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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Superior Energy Services, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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number, or the Form or Schedule and the date of its filing.
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SEC 1913 (02-02)
SUPERIOR ENERGY SERVICES, INC.
1105 PETERS ROAD
HARVEY, LOUISIANA 70058
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Superior Energy Services, Inc.:
Superior's annual stockholders' meeting will be held Tuesday, May 25, 2004,
12:00 p.m., at 201 St. Charles Avenue, 52nd Floor, New Orleans, Louisiana 70170.
At the meeting, stockholders will be asked to:
1. elect directors;
2. approve the 2004 Directors Restricted Stock Units Plan;
3. ratify the appointment of KPMG LLP as our independent auditors for
the fiscal year ending December 31, 2004; and
4. consider any other business that may properly come before the
meeting.
Only holders of record of our common stock as of the close of business on
March 31, 2004 are entitled to receive notice of, attend and vote at the
meeting.
Please sign, date and return the accompanying proxy in the enclosed
addressed, postage-paid envelope. If you attend the annual meeting, you may vote
your shares in person, even if you have sent in your proxy.
By Order of the Board of Directors
/s/ Greg Rosenstein
GREG ROSENSTEIN
Secretary
Harvey, Louisiana
April 16, 2004
SUPERIOR ENERGY SERVICES, INC.
1105 PETERS ROAD
HARVEY, LOUISIANA 70058
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is being mailed to our stockholders on or about April 16,
2004.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Q: WHY AM I RECEIVING THIS PROXY STATEMENT?
A: Our Board of Directors is soliciting your proxy to vote at the annual
meeting because you owned shares of our common stock at the close of
business on March 31, 2004, the record date for the meeting, and are
entitled to vote at the meeting. The proxy statement, along with a proxy
card or a voting instruction card, is being mailed to stockholders
beginning April 16, 2004. The proxy statement summarizes the information
you need to know to vote at the annual meeting. You do not need to attend
the annual meeting to vote your shares.
Q: WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
A: At the annual meeting, our stockholders will be asked to elect our
directors, approve our proposed 2004 Directors Restricted Stock Units Plan
(the "Director Plan"), ratify the appointment of KPMG LLP as our
independent auditors for the fiscal year ending December 31, 2004 and
consider any other matter that properly comes before the meeting.
Q: WHEN AND WHERE WILL THE MEETING BE HELD?
A: The meeting will be held on Tuesday, May 25, 2004, 12:00 p.m., at 201 St.
Charles Avenue, 52nd Floor, New Orleans, Louisiana 70170.
Q: WHO IS SOLICITING MY PROXY?
A: Our Board of Directors is soliciting your vote for our 2004 annual meeting
of stockholders. By completing and returning the proxy card or voting
instruction card, you are authorizing the proxy holder to vote your shares
at our annual meeting as you have instructed him on the card.
Q: HOW MANY VOTES DO I HAVE?
A: You have one vote for every share of our common stock that you owned on the
record date.
Q: HOW MANY VOTES CAN BE CAST BY ALL STOCKHOLDERS?
A: As of the record date, we had 74,405,826 shares of common stock
outstanding.
Q: HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
A: Our By-laws provide that a majority of the outstanding shares of stock
entitled to vote constitutes a quorum at a meeting of our stockholders. As
of the record date, 37,202,914 shares constitute a majority of our
outstanding stock entitled to vote at the meeting. Shares that are voted,
broker non-votes, and shares for which voting authority is withheld are
treated as being present at the annual meeting for purposes of determining
whether quorum is present. A broker non-vote occurs when a nominee holding
common stock for a beneficial owner does not vote on a particular matter
because the nominee does not have discretionary voting power with respect
to that item and has not received voting instructions from the beneficial
owner.
Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD
AND AS A BENEFICIAL OWNER?
A: If your shares are registered directly in your name with our transfer
agent, American Stock Transfer and Trust Company, you are considered, with
respect to those shares, the "stockholder of record." The proxy statement
and proxy card have been directly sent to you by us.
