SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 Under Rule 14a-12
SCHLUMBERGER LIMITED
................................................................................
(Name of Registrant as Specified In Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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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 was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing party:
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4) Date Filed:
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Notes:
Reg. (S) 240.14a-101
SEC 1913 (3-99)
[LOGO] Schlumberger
NOTICE OF
ANNUAL GENERAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
APRIL 11, 2001
Please sign your proxy card and return it in the enclosed
envelope so that you may be represented at the Meeting.
[LOGO] Schlumberger
Schlumberger Limited
277 Park Avenue
New York, New York 10172-0266
- -------------
42, rue Saint-Dominique
75007 Paris, France
- -------------
Parkstraat 83
2514 JG The Hague
The Netherlands
NOTICE OF ANNUAL GENERAL MEETING OF STOCKHOLDERS
To Be Held April 11, 2001
March 7, 2001
The Annual General Meeting of Stockholders of Schlumberger Limited
(Schlumberger N.V.) will be held at the Avila Beach Hotel, Penstraat 130,
Willemstad, Curacao, Netherlands Antilles, on Wednesday, April 11, 2001 at
10:30 in the morning (Curacao time), for the following purposes:
1. To elect 12 directors.
2. To report on the course of business during the year ended December 31, 2000,
to adopt and approve the Company's Consolidated Balance Sheet as at December
31, 2000, its Consolidated Statement of Income for the year ended December
31, 2000, and the declaration of dividends by the Board of Directors as
reflected in the Company's 2000 Annual Report to Stockholders.
3. To adopt amendments to the Deed of Incorporation of the Company to:
a. increase the authorized Common Stock from 1,000,000,000 to 1,500,000,000
shares and
b. make other changes recommended by the Board of Directors as reflected in
Exhibit B.
4. To approve adoption of the Schlumberger 2001 Stock Option Plan.
5. To approve the appointment of PricewaterhouseCoopers LLP as independent
public accountants to audit the accounts of the Company for 2001.
Action will also be taken upon such other matters as may come properly before
the meeting.
The close of business on February 22, 2001 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,
JAMES L. GUNDERSON
Secretary
PROXY STATEMENT
March 7, 2001
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Schlumberger Limited (Schlumberger N.V.) ("the
Company") of proxies to be voted at the 2001 Annual General Meeting of
Stockholders. The approximate mailing date of this proxy statement is March 7,
2001. 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 2000 Annual Report to Stockholders is included in this
package as a separate document. The Company's Consolidated Balance Sheet as at
December 31, 2000, its Consolidated Statement of Income for the year ended
December 31, 2000 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 bear 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 $10,000 plus reasonable expenses. The Company will
reimburse brokerage firms, fiduciaries and custodians for their reasonable
expenses in forwarding the solicitation material to the beneficial owners.
Voting Procedure
Each stockholder of record at the close of business on February 22, 2001
is entitled to one vote for each share registered in the stockholder's name. On
that date there were 573,125,405 outstanding shares of common stock of
Schlumberger, excluding 93,962,036 shares held in treasury.
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
holding of the meeting. Abstentions and broker non-votes are counted for
determining the presence of a quorum but are not counted as votes cast in the
tabulation of votes on any matter brought before the meeting, except as set
forth in Item 3 (Amendment to Deed of Incorporation) or as otherwise required
by law or regulation.
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 Antilles and, as required by the Schlumberger Deed of
Incorporation, meetings of stockholders must be held in Curacao. The enclosed
proxy card is a means by which a stockholder may authorize the voting of shares
at the meeting. It may be revoked at any time by written notice to the
Secretary of the Company before it is voted. If it is not revoked, the shares
represented will be voted in accordance with the proxy.
1
1. Election of Directors
It is intended to fix the number of directors at 12 and to elect a Board
of Directors of 12 members, each to hold office until the next Annual General
Meeting of Stockholders and until a director's successor is elected and
qualified or until a director's death, resignation or removal. Each of the
nominees, except John Mayo, is now a director and was previously elected by the
stockholders. Sir Denys Henderson, a director since 1995, is not standing for
reelection. Unless instructed otherwise, the proxies will be voted for the
election of the 12 nominees named below. 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.
A majority of the votes cast is required to elect each of the nominees for
director.
The Board of Directors Recommends a Vote FOR All Nominees.
The Board of Directors' nominees for election to the Board, together with
information furnished by them with respect to their business experience, and
other information regarding them, are set forth below:
Director
Nominee, Age and Five-Year Business Experience Since
---------------------------------------------- --------
DON E. ACKERMAN, 67; Private Investor since 1991........................................................................ 1982
D. EUAN BAIRD, 63; Chairman and Chief Executive Officer since October 1986.(1).......................................... 1986
JOHN DEUTCH, 62; Institute Professor, Massachusetts Institute of Technology, Cambridge, Massachusetts since
January 1997; Director of U.S. Central Intelligence May 1995 to December 1996; Deputy Secretary of Defense
April 1994 to May 1995; Undersecretary of Defense (Acquisition and Technology) March 1993 to 1994; Director of
Schlumberger Limited, May 1987 to 1993.(2)............................................................................. 1997
VICTOR E. GRIJALVA, 62; Vice Chairman since April 1998; Executive Vice President, Oilfield Services from 1994
to April 1998; Executive Vice President for Wireline, Testing & Anadrill from 1992 to 1994. (3)........................ 1998
ANDRE LEVY-LANG, 63; Independent Investor since November 1999; Chairman of the Executive Board of Paribas,
an international banking group, May 1998 to August 1999; Chairman of the Board of Management of Compagnie
Financiere de Paribas from June 1990 until May 1998, Paris. (4)........................................................ 1992
JOHN C. MAYO, 44; Finance Director of the General Electric Company plc, an industrial conglomerate, from
September 1997 to November 1999 and then Finance Director of the surviving entity Marconi, plc, a global
communications and IT company, since the restructuring of the General Electric Company plc was completed at
the end of November 1999; Finance Director of Zeneca Group, plc, a pharmaceutical and life sciences concern,
from May 1993 to September 1997, all in London. (5).................................................................... --
WILLIAM T. McCORMICK, JR., 56; Chairman and Chief Executive Officer, CMS Energy Corp., a diversified energy
company, Dearborn, Michigan.(6)........................................................................................ 1990
DIDIER PRIMAT, 56; President, Primwest Holding N.V., an investment management company, Curacao, N.A.(7)................. 1988
NICOLAS SEYDOUX, 61; Chairman and Chief Executive Officer, Gaumont, a French film-making enterprise,
Paris.(7).............................................................................................................. 1982
LINDA GILLESPIE STUNTZ, 46; Partner, law firm of Stuntz, Davis & Staffier P.C., since February 1995; Partner,
law firm of Van Ness Feldman, P.C., March 1993 to February 1995, both in Washington, D. C. (8)......................... 1993
SVEN ULLRING, 65; Independent Adviser since June 2000; President and Chief Executive Officer, Det Norske
Veritas, provider of safety, quality and reliability services to maritime, offshore and other industries from July 1985
through May 2000, Hovik, Norway. (9)................................................................................... 1990
YOSHIHIKO WAKUMOTO, 69; Adviser to Toshiba Corporation, a technology company centered on electronics and
energy, since July 1996; member of Board of Toshiba from July 1988 to June 1996; Executive Vice President of
Toshiba, July 1992 through June 1996, with responsibility for corporate planning, group companies and
information systems (1992 to 1995), and international affairs (1996), all in Tokyo. (10)............................... 1997
2
(1) Mr. Baird is a director of Scottish Power, a company which supplies gas,
electricity and water services in the United Kingdom and Western United
States. He is a trustee of Haven Capital Management Trust.
(2) Mr. Deutch is a director of Citigroup, a banking and insurance
organization; CMS Energy Corp., a diversified energy company; Cummins
Engine Company, Inc., a manufacturer of diesel engines and components;
ARIAD Pharmaceuticals which is engaged in the discovery of novel
pharmaceuticals; and Raytheon Corporation, an electronics manufacturer.
Mr. Deutch's adult son, Paul Deutch, is employed by a unit of
Schlumberger. The employment of Mr. Deutch's son was not influenced by
John Deutch's position as a director of the company.
(3) Mr. Grijalva is Chairman of the Board of Directors of Transocean Sedco
Forex Inc., an offshore drilling company.
(4) Mr. Levy-Lang is a director and member of the Compensation Committee of
AGF, a French insurance company and a director of Dexia, a Belgian
financial services company. On January 4, 1996, Mr. Levy-Lang was notified
by a French judge that he was placed under official investigation ("mise
en examen") as part of an ongoing inquiry regarding irregularities
uncovered in the 1991 financial statements of Ciments Francais, S. A.,
which was at that time a subsidiary of Compagnie Financiere de Paribas.
(5) Mr. Mayo is a director of Alstom S.A., a French global company engaged in
energy and transport infrastructure and a member of its audit committee.
(6) Mr. McCormick is a director of Bank One, Inc., a regional bank holding
company, and Rockwell International Inc., a diversified producer of, among
others, electronic, industrial automation and avionics products.
(7) Mr. Primat and Mr. Seydoux are cousins.
(8) Mrs. Stuntz is a director of American Electric Power Company, Inc., an
electric and power holding company. She is Chairman of its Finance
Committee and is a member of its Executive, Directors, Nuclear Oversight
and Public Policy Committees.
(9) Mr. Ullring is Chairman of the Supervisory Board of Norsk Hydro, an
energy, fertilizer and metals company; Chairman of the Supervisory Board
of Storebrand, an insurance company; member of the Supervisory Board of
ABB Norway; and Chairman of the Board of the Foundation for Business and
Sustainable Development, all in Oslo, Norway; and a member of the Board of
Keppel Corporation, a real estate development, shipbuilding and
telecommunications company in Singapore.
(10) Mr. Wakumoto is Vice President, part-time executive member of the Board of
The Japan Foundation, a nonprofit institution funded by the Japanese
Government and incorporated under a special enactment.
3
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information with respect to persons
known by the Company to be the beneficial owner of 5% or more of the Common
Stock.
Beneficial Ownership
of Common Stock
---------------------
Number of Percentage
Name and Address Shares of Class
- ---------------- ---------- ---------
FMC Corp.(1)................... 37,380,502 6.6%
82 Devonshire Street Boston
Massachusetts 02109
- --------
(1) Based on a Statement on Schedule 13G dated February 14, 2001. Such filing
indicates that FMR Corp. has sole voting power with respect to 1,700,421
shares and sole dispositive power with respect to 37,380,502 shares. FMR
Corp. is the parent of Fidelity Management & Research Company, investment
adviser to the Fidelity group of investment companies. The filing
indicates that the Common Stock was acquired in the ordinary course of
business and not for the purpose of influencing control of the Company.
