1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
COOPER CAMERON CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
2
[COOPER CAMERON LOGO]
515 Post Oak Boulevard, Suite 1200
Houston, Texas 77027
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1999
To the Stockholders of
COOPER CAMERON CORPORATION:
The 1999 Annual Meeting of Stockholders of COOPER CAMERON CORPORATION will
be held at The Houstonian Hotel and Conference Center, 111 North Post Oak Lane,
Houston, Texas, on Thursday, May 13, 1999, at 10:00 a.m. central daylight time,
for the following purposes:
1) To elect two (2) members of the Board of Directors;
2) To approve the Company's Second Amended and Restated 1995 Stock
Option Plan for Non-Employee Directors to increase by 500,000 the number of
shares of common stock reserved under the Plan and make certain other
modifications;
3) To transact such other business as may properly come before the
meeting and any adjournment thereof.
The record date for the annual meeting is March 15, 1999. Only stockholders
of record at the close of business on that date will be entitled to notice of
and to vote at the meeting or any adjournment.
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, SIGN, DATE,
AND PROMPTLY MAIL THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE. IF YOU
DECIDE TO ATTEND THE MEETING, YOU MAY, IF SO DESIRED, REVOKE THE PROXY AND VOTE
THE SHARES IN PERSON.
By Order of the Board of Directors,
/s/ FRANKLIN MYERS
Franklin Myers
Senior Vice President, General
Counsel and Secretary
Houston, Texas
March 20, 1999
3
COOPER CAMERON CORPORATION
515 POST OAK BOULEVARD, SUITE 1200
HOUSTON, TEXAS 77027
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1999
The following information is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Cooper Cameron Corporation
(the "Company") to be voted at the Annual Meeting of Stockholders of the Company
to be held at The Houstonian Hotel and Conference Center, 111 North Post Oak
Lane, Houston, Texas on the 13th day of May, 1999, at 10:00 a.m. local time, and
at any adjournment. This proxy statement and the enclosed form of proxy will be
mailed to stockholders beginning March 22, 1999.
INFORMATION CONCERNING PROXY
REVOKING YOUR PROXY
You may revoke your proxy at any time before it is exercised by: (1)
sending a written statement revoking your proxy to the Secretary of the Company;
(2) submitting a properly signed proxy with a later date; or (3) voting in
person at the annual meeting. If you return your signed proxy to us before the
annual meeting, we will vote your shares as you direct. If you do not specify on
your proxy card how you want to vote your shares, we will vote them "for" the
election of all nominees for director as set forth under "Election of Directors"
and "for" Proposal 2. If any other business is brought before the meeting, the
proxies will be voted in accordance with the judgment of the persons voting
those shares.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be paid by the Company. In addition to
the use of the mails, proxies may be solicited by the directors, officers and
employees of the Company without additional compensation, by personal interview,
telephone, telegram, or other means of electronic communication. Arrangements
also may be made with brokerage firms and other custodians, dealers, banks and
trustees, or their nominees who hold the voting securities of record, for
sending proxy materials to beneficial owners. Upon request, the Company will
reimburse the brokers, custodians, dealers, banks, or their nominees for the
reasonable out-of-pocket expenses incurred by them. In addition, the Company has
retained Corporate Investor Communications to assist in the solicitation of
proxies for which the Company will pay an estimated fee of $1,500.00, plus
expenses and disbursements.
ANNUAL REPORT TO STOCKHOLDERS
Cooper Cameron's Annual Report to Stockholders for the year ended December
31, 1998, including financial statements, is being mailed with this Proxy
Statement to all stockholders entitled to vote at the Annual Meeting. The Annual
Report does not constitute a part of the proxy soliciting material.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
On March 15, 1999, there were 53,274,157 shares of Common Stock of the
Company issued and outstanding, which constituted the only outstanding voting
securities. Each share of Common Stock has one vote. The presence, in person or
by proxy, of the holders of a majority of all the outstanding shares of stock
entitled to vote at the meeting is necessary to constitute a quorum at the
Annual Meeting of Stockholders or any adjournment or postponement.
1
4
REQUIRED VOTES
The affirmative vote of a majority of the Company's voting stock present in
person or by proxy and entitled to vote at the meeting at which a quorum is
present is required for the election of each director. The affirmative vote of a
majority of the shares voting is required for the approval of the Company's
Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors.
Proxies marked as abstaining for these proposals shall not have an effect on the
outcome of the vote. Abstentions and broker non-votes will be counted in
determining whether or not there is a quorum at the Annual Meeting. Abstentions
will also be counted when tabulating the votes cast on Proposal 2, but broker
non-votes will not be counted.
For Cooper Cameron Employees: If you are a participant in the Cooper
Cameron Corporation Retirement Savings Plan ("CC-SAVE"), the accompanying proxy
card will include the number of equivalent shares credited to your account by
The Chase Manhattan Bank, N.A., as Trustee for CC-SAVE ("Trustee"). When your
proxy card is returned properly signed, it will serve as direction to the
Trustee to vote the shares held in CC-SAVE for your account in accordance with
your directions. If you return a proxy card properly signed, but do not indicate
your voting preference, the shares represented by your proxy card will be voted
FOR all items specified in the Notice. If you fail to return a proxy card
properly signed, the equivalent shares of Common Stock credited to your account
will then be voted by the Trustee in the same proportion as the shares for which
instructions were received from other CC-SAVE participants.
VOTING BY TELEPHONE OR THE INTERNET
Instructions for a shareholder of record to vote by telephone or the
internet are set forth on the enclosed proxy card. The telephone and internet
voting procedures are designed to authenticate votes cast by use of a personal
identification number. The procedures, which comply with Delaware law, allow
shareholders to appoint a proxy to vote their shares and to confirm that their
instructions have been properly recorded.
STOCKHOLDER LIST
A copy of the list of stockholders entitled to vote at the Annual Meeting
will be available for inspection by qualified stockholders for proper purposes
at the offices of the Company during normal business hours beginning on April
29, 1999 and at the annual meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth those persons who, to the knowledge of the
Company, beneficially owned five percent or more of the shares of Common Stock
outstanding as of March 15, 1999, on which date 53,274,157 shares were
outstanding.
AMOUNT
AND NATURE
NAME AND ADDRESS OF BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
- ------------------- ------------- ----------------
FMR Corp. ............................................... 6,920,030(1) 13.0%
82 Devonshire Street
Boston, Massachusetts 02109-3614
Franklin Mutual Advisers Inc. ........................... 5,110,890(2) 9.6%
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Loomis, Sayles & Company, L.P. .......................... 3,333,815(3) 6.3%
One Financial Center
Boston, MA 02111
- ---------------
(1) According to a Schedule 13G/A filed with the Securities and Exchange
Commission (the "SEC") by FMR Corp., as of December 31, 1998, FMR Corp. had
sole voting power over 123,100 shares and sole
2
5
dispositive power over 6,920,030 shares. Fidelity Management & Research
Company, a wholly-owned subsidiary of FMR Corp. and an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940, is the
beneficial owner of 6,799,130 shares or 12.773% of the common stock of
Cooper Cameron.
(2) According to a Schedule 13G filed with the SEC by Franklin Mutual Advisers
Inc. ("FMAI"), dated January 27, 1999, FMAI had sole voting power over
5,110,890 shares and sole dispositive power over 5,110,890 shares. FMAI is a
direct subsidiary of Franklin Resources, Inc.
(3) According to a Schedule 13G filed with the SEC by Loomis, Sayles & Company,
L.P. ("Loomis"), dated February 10, 1999, Loomis had sole voting power over
1,555,655 shares, shared voting power over 800 shares, and sole dispositive
power over 3,333,815 shares.
PROPOSAL 1: ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors will be
comprised of not less than five nor more than fifteen members. The authorized
number of directors is currently six, divided into three classes having two
members in Class I, two members in Class II and two members in Class III. Each
class is elected for a term of three years, so that the term of one class of
directors expires at each Annual Meeting of Stockholders.
NOMINEES
The Board of Directors has nominated Grant A. Dove and David Ross III for
election to the Board of Directors for three-year terms expiring at the Annual
Meeting of Stockholders in 2002, or when their successors are elected and
qualified. The affirmative vote of the holders of at least a majority of a
quorum is required in order to elect each director. The enclosed proxy (unless
otherwise directed, revoked or suspended) will be voted for the election of
these two nominees for director.
If any nominee should be unable to serve as a director, which is not
anticipated, the shares represented by proxies will be voted for the election of
a substitute nominated by the Board of Directors. Set forth on the following
pages are the names of, and certain information with respect to, the persons
nominated as directors and the continuing directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE DIRECTOR
NOMINEES.
3
6
NOMINEES FOR DIRECTORS
CLASS I -- TERM ENDING 2002
GRANT A. DOVE
Chairman of Cooper Cameron's Compensation Committee and a director since
June 1995. Age 70. Mr. Dove is now, and has been since 1991, a Managing Partner
of Technology Strategies and Alliances, which performs strategic planning and
investment banking services. He was Chief Executive Officer of Microelectronics
and Computer Technology Corporation from 1987 to 1991 and currently serves as a
director. From 1982 until 1987 he was Executive Vice President of Texas
Instruments Incorporated and previously served as Senior Vice President. He is
retired Chairman and a director of Optek Technology, Inc., and is a director of
Media One Group and Intervoice, Inc.
DAVID ROSS III
Member of Cooper Cameron's Compensation Committee and a director since June
1995. Age 58. Mr. Ross is an adjunct professor and member of the Board of
Overseers of the Jesse H. Jones Graduate School of Administration at Rice
University. From 1987 until 1993 he was Chairman and Chief Executive Officer of
the Sterling Consulting Group, a firm which provides analytical research,
planning and evaluation services to companies in the oil and gas industry.
Between 1984 and 1987 he was a principal in the Sterling Group, a firm which
participated in leveraged buyouts, primarily in the chemical industry, and Camp,
Ross, Santoski & Hanzlik, Inc., which provides planning and consulting services
to the oil and gas industry. He is a director of Nuevo Energy Company.