If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the "beneficial owner" of shares held in
"street name." The proxy statement has been forwarded to you by your
broker, bank or nominee who is considered, with respect to those shares,
the stockholder of record. As the beneficial owner, you have the right to
direct your broker, bank or nominee how to vote your shares by using the
voting instruction card included in the mailing or by following their
instructions for voting.
Q: CAN MY SHARES BE VOTED IF I DON'T RETURN THE PROXY CARD AND DO NOT ATTEND
THE MEETING IN PERSON?
A: If you hold shares in street name and you do not provide voting
instructions to your broker, bank or nominee your shares will not be voted
on any proposal on which your broker does not have discretionary authority
to vote. In that case, your shares will be considered present at the
meeting for purposes of determining a quorum, but will not be considered to
be represented at the meeting for purposes of calculating the vote with
respect to such proposal. Under New York Stock Exchange rules, brokers
generally have discretionary authority to vote without instructions from
beneficial owners on the election of directors and the ratification of
independent auditors but do not have discretionary authority to vote on any
proposed equity compensation plan, such as our proposed Director Plan.
If you don't vote the shares held in your name, your shares will not be
voted.
Q: WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
A: Our By-laws provide that directors are elected by plurality vote, meaning
that the nominees who receive the most votes will be elected directors. The
Director Plan must be approved by a majority of the votes cast on the
proposal. The appointment of KPMG LLP as our independent auditors for the
fiscal year ended December 31, 2004 must be ratified by the vote of a
majority of the shares of common stock present in person or by proxy at the
annual meeting.
Withheld votes, abstentions and broker non-votes will have no effect on the
voting calculations for the election of directors but will count as a vote
against the ratification of the appointment of our independent auditors.
Withheld votes will have the effect of a vote against the adoption of the
Director Plan, while abstentions and broker non-votes will have no effect
on the voting calculations for the adoption of the Director Plan.
Q: HOW DO I VOTE?
A: You may vote using any of the following methods:
- PROXY CARD OR VOTING INSTRUCTION CARD: Be sure to complete, sign and
date the card and return it in the prepaid envelope.
- IN PERSON AT THE ANNUAL MEETING: All stockholders may vote in person at
the annual meeting. You may also be represented by another person at the
meeting by executing a proper proxy designating that person. If you are a
beneficial owner of shares, you must obtain a legal proxy from your
broker, bank or nominee and present it to the inspectors of election with
your ballot when you vote at the annual meeting.
Q: CAN I CHANGE MY VOTE?
A: Yes. Your proxy can be revoked or changed at any time before it is voted by
notice in writing to our Secretary, by our timely receipt of another proxy
with a later date or by voting in person at the meeting.
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Q: WHAT IF I DON'T VOTE FOR A MATTER LISTED ON MY PROXY CARD?
A: If you return the proxy card without indicating your vote for a director,
your shares will be voted FOR each of the nominees listed on your card, FOR
the approval of the Director Plan, and FOR the ratification of the
appointment of KPMG LLP as our independent auditors.
Q: WHO PAYS FOR SOLICITING PROXIES?
A: We are paying for all costs of soliciting proxies. In addition to
solicitations by mail, we have retained Georgeson Shareholder
Communications, Inc. to aid in the solicitation of proxies at an estimated
fee of $7000. Our officers and employees may request the return of proxies
by personal conversation or by telephone or telecopy. We are also
requesting that banks, brokerage houses and other nominees or fiduciaries
forward the soliciting material to their principals and that they obtain
authorization for the execution of proxies. We will reimburse them for
their expenses.
Q: COULD OTHER MATTERS BE DECIDED AT THE MEETING?
