SECURITIES AND EXCHANGE COMMISSION SCHEDULE 14AProxy Statement Pursuant to Section
PROXY STATEMENT PURSUANT TO SECTION 14(a) of theSecurities Exchange Act ofOF THE SECURITIES
EXCHANGE ACT OF 1934(Amendment No.)
Filed by the Registrantxþ
Filed by a Party other than the Registrant
¨oCheck 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 §240.14a-12
|
þ Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted byRule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
Schlumberger N.V. (Schlumberger Limited)
(Name of Registrant as Specified
Inin Its Charter)
(
Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
¨
| |
o | Fee computed on table below per Exchange ActRules 14a-6(i)(1)(4) and 0-11. |
| | |
| | (1) | | Title of each class of securities to which the transaction applies: |
| | (2) | | Aggregate number of securities to which the transaction applies: |
| | (3) | | Per unit price or other underlying value of the transaction computed pursuant to Exchange ActRule 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 the transaction: |
¨
o | | Fee paid previously with preliminary materials. |
¨
| |
o | Check box if any part of the fee is offset as provided by Exchange ActRule 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 Formform or Scheduleschedule and the date of its filing. |
| | |
| | (1) | | Amount Previously Paid: |
| | (2) | | Form, Schedule or Registration Statement No.: |
5599 San Felipe, 17th17th Floor NOTICE OF ANNUAL GENERAL MEETING OF STOCKHOLDERS To Be Held April 8, 20096, 2011
The
2011 Annual General Meeting of Stockholders of Schlumberger Limited (Schlumberger N.V.) will be held at the Avila Beach Hotel, Penstraat 130, Willemstad, Curaçao,
Netherlands Antilles, on Wednesday, April
8, 20096, 2011 at 10:30
in the morning (Curaça.m., Curaçao
time),time, for the following purposes:
1. | |
| 1. | To elect 11 directors.the 14 directors named in this proxy statement. |
|
| 2. | To approve an advisory resolution on executive compensation. |
|
| 3. | To conduct an advisory vote on the frequency of future advisory votes on executive compensation. |
|
| 4. | To approve an amendment to the Company’s Articles of Incorporation to increase the authorized common share capital. |
|
| 5. | To approve amendments to the Company’s Articles of Incorporation to clarify the voting standard in contested director elections and to make certain other changes. |
|
| 6. | To report on the course of business during the year ended December 31, 2008,2010, to approve the Company’s Consolidated Balance Sheet as at December 31, 2008,2010, its Consolidated Statement of Income for the year ended December 31, 2008,2010, and the declarationdeclarations of dividends by the Board of Directors in 2010 as reflected in the Company’s 20082010 Annual Report to Stockholders. |
3. | | To act on a stockholder proposal regarding a stockholder advisory vote on compensation of the Company’s named executive officers. |
4. | 7. | To approve the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm to audit the accounts of the Company for 2009.2011. |
Action will also be taken
uponon such other matters as may
come properly
be brought before the meeting.
The close of business on February
18, 200916, 2011 has been fixed as the record date for the meeting. All holders of common stock of record at the close of business on that date are entitled to vote at the meeting.
|
By order of the Board of Directors,
|
ELLEN SUMMER |
Secretary |
By order of the Board of Directors,
Alexander C. Juden
Secretary
Please sign, date and promptly return the enclosed proxy card in the enclosed envelope, or grant a proxy and give voting instructions by telephone or internet, so that you may be represented at the meeting. Instructions are on your proxy card or on the voting instruction card included by your broker. Brokers cannot vote for ItemItems 1, 2, 3, 4 or 5 without your instructions. Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting of
Stockholders to Be Held on April 8, 2009:6, 2011: This proxy statement, along with the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 20082010 and the 20082010 Annual Report to Stockholders, are available free of charge on the Company’s website athttp://investorcenter.slb.com.
TABLE OF CONTENTS
| | | | |
| | | 1 | |
| | | 1 | |
| | | 1 | |
| | | 1 | |
| | | 2 | |
| | | 3 | |
| | | 3 | |
| | | 8 | |
| | | 8 | |
| | | 8 | |
| | | 9 | |
| | | 10 | |
| | | 11 | |
| | | 11 | |
| | | 12 | |
| | | 17 | |
| | | 17 | |
| | | 17 | |
| | | 17 | |
| | | 18 | |
| | | 18 | |
| | | 20 | |
| | | 37 | |
| | | 38 | |
| | | 51 | |
| | | 52 | |
| | | 52 | |
| | | 53 | |
| | | 55 | |
| | | 57 | |
| | | 58 | |
| | | 58 | |
| | | 58 | |
| | | 60 | |
| | | 61 | |
| | | 61 | |
| | | 61 | |
| | | 63 | |
| | | 63 | |
| | | 63 | |
| | | 63 | |
i
This proxy statement is furnished in connection with the solicitation by the Board of Directors of Schlumberger Limited (Schlumberger N.V.) (“Schlumberger” or the “Company”) of proxies to be voted at
the 2009 Annual General Meetingits 2011 annual general meeting of
Stockholders.stockholders. The approximate mailing date of this proxy statement is March
13, 2009.[ ], 2011. Business at the meeting is conducted in accordance with the procedures determined by the Chairman of the meeting and is generally limited to matters properly brought before the meeting by or at the direction of the Board of Directors or by a stockholder in accordance with specified requirements requiring advance notice and disclosure of relevant information.
The Schlumberger
20082010 Annual Report to Stockholders is included in this package as a separate document. The Company’s Consolidated Balance Sheet as at December 31,
2008,2010, its Consolidated Statement of Income for the year ended December 31,
20082010 and the supplemental financial information with respect to dividends included in the Annual Report are incorporated by reference as part of this proxy soliciting material.
The Company will pay
Items to be Voted on at the cost of furnishing proxy material to all stockholders and of soliciting proxies by mail and telephone. D. F. King & Co., Inc. has been retained byAnnual Meeting
At the
Company to assist in2011 annual general meeting, the
solicitation of proxies for a fee estimated at $12,750 plus reasonable expenses. Directors, officers and employees ofagenda includes the
Company may also solicit proxies for no additional compensation. The Company will reimburse brokerage firms, fiduciaries and custodians for their reasonable expenses in forwarding the solicitation material to beneficial owners.following items:
| | |
| | Board
|
Agenda Item | | Recommendation |
|
| • Election of directors | | FOR |
| • Advisory resolution on executive compensation | | FOR |
| • Advisory vote on frequency of future advisory votes on executive compensation | | TWO YEARS |
| • Amendment to the Company’s Articles of Incorporation to increase the authorized common share capital | | FOR |
| • Amendments to the Company’s Articles of Incorporation to clarify the voting standard in contested director elections and to make certain other changes | | FOR |
| • Approval of the Company’s Financial Statements | | FOR |
| • Appointment of PricewaterhouseCoopers LLP as independent auditor | | FOR |
Each stockholder of record at the close of business on
the record date, February
18, 200916, 2011, is entitled to one vote for
each director nominee and one vote for each of the other proposals to be voted on with respect to each share registered in the stockholder’s name. A stockholder of record is a person or entity who held shares on that date
registeredin its name on the records of Computershare Trust Company, N.A. (“Computershare”), Schlumberger’s stock transfer agent. Persons who held shares on the record date through a broker, bank or other nominee are considered
beneficialowners. On February
18, 2009,16, 2011, there were
1,196,052,203 outstanding[ ] shares of common stock of Schlumberger
outstanding and entitled to vote, excluding
138,159,961[ ] shares held in treasury.
Shares cannot be voted at the meeting unless the owner of record is present in person or is represented by proxy. Schlumberger is incorporated in
the Netherlands AntillesCuraçao and, as provided by
Netherlands AntillesCuraçao law, meetings of stockholders are held in
the Netherlands Antilles.Curaçao. Because many stockholders cannot personally attend the meeting, it is necessary that a large number be represented by proxy.
Fifty percent of the outstanding shares, exclusive of shares held in treasury, must be present in person or by proxy to constitute a quorum for the taking of any action at the meeting. Abstentions and broker non-votes (described below) are countedproxies submitted by brokers that do not indicate a vote because they do not have discretionary voting authority and have not received instructions as to how to vote on a proposal (so-called “broker non-votes”) will be considered as present for determining the presence of a quorum.quorum purposes. If a quorum is not present at the meeting, the Board may call a second General Meetinggeneral meeting of stockholders, at which the quorum requirement will not apply.
1
Brokers holding shares must vote according to specific instructions they receive from the beneficial owners of those shares. If brokers do not receive specific instructions, are not received, brokers may generallyin some cases vote the shares in their discretion. However, the New York Stock Exchange (the “NYSE”) precludes brokers from exercising voting discretion on certain proposals without specific instructions from the beneficial owner. Importantly, NYSE rules expressly prohibit brokers holding shares in “street name” for theirbeneficialholder clients from voting on behalf of the clients in uncontested director elections and on certain matters relating to executive compensation, unless the brokers have received specific voting instructions from those clients.
Under NYSE rules, brokers will have discretion to vote
only on
the election of directorsItems 6 and
Items 2 and 4.7. Brokers cannot vote on Item
1 (the election of directors), Item 2 (advisory resolution on executive compensation), Item 3
(advisory vote on the frequency of future advisory votes on executive compensation), Item 4 (amendment to the Articles of Incorporation to increase the authorized common share capital) or Item 5 (amendments to the Articles of Incorporation to clarify the voting standard in contested director elections and to make certain other changes) without instructions from the
beneficial owners.
If you do not instruct your broker how to vote on the election of directors, the two advisory votes on executive compensation, or the two proposals to amend the Articles of Incorporation, your broker willnotbe able to vote for you on those matters. Abstentions and broker non-votes will not affect the outcome of the vote on the election of directors or on any of the proposals, except for Items 4 and 5 (the proposals to amend the Articles of Incorporation), with respect to which an abstention or broker non-vote has the same effect as a vote against the proposal.
Stockholders with shares
registered in their names with Computershare and participants who hold shares in the Schlumberger Discounted Stock Purchase Plan may authorize a proxy by:
The internet at the following internet address: http://www.proxyvote.com;
1
Telephonically by calling 1-800-690-6903; or
Completing and mailing the proxy card.
| | |
| • | the internet at the following internet address:http://www.proxyvote.com; |
|
| • | telephonically by calling1-800-690-6903; or |
|
| • | completing and mailing their proxy card. |
The internet and telephone voting facilities for stockholders of record will close at 11:59 p.m. Eastern time on April
7, 2009.5, 2011. The internet and telephone voting procedures have been designed to authenticate stockholders and to allow you to vote your shares and to confirm that your instructions have been properly recorded.
A number of banks and brokerage firms participate in
a programprograms that also
permitspermit beneficial stockholders to direct their vote by the internet or telephone. If shares are held in an account at a bank or brokerage firm that participates in such a program, beneficial stockholders may direct the vote of these shares by the internet or telephone by following the instructions on the voting form.
You can revoke your proxy at any time before it is exercised by timely delivery of a properly executed, later-dated proxy (including an internet or telephone vote) or by voting by ballot at the meeting.
By providing your voting instructions promptly, you may save the Company the expense of a second mailing.
All shares entitled to vote and represented by properly executed proxies received prior to the meeting and not revoked will be voted at the meeting in accordance with your instructions. If you are a stockholder with shares registered in your name with Computershare and you submit a proxy card but do not direct how to vote on each item, the persons named as proxies will vote as the Board recommends on each proposal.
2
ITEM 1. ElectionELECTION OF DIRECTORS
All of
DirectorsIt is intended that the numberour directors are elected annually at our annual general meeting of directors be fixed at 11 and that thestockholders. The stockholders are requested to elect a Board of Directors of 1114 members, each to hold office until the next Annual General Meetingannual general meeting of Stockholdersstockholders and until a director’s successor is elected and qualified or until a director’s death, resignation or removal. Each of the nominees other than Henri Seydoux, is now a director and was previously elected by the stockholders. Unless instructed otherwise,stockholders at the proxies will be voted2010 annual general meeting, except for (a) Ms. Moler, who was appointed by the electionBoard in September 2010 to serve as a director upon the recommendation of the 11Nominating and Governance Committee, and (b) Mr. Kibsgaard and Ms. Olayan, who are not currently directors. Our former director, Jamie Gorelick, resigned from the Board in June 2010, and Ms. Moler was appointed to fill this vacancy. All of the nominees for election have consented to being named below.in this proxy statement and to serve if elected. If any nominee is unable or unwilling to serve, proxies may be voted for another person designated by the Board of Directors. The Board knows of no reason why any nominee will be unable or unwilling to serve if elected. Mr. Nicolas Seydoux
Shares represented by executed proxies will be voted, if authority to do so is not
standingwithheld, for
re-election.the election of each of the 14 nominees named below. If you hold your shares in “street name,” you should know that your broker will not vote your shares for the 14 nominees listed below without your specific voting instructions.
Required Vote
A majority of the votes cast is required to elect each nominee for director.
Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal.
Recommendation of the Board
The Board of Directors Recommends a Vote FOR All Nominees. Director Nominees
The Board
believes that each director nominee possesses the qualities and experience that the Nominating and Governance Committee believes that nominees should possess, as described in detail below in the section entitled “Corporate Governance—Director Nominations.” The Board seeks out, and the Board is comprised of,
Directors’individuals whose background and experience complement those of other Board members. The nominees for election to the Board, together with
biographical information furnished by
each of them
with respect to their business experience, and
other information regarding
them,each nominee’s director qualifications, are set forth
below: | | |
Nominee, Age and Five-Year Business Experience
| | Director
Since
|
PHILIPPE CAMUS, 60; Co-Managing Partner, Société Lagardère, a French media and technology company, since March 1998, and Senior Managing Director, Evercore Partners Inc., an advisory and investment firm, since January 2006; co-Chief Executive Officer of the European Aeronautic Defence & Space Company, an aerospace and defense contractor, from July 2000 to July 2005, New York, New York (1)
| | 2007 |
| |
JAMIE S. GORELICK, 58; Partner, Wilmer Cutler Pickering Hale and Dorr LLP, an international law firm, since July 2003 (2)
| | 2002 |
| |
ANDREW GOULD, 62; Chairman and Chief Executive Officer since February 2003 (3)
| | 2002 |
| |
TONY ISAAC, 67; Retired; Former Chief Executive of The BOC Group plc, an international group with three business segments consisting of Gases and Related Products, Vacuum Technology and Supply Chain Solutions, from September 1999 to October 2006, Surrey, U.K. (4)
| | 2003 |
| |
NIKOLAY KUDRYAVTSEV, 58; Rector, Moscow Institute of Physics and Technology, since June 1997, Moscow, Russia (5)
| | 2007 |
| |
ADRIAN LAJOUS, 65; Senior Energy Advisor, McKinsey & Company, Houston, Texas, and President of Petrométrica, an energy consulting company, since January 2001, Mexico City (6)
| | 2002 |
2
| | |
Nominee, Age and Five-Year Business Experience
| | Director
Since
|
MICHAEL E. MARKS, 58; Managing Partner, Riverwood Capital, LLC (formerly Bigwood Capital, LLC), a private equity firm, since March 2007, Palo Alto, California; Senior Advisor of Kohlberg Kravis Roberts & Co., a private equity firm, from January 2007 to January 2008 and Member from January 2006 to January 2007, Menlo Park, California; Chief Executive Officer of Flextronics, an electronics manufacturing services company, from January 1994 to January 2006 and Chairman of the Board from January 2006 to January 2008, Singapore (7)
| | 2005 |
| |
LEO RAFAEL REIF, 58; Provost, Chief Academic Officer and Chief Budget Officer, Massachusetts Institute of Technology, since August 2005, Head of Electrical Engineering and Computer Science Department, from September 2004 to July 2005, and Associate Department Head for Electrical Engineering, Department of Electrical Engineering and Computer Science from January 1999 to August 2004, Cambridge, Massachusetts
| | 2007 |
| |
TORE I. SANDVOLD, 61; Chairman, Sandvold Energy AS, an advisory company in the energy business, since September 2002 (8)
| | 2004 |
| |
HENRI SEYDOUX, 48; Chairman and Chief Executive Officer, Parrot S.A., a global provider of wireless mobile telephone accessories, since June 2003, Paris (9)
| | N/A |
| |
LINDA GILLESPIE STUNTZ, 54; Partner, Stuntz, Davis & Staffier P.C., a law firm, Washington, D.C. (10)
| | 1993 |
(1) | | Mr. Camus is Chairman of the Board of Lucent Alcatel, a global communications solutions provider,below. There are no family relationships among executive officers and directors of the Company.Current Directors PHILIPPE CAMUS, 62, has been a director of Credit Agricole, a banking company, where he is a member of the Audit Committee and Chairman of the Compensation Committee. |
(2) | | Ms. Gorelick is a director of United Technologies Corporation, a provider of high technology products and services, where she serves on its Finance, Compensation and Public Issues Review Committees, and serves on the boards of the John D. and Catherine T. MacArthur Foundation and the Carnegie Endowment for International Peace. She is a member of the Council on Foreign Relations. |
(3) | | Mr. Gould is a director of Rio Tinto plc and Rio Tinto Limited, a mineral resources group, and is Chairman of its Remuneration Committee and a member of its Nominations Committee. |
(4) | | Mr. Isaac is senior independent director of International Power plc, an independent power producer, and serves on its Audit, Remuneration and Appointments Committees; and senior independent director of the Hogg Robinson Group, a corporate travel services company, where he serves on its Remuneration Committee and is Chairman of its Audit Committee. |
(5) | | Mr. Kudryavtsev is a member of the Russian Academy of Sciences and a member of the Council of the Ministry of Education and Science of Russia for Scientific Programs. |
(6) | | Mr. Lajous is a director of Ternium, S.A., a flat and long steel producer headquartered in Luxembourg, and a member of its Audit Committee; a director of Trinity Industries, Inc., a volume producer of freight and tank railcars in the United States and Mexico and serves on its Audit and Finance Committees; a director of Grupo Petroquimico Beta, S.A., a chemicals company in Mexico; and Chairman of Oxford Institute for Energy Studies, Oxford, U.K. |
(7) | | Mr. Marks is a director at SanDisk, a memory products company headquartered in California, and a member of its Compensation and Nominating and Governance Committees; and a director of Sun Microsystems, Inc., a network computing infrastructure product and service company, and a member of its Audit Committee. Mr. Marks also serves on several private company boards. |
(8) | | Mr. Sandvold is a director of Teekay Corporation, a leading provider of international crude oil and petroleum product transportation services, where he is a member of its Nominating and Governance Committee, and also serves on the boards of Lambert Energy Advisory Ltd., E.on Rührgas Norge AS, Energy Policy Foundation of Norway, Stavanger University, NorWind AS and OceanWind. |
(9) | | Mr. Seydoux is a director of Christian Louboutin, Strapmedia, Mobinear and Maison Darre, all private companies located in Paris. |
(10) | | Mrs. Stuntz is a director of Raytheon Company, a defense technology company, where she serves on its Audit, Nominating and Governance Committees and is Chair of its Public Affairs Committee. |
3
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to persons known by the Company since 2007. He has been a Co-Managing Partner of Société Lagardère, a French media and technology company, since March 1998, and a Senior Managing Director of Evercore Partners Inc., an advisory and investment firm, since January 2006. From July 2000 to beJuly 2005, Mr. Camus was co-Chief Executive Officer of the beneficial ownersEuropean Aeronautic Defence & Space Company, an aerospace and defense contractor. Mr. Camus is Chairman of 5% orthe Board of Alcatel-Lucent, a global communications solutions provider. From May 2005 to May 2009, he was a director of Credit Agricole, the second-largest retail banking group in Europe, where he was a member of the audit committee and chaired the compensation committee. From January 2006 to September 2008, he was a director of Accor S.A., a global hotel and tourism-related company, and a member of its audit and compensation committees. The Board selected Mr. Camus to serve as a director because it believes he possesses valuable financial expertise, including extensive experience with capital markets transactions and investments in both public and private companies. He has led and directed global industrial, technology-dependent businesses, which informs his
3
judgment and ability to assess risk as a Board member. Schlumberger also benefits from Mr. Camus’ experience as a former director and audit committee member at Accor S.A. and Credit Agricole.
PETER L.S. CURRIE, 54, has been a director of the Company since 2010. He has been President of Currie Capital LLC, a private investment firm, since April 2004. Mr. Currie is a director of Clearwire Corporation (since 2005), a wireless internet service provider, and is a member of both its compensation committee and its audit committee, which he chairs. Until Sun Microsystems’ merger with Oracle in January 2010, he was a director of Sun Microsystems (since 2006), a network computing infrastructure product and service company, and a member of its audit committee. Mr. Currie has also served on the boards of CNET Networks, Inc. (from December 2005 to June 2008), where he was on the audit committee, and Safeco Corporation (from July 2005 to September 2008), where he also served on the nominating and governance committee and on the audit committee, which he chaired during his last year on the committee. The Board selected Mr. Currie to serve as a director because he has extensive board and committee experience at both public and private companies; he served as Chief Financial Officer of two public companies (McCaw Cellular Communications Inc. and Netscape Communications Corp.); and has had senior positions in investment banking, venture capital and private equity. With his extensive executive experience, Mr. Currie brings strong financial and operational expertise to the Board.
ANDREW GOULD, 64, has served on the Board since 2002 and has been Chairman and Chief Executive Officer of the Company since February 2003. Since 2002, he has served as director of Rio Tinto plc and Rio Tinto Limited, a mineral resources group. In 2008, he was appointed the senior independent nonexecutive director and chairman of its remuneration committee. He is also a member of Rio Tinto’s nominations committee. The Board selected Mr. Gould to serve as a director because he is the Company’s Chief Executive Officer, and has been with the Company for more than 35 years, having begun in 1975 as an internal auditor. His service as Chairman and CEO of Schlumberger creates a critical link between management and the Board, enabling the Board to perform its oversight function with the benefit of management’s perspectives on the business. He has held 16 financial and operational management positions within the Company in Asia, Europe and the U.S. He has an expansive knowledge of the oil and gas industry and macro-economic global conditions, as well as relationships with chief executives and other senior management at oil and natural gas companies and oilfield service companies throughout the world, and brings a unique and valuable perspective to the Board.
TONY ISAAC, 69, has been a director of the Company since 2003, and is the Board’s lead independent director. He was the former Chief Executive of The BOC Group plc, an international group with three business segments consisting of Gases and Related Products, Vacuum Technology and Supply Chain Solutions, from September 1999 to October 2006. Since October 2000, Mr. Isaac has served on the board of International Power plc, an independent power producer, as its senior independent director, and currently serves on its audit, remuneration and appointments committees. He is also the senior independent director of the Hogg Robinson Group, a corporate travel services company, where he serves on its remuneration and nomination committees, and is chairman of its audit committee. The Board selected Mr. Isaac to serve as a director because he has extensive experience serving on boards of large, multinational companies. Mr. Isaac also has valuable experience in the operation of a worldwide business faced with a myriad of international business and political issues. Mr. Isaac’s even temperament and ability to communicate and encourage discussion, together with his experience as senior independent director of all boards on which he serves, make him an effective lead independent director for the Board.
K. VAMAN KAMATH, 63, has been a director of the Company since 2010. He has been thenon-executive Chairman of the Board of ICICI Bank Limited, a banking institution, since May 2009, and was Managing Director and Chief Executive Officer of ICICI Bank Limited from 2002 to May 2009. He has also been a director of Infosys Technologies Limited, an information technology services company, since May 2009, where he serves on its audit and nomination committees, and is chairman of its compensation committee. He has also been a director of Lupin Limited, a pharmaceutical company, since January 2010 and of Great Eastern Shipping Co. Limited, a shipping company, since May 2010. The Board selected Mr. Kamath to serve as a director because it believes he possesses a deep understanding of India, a large and critical market for Schlumberger, and of Asia generally, which is of immense value to the Board. As a banker with
4
more than 35 years’ experience, Mr. Kamath has extensive CEO experience and expertise in corporate finance, international banking, financial reporting, and mergers and acquisitions. Mr. Kamath’s leadership abilities and experience in India and Asia enables him to make a meaningful contribution to the Board.
NIKOLAY KUDRYAVTSEV, 60, has been a director of the Company since 2007. Since June 1997, he has been the Rector of the Moscow Institute of Physics and Technology, the most prestigious institute of theoretical and applied physics in Russia. The Board selected Mr. Kudryavtsev to serve as a director because it believes he brings valuable management and finance experience to the Board, as well as deep scientific and technological expertise. This provides the Board with valuable insight regarding the Company, its products and current technology, as well as the future technological needs of the Company and the industry. Mr. Kudryavtsev also provides the Board with a particularly valuable Russian vantage point, which is useful for both the development of the Company’s
common stock. | | | | | |
| | | Beneficial Ownership of
Common Stock
| |
Name and Address
| | Number of
Shares
| | Percentage
of Class
| |
Capital Research Global Investors (1) 333 South Hope Street Los Angeles, CA 90071 | | 65,005,000 | | 5.4 | % |
(1) | | Based on a Statement on Schedule 13G dated February 17, 2009. Such filing indicates that Capital Research Global Investors has sole voting power with respect to 23,730,000 shares and sole dispositive power with respect to 65,005,000 shares. Capital Research Global Investors is a division of Capital Research and Management Company. The filing indicates that the common stock was acquired in the ordinary course of business and not for the purpose of changing or influencing the control of the Company. |
The following lists the shares of Schlumberger common stock beneficially owned as of January 31, 2009 by all directors and nominees, by eachunderstanding of the named executive officers, and by the directors, director nominees and executive officers as a group. Except as footnoted, each individual has sole voting and investment power over the shares listed by that individual’s name. As of January 31, 2009, no nominee for director owned more than 1% of the outstanding sharesneeds of the Company’s common stock. All directors,growing population of Russian employees. The Board is aided immensely by Mr. Kudryavtsev’s sensitivity to Russian culture and risk at the field level.
ADRIAN LAJOUS, 67, has been a director
nominees and executive officers as a group owned 0.6% of the outstanding shares of the common stock of the Company
since 2002. He has been a Senior Energy Advisor at
McKinsey & Company, a consulting firm, and President of Petrométrica, an energy consulting company, in both cases since January
31, 2009. | | | |
Name
| | Shares
| |
Simon Ayat
| | 378,087 | (1) |
Dalton Boutte
| | 668,553 | (2) |
Philippe Camus
| | 7,000 | |
Jamie S. Gorelick
| | 19,200 | (3) |
Andrew Gould
| | 3,563,158 | (4) |
Tony Isaac
| | 12,000 | (5) |
Nikolay Kudryavtsev
| | 4,000 | |
Adrian Lajous
| | 14,232 | (6) |
Michael E. Marks
| | 22,000 | (7) |
Satish Pai
| | 409,821 | (8) |
Leo Rafael Reif
| | 4,000 | |
Tore I. Sandvold
| | 16,000 | |
Chakib Sbiti
| | 890,568 | (9) |
Henri Seydoux
| | — | |
Nicolas Seydoux
| | 491,320 | (10) |
Linda Gillespie Stuntz
| | 26,200 | (11) |
All directors, director nominees and executive officers as a group (25 persons)
| | 7,449,984 | (12) |
(1) | | Includes 282,000 shares which may be acquired by Mr. Ayat within 60 days through the exercise of stock options. |
(2) | | Includes 572,968 shares which may be acquired by Mr. Boutte within 60 days through the exercise of stock options. |
(3) | | Excludes 13,000 shares the receipt of which Ms. Gorelick has deferred under the Stock and Deferral Plan for Non-Employee Directors. |
(4) | | Includes 2,256,430 shares which may be acquired by Mr. Gould within 60 days through the exercise of stock options and 328,908 pledged shares. |
(5) | | Excludes 5,000 shares the receipt of which Mr. Issac has deferred under the Stock and Deferral Plan for Non-Employee Directors. |
(6) | | Held through a limited liability company in which Mr. Lajous has an indirect interest, and excludes 8,000 shares the receipt of which he has deferred under the Stock and Deferral Plan for Non-Employee Directors. |
(7) | | Excludes 2,000 shares the receipt of which Mr. Marks has deferred under the Stock and Deferral Plan for Non-Employee Directors. |
(8) | | Includes 358,619 shares which may be acquired by Mr. Pai within 60 days through the exercise of stock options. |
(9) | | Includes 855,000 shares which may be acquired by Mr. Sbiti within 60 days through the exercise of stock options. |
(10) | | Excludes 30,728 shares owned by Mr. Seydoux’s wife, as to which he has no voting and investment power, and includes 200,000 pledged shares. |
(11) | | Includes 6,000 shares as to which Mrs. Stuntz shares voting power and 600 shares owned by a minor child in a trust for which Mrs. Stuntz serves as trustee and excludes 3,400 shares which she deferred under the Stock and Deferral Plan for Non-Employee Directors. |
(12) | | Includes 5,055,667 shares which may be acquired by executive officers as a group within 60 days through the exercise of stock options and excludes 31,490 shares the receipt of which directors have deferred under the Stock and Deferral Plan for Non-Employee Directors. |
4
Section 16(a) Beneficial Ownership Reporting Compliance
The Company believes, based upon2001. Mr. Lajous is a reviewdirector of Ternium, S.A. (since 2006), a flat and long steel producer, and serves on its audit committee. He is also a director of Trinity Industries, Inc. (since 2006), a volume producer of freight and tank railcars, and serves on its audit and its finance and risk management committees. From 1994 to 1999, Mr. Lajous was Chief Executive Officer of Petróleos Mexicanos (“Pemex”), Mexico’s national oil company. He served as Director General of Pemex and Chairman of the forms filed byBoard of the Pemex group of operating companies from 1994 to 1999. The Board selected Mr. Lajous to serve as a director because it believes he has extensive knowledge and experience of the energy industry and its officersparticipants, as well as a deep understanding of operations in difficult political and directors,regulatory environments. He also has significant knowledge of the issues affecting the international oil and gas industry, particularly in Mexico. Through his service on the boards of Pemex and Ternium S.A., he has valuable experience in governance, compensation and audit issues.
MICHAEL E. MARKS, 60, has been a director of the Company since 2005. He has been a Managing Partner of Riverwood Capital, LLC (formerly Bigwood Capital, LLC), a private equity firm, since March 2007. From January 2007 to January 2008, Mr. Marks was a Senior Advisor to Kohlberg Kravis Roberts & Co., a private equity firm, and was a Member of that duringfirm from January 2006 to January 2007. From 1994 to 2006, Mr. Marks served as the Chief Executive Officer of Flextronics, Inc., a leading producer of advanced electronic manufacturing services. Mr. Marks also served as a director of Flextronics from 1991 to 2008. He was appointed Chairman of the Board of Flextronics effective upon his retirement as Chief Executive Officer in 2006 until his retirement from the Board of Flextronics in 2008, alland he previously served as Chairman of the Board of Flextronics from 1993 to 2003. Mr. Marks is a director at SanDisk (since 2003), a memory products company, and a member of its officerscompensation and directors filedits nominating and governance committees. Until Sun Microsystems’ merger with Oracle in January 2010, he was a director at Sun Microsystems (since 2007), a network computing infrastructure product and service company, and a member of its audit committee. Until December 2010, Mr. Marks was a director of Calix (since 2009), a provider of broadband communications access systems and software. The Board selected Mr. Marks to serve as a director because it believes he is familiar with world-class manufacturing from the field level to the boardroom based on his experience at Flextronics, and because he has run a timely basis the reports required to be filed under Section 16(a)large, diversified global corporation with many of the Securities Exchange Actsame issues that Schlumberger faces. As a former CEO and as a public company director at various other companies, Mr. Marks has been involved in succession planning, compensation, employee management and the evaluation of 1934,acquisition opportunities. Almost all companies of which Mr. Marks has been a director have been involved in some form of technology business, and this experience is especially relevant, given Schlumberger’s technology-oriented business and the fact that many of its acquisition targets are technology companies.
ELIZABETH MOLER, 62, has been a director of the Company since her appointment by the Board in September 2010, upon the recommendation of the Nominating and Governance Committee. She is retired from Exelon Corporation (formerly Unicom), one of the nation’s largest electric utility companies, where she served as amendedExecutive Vice President, Government Affairs and Policy from January 2000 to July 2010. During 1999 she
5
was a member of the Unicom Board of Directors. In December 1999, she resigned as a director of Unicom to become a Senior Vice President of Unicom. Ms. Moler is a nationally-recognized energy policy expert, and was responsible for all aspects of Exelon’s federal government affairs initiatives. Ms. Moler also had a long career in government service. She served as Senior Counsel for the United States Senate Committee on Energy and Natural Resources from 1976 to 1988. Ms. Moler also served as a member of the Federal Energy Regulatory Commission (FERC) from 1988 to 1997, where she served as its chairperson from 1993 to 1997. She also served as the Deputy Secretary of the U.S. Department of Energy (the “Exchange Act”“DOE”) from 1997 to 1998. At the DOE, she was Chief Operating Officer, overseeing a $16 billion budget and more than 10,000 federal employees and 100,000 contract employees. The Board selected Ms. Moler to serve as a director because of her extensive government experience and expertise in U.S. energy policy, as well as her management and policy experience at Exelon. Her many years in government service and her expertise in U.S. energy policy enable her to assist the Board in analyzing energy-related issues and the interplay of those issues with government, and position her to provide oversight in an increasingly regulated industry and guidance in government relations. In addition, as a result of Ms. Moler’s tenure at Exelon as Executive Vice President, Government Affairs and Policy, she provides valuable business, leadership and management insights into governmental affairs.
LEO RAFAEL REIF, 60, has been a director of the Company since 2007. He has been Provost, Chief Academic Officer and Chief Budget Officer of the Massachusetts Institute of Technology (MIT) since August 2005. Mr. Reif was head of the Electrical Engineering and Computer Science Department at MIT from September 2004 to July 2005, and an Associate Department Head for Electrical Engineering in the Department of Electrical Engineering and Computer Science at MIT from January 1999 to August 2004. The Board selected Mr. Reif to serve as a director because it believes he brings valuable management and finance expertise to the Board. As a scientist, he has deep scientific and technological expertise about the Company’s products and current technology, as well as about anticipated future technological needs of the Company and the industry. The Board values Mr. Reif’s connections to the U.S. scientific community, as well as his expertise in university relations and collaborations, which are of high importance to Schlumberger and its efforts in technology leadership and employee retention. Mr. Reif provides the Board with a critical U.S. scientific perspective, which is of immense value in the development of the Company’s strategy.
TORE I. SANDVOLD, 63, has been a director of the Company since 2004. He has been Chairman of Sandvold Energy AS, an advisory company in the energy business, since September 2002. Mr. Sandvold is a director of Teekay Corporation (since 2003), excepta leading provider of international crude oil and petroleum product transportation services, where he is a member of its nominating and governance committee. From 2001 to 2002, Mr. Sandvold served as executive Chairman of Petoro AS, the Norwegian state-owned oil company. The Board selected Mr. Sandvold to serve as a director because he has worked in the area of energy policy for more than 35 years, and has broad experience in developing domestic and international energy policies for Norway as a late Form 4 filing by Rodney Nelson reporting shares acquired throughcareer civil servant. He has extensive experience dealing with global energy institutions such as the Organization of the Petroleum Exporting Countries and the International Energy Agency, and in negotiating with global energy companies. Mr. Sandvold has finance experience and a stock option exercise.solid understanding of business opportunities, both as concerns acquisition targets and the industry in general.
HENRI SEYDOUX, 50, has been a director of the Company since 2009. Since 1994, he has been Chairman and Chief Executive Officer of Parrot S.A., a global provider of wireless mobile telephone accessories. Mr. Seydoux is an entrepreneur with great initiative. He founded Parrot S.A. in 1994 as a private company and took it public in 2007. The Board selected Mr. Seydoux to serve as a director because he has family ties to the founding Schlumberger brothers, and having grown up in the Schlumberger family culture, is well placed to see that the Company continues its historical commitment to Schlumberger’s core values. His service on the Board addresses the Company’s need to preserve the Company’s unique culture and history on the Board.
6
New Director Stock Ownership GuidelinesNominees PAAL KIBSGAARD, 43, has been the Company’s Chief Operating Officer since February 2010, and was President of the Reservoir Characterization Group from May 2009 to February 2010. Prior to that, Mr. Kibsgaard served as Vice President, Engineering, Manufacturing and Sustaining, from November 2007 to May 2009. He was Vice President of Personnel from April 2006 to November 2007, and President, Drilling & Measurements, from January 2003 to April 2006. The Board selected Mr. Kibsgaard to serve as a director because he is the Company’s Chief Operating Officer, with a thorough knowledge of all operational activities of the Company worldwide. Mr. Kibsgaard has been with the Company since 1997, and began his career as a reservoir engineer. He has held numerous operational and administrative management positions within the Company in the Middle East, Europe and the U.S., and will bring a valuable operational perspective to the Board. The Board believes that ownership of Schlumberger stock byMr. Kibsgaard’s service as Chief Operating Officer will offer an important link between management and the Board, members aligns their interestsenabling the Board to perform its oversight function with the interestsbenefit of his perspectives on the Company’s business.
