<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
COOPER CAMERON CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
COOPER CAMERON LOGO
515 POST OAK BOULEVARD, SUITE 1200
HOUSTON, TEXAS 77027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1998
To the Stockholders of
COOPER CAMERON CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders of COOPER
CAMERON CORPORATION will be held at the Crowne Plaza Hotel, 2222 West Loop
South, Houston, Texas, on Thursday, May 14, 1998, at 10:00 a.m., for the
following purposes:
(1) To elect two (2) members of the Board of Directors;
(2) To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation (the "Amendment") to increase the number of
shares of Common Stock which the Company is authorized to issue to
150,000,000 shares from the 75,000,000 presently authorized;
(3) To approve an amendment to the Company's 1995 Amended and Restated
Stock Option Plan for Non-Employee Directors;
(4) To approve an amendment to the Amended and Restated Cooper Cameron
Corporation Long-Term Incentive Plan to increase by 3,000,000 the number of
shares of common stock reserved under the Plan;
(5) To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only stockholders of record as of the close of business on March 20, 1998
(the "Record Date"), will be entitled to notice of and to vote at the Annual
Meeting of Stockholders or any adjournment(s) thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN THE ACCOMPANYING PROXY PROMPTLY IN THE ENVELOPE PROVIDED.
IF YOU DECIDE TO ATTEND THE MEETING, YOU MAY, IF SO DESIRED, REVOKE THE PROXY
AND VOTE THE SHARES IN PERSON.
By Order of the Board of Directors,
/s/ FRANKLIN MYERS
Franklin Myers
Senior Vice President, General
Counsel and Secretary
Houston, Texas
March 25, 1998
<PAGE> 3
COOPER CAMERON CORPORATION
515 POST OAK BOULEVARD, SUITE 1200
HOUSTON, TEXAS 77027
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1998
The following information is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Cooper Cameron Corporation
(the "Company") to be voted at the Annual Meeting of Stockholders of the Company
to be held at the Crowne Plaza Hotel at 2222 West Loop South, Houston, Texas on
the 14th day of May, 1998, at 10:00 a.m. local time, and at any adjournment(s)
thereof. The approximate date this Proxy Statement and the enclosed form of
proxy are first being sent to stockholders is March 30, 1998.
----------------------------------------------
INFORMATION CONCERNING PROXY
----------------------------------------------
A proxy may be revoked by a stockholder at any time prior to the exercise
thereof by filing with the Secretary of the Company a written revocation or duly
executed proxy bearing a later date, or by attending the meeting and giving
notice of such revocation. Attendance at the meeting does not by itself
constitute revocation of a proxy. Unless marked to the contrary, such proxies
will be voted for the election of the two directors and for the amendments. If
any other business is brought before the meeting, the proxies will be voted in
accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by the directors,
officers and employees of the Company without additional compensation, by
personal interview, telephone, telegram, or otherwise. Arrangements also may be
made with brokerage firms and other custodians, dealers, banks and trustees, or
their nominees who hold the voting securities of record, for the forwarding of
solicitation material to the beneficial owners thereof. Upon request, the
Company will reimburse such brokers, custodians, dealers, banks, or their
nominees for the reasonable out-of-pocket expenses incurred by them in
connection therewith. In addition, the Company has retained Corporate Investor
Communications to assist in the solicitation of proxies for which the Company
will pay an estimated fee of $5,500, plus expenses and disbursements.
Cooper Cameron's Annual Report to Stockholders for the year ended December
31, 1997, including financial statements, is being mailed with this Proxy
Statement to all stockholders entitled to vote at the Annual Meeting. The Annual
Report does not constitute a part of the proxy soliciting material.
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OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
--------------------------------------------------------------------------
On the Record Date, there were 52,465,009 shares of Common Stock of the
Company outstanding, which constituted the only outstanding voting securities.
Each share of Common Stock has one vote. The presence, in person or by proxy, of
the holders of a majority of all the outstanding shares of stock entitled to
vote at the meeting is necessary to constitute a quorum at the Annual Meeting of
Stockholders or any adjournment(s) or postponement(s) thereof. The affirmative
vote of the holders of a majority of the Company's voting stock present in
person or by proxy and entitled to vote at the meeting at which a quorum is
present is required for the election of each director. The affirmative vote of
the holders of a majority of the Company's voting stock outstanding on the
Record Date is required for the adoption of the amendment to the Amended and
Restated Certificate of Incorporation. Proxies marked as abstaining on this
matter will be treated as present at the meeting for purposes of determining a
quorum and will be counted as votes against the Amendment. The affirmative vote
of a majority of the shares voting is necessary for the approval of the
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<PAGE> 4
amendments to the Company's Amended and Restated Long-Term Incentive Plan and
the Company's Amended and Restated 1995 Stock Option Plan for Non-Employee
Directors. Proxies marked as abstaining for these proposals shall not have an
effect on the outcome of the vote.
A copy of the list of stockholders entitled to vote at the Annual Meeting
will be available for inspection by qualified stockholders for proper purposes
at the offices of the Company during normal business hours.
For Cooper Cameron Employees: If you are a participant in the Cooper
Cameron Corporation Retirement Savings Plan ("CC-SAVE"), the accompanying proxy
card will include the number of equivalent shares credited to your account by
The Chase Manhattan Bank, N.A., as Trustee for CC-SAVE ("Trustee"). When your
proxy card is returned properly signed, it will serve as direction to the
Trustee to vote the shares held in CC-SAVE for your account in accordance with
your directions. If you return a proxy card properly signed, but do not indicate
your voting preference, the shares represented by your proxy card will be voted
FOR all items specified in the Notice. If you fail to return a proxy card
properly signed, the equivalent shares of Common Stock credited to your account
will then be voted by the Trustee in the same proportion as the shares for which
instructions were received from other CC-SAVE participants.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
--------------------------------------------------------------------------
The following table sets forth those persons who, to the knowledge of the
Company, beneficially owned five percent or more of the shares of Common Stock
outstanding as of March 20, 1998, on which date 52,465,009 shares were
outstanding.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
NATURE OF OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------------------ -------------------- -------
<S> <C> <C>
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109-3614.......................... 6,911,740(1) 13.2
INVESCO PLC
11 Devonshire Square
London EC2M 4YR England................................... 2,683,975(2) 5.1
</TABLE>
- ---------------
(1) According to reports filed with the Securities and Exchange Commission (the
"SEC") by FMR Corp. dated February 14, 1998, FMR Corp. had sole voting power
over 184,600 shares and sole dispositive power over 6,911,740 shares. FMR
Corp.'s wholly-owned subsidiary, Fidelity Management & Research Company, is
the beneficial owner of 6,732,340 shares, or 12.80% of the common stock
outstanding of the Company.
(2) According to a Schedule 13G filed with the SEC by INVESCO PLC, as of
December 31, 1997, INVESCO, through various subsidiaries, had shared voting
power over 2,683,975 and shared dispositive power over 2,683,975 shares.
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<PAGE> 5
--------------------------------------------------
PROPOSAL 1: ELECTION OF DIRECTORS
--------------------------------------------------
The Bylaws of the Company provide that the Board of Directors will be
comprised of not less than five nor more than fifteen members. The authorized
number of directors is currently six, divided into three classes having two
members in Class I, two members in Class II and two members in Class III. Each
class is elected for a term of three years, so that the term of one class of
directors expires at each Annual Meeting of Stockholders.
NOMINEES
The Board of Directors has nominated Michael E. Patrick and Michael J.
Sebastian for election to the Board of Directors for three-year terms expiring
at the Annual Meeting of Stockholders in 2001, or when their successors are
elected and qualified. The affirmative vote of the holders of at least a
majority of a quorum is required in order to elect each director. The enclosed
proxy (unless otherwise directed, revoked or suspended) will be voted for the
election of these two nominees for director.
If any nominee should be unable to serve as a director, which is not
anticipated, the shares represented by proxies will be voted for the election of
a substitute nominated by the Board of Directors. Set forth on the following
pages are the names of, and certain information with respect to, the persons
nominated as directors and the continuing directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE DIRECTOR NOMINEES.
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<PAGE> 6
------------------------------------
NOMINEES FOR DIRECTORS
------------------------------------
CLASS III -- TERM ENDING 2001
MICHAEL E. PATRICK
Member of Cooper Cameron's Audit Committee and a director since November
1996. Age 54. He has been Vice President and Chief Investment Officer of Meadows
Foundation, Inc. since December 1995. He was a Managing Director and Partner
with M.E. Zukerman Energy Advisors from 1994 to 1995 and served as Executive
Vice President, Chief Financial Officer and a director of Lomas Financial
Corporation, parent, as well as President and Chief Operating Officer of two
subsidiaries, Lomas Mortgage USA and Lomas Information Systems, Inc. from 1992
to 1994. The Lomas companies were engaged in mortgage banking, information
systems and real estate. Lomas Financial Corporation and Lomas Mortgage USA
filed for bankruptcy protection in October 1995. Previously, he was Executive
Vice Chancellor for Asset Management for the University of Texas System from
1984 to 1991. He is a director of BJ Services Company and a trustee of St.
Edward's University.
MICHAEL J. SEBASTIAN
Chairman of Cooper Cameron's Audit Committee and a director since November
1994. Age 67. Mr. Sebastian retired in August 1995, after serving as Executive
Vice President, Operations of Cooper Industries, Inc. since February 1982,
responsible for Cooper's former Petroleum & Industrial Equipment segment. He is
a director of Quanex Corporation and Gardner Denver Machinery Inc.
--------------------------------
CONTINUING DIRECTORS
--------------------------------
CLASS I -- TERM ENDING 1999
GRANT A. DOVE
Chairman of Cooper Cameron's Compensation Committee and a director since
June 1995. Age 69. Mr. Dove is now, and has been since 1991, a Managing Partner
of Technology Strategies and Alliances, which performs strategic planning and
investment banking services. He was Chief Executive Officer of Microelectronics
and Computer Technology Corporation from 1987 to 1991 and currently serves as a
director. From 1982 until 1987 he was Executive Vice President of Texas
Instruments Incorporated and previously served as Senior Vice President. He is
Chairman and a director of Optek Technology, Inc., and is a director of U. S.
