Draft of April 11, 2000
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
PRIDE INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
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[Pride International letterhead]
May 1, 2000
To Our Shareholders:
We are pleased to invite you to attend the Annual Meeting of Shareholders of
PRIDE INTERNATIONAL, INC., which will be held at 1:30 p.m., Houston time, on
May 23, 2000, at the St. Regis Hotel, 1919 Briar Oaks Lane, Houston, Texas.
At this meeting, stockholders will be asked to approve and ratify the
issuance in March 2000 of 4.5 million shares of our common stock to an
investment fund managed by First Reserve Corporation, a private equity firm
specializing in the energy industry. Affiliates of First Reserve now own 15.7%
of our common stock. Ratification will relieve us of the contingent obligation
to repurchase the 4.5 million shares. Also scheduled for consideration at this
meeting is the ratification of PricewaterhouseCoopers LLP as our independent
accountants for 2000. The meeting will provide an opportunity to review with
you our business and affairs during 1999.
The Board of Directors unanimously recommends that shareholders vote "for"
both of these proposals. Whether or not you plan to attend, please sign, date
and return the proxy card in the accompanying envelope. Your vote is important
no matter how many shares you own. If you do attend the meeting and desire to
vote in person, you may do so even though you have previously submitted your
proxy.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Paul A. Bragg
Paul A. Bragg
President and Chief Executive Officer
[Pride International logo]
PRIDE INTERNATIONAL, INC.
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NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
To be held on May 23, 2000
The Annual Meeting of Shareholders of Pride International, Inc. will be
held at the St. Regis Hotel, 1919 Briar Oaks Lane, Houston, Texas 77027 on
Tuesday, May 23, 2000, at 1:30 p.m., Houston time, for the following purposes:
1. To approve and ratify the issuance on March 31, 2000 of 4,500,000
shares of Pride common stock to First Reserve Fund VIII, L.P.
2. To ratify the appointment of PricewaterhouseCoopers LLP as Pride's
independent accountants for 2000.
3. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Attached to this Notice is a Proxy Statement setting forth information with
respect to the above items and certain other information.
The Board of Directors has established April 3, 2000 as the record date for
the determination of shareholders entitled to notice of and to vote at the
Annual Meeting.
Shareholders, whether or not they expect to be present at the meeting, are
requested to sign and date the enclosed proxy card and return it promptly in
the envelope enclosed for that purpose. Any person giving a proxy has the
power to revoke it at any time, and shareholders who are present at the
meeting may withdraw their proxies and vote in person.
By Order of the Board of Directors
/s/ Robert W. Randall
Robert W. Randall
Secretary
May 1, 2000
5847 San Felipe, Suite 3300
Houston, Texas 77057
PRIDE INTERNATIONAL, INC.
5847 San Felipe, Suite 3300
Houston, Texas 77057
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PROXY STATEMENT
for
2000 ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the 2000 Annual Meeting of Shareholders of Pride
International, Inc. (the "Company") to be held on May 23, 2000, or at any
adjournment or adjournments thereof, at the time and place and for the
purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders.
All properly executed written proxies delivered pursuant to this
solicitation (and not later revoked) will be voted at the Annual Meeting in
accordance with the instructions given in the proxy. When voting, shareholders
may vote for or against a proposal or may abstain from voting. Shareholders
should vote their shares on the enclosed proxy card. If neither "for,"
"against" nor "abstain" is indicated, proxies that are signed and returned
will be voted "for" approval and ratification of the issuance of 4.5 million
shares of the Company's common stock to First Reserve Fund VIII, L.P. and
"for" ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for 2000.
The accompanying proxy is solicited on behalf of the Board of Directors of
the Company and is revocable at any time before it is exercised at the Annual
Meeting by written notice of termination given to the Secretary of the Company
or by filing with the Secretary a later-dated proxy. All shares of the
Company's common stock represented by properly executed and unrevoked proxies
will be voted if such proxies are received in time for the meeting. Such
proxies, together with this Proxy Statement and the Company's Annual Report to
Shareholders, are being sent to shareholders on or about May 1, 2000.
QUORUM, VOTE REQUIRED AND REVOCATION OF PROXIES
The Board of Directors has established April 3, 2000 as the record date for
the determination of shareholders entitled to notice of and to vote at the
Annual Meeting. At the record date, there were outstanding 65,065,636 shares
of common stock held by 1,695 shareholders of record. Each share of common
stock (other than the 4.5 million shares issued to First Reserve, which First
Reserve has agreed not to vote) is entitled to one vote upon each matter to be
voted on at the meeting. As of April 3, 2000, 13,559,410 shares of common
stock, or 20.3% of the total outstanding, were beneficially owned by the
directors and executive officers of the Company. Certain directors of the
Company disclaim beneficial ownership of a total of 11,511,017 of these
shares. See "Information Concerning Directors of the Company."
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock eligible to vote at the Annual Meeting is
necessary to constitute a quorum. Abstentions and broker non-votes (proxies
submitted by brokers that do not indicate a vote for a proposal because they
do not have discretionary voting authority and have not received instructions
as to how to vote on the proposal) are counted as present in determining
whether the quorum requirement is satisfied. If a quorum is present, the
approval and ratification of the issuance of the shares to First Reserve and
the ratification of the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for 2000 require the affirmative vote of at
least a majority of the votes cast. Abstentions from voting will be included
in the voting tally and will have the same effect as a vote against a
proposal. Although broker non-votes are considered present for quorum
purposes, they are not considered entitled to vote with respect to a proposal.
Accordingly, broker non-votes will not affect the outcome of the voting, but
will have the effect of reducing the number of affirmative votes required to
achieve the majority vote for the proposal. The 4.5 million shares issued to
First Reserve will not be counted as present or voting for the purposes
described in this paragraph.
The Company expects that no other matter will be brought before the Annual
Meeting. If other matters are properly presented, however, the persons named
as proxies will vote in accordance with their judgment with respect to such
matters.
Any holder of common stock has the right to revoke his or her proxy at any
time prior to the voting thereof at the Annual Meeting by (1) filing a written
revocation with the Secretary prior to the voting of such proxy, (2) giving a
duly executed proxy bearing a later date or (3) attending the Annual Meeting
and voting in person. Attendance by a shareholder will not itself revoke his
or her proxy.