A: The Board does not expect to bring any other matter before the annual
meeting, and it is not aware of any other matter that may be considered at
the meeting. In addition, pursuant to our By-laws, the time has elapsed for
any stockholder to properly bring a matter before the meeting. However, if
any other matter does properly come before the meeting, the proxy holder
will vote the proxies in his discretion.
Q: WHAT HAPPENS IF THE MEETING IS POSTPONED OR ADJOURNED?
A: Your proxy will still be good and may be voted at the postponed or
adjourned meeting. You will still be able to change or revoke your proxy
until it is voted.
ELECTION OF DIRECTORS
The size of our Board has been fixed at seven directors. Proxies cannot be
voted for a greater number of persons. Unless you specify otherwise in your
proxy card, your shares will be voted by the proxy holder FOR the election of
each of the seven nominees named below to serve until the next annual meeting
and until their successors are duly elected and qualified. If any nominee should
decline or be unable to serve for any reason, votes will be cast for a
substitute nominee designated by the Board. The nominees have advised us that
they will serve on the Board if elected.
INFORMATION ABOUT DIRECTORS
THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE RECOMMENDS, AND THE BOARD
NOMINATES, THE FOLLOWING SEVEN INDIVIDUALS FOR ELECTION AS DIRECTORS AT THE
ANNUAL MEETING:
Richard A. Bachmann, 59, has served as a Director since July 1999. He has
been Chairman, President and Chief Executive Officer of Energy Partners, Ltd.,
an independent oil and gas exploration company, since its formation in March
1997. From 1995 to January 1997, he served as director, president and chief
operating officer of The Louisiana Land and Exploration Company, an independent
oil and gas exploration company. From 1982 to 1995, Mr. Bachmann held various
positions with The Louisiana Land and Exploration Company, including director,
executive vice president, chief financial officer and senior vice president of
finance and administration. From 1978 to 1981, Mr. Bachmann was treasurer of
Itel Corporation. Prior to 1978, Mr. Bachmann served with Exxon International,
Esso Central America, Esso InterAmerica and Standard Oil of New Jersey.
Enoch L. Dawkins, 66, has served as a Director since August 2003. He has
over 40 years of experience in the energy industry. From 1991 until his
retirement in March 2003, Mr. Dawkins served as president of Murphy Exploration
and Production Company, a subsidiary of Murphy Oil. His career includes numerous
management positions domestically and internationally with Ocean Drilling and
Exploration, a company he joined in 1964, including serving as President from
1989 until its acquisition by Murphy Oil Company in 1991. Mr. Dawkins is also a
director of Energy Partners, Ltd.
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Joseph R. Edwards, 31, has served as a Director since December 2001. Mr.
Edwards is currently a vice president of First Reserve Corporation, a corporate
manager of private investments focusing on the energy and energy-related
sectors. Mr. Edwards has served in various capacities at First Reserve since
March 1998. From July 1995 until March 1998, Mr. Edwards was a member of the
corporate finance team of Simmons & Company International, a Houston-based,
energy-focused investment banking firm. Mr. Edwards also serves as a director of
T-3 Energy Services, Inc.
Ben A. Guill, 53, has served as a Director since July 1999 and is President
of First Reserve Corporation, which he joined in September 1998. Prior to
joining First Reserve, Mr. Guill spent 18 years with Simmons & Company
International, where he served as Managing Director and Co-Head of Investment
Banking. Mr. Guill also serves as a director of National-Oilwell, Inc., T-3
Energy Services, Inc., Quanta Services, Inc. and Dresser, Inc.
Terence E. Hall, 58, has served as the Chairman of the Board, Chief
Executive Officer, President and a Director since December 1995. Since 1989, he
has also served as President and Chief Executive Officer of our wholly-owned
subsidiaries Superior Energy Services, L.L.C. and Connection Technology, L.L.C.,
and their predecessors.
Richard A. Pattarozzi, 60, has served as a Director since June 2002. Mr.
