<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
UTI ENERGY CORP.
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
Fee paid previously with preliminary materials.
<PAGE> 2
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:
N/A
(2) Form, Schedule or Registration Statement No.:
N/A
(3) Filing Party:
N/A
(4) Date Filed:
N/A
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<PAGE> 3
UTI ENERGY CORP.
16800 Greenspoint Park, Suite 225N
Houston, Texas 77060
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING
- --------------------------------------------------------------------------------
The 1998 Annual Meeting of Stockholders (the "Meeting") of UTI Energy
Corp., a Delaware corporation (the "Company"), will be held in the Versailles
Room of the Hotel Sofitel, 425 North Sam Houston Parkway East, Houston, Texas
77060, at 9:00 a.m. on June 9, 1998, for the following purposes:
1. to elect three Class I directors for a three-year term to expire at
the 2001 Annual Meeting of Stockholders of the Company;
2. to take action upon any other matters which may properly come before
the Meeting.
Stockholders of record at the close of business on April 24, 1998, are
entitled to notice of and to vote at the Meeting and any adjournment thereof.
It is important that your shares be represented at the Meeting. I urge
you to sign, date and promptly return the enclosed proxy card in the enclosed
postage paid envelope.
BY ORDER OF THE BOARD OF DIRECTORS
P. Blake Dupuis
Secretary
April 30, 1998
<PAGE> 4
UTI ENERGY CORP.
16800 Greenspoint Park, Suite 225N
Houston, Texas 77060
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 9, 1998
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of UTI Energy Corp., a Delaware corporation (the
"Company"), of proxies to be voted at the Company's 1998 Annual Meeting of
Stockholders (the "Meeting") to be held in the Versailles Room of the Hotel
Sofitel, 425 North Sam Houston Parkway East, Houston, Texas 77060, on June 9,
1998, at 9:00 a.m., local time, and at any adjournment thereof. This Proxy
Statement and the accompanying proxy are being mailed to the Company's
stockholders on or about April 30, 1998.
Properly executed proxies received in time for the Meeting will be voted
as directed therein, unless revoked in the manner provided hereafter. As to
any matter for which no choice has been specified in a proxy, the shares
represented thereby will be voted by the persons named in the proxy (i) "FOR"
the election of the nominees to the Board of Directors, and (ii) in the
discretion of such persons, "FOR" or "AGAINST" any other proposals which may be
submitted at the Meeting. A stockholder giving a proxy may revoke it at any
time before the proxy is voted by giving written notice to the Secretary of the
Company, by executing and delivering a proxy bearing a later date, or by
attending the Meeting and voting in person.
PERSONS MAKING THE SOLICITATION
This Proxy Statement solicits proxies on behalf of the Board of Directors
of the Company. The total expense of such solicitation, including the cost of
preparing, assembling, and mailing the proxy materials to stockholders, will be
borne by the Company. It is anticipated that solicitations of proxies for the
Meeting will be made only by use of the mails; however, the Company may use the
services of its directors, officers and employees to solicit proxies personally
or by telephone, without additional salary or compensation to them. Brokerage
houses, custodians, nominees and fiduciaries will be required to forward the
proxy soliciting materials to the beneficial owners of the Company's shares
held of record by such persons and the Company will reimburse such persons for
their reasonable out-of-pocket expenses incurred in that connection.
SHARES OUTSTANDING AND VOTING RIGHTS
Only stockholders of record of the Company's Common Stock at the close of
business on April 24, 1998 (the "Record Date"), are entitled to notice of and
to vote at the Meeting or any adjournment thereof. At the close of business on
the Record Date, there were 16,026,741 shares Common Stock issued and
outstanding. Holders of record of the Common Stock on such date will be
entitled to one vote per share on all matters to come before the Meeting. A
list of stockholders entitled to notice of and to vote at the Meeting will be
made available during regular business hours at the offices of the Company,
16800 Greenspoint Park, Suite 225N, Houston, Texas 77060, from May 29, 1998,
through June 8, 1998, and at the Meeting, for inspection by any stockholder for
any purpose regarding the Meeting.
A majority of the total shares of Common Stock issued and outstanding on
the Record Date will constitute a quorum for the transaction of business at the
Meeting. The shares held by each stockholder who signs and returns the
enclosed form of proxy will be counted for purposes of determining the presence
of a quorum at the Meeting.
The enclosed form of proxy provides a means for stockholders to vote for
all of the director nominees listed herein, to withhold authority to vote for
one or more of such nominees or to withhold authority to
<PAGE> 5
vote for all of such nominees. The withholding of authority by a stockholder
will have no effect on the results of the election of those directors for whom
authority to vote is withheld because the Company's bylaws provide that
directors are elected by a plurality of the votes cast at the Meeting.
PROPOSAL NO. 1
ELECTION OF CLASS I DIRECTORS
Three directors will be elected at the Meeting to serve as Class I
directors for three-year terms ending at the 2001 Annual Meeting of
Stockholders or until such person's successor shall be duly elected and
qualified. The Board of Directors recommends the election of Mr. Curtis W.
Huff, Mr. Terry H. Hunt and Ms. Nadine C. Smith as the Class I Directors to
serve for such three-year terms. Mr. Huff, Mr. Hunt and Ms. Smith are
currently directors of the Company.
