<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
SUPERIOR ENERGY SERVICES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
SUPERIOR ENERGY SERVICES, INC.
1105 PETERS ROAD
HARVEY, LOUISIANA 70058
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the holders of common stock of Superior Energy Services, Inc.:
The annual meeting (the "Meeting") of stockholders of Superior Energy
Services, Inc. (the "Company") will be held at 201 St. Charles Avenue, 52nd
Floor, New Orleans, Louisiana 70170, on Thursday, May 18, 2000, at 10:00 a.m.,
New Orleans time, to consider and vote on:
1. The election of directors; and
2. Such other business as may properly come before the meeting or any
adjournment thereof.
Only holders of record of the Company's common stock at the close of
business on April 3, 2000 are entitled to notice of and to vote at the annual
meeting.
Even if you now expect to attend the Meeting, you are requested to mark,
sign, date, and return the accompanying proxy in the enclosed addressed,
postage-paid envelope. If you attend the Meeting, you may vote in person,
whether or not you have sent in your proxy. A proxy may be revoked at any time
prior to the voting thereof.
By Order of the Board of Directors
/s/ CAROLYN PLAISANCE
Carolyn Plaisance
Secretary
Harvey, Louisiana
April 17, 2000
<PAGE> 3
SUPERIOR ENERGY SERVICES, INC.
1105 PETERS ROAD
HARVEY, LOUISIANA 70058
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 2000
This Proxy Statement is furnished to the stockholders of Superior Energy
Services, Inc. (the "Company") in connection with the solicitation on behalf of
the Board of Directors (the "Board") of proxies for use at the annual meeting of
stockholders to be held on May 18, 2000, at the time and place set forth in the
accompanying notice and any adjournment thereof (the "Meeting").
Only stockholders of record as of the close of business on April 3, 2000
are entitled to notice of and to vote at the Meeting. On that date, 59,992,789
shares of common stock, $0.001 par value per share (the "Common Stock"), were
outstanding, each of which is entitled to one vote.
A stockholder may revoke the enclosed proxy at any time prior to its
exercise by filing with the Secretary of the Company a written revocation or
duly executed proxy bearing a later date. A stockholder who votes in person at
the Meeting in a manner inconsistent with a proxy previously filed on the
stockholder's behalf will be deemed to have revoked such proxy as it relates to
the matter voted upon in person. Attendance at the Meeting will not in and of
itself constitute a revocation of a proxy. Unless otherwise marked, properly
executed proxies in the form of the accompanying proxy card will be voted for
the election of the nominees to the Board listed below.
This Proxy Statement is first being mailed to stockholders on or about
April 17, 2000 and the cost of soliciting proxies in the enclosed form will be
borne by the Company. In addition to the use of the mails, proxies may be
solicited by personal interview, telephone and telegraph. Banks, brokerage
houses and other nominees or fiduciaries will be requested to forward the
soliciting material to their principals and to obtain authorization for the
execution of proxies, and the Company will, upon request, reimburse them for
their expenses in so acting.
ELECTION OF DIRECTORS
VOTING PROCEDURE
The Company's Bylaws authorize the Board to fix the number of directors.
Pursuant thereto, the Board has fixed the number of directors to be elected at
the Meeting at six, and proxies cannot be voted for a greater number of persons.
Unless authority is withheld, the persons named in the enclosed proxy will vote
the shares represented by the proxies received by them for the election of the
six nominees named below to serve until the next annual meeting and until their
successors are duly elected and qualified.
Unless authority to vote for the election of directors is withheld, the
proxies solicited hereby will be voted FOR the election of each individual named
below as a director or nominee. If any nominee should decline or be unable to
serve for any reason, votes will instead be cast for a substitute nominee
designated by the Board. The Board has no reason to believe that any nominee
will decline to be a candidate or, if elected, will be unable or unwilling to
serve. Under the Company's Bylaws, directors are elected by a plurality vote.
INFORMATION ABOUT DIRECTORS
The following sets forth certain information, as of March 31, 2000, about
the directors, of the Company. Each incumbent director listed below has been
nominated for re-election.