CONTINUING DIRECTORS
CLASS II -- TERM ENDING 2000
SHELDON R. ERIKSON
Chairman of the Board of the Company since May 1996, President and Chief
Executive Officer since January 1995, and a director since March 1995. Age 57.
He was Chairman of the Board from 1988 to 1995 and President and Chief Executive
Officer from 1987 to 1995 of The Western Company of North America, an
international petroleum service company engaged in pressure pumping, well
stimulating and cementing. Previously, he was President of the Joy Petroleum
Equipment Group of Joy Manufacturing Company. He is a director of Triton Energy
Corporation and Layne Christensen Co. He also serves on the board of directors
of the National Ocean Industries Association and The Petroleum Equipment
Suppliers Association.
C. BAKER CUNNINGHAM
Member of Cooper Cameron's Compensation Committee and a director since
November 1996. Age 57. He is now, and has been since 1993, Chairman of the Board
of Directors, President and Chief Executive Officer of Belden Inc. He held
various positions with Cooper Industries, Inc. from 1970 to 1993, including
Executive Vice President, Operations from 1982 to 1993.
4
7
CLASS III -- TERM ENDING 2001
MICHAEL E. PATRICK
Member of Cooper Cameron's Audit Committee and a director since November
1996. Age 55. He has been Vice President and Chief Investment Officer of Meadows
Foundation, Inc. since December 1995. He was a Managing Director and Partner
with M.E. Zukerman Energy Advisors from 1994 to 1995 and served as Executive
Vice President, Chief Financial Officer and a director of Lomas Financial
Corporation, parent, as well as President and Chief Operating Officer of two
subsidiaries, Lomas Mortgage USA and Lomas Information Systems, Inc., from 1992
through 1993. The Lomas companies were engaged in mortgage banking, information
systems and real estate. Lomas Financial Corporation and Lomas Mortgage USA
filed for bankruptcy protection in October 1995. Previously, he was Executive
Vice Chancellor for Asset Management for the University of Texas System from
1984 to 1991. He is a director of BJ Services Company and a trustee of St.
Edward's University.
MICHAEL J. SEBASTIAN
Chairman of Cooper Cameron's Audit Committee and a director since November
1994. Age 69. Mr. Sebastian retired in August 1995, after serving as Executive
Vice President, Operations of Cooper Industries, Inc. since February 1982,
responsible for Cooper's former Petroleum & Industrial Equipment segment. He is
a director of Quanex Corporation and Gardner Denver Machinery Inc.
ADVISORY DIRECTOR
NATHAN M. AVERY
Appointed an advisory director in December 1996. Age 64. Mr. Avery was a
director of the Company from June 1995 to December 1996. Mr. Avery is Chairman
of the Board and Chief Executive Officer of TransCoastal Marine Services, Inc.,
a marine construction company. He was Chairman of the Board, President and Chief
Executive Officer of Galveston-Houston Company, a company specializing in the
manufacturing of products to serve the oilfield from 1972-1998. He has been an
active participant in the oil and gas industry since the 1960s. He was Chairman
of the Board of Directors of Bettis Corporation until December 1996 when Bettis
Corporation merged with Daniel Industries, Inc. He is a director and member of
the Executive Committee of Daniel Industries and a director of Prime Cable.
PROPOSAL 2: APPROVAL OF THE SECOND
AMENDED AND RESTATED 1995 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
The Board of Directors has approved the Cooper Cameron Corporation Second
Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (the
"Directors Plan") authorizing an increase by 500,000 shares in the number of
authorized shares available under the Directors Plan and certain other
modifications. As of December 31, 1998, 318,540 shares were reserved for
issuance upon the exercise of outstanding options under the Directors Plan and
18,618 shares were available for future grants. The Directors Plan has also been
modified to provide for certain payments in the event of a Change in Control, as
herein defined. The Second Amended and Restated 1995 Stock Option Plan for
Non-Employee Directors (the "Directors Plan"), attached to this Proxy Statement
as Appendix A, includes these amendments and modifications.
Each director of the Company who is not an employee of the Company or any
of its subsidiaries ("Eligible Director") is eligible to participate in the
Directors Plan. If the nominees for election named in this proxy statement are
elected, five directors and one advisory director will qualify as non-employee
directors under the Directors Plan in 1999. All the Eligible Directors elected
to receive stock options in lieu of their annual cash retainer beginning July 5,
1995 through December 31, 1999. The options granted in lieu of
5
8
retainer are fully exercisable one year after the date of grant, are vested pro
rata in the event of the resignation of the director and have a five-year
expiration date. In addition, each director receives an annual automatic option
grant of 6,000 shares of Common Stock. The automatic grants are fully
exercisable one year after the grant date and have a five-year expiration date.
VOTE REQUIRED. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES CAST WILL BE
REQUIRED TO APPROVE THE SECOND AMENDED AND RESTATED 1995 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS, PROVIDED SUCH AFFIRMATIVE VOTE ALSO CONSTITUTES A
MAJORITY OF THE QUORUM.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SECOND AMENDED
AND RESTATED 1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
DESCRIPTION OF THE DIRECTORS PLAN
The following summary describes briefly the principal features of the
Directors Plan.
General Terms. The Board of Directors and the Company's sole stockholder
adopted and approved the Directors Plan on May 3, 1995 and adopted and approved
an Amended and Restated Directors Plan on June 28, 1995. On May 8, 1997, the
stockholders of the Company approved an amendment to the Directors Plan to
provide options in lieu of the director's annual retainer and automatic annual
option grants. In May 1998, the Board approved a change in the number of
elective options to be received in lieu of the retainer as described below under
the heading "Stock Options." On the same date the stockholders approved an
amendment to the Directors Plan authorizing a stock option grant to a director
who exercises a previously existing stock option and pays the exercise price in
shares of Company Common Stock. The purpose of the Directors Plan is to increase
stockholder value and to advance the interests of the Company and its
stockholders by strengthening its ability to attract and retain the services of
experienced and knowledgeable directors and by causing each non-employee
director to acquire an equity interest in the Company by issuing stock options,
pursuant to the terms of the Directors Plan.
Stock Options. The options granted pursuant to the Directors Plan are
non-qualified options having an exercise price equal to the fair market value of
the Common Stock on the date the option is granted. Options granted under the
Directors Plan are exercisable 12 months from the date of grant. Such options
terminate and cease to be outstanding five years and one day after the date on
which they are granted. If an Eligible Director to whom an option is granted
ceases to be an Eligible Director by reason of death or disability, the option
becomes immediately exercisable in full. The Directors Plan provides for each
Eligible Director to elect to receive, in lieu of the $30,000 cash retainer,
either (a) a stock option for 4,290 in lieu of all of the annual cash retainer,
(b) a stock option for 2,860 in lieu of two-thirds of the cash retainer, or (c)
a stock option for 1,430 in lieu of one-third of the cash retainer for 1999 and
each of the years thereafter. The Directors Plan also provides for an initial
option grant of 6,000 shares of Common Stock to each Eligible Director on the
first trading date on which such individual becomes an Eligible Director. If the
Company has a non-executive (non-full time employed) Chairman of the Board, an
initial grant for 20,000 shares of Common Stock will be made on the first
trading date on which such individual becomes the non-executive Chairman of the
Board. The Directors Plan further provides for the grant of an additional option
for 6,000 shares of Common Stock to Eligible Directors in each subsequent year
during the term of the Directors Plan on the first trading date following the
Annual Meeting of Stockholders of the Company.
All outstanding options granted under the Directors Plan become exercisable
immediately if a change in control of the Company occurs. No awards will be made
or options granted under the Directors Plan after May 3, 2005. On March 15,
1999, the reported closing price of the Company's Common Stock in New York Stock
Exchange Composite Transactions was $29.625 per share.
Change in Control. The Directors Plan has been amended to propose the
payment to the directors for the value of the options which would be terminated
as a result of the Change in Control. "Change in Control" is defined in the
Directors Plan. The Directors Plan provides that the options are to remain
outstanding through the term set forth, but be modified so as to be exercisable
into shares of common stock of an acquiring company on a relative value basis.
At the election of each director, upon a Change in Control, in lieu of
6
9
retaining the Options, the Directors Plan provides for cash payments to such
director equal to the value of such option as determined by a Black-Sholes
formula set forth in the Directors Plan.
Federal Income Tax Consequences. The following is a brief description of
the federal income tax consequences generally arising with respect to grants of
options under the Directors Plan. This discussion is intended for the
information of stockholders considering how to vote at the Annual Meeting of
Stockholders and not as tax guidance to non-employee directors who participate
in the Directors Plan. The grant of an option will create no tax consequences
for the optionee. Upon exercise of an option, the optionee must generally
recognize ordinary income at the time of the exercise of such option measured by
the excess of the then fair market value of the shares over the option price.
The Company will be entitled to claim a tax deduction for compensation paid
equal to the amount the optionee recognizes as ordinary income. Upon a taxable
disposition of shares acquired by the optionee upon the exercise of an option,
any amount received by the optionee in excess of the sum of (1) the option price
of the shares as of the date of exercise and (2) the amount includable in income
with respect to such option, if any (such sum being his or her "basis" in the
shares), will, in general, be treated as long- or short-term capital gain,
depending upon the holding period of the shares. If upon disposition the
optionee receives less than his or her basis in the shares, the loss will be
treated as a long- or short-term capital loss, depending upon the holding period
of the shares.
New Plan Benefits Table. The following table sets forth the number of
shares of Common Stock that have been granted to non-employee Directors as a
group under the Directors Plan as of December 31, 1998, in lieu of retainers and
as automatic grants.