Pattarozzi retired as a Vice President of Shell Oil Company in January 2000. He
also previously served as President and Chief Executive Officer for both Shell
Deepwater Development, Inc. and Shell Deepwater Production, Inc. Mr. Pattarozzi
serves on the Board of Directors of Global Industries, Ltd., Stone Energy
Corporation, Transocean, Inc., Tidewater, Inc. and FMC Technologies, Inc. He
received a BS degree in Civil Engineering from the University of Illinois.
Justin L. Sullivan, 64, has served as a Director since December 1995. Mr.
Sullivan has been a private investor and has served as a business consultant
since May 1993. Prior to May 1993, he held senior operating and financial
management positions with various companies in the forest products industry. Mr.
Sullivan also has been an accounting faculty member of the University of New
Orleans and Tulane University. He holds an MBA degree from Tulane University and
is a certified public accountant.
---------------------
MEETINGS OF THE BOARD
There were five Board meetings in 2003. Each director attended at least 75%
of the meetings of the Board and the committees of which he was a member. The
Board of Directors has determined that the following directors are "independent"
within the meaning of the New York Stock Exchange listing standards currently in
effect and approved by the Securities and Exchange Commission on November 4,
2003: Richard A. Bachmann, Enoch L. Dawkins, Richard A. Pattarozzi, and Justin
L. Sullivan.
BOARD COMMITTEES
Our Board has, as standing committees, an Audit Committee, a Compensation
Committee and a Nominating and Corporate Governance Committee. The Board has
affirmatively determined that each member of each of our standing committees has
no material relationship with the Company and is also "independent" within the
meaning of New York Stock Exchange listing standards. Members of the individual
committees are named below:
NOMINATING AND
AUDIT COMPENSATION CORPORATE GOVERNANCE
----- ------------ --------------------
R. A. Bachmann R. A. Bachmann R. A. Bachmann*
E. L. Dawkins R. A. Pattarozzi* R. A. Pattarozzi
R. A. Pattarozzi J. L. Sullivan J. L. Sullivan
J. L. Sullivan*
---------------
* Chairman of the committee
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Each of the Audit, Compensation and Nominating and Corporate Governance
Committees has adopted a written charter that has been approved by the Board.
Copies of these charters, as well as a copy of our Corporate Governance
Guidelines, are available on the investor relations page of our website at
www.superiorenergy.com.
AUDIT COMMITTEE
The Audit Committee is primarily responsible for assisting the Board in
fulfilling its fiduciary duties to our stockholders with respect to financial
matters. The committee has oversight responsibility for our financial statements
and the financial reporting process, our systems of internal accounting and
financial controls and the annual independent audit of our financial statements.
The Audit Committee met six times during 2003. The Board of Directors has
determined that Justin L. Sullivan qualifies as our audit committee financial
expert.
COMPENSATION COMMITTEE
The Compensation Committee has recently adopted a new charter that complies
with the New York Stock Exchange corporate governance listing standards approved
by the Securities and Exchange Commission in November 2003. Under its new
charter, the committee is charged with evaluating and approving our overall
compensation strategy, including the compensation strategy of our executive
officers, in order to ensure that our executive officers are rewarded
appropriately for their contributions to our growth and profitability and that
such strategy supports our objectives and the interests of our stockholders. In
addition, the committee annually reviews and approves corporate goals and
objectives relevant to the compensation of our Chief Executive Officer,
evaluates his performance with respect to such goals and objectives, and, based
on this evaluation, sets the level of his compensation. Together with the Chief
Executive Officer, the committee also annually evaluates the performance of our
other executive officers and, based on such evaluation, reviews and approves
their compensation. Finally, the committee reviews our incentive compensation
and other stock-based plans and recommends changes in such plans to the board of
directors as needed. The committee has been delegated the authority of the
entire Board with respect to the administration of such plans, including annual
bonus plan provisions and measurements.