<PAGE> 4
Richard A. Bachmann, age 55, has served as a Director of the Company since
July 1999. He has been Chairman, President and Chief Executive Officer of Energy
Partners, Ltd., an independent oil and gas exploration company, since its
formation in March 1997. Mr. Bachmann's career began at Standard Oil of New
Jersey where he moved through positions of increased responsibility in the
treasury department. Mr. Bachmann served as President and Chief Operating
Officer of The Louisiana Land and Exploration Company ("LL&E") from September
1995 to January 1997, and served as a director of LL&E from 1989 to 1997. In
addition to sitting on numerous boards of charitable organizations, Mr. Bachmann
sits on the Board of Directors of the Penn Virginia Company, a developer of
natural gas deposits and mineral leases.
Ben A. Guill, age 49, has served as a Director of the Company since July
1999 and is President of First Reserve Corporation ("First Reserve"), a
corporate manager of private investments focusing on the energy and
energy-related sectors, which he joined in September 1998. Prior to joining
First Reserve, Mr. Guill spent eighteen years with Simmons & Company
International, an investment banking firm, where he served as Managing Director
and Co-Head of Investment Banking. Mr. Guill also serves as a director of Range
Resources Group, an oil and gas company, Destiny Resource Services Corp., a
Canadian provider of seismic drilling and oilfield services, and National
Oilwell, Inc. ("National Oilwell"), a manufacturer and distributor of oil field
equipment.
Terence E. Hall, age 54, has served as the Chairman of the Board, Chief
Executive Officer, President and a Director of the Company since December 1995.
Since 1989, he has also served as President and Chief Executive Officer of
Superior Well Service, Inc. and Connection Technology, Ltd., both of which are
wholly-owned subsidiaries of the Company.
William E. Macaulay, age 54, has served as a Director of the Company since
July 1999 and is the Chairman and Chief Executive Officer of First Reserve,
which he joined in 1983. Mr. Macaulay also serves as a director of Weatherford
International, Inc., an oilfield services company, Maverick Tube Corporation, a
manufacturer of steel pipe and casing, National Oilwell, a manufacturer and
distributor of oil field equipment, Pride International Inc., a provider of
contract drilling and related services, TransMontaigne Inc., a transporter and
marketer of petroleum products, and Grant Prideco, Inc., a drill pipe
manufacturer.
Robert E. Rose, age 61, has served as a Director of the Company since July
1999. He has been a Director, President and Chief Executive Officer of Global
Marine Inc. ("Global Marine") since May 1998 and Chairman of its Board since May
1999. Mr. Rose began his professional career with Global Marine in 1964. He left
Global Marine in 1976 and has held several executive positions with other
offshore drilling companies, including more than a decade as President and Chief
Executive Officer of Diamond Offshore Drilling, Inc. ("Diamond") and its
predecessor, Diamond M Company. He resigned from Diamond in April 1998 and
served as President and Chief Executive Officer of Cardinal Holding Corp.
("Cardinal"), an oilfield services company, from April 1998 to May 1998. In July
1999, Cardinal became a wholly-owned subsidiary of the Company.
Justin L. Sullivan, age 60, has served as a Director of the Company since
December 1995. Mr. Sullivan has been a private investor and has served as a
business consultant since May 1993. Prior to May 1993, he held senior management
positions with various companies in the forest products industry. Mr. Sullivan
also has been an accounting faculty member of the University of New Orleans and
Tulane University.
BOARD COMMITTEES
The Board has an Audit and Compensation Committee, but does not have a
nominating committee. The current members of the Audit Committee are Messrs.
Sullivan, Bachmann and Guill. The Audit Committee, which met one time during
1999, is responsible for (i) making recommendations to the Board concerning the
engagement of the Company's independent public accountants, (ii) consulting with
the independent public accountants with regard to the plan of audit, (iii)
consulting with the Company's chief financial officer on any matter the Audit
Committee or the chief financial officer deems appropriate in connection with
carrying out the audit, (iv) reviewing the results of audits of the Company by
its independent public accountants, (v) reviewing all related party transactions
and all other potential conflict of interest situations, (vi) discussing
2
<PAGE> 5
audit recommendations with management and reporting the results of its reviews
to the Board and (vii) performing such other functions as may be prescribed by
the Board.
