<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
J. Ray McDermott, S.A.
- --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
J. RAY McDERMOTT, S.A.
- --------------------------------------------------------------------------------
R. E. Howson 1450 Poydras Street
Chairman of the Board and P.O. Box 61829
Chief Executive Officer New Orleans, Louisiana, 70161-1829
(504) 587-5300
June 30, 1995
Dear Stockholder:
You are cordially invited to the Company's first Annual Meeting of
Stockholders since the merger of Offshore Pipelines, Inc. into a merger
subsidiary of the Company on January 31, 1995. The Annual Meeting will be held
on Friday, August 4, 1995, in the La Salle Ballroom of the Hotel Inter-
Continental, 444 St. Charles Avenue, New Orleans, Louisiana, commencing at 9:30
a.m. local time. We look forward to greeting personally as many of our
stockholders as possible at the meeting.
We hope you will join us at this year's meeting; but, whether or not you
personally plan to attend, please take a few minutes now to sign, date and
return your Proxy in the enclosed postage-paid envelope.
Thank you for your interest in our Company.
Very truly yours,
R. E. HOWSON
<PAGE>
J. RAY McDERMOTT, S.A.
1450 POYDRAS STREET
P. O. BOX 61829 NEW ORLEANS, LOUISIANA 70161-1829
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 4, 1995
To the Stockholders of
J. RAY McDERMOTT, S.A.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of J. Ray
McDermott, S.A., a Panama corporation (the "Company"), for the fiscal year
ended March 31, 1995 will be held in the La Salle Ballroom of the Hotel Inter-
Continental, 444 St. Charles Avenue, New Orleans, Louisiana, on Friday, August
4, 1995, at 9:30 a.m. local time, for the following purposes:
(1) To elect three Class I Directors;
(2) To consider and act upon a proposal to retain Ernst & Young LLP as
the Company's independent auditors for the fiscal year ending March
31, 1996; and
(3) To transact such other business as may properly come before the
meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on June 26, 1995 as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the meeting and at any adjournment or adjournments thereof.
Stockholders are urged to sign the enclosed Proxy and return it promptly to
the Company in the enclosed envelope, which requires no postage if mailed in
the United States.
By Order of the Board of Directors,
LAWRENCE R. PURTELL
Secretary
Dated: June 30, 1995
<PAGE>
J. RAY McDERMOTT, S.A.
1450 POYDRAS STREET
P. O. BOX 61829
NEW ORLEANS, LOUISIANA 70161-1829
----------------
PROXY STATEMENT
----------------
The accompanying Proxy is solicited by the Board of Directors of J. Ray
McDermott, S.A. (the "Company"), which will bear all expenses incurred in
connection with such solicitation. It is expected that solicitation of Proxies
will be primarily by mail. Morrow & Co., Inc. has been engaged to assist in the
delivery of proxy materials for a fee of $1,500, plus out-of-pocket expenses.
Brokerage houses, banks and other custodians, nominees and fiduciaries will be
reimbursed for their customary out-of-pocket and reasonable expenses incurred
in forwarding proxy materials to their clients who are beneficial owners of
shares. Any Proxy may be revoked at any time prior to its exercise by written
notice to the Secretary of the Company, by submission of another Proxy having a
later date or by voting in person at the meeting. This Proxy Statement is first
being mailed to stockholders on or about June 30, 1995.
VOTING AT MEETING
Only holders of record of the Company's Common Stock, $.01 par value per
share (the "Common Stock"), and the Company's Series A $2.25 Cumulative
Convertible Preferred Stock, $.01 par value per share (the "Series A Preferred
Stock"), at the close of business on June 26, 1995 (the "Record Date"), will be
entitled to notice of, and to vote at, the Annual Meeting. Each outstanding
share of Common Stock and each outstanding share of Series A Preferred Stock is
entitled to one vote per share, with all holders thereof voting as a single
class on the matters to be acted upon at the Annual Meeting. There were
outstanding on the Record Date 38,950,368 shares of Common Stock and 3,200,000
shares of Series A Preferred Stock. On the Record Date, 24,668,297 shares of
Common Stock and all of the outstanding 3,200,000 shares of Series A Preferred
Stock (or approximately 66.12% of the total votes entitled to be cast at the
meeting) were held by McDermott International, Inc. ("McDermott
International"), with its address at 1450 Poydras Street, New Orleans,
Louisiana 70112-6050. A majority of the outstanding shares present in person or
by proxy will constitute a quorum at the meeting. Abstentions and broker non-
votes are counted for the purpose of determining whether a quorum is present
but are not counted for any other purposes.
Offshore Pipelines, Inc. ("OPI") merged into J. Ray McDermott Holdings, Inc.,
a wholly owned subsidiary of the Company formerly known as MCB I, Inc. ("JRM
Holdings"), on January 31, 1995 (the "Merger") pursuant to an Agreement and
Plan of Merger dated as of June 2, 1994, as amended, by and among OPI,
McDermott International, the Company, and JRM Holdings (the "Merger
Agreement"). Under the terms of the Merger Agreement, McDermott International
is required to vote its shares of Common Stock
<PAGE>
and Series A Preferred Stock in favor of the election of Messrs. Robert E.
Howson, Mike H. Lam and Frank C. Wade as Class I Directors at the Company's
first annual meeting of stockholders following the Merger. McDermott
International has informed the Company that it will vote its shares in favor of
the election of such nominees as Class I Directors and in favor of the
retention of Ernst & Young LLP as the Company's independent auditors for the
fiscal year ending March 31, 1996.
ELECTION OF DIRECTORS
(ITEM 1)
At the Annual Meeting, three Directors are to be elected to Class I of the
Board of Directors, each to hold office until the Company's 1998 Annual Meeting
and until his successor is elected and qualified. The persons named as proxies
in the enclosed Proxy have been designated by the Board of Directors and,
unless otherwise directed, intend to vote for the election of the Class I
Nominees named below. If any nominee named below should become unavailable for
election, the shares will be voted for such substitute nominee as may be
proposed by the Board of Directors. No circumstances are now known, however,
that would prevent any of the nominees from serving. Set forth under Class II
and Class III are the names of the other Directors of the Company currently in
office. Class II Directors will continue to serve until the Company's Annual
Meeting of Stockholders in 1996 and Class III Directors will continue to serve
until the Company's Annual Meeting of Stockholders in 1997.
Pursuant to the Merger Agreement, all Directors, other than Rick L. Burdick,
were previously elected as of January 31, 1995, the effective time of the
Merger (the "Effective Time"). Mr. Burdick was appointed a Director of the
Company by the Board of Directors of the Company after the Merger, upon the
recommendation of Frank C. Wade, former Chairman of the Board of OPI, in
accordance with the terms of the Merger Agreement, which entitled OPI to
designate one additional director who is neither an "Affiliate" nor an
"Associate" (as such terms are defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of OPI or any of its
subsidiaries.
The information appearing below with respect to the business experience of
each Director and other directorships held, has been furnished by each such
Director as of June 20, 1995.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
---- --- --------
CLASS I NOMINEES
<S> <C> <C>
Robert E. Howson................................................. 63 1995
Chairman of the Board and Chief Executive Officer of the Company
since January 31, 1995 and Chairman of the Board and Chief
Executive Officer of McDermott International and McDermott
Incorporated since August 1988. Prior to assuming these
positions, he was President and Chief Operating Officer of
McDermott International and McDermott Incorporated from August
1987. He is also a director of McDermott International,
McDermott Incorporated, The Louisiana Land and Exploration
Company and Whitney Holding Corporation.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
---- --- --------
<S> <C> <C>
Mike H. Lam...................................................... 48 1995
Former Vice Chairman of the Board of Directors and Chief
Operating Officer of OPI from October 1992, prior to which he
was Executive Vice President--Worldwide Operations of OPI from
April 1990. He is an advisory director of DeepTech International
Inc.
Frank C. Wade.................................................... 49 1995
Vice Chairman of the Board of Directors of the Company since
January 31, 1995. Prior to assuming this position, he was the
Chairman of the Board of Directors and Chief Executive Officer
of OPI from December 1988.
CLASS II DIRECTORS
James J. Wildasin................................................ 60 1995
President and Chief Operating Officer of the Company since
January 31, 1995. Prior to assuming this position, he was
President and Chief Operating Officer of McDermott
International's Marine Construction Services Business from
February 1993; Senior Vice President and Group Executive, North
Sea, Middle East and West Africa Operations of McDermott
International from February 1992; Vice President and Group
Executive, North Sea, Middle East and West Africa Operations of
McDermott International from July 1991; Vice President and
General Manager, London Engineering of McDermott International
from March 1991; and prior to that, President and Co-Chief
Executive Officer of McDermott-ETPM, Inc.
J. Howard Macdonald.............................................. 67 1995
Chairman and Chief Executive Officer of NatWest Investment Bank
from January 1989 to April 1991. He is also a director of
McDermott International, The BOC Group plc, and The Weir Group
plc.