In 2003, under its previous charter, the Compensation Committee was charged
with establishing the compensation of our Chief Executive Officer and
administering our management bonus program and stock incentive plans. The
Compensation Committee met once during 2003.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Board formed the Nominating and Corporate Governance Committee in
February 2003. The committee assists the Board in identifying qualified
individuals to become directors, determining the composition of the Board and
Board committees, monitoring a process to assess Board effectiveness and
developing and implementing our corporate governance guidelines. The Nominating
and Corporate Governance Committee met four times during 2003.
The committee identifies potential nominees for director, other than
potential nominees who are current directors standing for reelection, through
business and other contacts. The committee's responsibility to identify and
recommend individuals to serve as directors is subject to the right of our
largest stockholders to designate two individuals for consideration as director
nominees under the stockholders' agreement described in "Certain Relationships
and Related Transactions."
The committee will also consider director nominees recommended by
stockholders in accordance with the procedures described in our By-laws. If you
have been the beneficial owner of at least 1% of our outstanding common stock
for at least one year, you may recommend a person or persons for consideration
as a nominee for election to the Board by sending written notice by mail, c/o
Secretary, Superior Energy Services, Inc. 1105 Peters Road, Harvey, Louisiana
70058. The notice must set forth:
- the name, age, business address and residential address of your proposed
nominee;
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- his or her principal occupation or employment;
- the number of shares of common stock beneficially owned by him or her;
and
- and any other information relating to your proposed nominee that would be
required to be disclosed in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission, had he or she been
nominated by the Board of Directors.
In addition, you must provide:
- your name, age, business address and residential address;
- the number of shares of our common stock that you beneficially own;
- a representation that you intend to appear in person at the stockholders
meeting to make the nomination; and
- a description of all agreements, arrangements and understandings among
you, any person acting in concert with you, your proposed nominee and any
other person or persons (naming such person or persons), pursuant to
which you submitted the name of your proposed nominee.
You should also include a written consent of your proposed nominee to serve
as a director if so elected and an affidavit signed by him or her certifying
that he or she meets the qualifications necessary to serve as a director.
Stockholder recommendations will be considered only if received no later
than the 120th calendar day before the first anniversary of the date of our
proxy in connection with the previous year's annual meeting (no later than
December 18, 2004) with respect to recommendations for nominees to be considered
at the 2005 annual meeting of stockholders).
The Nominating and Corporate Governance Committee believes that nominees to
our Board of Directors must meet the following minimum qualifications: The
nominee must have achieved significant success in business or have extensive
financial expertise, particularly in the energy industry, must be committed to
representing the long-term interests of our stockholders, and must have high
ethical and moral standards and integrity. The committee evaluates a potential
nominee by considering whether the potential nominee meets the minimum
qualifications described above, as well as by considering the following factors:
- whether the potential nominee has experience and expertise that is
relevant to our business, including any specialized business experience,
technical expertise, or other specialized skills, and whether the
potential nominee has knowledge regarding issues affecting us;
- whether the potential nominee is independent, whether he or she is free
of any conflict of interest or the appearance of any conflict of interest
with our best interests and the best interests of our stockholders, and
whether he or she is willing and able to represent the interests of all
of our stockholders; and
- any factor affecting the ability or willingness of the potential nominee
to devote sufficient time to Board activities and to enhance his or her
understanding of our business.
In addition, with respect to an incumbent director whom the Nominating and
Corporate Governance Committee is considering as a potential nominee for
re-election, the committee reviews and considers the incumbent director's
service to us during his or her term, including the number of meetings attended,
level of participation, and overall contribution to the Board. Each of the
nominees for director at the 2004 annual meeting of stockholders is a current
director standing for re-election. There are no differences in the manner in
which the Nominating and Corporate Governance Committee evaluates nominees for
director suggested by stockholders using the process set forth in our By-laws.
We did not pay any fee to any third party to identify or evaluate or assist
in identifying or evaluating potential nominees for director at the 2004 annual
meeting of stockholders. However, the committee may in the future choose to
retain a professional search firm to identify potential nominees for director.