Unless contrary instructions are set forth in the proxies, it is intended
that the persons executing a proxy will vote all shares represented by such
proxy for the election as director of Mr. Huff, Mr. Hunt and Ms. Smith. Should
Mr. Huff, Mr. Hunt or Ms. Smith become unable or unwilling to accept
nomination or election, it is intended that the person acting under the proxy
will vote for the election of such other person as the Board of Directors of
the Company may recommend. Management has no reason to believe that Mr. Huff,
Mr. Hunt or Ms. Smith will be unable or are unwilling to serve if elected.
There are currently three Class I directorships up for election. Proxies
cannot be voted for other than such directorships. Pursuant to the Company's
bylaws, directors are elected to serve for three-year terms and until their
successors are elected or their earlier resignation or removal. Class I
directors' terms expire at the Meeting, Class II directors' terms expire in
1999 and Class III directors' terms expire in 2000.
There currently are seven board seats authorized under the Company's
bylaws. The following table sets forth information regarding the current
directors of the Company, including the nominees for Class I Directors included
herein. There are no family relationships among any of the directors or
executive officers of the Company, nor any arrangements or understandings
between any director and any other person pursuant to which such director was
selected as a director.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Mark S. Siegel 47 Chairman and Class II Director (since 1995)
Vaughn E. Drum 52 President, Chief Executive Officer and Class III Director
(since 1986)
Kenneth N. Berns 38 Class II Director (since 1995)
Curtis W. Huff 40 Class I Director (since 1997)
Terry H. Hunt 49 Class I Director (since 1994)
Nadine C. Smith 40 Class I Director (since 1995)
Robert B. Spears 71 Class III Director (since 1994)
</TABLE>
- -------------------
Mark S. Siegel - Mr. Siegel has served as Chairman of the Board and a
director of the Company since March 14, 1995. Mr. Siegel has been President of
Remy Investors and Consultants, Incorporated ("Remy Investors") since 1993.
From 1992 to 1993, Mr. Siegel was President, Music Division, Blockbuster
Entertainment Corp. From 1988 through 1992, Mr. Siegel was an Executive Vice
President of Shamrock Holdings, Inc. and Managing Director of Shamrock Capital
Advisors, Incorporated. Mr. Siegel is a
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<PAGE> 6
Director of Applause Enterprises, Inc., Modern Videofilm, Inc. and Variflex
Inc. Mr. Siegel holds a B.A. from Colgate University and a J.D. from Boalt
Hall School of Law.
Vaughn E. Drum - Mr. Drum has served as President, Chief Executive
Officer and a director of the Company since December 1986. From 1980 through
November 1986, Mr. Drum served in various capacities for UGI Development
Company ("UGIDC"), a subsidiary of UGI Corporation. Mr. Drum holds a B.S. in
Petroleum Engineering from Marietta College.
Kenneth N. Berns - Mr. Berns has served as a director of the Company
since May 24, 1995. Mr. Berns has been an employee of Remy Investors since
1994. From 1990 through 1994, Mr. Berns was employed by affiliated real estate
development and management companies, including Ridge Properties, Ltd., Ridge
Development, Ltd. and Spound Company. Prior to 1990, Mr. Berns was a senior
manager of Spicer & Oppenheim and a Vice President of Cantor Fitzgerald
Financial Corporation. Mr. Berns is the majority stockholder of RD Management,
Inc., which is the general partner of Ridge Properties, Ltd. Mr. Berns is a
Certified Public Accountant and holds a Bachelors Degree in Business
Administration from San Diego State University and a Masters Degree in Taxation
from Golden Gate University.
Curtis W. Huff - Mr. Huff has served as a director of the Company since
December 1997. Mr. Huff has been a Partner in the law firm of Fulbright &
Jaworski L.L.P. for at least the past five years.
Terry H. Hunt - Since 1992, Mr. Hunt has served as the President and
Chief Executive Officer of Penn Fuel Gas, Inc., a natural gas and propane
distribution company. From 1989 to 1992, Mr. Hunt was the President and
Chairman of Carnegie Natural Gas Company, a gas distribution and transportation
company, and of Apollo Gas Company, a natural gas distributor. From 1984
through 1988, he served as Vice President of Delhi Gas Pipeline Corporation, an
intrastate pipeline company. Mr. Hunt holds a Bachelor of Engineering degree
from the University of Saskatchewan, Canada and a M.B.A. from Southern
Methodist University.
Nadine C. Smith - Ms. Smith is President and Chief Executive Officer of
Enidan Capital, an investment company that makes equity investments in public
and privately held companies, Prior to co-founding Enidan Capital in 1997, Ms.
Smith was an investment banker and principal with NC Smith & Co. and The First
Boston Corporation and a management consultant with McKinsey & Co. Ms. Smith
also is President and Chief Executive Officer of Sirrom Resource Funding LP,
which finances environmental companies. Ms. Smith is a director of American
Retirement Corporation, Sirrom Partners, L.P. and Carson Private Capital, G.P.,
L.L.C. and Shield Life Insurance Company. Ms. Smith earned a bachelors degree
in economics from Smith College and a Masters degree in business from Yale
University.
Robert B. Spears - Since 1989, Mr. Spears has served as the Chairman and
Vice President, Business Development of Spears & Associates, Inc., a firm which
he founded in 1965. Spears & Associates is a leading research-based consulting
firm to the oil and natural gas industry worldwide.
MEETING AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met nine times during the year ended December 31,
1997. Each director participated in at least 75% of all meetings of the Board
of Directors for which he or she was eligible and all meetings of each
committee for which he or she was eligible.
The Board of Directors has an Executive Committee, an Audit Committee and
a Compensation Committee. The Company does not have a nominating or other
similar committee.