Rick L. Burdick.................................................. 43 1995
Sole shareholder of a professional corporation which has served
as a partner in the law firm of Akin, Gump, Strauss, Hauer &
Feld, L.L.P., a limited liability partnership including
professional corporations, since 1988. Mr. Burdick has also been
a director of Republic Waste Industries, Inc. since May 1991.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
---- --- --------
CLASS III DIRECTORS
<S> <C> <C>
Brock A. Hattox.................................................. 47 1995
Executive Vice President and Chief Financial Officer of McDermott
International, and Executive Vice President and Chief Financial
Officer, and President of the Engineering and Construction
Group, of McDermott Incorporated since February 1995. Prior to
assuming these positions, he was Senior Vice President and Chief
Financial Officer of McDermott International and McDermott
Incorporated from March 1991; and prior to that, Vice President,
Controller and Planning, of the Eaton Corporation (a
manufacturer of engineered products for automotive, industrial,
commercial and defense markets). He is also a director of
McDermott International and McDermott Incorporated.
John F. Bookout.................................................. 72 1995
Until his retirement in June 1988, Mr. Bookout was President and
Chief Executive Officer of Shell Oil Company; he is also a
director of The Investment Company of America and McDermott
International.
Cedric E. Ritchie................................................ 67 1995
Chairman of the Executive Committee of the Board of The Bank of
Nova Scotia since January 1995. Prior to assuming this position,
he was Chairman of the Board and Chairman of the Executive
Committee of the Board of The Bank of Nova Scotia from January
1993; and prior to that, Chairman of the Board and Chief
Executive Officer of The Bank of Nova Scotia from December 1979.
He is also a director of Ingersoll-Rand Company, MacMillan
Bloedel Limited, Minorco, Moore Corporation Limited and NOVA
Corporation of Alberta.
Thomas P. Tatham................................................. 49 1995
Chairman of the Board and a director of Tatham Offshore, Inc.
since December 1988. He has also served as Chairman of the
Board, Chief Executive Officer and a director of DeepTech
International Inc. and Leviathan Gas Pipeline Company (the
general partner of Leviathan Gas Pipeline Partners, L.P., a
publicly traded limited partnership) since October 1989 and
February 1989, respectively.
</TABLE>
BOARD OF DIRECTORS AND ITS COMMITTEES
General Information. In accordance with the terms of a Letter Agreement
entered into between the Company and McDermott International in connection with
the Merger (the "Letter Agreement"), the Board of Directors of the Company has
established an Independent Committee, an Audit Committee and a Compensation
Committee. Under the terms of the Letter Agreement, each of such committees
initially shall have at least one director designated by OPI pursuant to the
Merger Agreement. The Board also has established a Directors Nominating
Committee.
4
<PAGE>
Independent Committee. Under the terms of the Letter Agreement, the
Independent Committee must be comprised of each member of the Company's Board
of Directors who either (i) would qualify as an independent director within the
meaning given to such term under the rules of the New York Stock Exchange or
(ii) is not an "Affiliate" or "Associate" (as such terms are defined in Rule
12b-2 of the Exchange Act) of McDermott International, the Company, or with
respect to periods ending on or prior to the Effective Time, OPI, other than
solely as a result of being a director of the Company.
The Independent Committee is currently composed of Messrs. Ritchie, Bookout,
Macdonald, Tatham and Burdick. From the time it was established until the end
of the Company's fiscal year, the Independent Committee met once. Under the
Letter Agreement, a majority of the members of the Independent Committee must
approve certain transactions between the Company, on one hand, and McDermott
International and its Affiliates and Associates, other than the Company and its
subsidiaries (the "McDermott Group"), on the other.
Such Letter Agreement provides that until the earlier of the third
anniversary of the Effective Time or the date on which McDermott International
and its Affiliates cease to own at least 30% of the outstanding voting stock of
the Company, the Company shall not take any of the following actions, among
others, without the approval of the Independent Committee: (a) repurchase,
redeem, prepay or amend the $231 million 9% Senior Subordinated Note due 2001
issued by the Company to McDermott International or the Series A Preferred
Stock; or repurchase any of the Common Stock owned by McDermott International
or certain of its Affiliates; (b) lease, sell or otherwise provide certain
goods or services to, or lease or purchase certain goods or services from,
McDermott International or certain of its Affiliates, involving aggregate
payments in excess of $5,000,000; or (c) fill any vacancies on the Board of
Directors of the Company created by an increase in the size of such Board of
Directors with certain persons who are or were executive officers or directors
of McDermott International, the Company or OPI.
The Letter Agreement also provides that until the earlier of the third
anniversary of the Effective Time or the date on which McDermott International
and its Affiliates cease to own at least 30% of the outstanding voting stock of
the Company, the Company shall not take any of the following actions, among
others, without either (i) the affirmative vote of the holders of at least a
majority of the then outstanding voting stock of the Company owned by persons
other than members of the McDermott Group or Associates thereof or (ii) the
approval of the Independent Committee: (a) any merger or consolidation of the
Company or any subsidiary of the Company with any member of the McDermott
Group; (b) certain transfers or other dispositions of assets outside of the
ordinary course of business to any member of the McDermott Group; (c) certain
issuances or transfers by the Company or any subsidiary of the Company of
equity securities of the Company or any such subsidiary; (d) the adoption of
any plan or proposal for the liquidation or dissolution of the Company pursuant
to which any member of the McDermott Group would receive securities of the
Company or any subsidiary of the Company; (e) certain reclassifications or
recapitalizations of the Company, mergers or consolidations of the Company with
any subsidiary, or certain other transactions that have the effect of
increasing the proportionate equity interest of the Company or any subsidiary
owned by any McDermott Group member; or (f) certain loans, advances,
guarantees, pledges or other financial assistance or any tax
5
<PAGE>
credits or other tax advantages provided by the Company or any subsidiary of
the Company to any McDermott Group member.
Audit Committee. The Audit Committee is currently composed of Messrs. Ritchie
(Chairman), Tatham and Burdick. From the time it was established until the end
of the fiscal year, the Audit Committee did not meet. Such Committee did meet
in June 1995. The functions of the Audit Committee include reviewing the
accounting principles and practices employed by the Company and, to the extent
the Audit Committee deems appropriate, by the Company's subsidiaries; meeting
with the Company's independent auditors to review their report on their
examination of the Company's accounts, their comments on the internal controls
and audit procedures of the Company and the action taken by management with
regard to such comments; approving professional services, including non-audit
services, rendered by such independent auditors; and recommending annually to
the Board of Directors the appointment of the Company's independent auditors.
Compensation Committee. The Compensation Committee is currently composed of
Messrs. Bookout (Chairman), Ritchie and Tatham. From the time it was
established until the end of the fiscal year, the Compensation Committee met
once. The Compensation Committee determines the salaries of all of the
Company's officers elected to their positions by the Board, and also reviews
and makes recommendations regarding the salaries of officers of the Company's
subsidiaries; and administers and makes awards under the Company's Executive
Long-Term Incentive Compensation Plan and Short-Term Incentive Compensation
Plan.
Directors Nominating Committee. The Directors Nominating Committee is
currently composed of Messrs. Macdonald (Chairman), Bookout and Wade. From the
time it was established until the end of the fiscal year, the Directors
Nominating Committee met once. The function of the Directors Nominating
Committee is to recommend nominees for election to the Company's Board of
Directors. The Directors Nominating Committee will consider nominees
recommended by stockholders for election as directors. Any such recommendation,
together with the nominee's qualifications and consent to be considered as a
nominee, should be sent to the Secretary of the Company.
DIRECTORS' ATTENDANCE AND COMPENSATION
Directors' Attendance and Fees. During the short fiscal year ended March 31,
1995, there were only two meetings of the Board of Directors of the Company.
Each Director attended 75% or more of the aggregate of the meetings of the
Board and of the committees on which he served, other than Messrs. Ritchie and
Wade. Each Director who is not an employee of the Company or any of its
affiliated companies receives an annual stipend of $20,000 plus a fee of $1,500
and $1,000 for each Board meeting and telephonic Board meeting, respectively,
in which such Director participates, and a fee of $1,500 for each committee
meeting in which such Director participates.
Mr. Lam's Deferred Compensation Agreement. In January 1992, OPI entered into
a deferred compensation agreement with Mr. Lam. Under his deferred compensation
agreement, OPI was required to
6
<PAGE>
pay Mr. Lam annual cash payments in varying amounts beginning at the end of his
fifth year of service with OPI, and either a cash payment or annuity in the
amount of $1,000,000, plus an additional amount equal to all federal and state
income taxes attributable to such payment, at the end of his tenth year of
service. The obligations of OPI under the deferred compensation agreement were
indirectly assumed by the Company by operation of law upon the consummation of
the Merger. The Board of Directors of the Company on February 7, 1995 approved
a resolution that Mr. Lam's service as a member of the Board, or as an advisor
to the Company, would be treated as service as an "employee" for purposes of
his deferred compensation agreement. For purposes of his deferred compensation
agreement, Mr. Lam is considered to have commenced service with the Company in
May 1990.
If a "business combination" (as defined in the deferred compensation
agreement) not approved by the Board occurs during the term of such agreement,
Mr. Lam will be entitled to receive a fully vested and non-forfeitable benefit
under such agreement as if he completed ten years of service with the Company.