COST AND METHOD OF PROXY SOLICITATION
The Company will bear the cost of the solicitation of proxies. In addition
to solicitation by mail, directors, officers and employees of the Company may
solicit proxies from shareholders by telephone, facsimile or telegram or in
person. The Company will supply banks, brokers, dealers and other custodian
nominees and fiduciaries with proxy materials to enable them to send a copy of
such material by mail to each beneficial owner of shares of the Company's
common stock that they hold of record and will, upon request, reimburse them
for their reasonable expenses in doing so. In addition, the Company has
engaged Georgeson & Company to assist in the solicitation of proxies for a fee
of $7,500, plus reimbursement of certain out-of-pocket expenses.
ISSUANCE OF SHARES TO FIRST RESERVE FUND VIII, L.P.
(ITEM 1)
To fund the Company's acquisition of Servicios Especiales San Antonio S.A.,
formerly a subsidiary of Perez Companc S.A., and to improve the Company's
overall liquidity, on March 31, 2000, the Company issued 4,500,000 shares of
its common stock (the "New First Reserve Shares") to First Reserve Fund VIII,
L.P. ("Fund VIII"), an investment partnership managed by First Reserve
Corporation ("First Reserve"), for a cash price of $16.00 per share, or $72.0
million total. First Reserve specializes in the energy industry. Founded in
1980, the firm has offices in Houston, Texas; Greenwich, Connecticut; and
Denver, Colorado and manages a portfolio of energy holdings with a market
value in excess of $1.5 billion. The $16.00 per share price paid by Fund VIII
represents a discount of 5.9% to the closing bid price of the common stock on
the New York Stock Exchange on the day prior to approval by the Company's
Board of Directors. In determining the appropriate discount, the Board of
Directors took into consideration that the stock to be issued to Fund VIII
would be restricted stock and that, if the Company were to pursue an
underwritten public offering or institutional block sales off of its "shelf"
registration statement, the underwriters or purchasers would require a
discount in line with that given to Fund VIII. The Company used $35 million of
the net proceeds from the issuance of the New First Reserve Shares to fund its
acquisition of San Antonio, and an additional $17 million to pay a portion of
San Antonio's outstanding debt. San Antonio provides a variety of oilfield
services to customers in Argentina, Venezuela, Bolivia and Peru. The remaining
proceeds will improve the Company's overall liquidity.
In 1999, Fund VIII and First Reserve Fund VII, L.P. ("Fund VII") purchased
5.7 million shares of the Company's common stock for $37.5 million in cash and
the delivery of approximately $77 million principal amount at maturity of the
Company's Zero Coupon Convertible Subordinated Debentures due 2018 that such
funds had previously acquired. Fund VIII and Fund VII also invested an
additional $12.5 million in cash in the common equity of an unconsolidated
affiliate of the Company, which is exchangeable after three years (or earlier
in certain events) at their option for an additional 1.0 million shares of the
Company's common stock. Upon completion of the 1999 transactions, William E.
Macaulay, Chairman and Chief Executive Officer of First Reserve, was appointed
to the Board of Directors of the Company. After completion of the sale of the
New First Reserve Shares, Fund VIII and Fund VII collectively own a total of
10.2 million shares of the Company's common stock, or approximately 15.7% of
the total shares outstanding. Because First Reserve and its investment
partnerships are deemed to be "Related Parties" under Rule 312.03(b) of the
rules of the New York Stock Exchange and the New First Reserve Shares exceed
five percent of the Company's voting stock outstanding immediately prior to
the issuance, approval and ratification by the Company's shareholders of the
issuance is required under that rule.
2
The issuance of the New First Reserve Shares was made under a Securities
Purchase Agreement dated March 31, 2000 among the Company, Fund VIII and Twin
Oaks Financial Ltd., a subsidiary of the Company ("Twin Oaks"). Fund VIII has
agreed that it will not vote the New First Reserve Shares on any matter for
which shareholder approval is sought, including the proposals described in
this Proxy Statement, and that it will not transfer beneficial ownership or
otherwise dispose of the New First Reserve Shares to any person. These
restrictions will cease to apply after the date the required shareholder
approval is obtained (the "Shareholder Approval Date").
If the Company's shareholders fail to approve and ratify the issuance of
the New First Reserve Shares as described in this Item 1, Fund VIII has the
right to cause Twin Oaks to purchase all, but not less than all, of the New
First Reserve Shares for cash (the "Put Right") at a per share price equal to
the average market price of the Company's common stock calculated for the 20
trading day period ending on the 10th trading day after the date Fund VIII
exercises the Put Right. For example, if Fund VIII had exercised the Put Right
on April 12, 2000, Twin Oaks would have been required to purchase the New
First Reserve Shares for $22.64 per share. Fund VIII may not exercise the Put
Right prior to March 31, 2001 or the occurrence of change in control events
involving the Company or Twin Oaks.
If the Company's shareholders fail to approve and ratify the issuance of
the New First Reserve Shares as described in this Item 1, Twin Oaks has the
right to purchase all, but not less than all, of the New First Reserve Shares
from Fund VIII for cash (the "Call Right"). The per share purchase price will
be the greater of $16.00 (adjusted for stock splits, stock dividends and
recapitalizations) and the average market price of the Company's common stock
calculated for the 20 trading day period ending on the 10th trading day after
the date Twin Oaks exercises the Call Right. Twin Oaks may exercise the Call
Right at any time during the 30-day period beginning October 7, 2000. The
right terminates on the Shareholder Approval Date. If Twin Oaks exercises the
Call Right, Fund VIII or any other affiliate of First Reserve (collectively,
the "First Reserve Group") may purchase the Company's common stock in the open
market, in equity offerings by the Company or otherwise up to the same number
of shares purchased by Twin Oaks by exercise of the Call Right.
If Twin Oaks repurchases the New First Reserve Shares pursuant to the
exercise by Fund VIII of the Put Right or by Twin Oaks of the Call Right, the
Company currently expects that the cash used in any such repurchase will be
replenished from the proceeds of sales of additional equity securities.