The Executive Committee, which currently is composed of Messrs. Drum and
Siegel, has the authority to act for the Board in all matters arising between
regular or special meetings of the Board. The Executive Committee did not meet
during the year ended December 31, 1997.
The Audit Committee, which currently is composed of Messrs. Berns and
Spears and Ms. Smith, selects, subject to Board approval (and, if the Board so
determines, subject to stockholder approval), the independent accountants to
audit the Company's books and records, and considers and acts upon
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<PAGE> 7
accounting matters as they arise. The Audit Committee met once during the year
ended December 31, 1997.
The Compensation Committee, which currently is composed of Messrs. Hunt
and Spears, administers the employee stock option and similar plans of the
Company and determines the annual compensation to be paid to the executive
officers of the Company. The Compensation Committee met once during the year
ended December 31, 1997.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive any additional
compensation for serving as a director or as a member of a committee of the
Board of Directors. The non-employee directors are each entitled to receive an
annual retainer fee of $5,000 and fees of $700 per meeting for their attendance
at regular and special Board of Directors meetings. Non-employee committee
members are entitled to additional fees of $500 for each committee meeting
attended. All directors have been and will be reimbursed for reasonable
out-of-pocket expenses incurred in connection with attendance at Board of
Directors meetings.
The Company currently maintains a Non-Employee Director Stock Option Plan
(the "Director Plan"). Under the Director Plan, options to purchase up to an
aggregate of 300,000 shares of Common Stock of the Company may be granted to
non-employee directors of the Company. Options granted pursuant to the
Director Plan stipulate that the purchase price per share be equal to the fair
market value of the Common Stock as of the date of grant. The Director Plan
provides for the grant of an option to purchase 7,500 shares of Common Stock to
each non-employee director as of the date he or she is first elected. Upon Mr.
Huff's appointment to the Board of Directors in 1997, options to purchase 7,500
shares of Common Stock were awarded to Mr. Huff pursuant to this provision.
The Director Plan also provides that each non- employee director who has served
for a period of at least one year will automatically be granted, on December 31
of such year, an option to purchase 3,750 shares of Common Stock. Options to
purchase 11,250 shares of Common Stock were awarded under this provision in
1997. No options under the Director Plan will be granted after December 18,
2005 and all options issued expire five years from the date of grant.
Messrs. Siegel, Berns and Drum each participate in the Company's 1996
Employee Stock Option Plan (the "1996 Plan") and the Company's 1997 Long-Term
Incentive Plan (the "1997 Incentive Plan") in their capacities as employees of
the Company.
EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive officers
of the Company, each of whom serves at the pleasure of the Board of Directors.
There is no family relationship between any of these individuals or any of the
Company's directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Mark S. Siegel 47 Chairman of the Board
Vaughn E. Drum 51 President, Chief Executive Officer and Class III Director
(since 1986)
P. Blake Dupuis 43 Vice President, Secretary, Treasurer and Chief Financial
Officer
</TABLE>
For additional information regarding Mr. Siegel and Mr. Drum, see
"Directors" above.
P. Blake Dupuis - Mr. Dupuis has served as Vice President and Chief
Financial Officer of the Company since September 1996. From April 1996 to
September 1996, Mr. Dupuis served as Chief Financial Officer of Adcor-Nicklos
Drilling Company and from December 1993 to April 1996 he served
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<PAGE> 8
as Chief Financial Officer of Coastwide Energy Services, Inc. From September
1989 to December 1993, Mr. Dupuis served as Chief Financial Officer of EVI,
Inc. Mr. Dupuis is a Certified Public Accountant and holds a B.S. in Business
Administration from the University of Southwestern Louisiana.
Summary Compensation Table
The following table sets forth information concerning compensation for
1997, 1996 and 1995 earned by or paid to the Company's Chief Executive Officer,
the Company's other executive officers whose total annual salary and bonus
exceeded $100,000 in 1997 and each employee for whom disclosure would be
required except for the fact such individual was not serving as an executive
officer of the Company as of December 31, 1997 (collectively, the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
---------------------------------------- ---------------------------------------
Securities
Other Annual Restricted Underlying All Other
Name and Principal Compensation Stock Options Compensation
Position Year Salary $ Bonus $ (1) $ Award(s) SARs(#)(2) (3) $
------------------ ---- --------- --------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Vaughn E. Drum 1997 $ 156,530 $ 115,681 -- -- 42,500 $5,959
President and Chief 1996 144,950 58,912 -- -- 291,960 (4) 2,899
Executive Officer 1995 144,950 -- -- -- -- 2,899
P. Blake Dupuis 1997 115,024 75,000 -- -- 10,000 531
Vice President, Secretary, 1996(5) 35,392 19,805 -- -- 225,000 (4) -
Treasurer and Chief 1995(5) -- -- -- -- -- -
Financial Officer
Gerald J. Guz 1997 103,285 123,721 -- -- 22,000 3,870
President--Universal 1996 90,000 66,801 -- -- 291,960 (4) 1,471
Well Services, Inc. 1995 90,000 -- -- -- -- 1,350
Terry L. Pope 1997 103,302 121,541 -- -- 22,000 4,506
President--Triad Drilling 1996 90,000 79,520 -- -- 145,980 (4) 2,119
Company 1995 90,000 12,500 -- -- -- 1,726
</TABLE>
(1) The aggregate amounts of perquisites and other personal benefits,
securities or property is less than 10% of each executive officer's
combined annual salary and bonus during the applicable year.