The following lists the shares of Schlumberger common stock beneficially
owned as of January 31, 2001 by all directors and nominees, by each of the
named executive officers, and by the directors and 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, 2001, no nominee for
director owned more than 1% of the outstanding shares of the Company's common
stock, except Mr. Primat who owned 4.13%. All 24 directors and executive
officers as a group owned 5.08% of the outstanding shares of the Company at
January 31, 2001.
Name Shares
---- ----------
Don E. Ackerman............................................. 2,000
D. Euan Baird............................................... 2,293,504 (1)
John Deutch................................................. 3,600 (2)
Andrew Gould................................................ 256,948 (3)
Victor E. Grijalva.......................................... 741,541 (4)
Denys Henderson............................................. 5,000
Andre Levy-Lang............................................. 4,000
Clermont Matton............................................. 581,248 (5)
John C. Mayo................................................ 0
William T. McCormick, Jr.................................... 10,000
Irwin Pfister............................................... 281,906 (6)
Didier Primat............................................... 23,656,136 (7)
Nicolas Seydoux............................................. 251,524 (8)
Linda Gillespie Stuntz...................................... 5,300 (9)
Sven Ullring................................................ 3,305
Yoshihiko Wakumoto.......................................... 2,000
All directors and executive officers as a group (24 persons) 29,139,739 (10)
- --------
(1) Includes 699,955 shares held in a revocable grantor trust and 1,593,549
shares which may be acquired by Mr. Baird within 60 days through the
exercise of stock options.
(2) Includes 600 shares owned by Mr. Deutch's wife, as to which he disclaims
beneficial ownership.
(3) Includes 221,948 shares which may be acquired by Mr. Gould within 60 days
through the exercise of stock options.
(4) Includes 626,429 shares which may be acquired by Mr. Grijalva within 60
days through the exercise of stock options.
(5) Includes 571,479 shares which may be acquired by Mr. Matton within 60 days
through the exercise of stock options.
(6) Includes 263,485 shares which may be acquired by Mr. Pfister within 60
days through the exercise of stock options.
(7) Includes 560,000 shares as to which Mr. Primat shares investment power,
10,396,036 shares held by Mr. Primat as Executor of the Estate of
Francoise Primat as to which he has sole voting and investment power and
5,900,000 shares held for account of the minor children of Mr. Primat as
to which he has joint voting and investment power.
(8) Includes 15,364 shares owned by Mr. Seydoux's wife as to which he shares
voting and investment power.
(9) Includes 3,000 shares as to which Mrs. Stuntz shares voting power and 300
shares owned by a minor child in a trust for which Mrs. Stuntz serves as
trustee.
(10) Includes 4,087,391 shares which may be acquired by executive officers as a
group because they have the right to acquire such shares within 60 days
through the exercise of stock options.
4
Board and Committees
Schlumberger has an Audit, a Compensation, a Finance, a Nominating and a
Technology Committee.
The Audit Committee is comprised of four independent directors. It assists
the Board in fulfilling its responsibilities to oversee the Company's financial
reporting process and monitors the integrity of the Company's financial
statements and the independence and performance of the Company's auditors. The
Audit Committee recommends for appointment by the Board of Directors, subject
to approval by the stockholders, a firm of independent certified public
accountants whose duty is to examine the Schlumberger consolidated financial
statements. Mrs. Stuntz is Chair of the Audit Committee, and Messrs. Levy-Lang,
Primat and Ullring are the other members.
The Compensation Committee reviews and approves the compensation of the
officers of the Company, advises on compensation and benefits matters and
administers the Company's stock option plans. Mr. McCormick is Chair of the
Compensation Committee. Sir Denys Henderson, Messrs. Ackerman and Seydoux are
the other members.
The Finance Committee advises on various matters, including dividend and
financial policies and the investment and reinvestment of funds. The Finance
Committee periodically reviews the administration of the Schlumberger employee
benefit plans and those of its subsidiaries. Mr. Levy-Lang is Chair of the
Finance Committee and Messrs. Ackerman, Baird, Grijalva and Wakumoto are the
other members.
The Nominating 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 meetings of stockholders. It may also recommend to the Board persons to
be appointed by the Board or to be elected by the stockholders to fill any
vacancies which occur on the Board. Mr. Seydoux is Chair of the Nominating
Committee, and Mrs. Stuntz, Messrs. Baird, Deutch and McCormick are the other
members. The Nominating Committee will consider nominees recommended by
stockholders who may submit nominations to Chair, Nominating Committee, care of
the Secretary, Schlumberger Limited, 277 Park Avenue, New York, New York
10172-0266.
The Technology Committee advises the Board and senior management on
various matters including the quality and relevance of programs dealing with
scientific research, development, information and manufacturing technology and
also advises on research strategy and university relationships. Mr. Deutch is
Chair of the Technology Committee and Mr. Levy-Lang is also a member.
During 2000 the Board of Directors held five meetings. The Audit Committee
met four times; the Compensation Committee met four times; the Finance
Committee met twice; the Nominating Committee met four times; and the
Technology Committee met once. All present directors attended 100% of the
aggregate of the meetings of the Board and of the committees of the Board on
which such directors served, except for Mr. Primat who attended 71% and Mr.
Seydoux who attended 92% of all such meetings.
Directors who are employees of Schlumberger do not receive compensation
for serving on the Board or on committees of the Board. Board members who are
not employees receive annual fees of $40,000 each and additional annual fees of
$10,000 as members of each of the committees on which they serve, except that
the Chair of each Committee receives an annual fee of $20,000, rather than the
$10,000 annual fee for committee service.
5
Audit Committee Report
The Audit Committee is comprised of four independent directors and
operates under a written charter adopted annually by the Board of Directors,
which is attached as Exhibit A to the Proxy Statement. The Audit Committee
assists the Board in fulfilling its responsibilities to oversee the Company's
financial reporting process and monitors the integrity of the Company's
financial statements and the independence and performance of the Company's
auditors. In this context, we have reviewed and discussed the Company's
financial statements with Company management and the independent auditors,
PricewaterhouseCoopers LLP, including matters raised by the independent
auditors pursuant to Statement on Auditing Standards No. 61 (Communication with
Audit Committees). The Audit Committee has reviewed and discussed such other
matters as we deemed appropriate.
The Company's independent auditors provided the Audit Committee with
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and we discussed the
PricewaterhouseCoopers' independence with them.
We have considered whether the provision of services by
PricewaterhouseCoopers LLP not related to the audit of the Company's financial
statements and to the review of the Company's interim financial statements is
compatible with maintaining PricewaterhouseCoopers' independence.
Based on the foregoing review and discussion, and relying on the
representation of Company management and the independent auditors' report to
the Audit Committee, the Audit Committee recommended that the Board of
Directors include the audited financial statements in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000 filed with the
Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE OF THE SCHLUMBERGER
BOARD OF DIRECTORS
A. Levy-Lang L. Stuntz, Chair
D. Primat S. Ullring
6
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table shows the compensation paid by the Company and its
subsidiaries to the Chief Executive Officer and to the next four most highly
compensated executive officers for the fiscal years ending December 31, 2000,
1999, and 1998.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
---------------
Annual Compensation Awards
-------------------------- ---------------
Securities All
Underlying Other
Name and Principal Position Year Salary ($)(1) Bonus ($)(1) Options (#) (3) Compensation ($) (4)
- --------------------------- ---- ---------- ------------ --------------- --------------------
D. E. Baird................... 2000 1,500,000 1,500,000 0 175,000
Chairman and 1999 1,500,000 1,000,000 0 105,000
Chief Executive Officer 1998 1,500,000 600,000 0 270,000
- ---------------------------------------------------------------------------------------------------
A. Gould...................... 2000 507,900(2) 567,200 200,000 53,922
Executive Vice President, 1999 589,102 310,915 54,950 36,691
Oilfield Services 1998 499,154 152,284 43,960 63,198
- ---------------------------------------------------------------------------------------------------
C. Matton..................... 2000 409,142(2) 507,900 0 29,141
Executive Vice President 1999 474,554 75,929 0 20,712
Resource Management Systems 1998 490,694 122,673 0 62,313
- ---------------------------------------------------------------------------------------------------
V. Grijalva................... 2000 400,000 300,000 0 57,400
Vice Chairman 1999 800,000 420,000 0 52,000
1998 800,000 240,000 0 112,500
- ---------------------------------------------------------------------------------------------------
I. Pfister.................... 2000 500,000 150,000 100,000 44,800
Executive Vice President 1999 500,000 290,000 54,949 39,719
Test & Transactions 1998 500,000 150,000 0 72,000
- ---------------------------------------------------------------------------------------------------
(1) Salary and bonus amounts include cash compensation earned and received and
any amounts deferred under the Schlumberger Restoration Savings Plan.
(2) Mr. Gould's salary and Mr. Matton's salary and bonus were paid in French
francs.
(3) The Company has granted no stock appreciation rights or restricted stock.
(4) The 1999 amounts disclosed in this column include:
(a) Company contributions to Schlumberger Profit Sharing Plans
(b) Company unfunded credits to the Schlumberger Supplementary Benefit
Plan
(c) Company unfunded matching credits to the Schlumberger Restoration
Savings Plan
(a)($) (b)($) (c)($)
------ ------ ------
Mr. Baird... 11,900 93,200 69,900
Mr. Gould... 53,922 N/A N/A
Mr. Matton.. 29,141 N/A N/A
Mr. Grijalva 11,900 26,000 19,500
Mr. Pfister. 11,900 18,800 14,100
The Company's matching credits under the Schlumberger Restoration Savings
Plan are vested one-third at three years of service, two-thirds at four
years, fully at five years or upon reaching the earliest of age 60, death
or change of control. The amounts credited under the Schlumberger
Restoration Savings Plan will be paid upon termination or retirement,
death, disability, or change in control.
Stock Option Grants Table
The following table sets forth certain information concerning options
granted during 2000 to the Chief Executive Officer and the next four most
highly compensated executive officers. Shown are hypothetical gains that could
be realized for the respective options, based on assumed rates of annual
compound stock price appreciation of 5% and 10% from the date the options were
granted over the ten-year term of the options. Any amount realized upon
exercise of the options will depend upon the market price of Schlumberger
common stock at the time the option is exercised relative to the exercise price
of the option. There is no assurance that the amounts reflected in this table
will be realized.
