<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
Cal Dive International, 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:
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<PAGE> 2
[CAL DIVE LOGO]
400 N. SAM HOUSTON PARKWAY E., SUITE 400
HOUSTON, TEXAS 77060
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Cal Dive International, Inc.:
NOTICE IS HEREBY GIVEN that the 2000 annual meeting of shareholders of Cal
Dive International, Inc. will be held Wednesday, May 10, 2000 at 2:00 p.m. local
time in the Toulouse Room at the Hotel Sofitel, 425 N. Sam Houston Parkway, E.,
Houston, Texas 77060, for the following purposes, as more fully described in the
accompanying proxy statement:
1. To elect two "Class III" Directors.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only common shareholders of record at the close of business on March 24,
2000 are entitled to notice of and to vote at the annual meeting and all
adjournments thereof.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. Whether
or not you plan to attend the annual meeting, please mark, date and sign the
enclosed proxy card and return it promptly in the enclosed stamped envelope.
Furnishing the enclosed proxy will not prevent you from voting in person at the
meeting should you wish to do so.
By Order of The Board of Directors
CAL DIVE INTERNATIONAL, INC.
/s/ ANDREW C. BECHER
Andrew C. Becher
Corporate Secretary
Houston, Texas
April 7, 2000
<PAGE> 3
CAL DIVE INTERNATIONAL, INC.
400 N. SAM HOUSTON PARKWAY E., SUITE 400
HOUSTON, TEXAS 77060
APRIL 7, 2000
PROXY STATEMENT
GENERAL
This Proxy Statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Cal Dive International, Inc.
(the "Company" or "CDI") for use at its annual meeting of shareholders to be
held May 10, 2000 at the time and place and for the purposes set forth in the
accompanying Notice of Meeting, and at any adjournment thereof (the "Meeting").
The costs of soliciting proxies as described herein will be borne by CDI.
In addition to soliciting proxies by mail, directors, officers, and employees of
CDI and its subsidiaries, without receiving additional compensation therefor,
may solicit proxies by telephone and in person. Arrangements will also be made
with banks, brokerage firms and other custodians, nominees and fiduciaries to
forward solicitation materials to the beneficial owners of shares of the common
stock of CDI ("Common Stock") and the Company will reimburse such persons for
reasonable out-of-pocket expenses incurred in connection therewith.
The proxy that accompanies this Proxy Statement, when properly executed and
returned, permits each holder of record of Common Stock on March 24, 2000 to
vote on all matters to come before the Meeting. On that date CDI had outstanding
15,664,658 shares of Common Stock, each of which is entitled to one vote. Where
a shareholder specifies his choice on the proxy with respect to a matter being
voted upon, the shares represented by the proxy will be voted in accordance with
such specification. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED IN
FAVOR OF THE TWO (2) PROPOSED CLASS III NOMINEES TO THE BOARD OF DIRECTORS.
The Board of Directors of CDI is not aware of any business to be acted upon
at the Meeting other than those matters set forth in the accompanying Notice of
Meeting. If, however, other proper matters are brought before the Meeting, or
any adjournment thereof, the persons appointed as proxies will have discretion
to vote or abstain from voting thereon according to their best judgment.
A proxy may be revoked by (i) giving written notice of revocation at any
time before its exercise to Andrew C. Becher, Senior Vice President, General
Counsel and Secretary, Cal Dive International, Inc., 400 N. Sam Houston Parkway,
Suite 400, Houston, Texas 77060, (ii) executing and delivering a later dated
proxy to Mr. Becher at any time before its exercise or (iii) attending the
Meeting and voting in person.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Company's 1997 Amended and Restated By-Laws provide for a Board of
Directors consisting of three classes, with the number of directors set at eight
by the Company's Board pursuant to the 1997 Amended and Restated Shareholders
Agreement (the "1997 Shareholders Agreement"). The term of office of the Class
III directors will expire at the 2000 Annual Shareholders Meeting, and those
same persons are again listed as the Class III nominees in the following table
and will be nominated for the election to the Board of Directors for a term
expiring in 2003. The term of office of the Class I directors will expire at the
2001 annual meeting. The term of office of the Class II directors will expire at
the 2002 meeting. Proxies cannot be voted for more than two nominees and not
more than two (2) directors can be elected. In the absence of contrary
instructions, it is the intention of the persons named in the accompanying proxy
to vote the shares represented thereby for the election of the two (2) Class III
nominees listed below.