(2) Share amounts have been adjusted to reflect the Company's three-for-one
stock dividend effected in September 1997.
(3) Amounts set forth for 1997, 1996 and 1995 reflect the Company's
contributions or other allocations to defined contribution plans.
(4) On December 15, 1995, the Compensation Committee of the Board of
Directors approved the repricing of stock options granted to Messrs.
Drum, Guz and Pope from an exercise price of $2.67 per share to a price
ranging from $1.77 to $2.13 per share (depending on the year the
applicable option vests) for Messrs. Drum, Guz and Pope. The repricings,
which were subject to stockholder approval, were approved by the
stockholders of the Company at the 1996 Annual Meeting of Stockholders
held August 8, 1996.
(5) Mr. Dupuis became employed by the Company in August 1996.
Compensation Pursuant to Employee Benefit Plans
The Company maintains several plans intended to provide incentives to its
key employees. These plans are described below (share amounts have been
adjusted to reflect the Company's three-for-one stock dividend effected in
September 1997).
Incentive Compensation Plan. The Company maintains an Incentive
Compensation Plan established in 1987 (the "ICP"). Under the ICP, specified
management employees of the Company or any subsidiary
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<PAGE> 9
with at least 90 days of service may be eligible to receive a cash bonus
following each plan year based on a comparison of financial performance against
targets established for each plan year.
1993 Non-Qualified Stock Option Plan. During 1993, the Company adopted
its 1993 Non-Qualified Stock Option Plan (the "1993 Plan"). Under the 1993
Plan, options to purchase shares of Common Stock available for grant were
awarded in December 1993 to the following individuals in the following amounts:
Mr. Drum, 291,960 shares; Mr. Guz, 291,960 shares; and Mr. Pope, 145,980
shares. There are no additional shares available for grant under the 1993
Plan.
1996 Employee Stock Option Plan. In August 1996, the Company's
shareholders approved the Company's 1996 Employee Stock Option Plan (the "1996
Plan"). In November 1997, the 1996 Plan was amended and restated by the Board
of Directors to reflect the Company's three-for-one stock split approved by the
stockholders at the 1997 Annual Meeting of Stockholders. Under the 1996 Plan,
the Company can award options on up to 900,000 shares of Common Stock to
certain employees at a price equal to the fair market value of the stock at the
date the option is granted. During 1997, the Company awarded options to
purchase 527,700 shares of Common Stock under the 1996 Plan. The 1996 Plan
currently is administered by the Company's Compensation Committee. Due to the
approval of the 1997 Incentive Plan by the stockholders at the 1997 Annual
Meeting of Stockholders, no additional grants under the 1996 Plan will be made.
1997 Long-Term Incentive Plan. In August 1997, the stockholders
approved the 1997 Incentive Plan. In November 1997, the 1997 Incentive Plan
was amended and restated by the Board of Directors to reflect the Company's
three-for-one stock split approved by the stockholders at the 1997 Annual
Meeting of Stockholders. Under the 1997 Incentive Plan, the Company may grant
stock options, stock appreciation rights issued independent or in tandem with
such options ("SAR"), restricted stock awards and performance awards to certain
employees of the Company and is subsidiaries. There are 600,000 shares of
Common Stock authorized for issuance under the 1997 Incentive Plan. Options
are to be granted at a price not less than the fair market value of the Common
Stock on the date the option is granted, and the exercise price of any SAR is
to be determined by the Compensation Committee on the date of grant. During
1997, the Company awarded options to purchase 451,375 shares of Common Stock
pursuant to the 1997 Incentive Plan. The options granted in 1997 vest over one
to five years. The 1997 Incentive Plan currently is administered by the
Company's Compensation Committee. There are currently 88,625 shares of Common
Stock available for grant under the 1997 Incentive Plan.
The following table sets forth information regarding grants of stock
options to the Named Executive Officers during 1997:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
% OF TOTAL APPRECIATION FOR
NUMBER OF OPTIONS/SARS OPTION TERM
SECURITIES GRANTED TO EXERCISE OR ----------------------
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION
NAME OPTIONS/SARS FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------- ------------ ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Vaughn E. Drum . . 30,000 3.1% $8.125 2/25/02 $67,343 $148,812
12,500 1.2% 31.375 11/25/02 108,354 239,434
P. Blake Dupuis . . 10,000 1.0% 31.375 11/25/02 86,683 191,548
Gerald J. Guz . . . 12,000 1.2% $8.125 2/25/02 26,937 59,525
10,000 1.0% 31.375 11/25/02 86,683 191,548
Terry L. Pope . . . 12,000 1.2% $8.125 2/25/02 26,937 59,525
10,000 1.0% 31.375 11/25/02 86,683 191,548
</TABLE>
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<PAGE> 10
The following table sets forth information concerning stock options
exercised in 1997 and stock options unexercised at December 31, 1997 for the
Named Executive Officers:
AGGREGATED OPTION/SAR EXERCISES IN 1997 AND VALUE TABLE AT DECEMBER 31,1997
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised
Acquired Value Options/SARs at In-the-money Options/SARs
on Realized December 31, 1997 at December 31,1997
Name Exercise ($) Exercisable/Unexercisable Exercisable/Unexercisable
--------------- -------- ---------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Vaughn E. Drum -- -- 321,960/12,500 $7,534,362/$0
P. Blake Dupuis -- -- 45,000/190,000 958,275/3,833,100
Gerald J. Guz 60,000 $1,046,820 173,569/80,391 4,157,255/1,612,837
Terry L. Pope 45,000 602,492 71,784/51,196 1,730,353/915,750
</TABLE>
Employment Contracts
The Company has employment agreements with each of Mr. Drum, Mr. Guz and
Mr. Pope. The annual salaries payable under such agreements are $170,000,
$105,000 and $105,000, respectively. Annual salaries payable under such
agreements may be increased by the Company's Board of Directors or the
Compensation Committee. The agreements with Messrs. Drum, Guz, and Pope have
an initial term of five years continuing through December, 2000 and
automatically extend for an additional year upon the completion of the
five-year term unless either party provides notice to the other of the
intention to terminate such contract 120 days prior to the termination date.