7
Option Grants in Last Fiscal Year
Individual Grants
-----------------------------------------------------
Potential Realizable
Value at Assumed
% of Total Annual Rates of Stock
Number of Options Price Appreciation for
Securities Granted to Exercise Option Term
Underlying Options Employees in Price Expiration ----------------------
Name Granted (#) (1) Fiscal Year ($/SH) (2) Date 5%($) 10%($)
- ---- ------------------ ------------ ---------- ---------- ---------- ----------
D. E. Baird 0 -- -- -- -- --
A. Gould... 200,000 3.54 82.282 10/19/10 10,349,342 26,227,263
C. Matton.. 0 -- -- -- -- --
V. Grijalva 0 -- -- -- -- --
I. Pfister. 100,000 1.77 82.282 10/19/10 5,174,671 13,113,632
- --------
(1) The Company has not granted any stock appreciation rights. Options become
exercisable in installments of 20% each year following the date of grant.
All outstanding stock options become fully exercisable prior to liquidation
or dissolution of the Company or prior to any reorganization, merger or
consolidation of the Company where the Company is not the surviving
corporation unless such merger, reorganization or consolidation provides
for the assumption of such stock options.
(2) The exercise price of the options is equal to the average of the high and
the low per share prices of the common stock on the options' dates of grant
and may be paid in cash or by tendering shares of common stock. Applicable
tax obligations may be paid in cash or by the withholding of shares of
common stock.
Stock Option Exercises and
December 31, 2000 Stock Option Value Table
The following table shows certain information concerning options exercised
during 2000 by the Chief Executive Officer and by the next four most highly
compensated executive officers and the number and value of unexercised options
at December 31, 2000. Schlumberger has not granted stock appreciation rights.
The values of unexercised in-the-money stock options at December 31, 2000 as
shown below are presented pursuant to Securities and Exchange Commission rules.
Any amount realized upon exercise of stock options will depend upon the market
price of Schlumberger common stock at the time the stock option is exercised.
There is no assurance that the values of unexercised in-the-money options
reflected in this table will be realized.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Shares Options at FY-End (#) at FY-End ($) (2)
Acquired on Value Realized Exercisable/ Exercisable/
Name Exercises (#) ($) (1) Unexercisable Unexercisable
- ---- ------------- -------------- ---------------------- --------------------
D. E. Baird 0 -- 1,527,609/ 62,816,916/
285,740 3,246,226
A. Gould... 55,000 2,558,734 197,770/ 7,211,896/
309,900 2,419,602
C. Matton.. 0 -- 527,519/ 25,499,471/
65,940 2,164,151
V. Grijalva 131,880 5,216,909 582,469/ 23,209,577/
131,880 2,164,151
I. Pfister. 39,837 1,986,289 230,516/ 7,344,372/
220,887 2,624,820
- --------
(1) Market value of stock on date of exercise less exercise price.
(2) Closing price of stock on December 31, 2000 ($79.94) less exercise price.
8
Pension Plans
Schlumberger and certain of its subsidiaries maintain pension plans for
employees, including executive officers, providing for lifetime pensions upon
retirement after a specified number of years of service. Employees may
participate in one or more pension plans in the course of their careers with
the Company or its subsidiaries, 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 on an actuarial basis
through cash contributions made by the Company or its subsidiaries. Certain of
the plans also permit or require contributions by employees.
Benefits under the international staff pension plans of the Company and
certain of its subsidiaries are based on a participant's pensionable salary
(generally, base salary plus incentive) for each year in which the employee
participates in the plans and the employee's length of service with the Company
or the subsidiary. Since January 1, 1993, the benefit earned has been 3.2% of
pensionable salary for each year of service. Benefits are payable upon normal
retirement age, at or after age 55, or upon early retirement. Estimated annual
benefits from these plans payable upon retirement are: $37,052 for Mr. Baird;
$360,593 for Mr. Gould, $155,191 for Mr. Matton and $62,796 for Mr. Grijalva,
assuming pensionable salary continues at the December 31, 2000 level for Mr.
Gould and Mr. Matton.
Benefits under the U.S. tax qualified pension plans of the Company and
certain of its subsidiaries are based on an employee's admissible compensation
(generally, base salary plus incentive) for each year in which an employee
participates in the U.S. plans and the employee's length of service with the
Company or the subsidiary. From 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. The Company has adopted a
supplementary benefit plan for eligible employees, including executive
officers. Amounts under the supplementary plan are accrued under an unfunded
arrangement to pay each individual the additional amount which would have been
payable under the plans if the amount had not been subject to limitations
imposed by law on maximum annual benefit payments and on annual compensation
recognized to compute plan benefits. Estimated annual benefits from the plans
payable upon retirement are: $17,657 for Mr. Gould and $97,891 for Mr. Matton,
and, assuming admissible compensation continues at the December 31, 2000
levels, estimated annual benefits payable from the U.S. plans and the
supplementary benefit plan are: $698,295 for Mr. Baird; $293,520 for Mr.
Grijalva, and $172,765 for Mr. Pfister.
9
Corporate Performance Graph
The following graph compares the yearly percentage change in the
cumulative total stockholder return on Schlumberger common stock, assuming
reinvestment of dividends on the last day of the month of payment into common
stock of Schlumberger, with the cumulative total return on the published
Standard & Poor's 500 Stock Index and the cumulative total return on Value
Line's Oilfield Services Industry Group over the preceding five-year period.
The following graph is presented pursuant to Securities and Exchange Commission
rules. Schlumberger believes that while total stockholder return is an
important corporate performance indicator, it is subject to the vagaries of the
market. In addition to the creation of stockholder value, the Schlumberger
executive compensation program is based on financial and strategic results and
the other factors set forth and discussed in the Compensation Committee Report
beginning on page 11.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG SCHLUMBERGER LIMITED, S&P 500 INDEX AND VALUE LINE'S OILFIELD
SERVICES INDUSTRY INDEX
[CHART]
Value Line
Oilfield Services
Schlumberger Ltd. S&P 500 Industry Index
----------------- ------- -----------------
12/31/95 $100 $100 $100
12/31/96 147 123 155
12/31/97 239 164 240
12/31/98 140 211 116
12/31/99 191 255 171
12/31/00 274 232 239
Assumes $100 invested on December 31, 1995 in Schlumberger Limited stock,
in the S&P 500 Index and in Value Line's 2000 Oilfield Services Industry Index.
Reflects reinvestment of dividends on the last day of the month of payment and
annual reweighting of the Industry Peer Index portfolio.
10
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board is composed entirely of outside
Directors who review and approve compensation programs applicable to executive
officers. Specific awards for these officers are approved by the Committee.
Three programs continue to provide the core compensation vehicles for
executive officers:
-- Base Salaries
-- Annual Cash Incentive Awards
-- Stock Option Grants
Base salaries are reviewed annually for competitiveness against a data
base of comparator company information provided by outside compensation
consultants. The approximately 50 companies in the data base are from broad
industry segments in which Schlumberger competes to provide integrated
solutions for oilfield, high tech, manufacturing, utility and energy service
businesses. The companies in the data base change slightly from year to year
due to mergers and acquisitions as well as the normal movement of companies
into and out of the data base at their own volition. The same companies used
for executive officer base salary ranges are used for professional and
managerial employees of Schlumberger throughout the world.
The comparator companies used for compensation purposes are different from
those in the Corporate Performance Graph (the Value Line Oilfield Services
Industry Index). The Value Line companies do not constitute a source of
recruits nor do they reflect all the industry segments in which Schlumberger
operates.
While executive officer base salaries are reviewed annually to analyze
their position versus the competitive market, they are adjusted less
frequently. Except for significant changes in responsibility, an executive
officer's base salary may be increased every three to five years and then by a
significant amount. This has allowed the Company to focus primarily on variable
compensation during periods of low inflation.
Consistent with this policy, there were no base salary increases in 2000
for the named executive officers.
Annual cash incentive awards for each executive officer are payable early
in the calendar (fiscal) year and reflect performance against targets or
objectives established early in the preceding year.
For executive officers incentive awards are calculated as a percentage of
the base salary paid for the completed calendar year. The percentage varies
among executive officer positions to reflect the differing levels of potential
impact on Company results. For 2000, the incentive award ranges were:
-- 0 to 100% for Mr. Baird
-- 0 to 100% for Messrs. Gould, Matton and Pfister
With exceptional results, the incentive ranges can be exceeded.
One half of the incentive for each executive officer is a function of
performance against financial targets for the Company or the business sector
for which the executive officer is responsible. In 2000, the Company objectives
were based on earnings goals; the business sector target was net income for
that sector.
11
The second half of the incentive relates to performance against various
objectives of each executive officer. Objectives may be strategic or personal
and may relate solely to the completed fiscal year or be interim measures
against longer-term objectives. Achievement against objectives is determined
subjectively.
The strong overall performance of the Company in 2000 and of the oilfield
services sector in particular, resulted in an incentive award that places Mr.
Gould at an appropriately high level of total cash compensation in the
comparator market. The scope of Mr. Grijalva's responsibilities and
compensation structure were changed in 2000 to align his reward to his
contributions. Mr. Grijalva's results were based in particular on his role in
analyzing strategic acquisitions, management of Communications and Investor
Relations and the coordination of Quality, Health, Safety and Environment
functions for Schlumberger. Mr. Matton's results were based on Resource
Management Services, including the integration of two recent acquisitions,
CellNet and Convergent. Mr. Matton's total cash compensation is in the third
quartile of the comparator market. Mr. Pfister's results were based on the
reorganized Test & Transactions Group, which includes Smart Cards, Network
Solutions, e-Transactions and Semiconductor Solutions. Mr. Pfister's total cash
compensation is in the second quartile of the comparator market.
Stock option grants were awarded in 2000 on a general basis throughout
Schlumberger to professional, managerial and technical employees deemed
eligible for consideration. Such reviews are conducted every 18 months to two
years. Grants are awarded on an entirely discretionary basis to individuals
demonstrating exceptional performance in their current positions as well as the
likelihood of continuing high quality performance in the future. In addition,
grants typically are awarded between general reviews to recognize promotions,
substantial changes in responsibility and significant individual or team
achievements. The 2000 grants emphasized high potential employees early in
their careers with Schlumberger.
Of the named executive officers, Messrs. Gould and Pfister were awarded
stock option grants in 2000.
The stock option grants awarded by the Company are uniform in their terms
for executive officers as well as all other optionees - 10-year term, vesting
in 20% steps at the first through fifth anniversary of grant date, and option
price equal to fair market value on date of grant.
The Company does not utilize below-market options, stock appreciation
rights, phantom stock, restricted stock, performance units or reload options.
Section 162(m) of the Internal Revenue Code limits the deductibility of certain
compensation expenses in excess of $1,000,000 per individual. The Committee
does not believe that the cash compensation payable in excess of this amount
for fiscal year 2000 will result in any material loss of tax deduction.
Therefore, the Committee has elected not to follow the provisions of Section
162(m) with regard to cash compensation. The Company's stock option plans are
believed to be in compliance with the provisions of Section 162(m).
