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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
Tidewater Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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TIDEWATER LOGO
TIDEWATER INC.
1440 CANAL STREET
NEW ORLEANS, LA 70112
June 10, 1997
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Tidewater Inc. to be held at the Pan American Life Center Auditorium, 11th
Floor, 601 Poydras Street, New Orleans, Louisiana, on Thursday, July 24, 1997,
at 10:00 a.m., C.D.S.T.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. During the meeting, we will
also report on the operations of the Company. Directors and officers of the
Company will be present to respond to any questions that stockholders may have.
Please sign, date and return the enclosed proxy card promptly. If you
attend the meeting, which we hope you will do, you may vote in person even if
you have previously mailed a proxy card.
Sincerely,
/s/ WILLIAM C. O'MALLEY
William C. O'Malley
Chairman of the Board,
President, and Chief
Executive Officer
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TIDEWATER INC.
1440 CANAL STREET
NEW ORLEANS, LA 70112
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of the Stockholders of TIDEWATER INC. will be held in
the Pan American Life Center Auditorium, 11th Floor, 601 Poydras Street, New
Orleans, Louisiana, on Thursday, July 24, 1997, at 10:00 a.m., C.D.S.T., to vote
upon the following matters:
1. The election of three Directors to serve three-year terms ending in July
2000 or until their successors are elected and qualified;
2. A proposal to approve the 1997 Stock Incentive Plan;
3. A proposal to approve the Executive Officer Annual Incentive Plan;
4. Ratification of the selection of Ernst & Young LLP as the Company's
independent accountants for the fiscal year ending March 31, 1998; and
5. Such other matters as may properly come before the meeting or any
adjournment thereof.
The record date for the determination of stockholders entitled to notice of
and to vote at the meeting has been fixed as June 2, 1997.
Stockholders are requested to date, sign and return as soon as possible the
enclosed proxy card. A return envelope which requires no postage if mailed in
the United States is enclosed for that purpose.
By Order of the Board of Directors
/s/ CLIFFE F. LABORDE
Cliffe F. Laborde
Senior Vice President, Secretary
and General Counsel
New Orleans, Louisiana
June 10, 1997
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TABLE OF CONTENTS
DESCRIPTION PAGE
----------- ----
Solicitation of Proxies..................................... 1
Revocation of Proxies....................................... 1
Shares Outstanding and Voting Procedures.................... 1
Security Ownership of Certain Beneficial Owners............. 2
Security Ownership of Management............................ 2
Election of Directors (Proposal 1).......................... 3
Committees of the Board..................................... 5
Compensation Committee Interlocks and Insider
Participation............................................. 6
Director Compensation....................................... 6
Executive Compensation...................................... 7
Compensation Committee Report............................... 11
Performance Graph........................................... 14
Interest in Certain Transactions............................ 15
Proposal to Approve 1997 Stock Incentive Plan (Proposal
2)........................................................ 16
Proposal to Approve the Executive Officer Annual Incentive
Plan (Proposal 3)......................................... 21
Proposal for the Ratification of Selection of Independent
Accountants (Proposal 4).................................. 22
Stockholder Proposals and Director Nominations.............. 23
Other Matters............................................... 24
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TIDEWATER INC.
1440 CANAL STREET
NEW ORLEANS, LA 70112
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation by the Board of Directors of Tidewater Inc.
(the "Company") of proxies to be used at the Annual Meeting of Stockholders of
the Company which will be held in the Auditorium of the Pan American Life
Center, 601 Poydras Street, New Orleans, Louisiana, on Thursday, July 24, 1997,
at 10:00 a.m., C.D.S.T., and at any adjournment thereof. Only stockholders of
record at the close of business on June 2, 1997, are entitled to vote at the
meeting or any adjournment thereof.
The Company will bear the costs of soliciting proxies. Proxies may be
solicited, without extra remuneration, by Directors, officers, or employees of
the Company, by mail, telephone, telex, telefax, telegram, or personal
interview. The Company will reimburse brokers, banks, and other custodians,
nominees, or fiduciaries for their reasonable expenses in forwarding proxies and
proxy materials to beneficial owners of shares.
REVOCATION OF PROXIES
Any stockholder giving a proxy may revoke it at any time before it is voted
by voting in person at the meeting or by delivering written revocation or a
later dated proxy to the Secretary of the Company.
SHARES OUTSTANDING AND VOTING PROCEDURES
The Bylaws of the Company (the "Bylaws") provide that the holders of a
majority of the shares of common stock of the Company, par value $.10 per share
(the "Common Stock"), issued and outstanding and entitled to vote at the Annual
Meeting, present in person or represented by proxy, shall constitute a quorum at
the Annual Meeting. The Bylaws further provide that, except as otherwise
provided by statute, the Certificate of Incorporation of the Company, or the
Bylaws, all matters coming before the Annual Meeting shall be decided by the
vote of a majority of the number of shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote thereat.
Votes cast by proxy or in person at the Annual Meeting will be counted by
the persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will treat shares represented by proxies that
reflect abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum and for purposes of determining the
outcome of any matter submitted to the stockholders for a vote.
Abstentions as to particular proposals will have the same effect as votes
against such proposals. Broker non-votes as to particular proposals will not,
however, be deemed to be a part of the voting power present with respect to such
proposals and will not therefore count as votes for or against such proposals
and will not be included in calculating the number of votes necessary for
approval of such proposals.
As of the close of business on June 2, 1997, the Company had 60,324,802
shares of Common Stock that were issued, outstanding, and entitled to vote. Each
share of Common Stock is entitled to one vote with respect to matters to be
voted upon at the meeting.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and notes thereto indicate the name, address, and stock
ownership of each person or persons known by the Company to own beneficially
more than 5% of the Company's voting securities as of June 2, 1997:
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS(2)
------------------- ------------ -----------
Common Stock
FMR Corporation.......................................... 6,032,027(1) 10.0%
82 Devonshire Street
Boston, MA 02109
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(1) Based on amended Schedule 13G dated January 10, 1997, filed with the
Commission reporting the beneficial ownership position of FMR Corporation.
(2) Based on 60,339,850 shares of Common Stock outstanding on June 2, 1997.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
as of June 2, 1997, with respect to each executive officer named in the Summary
Compensation Table and by all Directors and executive officers as a group:
AMOUNT AND
NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP* OF CLASS
---- --------------------- --------
Robert H. Boh............................................ 11,000(1) **
Donald T. Bollinger...................................... 36,080(1) **
Arthur R. Carlson........................................ 7,100(1) **
Richard M. Currence...................................... 151,294(2) **
Larry D. Hornbeck........................................ 174,486(3) **
Hugh J. Kelly............................................ 8,000(1) **
Cliffe F. Laborde........................................ 79,111(4) **
John P. Laborde.......................................... 186,569(5) **
Paul W. Murrill.......................................... 7,100(1) **
William C. O'Malley...................................... 386,821(6) **
Lester Pollack........................................... 1,497,999(7) 2.5%(8)
J. Hugh Roff, Jr......................................... 8,000(9) **
Stephen A. Snider........................................ 47,917(10) **
Ken C. Tamblyn........................................... 39,424(11) **
All Directors and Executive Officers as a group (14
persons)............................................... 2,640,901(12) 4.4%(13)
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* Unless otherwise indicated by footnote, all shares are held by the named
individuals with sole voting and investment powers.
** Less than 1.0%.
(1) Includes 7,000 shares of Common Stock that such person has the right to
acquire within 60 days upon exercise of a stock option granted to Directors
of the Company who are not employees of the Company ("Outside Directors").
(2) Includes 124,166 shares which Mr. Currence has the right to acquire within
60 days through the exercise of employee stock options together with
related restricted stock awards, and 4,251 shares of Common Stock
attributable to Mr. Currence's account in the Company's Savings Plan, as to
which shares Mr. Currence has sole voting power.
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(3) Includes 1,000 shares of Common Stock which Mr. Hornbeck has the right to
acquire within 60 days upon exercise of an Outside Director stock option.
(4) Includes 66,989 shares which Mr. Laborde has the right to acquire within 60
days through the exercise of employee stock options together with related
restricted stock awards, 8,484 shares held in trusts for Mr. Laborde's
minor children, beneficial ownership of which is disclaimed, and 648 shares
of Common Stock attributable to Mr. Laborde's account in the Company
Savings Plan, as to which shares Mr. Laborde has sole voting power.
(5) Includes 932 shares owned by Mr. Laborde's wife, beneficial ownership of
which is disclaimed.
(6) Includes 316,666 shares which Mr. O'Malley has the right to acquire within
60 days through the exercise of employee stock options, and 155 shares of
Common Stock attributable to Mr. O'Malley's account in the Company's
Savings Plan, as to which shares Mr. O'Malley has sole voting power.
(7) Includes 5,000 shares of Common Stock which Mr. Pollack has the right to
acquire within 60 days through exercise of an Outside Director stock
option, and 1,492,999 shares owned by the Corporate Partners Group, as to
which Mr. Pollack disclaims beneficial ownership.
(8) Calculated on the basis of 60,339,850 shares of Common Stock outstanding at
June 2, 1997, plus the number of shares such person has the right to
acquire within 60 days.
(9) Includes 6,000 shares of Common Stock which Mr. Roff has the right to
acquire within 60 days upon exercise of an Outside Director stock option.
(10) Includes 37,944 shares which Mr. Snider has the right to acquire within 60
days through the exercise of employee stock options together with related
restricted stock awards, and 973 shares of Common Stock attributable to Mr.
Snider's account in the Company's Savings Plan, as to which shares Mr.
Snider has sole voting power.
(11) Includes 17,333 shares which Mr. Tamblyn has the right to acquire within 60
days through the exercise of employee stock options together with related
restricted stock awards, and 2,976 shares of Common Stock attributable to
Mr. Tamblyn's account in the Company's Savings Plan, as to which shares Mr.
Tamblyn has sole voting power.
(12) Includes 610,098 shares of Common Stock that such persons have the right to
acquire within 60 days through the exercise of options together with
related restricted stock awards; 1,502,415 shares for which Directors and
executive officers reported indirect ownership and disclaim beneficial
ownership; and 9,003 shares of Common Stock attributable to such persons'
accounts in the Company's Savings Plan, as to which shares such persons
have sole voting power only.
(13) Calculated on the basis of 60,339,850 shares of Common Stock outstanding at
June 2, 1997, and the 610,098 shares that all Directors and executive
officers as a group have the right to acquire within 60 days.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Certificate of Incorporation divides the Board of Directors
into three classes, as nearly equal in number as possible, with each class of
Directors serving a three-year term. The term of office of the classes of
Directors expires in rotation so that one class is elected at each Annual
Meeting for a full three-year term. The terms of Messrs. Arthur R. Carlson, John
P. Laborde and William C. O'Malley will expire at the Annual Meeting.
The Board of Directors has nominated and urges you to vote FOR the election
of Messrs. Carlson, Laborde and O'Malley for terms of office ending in 2000.
Proxies solicited hereby will be so voted unless stockholders specify otherwise
in their proxies.
It is intended that the proxies solicited hereby will be voted FOR the
election of each individual named under "Nominees" below. In the event any
nominee is not a candidate when the election occurs, it is intended
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that the proxies will be voted for the election of the other nominees and may be
voted for any substitute nominee. The Board of Directors has no reason to
believe that any nominee will not be a candidate or, if elected, will be unable
or unwilling to serve as a Director. In no event, however, will the proxies be
voted for a greater number of persons than the number of nominees named.
DIRECTOR TERM
NOMINEES AGE PRINCIPAL OCCUPATION OR EMPLOYMENT SINCE EXPIRING
-------- --- ---------------------------------- -------- --------
Arthur R. Carlson 56 Managing Director, Trust Company of the 1982 2000
West (investment advisor).
John P. Laborde 73 Former Chairman, President and Chief 1956 2000
Executive Office of the Company from 1956
to 1994; Director of Stolt Comex Seaway
S.A., Stone Energy Corporation, Stewart
Enterprises, Inc., and Director Emeritus
of American Bankers Insurance Group Inc.
William C. O'Malley 60 Chairman, President and Chief Executive 1994 2000
Officer of the Company since 1994; prior
thereto, served as Chairman of the Board
and Chief Executive Officer of Sonat
Offshore Drilling, Inc.; Director of
American Oilfield Divers, Inc., Hibernia
Corporation, and American Bureau of
Shipping.
DIRECTORS DIRECTOR TERM
CONTINUING IN OFFICE AGE PRINCIPAL OCCUPATION OR EMPLOYMENT SINCE EXPIRING
-------------------- --- ---------------------------------- -------- --------
Robert H. Boh 66 Chairman and Former President and Chief 1978 1999
Executive Officer of Boh Bros.
Construction Co. (general construction
contractor); and Chairman of Hibernia
Corporation and Hibernia National Bank.
Donald T. Bollinger 47 Chairman of Bollinger Shipyards, Inc. 1990 1999
since 1989 and its Chief Executive Officer
since 1985; Director of Banc One Louisiana
Corporation, Campo Electronics Appliances
& Computers, Inc. and Louisiana Worker's
Compensation Corp.