West, Inc., Intervoice, Inc., and The Forefront Group, Inc.
DAVID ROSS III
Member of Cooper Cameron's Compensation Committee and a director since June
1995. Age 57. Mr. Ross is an adjunct professor and member of the Board of
Overseers of the Jesse H. Jones Graduate School of Administration at Rice
University. From 1987 until 1993 he was Chairman and Chief Executive Officer of
the Sterling Consulting Group, a firm which provides analytical research,
planning and evaluation services to companies in the oil and gas industry.
Between 1984 and 1987 he was a principal in the Sterling Group, a firm which
participated in leveraged buyouts, primarily in the chemical industry, and Camp,
Ross, Santoski & Hanzlik, Inc., which provides planning and consulting services
to the oil and gas industry. He is a director of Nuevo Energy Company.
CLASS II -- TERM ENDING 2000
SHELDON R. ERIKSON
Chairman of the Board of the Company since May 1996, President and Chief
Executive Officer since January 1995, and a director since March 1995. Age 56.
He was Chairman of the Board from 1988 to 1995
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<PAGE> 7
and President and Chief Executive Officer from 1987 to 1995 of The Western
Company of North America, an international petroleum service company engaged in
pressure pumping, well stimulating and cementing. Previously, he was President
of the Joy Petroleum Equipment Group of Joy Manufacturing Company. He is a
director of Triton Energy Corporation and Layne Christensen Co. He also serves
on the board of directors of the National Ocean Industries Association and The
Petroleum Equipment Suppliers Association.
C. BAKER CUNNINGHAM
Member of Cooper Cameron's Compensation Committee and a director since
November 1996. Age 56. He is now, and has been since 1993, Chairman of the Board
of Directors, President and Chief Executive Officer of Belden Inc. He held
various positions with Cooper Industries, Inc. from 1970 to 1993, including
Executive Vice President, Operations from 1982 to 1993.
ADVISORY DIRECTOR
NATHAN M. AVERY
Appointed an advisory director in December 1996. Age 63. Mr. Avery was a
director of the Company from June 1995 to December 1996. Mr. Avery is now, and
has been since 1972, Chairman of the Board, President and Chief Executive
Officer of Galveston-Houston Company, a company specializing in the
manufacturing of products to serve the oilfield. He has been an active
participant in the oil and gas industry since the 1960s. He was Chairman of the
Board of directors of Bettis Corporation until December 1996. He is a director
and member of the Executive Committee of Daniel Industries and a director of
Prime Cable, Transcoastal Marine Inc. and ITEQ, Inc.
------------------------------------------------------------
PROPOSAL 2: APPROVAL OF
AN AMENDMENT TO THE AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION
----------------------------------------------------------
The Board of Directors has proposed the adoption of the Amendment which, if
adopted, would authorize the issuance by the Company of a maximum of 150,000,000
shares of Common Stock, par value $.01 per share, instead of the 75,000,000
shares presently authorized.
At December 31, 1997, there were 52,758,143 shares of Common Stock
outstanding, and another 8,616,237 shares were reserved for issuance under
various employee benefit plans. Thus, only 13,625,620 uncommitted shares remain
available for future issuance, and the Board of Directors believes this to be an
insufficient number of shares for effecting possible future transactions,
including stock dividends, other stock distributions, financing arrangements, or
acquisitions by the Company. The Company has no present plans for issuance of
additional shares of Common Stock.
The authorized shares of Common Stock, which would be available for
issuance, could be issued at any time without further stockholder approval,
unless such approval were required by law, as in the case of consolidations and
certain statutory mergers, or by the rules of the New York Stock Exchange or
other exchanges on which the Common Stock were to then be listed. While no
particular future issuance of Common Stock is under consideration, it is
possible that, in the absence of the additional authorization, further issuances
could not be effected without the exposure and delays associated with any
necessary further action by stockholders.
VOTE REQUIRED. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF COMMON STOCK IS REQUIRED TO APPROVE THE PROPOSED
AMENDMENT.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT.
5
<PAGE> 8
----------------------------------------------------------------------
PROPOSAL 3: APPROVAL OF AN AMENDMENT TO THE
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
----------------------------------------------------------------------
The Board of Directors has approved an amendment to the Cooper Cameron
Corporation Amended and Restated 1995 Stock Option Plan for Non-Employee
Directors (the "Directors Plan") authorizing a stock option grant to a director
who exercises a previously existing stock option and pays the exercise price in
shares of Company Common Stock. The number of shares of stock granted under the
second stock option is equal to the number of shares of Common Stock surrendered
in the first option exercise. The option price of the second stock option is
equal to the fair market value of the Company's Common Stock on the date of
grant (which will be the date of exercise of the first option) and has a term
equal to the remaining term on the first option.
The effect of this change is to allow directors to exercise stock options
with Common Stock which they currently own without the personal dilutive effect
of the exercise and without causing the Company to have outstanding any more
shares than were authorized by the stockholders.
VOTE REQUIRED.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES CAST WILL BE REQUIRED TO
APPROVE THE AMENDMENT TO THE DIRECTORS PLAN, PROVIDED SUCH AFFIRMATIVE VOTE ALSO
CONSTITUTES A MAJORITY OF THE QUORUM.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
THE AMENDED AND RESTATED 1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
DESCRIPTION OF THE DIRECTORS PLAN
The following summary describes briefly the principal features of the
Directors Plan, and is qualified in its entirety by reference to the full text
of the Directors Plan, as amended by the proposed Fifth Amendment, the full text
of which amendment is provided as Appendix A to this Proxy Statement.
General Terms.
The Board of Directors and the Company's sole stockholder adopted and
approved the Directors Plan on May 3, 1995 and adopted and approved an Amended
and Restated Directors Plan on June 28, 1995. On May 8, 1997, the stockholders
of the Company approved an amendment to the Directors Plan to provide options in
lieu of the director's annual retainer and automatic annual option grants. In
November 1997, the Board approved a change in the number of elective options to
be received in lieu of the retainer as described below under the heading "Stock
Options." The purpose of the Directors Plan is to increase stockholder value and
to advance the interests of the Company and its stockholders by strengthening
its ability to attract and retain the services of experienced and knowledgeable
directors and by causing each non-employee director to acquire an equity
interest in the Company by issuing stock options, pursuant to the terms of the
Directors Plan. As of December 31, 1997, 243,592 shares are subject to issuance
upon the exercise of outstanding options under the Directors Plan and 105,158
shares are available for future grants.
Each director of the Company who is not an employee of the Company or any
of its subsidiaries ("Eligible Director") is eligible to participate in the
Directors Plan. If the nominees for election named in this proxy statement are
elected, five directors and one advisory director will qualify as non-employee
directors under the Directors Plan in 1998.
Stock Options.
The options granted pursuant to the Directors Plan are non-qualified
options having an exercise price equal to the fair market value of the Common
Stock on the date the option is granted. Options granted under the Directors
Plan are exercisable 12 months from the date of grant. Such options terminate
and cease to be outstanding five years and one day after the date on which they
are granted. If an Eligible Director to whom an
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option is granted ceases to be an Eligible Director by reason of death or
disability, the option becomes immediately exercisable in full. The Directors
Plan provides for each Eligible Director to elect to receive, in lieu of the
annual retainer of $30,000 for service on the Board, which would otherwise be
paid in cash (a) an 8,700-share stock option, (b) a 5,800-share stock option and
one-third of the cash retainer, or (c) a 2,900-share stock option and two-thirds
of the cash retainer. The Directors Plan also provides for an initial option
grant of 6,000 shares of Common Stock to each Eligible Director on the first
trading date on which such individual becomes an Eligible Director. If the
Company has a non-executive (non-full time employed) Chairman of the Board, an
initial grant for 20,000 shares of Common Stock will be made on the first
trading date on which such individual becomes the non-executive Chairman of the
Board. The First Amendment to the Directors Plan further provides for the grant
of an additional option for 6,000 shares of Common Stock to Eligible Directors
in each subsequent year during the term of the Directors Plan on the first
trading date following the Annual Meeting of Stockholders of the Company.
All outstanding options granted under the Directors Plan become exercisable
immediately if a Change in Control occurs. No awards will be made or options
granted under the Directors Plan after May 3, 2005. On March 20, 1998, the
reported closing price of the Company's Common Stock in New York Stock Exchange
Composite Transactions was $61.8125 per share.
Federal Income Tax Consequences.
The following is a brief description of the federal income tax consequences
generally arising with respect to grants of options under the Directors Plan.
This discussion is intended for the information of stockholders considering how
to vote at the Annual Meeting of Stockholders and not as tax guidance to
non-employee directors who participate in the Directors Plan. The grant of an
option will create no tax consequences for the optionee. Upon exercise of an
option, the optionee must generally recognize ordinary income at the time of the
exercise of such option measured by the excess of the then fair market value of
the shares over the option price. The Company will be entitled to claim a tax
deduction for compensation paid equal to the amount the optionee recognizes as
ordinary income. Upon a taxable disposition of shares acquired by the optionee
upon the exercise of an option, any amount received by the optionee in excess of
the sum of (i) the option price of the shares as of the date of exercise and
(ii) the amount includable in income with respect to such option, if any (such
sum being his or her "basis" in the shares), will, in general, be treated as
long- or short-term capital gain, depending upon the holding period of the
shares. If upon disposition the optionee receives less than his or her basis in
the shares, the loss will be treated as a long- or short-term capital loss,
depending upon the holding period of the shares.
New Plan Benefits Table.
The following table sets forth the number of shares of Common Stock that
have been granted to non-employee Directors as a group under the Directors Plan
as of December 31, 1997, in lieu of retainers and as automatic grants.