The following table sets forth certain information as of April 7, 2000
concerning each nominee for director, each director and each executive officer
of the Company named in the Summary Compensation Table contained under
"Executive Compensation and Other Transactions", including the number and
percentage of shares of Common Stock beneficially owned by him, determined in
accordance with Rule 13d-3
<PAGE> 4
of the Securities Exchange Act of 1934 (the "Exchange Act"). The date shown
under the caption "First Elected Director" for each nominee and director refers
to the year in which he was first elected to the Board of Directors. Unless
otherwise indicated, each person has been engaged in the principal occupation
shown for the past five years or longer and shares indicated as beneficially
owned are held directly with sole voting and investment power. In the case of
directors who are also officers of the Company, unless otherwise indicated, such
persons have been employed as an officer in one or more capacities by the
Company or a subsidiary for the past five years or longer. The address of each
director and executive officer is c/o Cal Dive International, Inc., 400 N. Sam
Houston Parkway, Suite 400, Houston, Texas 77060. Except as provided in
Employment Contracts described under "Executive Compensation and Other
Transactions -- Summary of Employment Contracts and Profit Sharing Plan", all
executive officers of the Company serve at the pleasure of the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE TWO (2) NOMINEES FOR CLASS III
DIRECTOR NAMED BELOW:
<TABLE>
<CAPTION>
FIRST SHARES
ELECTED BENEFICIALLY
NAME AGE PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR OWNED PERCENT
- ---- --- ---------------------------------- -------- ------------ -------
<S> <C> <C> <C> <C> <C>
NOMINEES FOR ELECTION AS CLASS III DIRECTORS (TERM EXPIRES IN 2000)
S. James Nelson, Jr. ....... 57 Executive Vice President and Chief 1990 65,000 *
Financial Officer
Kevin Wood.................. 44 Executive Vice President, Coflexip, 1998 --(1) --
Paris, France
CONTINUING CLASS I DIRECTORS (TERM EXPIRES IN 2001)
Owen Kratz.................. 45 Chairman and Chief Executive Officer 1990 1,396,979 8.8
Aline Montel................ 44 Corporate Counsel and Secretary, 1999 --(1) --
Coflexip, Paris, France
Bernard J.
Duroc-Danner.............. 46 Chairman, Chief Executive Officer and 1999 4,400 *
President, Weatherford International,
Inc., Houston, Texas
CONTINUING CLASS II DIRECTORS (FOR TERMS EXPIRING IN 2002)
Martin R. Ferron............ 43 President and Chief Operating Officer 1998 -- --
Gordon F. Ahalt............. 72 President, GFA, Inc. Morristown, New 1990 29,000 *
Jersey
Claire Giraut............... 44 Executive Vice President & Chief 1999 --(1) --
Financial Officer, Coflexip, Paris,
France
NAMED EXECUTIVE OFFICERS NOT SERVING AS DIRECTORS
Lyle K. Kuntz............... 47 President, Energy Resource Technology, N/A -- --
Inc.
Louis T. Tapscott........... 62 Senior Vice President-Business N/A 14,000 *
Development
ALL NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (10 PERSONS).............. 1,509,379 9.5
</TABLE>
- ---------------
* Less than one percent
(1) For information with respect to common stock owned by Coflexip, see
"Principal Shareholders". Mr. Wood, Ms. Montel and Ms. Giraut disclaim
beneficial ownership of those shares.
2
<PAGE> 5
BIOGRAPHICAL INFORMATION
NOMINEES FOR ELECTION
Biographical information, including principal occupation and business
experience during the last five years, of each nominee for Director is set forth
below. Unless otherwise stated, the principal occupation of each nominee has bee
the same for the past five years.
S. James Nelson, Jr., has served as Executive Vice President, Chief
Financial Officer and a director of the Company since 1990. From 1985 to 1988,
Mr. Nelson was the Senior Vice President and Chief Financial Officer of
Diversified Energies, Inc., the former parent of Cal Dive, at which time he had
corporate responsibility for the Company. From 1980 to 1985, Mr. Nelson served
as Chief Financial Officer of Apache Corporation, an oil and gas exploration and
production company. From 1966 to 1980, Mr. Nelson was employed with Arthur
Andersen & Co., and from 1976 to 1980, he was a partner serving on the firm's
worldwide oil and gas industry team. Mr. Nelson received his undergraduate
degree from Holy Cross College (B.S.) in 1964 and a masters in business
administration (M.B.A.) from Harvard University in 1966.
Kevin P. Wood has served on the Company's Board of Directors since December
of 1998. Mr. Wood has been Executive Vice President of the CSO Group since April
1998, and was previously Managing Director of CSO's Asia Pacific subsidiary for
four years. Mr. Wood is currently responsible for the Operations of CSO's Group
subsidiaries in the North Sea, North America and Asia-Pacific regions.
CONTINUING DIRECTORS
Biographical information, including principal occupation and business
experience during the last five years, for each continuing member of the Board
of Directors whose term is not expiring at the 2000 annual meeting is set forth
below. Unless otherwise stated, the principal occupation of each nominee has
been the same for the past five years.
Owen Kratz has served as the Company's Chairman since May, 1998, Chief
Executive Officer since April 1997, President since 1993 and Chief Operating
Officer and director since 1990. He joined the Company in 1984 and has held
various offshore positions, including SAT diving supervisor, and has had
management responsibility for client relations, marketing and estimating.
Aline Montel has served on the Company's Board of Directors since September
1999. Ms. Montel has been head of Coflexip's Legal Department since 1980 and
Corporate Counsel and Company Secretary since 1996. She received a High Degree
in Business Law and European Law from Paris II University.
