by the Committee or any appropriately
designated officer pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Plan participants.
Section 3. Eligibility.
Employees of the Company, its subsidiaries and affiliates who are responsible
for or contribute to the management, growth and profitability of the business of
the Company, its subsidiaries or affiliates are eligible to be granted awards
under the Plan.
Section 4. Performance Awards.
(a) Awards and Administration. Performance Awards may be awarded either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the nature, length, and starting date of the Performance Period for
each Performance Award, which, subject to Section 9, shall be at least one year,
and shall determine the performance objectives to be used in valuing Performance
Awards and determining the extent to which such Performance Awards have been
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earned. Performance objectives may vary from participant to participant and
between groups of participants and shall be based upon such Company, business
unit or individual performance factors or criteria as the Committee may deem
appropriate, including, but not limited to, earnings per share or return on
equity. Performance Periods may overlap and participants may participate
simultaneously with respect to Performance Awards that are subject to different
Performance Periods and different performance factors and criteria. Performance
Awards shall be confirmed by, and be subject to the terms of, a Performance
Award Agreement. The terms of such awards need not be the same with respect to
each participant.
On or before the beginning of each Performance Period, the Committee shall
determine for each Performance Award subject to such Performance Period the
range of dollar values to be paid to the participant at the end of the
Performance Period if and to the extent that the relevant measures of
performance for such Performance Award are met. Such dollar values may be fixed
or may vary in accordance with such performance or other criteria as may be
determined by the Committee.
(b) Adjustment of Awards. The Committee may adjust the performance goals and
measurements applicable to Performance Awards to take into account changes in
law and accounting and tax rules and to make such adjustments as the Committee
deems necessary or appropriate to reflect the impact of the inclusion or
exclusion of extraordinary or unusual items, events or circumstances in order to
avoid windfalls or unintended disadvantages.
(c) Termination of Employment. Subject to Section 9 and unless otherwise
provided in the applicable Performance Award Agreement, if a participant
terminates employment during a Performance Period because of death, Disability
or Retirement, such participant shall be entitled to a payment with respect to
each outstanding Performance Award at the end of the applicable Performance
Period:
i) based, to the extent relevant under the terms of the Performance
Award, upon the participant's performance for the portion of such
Performance Period ending on the date of termination and the performance
of the Company or any applicable business unit for the entire
Performance Period, and
ii) prorated for the portion of the Performance Period during which
the participant was employed by the Company, a subsidiary or affiliate,
all as determined by the Committee. The Committee may provide for an earlier
payment in settlement of such award in such amount and under such terms and
conditions as the Committee deems appropriate.
Subject to Section 9 and except as otherwise provided in the applicable
Performance Award Agreement, if a participant terminates employment during a
Performance Period for any other reason, then such participant shall not be
entitled to any payment with respect to a Performance Award awarded for such
Performance Period, unless the Committee shall otherwise determine.
(d) Form of Payment. The earned portion of a Performance Award shall be
paid in cash currently or on a deferred basis with such interest as may be
determined by the Committee.
Section 5. Stock Subject to Plan.
The total number of shares of Stock reserved and available for distribution
pursuant to Stock Options, Stock Appreciation Rights and Restricted Stock
awarded under the Plan shall be 10,000,000 shares; provided, however, that no
Stock Options, Stock Appreciation Rights, or Restricted Stock shall be issued if
immediately after such issuance the shares of Stock subject to outstanding Stock
Options, Stock Appreciation Rights and Restricted Stock would exceed five
percent (5%) of the shares of Stock then outstanding.
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Notwithstanding any provision in the Plan to the contrary, the maximum number of
shares of Stock that may be subject to Stock Options and Stock Appreciation
Rights granted to any one individual during any calendar year may not exceed
750,000 shares. The limitation set forth in the preceding sentence shall be
applied in a manner which will permit compensation generated in connection with
Stock Options and Stock Appreciation Rights awarded under the Plan by the
Committee to constitute "performance-based" compensation for purposes of Section
162(m) of the Code, including, without limitation, counting against such maximum
number of shares, to the extent required under Section 162(m) of the Code and
applicable interpretive authority thereunder, any shares subject to Stock
Options and Stock Appreciation Rights that are canceled or repriced.