Bases for the Compensation of the Chief Executive Officer
As in past years, the same companies used for comparison purposes to
review base salaries of other executive officers (and managerial employees
throughout Schlumberger) are analyzed to review the base salary of the Chief
Executive Officer. The approximately 50 companies in the data base are from
broad industry segments in which Schlumberger competes to provide integrated
solutions for oilfield, high tech, manufacturing, utility and energy service
businesses.
The Chief Executive Officer's salary remained at $1,500,000 during 2000.
The cash incentive range for Mr. Baird was 100% of base salary in 2000.
One-half of this award was measured against targeted earnings per share for the
Company. These targets were fully achieved, so payment on this half of the
incentive award is in proportion to the results.
12
The second half of the award reflects the Committee's positive evaluation
of Mr. Baird's performance against strategic objectives established early in
2000 for the calendar year. These objectives were a combination of market
growth, acquisitions and organizational changes. Disclosure of specific
measures applied to evaluate achievement of Mr. Baird's objectives could
adversely affect the Company's competitive position.
The total cash incentive awarded Mr. Baird for 2000 performance was
$1,500,000. In combination with base salary, this places him in the top
quartile of comparator market data.
Mr. Baird has no employment agreement with the Company.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE SCHLUMBERGER BOARD OF DIRECTORS
Don E. Ackerman William T. McCormick, Jr., Chair
Denys Henderson Nicolas Seydoux
13
2. Financial Statements
The Company's Consolidated Balance Sheet as at December 31, 2000, its
Consolidated Statement of Income for the year ended December 31, 2000, as
audited by PricewaterhouseCoopers LLP, and the amount of dividends declared by
the Board of Directors during 2000 are submitted to the stockholders pursuant
to the Schlumberger Deed of Incorporation.
A majority of the votes cast is required for the adoption and 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 2000
Annual Report to Stockholders.
The Board of Directors Recommends a Vote FOR Item 2.
3. Amendment to Deed of Incorporation
The Board of Directors has approved and recommended for submission to the
stockholders an amendment in full of the Company's Deed of Incorporation. A
copy of the Deed of Incorporation, as proposed to be amended, is set forth as
Exhibit B to this Proxy Statement, and reference is made to that exhibit for
the complete text of its provisions. The following summarizes the principal
changes to be effected by the proposed amendment in full:
The authorized Common Stock of the Company would be increased from its
present 1,000,000,000 shares to 1,500,000,000 shares of U.S.$0.01 each. The
authorized Common Stock of the Company was last increased in 1997, when the
shareholders voted to increase the authorized shares of Common Stock to
1,000,000,000 from 500,000,000. After that increase, the Company effected a
2-for-1 split of the Common Stock. The Board of Directors believes that there
should be a sufficient number of authorized but unissued shares of Common Stock
available for issue from time to time to enable the Board of Directors to
authorize the issuance of additional shares without necessarily requiring an
amendment to the Deed of Incorporation at the time of such action. As of
January 31, 2001, there were 573,045,851 shares of Common Stock issued and
outstanding, and another 41,442,028 shares were reserved for issuance pursuant
to the Company's stock option and stock purchase plans. If the amendment to the
Deed of Incorporation is adopted and the authorized Common Stock is accordingly
increased to 1,500,000,000 shares, the Board of Directors would not anticipate
obtaining further shareholder approval prior to issuing any of the newly
authorized shares, unless required by the Deed of Incorporation, Netherlands
Antilles law or rules of the New York Stock Exchange.
The amendment to increase the authorized Common Stock will be voted on as
a separate Item 3(a) on the proxy card, while the amendment in full to make all
other changes to the Deed of Incorporation will be voted on as Item 3(b).
In accordance with Netherlands Antilles law, the Company's formal legal
name is "Schlumberger N.V.", and the current Deed of Incorporation allows the
use of the name "Schlumberger Limited" in "transactions with foreign
countries." For clarity and to avoid any issue with respect to the scope of
this provision, the permitted uses of the name "Schlumberger Limited" would be
expanded to allow for its use for any purpose outside the Netherlands Antilles.
This change is designed to enable the use of the "Schlumberger Limited" in the
widest circumstances.
The objects (or purposes) article of the Deed of Incorporation would be
amended to clarify the scope of activities that can be conducted by the
Company, which would specifically include the power to design, develop, produce
and supply technology, services, products and systems and to, throughout
14
the world, engage in any business or activity related thereto, together with
broad powers to invest, manage, trade, borrow, lend and undertake research and
development. Although the objects article in the current Deed of Incorporation
is very broad, the Board of Directors believes that the more explicit statement
will clarify the Company's authority to act and will facilitate meeting various
legal requirements in connection with future transactions.
A number of changes contained in the proposed amended Deed of
Incorporation would clarify or modify the authority of the Board of Directors
with respect to a variety of matters relating to the management of the Company.
For example, the Board of Directors would be given the express 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 shareholders. This clarification will remove any existing
legal uncertainty as to the Board's power by confirming that the Board of
Directors has the ability to effect this type of transaction on a basis similar
to that governing a U.S. corporation.
The Deed of Incorporation currently allows the Board of Directors to act
without the holding of a meeting if all directors sign a consent to the action
to be acted on by the Board of Directors. The proposed amendments would expand
this power to allow action by a written consent signed by three-fourths of the
directors if all commercially reasonable efforts to reach all the remaining
directors have been taken.
The Deed of Incorporation as amended would provide that the Chairman and
the Vice Chairman, if any, would be chosen from among the Board of Directors,
but the other officers of the Company would not be required to be members of
the Board of Directors. In particular, the requirement that the President be a
director of the Company would be deleted.
The proposed amended Deed of Incorporation would also confirm and clarify
the authority allowed under Netherlands Antilles law to the Board of Directors
to issue shares, options, warrants or rights to purchase or subscribe for
shares.
The Deed of Incorporation currently gives the Company broad power to
indemnify directors, officers, employees and agents from various liabilities.
The indemnification provisions of the current Deed of Incorporation are based
on the relevant provisions of Delaware corporate law (as they existed when
these provisions were added to the current Deed of Incorporation). The proposed
amendments would make this permissive indemnification mandatory in certain
cases. In particular, the Company would be required to indemnify former and
present directors and officers upon a change in control of the Company. The
Company believes that this change will assist the Company in its efforts to
attract and retain key personnel by eliminating the concern that they could
lose their rights to indemnification in the event of a change in control. In
addition, various technical drafting changes would be made, many of which
reflect recent changes to Delaware corporate law.
In addition, a number of technical or procedural changes would be made to
the Deed of Incorporation to clarify current authority, to conform the Deed of
Incorporation to the Company's current practices or to provisions that have
become more common in U.S. and other significant commercial jurisdictions, and
to cure omissions or ambiguities that may exist in existing provisions. For
example:
. The Board of Directors would be required to prepare a balance sheet and
profit and loss account for submission to and adoption by the
shareholders within eight months of the fiscal year end and would be
authorized to allocate a portion of profits to retained earnings
reserve.
. In the event of a conflict of interest between the Company and one or
more directors, the Company would be represented or would act as
determined from time to time by the Board of Directors in order to
eliminate any appearance of apparent conflicts.
15
. The permissible locations for shareholder meetings would be expanded to
include islands of the Netherlands Antilles other than Curacao.
(Netherlands Antilles law requires shareholders meetings to be held
within the Netherlands Antilles.)
. Provisions for a transfer register for the Common Stock and the
appointment of a registrar to record any transfers of Common Stock would
be made express in the Deed of Incorporation.
. The maximum advance notice period for shareholder meetings and record
dates for shareholder voting and action by consent and for dividends
would be extended from 50 to 60 days. The method of giving notice would
be expanded to allow email and other forms of electronic transmission if
consented to by the person receiving notice.
. The current restriction that directors, officers and other employees are
not eligible to act as a proxy at shareholder meetings would be deleted
to avoid the need to use third parties as proxies at shareholder
meetings.
. Shareholders voting to abstain would be counted as present in
determining the existence of a quorum, but would not be counted as a
vote for or against in determining passage of any shareholder
resolution.
The following resolutions, which will be presented to the Annual General
Meeting of Stockholders, will adopt the proposed amendments to the Deed of
Incorporation of the Company:
RESOLVED, that the amendment to Section 1 of Article 4 of the Deed of
Incorporation of the Company be, and it hereby is, adopted to increase the
authorized Common Stock from one billion (1,000,000,000) to one billion
five hundred million (1,500,000,000) shares as set forth in Exhibit B to
the Company's Proxy Statement dated March 7, 2001; and further
RESOLVED, that the remainder of the Deed of Incorporation of the
Company be, and it hereby is, adopted to read in its entirety as set forth
in Exhibit B to the Company's Proxy Statement dated March 7, 2001.
In connection with the foregoing resolutions a vote in favor will include
a power of attorney to each lawyer of Smeets, Thesseling, Van Bokhorst,
Netherlands Antilles counsel to the Company, to file the amendment with the
Netherlands Antilles Minister of Justice, to make such changes as may be
required by such Minister and to execute the notarial deed of amendment
effectuating the foregoing amendments.
The affirmative vote of a majority of the Company's shares outstanding and
entitled to vote is required for the adoption of the foregoing resolutions.
Accordingly, abstentions and broker non-votes will have the same effect as no
votes.
The Board of Directors Recommends a Vote FOR Items 3(a) and 3(b).
4. Adoption of Schlumberger 2001 Stock Option Plan
On February 16, 2001, the Board adopted, subject to stockholder approval,
the Schlumberger 2001 Stock Option Plan (the "2001 Plan"). The Board's approval
of the Plan followed a review and evaluation of the Company's existing plans by
the Compensation Committee of the Board (the "Committee").
Status of Existing Plans as of January 31, 2001
Under the Schlumberger 1989 Stock Incentive Plan (under which no further
options can be granted), 6,038,065 shares of Common Stock are reserved for
issuance in respect of outstanding options. Under the Schlumberger 1994 Stock
Option Plan (the "1994 Plan"), 19,078,321 shares are
16
reserved for issuance in respect of outstanding options and 4,804 shares are
reserved for future grants. Under the Schlumberger 1998 Stock Option Plan (the
"1998 Plan"), 5,333,250 shares are reserved for issuance in respect of
outstanding options and 6,666,750 shares are reserved for future grants. All
these existing option plans were approved by Schlumberger stockholders.
Summary of the 2001 Plan
In structuring the 2001 Plan, the Committee sought to provide incentives
which link the interests of key employees with the long term growth of the
Company and the interests of the Company's stockholders through the ownership
and performance of the Company's Common Stock and to respond to applicable tax
laws, accounting rules and securities regulations. The 2001 Plan is set forth
in Exhibit C to this Proxy Statement and reference is made to such Exhibit for
a complete statement of its terms and provisions.