An irrevocable grantor trust was established contemporaneously with the
execution of the deferred compensation agreement. To date, the trust has not
been funded. Unless the trust is subsequently amended, Mr. Lam's interest in
any assets of the trust will be that of an unsecured general creditor of the
Company.
Non-Employee Director Stock Plan. The Company has a Non-Employee Director
Stock Plan (the "Directors Plan") to encourage stock ownership by Directors, to
more closely align the interests of Directors with the Company's stockholders
and to provide the Company with an effective means of attracting and retaining
qualified individuals to serve on the Board of Directors. The Directors Plan,
which is administered by the Board of Directors, permits the Board to grant to
Directors who are not employees of the Company or any of its Affiliates stock
options and rights to purchase restricted stock in an aggregate of up to
100,000 shares of Common Stock. Options, which are granted at no less than 100%
of the fair market value on the date of grant, are fully vested and exercisable
on the date of grant and remain exercisable for not more than ten years
thereafter. Rights to purchase Common Stock are granted at $1.00 per share, and
upon purchase are subject to transfer restrictions and forfeiture under certain
circumstances.
Pursuant to the Directors Plan, each eligible Director is granted options to
purchase at fair market value 600 shares of Common Stock on the first day of
the first year of such Director's term, and 200 shares on the first day of each
subsequent year during such term. Also pursuant to the Directors Plan, each
eligible Director is granted the right to purchase 300 shares of restricted
stock on the first day of the first year of such Director's term, and 100
shares of restricted stock on the first day of each subsequent year during such
term. The restrictions and forfeiture provisions generally lapse on all shares
of restricted stock purchased under grants made during a Director's term at the
end of such term. In the event of a change in control of the Company, all such
restrictions and forfeiture provisions shall lapse and options shall remain
exercisable throughout their term.
During the last fiscal year, no options or rights to purchase shares of
restricted stock were awarded under the Directors Plan. Such options and rights
to purchase shares of restricted stock will be granted commencing after the
first Annual Meeting of Stockholders.
7
<PAGE>
EXECUTIVE OFFICERS
Set forth below is the age, positions held with the Company and certain
business experience information for each of the Company's executive officers
who are not Directors.
Richard R. Foreman, 46, Executive Vice President and Chief Financial Officer
of the Company since January 31, 1995. During the past five years and before
assuming his present position, Mr. Foreman was President and Chief Financial
Officer of OPI from October 1992; and prior to that, President and Chief
Operating Officer of OPI from December 1989.
Lawrence R. Purtell, 48, Senior Vice President and General Counsel and
Corporate Secretary of the Company since January 31, 1995 and Senior Vice
President and General Counsel and Corporate Secretary of McDermott
International and McDermott Incorporated since May 1993. Before assuming his
present positions, Mr. Purtell was Vice President, General Counsel and
Secretary of Carrier Corporation, a United Technologies Corporation subsidiary,
from December 1992; and prior to that, he was Corporate Secretary and Associate
General Counsel of United Technologies Corporation from June 1989.
L. E. Walker, 50, Senior Vice President, Business Development and Strategic
Initiatives of the Company since February 1995. Before assuming this position,
Mr. Walker served as President of Offshore Pipelines International, Ltd., OPI's
primary international operating subsidiary, from December 1991 and as Executive
Vice President-International Operations of OPI from October 1990 until December
1991. He has over 20 years of experience in the offshore construction industry,
including serving from 1980 until 1988 as a Vice President and General Manager
for McDermott International.
Don W. Wilson, 47, Executive Vice President, Operations of the Company since
February 1995. During the past five years and before assuming his present
position, Mr. Wilson served as President of OPI International, Inc., OPI's
principal operating subsidiary, from March 1993. Mr. Wilson has more than 19
years of experience in the offshore construction industry. Prior to joining
OPI, Mr. Wilson was employed by affiliates of Brown & Root, Inc. for more than
15 years in a variety of managerial positions including, since 1990, Vice
President of Global Operations with primary responsibility for worldwide marine
operations.
Richard E. Woolbert, 61, Executive Vice President and Chief Administrative
Officer of the Company since February 1995 and Executive Vice President and
Chief Administrative Officer of McDermott International and McDermott
Incorporated since February 1995. Before assuming his present positions, Mr.
Woolbert was Senior Vice President and Chief Administrative Officer of
McDermott International and McDermott Incorporated from August 1991; and prior
to that, Vice President and Chief Administrative Officer of McDermott
International and McDermott Incorporated from November 1988.
8
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Common Stock and
McDermott International's Common Stock, par value $1.00 per share ("McDermott
Common Stock"), beneficially owned by each Director, each Named Executive
Officer, as defined in "COMPENSATION OF EXECUTIVE OFFICERS", and all Directors
and executive officers of the Company as a group, as of June 20, 1995, except
as otherwise noted. No Director or executive officer beneficially owned, as of
June 20, 1995, any other equity security of the Company or of its parent or
subsidiaries.
<TABLE>
<CAPTION>
MCDERMOTT
COMMON COMMON
NAME STOCK STOCK
- ---- --------- ---------
<S> <C> <C>
John F. Bookout(2)......................................... 0 4,475
Rick L. Burdick............................................ 0 0
Richard R. Foreman(1)(4)(5)(7)............................. 229,232 0
Brock A. Hattox(3)(6)...................................... 1,000 98,999
Robert E. Howson(3)(6)(7).................................. 7,490 486,556
Mike H. Lam(1)(4)(5)....................................... 211,582 0
J. Howard Macdonald(2)..................................... 0 2,925
Cedric E. Ritchie.......................................... 0 0
Thomas P.Tatham............................................ 0 0
Frank C. Wade(4)........................................... 1,796,914 0
L. E. Walker(1)(4)(5)(7)................................... 140,273 0
James J. Wildasin(3)(6)(7)................................. 8,210 80,592
Don W. Wilson(5)(7)........................................ 119,498 0
All Directors and executive officers as a group (15 per-
sons)..................................................... 2,518,199 820,698
</TABLE>
- --------
(1) With respect to Messrs. Foreman, Lam and Walker, includes 214,784, 210,000
and 133,400 shares of Common Stock, respectively, which are issuable upon
the exercise of certain stock options that are currently exercisable. Such
options relate to options to acquire OPI Common Stock that were assumed by
the Company and became options to acquire Common Stock pursuant to the
terms of the Merger Agreement.
(2) With respect to Messrs. Bookout and Macdonald, includes 1,650 and 1,950
shares of McDermott Common Stock, respectively, which are issuable upon the
exercise of certain stock options, currently exercisable, granted under
McDermott International's 1992 Director Stock Program. Also includes with
respect to Messrs. Bookout and Macdonald, 825 and 975 shares of McDermott
Common Stock, respectively, which were acquired as restricted stock awards
under McDermott International's 1992 Director Stock Program.
(3) With respect to Messrs. Hattox, Howson and Wildasin, includes 60,377,
275,776 and 45,334 shares of McDermott Common Stock, respectively, which
are issuable upon the exercise of certain stock options, currently
exercisable, granted under McDermott International's 1983 and 1987 Long-
Term Performance
9
<PAGE>
Incentive Compensation Programs or 1992 Officer Stock Incentive Program.
Also includes with respect to Messrs. Hattox, Howson and Wildasin, 37,790,
201,500 and 33,220 shares of McDermott Common Stock, respectively, which
were acquired as restricted stock awards under McDermott International's
1987 Long-Term Performance Incentive Compensation Program or 1992 Officer
Stock Incentive Program.
(4) With respect to Messrs. Foreman, Lam, Wade and Walker includes 760, 734,
760 and 725 shares of Common Stock, respectively, which are held in OPI's
Employee Stock Ownership Plan, as assumed by the Company.
(5) With respect to Messrs. Foreman, Lam, Walker and Wilson, includes the
equivalent of approximately 5,198, 848, 2,528 and 68 shares of Common Stock
held in The Thrift Plan for Employees of McDermott Incorporated and
Participating Subsidiary and Affiliated Companies (the "McDermott Thrift
Plan") as of March 31, 1995.
(6) With respect to Messrs. Hattox, Howson and Wildasin, includes the
equivalent of 832, 780 and 1,267 shares, respectively, of McDermott Common
Stock held in the McDermott Thrift Plan as of April 30, 1995.
(7) With respect to Messrs. Foreman, Howson, Walker, Wildasin and Wilson,
includes 5,490, 7,490, 3,620, 8,210 and 4,430 shares of Common Stock,
respectively, which were acquired on June 20, 1995 as restricted stock
awards under the Company's Executive Long-Term Incentive Compensation Plan.
Total shares beneficially owned in all cases constituted less than one
percent of the outstanding shares of the applicable security, except that (i)
the 1,796,914 and 2,518,199 shares of Common Stock beneficially owned by Frank
C. Wade and all Directors and executive officers as a group, respectively,
constituted approximately 4.6% and 6.5%, respectively, of the outstanding
shares of Common Stock, and (ii) the 820,698 shares of McDermott Common Stock
beneficially owned by all Directors and executive officers as a group
constituted approximately 1.51% of the outstanding shares of McDermott Common
Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table furnishes information concerning all persons known to the
Company to beneficially own 5% or more of any class of voting stock of the
Company as of June 20, 1995:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP(1) CLASS
-------------- ------------------- ------------ -------
<C> <S> <C> <C>
McDermott International,
Common Stock................ Inc. 24,668,297(2) 63.42%
1450 Poydras Street
New Orleans, LA 70112-
6050
Series A Preferred Stock McDermott International,
(4)......................... Inc. 3,200,000(3) 100.00%
1450 Poydras Street
New Orleans, LA 70112-
6050
</TABLE>
- --------
(1) Sole voting and investment power unless otherwise noted.