If any Stock Option or Stock Appreciation Right terminates without a payment
being made to the participant, the shares subject to such Stock Option or Stock
Appreciation Right shall again be available for distribution in connection with
awards under the Plan.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split or other change in corporate structure affecting the
Stock, such substitution or adjustments shall be made in the aggregate number
and kind of shares reserved for issuance under the Plan and to any one
individual, in the number, kind and option price of shares subject to
outstanding Stock Options and any related Stock Appreciation Rights and in the
number and kind of shares of Restricted Stock outstanding or available for
awards as may be determined to be appropriate by the Board, in its sole
discretion; provided, however, that the number of shares subject to any award
shall always be a whole number.
Section 6. Stock Options.
Stock Options may be granted alone or in addition to other awards granted under
the Plan and may be of two types: Incentive Stock Options and Non-Qualified
Stock Options (in each case with or without Stock Appreciation Rights). Any
Stock Option granted under the Plan shall be in such form as the Committee may
from time to time approve.
The Committee shall have the authority to grant any optionee Incentive Stock
Options, Non-Qualified Stock Options or both types of Stock Options. Incentive
Stock Options may be granted only to employees of the Company and its
subsidiaries (within the meaning of Section 424(f) of the Code). To the extent
that any Stock Option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option.
Stock Options shall be evidenced by option agreements, the terms and provisions
of which may differ. An option agreement shall indicate on its face whether it
is an Incentive Stock Option or a Non-Qualified Stock Option. The grant of a
Stock Option shall occur on the date the Committee by resolution, or a duly
authorized officer, selects an employee as a participant in any grant of Stock
Options, determines the number of shares to be subject to the Stock Option
granted to such employee and specifies the terms and provisions of the Stock
Option. The Company shall notify a participant of a grant of a Stock Option, and
a written option certificate shall be duly executed and delivered by the
Company.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be exercised so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
optionee affected, to disqualify any Incentive Stock Option under such Section
422.
Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions as the
Committee shall deem desirable:
(a) Option Price. The option price per share of Stock purchasable under a
Stock Option shall be equal to the Fair Market Value of the Stock at the
date of grant or such higher price as shall be determined by the Committee
at grant; provided, however, that, in connection with the issuance of a
Stock Option in a transaction to which Section 424(a) of the Code applies,
the option price may be determined pursuant to said Section 424(a).
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<PAGE> 32
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years
after the date the Stock Option is granted.
(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by
the Committee; provided, however, that, except as provided in Sections
6(f), (g), (h) and (i) and 9 or, unless otherwise determined by the
Committee, no Stock Option shall be exercisable prior to the first
anniversary date of the granting of the Stock Option. The Committee may
waive, reduce or eliminate provisions that Stock Options are exercisable
only in installments and provisions that Stock Options are not exercisable
for a specified period of time, in whole or in part, based on such factors
as the Committee may determine.
(d) Method of Exercise. Subject to the provisions of this Section 6, Stock
Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying
the number of shares to be purchased. Such notice shall be accompanied by
payment in full of the purchase price. As determined by the Committee,
payment in full or in part may be made in the form of unrestricted Stock
already owned by the optionee based on the Fair Market Value on the date
the Stock Option is exercised.
No shares of Stock shall be issued until full payment therefor has been
made. An optionee shall have all of the rights of a stockholder of the
Company, including the right to vote the shares and the right to receive
dividends, with respect to shares subject to the Stock Option when the
optionee has given written notice of exercise, has paid in full for such
shares and, if requested, has given the representation described in Section
12(a).
(e) Non-transferability of Options. No Stock Option shall be transferable
by the optionee other than (i) by will or by the laws of descent and
distribution, (ii) (in the case of a Non-Qualified Stock Option) with the
consent of the Committee or (iii) pursuant to a "qualified domestic
relations order" (as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules
thereunder). All Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee, by the guardian or legal representative of
the optionee or (in the case of a Non-Qualified Stock Option) its
transferee (with the consent of the Committee) or alternate payee pursuant
to such qualified domestic relations order, it being understood that the
terms "holder" and "optionee" include the guardian and legal representative
of the optionee named in the option agreement and any person to whom an
option is transferred by will, the laws of descent and distribution or (in
the case of a Non-Qualified Stock Option) with the consent of the Committee
or by such qualified domestic relations order.