In addition, each employment agreement entitles the employee to receive four
weeks paid vacation per year and to participate fully in all employee plans and
fringe benefit programs established by the Company after the date of the
contract in which other senior executives of the Company are eligible to
participate.
In the event of a termination due to an employee's death or disability,
the employee or his estate is entitled to receive unused vacation pay, a
pro-rated portion of the bonus (the "Pro-rated Bonus") which would have been
payable to the employee under the Company's Incentive Compensation Plan had
such employee been employed at the end of the year in which the termination
occurred (the "Annual Bonus"), and a separation payment equal to the product of
the employee's compensation in the most recent calendar year (such amount is
referred to herein as a "Year's Compensation"), and a fraction, the denominator
of which is 260, and the numerator of which is the number of months of the
employee's service with the Company and a previous parent, UGI Corporation, but
in any event not more than six months of compensation (the "Separation
Payment"). Additionally, the employee or the employee's estate is entitled to
the vesting of all of the employee's interests, if any, under the Company's
stock option plans and any other employee plans of the Company ("Plan
Vesting"). In the event an employee retires in accordance with the Company's
retirement policies, such employee is entitled to receive unused vacation pay,
Pro-rated Bonus, Separation Payment and Plan Vesting (but only to the extent
provided in the Company's employee benefit plans for retiring employees).
If any of Messrs. Drum, Guz or Pope is terminated by the Company without
cause, such employee is entitled to receive termination pay of one year's
salary (six months in the case of Mr. Guz), unused vacation pay, Separation
Payment, Annual Bonus and Plan Vesting. In addition, each employee is entitled
to the continuation of all employee benefits, without any increase in cost to
employee, for a period of 18 months following termination.
In connection with the Company's relocation of its corporate headquarters
from Wayne, Pennsylvania to Houston, Texas, the Company agreed in January 1997
to increase Mr. Drum's annual salary to $170,000 per year, accelerated vesting
on any unvested options held by him, and agreed to provide relocation
assistance if and when Mr. Drum's employment with the Company is terminated.
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<PAGE> 11
In 1997, the Compensation Committee approved employed arrangements with
Mr. Siegel and Mr. Berns providing for annual salaries of $100,000 and $50,000
for a period of five years. In the event of a change in control of the
Company, the Company's obligation to pay such salaries would end and Mr. Siegel
and Mr. Berns would each be entitled to payment of one year's salary and
vesting of all options granted in connection with such employment agreements.
Both Mr. Siegel and Mr. Berns are entitled to receive bonuses for extraordinary
services solely within the discretion of the Board of Directors and
Compensation Committee.
CERTAIN TRANSACTIONS
In connection with Remy Capital Partners III, L.P.'s ("Remy") acquisition
of its ownership interest in the Company in March 1995, Remy succeeded to a
registration rights agreement with the Company (the "Registration Agreement")
which provides Remy with the right to require the Company to use its best
efforts to register shares held by Remy under the Securities Act. In the event
that such rights are exercised in connection with a primary offering proposed
by the Company (or a secondary offering with which the Company agrees to
participate), Remy would bear its pro-rata share of the costs of the offering,
other than legal, accounting and printing costs which are to be borne by the
Company. In the event that Bear, Stearns elected to exercise such rights
otherwise than in connection with an offering proposed by the Company, all
costs of the offering will be borne by it. These rights continue so long as
Remy continues to own Common Stock acquired by it. The right to a demand
registration may be exercised three times.
Mr. Mark S. Siegel, Chairman of the Company, is President and sole
stockholder of Remy Investors, which is the General Partner of Remy. Kenneth
N. Berns, a director of the Company, is an employee of Remy Investors.
In connection with the Company's recent public offering of Common Stock
in October 1997, the Company permitted Remy, Remy Investors, Mr. Berns and Mr.
Drum to include certain shares in the applicable registration statement and
offering, although such shares were not covered by a previously executed
registration rights agreement. Each of the parties agreed to bear all
registration and selling expenses with respect to such shares included in the
offering.
The law firm of Fulbright & Jaworski L.L.P., of which Mr. Huff, a
director of the Company, is a partner, acted as the Company's principal outside
legal counsel in 1997 and is continuing to do so in 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to November 1997, grants of stock options to the Named Executive
Officers and Mr. Siegel and Mr. Berns as well as salary levels of the Named
Executive Officers were approved by the full Board of Directors. In November
1997, the Board of Directors delegated these responsibilities to the
Compensation Committee, which is comprised of Messrs. Hunt and Spears. It is
intended that the Compensation Committee will determine compensation awarded to
the Company's executive officers, as well as Mr. Siegel and Mr. Berns, in the
future.