The 2001 Plan is administered by the Committee, which may from time to
time grant stock options (either "incentive" or "non-qualified" stock options)
(hereinafter collectively referred to as "Stock Options") to employees of the
Company or its subsidiaries who are executive, administrative, professional or
technical personnel with responsibilities affecting the management, direction,
development and financial success of the Company or its subsidiaries
(approximately 6,250 of whom are optionees as of January 31, 2001).
Subject to certain limitations specified in the 2001 Plan, the Committee
has discretion to determine the terms and conditions upon which such Stock
Options may be exercisable. No member of the Committee, no director of the
Company who is not also an employee nor any person who owns directly or
indirectly stock possessing more than 5% of the total combined voting power or
value of all classes of stock of the Company or any subsidiary is eligible to
receive Stock Options under the 2001 Plan. Members of the Committee shall be
subject to the requirements for Non-Employee Directors as defined in Rule 16b-3
under the United States Securities Exchange Act of 1934 (the "Exchange Act"),
as it may be amended from time to time. No Stock Options may be granted under
the 2001 Plan after February 16, 2011. All outstanding Stock Options become
fully exercisable prior to any reorganization, merger or consolidation of the
Company where the Company is not the surviving corporation or prior to
liquidation or dissolution of the Company, unless such merger, reorganization
or consolidation provides for the assumption of such Stock Options.
The 2001 Plan provides that an aggregate of 9,000,000 shares of Common
Stock, par value $0.01 per share, of the Company shall be subject to the 2001
Plan. The shares subject to the 2001 Plan consist of authorized and unissued
shares or previously issued shares reacquired and held by the Company and any
subsidiary. Should any Stock Option under the 2001 Plan expire or be terminated
prior to its exercise in full and prior to the termination of the 2001 Plan,
the shares subject to such Stock Option shall be available for further grants
under the 2001 Plan. To date, no stock options have been granted under the 2001
Plan.
Stock Options under the 2001 Plan give the optionee the right to purchase
a number of shares of the Company's Common Stock at future dates within 10
years of the date of grant. In order to satisfy the requirements of Section
162(m) of the Code, no optionee may be granted options to purchase more than
500,000 shares during the life of the 2001 Plan. The exercise price may be the
fair market value of the stock (as defined in the 2001 Plan) on the date of
grant, or such other price as the Committee may determine, but not less than
100% of such fair market value. After it is granted, no Stock Option may be
amended to decrease the purchase price and no Stock Option may be granted with
a purchase price lower than the purchase price of an outstanding Stock Option
if the Stock Option is granted in substitution for an outstanding Stock Option.
The purchase price to be paid upon exercise of the option may be paid, subject
to such rules, procedures and restrictions as the Committee may
17
prescribe from time to time (i) in cash or by certified check; (ii) by the
delivery of shares of the Company's Common Stock with a fair market value at
the time of exercise equal to the total option price; or (iii) by a combination
of the preceding methods. At the election of the optionee and subject to such
rules, procedures and restrictions as the Committee may prescribe, withholding
obligations may be satisfied through the surrender of shares of Common Stock to
which the optionee is otherwise entitled. The fair market value of a share of
Common Stock on a particular date is defined as the mean between the highest
and lowest sales price per share of the Common Stock in the New York Stock
Exchange Composite Transactions Quotations as reported for that date or, if
there have been no such reported prices for that date, the mean of the reported
prices on the last preceding date on which a composite sale or sales were
effected on one or more of the exchanges on which the Common Stock traded. On
January 31, 2001, the closing sale price of the Company's Common Stock on the
New York Stock Exchange Composite Tape was $75.975.
The 2001 Plan permits an optionee to exercise an outstanding option after
termination of employment during the three months after such termination,
unless the optionee's employment is terminated for cause (as determined by the
Committee), without the consent of the Company or due to retirement. If the
optionee terminates employment due to retirement (within the meaning of any
prevailing pension plan in which the optionee participates), the exercise
period of an outstanding option shall continue for 60 months. If an optionee
dies with outstanding options that were exercisable on the date of his death,
the optionee's legal representatives have five years from the date of his death
(or, if earlier, from the date of his termination of employment other than for
retirement) to exercise the outstanding options. In any instance, however, such
option may be exercised only to the extent that the option was exercisable on
the date of termination and in no event beyond the original term of the option.
The Committee may in its discretion cause an option to be forfeited if, at any
time within the five years after termination of employment due to retirement or
within one year after any other termination of employment, the holder of such
option engages in "detrimental activity" as defined in Section 5(c)(iv)(D) of
the 2001 Plan.
The Board is authorized to amend or terminate the 2001 Plan. Stockholder
approval will be required for a plan amendment only if and to the extent (i)
such approval is required to meet the requirements of Code Section 422 or (ii)
the amendment would permit the decrease of the exercise price of a Stock Option
after the grant of the Stock Option or grant to the holder of an outstanding
Stock Option, a new Stock Option with a lower exercise price in exchange for
such Stock Option. Section 422 of the Code currently requires stockholder
approval of a plan amendment with respect to incentive stock options that would
(a) change the number of shares subject to the plan or (b) change the class of
employees eligible to participate in the plan.
U.S. Federal Income Tax Consequences
The following discussion of tax considerations relates only to U.S.
federal income tax matters. The discussion assumes that optionees are fully
subject to U.S. federal income tax on the basis of U.S. citizenship or
residency. Moreover, the discussion is general in nature and does not take into
account a number of considerations which may apply in light of the particular
circumstances of an optionee.
Some of the options issued under the 2001 Plan are intended to constitute
"incentive stock options" within the meaning of Section 422 of the Code, while
other options granted under the 2001 Plan are non-qualified stock options. The
Code provides for tax treatment of stock options qualifying as incentive stock
options that may be more favorable to employees than the tax treatment accorded
non-qualified stock options. Generally, upon the exercise of an incentive stock
option, the optionee will recognize no income for U.S. federal income tax
purposes. The difference between the exercise price of the incentive stock
option and the fair market value of the stock at the time of purchase is an
item of tax preference which may require payment of an alternative minimum tax.
On the sale of shares
18
acquired by exercise of an incentive stock option (assuming that the sale does
not occur within two years of the date of grant of the option or within one
year from the date of exercise), any gain will be taxed to the optionee as
long-term capital gain. In contrast, upon the exercise of a non-qualified
option, the optionee recognizes taxable income (subject to withholding) in an
amount equal to the difference between the fair market value of the shares on
the date of exercise and the exercise price. Upon any sale of such shares by
the optionee, any difference between the sale price and the fair market value
of the shares on the date of exercise of the non-qualified option will be
treated generally as capital gain or loss. Under rules applicable to U.S.
corporations, no deduction is available to the employer corporation upon the
grant or exercise of an incentive stock option (although a deduction may be
available if the employee sells the shares so purchased before the applicable
holding period expires), whereas, upon exercise of a non-qualified stock
option, the employer corporation is entitled to a deduction in an amount equal
to the income recognized by the employee. A non-U.S. corporation, such as the
Company, is entitled to deductions only to the extent allocable to "effectively
connected income" which is subject to U.S. federal income tax. Based on the
provisions of the 2001 Plan, the Company expects that the 2001 Plan will comply
with the requirements of Section 162(m) of the Code, provided that the
Committee is comprised solely of "Outside Directors" as defined in Section
162(m) of the Code.
Except with respect to death, an optionee has three months after
termination of employment in which to exercise an incentive stock option and
retain favorable tax treatment at exercise. An option exercised more than three
months after an optionee's termination of employment, including termination due
to retirement, cannot qualify for the tax treatment accorded incentive stock
options.
A majority of the votes cast is required for the approval of the 2001
Plan.
The Board of Directors Recommends a Vote FOR Item 4.
5. Appointment of Auditors
PricewaterhouseCoopers LLP have been selected by the Board of Directors as
independent public accountants to audit the accounts of the Company for the
year 2001. The Schlumberger by-laws provide that the selection of auditors is
subject to approval by the stockholders, and a majority of the votes cast is
required for such approval. A representative of PricewaterhouseCoopers LLP will
attend the 2001 Annual General Meeting and will have the opportunity to make a
statement and respond to questions.
Fees Paid to PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP has billed the Company and its subsidiaries
fees and out-of-pocket expenses as set forth in the table below for (i) the
audit of the Company's 2000 annual financial statements and reviews of
quarterly financial statements, (ii) financial information systems design and
implementation work rendered in 2000 and (iii) all other services rendered in
2000.
Financial Information
Systems Design and
Audit Fees Implementation All Other Fees
---------- --------------------- --------------
Fiscal year 2000 $4,707,000 $2,010,000 $6,144,000
Software in the amount of $231,000 was acquired by PricewaterhouseCoopers
LLP from third party software vendors and resold to Schlumberger. This amount
is included in the caption, "Financial Information Systems Design and
Implementation" shown above.
The Board of Directors Recommends a Vote FOR Item 5.
19
Stockholder Proposals for 2002 Annual General Meeting
In order for a stockholder proposal to be considered for inclusion in the
proxy statement for the 2002 Annual General Meeting of Stockholders, written
proposals must be received by the Secretary of the Company, 277 Park Avenue,
New York, New York 10172-0266, no later than November 7, 2001. Pursuant to the
rules under the Securities Exchange Act of 1934, the Company may use
discretionary authority to vote with respect to stockholder proposals presented
in person at the 2002 Annual General Meeting if the stockholder making the
proposal has not given notice to the Company by January 23, 2002.
Other Matters
Stockholders may obtain a copy of Form 10-K filed with the United States
Securities and Exchange Commission without charge by writing to the Secretary
of the Company at 277 Park Avenue, New York, New York 10172-0266.
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,
James L. Gunderson
Secretary
New York, N.Y.
March 7, 2001
20
Exhibit A
AUDIT COMMITTEE CHARTER
The Board of Directors shall annually appoint an Audit Committee consisting of
at least three directors who have no relationship with the Company that might
interfere with their independence from the Company and its management. The
members of the Audit Committee shall meet the applicable independence
requirements of the New York Stock Exchange and shall be directors who the
Board has determined to be financially literate at the time of appointment or
within a reasonable period after appointment to the Audit Committee. At least
one member of the Audit Committee shall be a director who the Board has
determined has appropriate accounting or related financial management
expertise.
The purpose of the Audit Committee is to assist the Board of Directors in
fulfilling its responsibilities to oversee the Company's financial reporting
process, including review of the Company's accounting practices, internal
accounting controls, the scope of the annual audit, and the auditors' findings
and recommendations, as well as monitoring the integrity of the Company's
financial statements and the independence and performance of the Company's
auditors. In carrying out its responsibility, the Audit Committee is not
providing any special assurance as to the Company's financial statements.