10
<PAGE>
(2) As reported on a Schedule 13D dated February 9, 1995 filed by McDermott
International.
(3) As footnoted on a Schedule 13D dated February 9, 1995 filed by McDermott
International with respect to its Common Stock.
(4) Entitles holders thereof to one vote per share, voting as a single class
with holders of Common Stock.
REPORT ON EXECUTIVE COMPENSATION
TO OUR STOCKHOLDERS
The Compensation Committee, which is composed of three independent non-
employee Directors, administers the Company's executive compensation programs.
The Compensation Committee's primary responsibility is to ensure the executive
compensation program supports the interests of the Company and its
stockholders.
The Company's program has four goals:
. Attract and retain a top management team;
. Motivate superior performance;
. Reward contributions toward the attainment of Company strategies; and
. Drive increases in the value of stockholders' investments in the Company.
The key elements of the executive compensation program are base salary,
short-term incentives, and long-term incentives (stock options and restricted
stock). Pay levels and opportunities under the executive compensation programs
are targeted at the median of competitive levels, defined by companies within
the Company's industry, as well as by more general industrial companies. The
Compensation Committee and the Company have access to outside consultants and
multiple data surveys to help them determine where the competitive median lies
for various executive positions and different types of compensation.
BASE SALARY
Salaries and salary ranges have been established based upon the past
practices of OPI and McDermott International's Marine Construction Services
Business (the "Merged Companies") and have been developed to be more reflective
of the size and responsibilities of the new, larger company. Future changes to
salaries will be determined based upon individual performance and expectations
regarding future contributions. Mr. Howson does not receive a base salary from
the Company. Mr. Wildasin's base salary for fiscal year 1996 will be $397,164
for the reasons cited above.
SHORT-TERM INCENTIVES
Executives have the opportunity to earn annual cash incentives each year.
Actual payments will reflect actual performance versus goals which are
established at the beginning of each fiscal year. Bonuses were
11
<PAGE>
awarded for the year ended March 31, 1995 in keeping with preexisting
commitments made to executives and based on the past practices of the Merged
Companies. Opportunities and performance goals will be established and
structured for all executives for the next fiscal year.
LONG-TERM INCENTIVES
This program allows for various types of long-term incentive awards. Grants
of nonqualified stock options were made coincident with the Merger and grants
of restricted stock were made in connection with the close of fiscal year 1995.
The Compensation Committee intends to grant both types of equity awards
annually if performance warrants.
Mr. Howson's and Mr. Wildasin's equity grants were determined subjectively by
the Compensation Committee. Mr. Howson received a grant of Company stock
options in recognition of the services he renders as Chairman and Chief
Executive Officer. Mr. Howson was awarded options to acquire 23,770 shares of
Common Stock at a per share exercise price of $22.625 (market value on the date
of grant). He also received 7,490 shares of restricted Common Stock for fiscal
year 1995 in recognition of the services he renders as Chairman and Chief
Executive Officer. Mr. Wildasin received a grant of options to acquire 22,540
shares of Common Stock at a per share exercise price of $22.625 (market value
on the date of grant). In addition, he received 8,210 shares of restricted
Common Stock. Mr. Wildasin's awards were made in recognition of the services he
renders as President and Chief Operating Officer of the Company.
POLICY WITH RESPECT TO SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986 (the "Code"), enacted in
August 1993, limits the tax deduction the Company can take with respect to the
compensation of certain executive officers unless the compensation is
"performance based", and the material terms of performance goals are disclosed
to and approved by the stockholders. The Company's executive compensation plans
received stockholder approval prior to becoming a publicly traded company and
were drafted with the intention that incentive opportunities (short term, stock
options and restricted stock) qualify as performance-based compensation under
Section 162(m).
J. F. Bookout, Chairman
C. E. Ritchie
T. P. Tatham
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Tatham, a member of the Compensation Committee, is Chairman of the Board
and Chief Executive Officer of DeepTech International Inc. and Leviathan Gas
Pipeline Company, and Chairman of the Board of Tatham Offshore, Inc. These
companies and their affiliates, either directly or indirectly, have, and will
continue to be, engaged in a number of commercial transactions with the
Company, all of which have been, and are expected to continue to be, entered
into in the ordinary course of business and on an arms-length basis. See
"CERTAIN TRANSACTIONS--Thomas P. Tatham and Affiliates".
12
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing, on a monthly basis, the cumulative
total stockholder return on Common Stock with the cumulative total return of
the S&P 500 Index and a peer group index for the two month period from January
31, 1995 (the date that the Common Stock commenced trading on the New York
Stock Exchange) until March 31, 1995 (the end of the Company's fiscal year).
The Common Stock did not become publicly traded under Section 12 of the
Exchange Act until January 31, 1995; therefore, return information for earlier
periods is not presented. The peer group of companies consists of Baker-Hughes,
Inc., BJ Services Co., Camco International Inc., Coflexip, Dresser Industries
Inc., Global Marine Inc., Halliburton Co., Schlumberger Ltd., Stolt Comex
Seaway S.A., and Tidewater Inc.
COMPARISON OF TWO-MONTH CUMULATIVE TOTAL RETURN*
J. RAY MCDERMOTT, S.A.; S&P 500; AND PEER GROUP
* Assumes $100 invested on January 31, 1995 in J. Ray McDermott, S.A. common
stock; S&P 500; and the Peer Group and the reinvestment of dividends as they
are paid.
<TABLE>
<CAPTION>
1/31/95 2/31/95 3/31/95
------- ------- -------
<S> <C> <C> <C>
J. Ray McDermott, S.A............................ $100.00 $101.71 $123.42
S&P 500.......................................... $100.00 $103.61 $107.11
Peer Group....................................... $100.00 $107.53 $111.61
</TABLE>
13
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table summarizes the annual and long-term compensation of the
Company's Chief Executive Officer and four highest paid executive officers
(collectively, the "Named Executive Officers") for fiscal year 1995. Except as
otherwise noted, such table only reflects the compensation paid for the two
month period from the Effective Time (at which time all of the Named Executive
Officers, other than Mr. Howson, became employees of the Company) until March
31, 1995. Mr. Howson, who is an employee of McDermott International, does not
receive a salary from the Company. Under a services agreement between the
Company and McDermott International, the Company is required to pay to
McDermott International $2,000,000 annually for the services of certain of
McDermott International's executives, including the services of Mr. Howson as
Chairman and Chief Executive Officer of the Company. The table does not provide
any compensation information relating to the services that Mr. Howson provides
as an executive officer of McDermott International.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
--------------------------- -----------------------------
AWARDS
---------------------
SECURITIES
OTHER UNDERLYING PAYOUTS ALL
FISCAL ANNUAL RESTRICTED STOCK LTIP OTHER
NAME PRINCIPAL POSITION YEAR SALARY BONUS COMP. STOCK(2) OPTIONS PAYOUTS COMP.(3)
- ---- --------------------- ------ ------- -------- ------- ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
R.E. Howson........ Chairman & Chief 1995 $ 0 $ 0 $ 0 $174,143 23,770 $ 0 $ 0
Executive Officer
R.R. Foreman....... Executive VP & 1995 $50,750 $ 0 $ 0 $127,643 19,010 $ 0 $51,008(4)
Chief Financial
Officer
L.E. Walker........ Senior VP Business 1995 $34,007 $ 0 $ 0 $ 84,165 10,140 $ 0 $ 340(5)
Development &
Strategic Initiatives
J.J. Wildasin...... President & Chief 1995 $63,181 $110,285(6) $38,222(7) $190,883 22,540 $ 0 $ 375
Operating Officer
D.W. Wilson........ Executive VP, 1995 $36,867 $ 0 $15,701(8) $102,998 12,670 $ 0 $ 369(9)
Operations
</TABLE>
- --------
(1) Includes amounts earned in fiscal year 1995, whether or not deferred.
(2) Restricted stock awards in Common Stock for fiscal year 1995 are valued at
the closing price on the date of grant, which was June 20, 1995. Dividends
are paid on restricted shares at the same time and at the same rate as
dividends paid to stockholders of unrestricted shares. Grants of restricted
stock generally vest fifty percent in five years with the remaining fifty
percent vesting in three to ten years based on performance. In the event of
a change of control of the Company, the Compensation Committee may cause
all restrictions to lapse. As of March 31, 1995, none of the Named
Executive Officers had been awarded, and therefore none of them held, any
restricted shares of Common Stock.
14
<PAGE>
(3) In addition to items specifically footnoted, amounts indicated relate to
company matching contributions in Common Stock or McDermott Common Stock
made under McDermott's Thrift Plan.