PLAN BENEFITS
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
<TABLE>
<CAPTION>
POSITION NUMBER OF SHARES
-------- ----------------
<S> <C>
Non-Employee Directors and Advisory Director as a Group
(Six in number)..........................................
268,842 options in lieu of retainer
126,000 automatic options
</TABLE>
7
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------------------------------------------------------------------
PROPOSAL 4: APPROVAL OF AN AMENDMENT TO
THE AMENDED AND RESTATED COOPER CAMERON
CORPORATION LONG-TERM INCENTIVE PLAN
------------------------------------------------------------------
The Board of Directors has approved an amendment to the Amended and
Restated Cooper Cameron Corporation Long-Term Incentive Plan (the "Incentive
Plan") which provides for long-term compensation and incentive opportunities for
executives and key employees of the Company and its subsidiaries. The amendment
would increase by 3,000,000 the number of authorized shares available under the
Incentive Plan. The stockholders of the Company approved an increase in the
number of authorized shares available under the Incentive Plan of 3,000,000
(adjusted for the 2-for-1 stock split in June 1997) on May 8, 1997. As of
December 31, 1997, 6,046,647 shares were reserved for issuance upon the exercise
of outstanding options under the Incentive Plan and 462,464 shares were
available for future grants.
The executive officers named in this Proxy Statement and certain other key
employees elected to receive stock options in lieu of salary for all or a
portion of their annual salary beginning July 1, 1995 through December 1998. The
options granted in lieu of salary are fully exercisable one year after the date
of grant, are vested pro rata in the event employees terminate their employment
before vesting and have a five-year expiration date. The Company believes that
the stock option program ties the individual executive's compensation to the
Company's performance and directly links the executive's personal interests to
the interests of the Company and its stockholders. The Options in Lieu of Salary
Program provides increased capital appreciation opportunities for executive
officers in a manner directly linked to stockholder value while causing the
executive officers to substantially invest in the stock's performance. The
Company intends to extend the Options in Lieu of Salary Program for the year
beginning January 1999, and this amendment to the Incentive Plan will provide
the shares necessary for future grants under this program.
The Plan authorizes the issuance of options to purchase shares of Common
Stock to employees of the Company for all purposes under the Plan, including the
award of stock options, stock appreciation rights, restricted stock grants, and
performance awards. The amendment to this Plan is effective as of February 12,
1998, subject to the approval by the stockholders of the Company.
The Board of Directors believes that the future success of the Company and
its subsidiaries and divisions is dependent upon the quality and continuity of
management, and that compensation programs have been important in attracting and
retaining individuals of superior ability and in motivating their efforts on
behalf of the Company.
VOTE REQUIRED.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES CAST WILL BE REQUIRED TO
APPROVE THE PLAN, PROVIDED SUCH AFFIRMATIVE VOTE ALSO CONSTITUTES A MAJORITY OF
THE QUORUM.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDED AND
RESTATED COOPER CAMERON CORPORATION LONG-TERM INCENTIVE PLAN.
DESCRIPTION OF THE PLAN
The following summary describes briefly the principal features of the Plan,
and is qualified in its entirety by reference to the full text of the Plan,
which is provided as Appendix B to this Proxy Statement.
General Terms.
In May 1997, the Board of Directors and the Company's stockholders adopted
and approved the amended and restated Plan. The purpose of the Plan is to
promote the long-term financial interests of the Company, including its growth
and performance, by encouraging employees of the Company and its subsidiaries
and divisions to acquire an ownership position in the Company, enhancing the
ability of the Company to attract and retain employees of outstanding ability,
and providing employees with an interest in the Company parallel to that of the
Company's stockholders. Certain key employees of the Company and its
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<PAGE> 11
subsidiaries or divisions are eligible to participate in the Plan. The amended
and restated Plan authorized the issuance of an additional 3,000,000 shares.
Currently, 158 employees have received grants under the Plan. The maximum number
of shares of Common Stock subject to awards granted during any calendar year to
any individual who is an Executive Officer is limited to not more than 1,000,000
shares. Unless the Plan is terminated sooner, no awards will be made or options
granted under the Plan after May 3, 2005. It is not possible to determine at
this time the number of shares of Common Stock covered by options that may be
granted in the future under the Plan to any employee.
Administration.
The Plan is administered by the Compensation Committee, which is composed
of directors of the Company who are not employees and who are not eligible to
participate in the Plan. Subject to the provisions of the Plan, the Compensation
Committee has the authority in its sole discretion to select the participants
who will receive the Awards, to determine the type and terms of the Awards to be
granted, and to interpret and administer the Plan.
Eligibility for Participation.
Officers and key employees of the Company or its subsidiaries will be
eligible to receive certain awards under the Plan.
Term of the Plan.
The Plan will terminate on May 3, 2005, after which time no additional
awards may be made under the Plan.
SUMMARY OF AWARDS UNDER THE PLAN
Types of Awards.
The Plan would permit the granting of any or all of the following types of
awards ("Awards"): (i) stock options, including incentive stock options; (ii)
stock appreciation rights (SARs); (iii) restricted stock; and (iv) performance
awards. Since the inception of the Plan, the only type of awards granted under
the Incentive Plan has been stock options. A principal reason for the request of
the increase in the number of authorized shares available under the Incentive
Plan is to allow a continuation of granting options in lieu of salary to senior
officers and other key employees of the Company. Without this increase, the
Company will not have sufficient shares to continue this method of compensation.
Stock Options and SARs.
Options granted under the Plan may be either incentive stock options or
non-qualified stock options, or a combination of both.
An option is exercisable in whole or in such installments and at such times
and upon such terms as may be determined by the Committee; provided, however,
that no stock option will be exercisable more than ten years after the date of
grant thereof. The option exercise price will equal the fair market value on the
date of the stock option's grant. Upon exercise, a participant may pay the
option exercise price of a stock option in cash, shares of Common Stock, stock
appreciation rights or a combination of the foregoing, or such other
consideration as the Committee may deem appropriate.
Awards may be granted in the form of SARs. SARs will entitle the recipient
to receive a payment, in cash or shares of Common Stock or a combination of
both, equal to the appreciation in market value of a stated number of shares of
Common Stock from the price stated in the award agreement to the fair market
value on the date of exercise or surrender. The price stated in the award
agreement will not be less than the fair market value on the date of the SAR's
grant, except that if a SAR is granted retroactively in tandem with or in
substitution for a stock option, the designated fair market value set forth in
the award agreement will not be less than the fair market value of a share for
such tandem or replaced stock option. A SAR may be
9
<PAGE> 12
granted in tandem with all or a portion of a related stock option under the Plan
("Tandem SARs"), or may be granted separately ("Freestanding SARs"). A Tandem
SAR may be granted either at the time of the grant of the related stock option
or at any time thereafter during the term of the stock option. A Tandem SAR will
be exercisable to the extent, and only to the extent, that the related stock
option is exercisable. Upon exercise of a Tandem SAR as to some or all of the
shares covered in an Award, the related stock option will be canceled
automatically to the extent of the number of SARs exercised, and such shares
will not thereafter be eligible for grant.
Restricted Stock.
Awards may be granted in the form of restricted stock ("Restricted Stock
Awards"). Restricted Stock Awards will be awarded in such numbers and at such
times as the Committee will determine. Restricted Stock Awards will be subject
to such terms, conditions or restrictions as the Committee deems appropriate,
including, but not limited to, restrictions on transferability, requirements of
continued employment, individual performance or the financial performance of the
Company. The period of vesting and the forfeiture restrictions will be
established by the Committee at the time of grant. During the period in which
any restricted shares of Common Stock are subject to forfeiture restrictions
imposed under the preceding paragraph, the Committee may, in its discretion,
grant to the Participant to whom such restricted shares have been awarded, all
or any of the rights of a stockholder with respect to such shares, including,
but not limited to, the right to vote such shares and to receive dividends.
Performance Awards.
Awards may be granted in the form of shares of Common Stock that are earned
only after the attainment of predetermined performance goals during a
performance period as established by the Committee ("Performance Shares") or in
the form of performance awards payable in cash ("Performance Units"). The
Committee may grant an Award of Performance Shares or Performance Units to
Participants as of the first day of each Performance Period. A Performance
Target will be established at the beginning of each Performance Period. At the
end of the Performance Period, the Performance Shares or Performance Units, as
the case may be, will be converted into Common Stock (or cash or a combination
of Common Stock and cash, as determined by the Award Agreement) and distributed
to Participants based upon such entitlement. Performance criteria used in
performance goals governing Performance Share and Performance Unit Awards to
Executive Officers may include any or all of the following: (i) the Company's
return on equity, assets, capital or investment, (ii) pre-tax or after-tax
profit levels of the Company or any subsidiary or business segment of the
Company, or any combination of the foregoing, (iii) cash flow or similar
measure, (iv) total stockholder return, (v) changes in the market price of the
Common Stock, or (vi) market share. The performance goals established by the
Committee for each Performance Share Award will specify achievement targets with
respect to each applicable performance criterion (including a threshold level of
performance below which no amount will become payable with respect to such
Award). No Executive Officer may receive a Performance Share or Performance Unit
payment with respect to any calendar year which exceeds $2,000,000 or, if
greater, the fair market value of 1,000,000 shares of Common Stock as of the
payment date of such Awards. If a Performance Period is longer than one year,
the Performance Share or Performance Unit payment with respect to any calendar
year which is partially or wholly included in the Performance Period will be
deemed to be a pro-rated portion of the Performance Share or Performance Unit
payment with respect to the complete Performance Period. If two or more
Performance Periods run concurrently during any calendar year, the Performance
Share or Performance Unit payment with respect to such calendar year will be
deemed to be the aggregate of the allocable Performance Share payments with
respect to each such Performance Period.
Federal Income Tax Consequences.