The current members of the Compensation Committee are Messrs. Guill and
Rose. The Compensation Committee met two times during 1999. The Compensation
Committee is responsible for administering the Company's two stock incentive
plans and performing such other functions as may be prescribed by the Board.
In 1999, the current Board held three meetings. Each director attended 75%
or more of the meetings of the board of directors and committees of which he was
a member that were held during the period in which he served.
DIRECTOR COMPENSATION
Each director who is not a full-time employee of the Company is paid a
director's fee of $15,000 annually, plus $1,000 for each Board and committee
meeting attended. Directors are also reimbursed for reasonable expenses incurred
in attending Board and committee meetings. Under the Company's 1999 Stock
Incentive Plan (the "Plan"), directors who are not also full-time employees of
the Company receive options to acquire 20,000 shares of the Company's Common
Stock on the date such person first becomes a member of the Board and an option
to acquire 5,000 shares of the Company's Common Stock on the day following each
annual meeting of stockholders.
3
<PAGE> 6
PRINCIPAL STOCKHOLDERS
The following table indicates the beneficial ownership, as of March 31,
2000, of the Company's Common Stock by (i) each director, (ii) each Named
Officer disclosed under the "Summary Compensation Table," (iii) each person
known by the Company to own more than 5% of the outstanding shares of the
Company's Common Stock, and (iv) all directors and executive officers of the
Company as a group, all as determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934. Except as otherwise indicated below, all shares
indicated as beneficially owned are held with sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNER OF CLASS
- ------------------------------------ ---------------- --------
<S> <C> <C>
First Reserve Fund VII, Limited Partnership(1).............. 10,769,777 18.0%
475 Steamboat Road, 2nd Floor
Greenwich, Connecticut 06830
First Reserve Fund VIII, L.P.(1)............................ 7,179,850 12.0%
475 Steamboat Road, 2nd Floor
Greenwich, Connecticut 06830
John P. Kotts............................................... 7,696,095 12.8%
650 Poydras Street, Suite 2525
New Orleans, LA 70130
Dresdner RCM Global Investors LLC(2)........................ 3,080,900 5.1%
Four Embarcadero Center
San Francisco, California 94111
Terence E. Hall............................................. 1,749,819(3) 2.9%
Justin L. Sullivan.......................................... 30,000(3) *
William E. Macaulay......................................... 17,969,627(3)(4) 30.0%
Ben A. Guill................................................ 20,000(3) *
Robert E. Rose.............................................. 20,000(3) *
Richard A. Bachmann......................................... 20,000(3) *
Kenneth L. Blanchard........................................ 451,568(3)(5) *
Robert S. Taylor............................................ 235,000(3) *
Charles P. Funderburg....................................... 371,000(3)(6) *
James A. Holleman........................................... 151,403(3) *
All directors and executive officers as a group (ten
persons).................................................. 21,018,417(4)(7) 34.2%
</TABLE>
- ---------------
* Less than 1%.
(1) First Reserve is the indirect general partner of First Reserve Fund VII,
Limited Partnership and First Reserve Fund VIII, L.P. (together, the
"Funds") and is deemed to beneficially own the shares held by both of the
Funds.
(2) Based on a Schedule 13G, dated February 16, 2000, filed with the Securities
and Exchange Commission. In its Schedule 13G, Dresdner RCM Global Investors
LLC ("Dresdner RCM") reported sole voting power with respect to 2,574,700
shares, and sole dispositive power with respect to 2,502,000 shares, as a
result of acting as investment advisor to Dresdner RCM US Holdings LLC, a
wholly-owned subsidiary of Dresdner Bank AG, an international banking
organization headquartered in Germany.
(3) Includes the following number of shares subject to options that are
exercisable by July 15, 2000: Mr. Hall, 206,872; Mr. Sullivan, 20,000; Mr.