Larry D. Hornbeck 58 Former Chairman, President and Chief 1966 1999
Executive Officer of Hornbeck Offshore
Services, Inc.; Director of Coastal
Towing, Inc.
Hugh J. Kelly 72 Oil and gas consultant since 1989; former 1990 1999
Chief Executive Officer of Ocean Drilling
and Exploration Company, 1977-1989;
Director of Chieftain International, Inc.,
Central Louisiana Electric Co., and Gulf
Island Fabrication Co.
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DIRECTORS DIRECTOR TERM
CONTINUING IN OFFICE AGE PRINCIPAL OCCUPATION OR EMPLOYMENT SINCE EXPIRING
-------------------- --- ---------------------------------- -------- --------
Paul W. Murrill 62 Professional Engineer; Chairman of 1981 1998
Piccadilly Cafeterias since 1994; Special
Advisor to the Chairman of the Board of
Gulf States Utilities Co. (public
utility), 1987-1989, its Chairman,
1982-1987, and its Chief Executive
Officer, 1982-1986; Director of ChemFirst,
Inc., Entergy Corporation, Howell
Corporation, Piccadilly Cafeterias, Inc.,
and ZYGO Corp.
Lester Pollack 63 Senior Managing Director of Corporate 1992 1998
Advisors, L.P. since 1988, Managing
Director of Lazard Freres & Co. LLC since
1995 (prior thereto a general partner),
Chief Executive Officer of Centre
Partners, L.P. since 1986 and Managing
Director of Centre Partners Management LLC
since 1995; Director of Parlex
Corporation, LaSalle Re Limited, Firearms
Training Systems, Inc., Sphere Drake
Holdings, Ltd., and SunAmerica, Inc.
J. Hugh Roff, Jr. 65 Chairman of the Board of PetroUnited 1986 1998
Terminals, Inc. (petrochemical terminals)
since 1986; Director of Texas Commerce
Bank, N.A.
COMMITTEES OF THE BOARD
The Company has standing Executive, Audit, and Compensation Committees of
the Board of Directors. It has no nominating committee. During fiscal 1997, nine
meetings of the Board of Directors were held. Each Director attended at least
75% of the aggregate of the meetings of the Board and the Committees on which
they served except that Mr. Pollack was only able to attend one of the three
meetings of the Audit Committee.
The Company's Executive Committee is composed of Messrs. Robert H. Boh,
Donald T. Bollinger, Arthur R. Carlson, Larry D. Hornbeck, Hugh J. Kelly, John
P. Laborde, Paul W. Murrill, William C. O'Malley, Lester Pollack, and J. Hugh
Roff, Jr. The function of the Committee is to act in the place of the Board of
Directors at times when the Board is not in session. The Committee may exercise
all powers of the Board except those powers specifically reserved to the Board
under applicable law. The Committee did not meet during fiscal 1997.
The Company's Audit Committee is composed of Messrs. Donald T. Bollinger,
Larry D. Hornbeck, John P. Laborde, Paul W. Murrill, and Lester Pollack. The
Committee met three times during fiscal 1997. The principal functions of the
Committee are to recommend selection of independent auditors, review the plan
for and results of audit examinations by internal and independent auditors,
review the Company's annual and quarterly financial statements, and review and
approve the services provided and fees charged by independent auditors. The
Committee also monitors and evaluates internal accounting controls of the
Company and ensures continuing adherence to stated management policies and
regulatory requirements in the area of financial reporting.
The Company's Compensation Committee is composed of Messrs. Robert H. Boh,
Arthur R. Carlson, Hugh J. Kelly, and J. Hugh Roff, Jr. The Committee met seven
times during fiscal 1997. The principal functions of the Committee include
responsibility for considering all substantive elements of the Company's total
employee compensation package, including overall plan design for each of the
Company's major benefit programs, determining appropriate actuarial assumptions
and funding methods, appointing and monitoring independent investment managers
and monitoring compliance with applicable provisions of state and federal
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law. The Committee also has responsibility for determining salary and bonus
awards for executive officers and determining stock option and restricted stock
awards for all key employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Messrs. Robert H.
Boh, Arthur R. Carlson, Hugh J. Kelly, and J. Hugh Roff, Jr. None of the members
of the Compensation Committee have been officers or employees of the Company or
any of its subsidiaries. No executive officer of the Company served in the last
fiscal year as a director or member of the compensation committee of another
entity one of whose executive officers served as a Director or on the
Compensation Committee of the Company.
DIRECTOR COMPENSATION
For fiscal 1997, Outside Directors of the Company received an annual
retainer fee of $20,000 and a fee of $1,500 for attendance at each meeting of
the Board of Directors. Directors also received a fee of $1,000 for attendance
at each meeting of any Committee of the Board of Directors or $1,400 for
attendance at those Committee meetings they chaired.
For fiscal 1998, Outside Directors of the Company will receive an annual
retainer fee of $25,000, except for John P. Laborde, who will receive an annual
retainer fee of $100,000 for the duration of his three year term as Director.
Mr. Laborde, the founder of the Company who served as Chairman and Chief
Executive Officer of the Company for 38 years, has served as a consultant to the
Company since his retirement in October 1994, pursuant to a consulting contract
which will terminate on October 20, 1997. (See Section "Interest in Certain
Transactions") The Board of Directors approved that Mr. Laborde receive the
increased annual retainer fee for services to be rendered to the Board. The
Board of Directors also elected Mr. Laborde to the honorary position of Chairman
Emeritus.
For fiscal 1998, in addition to the annual retainer fee, Outside Directors
will receive a fee of $1,500 for attendance at each meeting of the Board of
Directors. Directors will also receive a fee of $1,200 for attendance at each
meeting of any Committee of the Board of Directors or $1,600 for attendance at
those committee meetings they chair.
For fiscal 1997, Outside Directors also received a stock option to purchase
1,000 shares of Common Stock after the Annual Meeting of Stockholders. The
exercise price of the stock options was equal to the closing price for the
Common Stock reported on the New York Stock Exchange consolidated tape on the
date of the Annual Meeting.
For fiscal 1998, assuming the proposed 1997 Stock Incentive Plan is
approved by stockholders at the Annual Meeting, Outside Directors will receive a
stock option to purchase 2,000 shares of common stock after the Annual Meeting.
The exercise price of the stock option will be equal to the closing price for
the Common Stock reported on the New York Stock Exchange consolidated tape on
the date of the Annual Meeting.
The Company provides a Deferred Compensation Plan pursuant to which an
Outside Director may elect to defer all fees which are payable to him from the
Company. Deferred amounts are credited to an account in the name of the
participant as a cash credit or a phantom Common Stock credit of the Company's
Common Stock. Cash credit accounts are credited quarterly with interest at a
rate based upon the one year U.S. Treasury Bill rate. The phantom share accounts
are credited with a Common Stock dividend equivalent at the time dividends are
paid on Common Stock. Upon the earlier of termination of Board service with the
Company or the Director's attainment of age 65, amounts accrued under this Plan
are payable either in a lump sum or over a period of two to ten years, at the
election of the participant. Directors participate at their election in this
Plan on a year-to-year basis. Two Directors participated in the Deferred
Compensation Plan during fiscal 1997.
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The Company also provides a Retirement Plan for the benefit of Outside
Directors who retire from the Board on or after reaching age 65 or after
completing five or more years of service on the Board. Under the Retirement
Plan, an eligible Director will be entitled to an annual benefit equal to the
annual retainer fee for a Board member at the time of his retirement. (For Mr.
Laborde, the annual retainer fee for purposes of this Retirement Plan will be
the same amount as the other Directors' annual retainer fee.) The benefit is
payable for a term equal to the number of years the retired Director served as
an Outside Director. If a Director dies prior to payment of his benefit, a death
benefit is payable to his beneficiaries equal to the then present value of the
unpaid benefit.
The Deferred Compensation Plan and the Retirement Plan both provide for the
acceleration of the payment of certain benefits in the event of a change of
control in the Company. In such event, any unpaid benefits deferred under the
Deferred Compensation Plan as a cash credit only and any Retirement Plan
benefits are payable upon the Company's receipt of a request for payment by a
Director.
EXECUTIVE COMPENSATION
The following table summarizes, for each of the three fiscal years ended
March 31, 1995, 1996, and 1997, the compensation of the named individuals in all
capacities in which they served:
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION ------------------------------------
---------------------------- RESTRICTED NO. OF ALL OTHER
NAME AND FISCAL STOCK OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) AWARDED (2)
------------------ ------ -------- -------- ---------- ------- ------------
William C. O'Malley, 1997 $500,000 $750,000 -0- 100,000 $18,786
Chairman, President and 1996 500,000 456,000 -0- 50,000 11,376
Chief Executive Officer 1995 268,918 200,000 $1,636,250(3) 450,000 1,938
Richard M. Currence, 1997 245,000 244,389 -0- 50,000 11,226
Executive Vice President 1996 245,000 175,000 -0- 22,000 11,226
1995 242,500 140,000 38,760(4) 45,675 11,151
Ken C. Tamblyn, 1997 235,000 234,414 -0- 50,000 10,926
Executive Vice President 1996 235,000 175,000 -0- 22,000 10,926
and Chief Financial Officer 1995 232,500 140,000 37,091(4) 45,000 10,851
Cliffe F. Laborde, 1997 200,000 153,125 -0- 35,000 9,876
Senior Vice President, 1996 200,000 120,000 -0- 18,000 9,876
Secretary and General 1995 197,500 85,000 26,878(4) 30,875 9,801
Counsel
Stephen A. Snider, 1997 160,000 87,500 -0- 30,000 8,676
Senior Vice President 1996 160,000 68,000 -0- 18,000 8,676
1995 149,583 85,000 26,878(4) 35,875 8,373
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(1) Reflects the number of shares of restricted stock awarded multiplied by the
closing market price of the Company's Common Stock on the date of grant.
(2) Consists of amounts contributed by the Company on behalf of the named
executive officer pursuant to the Company's Savings Plan and Supplemental
Savings Plan and health care premiums paid by the Company under the
Company's Executive Medical Plan. See following table.
(3) Reflects the value on the date of grant of 70,000 shares of restricted stock
that vest based upon increases in the price of Common Stock and that were
awarded to Mr. O'Malley in Fiscal 1995 of which 20,000 shares remain subject
to restriction. Dividends are paid on the shares of restricted stock. The
aggregate market value of the 20,000 shares subject to restriction was
$920,000 as of March 31, 1997.
(4) Reflects the value of shares of restricted stock (the "Restricted Shares")
that the named individual has the right to receive upon the exercise of
related stock options. Once issued, the Restricted Shares are
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restricted for a period of six months. Once the Restricted Shares are
issued, the holders of the Restricted Shares will be entitled to receive any
dividends paid to the holders of Common Stock of the Company. For Fiscal
1995, the number of Restricted Shares to be awarded to each named individual
is as follows: Mr. Currence 1,742 shares, Mr. Tamblyn 1,667 shares, Mr.
Laborde 1,208 shares, and Mr. Snider 1,208 shares.
AMOUNTS CONTRIBUTED BY THE COMPANY
PURSUANT TO SAVINGS PLAN AND SUPPLEMENTAL SAVINGS PLAN
AND HEALTH CARE PREMIUMS PAID BY THE COMPANY
UNDER EXECUTIVE MEDICAL PLAN
CONTRIBUTIONS PREMIUMS PAID
UNDER UNDER EXECUTIVE
NAME FISCAL YEAR SAVINGS PLANS MEDICAL PLAN
---- ----------- ------------- ---------------
William C. O'Malley.................................. 1997 $15,000 $3,876
1996 7,500 3,876
1995 0 1,938
Richard M. Currence.................................. 1997 7,350 3,876
1996 7,350 3,876
1995 7,275 3,876
Ken C. Tamblyn....................................... 1997 7,050 3,876
1996 7,050 3,876
1995 6,975 3,876
Cliffe F. Laborde.................................... 1997 6,000 3,876
1996 6,000 3,876
1995 5,925 3,876
Stephen A. Snider.................................... 1997 4,800 3,876
1996 4,800 3,876
1995 4,497 3,876
STOCK OPTIONS
The following table contains certain information concerning the grant of
stock options to the named individuals during the fiscal year ended March 31,
1997:
OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 1997
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OPTIONS AT ASSUMED ANNUAL RATES
OF SHARES GRANTED TO OF STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES FOR OPTION TERM
OPTIONS IN LAST EXERCISE EXPIRATION ---------------------------
NAME GRANTED(1) FISCAL YEAR PRICE(2) DATE 5% 10%
---- ---------- ----------- -------- ---------- ------------ ------------
William C. O'Malley......... 100,000 19.6% $43.625 3/19/07 $2,892,915 $7,331,215
Richard M. Currence......... 50,000 9.8% 43.625 3/19/07 1,446,458 3,665,608
Ken C. Tamblyn.............. 50,000 9.8% 43.625 3/19/07 1,446,458 3,665,608
Cliffe F. Laborde........... 35,000 6.8% 43.625 3/19/07 1,012,520 2,565,925
Stephen A. Snider........... 30,000 5.9% 43.625 3/19/07 867,875 2,195,365
- ---------------
(1) The options become fully exercisable within three years after the date of
grant. Exercisability is accelerated upon a change of control.