The following is a brief description of the federal income tax consequences
generally arising with respect to grants of options under the Plan. This
discussion is intended for the information of stockholders considering how to
vote at the Annual Meeting of Stockholders and not as tax guidance to employees
who participate in the Plan. The optionee generally does not recognize income at
either the date of grant or exercise of an
10
<PAGE> 13
incentive stock option. Upon a taxable disposition of shares acquired by the
optionee upon the exercise of an incentive stock option, the optionee receives
long-term capital gain or loss treatment for the difference between the sales
price and the option price, provided the shares are held for two years after the
option is granted and one year after the date of exercise. The Company will be
entitled to claim a tax deduction for compensation paid equal to the amount the
optionee recognizes as income in a disqualifying disposition. The grant of a
non-qualified option will create no tax consequences for the optionee. Upon
exercise of a non-qualified option, the optionee must generally recognize
ordinary income at the time of the exercise measured by the excess of the then
fair market value of the shares over the option price. The Company will be
entitled to claim a tax deduction for compensation paid equal to the amount the
optionee recognizes as ordinary income. Upon a taxable disposition of shares
acquired by the optionee upon the exercise of a non-qualified option, any amount
received by the optionee in excess of the sum of (i) the option price of the
shares as of the date of exercise and (ii) the amount includable in income with
respect to such option, if any (such sum being his or her "basis" in the
shares), will, in general, be treated as long- or short-term capital gain,
depending upon the holding period of the shares. If upon disposition the
optionee receives less than his or her basis in the shares, the loss will be
treated as a long- or short-term capital loss, depending upon the holding period
of the shares.
Change in Control.
The Compensation Committee has the discretion, exercisable at any time
before a Change of Control, to provide for the acceleration of vesting and for
settlement, including cash payment, of an Award granted under the Plan upon or
immediately before such event is effective. However, the granting of Awards
under the Plan will in no way affect the right of the Company to adjust,
reclassify, reorganize, or otherwise change its capital or business structure,
or to merge, consolidate, dissolve, liquidate, sell or transfer all or any
portion of its businesses or assets.
Policy Changes.
In August 1997, the Compensation Committee approved the following policy
changes to the Incentive Plan: 1) the Committee requires, with respect to
performance units and restricted stock awards, either (i) a minimum of a
three-year vesting period or (ii) a one-year vesting period if performance goals
are established; and 2) the Committee requires that there will be no arbitrary
waiving of any performance goals or lapsing of any restrictions which may attach
to any performance units or restricted stock awards except in the case of a
combination of the Company. Further, the Compensation Committee has only used
the grant of stock options under the Plan as method of compensation award during
the entire history of the Plan.
11
<PAGE> 14
New Plan Benefits Table.
The following table sets forth, as to the executive officers of the Company
named below and all other employees as a group, the number of shares covered by
outstanding options granted, as of December 31, 1997. Such options were granted
with one-year, four-year and three-year vesting periods at exercise prices that
were the fair market value of the Common Stock at the time of grant and range
from $8.329 to $79.41 per share. On March 20, 1998, the reported closing price
of the Company's Common Stock in New York Stock Exchange Composite Transactions
was $61.8125 per share.
PLAN BENEFITS
LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME POSITION OPTIONS(1)
---- -------- ----------
<S> <C> <C>
Sheldon R. Erikson............ Chairman of the Board, President & CEO 1,555,528
Thomas R. Hix................. Senior Vice President of Finance & CFO 488,136
Franklin Myers................ Senior Vice President, General Counsel & Secretary 530,876
Michael L. Grimes............. Vice President & President, Cooper Energy Services 184,298
E. Fred Minter................ Vice President & President, Cooper Turbocompressor 96,030
Joseph D. Chamberlain......... Vice President & Corporate Controller 104,318
Executive Officer Group
(6 persons)................................................................................ 2,959,176
Non-Executive Employee Group
(152 persons)(2)........................................................................... 3,087,471
</TABLE>
- ---------------
(1) For information on options granted in 1997 under the Plan, see Table 2,
"Option Grants in Last Fiscal Year."
(2) Directors are not eligible for participation in the Plan.
-------------------------------------------
DESCRIPTION OF CAPITAL STOCK
-------------------------------------------
COMMON STOCK
Each holder of the Common Stock is entitled to one vote per share with
respect to all matters submitted to holders of the Common Stock. The Common
Stock does not have cumulative voting rights. Subject to the rights of holders
of Preferred Stock, holders of the Common Stock will be entitled to receive
dividends if, as and when declared by the Board of Directors. Upon dissolution,
liquidation or winding up of the Company, holders of the Common Stock are
entitled to share pro rata in all assets remaining after the liquidation
payments have been made on any outstanding shares of Preferred Stock.
PREFERRED STOCK
Shares of Preferred Stock may be issued in one or more series or classes,
which will have such designation, voting powers, preferences and relative,
participating, optional or other rights and such qualifications, limitations or
restrictions thereon, including voting rights, dividends, rights on liquidation,
dissolution or winding up, conversion or exchange rights and redemption
provisions, as set forth in the resolutions adopted by the Board of Directors
providing for the issuance of such stock and as permitted by the Delaware
General Corporation Law (the "DGCL"). Although the Company has no current plans
to issue Preferred Stock, the issuance of shares of Preferred Stock, or the
issuance of securities convertible into or exchangeable for such shares, could
be used to discourage an unsolicited acquisition proposal that some or a
majority of the stockholders believe to be in their interests or in which
stockholders are to receive a premium for their stock over the current market
price. In addition, the issuance of Preferred Stock could adversely affect the
voting
12
<PAGE> 15
power of the holders of Common Stock. The Board of Directors does not intend to
seek stockholder approval prior to any issuance of currently authorized stock,
unless otherwise required by law or stock exchange rules.
RIGHTS PLAN
The Company has adopted a stockholder rights plan and declared a dividend
of one right (a "Right") for each share of Common Stock then outstanding. As
presently amended, the Rights (which, under certain circumstances, entitle their
holders to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock for an exercise price of $300) will expire on
October 31, 2007.
The Rights are not exercisable until the earlier to occur of (i) 10 days
following the first date of public announcement that a person or group of
affiliated persons (an "Acquiring Person") has acquired beneficial ownership of
20% or more of the outstanding shares of Common Stock or such earlier date as a
majority of the Board of Directors shall become aware of the existence of an
Acquiring Person (the "Stock Acquisition Date") or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of the outstanding
shares of Common Stock.
In the event that any person becomes an Acquiring Person, each holder of a
Right, other than Rights beneficially owned by the Acquiring Person (which will
thereupon become void), will thereafter have the right to receive upon exercise
of a Right at the then-current exercise price of the Right, that number of
shares of Common Stock having a market value of two times the exercise price of
the Right. In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
each holder of a Right other than Rights beneficially owned by an Acquiring
Person (which will have become void) will thereafter have the right to receive,
upon the exercise of the Right at the then-current exercise price of the Right,
that number of shares of common stock of the person with whom the Company has
engaged in the foregoing transaction having a market value of two times the
exercise price of the Right.
At any time until 10 days following the Stock Acquisition Date (subject to
extension by the Board of Directors), the Company may redeem the Rights in
whole, but not in part, at a price of $.0l per Right.
The Rights have certain anti-takeover effects. They may reduce or eliminate
(i) "two-tiered" or other partial offers which do not offer fair value for all
Common Stock; (ii) the accumulation by a third party of 20% or more of the
Common Stock in open-market or private purchases in order to influence or
control the business and affairs of the Company without paying an appropriate
premium for a controlling position in the Company; and (iii) the accumulation of
shares of Common Stock by third parties in market transactions for the primary
purpose of attempting to cause the Company to be sold. In addition, the Rights
will cause substantial dilution to a person or group that attempts to acquire
the Company in a manner defined as a Triggering Event (a merger, combination,
consolidation or sale or transfer of assets or earning power, as described in
the Rights Agreement) unless the offer is conditioned on a substantial number of
Rights being acquired. The Rights, however, should not affect any prospective
offeror willing to make an offer for all outstanding shares of Common Stock and
other voting securities at a price and on other terms which are in the best
interests of the Company and its stockholders as determined by the Board of
Directors or affect any prospective offeror willing to negotiate with the Board
of Directors, since the Rights would either be redeemed or otherwise made
inapplicable. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors, since the Board of Directors
may, at its option, at any time until ten business days following the Stock
Acquisition Date, redeem all, but not less than all, of the then-outstanding
Rights at the $.01 redemption price.
SPECIAL PROVISIONS OF DELAWARE LAW AND THE COMPANY'S GOVERNING DOCUMENTS
Anti-Takeover Provisions. Section 203 of the DGCL ("Section 203") generally
provides that a stockholder acquiring more than 15% of the outstanding voting
stock of a corporation but less than 85% of
13
<PAGE> 16
such stock (an "Interested Stockholder") may not engage in certain Business
Combinations (as defined in Section 203) with the corporation for a period of
three years after the date on which the stockholder became an Interested
Stockholder unless (i) prior to such date, the corporation's board of directors
approved either the Business Combination or the transaction in which the
stockholder became an Interested Stockholder or (ii) the Business Combination is
approved by the corporation's board of directors and authorized at a
stockholders' meeting by a vote of at least two-thirds of the corporation's
outstanding voting stock not owned by the Interested Stockholder. The provisions
of Section 203 could discourage a change in control of the Company.
The Company's Certificate of Incorporation (the "Certificate") requires
that any "Business Combination" involving the Company and a person who
beneficially owns 20% or more of the Common Stock must be approved by the
holders of at least 80% of the voting power of the outstanding shares of the
Company's capital stock (the "Voting Requirement"), voting together as a single
class. The Voting Requirement does not apply if either (i) the Business
Combination is approved by a two-thirds vote of the Continuing Directors (as
defined in the Certificate) or (ii) certain "fair price" and disclosure
conditions are met.