The Audit Committee shall meet as often as it deems appropriate and shall
annually propose to the Board of Directors the appointment of independent
auditors, subject to shareholder approval, and reassess the adequacy of this
Charter and submit it to the Board of Directors for approval. The independent
auditors shall be accountable to the Board of Directors and the Audit
Committee. The Audit Committee shall keep minutes of its proceedings and report
regularly to the Board of Directors.
The Audit Committee shall determine whether to recommend to the Board of
Directors that the Company's financial statements be included in its Annual
Report on Form 10-K for filing with the U.S. Securities and Exchange
Commission. The Audit Committee shall base its determination on a review and
discussion of the financial statements with Company management and the
independent auditors, including matters raised by the independent auditors
pursuant to Statement on Auditing Standards No. 61 (regarding conduct of the
audit) and Independence Standards Board Standard No.1 (regarding independence).
The Audit Committee shall have unrestricted access to the independent auditors,
the Company's internal audit department and other Company personnel, and shall
have authority to retain legal, accounting or other consultants. The Audit
Committee shall ensure that the independent auditors periodically submit a
formal written statement delineating all relevant relationships with the
Company and shall review and discuss disclosed relationships or services that
may impact the auditors' objectivity and independence. Where appropriate, the
Audit Committee shall recommend that the Board of Directors take action in
response to the disclosures to satisfy itself of the independence of the
Company's auditors.
A-1
Exhibit B
PROPOSED
ARTICLES OF INCORPORATION OF THE
CORPORATION WITH LIMITED LIABILITY
SCHLUMBERGER N.V.
NAME AND DOMICILE
Article 1
1.1. The Company shall bear the name: 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 established in Curacao.
1.4. The Company may change its place of domicile in accordance with the
Netherlands Antilles 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 baring 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 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.
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DURATION
Article 3
The Company shall have perpetual existence.
CAPITAL AND SHARES
Article 4
4.1. The authorized capital of the Company shall be SEVENTEEN MILLION UNITED
STATES DOLLARS (US$17,000,000.-), divided into (a) one billion five
hundred million (1,500,000,000) shares of common stock of the par value of
One United States Cent (US$0.01) per share 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.
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 "shareholders".
4.2. Common shares representing more than twenty percent (20%) of the
authorized capital of the Company have been duly issued and fully paid.
4.3. 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 shareholders:
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 of the Netherlands Antilles.
4.5. Subject to the provisions 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
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(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 association or Netherlands
Antilles 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
(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.
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-fifth part of its authorized capital remains outstanding with others
than the Company. 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
shareholders.
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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
shareholders, 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.
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
shareholder.
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 shareholder, his residence or his elected
domicile, the quantity of his shares and the numbers of the share
certificates, if any, representing such shares. The Register shall not be
open for inspection by third parties or shareholders 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.
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 either by serving a deed of
transfer upon the Company or by written acknowledgment of the transfer by
the Company, which acknowledgement can only take place by an annotation on
the share certificate, if share certificates have been issued.
7.6. The entry in the Register provided for in paragraphs 3 and 4 of this
Article shall have the effect of a written acknowledgment of the transfer
by the Company in the event no share certificate has been issued for the
shares concerned.
7.7. If any shareholder 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 shareholder.
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 shareholders
by law or by these Articles of Association.
8.2. The directors shall be elected at a general meeting of shareholders by a
majority of votes cast, in person or by proxy, by the shareholders
entitled to vote. The number of persons constituting the whole Board of
Directors shall be not less than five nor more than twenty-four, as fixed
and elected by the general meeting of shareholders. The number of persons
constituting the whole Board of Directors shall, until changed at any
succeeding general meeting of shareholders, be
B-4
the number so fixed and elected. Directors may be suspended or dismissed
at any general meeting of shareholders. At any general meeting of
shareholders 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 shareholders may fill any vacancy or
vacancies created by such action.
8.3. Each director shall be elected to serve until the next annual general
meeting of shareholders and until his successor shall be elected and
qualify, or until his death, resignation or removal.
8.4. Directors need not be Netherlands Antilles citizens or residents of the
Netherlands Antilles or shareholders of the Company.
8.5. 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 shareholders, 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 shareholders 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 shareholders for the purpose of
electing a Board of Directors. Until such general meeting of shareholders
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 shareholders
shall be called, and if no such person shall have been appointed, any
person or persons holding in the aggregate at least five percent of the
outstanding shares of stock of the Company may call a general meeting of
shareholders for the purpose of electing a Board of Directors.
8.6. 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.
8.7. Meetings of the Board of Directors may be held in or outside the
Netherlands Antilles.
8.8. 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.
8.9. Directors may in writing, by telegram, cable, telex, 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.
8.10. 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 fourth of the directors shall consent in writing, by telegram,
cable, telex, 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. 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
B-5
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 Association to be executed,
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) those directors authorized by the Board of Directors to represent
the Company, who shall have the following titles and occupy the
following offices:
(i) Chairman; or
(ii) Vice-Chairman;
(b) persons, who may, but are not required to, be directors, authorized
by the Board of Directors to represent the Company, 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, 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 shareholders 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 shareholders.
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 Association.
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.
Article 10
10.1. The Company shall have the power 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
B-6
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 in 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 any 15-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 shareholders 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 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 in 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
B-7
and 2 of this 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 shareholders or as required by
the last sentences of paragraphs 1 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 shareholders 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 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, shall stand in the same position under the provisions of this
Article with respect to the resulting or surviving 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.
B-8
MEETINGS OF SHAREHOLDERS
Article 11
11.1. All general meetings of shareholders shall be held in the Netherlands
Antilles on Curacao, Bonaire, St. Eustatius, Saba or the Dutch part of
St. Maarten.
11.2. The annual general meeting of shareholders shall be held within nine
months after the end of the preceding fiscal year, 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, adopting 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 shareholders 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 in the manner
provided for in Article 82 of the Code of Commerce of the Netherlands
Antilles, 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 8.5.
11.4. Notice of meetings of shareholders, whether annual general meetings or
special general meetings, stating the time and place of the meeting,
shall be given to the shareholders not less than twenty (20) or more than
sixty (60) days prior to the date of the meeting in question by notice to
each shareholder at the address thereof appearing in the Register.
11.5. All notices of general meetings of shareholders 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 shareholders 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 association, "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 shareholder 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.
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 shareholders entitled to notice of and to
vote at any general meeting of shareholders, or entitled to receive
payment of any dividend, or in order to make a determination of
shareholders 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 but not to exceed, in any case, sixty (60) days. If the
stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a general meeting of
shareholders, such books shall be closed for at least ten (10) 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 shareholders, such date in any case to
be not more
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than sixty (60) days and, in case of a general meeting of shareholders,
not less than ten (10) days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If
the stock transfer books are not closed and no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
general meeting of shareholders, or shareholders entitled to receive
payment of a dividend, 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 is adopted, as the case may be, shall be the record date
for such determination of shareholders. When a determination of
shareholders 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 shareholders unless a quorum consisting of the holders
of at least one-half of the outstanding shares 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 shareholders, a second general meeting shall be called in the same
manner as such original meeting of shareholders, to be held within two
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 shareholders
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 shareholders.
13.4. The Board of Directors from time to time shall appoint a person to
preside at general meetings of shareholders.
13.5. At any general meeting of shareholders, a shareholder 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 shareholder, any right against the
Company or would in such other capacity relieve him of any obligation to
the Company.
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 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 in the Netherlands Antilles
but may be held in conjunction with any general meeting of shareholders.
14.5. To a Series Meeting all the provisions of these Articles of Association
and the laws of the Netherlands Antilles as to General Meetings of
Shareholders shall, mutatis mutandis, apply, if not otherwise provided in
this Article.
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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 eight months after the end of the fiscal year of the Company, the
Board of Directors shall prepare the balance sheet and profit and loss
account with respect to the preceding fiscal year. Subsequently, the
balance sheet and profit and loss account shall be submitted to the
shareholders for inspection and adoption at the annual general meeting of
shareholders in accordance with paragraph 2 of Article 11. From the date
at which the notice of the annual general meeting of shareholders is sent
until the close of the annual general meeting of shareholders, the
balance sheet and profit and loss account shall be available for
inspection by the shareholders 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 shareholders.
17.3. If, as appears from the adopted profit and loss statement, a loss has
been suffered which cannot be covered by a reserve or which cannot be
extinguished through the application of undistributed profits from
previous years or otherwise, no distribution of profits shall be effected
in subsequent years so long as such loss has not been made good.
17.4. 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.
17.5. 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 shareholders at the annual general meeting.
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 shareholders 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 shareholders of the Company in
such assets.
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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 shareholders 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.
ACTION BY SHAREHOLDERS WITHOUT MEETING
Article 20
20.1. Notwithstanding any provision of Article 13, 18, 19 or 21, any action
which by law or by these Articles of Association is required or permitted
to be taken at a general meeting of shareholders may be taken without a
meeting if taken by the written consent of the holder or holders of at
least the majority of the shares of the Company outstanding and entitled
to vote. Each shareholder may evidence his consent by separate instrument
which may be executed by himself or on his behalf by a duly appointed
proxy. Notice of any action proposed to be taken under this Article 20
shall be communicated to each shareholder at his address appearing in the
share register, such notice to designate the date on or before which such
written consent must be received by the Secretary of the Company in order
to be counted. Any shareholder may revoke his consent by instrument
received by the Secretary of the Company on or before the date so
designated, or before written consents from the holders of the majority
of the shares outstanding and entitled to vote have been received by the
Secretary of the Company, whichever first occurs, and not thereafter.
20.2. For the purpose of determining shareholders entitled to notice of and or
to give written consent to any action proposed to be taken under this
Article 20, the Board of Directors of the Company may provide that the
stock transfer books shall be closed for a stated period not to exceed
sixty (60) days. Such books shall be closed for at least ten (10) days
immediately preceding the date on or before which written consents must
be received by the Secretary of the Company in order to be counted. 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
shareholders, such date in any case to be not earlier than sixty (60)
days prior to the date on or before which written consents must be
received by the Secretary of the Company in order to be counted. If the
stock transfer books are not closed and no record date is fixed for the
determination of shareholders, the date on which notice of the action
proposed to be taken hereunder is mailed shall be the record date for
such determination of shareholders.
AMENDMENTS
Article 21
21.1. Notwithstanding any provision of Article 13, these Articles of
Association may be amended only pursuant to a resolution duly adopted at
a general meeting of shareholders 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 Curacao for inspection by the shareholders of the Company, and shall
remain available for inspection until the conclusion of said meeting.
