SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant [ ]
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[ ] 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 Section 240.14a-11(c) or Section
240.14a-12
TRITON ENERGY LIMITED
(Name of Registrant as Specified In Its Charter)
______________________________________________________
Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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_____________________________________________________________
(2) Aggregate number of securities to which transactions applies:
_____________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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[ ] Fee paid previously with preliminary materials.
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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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TRITON ENERGY LIMITED
CALEDONIAN HOUSE, JENNETT STREET
P. O. BOX 1043
GEORGE TOWN
GRAND CAYMAN, CAYMAN ISLANDS
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Triton Energy Limited will be held at
10:00 a.m., Dallas time, on Tuesday, May 15, 2001, at the Royal Oaks Country
Club, 7915 Greenville Avenue, Dallas, Texas 75231. The purposes of the meeting
are to:
(1) elect three directors to serve until the Annual Meeting of
Shareholders in 2004, or until their respective successors shall have
been duly elected and qualified;
(2) approve the 2001 Share Incentive Plan; and
(3) consider and act upon such other matters as may properly come before
the meeting.
March 26, 2001 is the record date for the meeting. Only holders of record
of ordinary shares and 8% convertible preference shares at the close of business
on the record date are entitled to receive notice of and to vote at the meeting.
The meeting may be adjourned from time to time without notice other than
announcement at the meeting.
Information concerning the matters to be acted upon at the meeting is set
forth in the accompanying proxy statement.
WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN AS PROMPTLY AS POSSIBLE THE ENCLOSED PROXY CARD
IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS MAILED IN THE
UNITED STATES.
By Order of the Board of Directors
Thomas J. Murphy
Secretary
April 3, 2001
TRITON ENERGY LIMITED
CALEDONIAN HOUSE, JENNETT STREET
P. O. BOX 1043
GEORGE TOWN
GRAND CAYMAN, CAYMAN ISLANDS
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
_____________________
SOLICITATION AND REVOCABILITY OF PROXIES
Triton Energy Limited is furnishing this proxy statement to shareholders in
connection with the solicitation, by order of our Board of Directors, of proxies
to be voted at the 2001 Annual Meeting of Shareholders. The meeting will be held
at the Royal Oaks Country Club, 7915 Greenville Avenue, Dallas, Texas 75231, on
Tuesday, May 15, 2001, commencing at 10:00 a.m., Dallas time. This proxy
statement, the Notice of Annual Meeting and the accompanying proxy card are
first being mailed on or about April 3, 2001. Unless this proxy statement
indicates otherwise or the context otherwise requires, the terms "we," "our,"
"us," "Triton" or the "Company" refer to Triton Energy Limited. When this proxy
statement refers to the meeting, we are also referring to the meeting as it may
be adjourned, if applicable.
At the meeting, we are asking shareholders to consider and act upon (i) the
election of three directors to serve until the Annual Meeting of Shareholders in
2004, or until their successors have been duly elected and qualified; (ii) the
approval of the 2001 Share Incentive Plan; and (iii) such other matters as may
properly come before the meeting. We do not know of any other matters that are
likely to be brought before the meeting. However, if any other matters do
properly come before the meeting, the persons named in the enclosed proxy will
vote the proxy in accordance with their best judgment.
We urge you to vote your shares by signing and returning the enclosed
proxy, even if you plan to attend the meeting in person. Voting by proxy assists
in making the meeting run more efficiently. If you specify in your proxy how
your shares are to be voted, the persons named in the enclosed proxy will vote
your shares in accordance with your instructions. If you execute and return the
enclosed proxy, but do not specify how your shares are to be voted, the persons
named in the enclosed proxy will vote your shares (i) FOR the election of the
three individuals nominated by the Board of Directors; (ii) FOR the approval of
the 2001 Share Incentive Plan; and (iii) at their discretion with regard to any
other matters that may properly come before the meeting.
If you execute and return the enclosed proxy, and you later desire to
change your vote, you may revoke your proxy at any time before it is voted. You
may revoke your proxy either by executing and delivering a different proxy
relating to your shares with a later date, or you may revoke your proxy by
attending the meeting and voting personally at the meeting by ballot. If you
attend the meeting but do not execute a ballot, your proxy will not be
considered revoked and your proxy will still be voted.
RECORD DATE AND VOTING
The close of business on March 26, 2001, is the record date for determining
the shareholders entitled to vote at the meeting. Our ordinary shares and 8%
convertible preference shares are the only securities entitled to be voted at
the meeting. Each ordinary share is entitled to one vote on any matter to come
before the meeting and each 8% convertible preference share is entitled to four
votes on any matter to come before the meeting. As of the record date,
there were outstanding 37,460,585 ordinary shares and 5,180,604 8% convertible
preference shares.
The presence at the meeting, in person or by proxy, of the holders of at
least a majority of the ordinary shares and 8% convertible preference shares
entitled to vote as of the record date, taken together, is necessary to
constitute a quorum. Each ordinary share and 8% convertible preference share
represented at the meeting, in person or by proxy, will be counted toward a
quorum. If a quorum is not present, the meeting may be adjourned from time to
time until a quorum is obtained.
Approval of the proposal to elect the three nominees to serve as directors
requires the affirmative vote of the holders of a plurality of the ordinary
shares and 8% convertible preference shares, voting together as a single class,
represented and voting at the meeting. On the enclosed proxy, you may vote your
shares in favor of the Board's nominees or withhold your votes as to one or more
nominees. Votes that are withheld will be excluded entirely from the vote and
will have no effect.
Approval of 2001 Share Incentive Plan requires that holders of a majority
of the ordinary shares and 8% convertible preference shares entitled to vote on
the plan, voting together as a single class, cast a vote, and that a majority of
those votes be cast in favor of the plan.
Brokers are permitted to vote on discretionary items if they have not
received instructions from the beneficial owners, but they are not permitted to
vote (a "broker non-vote") on non-discretionary items absent instructions from
the beneficial owner. Abstentions and broker non-votes will count in determining
whether a quorum is present at the meeting. Abstentions and broker non-votes
will not have any effect on the outcome of voting on director elections. For
purposes of voting on the approval of the 2001 Share Incentive Plan, abstentions
will be included in the number of shares voting and will have the effect of a
vote against the proposal, and broker non-votes will not be included in the
number of shares voting and therefore will have no affect on the outcome of the
voting.
Shareholders have no appraisal or similar rights with respect to any matter
scheduled to be voted on at the meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes for purposes of
election. One class of directors is elected at each annual meeting of
shareholders to serve for a three-year term. At the meeting, the terms of three
directors, Fitzgerald S. Hudson, James C. Musselman and C. Lamar Norsworthy,
are expiring. Mr. Hudson is retiring from the Board at the expiration of his
term and will not stand for re-election. The Board has nominated Mr. Tom C.
Davis for election at the meeting to fill the vacancy created by Mr. Hudson's
retirement. The Board would like to express its sincere gratitude to Mr. Hudson
for his nine years of dedicated service to Triton and his valuable contribution
to our success.
Each director elected at the meeting will hold office until the expiration
of his term in 2004. The directors who are not up for election this year will
continue in office for the remainder of their terms. The following is certain
information concerning each of the nominees for election, as well as information
concerning those directors whose terms are continuing. We do not believe there
are any family relationships among our directors and officers.
NOMINEES FOR DIRECTOR - TERM EXPIRING 2004
The Board of Directors has nominated Tom C. Davis, James C. Musselman and
C. Lamar Norsworthy for election at the meeting. Each of the nominees has
indicated that he is willing to continue to serve as a member of the Board if
elected. If a nominee becomes unavailable for election for any reason, the proxy
holders will vote for the election of another nominee proposed by the Board of
Directors or, as an alternative, the Board of Directors may reduce the number of
directors to be elected at the meeting.
The following is a summary of the background of each of the nominees for
election at the meeting:
Tom C. Davis (age 52). Mr. Davis has served as Chief Executive Officer of
The Concorde Group, a private investment firm, since March 2001. Mr. Davis had
served as Managing Partner of Credit Suisse First Boston's (formerly Donaldson,
Lufkin & Jenrette Securities Corporation) investment banking and corporate
finance activities in the Southwest from March 1984 to February 2001. Mr. Davis
is also a director of Suiza Foods Corporation.
James C. Musselman (age 53). Mr. Musselman was elected a director of Triton
in May 1998 and was elected Chief Executive Officer in October 1998. Previously,
Mr. Musselman has served as Chairman, President and Chief Executive Officer of
Avia Energy Development, LLC, a private company engaged in gas processing and
drilling, since September 1994. From June 1991 to September 1994, Mr. Musselman
was the President and Chief Executive Officer of Lone Star Jockey Club, LLC, a
company formed to organize a horse racetrack facility in Texas.
C. Lamar Norsworthy (age 54). Mr. Norsworthy has served as a director of
Triton since 1998. Mr. Norsworthy has served as Chairman of the Board and Chief
Executive Officer of Holly Corporation, an independent refiner of petroleum and
petroleum derivatives, since 1979. He also served as President of Holly
Corporation from 1988 to 1995.
CONTINUING DIRECTORS - TERM EXPIRING 2002
The current Class I directors of Triton who are not standing for
re-election at the meeting and whose terms will expire at our Annual Meeting of
Shareholders in 2002 are:
Jack D. Furst (age 42). Mr. Furst has served as a director of Triton since
1998. Mr. Furst is a Partner of Hicks, Muse, Tate & Furst Incorporated, a
private investment firm located in Dallas, New York, St. Louis, Buenos Aires and
London specializing in strategic investments, leveraged acquisitions and
recapitalizations. From 1987 to May 1989, Mr. Furst was a vice president and
subsequently a partner of Hicks & Haas Incorporated, a Dallas-based private
investment firm. Mr. Furst also serves as a director of Cooperative Computing,
Inc., Globix Corporation, Hedstrom Corporation, Hedstrom Holdings, Inc., Home
Interiors & Gifts, Inc., International Wire Group, Inc., LLS Corp. and
Viasystems Group, Inc.
Michael E. McMahon (age 53). Mr. McMahon has served as a director of Triton
since 1993. Mr. McMahon has served as a partner in RockPort Partners LLC, a
merchant banking company, since June 1998. From July 1997 to June 1998, Mr.
McMahon was a Managing Director of Chase Securities, Inc., and from October 1994
until July 1997, he was a Managing Director of Lehman Brothers. Prior to joining
Lehman Brothers, Mr. McMahon had been a partner in Aeneas Group, Inc., a
subsidiary of Harvard Management Company, Inc., since January 1993. Harvard
Management Company, Inc. is a private investment company responsible for
managing the endowment fund of Harvard University. Mr. McMahon was primarily
responsible for the fund's energy and commodities investments. Mr. McMahon also
serves as a director of Spinnaker Exploration Company.
C. Richard Vermillion, Jr. (age 55). Mr. Vermillion has served as a
director of Triton since 1998. Mr. Vermillion has served as a director of Varel
International, Inc., a drill bit manufacturer and distributor, since August
1998, Chairman of Seismic Energy Products L.P., a manufacturer of structural
bearings, since November 1996, Chairman of Gammaloy Holdings L.P., an oilfield
service firm, since February 1996, and President of MV Partners, Inc., a
private investment firm, since June 1995. From October 1993 to June 1995, Mr.
Vermillion was a Managing Director of Donaldson, Lufkin & Jenrette Securities
Corporation, an investment banking firm.
J. Otis Winters (age 68). Mr. Winters has served as a director of Triton
since 1998. Mr. Winters also served as a director of Triton from September 1993
to May 1996. Mr. Winters was co-founder of PWS Group (formerly known as Pate,
Winters & Stone, Inc.), a consulting firm, in 1989. Since 1989 he has served as
Chairman of that company. Mr. Winters also serves as a director of Dynegy, Inc.
and Panja Corporation.
CONTINUING DIRECTORS - TERM EXPIRING 2003
The current Class II directors of the Company who are not standing for
re-election at the meeting and whose terms will expire at our Annual Meeting of
Shareholders in 2003 are:
Sheldon R. Erikson (age 59). Mr. Erikson has served as a director of Triton
since 1995. Mr. Erikson has served as Chairman, President and Chief Executive
Officer of Cooper Cameron Corporation, a petroleum and industrial equipment
company, since January 1995 and has served as a director of that corporation
since March 1995. Mr. Erikson was the Chairman of the Board from 1988 to 1995,
and President and Chief Executive Officer from 1987 to 1995, of The Western
Company of North America, an oil and gas service company. Mr. Erikson is also a
director of Layne Christensen Company, NCI Building Systems, Inc. and Spinnaker
Exploration Company.
Thomas O. Hicks (age 55). Mr. Hicks has served as Chairman of the Board of
Directors of Triton since 1998. Mr. Hicks has served as Chairman of the Board
and Chief Executive Officer of Hicks, Muse, Tate & Furst Incorporated since
1989. From 1984 to May 1989, Mr. Hicks was Co-Chairman of the Board and Co-Chief
Executive Officer of Hicks & Haas Incorporated. Mr. Hicks also serves as a
director of Clear Channel Communications, Inc., Cooperative Computing, Inc.,
Home Interiors & Gifts, Inc., Lamar Advertising Company, LIN Holdings Corp.,
LIN Television Corporation, Mumm Perrier-Jouet, Sybron International
Corporation, Teligent, Inc. and Viasystems Group, Inc.
John R. Huff (age 55). Mr. Huff has served as a director of Triton since
1995. Mr. Huff has served as Chief Executive Officer of Oceaneering
International, Inc., a company providing engineering and intervention services
primarily for underwater operations, since August 1986, and as Chairman of the
Board of Oceaneering International since 1990. He also served as President of
Oceaneering International from 1986 to 1998. Mr. Huff is also a director of BJ
Services Company and Suncor Energy Inc.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During 2000, the Board of Directors met four times and each current
director attended at least 75% of the aggregate of all Board and applicable
committee meetings, other than Mr. Winters, who attended 72% of such meetings.
The Board of Directors has an Executive Committee, which has the authority,
subject to restrictions imposed by Cayman Islands law and the Company's Articles
of Association, to act for the Board of Directors. Messrs. Musselman (Chairman),
Erikson, Furst and Hicks currently are members of the Executive Committee. The
Executive Committee met or acted by written consent three times during 2000.
The Board of Directors has an Audit Committee, whose functions include the
selection and evaluation of the independent auditors, along with the review in
conjunction with the independent auditors of the plans and scope of the audit
engagement. The committee's functions also include reviewing with the
independent auditors their objectivity and independence and the results of their
examination, approving the fee charged by the independent auditors and reviewing
our internal controls. Messrs. Vermillion (Chairman), Hudson, Norsworthy and
Winters currently are members of the Audit Committee. The Audit Committee met
eight times during 2000.
The Board of Directors has a Compensation Committee, which reviews and
recommends the compensation to be paid to senior management, and interprets and
helps administer our compensation plans. Messrs. Huff (Chairman), Furst, Hicks,
McMahon and Winters currently are members of the Compensation Committee. The
Compensation Committee met or acted by written consent twelve times during 2000.
The Board of Directors has a Nominating Committee, which is authorized by
the Board of Directors to recommend nominees for election to the Board of
Directors and nominees to fill additional directorships that may be created and
to fill vacancies that may exist on the Board of Directors. Messrs. Winters
(Chairman), Furst, McMahon and Vermillion currently are members of the
Nominating Committee. The Nominating Committee met or acted by written consent
one time during 2000. The Nominating Committee will consider nominees
recommended by shareholders. See "Shareholder Proposals."
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS
The following table lists, as of March 1, 2001 (except as noted below), the
beneficial ownership of our shares by (i) each person known to us to own 5% or
more of the outstanding ordinary shares and 8% convertible preference shares,
(ii) each of our directors and nominees for director, (iii) our Chief Executive
Officer and each of our four other most highly compensated executive officers
during 2000 (the "named executive officers"), and (iv) our directors, nominees
and executive officers as a group. The persons named in the table have sole
voting and investment power with respect to all capital shares owned by them,
unless otherwise noted.