Classified Board. The Company's Board of Directors is divided into three
classes of directors serving staggered terms. One class of directors is elected
at each annual meeting for a three-year term.
Annual and Special Meetings. The Company's Certificate of Incorporation
provides, as permitted by the DGCL, that stockholders are not permitted to call
annual or special meetings of stockholders. Generally, stockholder action may be
taken only at an annual or special meeting of stockholders and may not be taken
by written consent.
Limitation of Director Liability. Section 102(b)(7) of the DGCL ("Section
102(b)") authorizes corporations to limit or to eliminate the personal liability
of directors to corporations and their stockholders for monetary damages for
breach of directors' fiduciary duty of care. Although Section 102(b) does not
change directors' duty of care, it enables corporations to limit available
relief to equitable remedies such as injunction or rescission. The Certificate
limits the liability of directors to the Company or its stockholders to the
fullest extent permitted by Section 102(b). Specifically, directors of the
Company will not be personally liable for monetary damages for breach of a
director's fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith, or which involve intentional misconduct or
a knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the DGCL, or (iv)
for any transaction from which the director derived an improper personal
benefit. In the view of the Securities and Exchange Commission ("Commission"),
the limitation of monetary liability pursuant to state law does not apply to
liabilities under the federal securities laws.
14
<PAGE> 17
----------------------------------------------------------------------------
INFORMATION ABOUT MANAGEMENT AND ORGANIZATION
OF THE BOARD OF DIRECTORS
----------------------------------------------------------------------------
EXECUTIVE OFFICERS
The following sets forth information with respect to Cooper Cameron's
present executive officers. All executive officers are elected to terms that
expire at the meeting of the Board of Directors which follows the Annual Meeting
of Stockholders. All executive officers were first elected in 1995, except for
Mr. Minter who was elected in February 1996 and Mr. Grimes who was elected in
April 1996. Mr. Grimes and Mr. Minter were elected as officers of Cooper Cameron
in November 1996.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Sheldon R. Erikson................................. 56 Chairman of the Board, President and Chief
Executive Officer, President of the
Cameron Division
Thomas R. Hix...................................... 50 Senior Vice President of Finance and Chief
Financial Officer
Franklin Myers..................................... 45 Senior Vice President, General Counsel and
Secretary
Joseph D. Chamberlain.............................. 51 Vice President and Corporate Controller
Michael L. Grimes.................................. 47 Vice President, President of the Cooper
Energy Services Division
E. Fred Minter..................................... 62 Vice President, President of the Cooper
Turbocompressor Division
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates the total number of shares of Common Stock of
the Company beneficially owned, or as described below, as of March 20, 1998, by
each director or nominee for director, each executive officer named in the
Summary Compensation Table and all officers, directors and nominees for director
as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------------------------------
SOLE
VOTING OPTIONS TOTAL
AND INVESTMENT EXERCISABLE BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER POWER WITHIN 60 DAYS(4) OWNERSHIP CLASS
------------------------ -------------- ----------------- ---------- ----------
<S> <C> <C> <C> <C>
Nathan M. Avery(1)...................... 126 24,000 24,126 *
C. Baker Cunningham..................... 8,846 39,000 47,846 *
Grant A. Dove........................... 14,296 48,000 62,296 *
Sheldon R. Erikson...................... 168,482(2) 652,067 820,549 1.56%
Michael E. Patrick...................... 0 39,000 39,000 *
David Ross III.......................... 7,000 55,296 62,296 *
Michael J. Sebastian.................... 24,296(3) 24,000 48,296 *
Thomas R. Hix........................... 57,670(2) 79,607 137,277 *
Franklin Myers.......................... 44,684(2) 89,317 134,001 *
E. Fred Minter.......................... 2,742(2) 26,010 28,752 *
Michael L. Grimes....................... 1,178(2) 65,822 67,000 *
All Directors, Advisory Director and
Executive Officers as a Group (12
persons).............................. 1,512,589 2.88%
</TABLE>
- ---------------
* Indicates ownership of less than one percent of Common Stock outstanding.
(1) Mr. Avery is an Advisory Director.
15
<PAGE> 18
(2) Includes shares held in the Cooper Cameron Corporation Retirement Savings
Plan as of December 31, 1997.
(3) Includes shares held in the Cooper Industries, Inc. Savings and Stock
Ownership Plan as of December 31, 1997.
(4) Includes shares under option that have been earned pursuant to either (i)
waiver of directors' fees by the directors or (ii) waiver of salary by
certain executive officers, except for Mr. Minter. Such options are not
forfeitable or cancelable, expire five years from date of grant and become
exercisable one year from date of grant.
COMMITTEES AND BOARD MEETINGS
The Board of Directors has established two standing committees: the Audit
Committee and the Compensation Committee. The Audit and Compensation Committees
are comprised of directors who are not officers or employees of the Company.
Audit Committee
The Audit Committee consists of two non-employee directors: Messrs. Michael
J. Sebastian (Chairman) and Michael E. Patrick. The principal functions of the
Audit Committee include recommending the annual engagement of the Company's
independent accountants; reviewing non-audit consulting services performed by
the independent accountants and related fees; reviewing with management and the
independent accountants the scope and results of the annual financial statement
audit; reviewing the charter and scope of the internal audit function; reviewing
the scope and adequacy of the Company's internal accounting controls and
record-keeping systems; reviewing legal and regulatory matters that may impact
the financial statements, related company compliance policies, and programs and
reports received from regulators; reviewing compliance with the Company's
conflicts of interest and ethical conduct policy (Standards of Conduct Policy);
and conferring independently with the internal auditors and the independent
accountants.
Compensation Committee
The Compensation Committee consists of three non-employee directors:
Messrs. Grant A. Dove (Chairman), C. Baker Cunningham and David Ross III. The
principal functions of the Compensation Committee include reviewing the
Company's overall compensation policy, including compensation philosophy and
strategy, short- and long-term incentive plans and programs, stock ownership
plans, employee benefit plans and employee welfare plans; reviewing and
recommending to the Board the compensation and benefits to be paid or provided
to the Board of Directors; reviewing the performance and compensation of the
Chief Executive Officer and senior executives of the Company; and reviewing and
recommending to the Board employment agreements, termination agreements and
severance policies and agreements.
Since January 1997, the Board held four (4) meetings, the Audit Committee
held two (2) meetings and the Compensation Committee held four (4) meetings.
Each of the directors attended 100 percent of the meetings of the Board and the
committee of the Board on which they served.
16
<PAGE> 19
------------------------------------------------------------------------------
DIRECTOR AND EXECUTIVE MANAGEMENT COMPENSATION
------------------------------------------------------------------------------
COMPENSATION OF DIRECTORS
During 1997, the Directors Plan provided that each director receive an
annual cash retainer of $30,000, or an option for 18,000 shares of Common Stock
in lieu of the annual cash retainer, or a combination of cash and options.
Directors also received under the Directors Plan an initial option grant of
Common Stock of 6,000 shares on May 2, 1997 and will receive annual option
grants of 6,000 shares of Common Stock on the first trading date following the
Annual Meeting of Stockholders. The Directors Plan was amended in November 1997
to provide for an annual election for directors to receive either the annual
cash retainer of $30,000 or an option for 8,700 shares of Common Stock in lieu
of the annual cash retainer, or a combination of cash and options.
Any options elected in lieu of cash will be granted on the first trading
date following the Company's Annual Meeting of Stockholders. Options granted to
non-employee directors become fully exercisable on the first anniversary of the
date of grant of the option, and will expire five years and one day after the
date of grant, subject to prior termination pursuant to the terms of the
Directors Plan.
In addition, non-employee directors are paid meeting attendance fees of
$1,000 for each Board meeting of the Company and $1,000 for each committee
meeting they attend. All directors are reimbursed for expenses incurred in
connection with attending Board and committee meetings.
The maximum number of shares to be issued under the Directors Plan and the
number of shares subject to each option are subject to adjustment in the event
of stock splits or other changes in the Cooper Cameron capital structure.
In 1997, all directors elected to receive their entire retainer in stock
options through May 1998. Therefore, during 1997 options for a total of 144,000
shares of Cooper Cameron Common Stock were granted pursuant to the Directors
Plan. Likewise in 1998, each non-employee director elected to receive all of his
annual retainer in stock options.
STOCK OWNERSHIP GUIDELINES
In 1996, the Board of Directors of the Company adopted stock ownership
guidelines to encourage ownership of common stock by officers and certain key
employees of the Company, as well as directors. Such guidelines set forth that
by the 1999 Annual Meeting of Stockholders, directors should each own $100,000
worth of common stock of the Company. Further, the officers of the Company and
certain key employees, a total of 30 persons, are expected to own by such date
between one times and five times their base salary in common stock of the
Company, depending on their job category. The Board of Directors believes that
aligning the economic interest of the key managers of the Company with those of
the stockholders will further focus the future direction of the Company to one
of enhancing stockholder value.
COMPENSATION OF EXECUTIVE MANAGEMENT
Table 1 "Summary Compensation Table" presents information concerning
compensation paid to, or accrued for services by, the Chief Executive Officer
and the four other most highly compensated executive officers of Cooper Cameron
during fiscal year 1997.
Table 2 "Option Grants in Last Fiscal Year" presents information concerning
the grant of options during fiscal year 1997 to the Chief Executive Officer and
the four other most highly compensated executive officers of Cooper Cameron to
acquire the Company's Common Stock under the Company's Long-Term Incentive Plan.
No stock appreciation rights were granted during 1997.
17
<PAGE> 20
Table 3 "Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-end Option Values" presents information concerning the unexercised stock
options held by the Chief Executive Officer and the four other most highly
compensated executive officers of Cooper Cameron at the end of fiscal year 1997.
Table 4 "Pension Plan Table" sets forth the estimated annual retirement
benefits payable to the Chief Executive Officer and the four other most highly
compensated executive officers of Cooper Cameron under the Cooper Cameron
Corporation Salaried Employees' Retirement Plan upon retirement at age 65, based
on an employee's assumed average annual compensation for the five-year period
preceding retirement.