-8-
<PAGE> 12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Annual Salaries and Other Cash Compensation
The Company's continuing policies regarding cash compensation for its
executives were, to a great extent, established by the Board of Directors in
1990 following a comprehensive study performed for the Company by the Hay
Group. That report furnished information on the compensation practices of both
firms similar in size to the Company and firms engaged in similar businesses.
Prior to 1996, the salaries of the Named Executive Officers and their salary
rates remained the same as were established in 1990 based on the Hay Group's
report. Likewise, the Incentive Compensation Plan for participating management
personnel was established in 1990 based on that report, and has not
subsequently changed. In November 1997, the Board of Directors delegated to
the Compensation Committee the responsibility to administer the Company's stock
option plans and to determine compensation levels for the Named Executive
Officers, as well as any compensation to be paid to Mr. Siegel or Mr. Berns.
Prior to such time, the Board of Directors had administered the Company's stock
option plans and had approved compensation levels for the Named Executive
Officers and Mr. Siegel and Mr. Berns based upon recommendations of the
Compensation Committee.
In considering the amount and form of compensation to be provided for the
Named Executive Officers of the Company, the Board of Directors took into
consideration the size of the Company, its financial results and condition, the
nature of the Company's business, business conditions in the oil and gas field
services and supplies industries, the Company's competitive position in the
labor market for skilled executives and amounts paid by other firms to attract
and retain executives of comparable competence and experience. The Company has
sought to provide salaries that are competitive but not excessive and to
provide incentive compensation, in the form of performance related bonuses
under the ICP, to encourage executive performance. The ICP, which is described
above, is also intended to diminish, for successful employees, any potential
competitive shortfall in their cash compensation.
In January 1997, the Board of Directors increased the salaries of Messrs.
Guz and Pope by $15,000. The Board of Directors recommended such increases to
bring such Named Executive Officers' salaries in line with those paid by
comparable firms to their executive officers and regional managers. At the
same time, the Board of Directors increased Mr. Drum's annual salary to
$170,000 per year and agreed to vest all unvested stock options held by Mr.
Drum. Under the terms of the employment arrangements with Mr. Drum, Mr. Drum
would have been entitled to the vesting of those options had he elected to
terminate his employment with the Company following his relocation to Houston,
Texas. Accordingly, the acceleration of Mr. Drum's stock options were in
consideration of Mr. Drum's relocation with the Company to Houston, Texas. The
compensation of Mr. Drum, the Company's President and Chief Executive Officer,
was established to reflect the views of the Board of Directors regarding his
experience and performance and the performance of the Company in light of
prevailing competitive conditions. The Board believes that Mr. Drum is
primarily responsible for the implementation of Board policies. Mr. Drum has
been effective in integrating acquisitions and positioning the Company to take
advantage of improvements in demand and prices for the Company's services as
they occur. Mr. Drum's compensation is intended to reflect these views and to
provide him incentives to continue his successful leadership of the Company.
In November 1997, the Compensation Committee approved employment
agreements with Messrs. Siegel and Berns providing for annual salaries of
$100,000 and $50,000, respectively, for a term of five years. Such salaries
are being paid to Messrs. Siegel and Berns in their capacities as employees of
the Company in recognition of the regular and continued services each provides
the Company in connection with the identification, evaluation and financing of
strategic acquisitions in connection with the Company's growth strategy as well
as various other financial advisory services. Prior to such time, neither Mr.
Siegel nor Mr. Berns had received annual cash salaries from the Company for
services they had rendered the Company.
Compensation Pursuant to Employee Benefit Plans
Prior to delegation to the Compensation Committee in November 1997, both
the 1997 Incentive Plan and the 1996 Plan were administered by the full Board
of Directors. Pursuant to such plans, the Company awarded stock options during
1997 to the Company's Named Executive Officers and other key employees of the
Company. These grants reflect the Board's and Compensation Committee's
recognition
-9-
<PAGE> 13
of the performance of such individuals and the Board's and Compensation
Committee's desire to provide the Company's employees who have substantial
responsibility for the Company's management and growth with additional
incentive by increasing their proprietary interest in the success of the
Company.
The Company also granted stock options to Messrs. Siegel and Berns during
1997. In February 1997, the Board of Directors granted Mr. Siegel and Mr.
Berns options to purchase 165,000 and 15,000 shares of Common Stock,
respectively, at an exercise price of $8.125 per share, and in July 1997,
granted Mr. Siegel and Mr. Berns additional options to purchase 135,000 and
30,000 shares respectively, at an exercise price of $20.00 per share. In
determining to grant these options to Messrs. Siegel and Berns, the Board of
Directors considered the fact that neither Mr. Siegel or Mr. Berns received
any form of regular compensation from the Company for the regular and continued
services each had provided during the past year in connection with the
identification, evaluation and financing of strategic acquisitions in
connection with the Company's growth strategy. In this regard, the Board
considered the fact that each had been instrumental in the identification,
negotiation and financing of the Company's acquisitions of the assets of
Quarles Drilling Corporation and Southland Drilling Company as well as in the
Company's private placement of debt with CanPartners Investments and
negotiation of credit arrangements with Mellon Bank. In November 1997, the
Compensation Committee granted Messrs. Siegel and Berns options to purchase
200,000 shares and 50,000 shares, respectively, at $31.375 per share. One
fifth of such options vest immediately with an additional one-fifth vesting on
each anniversary until fully vested. Such options were granted in connection
with the employment agreements entered into with each individual and are
intended to provide them with an incentive to continue assisting the Company in
its growth over the next five years. In considering the additional grants, the
Compensation Committee also considered the fact that Mr. Siegel and Mr. Berns
had both been instrumental in the identification and negotiation of the
Company's recent acquisition of JSM & Associates and in the success of the
Company's recent public offering of Common Stock.