Macaulay, 20,000; Mr. Guill, 20,000; Mr. Rose, 20,000; Mr. Bachmann, 20,000;
Mr. Blanchard, 375,000; Mr. Taylor, 230,000; Mr. Funderburg, 347,000; and
Mr. Holleman, 132,500.
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<PAGE> 7
(4) Includes shares held by both of the Funds. Mr. Macaulay is a controlling
stockholder of First Reserve, the indirect general partner of each of the
Funds, and expressly disclaims beneficial ownership of such shares.
(5) Includes 49,568 shares held by Mr. Blanchard's children, of which Mr.
Blanchard is deemed to be the beneficial owner.
(6) Includes 8,000 shares held by Mr. Funderburg's children, of which Mr.
Funderburg is deemed to be the beneficial owner.
(7) Includes 1,391,372 shares subject to options that are exercisable by July
15, 2000 held by directors and executive officers.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended December 31, 1999,
1998 and 1997, the compensation of the Company's chief executive officer and the
four other most highly compensated executive officers of the Company, all who
were serving in such capacities at December 31, 1999. The persons named in the
table are referred to in this proxy statement as the "Named Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS COMPENSATION(1)
- --------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Terence E. Hall...................... 1999 $362,971 $132,000 488,617 $6,339
Chairman, Chief Executive Officer 1998 346,570 302,202 -- 3,939
1997 316,669 392,470 -- 4,843
Kenneth L. Blanchard................. 1999 $139,687 $572,850(2) 372,000 $6,339
Vice President 1998 139,753 133,970 75,000 3,939
1997 127,749 173,987 25,000 4,355
Charles P. Funderburg................ 1999 $130,977 $533,386(2) 347,000 $6,339
Vice President 1998 140,421 133,970 75,000 3,939
1997 127,650 173,987 45,000 3,939
Robert S. Taylor..................... 1999 $130,681 $ 72,850 240,000 $6,339
Chief Financial Officer 1998 125,493 77,000 60,000 3,939
1997 107,104 100,000 25,000 3,539
James A. Holleman(3)................. 1999 $ 64,723 $ 52,800 265,000 $1,993
Vice President
</TABLE>
- ---------------
(1) Comprised of the Company's matching contributions to the 401(k) plan and
hospitalization and health insurance.
(2) Includes a $500,000 bonus paid as a result of the executive's efforts
resulting in the acquisition of Cardinal in July 1999.
(3) Mr. Holleman became an officer of the Company in July 1999.
EXECUTIVE EMPLOYMENT AGREEMENTS
Mr. Hall's employment agreement with the Company was amended and restated
in July 1999 to: (a) provide for an annual base salary of $375,000; (b) replace
the previous bonus arrangement with Mr. Hall's participation in a new management
incentive bonus plan administered by the Compensation Committee of the Company;
and (c) grant to Mr. Hall an option to purchase 488,617 shares of Common Stock.
The amended agreement has an identical term to the original agreement and
terminates on December 13, 2000. The employment term will be automatically
renewed for an additional year unless the Company or Mr. Hall gives at least 90
days written notice that the term will not be extended. The amended agreement
contains non-competition and other provisions to protect the Company's interests
in the event that Mr. Hall ceases to be employed by the Company.
In July 1999, the Company entered into two-year employment agreements with
Messrs. Funderburg, Blanchard, Taylor and Holleman that provide annual base
salaries of $135,000 for Messrs. Blanchard and Holleman, and annual base
salaries of $125,000 for Messrs. Funderburg and Taylor. Each of these officers
will also be eligible to earn an annual incentive bonus based upon the
achievement of performance objectives,
6
<PAGE> 9
under the Company's new management incentive bonus plan, as determined by the
Compensation Committee of the Company. In addition to the foregoing amounts,
Messrs. Blanchard and Funderburg each received, in consideration of services
performed by each in connection with the Company's acquisition of Cardinal in
July 1999, a one-time cash payment of $500,000. The officers' employment
agreements contain non-competition and other provisions to protect the Company's
interests in the event that any officer ceases to be employed by the Company. In
consideration of such non-competition provisions, Messrs. Blanchard and
Funderburg will each receive payments totaling an aggregate of $500,000, payable
in two equal installments on the first two anniversaries of the effective date
of their employment agreements.