(2) The exercise price is equal to the closing price of the Company's common
stock on the New York Stock Exchange consolidated tape on the date of grant.
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OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the exercise
of options during the fiscal year ended March 31, 1997, and unexercised options
held on March 31, 1997:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED MARCH 31, 1997
AND OPTION VALUES AS OF MARCH 31, 1997
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
NUMBER SHARES UNDERLYING IN-THE-MONEY OPTIONS
OF SHARES OPTIONS AT MARCH 31, 1997 AT MARCH 31, 1997(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
William C. O'Malley... -0- -0- 316,666 283,334 $7,122,912 $3,973,963
Richard M. Currence... 2,050 $ 82,892 120,783 79,892 3,334,519 615,513
Ken C. Tamblyn........ 54,518 1,418,935 17,333 79,667 321,331 610,169
Cliffe F. Laborde..... 4,000 137,260 64,517 57,292 1,661,693 433,228
Stephen A. Snider..... 25,000 670,280 36,583 56,292 870,929 529,353
- ---------------
(1) Reflects the difference between the closing sale price of the Company's
Common Stock on the exercise date and the exercise price of the options.
(2) Reflects the difference between the closing sale price of the Company's
Common Stock on March 31, 1997, and the exercise price of the options.
PENSION PLANS
Defined Benefit Pension Plan. The Company and its participating
subsidiaries sponsor a defined benefit pension plan ("Pension Plan") covering
eligible employees. Upon normal retirement at age 65, the Pension Plan provides
a monthly benefit equal to the sum of (i) 1.5% of five-year final average
earnings above Social Security covered compensation times years of credited
service to a maximum of 35, plus (ii) 0.85% of five-year final average earnings
of Social Security covered compensation times years of credited service to a
maximum of 35, plus (iii) 1% of five-year final average earnings times credited
service in excess of 35 years.
Early retirement benefits are available upon attainment of age 55 and
completion of 10 years of credited service and are payable on a reduced basis.
There is no reduction for benefits payable at age 62 or later. For employees
retiring between age 55 and 62, the reduction is 5% per year for each year prior
to age 62. A retiring employee may select a life annuity or one of several
optional forms of settlement.
Employees completing five years of credited service are 100% vested in
their pension benefits. Messrs. O'Malley, Currence, Tamblyn, Cliffe Laborde, and
Snider have 2, 23, 11, 5 and 5 years of credited service, respectively, under
the Company's Pension Plan.
Supplemental Executive Retirement Plan. Under federal law, an employee's
benefits under a qualified pension plan are limited to certain maximum amounts.
The Company has adopted a supplemental executive retirement plan ("SERP") to
supplement the benefits received by the Company's officers participating in the
Pension Plan. The supplemental benefits consist of an amount equal to the excess
of the participant's benefits calculated under the Pension Plan over the maximum
benefit permitted by law. The SERP also gives credit for prior service by the
SERP participants without regard to any break in service. As a consequence,
under the SERP, Messrs. Currence and Snider were given credit for prior service
without regard to their breaks in service. The SERP also provides for payment of
a supplemental monthly benefit upon an officer's death or upon the later of
attainment of age 55 or separation from service. The monthly benefit is equal to
the sum of
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(i) 2.0% of five-year final average earnings above Social Security covered
compensation times years of credited service to a maximum of 35 years, plus (ii)
1.35% of five-year final average earnings below Social Security covered
compensation times years of credited service to a maximum of 35 years, plus
(iii) 1% of five-year final average earnings times credited service in excess of
35 years. The monthly benefit provided by the SERP is offset by the monthly
benefit provided by the Pension Plan.
The following table sets forth estimated aggregate combined annual benefits
payable in the form of a straight life annuity under the Pension Plan and the
SERP upon retirement to persons in the remuneration and years-of-service
classifications specified. Benefits are not subject to any deduction for Social
Security or other offset amounts.
PENSION PLANS TABLE
FIVE-YEAR YEARS OF CREDITED SERVICE AT RETIREMENT
FINAL AVERAGE --------------------------------------------------------
EARNINGS 15 20 25 30 35
- ------------- -------- -------- -------- -------- --------
$150,000................................ $ 42,143 $ 56,190 $ 70,238 $ 84,286 $ 98,333
$175,000................................ 49,643 66,190 82,738 99,286 115,833
$200,000................................ 57,143 76,190 95,238 114,286 133,333
$225,000................................ 64,643 86,190 107,738 129,286 150,833
$250,000................................ 72,143 96,190 120,238 144,286 168,333
$300,000................................ 87,143 116,190 145,238 174,286 203,333
$400,000................................ 117,143 156,190 195,238 234,286 273,333
$500,000................................ 147,143 196,190 245,238 294,286 343,333
$600,000................................ 177,143 236,190 295,238 354,286 413,333
EMPLOYMENT CONTRACTS
The Company has entered into an employment agreement (the "Employment
Agreement") with Mr. William C. O'Malley, pursuant to which Mr. O'Malley agreed
to serve as the Chairman, President, and Chief Executive Officer of the Company.
Under the Employment Agreement, which has a term that expires on December 31,
1997, the Company pays Mr. O'Malley a minimum annual base salary of $500,000. In
addition, Mr. O'Malley is eligible for an annual incentive bonus in accordance
with the terms of the Company's incentive compensation plans. Under the
Employment Agreement, the Company has agreed to pay Mr. O'Malley such additional
amounts as are necessary in order that his total retirement benefits will not be
less than the benefits he would have been entitled to receive under the
retirement plans of his previous employer. Upon death or disability, Mr.
O'Malley or his estate will be paid 50% of the base salary that he would have
been paid under the Employment Agreement for the remaining term.
CHANGE OF CONTROL AGREEMENTS
The Company has entered into change of control agreements (the "Change of
Control Agreements") with each of the executive officers named in the Summary
Compensation Table. Mr. O'Malley's Change of Control Agreement supersedes his
employment agreement upon a change of control of the Company.
The Change of Control Agreements for each executive officer provide for
continued employment for a two-year period following a change of control (the
"Employment Term"). Should the officer's employment be terminated during the
Employment Term for any reason other than death, disability or "Cause," as
defined, or should the officer terminate his employment for "Good Reason," as
defined, the officer will become entitled to certain benefits. The benefits
include a lump sum payment equal to three times the officer's base salary at
termination, plus a payment equal to three times the greater of the average of
his last three bonuses or the target bonus for which the officer is eligible
within the following twelve months. Also, the officer will be entitled to
continued life and health insurance benefits for thirty-six months following the
date of termination. The officer will immediately become fully vested in his
benefits under each supplemental or excess retirement plan of the Company in
which the officer participated. In addition, the Company will contribute to a
trust for
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the officer's account an amount equal to the additional benefits to which the
officer would have been entitled under any qualified or non-qualified defined
benefit or defined contribution plan of the Company, as if the officer had
continued to participate in such plan for three years following the change of
control.
Mr. O'Malley's Change of Control Agreement provides that he is entitled to
payments related to any excise tax that arises as a result of the "excess
parachute payment" provisions of section 4999 of the Internal Revenue Code of
1986, to the extent such payments are provided for under any employment
agreement in effect immediately prior to a change of control. Mr. O'Malley's
current employment agreement provides for payments in such amounts as are
necessary to place Mr. O'Malley in the same after-tax position as he would have
been in had such excise tax not been applicable to him. The Change of Control
Agreements with the other named executive officers provide that if the excise
tax would be avoided by reduction of benefits payable under the Change of
Control Agreements, then a reduction will occur, unless the amount of the
reduction would exceed the excise tax due thereon, in which case there will be
no reduction. Mr. O'Malley's Change of Control Agreement also continues in
effect any additional retirement, death and disability benefits provided by an
employment agreement in effect at the time of a change of control.
COMPENSATION COMMITTEE REPORT
PRINCIPLES OF EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of
independent Outside Directors who are responsible for Tidewater's compensation
programs. The executive compensation program is designed to help the Company
attract, motivate, and retain the executive talent that the Company needs in
order to maximize its return to shareholders. Toward that end, the Company's
executive compensation program has been structured based on the following
principles:
- COMPETITIVE LEVELS OF COMPENSATION -- Tidewater attempts to provide its
executives with a total compensation package that, at expected levels of
performance, is competitive with those provided to executives who hold
comparable positions or have similar qualifications. Total compensation
is defined to include base salary, annual incentive bonus, long-term
incentives, and executive benefits.
The Company's philosophy is to provide a total compensation package which
is market driven. The Company determines competitive levels of compensation for
executive positions based on information drawn from compensation surveys, proxy
statements for comparable organizations and independent compensation
consultants. Tidewater considers market pay data for general industry companies
with comparable revenues to Tidewater and the Value Line oilfield service peer
companies used in the total shareholder return graph in this proxy statement in
setting competitive compensation levels.
- PAY FOR PERFORMANCE -- Tidewater's base salary and incentive plans are
managed within a pay for performance framework. As a result, while the
expected value of an executive's compensation package may be market
driven, actual payments made to executives in a given year may be higher
or lower than competitive market rates because of Company and individual
performance.
- FOCUS ON ANNUAL AND LONG-TERM RESULTS -- As part of its pay for
performance program, Tidewater maintains both an annual and a long-term
incentive plan for key employees. The purpose of the annual incentive
plan is to reward short-term performance that is tied to the Company's
annual business objectives. The long-term incentive plan focuses on
providing stock based Incentives which are intended to be consistent with
the goals of long term shareholders.
DESCRIPTION OF THE CURRENT EXECUTIVE COMPENSATION PROGRAM
This section describes each of the principal elements of the Company's
executive compensation program with specific reference to the objectives
discussed above. The Company's compensation program is periodically reviewed to
ensure an appropriate mix of base salary, annual incentive, and long-term
incentive within the philosophy of providing competitive total direct
compensation opportunities.
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Base Salary Program. Tidewater believes that offering competitive rates of
base pay plays an important role in our ability to attract and retain executive
talent. Discretionary base salary adjustments are also made for each individual
employee's performance over time. Consequently, employees with higher levels of
sustained performance over time will be paid correspondingly higher salaries.
Generally, salaries for executives are reviewed annually based on a variety of
factors, including individual performance, general levels of market salary
increases, and Tidewater's overall financial results. Unlike the prior two
fiscal years, base salaries for fiscal year 1998 will be adjusted upward to
maintain competitive rates of base pay; however, greater emphasis continues to
be placed upon the incentive portion of total cash compensation and the
risk/reward element of executive compensation.
Annual Incentive Plan. Tidewater's annual incentive plan is intended to
motivate, attract, and retain high quality employees by offering variable pay
tied to Company and individual performance. This program is also an important
component in providing a fully competitive compensation package to the Company's
executive officers.
A bonus pool is established each year based on the Company's overall
performance against measures established by the Compensation Committee of the
Board of Directors. In fiscal 1997, two equally weighted performance measures
were considered. These performance measures were (1) adjusted net income
compared to the budget, and (2) return on total capital compared to the Value
Line oilfield services industry peer group.
For fiscal 1997, the Company exceeded the targets for return on total
capital and for adjusted net income as compared to the budget. As a result, the
overall company performance measures generated a bonus pool from which payouts
were made.
Individual awards from the established bonus pool are determined by the
Compensation Committee. The Chief Executive Officer provides advice to the
Committee for specific individual awards for executives other than himself.
Individual awards from the pool are based on a combination of objective
performance criteria (such as operating margins, business unit performance, and
the attainment of safety goals), as well as a discretionary evaluation of
individual employee performance.
The aggregate individual bonus awards for fiscal 1997 did not exceed the
amount of funds in the bonus pool.
For fiscal year 1998, the Company has submitted for approval to
shareholders the Executive Officer Annual Incentive Plan, which for fiscal 1998
applies only to the Chief Executive Officer, and which is intended to comply
with Section 162(m) of the Internal Revenue Code. This plan provides for payment
of a variable bonus contingent upon achievement of certain performance goals.
For fiscal 1998, the performance measures are 1) adjusted net income versus
budget; 2) return on total capital as compared to the Value Line oilfield
services industry peer group; and 3) achievement of safety performance goals.
The actual amount of the incentive award is dependent upon the attainment of
corporate performance in each of these three criteria. The target payout is 100%
of base salary; the maximum payout is 200% of base salary.
Long-Term Incentive Plan. Tidewater's long-term incentive plan provides
long-term incentives to executives in two forms: stock options and restricted
stock.
Tidewater's stock option plan is intended to reward participants for
generating appreciation in the Company's stock price. Stock options granted
during the last fiscal year were granted at the closing price of the Company's
Common Stock on the New York Stock Exchange on the date of grant. All stock
options have a term of 10 years and are exercisable in accordance with a vesting
schedule established by the Compensation Committee at the time of the grant. For
fiscal 1997, the Compensation Committee used a vesting schedule of one-third per
year commencing one year following the grant date. Although restricted stock was
awarded in fiscal 1995, no such grants were made in fiscal 1996 or fiscal 1997.