PLAN BENEFITS
AMENDED AND RESTATED
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
POSITION NUMBER OF SHARES
- -------- ----------------
Non-Employee Directors and Advisory Director as a 315,724 options in lieu of retainer
Group (Six in number) 175,658 automatic options
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
Each holder of the Common Stock is entitled to one vote per share with
respect to all matters submitted to holders of the Common Stock. The Common
Stock does not have cumulative voting rights. Subject to the rights of holders
of Preferred Stock, holders of the Common Stock will be entitled to receive
dividends if, as and when declared by the Board of Directors. Upon dissolution,
liquidation or winding up of the Company, holders of the Common Stock are
entitled to share pro rata in all assets remaining after the liquidation
payments have been made on any outstanding shares of Preferred Stock.
PREFERRED STOCK
Shares of Preferred Stock may be issued in one or more series or classes,
which will have such designation, voting powers, preferences and relative,
participating, optional or other rights and such qualifications, limitations or
restrictions thereon, including voting rights, dividends, rights on liquidation,
dissolution or winding up, conversion or exchange rights and redemption
provisions, as set forth in the resolutions adopted by the Board of Directors
providing for the issuance of such stock and as permitted by the Delaware
General Corporation Law (the "DGCL"). Although the Company has no current plans
to issue Preferred Stock, the issuance of shares of Preferred Stock, or the
issuance of securities convertible into or exchangeable for such shares, could
be used to discourage an unsolicited acquisition proposal that some or a
majority of the stockholders believe to be in their interests or in which
stockholders are to receive a premium for their stock over the current market
price. In addition, the issuance of Preferred Stock could adversely affect the
voting power of the holders of Common Stock. The Board of Directors does not
intend to seek stockholder approval prior to any issuance of currently
authorized stock, unless otherwise required by law or stock exchange rules.
7
10
RIGHTS PLAN
The Company has adopted a stockholder rights plan and declared a dividend
of one right (a "Right") for each share of Common Stock then outstanding. As
presently amended, the Rights (which, under certain circumstances, entitle their
holders to purchase one one-hundredth of a share of Series A Junior
Participating Preferred Stock for an exercise price of $300) will expire on
October 31, 2007.
The Rights are not exercisable until the earlier to occur of (i) 10 days
following the first date of public announcement that a person or group of
affiliated persons (an "Acquiring Person") has acquired beneficial ownership of
20% or more of the outstanding shares of Common Stock or such earlier date as a
majority of the Board of Directors shall become aware of the existence of an
Acquiring Person (the "Stock Acquisition Date") or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer, the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of the outstanding
shares of Common Stock.
In the event that any person becomes an Acquiring Person, each holder of a
Right, other than Rights beneficially owned by the Acquiring Person (which will
thereupon become void), will thereafter have the right to receive upon exercise
of a Right at the then-current exercise price of the Right, that number of
shares of Common Stock having a market value of two times the exercise price of
the Right. In the event that, after a person or group has become an Acquiring
Person, the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold,
each holder of a Right other than Rights beneficially owned by an Acquiring
Person (which will have become void) will thereafter have the right to receive,
upon the exercise of the Right at the then-current exercise price of the Right,
that number of shares of common stock of the person with whom the Company has
engaged in the foregoing transaction having a market value of two times the
exercise price of the Right.
At any time until ten days following the Stock Acquisition Date (subject to
extension by the Board of Directors), the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right.
The Rights have certain anti-takeover effects. They may reduce or eliminate
(i) "two-tiered" or other partial offers which do not offer fair value for all
Common Stock; (ii) the accumulation by a third party of 20% or more of the
Common Stock in open-market or private purchases in order to influence or
control the business and affairs of the Company without paying an appropriate
premium for a controlling position in the Company; and (iii) the accumulation of
shares of Common Stock by third parties in market transactions for the primary
purpose of attempting to cause the Company to be sold. In addition, the Rights
will cause substantial dilution to a person or group that attempts to acquire
the Company in a manner defined as a Triggering Event (a merger, combination,
consolidation or sale or transfer of assets or earning power, as described in
the Rights Agreement) unless the offer is conditioned on a substantial number of
Rights being acquired. The Rights, however, should not affect any prospective
offeror willing to make an offer for all outstanding shares of Common Stock and
other voting securities at a price and on other terms which are in the best
interests of the Company and its stockholders as determined by the Board of
Directors or affect any prospective offeror willing to negotiate with the Board
of Directors, since the Rights would either be redeemed or otherwise made
inapplicable. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors, since the Board of Directors
may, at its option, at any time until ten business days following the Stock
Acquisition Date, redeem all, but not less than all, of the then-outstanding
Rights at the $.01 redemption price.
SPECIAL PROVISIONS OF DELAWARE LAW AND THE COMPANY'S GOVERNING DOCUMENTS
Anti-Takeover Provisions. Section 203 of the DGCL ("Section 203") generally
provides that a stockholder acquiring more than 15% of the outstanding voting
stock of a corporation but less than 85% of such stock (an "Interested
Stockholder") may not engage in certain Business Combinations (as defined in
Section 203) with the corporation for a period of three years after the date on
which the stockholder became an Interested Stockholder unless (i) prior to such
date, the corporation's board of directors approved either
8
11
the Business Combination or the transaction in which the stockholder became an
Interested Stockholder or (ii) the Business Combination is approved by the
corporation's board of directors and authorized at a stockholders' meeting by a
vote of at least two-thirds of the corporation's outstanding voting stock not
owned by the Interested Stockholder. The provisions of Section 203 could
discourage a change in control of the Company.
The Company's Certificate of Incorporation (the "Certificate") requires
that any "Business Combination" involving the Company and a person who
beneficially owns 20% or more of the Common Stock must be approved by the
holders of at least 80% of the voting power of the outstanding shares of the
Company's capital stock (the "Voting Requirement"), voting together as a single
class. The Voting Requirement does not apply if either (i) the Business
Combination is approved by a two-thirds vote of the Continuing Directors (as
defined in the Certificate) or (ii) certain "fair price" and disclosure
conditions are met.
Classified Board. The Company's Board of Directors is divided into three
classes of directors serving staggered terms. One class of directors is elected
at each annual meeting for a three-year term.
Annual and Special Meetings. The Company's Certificate of Incorporation
provides, as permitted by the DGCL, that stockholders are not permitted to call
annual or special meetings of stockholders. Generally, stockholder action may be
taken only at an annual or special meeting of stockholders and may not be taken
by written consent.
Limitation of Director Liability. Section 102(b)(7) of the DGCL ("Section
102(b)") authorizes corporations to limit or to eliminate the personal liability
of directors to corporations and their stockholders for monetary damages for
breach of directors' fiduciary duty of care. Although Section 102(b) does not
change directors' duty of care, it enables corporations to limit available
relief to equitable remedies such as injunction or rescission. The Certificate
limits the liability of directors to the Company or its stockholders to the
fullest extent permitted by Section 102(b). Specifically, directors of the
Company will not be personally liable for monetary damages for breach of a
director's fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith, or which involve intentional misconduct or
a knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemptions as provided in Section 174 of the DGCL, or (iv)
for any transaction from which the director derived an improper personal
benefit. In the view of the Securities and Exchange Commission ("Commission"),
the limitation of monetary liability pursuant to state law does not apply to
liabilities under the federal securities laws.
9
12
INFORMATION ABOUT MANAGEMENT AND ORGANIZATION
OF THE BOARD OF DIRECTORS
EXECUTIVE OFFICERS
The following sets forth information with respect to Cooper Cameron's
present executive officers. All executive officers are elected to terms that
expire at the meeting of the Board of Directors which follows the Annual Meeting
of Stockholders. Mr. Chapman was elected an officer of Cooper Cameron in May
1998, and Mr. Thomas was elected an officer of Cooper Cameron in July 1998.
NAME AGE POSITION WITH THE COMPANY FIRST ELECTED
- ---- --- ------------------------- -------------
Sheldon R. Erikson........... 57 Chairman of the Board, President and 1995
Chief Executive Officer
Thomas R. Hix................ 51 Senior Vice President of Finance and 1995
Chief Financial Officer
Franklin Myers............... 46 Senior Vice President, General Counsel 1995
and Secretary, President of the Cooper
Energy Services division
Joseph D. Chamberlain........ 52 Vice President and Corporate 1995
Controller
A. John Chapman.............. 57 Vice President, President of the 1998
Cooper Cameron Valves division
E. Fred Minter............... 63 Vice President, President of the 1996
Cooper Turbocompressor division
Dalton L. Thomas............. 49 Vice President, President of the 1998
Cameron division
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates the total number of shares of Common Stock of
the Company beneficially owned, or as described below, as of March 15, 1999, by
each director or nominee for director, each executive officer named in the
Summary Compensation Table and all officers, directors and nominees for director
as a group.
SHARES BENEFICIALLY OWNED
--------------------------------------------------------------
SOLE VOTING AND OPTIONS TOTAL
INVESTMENT EXERCISABLE BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER POWER WITHIN 60 DAYS(4) OWNERSHIP CLASS
- ------------------------ --------------- ----------------- ---------- ----------
Nathan M. Avery(1)....................... 126 35,800 35,926 *
C. Baker Cunningham...................... 8,846 50,800 59,646 *
Grant A. Dove............................ 14,296 59,800 74,096 *
Sheldon R. Erikson....................... 345,409(2) 896,849 1,242,258 2.33%
Michael E. Patrick....................... 0 50,800 50,800 *
David Ross III........................... 9,796 59,800 69,596 *
Michael J. Sebastian..................... 26,270(3) 35,800 62,070 *
Thomas R. Hix............................ 69,880(2) 239,913 309,793 *
Franklin Myers........................... 14,560(2) 104,344 118,904 *
E. Fred Minter........................... 5,778(2) 62,020 67,798 *
A. John Chapman.......................... 26,822(2) 52,138 78,960 *
Dalton L. Thomas......................... 29,499(2) 75,342 104,841 *
Joseph D. Chamberlain.................... 25,466(2) 43,685 69,151 *
All Directors, Advisory Director and
Executive Officers as a Group (13
persons)............................... 2,343,839 4.40%
- ---------------
* Indicates ownership of less than one percent of Common Stock outstanding.