In 1999, the Company, Fund VIII and Fund VII also entered into a
Shareholders Agreement. The Shareholders Agreement, which was amended in
connection with the issuance of the New First Reserve Shares, provides that,
as long as any member of the First Reserve Group owns Company Securities,
First Reserve is entitled to nominate one director to the Company's Board of
Directors. "Company Securities" include the Company's common stock and any
class or series of the Company's preferred stock, and any other securities,
warrants or options or rights of any nature that are convertible into,
exchangeable for or exercisable for the purchase of, or otherwise give the
holder any rights in, the Company's common stock, or any class or series of
Company preferred stock entitled to vote generally for the election of
directors or otherwise. The First Reserve director nominee currently is
William E. Macaulay, Chairman and Chief Executive Officer of First Reserve. In
addition, the Shareholders Agreement provides that:
. Members of the First Reserve Group are restricted from acquiring Company
Securities, except as provided in the purchase agreement relating to the
New First Reserve Shares, without the Company's consent if the effect
would be to increase the First Reserve Group's ownership of Company
Securities by an amount equal to three percent or more of either the
voting power of the Company or the number of outstanding shares of any
class or series of Company Securities. The First Reserve Group currently
cannot acquire any additional shares of the Company's common stock
without causing all other shareholders to receive preferred share
purchase rights under the Company's Shareholder Rights Plan, unless such
acquisition is expressly approved by the Company's Board of Directors.
. Members of the First Reserve Group are restricted from transferring any
Company Securities they own except in accordance with the Shareholders
Agreement, which permits, among others, sales registered
3
under the Securities Act of 1933, sales effected in compliance with Rule
144 under the Securities Act and other privately negotiated sales.
Members of the First Reserve Group will, however, use their reasonable
efforts to refrain from knowingly transferring more that five percent of
the voting power of the Company to one person unless the Company
consents.
. Members of the First Reserve Group will vote all Company Securities they
beneficially own with respect to each matter submitted to the Company's
shareholders involving a business combination or other change in control
of the Company that has not been approved by the Board of Directors
either (a) in the manner recommended by the Board or (b) proportionately
with all other holders of Company Securities voting with respect to such
matter. The First Reserve Group will, however, retain the power to vote
for the election of the nominee of First Reserve to the Company's Board.
No member of the First Reserve Group will take any action, or solicit
proxies in any fashion, inconsistent with the provisions of this
paragraph.
. No member of the First Reserve Group will join a group or otherwise act
in concert with any other person for the purpose of acquiring, holding,
voting or disposing of any Company Securities, other than the First
Reserve Group itself.
These restrictions will not apply during any period that the First Reserve
director designee is not serving as a director either (a) as a result of a
failure of the Company or its Board to comply with the terms of the
Shareholders Agreement or (b) if such designee is not elected by the
shareholders (and such terms are complied with).
Members of the First Reserve Group also are provided demand and piggyback
registration rights with respect to the Company's common stock they own.
If a quorum is present at the Annual Meeting, the approval and ratification
of the issuance of the New First Reserve Shares to Fund VIII requires the
affirmative vote of at least a majority of the votes cast. Your Board of
Directors unanimously recommends a vote FOR such approval and ratification.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(ITEM 2)
PricewaterhouseCoopers LLP has been appointed by the Board of Directors as
independent public accountants for the Company and its subsidiaries for the
year ending December 31, 2000. This appointment is being presented to the
shareholders for ratification. Representatives of PricewaterhouseCoopers LLP
are expected to be present at the Annual Meeting and will be provided an
opportunity to make statements if they desire to do so and to respond to
appropriate questions from shareholders.
If a quorum is present at the Annual Meeting, the ratification of the
appointment of PricewaterhouseCoopers LLP requires the affirmative vote of at
least a majority of the votes cast. Your Board of Directors unanimously
recommends a vote FOR such ratification.
If the shareholders fail to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent accountants, it is not
anticipated that PricewaterhouseCoopers LLP will be replaced in 2000. Such
lack of approval will, however, be considered by the Audit Committee in
selecting the Company's independent accountants for 2001.
4
INFORMATION CONCERNING DIRECTORS OF THE COMPANY
The Board of Directors currently consists of the eight members named in the
table below. The term of each director will continue until the 2003 Annual
Meeting of Shareholders and until their respective successors are elected.
Presented below for each director are the number of shares of the Company's
common stock beneficially owned as of April 3, 2000 and the percentage of
outstanding shares of common stock that such number of shares represents.
Unless otherwise indicated, the indicated owner has, or would have upon
exercise of stock options, sole voting and investment power with respect to
such shares.
Percent of
Number of Shares Outstanding
Name Beneficially Owned(1) Shares
- ---- --------------------- -----------
Paul A. Bragg................................. 444,050 *
James B. Clement.............................. 42,083 *
Remi Dorval (2)............................... 1,331,583 2.0%
Jorge E. Estrada M. .......................... 50,000 *
Christian J. Boon Falleur .................... 68,833 *
William E. Macaulay (3)....................... 10,228,267 15.7%
Ralph D. McBride.............................. 39,633 *
James T. Sneed................................ 43,933 *
- --------
* Less than 1% of issued and outstanding shares of the Company's common
stock.
(1) Includes shares that may be acquired within 60 days of April 3, 2000 by
exercise of stock options as follows: Mr. Bragg--402,850; Mr. Clement--
42,083; Mr. Dorval--28,833; Mr. Boon Falleur--28,833; Mr. McBride--
35,333; and Mr. Sneed--40,833.
(2) Mr. Dorval disclaims beneficial ownership of 1,282,750 shares
beneficially owned by Soletanche Group, of which Mr. Dorval serves as a
Supervisory Director.
(3) Mr. Macaulay disclaims beneficial ownership of 10,228,267 shares
beneficially owned by First Reserve, with which Mr. Macaulay is
affiliated. See "Issuance of Shares to First Reserve Fund VIII, L.P." and
"Certain Shareholders."