TABLE 1
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------ ------------
(a) (b) (c) (d) (e) (g) (i)
SECURITIES
SALARY OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR $(1) BONUS $ COMPENSATION $(2) OPTIONS #* COMPENSATION $(4)
--------------------------- ---- ----------- -------- ----------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Sheldon R. Erikson............ 1997 $ -0- $787,600 $150,720(7) 550,000 $34,291
Chairman, President 1996 -0- 562,550 146,131(6)(7) 443,234 11,131
and Chief Executive Officer 1995 250,000 250,000 -- 886,306 70,472(5)
Thomas R. Hix................. 1997 -0- 252,100 78,917(7) 232,000 12,468
Senior Vice President 1996 -0- 180,050 64,382(7) 212,750 16,615(5)
of Finance and Chief 1995 120,000 100,000 -- 377,398 5,997
Financial Officer
Franklin Myers................ 1997 -0- 252,100 72,485(7) 232,000 12,008
Senior Vice President, 1996 -0- 180,050 58,138(7) 212,750 10,832(5)
General Counsel and 1995 60,000 200,000 -- 377,398 11,908
Secretary
E. Fred Minter................ 1997 185,000 112,772 -- 48,000 14,787
Vice President, and 1996 177,500 101,438 -- -0- 14,452
President, Cooper 1995 170,000 94,248 -- 60,034 14,490
Turbocompressor
Michael L. Grimes(8).......... 1997 170,000 74,052 18,900(7) 117,142 11,531
Vice President, and 1996 138,718 146,717 16,149(7) 51,470 9,819
President,
Cooper Energy Services 1995 -- -- -- -- --
</TABLE>
- ---------------
(1) Certain of the named executive officers were granted non-qualified stock
options in lieu of salary for the periods July 1, 1995 through June 30,
1996, July 1, 1996 through June 30, 1997, July 1, 1997 through December 31,
1997, and January 1, 1998 through December 31, 1998 under the Cooper
Cameron Stock Options in Lieu of Salary Program approved by the Cooper
Cameron Board of Directors. Under the Program, certain officers and key
management elected to receive a percentage of base pay in non-qualified
stock options under the Company's Long-Term Incentive Plan. The terms of
the Stock Options are explained in Table 2 "Option Grants in Last Fiscal
Year". For 1995, prior to the split-off, Mr. Erikson, Mr. Hix and Mr. Myers
received salaries of $250,000, $120,000 and $60,000, respectively. For the
remainder of 1995, Mr. Erikson, Mr. Hix and Mr. Myers elected to have
$250,000, $120,000 and $120,000 in base salary, respectively, converted to
stock options. Subsequently, this program was extended through the
remainder of 1998. See Table 2 "Option Grants in Last Fiscal Year."
(2) Perquisites and other personal benefits paid or distributed during 1995
(and during 1996 and 1997 where no amounts are indicated for Messrs. Minter
and Grimes) to the persons listed in the compensation table above did not
exceed, with respect to any individual, the lesser of $50,000 or 10 percent
of such individual's total salary and bonus.
(3) Columns (f) "Restricted Stock Awards" and (h) "LTIP Payouts" have been
omitted since no restricted stock awards or LTIP payouts were awarded to
the named executives.
(Footnotes continued on the next page.)
18
<PAGE> 21
(4) The figures in this column for 1995, 1996 and 1997 include the Company's
contributions to the Cooper Cameron Corporation Retirement Savings Plan,
the Cooper Cameron Corporation Supplemental Excess Defined Contribution
Plan and amounts paid by the Company for excess life insurance,
respectively, as follows:
S. Erikson $6,750, $8,250 and $5,472 for 1995; $4,081, zero and $7,050 for
1996; and $6,750, $23,266 and $4,275 for 1997.
T. Hix $4,500, zero and $1,497 for 1995; $2,618, zero and $1,497 for 1996;
and $6,750, $4,554 and $1,164 for 1997.
F. Myers $6,750, $4,500 and $658 for 1995; $2,618, zero and $714 for 1996;
and $4,865, $6,440 and $703 for 997.
F. Minter $6,750, $2,250 and $5,490 for 1995; $6,742, $5,468 and $2,242 for
1996; and $4,275, $8,617 and $1,895 for 1997.
Mr. Grimes $6,750, $2,717 and $631 for 1996; and $6,750, $3,905 and $522
for 1997.
(5) Included in this amount is reimbursement for the purchase of country club
memberships: ($50,000 for Mr. Erikson, $12,500 for Mr. Hix, and $7,500 for
Mr. Myers.)
(6) Includes Executive Long Term Disability (LTD) Premium payment, spouse
travel expense and tax gross up of LTD Premium and spouse travel.
(7) Includes cash payment for loss of benefits due to participation in the
Options in Lieu of Salary Program.
(8) Mr. Grimes joined the Company in April 1996.
* All share amounts have been adjusted for the 2-for-1 stock split effective
June 13, 1997.
TABLE 2
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
INDIVIDUAL STOCK PRICE APPRECIATION FOR
GRANTS OPTION-TERM
- -----------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED EXERCISE
UNDERLYING TO OR BASE
OPTIONS EMPLOYEES PRICE
GRANTED IN FISCAL ($/SHARE) EXPIRATION
NAME (#) YEAR (2) DATE 5%($) 10%($)
---- ---------- ---------- --------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Sheldon R. Erikson... 150,000(1) 19% $34.34 1/1/03 $1,635,637 $ 3,676,653
400,000 34.34 5/8/07 8,638,497 21,891,646
Thomas R. Hix........ 72,000(1) 8% $34.34 1/1/03 785,106 1,764,794
160,000 34.34 5/8/07 3,455,399 8,756,659
Franklin Myers....... 72,000(1) 8% $34.34 1/1/03 785,106 1,764,794
160,000 34.34 5/8/07 3,455,399 8,756,659
E. Fred Minter....... 48,000 2% $34.34 5/8/07 1,036,620 2,626,998
Michael L. Grimes.... 17,142(1) 4% $34.34 1/1/03 186,921 420,168
100,000 34.34 5/8/07 2,159,624 5,472,912
</TABLE>
- ---------------
(1) These Shares were granted under the options in lieu of salary program,
explained in footnote 1 to the Summary Compensation Table, and vest in full
in December 1998.
(2) The exercise price of each option is equal to the fair market value of the
Company's shares on the date of grant of the option. The exercise price may
be paid in cash, or, in certain instances, by tendering already owned
Cooper Cameron Common Stock having a fair market value on the date of
exercise equal to the exercise price.
19
<PAGE> 22
TABLE 3
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR (1)
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
1997(#) DECEMBER 31, 1997($)(1)
--------------------------- ---------------------------
(a) (b) (c) (d) (e)
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sheldon R. Erikson........ 324,012 $12,302,798 555,226 1,000,302 $25,034,716 $34,705,123
Thomas R. Hix............. 334,012 13,424,225 64,006 424,130 $ 2,432,613 14,540,482
Franklin Myers............ 222,266 9,597,297 106,746 424,130 $ 4,080,753 14,540,482
E. Fred Minter............ 12,004 464,445 18,010 78,020 $ 948,605 2,860,863
Michael L. Grimes......... 10,000 336,245 10,000 174,298 385,620 5,149,062
</TABLE>
- ---------------
(1) Values are based on the difference between option prices and the closing
price of $61.00 per share of Common Stock on the New York Stock Exchange on
the last trading day of 1997.
TABLE 4
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEAR ANNUAL
CREDITED INDIVIDUAL ESTIMATED
SERVICE AS OF REACHES BENEFIT AT
JANUARY 1, 1998 AGE 65 AGE 65
--------------- ---------- ----------
<S> <C> <C> <C>
Sheldon R. Erikson.................................. 3.0 2006 $134,640
Thomas R. Hix....................................... 3.0 2012 93,900
Franklin Myers...................................... 2.8 2017 145,248
E. Fred Minter...................................... 10.1 2000 56,004
Michael L. Grimes................................... 1.7 2015 26,892
</TABLE>
For each of the individuals shown in the Summary Compensation Table, the
table above shows current credited years of service, the year each attains age
65, and the projected annual pension benefit at age 65. The formula for
calculating the projected annual pension benefits is 4% of pay up to the Social
Security Wage Base and 8% thereafter. The calculation is based on the following
assumptions: benefits paid on a straight-life annuity basis; continued
compensation at the 1997 levels; and an interest credit rate of 5.25%. Amounts
under the Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan
are included in the Annual Estimated Benefit.
20
<PAGE> 23
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph showing the cumulative total stockholder
return on Company Common Stock from July 5, 1995 to December 31, 1997, and
comparing it with the cumulative total return over the same period of the
Standard & Poor's Composite-500 Stock Index and the S&P Oil & Gas (Drilling &
Equipment) Index. In each case, cumulative total return is calculated assuming a
fixed investment of $100 on July 5, 1995.
<TABLE>
<CAPTION>
S&P Oil &
Gas (Drilling
Measurement Period Cooper &
(Fiscal Year Covered) Cameron S&P 500 Equipment)
--------------------- -------- ------- -------------
<S> <C> <C> <C>
July 5, 1995 100.0 100.0 100.0
Dec. 29, 1995 176.40 112.55 116.02
Dec. 31, 1996 380.12 135.35 161.48
Dec. 31, 1997 606.21 177.33 245.47
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
General
The Compensation Committee of the Board of Directors (the "Committee")
administers the compensation of the Company's executive officers, including its
Chief Executive Officer. The Committee is comprised of three directors, Messrs.
C. Baker Cunningham, Grant A. Dove and David Ross III, who are neither officers
nor employees of the Company. The principal functions of the Committee are set
forth on page 16 under the heading "Committees and Board Meetings."
The Company's primary objective is to increase stockholder value over time.