(1) Mr. Avery is an Advisory Director.
10
13
(2) Includes shares held in the Cooper Cameron Corporation Retirement Savings
Plan as of December 31, 1998.
(3) Includes shares held in the Cooper Industries, Inc. Savings and Stock
Ownership Plan as of December 31, 1998.
(4) Includes shares under option that have been earned pursuant to either (i)
waiver of directors' fees by the directors or (ii) waiver of salary by
certain executive officers, except for Mr. Minter. Such options are not
forfeitable or cancelable, expire five years from date of grant and become
exercisable one year from date of grant.
COMMITTEES AND BOARD MEETINGS
The Board of Directors has established two standing committees: the Audit
Committee and the Compensation Committee. The Audit and Compensation Committees
are comprised of directors who are not officers or employees of the Company.
Audit Committee
The Audit Committee consists of two non-employee directors: Messrs. Michael
J. Sebastian (Chairman) and Michael E. Patrick. The principal functions of the
Audit Committee include recommending the annual engagement of the Company's
independent accountants; reviewing non-audit consulting services performed by
the independent accountants and related fees; reviewing with management and the
independent accountants the scope and results of the annual financial statement
audit; reviewing the charter and scope of the internal audit function; reviewing
the scope and adequacy of the Company's internal accounting controls and record-
keeping systems; reviewing legal and regulatory matters that may impact the
financial statements, related company compliance policies, and programs and
reports received from regulators; reviewing compliance with the Company's
conflicts of interest and ethical conduct policy (Standards of Conduct Policy);
and conferring independently with the internal auditors and the independent
accountants.
Compensation Committee
The Compensation Committee consists of three non-employee directors:
Messrs. Grant A. Dove (Chairman), C. Baker Cunningham and David Ross III. The
principal functions of the Compensation Committee include reviewing the
Company's overall compensation policy, including compensation philosophy and
strategy, short- and long-term incentive plans and programs, stock ownership
plans, employee benefit plans and employee welfare plans; reviewing and
recommending to the Board the compensation and benefits to be paid or provided
to the Board of Directors; reviewing the performance and compensation of the
Chief Executive Officer and senior executives of the Company; and reviewing and
recommending to the Board employment agreements, termination agreements and
severance policies and agreements.
Since January 1998, the Board held 5 meetings, the Audit Committee held 2
meetings and the Compensation Committee held 4 meetings. Each of the directors
attended 100 percent of the meetings of the Board and the committee of the Board
on which they served.
11
14
DIRECTOR AND EXECUTIVE MANAGEMENT COMPENSATION
COMPENSATION OF DIRECTORS
Directors receive an annual cash retainer of $30,000. In lieu of this
annual cash retainer, they may elect to receive stock options, or a combination
of cash and options. In May 1998, all of the directors elected to receive stock
options in lieu of all of their cash retainers through the year 1999 as follows:
1) for the period May 1, 1998 to December 31, 1998, an option for 5,800 shares
of Common Stock, and 2) for the year ending December 31, 1999, an option for
4,290 shares of Common Stock. Directors also received under the Directors Plan
annual option grants of Common Stock of 6,000 shares on May 14, 1998 and will
receive annual option grants of 6,000 shares of Common Stock on the first
trading date following the 1999 Annual Meeting of Stockholders. During 1998
options for a total of 96,540 shares of Cooper Cameron Common Stock were granted
pursuant to the Directors Plan.
Options granted to non-employee directors become fully exercisable on the
first anniversary of the date of grant of the option, and will expire five years
and one day after the date of grant, subject to prior termination and pursuant
to the terms of the Directors Plan.
In addition, non-employee directors are paid meeting attendance fees of
$1,000 for each Board meeting of the Company and $1,000 for each committee
meeting they attend. All directors are reimbursed for expenses incurred in
connection with attending Board and committee meetings.
The maximum number of shares to be issued under the Directors Plan and the
number of shares subject to each option are subject to adjustment in the event
of stock splits or other changes in the Cooper Cameron capital structure.
STOCK OWNERSHIP GUIDELINES
In 1996, the Board of Directors of the Company adopted stock ownership
guidelines to encourage ownership of common stock by officers and certain key
employees of the Company, as well as directors. Such guidelines set forth that
by the 1999 Annual Meeting of Stockholders, directors should each own $100,000
worth of common stock of the Company. Further, the officers of the Company and
certain key employees, a total of 42 persons, are expected to own by such date
between one times and five times their base salary in common stock of the
Company, depending on their job category. The Board of Directors believes that
aligning the economic interest of the key managers of the Company with those of
the stockholders will further focus the future direction of the Company to one
of enhancing stockholder value.
COMPENSATION OF EXECUTIVE MANAGEMENT
Table 1 "Summary Compensation Table" presents information concerning
compensation paid to, or accrued for services by, the Chief Executive Officer
and the four other most highly compensated executive officers of Cooper Cameron
during fiscal year 1998.
Table 2 "Option Grants in Last Fiscal Year" presents information concerning
the grant of options during fiscal year 1998 to the Chief Executive Officer and
the four other most highly compensated executive officers of Cooper Cameron to
acquire the Company's Common Stock under the Company's Long-Term Incentive Plan.
No stock appreciation rights were granted during 1998.
Table 3 "Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-end Option Values" presents information concerning the unexercised stock
options held by the Chief Executive Officer and the four other most highly
compensated executive officers of Cooper Cameron at the end of fiscal year 1998.
Table 4 "Pension Plan Table" sets forth the estimated annual retirement
benefits payable to the Chief Executive Officer and the four other most highly
compensated executive officers of Cooper Cameron under the Cooper Cameron
Corporation Salaried Employees' Retirement Plan upon retirement at age 65, based
on an employee's assumed average annual compensation for the five-year period
preceding retirement.
12
15
TABLE 1
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- -------------------------
(A) (B) (C) (D) (E) (G)
OTHER SECURITIES (I)
ANNUAL UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR $(1) $ $ #* $(4)
- ------------------ ---- ------- -------- ------------ ---------- ------------
Sheldon R. Erikson 1998 -- $196,875 $ 62,931(6) 459,096 $41,380
Chairman, President 1997 -- 787,500 150,720(6) 550,000 34,291
and Chief 1996 -- 562,550 146,131(6) 443,234 11,131
Executive Officer
Thomas R. Hix 1998 -- $ 63,000 $ 19,987(6) 135,875 $12,504
Senior Vice President 1997 -- 252,100 78,917(6) 232,000 12,468
of Finance and Chief 1996 -- 180,050 64,382(6) 212,750 16,615(5)
Financial Officer
Franklin Myers 1998 -- $ 63,000 $ 19,987(6) 138,161 $12,942
Sr. Vice President, 1997 -- 252,100 72,485(6) 232,000 12,008
General Counsel and 1996 -- 180,050 58,138(6) 212,750 10,832(5)
Secretary and President,
Cooper Energy Services
division
A. John Chapman(7) 1998 185,000 $128,871 --(2) 42,539 $15,757
President, Cooper Cameron
Valves division
Dalton L. Thomas(8) 1998 55,000 $ 90,988 $361,403(6)(9) 129,329 $42,101(10)
President, Cameron division
- ---------------
(1) Certain of the named executive officers were granted non-qualified stock
options in lieu of salary for the periods July 1, 1995 through June 30,
1996, July 1, 1996 through June 30, 1997, July 1, 1997 through December 31,
1997, January 1, 1998 through December 31, 1998, and January 1, 1999
through December 31, 1999 under the Cooper Cameron Stock Options in Lieu of
Salary Program approved by the Cooper Cameron Board of Directors. Under the
Program, certain officers and key management elected to receive a
percentage of base pay in non-qualified stock options under the Company's
Amended and Restated Long-Term Incentive Plan ("LTIP"). The terms of the
Stock Options are explained in Table 2 "Option Grants in Last Fiscal Year."
See Table 2 "Option Grants in Last Fiscal Year."
(2) Perquisites and other personal benefits paid or distributed did not exceed
the lesser of $50,000 or 10 percent of this individual's total salary and
bonus.
(3) Columns (f) "Restricted Stock Awards" and (h) "LTIP Payouts" have been
omitted since no restricted stock awards or LTIP payouts were awarded to
the named executives.
(4) The figures in this column for 1996, 1997 and 1998 include the Company's
contributions to the Cooper Cameron Corporation Retirement Savings Plan,
the Cooper Cameron Corporation Supplemental Excess Defined Contribution
Plan and amounts paid by the Company for excess life insurance,
respectively, as follows: S. Erikson $4,081, zero and $7,050 for 1996;
$6,750, $23,266 and $4,275 for 1997; and $7,200, $29,905 and $4,275 for
1998. T. Hix $2,618, zero and $1,497 for 1996; $6,750, $4,554 and $1,164
for 1997; and $7,200, $4,140 and $1,164 for 1998. F. Myers $2,618, zero and
$714 for 1996; $4,865, $6,440 and $703 for 1997; and $7,200, $5,039 and
$703 for 1998. J. Chapman $4,556, $9,986 and $1,215 for 1998. D. Thomas
$4,500, $3,093 and $539 for 1998.
13
16
(5) Included in this amount is reimbursement for the purchase of country club
memberships: $12,500 for Mr. Hix, and $7,500 for Mr. Myers.
(6) Includes cash payment for loss of benefits due to participation in the
Options in Lieu of Salary Program.
(7) Mr. Chapman was elected an officer of the Company in May 1998.
(8) Mr. Thomas was elected an officer of the Company in July 1998.
(9) Mr. Thomas was Vice President, Eastern Hemisphere for Cameron until July
1998 and was located in the United Kingdom. As a result of his overseas
assignment, the Company was obligated to reimburse him for certain foreign
and U.S. income taxes. Included in this amount is reimbursement for foreign
and U.S. taxes of $306,167.
(10) Included in this amount is reimbursement for relocation expenses of
$33,969.
* All share amounts have been adjusted for the 2-for-1 stock split effective
June 13, 1997.