LUBNA S. OLAYAN, 55, has been the deputy chairperson and Chief Executive Officer of Riyadh-based Olayan Financing Company, the holding entity for The Olayan Group’s operations in the Kingdom of Saudi Arabia and the Middle East, since 1986. Since 2001, Ms. Olayan has been a Principal of The Olayan Group, a private multinational enterprise engaged in manufacturing, distribution and services. She is a member of the Company’s stockholders. Accordingly,Board of Directors of Olayan Investment Company Establishment, the parent company of The Olayan Group. In her capacity as CEO of Olayan Financing Company, Ms. Olayan is responsible for The Olayan Group’s operating businesses and investments in Saudi Arabia and the Middle East. These include more than 40 companies engaged in product manufacturing, distribution and services, often in partnership with leading multinationals. Prior to joining The Olayan Group, Ms. Olayan worked for Morgan Guaranty in New York as a financial analyst from 1979 to 1981. Ms. Olayan also serves as a non-executive director and member of various corporate and advisory boards. Since December 2004, Ms. Olayan has been a Director of Saudi Hollandi Bank, becoming the first woman to join the board of a Saudi publicly-listed company, and is a member of its executive committee and its nomination and remuneration committee. Ms. Olayan has been a member of the Board at Chelsfield Partners LLP, a UK real estate investment firm, since 2005. Ms. Olayan also has establishedbeen a guidelinenon-executive director of WPP plc, a public company and one of the largest communication services businesses in the world, since March 2005, and is a member of its nomination committee. Since 2006, Ms. Olayan has been a member of the International Advisory Boards of Rolls Royce Group plc, Akbank and the National Bank of Kuwait. Ms. Olayan also serves on the boards of various non-governmental organizations, including the Asia Business Council, Al Fanar (venture philanthropy) and the Down’s Syndrome Charitable Association in Saudi Arabia, and on the boards of various educational institutions, including INSEAD, Cornell University and King Abdullah University of Science and Technology. The Board believes that eachMs. Olayan’s proven leadership abilities and experience in Saudi Arabia and the Middle East will enable her to make a meaningful contribution to the Board. The Board selected Ms. Olayan to serve as a director because of her extensive business experience in Saudi Arabia and the Middle East and her deep understanding of those areas, which are critical to the Company. The Board will benefit from her extensive CEO experience and expertise in corporate finance, international banking, distribution and manufacturing. Ms. Olayan, as a member must, within five years after April 22, 2004 or after joiningof the Board (whichever is later), own at least 10,000 shares or restricted stock units.of Directors of INSEAD, one of the world’s leading graduate business schools, will also bring a critical international perspective on business and global best practices. Ms. Olayan’s service on the Boards of Trustees of Cornell University and of King Abdullah University of Science and Technology, and her connections to the scientific community and her experience in university relations, will also be of great value to Schlumberger and its efforts in technology leadership and employee recruiting and retention.
7
Corporate Governance
CORPORATE GOVERNANCE
Schlumberger is committed to adhering to sound principles of corporate governance and has adopted corporate governance principles that the Board believes promote the effective functioning of the Board, its committees and the Company.
These guidelines are available on our website athttp://www.slb.com/about/guiding _principles/corpgovernance/corpgov_guidelines.aspx.
Majority Voting for Directors Schlumberger’s Articles of Incorporation provide that director nominees must be elected at a general meeting of stockholders by a majority of votes cast.
Schlumberger’s Corporate Governance Guidelines provide that at least a majority of the Board will consist of independent directors. This standard reflects the NYSE corporate governance listing standards. In addition, each member of the Audit Committee meets the heightened independence standards required for audit committee members under the NYSE’s listing standards. The Board of Directors has determined that each current director and each director nominee listed above under “Election of Directors,” as well as our former directors Linda Stuntz (who did not stand for re-election at our 2010 annual general meeting) and Jamie Gorelick (who resigned from the Board of Directors in June 2010), is independent under the NYSE’s listing standards, other thanexcept Mr. Gould, who is Chairman and Chief Executive Officer of Schlumberger, and Mr. Kibsgaard, who is Chief Operating Officer of Schlumberger. In making this determination,The NYSE listing standards include objective tests that can disqualify a director from being treated as independent, as well as a subjective test, under which the Board must affirmatively determineddetermine that each independent director has no material relationship with Schlumberger or management,management. In making its independence determinations, the Board considered all material relationships with each director and that noneeach new director nominee, and all transactions since the start of the express disqualifications contained in the NYSE rules applied to any2008 between Schlumberger and each current director and director nominee and members of their immediate families or entities associated with them.
As contemplated by NYSE rules then in effect, the Company hasadopted categorical standards in 2004 to assist the Board in making independence determinations, under whichdeterminations. Under the rules then in effect, relationships that fallfell within the categorical standards arewere not required to be disclosed in the proxy statement and their impact on independence needwas not required to be separately discussed. The Board, however, considers all material relationships with each director in making its independence determinations. A relationship falls within thethese current categorical standards if it:
| | |
| • | is a type of relationship addressed in Section 303A.02(b) of the NYSE Listed Company Manual, but under those rules does not preclude a determination of independence; or |
|
| • | is a type of relationship addressed in Item 404 of SECRegulation S-K, but under that item does not require disclosure; or |
|
| • | consists of charitable contributions by the Company to an organization where a director is an executive officer but the contributions did not exceed the greater of $1 million or 2% of the organization’s gross revenue in any of the last 3 years. |
None of the non-employee directors was disqualified from “independent” status under the objective NYSE Listedlisting standards. In making its subjective determination that each non-employee director is independent, the Board reviewed and discussed additional information provided by the directors and the Company Manual, but under those rules does not preclude a determination of independence; or
Is a type of relationship addressedwith regard to each director’s business and personal activities as they may relate to Schlumberger and Schlumberger’s management. The Board considered the transactions in Item 404 of Regulation S-Kthe context of the SecuritiesNYSE’s objective listing standards, the categorical standards noted above, the additional standards established for members of audit committees, and Exchange Commission (the “SEC”), but underthe SEC and U.S. Internal Revenue Service standards for compensation committee members. Based on all of the foregoing, the Board made a subjective determination as required by NYSE rules that, item does not require disclosure; because of the nature of the transaction, the director’s relationship with the entityand/or the
8
Consists
amount involved, no relationships exist that, in the opinion of the Board, would impair the director’s independence.
The Board’s independence determinations included a review of charitable contributions by Schlumberger to The Massachusetts Institute of Technology, of which Mr. Reif is the CompanyProvost, and to an organization where a directorThe Moscow Institute of Physics and Technology, of which Mr. Kudryavtsev is an executive officer and doesthe Rector. Aggregate contributions to each of these educational institutions did not exceed the greater of $1 million or 2%1% of thethat organization’s consolidated gross revenue in any of the last 3 years.revenues for 2008, 2009 or 2010.
None of the independent directors has ongoing relationships relevant to an independence determination that were outside the scope of the Board’s categorical standards.
The Nominating and Governance Committee recommends to the Board the number and names of persons to be proposed by the Board for election as directors at the annual general meeting of stockholders. In obtaining the names of possible nominees, the Nominating and Governance Committee makes its own inquiries and will
5
receive suggestions from other directors, management, stockholders and other sources, and its process for evaluating nominees identified in unsolicited recommendations from security holders is the same as its process for unsolicited recommendations from other sources. All potentialConsideration of new Board candidates typically involves a series of internal discussions, review of information concerning candidates, and interviews with selected candidates. Board members typically suggest candidates for nomination to the Board. Our CEO suggested Ms. Olayan and an independent director nominees must be considered by thesuggested Ms. Moler as prospective Board candidates.
The Nominating and Governance Committee must first consider all potential director nominees before beingthey are contacted by other Company directors or officers as possible nominees and before having their namesthey are formally considered by the full Board. The Nominating and Governance Committee will consider nominees recommended by security holders who meet the eligibility requirements for submitting stockholder proposals for inclusion in the next proxy statement and submit their recommendations in writing to to:
Chair, Nominating and Governance Committee in care of the
c/o Secretary, Schlumberger Limited
5599 San Felipe, 17th Floor
Houston, Texas 77056
by the deadline for such stockholder proposals referred to at the end of this proxy statement. Unsolicited recommendations must contain all of the information that would be required in a proxy statement soliciting proxies for the election of the candidate as a director, a description of all direct or indirect arrangements or understandings between the recommending security holder and the candidate, all other companies to which the candidate is being recommended as a nominee for director, and a signed consent of the candidate to cooperate with reasonable background checks and personal interviews, and to serve as a director of the Company, if elected.
The Nominating and Governance Committee believes that nominees should, in the judgment of the Board, be persons of integrity and honesty, be able to exercise sound, mature and independent business judgment in the best interests of the stockholders as a whole, be recognized leaders in business or professional activity, have background and experience that will complement those of other board members, be able to actively participate in Board and Committee meetings and related activities, be able to work professionally and effectively with other Board members and Schlumberger management, be available to remain on the Board long enough to make an effective contribution and have no material relationship with competitors, customers, or other third parties that could present realistic possibilities of conflict of interest or legal issues.
The Nominating and Governance Committee also believes that the Board should include appropriate expertise and reflect gender, cultural and geographical diversity, in light of the entire Board’s current composition and range of diversity. Schlumberger has approximately 108,000 employees worldwide, representing more than 140 countries, and values gender, cultural and geographical diversity in its directors as well. One of the Company’s current directors is a woman, as is one of the two new director nominees. Of the 14 current director nominees, four are citizens of the United States of America; two are French citizens; two
9
are citizens of Great Britain; two are citizens of Norway; and one director nominee is a citizen of each of Russia, Mexico, India and Saudi Arabia. The Company’s very diverse Board also evidences the Board’s commitment to have directors who represent countries where Schlumberger operates. In addition, the exceptionally broad and diverse experience of Board members is in keeping with goal of having directors whose background and experience complement those of other directors. The Nominating and Governance Committee’s evaluation of director nominees takes into account their ability to contribute to the Board’s diversity, and the Nominating and Governance Committee reviews its effectiveness in balancing these considerations when assessing the composition of the Board.
Board Leadership Structure; Independent Lead Director
Andrew Gould serves as both our Chairman of the Board and CEO. The Board believes that independent oversight of management is an important component of an effective board of directors. The independent Board members have determined that the most effective Board leadership structure for Schlumberger at the present time is for the CEO to also serve as Chairman of the Board, a structure that has served Schlumberger well for many years. The independent Board members believe that because the CEO is ultimately responsible for theday-to-day operation of the Company and for executing the Company’s strategy, and because the performance of the Company is an integral part of Board deliberations, the CEO is the director best qualified to act as Chairman of the Board. The Board retains the authority to modify this structure to best address the Company’s unique circumstances, and so advance the best interests of all stockholders, as and when appropriate.
The Board also believes, for the reasons set forth below, that its existing corporate governance practices achieve independent oversight or management accountability, which is the goal that many seek to achieve by separating the roles of Chairman and CEO. Schlumberger’s governance practices provide for strong independent leadership, active participation by independent directors and for independent evaluation of, and communication with, many members of senior management. These governance practices are reflected in Schlumberger’s Corporate Governance Guidelines and the various Committee Charters, which are available on our website. Some of the relevant processes and other corporate governance practices include:
| | |
| • | The Board has an independent lead director with leadership authority and responsibilities. Tony Isaac, Chair of the Nominating and Governance Committee, was selected by the independent Board members to be the lead independent director. The Chairman of the Board and the lead independent director together set the agenda for all Board meetings, and the lead independent director sets the agenda for, and leads, all executive meetings of the independent directors, providing consolidated feedback, as appropriate, from those meetings to the Chairman and CEO. The lead independent director also has the authority to call meetings of the Board of Directors in executive session; facilitates discussions, outside of scheduled Board meetings, among the independent directors on key issues as appropriate; and serves as a non-exclusive liaison with the Chairman and CEO, in consultation with the other independent directors. |
|
| • | At each regularly scheduled Board meeting, all independent directors meet in an executive session without management present. In these executive sessions, the independent directors deliberate on such matters as CEO succession planning and the performance of the CEO. |
|
| • | All of our director nominees, except the Chairman and CEO and the Chief Operating Officer, are independent directors, which is substantially above the NYSE requirement that a majority of directors be independent. Each director is an active and equal participant in decisions made by the full Board. In addition, each of the Audit, Finance and Nominating and Governance Committees are comprised solely of independent directors. |
|
| • | Each of our directors is elected annually by majority vote of our stockholders. |
|
| • | Schlumberger’s Corporate Governance Guidelines also facilitate the involvement of the independent members of the Board in key aspects of governance. For example, any director may request that the lead director call an executive meeting of the Board. Additionally, the Chairman and CEO regularly solicits suggestions from the directors for presentations by management at Board and Committee |
10
| | |
| | meetings. Furthermore, each Board member has full and free access to the Company’s management and employees. |
The Board’s Role in Risk Oversight
The role that the Company’s Board of Directors fulfills in risk oversight is set out in the Company’s Corporate Governance Guidelines. The Board of Directors assesses major risks facing the Company and options for their mitigation, in order to promote the Company’s stockholders’ and other stakeholders’ interest in the long-term health and the overall success of the Company and its financial strength.
The full Board of Directors is actively involved in overseeing risk management for the Company. It does so in part through its oversight of the Company’s Executive Risk Committee (the “ERC”) comprised of more than half a dozen top executives of the Company from various functions, each of whom supervisesday-to-day risk management throughout the Company. The ERC is not a committee of the Board of Directors. The ERC ensures that the Company identifies all potential material risks facing the Company and implements appropriate mitigation measures. The Company’s risk identification is performed at two levels: the ERC performs a corporate-level risk mapping exercise, which involves the CEO and several other members of senior management, and while maintaining oversight, delegates operational (field-level) risk assessment and management to the Company’s various Areas, Technologies, Functions and the Research, Engineering, Manufacturing and Sustaining organization. To the extent that the ERC identifies recurring themes from the operational risk mapping exercises, they are acted on at the corporate level. Members of the ERC meet formally at least once a year, and more frequently on an ad hoc basis, to define and improve the risk mapping process, and to review and monitor the results of those exercises and those that have been delegated. The ERC reports directly to the CEO and to the full Board, and periodically presents to the full Board a comprehensive report as to its risk mapping efforts for that year.
In addition, each of our Board committees considers the risks within its areas of responsibilities. For example, the Finance Committee considers finance-related risks on a quarterly basis and recommends guidelines to control cash and currency exposures. The Compensation Committee reviews the Company’s overall compensation program and its effectiveness at linking executive pay to performance, aligning the interests of our executives and our stockholders and providing for appropriate incentives. The Nominating and Governance Committee oversees compliance-related risk and reviews and discusses the Company’s Compliance and Ethics program’s quarterly statistical report and the various allegations, disciplinary actions and training statistics brought to its attention. The Audit Committee reviews risks related to financial reporting. The Audit Committee discusses all significant finance-related violations of Company policies brought to its attention on an ad hoc basis, and once per year reviews a summary of all finance-related violations. Additionally, the outcome of the Company’s Audit Risk assessment is presented to the Audit Committee annually; this assessment identifies internal controls risks and drives the internal audit plan for the coming year. All violations of the Company’s Code of Ethics and related corporate policies are reported to the Nominating and Governance Committee and, as appropriate, are reported to the full Board. Once a year, the Director of Compliance delivers to the full Board a comprehensive Annual Compliance Report. The risks identified within the Compliance and Ethics program are incorporated into the ERC’s enterprise risk management program described above. The Chair of each of the Board’s key committees also discusses, reviews and makes decisions on serious matters outside of quarterly Board meetings, as needed.
Meetings of the Board of Directors and its Committees During 2008,2010, the Board of Directors held sixeight meetings. Schlumberger has an Audit, a Compensation, a Nominating and Governance, a Finance, and a Technology Committee. During 2008,2010, the Audit Committee met five times; the Compensation Committee met fiveseven times; the Finance Committee met fourfive times; the Nominating and Governance Committee met fourfive times; and the Technology Committee met twice.two times. All incumbent director nominees attended at least 83%88% or more of the aggregate of the meetings of the Board and of the committees of the Board on which such directors served. From time to time between meetings, boardBoard and committee members may confer with each other and with management and independent consultants regarding
11
relevant issues, and representatives of management may meet with the independent consultants on behalf of the relevant committee.
Board meetings have historically been held on the third or fourth Thursday of January, April, July and October, and committee meetings have been held on the day before each Board meeting. In 2006, the Board also began meeting on the first Thursday of June without any associated committee meetings to discuss topics of significance, such as business strategy, and to visit company facilities. Additional meetings of the Board are held from time to time as required.
6
Members of the Committees of the Board of Directors | | | | | | | | | | |
| | Audit
Committee
| | Compensation
Committee
| | Nominating
and
Governance
Committee
| | Finance
Committee
| | Technology
Committee
|
Philippe Camus
| | X | | | | | | X | | |
Jamie S. Gorelick
| | | | X | | | | X* | | |
Andrew Gould
| | | | | | | | | | |
Tony Isaac
| | X* | | | | X | | X | | |
Nikolay Kudryavtsev
| | X | | | | | | | | X |
Adrian Lajous
Nominating
| | X | | X | | X | | | | |
Michael Marks
| | | | X | | X | | | and
| | | | | | |
Didier Primat (1)
| | | Audit
| | | Compensation
| | | Governance
| | | Finance
| | | Technology
|
| Name of Director | | | Committee | | | Committee | | | Committee | | | Committee | | | Committee |
| Philippe Camus | | | X | | | | | | | | | Chair | | | |
| | | | | | | | | | | | | | | |
| Peter L.S. Currie | | | Chair | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Andrew Gould | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Tony Isaac | | | | | | X | | | Chair | | | | | | |
| | | | | | | | | | | | | | | |
| K. Vaman Kamath | | | X | | | | | | | | | X | | | |
Leo Rafael Reif
| | | | | | | | | | | | | | | |
| Nikolay Kudryavtsev | | | X | | | | | | | | | | | | X |
| | | X | | | | | | | | | | | | | |
Tore I. Sandvold
Adrian Lajous | | | X | | | X | | | X | | | | | | |
| | | | | | | | | | | | | | | |
| Michael E. Marks | | | | | | Chair | | | X | | | | | | |
| | | | | | | | | | | | | | | |
| Elizabeth A. Moler | | | | | | X | | | | X |
Nicolas Seydoux (2)
| | | | X | | X* | | | | |
Linda Gillespie Stuntz
| | | | X* | | | | | | | | | | | |
| Leo Rafael Reif | | | | | | | | | X | | | | | | Chair |
| | | | | | | | | | | | | | | |
| Tore I. Sandvold | | | | | | | | | X | | | X | | | |
| | | | | | | | | | | | | | | |
| Henri Seydoux | | | | | | | | | | | | X | | | X |
| | | | | | | | | | | | | | | |
(2) | | Mr. Seydoux is not standing for re-election. |
The Audit Committee consists of four independentfive directors, who meeteach of whom meets the independence and other requirements of the NYSE’s listing standards. The Audit Committee assists the Board in its oversight of the integrity of the Company’s financial statements, legal and regulatory compliance, the independent registered public accounting firm’s qualifications, independence, performance and related matters, and the performance of Schlumberger’s internal audit function. The authority and responsibilities of the Audit Committee include the following:
| | |
| • | evaluate the independence and qualification of the Company’s independent registered public accounting firm; |
|
| • | recommend for stockholder approval the independent registered public accounting firm to audit the accounts of the Company for the year; |
|
| • | review with the Company’s independent registered public accounting firm the scope and results of its audit, and any audit issues or difficulties and management’s response; |
|
| • | discuss with management Schlumberger’s risk assessment and risk management policies; |
|
| • | discuss Schlumberger’s annual audited financial statements and quarterly unaudited financial statements with management and the Company’s independent registered public accounting firm; |
|
| • | review with management, the internal audit department and the independent registered public accounting firm the adequacy and effectiveness of the Company’s disclosure and internal control procedures, including any material changes or deficiencies in such controls; |
|
| • | discuss with management and the independent registered public accounting firm Schlumberger’s earnings press releases; |
12
evaluate the independence and qualification of the independent registered public accounting firm;
review with the independent registered public accounting firm the scope and results of its audit, and any audit problems or difficulties and management’s response;
discuss the Schlumberger annual audited financial statements and quarterly financial statements with management and the independent registered public accounting firm;
review with management, the internal audit department and the independent registered public accounting firm the adequacy and effectiveness of the Company’s disclosure and internal control procedures, including any material changes or deficiencies in such controls;
discuss with management Schlumberger’s risk assessment and risk management policies;
discuss with management and the independent registered public accounting firm Schlumberger’s earnings press releases, as well as the type of financial information and earnings guidance, if any, provided to analysts and rating agencies;
review Schlumberger’s financial reporting and accounting standards and principles, significant changes in such standards or principles or in their application and the key accounting decisions affecting the Company’s financial statements;
set policies for the hiring of employees or former employees of the Company’s independent registered public accounting firm;
7
review with the internal audit department the status and results of the annual internal audit plan, assessments of the adequacy and effectiveness of internal controls, and the sufficiency of the department’s resources;
| | |
| • | review Schlumberger’s financial reporting and accounting standards and principles, significant changes in such standards or principles or in their application and the key accounting decisions affecting the Company’s financial statements; |
|
| • | set policies for the hiring of employees or former employees of the Company’s independent registered public accounting firm; |
|
| • | review with the internal audit department the status and results of the Company’s annual internal audit plan, assessments of the adequacy and effectiveness of internal controls, and the sufficiency of the department’s resources; |
|
| • | establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters, as well as for confidential submission by employees, and others, if requested, of concerns regarding questionable accounting or auditing matters; and |
|
| • | prepare an annual audit committee report for Schlumberger’s annual proxy statement. |
establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls, or auditing matters, as well as for confidential, anonymous submission by employees, and others, if requested, of concerns regarding questionable accounting or auditing matters; and
prepare an annual audit committee report for the Schlumberger annual proxy statement.
The Company’s independent registered public accounting firm is accountable to the Audit Committee. The Audit Committee pre-approves all engagements, fees and terms for audit and other services provided by the Company’s independent registered public accounting firm.
The Board of Directors has determined that
Messrs. Camus, Isaaceach Committee member has sufficient knowledge in financial and
Lajous, who are independent under applicable NYSE listing standards, areauditing matters to serve on the Committee. In addition, the Board of Directors has determined that each member of the Audit Committee, other than Mr. Kudryavtsev, qualifies as an “audit committee financial
experts” as defined byexpert” under applicable SEC rules. The Audit Committee operates pursuant to a written charter, which is available on the Company’s website at
http://www.slb.com/content/about/audit_committee.asp?. Stockholders may also obtain a copy of the charter without charge by writing to the Secretary of the Company at 5599 San Felipe, 17th Floor, Houston, Texas 77056.guiding_principles/corpgovernance/audit_committee.aspx.
The Compensation Committee consists of five independentfour directors, who meeteach of whom meets the independence requirements of the NYSE’s listing standards. The purpose of the Compensation Committee is to assist Schlumberger’s Board of Directors in discharging its responsibilities with regard to executive compensation,compensation; periodically review non-executive directors’ compensation,compensation; oversee Schlumberger’s general compensation philosophy,philosophy; serve as the administrative committee under Schlumberger’s stock plansplans; and prepare the annual Compensation Committee Report required by the rules of the SEC. The authority and responsibilities of the Compensation Committee include the following:
| | |
| • | review and approve the objectives, evaluate the performance, and review and recommend the compensation of the Company’s Chief Executive Officer to the full Board meeting in an executive session of independent directors. |
|
| • | review and approve the evaluation process and compensation structure for the Company’s executive officers and approve their annual compensation, including salary, annual cash incentive andlong-term equity incentives; |
|
| • | select appropriate peer companies against which the Company’s executive compensation practices are compared; |
|
| • | review incentive compensation and equity based plans, and advise management and the Board of Directors on the design and structure of the Company’s compensation and benefits programs and policies and recommend changes to the Board; |
|
| • | administer and make awards under the Company’s stock option plans and review and approve annual stock allocation under those plans; |
|
| • | monitor trends and best practices in director compensation and stock ownership guidelines and recommend changes to the Board as it deems appropriate in accordance with Schlumberger’s Corporate Governance Guidelines; |
review and approve the objectives, evaluate the performance, and review and recommend the compensation of the Company’s Chief Executive Officer to the full Board meeting in an executive session of independent directors. The Compensation Committee bases its recommendations regarding CEO compensation on:
13
CEO performance in light of those objectives;
the Company’s financial and business performance, and relative stockholder returns;
the CEO’s compensation in prior years; and
the Company’s objective to be competitive with comparable peer group companies;
review and approve the evaluation process and compensation structure for the Company’s executive officers and approve their annual compensation, including salary, annual cash incentive and long-term incentives (sometimes referred to as “LTIs”);
select appropriate peer groups against which the Company’s executive compensation is compared;
review incentive compensation and equity based plans, and advise management and the Board of Directors on the design and structure of the Company’s compensation and benefits programs and policies and recommend changes to the Board;
administer and make awards under the Company’s stock option plans and review and approve annual stock allocation under those plans;
monitor trends and best practices in director compensation and stock ownership guidelines and recommend changes to the Board as it deems appropriate in accordance with the Corporate Governance Guidelines;
monitor and review the Company’s overall compensation and benefits program design to ensure continued competitiveness and consistency with established Company compensation philosophy, corporate strategy and objectives and alignment with stockholder interests;
review and make recommendations to the Board regarding people-related strategies and initiatives, such as recruitment, retention and diversity management;
establish stock ownership guidelines for executive officers and other key position holders;
review and discuss with the Company’s management the Compensation Discussion and Analysis (“CD&A”) to be included in the Company’s annual proxy statement to stockholders; and
submit a Compensation Committee Report recommending to the Board that the CD&A be included in the proxy.
8
| | |
| • | monitor and review the Company’s overall compensation and benefits program design to confirm continued competitiveness and consistency with established Company compensation philosophy, corporate strategy and objectives, and alignment with stockholder interests; |
|
| • | review and make recommendations to the Board regarding people-related strategies and initiatives, such as recruitment, retention and diversity management; |
|
| • | establish stock ownership guidelines for executive officers and other key position holders; |
|
| • | review and discuss with the Company’s management the Compensation Discussion and Analysis (“CD&A”) to be included in the Company’s annual proxy statement; and |
|
| • | submit a Compensation Committee Report recommending to the Board that the CD&A be included in the Company’s annual proxy statement. |
The Compensation Committee may delegate specific responsibilities to one or more individual committee members to the extent permitted by law, NYSE listing standards and Schlumberger’s governing documents.
The design andday-to-day administration of all compensation and benefits plans and related policies, as applicable to executive officers and other salaried employees, are handled by teams of the Company’s human resources, finance and legal department employees.
The Compensation Committee has retained
Towers PerrinPay Governance LLC (“Pay Governance”) as an independent consultant with respect to executive compensation matters.
The consultantPay Governance, which focuses on advising boards on executive compensation, was formed by former practitioners at the consulting firm Towers Watson (our former (our compensation consultant), which previously provided executive compensation advisory services to Schlumberger’s Compensation Committee. Pay Governance reports
only to, and acts solely at the direction of, the Compensation Committee.
SchlumbergerSchlumberger’s management does not direct or oversee the activities of
Towers PerrinPay Governance with respect to the Company’s executive compensation
program and has not engaged Towers Perrin for any other matter. Towers Perrinprogram. Pay Governance prepares compensation surveys for review by the Compensation Committee each October, in advance of the annual executive officer compensation review
eachthe following January.
Towers PerrinPay Governance works with the Company’s
human resources functionexecutive compensation department to compare compensation paid to the Company’s executive officers with compensation paid for comparable positions at companies included in the
surveys. Towers Perrincompensation surveys conducted by Pay Governance at the direction of the Compensation Committee. Pay Governance and the Company’s
human resources functionexecutive compensation department also compile annual compensation data for each executive officer. The Compensation Committee has also instructed
Towers PerrinPay Governance to prepare an analysis of each named executive officer’s compensation.
The design and day-to-day administration of all compensation and benefits plans and related policies, as applicable to executive officers and salaried employees, are handled by teams of the Company’s human resources, finance and legal department employees.The Compensation Committee evaluates all elements of executive officer compensation each January, after a review of achievement of financial and personal objectives with respect to the prior year’s results. The purpose is to determine ifwhether any changes in the officer’s compensation are appropriate. The CEO does not participate in the Compensation Committee’s deliberations with regard to his own compensation. At the Compensation Committee’s request, the CEO reviews with the Compensation Committee the performance of the other executive officers, but no other executive officer has any input in executive compensation decisions. The Compensation Committee gives substantial weight to the CEO’s evaluations and recommendations because he is particularly able to assess the other executive officers’ performance and contributions to the Company. The Compensation Committee independently determines each executive officer’s mix of total direct compensation based on the factors described in “Compensation Discussion and Analysis—Elements of Compensation—Framework for Setting Executive Compensation in 2010—Relative Size of Direct Compensation Elements.” Early in the calendar year, financial and personal objectives for each executive officer are determined for the currentthat year. The Compensation Committee may, however, review and adjust salaries or grant stock optionscompensation at other times as the result of new appointments or promotions during the year.
14
The following table summarizes the approximate timing of significant compensation events:
| | |
Event
| | Timing
|
Event | | Timing |
|
| Establish executive officer financial objective(s) | | January of each fiscal year for current year |
| |
Establish executive officer personal objectives | | Early in the first quarter of the fiscal year for current year |
| |
External consultants provideIndependent compensation consultant provides analysis for compensation
committeethe Compensation Committee to evaluate executive compensation
| | October of each year for compensation in the following fiscal year |
| |
Evaluate executive performance (achievement of objectives established in previous fiscal year) and recommend compensation based on those results | | Results approved in January of each fiscal year for annual cash incentive with respect to prior year. EarnedThe incentive earned in prior fiscal year is paid in February.February of the current fiscal year. |
| |
Review and recommend base salary and determine stock option grants | | January of each fiscal year for base salary for that year and for stock options to be granted in that year |
The Compensation Committee has also retained
Towers PerrinPay Governance as an independent consulting firm with respect to director compensation matters.
The consultantAs stated above, Pay Governance reports
exclusively to and acts
solely at the direction of the Compensation Committee. The consultant prepares an analysis of competitive non-employee director compensation levels and market trends using the same peer groups as those used in the executive compensation review.
9
The Compensation Committee operates pursuant to a written charter, which is available on the Company’s website at
http://www.slb.com/content/about/compensation_committee.asp?. Stockholders may also obtain a copy of the Compensation Committee’s charter, without charge, by writing to the Secretary of the Company at 5599 San Felipe, 17th Floor, Houston, Texas, 77056.guiding_principles/corpgovernance/compensation_committee.aspx.
Nominating and Governance Committee The Nominating and Governance Committee is comprised of six independentfive directors, who meeteach of whom meets the independence requirements of the NYSE’s listing standards. The authority and responsibilities of the Nominating and Governance Committee include the following:
| | |
| • | lead the search for individuals qualified to become members of the Board; |
|
| • | evaluate the suitability of potential nominees for membership on the Board; |
|
| • | periodically review the qualifications and criteria taken into consideration in the evaluation of potential nominees for membership on the Board; |
|
| • | recommend to the Board the number and names of proposed nominees for election as director at the annual meeting of stockholders and, in the case of a vacancy on the Board, the name of an individual to fill the vacancy; |
|
| • | consider the resignation of a director who has changed his or her principal occupation or employer, and inform the Board as to whether or not the Nominating and Governance Committee recommends that the Board accept the resignation; |
|
| • | review the direct and indirect relationships of members of the Board with the Company or its management and assist the Board with its determination of the independence of its members; |
|
| • | monitor trends and best practices in corporate governance, periodically review the Company’s Corporate Governance Guidelines and recommend changes as it deems appropriate in those guidelines, in the corporate governance provisions of the Company’s By-Laws and in the policies and practices of the Board; |
|
| • | perform the functions of the Committee under the Company’s Policy with respect to Related Person Transactions; |
|
| • | quarterly review the Company’s Ethics and Compliance Program; |
15
evaluate the suitability of potential nominees for membership on the Board;
| | |
| • | annually review and make recommendations to the Board regarding its process for evaluating the effectiveness of the Board and its committees; |
|
| • | oversee the annual assessment of Board effectiveness and report to the Board; |
|
| • | periodically review and make recommendations to the Board regarding new director orientation and director continuing education; |
|
| • | annually recommend to the Board committee membership and chairs, and review periodically with the Board committee rotation practices; |
|
| • | approve the membership of any executive officer on another listed company’s board, and receive timely information from non-employee directors of any new listed company board to which they have been nominated for election as director and of any change in their existing status as director on any other listed company board; and |
|
| • | advise the Board on succession planning. |
periodically review the qualifications and criteria taken into consideration in the evaluation of potential nominees for membership on the Board;
recommend to the Board the number and names of proposed nominees for election as director at the annual meeting of stockholders and, in the case of a vacancy on the Board, the name of an individual to fill the vacancy;
consider the resignation of a director who has changed his or her principal occupation and inform the Board as to whether or not the Nominating and Governance Committee recommends that the Board accept the resignation;
review the direct and indirect relationships of members of the Board with the Company or its management and assist the Board with its determination of the independence of its members;
monitor trends and best practices in corporate governance, periodically review the corporate governance guidelines and recommend changes as it deems appropriate in those guidelines, in the corporate governance provisions of the Company’s By-Laws, and in the policies and practices of the Board;
perform the functions of the Committee under the Company’s Policy with respect to Related Person Transactions;
quarterly review the Company’s Ethics and Compliance Program;
annually review and make recommendations to the Board regarding its process for evaluating the effectiveness of the Board and its committees;
oversee the annual assessment of Board effectiveness and report to the Board;
periodically review and make recommendations to the Board regarding new Director orientation and Director continuing education;
annually recommend to the Board committee membership and chairs, and review periodically with the Board committee rotation practices;
approve the membership of any executive officer on another listed company’s board, and receive timely information from non-employee directors of any new listed company board to which they have been nominated for election as director and of any change in their existing status as director on any other listed company board; and
advise the Board on succession planning.
The Nominating and Governance Committee operates pursuant to a written charter, which is available on the Company’s website athttp://www.slb.com/content/about/nomgov_committee.asp?. Stockholders may also obtain a copy of the charter without charge by writing to the Secretary of the Company at 5599 San Felipe, 17th Floor, Houston, Texas 77056.
guiding_principles/corpgovernance/nomgov_committee.aspx.
The Finance Committee advises the Board and management on various matters, including dividends, financial policies and the investment
and reinvestment of funds. The authority and responsibilities of the Finance Committee include the following:
recommend investment and derivative guidelines for the cash and currency exposures of the Company and its subsidiaries;
10
review the actual and projected financial situation and capital needs of the Company as needed, regarding:
the capital structure of the Company, including the respective level of debt and equity, the sources of financing and equity, and the Company’s financial ratios and credit rating policy;
| | |
| • | recommend investment and derivative guidelines for the cash and currency exposures of the Company and its subsidiaries; |
|
| • | review the actual and projected financial situation and capital needs of the Company as needed, regarding: |
| | |
| • | the capital structure of the Company, including the respective level of debt and equity, the sources of financing and equity and the Company’s financial ratios and credit rating policy; |
|
| • | the Company’s dividend policy; and |
|
| • | the issuance and repurchase of Company stock; |
| | |
| • | review the insurance principles and coverage of the Company and its subsidiaries, as well as financing risks, including those associated with currency and interest rates; |
|
| • | oversee the investor relations and stockholder services of the Company; |
|
| • | review the financial aspects of any acquisitions submitted to the Board and, as delegated to the Finance Committee by the Board, review and approve any acquisitions covered by such delegation; |
|
| • | review the administration of the employee benefit plans of the Company and the performance of fiduciary responsibilities of the administrators of the plans; and |
|
| • | function as the Finance Committee for pension and profit-sharing trusts as required by U.S. law. |
the Company’s dividend policy; and
the issuance and repurchase of Company stock;
review the insurance principles and coverage of the Company and its subsidiaries, as well as financing risks, including those associated with currency and interest rates;
review the investor relations and stockholder services of the Company;
review the financial aspects of any acquisitions submitted to the Board and, as delegated to the Finance Committee by the Board, to review and approve any acquisitions covered by such delegation;
review the administration of the employee benefit plans of the Company and the performance of fiduciary responsibilities of the administrators of the plans; and
function as the Finance Committee for pension and profit-sharing trusts as required by U.S. law.
The Finance Committee operates pursuant to a written charter, which is available on the Company’s website athttp://www.slb.com/content/about/finance_committee.asp?. Stockholders may also obtain a copy of the charter without charge by writing to the Secretary of the Company at 5599 San Felipe, 17th Floor, Houston, Texas 77056.
guiding_principles/corpgovernance/finance_committee.aspx.
The Technology Committee advises the Board and management on various matters, including the following:
research and development:
| | |
| • | research and development strategies and priorities; and |
|
| • | the quality and relevance of programs dealing with scientific research, development, information and manufacturing technology, systems integration and university relationships. |
16
the quality and relevance of programs dealing with scientific research, development, information and manufacturing technology, systems integration and university relationships.
The Technology Committee operates pursuant to a written charter, which is available on the Company’s website at
http://www.slb.com/content/about/tech_committee.asp?. Stockholders may also obtain a copy of the charter without charge by writing to the Secretary of the Company at 5599 San Felipe, 17th Floor, Houston, Texas 77056.guiding_principles/corpgovernance/tech_committee.aspx.
Director Presiding at Executive SessionsThe Board of Directors schedules executive sessions without any management members present in conjunction with each regularly scheduled Board meeting, and at the request of a director. Mr. Nicolas Seydoux, Chair of the Nominating and Governance Committee, has presided at these executive sessions of non-management directors.
Stockholder Communication with the Board Members
The Board has established a process for all interested parties, including stockholders and other security holders, to send communications, other than sales-related communications, to one or more of its members. Any such communication should be sent by letter addressed to any member or members ofInterested parties may contact the Board or any Schlumberger director (including the lead director) by writing to whomthem at the communication is directed, in care of the Secretary, following address:
Schlumberger Limited
c/o the Secretary
5599 San Felipe, 17th Floor
Houston, Texas 77056. 77056
All such communications will be forwarded to the Board member or members specified.
Director Attendance at Annual General Meeting The Board’s policy regarding director attendance at the
Annual General Meetingannual general meeting of
Stockholdersstockholders is that directors are welcome to attend, and that the Company will make all appropriate arrangements for directors
thatwho choose to attend.
In 2008, no directorsOne director attended the
Annual General Meeting.11
annual general meeting of stockholders in 2010.
Policies and Procedures for Approval of Related Person Transactions In January 2007, the Board formally adopted a
written policy with respect to
Related Person Transactions“related person transactions” to document procedures pursuant to which such transactions are reviewed, approved or ratified.