Paul A. Bragg, 44, has been Chief Executive Officer and a director since
March 1999, President since February 1997 and was Chief Operating Officer from
February 1997 to April 1999. He joined the Company in July 1993 as its Vice
President and Chief Financial Officer. From 1988 until he joined the Company,
Mr. Bragg was an independent business consultant and managed private
investments. He previously served as Vice President and Chief Financial
Officer of Energy Service Company, Inc. (now ENSCO International, Inc.), an
oilfield services company, from 1983 through 1987. Mr. Bragg serves on the
Executive Committee of the Board of Directors.
James B. Clement, 54, has been a director of the Company since November
1993. From 1977 until October 1997, he was an executive officer of Offshore
Logistics, Inc., a publicly traded company engaged in helicopter
transportation services, serving as its President, Chief Executive Officer and
a director since 1988. He is currently serving as a consultant to Offshore
Logistics and manages personal investments. Mr. Clement serves on the
Executive Committee and the Audit Committee of the Board of Directors. In
March 1999, he was elected Chairman of the Board of the Company.
Remi Dorval, 49, became a director of the Company in March 1997 in
connection with the acquisition by the Company of the operating subsidiaries
of Forasol-Foramer N.V. ("Forasol-Foramer"). From that time until March 1999,
he served as Vice Chairman of the Board of the Company. For more than five
years prior to becoming a director, Mr. Dorval was a Supervisory Director and
Chief Executive Officer of Forasol-Foramer and its predecessors. Since 1990,
he has been a Supervisory Director of Soletanche Group, a privately held
French company, and is in charge of its interests in the oil and gas sector.
Mr. Dorval serves on the Audit Committee of the Board of Directors.
5
Jorge E. Estrada M., 52, has been a director of the Company since October
1993. For more than five years, Mr. Estrada has been President and Chief
Executive Officer of JEMPSA Media and Entertainment, a company specializing in
the Spanish and Latin American entertainment industry. Previously, Mr. Estrada
served as President--Worldwide Drilling Division of Geosource and Vice
President of Geosource Exploration Division--Latin America.
Christian J. Boon Falleur, 52, became a director of the Company in March
1997 in connection with the Forasol-Foramer transaction. For more than five
years prior to becoming a director, Mr. Boon Falleur was a Supervisory
Director and Executive Vice President of Forasol-Foramer and its predecessors.
From 1972 until April 2000, he was affiliated with Ackermans & van Haaren
Group, a publicly traded company listed on the Brussels Stock Exchange. Mr.
Boon Falleur serves on the Compensation Committee of the Board of Directors.
William E. Macaulay, 54, became a director of the Company in July 1999. See
"Issuance of Shares to First Reserve Fund VIII, L.P." Mr. Macaulay is Chairman
and Chief Executive Officer of First Reserve Corporation, the manager of the
two funds that own 15.7% of the Company's common stock. He is a director of
the following publicly held companies: National-Oilwell, Inc., a distributor
of oilfield equipment and machinery, Weatherford International, Inc., an
oilfield services company, Superior Energy Services, Inc., a provider of
specialized oilfield services and equipment, Maverick Tube Corporation, a
manufacturer of oilfield tubulars, line pipe and structural steel,
TransMontaigne Inc., a company engaged in transporting, terminaling, storing
and marketing refined petroleum products, and Grant Prideco, Inc., a company
engaged in drill stem technology development and drill pipe manufacturing.
Ralph D. McBride, 53, has been a director of the Company since September
1995. Mr. McBride has been a partner with the law firm of Bracewell &
Patterson, L.L.P. in Houston, Texas, since 1980. Bracewell & Patterson, L.L.P.
provides legal services to the Company from time to time. The Company paid
$528,000 to Bracewell & Patterson, L.L.P. for services rendered during 1999.
Mr. McBride serves on the Executive Committee, the Audit Committee and the
Compensation Committee of the Board of Directors. In March 1999, he was
elected Vice Chairman of the Board of the Company.
James T. Sneed, 68, has been a director of the Company since October 1992.
In 1991 he retired after 37 years of employment with Mobil Oil Corporation
where he was Production Manager USA. Mr. Sneed serves on the Executive
Committee and the Compensation Committee of the Board of Directors.
Compensation of Directors
General. The annual retainer for each outside director is $7,000 per
quarter, or $28,000 annually. Mr. Clement, the Chairman of the Board, receives
$14,000 per quarter, or $56,000 annually, less costs incurred by the Company
in connection with providing Mr. Clement coverage under the Company's health
insurance program. Each outside director also receives a fee of (i) $1,000
($2,000 for Mr. Clement) for each Board meeting attended and (ii) $1,000
($2,000 for Mr. Clement) for each committee meeting attended that is not on
the date of a Board meeting or $500 ($1,000 for Mr. Clement) for each
committee meeting attended that is on the date of a Board meeting.
In addition, each director who is not an employee of the Company (other
than Mr. Estrada) has received stock options under the Company's 1993
Directors' Stock Option Plan. A maximum of 400,000 shares of common stock is
available for purchase upon exercise of options granted under the plan. Under
the terms of the plan, each eligible director automatically receives an
initial option grant of 10,000 shares upon becoming a director and, as long as
the director remains eligible, may receive one grant annually as determined by
the Board of Directors or the Executive Committee following the calendar year
in which such director receives the initial grant. Persons who were eligible
directors on the date the plan was adopted received their initial option
grants of 10,000 shares each at that time. The exercise price of options is
the fair market value per share on the date the option is granted. Options
expire ten years from the date of grant. Each option becomes exercisable as to
50% of the shares covered at the end of one year from the date of grant and
the remaining 50% at the end of
6
two years from the date of grant. The plan provides for adjustments of options
in cases of mergers, stock splits and similar capital reorganizations and for
immediate vesting in the case of a change in control of the Company. The
current directors collectively have been granted options to purchase 261,498
shares under the plan.