Tidewater's overall stock option and restricted stock grant levels
generally are established by considering market data on grant levels. Individual
long-term incentive grants are based on a subjective evaluation of the level of
responsibility of each participant in the Company and individual performance.
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1997 CHIEF EXECUTIVE OFFICER COMPENSATION
During fiscal 1997, Mr. William C. O'Malley served as Chief Executive
Officer pursuant to an employment contract entered into in June 1994. The
employment contract set Mr. O'Malley's annual base salary at $500,000, which is
the amount he received in fiscal 1997. On March 19, 1997, Mr. O'Malley was
granted stock options to purchase 100,000 shares of Common Stock. The size of
the stock option grant was based upon the Committee's subjective evaluation of
Mr. O'Malley's performance during the last fiscal year. In addition, under the
terms of the annual incentive plan, Mr. O'Malley was eligible for an annual
incentive award for fiscal 1997. Based upon Company performance under the plan
measures (as described previously in this report), and the discretionary
evaluation of the Company's safety performance and his individual performance by
the Compensation Committee, an allowable payout of $750,000 was awarded.
For fiscal 1998, the Compensation Committee has increased Mr. O'Malley's
annual base salary to $600,000.
$1 MILLION PAY DEDUCTIBILITY CAP
Section 162(m) of the Internal Revenue Code limits the tax deductibility by
a company of compensation in excess of $1 million paid to each of its most
highly compensated executive officers. Although the aggregate of Mr. O'Malley's
salary and bonus for fiscal 1997 exceeded $1 million, his 1997 bonus was not
paid until fiscal 1998. As a result, the compensation paid to each of the named
executive officers for the income tax year ending March 31, 1997, did not exceed
the amount deductible under Section 162(m). Mr. O'Malley elected to defer
receipt of a portion of his bonus for fiscal 1997 and, accordingly, the amount
of salary and bonus paid to him during fiscal 1998 is also expected to be fully
deductible. The Company is asking the stockholders to approve the Executive
Officer Annual Incentive Plan and the 1997 Stock Incentive Plan in order that
benefits paid through those plans in the future will be excluded in calculating
the $1 million limit of Section 162(m). The Compensation Committee intends to
establish executive officer compensation programs that will maximize Tidewater's
income tax deduction, assuming the Committee determines that such actions are
consistent with its philosophy and in the best interest of Tidewater and its
shareholders. However, from time to time, the Committee may award compensation
that is not fully tax deductible if the Committee determines that such award is
consistent with its philosophy and in the best interest of Tidewater and its
shareholders.
The Compensation Committee has approved and has submitted to shareholders
the Executive Officer Annual Incentive Plan, which for fiscal 1998 applies only
to the Chief Executive Officer. Assuming this plan is approved by shareholders
at the Annual Meeting, then payments made pursuant to such plan should be fully
deductible under Section 162(m).
Compensation Committee:
Robert H. Boh, Chairman
Arthur R. Carlson
Hugh J. Kelly
J. Hugh Roff, Jr.
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PERFORMANCE GRAPH
The following graph compares the change in the cumulative total shareholder
return on Company shares with the cumulative total return of the Standard &
Poor's 500 Stock Index and the cumulative total return of the Value Line
Oilfield Services Group Index during fiscal 1993, 1994, 1995, 1996 and 1997. The
graph assumes the investment of $100 on April 1, 1992, at closing prices on
March 31, 1992, and the reinvestment of dividends. The Value Line Oilfield
Services Group consists of 19 companies.
COMPARISON OF CUMULATIVE SHAREHOLDER RETURN 1992-1997
[GRAPH]
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) TIDEWATER INC. S&P 500 PEER GROUP
1992 100 100 100
1993 202 115 123
1994 166 117 111
1995 177 135 127
1996 336 179 191
1997 412 214 253
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INTEREST IN CERTAIN TRANSACTIONS
RELATED PARTY TRANSACTIONS
During fiscal 1997, the Company contracted with Bollinger Shipyards, Inc.
("Bollinger Shipyards") for repair services in the amount of approximately
$1,987,000 for vessels owned by the Company. The contracts were awarded to
Bollinger Shipyards on the basis of competitive bidding and/or drydock
availability. Donald T. Bollinger is the Chairman and Chief Executive Officer of
Bollinger Shipyards and a Director of the Company.
Pursuant to a stock repurchase program authorized by the Board of Directors
in December 1996, in January 1997 the Company repurchased an aggregate of
500,000 shares of its Common Stock at a price of $49.88 per share (the market
price on the date of purchase) from Corporate Partners, L.P., Corporate Offshore
Partners, L.P. and the State Board of Administration of Florida ("SBAF"). Lester
Pollack, a director of the Company, is the Senior Managing Director of Corporate
Advisors, L.P. ("Corporate Advisors") and is a Managing Director of Lazard
Freres & Co. LLC ("Lazard"). A wholly-owned subsidiary of Lazard is the general
partner of Corporate Advisors, which in turn is the general partner of Corporate
Partners, L.P. and Corporate Offshore Partners, L.P. Pursuant to an investment
management agreement, Corporate Advisors also manages certain investments on
behalf of SBAF (including SBAF's investment in the Company).
In fiscal 1997, the Company sold the M/V Greenhead to a limited liability
company organized by Richard M. Currence, Executive Vice President of the
Company, and certain of his partners, for $217,501.
During fiscal 1997, the Company received approximately $382,000 for charter
of the M/V Bea Tide to a company controlled by Peter Laborde. Mr. Laborde is the
son of John P. Laborde.
In the opinion of management, all of the Company's transactions with
affiliates were provided on terms that were usual, customary, and no less
favorable to the Company than would be available from unaffiliated parties.
CONSULTING CONTRACTS
On October 20, 1994, John P. Laborde retired as Chairman of the Board and
Chief Executive Officer of the Company after more than 38 years of service. In
connection with his retirement, the Company entered into a consulting contract
(the "Consulting Contract") with Mr. Laborde under which he agreed to provide
consulting services to the Company for a three-year period following his
retirement (the "Consultant Term). Under the terms of the Consulting Contract,
Mr. Laborde is paid an annual consulting fee of $600,000. During the Consultant
Term, Mr. Laborde, among other perquisites, is entitled to all benefits that he
is eligible to receive as a retiree from the Company. Mr. Laborde and his spouse
are also entitled to be provided medical coverage by the Company for life. If
Mr. Laborde's employment as a consultant is terminated other than under the
conditions permitted in the Consulting Contract, including termination at the
option of Mr. Laborde following a change in control of the Company, Mr. Laborde
will be paid the aggregate amount of his annual consulting fee through the last
day of the Consultant Term. In the case of disability or death, Mr. Laborde or
his heirs will receive a payment equal to 50% of Mr. Laborde's annual consulting
fee from the date of termination through the last day of the Consultant Term. In
the case of disability, Mr. Laborde will be entitled to receive disability and
other benefits at least equal to the most favorable of those generally provided
by the Company to executive officers.
In connection with the acquisition of Hornbeck Offshore Services, Inc. by
the Company, Larry D. Hornbeck entered into a two-year consulting agreement with
the Company under which Mr. Hornbeck agreed to render consulting and advisory
services to the Company in return for payments aggregating $350,000. In the
event of Mr. Hornbeck's death or disability during the term of the agreement,
the balance remaining to be paid under the consulting agreement will be paid to
Mr. Hornbeck or his estate. Also, the agreement provides that Mr. Hornbeck will
receive certain health insurance benefits, indemnification with respect to
activities undertaken in connection with services rendered thereunder, and an
assignment of all right, title and interest in and to the Hornbeck name and
logo.
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PROPOSAL TO APPROVE 1997 STOCK INCENTIVE PLAN
(PROPOSAL 2)
GENERAL
The Board of Directors of the Company believes that the continued growth of
the Company depends significantly upon the efforts of its officers, directors
and key employees, and that such individuals are best motivated to put forth
maximum effort on behalf of the Company if they own an equity interest in the
Company and can participate in the long-term growth and financial success of the
Company. In accordance with this philosophy, the Board of Directors has adopted
the 1997 Stock Incentive Plan (the "Stock Plan") and has directed that it be
submitted for approval by the stockholders at the Annual Meeting.
Officers and other key employees of the Company will be eligible to receive
awards ("Incentives") under the Stock Plan when designated by the Compensation
Committee of the Board of Directors (the "Committee"). With respect to
participants not subject to Section 162(m) of the Code, the Committee may
delegate its authority to grant Incentives under the Stock Plan to appropriate
personnel of the Company. There are approximately 12 officers and 15 key
employees of the Company and its subsidiaries who may be expected to participate
in the Stock Plan. Incentives under the Stock Plan may be granted to officers
and employees in any one or a combination of the following forms: incentive
stock options, non-qualified stock options or restricted stock.
In addition, directors of the Company who are not employees of the Company
("Outside Directors") may be granted non-qualified stock options on an annual
basis. There are currently 9 Outside Directors.
PURPOSES OF THE PROPOSAL
The Board of Directors is committed to creating and maintaining a
compensation system based to a significant extent on grants of equity-based
incentive awards. Approximately 330,000 shares of Common Stock remain available
for issuance under the Company's 1992 Stock Option and Restricted Stock Plan
(the "1992 Plan"). The Committee generally grants Incentives in the spring of
each year and the Committee anticipates that the number of shares that remain
available under the 1992 Plan will not be sufficient to accommodate the 1998
grants. The Board of Directors believes that approval of the Stock Plan will
allow the Company to continue to provide members of management and key personnel
with a proprietary interest in the growth and performance of the Company.
TERMS OF THE STOCK PLAN
Shares Issuable through the Stock Plan
The total number of shares of Common Stock with respect to which Incentives
may be granted under the Stock Plan is limited to 3,000,000 shares. There are
currently 1,893,411 shares subject to outstanding options granted under the 1975
Incentive Program Stock Option Plan and the 1992 Plan to officers, directors and
employees. If the Stock Plan is approved, no future grants will be made under
the 1992 Plan. Incentives with respect to no more than 500,000 shares may be
granted under the Stock Plan to a single participant in one calendar year.
Shares of Common Stock subject to Incentives that are cancelled, terminated
or forfeited, or shares of Common Stock that are issued as Incentives and
forfeited or reacquired by the Company, will again be available for issuance
under the Stock Plan. Additional rules for determining the number of shares
granted under the Stock Plan may be made by the Committee as deemed necessary.
Proportionate adjustments will be made to the number of shares of Common
Stock subject to the Stock Plan, including shares subject to outstanding
Incentives, in the event of any recapitalization, stock dividend, stock split,
combination of shares or other change in the Common Stock, and the terms of any
Incentive shall be adjusted to the extent appropriate to provide participants
with the same relative rights before and after the occurrence of such an event.
In the event of any merger, consolidation or reorganization of the Company with
any other corporation, there will be substituted for each of the shares of
Common Stock then subject to the
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Plan, including shares subject to restrictions, options or achievement of
performance objectives, the number and kind of shares of stock or other
securities to which the holders of the shares of Common Stock will be entitled
pursuant to the transaction.
On June 2, 1997, the closing sale price of a share of Common Stock was
$44.125 as reported on the consolidated transaction reporting system for New
York Stock Exchange issues.
Administration of the Stock Plan
The Committee administers the Stock Plan and has plenary authority to award
Incentives under the Stock Plan to officers and employees, to interpret the
Stock Plan, to establish any rules or regulations relating to the Stock Plan
that it determines to be appropriate, to delegate its authority as appropriate,
and to make any other determination that it believes necessary or advisable for
the proper administration of the Stock Plan.
Amendments to or Termination of the Stock Plan
The Board may amend or discontinue the Stock Plan at any time, except that
no amendment may be made without stockholder approval if approval is necessary
to comply with tax or regulatory requirements and compliance is deemed necessary
or advisable by the Committee. The Committee may cause any Incentive to be
cancelled in consideration of a cash payment or alternative Incentive equal in
value to the cancelled Incentive.
Types of Incentives
The Committee may grant the following types of Incentives to officers and
employees: non-qualified stock options, incentive stock options or restricted
stock. The various types of Incentives are described further below:
Stock Options. The Committee may grant non-qualified stock options or
incentive stock options to purchase shares of Common Stock. The Compensation
Committee will determine the number and exercise price of the options. The
option exercise price may not be less than the fair market value of the Common
Stock on the date of grant, except that in connection with an acquisition,
consolidation, merger or other extraordinary transaction, options may be granted
at less than fair market value in order to replace options previously granted by
a party to the transaction or an affiliate as long as the spread on the
replacement options for any participant is equal to or less than the spread on
the options being replaced. The term of the options, and the time or times that
the options become exercisable, will also be determined by the Committee,
provided that the term of an incentive stock option may not exceed 10 years.