All of the Company's employment agreements with its officers provide for
the termination of employment: (i) upon death; (ii) upon disability; or (iii) by
the Company for cause, which includes a willful and continued failure by the
officer to substantially perform his duties, or if the officer willfully engages
in misconduct that is materially injurious to the Company. Mr. Hall's agreement
also provides for the termination by Mr. Hall for good reason, which includes a
failure by the Company to comply with any material provision of the employment
agreement.
Upon termination of an officer's employment, the Company must pay to such
officer all compensation owing through the date of termination. Upon termination
of Mr. Hall due to his death or disability, in addition to all compensation
owing through the date of termination, the Company would pay to Mr. Hall a
benefit in an amount equal to one-year's base salary. If Mr. Hall's agreement is
terminated by the Company other than for cause or by Mr. Hall for good reason,
Mr. Hall would be entitled to an amount equal to the sum of his then base salary
and the bonus paid or payable to Mr. Hall for the preceding fiscal year,
multiplied by the greater of (a) two or (b) the number of years remaining in the
term of Mr. Hall's employment under the agreement.
1999 STOCK OPTION AND STOCK APPRECIATION RIGHT GRANTS
The following table contains information concerning the grants of options
granted to the Named Officers during 1999. No stock appreciation rights were
granted during 1999.
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL RATES
NO. OF SHARES OPTIONS OF STOCK APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2)
OPTIONS EMPLOYEES OR BASE EXPIRATION ---------------------------
NAME GRANTED IN 1999(1) PRICE DATE 5% 10%
- ---- ------------- ---------- -------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Terence E. Hall............ 488,617 18.9% $5.75 7/15/09 $1,766,910 $4,477,969
Kenneth L. Blanchard....... 107,000 14.4% $5.75 7/15/04 $ 169,982 $ 375,616
265,000 5.75 7/15/09 958,278 2,428,465
Charles P. Funderburg...... 107,000 13.4% $5.75 7/15/04 $ 169,982 $ 375,616
240,000 5.75 7/15/09 867,874 2,199,364
Robert S. Taylor........... 240,000 9.3% $5.75 7/15/09 $ 867,874 $2,199,364
James A. Holleman.......... 265,000 10.2% $5.75 7/15/09 $ 958,278 $2,428,465
</TABLE>
- ---------------
(1) Each respective percentage includes all options granted to that executive
officer in 1999.
(2) Appreciation has been calculated over the term of the options, beginning
with the exercise price of each respective option.
7
<PAGE> 10
AGGREGATE OPTION EXERCISES DURING 1999 AND OPTION VALUES AT FISCAL YEAR END
The following table contains information concerning the aggregate option
exercises during 1999 and the value of outstanding options as of December 31,
1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR END(#) AT YEAR END($)(1)
ACQUIRED ON VALUE ------------------------- -------------------------
EXERCISE(#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Terence E. Hall............... -- -- 44,000/488,617 $185,680/488,617
Kenneth L. Blanchard.......... -- -- 135,500/372,000 232,015/372,000
Charles P. Funderburg......... -- -- 120,000/347,000 149,400/347,000
Robert S. Taylor.............. -- -- 110,000/240,000 189,250/240,000
James A. Holleman............. -- -- 0/265,000 0/265,000
</TABLE>
- ---------------
(1) Based on the difference between the closing sale price of the Company's
Common Stock of $6.75 on December 31, 1999, as reported by the Nasdaq
National Market and the exercise price of such options.
COMPENSATION COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, which is currently
comprised of two non-employee directors, Messrs. Rose and Guill, provides
overall guidance to the Company's executive compensation programs, administers
the Company's Management Incentive Plan (the "Incentive Plan") and administers
the Company's two stock option plans.
The Compensation Committee makes recommendations to the Board regarding the
compensation of the Chief Executive Officer. The Chief Executive Officer does
not participate in discussions about his compensation matters or in the making
of recommendations by the Compensation Committee of his compensation. The Board
must approve all compensation actions regarding the Chief Executive Officer. The
Board approved all transactions which were recommended by the Compensation
Committee related to the compensation of the Chief Executive Officer for the
1999 fiscal year.