To accomplish this objective, the overall goal of the Committee is to develop
executive compensation policies which are consistent with and linked to the
Company's strategic business objectives. It is the policy of the Committee to
compensate executive officers based on their responsibilities and experience,
the achievement of specific business objectives and established goals and the
Company's long-term performance. The Committee has received advice from a
compensation consulting firm as to comparable compensation for executives
similarly situated as part of the Committee's analysis. The compensation of the
Chief Executive Officer and the other executive officers consists of a base
salary, an annual bonus opportunity and stock option awards.
Base Salary and Annual Incentive Awards
Each of the Company's executive officers receives a base salary and has an
opportunity to earn a bonus under Cooper Cameron's Management Incentive
Compensation Plan (the "MICP"). Decisions regarding base salaries are made based
upon individual performance, job responsibilities, experience and competitive
practice determined by compensation surveys. The Compensation Committee's policy
is to pay base salaries at or below peer industry medians with a significant
portion of targeted total annual compensation at risk tied to
21
<PAGE> 24
performance-based MICP objectives. The MICP is designed to motivate and reward
key management employees whose efforts impact the performance of the Company and
its subsidiaries and divisions through the achievement of financial performance
targets and, in some instances, individual performance objectives. The Committee
is responsible for approving the financial performance targets that are used to
determine awards made under the MICP. Performance targets are based upon
proposals submitted to the Committee by the Chief Executive Officer which, in
turn, reflect the annual operating plan prepared for the Board of Directors. The
basic measure of financial performance is earnings before interest, taxes,
depreciation and amortization with a target return on equity to also be
achieved. A target award percentage is established for each position eligible to
participate in the MICP. Annual incentives were awarded to 223 employees for
1997 performance. The Committee is mindful of the unusual variances that occur
in today's financial arena in running corporations such as the Company. The
Committee will take into account unusual items when applying the MICP targets to
the actual results. Such items may include acquisitions, divestitures,
recapitalizations, restructurings and other similar unforeseeable events. The
Committee also evaluates performance taking into account industry-wide market
conditions and peer performance.
Long-Term Incentives
It is the policy of the Committee to provide incentives to executives that
are tied to the long-term performance of the Company. For this purpose, the
Committee has granted stock options to the named executive officers or other key
management personnel pursuant to the Cooper Cameron Corporation Long-Term
Incentive Plan. In May 1997, the Board granted stock options to certain
employees other than executive officers and key management personnel. The
Committee determined the number of options granted to each individual based on
actual compensation and assumptions relating to stock price. The stock options
were granted with an exercise price equal to fair market value on the date of
grant. These options were granted to cover two years of options for 1997 and
1998, have a ten-year expiration date and become one-sixth exercisable one year
after the date of grant, one-half exercisable two years after the date of grant,
five-sixths exercisable three years after the date of grant, and fully
exercisable four years after the date of grant. Certain of the named executive
officers elected to receive stock options in lieu of salary for all or a portion
of their annual salary for the year ending December 31, 1998. The options
granted in lieu of salary are fully exercisable one year after the date of
grant, are vested pro rata in the event employees terminate their employment
before vesting and have a five-year expiration date. The Committee will review
each year whether any such employees should be reimbursed for benefits lost
pursuant to their participation in this program.
The Committee believes that the stock option program ties the individual
executive's compensation to the Company's performance and directly links the
executive's personal interests to the interests of the Company and its
stockholders. The Options in Lieu of Salary Program provides increased capital
appreciation opportunities for executive officers in a manner directly linked to
stockholder value while causing the executive officers to substantially invest
in the stock's performance.
Compensation of the CEO
Mr. Erikson currently has a base salary of $525,000, based on a review of
the compensation levels of chief executive officers of companies of comparable
size and in similar businesses. He also received a bonus in the amount of
$250,000 for 1995, $562,550 for 1996, and $787,500 for 1997. Mr. Erikson's
target bonus opportunity for 1998 is 75 percent of his base salary. Mr. Erikson
elected to convert the equivalent of one year's base salary to stock options
under the Options in Lieu of Salary Program starting with 1995, subsequent to
the split-off, 1996, 1997 and 1998. The number of options granted to Mr. Erikson
under this program in 1996 for the year 1997 was 300,255 and in 1997 for the
year 1998 was 150,000. These options become fully exercisable on the date ending
after the term of compensation.
The Committee believes that the total options awarded to Mr. Erikson under
the Long-Term Incentive Plan (excluding those he was awarded in lieu of salary)
are competitive with options granted to CEOs of comparable companies. Through
the stock option award and the options awarded in lieu of salary, a large
percentage of Mr. Erikson's compensation is tied directly to corporate
performance and return to stockholders.
22
<PAGE> 25
Summary
The Committee believes that the total executive compensation program should
link compensation to corporate and individual performance. The Committee will
continue to review the compensation of the CEO and other executive officers on
an annual basis.
Compensation Committee,
Grant A. Dove, Chairman
C. Baker Cunningham
David Ross III
SECTION 162(m) OF THE INTERNAL REVENUE CODE.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
federal income tax deductibility (to $1 million per covered executive) of annual
compensation of the Company's Chief Executive Officer and its other four most
highly compensated executive officers. Under Section 162(m), the Company may
deduct compensation in excess of $1 million if it qualifies as performance-based
compensation, as defined in Section 162(m). Options granted under the Cooper
Cameron Corporation Amended and Restated Long-Term Incentive Plan and bonuses
awarded under the Cooper Cameron Corporation Management Incentive Compensation
Plan, as amended, qualify as performance-based compensation and, therefore,
qualify as an exemption from the application of Section 162(m). The Company will
continue to receive a federal income tax deduction respecting future grants of
options and performance awards to its executives under the these plans.
EMPLOYMENT, TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
The Company has entered into employment agreements containing certain
termination and/or severance provisions with Messrs. Erikson, Hix and Myers (the
"Agreements"). The Agreements provide for specific terms of employment,
including base salary, bonus and benefits over specified periods of time. The
Agreements also provide severance pay and continuation of certain benefits
should a Change of Control, as herein defined, occur. Entry into the Agreements
was unanimously approved by the independent members of the Board of Directors.
The Agreement between the Company and Mr. Erikson has a term of three
years, which is automatically extended on a monthly basis. The Agreement
provides that Mr. Erikson will receive a salary of not less than $500,000 a year
and a bonus as provided under the Company's Management Incentive Compensation
Plan or any other plan adopted by the Board of Directors; will participate in
the Cooper Cameron Corporation Salaried Employees' Retirement Plan (a defined
benefit plan) and the Long-Term Incentive Plan; and will be eligible to
participate in the Cooper Cameron Corporation Retirement Savings Plan (a defined
contribution plan), the Employee Stock Purchase Plan and any other plans
generally available to employees of the Company during his employment. The
Agreements between the Company and each of Messrs. Hix and Myers are
substantially the same as Mr. Erikson's, except the Agreements with Messrs. Hix
and Myers have terms of two years, which end November 30, 1998, and the
Agreements are automatically extended for one year on an annual basis if they
are then employees of the Company. The Agreements provide that Messrs. Hix and
Myers each will receive a salary of not less than $240,000 per year.
The Agreements with Messrs. Erikson, Hix and Myers also provide for
severance arrangements in the event of a Change of Control. A Change of Control
of the Company will occur for purposes of these Agreements if (i) any person is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's
outstanding voting securities, other than through the purchase of voting
securities directly from the Company through a private placement; (ii) the
current members of the Board, or their nominees, no longer comprise a majority
of the Board; (iii) the Company is merged or consolidated with another
corporation or entity and the Company's stockholders own less than 80%
23
<PAGE> 26
of the outstanding voting securities of the surviving or resulting corporation
or entity; (iv) a tender offer or exchange offer is made and consummated by a
person other than the Company for the ownership of 20% or more of the Company's
voting securities; or (v) there has been a disposition of all or substantially
all of the Company's assets.
If the executive terminates due to death, retirement, disability or without
Good Reason, as defined below, or is terminated by the Company for cause, no
salary or other benefits are payable under the Agreements. However, if
termination occurs without cause prior to or after a Change of Control or by Mr.
Erikson with Good Reason prior to or after a Change of Control, Mr. Erikson is
entitled to an amount equal to three times the highest base pay (or its
equivalent if paid in compensation other than cash) and cash incentive
compensation he received during any of the three preceding years, and certain
other payments relating to benefit plans applicable to all employees. If
termination occurs without cause prior to a Change of Control or by the employee
with Good Reason prior to a Change of Control, Messrs. Hix and Myers each are
entitled to an amount equal to two times the highest base pay (or its equivalent
if paid in compensation other than cash) and cash incentive compensation they
received during any of the three preceding years and certain other payments
relating to benefit plans applicable to employees. If termination occurs without
cause after a Change of Control, or resignation for Good Reason after a Change
of Control, Messrs. Hix and Myers each are entitled to an amount equal to three
times the highest base pay and cash incentive compensation they received during
the preceding three years and certain other payments relating to benefit plans.
"Good Reason" for termination includes any of the following events which occur
without employee consent: a change in status, title(s) or position(s) as an
officer of the Company which does not represent a promotion, a reduction in base
salary, termination of participation in an ongoing compensation plan,
relocation, failure of a successor to assume the Agreement, termination by the
Company other than as provided in the Agreement, prohibition from engaging in
outside activities, or any continuing material default by the Company in the
performance of its obligations under the Agreement, whether before or after a
Change of Control.
The Company has adopted an Executive Severance Policy and Change in Control
Policy which set forth certain salary and benefit obligations in the event of
the termination of designated key employees of the Company, including Mr. Grimes
and Mr. Minter. The Executive Severance Policy provides for compensation
continuation of 15 months for each of Messrs. Grimes and Minter if their
employment with the Company is terminated for any reason except cause. Each of
Messrs. Grimes and Minter would receive an additional 9 months of compensation
continuation if such termination occurred subsequent to a "change in control" of
the Company, as defined in the Change in Control Policy. Both policies are
subject to future amendment, modification or cancellation at the discretion of
the Board of Directors.