The option exercise price may be paid in cash, check, in shares of Common
Stock that, unless otherwise permitted by the Committee, have been held for a
least six months, or through a broker-assisted exercise arrangement.
Options are non-transferable except (i) by will, (ii) by the laws of
descent and distribution or (iii) pursuant to a domestic relations order, or if
permitted by the Committee and if provided in the Incentive agreement or an
amendment thereto, to family members, to a family partnership, to a family
limited liability company or to a trust for the benefit of family members
Incentive stock options will be subject to certain additional requirements
necessary in order to qualify as incentive stock options under Section 422 of
the Code.
Restricted Stock. Shares of Common Stock may be granted by the Committee to
an eligible employee and made subject to restrictions regarding their sale,
pledge or other transfer by the employee for a specified period (the "Restricted
Period"). All shares of restricted stock will be subject to such restrictions as
the Committee may designate in an agreement with the employee, including, among
other things, that the shares be forfeited or resold to the Company in the event
of termination of employment or in the event specified performance goals or
targets are not met.
If restricted stock is intended to vest based upon the achievement of
pre-established performance goals rather than solely upon continued employment
over a period of time, the performance goals pursuant to which
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the restricted stock will vest will be any or a combination of the following
performance measures: earnings per share, return on assets, an economic value
added measure, shareholder return, earnings, stock price, return on equity,
return on total capital, safety performance, reduction of expenses or increase
in cash flow of the Company, a division of the Company or a subsidiary. The
performance objectives may be measured on an absolute basis or relative to a
group of peer companies selected by the Committee, relative to internal goals or
relative to levels attained in prior years. A Restricted Period of at least
three years is required, except that if vesting is subject to the attainment of
performance goals, a minimum Restricted Period of one year is required. Subject
to the restrictions provided in the restricted stock agreement and the Stock
Plan, a participant receiving restricted stock shall have all of the rights of a
shareholder as to such shares.
Grant of Options to Outside Directors
The Stock Plan provides for the automatic grant to each Outside Director of
an option to acquire shares of Common Stock of the Company on the day of the
1997 annual meeting and each subsequent annual meeting while the Stock Plan
remains in effect. Each Outside Director may receive an option to purchase no
more than 5,000 shares each year, the exact number of which will be set from
time to time by the Committee. For 1997 and until changed by the Committee, each
Outside Director will be granted an option to purchase 2,000 shares.
The options granted to Outside Directors become exercisable six months
after grant and have a term of ten years. If an Outside Director ceases to serve
on the Board of Directors due to death, disability or retirement, exercisable
options granted under the Stock Plan must be exercised within two years from the
date of termination of Board service. If a Director's service on the Board
terminates for any other reason, exercisable options must be exercised within
one year. The per share exercise price of the options granted to Outside
Directors will be equal to the fair market value of a share of Common Stock on
the date of grant.
Termination of Employment
If a participant (other than an Outside Director) ceases to be an employee
of the Company for any reason, including death, any Incentive may be exercised,
shall vest or shall expire at such time or times as may be determined by the
Committee in the Incentive agreement with the participant.
Change of Control
In the event of a change of control of the Company, all outstanding options
granted under the Stock Plan automatically will become fully exercisable, all
restrictions or limitations on shares of restricted stock will lapse and all
performance criteria and other conditions relating to the vesting of restricted
stock will be deemed to be achieved. A change of control is defined to include
(a) stockholder approval of (i) a merger, consolidation or reorganization in
which the Company is not the surviving entity, (ii) a sale of all or
substantially all of the assets of the Company or (iii) a liquidation of the
Company, (b) an acquisition of more than 30% of the Company's outstanding Common
Stock, or (c) a change in a majority of the Board not approved by the incumbent
Directors or a change in a majority of the Board as a result of a contested
election of Directors.
Payment of Withholding Taxes in Stock
A participant may, but is not required to, satisfy his or her withholding
tax obligation by electing to have the Company withhold, from the shares the
participant would otherwise receive upon exercise or vesting of an Incentive,
shares of Common Stock having a value equal to the amount required to be
withheld. This election must be made prior to the date on which the amount of
tax to be withheld is determined and is subject to the Committee's right of
disapproval.
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AWARDS TO BE GRANTED
The grant of awards to officers and employees under the Stock Plan is
entirely in the discretion of the Committee. The Committee has not yet made a
determination as to the awards to be granted to officers and employees under the
Stock Plan, if it is approved by the stockholders. The awards to be made under
the terms of the Stock Plan to Outside Directors are provided in the table
below.
NEW STOCK PLAN BENEFITS
UNDER THE 1997 STOCK INCENTIVE PLAN
NUMBER
NAME OF OPTIONS
---- ----------
William C. O'Malley, Chairman, President and Chief Executive
Officer................................................... *
Richard M. Currence, Executive Vice President............... *
Ken C. Tamblyn, Executive Vice President and Chief Financial
Officer................................................... *
Cliffe F. Laborde, Senior Vice President, Secretary and
General Counsel........................................... *
Stephen A. Snider, Senior Vice President.................... *
Executive Group............................................. *
Non-Executive Director Group................................ **
Non-Executive Officer Employee Group........................ *
- ---------------
* Not yet determined.
** 2,000 per year per Outside Director for 1997; No more than 5,000 per year for
future years.
FEDERAL INCOME TAX CONSEQUENCES
Under existing federal income tax provisions, a participant who receives
stock options or who receives shares of restricted stock that are subject to
restrictions that create a "substantial risk of forfeiture" (within the meaning
of Section 83 of the Code) will not normally realize any income, nor will the
Company normally receive any deduction for federal income tax purposes, in the
year such Incentive is granted.
When a non-qualified stock option granted pursuant to the Stock Plan is
exercised, the employee will realize ordinary income measured by the difference
between the aggregate fair market value of the shares of Common Stock on the
exercise date and the aggregate purchase price of the shares of Common Stock as
to which the option is exercised, and, subject to Section 162(m) of the Code,
the Company will be entitled to a deduction in the year the option is exercised
equal to the amount the employee is required to treat as ordinary income.
An employee generally will not recognize any income upon the exercise of an
incentive stock option, but the excess of the fair market value of the shares at
the time of exercise over the option price will be an item of adjustment, which
may, depending on particular factors relating to the employee, subject the
employee to the alternative minimum tax imposed by Section 55 of the Code. An
employee will recognize capital gain or loss in the amount of the difference
between the exercise price and the sale price on the sale or exchange of stock
acquired pursuant to the exercise of an incentive stock option, provided the
employee does not dispose of such stock within either two years from the date of
grant or one year from the date of exercise of the incentive stock option (the
"required holding periods"). An employee disposing of such shares before the
expiration of the required holding period will recognize ordinary income
generally equal to the difference between the option price and the fair market
value of the stock on the date of exercise. The remaining gain, if any, will be
capital gain. The Company will not be entitled to a federal income tax deduction
in connection with the exercise of an incentive stock option, except where the
employee disposes of the Common Stock received upon exercise before the
expiration of the required holding period.
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If the exercise price of a non-qualified option is paid by the surrender of
previously owned shares, the basis and the holding period of the previously
owned shares carries over to the same number of shares received in exchange
therefor. The compensation income recognized on exercise of such non-qualified
option is added to the basis of the remaining shares received. If the exercised
option is an incentive stock option and the shares surrendered were acquired
through the exercise of an incentive stock option and have not been held for the
applicable holding period, the optionee will recognize income on such exchange
and the basis of the shares received will be equal to the fair market value of
the shares surrendered. If the applicable holding period has been met on the
date of exercise, there will be no income recognition and the basis and the
holding period of the previously owned shares carries over to the same number of
shares received in exchange therefor and the remaining shares begin a new
holding period and will have a zero basis.
An employee who receives restricted stock will normally recognize taxable
income on the date the shares become transferable or no longer subject to
substantial risk of forfeiture or on the date of their earlier disposition. The
amount of such taxable income will be equal to the amount by which the fair
market value of the shares of Common Stock on the date such restrictions lapse
(or any earlier date on which the shares are disposed of) exceeds their purchase
price, if any. An employee may elect, however, to include in income in the year
of purchase or grant the excess of the fair market value of the shares of Common
Stock (without regard to any restrictions) on the date of purchase or grant over
its purchase price. Subject to the limitations imposed by Section 162(m) of the
Code, the Company will be entitled to a deduction for compensation paid in the
same year and in the same amount as income is realized by the employee.
Dividends currently paid to the participant will be taxable compensation income
to the participant and deductible by the Company.
When the exercisability, vesting or payment of an Incentive granted under
the Stock Plan is accelerated upon a change of control, any excess on the date
of the change in control of the fair market value of the shares or cash issued
under Incentives over the purchase price of such shares may be characterized as
"parachute payments" (within the meaning of Section 280G of the Code) if the sum
of such amounts and any other such contingent payments received by the employee
exceeds an amount equal to three times the "base amount" for such employee. The
base amount generally is the average of the annual compensation of such employee
for the five years preceding such change in ownership or control. An "excess
parachute payment" with respect to any employee, is the excess of the present
value of the parachute payments to such person, in the aggregate, over and above
such person's base amount. If the amounts received by an employee upon a change
in control are characterized as parachute payments, such employee will be
subject to a 20% excise tax on the excess parachute payments pursuant to Section
4999 of the Code, and the Company will be denied any deduction with respect to
such excess parachute payments.
This summary of federal income tax consequences of stock options and
restricted stock that may be granted under the Plan does not purport to be
complete. Reference should be made to the applicable provisions of the Code.
There also may be state and local income tax consequences applicable to
transactions involving Incentives.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented at the Annual Meeting and entitled to vote is
required for approval of the Stock Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE PROPOSED APPROVAL FOR THE 1997 STOCK INCENTIVE PLAN.
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PROPOSAL TO APPROVE THE
EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN
(PROPOSAL 3)
THE PROPOSAL
The Executive Officer Annual Incentive Plan (the "Plan") was adopted by the
Committee on May 21, 1997, subject to stockholder approval of the Plan at the
Annual Meeting. Executive officers who have a potential to earn annual
compensation in excess of $1 million are eligible to participate in the Plan, if
designated by the Committee. For fiscal 1998, William C. O'Malley, the Company's
Chairman, President and Chief Executive officer, will be the only participant.
If the Plan is not approved at the Annual Meeting, the annual incentive bonus to
be paid to Mr. O'Malley under the Plan will not be paid. In such event, the
Committee may determine to pay a bonus to Mr. O'Malley on other terms in order
to provide fair compensation.
PURPOSE OF THE PROPOSAL
Under Section 162(m) of the Internal Revenue Code (the "Code"), the
allowable deduction for compensation paid or accrued with respect to the Chief
Executive Officer and the four other most highly compensated executive officers
of the Company is limited to $1 million per year. An exclusion from the $1
million limitation is available for compensation that satisfies the requirements
provided in Section 162(m) of the Code for qualified performance-based
compensation. The purpose of submitting the Plan to the stockholders is to
satisfy the stockholder approval requirement necessary in order to qualify the
annual incentive bonus as performance-based and, therefore, excluded from the $1
million limit on deductible compensation under Section 162(m).
THE PLAN
Under the Plan, each designated participant may be paid an annual incentive
bonus based on the achievement of pre-established annual performance measures.
The performance measures for each year must be established by the Committee
within the first 90 days of the year. The Plan operates similarly to the annual
bonus plan applicable to other officers of the Company, except that the bonus
under the Plan is determined solely by formula and the Committee has no
discretion to increase the formulaic bonus amount. The performance measures for
each year will be based upon one or more of the following: earnings per share,
return on assets, an economic value added measure, shareholder return, earnings,
stock price, return on equity, return on total capital, safety performance,
reduction of expenses or increase in cash flow. The Committee will determine
each year which performance measures will be used and the relative importance of
each measure. The Committee will prepare a formula for calculation of the bonus
based upon performance targets relative to these performance factors, including
whether those targets will be absolute targets, or relative to a group of peer
companies selected by the Committee, relative to internal goals or relative to
levels attained in prior years.
The Committee has discretion to decrease but not increase the amount of the
bonus paid to a participant from the amount that would be payable under the
terms of the pre-established formula for the applicable year. Prior to the
payment of the annual bonus under the Plan, the Committee must certify in
writing that the performance goals and the applicable conditions to the payment
of the bonus have been met.
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NEW PLAN BENEFITS UNDER THE
EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN
ESTIMATED DOLLAR VALUE
OF POTENTIAL ANNUAL
BONUS FOR 1998(1)
------------------------
NAME AND POSITION TARGET MAXIMUM
----------------- -------- ----------
William C. O'Malley......................................... $600,000 $1,200,000
Chairman of the Board
President and Chief Executive Officer
- ---------------
(1) Based on a percentage of current salary. The potential amount of the bonus
for future years is expected to change, but may not exceed $2,000,000 per
participant in any year.
VOTE REQUIRED
Approval of the Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock present or represented at the Annual
Meeting and entitled to vote
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE PROPOSAL TO APPROVE THE EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN.