21.2. Any amendment to these Articles of Association 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.
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Exhibit C
SCHLUMBERGER 2001 STOCK OPTION PLAN
(As Established Effective February 16, 2001)
1. Purpose of the Plan
This Stock Option Plan (the "Plan") is intended as an incentive to key
employees of Schlumberger Limited (the "Company") and its subsidiaries. Its
purposes are to retain employees with a high degree of training, experience and
ability, to attract new employees whose services are considered unusually
valuable, to encourage the sense of proprietorship of such persons and to
stimulate the active interest of such persons in the development and financial
success of the Company.
2. Administration of the Plan
(a) The Board of Directors shall appoint and maintain a Compensation Committee
(the "Committee") which shall consist of at least three (3) members of the
Board of Directors, none of whom is an officer or employee of the Company, who
shall serve at the pleasure of the Board. The Committee may from time to time
grant incentive stock options and non-qualified stock options ("Stock Options")
under the Plan to the persons described in Section 3 hereof. No member of such
Committee shall be eligible to receive Stock Options under this Plan during his
or her tenure on the Committee. Members of the Committee shall be subject to
any additional restrictions necessary to satisfy the definition of
"Non-Employee Director" as set forth in Rule 16b-3 under the United States
Securities Exchange Act of 1934 (the "Act") as it may be amended from time to
time.
(b) The Committee shall have full power and authority to interpret the
provisions of the Plan and supervise its administration. All decisions and
selections made by the Committee pursuant to the provisions of the Plan shall
be made by a majority of its members. Any decision reduced to writing and
signed by a majority of the members shall be fully effective as if adopted by a
majority at a meeting duly held. Subject to the provisions of the Plan, the
Committee shall have full and final authority to determine the persons to whom
Stock Options hereunder shall be granted, the number of shares to be covered by
each Stock Option except that no optionee may be granted options for more than
500,000 shares during the life of the Plan, and whether such Stock Option shall
be designated an "incentive stock option" or a "non-qualified stock option."
(c) No member of the Committee shall be liable for anything done or omitted to
be done by him or by her or any other member of the Committee in connection
with the Plan, except for his or her own willful misconduct or as expressly
provided by statute.
(d) If the exercise period of an outstanding Stock Option is continued
following a holder's termination of employment as provided in Section 5, and
the holder engages in 'detrimental activity' as described in Section 5, the
Committee shall have the authority in its discretion to cause such option to be
forfeited and certain option exercises thereunder to be rescinded as provided
for in Section 5.
3. Grants of Stock Options
(a) The persons eligible for participation in the Plan as recipients of Stock
Options shall include only employees of the Company or its subsidiary
corporations as defined in Section 424(f) of the Internal Revenue Code of 1986
as amended from time to time (the "Code"), and hereinafter referred to as
"subsidiaries" who are executive, administrative, professional or technical
personnel who have responsibilities affecting the management, direction,
development and financial success of the Company or its subsidiaries. No
Director of the Company who is not also an employee is eligible to participate
in the Plan, nor is any employee who owns directly or indirectly stock
possessing more than five percent (5%) of the total combined voting power or
value of all classes of stock of the Company or any subsidiary. An employee may
receive more than one grant of Stock Options at the Committee's discretion
including simultaneous grants of different forms of Stock Options.
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(b) The Committee in granting Stock Options hereunder shall have discretion to
determine the terms and conditions upon which such Stock Options may be
exercisable. Each grant of a Stock Option shall be confirmed by an Agreement
consistent with this Plan which shall be executed by the Company and by the
person to whom such Stock Option is granted. All such Agreements shall contain
a provision providing that the Stock Option shall not be exercisable unless the
recipient remains in the employment of the Company or a subsidiary for a period
of at least one (1) year from the date of any such Agreement, subject to the
right of the Company or subsidiary to terminate such employment.
(c) For purposes of this Plan, employment with the Company shall include
employment with any subsidiary of the Company, and Stock Options granted under
this Plan shall not be affected by an employee's transfer of employment from
the Company to a subsidiary, from a subsidiary to the Company or between
subsidiaries.
(d) The purchase price of the shares as to which a Stock Option is exercised
shall be paid in full at the time of the exercise subject to such rules,
procedures and restrictions as the Committee may prescribe from time to time:
(i) in cash or by certified check; (ii) by the delivery of shares of
Schlumberger Common Stock with a fair market value (as determined according to
Section 5(b) of the Plan) at the time of exercise equal to the total option
price; or (iii) by a combination of the methods described in (i) and (ii).
4. Shares Subject to the Plan
Subject to adjustment as provided in Section 8 hereof, there shall be subject
to the Plan 9,000,000 shares of Common Stock, par value $0.01 per share, of the
Company (the "Shares"). The Shares subject to the Plan shall consist of
authorized and unissued shares or previously issued shares reacquired and held
by the Company or any subsidiary. Should any Stock Option expire or be
terminated prior to its exercise in full and prior to the termination of the
Plan, the Shares theretofore subject to such Stock Option shall be available
for further grants under the Plan. Until termination of the Plan, the Company
and/or one or more subsidiaries shall at all times make available a sufficient
number of Shares to meet the requirements of the Plan. After termination of the
Plan, the number of Shares reserved for purposes of the Plan from time to time
shall be only such number of Shares as are issuable under then outstanding
Stock Options.
5. Terms of Stock Options
(a) Stock Options granted under this Plan which are designated as "incentive
stock options" may be granted with respect to any number of Shares, subject to
the limitation that the aggregate fair market value of such Shares (determined
in accordance with Section 5(b) of the Plan at the time the option is granted)
with respect to which such options are exercisable for the first time by an
employee during any one calendar year (under all such plans of the Company and
any subsidiary of the Company) shall not exceed $100,000. To the extent that
the aggregate fair market value of Shares with respect to which incentive stock
options (determined without regard to this subsection) are exercisable for the
first time by any employee during any calendar year (under all plans of the
employer corporation and its parent and subsidiary corporations) exceeds
$100,000, such options shall be treated as options which are not incentive
stock options. No Stock Options shall be granted pursuant to the Plan after
January 18, 2011.
(b) The purchase price of each Share subject to a Stock Option shall be
determined by the Committee prior to granting a Stock Option. The Committee
shall set the purchase price for each Share at either the fair market value
(the "Fair Market Value") of each Share on the date the Stock Option is
granted, or at such other price as the Committee in its sole discretion shall
determine, but not less than one hundred percent (100%) of such Fair Market
Value. After it is granted, no Stock Option may be amended to decrease the
purchase price and no Stock Option may be granted in substitution for an
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outstanding Stock Option with a purchase price lower than the purchase price of
an outstanding Stock Option. The Fair Market Value of a Share on a particular
date shall be deemed to be the mean between the highest and lowest composite
sales price per share of the Common Stock in the New York Stock Exchange
Composite Transactions Quotations, as reported for that date, or, if there
shall have been no such reported prices for that date, the reported mean price
on the last preceding date on which a composite sale or sales were effected on
one or more of the exchanges on which the Shares were traded shall be the Fair
Market value.
(c) (i) Each Stock Option granted hereunder shall be exercisable in one or
more installments (annual or other) on such date or dates as the Committee
may in its sole discretion determine, and the terms of such exercise shall
be set forth in the Stock Option Agreement covering the grant of the
option, provided that no Stock Option may be exercised after the
expiration of ten (10) years from the date such option is granted.
(ii) Except as provided in paragraph (e) below, the right to purchase
Shares shall be cumulative so that when the right to purchase any Shares
has accrued such Shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Stock Option.
(iii) At any time after the granting of any such Stock Option, the
Committee may accelerate the installment exercise dates (subject, however,
to any applicable limitations concerning options designated "incentive
stock options").
(iv) (A) If the optionee's employment with the Company is terminated with
the consent of the Company and provided such employment is not
terminated for cause (of which the Committee shall be the sole
judge), the Committee may permit such Stock Option to be exercised by
such optionee at any time during the period of three (3) months after
such termination, provided that such option may be exercised before
expiration and within such three-month period only to the extent it
was exercisable on the date of such termination.
(B) In the event an optionee dies while in the employ of the Company
or dies after termination of employment but prior to the exercise in
full of any Stock Option which was exercisable on the date of such
termination, such option may be exercised before expiration of its
term by the person or persons entitled thereto under the optionee's
will or the laws of descent and distribution during the "Post-Death
Exercise Period" (as hereinafter defined) to the extent exercisable
by the optionee at the date of death. The Post-Death Exercise Period
shall be a period commencing on the date of death and ending sixty
(60) months after the date of death (or, if earlier, the date of
termination of employment).
(C) If the optionee's employment with the Company is terminated
without the consent of the Company for any reason other than the
death of the optionee, or if the optionee's employment with the
Company is terminated for cause, his or her rights under any then
outstanding Stock Option shall terminate immediately. The Committee
shall be the sole judge of whether the optionee's employment is
terminated without the consent of the Company or for cause.
(D) Notwithstanding the foregoing, if the optionee engages in
'detrimental activity' (as hereinafter defined) within one year after
termination of employment for any reason other than retirement, the
Committee, in its discretion, may cause the optionee's right to
exercise such option to be forfeited. Such forfeiture may occur at
any time after the Committee determines that the optionee has engaged
in detrimental activity and prior to the actual delivery of all
shares subject to the option pursuant to the exercise of such
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option. If an allegation of detrimental activity by an optionee is
made to the Committee, the Committee, in its discretion, may suspend
the exercisability of the optionee's options for up to two months to
permit the investigation of such allegation. In addition, if the
optionee engages in detrimental activity within one year following
termination of employment for any reason other than retirement, the
Committee, in its discretion, may rescind any option exercise made
within the period commencing six months preceding the date of the
optionee's termination of employment and ending three months
following such termination. For purposes of this Section 5,
'detrimental activity' means activity that is determined by the
Committee in its sole and absolute discretion to be detrimental to
the interests of the Company or any of its subsidiaries, including
but not limited to situations where such optionee: (1) divulges trade
secrets of the Company, proprietary data or other confidential
information relating to the Company or to the business of the Company
and any subsidiaries, (2) enters into employment with a competitor
under circumstances suggesting that such optionee will be using
unique or special knowledge gained as a Company employee to compete
with the Company, (3) uses information obtained during the course of
his or her prior employment for his or her own purposes, such as for
the solicitation of business, (4) is determined to have engaged
(whether or not prior to termination) in either gross misconduct or
criminal activity harmful to the Company, or (5) takes any action
that harms the business interests, reputation, or goodwill of the
Company and/or its subsidiaries."
(v) (A) If the optionee's employment with the Company is terminated due
to retirement (within the meaning of any prevailing pension plan in
which such optionee is a participant), such Stock Option shall be
exercisable by such optionee at any time during the period of sixty
(60) months after such termination or the remainder of the option
period, whichever is less, provided that such option may be exercised
after such termination and before expiration only to the extent that
it is exercisable on the date of such termination.