(f) Termination by Death. If an optionee's employment terminates by reason
of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent then exercisable or on such accelerated basis as
the Committee may determine, for such period as the Committee may specify
at grant from the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability. If an optionee's employment
terminates by reason of Disability, any Stock Option held by such optionee
may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination or on such accelerated basis as the
Committee may determine, for such period as the Committee may specify at
grant from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter; provided, however, that, if the optionee dies within such period,
any unexercised Stock Option held by such optionee shall, notwithstanding
the expiration of such period, continue to be exercisable to the extent to
which it was exercisable at the time of death for a period of twelve months
from the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Disability, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option will thereafter
be treated as a Non-Qualified Stock Option.
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(h) Termination by Reason of Retirement. If an optionee's employment
terminates by reason of Retirement, any Stock Option held by such optionee
may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of such Retirement or on such accelerated basis as
the Committee may determine, for such period as the Committee may specify
at grant from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter; provided, however, that, if the optionee dies within such period,
any unexercised Stock Option held by such optionee shall, notwithstanding
the expiration of such period, continue to be exercisable to the extent to
which it was exercisable at the time of death for a period of twelve months
from the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Retirement, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option will thereafter
be treated as a Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee, if an
optionee's employment terminates for any reason other than death,
Disability or Retirement, the Stock Option shall thereupon terminate,
except that such Stock Option, to the extent then exercisable or on such
accelerated basis as the Committee may determine, may be exercised for the
lesser of one year from termination of employment or the balance of such
Stock Option's term; provided, however, that if the optionee dies within
such one-year period, any unexercised Stock Option held by such optionee
shall, notwithstanding the expiration of such one-year period, continue to
be exercisable to the extent to which it was exercisable at the time of
death for a period of twelve months from the date of such death or until
the expiration of the stated term of such Stock Option, whichever period is
the shorter. In the event of termination of employment, if an Incentive
Stock Option is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock Option will
thereafter be treated as a Non-Qualified Stock Option.
(j) Incentive Stock Options. The Committee is authorized to provide at the
time of grant, that, to the extent permitted under Section 422 of the Code,
if a participant's employment with the Company and its subsidiaries is
terminated and the portion of any Incentive Stock Option that is otherwise
exercisable during the post-termination period specified under Sections
6(f), (g), (h) or (i), applied without regard to this Section 6(j), is
greater than the portion of such option that is exercisable as an
"incentive stock option" during such post-termination period under Section
422, such post-termination period shall automatically be extended (but not
beyond the original option term) to the extent necessary to permit the
optionee to exercise such Incentive Stock Option (either as an Incentive
Stock Option or, if exercised after the expiration periods that apply for
the purposes of Section 422, as a Non-Qualified Stock Option).
(k) Cashing Out of Option; Settlement of Spread Value in Stock. On receipt
of written notice of exercise, the Committee may elect to cash out all or a
portion of the shares of Stock for which a Stock Option is being exercised
by paying the optionee an amount, in cash or Stock, equal to the Spread
Value of such shares on the effective date of such cash out.
Notwithstanding any other provision of this Plan, upon a Change in Control,
unless the Committee shall determine otherwise at grant, an optionee shall have
the right, by giving notice to the Company within the Exercise Period, to elect
to surrender all or part of the Stock Option to the Company and to receive in
cash, within 30 days of such notice, an amount equal to the amount by which the
"Change in Control Price" on the date of such notice shall exceed the exercise
price under the Stock Option multiplied by the number of shares of Stock as to
which the right granted under this Section 6(k) shall have been exercised.
Section 7. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be granted only in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of grant. In the case of an Incentive Stock Option, such
rights may be granted only at the time of grant.