Section 162(m) Deduction Limitation
Section 162(m) of the Code imposes a limitation on deductions that can be
taken by a publicly held corporation for compensation paid to certain of its
executive officers. Under Section 162(m), a deduction is denied for
compensation paid in a tax year beginning on or after January 1, 1994, to the
Named Executive Officers to the extent that such compensation exceeds $1
million per individual. Stock option grants pursuant to the Company's employee
benefit plans may be exempt from the deduction limit if certain requirements
are met. The Board of Directors and the Compensation Committee have considered
the effect of Section 162(m) on the Company's existing compensation program.
Kenneth N. Berns
Vaughn E. Drum
Curtis W. Huff
* Terry H. Hunt
Mark S. Siegel
Nadine C. Smith
* Robert B. Spears
* Member of the Compensation Committee.
-10-
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the cumulative stockholder return on the
Common Stock of the Company, for the period from December 7, 1993, the date on
which the Company's Common Stock was first registered under Section 12 of the
Securities Exchange Act of 1934, as amended, through December 31, 1997, with
the cumulative total return of the Standard and Poors 500 Stock Index and a
Company-Determined Peer Index. The peer group consists of Grey Wolf, Inc.,
Nabors Industries, Inc., Parker Drilling Company, Patterson Energy, Inc. and
TMBR/SHARP Drilling Inc. All of the peers are providers of contract oil and
gas land drilling services. The graph assumes investment of $100 on December
7, 1993 and reinvestment of all dividends.
<TABLE>
<CAPTION>
==========================================================================================================
12/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
----- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
UTI 100 92.06 41.35 70.23 441.65 969.11
S&P 100 101.21 102.55 141.08 173.47 231.35
Peer Group 100 112.03 93.83 147.36 252.59 417.84
==========================================================================================================
</TABLE>
The foregoing graph is based on historical data and is not necessarily
indicative of future performance. This graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to the Regulations of 14A or 14C under the Exchange Act
or to the liabilities of Section 18 under such act.
-11-
<PAGE> 15
SECURITY OWNERSHIP OF PRINCIPAL
STOCKHOLDERS AND MANAGEMENT
The following table sets forth, as of the Record Date, the stock
ownership of the Company's named executive officers and directors individually,
all directors and executive officers as a group, and each person known by the
Company to be the beneficial owner of more than 5% of the Company's Common
Stock.
<TABLE>
<CAPTION>
Amount and Nature
Name of of Percent
Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------
<S> <C> <C>
Other Beneficial Owners:
REMY Capital Partners III, L.P. 3,514,762 (1) 21.8%
1801 Century Park East, Suite 1111
Los Angeles, CA 90067
REMY Investors & Consultants, 3,580,762 (1) 22.1
Incorporated
1801 Century Park East, Suite 1111
Los Angeles, CA 90067
Nicholas Applegate Capital Mgmt. 1,164,731 (2) 7.3
Pilgrim Baxter & Associates, Ltd. 1,289,200 (3) 8.0
Directors and Executive Officers:
Mark S. Siegel 3,930,762 (1) 23.7
Vaughn E. Drum 398,360 (4) 2.4
Kenneth N. Berns 67,000 (5) *
Curtis W. Huff (6) *
Terry H. Hunt 13,350 (7) *
Nadine C. Smith 15,250 (7) *
Robert B. Spears 12,150 (7) *
P. Blake Dupuis 45,000 (4) *
Gerald J. Guz 234,369 (4) 1.5
Terry L. Pope 171,984 (4) 1.1
(All Directors and Executive Officers as a 4,481,720 (8) 26.6
group -- 8 persons)
</TABLE>
* indicates less than 1.0%
- --------------
(1) The Common Stock beneficially owned by Remy Investors, which is the
general partner of Remy, includes the 3,514,762 shares of Common Stock
owned by Remy as well as presently exercisable options to purchase
66,000 shares of Common Stock held by Remy Investors. The Common
Stock beneficially owned by Mr. Siegel, who is the President and sole
stockholder of Remy Investors, includes the 3,580,762 shares of Common
Stock and warrants beneficially owned by Remy Investors as well as
presently exercisable options to purchase 350,000 shares of Common
Stock held by Mr. Siegel, but does not include 200,000 shares
underlying stock options held by Mr. Siegel, which options are not
presently exercisable and will not become exercisable with sixty days.
-12-
<PAGE> 16
(2) Based on Schedule 13G filed with the Securities & Exchange Commission.
Pilgrim Baxter & Associates Ltd.'s address is 825 Duportail Road,
Wayne, PA 19087.
(3) Based on Schedule 13G filed with the Securities & Exchange Commission.
Nicholas Applegate Capital Management's address is 600 West Broadway,
29th Floor, San Diego, CA 92101.
(4) Includes shares underlying presently exercisable stock options held by
the following individuals in the following amounts: Mr. Drum, 321,960
shares; Mr. Guz, 185,569 shares; Mr. Pope, 83,784 shares; and Mr.
Dupuis, 45,000 shares. Does not include shares underlying stock
options held by the following individuals which options are not
presently exercisable and will not become exercisable within sixty
days in the following amounts: Mr. Drum, 12,500 shares; Mr. Guz,
68,391 shares; Mr. Pope, 39,196 shares; and Mr. Dupuis 190,000 shares.