Bernard J. Duroc-Danner has served on the Company's Board of Directors
since February, 1999. Mr. Duroc-Danner is the Chairman, CEO and President of
Weatherford International, Inc. Previous to its merger with Weatherford, Mr.
Duroc-Danner was President and Chief Executive Officer of EVI, Inc. where he was
directly responsible for the company's 1987 start-up in the oilfield service and
equipment business. Mr. Duroc-Danner also serves as director of Parker Drilling
Company, a provider of contract drilling and drilling services and Offshore Tool
& Energy Corporation, a provider of a range of equipment and services for oil
and gas, marine and industrial applications worldwide.
Martin R. Ferron has served on the Company's Board of Directors since
September of 1998. Mr. Ferron became President in February of 1999 and has
served as Chief Operating Officer since January 1998. Mr. Ferron has twenty
years of worldwide experience in the oilfield industry, the last seven of which
were in senior management positions with McDermott Marine Construction and
Oceaneering International Services Limited. Mr. Ferron has a Civil Engineering
degree, a Masters Degree in Marine Technology, an MBA and is a Chartered Civil
Engineer.
Gordon F. Ahalt has served on the Company's Board of Directors since July
1990 and has extensive experience in the oil and gas industry. Since 1982, Mr.
Ahalt has been the President of GFA, Inc., a petroleum industry management and
financial consulting firm. From 1977 to 1980, he was President of the
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<PAGE> 6
International Energy Bank, London, England. From 1980 to 1982, he served as
Senior Vice President and Chief Financial Officer of Ashland Oil Company. Prior
thereto, Mr. Ahalt spent a number of years in executive positions with Chase
Manhattan Bank. Mr. Ahalt serves as Vice President of W.H. Reaves & Co. Inc., an
asset management company, and as a director of The Houston Exploration Co., The
Harbinger Group and the Bancroft & Elsworth Convertible Funds.
Claire Giraut has served on the Company's Board of Directors since
September 1999. Ms. Giraut has been Executive Vice President, Chief Financial
Officer, Group Communications for Coflexip since 1997 and manages Group
Communications and Investor Relations. Prior to joining Coflexip Stena Offshore
in July of 1997, Ms. Giraut worked for the French engineering and construction
group Serete from 1985 to 1997. Her last two assignments with Serete were as
Chief Financial Officer and then Chief Operating Officer. Ms. Giraut, a Biotech
Engineer, received her degree from the Institut National Agronomique in Paris.
COMMITTEES AND MEETINGS OF DIRECTORS
During the fiscal year ended December 31, 1999, the Board of Directors held
four regular and three special meetings. During the period that they served in
1999, each director of the Company attended 75% or more of the aggregate number
of meetings of the Board of Directors and committees of which he is a member
except Director Duroc-Danner who attended 60% of the meetings.
The CDI Board of Directors currently has three committees. The Audit
Committee, which met twice in the fiscal year ended December 31, 1999, meets
periodically with representatives of the Company's independent public
accountants to obtain an assessment of the financial position and results of
operations of the Company and reports to the Board of Directors with respect
thereto. The Compensation Committee, which met two times in the fiscal year
ended December 31, 1999, reviews, analyzes and recommends compensation programs
to the Board, establishes executive compensation, evaluates the performance of
certain executive officers and is responsible for the administration and the
grant of awards under the Company's 1995 Long Term Incentive Compensation Plan.
The Nominating Committee, which met once in 1999 and does not meet unless
requested by the Board, held one meeting in 1999 and nominated a candidate for
CDI's second Independent Director. Its nomination was made at the Company's
February 1999 Board meeting and Bernard J. Duroc-Danner was elected as a Class I
Director to the Board. It is expected that the Nominating Committee will become
active in seeking another Independent Director in 2000.
DIRECTOR COMPENSATION
The Company pays the reasonable out-of-pocket expenses incurred by each
Director in connection with attending the meetings of the Board of Directors and
any committee thereof and of meetings of the Board of a subsidiary. In addition,
in 1999 the Company paid certain of its Directors (other than those six employed
by the Company and Coflexip) a directors fee of $20,000 per year and $1,000 per
Board Meeting for attending each of four regularly scheduled quarterly meetings.
Furthermore, each of those certain Directors received a fee of $500 ($750 for
the Chair) for each committee meeting attended.
Pursuant to the Company's 1995 Long Term Incentive Compensation Plan (the
"1995 Plan"), each independent director is eligible to receive options to
purchase shares of the Common Stock of the Company at an exercise price equal to
the fair market value of the Common Stock on the date of grant, which, so long
as the Company's Common Stock is quoted on the Nasdaq Stock Market, will be the
final closing sales price per share for the trading day next preceding the date
of grant. As of December 31, 1999, options for 10,000 shares were outstanding to
Gordon F. Ahalt and 22,000 shares were outstanding to Bernard J. Duroc-Danner
under the 1995 Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and beneficial owners of more than 10% of the
Common Stock to file certain beneficial ownership reports with the Securities
and Exchange Commission and to furnish the Company with copies of such reports
4
<PAGE> 7
that they file. Based upon its review of the filings which it has received, the
Company believes that all filings required to be made under Section 16(a) during
1999 were timely made.