(B) In the event an optionee dies during such extended exercise
period, such Stock Option may be exercised by the person or persons
entitled thereto under the optionee's will or the laws of descent and
distribution during the Post-Death Exercise Period to the extent
exercisable by the optionee at the date of death and to the extent
the term of the Stock Option has not expired within such Post-Death
Exercise Period.
(C) Notwithstanding the foregoing, if the optionee engages in
'detrimental activity' (as defined in Section 5(c)(iv)(D)) within
five years after termination of employment by reason of retirement,
the Committee, in its discretion, may cause the optionee's right to
exercise such option to be forfeited. Such forfeiture may occur at
any time after the Committee determines that the optionee has engaged
in detrimental activity and prior to the actual delivery of all
shares subject to the option pursuant to the exercise of such option.
If an allegation of detrimental activity by an optionee is made to
the Committee, the Committee, in its discretion, may suspend the
exercisability of the optionee's options for up to two months to
permit the investigation of such allegation. In addition, if the
optionee engages in detrimental activity within five years following
termination of employment by reason of retirement, the Committee, in
its discretion, may rescind any option exercise made within the
period commencing six months preceding the date of the optionee's
termination of employment by retirement and ending one year following
such termination.
(vi) Notwithstanding the other provisions of this paragraph (c), in no
event may a Stock Option be exercised after the expiration of ten (10)
years from the date such Stock Option is granted.
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(d) At the time of the grant of a Stock Option, the Committee may determine
that the Shares covered by such option shall be restricted as to
transferability. If so restricted, such Shares shall not be sold, transferred
or disposed of in any manner, and such Shares shall not be pledged or otherwise
hypothecated until the restriction expires by its terms. The circumstances
under which any such restriction shall expire shall be determined by the
Committee and shall be set forth in the Stock Option Agreement covering the
grant of the option to purchase such Shares.
(e) The Committee shall designate whether a Stock Option is to be an "incentive
stock option" for purposes of Section 422 of the Code.
6. Assignability of Stock Options
Stock Options granted under the Plan shall not be assignable or otherwise
transferable by the recipient except by will or the laws of descent and
distribution. Otherwise, Stock Options granted under this Plan shall be
exercisable during the lifetime of the recipient (except as otherwise provided
in the Plan or the applicable Agreement for Stock Options other than "incentive
stock options") only by the recipient for his or her individual account, and no
purported assignment or transfer of such Stock Options thereunder, whether
voluntary or involuntary, by operation of law or otherwise, shall vest in the
purported assignee or transferee any interest or right therein whatsoever but
immediately upon any such purported assignment or transfer, or any attempt to
make the same, such Stock Options thereunder shall terminate and become of no
further effect.
7. Taxes
The Committee may make such provisions and rules as it may deem appropriate for
the withholding of taxes in connection with any Stock Options granted under the
Plan. An optionee, subject to such rules as the Committee may prescribe from
time to time, may elect to satisfy all or any portion of the tax required to be
withheld by the Company in connection with the exercise of such option by
electing to have the Company withhold a number of shares having a Fair Market
Value on the date of exercise equal to or less than the amount required to be
withheld. An optionee's election pursuant to the preceding sentence must be
made on or before the date of exercise and must be irrevocable.
8. Reorganizations and Recapitalizations of the Company
(a) The existence of this Plan and Stock Options granted hereunder shall not
affect in any way the right or power of the Company or its stockholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company, or any issue of bonds, debentures, preferred
or prior preference stocks ahead of or affecting the Shares or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
(b) Except as hereinafter provided, the issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, for
cash or property, or for labor or services, either upon direct sale or upon
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of Shares subject to Stock Options granted
hereunder.
(c) The Shares with respect to which Stock Options may be granted hereunder are
shares of the Common Stock of the Company as presently constituted, but if, and
whenever, prior to the delivery by the Company or a subsidiary of all of the
Shares which are subject to the Stock Options or rights granted hereunder, the
Company shall effect a subdivision or consolidation of shares or other capital
readjustments, the payment of a stock dividend or other increase or reduction
of the number of shares
C-5
of the Common Stock outstanding without receiving compensation therefor in
money, services or property, the number of Shares subject to the Plan shall be
proportionately adjusted and the number of Shares with respect to which Stock
Options granted hereunder may thereafter be exercised shall:
(i) in the event of an increase in the number of outstanding shares, be
proportionately increased, and the cash consideration (if any) payable
per Share shall be proportionately reduced; and
(ii) in the event of a reduction in the number of outstanding shares, be
proportionately reduced, and the cash consideration (if any) payable per
Share shall be proportionately increased.
(d) If the Company merges with one or more corporations, or consolidates with
one or more corporations and the Company shall be the surviving corporation,
thereafter, upon any exercise of Stock Options granted hereunder, the recipient
shall, at no additional cost (other than the option price, if any) be entitled
to receive (subject to any required action by stockholders) in lieu of the
number of Shares as to which such Stock Options shall then be exercisable the
number and class of shares of stock or other securities to which the recipient
would have been entitled pursuant to the terms of the agreement of merger or
consolidation, if immediately prior to such merger or consolidation the
recipient had been the holder of record of the number of shares of Common Stock
of the Company equal to the number of Shares as to which such Stock Options
shall be exercisable. Upon any reorganization, merger or consolidation where
the Company is not the surviving corporation or upon liquidation or dissolution
of the Company, all outstanding Stock Options shall, unless provisions are made
in connection with such reorganization, merger or consolidation for the
assumption of such Stock Options, be canceled by the Company as of the
effective date of any such reorganization, merger or consolidation, or of any
dissolution or liquidation of the Company, by giving notice to each holder
thereof or his or her personal representative of its intention to do so and by
permitting the exercise during the thirty-day period next preceding such
effective date of all Stock Options which are outstanding as of such date,
whether or not otherwise exercisable.
9. Registration under Securities Act of 1933 and Exchange Listing
It is intended that the Stock Options and Shares covered by the Plan will be
registered under the Securities Act of 1933, as amended. At the time any Shares
are issued or transferred to satisfy the exercise of a Stock Option granted
under the Plan, such Shares will have been listed (or listed subject to notice
of issuance) on the New York Stock Exchange.
10. Reports and Returns
The appropriate officers of the Company shall cause to be filed any reports,
returns or other information regarding the Stock Options granted hereunder or
any Shares issued pursuant to the exercise thereof or a payment made hereunder,
as may be required by Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, or any other applicable statute, rule or regulation.
11. Plan Term
The Plan shall be effective February 16, 2001, subject to approval within
twelve (12) months from the effective date by the holders of a majority of the
votes cast at a meeting. In the event the Plan is not so approved, the Plan
shall automatically terminate and be of no further force or effect. No Stock
Options shall be granted pursuant to this Plan after February 16, 2011.
12. Amendment or Termination
The Board of Directors may amend, alter or discontinue the Plan at any time
insofar as permitted by law, but no amendment or alteration shall be made
without the approval of the stockholders:
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(a) if, except as contemplated by Section 8 of the Plan, the amendment would
permit the decrease of the purchase price of a Stock Option after the grant of
the Stock Option or grant to the holder of an outstanding Stock Option, a new
Stock Option with a lower purchase price in exchange for the outstanding Stock
Option; or
(b) if and to the extent such amendment requires stockholder approval under
Section 422 of the Code (or any successor provision).
No amendment of the Plan shall alter or impair any of the rights or obligations
of any person, without his or her consent, under any option or right
theretofore granted under the Plan.
13. Government Regulations
Nothwithstanding any of the provisions hereof or of any Stock Option granted
hereunder, the obligation of the Company or any subsidiary to sell and deliver
Shares under such Stock Option or to make cash payments in respect thereto
shall be subject to all applicable laws, rules and regulations and to such
approvals by any governmental agencies or national securities exchanges as may
be required, and the recipient shall agree that he will not exercise or convert
any option granted hereunder, and that the Company or any subsidiary will not
be obligated to issue any Shares or make any payments under any such option if
the exercise thereof or if the issuance of such Shares or if the payment made
shall constitute a violation by the recipient or the Company or any subsidiary
of any provision of any applicable law or regulation of any governmental
authority.
C-7
P R O X Y
Schlumberger Limited (Schlumberger N.V.)
Proxy Solicitation on Behalf of the Board of Directors
Annual General Meeting of Stockholders
The undersigned, having received the Notice and Proxy Statement of the Annual
General Meeting of Stockholders and the 2000 Annual Report to Stockholders,
hereby appoints Lupe A. Bosnie, Florence van Der Steur-De Jong, Jan A. Koning,
and Chris W.T. Nordemann and each of them, proxies, with power of subsititution,
to vote in the manner indicated on the reverse side hereof, and with
discretionary authority as to any other matters that may properly come before
the meeting, all my (our) shares of record of Schlumberger Limited (Schlumberger
N.V.) at the Annual General Meeting of Stockholders to be held at the Avila
Beach Hotel, Penstraat 130, Willemstad, Curacao, Netherlands Antilles on April
11, 2001, and at any adjournment or adjournments thereof.
If no other indication is made, the proxies will vote FOR the election of the
director nominees and FOR Proposals 2, 3(a), 3(b), 4 and 5.
- ---------------- ----------------
SEE REVERSE SIDE Continued and to be signed on reverse side SEE REVERSE SIDE
- ---------------- ----------------
[X] Please mark votes as in this example
Unless you indicate otherwise, this proxy will be voted in accordance with the
Board of Directors' recommendations. Directors recommend a vote FOR items 1, 2,
3(a), 3(b), 4 and 5.
1. Election of 12 Directors
Nominees: D.E. Ackerman, D.E. Baird, J. Deutch,
V.E. Grijalva, A. Levy-Lang, J.C. Mayo, W.T. McCormick, Jr.,
D. Primat, N. Seydoux, L.G. Stuntz, S. Ullring, Y. Wakumoto
FOR WITHHELD
ALL FROM ALL
NOMINEES [_] NOMINEES [_]
FOR ALL NOMINEES
EXCEPT THOSE
NOTED IN THE BLANK [_] ________________
FOR AGAINST ABSTAIN
2. Adoption and approval of Financials and Dividends [_] [_] [_]
3(a) Adoption of Amendment to Deed of Incorporation
(Increase in authorized Common Stock) [_] [_] [_]
3(b) Adoption of Amendment to Deed of Incorporation
(Other changes) [_] [_] [_]
4. Approval of Adoption of the Schlumberger 2001
Stock Option Plan [_] [_] [_]
5. Approval of Auditors [_] [_] [_]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
Please sign names exactly as printed hereon. If signing as attorney,
administrator, executor, guardian or trustee, please give full title as such.
Please sign, date and return in the enclosed envelope.
Signature: Date:
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Signature: Date:
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