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A Stock Appreciation Right or applicable portion thereof granted with respect to
a given Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, unless
otherwise determined by the Committee at the time of grant, a Stock Appreciation
Right granted with respect to less than the full number of shares covered by a
related Stock Option shall not be reduced until the number of shares covered by
an exercise or termination of the related Stock Option exceeds the number of
shares not covered by the Stock Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee in accordance with
Section 7(b) by surrendering the applicable portion of the related Stock Option
in accordance with procedures established by the Committee. Upon such exercise
and surrender, the optionee shall be entitled to receive an amount determined in
the manner prescribed in Section 7(b). Stock Options which have been so
surrendered shall no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions as shall be determined by the Committee, including
the following:
i) Stock Appreciation Rights shall be exercisable only at such time or
times and to the extent that the Stock Options to which they relate are
exercisable in accordance with the provisions of Section 6 and this Section
7.
ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be
entitled to receive an amount in cash, shares of Stock or both equal in
value to the excess of the Fair Market Value of one share of Stock over the
option price per share specified in the related Stock Option multiplied by
the number of shares in respect of which the Stock Appreciation Right shall
have been exercised, with the Committee having the right to determine the
form of payment.
iii) Stock Appreciation Rights shall be transferable only when and to the
extent that the underlying Stock Option would be transferable under Section
6(e) and only to the transferee of the underlying Stock Option.
iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or
part thereof to which such Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the limitation set forth
in Section 5 on the number of shares of Stock to be issued under the Plan.
v) The Committee may provide, at the time of grant, that a Stock
Appreciation Right can be exercised only in the event of a Change in
Control, subject to such terms and conditions as the Committee may specify
at grant.
Section 8. Restricted Stock.
(a) Administration. The Committee shall determine the employees to whom and
the time or times at which grants of Restricted Stock will be made, the number
of shares to be awarded, the time or times within which such awards may be
subject to forfeiture, the amount of any purchase payments required by law and
any other terms and conditions of the awards, in addition to those contained in
Section 8(c).
The Committee may condition the grant of Restricted Stock upon the attainment of
specified performance goals or such other factors or criteria as the Committee
shall determine.
The provisions of the Restricted Stock awards need not be the same with respect
to each recipient.
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<PAGE> 35
(b) Awards and Certificates. Shares of Restricted Stock may be evidenced in
such manner as the Committee may deem appropriate, including book-entry
registration or issuance of a stock certificate or certificates. Any certificate
issued in respect of shares of Restricted Stock shall be registered in the name
of the participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such award, substantially in the
following form:
The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) of
The Marine Drilling 1992 Long-Term Incentive Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at the offices of
Marine Drilling Companies, Inc., One Sugar Creek Center Blvd., Suite 600,
Sugar Land, Texas 77478-3556.
The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any Restricted Stock award, the participant shall have
delivered a stock power, endorsed in blank, relating to the Stock covered by
such award.
(c) Terms and Conditions. Shares of Restricted Stock shall be subject to
the following terms and conditions:
i) During a period set by the Committee (the "Restriction Period"),
commencing with the date of such award, the participant shall not be
permitted to sell, assign, transfer, pledge or otherwise encumber shares of
Restricted Stock. The Committee may provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions,
in whole or in part, based on service, performance and such other factors
or criteria as the Committee may determine.
ii) Except as otherwise provided in the applicable Restricted Stock
Agreement and Section 8(c)(i), the participant shall have, with respect to
the shares of Restricted Stock, all of the rights of a stockholder of the
Company, including the right to vote the shares and the right to receive
any cash dividends. Dividends payable in Stock shall be paid in the form of
Restricted Stock.
iii) Except as otherwise provided in the applicable Restricted Stock
Agreement and Sections 8(c)(i) and (iv), upon termination of a
participant's employment for any reason during the Restriction Period, all
shares still subject to restriction shall be forfeited by the participant.
iv) In the event of hardship or other special circumstances of a
participant whose employment is terminated for any reason, the Committee
may waive in whole or in part any or all remaining restrictions with
respect to such participant's shares of Restricted Stock.
v) If and when the Restriction Period expires without a prior forfeiture of
the Restricted Stock subject to such Restriction Period, certificates
without restrictive legend for such shares shall be delivered to the
participant.
vi) Each award shall be confirmed by, and be subject to the terms of, a
Restricted Stock Agreement.
Section 9. Change in Control Provisions.
(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control:
i) Any Stock Options and Stock Appreciation Rights outstanding as of the
date such Change in Control occurs and not then exercisable shall become
fully exercisable.
ii) The restrictions applicable to any Restricted Stock shall lapse, and
such Restricted Stock shall become free of all restrictions and fully
vested to the full extent of the original grant.