Consulting Arrangement with Jorge E. Estrada. The Company and Mr. Estrada
have entered into a consulting arrangement whereby Mr. Estrada is paid a fee
for the successful completion by the Company of an acquisition referred to the
Company by Mr. Estrada. The amount of the fee is based on the total dollar
amount of the transaction and may not exceed $1.0 million per transaction. The
Company has agreed to advance to Mr. Estrada an amount equal to $15,000 per
month against the fees payable under the arrangement, which advances will be
offset against any fees that become so payable. In addition, the Company has
agreed, on a case-by-case basis, to pay Mr. Estrada a business development fee
from revenues generated by projects identified by Mr. Estrada. In the event of
a change of control of the Company, the agreement and any other benefits
provided to Mr. Estrada will be automatically extended for three years, and
any amounts payable may, at Mr. Estrada's election, be required to be paid
upon demand in a lump sum. Fees paid to Mr. Estrada in 1999 under the
agreement totaled $418,398.
Organization of the Board of Directors
The Board of Directors is responsible for the overall affairs of the
Company. To assist it in carrying out its duties, the Board has delegated
certain authority to an Executive Committee, an Audit Committee and a
Compensation Committee. During 1999, the Board of Directors of the Company
held 13 meetings. Each director attended at least 75% of the total number of
meetings of the Board of Directors and of the total number of meetings held by
each Committee of the Board on which he served. The Board does not have a
standing nominating committee.
The Executive Committee, currently comprising Messrs. Bragg, Clement,
McBride and Sneed, may exercise the power and authority of the Board of
Directors, subject to certain limitations, when the Board is not in session.
The Executive Committee held one meeting during 1999.
The Audit Committee, currently comprising Messrs. Clement, Dorval and
McBride, has the authority and power to oversee the retention, performance and
compensation of the independent public accountants of the Company, and the
establishment and oversight of such systems of internal accounting and
auditing control as it deems appropriate. The Audit Committee held two
meetings during 1999.
The Compensation Committee, currently comprising Messrs. Boon Falleur,
McBride and Sneed, recommends and approves employment agreements, salaries and
incentive plans, stock options and employee benefit plans for officers and key
employees. The Compensation Committee held two meetings during 1999.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors to
file initial reports of ownership and reports of changes in ownership of the
Company's common stock with the Securities and Exchange Commission and,
pursuant to rules promulgated under Section 16(a), such individuals are
required to furnish the Company with copies of Section 16(a) reports they
file. Based solely on a review of the copies of such reports furnished to the
Company, the Company is not aware of any failure by any of its executive
officers or directors to comply with the Section 16(a) reporting requirements
during 1999.
7
CERTAIN SHAREHOLDERS
The following table sets forth certain information as of April 3, 2000
(unless otherwise noted) with respect to the beneficial ownership of the
Company's common stock by (1) each shareholder of the Company who is known by
the Company to be a beneficial owner of more than 5% of the Company's common
stock, (2) the persons named in the "Summary Compensation Table" herein and
(3) all executive officers and directors of the Company as a group. Unless
otherwise indicated, all of such stock is owned directly, and the indicated
person or entity has sole voting and investment power.
Number of
Shares Percent
Beneficially of
Name and Address Owned (1) Class
- ---------------- ------------ -------
First Reserve Corporation (2)............................ 10,228,267 15.7%
475 Steamboat Road
Greenwich, Connecticut 06830
Paul A. Bragg (3)........................................ 444,050 *
James W. Allen (3)....................................... 514,121 *
John O'Leary (3)......................................... 176,942 *
Gary W. Casswell (3)..................................... 13,200 *
Gerard Godde (3)......................................... 191,165 *
Ray H. Tolson (4)........................................ 251,894 *
All current executive officers and directors as a group
(15 persons)(5)......................................... 13,559,410 20.3%
- --------
* Less than 1% of issued and outstanding shares of the Company's common
stock.
(1) The number of shares beneficially owned by the named executive officers
includes shares that may be acquired within 60 days by exercise of stock
options or warrants as follows: Mr. Bragg--402,850; Mr. Allen--512,750;
Mr. O'Leary--176,942; Mr. Casswell--13,200; and Mr. Godde--188,370.
(2) Fund VIII and Fund VII own beneficially and of record 9,407,940 shares
and 820,327 shares, respectively, of the Company's common stock. The
shares owned beneficially and of record by Fund VIII and Fund VII are
beneficially owned by, and such funds share voting and investment power
with respect to such shares with, First Reserve GP VII, L.P. (820,327
shares), First Reserve GP VIII, L.P. (9,407,940 shares) and First Reserve
Corporation (10,228,267 shares). First Reserve Corporation is the
managing general partner of First Reserve GP VII, L.P. and First Reserve
GP VIII, L.P., which are, in turn, the general partners of Fund VII and
Fund VIII. See "Issuance of Shares to First Reserve Fund VIII, L.P."
(3) The business address of each named executive officer other than Mr.
Tolson is c/o Pride International, Inc., 5847 San Felipe, Suite 3300,
Houston, Texas 77057.
(4) Effective March 1999, Mr. Tolson retired as the Chairman of the Board and
Chief Executive Officer of the Company. See "Certain Relationships and
Related Transactions." His business address is HC12 Box 64R,
Fredericksburg, Texas 78624.
(5) Certain directors of the Company disclaim beneficial ownership of a total
of 11,511,017 of these shares. See note 2 above and "Information
Concerning Directors of the Company."
8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Forasol-Foramer Acquisition. In accordance with the purchase agreement
pursuant to which the Company acquired the operating subsidiaries of Forasol-
Foramer, until March 2002, Ackermans & van Haaren Group and its affiliates
(collectively, the "AVH Group") are entitled to nominate one director to the
Board of Directors of the Company; provided that the AVH Group continues to
own, directly or indirectly, at least 50% of the shares of the Company's
common stock acquired pursuant to the purchase agreement. Christian J. Boon
Falleur has been the director nominee of the AVH Group, and, although Mr. Boon
Falleur is no longer affiliated with the AVH Group, the AVH Group has not
named a replacement or requested Mr. Boon Falleur to resign.