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
SUMMARY OF EXECUTIVE COMPENSATION
The following table provides a summary of the compensation of the fiscal
year ended December 31, 1999 for each of (i) the chief executive officer and
(ii) each of the four most highly compensated executive officers of the Company
during 1999 other than the chief executive officer (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
----------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2)(3) OPTIONS(#) COMPENSATION(1)
- --------------------------- ---- -------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Owen Kratz......................... 1999 $280,000 $310,624 -- $4,000
Chairman and Chief 1998 259,359 161,242 -- 4,000
Executive Officer 1997 169,728 169,728 250,000 4,000
Martin R. Ferron................... 1999 $160,000 $149,069 -- $4,000
President and Chief 1998 148,000 -- 75,000 2,646
Operating Officer 1997(4) -- -- -- --
S. James Nelson.................... 1999 $200,000 $221,874 -- $4,000
Executive Vice President and 1998 183,035 126,760 -- 4,000
Chief Financial Officer 1997 133,432 133,432 -- 4,000
Lyle Kuntz......................... 1999 $109,071 $265,145 -- $4,000
President, ERT 1998 103,845 631,888 -- 4,000
1997 106,329 640,085 -- 4,000
Louis L. Tapscott.................. 1999 $151,424 $ 79,852 -- $2,627
Executive Vice President 1998 152,625 63,120 -- 4,000
1997 140,000 70,000 70,000 3,750
</TABLE>
- ---------------
(1) Consists of matching contributions by the Company through its Profit Sharing
Plan.
(2) The Bonus paid in a fiscal year is based on the previous year's performance.
(3) In 1999, despite strong performance relative to others in our industry, no
one in the Subsea and Administrative Groups (including Executive Officers in
those groups) received a bonus due to the Company's failure to achieve net
income levels required under the bonus plan. ERT, however, surpassed its
1999 performance objectives and paid bonuses up to 10% of ERT's net pre-tax
income ($777,000 for Mr. Kuntz).
(4) Mr. Ferron commenced work at the Company on January 1, 1998.
5
<PAGE> 8
STOCK OPTIONS
No stock options were granted in 1999 by the Company to any of the named
Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE FY-END (#) AT FY-END ($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Owen Kratz................. -- $ -- 100,000/150,000 $2,362,500/$3,543,750
Martin R. Ferron........... 15,000 293,125 5,000/55,000 49,375/953,125
S. James Nelson............ -- -- --/-- --/--
Lyle Kuntz................. -- -- --/-- --/--
Louis L. Tapscott.......... 28,000 615,406 --/42,000 --/992,250
</TABLE>
SUMMARY OF EMPLOYMENT CONTRACTS AND RETIREMENT PLANS
Four of the Company's named Executive Officers, Owen Kratz, Martin R.
Ferron, S. James Nelson and Louis L. Tapscott have entered into employment
agreements with the Company. Mr. Kratz's contract is described under
"Compensation Committee Report on Executive Compensation." Each of Messrs.
Ferron, Nelson and Tapscott's contracts have similar terms involving salary,
bonus and benefits (with amounts that vary due to their responsibilities) but
none of them have the right to cause the Company to purchase his shares.
Each of the employment agreements provide, among other things, that until
the later of February 28, 2005 or the first or second anniversary date of
termination of the executive's employment with the Company (depending on the
event of termination), the executive shall not, directly or indirectly either
for himself or any other individual or entity, participate in any business which
engages or which proposes to engage in the business of providing diving services
in the Gulf of Mexico or any other business actively engaged in by the Company
on the date of termination of employment, so long as the Company continues to
make payments to such executive, including his base salary and insurance
benefits received by senior executives of the Company. The Company also entered
into employment agreements with eight of the Company's other senior officers
substantially similar to the above agreements.
If an Executive Officer terminates his employment for "Good Cause" or is
terminated without cause during the two year period following a "Change of
Control", CDI would (a) make a lump sum payment to him of 2 times the sum of the
annual base salary and annual bonus paid to the officer with respect to the most
recently completed fiscal year, (b) all options held by such officer under the
CDI 1995 Long Term Incentive Plan would vest, and (c) he would continue to
receive welfare plan and other benefits for a period of two years or as long as
such plan or benefits allow. For the purposes of the employment agreements,
"Good Cause" includes both that (a) the CEO or COO shall cease employment with
CDI and (b) one of the following: (i) a material change in the officer's
position, authority, duties or responsibilities, (ii) changes in the office or
location at which he is based without his consent (such consent not to be
unreasonably withheld), (iii) certain breaches of the agreement. Each agreement
also provides for payments to officers as part of any "Change of Control". A
"Change of Control" for purposes of the agreements would occur if a person or
group becomes the beneficial owner, directly or indirectly, of securities of the
Company representing forty-five percent (45%) or more of the combined voting
power of the Company's then outstanding securities. The agreements provided that
if any payment to one of the covered officers will be subject to any excise tax
under Code Section 4999, a "gross-up" payment would be made to place the officer
in the same net after-tax position as would have been the case if no excise tax
had been payable.