------------------------------------
STOCKHOLDER PROPOSALS
-----------------------------------
Stockholders' proposals intended to be presented at the 1999 Annual Meeting
should be sent by certified mail, return receipt requested, and must be received
by the Secretary of the Company at its principal executive offices on or before
January 1, 1999, for inclusion in the proxy statement and the form of proxy for
that meeting. Such proposals may be made only by persons who are stockholders,
beneficially or of record, on the date the proposal is submitted and who
continue in such capacity through the meeting date, of at least 1% or $1,000 in
market value of securities entitled to be voted at the meeting, and have held
such securities for at least one year prior to submission of the proposal.
----------------------------------------
INDEPENDENT ACCOUNTANTS
---------------------------------------
During the year ended December 31, 1997, Ernst & Young LLP was employed
principally to perform the annual audit and to render other services.
Representatives of Ernst & Young will be present at the meeting and will be
available to answer questions and discuss matters pertaining to the Report of
Independent Auditors contained in the financial statements incorporated by
reference in the Company's Form 10-K. Representatives of Ernst & Young will have
the opportunity to make a statement, if they desire to do so.
24
<PAGE> 27
Selection of the Company's independent accountants each year is done at the
November meeting of the Board of Directors for such year.
-------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
-------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires executive officers and directors, and persons who own
more than 10% of the Company's Common Stock, to file initial reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Based on its review of the copies of such
reports, or written representations from certain reporting persons that no Forms
5 were required for those persons, the Company believes that during 1997, its
executive officers, directors and greater than ten percent stockholders complied
with all applicable filing requirements, with the exception of the following:
Mr. Joseph D. Chamberlain, Vice President and Corporate Controller filed a
Form 4 with the SEC on June 17, 1997, which was due on June 10, 1997, reporting
the exercise of a Cooper Cameron stock option on May 13, 1997, in the amount of
3,757 shares of common stock and subsequent same-day sale of 3,757 shares of
common stock. Mr. Sheldon R. Erikson, Chairman of the Board, President and Chief
Executive Officer filed a Form 4 with the SEC on June 17, 1997, which was due on
June 10, 1997, reporting the exercise of a Cooper Cameron stock option on May
21, 1997, in the amount of 100,000 shares of common stock and subsequent
same-day sale of 100,000 shares of common stock.
----------------------
OTHER BUSINESS
----------------------
The management of Cooper Cameron has no knowledge of any business to be
presented for consideration at the meeting other than that described above. If
any other business should properly come before the meeting, it is intended that
the shares represented by proxies will be voted with respect thereto in
accordance with the judgment of the persons named in such proxies.
COPIES OF COOPER CAMERON'S ANNUAL REPORT TO STOCKHOLDERS OR ITS ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, ARE AVAILABLE WITHOUT CHARGE TO STOCKHOLDERS
UPON REQUEST TO THE INVESTOR RELATIONS DEPARTMENT, COOPER CAMERON CORPORATION,
515 POST OAK BOULEVARD, SUITE 1200, HOUSTON, TEXAS 77027.
By order of the Board of Directors,
/s/ FRANKLIN MYERS
Franklin Myers
Senior Vice President, General Counsel
and Secretary
March 25, 1998
25
<PAGE> 28
APPENDIX A
FIFTH AMENDMENT TO
COOPER CAMERON CORPORATION
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
WHEREAS, COOPER CAMERON CORPORATION (the "Company") has heretofore adopted
the COOPER CAMERON CORPORATION 1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of
February 12, 1998:
1. The following shall be added to Section 4 of the Plan:
"Shares of Common Stock related to Options that are forfeited or
terminated, expire unexercised, are settled in cash in lieu of shares of
Common Stock or in a manner such that all or some of the shares of Common
Stock covered by an Option are not issued to an Eligible Director, shall
immediately become available for Options hereunder."
2. The following shall be added at the end of Section 7(f) of the Plan:
"The Committee may provide in an Option Agreement that, if an Eligible
Director pays the Option exercise price in shares of Company Common Stock,
upon the date of such payment a new option shall be granted and the number
of shares of Common Stock subject to such new option shall be equal to the
number of shares of Common Stock tendered in payment; provided that such
new option shall not be exercisable in any event after the original term of
the exercised option."
3. As amended hereby, the Plan is specifically ratified and reaffirmed.
A-1
<PAGE> 29
APPENDIX B
FIRST AMENDMENT TO
AMENDED AND RESTATED
COOPER CAMERON CORPORATION
LONG-TERM INCENTIVE PLAN
WHEREAS, COOPER CAMERON CORPORATION (the "Company") has heretofore adopted
the AMENDED AND RESTATED COOPER CAMERON CORPORATION LONG-TERM INCENTIVE PLAN
(the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of
February 12, 1998:
1. The number "11,000,000" shall be substituted for the number "8,000,000"
in the first and last sentences of Section 4.1 of the Plan.
2. The third sentence of Section 4.1 of the plan shall be deleted and the
following shall be substituted therefor:
"Common Stock related to Awards that are forfeited or terminated,
expire unexercised, are settled in cash in lieu of Common Stock or in a
manner such that all or some of the shares covered by an Award are not
issued to a Participant (including where shares of Common stock covered by
an Award are used to satisfy fax withholding obligations pursuant to
Section 15 of the plan), or are exchanged for Awards that do not involve
Common Stock, shall immediately become available for Awards hereunder."
3. The third sentence of Section 6.4 of the Plan shall be deleted and the
following shall be substituted therefor:
"The Committee may provide in an Award Agreement respecting a stock
option that, if a Participant pays the option exercise price in shares of
Common Stock, upon the date of such payment a new option shall be granted
and the number of shares of Common Stock subject to such new option shall
be equal to the number of shares of Common stock tendered in payment (plus
the number of any shares of Common Stock respecting the exercised option
retained to satisfy any tax withholding obligations); provided that such
new option shall not be exercisable in any event after the original term of
the exercised option."
4. As amended hereby, the Plan is specifically ratified and reaffirmed.
B-1
<PAGE> 30
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Please mark your - 5973
votes as in this - - -
[X] example.
The Board of Directors recommends a vote FOR all nominees.
FOR WITHHOLD FOR AGAINST ABSTAIN
1. [ ] [ ] Election of Directors 2. To approve an amendment [ ] [ ] [ ]
Nominees: Michael E. Patrick to the Amended and Restated
Michael J. Sebastian Certificate of Incorporation;
To withhold your vote for any nominee(s),
write the name(s) here: 3. To approve an amendment to [ ] [ ] [ ]
the Amended and Restated
1995 Stock Option Plan for
- ----------------------------------------- Non-Employee Directors;
Comments [ ] 4. To approve an amendment to [ ] [ ] [ ]
(see reverse) the Amended and Restated
Cooper Cameron Corporation
I plan to attend [ ] Long-Term Incentive Plan;
the meeting
5. To transact such other [ ] [ ] [ ]
business as may properly
come before the meeting and
any adjournments thereof.
Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
-----------------------------------------------------
-----------------------------------------------------
SIGNATURE(S) DATE
- ------------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
</TABLE>
COOPER CAMERON CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
10:00 A.M.
MAY 14, 1998
CROWNE PLAZA HOTEL
2222 WEST LOOP SOUTH
HOUSTON, TEXAS 77027
Agenda
o Call to order
o Introduction of Directors and Officers
o Nomination and Voting for Directors
o Voting for proposals 2, 3 and 4
o Chairman's Report
o General Question and Answer Period
THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT. IT IS IMPORTANT
THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER
OR NOT YOU ATTEND THE MEETING IN PERSON. TO MAKE SURE YOUR
SHARES ARE REPRESENTED, WE URGE YOU TO COMPLETE AND MAIL
THE PROXY CARD ABOVE.
<PAGE> 31
COOPER CAMERON CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 1998
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned stockholder of Cooper Cameron Corporation ("Cooper Cameron")
appoints Sheldon R. Erikson and Franklin Myers, or either of them, proxies,
with full power of substitution, to vote all shares of stock which the
stockholder would be entitled to vote if present at the Annual Meeting of
Stockholders of Cooper Cameron on Thursday, May 14, 1998, at 10:00 a.m.
(central time) in the Ballroom, Crowne Plaza Hotel, 2222 West Loop South,
Houston, Texas, and at any adjournments thereof, with all powers the
stockholder would posses if present. The stockholder hereby revokes any proxies
previously given with respect to such meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE, BUT IF NO
SPECIFICATION IS MADE, IT WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR (MICHAEL
E. PATRICK AND MICHAEL J. SEBASTIAN), WILL BE VOTED FOR PROPOSALS 2,3 AND 4 AND
IN THE DISCRETION OF THE PROXIES ON OTHER MATTERS AS MAY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF.
This card also constitutes voting instructions for any shares held for the
stockholder in the Cooper Cameron Retirement Savings Plan, as described in the
Notice of Meeting and Proxy Statement.
Comments: (Please sign and date on the reverse side)
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(If you have written in the above space, please mark the "comments" box on the
reverse side of this card.)
[SEE REVERSE SIDE]
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- FOLD AND DETACH HERE -
[COOPER CAMERON LOGO]
A telephone response center is available at Cooper Cameron's transfer agent,
First Chicago Trust, to provide stockholders personal assistance with:
o Verifying the number of Cooper Cameron shares in your account.
o Lost or stolen stock certificates.
o Name changes on stock registration in the event of marriage, death and
estate transfers, gifts of stock to minors in custodial accounts...any
transfer of stock ownership.
o Any stockholder inquiries concerning Cooper Cameron common stock will be
answered courteously and promptly.
Call First Chicago Trust Company of New York at (201) 324-1225, or write:
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, NJ 07303-2500