PROPOSAL FOR THE RATIFICATION OF
SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 4)
On May 22, 1997, the Company elected not to continue the engagement of KPMG
Peat Marwick LLP ("Peat Marwick") as the Company's independent accountants and
engaged Ernst & Young LLP ("Ernst & Young") as its new independent accountants.
The decision to change the Company's independent accountants was recommended by
the Company's Audit Committee and approved by the Company's Board of Directors.
Peat Marwick's reports on the Company's financial statements for the two
fiscal years ended March 31, 1996, and 1997, respectively, did not contain an
adverse opinion or disclaimer of opinion, nor were such reports qualified or
modified as to uncertainty, audit scope, or accounting principles.
During the Company's two fiscal years ended March 31, 1997, and the
subsequent interim period preceding the decision to change independent
accountants, there were no disagreements with Peat Marwick on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which if not resolved to the satisfaction of Peat Marwick,
would have caused it to make a reference to the subject matter of the
disagreement(s) in connection with its reports covering such periods.
During the two fiscal years ended March 31, 1997, and the subsequent
interim period preceding the decision to change independent accountants, neither
the Company nor anyone on its behalf consulted Ernst & Young regarding either
the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, nor has Ernst & Young provided to the
Company a written report or oral advice regarding such principles or audit
opinion.
Representatives of Peat Marwick and Ernst & Young are expected to be
present at the Annual Meeting and will have an opportunity to make a statement
if they desire to do so. Such representatives are also to be available at the
meeting to respond to appropriate questions.
The selection of Ernst & Young is submitted for ratification by
stockholders at the Annual Meeting. If stockholders do not ratify the selection
of Ernst & Young, the selection of independent accountants will be reconsidered
by the Board of Directors. Ratification will require the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy at the meeting.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING MARCH 31, 1998
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission and the Bylaws of the Company.
Should a stockholder intend to present a proposal at the Annual Meeting to
be held in 1998, it must be received by the Secretary of the Company (at 1440
Canal Street, New Orleans, Louisiana 70112) not less than 120 days in advance of
June 10, 1998, in order to be included in the Company's Proxy Statement and form
of proxy relating to that meeting.
The Company's Bylaws provide that in addition to any other applicable
requirements for business to be properly brought before the Annual Meeting by a
stockholder, the stockholder must give timely notice in writing to the
Secretary. To be timely, a stockholder's notice must be delivered or mailed to
and received at the principal executive offices of the Company not less than 75
days nor more than 100 days prior to the anniversary date of the immediately
preceding Annual Meeting, provided that in the event that the Annual Meeting is
called for a date more than 50 days prior to such anniversary date, notice by
the stockholder, in order to be timely, must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of the meeting was mailed or public disclosure of the date of the meeting
was made, whichever occurs first. A stockholder's notice to the Secretary must
set forth as to each matter the stockholder proposes to bring before the Annual
Meeting (i) a brief description of the business desired to be brought before the
Annual Meeting and the reasons for conducting such business at the Annual
Meeting, (ii) the name and record address of the stockholder proposing such
business, (iii) the class and number of shares of the Company which are
beneficially owned by the stockholder, and (iv) any material interest of the
stockholder in such business. This requirement does not preclude discussion by
any stockholder of any business properly brought before the Annual Meeting in
accordance with such procedures.
The Bylaws further provide that a stockholder of the Company entitled to
vote for the election of Directors may make nominations of persons for election
to the Board at a meeting of stockholders by complying with required notice
procedures. Such nominations shall be made pursuant to notice in writing to the
Secretary, which must be delivered or mailed to and received at the principal
executive offices of the Company not less than 75 days nor more than 100 days
prior to the anniversary date of the immediately preceding Annual Meeting,
provided that in the event the Annual Meeting is called for a date more than 50
days prior to such anniversary date, notice by the stockholder in order to be
timely must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
public disclosure of the date of the meeting was made, whichever occurs first.
Such stockholder's notice to the Secretary shall set forth (a) as to each person
whom the stockholder proposes to nominate for election or reelection as a
Director, (i) the name, age, business address, and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of capital stock of the Company which are
beneficially owned by the person, and (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of Directors pursuant to Rule 14A under the Securities Exchange Act of
1934 as amended; and (b) as to the stockholder giving the notice, (i) the name
and record address of the stockholder, and (ii) the class and number of shares
of capital stock of the Company which are beneficially owned by the stockholder.
The Company may require any proposed nominee to furnish such other information
as may reasonably be required by the Company to determine the eligibility of
such proposed nominee to serve as a Director of the Company.
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OTHER MATTERS
The Board of Directors knows of no business, other than that described
above, that will be presented to the meeting but, should any other matters
properly arise before the meeting, the persons named in the enclosed proxies
will vote the proxies in accordance with their best judgment.
By Order of the Board of Directors
/s/ CLIFFE F. LABORDE
Cliffe F. Laborde
Senior Vice President, Secretary
and General Counsel
New Orleans, Louisiana
June 10, 1997
PLEASE COMPLETE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE REQUIRED IF MAILED IN THE UNITED STATES.
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APPENDIX A
TIDEWATER INC.
1997 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the 1997 Stock Incentive Plan (the
"Plan") of Tidewater Inc. ("Tidewater") is to increase shareholder value and to
advance the interests of Tidewater and its subsidiaries (collectively, the
"Company") by furnishing stock-based economic incentives (the "Incentives")
designed to attract, retain and motivate key employees, officers and directors
and to strengthen the mutuality of interests between such employees, officers
and directors and Tidewater's shareholders. Incentives consist of
opportunities to purchase or receive shares of common stock, $.10 par value per
share, of Tidewater (the "Common Stock"), on terms determined under the Plan.
As used in the Plan, the term "subsidiary" means any corporation of which
Tidewater owns (directly or indirectly) within the meaning of Section 425(f) of
the Internal Revenue Code of 1986, as amended (the "Code"), 50% or more of the
total combined voting power of all classes of stock.
2. ADMINISTRATION.
2.1. COMPOSITION. The Plan shall be administered by the
Compensation Committee of the Board of Directors of Tidewater or by a
subcommittee thereof (the "Committee"). The Committee shall consist of
not fewer than two members of the Board of Directors, each of whom shall
(a) qualify as a "non-employee director" under Rule 16b-3 under the
Securities Exchange Act of 1934 (the "1934 Act") or any successor rule,
and (b) qualify as an "outside director" under Section 162(m) of the
Code.
2.2. AUTHORITY. The Committee shall have plenary authority to
award Incentives under the Plan, to interpret the Plan, to establish any
rules or regulations relating to the Plan that it determines to be
appropriate, to enter into agreements with participants as to the terms
of the Incentives (the "Incentive Agreements") and to make any other
determination that it believes necessary or advisable for the proper
administration of the Plan. Its decisions in matters relating to the
Plan shall be final and conclusive on the Company and participants. The
Committee may delegate its authority hereunder to the extent provided in
Section 3 hereof. The Committee shall not have authority to award
Incentives under the Plan to directors who are not also employees of the
Company ("Outside Directors"). Outside Directors may receive awards
under the Plan only as specifically provided in Section 8 hereof.
3. ELIGIBLE PARTICIPANTS. Key employees and officers of the Company
(including officers who also serve as directors of the Company) shall become
eligible to receive Incentives under the Plan when designated by the Committee.
Employees may be designated individually or by groups or categories, as the
Committee deems appropriate. With respect to participants not subject to
Section 16 of the 1934 Act or Section 162(m) of the Code, the Committee may
delegate to appropriate personnel of the Company its authority to designate
participants, to determine the size and type of Incentives to be received by
those participants and to determine or modify performance objectives for those
participants. Outside Directors may participate in the Plan only as
specifically provided in Section 8 hereof.
30
4. TYPES OF INCENTIVES. Incentives may be granted under the Plan to
eligible participants in the forms of (a) incentive stock options; (b) non-
qualified stock options; and (c) restricted stock.
5. SHARES SUBJECT TO THE PLAN.
5.1. NUMBER OF SHARES. Subject to adjustment as provided in
Section 9.5, a total of 3,000,000 shares of Common Stock are authorized
to be issued under the Plan. Incentives with respect to no more than
500,000 shares of Common Stock may be granted through the Plan to a
single participant in one calendar year. In the event that a stock
option granted hereunder expires or is terminated or cancelled prior to
exercise, any shares of Common Stock that were issuable thereunder may
again be issued under the Plan. In the event that shares of restricted
stock are issued as Incentives under the Plan and thereafter are
forfeited such forfeited shares may again be issued under the Plan.
Additional rules for determining the number of shares granted under the
Plan may be made by the Committee, as it deems necessary or appropriate.
5.2. TYPE OF COMMON STOCK. Common Stock issued under the Plan
may be authorized and unissued shares or issued shares held as treasury
shares.
6. STOCK OPTIONS. A stock option is a right to purchase shares of
Common Stock from Tidewater. Stock options granted under this Plan may be
incentive stock options or non-qualified stock options. Any option that is
designated as a non-qualified stock option shall not be treated as an incentive
stock option. Each stock option granted by the Committee under this Plan shall
be subject to the following terms and conditions:
6.1. PRICE. The exercise price per share shall be determined
by the Committee, subject to adjustment under Section 9.5; provided that
in no event shall the exercise price be less than the Fair Market Value
of a share of Common Stock on the date of grant, except that in
connection with an acquisition, consolidation, merger or other
extraordinary transaction, options may be granted at less than the then
Fair Market Value in order to replace options previously granted by one
or more parties to such transaction (or their affiliates) so long as the
aggregate spread on such replacement options for any recipient of such
options is equal to or less than the aggregate spread on the options
being replaced.
6.2. NUMBER. The number of shares of Common Stock subject to
the option shall be determined by the Committee, subject to Section 5.1
and subject to adjustment as provided in Section 9.5.
6.3. DURATION AND TIME FOR EXERCISE. The term of each stock
option shall be determined by the Committee. Each stock option shall
become exercisable at such time or times during its term as shall be
determined by the Committee. Notwithstanding the foregoing, the
Committee may accelerate the exercisability of any stock option at any
time, in addition to the automatic acceleration of stock options under
Section 9.11.
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31
6.4. MANNER OF EXERCISE. A stock option may be exercised, in
whole or in part, by giving written notice to the Company, specifying
the number of shares of Common Stock to be purchased. The exercise
notice shall be accompanied by the full purchase price for such shares.
The option price shall be payable in United States dollars and may be
paid by (a) cash; (b) uncertified or certified check; (c) unless
otherwise determined by the Committee, by delivery of shares of Common
Stock held by the optionee for at least six months, which shares shall
be valued for this purpose at the Fair Market Value on the business day
immediately preceding the date such option is exercised; (d) unless
otherwise determined by the Committee, through arrangements with a
brokerage firm under which such firm, on behalf of the optionee, will
pay the exercise price to the Company and the Company will promptly
deliver to such firm the number of shares of Common Stock subject to the
option so that the firm may sell such shares, or a portion thereof, for
the account of the optionee, or (e) in such other manner as may be
authorized from time to time by the Committee.
6.5. INCENTIVE STOCK OPTIONS. Notwithstanding anything in the
Plan to the contrary, the following additional provisions shall apply to
the grant of stock options that are intended to qualify as Incentive
Stock Options (as such term is defined in Section 422 of the Code):
A. Any Incentive Stock Option agreement authorized
under the Plan shall contain such other provisions as the
Committee shall deem advisable, but shall in all events be
consistent with and contain or be deemed to contain all
provisions required in order to qualify the options as Incentive
Stock Options.
B. All Incentive Stock Options must be granted within
ten years from the date on which this Plan is adopted by the
Board of Directors.
C. Unless sooner exercised, all Incentive Stock
Options shall expire no later than ten years after the date of
grant.
D. No Incentive Stock Options shall be granted to any
participant who, at the time such option is granted, would own
(within the meaning of Section 422 of the Code) stock possessing
more than 10% of the total combined voting power of all classes
of stock of the employer corporation or of its parent or
subsidiary corporation.
E. The aggregate Fair Market Value (determined with
respect to each Incentive Stock Option as of the time such
Incentive Stock Option is granted) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the
first time by a participant during any calendar year (under the
Plan or any other plan of Tidewater or any of its subsidiaries)
shall not exceed $100,000. To the extent that such limitation is
exceeded, such options shall not be treated, for federal income
tax purposes, as Incentive Stock Options.
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7. RESTRICTED STOCK.
7.1. GRANT OF RESTRICTED STOCK. The Committee may award shares
of restricted stock to such officers and key employees as the Committee
determines pursuant to the terms of Section 3. An award of restricted
stock shall be subject to such restrictions on transfer and
forfeitability provisions and such other terms and conditions as the
Committee may determine, subject to the provisions of the Plan. An
award of restricted stock may also be subject to the attainment of
specified performance goals or targets. To the extent restricted stock
is intended to qualify as performance-based compensation under Section
162(m) of the Code, it must be granted subject to the attainment of
performance goals as described in Section 7.2 below and meet the
additional requirements imposed by Section 162(m).