14
17
TABLE 2
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
-------------------------------------------------- ---------------------------
(A) (C) (D) (E) (F) (G)
(B) % OF TOTAL EXERCISE
NUMBER OF OPTIONS OR
SECURITIES GRANTED TO BASE
UNDERLYING EMPLOYEES PRICE
OPTIONS IN FISCAL ($/SHARE) EXPIRATION (5)
NAME GRANTED(#) YEAR (4) DATE 5%($) 10%($)
- ---- ---------- ---------- --------- ---------- ------------ ------------
Sheldon R. Erikson... 75,000(1)(6) 18% $60.2500 1/1/04 $1,362,099 $3,117,071
80,047(2) 49.8750 7/4/05 1,732,934 4,081,497
11,959(2) 61.3125 7/4/05 307,922 721,232
92,090(2) 30.1250 7/4/05 967,566 2,386,747
200,000 24.1875 10/9/08 3,042,277 7,709,728
Thomas R. Hix........ 36,000(1) 5% $60.2500 1/1/04 653,807 1,496,194
19,875(2) 50.1250 7/1/01 176,934 374,822
80,000 24.1875 10/9/08 1,216,911 3,083,892
Franklin Myers....... 36,000(1) 6% $60.2500 1/1/04 653,807 1,496,194
22,161(2)(7) 49.8750 7/1/01 198,216 420,225
80,000(7) 24.1875 10/9/08 1,216,911 3,083,892
A. John Chapman...... 3,571(1) 2% $60.2500 1/1/04 64,854 148,414
29,000 24.1875 10/9/08 441,130 1,117,911
3,000 24.1875 10/9/08 45,634 115,646
3,004(2) 61.1875 7/4/05 74,446 179,365
3,964(2) 29.2500 7/4/05 45,487 106,291
Dalton L. Thomas..... 14,285(1) 5% $60.2500 1/1/04 259,434 593,698
12,857(3) 51.8750 1/1/03 162,919 356,363
20,000(1) 51.8750 1/1/04 317,979 713,533
6,187(2) 57.5625 7/1/01 71,894 142,566
76,000 24.1875 10/9/08 1,156,066 2,929,697
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
REMAINING OPTION
TERM AT THE 12/31/98
STOCK PRICE OF $24.50
---------------------------
(A)
(8)
NAME 5%($) 10%($)
- ---- ------------ ------------
Sheldon R. Erikson... $ -0- $ -0-
-0- -0-
-0- -0-
324,912 1,422,643
3,080,740 7,679,280
Thomas R. Hix........ -0- -0-
-0- -0-
1,232,296 3,071,712
Franklin Myers....... -0- -0-
-0- -0-
1,232,296 3,071,712
A. John Chapman...... -0- -0-
446,707 1,113,496
46,211 115,189
-0- -0-
17,454 64,706
Dalton L. Thomas..... -0- -0-
-0- -0-
-0- -0-
-0- -0-
1,170,681 2,918,126
- ---------------
(1) These shares were granted under the options in lieu of salary program,
explained in footnote 1 to the Summary Compensation Table, and vest in full
on January 1, 2000.
(2) These shares were granted under the reload feature of the Amended and
Restated Long-Term Incentive Plan and vested in full on the date of grant.
(3) These shares were granted under the options in lieu of salary program,
explained in footnote 1 to the Summary Compensation Table, and vested in
full on January 1, 1999.
(4) The exercise price of each option is equal to the fair market value of the
Company's shares on the date of grant of the option. The exercise price may
be paid in cash, or, in certain instances, by tendering already owned Cooper
Cameron Common Stock having a fair market value on the date of exercise
equal to the exercise price.
(5) These columns show the gains option holders could realize if Cooper Cameron
stock appreciates at a 5% or 10% per year rate above the Exercise Price
noted in column d for each grant. These growth rates are arbitrary
assumptions specified by the U.S. Securities and Exchange Commission, not
Cooper Cameron's predictions. The closing price of Cooper Cameron Common
Stock on December 31, 1998 was $24.50.
(6) These options were transferred to a family limited partnership on October
23, 1998.
(7) Options for 21,045 shares under two grants were transferred under a
Qualified Domestic Relations Order.
(8) These two columns present the potential realizable value based on the
end-of-year stock price.
15
18
TABLE 3
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR(1)
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT DECEMBER 31, 1998(#) AT DECEMBER 31, 1998($)(1)
(B) (C) --------------------------- ------------------------------
(A) SHARES ACQUIRED VALUE (D) (E)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- -------------- -------------
Sheldon R. Erikson... 530,756 $19,290,304 625,476 858,392 $ 448,357 $1,680,538
Thomas R. Hix........ 148,072 4,731,983 114,581 361,358 1,100,275 672,228
Franklin Myers....... 207,322 5,752,312 41,678 229,897 275,230 342,426
A. John Chapman...... 26,008 948,804 38,806 78,915 129,627 171,872
Dalton L. Thomas..... 46,320 1,485,511 32,011 180,622 32,374 137,012
- ---------------
(1) Values are based on the difference between option prices and the closing
price of $24.50 per share of Common Stock on the New York Stock Exchange on
the last trading day of 1998. In-the-money shares (vested and unvested) at
12/31/98: Erikson 517,496; Hix 188,064; Myers 94,480; Chapman 50,026; and
Thomas 85,006.
(2) Includes shares exercisable within 60 days of December 31, 1998.
TABLE 4
PENSION PLAN TABLE
YEAR ANNUAL
INDIVIDUAL ESTIMATED
REACHES BENEFIT
AGE 65 AT AGE 65
---------- ---------
Sheldon R. Erikson.......................................... 2006 $127,080
Thomas R. Hix............................................... 2012 88,128
Franklin Myers.............................................. 2017 135,444
A. John Chapman............................................. 2006 48,396
Dalton L. Thomas............................................ 2014 72,948
For each of the individuals shown in the Summary Compensation Table, the
table above shows current credited years of service, the year each attains age
65, and the projected annual pension benefit at age 65. The formula for
calculating the projected annual pension benefits is 4% of pay up to the Social
Security Wage Base and 8% thereafter. The calculation is based on the following
assumptions: benefits paid on a straight-life annuity basis; continued
compensation at the 1998 levels; and an interest credit rate of 5.0%. Amounts
under the Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan
are included in the Annual Estimated Benefit.
16
19
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph showing the cumulative total stockholder
return on Company Common Stock from July 5, 1995 to December 31, 1998, and
comparing it with the cumulative total return over the same period of the
Standard & Poor's Composite-500 Stock Index and the S&P Oil & Gas (Drilling &
Equipment) Index. In each case, cumulative total return is calculated assuming a
fixed investment of $100 on June 30, 1995.
S&P Oil &
Gas (Drilling
Measurement Period Cooper &
(Fiscal Year Covered) Cameron S&P 500 Equipment)
June 30, 1995 100.00 100.00 100.00
Dec. 29, 1995 213.11 113.07 115.37
Dec. 31, 1996 459.24 135.98 160.57
Dec. 31, 1997 732.38 178.14 244.08
Dec. 31, 1998 294.15 225.65 137.70
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
General
The Compensation Committee of the Board of Directors (the "Committee")
administers the compensation of the Company's executive officers, including its
Chief Executive Officer. The Committee is comprised of three directors, Messrs.
C. Baker Cunningham, Grant A. Dove and David Ross III, who are neither officers
nor employees of the Company. The principal functions of the Committee are
listed on page 11 under the heading "Committees and Board Meetings."
The Company's primary objective is to increase stockholder value over time.
To accomplish this objective, the overall goal of the Committee is to develop
executive compensation policies which are consistent with and linked to the
Company's strategic business objectives. It is the policy of the Committee to
compensate executive officers based on their responsibilities and experience,
the achievement of specific business objectives and established goals and the
Company's long-term performance. The Committee has received advice from a
compensation consulting firm as to comparable compensation for executives
similarly situated as part of the Committee's analysis. The compensation of the
Chief Executive Officer and the other executive officers consists of a base
salary, an annual bonus opportunity and stock option awards.
Base Salary and Annual Incentive Awards
Each of the Company's executive officers receives a base salary, or in the
alternative, receives options in lieu of a target salary and has an opportunity
to earn a bonus under Cooper Cameron's Management Incentive Compensation Plan
(the "MICP"). Decisions regarding base salaries are made based upon individual
performance, job responsibilities, experience and competitive practice
determined by compensation surveys. The Compensation Committee's policy is to
pay or target base salaries at or below peer industry medians with
17
20
a significant portion of targeted total annual compensation at risk tied to
performance-based MICP objectives. The MICP is designed to motivate and reward
key management employees whose efforts impact the performance of the Company and
its subsidiaries and divisions through the achievement of financial performance
targets and, in some instances, individual performance objectives. The Committee
is responsible for approving the financial performance targets that are used to
determine awards made under the MICP. Performance targets are based upon
proposals submitted to the Committee by the Chief Executive Officer which, in
turn, reflect the annual operating plan prepared for the Board of Directors. The
basic measure of financial performance is earnings before interest, taxes,
depreciation and amortization with a target return on equity to also be
achieved. A target award percentage is established for each position eligible to
participate in the MICP. Annual incentives were awarded to 259 employees for
1998 performance. The Committee is mindful of the unusual variances that occur
in today's financial arena in running corporations such as the Company. The
Committee will take into account unusual items when applying the MICP targets to
the actual results. Such items may include acquisitions, divestitures,
recapitalizations, restructurings and other similar unforeseeable events. The
Committee also evaluates performance taking into account industry-wide market
conditions and peer performance. Although 1998 was a record year for earnings
before interest, taxes, depreciation and amortization (EBITDA) performance, this
performance fell below the target set at the beginning of the year.