SHARES BENEFICIALLY OWNED
------------------------------------------------------------------------
ORDINARY SHARES 8% PREFERENCE SHARES
------------------------------------------------ ----------------------
PERCENT OF
NUMBER OF PERCENT OF NUMBER OF PERCENT OF TOTAL VOTING
BENEFICIAL OWNER SHARES (1) CLASS SHARES CLASS POWER
- ------------------------------- -------------------------- -------------------- ---------- ---------- ------------
5% SHAREHOLDERS:
HM4 Triton, L.P. 21,960,448 (2) 37.9% 5,131,549 99.1% 37.7%
c/o Hicks, Muse ,
Tate & Furst
Incorporated
200 Crescent Court
Suite 600
Dallas, Texas 75201
DIRECTORS AND EXECUTIVE OFFICERS:
Thomas O. Hicks (3) 22,259,659 38.4 5,131,549 99.1 38.3
Tom C. Davis 5,000 * --- --- *
Sheldon R. Erikson 100,000 * --- --- *
Jack D. Furst 3,535 * --- --- *
Fitzgerald S. Hudson 249,740 (4) * --- --- *
John R. Huff 169,000 (5) * 1,000 * *
Michael E. McMahon 172,600 * --- --- *
C. Lamar Norsworthy 102,500 * --- --- *
C. Richard Vermillion, Jr. 61,000 * --- --- *
J. Otis Winters 66,800 * --- --- *
James C. Musselman 319,286 * --- --- *
A. E. Turner, III 194,596 * --- --- *
W. Greg Dunlevy 63,521 * --- --- *
Marvin Garrett 29,961 * --- --- *
Brian Maxted 67,717 * --- --- *
All directors, nominees and
executive officers as a group
(15 persons) 23,864,915 (6) 40.2 5,132,549 99.1 40.0
___________________
* less than 1%
(1) Includes shares held for the account of the named executive officers
pursuant to our 401(k) savings plan, shares held by or for the benefit of wives
and minor children of directors and executive officers and entities in which
directors or executive officers hold a controlling interest, and includes the
number of shares indicated as follows that are issuable upon exercise of stock
options that are currently exercisable, or are exercisable within 60 days from
April 1, 2001: Mr. Erikson, 90,000 shares; Mr. Hudson, 195,000 shares; Mr. Huff,
150,000 shares; Mr. McMahon, 172,500 shares; Mr. Norsworthy, 67,500 shares; Mr.
Vermillion, 60,000 shares; Mr. Winters, 60,000 shares; Mr. Musselman, 298,333
shares; Mr. Turner, 189,666 shares; Mr. Dunlevy, 53,583 shares; Mr. Garrett,
24,999 shares; Mr. Maxted, 67,717 shares; and the directors and executive
officers as a group, 1,429,298 shares.
(2) Includes 20,526,196 ordinary shares into which the 5,131,549 8%
convertible preference shares held by HM4 Triton, L.P. could be converted.
(3) Share ownership includes all of the shares beneficially owned by HM4
Triton, L.P. Mr. Hicks is a controlling person of the general partner of HM4
Triton, L.P. and as such, may be deemed to be the beneficial owner of the shares
owned by HM4 Triton, L.P. Mr. Hicks disclaims beneficial ownership of the shares
owned directly by HM4 Triton, L.P. In addition, Mr. Hicks' share ownership
includes 665 shares held as trustee of certain trusts for the benefit of his
children, and 3,141 shares held by two partnerships whose general partners are
controlled by Mr. Hicks.
(4) Includes 27,740 shares held by partnerships in which Mr. Hudson owns a
1% interest and for which Mr. Hudson serves as general partner, and stock
options held by trusts established for the benefit of family members of Mr.
Hudson as to which Mr. Hudson disclaims beneficial ownership.
(5) The number of ordinary shares beneficially owned includes the 4,000
ordinary shares Mr. Huff could acquire by converting the 8% convertible
preference shares he owns.
(6) Includes ordinary shares issuable upon conversion of 8% convertible
preference shares.
PROPOSAL NO. 2
APPROVAL OF 2001 SHARE INCENTIVE PLAN
The directors approved the 2001 Share Incentive Plan on March 14, 2001,
subject to shareholder approval at this meeting. The plan is summarized below.
See Annex A for the full text of the 2001 Share Incentive Plan. As of March 14,
2001, we had available for issuance under other stock option and employee stock
purchase plans a total of approximately 595,000 ordinary shares, and there were
outstanding stock options to purchase a total of approximately six million
ordinary shares.
Purpose and Eligibility. The purpose of the plan is to attract and retain
for Triton highly qualified officers, employees, directors and advisors and to
provide them with an equity interest in Triton. In general, awards may be
granted at the discretion of Triton's Board of Directors or the Compensation
Committee of the Board. Any officer, employee, director and advisor of Triton is
eligible.
Shares Available Under the Plan; Types of Awards. A total of 1,000,000
ordinary shares are authorized for issuance under the plan. Awards under the
plan can take the form of stock options and restricted stock grants, as the
Board of Directors or the Compensation Committee may determine from time to
time. Stock options may be in the form of "incentive stock options," which are
designed to qualify for favorable tax treatment under section 422 of the
Internal Revenue Code, or "nonqualified stock options," which are not designed
to qualify for this tax treatment. Additionally, the plan allows individuals to
receive ordinary shares in lieu of cash compensation. These shares are referred
to in this description as "elected shares." To the extent awards are intended to
qualify as performance-based compensation under section 162(m) of the Internal
Revenue Code, the following additional limitations are imposed under the plan:
(1) no more than 600,000 shares, in total, may be granted as stock options to
any one individual during the term of the plan, and (2) no more than 300,000
shares, in total, may be granted as restricted shares to any one individual
during the term of the plan. The share limitations may be adjusted as a result
of action by the Board that affects our ordinary shares or if an adjustment is
determined to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended under the plan.
The plan will continue the automatic grant of options to purchase 15,000
ordinary shares to our non-employee directors on the first trading day of
January each year. These stock options will have an exercise price equal to the
closing price of the ordinary shares on the date of grant, will be fully
exercisable upon issuance and will terminate upon the earlier to occur of the
tenth anniversary of the date of grant or five years following the termination
of service as a director (other than for cause).
Administration. The plan generally will be administered by the Compensation
Committee of the Board. The Committee will determine to whom awards will be
granted, and will have the authority to interpret the plan, to determine the
type and terms of awards to be granted, including the amount of each award and
the times at which each award will be exercisable or vested, and to take any
other action the Committee deems necessary or desirable for the administration
of the plan.
Plan Amendment and Termination. The Committee may terminate or amend the
plan at any time for any reason; provided, however that such termination or
amendment does not adversely affect the terms of any outstanding stock options,
restricted shares or elected shares. The plan does not permit the Committee to
reprice stock options without shareholder approval.
Stock Options. The exercise price for stock options cannot be less than
100% of the fair market value of the ordinary shares on the date of grant. If an
incentive stock option is granted to an individual who owns 10% or more of the
total combined voting power of all classes of shares of Triton or our
subsidiaries, the exercise price must be at least 110% of the fair market value
of the ordinary shares on the date of grant. An optionee who elects to exercise
an option may pay the exercise price (i) in cash, (ii) by certified check, (iii)
in ordinary shares, (iv) by a promissory note, (v) by delivery of instructions
to use a broker or dealer to exercise the shares or (vi) in any combination of
any of the foregoing as the Committee determines. The term of options granted
under the plan will be determined by the Committee at the time of each option
grant, but will not exceed 10 years; provided, however that an incentive stock
option granted to an individual who owns more than 10% or more of the total
combined voting power of all classes of shares of Triton or our subsidiaries
must not have a term of greater than five years.
Restricted Shares. Restricted shares may not vest until the restrictions
expire or performance criteria associated with the award are met. An employee
receiving a restricted share award will have the right to vote the shares and
receive any cash dividends during the restricted period. The Committee has the
authority to grant elected shares in lieu of all or a portion of the cash
compensation payable under any compensation program of the Company. The number
and type of shares distributed, as well as the terms and conditions of any stock
compensation, if any, will be determined by the Committee.
Change of Control. In the event of a change of control, any outstanding
stock option and restricted share award (unless otherwise provided in the award
agreement) will automatically vest.
Federal Income Tax Consequences
Stock Options. An optionee generally will not recognize taxable income
-------------
upon the grant or exercise of an incentive stock option and we generally will
not be entitled to any business expense deduction with respect to the grant or
exercise of the option. If the optionee has held the shares acquired upon
exercise of an incentive stock option for at least two years after the date of
grant and for at least one year after the date of exercise, upon disposition of
the shares by the optionee, the difference, if any, between the sales price of
the shares and the exercise price of the option will be treated as long-term
capital gain or loss. If the optionee does not satisfy these holding period
requirements, the optionee will recognize ordinary income at the time of the
disposition of the shares, generally in an amount equal to the excess of the
fair market value of the shares at the time the option was exercised over the
exercise price of the option. The balance of gain realized, if any, will be
long-term or short-term capital gain, depending upon whether or not the shares
were sold more than one year after the option was exercised. If the optionee
sells the shares prior to the satisfaction of the holding period requirements
but at a price below the fair market value of the shares at the time the option
was exercised, the amount of ordinary income will be limited to the excess of
the amount realized on the sale over the exercise price of the option. We will
be allowed a business expense deduction to the extent the optionee recognizes
ordinary income.
The holder of an incentive stock option may be subject to the
alternative minimum tax ("AMT") in the year the incentive stock option is
exercised because proceeds from the exercise are preference income as defined by
the Internal Revenue Code and are subject to an AMT calculation. AMT income on
the incentive stock option is equal to the difference between the fair market
value of the shares as of the date of exercise and the exercise price of the
option multiplied by the number of shares. The AMT calculation is made in the
same tax year as the regular, ordinary income tax calculation and the optionee
is required to generally pay the greater of the AMT or the ordinary income tax.
In addition, at the time the optionee sells the incentive stock option shares he
will (assuming the shares are held one year or more) be required to pay capital
gains tax on the difference between the sale price and the exercise price,
regardless of whether the optionee paid ordinary income tax or AMT during the
year that the incentive stock option was exercised.
In general, an optionee to whom a nonqualified stock option is granted
will recognize no income at the time of the grant of the option. Upon exercise
of a nonqualified stock option, an optionee will recognize ordinary income in an
amount equal to the amount by which the fair market value of the shares on the
date of exercise exceeds the exercise price of the option. We generally will be
entitled to a business expense deduction in the same amount and at the same time
as the optionee recognizes ordinary income.
Restricted Shares. In general, a recipient of restricted shares will
------------------
not recognize taxable income upon the grant of restricted shares, unless he
makes an election to be taxed in the year of receipt. The recipient can elect to
report as ordinary income the difference between the fair market value of the
shares on the date of receipt and the amount, if any, he paid for the shares. If
the recipient makes this election, any future appreciation of the shares will be
eligible for capital gains treatment if the shares are held for one year.
If the recipient does not make this election, he will recognize
taxable income at the time the restrictions on the shares expire, or his
interest in the shares otherwise is no longer subject to a substantial risk of
forfeiture. The amount of income he will recognize will be equal to the
difference between the fair market value of the shares at that time and the
amount, if any, that he paid for the shares. The recipient's rights in
restricted shares are subject to a substantial risk of forfeiture if the rights
to full enjoyment of the shares are conditioned, directly or indirectly, upon
his future performance of substantial services. We will be entitled to a
business expense deduction for the amount the participant includes in his
taxable income, subject to any limitation resulting from section 162(m) of the
Internal Revenue Code.
If a recipient sells the shares, the amount of taxable gain will be
the excess of the amount he realizes on the sale over the sum of the amount, if
any, he paid for the shares and the compensation he includes in his taxable
income. For shares held for more than one year, he would realize long-term
capital gain or loss upon disposition.
Elected Shares. Elected shares will be subject to ordinary income
---------------
treatment upon receipt. Specifically, the recipient of the shares will have
ordinary income equal to the fair market value of the shares. We will be
entitled to a corresponding business expense deduction. Upon disposition of the
shares the recipient will be entitled to capital gains treatment, provided that
he holds the shares for one year.
Performance-Based Compensation. Section 162(m) of the Internal Revenue
------------------------------
Code restricts the deductibility of compensation in excess of $1 million paid to
certain executive officers in a given year. There is an exception to the
deduction limitation for awards that are performance-based and meet objective
criteria, and the plan allows for the grant of this type of performance-based
compensation. If the Compensation Committee determines to grant an award that it
desires to qualify as "performance-based compensation," the Committee will use
one or more of the following criteria, among others, to establish performance
goals for performance-based compensation:
- revenues, net income, pretax earnings, earnings before interest,
depreciation and amortization, operating earnings after interest expense, or
operating income,
- reserves, net assets, return on assets, return on investment, return on
capital or return on equity,
- total shareholder return,
- debt reduction, and
- any of the above goals compared to an index the Compensation Committee
determines is applicable.
The Compensation Committee may also establish individual performance
goals for the grant of performance-based compensation.
New Plan Benefits. No grants have been made to any director or
executive officer under the plan at this time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
we paid or accrued for services rendered during 2000, 1999 and 1998 to our Chief
Executive Officer and each of the other named executive officers.
LONG-TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
--------------------- ----------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
----------------------------------------- RESTRICTED OPTIONS/ ALL OTHER
NAME AND FISCAL OTHER ANNUAL STOCK SARS LTIP COMPENSATION
PRINCIAL POSITION YEAR SALARY($) BONUS($) COMPENSATION (1) AWARDS(S) (#)(2) PAYOUTS ($)
- ----------------- ------ ---------- ----------- ---------------- --------- ----------- ---------- ------------
James C. Musselman (3) 2000 525,000 262,500 ---- ---- 150,000 ---- 33,717
President and Chief 1999 500,000 495,000 ---- ---- 350,000 ---- 2,500
Executive Officer 1998 132,000 ---- ---- ---- 315,000 ---- ----
A. E. Turner, III 2000 367,500 183,750 ---- ---- 125,000 ---- 18,852 (4)
Senior Vice President and 1999 350,000 262,500 ---- ---- 170,000 ---- 17,232
Chief Operating Officer 1998 350,000 200,000 ---- ---- 203,000 ---- 16,337
W. Greg Dunlevy 2000 183,456 100,000 ---- ---- 75,000 ---- 12,655 (5)
Senior Vice President and 1999 174,720 87,360 ---- ---- 85,000 ---- 11,984
Chief Financial Officer 1998 174,720 38,104 ---- ---- 57,250 ---- 11,470
Marvin Garrett 2000 170,000 130,000 ---- ---- 100,000 ---- 15,924 (6)
Vice President, Production 1999 146,156 75,000 ---- ---- 65,000 ---- 8,769
1998 136,822 10,262 ---- ---- 36,750 ---- 8,209
Brian Maxted 2000 200,000 110,000 ---- ---- 100,000 ---- 4,800 (7)
Senior Vice President, 1999 170,000 102,000 ---- ---- 125,000 ---- 4,800
Exploration 1998 170,000 69,420 ---- ---- 120,500 ---- 4,800
__________________________
(1) Excludes perquisites and other personal benefits if in total they do not
exceed the lesser of $50,000 or 10% of the total annual salary and bonus
reported for the named executive officer.
(2) These are stock options to acquire ordinary shares.
(3) Mr. Musselman was elected a director of Triton in May 1998 and became
Chief Executive Officer in October 1998. Compensation for 1998 includes
directors fees aggregating $7,000 paid to Mr. Musselman while he was a
non-employee director (through October 1998). The All Other Compensation amount
for 2000 consists of $10,500 in employer contributions to our 401(k) savings
plan and $23,217 in respect of life insurance premiums for Mr. Musselman's
benefit.
(4) Consists of $10,500 in employer contributions to our 401(k) savings plan
and $8,352 in respect of life insurance premiums for Mr. Turner's benefit.
(5) Consists of $10,500 in employer contributions to our 401(k) savings plan
and $2,155 in respect of life insurance premiums for Mr. Dunlevy's benefit.
(6) Consists of $10,200 in employer contributions to our 401(k) savings plan
and $5,724 in respect of life insurance premiums for Mr. Garrett's benefit.
(7) Consists of $4,800 in respect of life insurance premiums for Mr.
Maxted's benefit.
OPTION GRANTS IN 2000
The following table provides information regarding options granted to the
named executive officers in 2000.
INDIVIDUAL GRANTS
------------------------------------------------------------
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS/ ANNUAL RATES OF STOCK
SECURITIES SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS/SARS EMPLOYEES IN BASE PRICE -----------------------
GRANTED(#)(2) FISCAL YEAR(3) ($/SH)(4) EXPIRATION DATE 0% 5%($) 10%($)
------------- -------------- ------------ --------------- ----- ------- ---------
James C. Musselman 150,000 9% 39.125 10/6/2005 --- 520,635 2,193,866
A. E. Turner, III 125,000 8 39.125 10/6/2005 --- 433,862 1,828,221
W. Greg Dunlevy 75,000 5 39.125 10/6/2005 --- 260,317 1,096,933
Marvin Garrett 100,000 6 39.125 10/6/2005 --- 347,090 1,462,577
Brian Maxted 100,000 6 39.125 10/6/2005 --- 347,090 1,462,577
_____________________
(1) Under the rules of the Securities and Exchange Commission, the
"potential realizable value" of a stock option is calculated by assuming that
the market price of the underlying ordinary shares on the date the stock option
was granted appreciates at an annual compounded rate of 5% and 10%,
respectively, over the terms of the options, irrespective of the current price
of the ordinary shares. These numbers do not take into account provisions of
certain options providing for termination of the option following termination of
employment.
(2) The options have a term of five years and vest one-third per year. In
the event of a change of control of Triton, any unexercisable portions of
options become immediately exercisable. For the purposes of our stock option
plans, "change of control" has the same definition as that for our Supplemental
Executive Retirement Plan, which is set forth below.
(3) Options are calculated as a percentage of the sum of all options granted
to employees in 2000 (excluding options granted in 2000 to non-employee
directors).
(4) In the case of each grant, the exercise price was greater than the
closing price of the ordinary shares on the date of grant. On October 6, 2000,
the closing price was $33.375. The officer may pay an option's exercise price by
delivering ordinary shares he owns, by paying cash, or in any other form of
valid consideration or a combination of any of the foregoing, as determined by
the Compensation Committee.
AGGREGATED OPTION EXERCISES IN 2000 AND YEAR-END OPTION VALUES
The following table provides information related to the number and value of
options held by the named executive officers at December 31, 2000.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
SHARES AT FY-END (#) AT FY-END ($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ----------- ------------- ------------- ------------- -------------
James C. Musselman 100,000 $ 2,484,620 231,667 483,333 $ 3,358,339 $ 5,166,662
A. E. Turner, III 116,666 2,303,969 183,000 293,334 2,152,645 2,512,822
W. Greg Dunlevy 10,000 275,000 50,250 140,000 740,335 988,228
Marvin Garrett 22,250 629,231 23,333 151,667 357,809 781,566
Brian Maxted 53,700 1,560,850 58,967 215,833 794,920 1,652,755
__________________________
(1) Value at fiscal year end is calculated based on the difference between
the option exercise price and the closing market price of the ordinary shares at
December 29, 2000, multiplied by the number of shares to which the option
relates. On December 29, 2000, the closing price was $30.
PENSION PLAN TABLE
The following table lists estimated annual benefits payable upon retirement
under our Retirement Income Plan ("Retirement Plan"), including amounts
attributable to our Supplemental Executive Retirement Plan ("SERP"), to
participants with varying average earnings levels and years of service.
YEARS OF CREDITED SERVICE
-------------------------------------------
REMUNERATION 10 15 20 25 30
- ------------- ------- ------- ------- ------- -------
$ 150,000 56,568 57,541 58,514 59,487 60,460
200,000 81,568 82,614 83,660 84,706 85,752
250,000 106,568 107,614 108,660 109,706 110,752
300,000 131,568 132,614 133,660 134,706 135,752
350,000 156,568 157,614 158,660 159,706 160,752
400,000 181,568 182,614 183,660 184,706 185,752
450,000 206,568 207,614 208,660 209,706 210,752
500,000 231,568 232,614 233,660 234,706 235,752
550,000 256,568 257,614 258,660 259,706 260,752
600,000 281,568 282,614 283,660 284,706 285,752
650,000 306,568 307,614 308,660 309,706 310,752
700,000 331,568 332,614 333,660 334,706 335,752
Payments made under the Retirement Plan and SERP are based on years of
service and annual earnings. Salary and wages are included in the calculation of
average earnings, but bonuses, overtime, severance pay and fringe benefits are
excluded. The SERP generally provides that a participant may elect to receive
benefits under the SERP in equal monthly installments over a period of 20 years.
We have purchased life insurance to fund a portion of our obligations under the
SERP.
Under the Retirement Plan, the benefit a participant is entitled to receive
at his normal retirement date (age 65) is equal to .8% of his average monthly
compensation multiplied by his years of service, not to exceed 30 years, plus
.65% of his excess average monthly compensation multiplied by his years of
service, not to exceed 30 years. The Retirement Plan also provides an optional
early retirement benefit under which a participant may qualify for a reduced
pension after reaching age 55 and the completion of five years of service.
The SERP provides supplemental retirement benefits to selected employees.
The benefit levels under the SERP upon normal (age 60) or early retirement are
based on the participant's final average compensation at retirement reduced by
the participant's accrued benefit under the Retirement Plan and further reduced
by the participant's primary Social Security benefits. The offset for Social
Security does not apply to any benefit payable before a participant reaches the
age of 62. The normal retirement benefit is 50% of average compensation less
100% of anticipated social security less the Retirement Plan benefit multiplied
by the accrual percentage. The accrual percentage is 10% for each completed year
of service up to 100%. In the event of a change of control, the participant will
become fully accrued in the SERP benefit, the benefit will be distributed as a
lump sum, and the participant will receive an additional payment as a "gross-up"
to cover tax liabilities such that the net lump sum benefit is retained by the
participant. There will be deemed to be a change of control if any of the
following occurs:
- the sale of all or substantially all of our assets, or the consummation of
a merger or other form of business combination in which (1) we are
not the surviving corporation or (2) where we are the surviving
corporation, our ordinary shares would be converted into cash,
securities or other property, or the holders of our ordinary shares
immediately prior to the business combination would represent less than
a majority of the common stock of the surviving corporation immediately
after the business combination,
- any person or group becomes, without the prior approval of our Board of
Directors, a beneficial owner of our securities representing 25% or more
of our then outstanding securities having the right to vote in the
election of directors, or
- during any period of two consecutive years, individuals who, at the
beginning of such period constituted the entire Board, cease for any
reason (other than death) to constitute a majority of our directors,
unless the nomination for election of each new director was approved by a
vote of at least two-thirds of the directors then still in office.
For 2000, the remuneration included in the computation of annual earnings
under the Retirement Plan and the SERP for each of the executive officers named
in the Summary Compensation Table was as follows: James C. Musselman, $525,000;
A. E. Turner, III, $367,500; W. Greg Dunlevy, $183,500; Marvin Garrett,
$170,000; and Brian Maxted, $200,000. The years of credited service under the
Retirement Plan and the SERP for each of those individuals were as follows:
James C. Musselman, 2; A. E. Turner, III, 7; W. Greg Dunlevy, 8; Marvin Garrett,
6; and Brian Maxted, 7.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
General. The Compensation Committee of the Board of Directors comprises
non-employee directors. The Compensation Committee, as part of its review and
consideration of executive compensation, takes into account, among other things,
the following goals:
- Provision of incentives and rewards that will attract and retain highly
qualified and productive people;
- Motivation of employees to high levels of performance;
- Differentiation of individual pay based on performance;
- Ensuring external competitiveness and internal equity; and
- Alignment of Company, employee and shareholder interests.
The principal components of executive compensation are base pay,
discretionary bonus, and long-term incentives in the form of stock options.
Executive compensation also includes various benefit and retirement programs.
Each element has a somewhat different purpose and all of the determinations of
the Compensation Committee regarding the appropriate form and level of executive
compensation, including the compensation of the Chief Executive Officer,
historically have been negotiated with newly retained executives and thereafter
reviewed and adjusted based on the Compensation Committee's ongoing assessment
and understanding of the oil and gas business and our relative position in that
business, and the Company and our executive officers.
Management Compensation for 2000
In late 1999, management presented to the Board, and the Board approved, a
plan and budget for 2000. The plan focused on the continued development and
exploration of our interest offshore Equatorial Guinea, and the maximization of
the value of our interests in Colombia, the Gulf of Thailand and the remainder
of our exploration portfolio, while maintaining financial flexibility. The
Compensation Committee believes that management successfully executed that
strategy by accomplishing the following goals:
- Bringing the Ceiba field offshore Equatorial Guinea from discovery to
production in record time;
- Enhancing Triton's exploration portfolio through the acquisition of
interests in new blocks offshore Equatorial Guinea and Gabon;
- Improving Triton's capital structure by restructuring long-term debt and
calling the 5% convertible preference shares; and
- Increasing profitability and cash flow - while Triton benefited from more
favorable oil prices, the Committee determined that management
successfully contained operating and general and administrative expenses,
as well as capital expenditures.
The Committee believes management was successful in accomplishing its
operational and financial goals, and accordingly, approved salary increases and
bonuses, and the grant of stock options, for the executive officers. The
accomplishment of any one of the above goals was not, however, given greater
weight than any other in determining salary, bonus or stock option amounts.
In determining salary increases for executive officers, in general, the
Compensation Committee approved increases of about 10% to 30%, adjusted for
specific executive officers in the Committee's subjective judgment. In
determining bonuses for the executive officers, the Committee noted that, under
Triton's compensation policy, in general and subject to the Committee's
judgment, the maximum bonus for which the executive officers other than the
Chief Executive Officer were eligible was 75% of salary. While the Committee
recognized the operational successes of the Company as listed above, the
Committee noted that Triton's share price did not perform well relative to other
oil and gas companies. Accordingly, the Committee awarded bonuses of about 50%
of each executive officer's salary, except in the case of Mr. Garrett, Triton's
Vice President, Production, who was awarded a bonus of approximately 75% of his
salary.
In determining the level of stock options to be granted to executive
officers, in general, the Compensation Committee approved the grants recommended
by management, subject to adjustment by the Committee based on the Committee's
subjective judgment as to individual performance. The Compensation Committee
continues to believe that an emphasis on equity compensation is in the best
interests of shareholders because it more closely aligns management and
shareholder interests and maximizes the availability of cash for significant
capital expenditures. However, the Compensation Committee established the
exercise price for the stock options at $39.125, which was greater than the
closing price of the ordinary shares as of the date of grant, in order to
provide greater incentive to management to increase shareholder value.
Chief Executive Officer's 2000 Compensation. The Compensation Committee
determines the compensation of James C. Musselman, our President and Chief
Executive Officer, and is responsible for making all decisions with regard to
his compensation. With regard to the 2000 bonus for Mr. Musselman, the Committee
referred to the compensation plan based on performance goals, as approved by the
shareholders at the 1996 Annual Meeting. Under that plan, the Chief Executive
Officer is eligible for a bonus of up to 100% of his salary if his performance
is deemed to be "outstanding." For the reasons discussed above, the Committee
determined that Mr. Musselman should be awarded a bonus of 50% of his salary,
and a salary increase of 5%. In addition, the Committee approved stock options
to purchase a total of 150,000 shares for the reasons described above with
regard to the other executive officers.
Compensation Committee Members. This report is submitted by the members of
the Compensation Committee of the Board of Directors:
John R. Huff (Chairman) Jack D. Furst
Thomas O. Hicks Michael E. McMahon
J. Otis Winters
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total shareholder return on our ordinary shares during the five years ended
December 31, 2000, with (i) the cumulative total return on the S&P 500 Index and
(ii) a peer group of certain oil and gas exploration and development companies
selected by us. The peer group we selected consists of Anadarko Petroleum
Corporation, Apache Corporation, Burlington Resources Inc., Devon Energy
Corporation (beginning August 31, 2000, and prior to that, Santa Fe Snyder
Corp.), EOG Resources, Inc., Ocean Energy, Inc. (beginning March 31, 1999, and
prior to that Seagull Energy Corporation), Oryx Energy Company (through the
fourth quarter 1998), Pioneer Natural Resources Company (beginning August 8,
1997, and prior to that Mesa Inc.), and Union Texas Petroleum Holdings, Inc.
(through June 29, 1998). The comparison assumes $100 was invested on December
31, 1995, in our ordinary shares and in each of the foregoing indices and that
all dividends were reinvested. The returns of each issuer in the selected peer
group have been weighted according to their stock market capitalization as of
the beginning of each period.
CUMULATIVE TOTAL RETURN
Based upon an initial investment of $100 on December 31, 1995
with dividends reinvested
Custom Composite Index
Triton Energy Ltd. S&P 500-Registerd Trademark (9 Stocks)
Dec-95 $ 100 $ 100 $ 100
Dec-96 85 123 125
Dec-97 51 164 117
Dec-98 14 211 86
Dec-99 36 255 95
Dec-00 52 232 177
Source: Georgeson Shareholder Communications Inc.
EMPLOYMENT AGREEMENTS
We have entered into employment agreements with Messrs. Musselman, Turner,
Dunlevy, Garrett and Maxted. Among other provisions, the agreements with Messrs.
Musselman and Turner provide that the officer will be entitled to receive
specified benefits in the event of the termination of his employment. If, prior
to the occurrence of a change of control, the officer's employment is terminated
for a reason other than (a) his death, disability or retirement, (b) for cause,
or (c) his voluntary termination other than for good reason, (1) he will be
entitled to receive his salary for 18 months following the date of termination
and (2) his stock options will become fully vested and remain exercisable for
one year.
If a change of control occurs and within two years following the change of
control the employment of Mr. Musselman or Mr. Turner is terminated for a reason
other than (a) his death, disability or retirement, (b) for cause, or (c) his
voluntary termination other than for good reason, he will be entitled to receive
a lump sum severance payment equal to the sum of the following amounts: (1)
three times the sum of (x) the highest annual base salary in any of the three
preceding years, (y) the highest of the aggregate bonuses in any of the
preceding three years and (z) the highest of the contributions made by us on his
behalf in respect of our 401(k) plans in any of the three preceding years; (2)
an amount equal to the lump sum payment to which he would be entitled under the
SERP in the event of a change of control as defined in the SERP (in lieu of
further payments under the SERP); (3) the present value of the difference in
retirement benefit to which he would have been entitled if he would have
accumulated three additional years of service after the date of termination; and
(4) in the event he is subject to the excise tax imposed by section 4999 of the
Internal Revenue Code as a result of the change of control, an additional
"gross-up" amount such that, after payment of such excise tax, and any other
taxes on such additional amount, he will be entitled to a net amount equal to
the amounts set forth in the agreement. In addition, in the event of a change of
control, his options will be fully vested and will remain outstanding for one
year from the date of termination.
The employment agreements with Messrs. Dunlevy, Garrett and Maxted provide
certain benefits only in the event of the termination of employment following a
change of control. If, following a change of control, the officer's employment
is terminated for a reason other than (a) his death, disability or retirement,
(b) for cause, or (c) his voluntary termination other than for good reason, each
of Messrs. Dunlevy's and Maxted's agreements provide that he will be entitled to
receive a lump sum severance payment equal to the sum of the following amounts:
(1) three times the sum of (x) the highest annual base salary in any of the
three preceding years, (y) the greater of the highest of the aggregate bonuses
in any of the preceding three years or 15% of the highest annual base salary in
any of the three preceding years and (z) the highest of the contributions made
by us on his behalf in respect of our 401(k) plans in any of the three preceding
years; (2) the aggregate spread between the exercise prices of all stock options
held by the officer, whether or not then exercisable, and the highest price per
ordinary share actually paid in connection with any change of control; (3) the
present value of the difference in retirement benefit to which he would have
been entitled if he would have accumulated three additional years of service
after the date of termination; and (4) in the event he is subject to the excise
tax imposed by section 4999 of the Internal Revenue Code as a result of the
change of control, an additional "gross-up" amount such that, after payment of
such excise tax, and any other taxes on such additional amount, he will be
entitled to a net amount equal to the amounts set forth in the agreement. Mr.
Garrett's employment agreement is essentially identical except that his
severance benefit is calculated as two times the sum in clause (1) above over a
two-year period.
For the purposes of these employment agreements, there will be deemed to be
a change of control if any of the following occurs:
- the sale of all or substantially all of our assets, or the consummation of
a merger or other form of business combination in which (1) we are
not the surviving corporation or (2) if we are the surviving corporation,
our ordinary shares are converted into cash, securities or other property,
or the holders of our ordinary shares immediately prior to the business
combination represent less than a majority of the common stock of the
surviving corporation immediately after the business combination,
- any person or group becomes a beneficial owner of our securities
representing 25% (15% in the case of Messrs. Musselman and Turner) or
more of our then outstanding securities having the right to vote in
the election of directors, or
- during any period of two consecutive years, individuals who, at the
beginning of such period constituted the entire Board, cease for any
reason (other than death) to constitute a majority of our directors,
unless the nomination for election of each new director was approved by
a vote of at least two-thirds of the directors then still in office.
DIRECTORS' COMPENSATION
Stock and Cash Remuneration. Our non-employee directors are entitled to
receive an annual cash stipend of $25,000 plus $1,000 (or, $2,000 in the case of
the committee chairmen) for each board or committee meeting attended. Members of
the Board of Directors are also reimbursed for travel expenses to meetings of
the Board of Directors and its committees. On the first trading day of January
each year, our non-employee directors automatically receive nonqualified stock
options to purchase 15,000 ordinary shares. The stock options have an exercise
price equal to the closing price of the ordinary shares on the date of grant,
are fully exercisable upon issuance, and terminate upon the earlier to occur of
the tenth anniversary of the date of grant or five years following the
termination of service as a director (other than for cause). Accordingly, in
January 2001, each of Messrs. Erikson, Hudson, Huff, McMahon, Norsworthy,
Vermillion and Winters received nonqualified stock options to purchase 15,000
ordinary shares with an exercise price of $29 7/16. If Mr. Davis is elected as a
director at the meeting, he will receive nonqualified stock options to purchase
15,000 ordinary shares with an exercise price equal to the closing price of the
ordinary shares on May 15, 2001.
Retirement Plan for Directors. We have a retirement plan for our
non-employee directors. In order to be eligible, a director must have served as
an outside director for at least five years or, if a director has served less
than five years, (i) have had his service on the Board as an outside director
terminated due to death or disability or (ii) have a change of control of Triton
occur while he was a director. The annual benefit under the retirement plan is
$25,000, payable quarterly and commencing at the beginning of the fiscal quarter
next following the later of the date on which a director (i) attains age 65 or
(ii) retires from the Board of Directors. If a director retires from the Board
due to his death or disability, the payments to the director or his estate will
commence at the beginning of the next fiscal quarter. The payment of benefits
continue for a period equal to the number of years, rounded upwards to the
nearest six months, during which the director served as an outside director, but
not more than 10 years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION AND CERTAIN
TRANSACTIONS
Transactions with HM4 Triton, L.P. and its Affiliates
In August 1998, we entered into a Shareholders Agreement with HM4 Triton,
L.P. and a Financial Advisory Agreement and a Monitoring and Oversight Agreement
with Hicks, Muse & Co. Partners, L.P. Messrs. Hicks and Furst are owners of the
general partner of Hicks, Muse & Co. Partners.
The Shareholders Agreement provides that, subject to the following
paragraph, so long as our Board of Directors consists of 10 members, HM4 Triton,
L.P. may designate four nominees for election to the Board and we are obligated
to cause HM4 Triton, L.P.'s designees to be nominated for election. If HM4
Triton, L.P. transfers its 8% convertible preference shares, it may also assign
its right to designate Triton directors for nomination. Mr. Hicks was HM4
Triton, L.P.'s designee for nomination for election at the 2000 Annual Meeting
and Messrs. Furst, Vermillion and Winters were HM4 Triton, L.P.'s designees for
nomination for election at the 1999 Annual Meeting.
The right of HM4 Triton, L.P. (and its designated transferees) to designate
nominees for election to the Board will be reduced if the number of ordinary
shares (assuming conversion of any 8% convertible preference shares into
ordinary shares) held by HM4 Triton, L.P. and its affiliates is reduced as set
forth below:
Ownership of Ordinary Shares Number of directors
(including 8% Convertible Preference entitled to be designated
Shares on an as-converted basis)(approx.) for nomination
- ----------------------------------------- -------------------------
greater than or equal to 14.8 million 4
less than 14.8 million, but greater than or equal to 9.9 million 3
less than 9.9 million, but greater than or equal to 4.9 million 2
less than 4.9 million, but greater than or equal to 197,500 1
less than 197,500 0
So long as HM4 Triton, L.P. is entitled to designate one nominee for
director, we are required to cause at least one HM4 Triton, L.P. director to be
a member of each committee of the Board.
In the Shareholders Agreement, we also agreed that, so long as HM4 Triton,
L.P. and its affiliates continue to hold at least approximately 9.9 million
ordinary shares (assuming conversion of any 8% convertible preference shares
held by HM4 Triton, L.P. and its affiliates into ordinary shares), or shares
representing in the aggregate at least 10% of the outstanding ordinary shares
(assuming the conversion or exchange of all of our outstanding convertible or
exchangeable securities), we would not take certain actions without the consent
of HM4 Triton, L.P. Some of the actions that would require HM4 Triton, L.P.'s
consent are listed below:
- amending our Articles of Association or the terms of the 8% convertible
preference shares with respect to the voting powers, rights or
preferences of the holders of 8% convertible preference shares,
- entering into a merger or similar business combination transaction, or
effecting a reorganization, recapitalization or other transaction pursuant
to which a majority of the outstanding ordinary shares or any 8%
convertible preference shares are exchanged for securities, cash or
other property,
- authorizing, creating or modifying the terms of any securities that would
rank equal to or senior to the 8% convertible preference shares,
- selling assets comprising more than 50% of our market value,
- paying dividends on our ordinary shares or other shares ranking junior to
the 8% convertible preference shares,
- incurring debt over a specified amount, and
- commencing a tender offer or exchange offer for any of our ordinary
shares.
In the Shareholders Agreement, we have granted HM4 Triton, L.P. and persons
to whom it transfers its shares certain rights to require us to file a
registration statement with the Securities and Exchange Commission to permit
them to freely sell the 8% convertible preference shares and ordinary shares
they then own. The Shareholders Agreement provides that one or more holders may
require us to effect up to five registrations under the Securities Act of 1933
if the shares proposed to be sold represent more than 20% of the then
outstanding shares entitled to be registered. The Shareholders Agreement also
provides certain "piggyback" registration rights to these holders whenever we
propose to register an offering of any of our capital stock under the Securities
Act of 1933. In addition, the Shareholders Agreement contains customary
provisions regarding the payment of the holders' expenses relating to offerings
by us in connection with the exercise of registration rights and regarding
indemnification of us and the holders for certain securities law violations.
The Financial Advisory Agreement designates Hicks, Muse & Co. Partners as
our exclusive financial advisor in connection with any Sale Transaction (defined
below) unless Hicks, Muse & Co. Partners and we agree to retain an additional
financial advisor in connection with any particular Sale Transaction. The
Financial Advisory Agreement requires us to pay a fee to Hicks, Muse & Co.
Partners in connection with any Sale Transaction in an amount equal to the
lesser of (i) the fees then charged by first-tier investment banking firms for
similar advisory services rendered in similar transactions or (ii) 1.5% of the
value of the Sale Transaction. We would not have to pay this fee to Hicks, Muse
& Co. Partners if our Chief Executive Officer elects not to retain any financial
advisor in connection with the Sale Transaction. If we did retain an additional
financial advisor in addition to Hicks, Muse & Co. Partners, the fee would be
divided equally between Hicks, Muse & Co. Partners and the additional financial
advisor. A "Sale Transaction" is defined as any merger, sale of securities
representing a majority of our combined voting power, sale of assets
representing more than 50% of the total market value of our assets or other
similar transactions. We are also required to reimburse Hicks, Muse & Co.
Partners for reasonable disbursements and out-of-pocket expenses it incurs in
connection with its advisory services.
Pursuant to the Monitoring Agreement, Hicks, Muse & Co. Partners provides
financial oversight and monitoring services as we request and we pay to Hicks,
Muse & Co. Partners an annual fee of $500,000, payable in quarterly
installments. In addition, we are obligated to reimburse Hicks, Muse & Co.
Partners for reasonable disbursements and out-of-pocket expenses either it or
its affiliates incur for our account or in connection with the performance of
its services.
The Financial Advisory and Monitoring Agreements will remain in effect
until the earlier of (i) September 30, 2008 or (ii) the date on which HM4
Triton, L.P. and its affiliates cease to beneficially own at least 5% of our
outstanding ordinary shares (determined after giving effect to the conversion of
all 8% convertible preference shares held by HM4 Triton, L.P. and its
affiliates). We have agreed to indemnify Hicks, Muse & Co. Partners with respect
to liabilities it may incur as a result of its services for us pursuant to the
Financial Advisory Agreement and the Monitoring Agreement.
We are also required to provide directors' and officers' liability
insurance coverage for HM4 Triton, L.P. and its affiliates with respect to any
claims brought against them relating to any act or omission of any Triton
director in his or her capacity as a director of Triton. We are required to
maintain this coverage for so long as HM4 Triton, L.P. is entitled to nominate
any members of our Board of Directors.
From time to time, an affiliate of Hicks, Muse, Tate & Furst Incorporated
permits us to use a hunting facility in Texas for business purposes, and it
charges us for the pro rata part of the related costs. During 2000, we paid
approximately $87,500 to Hicks Muse in connection with the use of this facility.
Other Transactions
Both Cooper Cameron Corporation and Oceaneering International, Inc. were
winning bidders to provide services as subcontractors in connection with our
offshore development program in Equatorial Guinea. Cooper Cameron has provided,
and continues to provide, certain subsea equipment and related services. During
2000, we paid Cooper Cameron approximately $44 million, and we expect the
amounts we will pay under Cooper Cameron's current contracts will total
approximately $40 million during 2001. Oceaneering also has provided, and
continues to provide, certain subsea equipment and related services. During
2000, we paid Oceaneering approximately $2.6 million. We expect the amounts we
will pay under Oceaneering's current contracts will total approximately $7
million during 2001. Mr. Erikson, a director of Triton, is the Chairman,
President and Chief Executive Officer of Cooper Cameron Corporation, and Mr.
Huff, a director of Triton, is the Chairman of the Board and Chief Executive
Officer of Oceaneering International.
In November 2000, we purchased from a subsidiary of Holly Corporation a
one-half interest in a business aircraft for a purchase price of approximately
$1.1 million, which was based on an independent appraisal of the aircraft. In
addition, we agreed to reimburse that entity for our pro rata share of the costs
of maintaining and operating the aircraft. Mr. Norsworthy, a director of Triton,
is the Chairman and Chief Executive Officer of Holly Corporation.
REPORT OF THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Triton's Board of Directors has established an Audit Committee, which
operates under a written charter adopted by the Board of Directors. A copy of
the charter is attached to this proxy statement as Annex B. All of the members
of the Audit Committee are independent as determined in accordance with the
rules of the New York Stock Exchange and the Securities and Exchange Commission.
Triton's management is responsible for the Company's internal controls and the
financial reporting processes. Triton's independent accountants are responsible
for performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report on the financial statements. Under the Audit Committee's charter, the
primary function of the Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities as to these processes. The Committee's
functions also include the selection and evaluation of the independent auditors,
the review in conjunction with the independent auditors of the plans and scope
of the audit engagement and a review with the independent auditors of their
objectivity and independence.
In connection with the preparation of the audited financial statements
included in Triton's Annual Report on Form 10-K for the year ended December 31,
2000:
- The Committee reviewed and discussed the audited financial statements with
management of the Company.
- The Committee discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61 and
Statement on Auditing Standards No. 90. In general, these auditing
standards require the auditors to communicate to the Committee certain
matters that are incidental to the audit, such as any initiation of
or changes to significant accounting policies, management judgments,
accounting estimates and audit adjustments, disagreements with
management and the auditors' judgment about the quality of the Company's
accounting principles.
- The Committee received from the independent auditors disclosures regarding
their independence required by Independence Standards Board Standard
No. 1 and discussed with the auditors their independence. In general,
Independence Standards Board Standard No. 1 requires the auditors
to disclose to the Committee any relationship between the auditors and
its related entities and Triton that in the auditor's professional
judgment may reasonably be thought to bear on independence.
Based on the review and discussions noted above, the Committee recommended
to the Board of Directors that the audited consolidated financial statements for
the year ended December 31, 2000, be included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission.
This report is submitted by the members of the Audit Committee of the
Board of Directors:
C. Richard Vermillion, Jr. (Chairman) Fitzgerald S. Hudson
C. Lamar Norsworthy J. Otis Winters
INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors has approved the selection of
PricewaterhouseCoopers LLP as independent auditors to examine our accounts for
the year ending December 31, 2001. Representatives of PricewaterhouseCoopers LLP
are expected to be present at the meeting with the opportunity to make a
statement if they desire to do so and to be available to respond to appropriate
questions.
Set forth below is a summary of certain fees we paid to
PricewaterhouseCoopers LLP for services in 2000 and for the 2000 audit. In
determining the independence of PricewaterhouseCoopers LLP, the Audit Committee
considered whether the provision of the non-audit services is compatible with
maintaining PricewaterhouseCoopers LLP's independence.
AUDIT FEES
The total fees, including reimbursement of expenses, we paid
PricewaterhouseCoopers LLP for professional services rendered for the audit of
the annual financial statements for the year ended December 31, 2000, and the
reviews of the financial statements included in our Forms 10-Q for the first
three quarters in 2000, were $376,000.
ALL OTHER FEES
The total fees, including reimbursement of expenses, we paid
PricewaterhouseCoopers LLP for professional services rendered in 2000 other than
for audit services were $217,000. During 2000, PricewaterhouseCoopers LLP did
not provide us with financial information systems design and implementation
services.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors, executive officers and persons who own more than 10% of a
registered class of our equity securities to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Such persons are required by Securities and
Exchange Commission regulation to furnish us with copies of all section 16(a)
forms they file.
Based solely on our review of the copies of such forms we received with
respect to the year ended December 31, 2000, or written representations from
certain reporting persons, we believe that all filing requirements applicable to
our directors, officers and persons who own more than 10% of a registered class
of our equity securities have been complied with, except that Mr. Hudson filed
one report late regarding one transaction and Mr. Hicks filed three reports late
regarding three transactions.
SHAREHOLDER PROPOSALS
A shareholder who desires to present a proposal to our Annual Meeting of
Shareholders in 2002 and to have the proposal set forth in our proxy statement
for that meeting must submit the proposal to us no later than December 4, 2001.
Any shareholder may submit any such proposal to Triton Energy, Attention:
Corporate Secretary, 6688 North Central Expressway, Suite 1400, Dallas, Texas
75206. All shareholder proposals must comply with Rule 14a-8 promulgated by the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended. We will only include in the proxy materials those proposals
that we timely receive and that are proper for shareholder action (and otherwise
proper).
Pursuant to our Articles of Association, if a shareholder desires to
nominate persons for election as directors at an Annual Meeting, the shareholder
must deliver to our corporate secretary written notice no later than 90 days in
advance of such Annual Meeting. The notice must state (i) the name and address,
as it appears on our books, of the shareholder who intends to make the
nomination and of the person or persons to be nominated; (ii) a representation
that the shareholder is a record holder of our shares entitled to vote at the
meeting and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified; (iii) the number of ordinary shares
beneficially owned by the shareholder; (iv) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (v) such other information
regarding each nominee proposed by the shareholder as would be required to be
included in a proxy statement filed pursuant to the Securities Exchange Act of
1934; and (vi) the consent of each nominee to serve as a director, if so
elected.
Any shareholder who desires to present proposals to our Annual Meeting of
Shareholders in 2002 but who does not wish to have the proposals included in our
proxy statement for that meeting must submit those proposals to us at our
principal executive offices at the address above not later than February 15,
2002. If we do not receive those proposals by February 15, 2002, the persons
named in the proxies we solicit in connection with the 2002 Annual Meeting will
vote their proxies in their discretion with respect to such proposals.
OTHER MATTERS
The Annual Report to Shareholders for the year ended December 31, 2000, is
enclosed. The Annual Report does not form a part of this proxy statement or the
materials for the solicitation of proxies to be voted at the meeting.
A COPY OF THE ANNUAL REPORT ON FORM 10-K OF TRITON ENERGY LIMITED, AS
AMENDED, FOR THE PERIOD ENDED DECEMBER 31, 2000, INCLUDING FINANCIAL STATEMENTS
AND SCHEDULES BUT NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT NO CHARGE TO EACH
PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A WRITTEN OR ORAL
REQUEST OF SUCH PERSON ADDRESSED TO TRITON ENERGY, ATTN: INVESTOR RELATIONS,
6688 NORTH CENTRAL EXPRESSWAY, SUITE 1400, DALLAS, TEXAS 75206 (TELEPHONE (214)
691-5200). WE WILL ALSO FURNISH THE ANNUAL REPORT ON FORM 10-K TO ANY
"BENEFICIAL OWNER" OF SUCH SECURITIES AT NO CHARGE UPON RECEIPT OF A WRITTEN
REQUEST, ADDRESSED TO INVESTOR RELATIONS, AND CONTAINING A GOOD FAITH
REPRESENTATION THAT, AT THE RECORD DATE, SUCH PERSON WAS A BENEFICIAL OWNER OF
OUR SECURITIES ENTITLED TO VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
MAY 15, 2001. COPIES OF ANY EXHIBIT TO THE FORM 10-K WILL BE FURNISHED UPON THE
PAYMENT OF A $.15 PER PAGE FEE.
The accompanying proxy is being solicited on behalf our Board of Directors.
We will pay the expenses of preparing, printing and mailing the proxy and the
materials used in the solicitation.
We have retained Georgeson Shareholder Communications, Inc. to aid in the
solicitation of proxies, for a fee of $10,000 and the reimbursement of
out-of-pocket expenses. Our directors, officers and employees may also solicit
proxies, for no additional compensation from us. Arrangements also may be made
with brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of ordinary shares
held by such persons, and we will reimburse them for their reasonable expenses.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE ADDRESSED TO US. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. A PROMPT RETURN OF YOUR PROXY CARD WILL
BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
TRITON ENERGY LIMITED
By Order of the Board of Directors
Thomas J. Murphy
Secretary
April 3, 2001
ANNEX A
TRITON ENERGY LIMITED
2001 SHARE INCENTIVE PLAN
Triton Energy Limited (the "Company") hereby establishes its 2001 Share
Incentive Plan. Capitalized terms used herein are defined in Article I.
The purpose of the Plan is to help the Company and its Subsidiaries attract
and retain Directors, Employees and Advisors and to provide such persons with a
proprietary interest in the Company, which will (a) increase the interest of the
Directors, Employees and Advisors in the Company's welfare; (b) furnish an
incentive to the Directors, Employees and Advisors to continue their services
for the Company or its Subsidiaries; and (c) provide a means through which the
Company or its Subsidiaries may attract able persons to enter its employ or
serve as Directors, Employees or Advisors.
ARTICLE I
Definitions
-----------
For the purpose of this Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:
"Advisor" means any person performing services for the Company or any
Subsidiary of the Company, with or without compensation, to whom the Company
chooses to grant Stock Options or to whom the Company chooses to issue Elected
Shares or Restricted Shares in accordance with the Plan, provided that bona fide
---- ----
services must be rendered by such person and such services shall not be rendered
in connection with the offer or sale of securities in a capital-raising
transaction.
"Award" means any Elected Shares, Restricted Shares or Stock Options,
together with any or right or interest, granted to a Participant under this
Plan; provided that a Restricted Share Award shall cease to constitute an Award
under this Plan with respect to Ordinary Shares subject to such Award for which
restrictions have lapsed.
"Board" means the Board of Directors of the Company as constituted from
time to time.
"Cause" means an act or acts involving a felony, fraud, willful misconduct,
the commission of any act that causes or reasonably may be expected to cause
substantial injury to the Company, or other good cause. The term "other good
cause" shall include, but shall not be limited to, habitual impertinence, a
pattern of conduct that tends to hold the Company up to ridicule in the
community, conduct disloyal to the Company, conviction of any crime of moral
turpitude, and substantial dependence, as judged by the Committee, on alcohol or
any controlled substance. To the extent that a Participant is a party to a
written employment agreement with the Company or any Subsidiary that contains a
provision setting forth consequences for termination for cause and a definition
of cause, such definition shall control with respect to benefits granted
hereunder.
"Change in Control" means the occurrence of any of the following events:
(i) there shall be consummated (x) any consolidation, amalgamation, merger or
other form of business combination of the Company, or to which the Company is a
party, in which (I) the Company is not the continuing or surviving corporation
or (II) where the Company is the continuing or surviving corporation, the
Company's Ordinary Shares would be converted into cash, securities or other
property, or the holders of the Company's Ordinary Shares immediately prior to
the consolidation, amalgamation, merger or other form of business combination
would represent less than a majority of the common stock or ordinary shares of
the surviving corporation immediately after the consolidation, amalgamation,
merger or other form of business combination, or (y) any sale, lease, exchange
or other transfer (excluding transfer by way of pledge or hypothecation), in one
transaction or a series of related transactions, of all, or substantially all,
of the assets of the Company, (ii) the shareholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company, (iii) any
'person' (as such term is defined in Section 3(a)(9) or Section 13(d)(3) under
the 1934 Act) or any 'group' (as such term is used in Rule 13d-5 promulgated
under the 1934 Act), other than the Company or any successor of the Company or
any subsidiary of the Company or any employee benefit plan of the Company or any
subsidiary (including such plan's trustee), becomes, without the prior approval
of the Board of Directors of the Company (the 'Board'), a beneficial owner for
purposes of Rule 13d-3 promulgated under the 1934 Act, directly or indirectly,
of securities of the Company representing 25.0% or more of the Company's then
outstanding securities having the right to vote in the election of Directors of
the Company, or (iv) during any period of two consecutive years, individuals
who, at the beginning of such period constituted the entire Board (the
'Incumbent Directors'), cease for any reason (other than death) to constitute a
majority of the Directors of the Company, unless the election, or the nomination
for election, by the Company's shareholders, of each new Director of the Company
was approved by a vote of at least two-thirds of the Incumbent Directors (so
long as such new Director was not nominated by a person who expressed an intent
to effect a change in control of the Company or engage in a proxy or other
control contest) in which case such new Director shall be considered an
Incumbent Director.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee or committees appointed or designated by
the Board or another Committee in accordance with Section 2.1 of the Plan. The
Board may act from time to time in the absence of the Committee or in lieu of
action by the Committee.
"Covered Employee" means a Participant who is a covered employee as
specified in Section 7.4 of this Plan.
"Date of Grant" means the effective date on which a Stock Option is awarded
to a Director, Employee, or Advisor as set forth in the Stock Option Agreement.
"Director" means a member of the Board.
"Disability" means an event whereby a Participant is rendered unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment in accordance with policies as may be
determined from time to time by the Committee.
"Elected Share Agreement" means an agreement between the Company and a
Participant with respect to the issuance of Elected Shares.
"Elected Shares" means Ordinary Shares issued to a Participant under
Article VI.
"Employee" means an employee of the Company or of any Subsidiary.
"Fair Market Value" of an Ordinary Share means (i) the closing price per
share on the principal stock exchange on which the Ordinary Shares are traded,
or (ii) if not listed for trading on a stock exchange, the mean between the
closing or average (as the case may be) bid and asked prices per Ordinary Share
on the over-the-counter market, whichever is applicable.
"Incentive Stock Option" means an option to purchase Ordinary Shares
granted to a Participant and which is intended to be treated as an "incentive
stock option" under Section 422 of the Code, or any successor provision.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Non-Employee Director" means a Director of the Company who is not an
Employee.
"Nonqualified Stock Option" means any Stock Option that does not qualify
as an Incentive Stock Option.
"Ordinary Shares" means the Ordinary Shares, par value $.01 per share, of
the Company or in the event that the outstanding Ordinary Shares are hereafter
changed into or exchanged for shares or other securities of the Company or
another issuer, such other shares or securities.
"Participant" means any Employee, Director or Advisor who is, or who is
proposed to be, a recipient of a Stock Option, Elected Shares or Restricted
Shares.
"Plan" means this Triton Energy Limited 2001 Share Incentive Plan, as
amended from time to time.
"Qualified Member" means a member of the Committee who is a "non-employee
director" within the meaning of Rule 16b-3(b)(3) and an "outside director"
within the meaning of Treasury regulation 1.162-27 under Section 162(m).
"Restricted Shares" means Ordinary Shares issued to a Participant pursuant
to Article V.
"Retirement" of a Participant shall be deemed to be retirement in
accordance with policies as may be determined from time to time by the
Committee.
"Restricted Share Agreement" means an agreement between the Company and a
Participant with respect to the issuance of Restricted Shares.
"Rule 16b-3" means Rule 16b-3 promulgated under the 1934 Act, as amended
from time to time, or any successor provision.
"Section 162(m)" means Section 162(m) and the regulations promulgated
thereunder from time to time.
"Section 162(m) Exception" means the exception under Section 162(m) for
"qualified performance-based compensation."
"Stock Options" means any and all Incentive Stock Options and Nonqualified
Stock Options granted pursuant to Article IV of the Plan.
"Stock Option Agreement" means an agreement or certificate executed on
behalf of the Company with respect to one or more Stock Options, in such form as
may be approved by or at the direction of the Committee.
"Subsidiary" means any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in the chain, and "Subsidiaries" means more than one of any such corporations.
ARTICLE II
Administration; Eligibility
---------------------------
2.1 Administration. (a) The Plan shall be administered by a committee
--------------
or committees of Directors appointed by the Board (the "Committee"), each of
which may delegate its duties under the Plan to such agents as it may appoint
from time to time; provided that, with respect to any Award to a Participant who
is then subject to Section 16 of the 1934 Act in respect of the Company, the
Committee may not delegate its duties with respect to making such Award except
as provided in Section 2.1(c) below if such delegation, or such Award, would
result in the incurrence of liability under Section 16(b) of the 1934 Act.
(b) The Committee may select one of its members to act as its Chairman,
and may make such rules and regulations for its operation as it deems
appropriate. A majority of the Committee shall constitute a quorum and the act
of a majority of the members of the Committee present at a meeting at which a
quorum is present shall be the act of the Committee. Subject to the terms
hereof, the Committee shall have complete discretion and authority to (i)
designate from time to time the persons to whom Stock Options will be granted
and Elected Shares and Restricted Shares will be issued, (ii) interpret the
Plan, (iii) prescribe, amend, and rescind any rules and regulations necessary or
appropriate for the administration of the Plan, (iv) determine, and interpret,
the terms, details and provisions of each Stock Option Agreement, Elected Share
Agreement and Restricted Share Agreement, (v) modify or amend any Stock Option
Agreement, Elected Share Agreement and Restricted Share Agreement or modify,
amend or waive any terms, conditions or restrictions applicable to any Stock
Option, Elected Shares or Restricted Shares, and (vi) make such other
determinations and, subject to the terms of the Plan, take such other action as
it deems necessary or advisable. Subject to Rule 16b-3 and Section 162(m), the
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan, in any Award or in any Award agreement in the manner
and to the extent it deems necessary or desirable to carry the Plan in to
effect, and the Committee shall be the sole and final judge of that necessity or
desirability. Except as provided below, any interpretation, determination, or
other action made or taken by the Committee shall be final, binding, and
conclusive on all interested parties, including the Company and all
Participants. In addition, notwithstanding the foregoing, neither the Board nor
the Committee may substitute new Stock Options for previously granted Stock
Options where such new Stock Options would have a lower exercise price than such
previously granted Stock Options unless the shareholders of the Company approve
such substitution.
(c) At any time that a member of the Committee is not a Qualified
Member, any action of the Committee relating to an Award granted or to be
granted to a Participant who is then subject to Section 16 of the 1934 Act in
respect of the Company, or relating to an Award intended by the Committee to
qualify as "performance-based compensation" within the meaning of Section
162(m), to the extent necessary to avoid the incurrence of liability under
Section 16(b) of the 1934 Act or to the extent intended to qualify for the
Section 162(m) Exception, may be taken either (i) by a subcommittee, designated
by the Committee, composed solely of two or more Qualified Members, or (ii) by
the Committee but with each such member who is not a Qualified Member abstaining
or recusing himself or herself from such action; provided, however, that, upon
such abstention or recusal, the Committee remains composed solely of two or more
Qualified Members. Such action, authorized by such a subcommittee or by the
Committee upon the abstention or recusal of such non-Qualified Member(s), shall
be the action of the Committee for purposes of this Plan. Any action of the
Committee shall be final, conclusive and binding on all persons, including the
Company, its Subsidiaries, shareholders, Participants and transferees under
Section 12.1 hereof or other persons claiming rights from or through a
Participant. The Committee may delegate to officers of the Company or any
Subsidiary, or committees thereof, the authority, subject to such terms as the
Committee shall determine, to perform such functions, including administrative
functions, as the Committee may determine, to the extent that such delegation
will not result in the loss of an exemption under Rule 16b-3(d)(1) for Awards
granted to Participants subject to Section 16 of the 1934 Act in respect of the
Company and will not cause Awards intended to qualify as "performance-based
compensation" under Section 162(m) to fail to so qualify.
(d) With respect to restrictions ("mandated restrictions") in the Plan
that are based on the requirements of Rule 16b-3, Section 422 of the Code, the
Section 162(m) Exception, the rules of any exchange upon which the Company's
securities are listed, or any other applicable law, rule or restriction, to the
extent that any such mandated restrictions are no longer applicable, the
Committee shall have the discretion and authority to grant Stock Options that
are not subject to such mandated restrictions and/or to waive any such mandated
restrictions with respect to outstanding Stock Options.
2.2 Eligibility. Any Director, Employee and Advisor whose judgment,
-----------
initiative, and efforts contributed or may be expected to contribute to the
successful performance of the Company is eligible to participate in the Plan.
The Committee's determinations under the Plan (including without limitation
determinations of which persons, if any, are to receive Awards, the form, amount
and timing of such Awards, the terms and provisions of such Awards and any
agreements evidencing same) need not be uniform and may be made by it
selectively among Employees, Directors and/or Advisors who receive, or are
eligible to receive, Awards under the Plan.
ARTICLE III
Shares Subject to Plan
----------------------
3.1 Shares Available. (a) The Committee may not grant Stock Options or
-----------------
issue Elected Shares or Restricted Shares under the Plan for more than 1,000,000
Ordinary Shares, in the aggregate (as may be adjusted in accordance with the
terms of the Plan). Shares may be made available from either authorized but
unissued Ordinary Shares or Ordinary Shares held by the Company in its treasury.
(b) No Award may be granted if the number of Ordinary Shares to which
such Award relates exceeds the number of Ordinary Shares remaining available
under this Plan minus the number of Ordinary Shares issuable in settlement of or
relating to then outstanding Awards. The Committee may adopt reasonable
counting procedures to ensure appropriate counting and make adjustments if the
number of Ordinary Shares actually delivered differs from the number of shares
previously counted in connection with an Award.
(c) Ordinary Shares subject to an Award under this Plan that expire or
are canceled, forfeited, settled in cash or otherwise terminated without a
delivery of shares to the Participant, including, without limitation, (i) the
number of shares withheld in payment of any exercise or purchase price of an
Award or taxes relating to Awards, (ii) the number of shares subject to Stock
Options that by reason of the expiration or unexercised termination of such
Stock Options are no longer subject to issuance to a Participant and (iii) the
number of shares surrendered in payment of any exercise or purchase price of an
Award or taxes relating to any Award, will again be available for Awards under
this Plan, except that if any such shares could not again be available for
Awards to a particular Participant under any applicable law or regulation, such
shares shall be available exclusively for Awards to Participants who are not
subject to such limitation.
(d) To the extent awards are intended to qualify as performance-based
compensation under Section 162(m) the following additional limitations shall
apply, subject to adjustment as provided in this Article III and in Article X:
(i) no more than an aggregate of 600,000 Ordinary Shares may be granted as Stock
Options to any one individual over the term of the Plan; and (ii) no more than
an aggregate of 300,000 Ordinary Shares may be granted as Restricted Shares or
Elected Shares to any one individual over the term of the Plan.
3.2 Capital Adjustments. If at any time while the Plan is in effect or
--------------------
unexercised Stock Options, Elected Shares and Restricted Shares are outstanding,
there shall be any increase or decrease in the number of issued and outstanding
Ordinary Shares, or there shall be a change in the issued and outstanding
Ordinary Shares, through the declaration of a share dividend or through any
recapitalization, stock split, combination, or exchange of Ordinary Shares, then
and in such event: (i) any Elected Shares and Restricted Shares issued or deemed
issued hereunder will be deemed outstanding and affected in the same manner as
the outstanding Ordinary Shares (provided that any securities or other property
distributed or deemed distributed in respect of Restricted Shares or Elected
Shares shall be subject to the transfer restrictions then imposed on the
underlying Restricted Shares or Elected Shares); (ii) the Committee shall, in
such manner as it may deem equitable, make appropriate adjustment in the maximum
number of Ordinary Shares then subject to being awarded under Awards pursuant to
the Plan (including Awards for specific situations, including without limitation
the Awards under Section 4.6); and (iii) the Committee shall, in such manner as
it may deem equitable, make appropriate adjustment in the number of Ordinary
Shares and the exercise price per share thereof then subject to purchase
pursuant to each Stock Option previously granted and unexercised, to the end
that the same proportion of the Company's issued and outstanding Ordinary Shares
in each instance shall remain subject to purchase at the same aggregate exercise
price. Any fractional shares resulting from any adjustment made pursuant to this
Section 3.2 shall be rounded to the nearer whole share for the purposes of such
adjustment. Except as otherwise expressly provided herein, the issuance by the
Company of shares of any class, or securities convertible into shares of any
class, either in connection with direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number of
or exercise price of Ordinary Shares then subject to outstanding Awards granted
under the Plan.
ARTICLE IV
Stock Options
-------------
4.1 Option Grants. The Committee shall have the authority to select
--------------
the particular Directors, Employees and Advisors to whom the Stock Options
provided under this Article are to be granted at such times and for such amounts
as the Committee may determine. In the discretion of the Committee, any grant to
an Employee may be in the form of an Incentive Stock Option (subject to the
requirements of the Code). Incentive Stock Options shall not be granted more
than 10 years after the earlier of the adoption of this Plan or the approval of
this Plan by the Company's shareholders. The grant of Stock Options shall be
evidenced by Stock Option Agreements setting forth the total number of shares
subject to each Stock Option, the option exercise price, the term of the Stock
Option, and such other terms and provisions as are consistent with the Plan.
4.2 Option Exercise Price. The exercise price for a Stock Option
-----------------------
granted under this Article shall be determined by the Committee and shall be an
amount not less than 100% of the Fair Market Value per Ordinary Share on the
Date of Grant.
4.3 Option Period. The option period for each Stock Option granted
--------------
under this Article IV will begin and terminate on the respective dates specified
by the Committee. The Committee may provide that Stock Options may vest and be
exercised in installments and upon such terms, conditions and restrictions as it
may determine. The term of each Stock Option shall be for such period as may be
determined by the Committee; provided that in no event shall the term of any
Stock Option exceed a period of 10 years (or such shorter term as may be
required in respect of an Incentive Stock Option under Section 422 of the Code).
4.4 Payment. Full payment for shares purchased upon exercise of a
-------
Stock Option shall be made (i) in cash, (ii) by certified or cashier's check,
(iii) if permitted by the Committee, by Ordinary Shares, (iv) if permitted by
the Committee, and if permitted under applicable law, by delivery of a
promissory note for the purchase price, which note shall provide for full
personal liability of the maker and shall contain such other terms and
provisions as the Committee may determine, including without limitation the
right to repay the note partially or wholly with Ordinary Shares, (v) by
delivery of a copy of irrevocable instructions from the Participant to a broker
or dealer, reasonably acceptable to the Company, to sell certain of the shares
purchased upon exercise of the Stock Option or to pledge them as collateral for
a loan and promptly deliver to the Company the amount of sale or loan proceeds
necessary to pay such purchase price or (vi) if permitted by the Committee, and
to the extent permitted under applicable law, by any combination of the
foregoing. If any portion of the purchase price or a note given at the time of
exercise is paid in Ordinary Shares, those shares shall be valued at the then
Fair Market Value.
4.5 Exercise of Stock Option. Stock Options may be exercised during
---------------------------
the option period, at such times and in such amounts, in accordance with the
terms and conditions and subject to such restrictions as are set forth herein
and in the applicable Stock Option Agreements. The Committee shall have the
right to accelerate the time at which any Stock Option granted under this
Article shall become vested and exercisable. Except as otherwise contained
herein, Stock Options may not be exercised, nor may shares be issued under a
Stock Option if any necessary listing of the shares on a stock exchange or any
registration under state or federal securities laws required under the
circumstances has not been accomplished. Subject to such administrative
regulations as the Committee may from time to time adopt, a Stock Option will be
deemed exercised for purposes of the Plan when (i) written notice of exercise
has been received by the Company (which notice shall set forth the number of
Ordinary Shares with respect to which the Stock Option is to be exercised and
the date of exercise thereof) and (ii) payment of the Option Exercise Price is
received by the Company in accordance with the terms of the Plan; provided that,
with respect to a cashless exercise of any Stock Option (in accordance with
clause (v) of Section 4.4 above), such Stock Option will be deemed exercised for
purposes of the Plan on the date of sale of the Ordinary Shares received upon
exercise.
4.6 Automatic Grant of Stock Options. (a) Throughout the term of this
----------------------------------
Plan, on the first business day of January of each year (or if such day is not
business day, then the next succeeding business day) each Non-Employee Director
of the Company shall automatically receive a Nonqualified Stock Option to
purchase 15,000 Ordinary Shares (as may be adjusted in accordance with the terms
of this Plan). In addition, upon a person being first appointed or elected as a
Non-Employee Director, such person shall automatically receive a Nonqualified
Stock Option to purchase 15,000 Ordinary Shares (as may be adjusted in
accordance with the terms of this Plan). Notwithstanding anything in the
foregoing to the contrary, in no event shall any Holder Designee (as defined in
that certain Shareholders Agreement dated as of September 30, 1998, between the
Company and HM4 Triton, L.P.) who is an employee, principal or director of HM4
Triton, L.P. or Hicks, Muse, Tate & Furst Incorporated be entitled to receive
Stock Options pursuant to this Section 4.6(a), whether on an annual basis or
upon his or her first appointment or election as a Non-Employee Director.
(b) The exercise price for a Stock Option granted under this Section 4.6
shall be equal to 100% of the Fair Market Value of an Ordinary Share on the Date
of Grant.
(c) The option period for each Stock Option granted under this Section 4.6
will terminate ten years from the Date of Grant. No Stock Option granted under
this Section 4.6 may be exercised at any time after its term.
(d) Except only as specifically provided elsewhere in this Plan and as set
forth in any Stock Option Agreement, each Stock Option granted under this
Section 4.6 shall be fully vested and exercisable as to all of the Ordinary
Shares covered thereby on the Date of Grant.
4.7 Limitations on Incentive Stock Options. Notwithstanding the terms
----------------------------------------
of Article IV hereof, the following provisions of this Section 4.7 shall apply
to all Incentive Stock Options granted under the Plan.
(a) In the case of an Incentive Stock Option, the Stock Option
Agreement shall include provisions that may be necessary to assure that the
option is an incentive stock option under the Code. No Incentive Stock Option
may be granted to an Employee who owns more than 10% of the total combined
voting power of all classes of shares of the Company or its Subsidiaries. This
limitation will not apply if the option price is at least 110% of the fair
market value of the Ordinary Shares on the Date of Grant and the option is not
exercisable more than five years from the Date of Grant.
(b) Limitation on Exercise of Incentive Stock Options. To the extent
---------------------------------------------------
required by the Code for incentive stock options, the exercise of Incentive
Stock Options granted under the Plan shall be subject to the $100,000 calendar
year limit as set forth in Section 422(d) of the Code or such other amount as
may be prescribed thereunder from time to time. As used in the previous
sentence, Fair Market Value shall be determined as of the Date of Grant.
(c) Limitation on Incentive Stock Option Characterization. To the
----------------------------------------------------------
extent that any Stock Option fails to qualify as an Incentive Stock Option, such
Stock Option will be considered a Nonqualified Stock Option.
ARTICLE V
Restricted Shares
-----------------
5.1 Grant. The Committee shall have the authority to select the
-----
particular Directors, Employees and Advisors to whom Restricted Shares provided
under this Article may be issued, if any, at such times and for such amounts as
the Committee may determine. Subject to the terms, provisions and conditions of
the Plan, the Committee shall, upon the approval of the issuance of Restricted
Shares, determine the number of shares to be issued to each Participant and to
prescribe the form of the instruments evidencing any issuance of Restricted
Shares and the legend, if any, to be affixed to the certificates representing
Restricted Shares. The grant of Restricted Shares shall be evidenced by
Restricted Share Agreements setting forth the total number of shares subject to
each Restricted Share grant and such other terms and provisions as are not
inconsistent with the Plan.
5.2 Transfer Restrictions. Restricted Shares shall be subject to such
----------------------
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date of grant
or thereafter. Except to the extent restricted under the terms of this Plan and
any Restricted Share Agreement, a Participant granted Restricted Shares shall
have all of the rights of a shareholder, including the right to vote the
Restricted Shares and the right to receive dividends thereon (subject to any
mandatory reinvestment or other requirement imposed by the Committee). During
the restricted period applicable to the Restricted Shares, the Restricted Shares
shall not be sold, transferred or otherwise disposed of, and shall not be
pledged or otherwise hypothecated (any such sale, transfer or other disposition,
pledge or other hypothecation being referred to as "to dispose of" or a
"disposition"), by any Participant except as permitted under any conditions
imposed by the Committee in connection with the issuance thereof. The Committee
may require any Participant to whom Restricted Shares are issued to execute and
deliver to the Company a stock power in blank with respect to the shares issued
and may require that the Company retain possession of the certificates for
shares with respect to which the restrictions have not lapsed.
5.3 Notice to Company of Section 83(b) Election. Any Participant who
----------------------------------------------
exercises the election under Section 83(b) of the Code to have his receipt of
shares of Restricted Shares taxed currently without regard to the restrictions
shall give notice to the Company of such election immediately upon making the
election. Such an election must be made within thirty days of the effective date
of issuance and cannot be revoked except with the consent of the Internal
Revenue Service, as required by the treasury regulations under the Code.
5.4 Withholding. The Company is authorized to withhold any tax
-----------
required to be withheld from the amount considered as taxable compensation to
the Participant. In the event that funds are not otherwise available to cover
any required withholding tax, the Participant shall be required to provide such
funds before shares shall be issued to him.
5.5 Forfeiture. The Committee may provide, by rule or regulation or in
----------
any Restricted Share Agreement, the restrictions and forfeiture conditions
applicable to each Restricted Share Award and may waive in whole or in part the
forfeiture of Restricted Shares.
5.6 Dividends and Splits. Unless otherwise determined by the Committee,
--------------------
Ordinary Shares distributed in connection with a stock split or stock dividend,
and other property distributed as a dividend, shall be subject to restrictions
and a risk of forfeiture to the same extent as the Restricted Shares with
respect to which such Ordinary Shares or other property has been distributed.
ARTICLE VI
Elected Shares
--------------
6.1 Grants. The Committee shall have authority to select the particular
------
Directors, Employees and Advisors to whom Elected Shares may be issued, if any,
at such times and for such amounts as the Committee may determine.
6.2 Election to Receive Elected Shares. Each Participant eligible to
------------------------------------
receive Elected Shares may make an irrevocable election (an "Election") either
(a) to receive a grant of Ordinary Shares in a number determined by the
Committee from time to time in lieu of cash compensation from the Company or a
Subsidiary in an amount or amounts determined by the Committee (whether in a
fixed amount or by formula) or (b) not to participate in such award.
6.3 Written Election. Unless the Committee otherwise provides, any
-----------------
Participant eligible for Elected Shares and electing to participate shall make
his or her election in writing delivered to the Secretary of the Company (which
written election may be in the form of an Elected Share Agreement) no later than
January 31 of the year with respect to which such Participant's compensation
will be applied toward the issuance of Elected Shares. A Participant
participating in an award of Elected Shares may revoke or change his or her
election by filing a new election with the Secretary of the Company. Any
revocation or change in election by a Participant shall not be effective for any
period with respected to which Elected Shares have been issued to such
Participant.
6.4 Issuance of Shares. Unless the Committee otherwise provides, on
--------------------
each date on which a payment of compensation to a Participant is due, Ordinary
Shares shall be issued to such Participant in an amount determined by the
Committee pursuant to Section 6.1. All Elected Shares issued or deemed issued
pursuant to this Article shall be deemed outstanding for all purposes as of the
date of their deemed issuance. The issuance of Elected Shares shall be evidenced
by Elected Share Agreements setting forth the total number of shares to be
issued and such other terms, restrictions and provisions as are consistent with
the Plan.
ARTICLE VII
Performance Awards
------------------
7.1 Performance Conditions. The right of a Participant to exercise or
-----------------------
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions, except as limited under Section 7.2
hereof in the case of an award intended to qualify under Section 162(m) (a
"Performance Award").
7.2 Performance Awards Granted to Designated Covered Employees. If the
----------------------------------------------------------
Committee determines that a Performance Award to be granted to a Participant who
is designated by the Committee as likely to be a Covered Employee should qualify
as "performance-based compensation" for purposes of Section 162(m), the grant,
exercise and/or settlement of such Performance Award may be contingent upon
achievement of pre-established performance goals and other terms set forth in
this Section 7.2.
(a) Performance Goals Generally. The performance goals for such
-----------------------------
Performance Awards shall consist of one or more business criteria or individual
performance criteria and a targeted level or levels of performance with respect
to each of such criteria, as specified by the Committee consistent with this
Section 7.2. Performance goals shall be objective and shall otherwise meet the
requirements of Section 162(m) (including Treasury regulation 1.162-27 and
successor regulations thereto), including the requirement that the level or
levels of performance targeted by the Committee result in the achievement of
performance goals being "substantially uncertain." The Committee may determine
that such Performance Awards shall be granted, exercised, and/or settled upon
achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to the grant, exercise and/or settlement
of such Performance Awards. Performance goals may differ for Performance Awards
granted to any one Participant or to different Participants.
(b) Business and Individual Performance Criteria.
------------------------------------------------
(i) Business Criteria. One or more of the following business criteria
for the Company, on a consolidated basis, and/or for specified Subsidiaries or
business or geographical units of the Company(except with respect to the total
shareholder return and earnings per share criteria), shall be used by the
Committee in establishing performance goals for such Performance Awards: (1)
earnings per share; (2) increase in revenues, oil and/or gas sales, or oil
and/or gas production; (3) increase in cash flow, oil and/or gas reserves or
discounted net cash inflows from oil and/or gas reserves; (4) increase in cash
flow return; (5) return on net assets, return on assets, return on investment,
return on capital, or return on equity; (6) operating margin or contribution
margin; (7) net income; pretax earnings; pretax earnings before interest,
depreciation and amortization; or operating income; (8) total shareholder
return; (9) debt reduction; and (10) any of the above goals determined on an
absolute or relative basis or as compared to the performance of a published or
special index deemed applicable by the Committee including, but not limited to,
the Standard & Poor's 500 Stock Index or a group of comparable companies.
(ii) Individual Performance Criteria. The grant, exercise and/or
settlement of Performance Awards may also be contingent upon individual
performance goals established by the Committee. If required for compliance with
Section 162(m), such criteria shall be approved by the shareholders of the
Company.
(c) Performance Period; Timing for Establishing Performance Goals.
------------------------------------------------------------------
Achievement of performance goals in respect of such Performance Awards shall be
measured over a performance period of up to ten years, as specified by the
Committee. Performance goals shall be established not later than 90 days after
the beginning of any performance period applicable to such Performance Awards,
or at such other date as may be required or permitted for "performance-based
compensation" under Section 162(m).
(d) Performance Award Pool. The Committee may establish a Performance
-----------------------
Award pool, which shall be an unfunded pool, for purposes of measuring
performance of the Company in connection with Performance Awards. The amount of
such Performance Award pool shall be based upon the achievement of a performance
goal or goals based on one or more of the criteria set forth in Section 7.2(b)
hereof during the given performance period, as specified by the Committee in
accordance with Section 7.2(c) hereof. The Committee may specify the amount of
the Performance Award pool as a percentage of any of such criteria, a percentage
thereof in excess of a threshold amount, or as another amount which need not
bear a strictly mathematical relationship to such criteria.
(e) Settlement of Performance Awards; Other Terms. After the end of
------------------------------------------------
each performance period, the Committee shall determine the amount, if any, of
(A) the Performance Award pool, and the maximum amount of potential Performance
Award payable to each Participant in the Performance Award pool, or (B) the
amount of potential Performance Award otherwise payable to each Participant.
Settlement of such Performance Awards shall be in cash, Ordinary Shares, other
Awards or other property, in the discretion of the Committee. The Committee
may, in its discretion, reduce the amount of a settlement otherwise to be made
in connection with such Performance Awards, but may not exercise discretion to
increase any such amount payable to a Covered Employee in respect of a
Performance Award subject to this Section 7.2. The Committee shall specify the
circumstances in which such Performance Awards shall be paid or forfeited in the
event of termination of employment by the Participant prior to the end of a
performance period or settlement of Performance Awards.
7.3 Written Determinations. All determinations by the Committee as to
-----------------------
the establishment of performance goals, the amount of any Performance Award pool
or potential individual Performance Awards and the achievement of performance
goals relating to Performance Awards under Section 7.2 shall be made in writing
in the case of any Award intended to qualify under Section 162(m). The
Committee may not delegate any responsibility relating to such Performance
Awards.
7.4 Status of Performance Awards under Section 162(m). It is the
-------------------------------------------------------
intent of the Company that Performance Awards under Section 7.2 hereof granted
to persons who are designated by the Committee as likely to be Covered Employees
within the meaning of Section 162(m) (including Treasury regulation 1.162-27 and
successor regulations thereto) shall, if so designated by the Committee,
constitute "performance-based compensation" within the meaning of Section
162(m). Accordingly, the terms of this Article VII, including the definitions
of Covered Employee and other terms used herein, shall be interpreted in a
manner consistent with Section 162(m). The foregoing notwithstanding, because
the Committee cannot determine with certainty whether a given Participant will
be a Covered Employee with respect to a fiscal year that has not yet been
completed, the term Covered Employee as used herein shall mean only a person
designated by the Committee, at the time of grant of Performance Awards who is
likely to be a Covered Employee with respect to that fiscal year. If any
provision of this Plan as in effect on the date of adoption or any agreements
relating to Performance Awards that are designated as intended to comply with
Section 162(m) do not comply or are inconsistent with the requirements of
Section 162(m), such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.
ARTICLE VIII
Termination of Employment or Service
------------------------------------
8.1 Authority of Committee. The Committee may set forth in any Stock
------------------------
Option Agreement, Restricted Share Agreement or Elected Share Agreement the
consequences of the termination of employment or service as a Director or
Advisor. In the event a Participant who is an Employee shall cease to be
employed by the Company or a Subsidiary, or a Participant who is a Director or
Advisor shall cease to serve as a Director or Advisor, the Committee shall have
the authority to (i) accelerate the vesting of the Participant's Stock Option
and the lapse of any transfer restrictions imposed on Restricted Shares or
Elected Shares, and (ii) extend the period in which to exercise a Stock Option,
in its sole discretion.
8.2 Forfeiture of Non-Vested Benefits. Unless otherwise provided in a
-----------------------------------
Stock Option Agreement, Restricted Share Agreement or Elected Share Agreement or
otherwise provided by the Committee, upon the termination of employment or
service as a Director or Advisor of any Participant, any Stock Options held by
the Participant shall cease to vest and the portion of any Stock Options that
are not vested, and the portion of any Elected Shares and Restricted Shares as
to which restrictions have not lapsed, as of the date of termination shall be
forfeited.
8.3 Default Provisions. In the event a Participant who is an Employee
-------------------
shall cease to be employed by the Company or a Subsidiary, or a Participant who
is a Director or Advisor shall cease to serve as a Director or Advisor, and the
consequences of the termination of employment or service as a Director or
Advisor are not set forth in a Stock Option Agreement, Restricted Share
Agreement or Elected Share Agreement, as applicable, a Participant's Stock
Option may be exercised and any transfer restrictions imposed on a Participant's
Restricted Shares and Elected Shares shall lapse as follows:
(a) Without Cause. If such termination is by the Company without
--------------
Cause, and is not due to the death, Retirement or Disability of the Employee,
Director, or Advisor, then (i) the Participant's Stock Option (to the extent
then exercisable) may be exercised until 5:00 p.m., Dallas, Texas time, on the
date which is three months following the date of termination, unless by its
terms the Stock Option expires earlier and (ii) any restrictions on the
Participant's Restricted Shares and Elected Shares shall lapse. If such
termination is by the Employee, Director, or Advisor, and is not due to the
death, Retirement or Disability of the Employee, Director, or Advisor, then (i)
the Participant's Stock Option (to the extent then exercisable) may be exercised
until 5:00 p.m., Dallas, Texas time, on the date which is three months following
the date of termination, unless by its terms the Stock Option expires earlier
and (ii) the Participant's Restricted Shares and Elected Shares shall be
forfeited.
(b) Death. If a Participant dies while employed by the Company or a
-----
Subsidiary, or while serving as a Director or Advisor, or within three months
after ceasing to be an Employee, Director or Advisor, his Stock Option shall
become fully vested and exercisable on the date of his death and may be
exercised until 5:00 p.m., Dallas, Texas time, on the date which is three years
following the date of termination, unless by its terms it expires sooner, and
any transfer restrictions imposed on a Participant's Restricted Shares or
Elected Shares shall lapse.
(c) Retirement. If a Participant ceases to be employed by the Company
----------
or a Subsidiary, or ceases to serve as a Director or Advisor, as a result of
Retirement, the Participant's Stock Option shall become fully vested and
exercisable on the date of his Retirement and may be exercised until 5:00 p.m.,
Dallas, Texas time, on the date which is three years following the date of
Retirement, unless by its terms the Stock Option expires sooner, and any
transfer restrictions imposed on a Participant's Restricted Shares or Elected
Shares shall lapse.
(d) Disability. If a Participant ceases to be employed by the Company
----------
or a Subsidiary, or ceases to serve as a Director or Advisor, as a result of
Disability, the Participant's Stock Option shall become fully vested and
exercisable and may be exercised until 5:00 p.m., Dallas, Texas time, on the
date which is three years following the date of termination, unless by its terms
the Stock Option expires sooner, and any transfer restrictions imposed on a
Participant's Restricted Shares or Elected Shares shall lapse.
(e) Cause. If a Participant ceases to be employed by the Company or a
-----
Subsidiary, or ceases to serve as a Director or Advisor, because the Participant
is terminated for Cause, the Participant's Stock Option shall automatically
expire (including those exercisable on the date of termination), and any
Restricted Shares and Elected Shares as to which the transfer restrictions
imposed thereon have not lapsed shall be returned and forfeited to the Company,
unless the Committee otherwise agrees in its sole discretion.
7.4 Non-Employee Director Stock Options. With respect to any
--------------------------------------
Nonqualified Stock Option granted to a Non-Employee Director pursuant to Section
4.6, if a Participant ceases to serve as a Director for any reason (other than
removal for Cause), such Nonqualified Stock Option shall remain exercisable for
a period of five years thereafter, unless by its terms the Nonqualified Stock
Option expires sooner or the Committee agrees, in its sole discretion, to
further extend the term of such Nonqualified Stock Option.
ARTICLE IX
Amendment; Discontinuance and Termination
-----------------------------------------
The Board may amend, alter, suspend, discontinue or terminate this Plan or
the Committee's authority to grant Awards under this Plan without the consent of
shareholders or Participants, except that any amendment or alteration to this
Plan shall be subject to the approval of the Company's shareholders not later
than the annual meeting next following such Board action if such shareholder
approval is required by any federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Ordinary Shares
may then be listed or quoted, and the Board may otherwise, in its discretion,
determine to submit other such changes to this Plan to shareholders for
approval; provided that, without the consent of an affected Participant, no such
Board action may materially and adversely affect the rights of such Participant
under any previously granted and outstanding Award. The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue or terminate
any Award theretofore granted and any Award agreement relating thereto, except
as otherwise provided in this Plan; provided that, without the consent of an
affected Participant, no such Committee action may materially and adversely
affect the rights of such Participant under such Award.
ARTICLE X
Recapitalization, Merger and Consolidation
------------------------------------------
10.1 Existence of Plan. The existence of this Plan shall not affect in
-----------------
any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger, share
exchange or consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference shares ranking prior to or otherwise affecting the
Ordinary Shares or the rights thereof (or any rights, options or warrants to
purchase same), or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
10.2 Recapitalization. If the Company recapitalizes, reclassifies its
----------------
capital stock or otherwise changes its capital structure ( a
"recapitalization"), the number of Ordinary Shares covered by a Stock Option
theretofore granted shall be adjusted so that such Stock Option shall thereafter
cover the number and class of shares of stock and securities to which the holder
would have been entitled pursuant to the terms of the recapitalization if,
immediately prior to the recapitalization, the holder had been the holder of
record of the number of Ordinary Shares then covered by the Stock Option.
10.3 Company as Surviving Entity. Subject to any required action by
------------------------------
the shareholders, if the Company shall be the surviving or resulting corporation
in any merger, share exchange or consolidation, any outstanding Stock Option
granted hereunder shall pertain to and apply to the securities or rights
(including cash, property or assets) to which a holder of the number of Ordinary
Shares subject to the Stock Option would have been entitled.
10.4 Mergers and Consolidations. In the event of any merger, share
----------------------------
exchange or consolidation pursuant to which the Company is not the surviving or
resulting corporation, there shall be substituted for each Ordinary Share
subject to the unexercised portions of such outstanding Stock Option that number
of shares of each class of shares or other securities or that amount of cash,
property or assets of the surviving or consolidated company which were
distributed or distributable to the shareholders of the Company in respect of
each Ordinary Share held by them, such outstanding Stock Options to be
thereafter exercisable for such shares, securities, cash or property in
accordance with their terms.
10.5 Change in Control. In the event of a Change in Control of the
-------------------
Company, then, notwithstanding any other provision in the Plan to the contrary,
the vesting of all unvested installments of Stock Options outstanding shall
thereupon automatically be accelerated and all such Stock Options shall become
exercisable in full and any transfer restrictions remaining applicable to
Restricted Shares shall automatically lapse.
10.6 Dissolution. In case the Company shall, at any time while any
-----------
Stock Option under this Plan shall be in force and remain unexpired, (i) sell
all or substantially all of its property, or (ii) dissolve, liquidate, or wind
up its affairs, then each Participant may thereafter receive upon exercise
thereof (in lieu of each Ordinary Share which such Participant would have been
entitled to receive) the same kind and amount of any securities or assets as may
be issuable, distributable or payable upon any such sale, dissolution,
liquidation, or winding up with respect to each Ordinary Share. In the event
that the Company shall, at any time prior to the expiration of any Stock Option,
make any partial distribution of its assets in the nature of a partial
liquidation, split-off, spin-off or other special distribution, then the
Committee may make or provide for such adjustment in the number of Ordinary
Shares covered by outstanding Stock Options, in the exercise price applicable to
such Stock Options and/or in the kind of shares covered thereby that the
Committee, in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of rights of Participants
that otherwise would result therefrom.
ARTICLE XI
Options in Substitution for Stock Options
-----------------------------------------
Granted by Other Corporations
-----------------------------
Stock Options may be granted under the Plan from time to time in
substitution for stock options held by employees of a corporation who become or
are about to become Employees of the Company or a Subsidiary as the result of a
merger or consolidation of the employing corporation with the Company or a
Subsidiary, the acquisition by either of the foregoing of stock of the employing
corporation as the result of which it becomes a Subsidiary or a sale of
substantially all of the assets of the employing corporation. The terms and
conditions of the substitute options so granted may vary from the terms and
conditions set forth in this Plan to such extent as the Committee at the time of
grant may deem appropriate to conform, in whole or in part, to the provisions of
the options in substitution for which they are granted.
ARTICLE XII
Miscellaneous Provisions
------------------------
12.1 Transferability of Stock Options.
------------------------------------
(a) Incentive Stock Options. Incentive Stock Options may not be
-------------------------
transferred or assigned other than by will or the laws of descent and
distribution and may be exercised during the lifetime of the Participant only by
the Participant or the Participant's legally authorized representative, and each
Stock Option Agreement in respect of an Incentive Stock Option shall so provide.
The designation by a Participant of a beneficiary will not constitute a transfer
of the Stock Option. The Company may waive or modify any limitation contained
in this Section that is not required for compliance with Section 422 of the
Code.
(b) Nonqualified Stock Options. The Committee may, in its sole
---------------------------
discretion, provide in any Stock Option Agreement with respect to Nonqualified
Stock Options (or in an amendment to any existing Stock Option Agreement) such
provisions regarding transferability of the Nonqualified Stock Options as the
Committee, in its sole discretion, deems appropriate. If the Stock Option
Agreement does not otherwise specify, or the Committee does not otherwise
provide or agree, a Stock Option may not be transferred or assigned other than
by will or the laws of descent and distribution
(c) Qualified Domestic Relations Orders. Nonqualified Stock Options
--------------------------------------
may be transferred pursuant to qualified domestic relations orders entered or
approved by a court of competent jurisdiction upon delivery to the Company of
written notice of such transfer and a certified copy of such order.
(d) Effect of Transfer. Following the transfer of any Stock Option as
-------------------
contemplated by this Section, (i) such Stock Option shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that the term "Participant" shall be deemed to refer to the
transferee, the recipient under a qualified domestic relations order, or the
estate or heirs of a deceased Participant, as applicable, to the extent
appropriate to enable the Participant to exercise the transferred Stock Option
in accordance with the terms of this Plan and applicable law, and (ii) the
provisions of the Stock Option relating to exercisability thereof shall continue
to be applied with respect to the original Participant and, following the
occurrence of any such events described therein, the Stock Option shall be
exercisable by the transferee, the recipient under a qualified domestic
relations order, or the estate or heirs of a deceased Participant, as
applicable, only to the extent and for the periods that would have been
applicable in the absence of the transfer.