So long as the Board of Directors of the Company includes a person
designated by the AVH Group (or the AVH Group has participated in the
designation of such person), and for a period of not less than 90 days after
the Board of Directors of the Company ceases to include any person so
designated, the AVH Group may not, either directly or indirectly, individually
or as a member of any group, (1) participate in any unsolicited offer to
acquire control of the Company or in any election contest relating to the
Company; (2) vote any of the shares of common stock acquired pursuant to the
purchase agreement in the election of directors of the Company for any person
other than the persons nominated by the Board of Directors of the Company
(including those nominated pursuant to the agreements described above); (3)
vote in favor of any business combination or any other transaction with a
third party that has not been approved by at least a majority of the members
of the Company's Board of Directors; (4) increase its ownership in the Company
such that the AVH Group, individually or with the Soletanche Group (the other
former controlling shareholder of Forasol-Foramer), would own or control more
than 20% of the Company's outstanding voting securities; or (5) enter into any
discussions, negotiations, arrangements or understandings with any third party
with a view to taking, or advising, aiding, abetting, soliciting, inducing or
encouraging, any action prohibited by any of the foregoing.
Retirement of Ray H. Tolson. In connection with the retirement of Ray H.
Tolson in March 1999 as the Company's Chairman of the Board and Chief
Executive Officer, the Company made severance payments of $5.0 million to Mr.
Tolson and $3.0 million to his deferred compensation account, which are to be
paid to him in ten substantially equal annual installments. As consideration
for such payments, Mr. Tolson agreed to, among other things, (1) the immediate
termination of his employment agreement with the Company, (2) the cancellation
of all options to purchase the Company's common stock held by him, (3) the
cancellation of an airplane lease between Mr. Tolson as lessor and the Company
as lessee having a remaining term of approximately four years, and (4) a five-
year non-competition agreement.
9
COMPENSATION OF EXECUTIVE OFFICERS
Executive Compensation
The following table discloses compensation for the years ended December 31,
1999, 1998 and 1997 for the persons who served as Chief Executive Officer in
1999 and the four other most highly compensated executive officers of the
Company.
Summary Compensation Table
Long-Term
Compensation
Awards
------------
Annual
Compensation Shares
Name and Principal ----------------- Underlying All Other
Position (1) Year Salary Bonus Options Compensation (2)
------------------ ---- -------- -------- ------------ ----------------
Paul A. Bragg............. 1999 $402,141 $598,858 129,000 $ 9,776
President and Chief 1998 313,692 158,072 198,750 9,830
Executive Officer 1997 272,154 408,231 150,000 4,826
James W. Allen............ 1999 298,846 222,517 50,000 11,042
Senior Vice President and 1998 268,077 90,057 175,000 10,231
Chief Operating Officer 1997 224,807 224,807 125,000 5,227
John O'Leary.............. 1999 227,846 127,238 50,000 9,854
Vice President -- 1998 196,462 49,499 145,201 --
International Marketing 1997 148,356 101,467 171,200 --
Gary W. Casswell (3)...... 1999 190,768 89,830 15,500 334
Vice President -- Eastern 1998 63,000 34,699 35,000 --
Hemisphere Operations 1997 -- -- -- --
Gerard Godde.............. 1999 227,140 72,167 8,000 --
Senior Vice President 1998 197,000 108,504 129,850 --
1997 142,397 77,980 187,700 --
Ray H. Tolson (4)......... 1999 148,846 -- -- 8,000,870
Former Chief Executive 1998 413,077 277,536 307,139 12,829
Officer 1997 366,154 732,307 175,000 9,357
- --------
(1) As of December 31, 1999.
(2) Includes matching contributions deposited into the Company's 401(k) plan
and salary deferrals into the Company's restoration plan.
(3) Mr. Casswell joined the Company in August 1998.
(4) In March 1999, Mr. Tolson retired as Chairman of the Board and Chief
Executive Officer, and the options held by him were cancelled in partial
consideration of certain severance payments aggregating $8.0 million. See
"Certain Relationships and Related Transactions."
10
Option Grants, Exercise and Valuation
During 1999, options were granted to Mr. Bragg and the four other most
highly compensated executive officers of the Company as shown in the first
table below. All such options were granted at fair market value on the grant
date. Such options generally become exercisable as to one-fifth of the shares
covered thereby at the end of each six-month period after the grant date. Each
option permits tax withholding to be paid by the withholding of shares of
common stock issuable upon exercise of the option. Shown in the second table
below is information with respect to unexercised options held at December 31,
1999.
Option Grants in 1999
Individual Grants
--------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
Number of % of Total of Stock Price Appreciation
Securities Options Granted Exercise or for Option Term(1)
Underlying to Employees in Base Price Expiration ---------------------------
Name Options Granted 1999 ($ per Share) Date 5% 10%
- ---- --------------- --------------- ------------- ---------- ---------------------------
Paul A Bragg............ 129,000 24.6% $10.50 07/22/09 $ 851,838 $ 2,158,724
James W. Allen.......... 50,000 9.5% 10.50 07/22/09 330,170 836,715
John O'Leary............ 50,000 9.5% 10.50 07/22/09 330,170 836,715
Gary W. Casswell........ 15,500 3.0% 10.50 07/22/09 102,353 259,382
Gerard Godde............ 8,000 1.5% 10.50 07/22/09 52,827 133,874
- --------
(1) The amounts under these columns result from calculations assuming 5% and
10% annual growth rates through the actual option term as set by the
Securities and Exchange Commission and are not intended to forecast
future price appreciation of the Company's common stock. The gains
reflect a future value based upon growth at these prescribed rates.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Value
Number of Shares
Underlying Unexercised Value of Unexercised In-
Shares Options at Fiscal Year the-Money Options at
Acquired End(1) Fiscal Year-End(2)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
Paul A. Bragg........... -- -- 431,800 179,950 $1,536,813 $1,101,656
James W. Allen.......... -- -- 537,750 176,250 1,885,900 759,225
John O'Leary............ -- -- 195,982 134,621 471,319 604,742
Gary W. Casswell........ -- -- 17,100 33,400 105,538 190,275
Gerard Godde............ -- -- 221,540 104,010 346,947 495,090
- --------
(1) Number of options shown includes all options (both in and out of the
money) at December 31, 1999.
(2) Value reflects those options in-the-money based on a closing price of $14
5/8 per share at December 31, 1999, less the option exercise price.
Options are in-the-money if the market value of the shares covered
thereby exceeds the option exercise price.