Long-Term Incentives
It is the policy of the Committee to provide incentives to executives that
are tied to the long-term performance of the Company. For this purpose, the
Committee has granted stock options to the named executive officers or other key
management personnel pursuant to the Cooper Cameron Corporation Long-Term
Incentive Plan. In May 1998, the Board granted stock options to certain
employees other than executive officers and key management personnel. Also, in
October 1998, the Board granted options to certain executive officers and key
employees. In both instances, the Committee determined the number of options
granted to each individual based on actual compensation and assumptions relating
to stock price. The stock options were granted with an exercise price equal to
fair market value on the date of grant. Most of the options have a ten-year
expiration date and become one-third exercisable one year after the grant date,
two-thirds exercisable two years after the grant date and fully exercisable
three years after the date of grant. A portion of the options granted in October
1998 vest at the end of 1999 and have an additional four years in which a holder
may exercise. In addition, in May 1998 certain of the named executive officers
elected to receive stock options in lieu of salary for all or a portion of their
annual salary for the year ending December 31, 1999. The options granted in lieu
of salary are fully exercisable at the end of the applicable year, are vested
pro rata in the event employees terminate their employment before vesting and
have a four-year exercise period thereafter. The decision to elect options in
lieu of salary for the year 2000 will be made in 1999. The Committee will review
each year whether any such employees should be reimbursed for benefits lost
pursuant to their participation in this program.
The Committee believes that the stock option program ties the individual
executive's compensation to the Company's performance and directly links the
executive's personal interests to the interests of the Company and its
stockholders. The Options in Lieu of Salary Program provides increased capital
appreciation opportunities for executive officers in a manner directly linked to
stockholder value while causing the executive officers to substantially invest
in the stock's performance. The Committee will continue to review the Options in
Lieu of Salary Program and determine the degree, if any, to which it will be
modified.
Compensation of the CEO
Mr. Erikson currently has a base salary of $525,000, based on a review of
the compensation levels of chief executive officers of companies of comparable
size and in similar businesses. He also received a bonus in the amount of
$250,000 for 1995, $562,550 for 1996, $787,500 for 1997 and $196,875 for 1998.
Mr. Erikson's target bonus opportunity for 1999 is 90 percent of his base
salary. Mr. Erikson elected to convert the equivalent of one year's base salary
to stock options under the Options in Lieu of Salary Program for each of the
years starting with 1995, subsequent to the split-off, 1996, 1997 and 1998 and
1999. The number of options
18
21
granted to Mr. Erikson under this program in 1996 for the year 1997 was 300,255,
in 1997 for the year 1998 was 150,000 and in 1998 for the year 1999 was 75,000.
These options become fully exercisable on the date ending after the term of
compensation.
The Committee believes that the total options awarded to Mr. Erikson under
the Long-Term Incentive Plan (excluding those he was awarded in lieu of salary)
are competitive with options granted to CEOs of comparable companies. Through
the stock option award and the options awarded in lieu of salary, a large
percentage of Mr. Erikson's compensation is tied directly to corporate
performance and return to stockholders.
Summary
The Committee believes that the total executive compensation program should
link compensation to corporate and individual performance. The Committee will
continue to review the compensation of the CEO and other executive officers on
an annual basis.
Compensation Committee,
Grant A. Dove, Chairman
C. Baker Cunningham
David Ross III
SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
federal income tax deductibility to $1 million per covered executive of annual
compensation of the Company's Chief Executive Officer and its other four most
highly compensated executive officers. Under Section 162(m), the Company may
deduct compensation in excess of $1 million if it qualifies as performance-based
compensation, as defined in Section 162(m). Options granted under the Cooper
Cameron Corporation Amended and Restated Long-Term Incentive Plan and bonuses
awarded under the Cooper Cameron Corporation Management Incentive Compensation
Plan, as amended, qualify as performance-based compensation and, therefore,
qualify as an exemption from the application of Section 162(m). The Company will
continue to receive a federal income tax deduction respecting future grants of
options and performance awards to its executives under these plans.
EMPLOYMENT, TERMINATION AND CHANGE OF CONTROL ARRANGEMENTS
The Company has entered into employment agreements containing certain
termination and/or severance provisions with Messrs. Erikson, Hix and Myers (the
"Agreements"). The Agreements provide for specific terms of employment,
including base salary, bonus and benefits over specified periods of time. The
Agreements also provide severance pay and continuation of certain benefits
should a Change of Control, as herein defined, occur. Entry into the Agreements
was unanimously approved by the independent members of the Board of Directors.
The Agreement between the Company and Mr. Erikson has a term of three
years, which is automatically extended on a monthly basis. The Agreement
provides that Mr. Erikson will receive a salary of not less than $500,000 a year
and a bonus as provided under the Company's Management Incentive Compensation
Plan or any other plan adopted by the Board of Directors; will participate in
the Cooper Cameron Corporation Salaried Employees' Retirement Plan (a defined
benefit plan) and the Long-Term Incentive Plan; and will be eligible to
participate in the Cooper Cameron Corporation Retirement Savings Plan (a defined
contribution plan), the Employee Stock Purchase Plan and any other plans
generally available to employees of the Company during his employment. The
Agreements between the Company and each of Messrs. Hix and Myers are
substantially the same as Mr. Erikson's, except the Agreements with Messrs. Hix
and Myers have terms of two years, which ended on November 30, 1998, and the
Agreements are automatically extended for one year on an annual basis if they
are then employees of the Company. The Agreements provide that Messrs. Hix and
Myers each will receive a salary of not less than $240,000 per year.
19
22
The Agreements with Messrs. Erikson, Hix and Myers also provide for
severance arrangements in the event of a Change of Control. A Change of Control
of the Company will occur for purposes of these Agreements if (i) any person is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's
outstanding voting securities, other than through the purchase of voting
securities directly from the Company through a private placement; (ii) the
current members of the Board, or their nominees, no longer comprise a majority
of the Board; (iii) the Company is merged or consolidated with another
corporation or entity and the Company's stockholders own less than 80% of the
outstanding voting securities of the surviving or resulting corporation or
entity; (iv) a tender offer or exchange offer is made and consummated by a
person other than the Company for the ownership of 20% or more of the Company's
voting securities; or (v) there has been a disposition of all or substantially
all of the Company's assets.
If the executive terminates due to death, retirement, disability or without
Good Reason, as defined below, or is terminated by the Company for cause, no
salary or other benefits are payable under the Agreements. However, if
termination occurs without cause prior to or after a Change of Control or by Mr.
Erikson with Good Reason prior to or after a Change of Control, Mr. Erikson is
entitled to an amount equal to three times the highest base pay (or its
equivalent if paid in compensation other than cash) and cash incentive
compensation he received during any of the three preceding years, and certain
other payments relating to benefit plans applicable to all employees. If
termination occurs without cause prior to a Change of Control or by the employee
with Good Reason prior to a Change of Control, Messrs. Hix and Myers each are
entitled to an amount equal to two times the highest base pay (or its equivalent
if paid in compensation other than cash) and cash incentive compensation they
received during any of the three preceding years and certain other payments
relating to benefit plans applicable to all employees. If termination occurs
without cause after a Change of Control, or resignation for Good Reason after a
Change of Control, Messrs. Hix and Myers each are entitled to an amount equal to
three times the highest base pay and cash incentive compensation they received
during the preceding three years and certain other payments relating to benefit
plans. In addition, the agreements also provide for certain payments with
respect to stock options in order to protect the individual from a loss in value
that may result from a Change of Control. "Good Reason" for termination includes
any of the following events which occur without employee consent: a change in
status, title(s) or position(s) as an officer of the Company which does not
represent a promotion, a reduction in base salary, termination of participation
in an ongoing compensation plan, relocation, failure of a successor to assume
the Agreement, termination by the Company other than as provided in the
Agreement, prohibition from engaging in outside activities, or any continuing
material default by the Company in the performance of its obligations under the
Agreement, whether before or after a Change of Control.
The Company has adopted an Executive Severance Policy and Change in Control
Policy which sets forth certain salary and benefit obligations in the event of
the termination of designated key employees of the Company, including Mr.
Chapman and Mr. Thomas. The Executive Severance Policy provides for compensation
continuation of 15 months for each of Messrs. Chapman and Thomas if their
employment with the Company is terminated for any reason except cause. Each of
Messrs. Chapman and Thomas would receive an additional 9 months of compensation
continuation if such termination occurred subsequent to a "change in control" of
the Company, as defined in the Change in Control Policy. The Policy also
provides for certain protection in the loss of value of stock options in the
event of a Change of Control. Both policies are subject to future amendment,
modification or cancellation at the discretion of the Board of Directors.
20
23
STOCKHOLDER PROPOSALS
Stockholders' proposals intended to be presented at the 2000 Annual Meeting
should be sent by certified mail, return receipt requested, and must be received
by the Secretary of the Company at its principal executive offices on or before
January 1, 2000, for inclusion in the proxy statement and the form of proxy for
that meeting. In order to be eligible to submit a proposal, you must have
continuously held at least $2,000 in market value, or 1%, of the Company's
securities, beneficially or of record, entitled to be voted on the proposal at
the meeting for at least one year by the date you submit the proposal. You must
continue to hold those securities through the date of the meeting.
INDEPENDENT ACCOUNTANTS
During the year ended December 31, 1998, Ernst & Young LLP was employed
principally to perform the annual audit and to render other services.
Representatives of Ernst & Young will be present at the meeting and will be
available to answer questions and discuss matters pertaining to the Report of
Independent Auditors contained in the financial statements incorporated by
reference in the Company's Form 10-K. Representatives of Ernst & Young will have
the opportunity to make a statement, if they desire to do so.
Selection of the Company's independent accountants each year is done at the
November meeting of the Board of Directors for such year.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires executive officers and directors, and persons who own
more than 10% of the Company's Common Stock, to file initial reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Based on its review of the copies of such
reports, or written representations from certain reporting persons that no Forms
5 were required for those persons, the Company believes that during 1998, its
executive officers, directors and stockholders with holdings greater than ten
percent complied with all applicable filing requirements.