The Company's Retirement Plan (the "Retirement Plan") is a 401(k) savings
plan. The Retirement Plan permits each employee to become a participant in the
savings plan feature on January 1, April 1, July 1, or October 1 following the
employee's completion of 90 consecutive days of employment. Under the Retirement
Plan, each active participant may elect, subject to certain limitations required
by law, to defer payment of from 1% to 15% of his or her compensation. Upon such
an election, the Company contributes such
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<PAGE> 9
deferred amounts to the Retirement Plan on behalf of such participant. Such
contributions to the 401(k) savings plan are invested according to the
instructions of the participant in investment funds designated by the plan
administrator. Subject to reduction or elimination based on its financial
performance and needs as described in the Retirement Plan, the Company's
contributions are determined annually as 50% of each employee's contribution (up
to a maximum of 5% of the employee's annual salary). Employee contributions to
the 401(k) savings plan and earnings thereon are 100% vested at all times.
Contributions by the Company to the profit sharing feature, and earnings
thereon, vest based on the participant's years of service with the Company,
vesting 20% after two years of service, increasing to 50% with three years of
service, and becoming 100% vested following four years of service. All
contributions vest, regardless of years of service, upon termination of
employment by reason of death or disability, attainment of age 65 or the
termination or discontinuance of the Retirement Plan. After termination of
employment, an employee is entitled to receive a lump-sum distribution of his or
her entire vested interest in the Retirement Plan.
The Company and Mr. Lyle Kuntz are in the process of completing a five-year
retirement and non-compete agreement to be effective March 31, 2000. It has been
proposed, subject to Board approval and other customary terms, that Mr. Kuntz
will be paid $3 million on closing to commence the 5 year non-compete and to
cancel his employment agreement. He will also be paid his salary ($109,071) for
five years and be provided, at company cost, his health and similar welfare
benefits. During the term of his non-compete, he will remain available to
consult with the Company on a project-by-project mutually agreed basis.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Wood, Duroc-Danner, Ahalt and Ferron serve on the Company's
Compensation Committee, with Mr. Ferron acting as its Chairman. Mr. Ferron is
the only Executive Officer of the Company during the fiscal year ended December
31, 1999 serving as a member of the Compensation Committee of the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors reviews, analyzes and
establishes compensation packages for the Company's executive officers, reviews
and provides general guidance for the compensation packages for the Company's
officers, evaluates the performance of the Chief Executive Officer, Chief
Operating Officer and Chief Financial Officer and administers the grant of
stock-based awards under the Company's 1995 Long Term Incentive Compensation
Plan. Messrs. Wood, Duroc-Danner and Ahalt, who are three of the four members of
the Compensation Committee, are non-employee directors of the Company.
In consultation with an employee benefits consultant retained by the
Company in 1998, the Committee adopted an executive compensation philosophy that
seeks to (i) provide a competitive total compensation package that enables the
Company to hire, develop, reward and retain key executives, and (ii) tie bonuses
and executive compensation to the Company's annual business objectives,
strategies and stockholder value. The Company's compensation philosophy is also
intended to reward individual initiative and achievement, and to assure that the
amount and nature of executive compensation is reasonably commensurate with the
Company's financial condition, results of operations and Common Stock
performance.
These objectives are generally sought to be met with competitive base
salaries and annual incentive bonuses higher than a chosen comparison group
keyed primarily to the attainment of performance targets tied to the Company's
budget and the award of stock options or other stock-based awards that focus on
increases in stock value over a longer term. Factors considered from time to
time in establishing and reviewing the Company's executive compensation program
include the Company's financial performance, management's business philosophy,
industry practices and the Company's culture and organizational structure.
INCENTIVE BONUS
In order to link a portion of executive compensation to Company
performance, the Committee determined to continue during 1999 an annual bonus
plan under which each officer and the Company's profit center managers could
earn an annual bonus of between approximately 30% to 100% of salary based on the
quality of the individual's performance and the attainment of pre-established
revenue and profit goals by the
7
<PAGE> 10
Company as a whole and by individual profit centers. The exact amount of the
bonus paid to the executive officers would be determined by the Compensation
Committee. In 1999, despite strong performance relative to others in our
industry, no one in the Subsea and Administrative Groups (including Executive
Officers in those groups) received a bonus due to the Company's failure to
achieve the required net income levels. ERT, however, surpassed its 1999
performance objectives and paid bonuses up to 10% of ERT's net pre-tax income
($777,000 for Mr. Kuntz).
LONG TERM INCENTIVE
Another element of the Committee's performance-based compensation
philosophy is the 1995 Incentive Compensation Plan. The purpose of the Plan is
to link the interests of management to the interests of stockholders and focus
on intermediate and long-term results. Stock option grants are typically made at
100% of the market value of the stock on the date of the award, are not
exercisable during the first year after the award and are exercisable thereafter
under a vesting schedule selected by the Committee that specifies the number of
the options becoming exercisable each year throughout the schedule. The size of
option grants is determined subjectively, generally in approximate proportion to
the officer's level of responsibility and experience.