(4) Includes $50,000 paid under Mr. Foreman's deferred compensation agreement;
excludes a $2,000,000 noncompetition payment made to Mr. Foreman in
connection with the Merger under his employment agreement.
(5) Excludes a $1,280,000 deferred compensation payment made to Mr. Walker in
connection with the Merger as a result of the acceleration of the amounts
payable to him under a deferred compensation agreement between him and OPI.
(6) Reflects the amount paid to Mr. Wildasin by the Company equal to the bonus
that Mr. Wildasin would have received for the full 12 month fiscal year
ended March 31, 1995 under McDermott International's annual cash incentive
plan as President and Chief Operating Officer of McDermott International's
Marine Construction Services Business.
(7) Includes commodities, services, housing, utilities, expenses and tax
equalization associated with Mr. Wildasin's international assignment.
(8) Represents imputed income to Mr. Wilson on interest free loans given to him
under OPI's Incentive Compensation Program for federal tax liability
relative to the vesting of restricted stock awards under such program.
(9) Excludes $1,131,250 received in connection with the Merger (which amount is
the market value of 50,000 shares of Common Stock as of January 31, 1995,
the date upon which Mr. Wilson received such stock as a noncompetition
payment under his employment agreement).
15
<PAGE>
OPTION GRANT TABLE
Options generally vest in equal installments of one-third beginning on the
first anniversary of the date of grant through the third anniversary of the
date of grant and expire ten years from the date of grant. In general, vesting
is contingent on continuing employment with the Company. In the event of a
change in control of the Company, the Compensation Committee may accelerate the
exercisability of any options outstanding. The following table provides
information about option grants to the Named Executive Officers during fiscal
year 1995. The Company did not grant any stock appreciation rights to its
executive officers during fiscal year 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(4)
------------------------------------------- --------------------------------
NUMBER OF
SECURITIES % OF TOTAL 5% 10%
UNDERLYING OPTIONS --------------- ----------------
OPTIONS GRANTED TO EXERCISE EXPIRATION DOLLAR DOLLAR
NAME GRANTED EMPLOYEES(2) PRICE(3) DATE GAINS GAINS
---- ---------- ------------ -------- ---------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
R. E. Howson
Common Stock........... 23,770 9.76 $22.625 03/14/05 $ 338,366 $ 857,027
R. R. Foreman
Common Stock........... 19,010 7.81 $22.625 03/14/05 $ 270,607 $ 685,406
L. E. Walker
Common Stock........... 10,140 4.16 $22.625 03/14/05 $ 144,279 $ 365,632
J. J. Wildasin
Common Stock........... 22,540 9.26 $22.625 03/14/05 $ 320,857 $ 812,680
D. W. Wilson
Common Stock........... 12,670 5.20 $22.625 03/14/05 $ 180,357 $ 456,817
All Stockholders(1)..... -- -- $22.625 -- $ 549,931,574 $ 1,393,634,581
Named Executive Officers' gains as a % of all stockholders' gains... .23% .23%
</TABLE>
- --------
(1) Total dollar gains based on the assumed annual rates of appreciation shown
here and calculated on 38,649,349 outstanding shares of the Common Stock on
March 31, 1995.
(2) Based on 243,530 options granted to all employees of the Company during the
fiscal year ended March 31, 1995.
(3) Fair market value on date of grant.
(4) At a five percent and ten percent annual rate of appreciation, the stock
price would be approximately $36.86 and $58.68, respectively, if the
assumed annual rates of stock price appreciation shown were to be achieved
over a ten year option term.
16
<PAGE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information concerning the exercise of stock
options during fiscal year 1995 by each of the Named Executive Officers and the
value at March 31, 1995 of unexercised options held by such individuals. The
value of unexercised options reflects the increase in market value of the
Common Stock from the date of grant through March 31, 1995 (when the closing
price of the Common Stock was $27.00 per share). The value actually realized
upon exercise of the options by the Named Executive Officers will depend on the
value of the Common Stock at the time of exercise.
<TABLE>
<CAPTION>
TOTAL NUMBER OF TOTAL VALUE OF
SECURITIES UNDERLYING UNEXERCISED, IN-THE-MONEY
UNEXERCISED OPTIONS HELD OPTIONS HELD AT FISCAL YEAR-
AT FISCAL YEAR-END END
------------------------- -----------------------------
NUMBER
OF
SHARES
ACQUIRED
ON VALUE
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------------------------- ---
<S> <C> <C> <C> <C> <C> <C> <C>
R. E. Howson
Common Stock........... 0 $ 0 0 23,770 $ 0 $ 103,994
R. R. Foreman
Common Stock........... 0 $ 0 214,784 19,010 $ 4,044,383 $ 83,169
L. E. Walker*
Common Stock........... 0 $ 0 225,000 10,140 $ 4,725,000 $ 44,363
J. J. Wildasin
Common Stock........... 0 $ 0 0 22,540 $ 0 $ 98,613
D. W. Wilson
Common Stock............ 0 $ 0 0 12,670 $ 0 $ 55,431
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUES
- --------
* Mr. Walker exercised 91,600 of his options to acquire Common Stock after
March 31, 1995 and prior to June 20, 1995.
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS
Employment Agreements. In connection with the Merger, the Company entered
into employment agreements (collectively, the "Employment Agreements") with
each of Messrs. Foreman and Wilson (each an "Executive"), pursuant to which
Messrs. Foreman and Wilson are employed as Chief Financial Officer of the
Company and Executive Vice President, Operations of the Company, respectively.
Each of the Employment Agreements expires on January 31, 2000 (the "Employment
Term"). During the term of the Employment Agreements, each Executive is
entitled to receive an annual base salary ($300,000 and $200,000 for Messrs.
Foreman and Wilson, respectively), cash bonus (if any, as determined by the
Compensation Committee based upon the achievement of certain pre-established
performance goals), and to participate in all plans, policies and programs
maintained or provided by the Company for senior executives from time to time.
In the event of a termination of employment by the Company without cause, or by
the Executive for
17
<PAGE>
good reason, each Executive will be entitled to receive his annual base salary
through the balance of his Employment Term. In the event of a termination of
employment by reason of death or disability, each Executive will be entitled to
continue to receive his annual base salary through the end of the month in
which his date of death occurs or he is first eligible to receive payment of
disability benefits, as the case may be.
During the Employment Term and through the fifth anniversary of the
expiration of the Employment Term, each Executive has an affirmative duty not
to compete with the Company. In consideration for such agreement not to
compete, on January 31, 1995, the Company paid Mr. Foreman $2,000,000 and
issued to Mr. Wilson 50,000 shares of Common Stock. Additionally, each
Executive is prohibited from disclosing proprietary information and is subject
to standard non-solicitation and confidentiality covenants.
Mr. Foreman's Deferred Compensation Agreement. In January 1992, OPI entered
into a deferred compensation agreement with Mr. Foreman. The obligations of OPI
under the deferred compensation agreement were indirectly assumed by the
Company by operation of law upon the consummation of the Merger. For purposes
of the deferred compensation agreement, Mr. Foreman is considered to have
commenced employment with the Company in February 1990. Under the deferred
compensation agreement, he will receive annual cash payments in varying amounts
beginning at the end of his fifth year of service with the Company, and either
a cash payment or annuity in the amount of $1,000,000, plus an additional
amount equal to all federal and state income taxes attributable to such
payment, at the end of his tenth year of service. If Mr. Foreman's employment
with the Company is terminated, he will receive varying payments depending upon
the type of termination. In accordance with his deferred compensation
agreement, the Company paid to Mr. Foreman $50,000 on January 31, 1995.
If a "business combination" (as defined in the deferred compensation
agreement) not approved by the Board occurs during the term of such agreement,
Mr. Foreman will be entitled to receive a fully vested and non-forfeitable
benefit under such agreement as if he completed ten years of service with the
Company. An irrevocable grantor trust was established contemporaneously with
the execution of the deferred compensation agreement. To date, the trust has
not been funded. Unless the trust is subsequently amended, Mr. Foreman's
interest in any assets of the trust will be that of an unsecured general
creditor of the Company.
Deferred Compensation Payment to Mr. Walker. In January 1992, OPI entered
into a deferred compensation agreement with Mr. Walker. Under his deferred
compensation agreement, Mr. Walker is considered to have commenced employment
with OPI on August 1990, and OPI was required to pay him annual cash payments
in varying amounts beginning at the end of his fifth year of service with OPI,
and either a cash payment or annuity in the amount of $1,000,000, plus an
additional amount equal to all federal and state income taxes attributable to
such payment, at the end of his tenth year of service. In connection with the
Merger, the Board of Directors of OPI approved an acceleration of Mr. Walker's
right to receive such payments. On February 1, 1995, JRM Holdings, a subsidiary
of the Company and the successor corporation to OPI, paid to Mr. Walker
$1,280,000 in full satisfaction, release and discharge of Mr. Walker's rights
under his deferred compensation agreement. In connection therewith, the Company
also agreed to pay Mr. Walker on January 1, 1996 a bonus equal to $375,629,
less any amounts required under the Company's tax equalization policies due to
Mr. Walker's international assignment.