OTHER BUSINESS
The management of Cooper Cameron has no knowledge of any business to be
presented for consideration at the meeting other than that described above. If
any other business should properly come before the meeting, it is intended that
the shares represented by proxies will be voted in accordance with the judgment
of the persons named in the proxies.
COPIES OF COOPER CAMERON'S ANNUAL REPORT TO STOCKHOLDERS OR ITS ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, ARE AVAILABLE WITHOUT CHARGE TO STOCKHOLDERS
UPON REQUEST TO THE INVESTOR RELATIONS DEPARTMENT, COOPER CAMERON CORPORATION,
515 POST OAK BOULEVARD, SUITE 1200, HOUSTON, TEXAS 77027.
By order of the Board of Directors,
/s/ FRANKLIN MYERS
Franklin Myers
Senior Vice President, General
Counsel
and Secretary
March 20, 1999
21
24
APPENDIX A
COOPER CAMERON CORPORATION
SECOND AMENDED AND RESTATED
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose and Effective Date. The purpose of this Cooper Cameron
Corporation ("Company") Second Amended and Restated 1995 Stock Option Plan for
Non-Employee Directors ("Plan") is to increase stockholder value and to advance
the interests of the Company by strengthening its ability to attract and retain
the services of experienced and knowledgeable directors and by causing each
non-employee director and advisory director to acquire an equity interest in the
Company issuing stock options ("Options") pursuant to the terms of the Plan. It
is further intended that the options granted pursuant to this Plan (the
"Options") will be nonqualified options within the meaning of Section 83 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. Stockholder Approval. All Options granted pursuant to this amended and
restated Plan are subject to, and may not be exercised before, the approval of
this amended and restated Plan by the Company's stockholders as set forth in
Section 16.
3. Participation. Each director and advisory director of the Company who is
not an employee of the Company or any of its subsidiaries ("Eligible Director")
shall participate in the Plan.
4. Shares Subject to the Plan. The number of shares of Common Stock subject
to Options granted under the Plan in any year shall be determined in accordance
with the formulae set forth in Sections 5 and 6 below. In the event of any
merger, consolidation, reorganization, recapitalization, spinoff, stock
dividend, stock split, reverse stock split, exchange or other distribution with
respect to shares of Common Stock or other change in the corporate structure or
capitalization affecting the Common Stock, the number of shares of Common Stock
which are or may be subject to Options under the Plan and the terms of any
outstanding Options (including the price at which shares of Common Stock may be
issued pursuant to an outstanding Option) shall be adjusted by the Committee.
There are reserved 1,000,000 shares for issuance pursuant to the Plan. Shares of
Common Stock related to Options that are forfeited or terminated, expire
unexercised, are settled in cash in lieu of shares of Common Stock or in a
manner such that all or some of the shares of Common Stock covered by an Option
are not issued to an Eligible Director, shall immediately become available for
Options hereunder.
5. Automatic Options. An Eligible Director shall receive Options in
accordance with the provisions of this Section 5. An initial Option grant for
6,000 shares of Common Stock shall be made to an Eligible Director on the first
trading date on which such individual becomes an Eligible Director. An
additional Option for 6,000 shares of Common Stock shall be granted to Eligible
Directors in each subsequent year during the term of the Plan on a date
following the Annual Meeting of Company stockholders to be set by the Board of
Directors. Notwithstanding the foregoing, if the Company has a non-executive
(non-full time employed) Chairman of the Board of Directors, in lieu of the
Option grants set forth above, such Chairman shall receive an initial Option
grant for 20,000 shares of Common Stock on the first trading date such
individual becomes Chairman and an additional Option grant for 20,000 shares of
Common Stock in each subsequent year during the term of the Plan on the first
trading date following the Annual Meeting of Company stockholders. Except as
provided in Sections 7 and 8 below with respect to the exercisability of an
Option, no adjustment shall be made to such Option to reflect a termination of
service as an Eligible Director.
6. Elective Options. In addition to the Options granted under Section 5
above, an Eligible Director may make an annual election to receive either the
Eligible Director's annual cash retainer or options as described below. The
election shall be made by January 1 each year beginning in 2000. On the annual
meeting date of the board of directors for 1998, each of the Eligible Directors
may elect, for 1999, either (a) an Option for 4,290 shares of Common Stock under
this Section 6 (issued at the closing price of the Common Stock as determined
for the option in the preceding sentence) in lieu of all of the Eligible
Director's annual cash
A-1
25
retainer, (b) an Option for 2,860 shares in lieu of two-thirds of the Eligible
Director's annual cash retainer, or (c) an Option for 1,430 shares in lieu of
one-third of the Eligible Director's annual cash retainer, payable for 1999.
Beginning in 2000 and in each year thereafter, each Eligible Director may elect
either (a) an Option for 4,290 shares of Common Stock under this Section 6
(issued at the closing price of the Common Stock on the last trading day of the
prior year) in lieu of all of the Eligible Director's annual cash retainer, (b)
an Option for 2,860 shares in lieu of two-thirds of the Eligible Director's
annual cash retainer, or (c) an Option for 1,430 shares in lieu of one-third of
the Eligible Director's annual cash retainer, payable for the calendar year so
elected. Each such election under this Section 6 shall be made in writing, filed
with the Secretary of the Company and shall be irrevocable.
7. Option Terms. Each Option granted under the Plan shall be subject to the
following terms and conditions:
(a) The exercise price per share of each Option shall be equal to the
greater of the par value or the Fair Market Value of a share of Common
Stock on the date as of which the Option is granted.
(b) Except as otherwise provided by the provisions of paragraph 7(c),
7(d) or Section 8 below, each Option shall become exercisable in full as of
12 months after the date as of which the Option is granted.
(c) If an Eligible Director to whom an Option is granted ceases to be
an Eligible Director for any reason other than death or disability prior to
the date on which the Option becomes fully exercisable in accordance with
paragraph (b) above, the number of shares with respect to which the Option
shall be exercisable shall be the number, rounded to the nearest integer,
obtained by multiplying the number of shares originally subject to the
Option by a fraction, the numerator of which is the number of partial or
whole months elapsed since the date of grant and the denominator of which
is the number of whole months between the date of grant and the next
subsequent Option grant date. The balance of the Option shall be
immediately terminated and cease to be outstanding.
(d) If an Eligible Director to whom an Option is granted ceases to be
an Eligible Director by reason of death or disability, the Option shall
become immediately exercisable in full.
(e) An Option shall be terminated and cease to be outstanding five
years and one day after the date of which it is granted.
(f) An Option may be exercised, in whole or in part, by giving written
notice to the Secretary of the Company prior to the date on which the
Option terminates. Such notice shall specify the number of whole shares of
Common Stock to be purchased and shall be accompanied by payment in full of
the Option price for such shares by cash, check, bank draft or shares of
Company Common Stock theretofore owned and held by the Optionee for more
than six months. An Option shall not be exercisable with respect to
fractional shares. The Committee may provide in an Option Agreement that,
if an Eligible Director pays the Option exercise price in shares of Company
Common Stock, upon the date of such payment a new option shall be granted
and the number of shares of Common Stock subject to such new option shall
be equal to the number of shares of Common Stock tendered in payment;
provided that such new option shall not be exercisable in any event after
the original term of the exercised option.
8. Acceleration of Options; Change in Control.
(a) If the Optionee ceases to be an Eligible Director for any reason
other than death or disability (i) with respect to Automatic Options, the
Optionee shall have the right to exercise the Option for a period of three
(3) years from the date the Optionee ceases to be an Eligible Director or
for the remaining term of the Option, if a shorter period of time, and (ii)
with respect to Elective Options, the Optionee shall have the right to
exercise the Option for the remaining term of the Option.
(b) Notwithstanding any provision in this Plan to the contrary, all
outstanding Options granted under the Plan shall become exercisable
immediately if a Change in Control occurs. If a Change in Control occurs,
each holder of an Option shall have the right, but not the obligation, to
tender, within 30 days of such a Change in Control, any Option to the
Company (or any successor to the Company) and
A-2
26
receive in exchange therefor a lump sum cash amount equal to the
Black-Scholes value of the Option, without discount for risk of forfeiture
and non-transferability determined by using the highest Black-Scholes
valuation during the one-year period prior to the Change in Control. Any
Black-Scholes valuation for this purposes shall be performed on a basis
consistent with the methodology set forth on Exhibit A to this Plan. For
purposes of this Plan, a "Change in Control" means a change in control of
the Company (other than the initial distribution of Common Stock by Cooper
Industries, Inc.) of a nature that would be required to be reported
(assuming such event has not been "previously reported") in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"); provided that,
without limitation, a Change of Control shall be deemed to have occurred at
such time as (i) any "person" within the meaning of Section 14(d) of the
Exchange Act, is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities, or (ii) during
any period of two consecutive years, individuals who at the beginning of
such period constitute the Board cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for
election by the Company's shareholders, of each new director was approved
by a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period.
9. Definition of Fair Market Value. The "Fair Market Value" of a share of
Common Stock, as of any date, shall be equal to the average of the high and low
sales prices of a share of Common Stock as reported on the New York Stock
Exchange Composite Reporting Tape (or if the Common Stock is not traded on the
New York Stock Exchange, the average of the high and low sales prices on the
exchange on which it is traded, or as reported by an applicable automated
quotation system) (the "Composite Tape") on the applicable date or, if no sales
of Common Stock are reported on such date, the average of the high and low sales
prices of a share of Common Stock on the date the Common Stock was last reported
on the Composite Tape.
10. Transferability of Options. Awards granted under the Plan shall not be
transferable or assignable other than: (i) by will or the laws of descent and
distribution, (ii) pursuant to a qualified domestic relations order (as defined
by the Internal Revenue Code); or (iii) with respect to Awards of nonqualified
stock options, by transfer by an Eligible Director to a member of the Eligible
Director's immediate family, which includes the Eligible Director's spouse,
children or grandchildren (including adopted and step children and
grandchildren) ("Immediate Family"), to a trust solely for the benefit of the
Eligible Director and his Immediate Family, or to a partnership or limited
liability company whose only partners or shareholders are the Eligible Director
and members of his Immediate Family. However, any Option so transferred shall
continue to be subject to all the terms and conditions contained in the
instrument evidencing such Option.