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<PAGE> 36
iii) Subject to the provisions of Section 6(k), the value of all
outstanding Stock Options, Stock Appreciation Rights and Restricted Stock
shall, unless otherwise determined by the Committee at or after grant, be
cashed out on the basis of the "Change in Control Price," as defined in
Section 9(c), as of the date such Change in Control occurs or such other
date as the Committee may determine prior to the Change in Control.
iv) Any Performance Awards relating to Performance Periods prior to the
Performance Period in which the Change in Control occurs which have been
earned but not paid shall become immediately payable in cash. In addition,
subject to the provisions of Section 4(b), each participant who has been
awarded a Performance Award, shall be deemed to have earned a pro rata
Performance Award equal to the product of (y) such participant's maximum
award opportunity for such Performance Period, and (z) a fraction, the
numerator of which is the number of full or partial months which have
elapsed since the beginning of such Performance Period to the date on which
the Change in Control occurs, and the denominator of which is the total
number of months in such Period or, in the case of a completed Performance
Period, equal to the maximum award opportunity.
(b) Definition of Change in Control. A "Change in Control" means the
occurrence of any one or more of the following events:
i) The acquisition by any individual, entity or group [within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 50% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Stock") or (ii)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any Person who as of the date of the Plan
beneficially owned (within the meaning of Section 13(d) of the Exchange
Act) in excess of 10% of the Outstanding Company Common Stock or
Outstanding Company Voting Securities or (iv) any acquisition by any
corporation pursuant to a reorganization, merger, consolidation or similar
business combination involving the Company (a "Merger"), if, following such
Merger, the conditions described in clauses (i) and (ii) of subparagraph
9(b)(iii) are satisfied;
ii) Individuals who, as of the date of the Plan, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided however, that any
individual becoming a director subsequent to the date of the Plan whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board; or
iii) Approval by the shareholders of the Company of a Merger, unless
immediately following such Merger, (i) substantially all of the holders of
the Outstanding Company Voting Securities immediately prior to Merger
beneficially own, directly or indirectly, more than 50% of the common stock
of the corporation resulting from such Merger in substantially the same
proportions as their ownership of Outstanding Company Voting Securities
immediately prior to such Merger and (ii) at least a majority of the
members of the board of directors of the corporation resulting from such
Merger were members of the Incumbent Board at the time of the execution of
the initial agreement providing for such Merger; or
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<PAGE> 37
iv) The sale or other disposition of all or substantially all of the assets
of the Company, unless immediately following such sale or other
disposition, (i) substantially all of the holders of the Outstanding
Company Voting Securities immediately prior to the consummation of such
sale or other disposition beneficially own, directly or indirectly, more
than 50% of the common stock of the corporation acquiring such assets in
substantially the same proportions as their ownership of Outstanding
Company Voting Securities immediately prior to the consummation of such
sale or disposition, and (ii) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board
at the time of execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the Company.
(c) Change in Control Price. "Change in Control Price" means the highest
price per share paid in any transaction reported on the Nasdaq Stock Market or
paid or offered in any bona fide transaction related to a potential or actual
change in control of the Company at any time during the preceding 60-day period
as determined by the Committee, except that, in the case of Incentive Stock
Options, such price shall be based only on transactions reported for the date
on which such Incentive Stock Options are cashed out.
Section 10. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of an
optionee under a Stock Option or a recipient of a Performance Award, Stock
Appreciation Right or Restricted Stock Award theretofore granted without the
optionee's or recipient's consent or which, without the approval of the
Company's stockholder's, would:
(a) except as expressly provided in the Plan, increase the total number of
shares of Stock which may be issued under the Plan; or
(b) change the class of individuals eligible to receive Performance Awards,
Restricted Stock, Stock Options, or Stock Appreciation Rights under the
Plan.
The Committee may amend the terms of any Stock Option, Stock Appreciation Right,
Restricted Stock Agreement or other award theretofore granted, prospectively or
retroactively, but no such amendment shall impair the rights of any holder
without the holder's consent.
Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting rules, as well
as other developments.
Section 11. Unfunded Status of Plan.