CHIEF EXECUTIVE OFFICER
The Company and Mr. Kratz entered into a multi-year employment agreement
(the "Agreement") effective February 28, 1999. Pursuant to the provisions of the
Agreement, Mr. Kratz's annual salary is $280,000 as Chairman and Chief Executive
Officer. Mr. Kratz's salary is subject to review by the Board of Directors
annually. Mr. Kratz is also entitled to participate in all profit sharing,
incentive, bonus and other employee benefit plans made available to the
Company's executive officers but does not have the right to cause the Company to
purchase his shares. Mr. Kratz's agreement contains the same "Good Cause" and
"Change of Control" provisions as described above for other senior officers.
Under the Agreement, Mr. Kratz will be eligible for an annual bonus up to
100% of his base salary upon the attainment of certain Company-wide performance
goals (exceeding those goals can cause the bonus to exceed 100%), the amount of
which is to be determined by the Company's Compensation Committee. Pursuant to
the terms of the Agreement and in consideration of previous agreements which
were canceled, Mr. Kratz was granted options to purchase 250,000 shares of
Common Stock beginning April 11, 1998 at an option exercise price of $9.50 per
share. Such options are exercisable in installments of 50,000 shares each year
over five years.
At the end of Mr. Kratz's employment with the Company, the Company may, in
its sole discretion under the Agreement, elect to trigger a non-competition
covenant pursuant to which Mr. Kratz will be prohibited from competing with the
Company in various geographic areas for a period of up to five years. The amount
of the noncompetition payment to Mr. Kratz under the Agreement will be his base
salary plus company health and welfare benefits.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
Under Section 162(m) of the Internal Revenue Code, as amended, no deduction
by a publicly held corporation is allowed for compensation paid by the
corporation to its most highly compensated executive officers to the extent that
the amount of such compensation for the taxable year for any such individual
exceeds $1 million. Section 162(m) provides for the exclusion of compensation
that qualifies as performance-based from the compensation that is subject to
such deduction limitation. Incentive compensation granted through the Company's
Stock Option Plan may also qualify as performance-based compensation if
additional requirements are met. The Company anticipates that the components of
individual annual compensation for each highly compensated executive officer
that do not qualify for any exclusion from the deduction limitation of Section
162(m) will not exceed $1 million and will therefore qualify for deductibility.
SUBMITTED BY THE COMPENSATION COMMITTEE, MARTIN FERRON, KEVIN WOOD, GORDON F.
AHALT AND BERNARD J. DUROC-DANNER.
8
<PAGE> 11
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock for the period since the Company's initial public
offering in July 1997 to the cumulative total shareholder return, for (i) all
U.S. stocks quoted on the NASDAQ Stock Market as measured by the NASDAQ
Composite Index ("NASDAQ"), assuming the reinvestment of dividends; (ii) the
Philadelphia Oil Service Sector Index ("OSX"), a price-weighted index of leading
oil service companies, assuming the reinvestment of dividends; and (iii) a peer
group selected by the Company ("Peer Group") consisting of the following
companies, each of which is in the offshore construction business or the
offshore oil and gas support services business, or both businesses: Coflexip,
Global Industries, Ltd., Horizon Offshore, Inc., Oceaneering International,
Inc., Stolt Offshore and McDermott International. The returns of each member of
the Peer Group have been weighted according to each individual company's equity
market capitalization as of December 31, 1999 and have been adjusted for the
reinvestment of any dividends. The Company believes that the members of the Peer
Group provide services and products more comparable to those of the Company than
those companies included in the OSX. The Company's initial public offering was
completed in July 1997 and, accordingly, return information for earlier periods
is not presented. The graph assumes $100 was invested on July 1, 1997 in the
Company's Common Stock at its IPO price and on June 30, 1997 in the three
indices presented. The Company paid no dividends during the period presented.
The cumulative total percentage returns for the period presented were as
follows: Company Common Stock, 120%; the NASDAQ Composite Index, 182.2%; the
OSX, -6.1%; and the Peer Group, -27.6%. These results are not necessarily
indicative of future performance.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
6/30/97 09/30/97 12/31/97 03/31/98 06/30/98 09/30/98 12/31/98 03/31/99 06/30/99 09/30/99 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cal Dive 100.00 248.33 163.33 220.00 183.75 120.00 138.33 139.17 199.17 228.33 220.83
Peer Group(1) 100.0000 155.6077 144.8916 163.0481 146.5200 102.6093 81.6100 94.2337 112.1366 94.9669 72.3695
Oil Service Index 100.0000 135.4381 124.9399 119.9039 97.7387 63.7099 56.2923 74.0004 86.0280 82.8600 93.9043
NASDAQ 100.0000 116.8938 108.8956 127.2948 131.3903 117.4589 152.0516 170.6852 186.2684 190.4318 282.1853
</TABLE>
NOTES
1. Peer Group Consists of Coflexip, Global Industries, Ltd., Horizon Offshore,
Inc., Oceaneering International, Stolt Offshore and McDermott International
9
<PAGE> 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Described below are certain related agreements. The following descriptions
are qualified in their entirety by reference to the complete text of the
relevant agreements, copies of which are filed as exhibits to the Company's
Registration Statements on Form S-1 (Registration No. 333-26357 and Registration
No. 333-50751) filed with the Securities and Exchange Commission.