Under SEC rules, “related persons” include any director, executive officer, director nominee, or 5% stockholder of the Company since the beginning of the previous fiscal year, and their immediate family members. The policy applies to any transaction in which:
the Company is a participant;
any related person has a direct or indirect material interest; and
| | |
| • | the Company is a participant; |
|
| • | any related person has a direct or indirect material interest; and |
|
| • | the amount involved exceeds $120,000, but excludes any transaction that does not require disclosure under Item 404(a) of SECRegulation S-K. |
the amount involved exceeds $120,000, but excludes any transaction that does not require disclosure under Item 404(a) of Regulation S-K.
The Nominating and Governance Committee, with assistance from the Company’s Secretary and General Counsel, is responsible for reviewing and, where appropriate, approving andor ratifying any related party transaction.person transaction involving Schlumberger or its subsidiaries and related persons. The Nominating and Governance Committee intends to approveapproves only those related person transactions that are in, or are not inconsistent with, the best interests of the Company and its stockholders.
In 2010, there were no related person transactions under the relevant standards.
Corporate Governance Guidelines and Code of Ethics Copies of Schlumberger’s Corporate Governance Guidelines and Schlumberger’s Code of Ethics are available at the Company’s corporate governance website located athttp://www.slb.com/content/about/corpgovernance.asp?. Stockholders may also obtain copies of Schlumberger’s Corporate Governance Guidelines and Schlumberger’s Code of Ethics without charge by writingguiding_principles.aspx.
17
ITEM 2. ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION
We are asking stockholders to
the Secretary of the Company at 5599 San Felipe, 17th Floor, Houston, Texas 77056.12
AUDIT COMMITTEE REPORT
During 2008, the Audit Committee periodically reviewed and discussedapprove an advisory resolution on the Company’s financial statements with Company management and the independent registered public accounting firm, PricewaterhouseCoopers LLP, including matters raised by the independent registered public accounting firm pursuant to Statement on Auditing Standards No. 61 (Communication with Audit Committees) and the requirements of the Public Company Accounting Oversight Board. The Audit Committee discussed with the Company’s management and independent registered public accounting firm the review of the Company’s reporting and internal controls undertakenexecutive compensation as reported in connection with certifications by the Company’s Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 in certain of the Company’s filings with the SEC. The Audit Committee also reviewed and discussed such other matters as it deemed appropriate, including the Company’s compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and the other provisions of the Sarbanes-Oxley Act of 2002 and rules adopted or proposed to be adopted by the SEC and the NYSE.
The Company’s independent registered public accounting firm provided the Audit Committee with written disclosures required by the Public Company Oversight Board Rule 3526 (Communication with Audit Committees Concerning Independence), and the Committee discussed PricewaterhouseCoopers LLP’s independence with them.
Based on the foregoing review and discussion, and relying on the expected representation of Company management and the expected independent registered public accounting firm’s report to the Audit Committee, the Audit Committee recommended that the Board include the financial statementsthis proxy statement. As described above in the Company’s Annual Report on Form 10-K for“Compensation Discussion and Analysis” section of this proxy statement, the year ended December 31, 2008 filed withCompensation Committee has structured our executive compensation program to achieve the SEC.
SUBMITTED BY THE AUDIT COMMITTEE OF THE SCHLUMBERGER
BOARD OF DIRECTORS
following key objectives: | | |
Philippe Camus
| • | to attract, motivate and retain talented executive officers; |
|
| | Nikolay Kudryavtsev• | to motivate progress toward Company-wide financial and personal objectives while balancing rewards for short-term and long-term performance; and |
Tony Isaac, Chair
|
| | Adrian Lajous• | to align the interests of our executive officers with those of stockholders. |
We urge stockholders to read the “Compensation Discussion and Analysis” beginning on page 20 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative, appearing on pages 38 through 50, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the Board of Directors believe that the policies and procedures articulated in the “Compensation Discussion and Analysis” are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has contributed to the Company’s recent and long-term success.
In accordance with recently adopted Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to approve the following advisory resolution at the 2011 annual general meeting of stockholders:
RESOLVED, that the stockholders of Schlumberger Limited (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2011 annual general meeting of stockholders.
This advisory resolution, commonly referred to as a“say-on-pay” resolution, is non-binding on the Board of Directors. Although non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.
Required Vote
A majority of the votes cast is required to approve this Item 2.Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal.
Recommendation of the Board
The Board of Directors recommends that you vote “FOR” approval of the advisory vote on executive compensation.
ITEM 3. ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
Pursuant to recently adopted Section 14A of the Exchange Act, we are asking the Company’s stockholders to vote on whether future advisory votes on executive compensation of the nature reflected in Item 2 above should occur every year, every two years or every three years.
After careful consideration, the Board of Directors recommends that future advisory votes on executive compensation occur every two years (biennially). We believe that a biennial advisory vote on executive
18
13
compensation reflects the appropriate time frame to enable the Compensation Committee and the Board of Directors to evaluate the results of the most recent advisory vote on executive compensation, to discuss the implications of that vote with stockholders to the extent needed, to develop and implement any adjustments to our executive compensation programs that may be appropriate in light of a past advisory vote on executive compensation, and for stockholders to see and evaluate any such adjustments to our executive compensation programs. In this regard, because the advisory vote on executive compensation occurs after we already have implemented our executive compensation programs for the current year, and because the different elements of compensation are designed to operate in an integrated manner and to complement one another, we expect that in many cases it may not be appropriate or feasible to fully address and respond to any one year’s advisory vote on executive compensation by the time of the following year’s annual general meeting of stockholders. In addition, a biennial vote is consistent with the long-term performance focus of our executive compensation programs as it allows stockholders to evaluate our executive compensation programs over a multi-year horizon in a business that is cyclical.
The Board of Directors is aware of and took into account views that some have expressed in support of conducting an annual advisory vote on executive compensation. We are aware that some stockholders believe that annual advisory votes will enhance or reinforce accountability. However, we have in the past and will in the future continue to be proactively engaged with our stockholders on a number of topics and in a number of forums. Thus, we view the advisory vote on executive compensation as an additional, but not exclusive, means for our stockholders to communicate with us regarding their views on the Company’s executive compensation programs.
We believe that the many avenues that have and will continue to exist for stockholder engagement differentiate the Company from the situation that exists in certain countries where an annual advisory vote on executive compensation is prevalent. In addition, the fact that all of our directors stand for election annually in our view provides appropriate assurances of Board accountability. Also, because our executive compensation programs have typically not changed materially fromyear-to-year and are designed to operate over the long-term and to enhance long-term performance, we are concerned that an annual advisory vote on executive compensation could lead to a short-term perspective inappropriately bearing on our executive compensation programs. Finally, although we currently believe that holding an advisory vote on executive compensation every two years will reflect the right balance of considerations in the normal course, we will periodically reassess that view and can provide for an advisory vote on executive compensation on a more frequent basis if changes in our compensation programs or other circumstances suggest that such a vote would be appropriate.
We understand that our stockholders may have different views as to what is an appropriate frequency for advisory votes on executive compensation, and we will carefully review the voting results on this proposal. Stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. This advisory vote on the frequency of future advisory votes on executive compensation is not binding on the Board of Directors or Schlumberger in any way. Notwithstanding the Board’s recommendation and the outcome of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.
Required Vote
A majority of the votes cast is required to approve this Item 3.Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal.
Recommendation of the Board
The Board of Directors recommends that you vote to conduct future advisory votes on executive compensation every two years.
19
COMPENSATION DISCUSSION AND ANALYSIS The following Compensation Discussion and Analysis (“CD&A”) describes Schlumberger’s compensation policies and practices as they relate to the executive officers identified in the Summary Compensation Table below (the “named executive officers”
) and or the
other executive officers.“NEOs”). The purpose of the CD&A is to explain what the elements of compensation are; why the Compensation Committee selects these elements; and how the Compensation Committee determines the relative size of each element of compensation.
Included in this CD&A are decisions made in 2010 affecting 2010 base salaries and long-term incentives, as well as annual cash incentive awards earned in 2010 but paid in February 2011.
2010 Executive Summary
2010 Overview
In 2010, Schlumberger, like the rest of the oil and gas industry, continued to face an uncertain and challenging economic climate, evidenced by depressed exploration and production activity, particularly in the US, and pricing pressure in many markets. In response, Schlumberger’s management undertook significant cost control measures in 2010 and took other actions to maintain profitability during this difficult period. The oil and gas industry was also affected by the Macondo well catastrophe in April 2010 and the ensuing moratorium on exploration in the Gulf of Mexico. Schlumberger responded by taking swift action to redeploy field personnel out of the Gulf area where possible and to reduce headcount when other solutions were not possible.
Despite the economic challenges the Company faced in 2010, full-year revenue reached $27.45 billion, representing organic growth of approximately 5%, and the Company returned approximately $2.75 billion to its stockholders through dividends and stock repurchases. 2010 was also a year of tremendous positive change for the Company, highlighted by such significant events as the acquisitions of Smith International an $11 billion transaction, and Geoservices, a $1 billion transaction. The acquisitions complement the Company’s operations, product development and expertise, and enhance the Company’s overall breadth and global competitiveness. Furthermore, Schlumberger management took several other key operational, strategic and economic measures in 2010 to better position the Company for the long-term, in addition to the acquisitions of Smith and Geoservices and the cost-control measures described above. Schlumberger’s executives also achieved the following goals, many of which were also aligned with their individual objectives:
| | |
| • | retaining valuable technical employees; |
|
| • | continuing Schlumberger’s technology leadership by investing approximately $919 million in research and engineering; |
|
| • | implementing mechanisms necessary to keep costs in line with activity; |
|
| • | continuing to improve execution through the refinement of the Company’s Engineering, Manufacturing and Sustaining organization and its “Excellence in Execution” initiative; and |
|
| • | beginning to integrate the Smith and Geoservices businesses and realizing expected Smith-related synergies sooner than expected. |
Executive Compensation PhilosophyProgram OverviewSchlumberger’s longstanding
Schlumberger has a very strongpay-for-performance culture that runs through the whole Company and starts at the top with the named executive officers. The Company believes that attracting and retaining the best talent is key to delivering superior stockholder returns, and that a competitive compensation
philosophypackage is
critical to
compensate senior executivesachieving this. As the world’s leading oilfield services company, the Company places critical importance on recruiting, developing, motivating and
professional-level employees for demonstrable performance against goals that have been objectively set and measured. It is driven by the need to recruit, develop, motivate and retainretaining top talent, both in the short-term and
long-term and to support the Company’s values in the areas of people, technology and profitability. Promotion from within is a key principle at Schlumberger, and all executive officers, including the named executive officers, have reached their current positions through career development in the Company. Diversity is a very important part of Schlumberger’s cultural philosophy, and Schlumberger believes its use of similar compensation packages at all levels is a strong factor in Schlumberger’s success with diversity.In general, the same compensation philosophy is applied to all levels of exempt employees (usually employees in professional-level jobs), including the named executive officers. While the amounts of compensation may be different, each of the components of an exempt employee’s compensation package is the same and is applied using broadly the same methodology, which is described below. Exceptions tolong-term. To this principle are generally due to local (i.e., country-specific) requirements. Schlumberger compensation programs have been designed to ensure that the higher an executive’s position in the Company, the larger the proportion of compensation at risk and subject to performance criteria aligned with creating return for stockholders. Named executive officers receive a greater percentage of their compensation through at-risk pay tied to Company performance than other executives.
Employees globally (including named executive officers) are included in an annual objectives-setting process and review, and their performance against these objectives determines the compensation they receive. Other factors affecting compensation include:
annual Company performance;
the job’s impact on Company results;
the Company’s objective to be competitive with selected companies in the oil services, exploration and production, refining and pipeline industries and with other selected companies of comparable size and scope, known as the “comparator” or “peer” groups; and
leadership, management and technical expertise, performance history, complexity of the position and responsibilities, growth potential, reporting structure and internal pay equity.
Named executive officers receive the same benefits as other employees. As is the case with compensation, any differences are generally due to local requirements. In line with this philosophy, named executive officers receive minimal perquisites and have no employment agreements, “golden parachutes” or change in control agreements. In the event of a change in control, the only compensation and benefits changes for all employees are full vesting in any unexercised stock options and restricted stock units and full vesting in any account balance under the supplemental retirement savings plan. Change in control with regard to stock options is described more fully under the section “Change in Control” in the narrative following the Nonqualified Deferred Compensation table. Although Schlumberger’s stock plans provide that any restricted stock or restricted stock units (“RSUs”) granted to executive officers must be performance-based, it has not been Schlumberger’s practice to award RSUs to executive officers.
Goals of Executive Compensation
In establishing executive compensation, Schlumberger believes that:
compensation and benefits should be competitive with peer companies that compete with the Company for business opportunities and/or executive talent;
14
annual cash incentive and stock option awards should reflect progress toward Company-wide financial and personal objectives and should balance rewards for short-term and long-term performance;
the Company’s policies should encourage appropriate executive stock ownership through stock option awards and stock ownership guidelines in order to align the interests of its executive officers with those of its other stockholders; and
the overall executive compensation package should enable Schlumberger to attract, motivate and retain talented executive officers.
In years of average Company performanceend, the Compensation Committee seeks to offer a competitive compensation package and generally deems it appropriateseeks to positionprovide compensation to the compensation of executive officer jobs at or around the median of the market for a comparable position. This meansofficers that the package remains competitive enough to attract and retain top talent but does not over-reward average performance. Compensation is set between the 50th and 75th percentiles orof the two comparator groups. This range is a guideline, and the Compensation Committee retains the flexibility to set
20
elements of target compensation at higher percentiles for exceptionalstrong business performance, for key skills in critical demand, and for positions that are of high internal value. In exceptional circumstances, the Company pays above the 75th percentile for performance that significantly exceeds the Company’s and the individual’s goals, or for purposes of motivation, reward and retention.
The following is a summary of important aspects of the executive compensation program discussed later in this CD&A.
| | |
| • | The key elements of the program are base salary; performance-based annual cash incentive; and long-term equity incentives. |
|
| • | A significant portion of executive pay is in the form of variable compensation that is at risk, in order to align executive compensation with the Company’s business strategy and create long-term stockholder value. |
|
| • | Schlumberger executives have no employment, severance orchange-in-control agreements (other than employment agreements for some executives who are transitioning into retirement). |
|
| • | Executives are offered very limited perquisites and do not participate in any executive pension or insurance plans, other than those providing supplemental benefits (available to all eligible employees) to cover income that exceeds plan limits. |
|
| • | Schlumberger has a compensation recovery, or “clawback,” policy that allows the Board to recoup performance-based cash awards in the event of specified restatements of financial results. |
|
| • | Schlumberger’s executives are subject to stock ownership guidelines and are prohibited from hedging against the economic risk of such ownership. |
Compensation Decisions in 2010
The main elements and goals of Schlumberger’s executive compensation program did not change from fiscal year 2009 to fiscal year 2010. However, the Compensation Committee continued to focus on achieving the right mix and level of compensation to retain and motivate top executives through the difficult business conditions that prevailed through 2010.
The Compensation Committee took the following actions for 2010:
| | |
| • | As the result of a management reorganization to prepare for the future succession of the CEO, Paal Kibsgaard was appointed Chief Operating Officer effective February 8, 2010. As a consequence, Mr. Kibsgaard’s salary was increased from 600,000 Euros to 750,000 Euros and hisperformance-based annual incentive range from 0-75% to 0-100%. Also effective February 8, Mr. Belani was appointed President, Reservoir Characterization Group, replacing Mr. Kibsgaard, and his salary was increased from 500,000 Euros to 550,000 Euros. At the same time, Mr. Sbiti, previously Executive Vice President, Schlumberger Limited, became Executive Advisor to the Chairman and CEO. |
|
| • | Other than salary adjustments made in connection with the foregoing appointments, the only named executive officer who received a base salary increase in January 2010 was Mr. Ayat, the Company’s Chief Financial Officer. |
|
| • | Payout of the financial incentive that was made in February 2011 for performance in 2010 was 129% of target, largely due to 2010 growth in earnings per share, well short of the maximum 200% potential payout; |
|
| • | The Compensation Committee granted stock options in January 2010 with a grant date dollar fair value estimated to be generally between the 50th and 75th percentiles, or higher, of the Company’s oil industry and general industry peer groups. However, grants of long-term equity incentives (“LTI’s”) within the two peer groups were higher than preliminary estimates in January 2010 had indicated due to the uncertainty in early 2010 following the global economic crisis that began in late 2008. As a result, when the Compensation Committee conducted another review of executive officer |
21
2008 Summary
As a result of a decrease in profitability
| | |
| | compensation in October 2010, the named executive officer LTI values for January 2010 were ultimately found to be generally at or below the 50th percentile of both peer groups. The Compensation Committee agreed to review LTI awards at the January 2011 Compensation Committee in light of the foregoing to better ensure that the 2011 LTI’s of the named executive officers were more competitive with respect to the 2011 peer groups. |
| | |
| • | Effective February 4, 2010, the Compensation Committee approved additional stock option grants to Messrs. Kibsgaard and Pai in connection with the management reorganization and succession planning changes discussed above. Mr. Kibsgaard received a grant of $1,500,000 in stock options representing 64,000 shares and Mr. Pai received a grant of $1,600,000 in stock options representing 68,000 shares. On October 21, 2010, the Compensation Committee approved a further stock option grant to Mr. Pai of $2,000,000, representing 83,334 stock options, for retention purposes and to recognize his outstanding performance and his continued contributions to the Company during the management reorganization after the appointment of Mr. Kibsgaard as COO. |
Executive Compensation Philosophy
In keeping with the Company’s strongpay-for-performance culture, Schlumberger’s longstanding compensation philosophy is to pay senior executives and professional-level employees for demonstrable performance against goals that have been pre-established and carefully reviewed. Schlumberger’s compensation program is driven by the need to recruit, develop, motivate and retain top talent both in the fourth quartershort-term and long-term, and to promote the Company’s values of 2008 due topeople, technology and profitability. Promotion from within the global financial crisis, reduced exploration & production budgetsCompany is a key principle at Schlumberger, and lower spending by customers, as well as the more difficult business outlook for 2009, base salaries forall executive officers, including the named executive officers, were frozen for 2009, pay-out forhave reached their current positions through career development with the financialCompany. A diverse workforce is a very important part of their 2008 annual cash incentive was zero, andSchlumberger’s cultural philosophy. Schlumberger believes its use of a consistent approach to compensation at all levels is a strong factor in achieving a diverse workforce comprising top global talent. While the valueamount of compensation may be different, each of the 2009components of a professional-level employee’s compensation package is the same and is applied using broadly the same methodology, which is described below. Exceptions to this principle are generally due to local (i.e., country-specific) requirements.
Schlumberger’s compensation programs have been designed so that the higher an executive’s position in the Company, the larger the proportion of compensation that is contingent on positive stock
option grants awarded to them was reduced by approximately 20% in comparison with their 2008 grants.price performance, the Company’s financial performanceManagement of Executive Compensationand/or
individual performance, described as “at-risk” compensation. The SchlumbergerCompany believes that having a substantial portion of executive compensation program is managed bybe at-risk more closely aligns the Compensation Committee. The specific dutiesinterests of its executives with the long-term interests of Schlumberger and responsibilitiesits stockholders. Accordingly, the named executive officers receive a greater percentage of the Compensation Committee are described in this proxy statement under “Corporate Governance—Board Committees—Compensation Committee” above.
Role of Compensation Consultant
The Compensation Committee has engaged the independent consulting firm of Towers Perrin with respecttheir compensation through at-risk pay tied to executive compensation matters. Towers Perrin does noCompany performance than other work for Schlumberger. For more information on this engagement, see “Corporate Governance—Board Committees—Compensation Committee” above.
Elements of Compensation
General
executives.
Schlumberger’s executive compensation program consists of three primary
elements:base salary;
elements, comprising the executives’ total direct compensation:performance-based annual cash incentive; and
| | |
| • | base salary; |
|
| • | performance-based annual cash incentive; and |
|
| • | long-term equity incentives. |
long-term equity incentives (only stock option awards for executive officers).
These elements allow the Company to remain competitive in attracting and retaining top executive talent, and to motivate executives with current and potential future financial rewards. At the same time, this relatively simple compensation plan can be applied and communicated consistently to exempt employees of overmore than 140 nationalities working in approximately 80 countries globally. Schlumberger sees diversity of its work force as a business imperative enabling the Company to provide services toserve clients anywhere in the world.
Named executive officers generally receive the same benefits as other employees. As is the case with compensation, any differences are generally due to local requirements. In the event of a change in control, the only compensation and benefits changes for all employees would be full vesting of any unexercised stock
22
15
options and restricted stock units and full vesting in any account balance under the Company’s supplemental retirement savings plan. Change in control benefits with regard to stock options are described more fully in the section “Change in Control” following the Nonqualified Deferred Compensation table.
Employees globally (including named executive officers) are subject to an annual objectives-setting process and review, and their performance against these objectives affects the compensation they receive.
Framework for Setting Executive Compensation in 2010
Executive Compensation Goals
In establishing executive compensation, Schlumberger believes that:
| | |
| • | compensation and benefits should be competitive with peer companies that compete with the Company for business opportunitiesand/or executive talent; |
|
| • | annual cash incentive and stock option awards should reflect progress toward Company-wide financial and personal objectives and should balance rewards for short-term and long-term performance; and |
|
| • | the Company’s policies should encourage executives to hold stock through stock option awards and stock ownership guidelines that align their interests with those of our other stockholders. |
Management of Executive Compensation
Schlumberger’s executive officer compensation program is overseen by the Compensation Committee. The specific duties and responsibilities of the Compensation Committee are described in this proxy statement under “Corporate Governance—Board Committees—Compensation Committee” above.
Role of Compensation Consultant
The Compensation Committee has engaged the independent consulting firm of Pay Governance with respect to executive compensation matters. Pay Governance, which focuses on advising boards of directors on executive compensation, was formed by former practitioners at the consulting firm Towers Watson, which previously provided executive compensation advisory services to Schlumberger’s Compensation Committee. For more information on this engagement, see “Corporate Governance—Board Committees—Compensation Committee” above.
Relative Size of Direct Compensation Elements In setting executive compensation, the Compensation Committee considers the total direct compensation that it wishesbelieves is appropriate to pay to an executive officer, based on the size and mix of the compensation elements for executive officers against those of companies in the two comparator groups, as well as the other factors described in this CD&A, as well as the form of the compensation as discussed below.&A. The Committee aimsthus seeks to achieve thean appropriate balance between immediate cash rewards and long-term financial incentives for thethat encourage achievement of both annual and long-term financial and non-financial objectives.objectives andlong-term equity incentives that promote long-term stock price performance.
As stated above, the Compensation Committee believes that delivering a significant portion of an executive officer’s compensation through equity-based compensation with a multi-year vesting schedule more closely aligns an executive officer’s interests to the long-term interests of the Company and the stockholders, and encourages the named executive officers to act as owners. However, the Compensation Committee does not aim to achieve a specific target of cash versus equity-based compensation or annual versus long-term incentive compensation.
23
The
pie charts below show the average percentage of
20082010 base salary,
target cash incentive and
2010 long-term equity incentive (LTI) award for the named executive
officer positionsofficers in comparison
withto the two external peer groups
described below,as presented in September 2009, and indicate that Schlumberger’s current pay mix is
very close to that of both peer groups.
This table isThese charts are based on compensation data
as it appears in the consultant’sfrom Towers Watson’s September
20082009 report.
The
Compensation Committee relies on its own judgment in making compensation decisions for the named executive officers after reviewing the size and mix of the compensation elements for
its executive officers against those of companies in the
two comparator groups. The size and mix of each element
inof total direct compensation is based on:
job impact on the Company;
overall Company and individual performance;
| | |
| • | external market practice of companies in the two comparator groups; |
|
| • | leadership, management and technical expertise, performance history, complexity of the position and responsibilities, growth potential, reporting structure and internal pay equity; |
|
| • | overall Company and individual performance; and |
|
| • | the recommendations of the CEO (except for his own compensation). |
external market practice; and
the recommendationsThe percentage of the CEO (except for his own compensation).
The level of incentiveat-risk compensation typically increases in relation to an executive officer’s increased responsibilities. This is because the more senior the job, the more the executive officer can affect Company results either positively or negatively, with a corresponding effect on his or her own compensation package. The Compensation Committee believes that making a significant portion of an executive officer’s compensation contingent on positive annual results and positive stock price performance, described as “at risk” compensation, more closely aligns an executive officer’s interests with those of the stockholder. If the stockholder gains, the executive officer also gains, and vice-versa.
The Compensation Committee does not aim to achieve a specific target of cash versus equity-based compensation or annual versus long-term incentive compensation. Instead, the Committee relies on the processes described in this CD&A to determine the appropriate levels for each element of compensation.
The Compensation Committee may at its discretion modify the mix of base pay, annual cash incentive and long-term incentivesLTI’s, or otherwise adjust thean NEO’s total compensation to best fit an executive officer’s specific circumstances. For example, the Committee may award more cash and not award a stock option grant to an executive officer who is approaching retirement. This provides more flexibility to the Committee to reward executive officers appropriately as they near retirement, when they may only be able to partially fulfill the five-year vesting required for stock options. The Committee may also increase the size of stock option grants to an executive officer if the total number of career stock option grantsoptions granted does not adequately reflect the executive’s current position and level of responsibility within the Company, after a review of external market practice of companies in the two comparator groups and the other factors described immediately above.
Pay Mix and Internal Pay Equity Review
In October 2010, the Compensation Committee reviewed an analysis of pay mix and internal pay equity carried out by Pay Governance at the direction of the Compensation Committee. Regarding pay mix, the Committee reviewed the elements of pay for the Company’s executive officers, including the named executive officers, in relation to each other and in comparison with the Company.average pay mix of the Company’s other executive officers. The Committee concluded that the mix of base salary, incentive cash bonus and LTI was appropriate for each named executive officer and for the rest of the Company’s officers, based on its evaluation of the relative size of direct compensation elements of the two external peer groups.
Regarding internal pay equity, the Committee reviewed the CEO position in relation to the other NEO positions, and the NEO positions both in relation to one another and in comparison with the average of the
24
16
other executive officer positions. The Committee noted that the ratio between the CEO and the second-highest paid officer (Mr. Kibsgaard) had increased in comparison with the 2008 ratio when Mr. Sbiti was thesecond-highest paid officer. This was due to the fact that Mr. Kibsgaard was newly appointed to his position and his total direct compensation was below the 50th percentile of the COO position in both peer groups. The Committee also noted that total direct compensation amounts of the second, third and fourth highest paid officers were very close, whereas these had previously been more graduated from the highest to lowest. The Committee concluded that internal pay equity was appropriate for the time being and expected that it would evolve in line with organizational changes.
Pay for Performance
In July 2010, the Compensation Committee reviewed apay-for-performance analysis that had been completed by Towers Watson at the direction of the Committee. The analysis was against the oil industry peer group as provided by Towers Watson, and provided data on the actual 2009 annual cash incentive paid in 2010 to named executive officers of companies in the oil industry peer group as a percentage of their target annual incentive. This was compared with net income growth, revenue growth, earnings per share (EPS) growth and total shareholder return (TSR) of the companies in the peer group for 2010. In making this comparison, the Compensation Committee reviewed the position of Schlumberger’s CEO against other CEOs in the oil industry peer group. It then separately reviewed the other named executive officers against other named executive officers in the oil industry peer group.
This review showed that while Schlumberger had performed at the 75th percentile in terms of net income growth, revenue growth and EPS growth, and had performed between the median and 75th percentile on TSR, it had paid below median bonuses. The Compensation Committee concluded that Schlumberger’s cash incentive pay practices were aligned with itspay-for-performance philosophy, although it appeared that Schlumberger had set more aggressive financial targets for its named executive officers than many companies in the oil industry peer group did, and had therefore paid its NEOs below median bonuses for above median performance.
Selection of Comparator Companies The Compensation Committee annually approves the companies used in the executive compensation analysis based on surveys conducted by
Towers Perrin.the Compensation Committee’s independent executive compensation consultant. The
surveyspeer groups are based on criteria established and provided by the Committee, which include:
competition in the oilfield services industry;
global presence and scope of international operations;
| | |
| • | competition in the oilfield services industry; |
|
| • | global presence and scope of international operations; |
|
| • | competition for executive talent; |
|
| • | leadership position of the Company; and |
|
| • | comparable revenues. |
competition for executive talent;
leadership position in the oil and gas sector; and
To prepare for the compensation analysis, the Company’s human resources functionexecutive compensation department works with the executive compensation consultantsPay Governance to match Company positions and responsibilities against survey positions and responsibilities and to compile the annual compensation data for each executive officer.
The Compensation Committee attempts to set the compensation of our executive officers at levels that are competitive with the two peer groups described below. While the comparator market data provide important guidance in making decisions on executive compensation, the Compensation Committee does not set compensation based on market data alone. The Committee also considers the value of an executive officer’s position to the Company, and the market demand for those skills.skills and the other factors described in this CD&A.
25
Two peer groups are used for the compensation analysis. The two peer groups were first reviewed in July 2009 and were then further reviewed in October 2009 in preparation for the January 2010 compensation review. There were no changes in the composition of the two comparator peer groups during these reviews.
The first peer group
currently comprises
3027 companies in the oil services, exploration and production, refining and pipeline industries, including
109 direct competitors in the oilfield services industry, all of which,
arewith the exception of Parker Drilling, were part of
Value Line’s Oilfield Services Industry Group. Nine internationalthe 2009 S&P 500 and the Philadelphia Oil Service Index (OSX). Seven non-US energy and energy-related companies that also
meetmet the established criteria
arewere included in this peer group, reflecting the Company’s international operations. Although Schlumberger is an oilfield services company, the Compensation Committee decided that it is important to include oil exploration and production companies in the survey as they compete with Schlumberger for talent. Also, since Schlumberger is significantly larger than
manyall of its direct competitors in the oilfield services industry, the
Compensation Committee believed that the addition of the exploration
&and production companies provides a more complete comparator group.
Because the revenue of these
OIL INDUSTRY PEER GROUP: Oil services, E&P, refining and pipeline companies varies significantly, Towers Perrin uses regression analysis to adjust the data and make it possible to include both larger and smaller companies in the peer group. Regression analysis is a statistical tool for examining the relationship between two or more variables, in this case, compensation and company scope as measured by revenue. | | | | | | | | |
| OIL INDUSTRY PEER GROUP: Oil services, E&P, refining and pipeline companies with median sales and assets similar to SLB |
Anadarko Petroleum | | Baker Hughes | | BG Group | | BHP Billiton | | BJ Services |
| | | | | | | | |
| BP | | Cameron International | | Canadian Natural Resources | | Chevron | | CITGOConocoPhillips |
ConocoPhillips
| | | | | | | | |
| ENI, SPA | | Exxon Mobil | | Halliburton | | Hess | | Marathon Oil |
Marathon Oil
| | | | | | | | |
| Murphy Oil | | Nabors Industries | | Noble | | Occidental Petroleum | | Parker Drilling |
Parker Drilling
| | Repsol | | | | | | |
| Royal Dutch Shell | | Smith International | | Sunoco |
Statoil Hydro
| | Total | | Transocean |
| | | | | | | | | |
| Valero | | Weatherford | | | | | | |
| | | | | | | | |
Schlumberger uses a second, “general industry”industry,” peer group (shown below) to provide data fromsimilarly-sized companies and supplement the data from the oil group, whose companies are closest to Schlumberger in industry type but have widely varying revenue sizes. Excluded from this peer group are companies from industry sectors that do not have a global presence and are least comparable to Schlumberger’s areas of focus, such as companies in retail and financial services. Like the first comparator group, this second group also includes non-US companies. The Committee also considers data from the second peer group as it deems necessary or advisable insofar as data from the first peer group may not exist, or may be insufficient, for some executive officer positions.
The second group is also particularly relevant for staff
positions.17
positions, where the skills and experience may be easily transferable to other industries outside the oil industry.
In 2007,2008, the general industry peer group included 5038 companies with revenues from $10-$30$15 billion to $40 billion and a median revenue of $17.7$22.6 billion. As Schlumberger’s total revenue for 20072008 grew to $23.3$27 billion. Since the median of the same general industry peer was $23.8 billion in 2009 and because Schlumberger’s 2009 revenue decreased to $23 billion due to difficult business conditions, the Compensation Committee decided that it was appropriate in 2008 to alterleave the revenue range the same as for 2009 and to continue to include companies with revenues from $15-$40$15 billion of which there were 38.to $40 billion for the January 2010 analysis. The median revenue of this revised group was $23.3 billion. PriorCompensation Committee prefers to alter the change, Schlumberger’s revenue ranked at approximately the 79th percentile of the group, which was considered high in the range. After the change, Schlumberger was placed at approximately the 62nd percentile in terms of revenue, which was considered to be a better position in the range. Excluded from this peer group are companies from industry sectors that do not havecriteria as infrequently as possible to provide a stable basis for comparison.
26
GENERAL INDUSTRY PEER GROUP: $15B to $40B sales with technical and global presence and are least comparable to Schlumberger’s areas of focus such as companies in retail and financial services. | | | | | | | | |
GENERAL INDUSTRY PEER GROUP: Companies with $15B to $40B sales withand technical and global focus |
3M | | AbbotAbbott Laboratories | | Accenture | | Alcatel-LucentAlcoa | | AlcoaAmgen lnc. |
| | | | | | | | |
| Apple | | Arrow Electronics | | Astrazeneca | | BAE Systems | | BayerBristol-Myers Squibb |
| | Bristol-Myers Squibb | | Canon |
Cisco Systems
| | DuPont | | EDS |
| | | | | | | | |
| Cisco Systems | | Colgate-Palmolive | | Deere & Co | | E. I. du Pont de Nemours | | Eaton Corp. |
| | | | | | | | |
| Eli Lilly | | Emerson Electric |
| Freeport-McMoran Copper & Gold | | Goodyear Tire & Rubber | | Henkel |
| | | | | | | | | |
| Honeywell | | Intel |
| International Paper | | Kimberly-Clark | | Phillips ElectronicsLafarge SA |
| | Lenovo | | Merck | | | | |
Merck | | Motorola | | NIKE | | NovartisPPG Industries | | OracleRaytheon |
| | Rio Tinto | | | | | | |
SCA
Schering-Plough | | Schneider Electric | | Tech Data | | UnileverSprint Nextel | | US Steel | | Whirlpool |
Whirlpool
| | | | | | | | |
| Wyeth | | Xerox | | | | | | |
| | | | | | | | |
Apart from the change to the general industry revenue range, the
Elements of Compensation Committee decided to retain the same peer group criteria as in the previous year in order to provide a stable basis for comparison. Even if the peer group criteria do not change, the companies included in these peer groups may vary from year to year depending on companies’ participation in salary surveys and the quality of available compensation data.Internal Pay Equity
A review of internal pay equity was carried out and was discussed by the Compensation Committee at its October 2008 meeting. The Committee reviewed the CEO position in relation to the other named executive officers positions and concluded that in view of the breadth and complexity of the position, its impact on Company performance in comparison with the other named executive officer positions, and the extensive experience of the CEO, internal pay differences were equitable.
Pay-for-Performance
In July 2008, the Compensation Committee completed a review of the 2008 compensation elements of executive officers, including the named executive officers, in comparison with both peer groups. In order to specifically focus on pay-for-performance, the Committee reviewed the average percentage of annual incentive paid to Schlumberger’s executive officers in 2008 for 2007 performance as a percentage of their target incentive, in comparison with the percentage of Schlumberger’s 2007 revenue and net income growth. The Committee then compared Schlumberger’s data to similar data for oil industry peer group companies as provided by Towers Perrin. In making this comparison, the Compensation Committee reviewed the position of Schlumberger’s CEO against other CEOs in the oil industry peer group. It then separately reviewed all other executive officers including the named executive officers against other executive officers in the oil industry peer group. As a result of this review, the Compensation Committee concluded that Schlumberger’s pay practices were aligned with its pay-for-performance philosophy.
18
Cash Compensation
Base salary is the fixed portion of an executive’s annual cash
compensation. The fact that base salary is fixed means that the executive officer hascompensation, which provides some stability of income
whensince the other compensation elements are variable and not guaranteed. On appointment to an executive officer position,
the base salary is set at a level
that is competitive with base salaries in the two peer groups and takes into account factors such as the performance, experience and long-term potential of the individual, as well as internal pay equity and Company performance.
This means typically thatGenerally, base
salary is setsalaries for executive officers are targeted to be between the median and the
75th75th percentile of both peer groups.Base salaries for each executive officer position are compared annually with similar
jobspositions in both peer groups.
A baseBase salary
changechanges for
an executive
officer,officers, except the
Chief Executive Officer, is bothCEO, are recommended by the CEO and
approvedsubject to approval by the Compensation Committee,
according to:market movement of salaries in the peer groups;
taking into account:comparison to internal peer positions;
| | |
| • | market movement of comparable salaries in the two peer groups; |
|
| • | comparison to internal peer positions; |
|
| • | the Company’s performance during the year relative to the previous year and to its market peers; and |
|
| • | overall individual performance. |
the Company’s performance during the year relative to the previous year and to its market peers; and
overall performance against objectives.
The base salary of the CEO is reviewed and recommended by the Compensation Committee in executive session for approval byand recommended to the independent members of the Board of Directors for approval, based on the same criteria as above.
A base
Base salary for an executive
officer position is generally fixed for several years, which means that increases are usually more significant when they occur.
Less frequent changes of base salary also put more emphasis on the at-risk, or variable, portion of compensation, namely annual cash incentive and stock options. If business or individual performance is below target, the Compensation Committee has the discretion
not to award
noany increase in base
salary increase as is described further below.salary. The Compensation Committee may, on occasion, adjust an executive officer’s base salary during the year whenif the executive officer is promoted or if there is a significant change in his or her responsibilities. In this situation, the CEO (in the case of executive officers other than himself) and the Compensation Committee carefully consider these new responsibilities, external pay practices, retention considerations and internal pay equity, as well as past performance and experience.
There are occasions when a base Base salary may also be reduced, such as when an executive officer moves to a position of lesser responsibility in the organization.Company. Alternatively, the base salary can be frozen for a number of years until it falls in line with comparable positions in the two peer groups. This depends on individual situations.