The Company's executive compensation policy seeks to ensure that the base
and cash bonus compensation of the Company's executive officers and other key
employees of the Company are competitive with other similar size companies in
the oilfield service industry while, within the Company, being fair and
differentiating on the basis of individual performance. Annual awards of stock
options are intended to retain executives and key employees and to motivate them
to improve long-term stock market performance.
Base Salary
In establishing base cash compensation for its executives, the Company
targets the median cash compensation of its competitors for their executives
having similar responsibilities. Base salaries have historically been set at or
below the median, so that bonuses, which are primarily determined by individual
performance, will constitute a larger portion of cash compensation. Executive
base salaries are reviewed annually considering the Chief Executive Officer's
recommendation for executives other than himself, each executive's performance,
the competitiveness of the executive's base salary compared to the external
market, the Company's financial results and overall industry conditions.
Cash Incentive Bonuses
The Compensation Committee administers the Incentive Plan, which was
adopted by the Company in 1999 in an effort to advance the interests of the
Company by providing an annual cash incentive bonus to be paid to executive
officers and other key employees based upon the Company's performance during
each calendar year. The Compensation Committee establishes a formula to be used
to determine the size of a bonus pool for each year based upon the Company's
earnings before interest expense, taxes, depreciation and amortization
("EBITDA"). The Compensation Committee also determines the target bonus to be
awarded to each executive officer that it has designated as a participant in the
Incentive Plan at different levels of
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<PAGE> 11
EBITDA and the Chief Executive Officer determines the amount to be distributed
to each other participant. Target bonuses are determined considering the Chief
Executive Officer's recommendation for executive officers other than himself.
Both the Compensation Committee and Chief Executive Officer may determine to
award either more or less than the amount originally targeted at the beginning
of the year for any employee.
Stock Options
The Compensation Committee believes that stock options are critical in
motivating and rewarding the creation of long-term stockholder value. The
Compensation Committee has established a policy of awarding stock options each
year based on competitive practices, the continuing financial progress of the
Company and individual performance. All stock option awards are made with option
exercise prices equal to the fair market value of the underlying stock at the
time of grant. Holders of stock option awards benefit only when and to the
extent that the stock price of the Company increases after the option grant. In
1999, the Compensation Committee approved annual stock option grants to
executive officers and other key employees, as recommended by the Chief
Executive Officer. Option awards were made to 20 employees and executives and
covered approximately 2,587,600 shares of underlying common stock. The
Compensation Committee considered the performance of each individual executive
officer and key employee in allocating 1999 stock option grants.
Compensation of the Chief Executive Officer
Components of the Chief Executive Officer's compensation for 1999 included
base salary, participation in the Incentive Plan and the grant of stock options.
Mr. Hall was paid a base salary of $362,971 in 1999. His base salary was
established pursuant to his amended employment agreement at $375,000 commencing
in July 1999 by considering various factors, including his expertise and
performance and the extent to which his total compensation package is at risk
under the Company's Incentive Plan and stock option plans.
In July 1999, also in connection with his amended employment agreement and
closing the Cardinal acquisition, Mr. Hall was granted 488,617 stock options
with an exercise price of $5.75 per share. In return, Mr. Hall's employment
agreement was amended to delete the cash bonus previously required to be paid
under his employment agreement. Mr. Hall's options were granted on terms similar
to those granted to other executive officers of the Company. In February, 2000,
due to Mr. Hall's request that he not be awarded the cash amounts to which he
was entitled under the Incentive Plan, and in recognition of his leadership and
performance in connection with the acquisition and integration of Cardinal, the
Compensation Committee granted Mr. Hall an additional 100,000 stock options,
each with an exercise price of $7.31 per share
The Compensation Committee feels that the total compensation package
provided to Mr. Hall is fair and reasonable based on the competitive market in
which the Company conducts its business and his overall contribution to the
Company's success.