18
<PAGE>
SHORT-TERM INCENTIVE COMPENSATION PLAN
The Company has a Short-Term Incentive Compensation Plan based on the
achievement of certain performance standards for managerial and other key
employees, including officers, of the Company and its consolidated
subsidiaries. No awards under the plan were made to any executive officer of
the Company for fiscal year 1995, although Mr. Wildasin received for fiscal
year 1995 an award from the Company equal to the award that he would have been
entitled to under McDermott International's annual cash incentive plan for such
fiscal year.
Under the plan, the Aggregate Amount Available for Award with respect to
fiscal year 1996 shall equal the sum of 1% of that portion of Cash Flow for
such year as would produce a Cash Flow Return on Capital of no more than 16%
plus 6% of Cash Flow in excess of such portion. Cash Flow Return on Capital is
defined as Cash Flow divided by Capital (as those terms are defined in the
plan). Except on a selected basis, no awards will be made for any subsequent
fiscal year during which Cash Flow Return on Capital does not equal or exceed
16%. If an award is made during a fiscal year when the Cash Flow Return on
Capital requirement is not achieved, then the award, generally, will be equal
only to one-half of established guideline amounts. Allocations of awards to
eligible employees are made at the discretion of the Compensation Committee,
based upon a percentage of salary. For fiscal year 1996, the Chief Executive
Officer, and the President and Chief Operating Officer of the Company may
receive maximum awards of 70% and 55% of their respective salaries under the
plan.
Awards are payable to the recipients within 30 days of the Compensation
Committee's determination, unless deferred by such recipients. Awards may be
deferred until termination of employment other than by retirement or for up to
15 years after retirement. In case of deferral, awards accrue interest,
compounded daily, at the minimum commercial lending rate of a designated bank,
until paid. The plan is unfunded and no assets will be segregated to secure
payment of awards.
EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
The Company has an Executive Long-Term Incentive Compensation Plan (the
"Executive Incentive Plan") to provide flexibility to the Company in its
ability to attract, retain and motivate officers and key employees and to
increase their proprietary interest in the Company's success.
The Executive Incentive Plan, which is administered by the Compensation
Committee, provides for the grant of incentive stock options and nonqualified
stock options, rights to purchase restricted shares of Common Stock and stock
appreciation rights, as well as the grant of performance units and performance
shares to executive officers of the Company who are subject to Section 16 of
the Exchange Act, and certain other officers and key employees of the Company
and its subsidiaries selected by the committee. Subject to certain adjustments,
4,000,000 shares of Common Stock are subject to the Executive Incentive Plan.
To the extent an award is paid in cash, the authorized share pool will be
credited with the appropriate number of shares represented by the cash
settlement of the award, determined at the discretion of the Compensation
Committee. Shares subject to the plan may be either authorized and unissued
shares or issued shares held in the treasury or otherwise, including shares
purchased in the open market. The Compensation Committee
19
<PAGE>
may, in its sole discretion, accelerate the vesting of any award granted under
the plan. The Executive Incentive Plan will expire on January 1, 2005, except
with respect to options and rights to purchase restricted stock then
outstanding.
Award grants under this plan that are designed to comply with the
"performance based" requirements of Section 162(m) of the Code are subject to
the following limitations: (i) the maximum aggregate number of shares granted
or vesting in any fiscal year of the Company pursuant to any option grants is
100,000; (ii) the maximum aggregate number of shares of restricted stock that
may be granted or vest in any fiscal year of the Company is 50,000; and (iii)
the maximum aggregate cash payout with respect to any award granted in any
fiscal year of the Company is $1,500,000.
For fiscal year 1995, only nonqualified stock options and rights to purchase
restricted shares of Common Stock have been granted under the Executive
Incentive Plan. Such grants are described elsewhere herein, including in the
"REPORT ON EXECUTIVE COMPENSATION" and the "Summary Compensation Table" and the
"Option Grant Table".
RETIREMENT PLANS
Pension Plans. Effective April 1, 1995, officers of the Company (other than
those who are also officers of McDermott International, McDermott Incorporated
or The Babcock & Wilcox Company, including Mr. Howson) and all regular full
time employees of the Company or certain of its subsidiaries, except certain
non-resident alien employees who are not citizens of a European Community
country or do not earn income in the United States, Canada or the United
Kingdom, were covered under The Retirement Plan of Employees of J. Ray
McDermott Holdings, Inc. (the "J. Ray McDermott Retirement Plan"). Mr. Howson
and other employees of McDermott International, McDermott Incorporated or The
Babcock & Wilcox Company who also serve as officers of the Company receive
their salaries from these other companies and are covered under The Retirement
Plan for Employees of McDermott Incorporated (the "McDermott Retirement Plan")
or The Employee Retirement Plan of The Babcock & Wilcox Company, as applicable.
Employees do not contribute to any of these retirement plans and company
contributions are determined on an actuarial basis. In order to comply with the
limitations prescribed by the Employee Retirement Income Security Act of 1974,
as amended, pension benefits will be paid directly by the applicable company or
a subsidiary under the terms of the unfunded excess benefit plans maintained by
them (the "Excess Plans") when such benefits are limited by Section 415(b) or
401(a)(17) of the Code.
The following table shows the annual benefit payable under the J. Ray
McDermott Retirement Plan at age 65 (the normal retirement age) to employees
retiring in 1995 in accordance with the lifetime only method of payment and
before profit sharing plan offsets. Benefits are based on the formula of a
specified percentage (dependent on years of service) of average annual basic
earnings (exclusive of bonus and allowances) during the five consecutive years
out of the ten years prior to retirement in which such earnings were highest
("Final Average Earnings") less a specified percentage of anticipated social
security benefits. Effective April 1, 1995, the J. Ray McDermott Retirement
Plan assumed the liabilities attributable to the benefits accrued under the
McDermott Retirement Plan in respect of certain former employees of McDermott
International, including
20
<PAGE>
Mr. Wildasin. Accordingly, as of April 1, 1995 Mr. Wildasin had no entitlement
to any benefit from the McDermott Retirement Plan. As of such date, Mr.
Wildasin had Final Average Earnings of $226,446 and 6 years of credited service
under the J. Ray McDermott Retirement Plan. Messrs. Foreman, Walker and Wilson
have no credited service under the J. Ray McDermott Retirement Plan and,
therefore, have not accrued any benefits. Unless elected otherwise by the
employee, payment will be made in the form of a joint and survivor annuity of
equivalent actuarial value to the amount shown below.
J. RAY MCDERMOTT RETIREMENT PLAN
<TABLE>
<CAPTION>
FINAL
AVERAGE
EARNINGS 10 15 20 25 30 35 40
-------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
100,000 $14,267 $ 21,400 $ 28,533 $ 36,623 $ 45,885 $ 53,913 $ 61,631
125,000 18,433 27,650 36,867 46,087 57,731 67,821 77,524
150,000 22,600 33,900 45,200 56,500 69,576 81,730 93,417
200,000 30,933 46,400 61,867 77,333 93,266 109,548 125,202
250,000 39,267 58,900 78,533 98,167 117,800 137,433 157,067
300,000 47,600 71,400 95,200 119,000 142,800 166,600 190,400
400,000 64,267 96,400 128,533 160,667 192,800 224,933 257,067
500,000 80,933 121,400 161,867 202,333 242,800 283,267 323,733
550,000 89,267 133,900 178,533 223,167 267,800 312,433 357,067
600,000 97,600 146,400 195,200 244,000 292,800 341,600 390,400
</TABLE>
Supplemental Executive Retirement Plan. An unfunded supplemental retirement
plan called the Supplemental Executive Retirement Plan (the "SERP") was
established in June 1980 by McDermott Incorporated and was amended to become a
plan of McDermott International in September 1989. In March 1995, the Company
became a participating employer in the SERP, and as a result, the SERP covers
certain officers of the Company as well as officers of McDermott International
and other designated companies. Generally, retirement benefits are based upon a
specified percentage (determined by age, years of service and date of initial
participation in the SERP) of final 3-year average cash compensation (salary
plus supplemental compensation for the highest three out of the last ten years
of service) or 3-year average cash compensation prior to SERP scheduled
retirement date, whichever is greater. The maximum benefit payable to any
officer that is an employee of the Company may not exceed 60-65% (dependent
upon date of initial participation in the SERP) of such 3-year average cash
compensation. Payments under the SERP will be reduced by an amount equal to
pension benefits payable under any other retirement plan maintained by the
Company, any of its subsidiary companies or any previous employer. A death
benefit is also provided under the SERP. Before giving effect to such
reductions, the approximate annual benefit payable under the SERP to Messrs.
Wildasin, Foreman and Wilson at retirement age as stated in the SERP is 31.75%,
53.75% and 52.75% respectively, of each such person's final 3-year average cash
compensation. Mr. Howson, who receives no salary from the Company, will not
receive a benefit under the SERP as a result of his service as Chairman of the
Board and Chief Executive Officer of the Company. He will, however, receive a
benefit under the SERP as a result of his service as an executive officer of
McDermott International based upon the salary and bonus paid to him by such
company.