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock or make payments; provided, however, that, unless the Committee
otherwise determines, the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan.
Section 12. General Provisions.
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option to represent to and agree with the Company in writing that the
optionee or participant is acquiring the shares without a view to
the distribution thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer.
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<PAGE> 38
All certificates for shares of Stock or other securities delivered under the
Plan shall be subject to such stock transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Commission, any stock exchange upon which the Stock is then
listed and any applicable Federal, state or foreign securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Company, a subsidiary
or affiliate from adopting other or additional compensation arrangements for its
employees.
(c) The adoption of the Plan shall not confer upon any employee any right
to continued employment nor shall it interfere in any way with the right of the
Company, a subsidiary or affiliate to terminate the employment of any employee
at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the participant for Federal income tax purposes with
respect to any award under the Plan, the participant shall pay to the Company,
or make arrangements satisfactory to the Company regarding the payment of, any
Federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations arising from the award or vesting of
Restricted Stock or the exercise of Stock Options may be settled with
unrestricted Stock, including Stock that is part of, or is received upon
exercise of, the award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company, its subsidiaries and affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the participant. The Committee may establish such
procedures as its deems appropriate, including the making of irrevocable
elections, for the settling of withholding obligations with Stock.
(e) At the time of grant, the Committee may provide in connection with any
grant made under this Plan that the shares of Stock received as a result of
such grant shall be subject to a right of first refusal pursuant to which the
participant shall be required to offer to the Company any shares that the
participant wishes to sell at the then Fair Market Value of the Stock, subject
to such other terms and conditions as the Committee may specify at the time
of grant.
(f) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if sufficient shares of
Stock are available under Section 5 for such reinvestment (taking into account
then outstanding Stock Options, Stock Appreciation Rights and other Plan
awards).
(g) The Committee may establish such procedures as it deems appropriate for
a participant to designate a beneficiary to whom any amounts payable in the
event of the participant's death are to be paid.
(h) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Texas.
Section 13. Effective Date of Plan.
The Plan originally became effective on September 14, 1992. This amendment and
restatement of the Plan shall be effective as provided in Section 1.
Section 14. Term of Plan.
No Stock Option or Stock Appreciation Right shall be granted or award of
Restricted Stock made on or after May 8, 2007, but any such awards granted
prior to such date may extend beyond such date. There shall be no time
limitation with respect to the granting of Performance Awards.
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<PAGE> 39
MARINE DRILLING COMPANIES, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Joan R. Smith and William H. Flores, or
either of them with full power of substitution, proxies to vote at the Annual
Meeting of Stockholders of Marine Drilling Companies, Inc. (the "Company") to
be held at the Shoney's Inn & Suites located at 14444 Southwest Freeway, in
Sugar Land, Texas on Friday, May 9, 1997 at 9:00 a.m., central daylight time,
and at all adjournments or postponements thereof, hereby revoking any proxies
heretofore given, all shares of common stock of the Company held or owned by
the undersigned as directed hereon.
(To be Signed on Reverse Side)
<PAGE> 40
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
MARINE DRILLING COMPANIES, INC.
MAY 9, 1997
- --------------------------------------------------------------------------------
|
/X/ PLEASE MARK YOUR |___
VOTES AS IN THIS
EXAMPLE.
WITHHOLD
FOR all AUTHORITY
nominees to vote for all
nominees listed
1. Election of / / / / Nominees: Robert L. Barbanell
Directors David A. B. Brown
Howard I. Bull
/ / For all nominees listed except vote William H. Flores
withheld for the following nominees: Nathaniel A. Gregory
Christopher M. Linneman
------------------------------------ Jan Rask
------------------------------------
FOR AGAINST ABSTAIN
2. Approval of an amendment and restatement of / / / / / /
the Marine Drilling 1992 Long-Term Incentive
Plan
3. In their discretion, upon any other manner which may properly come before
the meeting or at any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS MADE, THE PERSONS NAMED HEREIN INTEND TO VOTE FOR THE ELECTION OF THE NAMED
NOMINEES FOR DIRECTOR AND FOR PROPOSAL 2.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
SIGNATURE(S) -------------------------------------------- DATE -------------
Note: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian
please give full title as such.