Policy Regarding Section 162(m) of the Internal Revenue Code
For compensation in excess of $1 million, Section 162(m) of the Internal
Revenue Code generally limits the ability of the Company to take a federal
income tax deduction for compensation paid to the Chief Executive Officer and
the four most highly compensated executive officers other than the Chief
Executive Officer, except for qualified performance-based compensation. Stock
options granted by the Company have been structured to qualify as
performance-based and are thus not subject to this deduction limitation. While
the Compensation Committee will seek to utilize deductible forms of compensation
to the extent practicable, it does not believe that compensation decisions
should be made solely to maintain the deductibility of compensation for federal
income tax purposes. Although none of the executive officers of the Company
reached the deduction limitation in 1999, the Compensation Committee plans to
continue to evaluate the Company's salary, bonus and stock incentive programs to
determine the advisability of future compliance with Section 162(m).
9
<PAGE> 12
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee served as an officer or employee of
the Company or any of its subsidiaries prior to or while serving on the
Compensation Committee. In 1999, no executive officer of the Company served as a
director or member of the compensation committee of another entity, any of whose
executive officers served on the Board of Directors or on the Compensation
Committee of the Company.
The Compensation Committee
Robert E. Rose Ben A. Guill
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1999, in connection with the acquisition of Cardinal, the Company
and the Funds entered into a stockholders' agreement that, among other things,
provides for the number and selection of the members of the Company's Board and
prevents the Funds from: (i) acquiring, other than shares received in the
Cardinal acquisition, additional shares of the Company that would result in the
Funds obtaining beneficial ownership of more than an additional 10% of the
outstanding shares of any class of the Company; (ii) disposing of any securities
of the Company, except in limited circumstances primarily involving public
sales; and (iii) facilitating a change of control of the Company.
On July 15, 1999, in connection with the Cardinal acquisition, the Company
entered into two registration rights agreements with the former Cardinal
shareholders. Under an agreement entered into with the Funds, commencing on July
15, 2000, the Funds will have the right to require the Company to file a
registration statement under the Securities Act of 1933 (the "Securities Act")
to sell not less than 20% of the Common Stock owned by the Funds. The Company
will not be obligated to make more than one such registration during any twelve
month period, nor more than four such registrations during the term of the
agreement. The Company also entered into a registration rights agreement with
all other former Cardinal stockholders, pursuant to which the Company filed a
shelf registration statement under the Securities Act registering the resale of
shares of Common Stock they acquired in the acquisition. The Company must keep
this registration statement effective until the earlier of July 15, 2001 or when
all shares of Common Stock covered by the registration statement have been sold.
Under both agreements, all of the former Cardinal stockholders also have the
right to include their shares of the Common Stock in any other registration
statement filed by the Company involving Common Stock.
The Company provides field management and other services to Energy
Partners, Ltd., of which Mr. Bachmann is Chief Executive Officer. The Company
billed Energy Partners, Ltd. approximately $1,500,000 for these services during
the year ended December 31, 1999, on terms that the Company believes are
customary in the industry. The Company expects to continue providing field
management and other services to Energy Partners, Ltd.
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 10% stockholders to file with the Securities
and Exchange Commission reports of ownership and changes in ownership of equity
securities of the Company. The Company believes that, during 1999, its directors
and executive officers complied with all these filing requirements.
10
<PAGE> 13
PERFORMANCE GRAPH
The graph and corresponding table below compares the total stockholder
return on the Company's Common Stock for the last five years with the total
return on the S&P 500 Index and the NASDAQ Oil and Gas Field Services Group for
the same period. The information in the graph is based on the assumption of (i)
a $100 investment on January 1, 1995 at closing prices on December 31, 1994 and
(ii) reinvestment of all dividends.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------
1995 1996 1997 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Superior Energy Services, Inc. ............. $ 68.33 $ 80.00 $270.00 $ 75.83 $180.00
NASDAQ Oil and Gas Field Services Group..... $145.46 $274.53 $339.99 $150.02 $254.69
S&P 500 Index............................... $137.59 $169.48 $226.14 $291.80 $353.30
</TABLE>
11
<PAGE> 14
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
KPMG LLP was selected by the Board of Directors to serve as the Company's
independent public accountants for the fiscal year ended December 31, 1999. A
representative of KPMG LLP is expected to attend the Meeting, will have an
opportunity to make a statement if he wishes to do so, and will be available to
respond to appropriate questions.