PURCHASE AGREEMENT
On April 11, 1997, the Company, certain executive shareholders (Messrs.
Kratz and Nelson) and certain other shareholders of the Company entered into an
agreement with Coflexip pursuant to which (i) the Company sold to Coflexip
528,541 shares of Common Stock and (ii) certain shareholders of the Company,
including Messrs. Kratz and Nelson, sold to Coflexip 3,171,247 shares of Common
Stock, all at a purchase price of $9.46 per share for an aggregate price of $35
million (the "Purchase Agreement"). For issuing Common Stock to Coflexip, the
Company received $5 million in consideration, consisting of two newly
constructed heavy work class construction remotely operated vehicles. Among
other terms of the Purchase Agreement, the Company was required to make a number
of specific representations, warranties and covenants about its business,
capital structure, assets and liabilities. Individual selling shareholders were
required to make separate representations. The Company and Coflexip also agreed
to indemnify each other against certain claims and liabilities arising in
connection with the transaction for a minimum of three years for up to the
amount of consideration transferred for shares, in the case of the Company, or
for the value of the assets transferred, in the case of Coflexip.
SHAREHOLDERS AGREEMENT
Composition of the Board
Pursuant to the 1997 Shareholders Agreement, the Board is required to
consist of 8 members. Over three successive Annual Meetings, the Company will
nominate three Directors from Coflexip and three from the Company's senior
management. In addition, the Board will nominate two independent directors by a
majority vote of the entire Board. Directors serve in three separate classes.
The 1997 Shareholders Agreement provides that the Company will nominate and use
its best efforts to take all necessary action to elect to the Board the
individuals required to be nominated for election as directors.
Right of First Offer
The 1997 Shareholders Agreement provides that the Company will not enter
into any agreement (i) to sell the Company (ii) to retain an advisor to sell the
Company or (iii) to pursue any acquisition in excess of 50% of the Company's
market capitalization (based on the 30-day average trading value of the Common
Stock) without first notifying Coflexip in writing and providing Coflexip
(including its affiliates) the opportunity to consummate an acquisition on terms
substantially equivalent to any proposal. If Coflexip does not notify the
Company of its intent to pursue a transaction within 15 days of the notice, the
Board will have the right to pursue the transaction.
If Coflexip elects to pursue an acquisition of the Company, the Company
will take no further action with respect thereto for 120 days from the date of
Coflexip's notice. Coflexip retains the foregoing rights to acquire the Company
so long as it owns at least five percent of the Company's Common Stock.
Limited Preemptive Rights
The 1997 Shareholders Agreement provides that, except under limited
circumstances (including issuances of securities under stock option plans or in
connection with acquisitions), the Company shall provide preemptive rights to
acquire the Company's securities to Coflexip and the Executive Directors. In the
event of any public offering by the Company and subject to certain limitations,
Coflexip may have the opportunity to
10
<PAGE> 13
acquire their pro rata share unless the managing underwriters for such offering
believe it would materially and adversely affect the marketability of such
offering.
Limitations on Transfers
The 1997 Shareholders Agreement contains certain customary transfer
restrictions that prohibit the parties from transferring any Common Stock,
except for certain permitted transfers.
REGISTRATION RIGHTS AGREEMENTS
In January 1995 and later in 1997, the Company, certain shareholders and
Coflexip entered into registration rights agreements (the "Registration Rights
Agreements") providing for demand and "piggyback" registration rights with
respect to such shares. These registration rights agreements provide that if the
Company proposes to register any of its securities under the Securities Act, the
holder is entitled to include shares of Common Stock owned by such holder in
such offering provided, among other conditions, that the underwriters of any
offering have the right to limit the number of such shares included in such
registration. Such Registration Rights Agreements further provide for
registration upon the request of holders of at least 5% of the shares of Common
Stock subject to the agreement. The Company pays certain expenses of a demand
offering but does not pay underwriting discounts and commissions. In connection
with its public offerings, the Company paid the costs of four Shareholders to
sell 3,593,104 of their CDI shares to be registered effective May 21, 1998.
ACQUISITION OF AQUATICA, INC.
In February 1998, CDI purchased a significant minority equity interest in
Aquatica, Inc., a surface diving company. The related Shareholder Agreement
provided that the remaining shares of Aquatica, Inc. could be converted into Cal
Dive shares based on a formula which, among other things, values the shares of
Aquatica, Inc. and must be accretive to Cal Dive shareholders. Effective August
1, 1999, 696,000 shares of common stock of Cal Dive were issued for all of the
remaining common stock of Aquatica, Inc. pursuant to these terms. Sonny Freeman,
President of Aquatica and an Executive Officer of the Company, received 626,000
of those shares in connection with the transaction.
QUORUM AND VOTING OF PROXIES
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Company is necessary to constitute a quorum.