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A trust (assets of the trust constitute corporate assets) has been
established which is designed to ensure the payment of benefits arising under
the SERP, the Excess Plans and certain other contracts and arrangements
(collectively, the "Plans") in the event of an effective change in control of
the Company. Although the Company would retain primary responsibility for such
payments, the trust would provide for payments to designated participants, in
the form of lump sum distributions, if certain events occur following an
effective change in control of the Company, including but not limited to
failure by the Company to make such payments and termination of a participant's
employment under certain specified circumstances. In addition, with respect to
benefits which otherwise would have been paid in the form of an annuity, the
trust provides for certain lump sum equalization payments which, when added to
the basic lump sum payments described above, would be sufficient, after payment
of all applicable taxes, to enable each active participant receiving a lump sum
distribution to purchase an annuity which would provide such participant with
the same net after-tax stream of annuity benefits that such participant would
have realized had he retired as of the date of the lump sum distribution and
commenced to receive annuity payments at that time under the terms of the
applicable Plan, based on salary and service factors at the time of the
effective change in control. With respect to designated participants who retire
prior to an effective change in control and who receive a basic lump sum
distribution under the circumstances described above, the trust provides for
similar lump sum equalization payments, based on salary and service factors at
the time of actual retirement.
CERTAIN TRANSACTIONS
MESSRS. WADE AND LAM AND AFFILIATES
Noncompetition Agreements with Frank C. Wade. At the Effective Time, each of
the Company and JRM Holdings entered into a noncompetition agreement with Frank
C. Wade pursuant to which Mr. Wade agreed not to compete with the Company and
JRM Holdings for a period of five years in exchange for (i) an aggregate
payment of $5 million at the Effective Time, and (ii) payments of $1.5 million
per year for a five-year period thereafter. Under such agreements, Mr. Wade is
also subject to standard non-solicitation and confidentiality covenants and a
covenant to refrain from selling his shares of Common Stock for a one-year
period, except under certain conditions.
Noncompetition Agreement with Mike H. Lam. At the Effective Time, the Company
entered into a noncompetition agreement with Mike H. Lam, pursuant to which Mr.
Lam agreed not to compete with the Company for a period of five years. As
consideration for such agreement not to compete, the Company paid Mr. Lam $2
million at the Effective Time. Under such agreement, Mr. Lam is also subject to
standard non-solicitation and confidentiality covenants.
Sublease with F-W Oil. Effective May 1, 1995, a subsidiary of the Company
entered into an Office Sublease with F-W Oil Interests, Inc., an affiliate of
Messrs. Wade and Lam ("F-W Oil"), pursuant to which such subsidiary subleased a
portion of its leased space in Houston, Texas to F-W Oil. Under the sublease,
which expires no later than March 14, 1997, F-W Oil is required to make monthly
rental payments of approximately $17,900 to such subsidiary. This transaction
was entered into in the Company's ordinary
22
<PAGE>
course of business and was negotiated on an arms-length basis. The Company
believes the terms thereof to be no more or less favorable to either of the
parties than those customary and standard in the industry.
Operating Agreement with F-W Oil. Effective April 1, 1995, a subsidiary of
the Company entered into a Production Management and Operation Agreement with
F-W Oil pursuant to which F-W Oil will manage and operate an offshore producing
oil and gas property for a subsidiary of the Company. Under this agreement,
such subsidiary is required to pay F-W Oil a monthly fee of $48,000 for F-W
Oil's management and operation of such property (the "Operating Fee"), together
with certain third party costs incurred by F-W Oil not covered by the Operating
Fee, plus, in certain cases, a 15% mark-up. Under this agreement, such payment
terms are applicable until December 31, 1996, at which time if the parties fail
to agree to new payment terms, either party may terminate the agreement. This
transaction was made on an arms-length basis and has been approved by the Board
of Directors of the Company.
Sale and Installation of Platform for F-W Oil. A subsidiary of the Company
has agreed to sell to F-W Oil an offshore jacket and deck (the "Platform") for
approximately $1.1 million. In connection therewith such subsidiary has agreed
to refurbish and install the Platform for F-W Oil pursuant to which F-W Oil is
obligated to pay approximately $1 million to such subsidiary of the Company.
This transaction was entered into in the Company's ordinary course of business
and was negotiated on an arms-length basis. The Company believes the terms
thereof to be no more or less favorable to either of the parties than those
customary and standard in the industry.
F-W Global Aviation. During fiscal year 1995, the Company paid to F-W Global
Aviation, Inc. ("F-W Global Aviation"), an affiliate of Mr. Wade, $70,000 for
aircraft usage by Company personnel. As of the end of fiscal year 1995, F-W
Global Aviation also owed a subsidiary of the Company approximately $634,000,
which such subsidiary carried as a current account receivable as of such date.
Other. The Company has also engaged in discussions with Messrs. Wade and Lam
with respect to other proposed transactions between them or affiliated entities
and the Company or its subsidiaries, including the proposed lease of the
Company's fabrication yard and related property located in Orange, Texas and
Calcasieu Parish, Louisiana to a company affiliated with Messrs. Wade and Lam.
All such proposed transactions are being negotiated on an arms-length basis and
will be submitted to the Company's Board of Directors for approval (with the
recusal of interested Board members) prior to consummation.
MCDERMOTT INTERNATIONAL AND AFFILIATES
Services Agreements. In connection with the Merger, McDermott International
and the Company entered into a Transition Services Agreement and a Services
Agreement under which McDermott International agreed to provide certain
services to the Company and the Company agreed to purchase such services.
Under the terms of the Transition Services Agreement, McDermott International
will provide for a period of one year after the Merger (i) accounting, employee
benefit, legal, salary, aviation and business planning services to the Company
and the Company will pay for such services based on the amount of services used
and the actual cost thereof to McDermott International, which is estimated to
be approximately $2.5
23
<PAGE>
million, excluding legal costs, and (ii) office support services to the
Company for an annual fee of $1.2 million for a period of one year. The
Transition Services Agreement may be extended by the mutual agreement of
McDermott International and the Company.
Under the terms of the Services Agreement, McDermott International has
agreed to provide certain services to the Company until such time as McDermott
International no longer owns a majority of the outstanding common stock of the
Company. These services, for which the Company will pay annual fees of
approximately $5.5 million, include accounting and financial reporting,
treasury and financing, tax administration and research, human relations
policies and procedures, safety, health and environmental administration,
public and investor relations, executive officer and corporate secretary
services, electronic information services and corporate transportation and
purchasing. In addition, McDermott International has agreed to provide, and
the Company has agreed to pay for, computing and telecommunications services
based on the amount of services used, which is estimated to be approximately
$3 million annually. Also, the Company has agreed to pay McDermott
International for marine system and automation services.
It is anticipated that the Company will pay to McDermott International a
total of approximately $16.4 million for all of the services provided under
the Transition Services Agreement and the Services Agreement. After
consultation with McDermott International and giving due consideration to the
legal obligations of McDermott International, the Company may seek the
provision of such services from third parties if the Board of Directors of the
Company determines that obtaining such services from a third party is in the
best interest of the Company.
Shipyard Business Transfer. On May 30, 1995, the Company and McDermott
International and certain of its subsidiaries entered into a Purchase
Agreement, a sublease and other documents pursuant to which the Company sold
and transferred back to McDermott International those assets and liabilities
comprising the shipyard business located in Morgan City, Louisiana (the
"Shipyard Business") that were included in McDermott International's Marine
Construction Services Business contributed to the Company by McDermott
International in connection with the Merger.
The sale and transfer of the Shipyard Business was made effective as of
January 31, 1995, and the fixed assets relating to the Shipyard Business were
sold to McDermott International in consideration of a reduction by $4,801,648
(the value attributed to such assets in the Merger) in the Term Note received
by McDermott International from the Company in connection with the Merger. See
"Notes and Working Capital Facility" below.
In connection with this sale and transfer, a subsidiary of the Company
subleased that portion of its leased Morgan City, Louisiana property on which
the Shipyard Business operates to McDermott Incorporated for $10,894 per
quarter. Such quarterly rental payment reflects an amount equal to that
portion of the total rent paid by such subsidiary of the Company for the total
leased area relative to that portion thereof occupied by the Shipyard
Business. The sublease contains terms and provisions similar to the underlying
lease, including the expiration term of such lease.
This transaction was approved by the Independent Committee in accordance
with the Letter Agreement.
24
<PAGE>
Notes and Working Capital Facility. As a part of the consideration that
McDermott International received in connection with the Merger and the related
contribution of its Marine Construction Services Business to the Company,
McDermott International received a $231 million 9% Senior Subordinated Note
due 2001 from the Company and a Term Note reflecting the net asset value of
the Marine Construction Services Business contributed by McDermott
International to the Company to the extent such value exceed $443 million,
such Term Note being in the principal amount of $39,750,000, as adjusted for
the sale and transfer of the Shipyard Business by the Company to McDermott
International and other items. In accordance with the terms of the Merger
Agreement, the Company and McDermott International also entered into a Loan
Agreement and Note (the "Working Capital Note") pursuant to which McDermott
International provided working capital to the Company and its subsidiaries of
up to $50 million for a period of three months after the Merger.