OTHER MATTERS
QUORUM AND VOTING OF PROXIES
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum. Stockholders 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, the election of
directors is determined by a plurality vote of the shares present at the
Meeting. All other matters shall be decided by a vote of the holders of a
majority of the outstanding shares of Common Stock, unless the Certificate of
Incorporation or By-laws of the Company, or any express provision of law,
require a different vote. If brokers do not receive instructions from beneficial
owners as to the granting or withholding of proxies and may not or do not
exercise discretionary power to grant a proxy with respect to such shares (a
"broker non-vote"), shares not voted as a result will be counted as not present
and not cast with respect to the proposals.
All proxies received by the Company in the form enclosed will be voted as
specified and, in the absence of instructions to the contrary, will be voted for
the election of the nominees named herein. The Company does not know of any
matters to be presented at the Meeting other than those described herein.
However, if any other matters properly come before the Meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares
represented by them in accordance with their best judgment.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The By-laws of the Company require that eligible stockholders who desire to
make a nomination for the election of a director or to bring any other matter
before a meeting of the stockholders of the Company must give timely written
notice of such intent to the Secretary of the Company. For the 2001 annual
meeting of stockholders, such notice must be received by the Secretary, at the
address set forth on the first page of this Proxy Statement, no earlier than
August 20, 2000 and no later than January 18, 2001.
Eligible stockholders who wish to present a proposal qualified for
inclusion in the proxy materials relating to the 2001 annual meeting of
stockholders must forward such proposal to the Secretary of the Company in time
to arrive at the Company prior to December 14, 2000. If such a proposal is in
compliance with all the requirements of Rule 14a-8 under the Securities Exchange
Act of 1934, it will be included in the proxy statement and set forth on the
form of proxy for such annual meeting of the stockholders of the Company. It is
urged that any such proposals be sent certified mail, return receipt requested.
By Order of the Board of Directors
/s/ CAROLYN PLAISANCE
Carolyn Plaisance
Secretary
Harvey, Louisiana
April 17, 2000
12
<PAGE> 15
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
PROXY
SUPERIOR ENERGY SERVICES, INC.
1105 PETERS ROAD, HARVEY, LOUISIANA 70058
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF SUPERIOR ENERGY SERVICES, INC.
The undersigned hereby appoints Robert S. Taylor, with full power of
substitution, as proxy, and hereby authorizes him to represent and to vote, as
designated below, all shares of common stock of Superior Energy Services, Inc.
that the undersigned is entitled to vote at the annual meeting of stockholders
to be held on May 18, 2000, or any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTIONS ARE GIVEN, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1. THE PROXY HOLDER NAMED ABOVE WILL VOTE IN
HIS DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
---------------------------------------------------------
The Board of Directors recommends a vote FOR the proposal
by checking the box marked "FOR";
---------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
(TO BE SIGNED ON REVERSE SIDE)
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 16
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
NOMINEES: Terence E. Hall
FOR WITHHELD Justin L. Sullivan
1. Election of [ ] [ ] Richard A. Bachmann
Directors William E. Macaulay
Ben A. Guill
Robert E. Rose
2. In his discretion, to transact such other business as may properly come
before the meeting and any adjournments thereof.
To withhold authority to vote for any specific nominee(s), mark the "FOR" box
and write the name of each such nominee on the line provided below
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Date: , 2000 Date: , 2000
- -------------------- -------------- --------------------------- ----------
SIGNATURE SIGNATURE IF HELD JOINTLY
</TABLE>
Please sign exactly as name appears on the certificate or certificates
representing the shares to be voted by this proxy, as shown on the label above.
When signing as executor, administrator, attorney, trustee, or guardian, please
give full title as such. If a corporation, please sign full corporation name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person(s).