27
As explainedBase Salary Decisions in “2008 Summary” above in this CD&A, the2010
The Compensation Committee decided in January 2009 that due to the difficult global business and Company specific operating conditions, it was not appropriate to award the named executive officers base salary increases for 2009. Prior to making this decision, the Compensation Committee reviewed, in October 2008, eachcarried out a review of the compensation elements of the named executive officers as well as their total direct compensation against the corresponding benchmark positions of the oil industry and the general industry peer groups.in January 2010. The Committee reviewed Mr. Gould’s base salary of $2,500,000, which had not been increased since January 2006, and decided that in view of decreased profitability for 2008, the uncertain outlook for 2009 and the fact that the base salaries for all named executive officers weresince it was above the 50th75th percentile of both peer groups, noit would not be increased. Messrs. Kibsgaard, Pai, Belani and Sbiti received base salary increases would be awardedin May 2009 and their base salaries were not reviewed in January 2010. The only named executive officer who received a base salary increase in January 2010 was Mr. Ayat, the Company’s Chief Financial Officer, whose salary was increased by 20% to any$900,000 to bring him more in line with the general industry peer group. This placed him above the 75th percentile of the oil industry peer group and between the 50th and 75th percentile of the general industry peer group. The salaries for the other named executive officers generally were between the 50th and 75th percentile of both peer groups.
Appointment of Chief Operating Officer (COO). As discussed above in the section “2010 Executive Summary,” effective February 8, 2010, the Schlumberger Board of Directors approved the appointment of Mr. Kibsgaard as COO reporting to the CEO, Mr. Gould, on recommendation from the Nominating and Governance Committee. This appointment was made to prepare for
2009.the future succession of the CEO. In connection with Mr. Kibsgaard’s promotion, the Compensation Committee determined to increase his salary from 600,000 Euros to 750,000 Euros, which placed him above the 50th percentile for the oil industry peer group and between the 50th and 75th percentile of the general industry peer group.
Effective the same date, Mr. Sbiti was appointed Executive Advisor, reporting to the CEO. There was no change to Mr. Sbiti’s base salary and incentive for the remainder of 2010, however, effective January 1, 2011, Mr. Sbiti began a term of phased retirement, as generally described under the section “Retirement Practices” below, and his compensation was reduced accordingly. Also, effective February 8, 2010, Mr. Belani was appointed President, Reservoir Characterization Group to replace Mr. Kibsgaard. Mr. Belani’s base salary was increased from 500,000 Euros to 550,000 Euros, which placed him above the 75th percentile of both peer groups. The Compensation Committee decided that Mr. Belani’s base salary increase was appropriate due to the size and complexity of his new role.
The Company pays
annual performance-based
bonusescash incentives to named executive officers to foster a results-driven, pay for performance culture and to align their interests with those of Schlumberger’s stockholders. The Compensation Committee selects performance-based measures which it believes will motivate an executive to increase operating results in the short-term as well as
to drive profitable long-term Company growth and value for
stockholders. Incentive cash payments are made in February according to the
stockholders.achievement of both personal and financial objectives during the previous fiscal year. The annual cash incentive for the named executive officers ranges from 0% to 60%75% to 0% to 100% of base salary, depending on the position. Half of the potential range is based on the satisfactory completion of personal
19
objectives and the other half of the potential range is based on the achievement of Company financial objectives, which is described in the section below entitled “2010 Annual Cash Incentive.”
The Committee increased Mr. Kibsgaard’s incentive compensation range from 0-75% to 0-100%, in
“2008 Annual Incentive”. Therecognition of his significantly increased responsibilities as COO and based on comparative data from the two peer groups. Otherwise, the incentive
is performance-based and is paid out in February according toranges of the
achievement of both personal and financial objectives during the previous fiscal year.named executive officers did not change for 2010.
The financial half of the incentive cash payment for NEOs has an incremental financial element, which means that the maximum incentive opportunity can doublebe up to 200% of target with respect to the payoutfinancial part based on achievement of superior financial results. This enhanced incentive is only applied to operations and staff positions reporting to the CEO, to positions reporting to executive officers and to certain categories of operations and staffother specified positions that have a significant impact on the Company’s success. The Compensation Committee reviews and recommends to the full Board the financial objectives for both the CEO and the other executive officers. The Committee approves the personal objectives for the CEO and assesses his performance against those objectives in determining the actual level of the annual cash incentive award, which is approvedsubject to final approval by the Board. The CEO approves the personal objectives for the other executive officers, including the other
28
named executive officers, and the Committee reviews and approves the results. The half of the incentive based on personal objectives has no
positive incremental
element.element, meaning the maximum payout with respect to this half of the annual incentive is 100%.
20082010 Annual Cash IncentiveIn 2008,
As in previous years, the financial half of the annual cash incentive for all executive officers
in 2010 was based on
diluted earnings per share
goals.Earnings per sharefrom continuing operations (“EPS”) was.
The Compensation Committee selected
EPS as the most appropriate measure upon which to base the financial portion of the annual cash incentive because it is
currentlythe primary basis on which we set our performance expectations for the year; we believe that consistent EPS growth leads to long-term stockholder value; and EPS is the metric
that Schlumberger believes is most widely used by investors and analysts to evaluate the performance of Schlumberger.
(TheWhen considering the Company’s operating results, the Compensation Committee has the discretion to decide whether to take into account the effect
on EPS of unusual
or infrequent charges or gains,
on EPS depending on the nature of the item.
) The Compensation Committee exercises its discretion when it believes that executives and other employees would be unfairly harmed by, or would unfairly benefit from, these items.
The process used to set these annual EPS targets starts with a review of plans and projections followingbottom-up planning from the field, which looks atconsiders factors including:such as:
| | |
| • | activity growth potential as measured by the number of rigs; |
|
| • | pricing; |
|
| • | anticipated exploration and production (E&P) spending; and |
|
| • | introduction of new technology. |
In 2008, the number of rigs;
exploration and production (E&P) spending; and
introduction of new technology.
Taking into account all of the above, together with Schlumberger’s leadership position in the oilfield services industry, management set aggressive EPS objectives for 2008, which were approved by the Compensation Committee, to exceed the average expected growth of the industry. These objectivesobjective had provided the opportunity to increase the financial half of the annual cash incentive from 100% to 300% of the incentive potential for those eligible. No incentive would be paid ifeligible, due to the minimum EPS target was not met.
In ordersignificant potential for 100%growth. However, due to the difficult business outlook at the beginning of 2009, the financial incentive to be paid in 2009 for goals set in early 2008, the EPS achieved had to be at least $4.80. An EPS of at least $4.96 was needed to achieve 200% of the financial incentive, and $5.16 was necessary to achieveCompensation Committee decided that the maximum 300% level. An EPSincentive opportunity for the financial-based portion of at least $4.60 was needed to trigger an 80% financial incentive payment and below that no financialthe annual incentive would be 200% instead of the 300% available in previous years. The Committee believed it was important to set EPS targets which, while very difficult to achieve in the context of the global recession, were realistic. Since the prospects for 2010 continued to look challenging, with the EPS earnings forecast to be just 7% higher than 2009, the Committee decided that it was still appropriate to retain the maximum financial incentive at 200%.
The performance targets and corresponding payouts for the financial half of the 2010 annual cash incentive were as follows:
| | |
| • | An EPS of at least $2.50 was needed to trigger a payment of 50% of the financial half of the incentive payment, below which no financial incentive would be paid. The EPS target of $2.50 represented an 11% reduction against EPS of $2.78 actually earned for 2009. |
|
| • | In order for 100% of the financial half of the incentive to be paid, 2010 EPS achieved had to be at least $2.78, which was the same as EPS earned for 2009. |
|
| • | An EPS of at least $3.20 was needed to achieve 200% of the financial half of the incentive, which represented a 15% increase against EPS earned for 2009. |
If the EPS result achieved was between two targets, then the financial incentive payment would be
pro-rated.For 2008,prorated. As in prior years, no cash incentive would be paid if the minimum 2010 EPS achievedtarget was $4.42, resultingnot met.
Schlumberger’s 2010 EPS was $2.86, excluding $0.46 of unusual charges and a $0.98 gain relating to our previously-held investment in zero incentive payment. This result was a consequenceMI-SWACO but including the dilutive impact of the current difficult global economic conditions,Smith transaction, which have reduced worldwide demandwas approximately $0.04 on full-year EPS. A significant portion of these unusual charges related to the acquisition of Smith, which had not been factored into 2010 EPS targets since at the time the goals were set, a transaction with Smith had not been confirmed. In addition to charges related to the Smith acquisition, the
29
unusual charges included charges related to overhead reductions and the restructuring of North America and Mexico operations.
The Compensation Committee decided that, for
energy, significantly lowered crude oilpurposes of calculating the financial half of the cash incentive payment, it would exclude all of these charges in arriving at target EPS. The Committee decided to exclude these charges because it believed that the actions taken were in the Company’s best interest and
natural gas pricesthat it was not appropriate to adjust the financial half of the cash incentive payment because of the effects of these unusual charges and
ledcredits on the Company’s 2010 earnings. Similarly, the Committee believed that it was not appropriate to
client curtailmentinclude either the $1 billion gain arising from our investment in M-I SWACO or the $0.04 dilutive effect of
spending.20
the Smith transaction, as those were not related to Schlumberger’s ordinary operations. Therefore, the Committee approved an EPS achievement of $2.90, which excluded the dilutive impact of the Smith transaction and all of the 2010 charges and credits described above, and which resulted in a payout of 129% of the financial half of the annual cash incentive.
The second half of the
annual cash incentive is related to personal objectives that are specific to each executive officer position and may relate to:
technology or geographical profitability or revenue growth;
| | |
| • | technology or geographical profitability or revenue growth; |
|
| • | new technology introduction and market penetration; |
|
| • | acquisitions or divestitures; |
|
| • | non-financial goals that are important to the Company’s success, including: |
| | |
| • | people-related objectives such as retention and diversity; |
|
| • | ethics and compliance; |
|
| • | safety objectives; and |
|
| • | any other business priority. |
The award for the personal half of the cash incentive was based on the specific results each named executive officer achieved, as approved by the Compensation Committee. Personal objectives are set at the start of the fiscal year and market penetration;
acquisitions or divestitures;
non-financial goals that are importantdo not have a formal weighting. At the end of the fiscal year, the CEO uses his judgment to evaluate the Company’s success, including:
people-relatedperformance of the other named executive officers against their personal objectives, such as retentiontaking into account performance for the just-completed fiscal year versus predefined commitments for the fiscal year; unforeseen financial, operational and diversity;
ethicsstrategic issues of the Company; and compliance;
any other business priority.
information deemed relevant by the CEO. The Compensation Committee evaluates the performance of the CEO in a similar way, subject to approval by the full Board.In 2008, all
Messrs. Gould, Kibsgaard and Pai had objectives on safety and security, which were mostly achieved.
Messrs. Gould, Kibsgaard, Pai and Belani had objectives on people, including diversity and retention of key talent, which were mainly achieved.
Messrs. Gould, Ayat and Pai had objectives on M&A, which were achieved.
All of the named executive officers, with the exception of Mr. Ayat, had objectives regarding people. These included objectives on the retention of key populations, diversity, compensation management and the development of specific competencies. These were mostly achieved. The same named executive officersSbiti, had objectives on strategic business development with regard to particular product offeringscost management and geographic areas,efficiency, including the restructuring of North America and the functions, all of which they completed to a significant extent. were achieved.
Messrs.
SbitiGould, Kibsgaard, Pai, and
Pai alsoBelani had objectives on
safety,marketing and technology development, which were
partiallylargely achieved.
Messrs. Gould and Ayat had objectives relating to acquisitions,on capital structure, which were largelywas mostly achieved. Mr. Ayat also achieved including the acquisition of Saxon Energy Services Inc. Additionally, Mr. Gouldan objective on debt management.
Messrs. Kibsgaard and Pai had objectives on business projects,quality, which among other things, resulted in an alliance between Schlumbergerwere achieved.
Mr. Kibsgaard had objectives on Engineering, Manufacturing and Gazprom.Sustaining, which were partly achieved.
30
Messrs.
Mr. Gould also achieved his objectives regarding the CEO succession process and Company-wide compliance programs.
Mr. Sbiti had objectives relating to
research, developmentSchlumberger’s activities in Kuwait and
manufacturing, which covered a numberIraq as well as Research and Development in the Middle East, all of
aspects including quality and geographic capability, and were partly achieved. Messrs. Sbiti and Pai had additional objectives on quality in field operations and cost management, which were
mostly completed.Mr. Ayat had additional objectives including currency management and a review of deferred benefit programs, which he achieved.
The award for the personal half of the objectives was based on the specific results each named executive officer achieved.
Total Cash CompensationCash compensation comprises base salary and annual cash incentive. Typically the higher the job is in the management hierarchy, the smaller the base salary as a percentage of total compensation. In other words, the greater the job’s impact on Company results, the larger the variable portion of compensation as a percentage of total compensation.
20082010 Annual Incentive as a Percentage of Base Salary
| | | | | | | | | | | | |
Name
| | Total Incentive
Range Eligibility
| | Financial
Half
Incentive
Eligibility
| | Financial
Half
Incentive
Achieved
| | Personal
Half
Incentive
Eligibility
| | Personal
Half
Incentive
Achieved
| | Total
Incentive
as a % of
Base
Salary
|
| | | | | | |
A. Gould | | 0-100 | | 50 | | 0 | | 50 | | 45 | | 45 |
S. Ayat | | 0-100 | | 50 | | 0 | | 50 | | 42 | | 42 |
C. Sbiti | | 0-100 | | 50 | | 0 | | 50 | | 43 | | 43 |
D. Boutte | | 0-100 | | 50 | | 0 | | 50 | | 42 | | 42 |
S. Pai | | 0-75 | | 37.5 | | 0 | | 37.5 | | 32 | | 32 |
21
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Total Incentive
| | | Financial Half
| | | Financial Half
| | | Personal Half
| | | Personal Half
| | | Total 2010
| |
| | | Range
| | | Range
| | | Incentive
| | | Range
| | | Incentive
| | | Incentive Paid
| |
| | | Eligibility
| | | Eligibility
| | | Achieved
| | | Eligibility
| | | Achieved
| | | as a % of
| |
| Name | | (%) | | | (%) | | | (%) | | | (%) | | | (%) | | | Base Salary | |
| |
| A. Gould | | | 0-100 | | | | 50 | | | | 64.5 | | | | 50 | | | | 47.5 | | | | 112 | |
| S. Ayat | | | 0-100 | | | | 50 | | | | 64.5 | | | | 50 | | | | 48 | | | | 112.5 | |
| P. Kibsgaard | | | 0-100 | | | | 50 | | | | 64.5 | | | | 50 | | | | 45 | | | | 109.5 | |
| S. Pai | | | 0-75 | | | | 37.5 | | | | 48.4 | | | | 37.5 | | | | 32.5 | | | | 80.9 | |
| A. Belani | | | 0-75 | | | | 37.5 | | | | 48.4 | | | | 37.5 | | | | 32.5 | | | | 80.9 | |
| C. Sbiti | | | 0-100 | | | | 50 | | | | 64.5 | | | | 50 | | | | 20 | | | | 84.5 | |
Long-Term IncentivesEquity Compensation—Stock Options
Stock options are a vital piece of the Company’s total compensation package and are designed to give high-value employees, including named executive officers, a longer-term stake in the Company, provide incentives for future performance, act as a long-term retention tool and align employee and stockholder interests.interests over the longer term. Schlumberger currently uses stock options as its sole long-term incentive for executive officers as it believes that they best align employee incentives with stockholdersstockholder interests. This is because options only have value if the stock price increases over time. Since a financial gain from stock options is possible only after the price of the common stock has increased, the Company believes that grants of stock options motivate executives and other employees towardstoward behavior and activities that benefitbenefits all stockholders.
The Compensation Committee grants stock options to reward past performance but also to retain executive officers and to provide incentives for future exceptional performance. The value of a stock option grant increases with the level of position, and for the CEO and other named executive officers is typically the largest element of the total compensation package. In determining the value of grants of stock options to be made to executive officers, the Compensation Committee (in the case of the CEO’s grant) and the CEO (in the case of recommendations for grants for the other NEOs), consider numerous factors, including:
| | |
| • | the Company’s financial and operating performance during the relevant period; |
|
| • | review of total direct compensation for comparable positions in the comparator groups; |
|
| • | the size and mix of the compensation elements for an executive officer; |
|
| • | retention; |
|
| • | achievement of non-financial goals; |
|
| • | the executive officer’s contribution to the Company’s success; |
|
| • | the level of competition for executives with comparable skills and experience; |
|
| • | the total value and number of stock options granted to an executive over the course of his or her career, together with the retentive effect of additional stock option grants; and |
|
| • | a review of the internal equity of peer position career grants. |
Once the dollar value of the stock option grant for a named executive officer has been determined based on the above factors, it is converted into a number of stock options on a fair value basis using theBlack-Scholes formula.
31
Stock Options Granted to Executive Officers in 2010
January 2010 Stock Option Grants. The table below details the approximate dollar value and number of stock options granted in January 2010 to the named executive officers. The approximate dollar value of each grant was used by the Compensation Committee to determine the number of options granted. The actual grant date fair value of each grant, computed in accordance with applicable accounting standards, is disclosed in the Grants of Plan-Based Awards For Fiscal Year 2010 table below.
The values given to equity compensation awards by the Compensation Committee are only estimates, and the actual value that may be realized by the NEOs depends on the NEOs’ continued service and Schlumberger’s future stock price performance.
January 2010 Stock Option Grants
| | | | | | | | | |
| | | Approximate Dollar
| | |
| Name | | Value of Grant | | Number of Options Granted |
| A. Gould | | $ | 9,000,000 | | | | 355,000 | |
| S. Ayat | | $ | 2,400,000 | | | | 95,000 | |
| P. Kibsgaard | | $ | 1,200,000 | | | | 47,000 | |
| S. Pai | | $ | 1,200,000 | | | | 47,000 | |
| A. Belani | | $ | 1,500,000 | | | | 59,000 | |
| C. Sbiti | | $ | 3,000,000 | | | | 118,000 | |
With respect to the January 2010 grants, the Committee took into account that even though 2009 was an extremely difficult year, during which global economic conditions deteriorated and Schlumberger revenue declined by 16% due to lower customer spending and lower commodity prices, Schlumberger delivered net income of over $3 billion and EPS, excluding charges and credits, of $2.61.
The Compensation Committee in January 2010 approved the following awards, based on peer market data then available to the Committee:
| | |
| • | an award of $9,000,000 in stock options to Mr. Gould, which was at the 75th percentile of the oil industry and between the 50th and 75th percentiles of the general industry. This grant was recommended by the Compensation Committee and approved by the Board. |
|
| • | Mr. Ayat was awarded $2,400,000 in stock options, which was between the 50th and 75th percentiles of both peer groups. |
|
| • | Messrs. Kibsgaard and Pai were each awarded $1,200,000 in stock options, to place them between the 50th and 75th percentiles of the oil industry and at the 50th percentile of the general industry. |
|
| • | Mr. Belani received $1,500,000 in stock options, placing him at the 50th percentile of the general industry. There was insufficient data for Mr. Belani’s position for the oil industry. |
|
| • | Mr. Sbiti received $3,000,000 in stock options, which was above the 75th percentile of the oil industry and between the 50th and 75th percentiles of the general industry. |
As explained in the 2010 Executive Summary above, when the Compensation Committee later reviewed market data from both peer groups in October 2010, it was obvious that peer group LTI amounts awarded during 2010 were higher than had been estimated in January 2010, due to the improved economic outlook during 2010 following the global economic crisis that began in late 2008. This resulted in the Company’s LTI awards being at or near the 50th percentile of both peer groups. Additionally, following the acquisition of Smith, the scope of the named executive officer positions had increased in size in line with the increased revenue of the Company. When the amount of the January 2010 LTI’s had been determined, Schlumberger had annual revenues of $23 billion and its 2010 general industry peer group included companies with revenues from $15 billion to $40 billion. After the acquisition of Smith, Schlumberger’s 2011 revenue was forecast to be more than $35 billion and the 2011 general industry peer group was modified to include companies with
32
revenues from $25 billion to $50 billion to better reflect the increased size of the Company. The Compensation Committee agreed to focus on LTI awards at the January 2011 Compensation Committee to better ensure that the 2011 LTI’s of the named executive officers are competitive with LTI’s of companies in the new 2011 peer groups.
February and October 2010 Stock Option Grants. The Compensation Committee approved an additional award of $1,500,000 in stock options representing 64,000 shares for Mr. Kibsgaard effective February 8, in recognition of his appointment as COO. This placed Mr. Kibsgaard’s total direct compensation above the 50th percentile of the oil industry and above the 50th percentile of the general industry, taking into account his new base salary, new target incentive and both 2010 LTI grants.
The Compensation Committee also awarded an additional stock option grant to Mr. Pai of $1,600,000 in stock options representing 68,000 shares for retention purposes. In October 2010, the Compensation Committee approved a further stock option grant to Mr. Pai of $2,000,000 in stock options representing 83,334 shares for retention purposes and in recognition of his outstanding performance with the Company’s restructuring efforts and continued contributions to the Company during the management reorganization after the appointment of Mr. Kibsgaard as COO.
February 2010 Stock Option Grants
| | | | | | | | | |
| | | Approximate Dollar
| | |
| Name | | Value of Grant | | Number of Options Granted |
| P. Kibsgaard | | $ | 1,500,000 | | | | 64,000 | |
| S. Pai | | $ | 1,600,000 | | | | 68,000 | |
October 2010 Stock Option Grant
| | | | | | | | | |
| | | Approximate Dollar
| | |
| Name | | Value of Grant | | Number of Options Granted |
| S. Pai | | $ | 2,000,000 | | | | 83,334 | |
The Compensation Committee is responsible for
option grantsgranting options under Schlumberger’s stock option and incentive plans. The Committee approves a
preliminary budget for stock option grants for the following year at each October Compensation Committee meeting. Management determines the allocation for groups within the Company and individual recommendations are made by the heads of the groups and approved by the CEO. The Compensation Committee approves and grants all stock option awards,
paying particular attention toincluding executive officer awards, which are recommended by the CEO, except for his own. Awards for executive officers other than the CEO are granted by the Compensation Committee and discussed with the Board of Directors. Awards for the CEO are granted by the Committee following approval by the full Board.
The regular Board of Directors and Compensation Committee meeting schedule is set at least a year in advance with Board meetings held quarterly, on the third or fourth Thursday of January, April, July and October, and the committee meetings held the day before each Board meeting. The timing of these committee meetings is not determined by any of the Company’s executive officers and is usually two days in advance of the Company’s announcement of earnings. The Compensation Committee sets the grant date as the day of the Board meeting. The Company does not time the release of material non-public information for the purpose of affecting the values of executive compensation. At the time of making stock option grant decisions are made, the Compensation Committee is aware of the earnings results and takes them into account, but it does not adjust the size of grants to reflect possible market reaction. Generally, annual stock option grants are made at the January meeting of the Compensation Committee, although specific grants may be made at other regular meetings to recognize the promotion of an employee, a change in responsibility or a specific achievement. It is Schlumberger’s policy to make awards to executive officers and other employees at the same time.
33
The exercise price for all stock options granted to executive officers and other employees is the average of the high and low trading price of the Schlumberger common stock on the NYSE on the date of grant, which has been
theSchlumberger’s practice for many years.
The potential gain with any increase in stock price is the same as the stockholders’ gain.Stock options
generally have five-year ratable vesting, except for those granted to employees in France, which have four-year cliff vesting (meaning that all
of those options vest at a single point in time)
. Stock options are awarded, and those granted to
employeesAndrew Gould in
professional-level jobs, but each general grant typically includes fewer than 10% of this population.January 2010, which have three-year ratable vesting. The
selection process for employees recommended for a grant is the same for all employeesBoard and
is based on management’s decision regarding the performance and potential of each individual, the individual’s success in achieving both financial and personal objectives and the desire to retain key employees while motivating future exceptional performance. The list of recommendations to the Compensation Committee
is reviewed throughhave the
Executive Vice President of each operating group and is approved by the Vice President of Personnel and the CEO.22
discretion to grant stock options with different vesting schedules as they deem necessary.
The Company’s stock option plans do not permit the following:
granting of stock options at a price below the fair market value on the grant date;
repricing, or reducing the exercise price of a stock option;
| | |
| • | granting of stock options at a price below the fair market value on the grant date; |
|
| • | re-pricing, or reducing the exercise price of a stock option; |
|
| • | substituting a new option grant with an exercise price lower than the exercise price of an outstanding option grant; or |
|
| • | granting options with a “reload” feature. |
substituting a new option grant with an exercise price lower than the exercise price of an outstanding option grant;
providing grants with a reload vehicle; or
acceleration of vesting upon retirement.
Executive Stock Ownership Guidelines
The Compensation Committee and management believe strongly in linking executive long-term rewards to stockholder value. As a result, the Committee has established the following stock ownership guidelines applicable to executive officers and other key position holders.
| | |
Title
| | |
| Title | | Stock Ownership Guidelines
|
CEO | | 5 times base salary |
Executive Vice President
COO | | 3 times base salary |
Other Officers | | 1.5 times base salary |
Key Staff Positions | | 1 times base salary |
Each executive covered by the guidelines must hold in shares at least 30% of their entire gain on
theevery stock option exercise for a period of six months. Those who do not meet the guidelines after the six-month
holding period must continue to hold the shares until the guidelines are met. There is no specified timeline to achieve the guidelines, as many of the executives do not exercise their stock options until the later part of their option term.
The stock ownership guidelines also specify that any individual covered by this policy may not purchase, sell or enter into any other market transactions with respect to Schlumberger stock during any “blackout” period. A blackout period usually applies from the beginning of the first day following the last month of each fiscal quarter (January, April, July and October 1 of each year) up to and including two full trading days after the public release of Schlumberger’s quarterly or annual financial results. In addition to the regularly scheduled blackout periods, Schlumberger may impose additional blackout periods during which there may
existbe material non-public information about Schlumberger, such as major acquisitions and divestitures.
Schlumberger’s stock ownership guidelines prohibit executives from speculating in the Company’s stock, which includes, but is not limited to, short selling (profiting if the market price of the common stock decreases); buying or selling publicly traded options, including writing covered calls; and hedging or any other type of derivative arrangement that has a similar economic effect.
Stock Options Granted to Executive Officers with Respect to 2008 Performance
The Compensation Committee makes grants of stock options to reward prior performance but also to retain executive officers and provide incentives for future exceptional performance. The size of a stock option grant increases with the level of position, and for the CEO is typically the largest element of the total compensation package. In determining the number, if any, of stock options granted to executive officers, the Compensation Committee considers numerous factors, including:
the Company’s financial and operating performance during the relevant period;
34
achievement of non-financial goals;
the executive officer’s contribution to the Company’s success;
the level of competition for executives with comparable skills and experience;
23
a review of compensation for comparable positions in the comparator groups;
the total value and number of stock options granted to an executive over the course of his or her career, together with the retentive effect of additional stock option grants; and
a review of the internal equity of peer position career grants.
In January 2008, the Compensation Committee established a new stock option grant value methodology for Schlumberger executive officers, including the named executive officers. Since then, grant values have been determined on a fair value basis using the Black-Scholes formula, taking into account the two peer group surveys. Prior to this, grant sizes were determined based on the number of stock options awarded in relation to previous grant sizes, internal equity comparisons between named executive officers, both Company and individual officer performance, and other factors described above. The Compensation Committee decided that by changing from a grant size to a grant value methodology, it would be better able to achieve its intended compensation goals by allowing it to more effectively address changes in the value of the stock option component of the compensation package due to stock price movement and to ensure market competitiveness.
In determining the values for the 2009 stock option grants to named executive officers, the Compensation Committee first took into consideration the factors listed immediately above, giving particular weight to the overall strong performance of the Company and of each named executive officer in 2008. In particular, the Compensation Committee considered that despite the very difficult operating environment in late 2008, Schlumberger’s leadership was able to deliver more than $27 billion in revenue during the year, an increase over 2007 revenue, and earnings per share of $4.42, another increase over 2007. As a result, the Compensation Committee felt that it was appropriate to use the stock option grant values for options granted in January 2008 as guidance for setting the values of the 2009 LTI awards.
While the Compensation Committee would normally also take into account the Towers Perrin comparator group LTI data, due to the severe market conditions, the Compensation Committee decided that the survey information collected earlier in 2008 with respect to LTI awards was no longer current. In light of the rapidly changing and deteriorating economic conditions, the Compensation Committee in December 2008 requested Towers Perrin to provide market information about the likely compensation decisions to be made by companies in the difficult economic environment. Towers Perrin then delivered to the Compensation Committee the results of its polls of companies in both the general industry and oil industry sectors, conducted in December 2008 and early January 2009. The polls revealed that many of the companies were considering lowering their LTI value for awards in 2009, with an average reduction of approximately 20%. The Compensation Committee also considered Schlumberger’s lower-than-expected growth and profitability in the fourth quarter of 2008, the significant fall in Schlumberger’s share price and an uncertain business outlook for 2009 due to extraordinarily difficult business conditions. Based on these considerations, and in spite of the Company’s overall strong operational performance in 2008, the Compensation Committee decided to reduce by 20 percent the stock option grant values in January 2009 relative to the target stock option award values established in January 2008. Mr. Boutte was the only exception to this and his reduction in LTI value was more than 20%.
The following table sets forth both the approximate fair value of these stock option grants to the named executive officers on January 22, 2009 and the number of shares granted with respect to each named executive officer’s performance in 2008. The methodology used to convert the dollar value to shares is based on the Black-Scholes value of the grant price.
Stock Option Grants
| | | | | |
Name
| | Value of Grant
| | Number of Shares Granted
|
A. Gould | | $ | 8,800,000 | | 680,000 |
S. Ayat | | $ | 1,600,000 | | 125,000 |
C. Sbiti | | $ | 3,200,000 | | 250,000 |
D. Boutte | | $ | 900,000 | | 70,000 |
S. Pai | | $ | 1,088,000 | | 85,000 |
24
Recoupment of Performance-based Bonuses
On the recommendation of the Compensation Committee in July 2006, the Board of Directors adopted a policy on recouping performance-based bonuses in the event of specified restatements of financial results. Under the policy, if financial results are significantly restated due to fraud or intentional misconduct, the Board will review any performance-based bonuses paid to executive officers who are found to be personally responsible for the fraud or intentional misconduct that caused the need for the restatement and will, to the extent permitted by applicable law, require recoupment of any amounts paid in excess of the amounts that would have been paid based on the restated financial results.
Benefits
Retirement Benefits
In line with Schlumberger’s aim to
provideencourage long-term careers
with the Company and to promote retention, retirement plans are provided, where possible, for all employees, including named executive officers, according to local market practice. Schlumberger considers
that both compensation and longer-term benefit plans
areto be an important
elementselement of
athe total compensation package. The pension plans provide for lifetime benefits upon retirement after a specified number of years of service and take into account local practice
onwith respect to retirement ages. They are designed to complement but not
be a substitute for local government plans, which may vary considerably in terms of the replacement income they provide, and other Company sponsored savings plans. Employees may participate in multiple retirement plans in the course of their career with the Company or its subsidiaries, in which case they become entitled to a benefit from each plan based upon the benefits earned during the years of service related to each plan.
TheseThe qualified plans are funded through cash contributions made by the Company and its subsidiaries based on actuarial valuations
andand/or regulatory requirements.
Some of the Schlumberger U.S. retirement plans are non-qualified plans
whichthat provide an eligible employee with additional retirement savings opportunities that cannot be achieved with tax-qualified plans due to limits
on (1) annual compensation that can be taken into account under qualified plans or (2) annual benefits that can be provided under qualified plans.on:
| | |
| • | annual compensation that can be taken into account under qualified plans, or |
|
| • | annual benefits that can be provided under qualified plans. |
Officers and other employees in the United States whose compensation exceeds the qualified plan limits are eligible to participate in non-qualified excess benefit programs for 401(k), profit-sharing and pension, whereby they receive correspondingly higher benefits. Employees and executive officers assigned outside the United States are entitled to participate in the applicable plans of the country where they are assigned, including supplemental plans where available.
The Company has a practice of phased retirement, which
is generallymay be offered to executive officers
approaching retirement, other(other than the
CEO,CEO) approaching retirement, at the discretion of
the individual and the Company. This practice involves a transition into retirement whereby the individual ceases being an executive officer and relinquishes primary responsibilities. He or she remains an employee and generally receives lesser salary
over time for reduced responsibilities and reduced working time. The arrangements are typically in place for an average of two to three years as agreed at the start of the term. The purpose is to allow the outgoing executive officer to support the incoming executive officer for a period of time to
ensureprovide for a smooth succession and to provide resources to the Company in particular areas of expertise. In these circumstances, the Company maintains pension contributions and other benefits such as medical and insurance, and the executive officer continues to vest in previously granted stock options. The executive officer, however, is no longer eligible for additional stock options or, once his or her work time is reduced, for an annual cash incentive.
Schlumberger seeks to provide benefit plans, such as medical coverage and life and disability insurance, on a
countrycountry-by-country basis in line with market conditions. Where the local practice is considered to be less than the
25
Schlumberger minimum standard, the Company generally offers this Schlumberger standard. Executive officers are eligible for the same benefit plans provided to other employees, including medical coverage and life and disability insurance as well as supplemental plans chosen and paid for by employees who wish additional coverage. There are no special insurance plans for executive officers.
35
Schlumberger provides only minimum perquisites to its executive officers, which (as to the named executive officers) have been identified in the narrative notes to the Summary Compensation Table. The same perquisites are generally available to all professional-level employees. For example, relocation assistance is provided to employees based on a Company-wide basis.
Schlumberger does not have employment, severance orchange-in-control agreements for any of the namedits executive officers, except for those in connection with phased retirement as described above. The namedCompany’s executive officers serve at the will of the Board of Directors, which enables the Company to terminate their employment using judgment as to the terms of any severance arrangement and based on specific circumstances at the time. This is
On the recommendation of the Compensation Committee in
line withJuly 2006, the
overall philosophy, previously discussed, that executive officers, includingBoard of Directors adopted a policy on recouping performance-based cash awards in the
CEO, be givenevent of specified restatements of financial results. Under the
same elements of compensation as other employees.Perquisites
Schlumberger provides only minimum perquisitespolicy, if financial results are significantly restated due to fraud or intentional misconduct, the Board will review any performance-based cash awards paid to executive officers whichwho are found to be personally responsible for the fraud or intentional misconduct that caused the need for the restatement and will, to the extent permitted by applicable law, require recoupment of any amounts paid in excess of the amounts that would have been identified in the narrative notes to the Summary Compensation Table. The same perquisites are generally available to all professional-level employees. For example, relocation assistance is provided to employeespaid based on a company-wide policy.
the restated financial results.
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model in accordance with
FAS 123R.applicable accounting standards. Once the fair value of each award is determined, it is expensed in the
Company’s income statement ratably over the vesting period.
The Company grants both incentive stock options and non-qualified stock options according to US tax regulations. The Company has a qualified French sub plan for stock options, restricted stock and restricted stock units to comply with French regulatory requirements. Stock options granted under the French sub plan have four-year cliff vesting rather than the usual five-year ratable vesting, and restricted stock and restricted stock units granted under the French sub plan have two-year cliff vesting and a two-year holding period rather than the usual three-year cliff vesting schedule.
Section 162(m) of the Internal Revenue Code limits the deductibility of certain compensation expenses in excess of $1,000,000 per individual covered employee. The Company’s stock option plans provide qualified performance-based compensation for purposes of Section 162(m) and are not subject to the $1 million limitation. The Compensation Committee continues to believe that the cash compensation payable in excess of this amount for the
five named executive officers will not result in any material loss of tax deduction relative to the flexibility gained.
Section 409A of the Internal Revenue Code requires that “deferred compensation” either comply with certain deferral election and payment rules or be subject to a 20% additional tax. The Company has amended itsCompany’s compensation programs and awards including the employment agreements, to the extent necessaryare designed to make them exempt from or compliant with Section 409A.