During the period from the Effective Time until March 31, 1995, the largest
principal balance outstanding under the Working Capital Note was $29,382,000
and as of March 31, 1995, no amounts were outstanding under the Working
Capital Note. From the Effective Time until the end of the fiscal year,
interest payments in the amount of $3,315,483, $486,444, and $145,911 were
paid by the Company to McDermott International under the Senior Subordinated
Note, the Term Note and the Working Capital Note, respectively.
THOMAS P. TATHAM AND AFFILIATES
Tatham Offshore Note. In August 1993, Tatham Offshore, Inc. ("Tatham
Offshore"), a corporation of which Thomas P. Tatham is Chairman of the Board,
entered into the Construction and Financing Agreement with a subsidiary of the
Company, pursuant to which such subsidiary acquired, fabricated and installed
an offshore platform at a cost to Tatham Offshore of approximately $11.4
million. In accordance with the Construction and Financing Agreement, Tatham
Offshore executed a Note pursuant to which Tatham Offshore must pay such
amount to such subsidiary in monthly installments of $476,168.57 commencing on
September 30, 1994, with the balance maturing on June 15, 1995. Interest is
payable monthly in arrears and currently accrues at a rate of 10.5% per annum.
The Construction and Financing Agreement is secured by Tatham Offshore's
interest in the Ship Shoal Block 331 lease, the platform and facilities
located thereon, related personal property and all proceeds to be derived
therefrom. Mr. Tatham also has personally guaranteed the payment of all
amounts due and owing under the Construction and Financing Agreement and the
Note. The Note was assigned and sold to a bank, subject to such subsidiary's
requirement to repurchase such Note under certain circumstances. The current
balance outstanding on the Note is approximately $7,142,000, which is now due
and payable. Tatham Offshore, the bank and the Company are engaged in
discussions pursuant to which the Note will be paid in full or extended until
December 14, 1995.
Tatham Farmout. Effective October 1, 1994, J. Ray McDermott Properties,
Inc., a subsidiary of the Company ("JRM Properties"), OPI International, Inc.
(a subsidiary of OPI prior to the Merger that became a subsidiary of the
Company under the name J. Ray McDermott, Inc. as a result of the Merger), F-W
Oil and Tatham Offshore entered into a Farmout Agreement, a Unit Operating
Agreement and other documents (collectively, the "Farmout Documents"),
pursuant to which Tatham Offshore, as the operator and 100% working interest
owner of a certain offshore oil and gas property, assigned to the other
parties an aggregate 25% working interest in such property. The Company,
through JRM Properties and J. Ray McDermott, Inc. acquired a 12.5% working
interest and a related net revenue interest with respect to such property. As
25
<PAGE>
of March 31, 1995, the Company has paid to Tatham Offshore a total of
approximately $2,420,000 under the Farmout Documents in connection with the
acquisition of its interests and the development of such property. Additional
amounts will be paid by all working interest owners, including the Company, to
develop the property.
On April 21, 1995, the working interest owners, including the Company, sold a
portion of their interests in such property to a third party in return for the
third party's agreement to pay up to $5.2 million of the developmental drilling
costs associated with the property.
Tatham Design, Fabrication and Installation Contracts. A subsidiary of the
Company has agreed to design, fabricate or install several offshore platforms
or structures for Tatham Offshore or its affiliates. The value of these
agreements exceeds $16 million. As of June 15, 1995, Tatham Offshore and its
affiliates have paid to such subsidiary of the Company approximately $2.8
million for work completed under such agreements. These agreements were entered
into by such subsidiary of the Company in its ordinary course of business and
on terms that the Company believes to be standard and customary in the
industry.
Tatham Interests. The Company, through one of its subsidiaries, owns 140,000
shares of Tatham Offshore Common Stock and 20,000 units of Leviathan Gas
Pipeline Partners, L.P., an affiliate of Mr. Tatham.
OTHER
Under the terms of OPI's Incentive Compensation Program, OPI, prior to the
Merger, and the Company, after the Merger and as a result of its indirect
assumption of such program, advanced, on an interest free basis, to the
participants of such program amounts sufficient to satisfy their federal tax
liability in connection with the vesting of restricted stock awards made under
such program. During fiscal year 1995, the Company advanced to Don W. Wilson
approximately $253,000 to satisfy federal tax withholding liability as a result
of the vesting of all his unvested restricted stock awards under such program.
As of March 31, 1995, the principal balance outstanding on all advances made to
Mr. Wilson under this program was $386,865. Such loan amounts become due and
payable on the earlier of Mr. Wilson's termination of employment with the
Company and its subsidiaries or November 1, 1999.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own 10% or more of the Company's voting
stock to file reports of ownership and changes in ownership of the Company's
equity securities with the Securities and Exchange Commission ("SEC") and the
New York Stock Exchange. Directors, executive officers and 10% or more
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company, or written representations that no forms were required, the Company
believes that its directors, executive officers and 10% or more beneficial
owners complied with all Section 16(a) filing requirements during the most
recent fiscal year.
26
<PAGE>
APPROVAL OF
INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING MARCH 31, 1996
(ITEM 2)
Upon the recommendation of the Audit Committee, the Board of Directors has
approved the retention of Ernst & Young LLP ("Ernst & Young"), independent
public accountants, to serve as independent auditors to audit the accounts of
the Company for the fiscal year ending March 31, 1996. Although not required to
do so, the Board of Directors considers it advisable that such retention be
submitted to the stockholders for their approval. Ernst & Young served as
independent auditors of the Company and its subsidiaries during the fiscal year
ended March 31, 1995. During such fiscal year Ernst & Young performed audit and
tax services for the Company and its subsidiaries for which they have received
or will receive, in the aggregate, approximately $1,900,000 in fees.
Representatives of Ernst & Young will be present at the Annual Meeting and
will have an opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
A majority of the voting power of the shares of the outstanding capital stock
of the Company entitled to vote and present in person or by proxy at the
meeting or any adjournment or adjournments thereof is required to approve this
proposal. Unless otherwise directed, the persons named in the enclosed Proxy
intend to vote for approval of the retention of Ernst & Young. The Board of
Directors recommends that the stockholders vote "FOR" the retention of Ernst &
Young as the Company's independent auditors.
STOCKHOLDERS' PROPOSALS AND OTHER MATTERS
No business other than that set forth in the accompanying Notice of Annual
Meeting of Stockholders is expected to come before the meeting, but should any
other matters requiring a vote arise, including a question of adjourning the
meeting, the persons named as proxies in the enclosed Proxy will vote thereon
according to their judgment in the best interests of the Company. All shares
represented by valid Proxies will be voted in accordance with the choice made
by the stockholder with respect to each specific proposal listed thereon. If a
choice is not made with respect to such proposal, the Proxy will be voted for
(i) the election of Directors as described under "ELECTION OF DIRECTORS" and
(ii) the retention of Ernst & Young as independent auditors for the fiscal year
ending March 31, 1996.
Proposals by stockholders intended to be presented at the 1996 Annual Meeting
must be received by the Corporate Secretary of the Company no later than March
2, 1996, in order to be qualified for inclusion in the Company's Proxy
Statement and form of proxy for such meeting. Concurrently therewith,
proponents shall provide the Company in writing with his or her name, address,
the number of shares of Common Stock held of record or beneficially, the date
or dates upon which such Common Stock was acquired and documentary support for
a claim of beneficial ownership.
By Order of the Board of Directors,
LAWRENCE R. PURTELL
Secretary
Dated: June 30, 1995
27
<PAGE>
J. RAY Mc DERMOTT, S.A.
Solicited by the Board of Directors
The undersigned stockholder(s) of J. Ray McDermott, S.A., a Panama corporation,
hereby appoint Lawrence R. Purtell, J.J. Wildasin and R.E. Woolbert and each of
them, attorneys, agents and proxies of the undersigned, with full power of
substitution to each of them to vote all the shares of Common Stock which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of the
Company for the fiscal year ended March 31, 1995 to be held in the La Salle
Ballroom of the Hotel Inter-Continental, 444 St. Charles Avenue, New Orleans,
Louisiana, on Friday, August 4, 1995, at 9:30 a.m. local time and at any
adjournment(s) of such meeting, with all powers which the undersigned would
possess if personally present.
Every properly signed Proxy will be voted in accordance with the specifications
made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND IN THE MANNER FAVORED BY THE DIRECTORS AS INDICATED ON
THE REVERSE SIDE.
The undersigned acknowledges receipt of the Annual Report for the fiscal year
ended March 31, 1995 and the Notice of Annual Meeting of Stockholders and Proxy
Statement of the Company for the above-mentioned Annual Meeting of Stockholders.
PLEASE MARK, SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY
RETURN IT IN THE ENCLOSED ENVELOPE.
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FOLD AND DETACH HERE
<PAGE>
1. Election of Directors Robert E. Howson, Mike H. Lam and Frank C. Wade
FOR WITHHELD
all nominees AUTHORITY
for all nominees
/ / / /
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below:
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2. Approving the retention of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending March 31, 1996 (the Directors favor a vote
"FOR");
FOR AGAINST ABSTAIN
/ / / / / /
3. Upon such other matters as may properly come before the meeting.
(Signature(s) should agree with name(s)
or stock certificates as specified
hereon. Executor, administrators,
trustees, etc., should indicate
when signing).
Date
----------------------------------
Signature
------------------------------
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