(5) Represents presently exercisable warrants and options to purchase
67,000 shares owned by Mr. Berns. Does not include 40,000 shares
underlying options that are not presently exercisable within 60 days
and does not include shares of Common Stock or warrants beneficially
owned by Remy Investors by whom Mr. Berns is employed. Mr. Berns
disclaims beneficial ownership of such shares and warrants.
(6) Does not include 7,500 shares underlying stock options held by Mr.
Huff which options are not presently exercisable and will not become
exercisable within sixty days.
(7) Includes presently exercisable options to purchase 11,250 shares owned
by each of Mr. Hunt, Ms. Smith and Mr. Spears. Does not include
options to purchase 3,750 shares owned by each of such individuals,
which are not exercisable within sixty days.
(8) Includes presently exercisable options to purchase 817,710 shares of
Common Stock.
Except as stated herein, there are no arrangements known to the
Company which may result in a change in control of the Company and each
shareholder has sole voting and investment power with respect to the Company's
Common Stock included in the above table.
-13-
<PAGE> 17
OTHER MATTERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's officers and directors, and persons who beneficially own more than
ten percent of a registered class of the Company's equity securities file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten percent shareholders are
required by the regulations promulgated under Section 16(a) to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 1, 1997 through December 31, 1997, all officers, directors and greater
than ten percent shareholders complied with all filing requirements applicable
to each of them.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was
not aware of any matter to be presented at the Meeting other than as set forth
herein. If any other matters are properly brought before the Meeting, however,
the shares represented by valid proxies will be voted with respect to such
matters in accordance with the judgment of the persons voting them.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any proposal by a Stockholder to be presented at the Company's next
Annual Meeting of Stockholders, currently expected to be held in August, 1999,
must be received at the offices of the Company, 16800 Greenspoint Park, Suite
225N, Houston, Texas 77060, not later than February 9, 1999.
INDEPENDENT ACCOUNTANTS
Ernst & Young LLP has served as the Company's independent accountants
for at least the past five years. It is anticipated that a representative of
Ernst & Young LLP will be present at the Meeting and will be entitled to make a
statement should he so desire and will be available to answer appropriate
questions.
ANNUAL REPORT
The Company has elected to satisfy its obligation to furnish an Annual
Report to stockholders by providing stockholders with a copy of its Annual
Report on Form 10-K for the year ended December 31, 1997, as filed with the
Securities and Exchange Commission, less exhibits. The financial statements
and related information contained therein are incorporated by reference into
this Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
P. Blake Dupuis
Secretary
April 30, 1998
-14-
<PAGE> 18
<TABLE>
<CAPTION>
<S> <C>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED Please
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS. mark your [X]
votes as
indicated
in this
example
1.ELECTION OF DIRECTORS 2.In their discretion, the proxies are
authorized to vote upon any other matter as
may properly come before the meeting.
FOR all nominees listed WITHHOLD AUTHORITY
below (except as to vote for all nominees
marked to the contrary) listed below
[ ] [ ]
I PLAN TO ATTEND THE MEETING. [ ]
Class I: Curtis W. Huff, Terry H. Hunt and Nadine C. Smith
(INSTRUCTIONS: To withhold authority to vote for any Please sign exactly as name appears
individual nominee, write that nominee's name in the below. When shares are held by
space provided below.) joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee, or guardian,
please give full title as such. If
a corporation, please sign in full
corporate name by President or other
authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated: , 1998
-------------------------
-------------------------------------------
(Signature)
-------------------------------------
(Signature if held jointly)
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
</TABLE>
-15-
<PAGE> 19
ANNUAL MEETING
OF
UTI ENERGY CORP.
TUESDAY JUNE 9, 1998
9:00 A.M.
HOTEL SOFITEL
425 NORTH SAM HOUSTON PARKWAY
HOUSTON, TX 77060
AGENDA
------
o Election of Directors
o Any other matter as may properly come before the meeting
-16-
<PAGE> 20
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
UTI ENERGY CORP.
The undersigned hereby appoints Vaughn E. Drum and P. Blake Dupuis
proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated
on the other side, all the shares of stock of UTI Energy Corp. standing in
the name of the undersigned with all powers which the undersigned would
possess if present at the Annual Meeting of Stockholders of the Company to
be held June 9, 1998 or any adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
UTI ENERGY CORP. ANNUAL
MEETING OF
STOCKHOLDERS
JUNE 9, 1998 9:00 A.M.
HOTEL SOFITEL
425 NORTH SAM HOUSTON PARKWAY
HOUSTON, TX 77060
-17-
<PAGE> 21
[FULBRIGHT & JAWORSKI L.L.P LETTERHEAD]
April 29, 1998
Re: Definitive Proxy Statement
================================================================================
Securities and Exchange Commission VIA EDGAR
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
Enclosed for filing via EDGAR are definitive proxy materials
relating to the UTI Energy Corp.'s Annual Meeting of Stockholders to be held on
June 9, 1998. The proxy materials are being mailed to stockholders on or about
April 30, 1998. In the event any member of the staff of the Commission has any
questions regarding the enclosed, he or she should contact Philip A. Choyce at
(713) 651-5503.
Very truly yours,
/s/ Philip A. Choyce
Philip A. Choyce
Enclosures
cc: American Stock Exchange, Inc.
86 Trinity Place
New York, New York 10006-1881
Attention: Filing Desk
(via federal express, receipt copy requested)