36
26
COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis included in this proxy statement. Based on that review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE SCHLUMBERGER
BOARD OF DIRECTORS
| | |
Jamie S. Gorelick
| | Nicolas Seydoux
|
Adrian Lajous
| | Linda G. Stuntz, Chair
|
Michael E. Marks
| | |
| Tony Isaac | | Adrian Lajous |
| Michael E. Marks, Chair | | Elizabeth Anne Moler |
37
27
The following table shows the compensation paid by the Company and its subsidiaries for the fiscal year ended December 31,
20082010 to the Chief Executive Officer, the Chief Financial Officer and the next
threefour most highly compensated executive officers as of December 31,
20082010 (collectively, the “named executive officers”).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Change in
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Pension Value &
| | | | | | | |
| | | | | | | | | | | | | | | | | | Non-Equity
| | | Nonqualified
| | | | | | | |
| | | | | | | | | | | | Stock
| | | Option
| | | Incentive Plan
| | | Deferred
| | | All Other
| | | | |
Name and
| | | | | | | | Bonus
| | | Awards
| | | Awards
| | | Compensation
| | | Compensation
| | | Compensation
| | | | |
| Principal Position | | Year | | | Salary ($) | | | ($)(7) | | | ($) | | | ($)(8) | | | ($)(7) | | | Earnings ($)(9) | | | ($)(10) | | | Total ($) | |
| A. Gould | | | 2010 | | | | 2,500,000 | | | | N/A | | | | N/A | | | | 8,938,900 | | | | 2,800,000 | | | | 1,104,721 | | | | 214,375 | (11) | | | 15,557,996 | |
| Chairman and Chief | | | 2009 | | | | 2,500,000 | | | | N/A | | | | N/A | | | | 8,650,280 | | | | 1,787,500 | | | | 944,323 | | | | 181,250 | | | | 14,063,353 | |
| Executive Officer | | | 2008 | | | | 2,500,000 | | | | N/A | | | | N/A | | | | 9,636,575 | | | | 1,125,000 | | | | 1,168,399 | | | | 437,500 | | | | 14,867,474 | |
P. Kibsgaard(1),(2) | | | 2010 | | | | 979,416 | | | | N/A | | | | N/A | | | | 2,670,820 | | | | 1,072,510 | | | | 203,730 | | | | 27,006 | (12) | | | 4,953,482 | |
| Chief Operating Officer | | | 2009 | | | | 746,451 | | | | N/A | | | | N/A | | | | 2,889,100 | | | | 362,136 | | | | 128,129 | | | | 202,964 | | | | 4,328,780 | |
| S. Ayat | | | 2010 | | | | 900,000 | | | | N/A | | | | N/A | | | | 2,392,100 | | | | 1,012,500 | | | | 513,898 | | | | 113,320 | (13) | | | 4,931,818 | |
| Executive Vice | | | 2009 | | | | 750,000 | | | | N/A | | | | N/A | | | | 1,590,125 | | | | 536,250 | | | | 400,685 | | | | 116,559 | | | | 3,393,619 | |
| President and Chief | | | 2008 | | | | 750,000 | | | | N/A | | | | N/A | | | | 1,779,060 | | | | 315,000 | | | | 374,420 | | | | 161,064 | | | | 3,379,544 | |
| Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
S. Pai(3) | | | 2010 | | | | 796,813 | | | | N/A | | | | N/A | | | | 4,491,811 | | | | 644,489 | | | | 598,600 | | | | 101,303 | (14) | | | 6,633,016 | |
| Vice President, | | | 2009 | | | | 785,945 | | | | N/A | | | | N/A | | | | 2,051,485 | | | | 403,814 | | | | 363,433 | | | | 126,423 | | | | 3,731,100 | |
| Operations | | | 2008 | | | | 717,844 | | | | N/A | | | | N/A | | | | 1,186,040 | | | | 229,794 | | | | 275,071 | | | | 207,566 | | | | 2,616,315 | |
A. Belani(4) | | | 2010 | | | | 724,879 | | | | N/A | | | | N/A | | | | 1,485,620 | | | | 586,321 | | | | 425,995 | | | | 116,987 | (15) | | | 3,339,802 | |
President Reservoir
Characterization Group | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
C. Sbiti(5),(6) | | | 2010 | | | | 1,287,654 | | | | N/A | | | | N/A | | | | 2,823,740 | | | | 1,088,100 | | | | 1,350,545 | | | | 251,794 | (16) | | | 6,801,833 | |
| Senior Executive | | | 2009 | | | | 1,178,927 | | | | N/A | | | | N/A | | | | 5,025,000 | | | | 783,981 | | | | 275,832 | | | | 82,569 | | | | 7,346,309 | |
| Advisor | | | 2008 | | | | 1,032,478 | | | | N/A | | | | N/A | | | | 3,263,400 | | | | 443,953 | | | | 547,786 | | | | 173,436 | | | | 5,461,053 | |
| | | | | | | | | | | | | | | | | | |
Name and
Principal Position
| | Year
| | Salary
($)
| | Bonus
($)(4)
| | Stock
Awards
($)
| | Option
Awards
($)(5)
| | Non-Equity
Incentive Plan
Compensation
($)(4)
| | Change in
Pension Value &
Nonqualified
Deferred
Compensation
Earnings ($)(6)
| | All Other
Compensation
($)(7)
| | Total
($)
|
| (1) | | | | | | | | | |
A. Gould
Chairman and Chief Executive Officer
| | 2008
2007
2006
| | 2,500,000
2,500,000
2,500,000
| | N/A
N/A
N/A
| | N/A
N/A
N/A
| | 8,918,008
9,485,019
8,689,859
| | 1,125,000
3,750,000
4,875,000
| | 1,168,399
1,360,865
955,156
| | 437,500(8)
591,307
510,980
| | 14,148,907
17,687,191
17,530,995
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
S. Ayat
Executive Vice President and Chief Financial Officer
| | 2008
2007
| | 750,000
575,000
| | N/A
N/A
| | N/A
N/A
| | 1,233,856
1,040,967
| | 315,000
845,300
| | 374,420
213,223
| | 161,064(9)
147,483
| | 2,834,340
2,821,973
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
C. Sbiti (1)
Executive Vice President OFS
| | 2008
2007
2006
| | 1,032,478
964,516
748,130
| | N/A
N/A
N/A
| | N/A
N/A
N/A
| | 3,212,378
2,928,390
2,376,617
| | 443,953
1,401,907
1,436,409
| | 547,786
851,533
474,079
| | 173,436(10)
213,489
157,322
| | 5,410,031
6,359,835
5,192,556
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
D. Boutte (2)
President WesternGeco
| | 2008
2007
2006
| | 650,000
630,000
520,073
| | N/A
N/A
N/A
| | N/A
N/A
N/A
| | 1,675,697
1,589,489
1,631,745
| | 273,000
685,100
741,058
| | 462,758
106,877
18,330
| | 101,231(11)
416,398
211,555
| | 3,162,686
3,427,864
3,122,761
|
| |
| |
| |
| |
| |
| |
| |
| |
| |
|
S. Pai (3)
Vice President Operating Oilfield Services
| | 2008
2006
| | 717,844
567,332
| | N/A
N/A
| | N/A
N/A
| | 929,324
1,089,205
| | 229,794
831,172
| | 275,071
165,248
| | 207,566(12)
127,574
| | 2,359,599
2,780,531
|
(1) | | Mr. SbitiKibsgaard is paid in Euros. For purposes of this table, theSummary Compensation Table, compensation for Mr. Sbiti has been determined using the 2008, 20072010 and 20062009 average exchange rates of 1 U.S. Dollar = 0.678 Euros, 1 U.S. Dollar = 0.7340.753 Euros and 1 U.S. Dollar = 0.8020.721 Euros, respectively. |
|
| (2) | | Three monthsEffective February 8, 2010, Mr. Kibsgaard was appointed Chief Operating Officer of Mr. Boutte’s 2007 salary was paid in Pounds Sterling. In 2006, Mr. Boutte was paid in Pounds Sterling. For purposes of this table, the compensation for Mr. Boutte has been determined using the 2007 and 2006 average exchange rates of 1 U.S. Dollar = 0.500 Pounds Sterling and 1 U.S. Dollar = 0.548 Pounds Sterling, respectively.Schlumberger Limited. |
|
| (3) | | Mr. Pai is paid in Euros. For purposes of this table, theSummary Compensation Table, compensation for has been determined using 2010, 2009 and 2008 average exchange rates of 1 U.S. Dollar = 0.753 Euros, 1 U.S. Dollar = 0.721 Euros, and 1 U.S. Dollar = 0.678 Euros, respectively. |
|
| (4) | | Mr. PaiBelani is paid in Euros. For purposes of this Summary Compensation Table, compensation has been determined using the 2008 and 20062010 average exchange rate of 1 U.S. Dollar = 0.6780.753 Euros. |
|
| (5) | | Mr. Sbiti was paid in Euros for part of 2010. For purposes of this Summary Compensation Table, compensation has been determined using 2010, 2009 and 2008 average exchange rates of 1 U.S. Dollar = 0.753 Euros, 1 U.S. Dollar = 0.721 Euros, and 1 U.S. Dollar = 0.8020.678 Euros, respectively. |
(4) |
| (6) | | Effective February 8, 2010, Mr. Sbiti became Senior Executive Advisor to the Chairman and Chief Executive Officer. |
|
| (7) | | The annual cash incentive paid to Schlumberger’s named executive officers is included in the column “Non-Equity Incentive Plan Compensation.” |
(5) | |
| (8) | | The amount reflected in this column is the compensation cost recognized by the Company during fiscal 2008 under Statement of Financial Accounting Standard No. 123R (Share-Based Payment)aggregate grant date fair value for grants madeduring the fiscal years shown, computed in 2008 and prior years.accordance with applicable accounting standards. The fair value of each grant |
38
| | |
| | is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions for the years indicated:indicated. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008
| | | 2007
| | | 2006
| | | 2005
| | | 2004
| | | 2003
| | | 2002
| |
Dividend yield | | | 1.0 | % | | | 1.1 | % | | | 0.8 | % | | | 1.3 | % | | | 1.5 | % | | | 1.4 | % | | | 1.6 | % |
Expected volatility | | | 31.40 | % | | | 33 | % | | | 33 | % | | | 30 | % | | | 30 | % | | | 36 | % | | | 34 | % |
Risk free interest rates | | | 3.2 | % | | | 4.7 | % | | | 4.2 | % | | | 3.8 | % | | | 3.2 | % | | | 2.8 | % | | | 4.8 | % |
Expected option life | | | 7.0 years | | | | 7.0 years | | | | 6.0 years | | | | 4.5 years | | | | 4.5 years | | | | 4.9 years | | | | 6.6 years | |
Weighted-average fair value per share | | $ | 29.21 | | | $ | 22.82 | | | $ | 18.75 | | | $ | 7.08 | | | $ | 6.17 | | | $ | 7.80 | | | $ | 10.23 | |
| | | | | | | | | | |
| | | 2010 | | 2009 | | 2008 |
| |
| Dividend yield | | | 1.2% | | | 1.2% | | | 1.0% |
| Expected volatility | | | 35% | | | 34% | | | 31% |
| Risk free interest rate | | | 2.8% | | | 2.1% | | | 3.2% |
| Expected option life | | | 6.6 years | | | 6.9 years | | | 7.0 years |
Weighted-average fair
value per share | | $ | 24.35 | | $ | 13.05 | | $ | 29.21 |
(6) | | |
| (9) | | The amounts in this column reflect the change in actuarial present value of the named executive officer’s accumulated benefit under all defined benefit and actuarial pension plans. There are no nonqualified deferred compensation earnings reflected in this column because no named executive officer received above-market or preferential earnings on such compensation during 2006, 20072008, 2009 or 2008.2010. |
(7) |
| (10) | | All of the perquisites included and described in Allthe column “All Other CompensationCompensation” are generally available to all of the Company’s exempt employees. Relocation assistance is provided to all employees on a company-wideCompany-wide basis. |
28
(8) |
| (11) | | The amount disclosed for Mr. Gould includes the following: |
| | | | | | | | | |
| | | Amount
|
Item
| | 2008
| | 2007
| | 2006
|
| | | |
Unfunded credits to the Schlumberger Supplementary Benefit Plan | | $ | 240,800 | | $ | 357,500 | | $ | 267,300 |
Unfunded matching credits to the Schlumberger Restoration Savings Plan | | $ | 180,600 | | $ | 214,500 | | $ | 133,650 |
Contributions to Schlumberger Profit Sharing Plans | | $ | 9,200 | | $ | 11,250 | | $ | 13,200 |
Contributions to Schlumberger 401(k) Plan | | $ | 6,900 | | $ | 6,750 | | $ | 6,600 |
Perquisites: | | | | | | | | | |
Relocation expenses: | | | | | | | | | |
Closing costs on sale of home | | $ | — | | $ | — | | $ | 86,411 |
Other expenses (moving costs, closing costs on purchase of home and other related costs) | | $ | — | | $ | 1,307 | | $ | 3,819 |
| | |
|
| |
|
| |
|
|
Total | | $ | 437,500 | | $ | 591,307 | | $ | 510,980 |
| | | | | |
| Item | | |
| |
| Unfunded credits to the Schlumberger Supplementary Benefit Plan | | $ | 80,850 | |
| Unfunded matching credits to the Schlumberger Restoration Savings Plan | | $ | 121,275 | |
| Contributions to Schlumberger Profit Sharing Plans | | $ | 4,900 | |
| Contributions to Schlumberger 401(k) Plan | | $ | 7,350 | |
| Total | | $ | 214,375 | |
(9) | | |
| (12) | | The amount disclosed for Mr. Kibsgaard includes the following: |
| | | | | |
| Item | | |
| |
| Unfunded credits to the Schlumberger Supplementary Benefit Plan | | $ | 22,106 | |
| Contributions to Schlumberger Profit Sharing Plans | | $ | 4,900 | |
| Total | | $ | 27,006 | |
| | |
| (13) | | The amount disclosed for Mr. Ayat includes the following: |
| | | | | | |
| | | Amount
|
Item
| | 2008
| | 2007
|
| | |
Unfunded credits to the Schlumberger Supplementary Benefit Plan | | $ | 54,612 | | $ | 43,055 |
Unfunded matching credits to the Schlumberger Restoration Savings Plan | | $ | 40,959 | | $ | — |
Contributions to Schlumberger Profit Sharing Plans | | $ | 9,200 | | $ | 11,250 |
Contributions to Schlumberger 401(k) Plan | | $ | 6,900 | | $ | 6,750 |
Perquisites: | | | | | | |
Relocation expenses: | | | | | | |
Other expenses (moving costs, closing costs on purchase of home and other related costs) | | $ | — | | $ | 3,961 |
Allowance in lieu of hotel expenses | | $ | 40,735 | | $ | 37,602 |
Child education expenses and cost of annual trip home | | $ | 8,658 | | $ | 44,865 |
| | |
|
| |
|
|
Total | | $ | 161,064 | | $ | 147,483 |
| | | | | |
| Item | | |
| |
| Unfunded credits to the Schlumberger Supplementary Benefit Plan | | $ | 23,825 | |
| Unfunded matching credits to the Schlumberger Restoration Savings Plan | | $ | 35,738 | |
| Contributions to Schlumberger Profit Sharing Plans | | $ | 4,900 | |
| Contributions to Schlumberger 401(k) Plan | | $ | 7,350 | |
| Perquisites: | | | | |
| Allowance in lieu of hotel expenses | | $ | 37,342 | |
| Cost of annual trip home | | $ | 4,165 | |
| Total | | $ | 113,320 | |
(10) | | The amount disclosed for Mr. Sbiti reflects contributions to International Schlumberger Profit Sharing Plans. |
(11)(14) | | The amount disclosed for Mr. Boutte includes the following: |
| | | | | | | | | |
| | | Amount
|
Item
| | 2008
| | 2007
| | 2006
|
| | | |
Unfunded credits to the Schlumberger Supplementary Benefit Plan | | $ | 44,204 | | $ | 93,012 | | $ | 75,733 |
Unfunded matching credits to the Schlumberger Restoration Savings Plan | | $ | 33,153 | | $ | — | | $ | — |
Contributions to Schlumberger Profit Sharing Plans | | $ | 9,200 | | $ | 11,250 | | $ | — |
Contributions to Schlumberger 401(k) Plan | | $ | 6,900 | | $ | 6,750 | | $ | — |
Contributions to the Schlumberger US Citizens Abroad Profit Sharing Plan | | $ | — | | $ | 18,739 | | $ | 17,600 |
Contributions to the Schlumberger International Staff Pension Plan | | $ | — | | $ | 74,441 | | $ | 86,172 |
Perquisites: | | | | | | | | | |
Relocation expenses: | | | | | | | | | |
North American relocation payment | | $ | — | | $ | 20,000 | | $ | — |
Lump-sum payment | | $ | — | | $ | 108,333 | | $ | — |
Payment for accrued vacation time in connection with relocation | | $ | — | | $ | 65,769 | | $ | — |
Other expenses (moving costs, closing costs on purchase of home and other related costs) | | $ | — | | $ | 18,104 | | $ | — |
Tax preparation expenses in connection with international assignment and cost of annual trip home | | $ | 7,774 | | $ | — | | $ | 32,050 |
| | |
|
| |
|
| |
|
|
Total | | $ | 101,231 | | $ | 416,398 | | $ | 211,555 |
(12) | | The amount disclosed for Mr. Pai includes the following: |
| | | | | |
| Item | | |
| |
Contributions to SchlumbergerNon-U.S. Profit Sharing Plans | | $ | 59,047 | |
| Perquisites: | | | | |
| Child education expenses | | $ | 38,912 | |
| Relocation expenses—miscellaneous | | $ | 1,397 | |
| Medical coverage for child | | $ | 1,947 | |
| Total | | $ | 101,303 | |
39
| | | | | | |
| | | Amount
|
Item
| | 2008
| | 2006
|
| | |
Unfunded credits to the Schlumberger Supplementary Benefit Plan | | $ | 47,512 | | $ | 56,267 |
Unfunded matching credits to the Schlumberger Restoration Savings Plan | | $ | 35,634 | | $ | 28,133 |
Contributions to Schlumberger Profit Sharing Plans | | $ | 9,200 | | $ | 13,200 |
Contributions to Schlumberger 401(k) Plan | | $ | 6,900 | | $ | 6,600 |
Perquisites: | | | | | | |
Taxes and tax preparation expenses in connection with international assignment and cost of annual trips home | | $ | 27,730 | | $ | 23,374 |
child education expenses | | $ | 80,590 | | $ | — |
| | |
|
| |
|
|
Total | | $ | 207,566 | | $ | 127,574 |
29
| | |
| (15) | | The amount disclosed for Mr. Belani includes the following: |
| | | | | |
| Item | | |
| |
| Unfunded credits to the Schlumberger Supplementary Benefit Plan | | $ | 16,542 | |
| Unfunded matching credits to the Schlumberger Restoration Savings Plan | | $ | 24,812 | |
| Contributions to Schlumberger Profit Sharing Plans | | $ | 4,900 | |
| Contributions to Schlumberger 401(k) Plan | | $ | 7,350 | |
| Perquisites: | | | | |
| Relocation expenses—miscellaneous | | $ | 5,967 | |
| Child education expenses | | $ | 37,915 | |
| Cost of annual trip home | | $ | 19,501 | |
| Total | | $ | 116,987 | |
| | |
| (16) | | The amount disclosed for Mr. Sbiti includes the following: |
| | | | | |
| Item | | |
| |
Contributions to SchlumbergerNon-U.S. Profit Sharing Plans | | $ | 110,000 | |
| Perquisites: | | | | |
| Vacation payout due to transfer | | $ | 141,794 | |
| Total | | $ | 251,794 | |
40
Grants of Plan-Based Awards for Fiscal Year 20082010 The following Grants of Plan-Based Awards table provides additional information about stock and option awards and equity incentive plan awards granted to Schlumberger’s named executive officers during the year ended December 31,
2008. | | | | | | | | | | | | | | | | |
Name
| | Grant Date
| | Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards (1)
| | All Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)(2)
| | Exercise
or Base
Price of
Option
Awards
($/Sh)(3)
| | Closing
Market
Price
on Grant
Date
($/Sh)
| | Grant Date
Fair Value
of Stock
and Option
Awards ($)
|
| | | Threshold ($)
| | Target ($)
| | Maximum ($)
| | | | |
| | | | | | | | |
A. Gould | | 1/17/2008 | | 1,012,500 | | 2,187,500 | | 5,000,000 | | 325,000 | | 84.93 | | 82.51 | | 9,636,575 |
S. Ayat | | 1/17/2008 | | 303,750 | | 656,250 | | 1,500,000 | | 60,000 | | 84.93 | | 82.51 | | 1,779,060 |
C. Sbiti | | 1/17/2008 | | 418,142 | | 903,392 | | 2,064,897 | | 120,000 | | 84.93 | | 82.51 | | 3,263,400 |
D. Boutte | | 1/17/2008 | | 263,250 | | 568,750 | | 1,300,000 | | 60,000 | | 84.93 | | 82.51 | | 1,779,060 |
S. Pai | | 1/17/2008 | | 218,031 | | 471,054 | | 1,076,695 | | 40,000 | | 84.93 | | 82.51 | | 1,186,040 |
2010.| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | All Other
| | | | | | | | | | |
| | | | | | | | | | | | | | | Option
| | | | | | | | | Full
| |
| | | | | | | | | | | | | | | Awards:
| | | Exercise
| | | Closing
| | | Grant Date
| |
| | | | | | Estimated Possible Payouts Under
| | | Number of
| | | or Base
| | | Market
| | | Fair Value
| |
| | | | | | Non-Equity Incentive Plan Awards(1) | | | Securities
| | | Price of
| | | Price on
| | | of Stock
| |
| | |
| | | | | | | | | | | | Underlying
| | | Option
| | | Grant
| | | and
| |
| | | Grant
| | | | | | | | | | | | Options
| | | Awards
| | | Date
| | | Option
| |
| Name | | Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | (#)(2) | | | ($/Sh)(3) | | | ($/Sh) | | | Awards ($) | |
| A. Gould | | | 1/21/10 | | | | 637,500 | | | | 2,187,500 | | | | 3,750,000 | | | | 355,000 | | | | 68.505 | | | | 68.31 | | | | 8,938,900 | |
| P. Kibsgaard | | | 1/21/10 | | | | 249,751 | | | | 856,989 | | | | 1,469,124 | | | | 47,000 | | | | 68.505 | | | | 68.31 | | | | 1,183,460 | |
| P. Kibsgaard | | | 2/4/10 | | | | | | | | | | | | | | | | 64,000 | | | | 63.760 | | | | 62.50 | | | | 1,487,360 | |
| S. Ayat | | | 1/21/10 | | | | 229,500 | | | | 787,500 | | | | 1,350,000 | | | | 95,000 | | | | 68.505 | | | | 68.31 | | | | 2,392,100 | |
| S. Pai | | | 1/21/10 | | | | 152,390 | | | | 522,909 | | | | 896,415 | | | | 47,000 | | | | 68.505 | | | | 68.31 | | | | 1,124,710 | |
| S. Pai | | | 2/4/10 | | | | | | | | | | | | | | | | 68,000 | | | | 63.760 | | | | 62.50 | | | | 1,542,920 | |
| S. Pai | | | 10/21/10 | | | | | | | | | | | | | | | | 83,334 | | | | 64.225 | | | | 64.31 | | | | 1,824,181 | |
| A. Belani | | | 1/21/10 | | | | 138,633 | | | | 475,702 | | | | 815,489 | | | | 59,000 | | | | 68.505 | | | | 68.31 | | | | 1,485,620 | |
| C. Sbiti | | | 1/21/10 | | | | 328,352 | | | | 1,126,697 | | | | 1,931,481 | | | | 118,000 | | | | 68.505 | | | | 68.31 | | | | 2,823,740 | |
| | |
| (1) | | These columns show the possible payouts for each named executive officer for fiscal 2008year 2010 based on goals set in January 2008.2010. The possible payouts are performance-driven and completely at risk. The cash incentive amounts actually earned in 2008for 2010 and payable in 20092011 are reflected in the Non-Equity“Non-Equity Incentive PlanPlan” column of the Summary Compensation Table. For information regarding the annual cash incentive paid to Schlumberger’s named executive officers with respect to 20082010 performance, please read “Compensation Discussion and Analysis—CashElements of Compensation—20082010 Annual Incentive—Total Cash Compensation.Incentive.” |
|
| (2) | | The amounts disclosed in this column include option grants made pursuant to the following stock option plans: |
| | | | | | | | | |
| | | Schlumberger 2008
| | Schlumberger 2010
|
Name | | Stock Option Plan | | Stock Incentive Plan |
| A. Gould | | | 355,000 | | | | — | |
| P. Kibsgaard | | | 111,000 | | | | — | |
| S. Ayat | | | 95,000 | | | | — | |
| S. Pai | | | 115,000 | | | | 83,334 | |
| A. Belani | | | 59,000 | | | | — | |
| C. Sbiti | | | 118,000 | | | | — | |
| | | | |
| | Schlumberger 1998
Stock Option Plan
| | Schlumberger 2005
Stock Incentive Plan
|
Mr. Gould
| | N/A | | 325,000 |
Mr. Ayat
| | 60,000 | | N/A |
Mr. Sbiti
| | N/A | | 120,000 |
Mr. Boutte
| | 60,000 | | N/A |
Mr. Pai
| | N/A | | 40,000 |
| (3) | | The exercise price is equal to the average of the high and low per share prices of Schlumberger common stock on the dates of grant, and may be paid in cash or by tendering shares of Schlumberger common stock. Applicable tax obligations may be paid in cash or by withholding of shares of Schlumberger common stock. |
Stock
The stock options granted in January 20082010, February 2010 and October 2010 vest in five equal annual installments, (except thoseexcept for (i) options granted to employees in France, which are subject to four-year cliff vesting)vesting, and are not subject(ii) options granted to a profit cap.Mr. Gould in January 2010, which vest in three equal annual installments.
41
30
Outstanding Equity Awards at Fiscal Year-End 20082010 The following table
sets forth certainprovides information
with respect to theregarding unexercised stock options outstanding for each of our named executive officers
concerning options outstanding as of December 31,
2008. | | | | | | | | | | |
Name
| | Option Grant
Date
| | Number of Securities
Underlying
Unexercised Options
(#) Exercisable (1)
| | Number of Securities
Underlying
Unexercised Options
(#) Unexercisable (1)
| | Option
Exercise
Price ($)
| | Option
Expiration
Date
|
| | | | | |
A. Gould | | 4/17/2002 | | 600,000 | | 0 | | 27.873 | | 4/17/2012 |
| | | 1/15/2003 | | 600,000 | | 0 | | 20.648 | | 1/15/2013 |
| | | 1/19/2005 | | 31,430 | | 180,000 | | 32.455 | | 1/19/2015 |
| | | 1/18/2006 | | 400,000 | | 400,000 | | 54.235 | | 1/18/2016 |
| | | 1/17/2007 | | 80,000 | | 320,000 | | 58.455 | | 1/17/2017 |
| | | 1/17/2008 | | 0 | | 325,000 | | 84.930 | | 1/17/2018 |
| |
| |
| |
| |
| |
|
| | | | | |
S. Ayat | | 10/19/2000 | | 40,000 | | 0 | | 41.141 | | 10/19/2010 |
| | | 4/17/2002 | | 60,000 | | 0 | | 27.873 | | 4/17/2012 |
| | | 1/15/2003 | | 60,000 | | 0 | | 20.648 | | 1/15/2013 |
| | | 7/21/2004 | | 10,000 | | 0 | | 32.618 | | 7/21/2014 |
| | | 1/19/2005 | | 0 | | 15,000 | | 32.455 | | 1/19/2015 |
| | | 1/18/2006 | | 30,000 | | 30,000 | | 54.235 | | 1/18/2016 |
| | | 1/17/2007 | | 20,000 | | 80,000 | | 58.455 | | 1/17/2017 |
| | | 1/17/2008 | | 0 | | 60,000 | | 84.930 | | 1/17/2018 |
| |
| |
| |
| |
| |
|
| | | | | |
C. Sbiti | | 4/17/2002 | | 100,000 | | 0 | | 27.873 | | 4/17/2012 |
| | | 1/15/2003 | | 200,000 | | 0 | | 20.648 | | 1/15/2013 |
| | | 7/21/2004 | | 180,000 | | 0 | | 32.618 | | 7/21/2014 |
| | | 1/19/2005 | | 135,000 | | 45,000 | | 32.455 | | 1/19/2015 |
| | | 1/18/2006 | | 130,000 | | 130,000 | | 54.235 | | 1/18/2016 |
| | | 1/17/2007 | | 0 | | 130,000 | | 58.455 | | 1/17/2017 |
| | | 1/17/2008 | | 0 | | 120,000 | | 84.930 | | 1/17/2018 |
| |
| |
| |
| |
| |
|
| | | | | |
D. Boutte | | 4/21/1999 | | 32,968 | | 0 | | 27.810 | | 4/21/2009 |
| | | 4/19/2000 | | 40,000 | | 0 | | 36.516 | | 4/19/2010 |
| | | 4/18/2001 | | 100,000 | | 0 | | 31.188 | | 4/18/2011 |
| | | 4/17/2002 | | 200,000 | | 0 | | 27.873 | | 4/17/2012 |
| | | 1/15/2003 | | 100,000 | | 0 | | 20.648 | | 1/15/2013 |
| | | 1/19/2005 | | 0 | | 25,000 | | 32.455 | | 1/19/2015 |
| | | 1/18/2006 | | 0 | | 70,000 | | 54.235 | | 1/18/2016 |
| | | 1/17/2007 | | 14,000 | | 56,000 | | 58.455 | | 1/18/2007 |
| | | 1/17/2008 | | 0 | | 60,000 | | 84.930 | | 1/17/2018 |
| |
| |
| |
| |
| |
|
| | | | | |
S. Pai | | 4/17/2002 | | 160,000 | | 0 | | 27.873 | | 4/17/2012 |
| | | 7/21/2004 | | 60,000 | | 0 | | 32.618 | | 7/21/2014 |
| | | 1/19/2005 | | 45,000 | | 15,000 | | 32.455 | | 1/19/2015 |
| | | 1/18/2006 | | 39,080 | | 40,920 | | 54.235 | | 1/18/2016 |
| | | 7/19/2006 | | 12,000 | | 18,000 | | 63.545 | | 7/19/2016 |
| | | 1/17/2008 | | 0 | | 40,000 | | 84.930 | | 1/17/2018 |
2010.| | | | | | | | | | | | | | | | | | | | | |
| | | | | Number of Securities
| | Number of Securities
| | | | |
| | | | | Underlying
| | Underlying
| | Option
| | Option
|
| | | Option Grant
| | Unexercised Options
| | Unexercised Options
| | Exercise
| | Expiration
|
| Name | | Date | | (#) Exercisable(1) | | (#) Unexercisable(1) | | Price ($) | | Date |
| A. Gould | | | 1/18/2006 | | | | 800,000 | | | | 0 | | | | 54.235 | | | | 1/18/2016 | |
| | | | 1/17/2007 | | | | 240,000 | | | | 160,000 | | | | 58.455 | | | | 1/17/2017 | |
| | | | 1/17/2008 | | | | 130,000 | | | | 195,000 | | | | 84.930 | | | | 1/17/2018 | |
| | | | 1/22/2009 | | | | 136,000 | | | | 544,000 | | | | 37.845 | | | | 1/22/2019 | |
| | | | 1/21/2010 | | | | 0 | | | | 355,000 | | | | 68.505 | | | | 1/21/2020 | |
| | | | | | | | | | | | | | | | | | | | | |
| P. Kibsgaard | | | 1/18/2006 | | | | 80,000 | | | | 0 | | | | 54.235 | | | | 1/18/2016 | |
| | | | 7/19/2006 | | | | 24,000 | | | | 6,000 | | | | 63.545 | | | | 7/19/2016 | |
| | | | 1/17/2008 | | | | 18,800 | | | | 28,200 | | | | 84.930 | | | | 1/17/2018 | |
| | | | 1/22/2009 | | | | 20,000 | | | | 80,000 | | | | 37.845 | | | | 1/22/2019 | |
| | | | 4/23/2009 | | | | 20,000 | | | | 80,000 | | | | 45.880 | | | | 4/23/2019 | |
| | | | 1/21/2010 | | | | 0 | | | | 47,000 | | | | 68.505 | | | | 1/21/2020 | |
| | | | 2/4/2010 | | | | 0 | | | | 64,000 | | | | 63.760 | | | | 2/4/2020 | |
| | | | | | | | | | | | | | | | | | | | | |
| S. Ayat | | | 4/17/2002 | | | | 60,000 | | | | 0 | | | | 27.873 | | | | 4/17/2012 | |
| | | | 1/15/2003 | | | | 60,000 | | | | 0 | | | | 20.648 | | | | 1/15/2013 | |
| | | | 1/18/2006 | | | | 60,000 | | | | 0 | | | | 54.235 | | | | 1/18/2016 | |
| | | | 1/17/2007 | | | | 60,000 | | | | 40,000 | | | | 58.455 | | | | 1/17/2017 | |
| | | | 1/17/2008 | | | | 24,000 | | | | 36,000 | | | | 84.930 | | | | 1/17/2018 | |
| | | | 1/22/2009 | | | | 25,000 | | | | 100,000 | | | | 37.845 | | | | 1/22/2019 | |
| | | | 1/21/2010 | | | | 0 | | | | 95,000 | | | | 68.505 | | | | 1/21/2020 | |
| | | | | | | | | | | | | | | | | | | | | |
| S. Pai | | | 4/17/2002 | | | | 160,000 | | | | 0 | | | | 27.873 | | | | 4/17/2012 | |
| | | | 1/18/2006 | | | | 80,000 | | | | 0 | | | | 54.235 | | | | 1/18/2016 | |
| | | | 7/19/2006 | | | | 24,000 | | | | 6,000 | | | | 63.545 | | | | 7/19/2016 | |
| | | | 1/17/2008 | | | | 16,000 | | | | 24,000 | | | | 84.930 | | | | 1/17/2018 | |
| | | | 1/22/2009 | | | | 17,000 | | | | 68,000 | | | | 37.845 | | | | 1/22/2019 | |
| | | | 4/23/2009 | | | | 12,000 | | | | 48,000 | | | | 45.880 | | | | 4/23/2019 | |
| | | | 1/21/2010 | | | | 0 | | | | 47,000 | | | | 68.505 | | | | 1/21/2020 | |
| | | | 2/4/2010 | | | | 0 | | | | 68,000 | | | | 63.760 | | | | 2/4/2020 | |
| | | | 10/21/2010 | | | | 0 | | | | 83,334 | | | | 64.225 | | | | 10/21/2020 | |
| | | | | | | | | | | | | | | | | | | | | |
| A. Belani | | | 1/18/2006 | | | | 100,000 | | | | 0 | | | | 54.235 | | | | 1/18/2016 | |
| | | | 1/17/2007 | | | | 30,000 | | | | 20,000 | | | | 58.455 | | | | 1/17/2017 | |
| | | | 1/17/2008 | | | | 24,000 | | | | 36,000 | | | | 84.930 | | | | 1/17/2018 | |
| | | | 1/22/2009 | | | | 25,000 | | | | 100,000 | | | | 37.845 | | | | 1/22/2019 | |
| | | | 1/21/2010 | | | | 0 | | | | 59,000 | | | | 68.505 | | | | 1/21/2020 | |
| | | | | | | | | | | | | | | | | | | | | |
| C. Sbiti | | | 4/17/2002 | | | | 100,000 | | | | 0 | | | | 27.873 | | | | 4/17/2012 | |
| | | | 1/15/2003 | | | | 200,000 | | | | 0 | | | | 20.648 | | | | 1/15/2013 | |
| | | | 1/18/2006 | | | | 260,000 | | | | 0 | | | | 54.235 | | | | 1/18/2016 | |
| | | | 1/17/2007 | | | | 0 | | | | 130,000 | | | | 58.455 | | | | 1/17/2017 | |
| | | | 1/17/2008 | | | | 0 | | | | 120,000 | | | | 84.930 | | | | 1/17/2018 | |
| | | | 1/22/2009 | | | | 0 | | | | 250,000 | | | | 37.845 | | | | 1/22/2019 | |
| | | | 4/23/2009 | | | | 0 | | | | 125,000 | | | | 45.880 | | | | 4/23/2019 | |
| | | | 1/21/2010 | | | | 0 | | | | 118,000 | | | | 68.505 | | | | 1/21/2020 | |
| | |
| (1) | | Options granted from July 2003 to January 2006 have four-year ratable vesting and stock price appreciation is capped at 125% of the exercise price on the date of grant. GrantsThe grants listed above that were made before and after these dates have five-year ratable vesting and no profit cap, except for those(i) options granted to employees in France, which have four-year cliff vesting.vesting, and (ii) options granted to Mr. Gould in January 2010, which vest in three equal annual installments. |
42
31
Option Exercises and Stock Vested for Fiscal Year 20082010 The following table sets forth certain information with respect to stock options exercised by
the named executive officers during
2008. | | | | |
| | | Option Awards
|
Name
| | Number of Shares
Acquired on Exercise (#)
| | Value Realized
on Exercise ($)
|
| | |
A. Gould | | 508,908 | | 35,906,220 |
S. Ayat | | 105,366 | | 7,318,220 |
C. Sbiti | | — | | — |
D. Boutte | | 117,223 | | 5,880,434 |
S. Pai | | 41,684 | | 2,329,719 |
2010.
| | | | | | | | | |
| | | Option Awards | |
| | | Number of Shares
| | | Value Realized
| |
| Name | | Acquired on Exercise(#) | | | on Exercise($) | |
| A. Gould | | | 211,430 | | | | 6,521,558 | |
| P. Kibsgaard | | | 14,390 | | | | 619,116 | |
| S. Ayat | | | 65,000 | | | | 1,566,205 | |
| S. Pai | | | 120,000 | | | | 4,027,620 | |
| A. Belani | | | — | | | | — | |
| C. Sbiti | | | 360,000 | | | | 13,953,060 | |
Pension Benefits for Fiscal Year 2010 Schlumberger maintains the following pension plans for executive officers and other employees, which provide for lifetime pensions upon retirement, based on years of service:
| | |
| • | Schlumberger Limited Pension Plan (“SLB Pension Plan”); |
|
| • | Schlumberger Technology Corporation Pension Plan (“STC Pension Plan”); |
|
| • | Schlumberger Limited Supplementary Benefit Plan (“SLB Supplementary Plan”); |
|
| • | Schlumberger Technology Corporation Supplementary Benefit Plan (“STC Supplementary Plan”); |
|
| • | Schlumberger French Supplementary Pension Plan (“SLB French Supplementary Plan”); and |
|
| • | Schlumberger International Staff Pension Plan (“SLB International Staff Pension Plan”). |
43
Schlumberger Technology Corporation Pension Plan (“STC Pension Plan”);
Schlumberger Limited Supplementary Benefit Plan (“SLB Supplementary Plan”);
Schlumberger Technology Corporation Supplementary Benefit Plan (“STC Supplementary Plan”);
Schlumberger French Supplementary Pension Plan (“SLB French Supplementary Plan”); and
Schlumberger International Staff Pension Plan (“SLB International Staff Pension Plan”).
The following table and narrative disclosure set forth certain information with respect to pension benefits payable to the named executive officers.
| | | | | | | | |
Name
| | Plan Name
| | Number of
Years of
Credited
Service (#)
| | Present Value
of Accumulated
Benefits ($)(1)
| | Payments During
Last Fiscal Year
|
| | | | |
A. Gould | | SLB Pension Plan | | 11.50 | | 540,838 | | N/A |
| | | SLB Supplementary Plan | | 9.00 | | 6,052,036 | | N/A |
| | | SLB International Staff Pension Plan | | 13.00 | | 1,612,550 | | N/A |
| |
| |
| |
| |
|
C. Sbiti | | STC Pension Plan | | 0.92 | | 55,116 | | N/A |
| | | SLB French Supplementary Plan | | 3.00 | | 1,808,117 | | N/A |
| | | SLB International Staff Pension Plan | | 16.00 | | 1,149,330 | | N/A |
| |
| |
| |
| |
|
D. Boutte | | SLB Pension Plan | | 4.75 | | 254,633 | | N/A |
| | | STC Pension Plan | | 12.37 | | 261,521 | | N/A |
| | | SLB Supplementary Plan | | 4.75 | | 577,849 | | N/A |
| | | STC Supplementary Plan | | 2.50 | | 31,841 | | N/A |
| | | SLB International Staff Pension Plan | | 10.50 | | 2,057,350 | | N/A |
| |
| |
| |
| |
|
S. Ayat | | SLB Pension Plan | | 2.25 | | 115,502 | | N/A |
| | | STC Pension Plan | | 0.75 | | 51,677 | | N/A |
| | | SLB Supplementary Plan | | 2.25 | | 451,950 | | N/A |
| | | STC Supplementary Plan | | 0.50 | | 3,738 | | N/A |
| | | SLB French Supplementary Plan | | 0.75 | | 137,521 | | N/A |
| | | SLB International Staff Pension Plan | | 10.60 | | 624,156 | | N/A |
| |
| |
| |
| |
|
S. Pai | | SLB Pension Plan | | 4.25 | | 133,353 | | N/A |
| | | STC Pension Plan | | 7.25 | | 153,876 | | N/A |
| | | SLB Supplementary Plan | | 4.25 | | 632,046 | | N/A |
| | | STC Supplementary Plan | | 3.75 | | 219,470 | | N/A |
| | | SLB International Staff Pension Plan | | 9.60 | | 213,179 | | N/A |
32
| | | | | | | | | | | | | | | |
| | | | | Number of
| | | | | | | |
| | | | | Years of
| | | Present Value
| | | | |
| | | | | Credited
| | | of Accumulated
| | | Payments During
| |
| Name | | Plan Name | | Service (#)(1) | | | Benefits ($)(2) | | | Last Fiscal Year | |
| |
| A. Gould | | SLB Pension Plan | | | 13.50 | | | | 666,650 | | | | — | |
| | | SLB Supplementary Plan | | | 11.00 | | | | 7,886,580 | | | | — | |
| | | SLB International Staff Pension Plan | | | 13.00 | | | | 1,701,237 | | | | — | |
| | | | | | | | | | | | | | | |
| P. Kibsgaard | | SLB Pension Plan | | | 2.75 | | | | 41,716 | | | | — | |
| | | STC Pension Plan | | | 5.00 | | | | 114,467 | | | | — | |
| | | SLB Supplementary Plan | | | 2.75 | | | | 218,229 | | | | — | |
| | | STC Supplementary Plan | | | 4.25 | | | | 162,295 | | | | — | |
| | | SLB International Staff Pension Plan | | | 3.20 | | | | 120,764 | | | | — | |
| | | | | | | | | | | | | | | |
| S. Ayat | | SLB Pension Plan | | | 4.25 | | | | 270,623 | | | | — | |
| | | STC Pension Plan | | | 0.75 | | | | 65,055 | | | | — | |
| | | SLB Supplementary Plan | | | 4.25 | | | | 1,082,932 | | | | — | |
| | | STC Supplementary Plan | | | 0.50 | | | | 4,706 | | | | — | |
| | | SLB French Supplementary Plan | | | 0.75 | | | | 143,822 | | | | — | |
| | | SLB International Staff Pension Plan | | | 10.60 | | | | 731,988 | | | | — | |
| | | | | | | | | | | | | | | |
| S. Pai | | SLB Pension Plan | | | 5.00 | | | | 223,310 | | | | — | |
| | | STC Pension Plan | | | 7.25 | | | | 203,990 | | | | — | |
| | | SLB Supplementary Plan | | | 5.00 | | | | 937,956 | | | | — | |
| | | STC Supplementary Plan | | | 3.75 | | | | 290,946 | | | | — | |
| | | SLB French Supplementary Plan | | | 1.25 | | | | 380,368 | | | | — | |
| | | SLB International Staff Pension Plan | | | 9.60 | | | | 285,665 | | | | — | |
| | | | | | | | | | | | | | | |
| A. Belani | | SLB Pension Plan | | | 5.75 | | | | 351,223 | | | | — | |
| | | STC Pension Plan | | | 2.58 | | | | 38,897 | | | | — | |
| | | SLB Supplementary Plan | | | 5.75 | | | | 856,290 | | | | — | |
| | | STC Supplementary Plan | | | 2.58 | | | | 94,957 | | | | — | |
| | | SLB International Staff Pension Plan | | | 10.00 | | | | 454,474 | | | | — | |
| | | | | | | | | | | | | | | |
| C. Sbiti | | STC Pension Plan | | | 0.92 | | | | 66,800 | | | | — | |
| | | SLB French Supplementary Plan | | | 4.13 | | | | 2,417,621 | | | | — | |
| | | SLB International Staff Pension Plan | | | 16.88 | | | | 2,154,520 | | | | — | |
| | |
| (1) | | The Company does not grant and does not expect to grant extra years of credited service to named executive officers under the pension plans. The number of years of credited service reflect each named executive officer’s actual years of service as a participant in each plan. |
|
| (2) | | The present value of accumulated benefits is calculated using the 1994 Group Annuity Mortality Table and a discount rate of 6.50%5.50% at both December 31, 2007 and December 31, 2008.2010. Retirement in each case is assumed to be the earlier of normal retirement age or December 31, 20082010 if the named executive officer is employed after normal retirement age, or, as to Schlumberger’s U.S. plans, the date that the sum of the named executive officer’s age plus years of service has reached, or is expected to reach, age 85, but not before the named executive officer reaches age 55. |
Tax-Qualified Pension Plans Both the Schlumberger LimitedSLB Pension Plan and the Schlumberger Technology CorporationSTC Pension Plan are U.S. tax-qualified pension plans. These plans have substantially identical terms. Employees may participate in one or both of these plans in the course of their careers with Schlumberger, in which case they become entitled to a pension from each plan based upon the benefits accrued during the years of service related to each plan. These plans are funded through cash contributions made by the Company and its subsidiaries based on actuarial valuations and regulatory
44
requirements. Benefits under these plans are based on an employee’s admissible compensation (generally base salary and cash incentive) for each year in which an employee participates in the plan, and the employee’s length of service with Schlumberger.
FromSince January 1, 1989, the benefit earned has been 1.5% of admissible compensation for service prior to the employee’s completion of 15 years of active service and 2% of admissible compensation for service after completion of 15 years of active service. Normal retirement under these plans is at age 65, however, early retirement with a reduced benefit is possible at age 55 or as early as age 50 with 20 years of service. Additionally, under the “rule of
85”,85,” an employee or executive officer who terminates after age 55 and whose combined age and service is 85 or more, is eligible for retirement with an unreduced pension.
Mr.Messrs. Gould
isand Sbiti are each eligible for retirement with an unreduced pension under the rule of 85. The benefits are usually paid as a life-time annuity.
The Company does not grant and does not expect to grant extra years of credited service under the tax-qualified pension plans to executive officers.In 2004, the above plans were amended to generally provide that employees hired on or after October 1, 2004 would not be eligible to participate. Newly-hired employees are eligible to participate in an enhanced defined contribution plan, which provides a Company contribution, depending on the employee’s 401(k) contribution and the profitability of the Company in any year. None of the named executive officers
working in the US were affected by this change.
Schlumberger Supplementary Benefit Plans—Nonqualified Pension Both the
Schlumberger LimitedSLB Supplementary
Benefit Plan and the
Schlumberger Technology CorporationSTC Supplementary
Benefit Plan contain
nonqualifiednon-tax-qualified pension benefits. These plans have substantially identical terms and each plan provides an eligible employee with benefits equal to the benefits that the employee is unable to receive under the applicable qualified pension plan due to the U.S. Internal Revenue Code (“U.S. IRC”) limits on
(1)(i) annual compensation that can be taken into account under qualified plans and
(2)(ii) annual benefits that can be provided under qualified plans. The retirement age under nonqualified pension plans is the same as under the tax-qualified pension plans. These benefits are subject to forfeiture if the employee
leaves the Company before the age of 50, is terminated for cause or has violated a confidentiality arrangement involving the Company or its affiliates. Mr. Gould is eligible for retirement with an unreduced pension under the rule of 85.
Currently, nonqualifiedNonqualified plan benefits are paid to an employee
(orupon separation from service, provided the
employee’s beneficiary) atemployee has attained the
same timeage of 55, or if earlier, the age of 50 with 20 years of service. Payment is made as a joint and
in the same mannersurvivor annuity, if married; otherwise, payment is made as
the benefita life only annuity. Payment to key employees is
paid under the applicable qualified plan.delayed six months following separation from service. These nonqualified plan benefits are payable in cash from the Company’s general assets and are intended to qualify as “excess benefit plans” exempt from certain requirements of Title I of ERISA.
The Company has not granted and does not expect to grant extra years of credited service under the nonqualified pension plans to executive officers.French Supplementary Pension Plan Effective January 2006, the Company adopted
athe SLB French Supplementary
Pension Plan for exempt employees in France. The plan complements existing national plans and provides a pension
frombeginning at age 60 when the
33
employee retires from Schlumberger and is eligible for a French state pension. The benefit is equivalent to 1.5% of admissible compensation above the earnings cap for less than fifteen years service and 2% of admissible compensation (generally base salary and cash incentive) for more than fifteen years service. No employee contributions are required or permitted. The benefit is paid as a life-time annuity. If an eligible employee leaves the Company before age 60 or is otherwise not entitled to a French pension, then the employee would not receive a benefit under the plan. If the eligible employee is terminated before age 60, is not subsequently employed and is otherwise entitled to a French pension, then the employee would receive a benefit under the plan.
The Company does not grant and does not expect to grant extra years of credited service under the tax-qualified pension plans to executive officers.
Schlumberger International Staff Pension PlanRecognizing the need to maintain a high degree of mobility for certain of the Company’s employees and consequentlythat otherwise the employees’ inabilityemployees would be unable to accumulate any meaningful pension because they are required to work in many different countries, the Company maintains the SchlumbergerSLB International Staff Pension Plan
45
for such employees. All of the Company’s named executive officers have either been in the
SLB International Staff Plan at some time during their career prior to becoming an executive officer or are in the plan because of their current assignment. This plan provides for a lifetime annuity upon retirement based on a specified number of years of service. The plan is funded through cash contributions made by the Company or its subsidiaries along with mandatory contributions by employees.
Benefits under this plan are based on a participant’s admissible compensation (generally, base salary, incentive and geographical coefficient) for each year in which the employee participates in the plan and the employee’s length of service.
SinceThe benefit earned from January 1, 1993
the benefit earned has beento January 31, 2009 is 2.4% of admissible compensation prior to completion of 15 years of service, and 3.2% of admissible compensation for each year of service after 15 years. Those employees who
remainremained with Schlumberger beyond 20 years of service
havehad the first 15 years of service upgraded to 3.2%. Benefits are payable upon normal retirement age, at or after age 55, or upon early retirement, at or after age 50 with 20 years of service.
Since January 1, 2010, the benefit earned has been equal to 3.5% of admissible compensation regardless of an employee’s years of service. Benefits earned on or after this date are payable upon normal retirement age, at or after age 60, or upon early retirement, at or after age 55.
Nonqualified Deferred Compensation for Fiscal Year 2010 The following table and narrative disclosure set forth certain information with respect to nonqualified deferred compensation payable to
the named executive officers.
| | | | | | | | | | | |
Name
| | Executive
Contributions
in Last FY
($)
| | Company
Contributions
in Last FY
($)(1)
| | Aggregate
Earnings
in Last FY
($)
| | | Aggregate Withdrawals/
Distributions
($)
| | Aggregate
Balance at
Last FYE
($)(1)
|
| | | | | |
A. Gould | | 361,200 | | 421,400 | | (311,704 | ) | | — | | 5,485,860 |
S. Ayat | | 81,918 | | 95,571 | | (198,296 | ) | | — | | 922,719 |
C. Sbiti | | — | | 173,436 | | (454,467 | ) | | — | | 1,261,390 |
D. Boutte | | 66,306 | | 77,357 | | 27,882 | | | — | | 519,339 |
S. Pai | | 178,170 | | 84,146 | | 38,214 | | | — | | 1,445,776 |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Executive
| | Company
| | Aggregate
| | Aggregate
| | Aggregate
|
| | | | | Contributions
| | Contributions
| | Earnings
| | Withdrawals/
| | Balance at
|
| | | | | in Last FY
| | in Last FY
| | in Last FY
| | Distributions
| | Last FYE
|
| Name | | Plan Name | | ($)(1) | | ($)(2) | | ($) | | ($) | | ($)(3) |
| A. Gould | | SLB Supplementary Plan | | | — | | | | 80,850 | | | | 286,301 | | | | — | | | | 1,834,693 | |
| | | SLB Restoration Plan | | | 242,550 | | | | 121,275 | | | | 235,824 | | | | — | | | | 3,990,021 | |
| | | International Staff Plan | | | — | | | | — | | | | 247,794 | | | | — | | | | 1,942,133 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| P. Kibsgaard | | SLB Supplementary Plan | | | — | | | | 22,106 | | | | 34,324 | | | | — | | | | 182,912 | |
| | | SLB Restoration Plan | | | — | | | | — | | | | 2,906 | | | | — | | | | 80,311 | |
| | | International Staff Plan | | | — | | | | — | | | | 9,197 | | | | — | | | | 85,748 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| S. Ayat | | SLB Supplementary Plan | | | — | | | | 23,825 | | | | 35,078 | | | | — | | | | 171,395 | |
| | | SLB Restoration Plan | | | 71,475 | | | | 35,738 | | | | 32,769 | | | | — | | | | 319,784 | |
| | | International Staff Plan | | | — | | | | — | | | | 104,353 | | | | — | | | | 994,056 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| S. Pai | | SLB Supplementary Plan | | | — | | | | — | | | | 43,410 | | | | — | | | | 290,622 | |
| | | SLB Restoration Plan | | | — | | | | — | | | | 62,085 | | | | — | | | | 1,282,808 | |
| | | International Staff Plan | | | — | | | | 59,047 | | | | 26,908 | | | | — | | | | 309,939 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| A. Belani | | SLB Supplementary Plan | | | — | | | | 16,542 | | | | 30,800 | | | | — | | | | 163,279 | |
| | | SLB Restoration Plan | | | 124,062 | | | | 24,812 | | | | 37,010 | | | | — | | | | 609,896 | |
| | | International Staff Plan | | | — | | | | — | | | | 114,116 | | | | — | | | | 821,426 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| C. Sbiti | | International Staff Plan | | | — | | | | 110,000 | | | | 210,109 | | | | — | | | | 1,941,529 | |
| | |
| (1) | | CompanyThe amounts reported in the “Executive Contributions in last FY” column represent elective contributions of a portion of a named executive officer’s base salary to the Schlumberger Limited Restoration Savings Plan (which amounts are also included in the “Salary” and aggregate balances include amounts contributed by Schlumberger to nonqualified deferred compensation plans in 2009 with respect to fiscal 2008 compensation. For more information on the amount“Non-Equity Incentive Plan Compensation” columns of company contributions, please read footnotes (8) through (12) to the Summary Compensation Table.Table). |
|
| (2) | | The amounts reported in the “Company Contributions in last FY” column represent Schlumberger’s contributions to each named executive officer’s SLB Supplementary Plan, SLB Restoration Plan and International Staff Plan accounts (which amounts are also included in the “All Other Compensation” column of the Summary Compensation Table). |
46
| | |
| (3) | | The amounts reported in the “Aggregate Balance at Last FYE” column represent balances from the Schlumberger Limited Restoration Savings Plan, the SLB Supplementary Plan and the International Staff Plan and include various amounts previously reported in the Summary Compensation Table as Salary, Non-Equity Incentive Plan Compensation or All Other Compensation. |
Schlumberger maintains the following nonqualified deferred compensation plans for
its employees, including executive officers:
Schlumberger Limited Supplementary Benefit Plan;
Schlumberger Technology Corporation Supplementary Benefit Plan;
| | |
| • | SLB Supplementary Plan; |
|
| • | STC Supplementary Plan; |
|
| • | Schlumberger Limited Restoration Savings Plan (the “SLB Restoration Plan”); |
|
| • | Schlumberger Technology Corporation Restoration Savings Plan (the “STC Restoration Plan”); and |
|
| • | Schlumberger International Staff Profit Sharing Plan (the “SLB International Staff Plan”). |
Schlumberger Limited Restoration Savings Plan;
Schlumberger Technology Corporation Restoration Savings Plan; and
Schlumberger International Staff Profit Sharing Plan.
Except for the international staff plans,International Staff Plan, all nonqualified deferred compensation plan benefits are payable in cash from the Company’s general assets. All of these nonqualified plans are intended to qualify as “supplementary plans” or “foreign plans” exempt from certain requirements of Title I of ERISA.
34
SchlumbergerSLB Supplementary Benefit Plans—Plan—Non-Qualified Profit SharingThe
Schlumberger LimitedSLB Supplementary
Benefit Plan provides certain non-qualified defined contribution benefits for eligible employees, including executive officers. Schlumberger Technology Corporation maintains a plan with substantially identical terms.
The
supplementary benefit plans provideSLB Supplementary Plan provides an eligible employee with discretionary
Company profit sharing contributions that
areis not permissible under the applicable tax-qualified
plansplan due to U.S. IRC limits on (1) annual compensation that can be taken into account under
the qualified
plansplan and (2) annual benefits that can be provided under
the qualified
plans.plan. These nonqualified plan benefits are credited with earnings and losses as if they were invested in the qualified
plans,plan, with the same employee investment elections as the qualified plan. An employee forfeits all rights under the
nonqualified planSLB Supplementary Plan if the employee is terminated for cause or has violated a confidentiality arrangement involving the Company or the Company’s affiliates. These nonqualified plan benefits are paid in a lump-sum payment following the end of the year in which the employee terminates active service. If the employee dies before full payment of these benefits, the unpaid benefits are paid in a lump sum to the beneficiaries designated under the applicable qualified plan.
SchlumbergerSLB Restoration Savings PlansPlanThe
Schlumberger LimitedSLB Restoration
Savings Plan, a non-qualified deferred compensation plan, provides certain defined contribution benefits for eligible employees, including executive officers. Schlumberger Technology Corporation maintains a plan with substantially identical terms. The
restoration savings plans allowSLB Restoration Plan allows an eligible employee to defer compensation (and receive an associated employer match) that the employee cannot defer under the applicable tax-qualified
plansplan because of U.S. IRC limits on the amount of compensation that can be taken into account.
An eligible employee may elect in advance to defer a percentage (from 1% to 15%) of his or her compensation (generally base salary and cash incentive) over the U.S. IRC compensation limits. The election cannot be changed during the year.Theyear. The Company makes an annual matching contribution with respect to each employee’s deferrals for a year, if the employee is still employed by the Company or an affiliate on the last day of the year. TheFor employees who participate in a Schlumberger pension plan, the amount of the matching contribution is equal to one-half of the first 6% deferred by the employee in profitable years. No matchFor employees who do not participate in a Schlumberger pension plan, the matching contribution is made100% on the first 6% deferred by the employee. The Company does not make a matching contribution in non-profitable years. Employees’ accounts are credited with interest, calculated to mirror the interest earnings of the Short-Term
47
Fixed Income Fund under the Schlumberger Master Profit Sharing
Trust.Trust, which was 3.73% in 2010. Matching contributions and related interest vest based on the employee’s years of service, as follows:
| | |
| 2 years | | 331/3 vested |
| 3 years | | 662/3 vested |
| 4 years | | 100% vested |
An employee’s account fully vests on his
or her death,
his or her 60th birthday
or plan
termination or a change in control.termination. An employee’s vested account balance is paid in a single lump sum (subject to tax withholding) following the participant’s death, qualifying disability, retirement or other qualifying termination of employment. However, an employee forfeits all
rightsbenefits under the plan if a determination is made that the employee has engaged in certain dishonest acts or violated a confidentiality arrangement involving Schlumberger or its affiliates.
SchlumbergerSLB International Staff Profit Sharing PlanSchlumberger maintains
anthe SLB International Staff
Profit Sharing Plan, which provides for an annual employer contribution based on admissible
compensation.compensation (generally base salary and cash incentive). Amounts allocated to the participants’ accounts share in investment gains
and/or losses of the trust fund and are generally distributed in a lump sum upon the satisfaction of certain conditions on termination of employment. Benefits earned under the
Profit SharingSLB International Staff Plan shall be forfeited upon a determination by the
SLB International Staff Plan’s
Administratoradministrator that the employee’s separation from service was due to or in circumstances of fraud or misconduct detrimental to the Company, an affiliate or any customer.
Potential Payments Upon Termination or Change in Control for Fiscal Year 2010
No Additional Payments Upon Termination or Change in ControlAs stated in the CD&A,
Schlumberger’s executive officers
generally receive the same benefits as other employees. As is the case with compensation, any differences are generally due to local (country-specific) requirements. In line with this practice, executive officers do not have employment agreements, “golden parachutes” or change in control agreements, except
for employment agreements in connection with phased
retirement as described above in the CD&A.35
retirement.
The Company has a practice of phased retirement, which
is generallymay be offered to executive officers
approaching retirement, other(other than the
CEO,CEO) approaching retirement, at the discretion of
the individual and the Company. Please read “Compensation Discussion and Analysis—Benefits—Retirement Practices” for a more detailed
discussion of this practice.discussion.
All salaried employees who receive stock options are subject to the same terms and conditions in the event of a termination or change in control.control, except for certain options assumed in connection with the acquisition of Smith (none of which are held by the named executive officers).
48
Termination of employmentThe following table
This section summarizes the consequences under the Company’s stock option plans
and standard form of stock option award agreement in the event an option holder’s employment terminates.
The following summary reflects amendments made by the Board of Directors in January 2008 which provided for accelerated vesting on a termination due to death or disability. | | | | |
Reason for Termination of Employment
| | Vesting
| | Post-Employment Exercise Period
|
| | |
| Voluntary termination or termination by the Company other than for cause | | No additional vesting.vesting | | Exercisable (to the extent exercisable at termination) at any time within three months after termination. |
| | | | |
| Termination by the Company for cause | | OptionsNone | | Vested and unvested options forfeited immediately. |
| | None. |
| | | |
| Disability | | Full vesting.vesting | | Exercisable at any time during the60-month period after termination bydue to disability or during the remainder of the option period, whichever is shorter.* |
| | | | |
Retirement (as defined in the applicable plan)plan or award agreement) | | No additional vesting.vesting | | Exercisable (to the extent exercisable at termination) at any time during the60-month period after termination bydue to retirement or during the remainder of the option period, whichever is shorter. |
| | | | |
| Death | | Full vesting.vesting | | Exercisable at any time during the60-month period after termination bydue to death or during the remainder of the option period, whichever is shorter. |
*
| | |
| * | | In order to preserve U.S. preferential tax treatment, the additional60-month exercise period following a termination due to disability is not applicable to incentive stock options granted prior to January 2008, and such awards are only exercisable for only 3 months following termination of employment. |
Regardless of
Notwithstanding the
vesting and exercisability provisions described above, an option holder may forfeit his or her right to exercise stock options, and may have certain prior option exercises rescinded, if such holder engages in “detrimental activity” within one year after termination of employment (or five years after termination of employment in the event of retirement or disability).
36
If an optionee dies following termination of employment, but during the period in which the optionee would otherwise be able to exercise the option, then the person entitled under the option holder’s will or by the
applicable laws of descent and distribution will be entitled to exercise the option until the earlier of (i) 60 months following the date of the optionee’s termination of employment or (ii) the expiration of the original term. Death following termination of employment will not result in any additional vesting, so that the option will be exercisable to the extent provided in the matrix above based on the circumstances of the optionee’s termination of employment.
Pursuant to Schlumberger’s stock options plans and standard form of stock option award agreement, in the event of any reorganization, merger or consolidation where Schlumberger is not the surviving corporation, or upon the liquidation or dissolution of Schlumberger, all outstanding stock option awards will, unless alternate provisions are made by Schlumberger in connection with the reorganization, merger or consolidation for the assumption of such awards, bebecome fully exercisable and vested, and all holders will be given noticepermitted to permit exercise their options for 30 days prior to the cancellation of the awards as of the effective date of such event.
49
The following table sets forth the intrinsic value of the unvested stock options held by each named executive officer as of December 31,
20082010 that would become vested upon the occurrence of
oneany of the events described in the preceding
sentence.paragraph. Due to the number of factors that affect the nature and amount of any benefits provided upon these events, any amounts actually paid or distributed may be different. Factors that could affect these amounts include the time during the year of any such event and the price of Schlumberger common stock. | | | | |
| Name | | Amount ($)(1) |
| A. Gould | | | 34,166,745 | |
| P. Kibsgaard | | | 8,746,855 | |
| S. Ayat | | | 6,991,825 | |
| S. Pai | | | 8,686,378 | |
| A. Belani | | | 5,951,105 | |
| C. Sbiti | | | 21,141,510 | |
| | |
Name
| | Amount ($)(1)
|
A. Gould
| | 1,777,500 |
S. Ayat
| | 148,125 |
C. Sbiti
| | 444,375 |
D. Boutte
| | 246,875 |
S. Pai
| | 148,125 |
| (1) | | Calculated based on the difference between the closing price of Schlumberger common stock on December 31, 20082010 ($42.33)83.50) and the exercise price of unvestedthe stock optionsoption as of such date. |
If Schlumberger merges or consolidates with
one or more corporationsanother entity and is the surviving entity, then a holder of stock options granted pursuant to Schlumberger’s stock
optionoptions plans will be entitled to receive, upon exercise or vesting, in lieu of the number of shares with respect to which the award is exercisable or vested, the number and class of shares of stock or other securities that the holder would have been entitled to receive under the terms of such merger or consolidation if, immediately prior to such event, such holder had been the holder of record of the number of shares of Schlumberger common stock equal to the number of shares as to which such award is then exercisable or vested.
Schlumberger’s pension plans and non-qualified deferred compensation plans include the same terms and conditions for all participating employees in the event of a termination or change in control. Other than the Schlumberger Restoration Savings Plan, none of Schlumberger’s non-qualified plans provide for the accelerated payment of benefits upon a change in control. For more information on these plans, please read “Executive Compensation—Pension Benefits” and “—Nonqualified Deferred Compensation.”
Subject to satisfying certain age, service and contribution requirements, all U.S. employees are eligible to participate in a retiree medical program. Generally, this program provides comprehensive medical, prescription drug and vision benefits for retirees and their dependents until attaining age 65, at which time Medicare becomes primary and the Schlumberger plan becomes secondary, paying eligible charges after Medicare has paid.
50
37
DIRECTOR COMPENSATION IN FISCAL YEAR 2010 Directors who are employees of Schlumberger do not receive compensation for serving on the Board or its committees. The following table provides information on Schlumberger’s compensation for non-employee directors for
2008. | | | | | | | | | | | | | | |
Name
| | Fees
Earned or
Paid in
Cash
($)(1)(2)
| | Stock
Awards(3)(4)
($)
| | Option
Awards
($)
| | Non-Equity
Incentive Plan
Compensation
($)
| | Change in
Pension Value
& Nonqualified
Deferred
Compensation
Earnings
($)
| | All Other
Compensation
($)
| | Total (5)
($)
|
| | | | | | | |
Philippe Camus | | 97,500 | | 201,100 | | — | | — | | — | | — | | 298,600 |
Jamie S. Gorelick | | 107,500 | | 201,100 | | — | | — | | — | | — | | 308,600 |
Tony Isaac | | 117,500 | | 201,100 | | — | | — | | — | | — | | 318,600 |
N. Kudryavtsev | | 97,500 | | 201,100 | | — | | — | | — | | — | | 298,600 |
Adrian Lajous | | 110,000 | | 201,100 | | — | | — | | — | | — | | 311,100 |
Michael Marks | | 100,000 | | 201,100 | | — | | — | | — | | — | | 301,100 |
Didier Primat(6) | | 35,000 | | 201,100 | | — | | — | | — | | — | | 236,100 |
Leo Rafael Reif | | 97,500 | | 201,100 | | — | | — | | — | | — | | 298,600 |
Tore I. Sandvold | | 100,000 | | 201,100 | | — | | — | | — | | — | | 301,100 |
Nicolas Seydoux(7) | | 110,000 | | 201,100 | | — | | — | | — | | — | | 311,100 |
Linda Gillespie Stuntz | | 110,000 | | 201,100 | | — | | — | | — | | — | | 311,100 |
Rana Talwar(8) | | 22,500 | | — | | — | | — | | — | | — | | 22,500 |
2010.| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Change in
| | | | | | | |
| | | | | | | | | | | | | | | Pension Value
| | | | | | | |
| | | Fees
| | | | | | | | | | | | & Nonqualified
| | | | | | | |
| | | Earned or
| | | | | | | | | Non-Equity
| | | Deferred
| | | | | | | |
| | | Paid in
| | | Stock
| | | Option
| | | Incentive Plan
| | | Compensation
| | | All Other
| | | | |
| | | Cash
| | | Awards(2)
| | | Awards
| | | Compensation
| | | Earnings
| | | Compensation
| | | Total(3)
| |
| Name | | ($)(1) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| Philippe Camus | | | 125,000 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 285,695 | |
| Peter L.S. Currie | | | 87,525 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 248,220 | |
Jamie S. Gorelick(4) | | | 65,000 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 225,695 | |
| Tony Isaac | | | 139,950 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 300,645 | |
| K.V. Kamath | | | 90,000 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 250,695 | |
| N. Kudryavtsev | | | 127,500 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 288,195 | |
| Adrian Lajous | | | 130,000 | | | | 160,695 | | | | — | | | | — | | | | — | | | | 15,368 | (7) | | | 306,063 | |
| Michael Marks | | | 127,500 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 288,195 | |
Elizabeth Moler(5) | | | 25,000 | | | | 92,133 | | | | — | | | | — | | | | — | | | | — | | | | 117,133 | |
| Leo Rafael Reif | | | 120,000 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 280,695 | |
| Tore I. Sandvold | | | 120,000 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 280,695 | |
| Henri Seydoux | | | 120,000 | | | | 160,695 | | | | — | | | | — | | | | — | | | | — | | | | 280,695 | |
Linda Stuntz(6) | | | 32,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 32,500 | |
| | |
| (1) | | This column includes cash fees earned, without taking into account any election to defer receipt of such fees. Directors receive an annual cash retainer of $100,000 plus an additional annual fee of $10,000 for membership on each committee. The chair of each committee receives an additional annual fee of $20,000 in lieu of the additional annual fee of $10,000 for committee membership. In July 2008, the Compensation Committee reviewed the then-currentThe fees disclosed in this column are subject to adjustment in cases where a director compensation program and increased the director retainer’s fee from $60,000 to $100,000, effective September 1, 2008. Neitherhas served less than one full year or has changed committee memberships or chairmanships. Ordinarily, the annual feecash retainer is paid in cash, but directors can elect to have their retainer paid in stock or deferred under the Schlumberger 2004 Stock and Deferral Plan for committee membership nor the chair fee changed as a result.Non-Employee Directors. |
|
| (2) | | Ms. Gorelick and Mr. Marks each deferredThis column includes the aggregate grant date fair value, computed in accordance with applicable accounting standards, of shares of Schlumberger common stock issued, without taking into account any election to defer receipt of their director fees until no earlier than the time each such person ceases to be a director. |
(3) | | shares. Schlumberger’s current practice is to grant each non-employee director shares of Schlumberger common stock each April. On April 30, 2008,2010, Schlumberger granted each non-employee director 2,000(except Ms. Stuntz, who did not stand for re-election in 2010, and Ms. Moler, who was not yet a director) 2,250 shares of Schlumberger common stock. EachExcept as provided in the next sentence, each amount set forth in the “Stock Awards” column in the Director Compensation table is equal to the number of shares of common stock issued, multiplied by $100.55,$71.42, which was the closing price of Schlumberger’s common stock on April 30, 2008,2010, the date of grant. Ms. Moler was appointed to serve as a director in September 2010, and the amount set forth in the “Stock Awards” column is equal to 1,313, being the number of shares issued to Ms. Moler in 2010, multiplied by $70.17, which was the closing price of Schlumberger’s common stock on November 1, 2010, the date of grant. Although Schlumberger’s Directors Stock and Deferral Plan provides that annual stock awards to non-employee directors may be in the form of shares of common stock, shares of restricted common stock or restricted stock units, Schlumberger’s practice has been to issue only shares of common stock to its non-employee directors. Schlumberger directors have never received restricted common stock or restricted stock units as director compensation. |
| |
| In July 2008, the Compensation Committee increased the annual grant of Schlumberger common stock to non-employee directors, to 2,250 shares of Schlumberger common stock. | A non-employee director may elect to defer the receipt of all or part of a stock award. For information on the number of shares of Schlumberger common stock deferred by our directors, please read the footnotes to the table under “Security Ownership of Certain Beneficial Owners and Management” on page 4.by Management.” |
51
| | |
| (3) | | Schlumberger reimburses non-management directors for travel and other business expenses incurred in the performance of their services for Schlumberger. |
|
| (4) | | Ms. Gorelick and Messrs. Lajous and Marks each deferred receipt of 2,000 shares until no earlier thanresigned from the time each such person ceases to be a director.Board effective June 3, 2010. |
|
| (5) | | Schlumberger also reimburses directors for out-of-pocket expenses attendant to Board membership.Ms. Moler became a director in September 2010. |
|
| (6) | | Mr. Primat passed away in July 2008. |
(7) | | Mr. Seydoux is not standing for re-election at the 2009 Annual General Meeting of Stockholders. |
(8) | | Mr. TalwarMs. Stuntz was a director for part of 2008. He2010. She did not stand for re-election at the 2008 Annual General MeetingCompany’s 2010 annual general meeting of Stockholders.stockholders. |
|
| (7) | | Represents amounts paid for spousal airfare and hotel accommodations in connection with a Board meeting. These amounts were paid in Euros. For purposes of this column, compensation has been determined using the exchange rate of 1 U.S. Dollar = 0.753 Euros, being the average exchange rate over 2010. |
Director Stock Ownership Guidelines
The Board believes that ownership of Schlumberger stock by Board members aligns their interests with the interests of the Company’s stockholders. Accordingly, the Board has established a guideline that each Board member must, within five years after joining the Board, own at least 10,000 shares or restricted stock units. As of December 31, 2010, each of our current directors was in compliance with these guidelines.
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth the following information as of the end of December 31, 2010 for (1) all compensation plans previously approved by our stockholders and (2) all compensation plans not previously approved by our stockholders.
| | | | | | | | | | | | | |
| | | (a) | | | (b) | | | (c) | |
| | | | | | | | | Number of securities remaining
| |
| | | Number of securities to be
| | | | | | available for future issuance
| |
| | | issued upon exercise of
| | | Weighted-average exercise
| | | under equity compensation
| |
| | | outstanding options, warrants
| | | price of such outstanding
| | | plans (excluding securities
| |
| Plan category | | and rights | | | options, warrants and rights | | | reflected in column (a)) | |
| Equity compensation plans approved by security holders | | | 39,721,715 | | | $ | 52.236 | | | | 31,458,983 | |
| Equity compensation plans not approved by security holders | | | N/A | | | | N/A | | | | N/A | |
| | | | | | | | | | | | | |
| Total | | | 39,721,715 | | | $ | 52.236 | | | | 31,458,983 | |
Equity compensation plans approved by our stockholders include the Schlumberger 2010 Stock Incentive Plan; the Schlumberger 2008 Stock Incentive Plan; the Schlumberger 2005 Stock Incentive Plan, as amended; the Schlumberger 1994 Stock Option Plan, as amended; the Schlumberger 1998 Stock Option Plan, as amended; the Schlumberger 2001 Stock Option Plan, as amended; the Schlumberger Discounted Stock Purchase Plan, as amended and restated, and the Schlumberger 2004 Stock and Deferral Plan for Non-Employee Directors.
52
38
2. Financial Statements
ITEM 4. ADOPTION OF AMENDMENT TO SCHLUMBERGER’S ARTICLES OF
INCORPORATION TO INCREASE AUTHORIZED COMMON SHARE CAPITAL
The Board of Directors has proposed for stockholder approval an amendment to Schlumberger’s Articles of Incorporation to increase the number of authorized shares of common stock from 3,000,000,000 shares to 4,500,000,000 shares.
The proposed amendment was adopted, subject to stockholder approval, by the unanimous vote of the Board on January 20, 2011. Separate from the proposed amendment described in this Item 4, the Board also has proposed for stockholder approval other amendments to Schlumberger’s Articles of Incorporation, as described in Item 5 below.
Last amended in 2006, Schlumberger’s Articles of Incorporation currently authorize up to 3,000,000,000 shares of common stock for issuance. As of January 31, 2011:
| | |
| • | 1,434,212,164 shares of Schlumberger common stock were issued (including 73,218,263 shares of Schlumberger common stock held in treasury); |
|
| • | 47,263,499 shares have been reserved for issuance upon the exercise of stock options and the vesting of restricted stock units granted by Schlumberger; |
|
| • | 22,801,141 shares have been reserved for issuance under Schlumberger’s equity incentive plans pursuant to options and restricted stock units that could be granted in the future; |
|
| • | 7,672,101 shares have been reserved for issuance under Schlumberger’s discount stock purchase plan; and |
|
| • | 98,187 shares have been reserved for issuance under Schlumberger’s Stock and Deferral Plan for Non-Employee Directors. |
Schlumberger’s Articles of Incorporation also authorize Schlumberger to issue 200,000,000 shares of preferred stock. There are no outstanding shares of preferred stock, and this amendment would not change the number of authorized shares of preferred stock.
Reasons for Increasing Schlumberger’s Authorized Shares of Common Stock
The Board of Directors believes that it is advisable and in the best interests of Schlumberger’s stockholders to have available additional authorized but unissued shares of common stock in order to maintain Schlumberger’s flexibility to use capital stock for business and financing purposes in the future. The newly authorized shares of common stock will constitute additional shares of the existing class of common stock and, if and when issued, will have the same rights and privileges as the shares of common stock currently authorized. Schlumberger currently has no specific plans to issue the additional shares of common stock that would be authorized by this proposal. However, the additional shares would provide flexibility to use capital stock for business and financial purposes in the future. The additional shares may be used for various purposes, including:
| | |
| • | expanding Schlumberger’s business through acquisitions and other strategic transactions; |
|
| • | paying stock dividends or effecting stock splits; |
|
| • | providing equity incentives to employees, officers and directors; |
|
| • | raising capital; and |
|
| • | other general corporate purposes. |
Currently, only 1,487,952,908 shares of Schlumberger’s common stock remain unissued and unreserved. If stockholders do not approve the proposed amendment to Schlumberger’s Articles of Incorporation, Schlumberger may not be able to complete strategic transactions, effect stock splits, retain employees and pursue other business opportunities integral to its growth and success. Schlumberger’s Board of Directors
53
believes that the proposed increase in authorized common stock will make sufficient shares available to maintain the flexibility necessary to pursue its strategic objectives.
Over the past several years, flexibility has allowed Schlumberger to pursue important acquisitions and other business opportunities. Most recently, in 2010, Schlumberger financed the acquisition of Smith entirely with shares of Schlumberger common stock. In connection with this acquisition, Schlumberger issued approximately 176 million shares of common stock, representing approximately 12.9% of Schlumberger’s outstanding common stock at the time after giving effect to the issuance. Schlumberger also reserved for issuance 0.7 million shares of common stock in connection with the exercise or conversion of Smith’s outstanding equity awards, which became exercisable for or convertible into Schlumberger common stock pursuant to the merger. Additionally, in 2006, in order to increase the liquidity and marketability of Schlumberger’s common stock, Schlumberger declared a2-for-1 stock split, in which each stockholder of record as of the close of business on March 1, 2006, received one additional share of Schlumberger’s common stock and the number of shares of Schlumberger common stock held in treasury doubled. Unless Schlumberger’s stockholders approve the proposed amendment to its Articles of Incorporation, Schlumberger may not have sufficient unissued and unreserved authorized shares to engage in similar transactions in the future.
Like the currently authorized but unissued shares of Schlumberger’s common stock, the additional shares of common stock authorized by this proposal would be available for issuance without further action by Schlumberger’s stockholders, unless further action is required by law, the rules of the New York Stock Exchange or any other stock exchange on which Schlumberger’s common stock may be listed. The authorization of additional shares of Schlumberger’s common stock will enable Schlumberger, as the need may arise, to take advantage of market conditions and favorable opportunities without the delay and expense associated with the holding of a special meeting of Schlumberger’s stockholders.
Effects of Increasing Schlumberger’s Authorized Common Stock
This proposal to increase the authorized number of shares of common stock has been prompted by business and financial considerations. While this proposal is not intended by management or the Board of Directors to prevent or discourage any actual or threatened takeover of Schlumberger, under certain circumstances, it could have an anti-takeover effect. For example, in the event of a hostile attempt to acquire control of Schlumberger, it may be possible for the company to endeavor to impede the attempt by issuing shares of common stock, thereby diluting the voting power of the other outstanding shares and increasing the potential cost to acquire control of the company. The proposed amendment may also have the effect of permitting Schlumberger’s current management, including the current Board of Directors, to retain its position, and place it in a better position to resist changes that stockholders may wish to make if they are dissatisfied with the conduct of the company’s business. Any such additional shares could be issued in private placements and without stockholder approval or further action by Schlumberger’s stockholders, subject to applicable law or rules. Accordingly, if the proposal is adopted, the increase in the number of authorized shares of common stock may render more difficult or discourage a merger, tender offer or proxy contest (and thereby potentially limit the opportunity for Schlumberger’s stockholder to dispose of their shares at the higher price generally available in takeover attempts or that may be available under a merger proposal), the assumption of control by a holder of a large block of Schlumberger’s common stock, or the replacement or removal of management or the Board of Directors. Any such anti-takeover effect may be beneficial to management and the Board of Directors and could have an adverse impact on stockholders.
The Board currently is not aware of any specific third-party effort to accumulate shares of common stock or to obtain control of Schlumberger by means of a merger, tender offer or solicitation in opposition to management or the Board. Moreover, Schlumberger currently has no plans to issue newly authorized shares of common stock to discourage third parties from attempting to take over Schlumberger. Although the Board is motivated by business and financial considerations in proposing the increase in the number of authorized shares of common stock, stockholders nevertheless should be aware that any issuance of newly authorized shares of common stock, regardless of the intent, could have an anti-takeover effect. In addition, because
54
stockholders do not have preemptive rights with respect to Schlumberger’s common stock, to the extent that additional authorized shares are issued in the future, they may decrease existing stockholders’ percentage equity ownership, and depending on the price at which they are issued, be dilutive to existing stockholders.
Resolutions Adopting the Proposed Amendment
The following resolutions, which will be presented to the Annual General Meeting of Stockholders, will adopt the proposed amendment to Schlumberger’s Articles of Incorporation to increase its authorized shares of common stock:
RESOLVED, Section 4.1 of Article 4 of Schlumberger’s Articles of Incorporation is hereby amended and restated to read in its entirety as follows:
The nominal capital of the Company (nominal capital being defined in the law and in these Articles of Incorporation as the sum of the par values of all of the issued and outstanding shares in the Company’s capital stock at any time) shall not exceed FORTY-SEVEN MILLION UNITED STATES DOLLARS (US$47,000,000, divided into (a) four billion five-hundred million (4,500,000,000) shares of common stock of the par value of One United States Cent (US$0.01) per share (the “Authorized Common Share Capital”) and (b) two hundred million (200,000,000) shares of preferred stock of the par value of One United States Cent (US$0.01) per share, which may be issued in different series (the “Authorized Preferred Share Capital” and, together with the Authorized Common Share Capital, the “Authorized Capital”). Shares of common stock may be referred to as “common shares” and shares of preferred stock may be referred to as “preferred shares”. The common shares and the preferred shares, if any, may sometimes be referred to herein as the “shares”. Holders of common shares and preferred shares may sometimes be referred to as the “stockholders”.
RESOLVED, that each lawyer of STvB Advocaten (Curaçao) N.V., Curaçao counsel to Schlumberger, is authorized to execute and file in Curaçao the notarial deed of amendment effectuating such amendment.
Required Vote
The affirmative vote of the holders of a majority of Schlumberger’s shares outstanding and entitled to vote at the Annual General Meeting of Stockholders is required for the adoption of the foregoing resolutions.Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal.
Effectiveness of Amendment
If stockholders approve the proposed amendment, it will become effective when the notarial deed is executed, which Schlumberger anticipates having executed as soon as practicable following stockholder approval.
Recommendation of the Board
The Board recommends that you vote “FOR” the approval of the amendment to the Articles of Incorporation to increase the authorized common share capital.
55
ITEM 5. ADOPTION OF AMENDMENTS TO SCHLUMBERGER’S ARTICLES OF
INCORPORATION TO CLARIFY THE VOTING STANDARD IN CONTESTED DIRECTOR
ELECTIONS AND TO MAKE CERTAIN OTHER CHANGES
In addition to the proposed amendment to increase the authorized common stock described in Item 4 above, the Board of Directors has proposed for stockholder approval amendments to Schlumberger’s Articles of Incorporation to clarify that in contested elections directors will be elected by a plurality vote and to make other technical changes to reflect the constitutional restructuring and dissolution of the Netherlands Antilles that occurred in October 2010.
The proposed amendments were adopted, subject to stockholder approval, by the unanimous vote of the Board on January 20, 2011.
The proposed amendments would:
| | |
| • | clarify that in a contested election directors will be elected by a plurality vote, and |
|
| • | make other technical changes to reflect the constitutional restructuring and dissolution of the Netherlands Antilles. |
Currently, as provided in the Articles of Incorporation, Schlumberger directors are elected by a majority of votes cast, regardless of whether the election is contested or uncontested. The Board of Directors believes that it is advisable and in the best interests of Schlumberger’s stockholders for a plurality voting standard to apply in contested elections. If a majority voting standard is used in a contested election, fewer candidates or more candidates could be elected to the Board than the number of Board seats. Because our majority voting standard only compares the number of “for” votes with the number of “against” votes for each director nominee without regard to voting for other candidates, it does not ensure that all Board seats are filled when there are more candidates than available Board seats. In addition, a majority voting standard in contested elections could be viewed as favoring incumbents because if majority voting applies in a contested election and all the nominees fail to receive a majority vote, then no directors are elected and the incumbents continue to serve as “hold over” directors. In contrast, under a plurality voting standard the number of available Board seats will be filled by those nominees receiving the greatest number of “for” votes. Accordingly, the proposed amendments would clarify that plurality voting applies in contested elections to avoid such results.
The other proposed amendments to the Articles of Incorporation are technical changes to reflect the constitutional restructuring and dissolution of the Netherlands Antilles. Prior to October 10, 2010, the Netherlands Antilles, together with Aruba and the Netherlands, formed the Kingdom of the Netherlands, with Curaçao being an island territory of the Netherlands Antilles. Under a constitutional restructuring of the Kingdom of the Netherlands agreed upon among the Netherlands Antilles, Aruba and the Netherlands, the Netherlands Antilles was dissolved effective October 10, 2010. Also effective October 10, 2010, Curaçao became an individual constitutional entity within the Kingdom of the Netherlands, having its own government and laws. As a result of the constitutional restructuring and the dissolution of the Netherlands Antilles, Netherlands Antilles law ceased to exist and Schlumberger became a Curaçao legal entity subject to Curaçao law. In connection with this restructuring, stockholders are being asked to approve amendments to the Articles of Incorporation to replace all references to “Netherlands Antilles” to instead refer to “Curaçao” and to make other technical changes. The amendments described in this Item 5 as well as the amendments described above in Item 4 to increase Schlumberger’s authorized common stock are set forth in Appendix A to this proxy statement.
Resolutions Adopting the Proposed Amendments
The following resolutions, which will be presented to the Annual General Meeting of Stockholders, will adopt the proposed amendments to Schlumberger’s Articles of Incorporation to clarify that in a contested
56
election directors will be elected by a plurality vote and to make other technical changes to reflect the constitutional restructuring and dissolution of the Netherlands Antilles:
RESOLVED, Section 8.3 of Article 8 of Schlumberger’s Articles of Incorporation is hereby amended and restated to read in its entirety as follows:
The directors shall be elected at a general meeting of stockholders by a majority of votes cast, in person or by proxy, by the stockholders entitled to vote; provided, that if as of a date that is five (5) business days in advance of the date the Company files its definitive proxy statement (regardless of whether thereafter revised or supplemented) with the United States Securities and Exchange Commission, the number of nominees exceeds the number of directors to be elected, a number of directors not exceeding the authorized number of directors as fixed in accordance with these Articles of Incorporation, shall be elected by a plurality of the voting power of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. For purposes of this Section 8.3, a majority of the votes cast means that the number of votes cast “for” a director must exceed the number of votes cast “against” that director. The Board of Directors shall be authorized to appoint directors to fill any vacancies on the Board of Directors, any such appointment to be effective until the next general meeting of stockholders. The number of persons constituting the whole Board of Directors shall be not less than five (5) nor more than twenty-four (24), as fixed and elected by the general meeting of stockholders. The number of persons constituting the whole Board of Directors shall, until changed at any succeeding general meeting of stockholders, be the number so fixed and elected. Directors may be suspended or dismissed at any general meeting of stockholders. A suspension as referred to in this Article automatically terminates if the person concerned has not been dismissed within two (2) months after the day of suspension. At any general meeting of stockholders at which action is taken to increase the number of the whole Board of Directors or to suspend or dismiss a director, or at any subsequent general meeting, the stockholders may fill any vacancy or vacancies created by such action.
RESOLVED, that the amendments to the Articles of Incorporation of Schlumberger to reflect the constitutional restructuring and dissolution of the Netherlands Antilles be, and they hereby are, adopted to read in their entirety as set forth in Appendix A to Schlumberger’s Proxy Statement dated March [ ], 2011 and in the form presented to this meeting.
RESOLVED, that each lawyer of STvB Advocaten (Curaçao) N.V., Curaçao counsel to Schlumberger, is authorized to execute and file in Curaçao the notarial deed of amendment effectuating such amendments.
Required Vote
The affirmative vote of the holders of a majority of Schlumberger’s shares outstanding and entitled to vote at the Annual General Meeting of Stockholders is required for the adoption of the foregoing resolutions.Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal.
Effectiveness of Amendments
If stockholders approve the proposed amendments, they will become effective when the notarial deed is executed, which Schlumberger anticipates having executed as soon as practicable following stockholder approval.
Recommendation of the Board
The Board recommends that you vote “FOR” the approval of the amendments to the Articles of Incorporation to clarify the voting standard in contested director elections and to make certain other changes.
57
ITEM 6. FINANCIAL STATEMENTS
Upon completion of the audit procedures to be performed by PricewaterhouseCoopers LLP, the
Company’s Consolidated Balance Sheet as at December 31, 2008, its Consolidated Statement of Income for the year ended December 31, 2008, as audited by PricewaterhouseCoopers LLP, and the amount of dividends declared by the Board of Directors during 2008following are submitted to the
Company’s stockholders pursuant to Schlumberger’s Articles of
Incorporation.Incorporation:
| | |
| • | the Company’s Consolidated Balance Sheet as at December 31, 2010, |
|
| • | its Consolidated Statement of Income for the year ended December 31, 2010, as audited by PricewaterhouseCoopers LLP, and |
|
| • | the amount of dividends declared by the Board of Directors during 2010. |
Required Vote
A majority of the votes cast is required for the approval of the financial results as set forth in the financial statements and of the declaration of dividends by the Board of Directors as reflected in the
2008Company’s 2010 Annual Report to Stockholders.
Brokers do have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will vote on this proposal in its discretion.
Recommendation of the Board
The Board of Directors Recommends a Vote FOR Item 2.3. Shareholder Proposal on Advisory Vote on Named Executive Officer Compensation
James McRitchie and Myra K. Young, 9295 Yorkship Court, Elk Grove, CA 95758, owners of at least $2,000 in market value of shares of common stock, have advised the Company that they have designated John Chevedden as proxy and intend to present the following resolution at the Annual General Meeting of Stockholders. Approval of this proposal would require a vote in favor by a majority of the votes cast (excluding any abstentions) at the Annual General Meeting of Stockholders. Rule 14a-8(h)(1) of the Exchange Act requires that the shareholder proponent or his or her qualified representative attend the meeting to present the proposal. Failure to attend the meeting and present the proposal will result in the proposal not being called for a vote at the meeting.
Shareholder Resolution
Shareholder Say on Executive Pay
RESOLVED, that shareholders request our board of directors to adopt a policy that provides shareholders the opportunity at each annual shareholder meeting to vote on an advisory resolution, proposed by management, to ratify the compensation of the named executive officers set forth in the proxy statement’s Summary Compensation Table and the accompanying narrative disclosure of material factors provided to understand the Summary Compensation Table (but not the Compensation Discussion and Analysis). The proposal submitted to shareholders should make clear that the vote is non-binding and would not affect any compensation paid or awarded to any named executive officers.
Shareholder Statement Supporting Item 3
Investors are increasingly concerned about mushrooming executive pay especially when it is insufficiently linked to performance. In 2008, shareholders filed close to 100 “Say on Pay” resolutions. Votes on these resolutions averaged 43% in favor, with ten votes over 50%, demonstrating strong shareholder support.
To date eight companies have agreed to an Advisory Vote, including Verizon, MBIA, H&R Block, Blockbuster, and Tech Data. TIAA-CREF, the country’s largest pension fund, has successfully utilized the Advisory Vote twice. On the other hand shareholders at Wachovia and Merrill Lynch did not support 2008 “Say on Pay” ballot proposals. Now these shareholders don’t have much of a say on anything.
“There should be no doubt that executive compensation lies at the root of the current financial crisis,” wrote Paul Hodgson, a senior research associate with The Corporate Library, an independent investment research firm. “There is a direct link between the behaviors that led to this financial collapse and the short-term compensation programs so common in financial services companies that rewarded short-term gains and short-term stock price increases with extremely generous pay levels.”
Nell Minow said, “If the board can’t get executive compensation right, it’s been shown it won’t get anything else right either.”
39
The Corporate Library (TCL) www.thecorporatelibrary.com rated our company “High Concern” in CEO pay—$17 million and said this raised, concerns about the link between executive pay and company performance and in some cases was difficult to justify.
The merits of this Shareholder Say on Executive Pay proposal should also be considered in the context of the need for improvements in our company’s corporate governance and in individual director performance. In 2008 the following governance and performance issues were identified:
6. We did not have an Independent Chairman—Independence concern.
Three directors had 15 to 26 years tenure (Independence concern) and two of these directors served on our executive pay committee:
Linda Gillespie Stuntz
Didier Primat
Nicolas Seydoux
Two other directors on the same executive pay committee also served on boards rated “D” by The Corporate Library:
| | | | |
Jamie Gorelick | | | | United Technologies (UTX) |
Adrian Lajous | | | | Trinity Industries (TRN) |
Nicolas Seydoux, with 26-years tenure (independence concern), chaired our key nomination committee.
The above concerns shows there is need for improvement. I urge our board to respond positively to this proposal:
Shareholder Say on Executive Pay—Yes on 3ITEM 7. APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors’ Response
The Schlumberger Board of Directors recognizes that executive compensation is of significant concern to shareholders of public companies and has considered this proposal and the issues surrounding shareholder ratification of executive compensation.
The Board recommends that you vote AGAINST Item No. 3 for the following reasons.
Schlumberger’s executive compensation policies and practices are balanced and responsible.
As more fully explained in our Compensation Discussion and Analysis (“CD&A”) beginning on page 14 of this proxy statement, a significant portion of the total pay of our named executive officers is “at risk” (contingent on positive annual results and positive stock price performance). Approximately 65% to 80% of total pay opportunities for our named executive officers in 2008 depended on company and individual performance.
Schlumberger uses stock options as its sole long-term incentive for its named executive officers, as it believes that they align employee incentives with the interests of our other stockholders.
The Compensation Committee believes that making a significant portion of an executive officer’s compensation at risk has the following benefits:
it fosters a results-driven, pay for performance culture;
it creates a sense of ownership among our executives in the financial health and long-term success of the Company; and
it properly aligns the interests of our executives with those of our other stockholders.
Schlumberger’s results-driven, pay for performance approach means that executive compensation can increase or decrease significantly from year to year. Additionally, aggressive target setting has most recently resulted in zero payout of the financial half of annual cash incentive for 2008 performance; below-target payout of the financial half of annual cash incentive for 2003 performance; and zero-payout of the financial half of annual cash incentive for 2002 performance.
40
None of Schlumberger’s named executive officers have employment agreements, or any “golden parachute” or other severance or change in control agreements. All of Schlumberger’s named executive officers are “at-will” employees, meaning that they serve at the will of our Board.
Schlumberger does not reset performance targets because of market deterioration or less-than-expected Company performance, and neither have we done so this year for 2008 executive compensation.
Schlumberger’s stock option plans do not permit the granting of stock options at a price below the fair market value on the grant date; re-pricing, or reducing the exercise price of a stock option; substituting a new option grant with an exercise price lower than the exercise price of an outstanding option grant; providing grants with a reload vehicle; or acceleration of vesting upon retirement.
Schlumberger provides only minimum perquisites to its named executive officers. The same perquisites enjoyed by our named executive officers are generally available to all of our professional-level employees.
Schlumberger has a policy of recouping performance-based bonuses in the event of specified restatements of financial results.
To date, Schlumberger has not awarded any restricted stock or restricted stock units (collectively, “RSUs”) to any of its executive officers. Schlumberger believes that time-based RSUs are more geared to retention than to future motivation and performance and thus are less well suited to motivating our executive officers. Because RSUs typically are time-vested and are not linked to future performance, they would potentially allow executives to be rewarded even when other shareholders are not. Our applicable stock option plans provide that any RSUs granted to executive officers must be performance based.
Schlumberger believes strongly in linking long-term rewards for executives with stockholder value. As a result, our Compensation Committee established stock ownership guidelines applicable to executive officers and other key employees, which range from 1 times base salary for key staff positions to 5 times base salary for our CEO, as more particularly explained in our CD&A.
There are already effective means for shareholders to express their views on our executive compensation programs.
We believe that our shareholders already have direct and effective means of communicating their concerns to our Board and the Compensation Committee. For example, shareholders can contact our Board members in writing through the Company’s General Counsel and Secretary, as described elsewhere in this proxy statement. In addition, shareholders may contact our investor relations department and attend our annual shareholder meetings. Schlumberger responds to shareholder inquiries; engages in real-time dialogue with shareholders about various corporate governance issues; and adopts policies or practices in response to shareholder concerns when we believe that it is in the best interests of all of our shareholders. As stated above, in response to a shareholder letter to our Compensation Committee in 2006, we adopted a policy of recouping performance-based bonuses in the event of specified restatements of financial results. Schlumberger believes that this type of active engagement, rather than an advisory vote (which would not provide any specific guidance on areas of dissatisfaction), truly enables shareholders to effectively address their specific concerns.
Schlumberger’s strong governance practices already provide effective director accountability.
We believe that an advisory vote on executive compensation is unnecessary at this time because there is already director accountability in setting executive pay. For example, (a) Schlumberger long ago adopted majority voting for the election of directors, thereby providing full Board accountability for our shareholders; (b) Schlumberger’s Board is declassified, which means that if shareholders are displeased with the governance of the Company or its compensation programs in particular, shareholders have the ability each year to vote against the entire Board or any member of the Board; (c) Schlumberger engages in dialogue between shareholders and the Company on corporate governance issues, including executive compensation; and (d) the SEC and the NYSE require that all members of compensation committees be independent, as is the case with Schlumberger’s compensation committee.
41
The Compensation Committee is in the best position to make judgments about Schlumberger’s executive compensation programs; an advisory vote on executive compensation would not provide the Company with clear or meaningful guidance regarding shareholders’ opinions of our compensation programs.
We believe that an independent, well-informed and experienced committee of the Board is in the best position to make judgments about the amount and form of executive compensation appropriate for Schlumberger, a global company of more than 80,000 employees, working in approximately 80 countries and representing more than 140 nationalities. The Compensation Committee, which is comprised of directors with tenures ranging from 4 years to 27 years, considers and balances numerous complex and interrelated factors in arriving at executive compensation that is competitive and equitable. It also relies upon the advice of independent executive compensation consultants.
A non-binding advisory vote on selected portions of our overall executive compensation disclosures would not provide the Board or the Compensation Committee with a clear insight into our shareholders’ specific concerns, or provide specific input about pay decisions that our Compensation Committee could act upon in making future executive compensation decisions. A simple negative vote would not assist the Board in identifying any specific compensation element or practice with which shareholders are dissatisfied. For these reasons, the Board believes that this proposal, if passed, would not improve shareholder communication with the Board but would instead cause confusion; it would also make it more difficult for the Company to attract and retain talented leaders for its highly technical, global business.
Approval of this proposal could put the Company at a competitive disadvantage.
The Company’s success is dependent on its ability to attract and retain top executive talent in a global marketplace. As a result, the Company may be competitively harmed by unilaterally adopting an advisory vote on executive compensation unless and until the same requirement also applies uniformly to our competitors. To the Board’s knowledge, none of the Company’s peers or competitors in the oil and gas service industry are similarly bound to seek an advisory vote on executive compensation. We believe that such a requirement could make it more difficult for Schlumberger to attract and retain top executive talent by creating the impression among the Company’s senior executives that their compensation opportunities could be limited or adversely affected, while opportunities at the Company’s competitors would not be similarly constrained. The Board believes that this result could negatively affect shareholder value.
Because (i) Schlumberger’s current compensation practices and policies are responsible and disciplined, and already address the concerns expressed in the proposal; (ii) there are already effective means for shareholders to express their views about executive compensation; (iii) Schlumberger’s corporate governance practices already provide director accountability for executive compensation decisions; (iv) the Compensation Committee is best qualified to make judgments about executive compensation in a highly technical, global company; (v) the proposal, if passed, would be of little value in discerning real shareholder concerns and discussing means to address them, and (vi) the proposal, if passed, could put Schlumberger at a competitive disadvantage, the Board recommends that you vote AGAINST Item No. 3.
42
4. Appointment of Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP has been selected by the Board of Directors as the independent registered public accounting firm to audit the accountsannual financial statements of the Company for the year 2009. A majority of the votes cast is required2011. We are asking stockholders to approve the appointment of PricewaterhouseCoopers LLP. LLP as the independent registered public accounting firm. If the selection is not approved, the Board will consider whether it is appropriate to select another independent registered public accounting firm.
A representative of PricewaterhouseCoopers LLP
willis expected to attend the
2009 Annual General Meeting and2011 annual general meeting of stockholders, will have the opportunity to make a statement
if he or she desires to do so, and
is expected to be available to respond to
appropriate questions.
Fees Paid to PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP has billed the Company and its subsidiaries
the fees
as set forth in the table below
for (i) the audit of the Company’s 2008 and 2007 annual financial statements and reviews of quarterly financial statements and other audit services and (ii) the other services described below that were billed in 2008 and 2007. | | | | | | |
| | | Year Ended
December 31,
|
| | | 2008
| | 2007
|
| | | (in thousands) |
Audit Fees (1) | | $ | 12,565 | | $ | 12,879 |
Audit-Related Fees (2) | | $ | 1,483 | | | 1,062 |
Tax Fees (3) | | $ | 702 | | | 500 |
| | |
|
| |
|
|
Total | | $ | 14,750 | | $ | 14,441 |
| | |
|
| |
|
|
for: | | |
| • | the audit of the Company’s 2010 and 2009 annual financial statements and reviews of quarterly financial statements and other audit services, and |
|
| • | the other services described below that were billed in 2010 and 2009. |
| | | | | | | | | |
| | | Year Ended
| |
| | | December 31, | |
| | | 2010 | | | 2009 | |
| | | (in thousands) | |
| |
Audit Fees(1) | | $ | 11,790 | | | $ | 11,796 | |
Audit-Related Fees(2) | | $ | 1,775 | | | $ | 962 | |
Tax Fees(3) | | $ | 1,884 | | | $ | 1,134 | |
| All Other Fees | | $ | 0 | | | $ | 0 | |
| | | | | | | | | |
| Total | | $ | 15,449 | | | $ | 13,892 | |
| | | | | | | | | |
| | |
| (1) | | Includes fees for statutory audits. |
|
| (2) | | Consists of fees for employee benefit plan audits and other audit-related items. |
|
| (3) | | Consists primarily of fees for tax compliance and fees for tax advice and other permitted tax services. |
58
The Audit Committee considers the provision of services by PricewaterhouseCoopers LLP not related to the audit of the Company’s
annual financial statements and the review of the Company’s interim financial statements when evaluating PricewaterhouseCoopers LLP’s independence.
Audit Committee’s Pre-Approval Policy and Procedures The Audit Committee pre-approves all
engagements ofservices provided to the Company and its subsidiaries by Schlumberger’s independent registered public accounting
firm to provide services to the Company and its subsidiaries.firm. The Audit Committee has adopted a schedule for annual approval of the audit and related audit plan, as well as approval of other anticipated audit related services; anticipated tax compliance, tax planning and tax advisory services; and other anticipated services. In addition, the Audit Committee (or an authorized committee member acting under delegated authority of the committee) will consider any proposed services not approved as part of this annual process. During
2008,2010, no matters were taken on without pre-approval under the
de minimisprovisions of the Sarbanes-Oxley Act.
Required Vote
A majority of the votes cast is required to approve the appointment of PricewaterhouseCoopers LLP.Brokers do have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will vote on this proposal in its discretion.
Recommendation of the Board
The Board of Directors Recommends a Vote FOR Item 4.7.
59
AUDIT COMMITTEE REPORT
During 2010, the Audit Committee periodically reviewed and discussed the Company’s financial statements with Company management and the independent registered public accounting firm, PricewaterhouseCoopers LLP, including matters raised by the independent registered public accounting firm pursuant to applicable Public Company Accounting Oversight Board requirements. The Audit Committee discussed with the Company’s management and independent registered public accounting firm the review of the Company’s reporting and internal controls undertaken in connection with certifications by the Company’s Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 in certain of the Company’s filings with the SEC. The Audit Committee reviewed and discussed such other matters as it deemed appropriate, including the Company’s compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and the other provisions of the Sarbanes-Oxley Act of 2002 and rules adopted or proposed to be adopted by the SEC and the NYSE.
The Company’s independent registered public accounting firm provided the Audit Committee with written disclosures required by Public Company Oversight Board Rule 3526 (Communication with Audit Committees Concerning Independence) and Public Company Oversight Board Rule 3524 (Audit Committee Pre-approval of Tax Services), and the Committee discussed PricewaterhouseCoopers LLP’s independence with them.
Based on the foregoing review and discussion, and relying on the representation of Company management and the independent registered public accounting firm’s report to the Audit Committee, the Audit Committee recommended that the Board include the financial statements in the Company’s Annual Report onForm 10-K for the year ended December 31, 2010 filed with the SEC.
SUBMITTED BY THE AUDIT COMMITTEE OF THE SCHLUMBERGER
BOARD OF DIRECTORS
| | |
| Philippe Camus | | K. Vaman Kamath |
| Peter L.S. Currie, Chair | | Nikolay Kudryavtsev |
| Tony Isaac | | Adrian Lajous |
60
STOCK OWNERSHIP INFORMATION
Security Ownership by Certain Beneficial Owners
The following table sets forth information as of December 31, 2010 with respect to persons known by the Company to be the beneficial owners of 5% or more of the Company’s common stock. This information is reported by such persons in their Schedule 13G filings with the SEC. For each entity included in the table below, percentage ownership is calculated by dividing the number of shares beneficially owned by such entity by the 1,360,993,901 shares of common stock outstanding on January 31, 2011.
| | | | | | | | | |
| | | Beneficial Ownership of
| |
| | | Common Stock | |
| | | Number of
| | | Percentage
| |
Name and Address | | Shares | | | of Class | |
| |
BlackRock Inc.(1)
40 East 52nd Street
New York, NY 10022 | | | 75,876,249 | | | | 5.6 | % |
| |
| (1) | Based on a Statement on Schedule 13G/A filed on February 8, 2011. Such filing indicates that BlackRock Inc. has sole voting power and sole investment power with respect to 75,876,249 shares. |
Security Ownership by Management
The following table sets forth information known to Schlumberger with respect to beneficial ownership of Schlumberger common stock as of January 31, 2011 by (i) each director and nominee, (ii) each of the named executive officers, and (iii) all directors and executive officers as a group.
Beneficial ownership is determined under the rules of the Securities and Exchange Commission (the “SEC”) and generally includes voting or investment power with respect to securities. Except as indicated in the footnotes to this table, to Schlumberger’s knowledge the persons named in the table below have sole voting and investment power with respect to all shares of Schlumberger common stock beneficially owned. The number of shares beneficially owned by each person or group as of January 31, 2011 includes shares of common stock that such person or group had the right to acquire on or within 60 days after January 31, 2011, including, but not limited to, upon the exercise of options to purchase common stock or the vesting of restricted stock units. References to options in the footnotes of the table below include only options to purchase shares outstanding as of January 31, 2011 that were exercisable on or within 60 days after January 31, 2011, and references to restricted stock units in the footnotes to the table below include only restricted stock units outstanding as of January 31, 201 that would vest and could settle on or within 60 days after January 31, 2011. For each individual and group included in the table below, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the 1,360,993,901 shares of common stock outstanding on January 31, 2011 plus the number of shares of common stock that such person or group had the right to acquire on or within 60 days after January 31, 2011.
61
As of January 31, 2011, no director, nominee or named executive officer owned more than 1% of the outstanding shares of the Company’s common stock. All directors and executive officers as a group owned less than 1% of the outstanding shares of common stock of the Company at January 31, 2011.
| | | | | | |
| Name | | Shares | | |
|
| Simon Ayat | | | 497,011 | (1) | | |
| Ashok Belani | | | 258,800 | (2) | | |
| Philippe Camus | | | 9,250 | (3) | | |
| Peter L.S. Currie | | | 7,250 | | | |
| Andrew Gould | | | 3,873,491 | (4) | | |
| Tony Isaac | | | 16,500 | (5) | | |
| K. Vaman Kamath | | | 2,250 | | | |
| Paal Kibsgaard | | | 230,081 | (6) | | |
| Nikolay Kudryavtsev | | | 8,500 | | | |
| Adrian Lajous | | | 16,482 | (7) | | |
| Michael E. Marks | | | 25,550 | (8) | | |
| Elizabeth A. Moler | | | 1,313 | | | |
| Lubna S. Olayan | | | 0 | | | |
| Satish Pai | | | 455,246 | (9) | | |
| Leo Rafael Reif | | | 8,500 | | | |
| Tore I. Sandvold | | | 20,500 | | | |
| Chakib Sbiti | | | 769,233 | (10) | | |
| Henri Seydoux | | | 4,500 | | | |
| All directors and executive officers as a group (27 persons) | | | 7,243,170 | (11) | | |
| |
| (1) | Includes options to purchase 365,000 shares. |
|
| (2) | Includes options to purchase 237,800 shares. |
|
| (3) | Excludes 2,250 shares the receipt of which Mr. Camus has deferred under Schlumberger’s 2004 Stock and Deferral Plan for Non-Employee Directors. |
|
| (4) | Includes (i) options to purchase 1,705,033 shares and (ii) 428,908 pledged shares. |
|
| (5) | Excludes 5,000 shares the receipt of which Mr. Isaac has deferred under Schlumberger’s 2004 Stock and Deferral Plan for Non-Employee Directors. |
|
| (6) | Includes options to purchase 214,400 shares. Effective February 8, 2010, Mr. Kibsgaard became Chief Operating Officer of Schlumberger Limited. |
|
| (7) | Held through a limited liability company in which Mr. Lajous has an indirect interest. Excludes 10,250 shares the receipt of which Mr. Lajous has deferred under Schlumberger’s 2004 Stock and Deferral Plan for Non-Employee Directors. Includes 16,482 pledged shares. |
|
| (8) | Includes 17,550 shares held by a limited liability company controlled by Mr. Marks and 10,000 shares held in the name of a trust for the benefit of Mr. Marks and his spouse. Excludes 2,000 shares the receipt of which Mr. Marks has deferred under Schlumberger’s 2004 Stock and Deferral Plan for Non-Employee Directors. |
|
| (9) | Includes options to purchase 334,000 shares. Also includes 14,281 shares held by children of Mr. Pai. |
|
| (10) | Includes options to purchase 390,000 shares. Effective February 8, 2010, Mr. Sbiti became Senior Executive Advisor to the CEO and relinquished his role as Executive Vice President, OFS. |
|
| (11) | Includes options to purchase 4,061,367 shares, and excludes 19,500 shares the receipt of which directors have deferred under Schlumberger’s 2004 Stock and Deferral Plan for Non-Employee Directors. |
62
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s executive officers and directors, among others, to file an initial report of ownership of Schlumberger common stock on Form 3 and reports of changes in ownership on Form 4 or Form 5. Persons subject to Section 16 are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms that they file. The Company believes, based solely on a review of the copies of such forms in our possession and on written representations from reporting persons, that with respect to the fiscal year ended December 31, 2010, all of its executive officers and directors filed on a timely basis the reports required to be filed under Section 16(a) of the Exchange Act, except for a late Form 4 that was filed on January 10, 2011 on behalf of Elizabeth Moler to report the issuance of Schlumberger common stock in connection with her appointment as a director.
OTHER INFORMATION
Stockholder Proposals for 20102012 Annual General Meeting In order for a stockholder proposal to be considered for inclusion in the proxy statement for the
2010 Annual General Meeting2012 annual general meeting of
Stockholders,stockholders, written proposals must be received by the Secretary of the Company, 5599 San Felipe, 17th Floor, Houston, Texas 77056, no later than November
13, 2009.[ ], 2011.
Pursuant to the rules under the Exchange Act, the Company may use discretionary authority to vote with respect to stockholder proposals presented in person at the
2010 Annual General Meeting2012 annual general meeting of stockholders if the stockholder making the proposal has not given notice to the Company by January
27, 2010.43
[ ], 2012.
Stockholders may obtain a copy of Schlumberger’s most recentForm 10-K filed with the SEC without charge by writing to the Secretary of the Company at 5599 San Felipe, 17th Floor, Houston, Texas 77056. The Company will pay the cost of furnishing proxy material to all stockholders and of soliciting proxies by mail and telephone. D. F. King & Co., Inc. has been retained by the Company to assist in the solicitation of proxies for a fee estimated at $13,500 plus reasonable expenses. Directors, officers and employees of the Company may also solicit proxies for no additional compensation. The Company will reimburse brokerage firms, fiduciaries and custodians for their reasonable expenses in forwarding the solicitation material to beneficial owners.
The Board of Directors knows of no other matter to be presented at the meeting. If any additional matter should be presented properly, it is intended that the enclosed proxy will be voted in accordance with the discretion of the persons named in the proxy.
Please sign, date, and return the accompanying proxy in the enclosed envelope at your earliest convenience.
|
By order of the Board of Directors,
|
|
|
Ellen Summer
|
Secretary
|
By order of the Board of Directors,
Alexander C. Juden
Secretary
March 13, 2009[ ], 2011
63
44
Appendix A
[As proposed to be amended April 6, 2011. Deletions are marked as stricken text and additions are marked
with an underline.]
ARTICLES OF INCORPORATION OF THE
CORPORATION WITH LIMITED LIABILITY
SCHLUMBERGER N.V.
NAME AND DOMICILE
Article 1
1.1. The name of the Company is:SCHLUMBERGER N.V.
1.2. Abroad and in transactions with foreign entities, persons or organizations, the name SCHLUMBERGER LIMITED may be used.