Employment Agreements
The Company is a party to employment agreements with Messrs. Bragg and
Allen, each for a term ending February 4, 2001. Each agreement is subject to
automatic renewals for successive one-year terms until either party terminates
the contract effective upon a February 4 anniversary date, with at least one
year's advance notice. Each agreement provides that if the executive is
terminated involuntarily for reasons not associated with a Change in Control
and not due to cause (as defined), the executive will receive (1) two full
years of base salary (not less than the highest annual base salary during the
preceding three years); (2) two years of life, health,
11
accident and disability insurance benefits for himself and dependents; (3) an
amount equal to two times the target award for the Company's annual incentive
compensation plan described below under "Report of the Compensation Committee
on Executive Compensation"; and (4) immediate vesting of the executive's
options and awards. The agreements treat death, disability, certain
constructive terminations of an executive or the Company's failure to renew an
agreement at the end of its term as an involuntary termination of the
executive.
Each agreement also provides for compensation due to involuntary
termination following a Change in Control. "Change in Control" is defined to
include the acquisition by a person of 20% or more of the Company's voting
power, certain changes in a majority of the Board of Directors, a merger
resulting in existing shareholders having less than 50% of the voting power in
the surviving company and sale or liquidation of the Company. In the event of
a Change in Control, the term of the agreements will be extended for a period
of three years from the date of the Change in Control. In the event of a
termination during the extended term of the agreement (including certain
voluntary resignations by the executive), the executive will be entitled to
receive (1) salary and benefits equal to three full years of compensation; (2)
bonus equal to three times the maximum award for the year of termination; (3)
life, health and accident and disability insurance continued for three years
or until reemployment; and (4) immediate vesting of the executive's options
and awards. The agreements also provide that the Company shall reimburse the
executive for certain taxes incurred by the executive as a result of payments
following a Change in Control.
In addition, each executive's contract provides a noncompete clause for two
years after termination (voluntary or involuntary) assuming that it was not
due to a Change in Control. In the event of a Change in Control, the
noncompete clause is void.
The Company also is a party to an employment agreement with Mr. Casswell
for a term ending August 15, 2000. The agreement is subject to automatic
renewals for successive one-year terms until either party terminates the
contract effective upon an August 15 anniversary date, with at least one
year's advance notice. The agreement provides that if the executive is
terminated involuntarily for reasons not associated with a Change in Control
and not due to cause (as defined), the executive will receive (1) one year of
base salary (not less than the highest annual base salary during the preceding
three years); (2) one year of life, health, accident and disability insurance
benefits for himself and dependents; (3) an amount equal to the target award
for the Company's annual incentive compensation plan described below under
"Report of the Compensation Committee on Executive Compensation"; and (4)
immediate vesting of the executive's options and awards. The agreement treats
death, disability, certain constructive terminations of the executive or the
Company's failure to renew the agreement at the end of its term as an
involuntary termination of the executive.
The agreement also provides for compensation due to involuntary termination
following a Change in Control. "Change in Control" is defined to include the
acquisition by a person of 20% or more of the Company's voting power, certain
changes in a majority of the Board of Directors, a merger resulting in
existing shareholders having less than 50% of the voting power in the
surviving company and sale or liquidation of the Company. In the event of a
Change in Control, the term of the agreement will be extended for a period of
two years from the date of the Change in Control. In the event of a
termination during the extended term of the agreement (including certain
voluntary resignations by the executive), the executive will be entitled to
receive (1) salary and benefits equal to two full years of compensation; (2)
bonus equal to two times the maximum award for the year of termination; (3)
life, health and accident and disability insurance continued for two years or
until reemployment; and (4) immediate vesting of the executive's options and
awards.
In addition, the executive's contract provides a noncompete clause for one
year after termination (voluntary or involuntary) assuming that it was not due
to a Change in Control. In the event of a Change in Control, the noncompete
clause is void.
In connection with the acquisition of the operating subsidiaries of
Forasol-Foramer, the Company entered into severance agreements with Messrs.
O'Leary and Godde. Each agreement provides that, if he is terminated other
than for reasons of misconduct, resignation, death, disability or the
attainment of 65 years of age, he will
12
receive one month of gross salary (as defined) for each year of service with
Forasol-Foramer and the Company. In addition, the Company will provide him and
his dependents 18 months of coverage under the Company's retirement and
benefit plans.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee (the "Committee") consists of three outside
directors, Messrs. McBride, Boon Falleur and Sneed (Chairman), who are neither
officers or employees of the Company nor eligible to participate in any of the
compensation programs the Committee administers. The Committee meets at least
semiannually to review, recommend and approve employment agreements, salaries,
incentive plans, stock options and employee benefit plans for officers and key
employees. The key elements of the Committee's compensation program are base
salary, annual incentive awards and long-term incentive awards.
Base Salary. Under the Committee's program, the base salary for the
executive officers and other key employees is established to position the
individual in the median to upper salary level for the individual's peers in
the contract drilling industry. Specific compensation for individual
executives will vary within this target range as a result of the subjective
judgment of the Committee. The Company has employment agreements with eight
executive officers. These executives received base salary increases ranging
from 5% to 10% (equal to a weighted average of 5.5%) effective January 1,
1999.
Annual Incentive Compensation. The second component of the program is the
annual incentive compensation plan. Because of depressed market conditions
experienced during 1999, the Compensation Committee modified the Company's
annual incentive compensation plan from the traditional measures used by the
Company in prior years. The modified plan provides incentives to each
executive officer to maximize cash generation and profitability of the
Company, enhance liquidity, build cash balances and reduce debt. Bonuses were
paid on a discretionary basis by the Compensation Committee from a bonus pool
based on the amount of free cash flow generated by the Company as determined
in accordance with the plan. For 1999, the amount of free cash flow was $25.4
million, resulting in a bonus pool of $3.4 million.
Long-Term Incentive Compensation. The final component of the Committee's
compensation program is the Company's 1998 Long-Term Incentive Plan. Under the
plan, the Committee is authorized to grant key employees, including the named
executive officers, stock options and other stock and cash awards in an effort
to provide long-term incentives to such executives. The Committee currently
views stock options as the most effective way to tie the long-term interests
of management directly to those of the shareholders. In awarding stock options
to executives other than the Chief Executive Officer, the Committee reviews
and approves or modifies recommendations made by the Chief Executive Officer.