Shareholders voting, or abstaining from voting, by proxy on any issue will be
counted as present for purposes of constituting a quorum. If a quorum is
present, (i) the election of the two directors to be elected at the Meeting will
be determined by plurality vote (that is, the nominees receiving the largest
number of votes will be elected) and (ii) a majority of votes actually cast will
be required to approve any matter properly brought before the Meeting for a vote
of stockholders. Shares for which proxy authority to vote for any nominee for
election as a director is withheld by the stockholders and shares that have not
been voted by brokers who may hold shares on behalf of the beneficial owners
("broker non-votes") will not be counted as voted for the affected nominee. With
respect to any other matter coming before the Meeting, shares that are not voted
as a result of abstentions and broker non-votes will not be considered as cast
in determining whether or not a majority of votes has been cast.
11
<PAGE> 14
PRINCIPAL SHAREHOLDERS
The following table sets forth information as to the only persons (or
entities) known by the Company to have beneficial ownership, as of March 24,
2000, of more than 5% of the outstanding shares of Company Common Stock, other
than Owen Kratz whose beneficial ownership and address is disclosed under
"Election of Directors." As of March 24, 2000, the Company had 15,664,658 shares
outstanding. To the Company's knowledge, all shares shown as beneficially owned
are held with sole voting power and sole dispositive power unless otherwise
indicated. The information set forth below has been determined in accordance
with Rule 13d-3 under the Exchange Act on the basis of the most recent
information furnished to the Company by the person listed.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME AND ADDRESS OWNED PERCENT OF CLASS
- ---------------- ------------------- ----------------
<S> <C> <C>
Coflexip.................................................... 3,699,788 23.6%
23 Avenue de Neuilly
75116 Paris, France
Peter R. Kellogg............................................ 1,039,074 6.6%
120 Broadway
New York, New York 10271
Dresdner RCM Global Investors, LLC.......................... 859,500 5.5%
Four Embarcadaro Center
San Francisco, California 94111
R. Chaney & Partners, L.P. ................................. 763,135 4.9%
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010-1006
</TABLE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the year ended December 31, 1999
were audited by the firm of Arthur Andersen LLP of Houston, Texas.
Representatives of Arthur Andersen LLP are expected to be present at the
Meeting, and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Eligible shareholders who desire to present a proposal qualified for
inclusion in the proxy materials relating to the Company's 2001 annual meeting
must forward such proposal to the Corporate Secretary of the Company at the
address set forth on the Notice of the Meeting in time to arrive at the Company
prior to February 12, 2001.
By Order of the Board of Directors
CAL DIVE INTERNATIONAL, INC.
/s/ ANDREW C. BECHER
Andrew C. Becher
Corporate Secretary
Houston, Texas
April 7, 2000
12
<PAGE> 15
[CAL DIVE LOGO]
400 N. SAM HOUSTON PARKWAY E. SUITE 400
HOUSTON TX. 77060-3500
PHONE #(281) 618-0400
[HOUSTON MAP]
<PAGE> 16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
MAY 10, 2000
AND PROXY STATEMENT
[CAL DIVE LOGO]
400 N. SAM HOUSTON PARKWAY E., SUITE 400
HOUSTON, TEXAS 77060
[Recycled Symbol]Printed on recycled paper.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 17
Please detach here
_ _ _ _ _ _
| |
| THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1. |
| |
1. To elect two directors of the Company to have a term expiring in 2003
and until his successor shall be elected and duly qualified.
[ ] For the two [ ] WITHHOLD AUTHORITY
"Class III" nominees to vote for the nominees
S. JAMES NELSON, JR. ___________________________
KEVIN WOOD ___________________________
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON
THE PROXY BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE CLASS III DIRECTORS INDICATED IN NUMBER 1 ABOVE.
ABSTENTIONS WILL BE COUNTED TOWARD THE EXISTENCE OF A QUORUM.
Dated: ____________________
___________________________
___________________________
Signature(s) in Box
Please sign exactly as the name appears on this proxy. When shares are held
by joint tenants, both should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporation name by president or other
authorized officer. If a partnership, please sign in partnership name by an
authorized person.
| |
| |
|_ _ _ _ _ _|
<PAGE> 18
CAL DIVE INTERNATIONAL, INC.
400 N. SAM HOUSTON PARKWAY, E.
SUITE 400
HOUSTON, TX 77060
PROXY
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, having duly received the Notice of Annual Meeting of
Shareholders and the Proxy Statement, dated April 7, 2000 hereby appoints
Owen E. Kratz and Andrew C. Becher as proxies (each with the power to act alone
and with the power of substitution and revocation) to represent the undersigned
and to vote, as designated below, all common shares of Cal Dive International,
Inc. held of record by the undersigned on March 24, 2000 at the 2000 Annual
Meeting of Shareholders to be held on May 10, 2000 at 2:00 p.m. at the Hotel
Sofitel located at 425 N. Sam Houston Parkway, E., Houston, Texas 77060, and at
any adjournments thereof.
See reverse for voting instructions.