7.2 PERFORMANCE-BASED RESTRICTED STOCK. To the extent that
restricted stock granted under the Plan is intended to vest based upon
the achievement of pre-established performance goals rather than solely
upon continued employment over a period of time, the performance goals
pursuant to which the restricted stock shall vest shall be any or a
combination of the following performance measures: earnings per share,
return on assets, an economic value added measure, shareholder return,
earnings, stock price, return on equity, return on total capital, safety
performance, reduction of expenses or increase in cash flow of
Tidewater, a division of Tidewater or a subsidiary. For any performance
period, such performance objectives may be measured on an absolute
basis or relative to a group of peer companies selected by the
Committee, relative to internal goals or relative to levels attained in
prior years. The Committee may not waive any of the pre-established
performance goal objectives, except that such objectives shall be waived
as provided in Section 9.11 hereof, or as may be provided by the
Committee in the event of death, disability or retirement.
7.3. THE RESTRICTED PERIOD. At the time an award of restricted
stock is made, the Committee shall establish a period of time during
which the transfer of the shares of restricted stock shall be
restricted (the "Restricted Period"). The Restricted Period shall be a
minimum of three years, except that if the vesting of the shares of
restricted stock is based upon the attainment of performance goals, a
minimum Restricted Period of one year is permitted. Each award of
restricted stock may have a different Restricted Period. The expiration
of the Restricted Period shall also occur as provided under Section 9.3
and under the conditions described in Section 9.11 hereof.
7.4. ESCROW. The participant receiving restricted stock shall
enter into an Incentive Agreement with the Company setting forth the
conditions of the grant. Certificates representing shares of restricted
stock shall be registered in the name of the participant and deposited
with the Company, together with a stock power endorsed in blank by the
participant. Each such certificate shall bear a legend in substantially
the following form:
The transferability of this certificate and the shares of Common
Stock represented by it are subject to the terms and conditions
(including conditions of forfeiture) contained in the Tidewater
Inc. 1997 Stock Incentive Plan (the "Plan"), and an agreement
entered into between the registered owner and
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33
Tidewater Inc. thereunder. Copies of the Plan and the agreement
are on file at the principal office of the Company.
7.5. DIVIDENDS ON RESTRICTED STOCK. Any and all cash and stock
dividends paid with respect to the shares of restricted stock shall be
subject to any restrictions on transfer, forfeitability provisions or
reinvestment requirements as the Committee may, in its discretion,
prescribe in the Incentive Agreement.
7.6. FORFEITURE. In the event of the forfeiture of any shares
of restricted stock under the terms provided in the Incentive Agreement
(including any additional shares of restricted stock that may result
from the reinvestment of cash and stock dividends, if so provided in the
Incentive Agreement), such forfeited shares shall be surrendered and the
certificates cancelled. The participants shall have the same rights and
privileges, and be subject to the same forfeiture provisions, with
respect to any additional shares received pursuant to Section 9.5 due to
a recapitalization, merger or other change in capitalization.
7.7. EXPIRATION OF RESTRICTED PERIOD. Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee, the restrictions applicable to
the restricted stock shall lapse and a stock certificate for the number
of shares of restricted stock with respect to which the restrictions
have lapsed shall be delivered, free of all such restrictions and
legends, except any that may be imposed by law, to the participant or
the participant's estate, as the case may be.
7.8. RIGHTS AS A SHAREHOLDER. Subject to the terms and
conditions of the Plan and subject to any restrictions on the receipt of
dividends that may be imposed in the Incentive Agreement, each
participant receiving restricted stock shall have all the rights of a
shareholder with respect to shares of stock during the Restricted
Period, including without limitation, the right to vote any shares of
Common Stock.
8. STOCK OPTIONS FOR OUTSIDE DIRECTORS.
8.1 GRANT OF OPTIONS. Beginning with the 1997 annual meeting
of stockholders and for as long as the Plan remains in effect and shares
of Common Stock remain available for issuance hereunder, each Outside
Director shall be automatically granted a non-qualified stock option on
the day of the annual meeting of stockholders of Tidewater, provided
such Outside Director continues to serve as a director following such
annual meeting. An option to purchase no more than 5,000 shares shall
be granted to each Outside Director each year, the exact number of which
shall be set by the Committee.
8.2 EXERCISABILITY OF STOCK OPTIONS. The stock options
granted to Outside Directors under this Section 8 shall become
exercisable six months following the date of grant and shall expire ten
years following the date of grant.
8.3 EXERCISE PRICE. The Exercise Price of the Stock Options
granted to Outside Directors shall be equal to the Fair Market Value, as
defined in the Plan, of a share of
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34
Common Stock on the date of grant. The Exercise Price may be paid as
provided in Section 6.4 hereof.
8.4 EXERCISE AFTER TERMINATION OF BOARD SERVICE. In the event
an Outside Director ceases to serve on the Board, the stock options
granted hereunder must be exercised, to the extent otherwise exercisable
at the time of termination of Board service, within one year from
termination of Board service; provided, however, that in the event of
termination of Board service as a result of retirement on or after
reaching age 65, death or disability, the stock options must be
exercised within two years from the date of termination of Board
service; and further provided, that no stock options may be exercised
later than ten years after the date of grant.
9. GENERAL.
9.1. DURATION. Subject to Section 9.10, the Plan shall remain
in effect until all Incentives granted under the Plan have either been
satisfied by the issuance of shares of Common Stock or the payment of
cash or been terminated under the terms of the Plan and all restrictions
imposed on shares of Common Stock in connection with their issuance
under the Plan have lapsed.
9.2. TRANSFERABILITY. No Incentives granted hereunder may be
transferred, pledged, assigned or otherwise encumbered by a participant
except: (a) by will; (b) by the laws of descent and distribution; (c)
pursuant to a domestic relations order, as defined in the Code, if
permitted by the Committee and so provided in the Incentive Agreement or
an amendment thereto; or (d) as to options only, if permitted by the
Committee and so provided in the Incentive Agreement or an amendment
thereto, (i) to Immediate Family Members, (ii) to a partnership in which
Immediate Family Members, or entities in which Immediate Family Members
are the sole owners, members or beneficiaries, as appropriate, are the
sole partners, (iii) to a limited liability company in which Immediate
Family Members, or entities in which Immediate Family Members are the
sole owners, members or beneficiaries, as appropriate, are the sole
members, or (iv) to a trust for the sole benefit of Immediate Family
Members. "Immediate Family Members" shall be defined as the spouse and
natural or adopted children or grandchildren of the participant and
their spouses. To the extent that an Incentive Stock Option is
permitted to be transferred during the lifetime of the participant, it
shall be treated thereafter as a nonqualified stock option. Any
attempted assignment, transfer, pledge, hypothecation or other
disposition of Incentives, or levy of attachment or similar process upon
Incentives not specifically permitted herein, shall be null and void and
without effect.
9.3. EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH. Except as
provided in Section 8.4 with respect to Outside Directors, in the event
that a participant ceases to be an employee of the Company for any
reason, including death, disability, early retirement or normal
retirement, any Incentives may be exercised, shall vest or shall expire
at such times as may be determined by the Committee in the Incentive
Agreement. The Committee has complete authority to modify the treatment
of an Incentive in the event of termination of employment of a
participant by means of an amendment to the Incentive Agreement.
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35
Consent of the participant to the modification is required only if the
modification materially impairs the rights previously provided to the
participant in the Incentive Agreement.
9.4. ADDITIONAL CONDITION. Anything in this Plan to the
contrary notwithstanding: (a) the Company may, if it shall determine it
necessary or desirable for any reason, at the time of award of any
Incentive or the issuance of any shares of Common Stock pursuant to any
Incentive, require the recipient of the Incentive, as a condition to the
receipt thereof or to the receipt of shares of Common Stock issued
pursuant thereto, to deliver to the Company a written representation of
present intention to acquire the Incentive or the shares of Common Stock
issued pursuant thereto for his own account for investment and not for
distribution; and (b) if at any time the Company further determines, in
its sole discretion, that the listing, registration or qualification (or
any updating of any such document) of any Incentive 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 the
award of any Incentive, the issuance of shares of Common Stock pursuant
thereto, or the removal of any restrictions imposed on such shares, such
Incentive shall not be awarded or such shares of Common Stock shall not
be issued or such restrictions shall not be removed, 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.
9.5. ADJUSTMENT. In the event of any merger, consolidation or
reorganization of the Company with any other corporation or
corporations, there shall be substituted for each of the shares of
Common Stock then subject to the Plan, including shares subject to
restrictions, options or achievement of performance objectives, the
number and kind of shares of stock or other securities to which the
holders of the shares of Common Stock will be entitled pursuant to the
transaction. In the event of any recapitalization, stock dividend,
stock split, combination of shares or other change in the Common Stock,
the number of shares of Common Stock then subject to the Plan, including
shares subject to outstanding Incentives, shall be adjusted in
proportion to the change in outstanding shares of Common Stock. In the
event of any such adjustments, the purchase price of any option, the
performance objectives of any Incentive, and the shares of Common Stock
issuable pursuant to any Incentive shall be adjusted as and to the
extent appropriate, in the reasonable discretion of the Committee, to
provide participants with the same relative rights before and after such
adjustment. No substitution or adjustment shall require the Company to
issue a fractional share under this Plan and the substitution or
adjustment shall be limited by deleting any fractional share.
9.6. INCENTIVE AGREEMENTS. The terms of each Incentive shall
be stated in an agreement approved by the Committee.
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36
9.7. WITHHOLDING.
A. The Company shall have the right to withhold from
any payments made under the Plan or to collect as a condition of
payment, any taxes required by law to be withheld. At any time
that a participant is required to pay to the Company an amount
required to be withheld under applicable income tax laws in
connection with the issuance of Common Stock, the lapse of
restrictions on Common Stock or the exercise of an option, the
participant may, subject to disapproval by the Committee, satisfy
this obligation in whole or in part by electing (the "Election")
to have the Company withhold shares of Common Stock having a
value equal to the amount required to be withheld. The value of
the shares to be withheld shall be based on the Fair Market Value
of the Common Stock on the date that the amount of tax to be
withheld shall be determined ("Tax Date").
B. Each Election must be made prior to the Tax Date.
The Committee may disapprove of any Election, may suspend or
terminate the right to make Elections, or may provide with
respect to any Incentive that the right to make Elections shall
not apply to such Incentive. If a participant makes an election
under Section 83(b) of the Internal Revenue Code with respect to
shares of restricted stock, an Election is not permitted to be
made.
9.8. NO CONTINUED EMPLOYMENT. No participant under the Plan
shall have any right, because of his or her participation, to continue
in the employ of the Company for any period of time or to any right to
continue his or her present or any other rate of compensation.
9.9. DEFERRAL PERMITTED. Payment of cash or distribution of
any shares of Common Stock to which a participant is entitled under any
Incentive shall be made as provided in the Incentive Agreement. Payment
may be deferred at the option of the participant if provided in the
Incentive Agreement.
9.10. AMENDMENTS TO OR TERMINATION OF THE PLAN.
A. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment
shall be made without stockholder approval if such approval is
necessary to comply with any tax or regulatory requirement,
including any approval necessary to qualify Incentives as
"performance-based" compensation under Section 162(m) or any
successor provision, if such qualification is deemed necessary or
advisable by the Committee.
B. Any provision of this Plan or any Incentive
Agreement to the contrary notwithstanding, the Committee may
cause any Incentive granted hereunder to be cancelled in
consideration of a cash payment or alternative Incentive made to
the holder of such cancelled Incentive equal in value to such
cancelled Incentive. The
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37
determinations of value under this subparagraph shall be made by
the Committee in its sole discretion.
9.11. CHANGE OF CONTROL; TENDER OFFER OR EXCHANGE OFFER.
A. "Change of Control" shall mean:
1. the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the 1934 Act of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of
more than 30% of the outstanding shares of the Common
Stock; provided, however, that for purposes of this
subsection 1., the following shall not constitute a Change
of Control:
(a) any acquisition of Common Stock
directly from Tidewater,
(b) any acquisition of Common Stock by
Tidewater,
(c) any acquisition of Common Stock by
any employee benefit plan (or related trust)
sponsored or maintained by Tidewater or any
corporation controlled by Tidewater, or
(d) any acquisition of Common Stock by
any corporation pursuant to a transaction that
complies with clauses (a), (b) and (c) of
subsection (A)(3) of this Section 9.11; or
2. individuals who, as of the date of adoption
of the Plan by the Board of Directors of Tidewater (the
"Adoption Date"), constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any
individual becoming a director subsequent to the Adoption
Date whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent
Board shall be considered a member of the Incumbent Board,
unless such individual's initial assumption of office
occurs as a result of an actual or threatened election
contest with respect to the election or removal of
directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than
the Incumbent Board; or
3. approval by the stockholders of Tidewater of
a reorganization, merger or consolidation, or sale or
other disposition of all of substantially all of the
assets of the Company (a "Business Combination"), in each
case, unless, following such Business Combination,
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(a) all or substantially all of the
individuals and entities who were the beneficial
owners of Tidewater's outstanding common stock and
Tidewater's voting securities entitled to vote
generally in the election of directors immediately
prior to such Business Combination have direct or
indirect beneficial ownership, respectively, of
more than 50% of the then outstanding shares of
common stock, and more than 50% of the combined
voting power of the then outstanding voting
securities entitled to vote generally in the
election of directors, of the corporation resulting
from such Business Combination (which, for purposes
of this paragraph (a) and paragraphs (b) and (c),
shall include a corporation which as a result of
such transaction controls the Company or all or
substantially all of the Company's assets either
directly or through one or more subsidiaries), and
(b) except to the extent that such
ownership existed prior to the Business
Combination, no person (excluding any corporation
resulting from such Business Combination or any
employee benefit plan or related trust of the
Company or such corporation resulting from such
Business Combination) beneficially owns, directly
or indirectly, 30% or more of the then outstanding
shares of common stock of the corporation resulting
from such Business Combination or 30% or more of
the combined voting power of the then outstanding
voting securities of such corporation, and
(c) at least a majority of the members
of the board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement, or of the
action of the Board, providing for such Business
Combination; or
4. approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company.