Factors used in determining individual award size are competitive practice
(awards needed to attract and retain management talent), rank within the
Company (internal equity), responsibility for asset management (size of job)
and ability to affect profitability. In each individual case, previous option
and performance unit grants are considered in determining the size of new
awards. Considering these factors, the Committee makes a subjective
determination as to the level of each award.
Chief Executive Officer Compensation. The Committee applies the executive
compensation program described above in determining the Chief Executive
Officer's total compensation. In 1999, the Committee reviewed Mr. Bragg's base
salary, comparing it to the salary of his peers in the international contract
drilling industry, and recommended to the Board of Directors that his base
salary be increased to $410,000. For 1999, the Company awarded Mr. Bragg an
incentive bonus of $598,858, which represented an incentive compensation award
of 146% of Mr. Bragg's base salary. In addition, the Committee awarded options
to Mr. Bragg to purchase an additional 129,000 shares of the Company's common
stock (at the market value of such stock on the date of the award).
13
Supplemental Retirement Plan. The Committee has implemented a supplemental
Executive Retirement Plan for executives that are selected from time to time
by the Company's Chief Executive Officer and approved by the Committee.
Currently, Messrs. Bragg and Allen participate in the Plan.
Limit on Deductibility of Compensation. Section 162(m) of the Internal
Revenue Code of 1986 denies a compensation deduction for federal income tax
purposes for certain compensation in excess of $1 million paid to specified
individuals. "Performance based" compensation meeting specified standards is
deductible without regard to the $1 million cap. The Committee does not
anticipate any payment of compensation in 1999 or 2000 in excess of what is
deductible under Section 162(m), and believes that options granted under the
1998 Long-Term Incentive Plan currently meet the requirements for "performance
based" compensation.
The Committee believes its practices are fair and equitable for both the
executive officers and the shareholders of the Company.
Respectfully submitted,
Christian J. Boon Falleur
Ralph D. McBride
James T. Sneed
14
Shareholder Return Performance Presentation
Presented below is a line graph comparing for the last five years the
yearly change in the Company's common stock against the SCI Index (which
includes 82 upstream oil service and equipment companies in the February 1999
SCI Monthly Performance & Valuation Guide), the SCI Offshore Drillers Index
(which includes, among others, the Company, Atwood Oceanics, Inc., Diamond
Offshore Drilling, Inc., ENSCO International Incorporated, Global Marine Inc.,
Marine Drilling Companies, Inc., Noble Drilling Corporation, R&B Falcon
Corporation and Rowan Companies, Inc.) and the S&P 500 Index.
[CHART APPEARS HERE]
1994 1995 1996 1997 1998 1999
----- ----- ----- ----- ----- -----
Pride.................................... 100.0 212.5 465.0 505.0 141.3 292.5
SCI...................................... 100.0 155.7 247.8 374.4 154.6 218.6
SCI Offshore............................. 100.0 192.8 457.3 587.7 215.1 415.0
S&P 500.................................. 100.0 137.5 168.5 224.5 288.7 349.4
15
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR THE 2001 ANNUAL MEETING
To be included in the proxy materials for the 2001 Annual Meeting of
Shareholders, shareholder proposals submitted for presentation at the annual
meeting must be received by the Company no later than January 2, 2001. Proxies
granted in connection with that annual meeting may confer discretionary
authority to vote on any shareholder proposal if notice of the proposal is not
received by the Company by March 17, 2001. It is suggested that proponents
submit their proposals by certified mail, return receipt requested. Detailed
information for submitting resolutions will be provided upon written request
to the Secretary of the Company. No shareholder proposals have been received
for inclusion in this Proxy Statement.
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not intend to bring before the Annual Meeting any matters
other than those disclosed in the Notice of Annual Meeting of Shareholders,
and it does not know of any business that persons, other than management,
intend to present at the meeting. If any other matter requiring a vote of the
shareholders arises, the proxies in the enclosed form shall be deemed to
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority for any such other matter in accordance
with their best judgment. Copies of the Company's Annual Report on Form 10-K
for the year ended December 31, 1999, as filed with the Securities and
Exchange Commission, are available without charge to shareholders upon request
to Earl W. McNiel, Chief Financial Officer, Pride International, Inc., 5847
San Felipe, Suite 3300, Houston, Texas 77057.
By Order of the Board of Directors
/s/ Robert W. Randall
Robert W. Randall, Secretary
16
PRIDE INTERNATIONAL, INC.
PROXY-2000 ANNUAL MEETING OF SHAREHOLDERS
MAY 23, 2000
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated May 1, 2000. Paul A. Bragg and Robert W.
Randall, each with full power of substitution, and acting alone, are hereby
constituted proxies of the undersigned and authorized to attend the Annual
Meeting of Shareholders of Pride International, Inc. (the "Company") to be
held at the St. Regis Hotel, 1919 Briar Oaks Lane, Houston, Texas on May 23,
2000 at 1:30 p.m., Houston time, or any adjournment of such meeting, and to
represent and vote all shares of common stock of the Company that the
undersigned is entitled to vote.
(CONTINUED AND TO BE SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE
FOR AGAINST ABSTAIN
(1) Approval and ratification of the issuance on March 31,
2000 of 4,500,000 shares of the Company's common stock to [ ] [ ] [ ]
First Reserve Fund VIII, L.P., thereby terminating
contingent obligations to repurchase such shares.
(2) Ratification of the appointment of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as the Company's independent
accountants.
This proxy is revocable. The undersigned hereby revokes any proxy or proxies
to vote or act with respect to such shares heretofore given by the undersigned.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL
BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS SPECIFIED ABOVE AND, IN THE ABSENCE
OF SUCH SPECIFICATIONS, WILL BE VOTED "FOR" ITEMS (1) AND (2). IF ANY OTHER
BUSINESS PROPERLY COMES BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF, THIS
PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXIES NAMED HEREIN.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------
(Signature)
- --------------------------
(Signature if held jointly)
- --------------------------
(Printed Name)
- --------------------------
Dated
NOTE: Please sign exactly as your stock is registered. Joint owners should each
sign personally. Executors, administrators, trustees, etc. should so indicate
when signing.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .