SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
Filed by Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
OCEANEERING INTERNATIONAL, INC.
---------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee Computed on table below per Exchange Act Rules 14a-6(i) (1) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[OCEANEERING LOGO]
OCEANEERING INTERNATIONAL, INC.
11911 FM 529, HOUSTON, TEXAS 77041-3011
April 15, 2002
Dear Shareholder:
You are cordially invited to attend the 2002 Annual Meeting of
Shareholders of Oceaneering International, Inc. The meeting will be held on
Friday, June 7, 2002, at 8:30 a.m. local time in the Atrium of our corporate
offices at 11911 FM 529, Houston, Texas 77041-3011.
On the following pages, you will find the Notice of Annual Meeting of
Shareholders and Proxy Statement giving information concerning the matters to be
acted on at the meeting. Our Annual Report to Shareholders describing
Oceaneering's operations during the fiscal year ended December 31, 2001 is
enclosed.
I hope you will be able to attend the meeting in person. Whether or not
you plan to attend, please take the time to vote. In addition to using the
enclosed paper proxy card to vote, which you may sign, date and return in the
enclosed postage-paid envelope, you may vote your shares via the Internet or by
telephone by following the instructions included in this package.
Thank you for your interest in Oceaneering.
Sincerely,
/s/ JOHN R. HUFF
John R. Huff
Chairman of the Board and
Chief Executive Officer
OCEANEERING INTERNATIONAL, INC.
11911 FM 529, HOUSTON, TEXAS 77041-3011
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 7, 2002
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To the Shareholders of Oceaneering International, Inc.:
The Annual Meeting of Shareholders of Oceaneering International, Inc.,
a Delaware corporation ("Oceaneering"), will be held on Friday, June 7, 2002, at
8:30 a.m. local time in the Atrium of our corporate offices at 11911 FM 529,
Houston, Texas 77041-3011, to consider and take action on the following:
(1) election of two Class I directors as members of the Board of
Directors of Oceaneering to serve until the 2005 Annual Meeting of
Shareholders or until a successor has been duly elected and
qualified (Proposal 1);
(2) approval of the Oceaneering 2002 Incentive Plan (Proposal 2); and
(3) transaction of such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 1 AND
PROPOSAL 2.
The close of business on April 9, 2002 is the record date for the
determination of shareholders entitled to notice of, and to vote at, the meeting
or any adjournment thereof.
The Board welcomes your personal attendance at the meeting. Whether or
not you expect to attend the meeting, please submit a proxy as soon as possible
so that your shares can be voted at the meeting. You may submit your proxy by
filling in, dating and signing the enclosed proxy card and returning it in the
enclosed postage-paid envelope. Please refer to page 1 of the Proxy Statement
and the proxy card for instructions for proxy voting by telephone or over the
Internet.
By Order of the Board of Directors,
/s/ GEORGE R. HAUBENREICH, JR.
George R. Haubenreich, Jr.
Senior Vice President, General Counsel
and Secretary
April 15, 2002
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND MAIL YOUR
PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE BY TELEPHONE OR
OVER THE INTERNET IN ACCORDANCE WITH INSTRUCTIONS IN THIS PROXY STATEMENT AND ON
YOUR PROXY CARD.
OCEANEERING INTERNATIONAL, INC.
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PROXY STATEMENT
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PROXIES AND VOTING AT THE MEETING
Only shareholders of record at the close of business on April 9, 2002
will be entitled to notice of, and to vote at, the meeting. As of that date,
24,528,522 shares of our Common Stock, $.25 par value per share ("Common
Stock"), were outstanding. Each of those outstanding shares is entitled to one
vote at the meeting. We are initially sending this Proxy Statement and the
accompanying proxy to our shareholders on or about April 15, 2002. The
requirement for a quorum at the meeting is the presence in person or by proxy of
holders of a majority of the outstanding shares of Common Stock. There is no
provision for cumulative voting.
SOLICITATION OF PROXIES
The accompanying proxy is solicited on behalf of our Board of Directors
(the "Board of Directors" or the "Board") for use at our annual meeting of
shareholders to be held at the time and place set forth in the accompanying
notice. Oceaneering will pay all costs of soliciting proxies. Solicitation of
proxies will be primarily by mail. In addition to solicitation by mail,
officers, directors and employees of Oceaneering may solicit proxies in person
or by telephone, facsimile and electronic transmissions, for which such persons
will receive no additional compensation. Oceaneering has retained Georgeson
Shareholder Communications, Inc. to solicit proxies at a fee estimated at $6,000
plus reasonable expenses. Oceaneering will reimburse brokerage firms, banks and
other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding proxy material to beneficial owners of Common Stock.
The persons named as proxies were designated by the Board and are
officers of Oceaneering. All properly executed proxies will be voted (except to
the extent that authority to vote has been withheld), and where a choice has
been specified by the shareholder as provided in the proxy, the proxy will be
voted in accordance with the specification so made. Proxies submitted without
specified choices will be voted FOR PROPOSAL 1 to elect the nominees for
director proposed by the Board and FOR PROPOSAL 2 to approve the Oceaneering
2002 Incentive Plan.
METHODS OF VOTING
o VOTING BY MAIL. You may sign, date and return your proxy cards in the
pre-addressed, postage-paid envelope provided. If you return your proxy
card without indicating how you want to vote, the designated proxies will
vote as recommended by the Board.
o VOTING BY TELEPHONE OR THE INTERNET. If you have stock certificates issued
in your own name, you may vote by proxy by using the toll-free number or at
the Internet address listed on the proxy card.
The telephone and Internet voting procedures are designed to verify your
vote through the use of a voter control number that is provided on each
proxy card. The procedures also allow you to vote your shares and to
confirm that your instructions have been properly recorded. Please see your
proxy card for specific instructions.
If you hold shares through a brokerage firm, bank or other custodian, you
may vote by telephone or the Internet only if the custodian offers that
option.
1
REVOCABILITY OF PROXIES
o REVOKING YOUR VOTING INSTRUCTIONS TO YOUR PROXY HOLDERS. If you have
certificates issued in your own name, and you vote by proxy,
mail, the Internet or telephone, you may later revoke your proxy
instructions by:
o sending a written statement to that effect to the Corporate
Secretary at P. O. Box 40494, Houston, Texas 72240-0494, the
mailing address for the executive offices of Oceaneering;
o submitting a proxy card with a later date signed as your name
appears on the stock account;
o voting at a later time by telephone or the Internet; or
o voting in person at the Annual Meeting.
If you have shares held through a brokerage firm, bank or other
custodian, and you vote by proxy, you may later revoke your proxy
instructions only by informing the custodian in accordance with any
procedures it sets forth.
ELECTION OF DIRECTORS
PROPOSAL 1
The Certificate of Incorporation of Oceaneering divides the Board into
three classes, each consisting as nearly as possible of one-third of the members
of the whole Board. There are currently two members of each class. The members
of each class serve for three years following their election, with one class
being elected each year.
Two Class I directors are to be elected at the 2002 Annual Meeting. In
accordance with Oceaneering's bylaws, directors are elected by a plurality of
the votes cast. Accordingly, abstentions and broker "non-votes" marked on proxy
cards will not be counted in the election. The Class I directors will serve
until the 2005 Annual Meeting of Shareholders or until a successor has been duly
elected and qualified. The directors of Classes II and III will continue to
serve their terms of office, which will expire at the Annual Meetings of
Shareholders to be held in 2003 and 2004, respectively.
The persons named in the accompanying proxy intend to vote all proxies
received in favor of the election of the nominees named below, who are currently
directors of Oceaneering, except in any case where authority to vote for the
directors is withheld. Although the Board has no reason to believe that the
nominees will be unable to serve as directors, if the nominees withdraw or
otherwise become unavailable to serve, the persons named as proxies will vote
for any substitute nominee the Board designates.
Set forth below is certain information (ages are as of June 7, 2002)
with respect to the nominees for election as directors of Oceaneering.
NOMINEES - CLASS I DIRECTORS:
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
------------------- --- --------
T. Jay Collins.................................................................. 55 2002
Mr. Collins was elected a director of Oceaneering in March 2002. He
has been President and Chief Operating Officer of Oceaneering since
1998. He served as Executive Vice President - Oilfield Marine Services
from 1995 to 1998 and as Senior Vice President and Chief Financial
Officer since 1993, when he joined Oceaneering. He is also a director
of Friede Goldman Halter, Inc.
2
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
------------------- --- --------
D. Michael Hughes.............................................................. 63 1970
Mr. Hughes has been owner of The Broken Arrow Ranch and affiliated
businesses, which harvest, process and market wild game meats, since
1983. He has been associated with Oceaneering since its incorporation,
serving as Chairman of the Board from 1984 to 1990.
CONTINUING DIRECTORS
Set forth below is comparable information for those directors whose
terms will expire in 2003 and 2004.
2003 - CLASS II DIRECTORS:
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
------------------- --- --------
Charles B. Evans............................................................... 77 1980
Mr. Evans has been a director of ResTech Inc., an oilfield service firm
specializing in custom log data processing, since 1982, having served as
Chairman through 1998. He previously served from 1973 to 1979 as
Executive Vice President of Schlumberger Limited, an international
oilfield evaluation and services company, until his retirement in 1979
after 31 years of service.
John R. Huff................................................................... 56 1986
Mr. Huff has been Chairman of the Board of Directors of Oceaneering
since August 1990. He has been a director and Chief Executive Officer of
Oceaneering since joining Oceaneering in 1986. He is also a director of
BJ Services Company and Suncor Energy Inc.
2004 - CLASS III DIRECTORS:
NAME AND DIRECTOR
BUSINESS EXPERIENCE AGE SINCE
------------------- --- --------
David S. Hooker................................................................ 59 1973
Mr. Hooker has been Chairman of Goshawk Insurance Holdings PLC, a marine
insurance group, since January 1996. Previously, he served as Chairman
of Bakyrchik Gold PLC, a natural resources company, from 1993 to 1996.
He was Managing Director of Aberdeen Petroleum PLC, an oil and gas
exploration and production company, from 1988 to 1993.
Harris J. Pappas................................................................ 57 1996
Mr. Pappas has been President and shareholder of Pappas Restaurants,
Inc., a privately owned and operated multistate restaurant group, since
1983. He is a director of Luby's Inc. and a trustee of Memorial Hermann
Hospital in the Texas Medical Center in Houston.
3
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the number of shares of Common Stock of
Oceaneering beneficially owned as of March 28, 2002, by each director and
nominee for director, each of the executive officers named in the Summary
Compensation Table in this Proxy Statement and all directors and officers as a
group. Except as otherwise indicated, each individual named has sole voting and
dispositive power with respect to the shares shown.
NUMBER OF PERCENT
NAME SHARES(1) OF CLASS
---- --------- --------
T. Jay Collins ............................................. 169,936 *
Charles B. Evans ........................................... 1,900 *
George R. Haubenreich, Jr. ................................. 90,696 *
David S. Hooker ............................................ 48,000 *
John R. Huff ............................................... 710,841 2.9
D. Michael Hughes .......................................... 83,400 *
M. Kevin McEvoy ............................................ 96,403 *
Marvin J. Migura ........................................... 84,600 *
Harris J. Pappas ........................................... 20,000 *
All directors and officers as a group (21 persons) ......... 1,535,825 6.3
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* Less than 1%
(1) Includes the following shares subject to stock options exercisable
within 60 days of March 28, 2002: Mr. Collins - 7,500, Mr. McEvoy -
5,000, Mr. Haubenreich - 5,000, Mr. Hooker - 48,000, Mr. Huff -
142,500, Mr. Hughes - 50,000, Mr. Migura - 13,000, Mr. Pappas - 20,000,
and all directors and officers as a group - 309,650. Includes the
following shares granted pursuant to restricted stock award agreements,
as to which the recipient has sole voting power and no dispositive
power: Mr. Collins - 75,598, Mr. McEvoy - 40,207, Mr. Haubenreich -
38,550, Mr. Huff - 163,547, Mr. Migura - 38,850, and all directors and
officers as a group - 455,208. Also includes the following share
equivalents, which are fully vested but are held in trust pursuant to
the Oceaneering Retirement Investment Plan (the "Retirement Plan"), for
which the individual has no voting rights until the shares are
withdrawn from the Retirement Plan: Mr. Collins - 10,136, Mr. Huff -
1,505, Mr. Hughes - 20,094, Mr. McEvoy - 5,533 and all directors and
officers as a group - 47,327.
4
Listed below are the only persons who, to our knowledge, may be deemed
to be beneficial owners as of March 28, 2002 of more than 5% of the outstanding
shares of Common Stock. This information is based on statements filed with the
Securities and Exchange Commission (the "SEC").
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
------------------- -------------------- -----------
Neuberger Berman, Inc.
Neuberger Berman, LLC
605 Third Avenue
New York, NY 10158 ......................... 1,576,094(2) 6.4
The TCW Group, Inc.
865 South Figueroa Street
Los Angeles, CA 90017 ...................... 1,424,755(3) 5.8
FMR Corp.
82 Devonshire Street
Boston, MA 02109 ........................... 1,263,820(4) 5.2
NewSouth Capital Management, Inc.
1000 Ridgeway Loop Road, Suite 233
Memphis, TN 38120 .......................... 1,222,602(5) 5.0
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(1) The percentages are based on the total number of issued and outstanding
shares of Common Stock at March 28, 2002.
(2) According to a Schedule 13G, dated February 11, 2002, filed with the SEC
by Neuberger Berman, Inc. and Neuberger Berman, LLC, Neuberger Berman,
LLC beneficially owned 1,576,094 shares of Common Stock as of December
31, 2001. That filing states that Neuberger Berman, Inc. owns 100% of
Neuberger Berman, LLC and is, therefore, also deemed to be a beneficial
owner of those shares. That filing also states that, of the 1,576,094
shares of Common Stock beneficially owned, Neuberger Berman, LLC had
sole voting power over 677,094 shares, shared voting power over 893,500
shares and shared dispositive power over 1,576,094 shares. To the extent
voting power or dispositive power is shared, the filing indicates it is
shared with Neuberger Berman's mutual fund clients.
(3) According to a Schedule 13G, dated February 13, 2002, filed with the SEC
by The TCW Group, Inc. on behalf of itself and its direct and indirect
subsidiaries ("The TCW Business Unit"), The TCW Business Unit
beneficially owned 1,424,755 shares of Common Stock as of December 31,
2001. That filing states that The TCW Business Unit had shared voting
and dispositive power over all those shares.
(4) According to a Schedule 13G, dated February 14, 2002, filed with the
SEC jointly by FMR Corp., Edward C. Johnson 3d, Abigail P. Johnson and
Fidelity Management and Research Company ("Fidelity"), Mr. Johnson is
chairman and Ms. Johnson is a director of FMR Corp. and may be deemed
to be members of a controlling group with respect to FMR Corp. That
filing states that, as of December 31, 2001, (a) Fidelity, a wholly
owned subsidiary of FMR Corp, was the beneficial owner of 227,620 shares
of Common Stock in its capacity as an investment adviser to various
investment companies (the "Fidelity Funds"), with the power to vote
those shares residing solely with the board of trustees of the Fidelity
Funds and the power to dispose of those shares residing with Mr.
Johnson, FMR Corp., Fidelity and the Fidelity Funds; and (b) Fidelity
Management Trust Company, a bank that is wholly owned by FMR Corp., was
the beneficial owner of 1,036,200 shares of Common Stock, with the power
to vote and dispose of those shares residing solely with Mr. Johnson and
FMR Corp. through its control of Fidelity Management Trust Company.
5
(5) According to a Schedule 13G, dated February 13, 2002, filed with the
SEC, NewSouth Capital Management, Inc. beneficially owned 1,222,602 of
Common Stock as of December 31, 2001. That filing states that NewSouth
Management, Inc. had sole voting power over 966,502 shares of Common
Stock, sole dispositive power over 1,208,002 shares of Common Stock and
shared dispositive power over 14,600 shares of Common Stock.
ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS
Oceaneering has standing Audit, Compensation and Nominating Committees
of its Board of Directors.
The Audit Committee, which held two meetings during fiscal year 2001,
is comprised of Messrs. Hooker (Chairman), Hughes and Pappas. The Audit
Committee is governed by a charter that it has adopted. We attached a copy of
that charter to the proxy statement for our 2000 Annual Meeting of Shareholders.
You can obtain a copy of that charter by making a request for a copy to our
Corporate Secretary. Oceaneering's securities are listed on the New York Stock
Exchange and are governed by its listing standards. Each of the members of the
Audit Committee is independent as defined by our policy and the New York Stock
Exchange's listing standards. The Audit Committee's role is one of financial
oversight. Oceaneering's management is responsible for preparing financial
statements, and Oceaneering's independent auditors are responsible for auditing
those financial statements. The Audit Committee is not providing any expert or
special assurance as to Oceaneering's financial statements or any professional
certification as to the independent auditors' work.
The following functions are the key responsibilities of the Audit Committee in
carrying out its oversight:
o recommending the appointment of our independent auditors to
the Board of Directors;
o reviewing the scope of the independent auditors' examination
and the scope of activities of our internal audit department;
o reviewing our financial policies and accounting systems and
controls and our audited financial statements and interim
financial statements;
o preparing a report for inclusion in our proxy statement
regarding its review of our audited financial statements,
which report includes a statement on whether it recommended
that the Board include those financial statements in our
annual report on Form 10-K for such period;
o approving and ratifying the duties and compensation of our
independent auditors, both for audit and non-audit services;
and
o reviewing and assessing, on an annual basis, the adequacy of
the Audit Committee's charter and recommending revisions to
the Board.
The Audit Committee meets separately with the internal and independent
auditors, outside the presence of Oceaneering management or other employees, to
provide an open avenue of communication. The Audit Committee and the Board of
Directors are ultimately responsible for the selection, evaluation and
replacement of the independent auditors.
The Compensation Committee is comprised of Messrs. Evans (Chairman) and
Pappas, both of whom are nonemployee directors and are not former officers of
Oceaneering. The Compensation Committee, which held three meetings during fiscal
year 2001, establishes and reports to the full Board with respect to
compensation plans under which officers and directors are eligible to
participate, as well as the salary for our Chief Executive Officer. The
Compensation Committee approves salaries for all our other executive officers.
The Compensation Committee administers our annual bonus plans, long-term
incentive plans and supplemental executive retirement plan (the "Supplemental
Executive Retirement Plan") and reviews our overall compensation program on a
regular basis. The Compensation Committee also recommends to the full Board a
successor to our Chief Executive Officer when a vacancy occurs.
6
The Nominating Committee is comprised of Messrs. Hughes (Chairman),
Evans and Hooker. The Nominating Committee, which held two meetings during the
fiscal year 2001, considers and recommends to the full Board nominees to fill
Board vacancies and a director to serve as Chairman of the Board. The Nominating
Committee receives and evaluates shareholder proposals for nominees to fill
Board vacancies and recommends to the Board candidates for membership on the
committees of the Board.
As to each person a shareholder proposes to nominate for election as a
director, our bylaws provide that the nomination notice must (1) include the
name, age, business address and principal occupation or employment of that
person, the number of shares of Common Stock beneficially owned or owned of
record by that person and any other information relating to that person that is
required to be disclosed under Section 14 of the Securities Exchange Act of 1934
(the "Exchange Act") and the related SEC rules and regulations and (2) be
accompanied by the written consent of the person to be named in the proxy
statement as a nominee and to serve as a director if elected. The nomination
notice must also include, as to that shareholder and the beneficial owner, if
any, of Common Stock on whose behalf the nomination or nominations are being
made (1) the name and address of that shareholder, as they appear on
Oceaneering's stock records and the name and address of that beneficial owner,
(2) the number of shares of Common Stock which that shareholder and that
beneficial owner each owns beneficially or of record, (3) a description of all
arrangements and understandings between that shareholder or that beneficial
owner and each proposed nominee of that shareholder and any other person or
persons (including their names) pursuant to which the nomination(s) are to be
made by that shareholder, (4) a representation by that shareholder that he or
she intends to appear in person or by proxy at that meeting to nominate the
person(s) named in that nomination notice, (5) a representation as to whether
that shareholder or that beneficial owner, if any, intends, or is part of a
group, as Rule 13d-5(b) under the Exchange Act uses that term, which intends (a)
to deliver a proxy statement and/or form of proxy to the holders of shares of
Common Stock of Oceaneering having at least the percentage of the total votes of
the holders of all outstanding shares of Common Stock of Oceaneering entitled to
vote in the election of each proposed nominee of that shareholder which is
required to elect that proposed nominee and/or (b) otherwise to solicit proxies
in support of the nomination and (6) any other information relating to that
shareholder and that beneficial owner that is required to be disclosed under
Section 14 of the Exchange Act and the related SEC rules and regulations. To be
timely for consideration at our 2003 Annual Meeting, a shareholder's nomination
notice must be received at our principal executive offices, 11911 FM 529,
Houston, Texas 77041-3011, addressed to our Corporate Secretary, no earlier than
December 2, 2002 and no later than the close of business on January 31, 2003.
During fiscal year 2001, the Board of Directors held a total of four
meetings. Each member of the Board attended all Board meetings and all meetings
of any committee on which he served.
Oceaneering pays its outside directors a $15,000 annual retainer,
$1,000 for each Board meeting attended, $800 for each committee meeting attended
(if the meeting is on a day other than the date of a Board meeting) and a
consulting fee of $100 per hour up to a maximum of $800 per day for any
consulting services. All directors are reimbursed for their travel and other
expenses involved in attendance at Board and committee meetings.
Nonemployee directors are participants in our shareholder-approved 1999
Incentive Plan. Under this plan, each of our nonemployee directors is
automatically granted an option to purchase 10,000 shares of Common Stock on the
date the director first becomes a nonemployee director and each year thereafter
while he remains a nonemployee director, in each case at an exercise price per
share equal to the fair market value of a share of Common Stock on the date the
option was granted. These options become fully exercisable six months following
the date of grant.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive
officers and persons who own more than 10% of our Common Stock to file with the
SEC and the New York Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock. Based solely on a review of the copies of
such reports furnished to us and representations that no other reports were
required, we believe that all our directors and executive officers complied on a
timely basis with all applicable filing requirements under Section 16(a) of the
Exchange Act during fiscal year 2001.
7
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviewed and discussed with management
Oceaneering's audited financial statements as of and for fiscal year 2001.
In addition, the Audit Committee discussed with Arthur Andersen LLP,
Oceaneering's independent accountants, the matters required to be discussed by
Statement of Auditing Standards No. 61, Communication with Audit Committees, as
amended, issued by the Auditing Standards Board of the American Institute of
Certified Public Accountants.
The Audit Committee received and reviewed the written disclosures and
the letter from Arthur Andersen LLP, required by the Independent Standards
Board's Standard No. 1, Independence Discussions with Audit Committee, as
amended, and discussed with that firm its independence from Oceaneering. The
Audit Committee also considered whether Arthur Andersen LLP's provision of
services that are not related to the audit of Oceaneering's financial statements
is compatible with monitoring that firm's independence from Oceaneering.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to Oceaneering's Board of Directors that the audited
financial statements referred to above be included in Oceaneering's annual
report on Form 10-K for fiscal year 2001 for filing with the SEC.
Audit Committee
David S. Hooker, Chairman
D. Michael Hughes
Harris J. Pappas
8
EXECUTIVE COMPENSATION
The following table sets forth compensation information for the fiscal
year ended December 31, 2001, the nine-month period ended December 31, 2000 and
the two fiscal years ended March 31, 2000 and 1999 with respect to our Chief
Executive Officer and our four other most highly compensated executive officers
who served as such during the fiscal year ended December 31, 2001.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
-------------------------------- ------------------------ --------
RESTRICTED SECURITIES LTIP ALL OTHER
NAME AND PERIOD STOCK UNDERLYING PAYOUTS COMPENSATION
PRINCIPAL POSITION ENDED SALARY($) BONUS($)(2) AWARDS OPTIONS(#) ($)(4) ($)(5)
------------------ ------ --------- ----------- ---------- ---------- -------- ------------
John R. Huff 12/01 500,000 550,000 0 50,000 1,112,659 301,500
Chairman and 12/00 326,250 0 0 100,000 739,504 195,750
Chief Executive Officer 3/00 435,000 0 (3) 0 854,006 174,000
3/99 435,000 235,000 0 40,000 1,150,603 174,000
T. Jay Collins 12/01 270,000 265,000 0 30,000 524,231 135,625
President and 12/00 176,250 0 0 60,000 345,102 88,125
Chief Operating Officer 3/00 235,000 0 (3) 0 251,032 70,500
3/99 225,000 139,000 0 20,000 214,111 68,750
Marvin J. Migura 12/01 210,000 170,000 0 20,000 262,115 84,333
Senior Vice President and 12/00 138,750 25,000 0 40,000 172,551 55,500
Chief Financial Officer 3/00 185,000 0 (3) 0 159,099 44,400
3/99 185,000 75,000 0 15,000 107,055 44,400
M. Kevin McEvoy 12/01 210,000 180,000 0 20,000 286,728 84,333
Senior Vice President 12/00 135,000 0 0 40,000 197,201 54,000
3/00 180,000 0 (3) 0 157,496 39,600
3/99 180,000 80,000 0 15,000 153,096 39,600
George R. Haubenreich, Jr. 12/01 205,000 170,000 0 20,000 262,115 82,333
Senior Vice President, 12/00 138,750 0 0 39,000 172,551 55,500
General Counsel and 3/00 185,000 0 (3) 0 143,066 44,400
Secretary 3/99 185,000 65,000 0 15,000 145,488 44,400
----------
(1) Includes salary earned in a fiscal period, whether or not deferred.
Excludes the value of perquisites and other personal benefits for each
of the named executive officers because the aggregate amounts thereof
did not exceed the lesser of $50,000 or 10% of the total annual salary
and bonus reported for any named executive officer.
(2) In our fiscal year ended March 31, 1999, Messrs. Huff, Collins, Migura,
McEvoy and Haubenreich elected to receive all or part of their bonus
awards in restricted stock. The bonus amounts stated for fiscal year
ended March 31, 1999 include the following restricted stock grants
valued on the basis of the closing market price of $16.56 per share on
the date of award: Mr. Huff - 14,188 shares, Mr. Collins - 8,392
shares, Mr. Migura - 2,400 shares, Mr. McEvoy - 4,828 shares and Mr.
Haubenreich - 1,200 shares. Twenty-five percent of these restricted
stock awards vested in June of the calendar year awarded, with the
remainder vesting over three years from the vesting date, conditional
upon continued employment. At the time of each vesting, a tax
assistance payment has been made to the award recipients, which must be
reimbursed to Oceaneering if the related vested stock is sold within
three years after the vesting date.
9
(3) At December 31, 2001, the number and value of the long-term incentive
restricted stock holdings that have not vested (based on the closing
market price on December 31, 2001 of $22.12 per share) under restricted
stock awards granted in the fiscal year ended March 31, 2000 and earlier
were as follows: Mr. Huff - 160,000 shares, $3,539,200; Mr. Collins -
76,500 shares, $1,692,180; Mr. Migura - 38,250 shares, $846,090; Mr.
McEvoy - 39,000 shares, $862,680; and Mr. Haubenreich - 38,250 shares,
$846,090. The following table sets forth the scheduled vesting of these
shares as of December 31 of the years indicated:
2002 2003 2004 2005 2006
---- ---- ---- ---- ----
Mr. Huff 40,000 45,000 37,500 25,000 12,500
Mr. Collins 19,000 21,500 18,000 12,000 6,000
Mr. Migura 9,500 10,750 9,000 6,000 3,000
Mr. McEvoy 10,000 11,000 9,000 6,000 3,000
Mr. Haubenreich 9,500 10,750 9,000 6,000 3,000
These restricted shares are issued and outstanding and dividends, if
any, are earned on the restricted shares. The value of such stock for
which restrictions were lifted and the related tax-assistance payments
in the fiscal year ended December 31, 2001, the nine-month period ended
December 31, 2000 and the fiscal years ended March 31, 2000 and 1999 are
included in the LTIP payout columns in the table.
(4) Amounts represent the aggregate value of long-term incentive restricted
stock for which restrictions were lifted and the related tax-assistance
payments.
(5) In the fiscal year ended December 31, 2001, the nine-month period ended
December 31, 2000 and the fiscal years ended March 31, 2000 and 1999,
the amounts represent amounts accrued for each executive under a
nonqualified Supplemental Executive Retirement Plan, which are subject
to vesting over a three-year period.
EXECUTIVE EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL AGREEMENTS
In November 2001, Oceaneering entered into a Service Agreement (the
"Service Agreement") with Mr. Huff which replaced Mr. Huff's prior employment
agreement. As did the prior employment agreement, the Service Agreement provides
medical coverage on an after-tax basis to Mr. Huff, his spouse and children
during his employment with Oceaneering and, under certain circumstances,
thereafter for their lives. The Service Agreement provides for a specific
employment period through August 15, 2006, followed by a specific service period
ending no later than August 15, 2011, during which time Mr. Huff, acting as an
independent contractor, will serve as nonexecutive Chairman of the Board of
Oceaneering if the Board requests that he serve in such capacity.
During the employment period under the Service Agreement, Mr. Huff's
compensation consists of an annual base salary, contributions by Oceaneering
into its Supplemental Executive Retirement Plan, an annual bonus and an
aggregate long-term incentive opportunity no less than that existing at the
commencement of the Service Agreement, as may be subsequently increased, and
certain perquisites and administrative assistance. If his employment is
terminated during his employment period by Oceaneering for cause or by Mr. Huff
for other than good reason, as defined below, no salary or benefits not
previously vested will be payable to Mr. Huff under the Service Agreement. If
Mr. Huff's employment is terminated by Oceaneering for reasons other than cause,
by Mr. Huff for good reason or by reason of Mr. Huff's death or disability: (1)
Mr. Huff will be entitled to receive a termination package consisting of: (a) an
amount equaling his highest rate of annual base salary during his employment
with Oceaneering multiplied by the sum of 10 and the number of years then
remaining in the unexpired portion of his employment period; (b) an amount equal
to the value of the maximum award he would have been eligible to receive under
the then current fiscal year bonus plan; and (c) an amount equal to the maximum
percentage of his annual base salary contributed by Oceaneering for him in its
Supplemental Executive Retirement Plan for the then current year multiplied by
his highest annual rate of base salary; (2) all of Mr. Huff's then outstanding
stock options will immediately vest and become exercisable or he may elect to be
paid an amount equal to the spread between the exercise price and the higher
market value for the shares of Common Stock underlying those options; (3) Mr.
Huff's benefits under all compensation plans, including restricted stock
agreements, will become payable to him as if all contingencies for payment and
maximum level of performance have been met; (4) Mr. Huff will receive benefits
under all other plans he participates in for three years; and (5) Mr. Huff will
be entitled to receive certain perquisites and administrative assistance for 10
years from the date of any such termination.
10
As defined in the Service Agreement, good reason for Mr. Huff to
terminate includes: any adverse change in status, title, duties or
responsibilities; any reduction in annual base salary, Supplemental Executive
Retirement Plan contribution level by Oceaneering, annual bonus opportunity or
aggregate long-term compensation, all as subsequently may be increased; any
relocation; the failure of a successor to assume the Service Agreement; any
prohibition by Oceaneering against Mr. Huff's engaging in outside activities
permitted by the Service Agreement; any purported termination by Oceaneering
that does not comply with the terms of the Service Agreement; and default by
Oceaneering in the performance of its obligations under the Service Agreement.
Following the completion of his employment period, Oceaneering may
request that Mr. Huff serve as nonexecutive Chairman of the Board during the
service period, and if he refuses to serve and Oceaneering is fulfilling its
obligations under the Service Agreement, no salary or benefits not previously
vested as of the time of his refusal will be payable to Mr. Huff under the
Service Agreement. If Mr. Huff is not requested to serve as nonexecutive
Chairman of the Board or his service as nonexecutive Chairman of the Board
terminates for any reason other than his refusal to serve, including by reason
of his death or disability, or the failure of Oceaneering to fulfill its
obligations under the Service Agreement, Mr. Huff will be entitled to receive
the termination package described above, except that an amount equal to the
highest annual rate of base salary earned during the employment period would be
paid to Mr. Huff over 10 years (rather than in a lump sum); provided that, in
the event of his subsequent death or a subsequent change of control, as defined
below, the aggregate amount of all such payments would be accelerated and
immediately payable. During Mr. Huff's service as nonexecutive Chairman of the
Board, if any, his annual rate of compensation would be equal to 50% of his
highest annual base salary during the employment period. Moreover, throughout
the service period, Mr. Huff would continue to receive certain perquisites and
administrative assistance, and he would continue to participate in plans he
participated in as of August 15, 2006; however, he would not be eligible for
subsequent grants or contributions made under any such plan after that date.
In November 2001, Oceaneering entered into Change of Control Agreements
(each, a "Change of Control Agreement") with Mr. Huff and other executives,
including each of the executive officers listed in the Summary Compensation
Table, replacing each of their respective prior senior executive severance
agreements and, in the case of Mr. Huff, also replacing his prior supplemental
senior executive severance agreement. These Change of Control Agreements entitle
the individual to receive a severance package, described below, in the event of
the occurrence of both a change of control and a termination of his employment
by Oceaneering without cause or by the executive for good reason (defined using
substantially the same definition as in Mr. Huff's Service Agreement) during a
specified period of time (or, with respect to Mr. Huff while nonexecutive
Chairman of the Board, a termination of his service for any reason other than
his refusal to serve as nonexecutive Chairman of the Board). For purposes of the
Change of Control Agreements and the Service Agreement, a change of control is
defined as occurring if: (1) any person is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Oceaneering representing 20% or more of the combined voting power
of Oceaneering's outstanding voting securities, other than through the purchase
of voting securities directly from a private placement; (2) the current members
of the Board, or subsequent members approved by at least two-thirds of the
current members, no longer comprise a majority of the Board; (3) Oceaneering is
merged or consolidated with another corporation or entity, and Oceaneering's
shareholders own less than 60% of the outstanding voting securities of the
surviving or resulting corporation or entity; (4) a tender offer or exchange
offer is made and consummated by a person other than Oceaneering for the
ownership of 20% or more of Oceaneering's voting securities; or (5) there has
been a disposition of all or substantially all of Oceaneering's assets.
The severance package provided for in each such executive's Change of
Control Agreement consists of an amount equal to three times the sum of: (1) the
executive's highest annual rate of base salary during the then current year or
any of the three years preceding termination; (2) an amount equal to the maximum
award the executive is eligible to receive under the then current fiscal year
bonus plan; and (3) an amount equal to the maximum percentage of the executive's
annual base salary contributed by Oceaneering for him in the Supplemental
Executive Retirement Plan for the then current year multiplied by the
executive's highest annual rate of base salary. A minimum aggregate amount
payable for these items is stated in each such executive's agreement, which
amount was calculated using the fiscal year ended December 31, 2001 amounts for
each component. This calculated minimum amount for Mr. Huff is applicable for
any termination occurring during his service as nonexecutive Chairman of the
Board.
11
The severance package also provides that, for each individual: (1) all
outstanding stock options immediately vest and become exercisable or the
individual may elect to be paid an amount equal to the spread between the
exercise price and the higher market value for the shares of Common Stock
underlying those options; (2) the benefits under all compensation plans,
including restricted stock agreements, will be paid as if all contingencies for
payment and maximum levels of performance have been met; and (3) the applicable
individual will receive benefits under all other plans he then participates in
for three years. Any payment of the Change of Control severance package to Mr.
Huff would not reduce any benefits or compensation due Mr. Huff under the
Service Agreement; provided however, that the above mentioned benefits regarding
stock options, benefits under compensation plans and other benefits payable for
three years are not provided under the Change of Control Agreement to Mr. Huff
to the extent they are duplicative of benefits provided to him under his Service
Agreement.
The Change of Control Agreements and Mr. Huff's Service Agreement
provide that if any payments made thereunder would cause the recipient to be
liable for an excise tax because the payment is a "parachute payment" (as
defined in the Internal Revenue Code), then Oceaneering will pay the individual
an additional amount to make the individual whole with respect to that tax
liability.
LONG-TERM INCENTIVE PLANS AND RETIREMENT PLANS
Under our 1996 and 1999 Incentive Plans and 2000 Non-Executive
Incentive Plan, the Compensation Committee may grant options, stock appreciation
rights, stock awards and cash awards to employees and other persons (excluding
nonemployee directors and, with respect to the 2000 Non-Executive Incentive
Plan, excluding executive officers) having an important business relationship
with us.
We also maintain a Retirement Plan and a Supplemental Executive
Retirement Plan. All employees of Oceaneering and its United States subsidiaries
who meet the eligibility requirements may participate in our Retirement Plan.
Certain key management employees and executives of Oceaneering and its
subsidiaries, as approved by the Compensation Committee, are eligible to
participate in our Supplemental Executive Retirement Plan, which we implemented
in the fiscal year ended March 31, 1998.
Under our Retirement Plan, each participant directs us to defer between
1% and 16% of the participant's base pay and contribute the deferred
compensation to the Retirement Plan, with such contributions being invested in
shares of Common Stock, mutual funds and guaranteed investments. A participant's
deferred compensation contributed to the plan is fully vested. Our contributions
to this plan become vested to the participant in percentage increments over a
six-year period, commencing with the participant's date of employment, provided
that the participant remains employed by us. We are currently contributing
shares of Oceaneering Common Stock in an amount equal to 100% of the deferred
compensation of each participant, up to the first 6% of the participant's base
pay. During the fiscal year ended December 31, 2001, none of the executive
officers listed in the Summary Compensation Table made contributions to the
Retirement Plan.
As of each July 1, the Compensation Committee may establish an amount
to be accrued subject to vesting under our Supplemental Executive Retirement
Plan for the following 12-month period (each a "Plan Year") as it determines in
its discretion, and the amounts accrued may be different for each participant.
As of September 1, 2000, a participant may elect to defer all or a portion of
base salary and annual bonus for accrual pursuant to the Supplemental Executive
Retirement Plan, which amounts are vested. We do not maintain a separate fund
for our Supplemental Executive Retirement Plan. Amounts accrued under our
Supplemental Executive Retirement Plan are adjusted for earnings and losses as
if they were invested in one or more investment vehicles selected by the
participant from those designated as alternatives by the Compensation Committee.
The account balances that are subject to vesting vest in one-third increments on
the close of the first, second and third years of continuous employment,
beginning with and including July 1 of the Plan Year with respect to which they
are accrued. These account balances vest in any event upon the first to occur of
ten years of continuous employment after becoming a participant, the date that
the sum of the participants' attained ages and years of participation equals 65,
termination of employment by reason of death or disability or within two years
of a change of control, or termination of the plan. A participant's interest in
the plan is generally distributable upon termination of employment.
12
The following table provides information concerning each stock option
exercised during the fiscal year ended December 31, 2001 by each of the named
executive officers and the value of unexercised options held by those officers
at December 31, 2001.
AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FY-END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2001 DECEMBER 31, 2001($)
ACQUIRED ON VALUE ------------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------ ------------- ----------- -------------
John R. Huff 35,000 534,625 192,500 97,500 1,602,500 506,250
T. Jay Collins 20,000 168,900 72,500 57,500 525,913 291,850
Marvin J. Migura 23,500 257,236 36,750 38,750 300,235 199,525
M. Kevin McEvoy 17,100 144,891 25,000 38,750 154,900 199,525
George R. 21,500 246,213 28,250 38,750 195,653 195,653
Haubenreich, Jr.
The following table provides information concerning grants of stock
options made to the named executive officers during the fiscal year ended
December 31, 2001.
OPTION GRANTS IN THE LAST FISCAL YEAR
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ASSUMED
----------------------------------------- ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION FOR
SECURITIES OPTIONS OPTION TERM(2)
UNDERLYING GRANTED TO EXERCISE ------------------------
OPTIONS EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE ($) ($)
---- ----------- ------------ -------- ---------- ------- -------
John R. Huff 50,000 6.7 23.82 05/31/06 329,052 727,116
T. Jay Collins 30,000 4.0 23.82 05/31/06 197,432 436,272
Marvin J. Migura 20,000 2.7 23.82 05/31/06 131,620 290,848
M. Kevin McEvoy 20,000 2.7 23.82 05/31/06 131,620 290,848
George R. Haubenreich, Jr. 20,000 2.7 23.82 05/31/06 131,620 290,848
----------
13
(1) Stock options have exercise prices equal to the fair market value of a
share of Common Stock at the date of award and become exercisable over
three years after the date of award. Options generally expire at the
earliest of five years after the date of the award, one year after the
optionee's death, disability or retirement, or at the time of the
optionee's termination of employment.
(2) The amounts shown as potentially realizable values are based on
arbitrarily assumed rates of stock price appreciation of five percent
and ten percent over the full term of the options, as required by
applicable SEC regulations. The actual value of the option grants
depends on future performance of the Common Stock and overall market
conditions. There is no assurance that the values reflected in this
table will be achieved.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Oceaneering's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). Each member
of the Committee is a nonemployee director. The Committee is dedicated to the
establishment of a strong, positive link between the development and attainment
of strategic goals, which enhance shareholder values, and the compensation and
benefit programs needed to achieve those results.
OVERALL EXECUTIVE COMPENSATION POLICY
Oceaneering's policy is designed to facilitate its mission of
increasing the net wealth of its shareholders by:
o attracting, rewarding and retaining highly qualified and
productive individuals;
o setting compensation levels that are externally competitive
and internally equitable;
o interrelating annual executive compensation with the results
of individual performance, the individual's profit center
performance and overall Oceaneering performance; and
o motivating executives and key employees toward achieving
long-term strategic results by aligning employee and
shareholder interests through the increased value of
Oceaneering's Common Stock.
There are three major components of Oceaneering's executive
compensation program: Base Salary, Annual Incentives and Long-Term Incentive
Awards. The Committee considers all elements of compensation when determining
individual components.
BASE SALARY
The Committee believes a competitive salary is essential to support
management development and career orientation of executives. The Committee
reviews annually the salary of executive officers. In determining appropriate
salary levels, the Committee considers level and scope of responsibility and
accountability, experience, individual performance contributions, internal
equity and market comparisons. The Committee does not assign specific weightings
to these criteria. However, the Committee manages base salaries for the
executive group in a manner that emphasizes incentive compensation.
ANNUAL INCENTIVES
The Committee administers an annual cash incentive bonus award plan to
reward executive officers and other key employees of Oceaneering based on
individual performance and the achievement of specific financial and operational
goals determined for the year. The award interrelates individual performance, an
individual's profit center performance and Oceaneering's overall performance.
For the fiscal year ended December 31, 2001, the maximum annual bonus award
established for executive officers was within a range of 40% to 150% of base
salary.
14
LONG-TERM INCENTIVE AWARDS
Long-term incentive awards under Oceaneering's Long-Term Incentive
Plans are designed to create a mutuality of interest between executive officers
(and other key employees) and shareholders through stock ownership and other
incentive awards.
To achieve these objectives, the Committee granted restricted Common
Stock to executive officers and other key employees of Oceaneering in the fiscal
year ended March 31, 2000. Those awards are subject to earning requirements
during the three-year performance period and subsequent vesting requirements. Up
to one-third of the total grant may be earned each year, depending upon
Oceaneering's cumulative Common Stock performance from July 16, 1999 as compared
with a specified peer group's cumulative common stock performance from that
date, with any amount earned subject to vesting in four equal installments over
three years commencing one year after earning, conditional upon continued
employment. If the performance of Oceaneering's Common Stock is less than 50% of
the average of the performance of the common stock of the peer group, no shares
of restricted stock are earned. If the performance of Oceaneering's Common Stock
is 50% to 87.5% or greater than the average of the performance of the peer
group, the amount of restricted stock earned will range from 16% to 100% of the
maximum achievable for that period. At the time of each vesting, the participant
receives a tax assistance payment, which must be reimbursed to Oceaneering if
the vested Common Stock is sold within three years after the vesting date. At
the end of the fiscal year ended December 31, 2001, two-thirds of this grant was
earned subject to vesting.
The Committee awards stock options to a broad group of executives and
key employees. Stock option grants were made in the fiscal year ended December
31, 2001 to all the executive officers listed in the Summary Compensation Table.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
John R. Huff has been Chief Executive Officer of Oceaneering since
August 1986 and Chairman of the Board since 1990. His compensation package has
been designed to encourage the enhancement of shareholder value. Mr. Huff's
compensation for the fiscal year ended December 31, 2001 included the same
components and methodology of salary and variable compensation as apply to other
executive officers, with regard to his high level of accountability. A
substantial portion of his compensation is at risk in the form of performance
bonuses and stock awards. During the fiscal year ended December 31, 2001, Mr.
Huff's base annual salary was increased to $500,000, he received an annual bonus
of $550,000, his last increase in base annual salary and annual bonus having
occurred in the fiscal year ended March 31, 1999, and he was granted stock
options for 50,000 shares of Oceaneering Common Stock. Mr. Huff's compensation
reflects the Committee's assessment of Oceaneering's record earnings in the
fiscal year ended December 31, 2001, its financial performance compared to other
oilfield service companies during the relevant periods, Mr. Huff's leadership
and significant personal contribution to Oceaneering's business, and
compensation data of competitive companies. In the fiscal year ended December
31, 2001, Oceaneering engaged a firm specializing in executive compensation and
change of control agreements to analyze Oceaneering's existing agreements and
make recommendations. Following consultation with that firm, Oceaneering agreed
to a Service Agreement and Change of Control Agreement with Mr. Huff, replacing
his existing employment and severance agreements. Based on the Committee's
review of the report of Oceaneering's compensation consultant, the Committee
believes the replacement agreements are more consistent with current executive
compensation practices than were the existing agreements and are structured to
better protect the interests of Oceaneering and Mr. Huff.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a
deduction to public companies to the extent of excess annual compensation over
$1 million paid to certain executive officers, except for qualified
performance-based compensation. Oceaneering had no nondeductible compensation
expense for the fiscal year ended December 31, 2001. The Committee plans to
review this matter as appropriate and take action as may be necessary to
preserve the deductibility of compensation payments to the extent reasonably
practical and consistent with Oceaneering's compensation objectives.
Compensation Committee
Charles B. Evans, Chairman
Harris J. Pappas
15
PERFORMANCE GRAPH
The following graph compares Oceaneering's total shareholder return to
the Standard & Poor's 500 Stock Index ("S&P 500") and the weighted average
return generated by a peer group from March 31, 1997 through December 31, 2001.
The peer group companies at December 31, 2001 for this performance graph are
Global Industries, Ltd., Halliburton Company, McDermott International, Inc.,
Nabors Industries, Inc., Offshore Logistics, Inc., Stolt Offshore S.A. and
Tidewater, Inc. Dresser Industries, Inc. was included in the peer group until
March 31, 1998, after which it merged with Halliburton Company. J. Ray
McDermott, S.A. was included in the peer group until March 31, 1999, after which
McDermott International, Inc. acquired all of its publicly held shares.
It is assumed in the graphs that: (1) $100 was invested in
Oceaneering's Common Stock, the S&P 500 and the peer group on March 31, 1997,
except that, with respect to the peer group, (a) the investment was made in J.
Ray McDermott, S.A., until March 31, 1999, and (b) the investment was made in
Dresser Industries, Inc. until March 31, 1998; (2) the peer group investment is
weighted based on the market capitalization of each individual company within
the peer group at the beginning of each period; and (3) any dividends are
reinvested. Oceaneering has not declared any dividends during the period covered
by the graph. The shareholder return shown is not necessarily indicative of
future performance.
COMPARISON OF CUMULATIVE SHAREHOLDER RETURN
FOR OCEANEERING, S&P 500 AND A SELECTED PEER GROUP
[PERFORMANCE GRAPH]
3/31/97 3/31/98 3/31/99 3/31/00 12/31/00 12/31/01
------- ------- ------- ------- -------- --------
Oceaneering 100.00 126.40 96.80 120.00 124.40 141.57
Peer Group 100.00 145.32 102.98 118.49 125.00 63.10
S&P 500 100.00 148.00 175.32 206.77 183.73 161.90
16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as set forth in this Proxy Statement, no director or executive
officer of Oceaneering or nominee for election as a director of Oceaneering, or
holder of more than 5% of the outstanding shares of Common Stock, and no member
of the immediate family of any such director, nominee, officer or security
holder, to our knowledge, had any material interest in any transaction during
our fiscal year ended December 31, 2001 or has any interest in any proposed
transaction to which Oceaneering or any subsidiary of Oceaneering was or is a
party in which the amount involved exceeds $60,000.
No director or executive officer of Oceaneering who served in such
capacity since January 1, 2001 or any associate of any such director or officer,
to the knowledge of the executive officers of Oceaneering, has any material
interest in any matter proposed to be acted on at the 2002 Annual Meeting of
Shareholders other than as described in this Proxy Statement.
APPROVAL OF THE 2002 INCENTIVE PLAN
PROPOSAL 2
The Board of Directors has approved, and recommends to Oceaneering's
shareholders that they approve, the 2002 Incentive Plan of Oceaneering
International, Inc. (the "Incentive Plan"). A copy of the Incentive Plan is
attached hereto as Appendix A and is incorporated herein by reference. The
following summary is qualified by reference to the full text of the Incentive
Plan.
INCENTIVE PLAN
General. The objectives of the Incentive Plan are to: (1) attract and
retain key employees, qualified directors and consultants and other independent
contractors; (2) encourage the sense of proprietorship of these persons in our
company; and (3) stimulate the active interest of these persons in the
development and financial success of Oceaneering and its subsidiaries by making
awards ("Awards") under the Incentive Plan.
Oceaneering has reserved 1,325,000 shares of Common Stock for use in
connection with the Incentive Plan, no more than 975,000 of which may be
available for incentive stock options and no more than 350,000 of which may be
available for Awards other than stock options or stock appreciation rights. On
April 9, 2002, the last reported sales price of the Common Stock on the New York
Stock Exchange was $26.96 per share. Shares which are the subject of Awards
under the Incentive Plan that are forfeited or terminated, expire unexercised,
exchanged for Awards that do not involve Common Stock, settled in cash in lieu
of Common Stock or exchanged for a consideration that does not include Common
Stock will again become available for Awards under the Incentive Plan. As of
March 28, 2002, 271,250 shares of Common Stock are available for awards under
Oceaneering's existing 1996 Incentive Plan, 1999 Incentive Plan and 2000
Non-Executive Incentive Plan (the "Prior Plans") on a combined basis. From
January 1, 2002, through March 28, 2002, 774,050 options previously granted
under the Prior Plans have been exercised. During this same time period, 6,200
additional options were granted under the Prior Plans. Accordingly, as of March
28, 2002, there were 1,560,610 options to purchase shares of Common Stock
outstanding under the Prior Plans, with a weighted average exercise price of
$18.26 per share and a weighted average term to expiration of 3.39 years. As of
March 28, 2002, no further awards will be made under the Prior Plans. Shares of
Common Stock awarded under the Prior Plans which are cancelled, terminated,
forfeited, expire unexercised, settled in cash in lieu of Common Stock or
exchanged for a consideration that does not involve Common Stock will
immediately become available for Awards under the Incentive Plan.
Persons eligible for Awards are: (1) key employees (including
individuals who have agreed to become employees of Oceaneering or its
subsidiaries within the next six months and actually become employees within
that time) holding positions of responsibility with Oceaneering or any of its
subsidiaries and whose performance can have a significant effect on the success
of Oceaneering ("Employees"); (2) nonemployee directors of Oceaneering or any of
its subsidiaries ("Nonemployee Directors"); and (3) independent contractors
providing services to Oceaneering or its subsidiaries ("Independent
Contractors").
17
The Compensation Committee of Oceaneering's Board of Directors (the
"Committee") has the exclusive power to administer the Incentive Plan, to take
all actions specifically contemplated thereby, or necessary or appropriate in
connection with the administration thereof, to interpret the Incentive Plan and
to adopt such rules, regulations and guidelines for carrying out its purposes as
the Committee may deem necessary or proper, all of which powers are to be
exercised in the best interests of Oceaneering and in keeping with the
objectives of the Incentive Plan. The Committee may, in its discretion, (1)
extend or accelerate the exercisability of any Award, (2) accelerate the vesting
of any Award, (3) eliminate or make less restrictive any restrictions contained
in any Award or waive any restriction or other provision of the Incentive Plan
or any Award or (4) otherwise amend or modify any Award in any manner that is
either not adverse to the participant holding the Award, consented to by that
participant or authorized in connection with a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or liquidation;
provided, however, that no such action by the Committee shall permit the term of
any Option to be greater than five years from the applicable grant date. The
Committee also may delegate to the chief executive officer and other senior
officers of Oceaneering its duties under the Incentive Plan.
Awards to Employees. Awards to Employees may be in the form of (1)
rights to purchase a specified number of shares of Common Stock at a specified
price ("Stock Options"), which may be denominated in one or both of Common Stock
or units denominated in Common Stock, (2) rights to receive a payment, in cash
or Common Stock, equal to the excess of the fair market value or other specified
value of a number of shares of Common Stock on the date the right is exercised
over a specified strike price, which must be not less than the fair market value
of a share of Common Stock on the date of grant ("Stock Appreciation Rights"),
(3) grants of Common Stock or units denominated in Common Stock ("Stock
Awards"), (4) grants denominated in cash ("Cash Awards") and (5) grants
denominated in cash, Common Stock, units denominated in Common Stock or any
other property that is made subject to the attainment of one or more performance
goals ("Performance Awards"). A Stock Option may be either an incentive stock
option ("ISO") that is intended to comply with the requirements of Section 422
of the Code or a nonqualified stock option ("NSO") that does not qualify under
those requirements. The term of a Stock Option will not exceed five years from
date of grant. The Committee will determine Employees to receive Awards and the
terms, conditions and limitations applicable to each Award, which conditions may
include continuous service with Oceaneering, achievement of specific business
objectives, increases in specified indices and other comparable measures of
performance. The Committee may grant Awards to Employees (1) singly, (2) in
combination or tandem with other Awards, (3) in replacement of or as
alternatives to prior Awards or (4) in combination or tandem with, in
replacement of or as alternatives to rights under any other employee plan of
Oceaneering or any acquired entity, but the Committee may not (a) grant, in
exchange for a Stock Option, a new Stock Option having a lower exercise price,
or (b) reduce the exercise price of a Stock Option. The exercise price of a
Stock Option may be paid with cash or, according to methods determined by the
Committee, with Common Stock or any other Award the applicable participant has
owned for at least six months. Performance Awards may include more than one
performance goal. A performance goal may be based on one or more business
criteria, including, but not limited to, criteria applicable to the grantee,
Oceaneering as a whole or one or more of Oceaneering's business units, and may
include one or more of the following: revenues, income from operations, net
income, stock price, market share, earnings per share, return on equity, assets
or invested capital, economic value added, market value added, decrease in costs
or achievement of balance sheet, income statement or cash flow objectives.
The Incentive Plan contains the following limitations on Awards granted
to Employees:
(1) a Stock Option must have a term not exceeding five years from the
date of grant and must have an exercise price of not less than the fair
market value of a share of Common Stock on the date of grant;
(2) the Committee must establish the performance goal or goals for each
Performance Award prior to the earlier to occur of (a) 90 days after
the commencement of the period of service for that goal or goals or (b)
the lapse of 25% of that period, and in any event while it is
substantially uncertain whether the goal or goals will be met;
(3) no Employee may be granted, during any one-year period, (a) Stock
Options or Stock Appreciation Rights exercisable for more than 300,000
shares of Common Stock or (b) Stock Awards covering or relating to more
than 300,000 shares of Common Stock (the "Stock Based Awards
Limitations"); and
(4) no Employee may be granted Cash Awards (including Performance
Awards denominated in cash) having a value determined on the date of
grant in excess of $3,000,000 in any one-year period.
18
Awards to Independent Contractors. Except for ISOs, the Committee may
make any form of Award to Independent Contractors as could be made to Employees.
The limitations in subparagraphs (2) through (4) above are inapplicable to
Awards to Independent Contractors.
Awards to Directors. On or after the effective date of his or her first
appointment or election to the Board of Directors, a Nonemployee Director will
automatically be granted an NSO that provides for the purchase of 10,000 shares
of Common Stock. In addition, on the first business day of the month next
succeeding the date on which the annual meeting of shareholders of Oceaneering
is held in each year, each Nonemployee Director will automatically be granted an
NSO that provides for the purchase of 10,000 shares of Common Stock. Each such
NSO will have a term of five years from the date of grant, notwithstanding any
earlier termination of the status of the holder as a Director. The purchase
price of each share of Common Stock subject to an NSO will be equal to the fair
market value of the Common Stock on the date of grant. No NSO may be issued in
exchange for the cancellation of an NSO with a higher exercise price, nor may
the exercise price of any NSO be reduced. All NSOs to Nonemployee Directors
shall become fully exercisable six months following the date of grant. All NSOs
granted to Nonemployee Directors that have not previously become exercisable
will be forfeited if the Director resigns as a Director without the consent of a
majority of the other Directors. Awards to Nonemployee Directors will not be
made in any year in which a sufficient number of shares of Common Stock is not
available to make such Awards under the Incentive Plan.
Other Provisions. With the approval of the Committee, payments in
respect of Awards may be deferred, either in the form of installments or a
future lump-sum payment. Oceaneering will have the right to deduct applicable
taxes from any Award payment to an Employee and withhold, at the time of
delivery or vesting of cash or shares of Common Stock under the Incentive Plan,
an appropriate amount of cash or number of shares of Common Stock, or
combination thereof, for the payment of taxes. The Committee may also (1) permit
withholding to be satisfied by the transfer to Oceaneering of shares of Common
Stock previously owned by the holder of the Award for which withholding is
required or (2) provide for loans, on either a short-term or demand basis, from
Oceaneering to a participant to permit the payment of taxes required by law.
The Board of Directors may amend, modify, suspend or terminate the
Incentive Plan for the purpose of addressing any changes in legal requirements
or for any other purpose permitted by law, except that (1) no amendment that
would impair the rights of any holder of an Award with respect to that Award may
be made without the consent of that holder and (2) no amendment or alteration
will be effective prior to its approval by the shareholders of Oceaneering to
the extent such approval is otherwise required by applicable legal requirements.
If any subdivision or consolidation of outstanding shares of Common
Stock, declaration of a stock dividend payable in shares of Common Stock or
stock split occurs, proportionate adjustments to (1) the number of shares of
Common Stock reserved under the Incentive Plan, (2) the number of shares of
Common Stock covered by outstanding Awards in the form of Common Stock or units
denominated in Common Stock, (3) the exercise or other price in respect of such
Awards, (4) the appropriate fair market value and other price determinations for
Awards, (5) the Stock Based Awards Limitations and (6) the number of shares of
Common Stock covered by Director Awards automatically granted under the
Incentive Plan will be made by the Board to reflect such transaction or event.
Furthermore, in the event of any other recapitalization or capital
reorganization of Oceaneering, any consolidation or merger of Oceaneering with
another corporation or entity, the adoption by Oceaneering of any plan of
exchange affecting the Common Stock or any distribution to holders of Common
Stock of securities or property (other than normal cash dividends or dividends
payable in Common Stock), Oceaneering's Board will make appropriate adjustments
to the amounts or other items referred to in clauses (2), (3), (4), (5) and (6)
above to give effect to such transactions, but only to the extent necessary to
maintain the proportionate interest of the holders of the Awards and to
preserve, without exceeding, the value thereof.
19
In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Board may make
such adjustments to Awards or other provisions for the disposition of Awards as
it deems equitable and will be authorized, in its discretion, (1) to provide for
the substitution of a new Award or other arrangement (which, if applicable, may
be exercisable for such property or stock as the Board determines) for an Award
or the assumption of the Award, (2) to provide, prior to the transaction, for
the acceleration of the vesting and exercisability of, or lapse of restrictions
with respect to, the Award and, if the transaction is a cash merger, provide for
the termination of any portion of the Award that remains unexercised at the time
of such transaction or (3) to provide for the acceleration of the vesting and
exercisability of an Award and the cancellation thereof in exchange for such
payment as shall be mutually agreeable to the Participant and the Board.
Tax Implications of Awards. The following is a summary of the United
States federal income tax consequences to Employees and Oceaneering as a result
of the grant and exercise of Awards under the Incentive Plan. The tax
consequences to participants who are Independent Contractors or Nonemployee
Directors are the same as the tax consequences described for Employees, except
that no ISOs are granted to those participants and no withholding applies to
those participants. This summary is based on statutory provisions, Treasury
regulations thereunder, judicial decisions and IRS rulings in effect on the date
hereof and does not address the consequences of the Incentive Plan under any
other tax laws.
No grant of any Stock Option or Stock Appreciation Right will
constitute realized taxable income to the Employee. Each participant exercising
a Stock Appreciation Right or NSO will (1) recognize ordinary income (subject to
withholding by Oceaneering) in an amount equal to the excess of (a) the amount
of cash and the fair market value of the Common Stock received over (b) the
exercise price (if any) paid therefor and (2) generally will have a tax basis in
any shares of Common Stock received pursuant to the exercise of a Stock
Appreciation Right or the cash exercise of an NSO which equals the fair market
value of those shares on the date of exercise. Subject to the discussion under
"-- Certain Tax Code Limitations on Deductibility" below, Oceaneering (or a
subsidiary) generally will be entitled to a deduction for U.S. federal income
tax purposes that corresponds as to timing and amount with the compensation
income recognized by the participant exercising a Stock Appreciation Right or
NSO.
An Employee will not have taxable income as a result of exercising an
ISO, but the excess of the fair market value of the shares of Common Stock
received on exercise of the ISO ("ISO Stock") over the exercise price will
increase the alternative minimum taxable income of the Employee, which may cause
the Employee to incur alternative minimum tax ("AMT"). The payment of any AMT by
an Employee attributable to his exercise of an ISO would be allowed as a credit
against his regular tax liability in a later year, to the extent his regular tax
liability is in excess of his AMT for that year.
On the disposition of ISO Stock that has been held for the requisite
holding period (generally, at least two years from the date of grant and one
year from the date of exercise of the ISO), the Employee generally will
recognize capital gain (or loss) equal to the difference between the amount
received in the disposition and the exercise price paid by the Employee for the
ISO Stock. If an Employee disposes of ISO Stock he has not held for the
requisite holding period (a "disqualifying disposition"), he will (1) recognize
ordinary income to the extent that the fair market value of the ISO Stock at the
time of exercise of the ISO (or, if less, the amount realized in the case of an
arm's-length disqualifying disposition to an unrelated party) exceeds the
exercise price paid by the Employee for such ISO Stock and (2) recognize capital
gain to the extent the amount realized in the disqualifying disposition exceeds
the fair market value of the ISO stock on the exercise date. If the exercise
price paid for the ISO Stock exceeds the amount realized in the disqualifying
disposition (in the case of an arm's-length disposition to an unrelated party),
such excess generally would constitute a capital loss.
Oceaneering generally will not be entitled to any federal income tax
deduction on the grant or exercise of an ISO, unless the Employee makes a
disqualifying disposition of the underlying ISO Stock, in which event,
Oceaneering will then, subject to the discussion below under "-- Certain Tax
Code Limitations on Deductibility," be entitled to a tax deduction that
corresponds as to timing and amount with the compensation income recognized by
the Employee.
20
Under current rulings, if a holder of a Stock Option uses shares of
Common Stock he already owns (other than ISO Stock that has not been held for
the requisite holding period) to pay all or any part of the exercise price of
that Option, (1) he will recognize income respecting the Common Stock received
in the manner described above, (2) no additional gain will be recognized as a
result of the transfer of shares used as payment and (3) shares so received, up
to the number of shares so used, will have a tax basis that equals, and a
holding period that includes, the tax basis and holding period of the shares of
Common Stock surrendered in satisfaction of that exercise price. Any additional
shares of Common Stock received on exercise will have a tax basis that equals
the amount of cash (if any) paid by the holder.
An Employee will recognize ordinary income on receipt of cash pursuant
to a Cash Award or Performance Award or, if earlier, at the time such cash is
otherwise made available for the Employee to draw upon. An Employee will not
have taxable income on the grant of a Stock Award in the form of units
denominated in Common Stock ("Stock Unit Award"), but rather will generally
recognize ordinary income at the time the Employee receives Common Stock or cash
in satisfaction of such Stock Unit Award in an amount equal to the fair market
value of the Common Stock or cash received. In general, an Employee will
recognize ordinary income as a result of the receipt of Common Stock pursuant to
a Stock Award or Performance Award in an amount equal to the fair market value
of the Common Stock when such stock is received; provided, however, that if the
stock is not transferable and is subject to a substantial risk of forfeiture
when received, the Employee will recognize ordinary income in an amount equal to
the fair market value of the Common Stock when it first becomes transferable or
is no longer subject to a substantial risk of forfeiture, unless the Employee
makes an election to be taxed on the fair market value of the Common Stock when
such stock is received.
An Employee will be subject to withholding for federal, and generally
for state and local, income taxes at the time the Employee recognizes income
under the rules described above with respect to Common Stock or cash received
pursuant to a Cash Award, Performance Award or Stock Award. Dividends that are
received by an Employee prior to the time that the Common Stock is taxed to the
Employee under the rules described in the preceding paragraph are taxed as
additional ordinary income, not as dividend income. The tax basis of an Employee
in the Common Stock received will equal the amount recognized by the Employee as
income under the rules described in the preceding paragraph, and the Employee's
holding period in such shares will commence on the date income is so recognized.
Certain Tax Code Limitations on Deductibility. In order for the amounts
described above to be deductible by Oceaneering or a subsidiary, such amounts
must constitute reasonable compensation for services rendered or to be rendered
and must be ordinary and necessary business expenses. The ability of Oceaneering
or a subsidiary to obtain a deduction for future payments under the Incentive
Plan could also be limited by Section 280G of the Code, which prevents the
deductibility of certain excess parachute payments made in connection with a
change in control of an employer. The ability of Oceaneering (or a subsidiary)
to obtain a deduction for amounts paid under the Incentive Plan could also be
affected by Section 162(m) of the Code, which limits the deductibility, for U.S.
federal income tax purposes, of compensation paid to certain employees of
Oceaneering to $1 million with respect to any such employee during any taxable
year of Oceaneering. However, certain exceptions apply to this limitation in the
case of performance-based compensation. It is intended that the description of
the Incentive Plan contained herein will satisfy certain of the requirements for
the performance-based exception and that Oceaneering will be able to comply with
the requirements of the Code and Treasury Regulation Section 1.162-27 with
respect to the grant and payment of certain performance-based awards (including
certain options and SARs) under the Incentive Plan so as to be eligible for the
performance-based exception. However, it may not be possible in all cases to
satisfy all of the requirements for the exception, and Oceaneering may, in its
sole discretion, determine that in one or more cases it is in its best interests
not to satisfy all of the requirements for the performance-based exception.
In accordance with Oceaneering's bylaws, approval of the Incentive Plan
requires the affirmative vote of a majority of the shares represented in person
or by proxy and entitled to vote on such matter. Because abstentions are counted
as present for purposes of the vote on this matter but are not votes "FOR" this
proposal, they have the same effect as votes "AGAINST" this proposal. Broker
non-votes will have no effect on the vote. The persons named in the accompanying
proxy intend to vote all proxies received for approval of this proposal unless
instructed otherwise.
THE BOARD OF DIRECTORS URGES THE SHAREHOLDERS TO VOTE FOR APPROVING THE
INCENTIVE PLAN.
21
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accountants who audited the financial statements
of Oceaneering for the year 2001 were Arthur Andersen LLP. As a result of the
recent widely publicized events involving Arthur Andersen LLP, including the
indictment obtained by the Department of Justice, the Board of Directors has
deferred selection of independent accountants to audit Oceaneering's financial
statements for 2002, and is therefore not seeking shareholder ratification of
the selection of accountants in accordance with its customary practice.
Oceaneering is continuing to work with Arthur Andersen LLP in
connection with the financial statement review for the first quarter of 2002.
The Audit Committee intends to continue to monitor the situation and expects to
make a recommendation to the Board of Directors shortly either to continue the
engagement of Arthur Andersen LLP or to select another accounting firm as
auditors for 2002. In any event, the Board of Directors reserves the right to
make a change in the accounting firm designated to audit Oceaneering's financial
statements at any time the Board considers such a change to be in the best
interests of Oceaneering and its shareholders.
A representative of Arthur Andersen LLP will attend the annual meeting
and will have the opportunity to make a statement and to respond to appropriate
questions.
AUDIT FEES
Arthur Andersen's fees for our audit for the fiscal year ended December
31, 2001 were $389,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
We did not incur any fees to Arthur Andersen in the fiscal year ended
December 31, 2001 with respect to financial information systems design and
implementation services.
ALL OTHER FEES
Arthur Andersen's fees for all other professional services rendered to
us during the fiscal year ended December 31, 2001 were $289,000 comprised of the
following: $74,000 for audit related services for statutory audits and audits of
employee benefit plans and a joint venture; $205,000 for tax planning and
compliance services; and $10,000 for other services.
SHAREHOLDER PROPOSALS
Any shareholder who wishes to have a qualified proposal considered for
inclusion in our proxy statement for our 2003 Annual Meeting of Shareholders
must send notice of the proposal to our Corporate Secretary at our principal
executive offices, 11911 FM 529, Houston, Texas 77041-3011, so that such notice
is received no later than December 16, 2002. If you submit such a proposal, you
must provide your name, address, the number of shares of Common Stock held of
record or beneficially, the date or dates on which you acquired those shares and
documentary support for any claim of beneficial ownership.
In addition, any shareholder who intends to submit a proposal for
consideration at our 2003 Annual Meeting of Shareholders, but not for inclusion
in our proxy statement for that meeting, or who intends to submit nominees for
election as directors at that meeting, must notify our Corporate Secretary.
Under our bylaws, such notice must (1) be received at our executive offices no
earlier than December 2, 2002 or later than close of business on January 31,
2003 and (2) satisfy certain requirements. A copy of the pertinent bylaw
provisions can be obtained from our Corporate Secretary on written request.
22
TRANSACTION OF OTHER BUSINESS
Should any other matter requiring the vote of shareholders arise at the
meeting, it is intended that proxies will be voted in respect thereto in
accordance with the judgment of the person or persons voting the proxies.
Please return your proxy as soon as possible. Unless a quorum
consisting of a majority of the outstanding shares entitled to vote is
represented at the Annual Meeting of Shareholders, no business can be
transacted. Therefore, please be sure to date and sign your proxy exactly as
your name appears on your stock certificate and return it in the enclosed
postage-paid return envelope or vote by telephone or over the Internet by
following the instructions included in this package. Please act promptly to
ensure that you will be represented at the meeting.
WE WILL PROVIDE WITHOUT CHARGE ON THE WRITTEN REQUEST OF ANY PERSON
SOLICITED HEREBY A COPY OF OUR ANNUAL REPORT ON FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001.
WRITTEN REQUESTS SHOULD BE MAILED TO GEORGE R. HAUBENREICH, JR., SECRETARY,
OCEANEERING INTERNATIONAL, INC., P. O. BOX 40494, HOUSTON, TEXAS 77240-0494.
By Order of the Board of Directors,
/s/ GEORGE R. HAUBENREICH, JR.
George R. Haubenreich, Jr.
Senior Vice President, General Counsel
and Secretary
April 15, 2002
23
APPENDIX A
2002 INCENTIVE PLAN
OF
OCEANEERING INTERNATIONAL, INC.
1. Plan. This 2002 Incentive Plan of Oceaneering International, Inc.
(the "Plan") was adopted by Oceaneering International, Inc. (the "Company") to
reward certain corporate officers and key employees of the Company and certain
independent consultants by enabling them to acquire shares of common stock of
the Company and/or through the provision of cash payments.
2. Objectives. This Plan is designed to attract and retain key
employees of the Company and its Subsidiaries, to attract and retain qualified
directors of the Company, to attract and retain consultants and other
independent contractors, to encourage the sense of proprietorship of such
employees, directors and independent contractors and to stimulate the active
interest of such persons in the development and financial success of the Company
and its Subsidiaries. These objectives are to be accomplished by making Awards
under this Plan and thereby providing Participants with a proprietary interest
in the growth and performance of the Company and its Subsidiaries.
3. Definitions. As used herein, the terms set forth below shall have
the following respective meanings:
"Annual Director Award Date" means the first business day of the month
next succeeding the date upon which the annual meeting of stockholders of the
Company is held in such year.
"Authorized Officer" means the Chairman of the Board or the Chief
Executive Officer of the Company (or any other senior officer of the Company to
whom either of them shall delegate the authority to execute any Award
Agreement).
"Award" means the grant of any Option, SAR, Stock Award or Cash Award,
whether granted singly, in combination or in tandem, to a Participant pursuant
to such applicable terms, conditions and limitations as the Committee may
establish in order to fulfill the objectives of the Plan.
"Award Agreement" means any written agreement between the Company and a
Participant setting forth the terms, conditions and limitations applicable to an
Award.
"Board" means the Board of Directors of the Company.
"Cash Award" means an award denominated in cash.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the Compensation Committee of the Board or such other
committee of the Board as is designated by the Board to administer the Plan.
"Common Stock" means the Common Stock, par value $0.25 per share, of
the Company.
"Company" means Oceaneering International, Inc., a Delaware
corporation.
"Director" means an individual serving as a member of the Board.
"Dividend Equivalents" means, with respect to shares of Restricted
Stock that are to be issued at the end of the Restriction Period, an amount
equal to all dividends and other distributions (or the economic equivalent
thereof) that are payable to stockholders of record during the Restriction
Period on a like number of shares of Common Stock.
A-1
"Employee" means an employee of the Company or any of its Subsidiaries
and an individual who has agreed to become an employee of the Company or any of
its Subsidiaries and actually becomes such an employee within the following six
months.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" of a share of Common Stock means, as of a
particular date, (i) if shares of Common Stock are listed on a national
securities exchange, the mean between the highest and lowest sales price per
share of Common Stock on the consolidated transaction reporting system for the
principal national securities exchange on which shares of Common Stock are
listed on that date, or, if there shall have been no such sale so reported on
that date, on the last preceding date on which such a sale was so reported, or,
at the discretion of the Committee, the price prevailing on the exchange at the
time of exercise, (ii) if shares of Common Stock are not so listed but are
quoted on the Nasdaq National Market, the mean between the highest and lowest
sales price per share of Common Stock reported by the Nasdaq National Market on
that date, or, if there shall have been no such sale so reported on that date,
on the last preceding date on which such a sale was so reported, (iii) if the
Common Stock is not so listed or quoted, the mean between the closing bid and
asked price on that date, or, if there are no quotations available for such
date, on the last preceding date on which such quotations shall be available, as
reported by the Nasdaq Stock Market, or, if not reported by the Nasdaq Stock
Market, by the National Quotation Bureau Incorporated or (iv) if shares of
Common Stock are not publicly traded, the most recent value determined by an
independent appraiser appointed by the Company for such purpose.
"Incentive Option" means an Option that is intended to comply with the
requirements set forth in Section 422 of the Code.
"Independent Contractor" means a person providing services to the
Company or any of its Subsidiaries, except an Employee or Nonemployee Director,
who is eligible to receive such Awards as could be made to an Employee, other
than Incentive Options.
"Option" means a right to purchase a specified number of shares of
Common Stock at a specified price.
"Nonqualified Option" means an Option that is not intended to comply
with the requirements set forth in Section 422 of the Code.
"Participant" means an Employee, Director or Independent Contractor to
whom an Award has been made under this Plan.
"Performance Award" means an award made pursuant to this Plan to a
Participant who is an Employee or Independent Contractor, which Award is subject
to the attainment of one or more Performance Goals.
"Performance Goal" means a standard established by the Committee, to
determine in whole or in part whether a Performance Award shall be earned.
"Restricted Stock" means any Common Stock that is restricted or subject
to forfeiture provisions.
"Restriction Period" means a period of time beginning as of the date
upon which an Award of Restricted Stock is made pursuant to this Plan and ending
as of the date upon which the Common Stock subject to such Award is no longer
restricted or subject to forfeiture provisions.
"SAR" means a right to receive a payment, in cash or Common Stock,
equal to the excess of the Fair Market Value or other specified valuation of a
specified number of shares of Common Stock on the date the right is exercised
over a specified strike price, in each case, as determined by the Committee.
"Stock Award" means an award in the form of shares of Common Stock or
units denominated in shares of Common Stock.
A-2
"Subsidiary" means (i) in the case of a corporation, any corporation of
which the Company directly or indirectly owns shares representing more than 50%
of the combined voting power of the shares of all classes or series of capital
stock of such corporation which have the right to vote generally on matters
submitted to a vote of the stockholders of such corporation and (ii) in the case
of a partnership or other business entity not organized as a corporation, any
such business entity of which the Company directly or indirectly owns more than
50% of the voting, capital or profits interests (whether in the form of
partnership interests, membership interests or otherwise).
4. Eligibility.
(a) Employees. Key Employees eligible for Awards under this Plan are
those who hold positions of responsibility and whose performance, in
the judgment of the Committee, can have a significant effect on the
success of the Company and its Subsidiaries.
(b) Directors. Directors eligible for Director Awards under this Plan
are those who are not employees of the Company or any of its
Subsidiaries ("Nonemployee Directors").
(c) Independent Contractors. Independent Contractors eligible for
Awards under this Plan are those Independent Contractors providing
services to, or who will provide services to, the Company or any of its
Subsidiaries.
5. Common Stock Available for Awards. Subject to the provisions of
paragraph 15 hereof, there shall be available for Awards under this Plan granted
wholly or partly in Common Stock (including rights or options that may be
exercised for or settled in Common Stock) an aggregate of 1,325,000 shares of
Common Stock. No more than 975,000 shares of Common Stock shall be available
under this Plan for Incentive Options. No more than 350,000 shares of Common
Stock shall be available under this Plan for Awards other than Options or SARs.
Shares of Common Stock awarded pursuant to the 1996 Incentive Plan, the 1999
Incentive Plan or the 2000 Non-Executive Incentive Plan (the "Prior Plans")
which are cancelled, terminated, forfeited, expire unexercised, are settled in
cash in lieu of Common Stock, or are exchanged for a consideration that does not
involve Common Stock will immediately become available for Awards under this
Plan. Effective as of March 28, 2002, no further awards shall be made under the
Prior Plans. Additionally, the number of shares of Common Stock that are the
subject of Awards under this Plan, that are forfeited or terminated, expire
unexercised, are settled in cash in lieu of Common Stock or in a manner such
that all or some of the shares covered by an Award are not issued to a
Participant or are exchanged for Awards that do not involve Common Stock, shall
again immediately become available for Awards hereunder. The Committee may from
time to time adopt and observe such procedures concerning the counting of shares
against the Plan maximum as it may deem appropriate. The Board and the
appropriate officers of the Company shall from time to time take whatever
actions are necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems to ensure that
shares of Common Stock are available for issuance pursuant to Awards.
6. Administration.
(a) Authority of the Committee. This Plan shall be administered by the
Committee. Subject to the provisions hereof, the Committee shall have
full and exclusive power and authority to administer this Plan and to
take all actions that are specifically contemplated hereby or are
necessary or appropriate in connection with the administration hereof.
The Committee shall also have full and exclusive power to interpret
this Plan and to adopt such rules, regulations and guidelines for
carrying out this Plan as it may deem necessary or proper, all of which
powers shall be exercised in the best interests of the Company and in
keeping with the objectives of this Plan. Subject to paragraph 6(c)
hereof, the Committee may, in its discretion, provide for the extension
of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any
restrictions contained in an Award, waive any restriction or other
provision of this Plan or an Award or otherwise amend or modify an
Award in any manner that is (i) not adverse to the Participant to whom
such Award was granted, (ii) consented to by such Participant or (iii)
authorized by paragraph 15(c) hereof; provided, however, that no such
action shall permit the term of any Option to be greater than five
years from the applicable grant date. The Committee may make an Award
to an individual who it expects to become an employee of the Company or
any of its Subsidiaries within the
A-3
next six months, with such Award being subject to the individual's
actually becoming an employee within such time period, and subject to
such other terms and conditions as may be established by the Committee.
The Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any Award in the manner
and to the extent the Committee deems necessary or desirable to further
the Plan purposes. Any decision of the Committee in the interpretation
and administration of this Plan shall lie within its sole and absolute
discretion and shall be final, conclusive and binding on all parties
concerned.
(b) Indemnity. No member of the Committee or officer of the Company to
whom the Committee has delegated authority in accordance with the
provisions of paragraph 7 of this Plan shall be liable for anything
done or omitted to be done by him or her, by any member of the
Committee or by any officer of the Company in connection with the
performance of any duties under this Plan, except for his or her own
willful misconduct or as expressly provided by statute.
(c) Prohibition on Repricing of Awards. No Award may be repriced,
replaced, regranted through cancellation or modified without
shareholder approval (except in connection with a change in the
Company's capitalization), if the effect would be to reduce the
exercise price for the shares underlying such Award.
7. Delegation of Authority. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish.
8. Awards. (a) Except as otherwise provided in paragraph 9 hereof
pertaining to Awards to Directors, the Committee shall determine the type or
types of Awards to be made under this Plan and shall designate from time to time
the Participants who are to be the recipients of such Awards. Each Award may be
embodied in an Award Agreement, which shall contain such terms, conditions and
limitations as shall be determined by the Committee in its sole discretion and
shall be signed by the Participant to whom the Award is made and by an
Authorized Officer for and on behalf of the Company. Awards may consist of those
listed in this paragraph 8(a) hereof and may be granted singly, in combination
or in tandem. Awards may also be made in combination or in tandem with, in
replacement of, or as alternatives to, grants or rights under this Plan or any
other plan of the Company or any of its Subsidiaries, including the plan of any
acquired entity; provided that, except as contemplated in paragraph 15 hereof,
no Option may be issued in exchange for the cancellation of an Option with a
higher exercise price nor may the exercise price of any Option be reduced. All
or part of an Award may be subject to conditions established by the Committee,
which may include, but are not limited to, continuous service with the Company
and its Subsidiaries, achievement of specific business objectives, increases in
specified indices, attainment of specified growth rates and other comparable
measurements of performance. Upon the termination of employment by a Participant
who is an Employee, any unexercised, deferred, unvested or unpaid Awards shall
be treated as set forth in the applicable Award Agreement.
(i) Option. An Award may be in the form of an Option. An Option awarded
pursuant to this Plan may consist of an Incentive Option or a Nonqualified
Option. The price at which shares of Common Stock may be purchased upon the
exercise of an Option shall be not less than the Fair Market Value of the
Common Stock on the date of grant. The term of an Option shall not exceed
five years from the date of grant. Subject to the foregoing provisions, the
terms, conditions and limitations applicable to any Options awarded
pursuant to this Plan, including the term of any Options and the date or
dates upon which they become exercisable, shall be determined by the
Committee.
(ii) Stock Appreciation Right. An Award may be in the form of a SAR.
The strike price for a SAR shall not be less than the Fair Market Value of
the Common Stock on the date on which the SAR is granted. The term of a SAR
shall not exceed five years from the date of grant. Subject to the
foregoing limitations, the terms, conditions and limitations applicable to
any SARs awarded pursuant to this Plan, including the term of any SARs and
the date or dates upon which they become exercisable, shall be determined
by the Committee.
A-4
(iii) Stock Award. An Award may be in the form of a Stock
Award. The terms, conditions and limitations applicable to any Stock
Awards granted pursuant to this Plan shall be determined by the
Committee.
(iv) Cash Award. An Award may be in the form of a Cash Award.
The terms, conditions and limitations applicable to any Cash Awards
granted pursuant to this Plan shall be determined by the Committee.
(v) Performance Award. Without limiting the type or number of
Awards that may be made under the other provisions of this Plan, an
Award may be in the form of a Performance Award. A Performance Award
shall be paid, vested or otherwise deliverable solely on account of the
attainment of one or more pre-established, objective Performance Goals
established by the Committee prior to the earlier to occur of (x) 90
days after the commencement of the period of service to which the
Performance Goal relates and (y) the lapse of 25% of the period of
service (as scheduled in good faith at the time the goal is
established), and in any event while the outcome is substantially
uncertain. A Performance Goal is objective if a third party having
knowledge of the relevant facts could determine whether the goal is
met. Such a Performance Goal may be based on one or more business
criteria that apply to the individual, one or more business units of
the Company, or the Company as a whole, and may include one or more of
the following: revenues, income from operations, net income, stock
price, market share, earnings per share, return on equity, assets or
invested capital, economic value added, market value added, decrease in
costs or achievement of balance sheet, income statement or cash flow
objectives. Unless otherwise stated, such a Performance Goal need not
be based upon an increase or positive result under a particular
business criterion and could include, for example, maintaining the
status quo or limiting economic losses (measured, in each case, by
reference to specific business criteria). In interpreting Plan
provisions applicable to Performance Goals and Performance Awards, it
is the intent of the Plan to conform with the standards of Section
162(m) of the Code and Treasury Regulation Section 1.162-27(e)(2)(i),
and the Committee in establishing such goals and interpreting the Plan
shall be guided by such provisions. Prior to the payment of any
compensation based on the achievement of Performance Goals, the
Committee must certify in writing that applicable Performance Goals and
any of the material terms thereof were, in fact, satisfied. Subject to
the foregoing provisions, the terms, conditions and limitations
applicable to any Performance Awards made pursuant to this Plan shall
be determined by the Committee.
(b) Notwithstanding anything to the contrary contained in this
Plan, the following limitations shall apply to any Awards made
hereunder:
(i) no Participant may be granted, during any
one-year period, Awards consisting of Options or SARs that are
exercisable for more than 300,000 shares of Common Stock;
(ii) no Participant may be granted, during any
one-year period, Stock Awards covering or relating to more
than 300,000 shares of Common Stock (the limitation set forth
in this clause (ii), together with the limitation set forth in
clause (i) above, being hereinafter collectively referred to
as the "Stock Based Awards Limitations"); and
(iii) no Participant may be granted Awards consisting
of cash or in any other form permitted under this Plan (other
than Awards consisting of Options or SARs or otherwise
consisting of shares of Common Stock or units denominated in
such shares) in respect of any one-year period having a value
determined on the date of grant in excess of $3,000,000.
(c) The Committee shall have the sole responsibility and
authority to determine the type or types of Awards to an Independent
Contractor to be made under this Plan and may make any such Awards as
could be made to an Employee, other than Incentive Options; provided
that the limitations described in paragraph 8(b) hereof shall be
inapplicable to Awards to an Independent Contractor.
A-5
9. Awards to Directors. Each Nonemployee Director of the Company shall
be granted Director Awards in accordance with this paragraph 9 and subject to
the applicable terms, conditions and limitations set forth in this Plan and the
applicable Award Agreement. Notwithstanding anything to the contrary contained
herein, Awards to Directors shall not be made in any year in which a sufficient
number of shares of Common Stock are not available to make such Awards under
this Plan.
On or after the effective date of his or her first appointment
or election to the Board of Directors, a Nonemployee Director shall
automatically be granted an Option that provides for the purchase of 10,000
shares of Common Stock. In addition, on each Annual Director Award Date, each
Nonemployee Director shall automatically be granted an Option that provides for
the purchase of 10,000 shares of Common Stock. Each Option granted to a Director
shall have a term of five years from the date of grant, notwithstanding any
earlier termination of the status of the holder as a Nonemployee Director. The
purchase price of each share of Common Stock subject to an Option granted to a
Director shall be equal to the Fair Market Value of the Common Stock on the date
of grant. No Option granted to a Director may be issued in exchange for the
cancellation of an Option with a higher exercise price, nor may the exercise
price of any Option granted to a Director be reduced. All Options granted to a
Director shall become fully exercisable six months following the date of grant.
All Options granted to a Director that have not previously become exercisable
shall be forfeited if the Nonemployee Director resigns as a Director without the
consent of a majority of the other Directors.
Any Award of Options granted to a Director shall be embodied
in an Award Agreement, which shall contain the terms, conditions and limitations
set forth above and shall be signed by the Participant to whom the Options are
granted and by an Authorized Officer for and on behalf of the Company.
10. Award Payment; Dividends; Substitution.
(a) General. Payment of Awards may be made in the form of cash or
Common Stock, or a combination thereof, and may include such restrictions
as the Committee shall determine, including, in the case of Common Stock,
restrictions on transfer and forfeiture provisions. If payment of an Award
is made in the form of Restricted Stock, the applicable Award Agreement
relating to such shares shall specify whether they are to be issued at the
beginning or end of the Restriction Period. In the event that shares of
Restricted Stock are to be issued at the beginning of the Restriction
Period, the certificates evidencing such shares (to the extent that such
shares are so evidenced) shall contain appropriate legends and restrictions
that describe the terms and conditions of the restrictions applicable
thereto. In the event that shares of Restricted Stock are to be issued at
the end of the Restricted Period, the right to receive such shares shall be
evidenced by book entry registration or in such other manner as the
Committee may determine.
(b) Deferral. With the approval of the Committee, amounts payable in
respect of Awards may be deferred and paid either in the form of
installments or as a lump-sum payment. The Committee may permit selected
Participants to elect to defer payments of some or all types of Awards in
accordance with procedures established by the Committee. Any deferred
payment of an Award, whether elected by the Participant or specified by the
Award Agreement or by the Committee, may be forfeited if and to the extent
that the Award Agreement so provides.
(c) Dividends and Interest. Rights to dividends or Dividend Equivalents
may be extended to and made part of any Award consisting of shares of
Common Stock or units denominated in shares of Common Stock, subject to
such terms, conditions and restrictions as the Committee may establish. The
Committee may also establish rules and procedures for the crediting of
interest on deferred cash payments and Dividend Equivalents for Awards
consisting of shares of Common Stock or units denominated in shares of
Common Stock.
A-6
11. Stock Option Exercise. The price at which shares of Common Stock
may be purchased under an Option shall be paid in full at the time of exercise
in cash or, if elected by the Participant, the Participant may purchase such
shares by means of tendering Common Stock or surrendering another Award,
including Restricted Stock, valued at Fair Market Value on the date of exercise,
or any combination thereof. The Committee shall determine acceptable methods for
Participants to tender Common Stock or other Awards; provided that any Common
Stock that is or was the subject of an Award may be so tendered only if it has
been held by the Participant for six months. The Committee may provide for
procedures to permit the exercise or purchase of such Awards by use of the
proceeds to be received from the sale of Common Stock issuable pursuant to an
Award. Unless otherwise provided in the applicable Award Agreement, in the event
shares of Restricted Stock are tendered as consideration for the exercise of an
Option, a number of the shares issued upon the exercise of the Option, equal to
the number of shares of Restricted Stock used as consideration therefor, shall
be subject to the same restrictions as the Restricted Stock so submitted as well
as any additional restrictions that may be imposed by the Committee.
12. Taxes. The Company shall have the right to deduct applicable taxes
from any Award payment and withhold, at the time of delivery or vesting of cash
or shares of Common Stock under this Plan, an appropriate amount of cash or
number of shares of Common Stock or a combination thereof for payment of taxes
required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes. The
Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the Award
with respect to which withholding is required. If shares of Common Stock are
used to satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made. The Committee may
provide for loans, on either a short-term or demand basis, from the Company to a
Participant to permit the payment of taxes required by law.
13. Amendment, Modification, Suspension or Termination. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law, except that (i) no amendment or alteration that would adversely affect
the rights of any Participant under any Award previously granted to such
Participant shall be made without the consent of such Participant and (ii) no
amendment or alteration shall be effective prior to its approval by the
stockholders of the Company to the extent stockholder approval is otherwise
required by applicable legal requirements.
14. Assignability. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under this Plan
shall be assignable or otherwise transferable. Any attempted assignment of an
Award or any other benefit under this Plan in violation of this paragraph 14
shall be null and void.
15. Adjustments.
(a) The existence of outstanding Awards shall not affect in any manner
the right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes
in the capital stock of the Company or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred
or prior preference stock (whether or not such issue is prior to, on a
parity with or junior to the Common Stock) or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding of any
kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock, declaration of a dividend payable in shares of
Common Stock or other stock split, then (i) the number of shares of Common
Stock reserved under this Plan, (ii) the number of shares of Common Stock
covered by outstanding Awards in the form of Common Stock or units
denominated in Common Stock, (iii) the exercise or other price in respect
of such Awards, (iv) the Stock Based Award Limitations described in
paragraph 8(b) hereof, (v) the number of shares of Common Stock covered by
Awards to Directors automatically granted pursuant to paragraph 9 hereof
and (vi) the appropriate Fair Market Value and other price determinations
for such Awards shall each be proportionately adjusted by the Board to
reflect such transaction. In the event of any other recapitalization or
capital reorganization of the Company, any
A-7
consolidation or merger of the Company with another corporation or
entity, the adoption by the Company of any plan of exchange affecting
the Common Stock or any distribution to holders of Common Stock of
securities or property (other than normal cash dividends or dividends
payable in Common Stock), the Board shall make appropriate adjustments
to (i) the number of shares of Common Stock covered by Awards in the
form of Common Stock or units denominated in Common Stock, (ii) the
exercise or other price in respect of such Awards, (iii) the
appropriate Fair Market Value and other price determinations for such
Awards, (iv) the number of shares of Common Stock covered by Awards to
Directors automatically granted pursuant to paragraph 9 hereof and (v)
the Stock Based Award Limitations described in paragraph 8(b) hereof,
to give effect to such transaction shall each be proportionately
adjusted by the Board to reflect such transaction; provided that such
adjustments shall only be such as are necessary to maintain the
proportionate interest of the holders of the Awards and preserve,
without exceeding, the value of such Awards. In the event of a
corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board shall be
authorized to issue or assume Awards by means of substitution of new
Awards, as appropriate, for previously issued Awards or to assume
previously issued Awards as part of such adjustment.
(c) In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Board may
make such adjustments to Awards or other provisions for the disposition of
Awards as it deems equitable, and shall be authorized, in its discretion,
(i) to provide for the substitution of a new Award or other arrangement
(which, if applicable, may be exercisable for such property or stock as the
Board determines) for an Award or the assumption of the Award, regardless
of whether in a transaction to which Section 424(a) of the Code applies,
(ii) to provide, prior to the transaction, for the acceleration of the
vesting and exercisability of, or lapse of restrictions with respect to,
the Award and, if the transaction is a cash merger, provide for the
termination of any portion of the Award that remains unexercised at the
time of such transaction or (iii) to provide for the acceleration of the
vesting and exercisability of an Award and the cancellation thereof in
exchange for such payment as shall be mutually agreeable to the Participant
and the Board.
16. Restrictions. No Common Stock or other form of payment shall be
issued with respect to any Award unless the Company shall be satisfied based on
the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. Certificates evidencing shares of
Common Stock delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any securities exchange
or transaction reporting system upon which the Common Stock is then listed or to
which it is admitted for quotation and any applicable federal or state
securities law. The Committee may cause a legend or legends to be placed upon
such certificates (if any) to make appropriate reference to such restrictions.
17. Unfunded Plan. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this Plan, any such accounts shall be
used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock
or rights thereto, nor shall this Plan be construed as providing for such
segregation, nor shall the Company, the Board or the Committee be deemed to be a
trustee of any cash, Common Stock or rights thereto to be granted under this
Plan. Any liability or obligation of the Company to any Participant with respect
to an Award of cash, Common Stock or rights thereto under this Plan shall be
based solely upon any contractual obligations that may be created by this Plan
and any Award Agreement, and no such liability or obligation of the Company
shall be deemed to be secured by any pledge or other encumbrance on any property
of the Company. Neither the Company nor the Board nor the Committee shall be
required to give any security or bond for the performance of any obligation that
may be created by this Plan.
18. Governing Law. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Delaware.
A-8
19. Effectiveness. This Plan shall be effective as of March 28, 2002
(the "Effective Date"), as approved by the Board of Directors of the Company.
Notwithstanding the foregoing, the adoption of this Plan is expressly
conditioned upon the approval by the holders of a majority of shares of Common
Stock present, or represented, and entitled to vote at a meeting of the Company
Stockholders held on or before December 31, 2002. If the Stockholders of the
Company should fail to so approve this Plan prior to such date, this Plan shall
terminate and cease to be of any further force or effect, and all grants of
Awards hereunder shall be null and void.
A-9
OCEANEERING INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
John R. Huff and George R. Haubenreich, Jr., and each of
them, with full power of substitution and resubstitution, are
P hereby appointed proxies to vote all the shares of common stock of
R the undersigned in Oceaneering International, Inc., held of record
O by the undersigned on April 9, 2002, at the Annual Meeting of
X Shareholders to be held on June 7, 2002, in the Atrium of
Y Oceaneering's corporate offices at 11911 FM 529, Houston, Texas
77041-3011, and at any adjournment or postponement thereof.
The undersigned acknowledges receipt of Oceaneering's
annual report for the year ended December 31, 2001 and the Notice
of 2002 Annual Meeting of Shareholders and related Proxy Statement.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES ON THE REVERSE SIDE. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD BEFORE THE ANNUAL
MEETING.
-----------
SEE REVERSE
SIDE
-----------
--------------------------------------------------------------------------------
oFOLD AND DETACH HEREo
PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE. [X] 1616
IMPORTANT - PLEASE MARK APPROPRIATE BOXES ONLY IN BLUE OR BLACK INK AS SHOWN.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. MANAGEMENT RECOMMENDS
THAT YOU VOTE FOR AUTHORITY ON PROPOSAL 1, AND FOR PROPOSAL 2.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Directors [ ] [ ] NOMINEES: 01. T. JAY COLLINS 2. Proposal to approve the [ ] [ ] [ ]
02. D. MICHAEL HUGHES Oceaneering 2002
Incentive Plan.
For, except vote withheld from the following nominee:
3. In their discretion, the proxies are authorized to
vote upon such other business as may properly come
before the meeting or any adjournment thereof,
including procedural and other matters relating to
----------------------------------------------------- the conduct of the meeting.
Please sign exactly as your name appears hereon.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee, guardian or other similar
capacity, please give full title as such.
If a corporation, please sign in full corporate
name by President or other authorized officer. If
a partnership, please sign in partnership name by
authorized person.
---------------------------------------
-------------------- ----------,2002
SIGNATURE(S) DATE
--------------------------------------------------------------------------------
oFOLD AND DETACH HEREo
OCEANEERING INTERNATIONAL, INC.
OFFERS TELEPHONE OR INTERNET VOTING
24 HOURS A DAY, 7 DAYS A WEEK
Voting by telephone or Internet eliminates the need to return this proxy card.
Your vote authorizes the proxies named above to vote your shares to the same
extent as if you marked, signed, dated and returned the proxy card. Before
voting, read the proxy statement and voting instruction form. Follow the steps
listed. Your vote will be immediately confirmed and posted. Thank you for
voting!
TO VOTE BY TELEPHONE
1. On a touch-tone telephone call toll free 1-877-779-8683
2. Enter the voter control number from the box above, just below the
perforation.
3. Enter the last four digits from your U.S. taxpayer identification number.
4. You then have two options:
Option 1: To vote as the Board of Directors recommends on all items
Option 2: To vote on each proposal separately.
TO VOTE BY INTERNET
1. Log on to the Internet and go to the web site http://www.eproxyvote.com/oii
2. Enter the voter control number from the box above, just below the
perforation.
3. Follow the instructions.
IF YOU CHOOSE TO VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL BACK YOUR
PROXY CARD.