1.3. The Company is incorporated in the Netherlands Antilles and has its corporate seat in Curaçao.
1.4. The Board of Directors has the authority to move the corporate seat of the Company to, or to convert the Company into a legal entity under the laws of, another jurisdiction, as, when, and in the manner permitted bythe laws of the Netherlands AntillesCuracao law. In particular, the Company may change its place of domicile in accordance with theNetherlands AntillesCuracao Ordinance on Transfer of Domicile to Third Countries pursuant to a resolution of the Board of Directors.
OBJECTS
Article 2
2.1. The objects of the Company are:
(a) to design, develop, produce and supply technology, services, products and systems and to, throughout the world, engage in any business or activity related thereto;
(b) to enter into and carry on any mercantile business in any country and to receive by assignment or purchase or to otherwise acquire any accounts receivable, bank accounts, securities, bills of exchange, notes, bonds, letters of credit, stocks or other instruments of value or documents of title in any country and to collect and hold the proceeds thereof;
(c) to invest its assets in securities, including shares and other certificates of participation and bonds, debentures or notes, as well as other claims for interest bearing or non-interest bearing debts, however denominated, and in certificates, receipts, options, warrants or other instruments representing rights to receive, purchase or subscribe for securities or evidencing or representing any other rights or interest therein in any and all forms, as well as derivatives and commodities;
(d) to borrow money and to issue evidences of indebtedness therefor, as well as to lend money;
(e) to undertake, conduct, assist, promote or engage in any scientific, technical or business research and development;
(f) to organize and to own, directly or indirectly, and to operate, under the laws of any state or other government, domestic or foreign, corporations and other organizations, companies, undertakings, entities, trusts, other arrangements or persons; to subscribe for any such corporation, organization, company, undertaking, entity, trust, other arrangement or person; and to dissolve, liquidate, wind up, reorganize, merge or consolidate any such corporation, organization, company, undertaking, entity, trust, other arrangement or person;
(g) to obtain income from the disposition or grant of rights to use copyrights, patents, designs, secret processes and formulae, trademarks and other analogous property, from royalties (including rentals) for
A-1
the use of industrial, commercial or scientific equipment, and from compensation or other consideration received for technical assistance or services;
(h) to establish, participate in and manage limited liability and other corporations, organizations, companies, undertakings, entities, trusts, other arrangements or persons of every kind or nature whatsoever, and to engage in industry and trade;
(i) to guarantee or otherwise secure, and to transfer ownership, to mortgage, to pledge or otherwise to encumber assets as security for, and otherwise take action to support, the obligations of the Company and the obligations of other corporations, organizations, companies, undertakings entities, trusts, other arrangements or persons, with or without consideration;
(j) to place in trust all or any of its properties, including securities.
2.2. The Company is entitled to do all that in any way may be useful or necessary for the attainment of the above objects or that is connected therewith in the widest sense.
DURATION
Article 3
The Company shall have perpetual existence.
CAPITAL AND SHARES
Article 4
4.1. The nominal capital of the Company (nominal capital being defined in the law and in these Articles of Incorporation as the sum of the par values of all of the issued and outstanding shares in the Company’s capital stock at any time) shall not exceedTHIRTY-TWOFORTY-SEVEN MILLION UNITED STATES DOLLARS (US$32,000,00047,000,000), divided into (a) threefour billion(3,000,000,000five-hundred million (4,500,000,000) shares of common stock of the par value of One United States Cent (US$0.01) per share (the “Authorized Common Share Capital”) and (b) two hundred million (200,000,000) shares of preferred stock of the par value of One United States Cent (US$0.01) per share, which may be issued in different series (the “Authorized Preferred Share Capital” and, together with the Authorized Common Share Capital, the “Authorized Capital”). Shares of common stock may be referred to as “common shares” and shares of preferred stock may be referred to as “preferred shares”. The common shares and the preferred shares, if any, may sometimes be referred to herein as the “shares”. Holders of common shares and preferred shares may sometimes be referred to as the “stockholders”.
4.2. The actual issue of shares shall be effected by way of written instrument signed by the Company and the acquirer or as otherwise permitted by applicable law. The Company cannot issue shares to itself.
4.3. Subject to the provisions of paragraph 1 of this Article, common shares, options to purchase or subscribe for common shares and warrants or rights to subscribe for common shares, shall be issued at such times, under such conditions and for such consideration, not less than the par value per share in the case of the issuance of such share, as may be determined from time to time by the Board of Directors.
4.4. With respect to the issuance of shares, options, warrants or rights to purchase or subscribe for shares, the Board of Directors may enter into and conclude agreements without necessity of any action by the general meeting of stockholders:
a. imposing special obligations upon the Company in connection with the purchase of or subscription for shares;
b. concerning the issue of shares on a basis other than that on which participation in the Company is open to the public; or
c. providing for the payment for shares by means other than by legal tender ofthe Netherlands AntillesCuracao.
A-2
4.5. Subject to the provisions of paragraphs 1 and 6 of this Article, preferred shares may be issued from time to time in one or more series on such terms and conditions as may be determined by the Board of Directors by the affirmative vote of at least three-fourths of the members of the Board of Directors, after considering the interests of the holders of common shares, for consideration not less than the par value thereof and not less than fair value taking into account the terms and conditions for the issuance thereof and the relative voting, dividend and liquidation rights of such preferred shares.
4.6. Prior to the issuance of any series of preferred shares, the Board of Directors shall specify:
a. the distinctive designation of such series and the number of preferred shares to constitute such series;
b. the annual dividend rate with respect to shares of such series, which shall be based on the consideration paid on issuance of such shares and which may be a fixed rate or a rate that fluctuates on dividend adjustment dates set under a formula or procedure determined by the Board of Directors prior to issuance, subject, in all cases, to the following limitations:
(1) the annual dividend rate shall not exceed the greater of (A) twenty percent (20%) or (B) one hundred and twenty percent (120%) of the Standard & Poor’s Weekly Preferred Stock Yield Index or, in the event the Standard & Poor’s Weekly Preferred Stock Yield Index is no longer published, any substantially equivalent preferred stock index, most recently published before the date of issuance or the relevant dividend adjustment date; and
(2) the annual dividend rate shall not be less than the smaller of (A) six percent (6%) or (B) eighty percent (80%) of the Standard & Poor’s Weekly Preferred Stock Yield Index or, in the event the Standard & Poor’s Weekly Preferred Stock Yield Index is no longer published, any substantially equivalent preferred stock index, most recently published before the date of issuance or the relevant dividend adjustment date;
c. whether such dividends shall be payable annually or in installments;
d. the rights, if any, of the holders of shares of such series to convert shares of such series for shares of any other series of preferred shares or for common shares, provided that shares of any series shall not be convertible into shares of any series senior thereto;
e. the rights, if any, of the Company to redeem shares of such series (in which case the directors shall specify the date on or after which the shares of such series may be called for redemption by the Company and the consideration to be paid therefor, or the manner by which such consideration shall be calculated) and the rights, if any, of holders of such shares to require the Company to purchase such shares, and the provisions, if any, of any sinking fund or other arrangement to be used in connection with such redemption or purchase; and
f. any other terms and conditions of such series which are not inconsistent with these Articles of Incorporation or Netherlands AntillesCuracao law.
4.7. Certificates for preferred shares may be issued bearing a legend describing the terms and conditions thereof specified by the Board of Directors.
4.8. Preferred shares of all series shall rank prior to the common shares with respect to dividend and liquidation preferences as determined by the Board of Directors at the time of issuance of any series of preferred shares. Any series of preferred shares may be ranked by the Board of Directors as to dividend and liquidation preferences, provided that no series issued after any other series shall rank prior to such other series as to such preferences. Any such series may be ranked pari passu with any one or more other series as the Board of Directors may so determine.
4.9. Upon liquidation of the Company, the holders of any series of preferred shares shall be entitled to receive, before any distribution is made to the holders of any other series of preferred shares ranking junior to such series as to liquidation preference, and before any distribution to the holders of common shares, the amount of the liquidation preference of such shares which shall not exceed the sum of:
(1) the amount paid for such preferred shares on issuance, plus
A-3
(2) all accumulated and unpaid dividends on such preferred shares to the date fixed for distribution.
Article 5
No holder of shares of the Company shall in that capacity have any preferential or preemptive right to purchase or subscribe for any shares or any options, warrants or rights to purchase shares or any securities convertible into or exchangeable for shares which the Company may issue or sell, except those rights of conversion, if any, of preferred shares specified in or determined in accordance with Article 4 and any contract rights granted by the Company.
Article 6
6.1. The Company may, for its own account and for valuable consideration, from time to time acquire fully paid shares of its stock, on such terms and conditions as the Board of Directors may determine, provided that at least one (1) common share remains outstanding with others than the Company and provided further that to the extent required by applicable law (x) the equity (as referred to in article 2:114.2 in conjunction with articles 2:118.7 and 2:118.5 of theNetherlands AntillesCuracao Civil Code (“NACCCC”)) of the Company at the time of acquisition at least equals the nominal capital and (y) as a result of the acquisition, the equity will not fall below the nominal capital. The authority to make any such acquisition is vested in the Board of Directors. Any shares so acquired may be canceled by the Board of Directors without the prior approval of the general meeting of stockholders.
6.2. The Company shall not acquire any voting rights by reason of ownership of shares of its stock and, in connection with any general meeting of stockholders, shares owned by the Company shall not be counted as outstanding, or as present or represented, for the purpose of determining a quorum or for any other purpose, other than determining the nominal capital.
6.3. Shares of its stock owned by the Company may be sold at such times, under such conditions and for such consideration as may be determined from time to time by the Board of Directors.
Article 7
7.1. The shares shall be in registered form.
7.2. Share certificates for common shares may be issued at the request of the stockholder.
7.3. The shares shall be entered into a register, which, provided a printed record can be produced therefrom, may be in computerized form (the “Register”) which is kept by the Board of Directors or by a registrar designated thereto by the Board of Directors (the “Registrar”). Each entry shall mention the name of the stockholder, his address, the number of shares held and the numbers of the share certificates, if any, representing such shares and such other information required to be included under Article 2:109NACCCC or other applicable law. The Register shall not be open for inspection by third parties or stockholders with respect to shares other than those registered in their name, except with respect to shares that have not been paid in full and except further, with respect to the Registrar, if said Registrar has been requested, or if demand of said Registrar has been made, to disclose any piece of information in the Register and failure to disclose such information would lead to liability of the Registrar. Each stockholder is under the obligation to provide his address to the Company in writing.
7.4. Every transfer and devolution of a share shall be entered in the Register and every such entry shall be signed or otherwise acknowledged by or on behalf of the Board of Directors or by the Registrar.
7.5. The transfer of shares shall be effected by way of a written instrument of transfer (“deed of transfer”) signed by the transferor and the transferee and either serving that deed of transfer upon the Company or by written acknowledgment of the transfer by the Company. Acknowledgement occurs by means of a signed annotation on the deed of transfer or a written statement from the Company addressed to the transferee for which purpose a (new) share certificate may serve. If it concerns shares on which an amount still has to be paid up, acknowledgement can only occur on a deed of transfer that has a formally fixed date as required by
A-4
applicable law (Article 2:110.2NACCCC). The transfer of shares listed on a stock exchange may also be effected in accordance with the trading system applied by such exchange.
7.6. Shares may be pledged by the holder thereof and a usufruct on shares can be granted, provided that, regardless of the terms of such pledge or usufruct, the Company will not be under the obligation to honor voting rights or rights of distribution of the usufructee or pledgee and provided further that the Company for the purposes of recognizing ownership, the right to vote, the right to receive dividends or other distributions and notices or for any other matter relating to a “stockholder” as set out in these Articles of Incorporation, shall only recognize the registered owner of the shares.
7.7. The provisions of the preceding paragraphs shall also apply in the event of a division of joint ownership.
7.8. If any stockholder shall establish to the satisfaction of the Board of Directors or the Registrar that his share certificate has been lost or destroyed, then, at his request, a duplicate may be issued under such conditions and guarantees (which, if required by the Registrar or the Board of Directors, may include the provision of an indemnity bond issued by an insurance company or other type of financial institution or entity) as the Board of Directors or the Registrar shall determine. By the issuance of the new share certificates on which shall be recorded that it is a duplicate, the old certificate in place of which the new one has been issued shall become null and void. The Board of Directors or the Registrar may authorize the exchange of new share certificates for mutilated share certificates. In such case the mutilated share certificates shall be delivered to the Company and shall be canceled immediately. The cost of a duplicate or new certificate and any proper expenses incurred by the Company in connection with the issuance thereof may, at the option of the Board of Directors or the Registrar, be charged to the stockholder.
MANAGEMENT
Article 8
8.1. The management of all the affairs, property and business of the Company shall be vested in a Board of Directors, who shall have and may exercise all powers except such as are exclusively conferred upon the stockholders by law or by these Articles of Incorporation.
8.2. The Board of Directors may adopt and amend By-laws setting forth the functions and authority of each of the directors, the division of tasks, the designation and authority of one or more committees of the Board of Directors and the way of taking action. Irrespective of the foregoing, the Board of Directors can also limit the management authority of one or more directors. Individual directors shall exercise their powers in accordance with any applicable resolutions of the Board of Directors.
8.3. The directors shall be elected at a general meeting of stockholders by a majority of votes cast, in person or by proxy, by the stockholders entitled to vote; provided, that if as of a date that is five (5) business days in advance of the date the Company files its definitive proxy statement (regardless of whether thereafter revised or supplemented) with the United States Securities and Exchange Commission, the number of nominees exceeds the number of directors to be elected, a number of directors not exceeding the authorized number of directors as fixed in accordance with these Articles of Incorporation, shall be elected by a plurality of the voting power of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. For purposes of this Section 8.3, a majority of the votes cast means that the number of votes cast “for” a director must exceed the number of votes cast “against” that director. The Board of Directors shall be authorized to appoint directors to fill any vacancies on the Board of Directors, any such appointment to be effective until the next general meeting of stockholders. The number of persons constituting the whole Board of Directors shall be not less than five (5) nor more than twenty-four (24), as fixed and elected by the general meeting of stockholders. The number of persons constituting the whole Board of Directors shall, until changed at any succeeding general meeting of stockholders, be the number so fixed and elected. Directors may be suspended or dismissed at any general meeting of stockholders. A suspension as referred to in this Article automatically terminates if the person concerned has not been dismissed within two (2) months after the day of suspension. At any general meeting of stockholders at which action is taken to
A-5
increase the number of the whole Board of Directors or to suspend or dismiss a director, or at any subsequent general meeting, the stockholders may fill any vacancy or vacancies created by such action.
8.4. Each director shall be elected to serve until the next annual general meeting of stockholders and until his successor shall be elected and qualify, or until his death, resignation or removal.
8.5. Directors need not beNetherlands Antilles citizens orresidents ofthe Netherlands AntillesCuracao or stockholders of the Company.
8.6. In the event that one or more of the directors is prevented from or is incapable of acting as a director, the remaining directors (or the remaining director, if there should be only one) may appoint one or more persons to fill the vacancy or vacancies thereby created on the Board of Directors until the next general meeting of stockholders, provided that if at any time the number of directors then in office shall be reduced to less than a majority of the number constituting the whole Board of Directors, the remaining directors or director shall forthwith call a general meeting of stockholders for the purpose of filling the vacancies on the Board of Directors, and provided further that in the event that all of the directors are prevented from or are incapable of acting as directors, the Company shall be temporarily managed by any person or persons previously appointed by the Board of Directors so to act, who shall forthwith call a general meeting of stockholders for the purpose of electing a Board of Directors. Until such general meeting of stockholders is held the person so designated shall only take such acts of management that can not suffer any delay. If no such general meeting of stockholders shall be called, and if no such person shall have been appointed, any person or persons holding in the aggregate at least five percent (5%) of the outstanding shares of common stock of the Company may call a general meeting of stockholders for the purpose of electing a Board of Directors.
8.7. A majority of the whole Board of Directors shall constitute a quorum for the conduct of any business and the action of the majority of the directors present in person or by proxy as hereinafter provided, at a meeting at which a quorum is so present, shall constitute the action of the Board of Directors.
8.8. Meetings of the Board of Directors may be held in or outsidethe Netherlands AntillesCuracao.
8.9. Meetings may be held through telephone conference, video conference or other real time communication allowing all persons participating in the meeting to hear each other or through any other device permitted by then applicable law, and participation in a meeting through any such lawful device or arrangement shall constitute presence at such meeting.
8.10. Directors may in writing, by telegram, telefax, electronic mail or other communication device appoint a proxy to act at any meeting of the Board of Directors, such proxy to be restricted, however, to the particular meeting specified therein. Such proxy must be another director of the Company, provided, however, that at any meeting of the Board of Directors a director may not act as proxy for more than one director.
8.11. When action by the Board of Directors is required or permitted to be taken, action at a meeting may be dispensed with if all commercially reasonable efforts have been taken to notify all the directors and if three-fourths of the directors shall consent in writing, by telegram, telefax, electronic mail or other communication device to such action taken or being taken, and provided further that all directors are promptly notified of such action being taken or having been taken.
Article 9
9.1. The Board of Directors shall at least annually elect or appoint the following officers: a Chairman, a Chief Executive Officer, a Secretary and a Treasurer, each to serve until his successor is elected and qualified or until his earlier death, resignation or removal. The Board of Directors from time to time also may elect or appoint a Chief Financial Officer, a President, a Vice Chairman of the Board of Directors, one or more Executive Vice Presidents, one or more Vice Presidents (who may have such additional descriptive designations as the Board of Directors may determine), and any such other officers and agents as it determines proper, all of whom shall hold office at the pleasure of the Board of Directors. The same person may hold any two or more of the aforesaid offices but no officer shall execute, acknowledge or verify an instrument in more than one capacity if such instrument is required by law or by these Articles of Incorporation to be executed,
A-6
acknowledged or verified by two or more officers. The Chairman and the Vice Chairman, if any, shall be chosen from among the Board of Directors, but the other officers of the Company need not be members of the Board of Directors.
9.2. The Company shall be represented at law and otherwise, and shall be bound with respect to third parties, by the Board of Directors and by:
(a) any of those directors authorized by the Board of Directors to represent the Company, acting alone, who shall have the following titles and occupy the following offices:
(i) Chairman; or
(ii) Vice-Chairman;
(b) any of the persons, who may, but are not required to, be directors, authorized by the Board of Directors to represent the Company, acting alone, who shall have the following titles and occupy the following offices:
| | |
| (i) | Chief Executive Officer; |
|
| | (ii) | President; |
|
| (iii) | Chief Financial Officer; |
|
| (iv) | one or more Executive Vice Presidents; |
|
| (v) | one or more Vice Presidents; |
|
| (vi) | Chief Operating Officer; |
|
| (vii) | Controller; |
|
| (viii) | Treasurer; or |
|
| (ix) | Secretary. |
9.3. The Board of Directors may also from time to time authorize other persons, who may or may not be directors or officers, to represent the Company, who shall have such titles and occupy such additional offices as the Board of Directors may determine.
9.4. The general meeting of stockholders may grant specific authority to the Chief Executive Officer, the President or any member of the Board of Directors to represent the Company with respect to any particular matter as specified by such general meeting of stockholders.
9.5. The persons holding the above-mentioned offices or any other offices which the Board of Directors may from time to time authorize as herein provided shall, respectively, have such power and authority as the Board of Directors may from time to time grant to the holders of the offices held by them.
9.6. The Board of Directors may grant general or specific authority to additional agents or to committees, giving such agents or committees such general or limited powers or duties as it may deem appropriate.
9.7. In the event of a conflict of interest between the Company and one or more directors, the Company shall be represented as determined from time to time by the Board of Directors.
9.8. The Board of Directors may adopt and may amend and repeal such rules, regulations and resolutions, including By-laws, as it may deem appropriate for the conduct of the affairs and the management of the Company, including rules, regulations and resolutions setting forth the specific powers and duties of the holders of the above-mentioned offices and other persons authorized by the Board of Directors to represent the Company. Such rules and regulations and resolutions must be consistent with these Articles of Incorporation.
9.9. The directors, the holders of the above-mentioned offices and other persons authorized by the Board of Directors to represent the Company shall receive such compensation as the Board of Directors may from time to time prescribe.
A-7
Article 10
10.1. The Company shall have the power, to the extent not prohibited by applicable law, to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that such person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or entity, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that such person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful. The Company shall indemnify any present or former officer or director of the Company to the fullest extent allowed by the preceding provisions of this paragraph 1 of this Article in the event of a “Change of Control”. “Change of Control” means a change in control of the Company which shall be deemed to have occurred if at any time (i) any entity, person or organization is or becomes the legal or beneficial owner, directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding shares without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such entity, person or organization attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, share exchange, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) during any15-month period, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.
10.2. The Company shall have the power, to the extent not prohibited by applicable law, to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or entity against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been finally adjudged to be liable to the Company for improper conduct unless and only to the extent that the court in which such action or suit was brought or any other court having appropriate jurisdiction shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses, judgments, fines and amounts paid in settlement which the court in which the action or suit was brought or such other court having appropriate jurisdiction shall deem proper. The Company shall indemnify any present or former officer or director of the Company to the fullest extent allowed by the preceding provisions of this paragraph 2 of this Article in the event of a Change of Control, as defined in paragraph 1 of this Article.
10.3. To the extent that a present or former director or officer of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraphs 1 and 2 of this
A-8
Article, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.
10.4. Any indemnification under paragraphs 1 and 2 of this Article (unless ordered by a court) shall be made by the Company only as authorized by contract approved, or by-laws, resolution or other action adopted or taken, by the Board of Directors or by the stockholders or as required by the last sentences of paragraphs 1 prior to the definition of Change of Control and 2 of this Article.
10.5. Expenses (including attorneys’ fees) incurred by a present or former director or a present officer in defending any civil or criminal, administrative or investigative action, suit or proceeding shall be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Company as authorized by this Article. Such expenses (including attorneys’ fees) incurred by former officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Company deems appropriate.
10.6. The indemnification and advancement of expenses provided by or granted pursuant to the other paragraphs of this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, by-law, agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, and shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
10.7. The Company shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or entity against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify such person against such liability under the provisions of this Article.
10.8. For purposes of this Article, reference to the Company shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or entity, shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as such person would have had with respect to such constituent corporation if its separate existence had continued.
10.9. For purposes of this Article, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Article.
MEETINGS OF STOCKHOLDERS
Article 11
11.1. All general meetings of stockholders shall be held in Curaçao or anywhere else in the Netherlands Antilles.
A-9
11.2. The annual general meeting of stockholders shall be held within the maximum period allowed under applicable law, on a date determined from year to year by the Board of Directors, for the purpose of electing directors, reporting on the course of business during the preceding fiscal year, approving of the balance sheet and the profit and loss account for the preceding fiscal year and for any other purposes required by law, and for such additional purposes as may be specified in the notice of such meeting.
11.3. Special general meetings of stockholders may be called at any time upon the direction of the Chairman, the Vice Chairman, the Chief Executive Officer, the President or the Board of Directors or by one or more stockholders representing at least ten percent (10%) of the votes that can be cast on the topics they wish to be addressed at such meeting and that have a reasonable interest in having such a meeting convened, in accordance with Article 2:129NACCCC, or by one or more holders of shares representing in the aggregate a majority of the shares then outstanding, or as provided for in Article 8.6.
11.4. Notice of meetings of stockholders, whether annual general meetings or special general meetings, stating the time and place of the meeting, shall be given to the stockholders not less than twenty (20) or more than sixty (60) days prior to the date of the meeting in question by notice to each stockholder at the address thereof appearing in the Register.
11.5. All notices of general meetings of stockholders shall state the matters to be considered at the meeting.
11.6. Without limiting the manner by which notice otherwise may be given effectively to stockholders or directors, any notice given by the Company shall be effective if given by a form of electronic transmission consented to by the person to whom the notice is given. Any such consent shall be revocable by written notice received by the Company.
11.7. Notice given pursuant to paragraph 6 of this Article shall be deemed given: (1) if by facsimile telecommunication, when directed to a number at which the recipient has consented to receive notice; (2) if by electronic mail, when directed to an electronic mail address at which the recipient has consented to receive notice; (3) if by a posting on an electronic network together with separate notice to the recipient of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (4) if by any other form of electronic transmission, when directed to the recipient. An affidavit that the notice has been given by a form of electronic transmission shall, in the absence of fraud or bad faith, be prima facie evidence of the facts stated therein.
11.8. For purposes of these Articles of Incorporation, “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof.
Article 12
12.1. Every stockholder has the right to attend any general meeting in person or by proxy, which proxy to the extent permitted by applicable law may be given by electronic transmission, and to address the meeting. Records and other data carriers used in relation to attendance of and voting at general meetings shall be kept during a period of ten (10) years or for the period required by applicable law.
12.2. Each holder of common shares and each holder of preferred shares shall be entitled to one vote for each common share or preferred share held.
12.3. For the purpose of determining stockholders entitled to notice of and to vote at any general meeting of stockholders, or entitled to receive payment of any dividend, or other distribution or allotment of any rights, or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of shares, or in order to make a determination of stockholders for any other proper purpose, the Board of Directors of the Company may provide that the stock transfer books shall be closed for a stated period or that a record date be fixed. If the stock transfer books shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a general meeting of stockholders, such books shall be closed for at least ten (10) days but not to exceed, in any case, sixty (60) days immediately preceding such meeting. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than sixty (60) days and, in case of a
A-10
general meeting of stockholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of stockholders is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of stockholders entitled to notice of or to vote at a general meeting of stockholders, or stockholders entitled to receive payment of a dividend or other distribution or allotment, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend or other distribution or allotment is adopted, as the case may be, shall be the record date for such determination of stockholders. When a determination of stockholders has been made as herein provided, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of stock transfer books and the stated period of closing has expired.
Article 13
13.1. Except as otherwise provided herein, no action may be taken at any general meeting of stockholders unless a quorum consisting of the holders of at least one-half of the outstanding shares entitling the holders thereof to vote at such meeting are present at such meeting in person or by proxy.
13.2. If a quorum is not present in person or by proxy at any general meeting of stockholders, a second general meeting shall be called in the same manner as such original meeting of stockholders, to be held within two (2) months, at which second meeting, regardless of the number of shares represented (but subject to the provisions of Articles 18, 19 and 21), valid resolutions may be adopted with respect to any matter stated in the notice of the original meeting and also in the notice of such second meeting or which by law is required to be brought before the stockholders despite the absence of a quorum.
13.3. Subject to the provisions of Articles 18, 19 and 21, the vote in favor by a majority of the votes cast (excluding any abstentions) shall be necessary to adopt any resolution at any general meeting of stockholders.
13.4. The Board of Directors from time to time shall appoint a person to preside at general meetings of stockholders.
13.5. At any general meeting of stockholders, a stockholder may vote upon all matters before the meeting, even if the decision to be taken would grant him, in a capacity other than as a stockholder, any right against the Company or would in such other capacity relieve him of any obligation to the Company.
13.6. Shares belonging to a legal entity, if a majority of the shares entitled to vote in the election of directors of such entity are held, directly or indirectly, by the Company, shall neither be entitled to vote nor be counted for quorum purposes, except in the event that such shares are held by such legal entity in a fiduciary capacity for others than for the Company itself.
SEPARATE MEETINGS
Article 14
14.1. Separate meetings of holders of each series of preferred shares (each a “Series Meeting”) can be held and may be convened by any two or more members of the Board of Directors.
14.2. Notice of a Series Meeting shall be given not less than ten (10) days prior to the date of the Series Meeting to the address of each holder of preferred shares of the relevant series appearing in the Register.
14.3. The notice shall contain the agenda of the Series Meeting or shall mention that it is deposited for inspection by the holder of the relevant shares at the offices of the Company.
14.4. The Series Meetings do not have to be held inthe Netherlands AntillesCuracao but may be held in conjunction with any general meeting of stockholders.
14.5. To a Series Meeting all the provisions of these Articles of Incorporation andthe laws of the Netherlands AntillesCuracao law as to General Meetings of Stockholders shall, mutatis mutandis, apply, if not otherwise provided in this Article.
A-11
FISCAL YEAR
Article 15
The fiscal year of the Company shall be the calendar year.
BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
Article 16
16.1. Within the period allowed under applicable law the Board of Directors shall prepare the annual accounts and the annual report with respect to the preceding fiscal year. Subsequently, the annual accounts together with the auditors’ report shall be submitted to the stockholders for inspection and approval at the annual general meeting of stockholders in accordance with paragraph 2 of Article 11, together with the annual report. From the date at which the notice of the annual general meeting of stockholders is sent until the close of the annual general meeting of stockholders, the annual accounts together with the auditors’ report and the annual report shall be available for inspection by the stockholders at the office of the Company, and at any additional place, if specified in the notice of such meeting.
16.2. The Board of Directors, with due observance of dividend entitlements of the holders of preferred shares, is authorized to allocate such part of the profits to the retained earning reserves as it deems fit.
DISTRIBUTION OF PROFITS
Article 17
17.1. Dividends on the shares of the Company may be declared either in cash, property (including securities) or in shares of the Company, out of the profits of the preceding fiscal year or years then available for distribution. To the extent that profits of any fiscal year which are available for distribution shall not be distributed, they shall be carried forward and, unless extinguished as the result of subsequent operations or otherwise applied by the Board of Directors, shall be available for distribution in any subsequent year or years.
17.2. The Board of Directors has the authority to declare and make distributions out of retained earnings reserves or out of the contributed surplus capital reserves either in cash, property (including securities) or in shares of the Company without the prior approval of the general meeting of stockholders.
17.3. If dividends are to be distributed, the holders of preferred shares shall have preference as to such dividends in accordance with the preferences of such shares as determined at the issuance thereof.
17.4. The Board of Directors may resolve at any time to distribute one or more interim dividends as an advance payment of the dividend expected to be determined by the stockholders at the annual general meeting.
17.5. Any distribution as provided for in the preceding paragraphs can only occur if, at the moment of distribution, the equity of the Company at least equals the nominal capital and as a result of the distribution will not fall below the nominal capital.
DISPOSITION OF THE COMPANY’S ASSETS
Article 18
Notwithstanding any provision of Article 13, any sale or other disposition of all or substantially all of the assets of the Company, whether for cash, property, stock or other securities of another company, or for any other consideration, shall be made only pursuant to a resolution duly adopted at a general meeting of stockholders by the holder or holders of at least the majority of the shares of the Company at the time outstanding and entitled to vote, the notice of which meeting shall have specified the terms of such proposed sale or other disposition; provided, however, the foregoing shall not apply to any reorganization or rearrangement of the Company, or of any of its subsidiaries or of any of its assets in any transaction whereby there shall be no diminution of the beneficial interest of the stockholders of the Company in such assets.
A-12
LIQUIDATION
Article 19
Notwithstanding any provision of Article 13, any resolution providing for the dissolution, liquidation or winding up of the Company shall be valid only if duly adopted at a general meeting of stockholders by the holder or holders of at least a majority of the shares at the time outstanding and entitled to vote, the notice of which meeting shall have specified the nature of any such resolution to be voted upon at such meeting.
BUY OUT
Article 20
Any one person, or any two or more legal entities belonging to the same group, holding shares representing at least ninety percent (90%) of the equity of the Company can require the remaining stockholders to transfer their shares as provided by and in accordance with the provisions of Article 2:250NACCCC.
AMENDMENTS
Article 21
21.1. Notwithstanding any provision of Article 13, these Articles of Incorporation may be amended only pursuant to a resolution duly adopted at a general meeting of stockholders by the holder or holders of at least the majority of the shares of the Company at the time outstanding and entitled to vote, the notice of which meeting shall have set forth the exact text of the proposed amendment or amendments or shall have stated that a copy of such text has been deposited at the office of the Company in Curaçao for inspection by the stockholders of the Company, and shall remain available for inspection until the conclusion of said meeting.
21.2. Any amendment to these Articles of Incorporation that would increase or decrease the authorized number of preferred shares or par value thereof, or the number of shares of any series thereof, or that would alter or change the powers, preferences or any special rights of the preferred shares, or of any series thereof, so as to affect them adversely, shall require the approval of the holders of a majority of all preferred shares, or of the preferred shares of the series adversely affected (voting together as a single class), as the case may be.
OFFICIAL LANGUAGE
Article 22
The official language of these Articles of Incorporation shall be the English language.
A-13
VOTE BY INTERNET –— www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site andSCHLUMBERGER LIMITEDfollow the instructions to obtain your records and to create an electronic voting instruction form. |
5599 San Felipe, 17th FloorSAN FELIPE, 17TH FLOOR instruction form.Houston, Texas 77056HOUSTON, TX 77O56 | | ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS PROXY MATERIALSIf you would like to reduce the costs incurred by Schlumberger Limitedour company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communicationsproxy materials electronically in future years. |
| |
| | VOTE BY PHONE –— 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. |
| |
| | VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Schlumberger Limited,Vote Processing, c/o Broadbridge,Broadridge, 51 Mercedes Way, Edgewood, NY 11717 |
| | |
| 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | M29712-P05197 KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | | | | | | | | | | | | | | | | | |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.DETACH AND RETURN THIS PORTION ONLYSCHLUMBERGER LIMITED THE BOARD OF DIRECTORS RECOMMEND A VOTE
“FOR” ITEMS The Board of Directors recommends you vote FOR the following:1. Election of DirectorsFor Against Abstain Nominees:1a. P. CAMUS0 0 01b. P. CURRIE0 0 0 For Against Abstain1c. A. GOULD0 0 01m. P. KIBSGAARD0 0 01d. T. ISAAC0 0 01n. L. S. OLAYAN0 0 0 The Board of Directors recommends you vote FOR the following proposal:1e. K. V. KAMATH0 0 02. To approve the advisory resolution on executive compensation.0 0 01f. N. KUDRYAVTSEV0 0 0 The Board of Directors recommends you vote 3 Years 2 Years 1 Year Abstain 2 AND 4. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” ITEM 3.
Voteyears on Directors
|
1.
| | ELECTION OF DIRECTORS
Nominees:
01) P. CAMUS
02) J. S. GORELICK
03) A. GOULD
04) T. ISAAC
05) N. KUDRYAVTSEV
06)the following proposal:1g. A. LAJOUS
| | 07)0 0 03. Advisory vote on the frequency of future advisory0 0 0 0votes on executive compensation. 1h. M. E. MARKS
08)0 0 0 The Board of Directors recommends you vote FOR the For Against Abstain following proposals:1i. E. MOLER0 0 04. To approve the amendment to the Company’s Articles of0 0 0Incorporation to increase the authorized common share capital. 1j. L. R. REIF
09)0 0 05. To approve the amendments to the Company’s Articles0 0 0of Incorporation to clarify the voting standard in contested director elections and to make certain other changes. 1k. T. I. SANDVOLD
10)0 0 06. To approve the Company’s financial statements and0 0 0 declaration of dividends. 7. To approve the appointment of the independent registered 1l. H. SEYDOUX
11) L. G. STUNTZ
| | For
All
¨
| | Withhold
All
¨
| | For All
Except
¨
| | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
|
Vote on Proposals | | | | For | | Against | | Abstain |
2. | | Proposal to adopt and approve of Financials and Dividends. | | ¨ | | ¨ | | ¨ |
3. | | Proposal regarding a stockholder advisory vote on named executive officer compensation. | | ¨ | | ¨ | | ¨ |
4. | | Proposal to approve of independent registered 0 0 0public accounting firm. | | ¨ | | ¨ | | ¨ |
The shares represented by this proxy when properly executed will be voted in the manner directed herein by the undersigned Stockholder(s). If no direction is made, this proxy will be voted FOR items 1, 2 and 4. If any other matters properly come before the meeting, or if cumulative voting is required, the person named in this proxy will vote in their discretion. | | | | | | |
For address changes and/or comments, please check this box and write them on the back where indicated. | | ¨
| | 0 0 0Please sign your name exactly as it appearsyour name(s) appear(s) hereon. When signing as attorney, executor, administrator, trustee or guardian,other fiduciary, please add yourgive full title as such. When signing as joint tenants, all parties in the joint tenancyJoint owners should each sign personally. All holders must sign. If a signer is a corporation or partnership, please sign in full corporate or partnership name, by duly authorized officer. |
| | | | | | Yes | | No | | | |
Please indicate if you plan to attend this meeting.
| | ¨ | | ¨ | | | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | (Joint Owners) Date | | |
|
|
| Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. M29713-P05197SCHLUMBERGER LIMITED (SCHLUMBERGER N.V.) |
|
|
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS |
|
|
ANNUAL GENERAL MEETING OF STOCKHOLDERS |
APRIL 8, 2009 |
|
Proxy Solicitation on Behalf of the Board of Directors Annual General Meeting of Stockholders April 6, 2011The undersigned hereby appoints Robin van Bokhorst, Aede Gerbranda, Jan A.E. KoningMartijn Moerdijk and Martijn Moerdijk,Margo Troll-Weusten, and each of them, as proxies, each with the power of substitution, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of Schlumberger Limited (Schlumberger(SCHLUMBERGER N.V.) that the undersigned is entitled to vote at the Annual General Meeting of Stockholders to be held at the Avila Beach Hotel, Penstraat 130, Willemstad, Curaçao, Netherlands AntillesCuracao on April 8, 2009,6, 2011, at 10:30 a.m. Curacao time and any adjournment or postponement thereof. |
|
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED ASIN THE MANNER DIRECTED BY THE UNDERSIGNED. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORSIN ITEM 1, 2 YEARS WITH RESPECT TO ITEM 3 AND FOR ITEMS 2, 4, 5, 6 AND 4. |
|
PLEASE MARK, SIGN, DATE AND RETURN7. IF ANY OTHER MATTERS PROPERLY COME BEFORE THE ANNUAL GENERAL MEETING OF STOCKHOLDERS, THE PERSONS NAMED IN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
|
| WILL VOTE ON SUCH MATTERS IN THEIR DISCRETION. Continued and to be signed on reverse side |
| | | | | | | | | | |
| | | | Address Changes/Comments: | | | | | | |
| | | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
|
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) |
|
|
CONTINUED AND TO BE SIGNED ON REVERSE SIDE |
|
|