11. Compliance with Applicable Law.
(a) Notwithstanding any other provision of the Plan, the Company shall
have no obligation to issue any shares of Common Stock under the Plan if
such issuance would violate any applicable law or the applicable
regulations or requirements of any securities exchanges or similar
entities.
(b) Prior to the issuance of any shares of Common Stock under the
Plan, the Company may require a written statement that the Eligible
Director is acquiring the shares for investment and not for the purpose or
with the intention of distributing the shares, and shall not dispose of
them in violation of the registration requirements of the Securities Act of
1933.
(c) If at any time, the Company in its sole discretion, determines
that the listing, registration or qualification (or any updating of any
such document) of any Option grant, or the shares of Common Stock issuable
pursuant thereto, is necessary on any securities exchange or under any
federal or state securities or blue sky law, or that the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, any Option grant, the issuance of
shares of Common Stock pursuant to any grant, such Option shall not be
granted and the shares of Common Stock shall not be issued, as the case may
be, in whole or in part, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company.
A-3
27
12. Treatment as a Stockholder. Any Option grant to an Eligible Director
under the Plan shall not create any rights in such Eligible Director as a
stockholder of the Company until shares of Common Stock are registered in the
name of such Eligible Director.
13. Amendments or Termination. The Board of Directors of the Company may
amend, alter or discontinue this Plan, except that (i) no amendment or
alteration that would impair the rights of any Optionee under any Option that he
has been granted shall be made without his consent and (ii) no amendment or
alteration shall be effective prior to approval by the Company's stockholders to
the extent such approval is then required by applicable legal requirements, and
(iii) the Plan shall not be amended more than once every six months to the
extent such limitation is required by Rule 16b-3(c)(2)(ii) (or any successor
provision) under the Exchange Act as then in effect.
14. Adjustments.
(a) The existence of outstanding Options shall not affect in any
manner 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 capital stock of the Company or its business or any
merger or consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stock (whether or not such issue is prior to,
on a parity with or junior to the Common Stock) 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 of any
kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock or declaration of a dividend payable in shares of
Common Stock or other stock split, then (i) the number of shares of Common
Stock issuable pursuant to each Option, (ii) the total number of shares
reserved under the Plan, and (iii) the per share exercise price of the
Options shall each be proportionately adjusted to reflect such transaction.
In the event of any other recapitalization or capital reorganization of the
Company, any consolidation or merger of the Company with another
corporation or entity, the adoption by the Company of a plan of exchange
affecting the Common Stock or any distribution to holders of Common Stock
of securities or property (other than normal cash dividends or dividends
payable in Common Stock), the Board of Directors shall make appropriate
adjustments to (1) the number of shares of Common Stock issuable pursuant
to each Option and (2) the per share exercise price of the Options to
reflect such transaction; provided that such adjustments shall only be such
as are necessary to maintain the proportionate interest of the optionees
and preserve, without exceeding, the value of the Options. In the event of
a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board of Directors shall be
authorized to issue or assume stock options by means of substitution of new
options for previously issued options or an assumption of previously issued
options as a part of such adjustment. Notwithstanding the foregoing, and in
addition to any other rights or privileges held by a holder with respect to
an Option (including the provisions of Section 8), upon a Change in Control
of the Company (as defined in Section 8) the holder shall have the right to
exchange such Option for a new option ("New Option"), that is immediately
exercisable (and will remain exercisable for its entire remaining term),
has the same remaining term as the Option and otherwise has the same terms
and conditions of the Option exchanged, except that the new Option will be
to acquire shares of the publicly traded common equity of the Company or
any successor or direct or indirect parent of either having an aggregate
value (as the date of the Change in Control) equal to the merger or
acquisition consideration paid or payable in the Change in Control in
exchange for the number of shares of Common Stock subject to the Option and
a per share exercise price determined by dividing the aggregate exercise
price of the Option by the number of shares of common equity subject to the
New Option; provided that if there is no publicly traded common equity of
the Company, or any successor or any direct or indirect parent of either,
then the New Option shall be with respect to shares of the direct or
indirect parent of the Company, and if no such parent then the Company, and
if the Company no longer exists, then the successor to the Company.
A-4
28
(c) The Board of Directors, which means, in event of a change in
control, the Board of Directors as constituted immediately prior to the
Change in Control, shall have the authority and responsibility to determine
the adjustments under Section 14.
15. Governing Law. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Delaware.
16. Effective Date of Plan. This amended and restated Plan shall be
effective as of the date (the "Effective Date") it is approved by the Board of
Directors of the Company. Notwithstanding the foregoing, the adoption of this
Plan is expressly conditioned upon the approval by the holders of a majority of
shares of Common Stock present, or represented, and entitled to vote at a
meeting of the Company's stockholders held on or before December 31, 1999. If
the stockholders of the Company should fail so to approve this Plan prior to
such date, the provisions of the Plan prior to the amendment and restatement
shall be continued as if the Plan had not been amended and restated.
17. Miscellaneous. The granting of any Option shall not impose upon the
Company, the Board of Directors of the Company or any other directors or
advisory director of the Company any obligation to nominate any Optionee for
election as a director or advisory director and the right of the stockholders of
the Company to remove any person as a director or advisory director of the
Company shall not be diminished or affected by reason of the fact that an Option
has been granted to such person.
A-5
29
EXHIBIT A
COOPER CAMERON CORPORATION
BLACK-SCHOLES OPTION VALUATION
THE STOCK'S CURRENT MARKET VALUE............................ $
-------
ESTIMATED FUTURE DIVIDEND YIELD............................. %
-------
THE OPTION'S EXERCISE OR STRIKE PRICE.......................
-------
OPTION TERM (IN YEARS)......................................
-------
RISK FREE RATE FOR OPTION TERM.............................. %
-------
ESTIMATED FUTURE ANNUAL STOCK VOLATILITY....................
-------
PRESENT VALUE AS A PERCENT OF MARKET VALUE.................. %
-------
PRESENT VALUE PER SHARE..................................... $
-------
30
[X] PLEASE MARK YOUR -------
VOTES IN THIS 5973
EXAMPLE. -------
- --------------------------------------------------------------------------------
The Board of Directors recommends a Vote FOR all nominees.
- --------------------------------------------------------------------------------
1. To withhold your vote for any nominee(s), write the name(s) here:
FOR WITHHELD
[ ] [ ]
Election of Directors
Nominees: 1. Grant Dove
2. David Ross III
Comments [ ]
(see reverse)
I plan to attend
the meeting. [ ]
FOR AGAINST ABSTAIN
2. To approve the Company's [ ] [ ] [ ]
Second Amended and Restated
1995 Stock Option Plan for Non-
Employee Directors to increase
by 500,000 the number of shares
of common stock reserved under
the Plan and make certain other
modifications.
3. To transact such other [ ] [ ] [ ]
business as may properly
come before the meeting and
any adjournments thereof.
Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such.
-----------------------------------------
-----------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
[COOPER CAMERON LOGO]
TELEPHONE AND INTERNET VOTING INSTRUCTIONS
You may use the telephone or internet to vote your shares
electronically, 24 hours per day, 7 days a week. To access the
telephone or internet voting system, you must use the control number
printed in the box above.
TO VOTE BY PHONE:
-----------------------------------------------------------------------
Using a touch-tone telephone, call 1-800-OK2-VOTE (1-800-652-8683).
Shareholders residing outside the United States, Canada and Puerto
Rico should call 1-201-324-0377. Use the Control Number located in the
box above. Follow the recorded instructions.
-----------------------------------------------------------------------
TO VOTE BY INTERNET:
-----------------------------------------------------------------------
Log on to http:///www.vote-by-net.com. Following the instructions on
the screen.
-----------------------------------------------------------------------
31
COOPER CAMERON CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned stockholder of Cooper Cameron Corporation ("Cooper
Cameron") appoints Sheldon R. Erikson and Franklin Myers, or either of
R them, proxies, with full power of substitution, to vote all shares of
stock which the stockholder would be entitled to vote if present at
O the Annual Meeting of Stockholders of Cooper Cameron on Thursday, May
13, 1999, at 10:00 a.m. (central time) in the Elm Room, The Houstonian
X Hotel and Conference Center, 111 North Post Oak Lane, Houston, Texas,
and at any adjournments thereof, with all powers the stockholder would
Y possess if present. The stockholder hereby revokes any proxies
previously given with respect to such meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE, BUT IF NO
SPECIFICATION IS MADE, IT WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR
(GRANT DOVE AND DAVID ROSS III), WILL BE VOTED FOR PROPOSAL 2 AND IN
THE DISCRETION OF THE PROXIES ON OTHER MATTERS AS MAY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
This card also constitutes voting instructions for any shares held for
the stockholder in the Cooper Cameron Retirement Savings Plan, as
described in the Notice of Meeting and Proxy Statement.
Comments: (Please sign and date on the reverse side)
-----------------------------
----------------------------- -----------
(If you have written in the above space, please mark the SEE REVERSE
"comments" box on the reverse side of this card.) SIDE
-----------
- --------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
COOPER CAMERON CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
10:00 a.m.
MAY 13, 1999
THE HOUSTONIAN
HOTEL AND CONFERENCE CENTER
111 NORTH POST OAK LANE
HOUSTON, TEXAS
================================================================================
Agenda
o Call to order
o Introduction of Directors and Officers
o Nomination and Voting for Directors
o Voting for proposal 2
o Chairman's Report
o General Question and Answer Period
================================================================================
- --------------------------------------------------------------------------------
THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT. IT IS IMPORTANT THAT YOUR
SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR NOT YOU ATTEND THE
MEETING IN PERSON. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE URGE
YOU TO COMPLETE AND MAIL THE PROXY CARD ABOVE.
- --------------------------------------------------------------------------------