(e) Procedures and Restrictions. Any Participant desiring to transfer
----------------------------
a Stock Option as permitted under this Section shall make application therefor
in the manner and time specified by the Committee and shall comply with other
requirements as the Committee may require to assure compliance with all
applicable securities laws.
12.2 Investment Intent. The Company may require that there be
------------------
presented to and filed with it by any Participant(s) under the Plan, such
evidence as it may deem necessary to establish that the Stock Options granted or
the Ordinary Shares to be issued, purchased or transferred are being acquired
for investment and not with a view to their distribution.
12.3 No Right to Continue Employment. Nothing in the Plan or the grant
-------------------------------
of any Stock Option or the issuance of any Elected Shares or Restricted Shares
confers upon any Director, Officer, Employee or Advisor the right to continue in
the employ or service of the Company or interferes with or restricts in any way
the right of the Company to discharge or remove any Director, Officer, Employee
or Advisor at any time (subject to any contract rights of such person).
12.4 Shareholders' Rights. The holder of a Stock Option shall have
---------------------
none of the rights or privileges of a shareholder except with respect to shares
which have been actually issued.
12.5 Tax Withholding.
----------------
(a) Whenever Ordinary Shares are to be issued in satisfaction of a
Stock Option granted hereunder, the Company shall have the right to require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state, local or other withholding tax requirements (whether so required to
secure for the Company an otherwise available tax deduction or otherwise) prior
to the delivery of any certificate or certificates for such shares.
(b) When a Participant is required to pay to the Company an amount
required to be withheld under applicable tax laws in connection with a Stock
Option, such payment may be made (i) in cash, (ii) by check, (iii) if permitted
by the Committee, by delivery to the Company of Ordinary Shares already owned by
the Participant having a Fair Market Value on the date the amount of tax to be
withheld is to be determined (the "Tax Date") equal to the amount required to be
withheld, (iv) if permitted by the Committee, through the withholding by the
Company of a portion of the Ordinary Shares acquired upon the exercise of the
Stock Options having a Fair Market Value on the Tax Date equal to the amount
required to be withheld, or (v) in any other form of valid consideration, as
permitted by the Committee in its discretion.
(c) As a condition to the issuance of Ordinary Shares covered by any
Incentive Stock Option, the Company may require the party exercising such Stock
Option to give a written representation to the Company, which is satisfactory in
form and substance to its counsel and upon which the Company may reasonably
rely, that he or she will report to the Company any disposition of such shares
prior to the expiration of the holding periods specified by Section 422(a)(1) of
the Code. If and to the extent that the realization of income in such a
disposition imposes upon the Company federal, state, local or other withholding
tax requirements, or any such withholding is required to secure for the Company
an otherwise available tax deduction, the Company shall have the right to
require that the recipient remit to the Company an amount sufficient to satisfy
those requirements; and the Company may require as a condition to the issuance
of Ordinary Shares covered by an Incentive Stock Option that the party
exercising such Incentive Stock Option give a satisfactory written
representation promising to make such a remittance.
12.6 Indemnification of Board and Committee. The Committee and each
------------------------------------------
member thereof shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any officer or employee of the
Company or a Subsidiary, the Company's legal counsel, independent auditors,
consultants or any other agents assisting in the administration of this Plan. No
member of the Board or the Committee, nor any officer or Employee of the Company
acting on behalf of or at the direction of the Board or the Committee, shall be
personally liable for any action, determination, or interpretation taken or made
in good faith with respect to the Plan, and all members of the Board or the
Committee and each and any officer or Employee of the Company acting on their
behalf shall, to the extent permitted by law, be fully indemnified and protected
by the Company in respect of any such action, determination or interpretation.
12.7 Government Regulations. Notwithstanding any of the provisions
-----------------------
hereof, or of any written agreements evidencing Stock Options, Elected Shares or
Restricted Shares granted or issued hereunder, the obligation of the Company to
issue, sell and deliver shares and remove any restrictions on any Elected Shares
or Restricted Shares shall be subject to all applicable laws, rules and
regulations and to such approvals by any government agencies or national
securities exchanges as may be required. The Participant shall not exercise any
Stock Option, and the Company shall not be obligated to issue any shares or
remove restrictions on any Elected Shares or Restricted Shares, if such
exercise, issuance or removal would constitute a violation by the Participant or
the Company of any provision of any law or regulation of any governmental
authority or any agreement with any stock exchange.
12.8 Exemptions from Section 16(b) Liability. It is the intent of the
------------------------------------------
Company that the grant of any Awards to or other transaction by a Participant
who is subject to Section 16 of the 1934 Act shall be exempt from liability
under Section 16 of the 1934 Act pursuant to an applicable exemption (except for
transactions acknowledged in writing to be non-exempt by such Participant).
Accordingly, if any provision of this Plan or any Award agreement would result
in liability under Section 16 of the 1934 Act as then applicable to any such
transaction (except for any transaction acknowledged in writing to be non-exempt
by such Participant), such provision or Award agreement shall be construed or
deemed amended to the extent necessary to avoid liability under Section 16 of
the 1934 Act as then applicable to such transaction.
12.9 Severability. If any provision of this Plan is held to be illegal
------------
or invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions hereof, but such provision shall be fully severable and the
Plan shall be construed and enforced as if the illegal or invalid provision had
never been included herein. If any of the terms or provisions of this Plan or
any Award agreement conflict with the requirements of Rule 16b-3 (as those terms
or provisions are applied to Participants who are subject to Section 16(b) of
the 1934 Act) or section 422 of the Code (with respect to Incentive Stock
Options), then those conflicting terms or provisions shall be deemed inoperative
to the extent they so conflict with the requirements of Rule 16b-3 (unless the
Board or the Committee, as appropriate, has expressly determined that the Plan
or such Award should not comply with Rule 16b-3 or Section 422 of the Code).
With respect to Incentive Stock Options, if this Plan does not contain any
provision required to be included herein under Section 422 of the Code, that
provision shall be deemed to be incorporated herein with the same force and
effect as if that provision had been set out at length herein; provided,
further, that, to the extent any Stock Option that is intended to qualify as an
Incentive Stock Option cannot so qualify, that Stock Option (to that extent)
shall be deemed a Stock Option not subject to Section 422 of the Code for all
purposes of the Plan.
ANNEX B
TRITON ENERGY
AUDIT COMMITTEE CHARTER
QUALIFICATION OF MEMBERS
The Audit Committee of the Board of Directors shall be comprised of at
least three directors, each of whom is independent and "financially literate"
(or becomes financially literate within a reasonable period of time after his or
her appointment to the committee), as determined in accordance with the rules of
the New York Stock Exchange and the Securities and Exchange Commission.
In some circumstances, if permitted by the rules of the New York Stock
Exchange and the Securities and Exchange Commission, a director who may not meet
the applicable definitions of independence may serve on the Audit Committee if
the Board of Directors determines that the director's membership on the Audit
Committee is required by the best interests of the Company and its shareholders.
At least one member of the Audit Committee shall have accounting or related
financial management expertise. This requirement may be met through past
employment experience in finance or accounting, professional certification in
accounting, or other comparable experience/background which results in the
member's financial sophistication, including being or having been a CEO, CFO or
other senior officer with financial oversight responsibilities.
RESPONSIBILITIES OF THE AUDIT COMMITTEE
The committee's primary function is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing the financial information
which will be provided to the shareholders and others, the systems of internal
controls which management and the Board of Directors have established, and all
audit processes.
GENERAL
The Audit Committee shall provide an open avenue of communication between
the independent accountant, the internal auditor and the Board of Directors.
The committee shall report committee actions to the Board of Directors with
such recommendations as the committee may deem appropriate.
The committee shall have the authority to conduct or authorize
investigations into any matters within the committee's scope of
responsibilities. The committee is empowered to retain independent counsel,
accountants, or others to assist it in the conduct of any investigation, if it
deems it necessary or appropriate.
The Board of Directors expects that the Audit Committee will meet at least
four times per year, but may meet such greater or fewer times as the committee
determines is appropriate. The Chairman of the Audit Committee has the
authority to call a committee meeting whenever he or she deems circumstances
warrant. The committee may ask members of management or others to attend the
meeting and provide pertinent information as necessary.
The committee will perform such other functions as assigned by law, the
Company's Memorandum and Articles of Association, or the Board of Directors.
AUTHORITY RELATING TO INDEPENDENT ACCOUNTANT
The independent accountant is ultimately accountable to the Board of
Directors and the Audit Committee. The Board of Directors and the Audit
Committee shall have the ultimate authority and responsibility for the
selection, evaluation and replacement of the independent accountant (or to
nominate the independent accountant to be proposed for shareholder approval in
any proxy statement).
Subject to the authority of the Board of Directors, the Audit Committee
shall have responsibility for, and the authority and power to take such actions
on behalf of the Company and the Board of Directors as it deems appropriate with
respect to, the following matters:
1. the compensation of the independent accountant,
2. the engagement of additional auditors with respect to matters of accounting
or reporting, and
3. maintaining an independent relationship between the Company and the
independent accountant, including obtaining a written statement from the
independent accountant (on a periodic basis to be established by the Audit
Committee from time to time) setting forth all relationships between the
independent accountant and the Company, consistent with Independence Standards
Board Standard No. 1, reviewing management consulting and other services
provided by the independent accountant, including fees paid for such services,
for any potential impact on the objectivity and independence of the independent
accountant, actively engaging in a dialogue with the independent accountant with
respect to any disclosed relationships or services that may impact the
objectivity and independence of the independent accountant and taking, or
recommending to the Board of Directors, such actions as it deems appropriate to
satisfy itself of the independence of the independent accountant.
AUTHORITY RELATING TO THE INTERNAL AUDIT FUNCTION
Subject to the authority of the Board of Directors, the Audit Committee
shall have responsibility for, and the authority and power to take such actions
on behalf of the Company and the Board of Directors as it deems appropriate with
respect to, the following matters:
1. the establishment by the Company of an internal audit department,
2. the appointment, replacement, reassignment, or dismissal of the director of
internal audit,
3. the maintenance by the Company of the continuing neutrality, objectivity,
training and competence of those Company employees performing the internal
audit function, and
4. the oversight by the Company of the engagement of any third parties as
the committee deems appropriate to review the activities of the department.
AUTHORITY RELATING TO THE ANNUAL EXTERNAL AUDIT AND INTERNAL AUDITS
In the course of performing its functions, the Audit Committee may deem it
appropriate to, and shall have the power and authority to act on behalf of the
Company and Board of Directors (subject to the authority of the Board of
Directors) to, take action with respect to, the following matters:
1. inquire of management, the internal auditor, and the independent
accountant about significant risks or exposures and assess the steps management
has taken to minimize such risks to the Company,
2. consult with the independent accountant, management and the internal
auditor regarding the scope of the external audit and the plan for internal
audits to be performed by the independent accountant or the internal auditor,
including with a view to completeness of coverage, reduction of redundant
efforts, and the effectiveness of audit resources,
3. review the following with the independent accountant and the internal
auditor:
a. the adequacy of the Company's internal controls including computerized
information system controls and security; and
b. any significant findings and recommendations made by the independent
accountant or the internal audit function, together with management's
responses thereto; and
4. review with management and the internal auditor:
a. any significant findings during the year and management's responses to
them;
b. any difficulties the internal auditor encountered while conducting
audits; including restrictions on the scope of their work or
access to the required information;
c. any changes to the planned scope of the internal audit plan;
d. the budget for the internal audit function;
e. the internal audit department charter; and
f. whether the internal auditor has complied with the Institute of
Internal Auditing's Standards for the Professional Practice of
Internal Auditing.
AUTHORITY RELATING TO ANNUAL AND QUARTERLY FINANCIAL STATEMENTS
In the course of performing its functions relating to the Company's annual
and quarterly financial statements, the Audit Committee shall take certain
actions, and may take such additional actions it may deem appropriate, as set
forth below, and shall have the power and authority (subject to the authority of
the Board of Directors) to act on behalf of the Company and Board of Directors
with respect to such matters:
1. The committee or the Chairman shall review with management and the
independent accountant prior to any announcement of financial results matters
described in AU Section 380, Communications with Audit Committees including
significant adjustments, management judgments and accounting estimates,
significant new accounting policies, and any disagreements with management.
2. The committee shall review with management and the independent accountant
at the completion of the annual examination:
a. the Company's annual financial statements and related footnotes;
b. the independent accountant's audit of the financial statements and
related report;
c. any significant changes to the independent accountant's audit plan;
d. any serious difficulties or disputes with management encountered during
the course of the audit; and
e. other matters related to the conduct of the audit which are to be
communicated to the committee under generally accepted auditing
standards.
3. The committee shall review with management and the independent accountant
the Company's quarterly report on Form 10-Q prior to filing with the Securities
and Exchange Commission.
4. The committee shall discuss such other matters regarding financial
results with the independent accountant as are required pursuant to generally
accepted auditing standards, including the independent accountant's judgment
about the quality, not just the acceptability, of the Company's accounting
principles as applied to its financial reporting. The discussion shall include
such issues as:
a. the clarity of the Company's financial disclosures;
b. the degree of aggressiveness or conservatism of the Company's accounting
principles and underlying estimates; and
c. other significant decisions made by management, in preparing
financial disclosures, and reviewed by the independent accountants.
OTHER MATTERS
1. If required by applicable rules or auditing standards, the committee
shall review and update this charter on an annual basis, and may review and
reassess this charter from time to time.
2. The committee shall have the authority to review with management and the
internal auditor the Company's compliance with its Ethics Policy and Code of
Conduct.
3. The committee shall have the authority to review such legal and
regulatory matters that it deems, in its discretion, could have a material
impact on the financial statements, related company compliance policies, and
programs and reports received from regulators.
4. The committee shall meet, on such occasions and with such frequency as it
deems appropriate, with the internal auditor, the independent accountant and
management in separate sessions to discuss any matters the committee or these
groups believe should be discussed privately with the audit committee.
TRITON ENERGY LIMITED
PROXY - ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints James C. Musselman, A. E. Turner, III, and
W. Greg Dunlevy, each with power to act without the other and with full power of
substitution, as Proxies to represent and vote, as designated on the reverse
side, all shares of Triton Energy Limited owned by the undersigned, at the
Annual Meeting of Shareholders to be held at the Royal Oaks Country Club, 7915
Greenville Avenue, Dallas, Texas 75231 on Tuesday, May 15, 2001, 10:00 a.m.,
local time, upon such business as may properly come before the meeting or any
adjournment including the following set forth on the reverse side.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFIC DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED (I) FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR, (II) FOR
APPROVAL OF THE TRITON ENERGY LIMITED 2001 SHARE INCENTIVE PLAN AND (III) AT THE
DISCRETION OF THE PROXY HOLDERS WITH REGARD TO ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
(CONTINUED, AND TO BE SIGNED AND DATED, ON THE REVERSE SIDE)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE MARK
YOUR VOTES AS X
IN THIS EXAMPLE
1. Election as Directors of the nominees listed below.
FOR all nominees WITHHOLD
listed (except as AUTHORITY
marked to the to vote for all
contrary below) Nominees
____ ____
Nominees: Tom C. Davis, James C. Musselman and C. Lamar Norsworthy
______________________________________
For all nominees except as noted above
2. Approval of the Triton Energy Limited 2001 Share Incentive Plan.
FOR AGAINST ABSTAIN
____ ____ ____
3. In their discretion on any other matter that may properly come before the
meeting or any adjournment thereof.
Please date, sign exactly as shown hereon and mail promptly this proxy in the
enclosed envelope. When there is more than one owner, each should sign. When
signing as an attorney, administrator, executor, guardian or trustee, please add
your title as such. If executed by a corporation, the proxy should be signed by
a duly authorized officer. If executed by a partnership, please sign in the
partnership name as an authorized person.
Date:__________________________, 2001
_______________________________
(Signature)
Date:__________________________, 2001
_______________________________
(Signature)
THIS PROXY MAY BE REVOKED PRIOR TO THE EXERCISE OF THE POWERS CONFERRED BY THE
PROXY.