B. Upon a Change of Control, all outstanding options
shall automatically become fully exercisable, all restrictions or
limitations on any Incentives shall lapse and all performance
criteria and other conditions relating to the payment of
Incentives shall be deemed to be achieved or waived by the
Company, without the necessity of any action by any person.
C. If any corporation, person or other entity (other
than the Company) makes a tender offer or exchange offer for
shares of the Common Stock pursuant to which purchases are made
(an "Offer"), then from and after the date of the first purchase
of the Common Stock pursuant to the Offer (the "Acceleration
Date"), all outstanding options shall automatically become fully
exercisable, all restrictions or
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39
limitations on any Incentives shall lapse and all performance
criteria and other conditions relating to the payment of
Incentives shall be deemed to be achieved or waived by the
Company, without the necessity of any action by any person, for a
period of 30 calendar days following the Acceleration Date.
Subject to the other provisions of this Section 9.11, following
the expiration of the 30-day period, any options not exercised
and any shares of Common Stock issued hereunder not tendered or
exchanged shall again be subject to the terms and conditions
applicable prior to the Offer.
9.12. DEFINITION OF FAIR MARKET VALUE. Whenever "Fair Market
Value" of Common Stock shall be determined for purposes of this Plan, it
shall be the closing sale price on the consolidated transaction
reporting system for New York Stock Exchange issues on the date of
reference for a share of the Common Stock, or if no sale of the Common
Stock shall have been made on that day, on the next preceding day on
which there was a sale of the Common Stock.
9.13 LOANS TO OPTIONEES. In the event of a Change of Control
of the Company, as defined in Section 9.11, in connection with which a
participant's employment with the Company will be terminated and the
participant is precluded for any reason from selling shares of Common
Stock, the Company shall, in connection with the exercise of an option,
if requested by the participant, extend a loan to the participant in the
maximum amount of the exercise price of the options to be exercised,
plus the maximum tax liability that may be incurred in connection with
the option exercise. Any such loan shall be unsecured, shall be on
market terms and shall be payable in full no later than thirty days
after the termination of the period during which the participant is
precluded from selling shares of Common Stock. Any participant to whom
a loan is extended hereunder shall, if requested by the Company, agree
in writing not to sell shares of Common Stock for such period as shall
be requested, it being understood that the Company's request that the
participant not sell shares of Common Stock shall only be invoked to the
extent necessary to preserve or recognize pooling-of-interests
accounting treatment, tax-free reorganization status, or comparable
corporate benefits from making such a request.
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Appendix B
PROVISIONS OF THE TIDEWATER INC.
EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN
I. PLAN OBJECTIVE
The primary objective of the Tidewater Inc. Executive Officer Annual
Incentive Plan (Executive Incentive Plan) is to reward Tidewater's
Executive Officers for their assistance in helping the Company achieve
its financial and operating goals for the fiscal year.
The Executive Incentive Plan links a significant element of variable
annual compensation to the accomplishment of these goals.
The Compensation Committee of the Board of Directors established this
Plan to maximize Tidewater's deduction under Section 162 of the
Internal Revenue Code, provided that such actions are consistent with
its philosophy and in the best interest of Tidewater and its
shareholders. Notwithstanding the provisions of Section 162(m) of the
Internal Revenue Code, the Committee may award compensation that is
not fully tax deductible if the Company determines that such award is
consistent with its philosophy and in the best interest of Tidewater
and its shareholders.
II. BASIC PLAN CONCEPT
The Plan concept for fiscal 1998 focuses primarily on Tidewater's
overall performance and is comprised of three specific criteria: (1)
adjusted net income, (2) return of total capital, and (3) safety.
These criteria are the bases upon which a monetary pool is established
for the participants if certain financial and operating goals are
accomplished.
III. ELIGIBILITY CRITERIA
Eligibility for participation in the Executive Incentive Plan is
limited to those executive officers who have a potential to earn
compensation in excess of $1,000,000. The specific positions eligible
to participate in the Plan will be reviewed and determined annually by
the Compensation Committee of the Board of Directors, but for fiscal
1998, Tidewater's Chief Executive Officer (CEO) is the sole eligible
participant.
1
41
IV. AWARD OPPORTUNITIES
Prior to June 30 of each fiscal year, Tidewater will specify target
incentive awards for each eligible position. These target awards will
determine the threshold and maximum incentive award amounts. These
amounts are determined from each eligible participant's base salary
multiplied by the target percent associated with the participant's
position within the Company. For fiscal year 1998, the Company has
established that the CEO's target award will be the equivalent of 100%
of base salary, and the maximum award will be equivalent to 200% of
base salary. The threshold and maximum awards are intended to
recognize the risk/reward component of the Company's overall
compensation program. The annual award to a participant under this
Plan will not exceed $2 million.
V. PERFORMANCE MEASURES AND STANDARDS
The performance goals under which a bonus may be paid shall be any or
a combination of the following: earnings per share, return on assets,
an economic value added measure, shareholder return, earnings, stock
price, return on equity, return on total capital, safety performance,
reduction of expenses or increase in cash flow of the Company, a
division of the Company or a subsidiary. For any performance period,
such performance goals may be measured on an absolute basis or
relative to a group of peer companies selected by the Compensation
Committee, relative to internal goals or relative to levels attained
in prior years.
Prior to the beginning of each fiscal year, specific corporate and
divisional measures and standards will be set. In addition, the
appropriate weighing of each measure will also be established.
Before any individual incentive amount can be awarded, Tidewater must
first achieve minimum (threshold) performance in at least one of the
three Company performance measures.
The performance measures for fiscal 1998 are as follows:
(1) Adjusted Net Income (ANI) versus Budget. - Under this
test, net income as compared with budgeted net income,
adjusted as specified below, is used. This test compares
actual results against budgeted results for the year. Under
this performance measurement, the Company's ANI must be at
least 50% of the budgeted net income, for a minimum
(threshold) award to be paid. For fiscal year 1998, due to
the aggressive nature of the budget, a threshold incentive
award will be paid if the Company's adjusted net income
reaches at least 90% of budget. Pro-rating will be permitted.
(Exhibit 2 illustrates this
2
42
test). This measurement carries a weight of 37.5% of the
participant's total award.
To encourage good management/business decisions, certain
adjustments to net income will be made in determining if the
net income test has been met. Accordingly, the following items
reported in the Company's consolidated statement of earnings
will be added to or subtracted from net income as reported in
order to determine net income for purposes of the Plan:
1) Cumulative affect of accounting changes.
2) Extraordinary items, as that term is defined in
Accounting Principles Board Opinion #30.
3) Discontinued operations; and
4) Unusual or infrequently occurring items (less the
amount of related income taxes), as that term is used
in Accounting Principles Board Opinion #30.
Note: For purposes of calculating achievement of this performance
measure, budgeted net income shall be divided by the average number of
common shares outstanding for the year as contemplated by the budget.
Likewise, the amount of adjusted net income shall be divided by the
average number of common shares outstanding during the year. When
calculating these earnings per share calculations, common stock
equivalent shall not be considered in determining the average number
of common shares outstanding.
(2) Return of Total Capital (ROTC) - Under this performance
measurement, the Company must attain at least a 40th
percentile when compared to the Value Line Peer Group (See
Exhibit 1) on ROTC. ROTC is defined as:
Earnings Before Interest Expense, Taxes
Depreciation and Amortization (EBITDA)
------------------------------------------------
Shareholders Equity + Average Long-Term Debt
(including current maturities of Long-Term Debt)
This measurement carries a weight of 37.5% of the
participant's total award.
Note: Average shareholders equity and average long-term debt shall be
determining by summing the respective totals as of the end of each
interim quarterly reporting period during the fiscal year and shown on
the Company's consolidated balance sheet and dividing such sums by the
number of interim reporting periods.
3
43
The standard for the ROTC performance measure will be established by
considering Tidewater's performance against the Value Line Peer Group
of companies (See Exhibit 1). When determining peer group performance
ranking, pro-rating is not permitted below the 50th percentile.
(3) Safety performance - This measurement is determined by
achievement of the Company's overall established safety
performance goals for the fiscal year (See Exhibit 2). Under
this performance measure, payout is directly correlated with
the maximum allowable LTA's for the current fiscal year. For
fiscal year 1998, it has been determined that there will be no
payout if 41 or more LTA's occur during the fiscal year.
Twenty-one (21) or less LTA's for fiscal year 1998 will yield
a 200% award, which is the maximum payout allowed under this
measurement. For this measurement, non-job related deaths
will not count as an LTA. The safety performance measurement
carries a weight of 25% of the individual's total award.
VI. AWARD CALCULATIONS
The actual amount of the incentive award depends upon the attainment
of Company performance in each of the three criteria. Each
measurement operates independently of the other in determining the
award due for the fiscal year. Thus, the Company could achieve above
threshold on one performance measure and below threshold on another
performance measure and still have funds available in the pool.
Exhibit 2 illustrates the threshold and maximum payouts for each
component of the Plan. The Compensation Committee has discretion to
decrease but not increase the amount of the bonus paid to a
participant from the amount that would be payable under the pre-
established formula for the applicable fiscal year.
VII. AWARD PAYMENTS
Awards will be paid in cash.
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44
EXHIBIT 1
TIDEWATER INC.
VALUE LINE PEER GROUP LIST
FOR RETURN ON TOTAL CAPITAL PERFORMANCE OBJECTIVE
FISCAL YEAR 1998
-------------------------------------------------
The following list of companies represents the Value Line Oilfield
Services Industry Peer Group for the fiscal year 1998.
COMPANY NAME
--------------------------
BJ Services
Baker Hughes
Camco International
Daniel Industries
Dresser Industries
Ensco International
Global Marine
Halliburton Company
Helmerich & Payne
Nabors Industries
Parker Drilling
Petroleum Geo-Services (ADR)
Rowan Companies
Schlumberger, Ltd.
Smith International, Inc.
Tidewater Inc.
TransOcean Offshore
Varco International
Weatherford Enterra
Western Atlas, Inc.
The above Peer Group list will be updated at the beginning of each
fiscal year. The effective mergers and acquisitions within the Peer Group for
purposes of excluding any given company in the year will also be considered.
5
45
DETACH HERE
TIDEWATER INC.
P
The undersigned appoints William C. O'Malley and John P. Laborde as
R proxies, each with power to act alone or by substitution, to vote all
shares of the undersigned at the Annual meeting of Stockholders of
O Tidewater Inc. to be held on July 24, 1997, and any adjournments thereof.
X THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF
NOT DIRECTED, FOR EACH NOMINEE AND FOR ALL PROPOSALS LISTED HEREIN, AND,
Y AS SAID PROXIES DEEM ADVISABLE, ON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING. RECEIPT OF THE NOTICE OF MEETING AND PROXY STATEMENT
IS HEREBY ACKNOWLEDGED. THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE
UNDERSIGNED.
SEE REVERSE SIDE. If you wish to vote in accordance with the Board of
Directors' recommendations, just sign on the reverse side. You need not
mark any boxes.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
46
[X] Please mark
votes as in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
LISTED BELOW
1. To elect directors to hold office until July 2000 or until their
successors are elected and qualified.
NOMINEES: Arthur R. Carlson, John P. Laborde, and William C.
O'Malley
FOR WITHHELD
[ ] ALL [ ] FROM ALL
NOMINEES NOMINEES
[ ]
-----------------------------------------------------
For all nominees except as noted above
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS
2. To approve the 1997 Stock Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To approve the Executive Officer Annual Incentive Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. To ratify the selection of Ernst & Young LLP as independent
auditors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE VOTE, DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
Please sign exactly as your name appears hereon. If the stock is issued
in the names of two or more persons, each of them should sign the
proxy. If the proxy is executed by a corporation, it should be signed
in the corporate name by an authorized officer. When signing as
attorney, executor, administrator, trustee, or guardian, or in any
other representative capacity, give full title as such.
Signature: Date:
---------------------------------------------- -----------------