With the exception of the recommendation by our largest stockholders, in
accordance with their rights under the
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stockholders' agreement described under "Certain Relationships and Related
Transactions," to re-nominate Messrs. Edwards and Guill for election, the
Nominating and Corporate Governance Committee did not receive, by January 20,
2004 (the 120th calendar day before the first anniversary of the date of our
2003 proxy statement), any recommended nominee from a stockholder who
beneficially owns more than 5% of our stock or from a group of stockholders who
beneficially own, in the aggregate, more than 5% of our stock.
DIRECTOR COMPENSATION
In order to closely align the outside directors' compensation with the
financial interests of our stockholders, a significant portion of their
compensation is paid in equity. Newly appointed directors receive a one-time
option to purchase 20,000 shares of our common stock. In addition, each outside
director receives an option to purchase 5,000 shares of our common stock on the
day following our annual stockholders' meeting.
If our proposed 2004 Directors Restricted Stock Units Plan is approved by
our stockholders, we will no longer make grants of stock options to non-employee
directors as provided under our 2002 Stock Incentive Plan. Rather, beginning in
2004, each non-employee director will automatically be granted a number of
restricted stock units (RSUs) having an aggregate value of $30,000, with the
exact number of units determined by dividing $30,000 by the fair market value of
our common stock on the day of the annual meeting. In addition, upon any
person's initial election or appointment as an eligible director, otherwise than
at an annual meeting of stockholders, such person will receive a pro rata number
of RSUs based on the number of full calendar months between the date of grant
and the first anniversary of the previous annual meeting. An RSU represents the
right to automatically receive from us, within 30 days of the date the
participant ceases to serve on the Board, one share of our common stock.
Our outside directors also receive cash compensation of $30,000 a year. The
chairman of the Audit Committee receives additional cash compensation of $20,000
a year, and the chairmen of the Nominating and Corporate Governance and
Compensation Committees receive additional cash compensation of $10,000 a year
for their service to these committees. These amounts are paid in equal monthly
installments. Outside directors also receive a $1,500 fee for each Board meeting
and each committee meeting.
Mr. Hall does not receive any special compensation for his service as a
director. All directors are reimbursed for reasonable expenses incurred in
attending Board and committee meetings.
EXECUTIVE SESSIONS; COMMUNICATIONS WITH THE BOARD; MEETING ATTENDANCE
The Board has adopted a policy providing that the independent directors
will meet in executive session at each regularly-scheduled Board meeting, or
more frequently if necessary. Under this policy, the chair of each executive
session meeting will be chosen by the independent directors, by majority vote,
immediately prior to the convening of each such meeting.
Any stockholder may communicate with our Board (or with any individual
director) by sending a letter by mail addressed to Secretary, Superior Energy
Services, Inc. 1105 Peters Road, Harvey, Louisiana 70058. Mr. Rosenstein will
forward the stockholder's communication directly to the appropriate director or
directors.
The Board has adopted a policy that recommends that all directors
personally attend each annual and special meeting of our stockholders. At the
last annual meeting of stockholders held on May 19, 2003, all of our directors
were in attendance.
7
STOCK OWNERSHIP
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the number of shares of our common stock
beneficially owned as of March 31, 2004 by persons known by us to beneficially
own more than 5% of the outstanding shares of our common stock. The information
in the table is based on our review of filings with the Securities and Exchange
Commission. Each person listed below has sole voting and investment power with
respect to the shares beneficially owned unless otherwise stated.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------------------ ---------- --------
First Reserve Fund VII, Limited Partnership(1).............. 10,769,777 14.5%
One Lafayette Place
Greenwich, Connecticut 06830
First Reserve Fund VIII, L.P.(1)............................ 7,179,850 9.6%
One Lafayette Place
Greenwich, Connecticut 06830
Kotts Capital Holdings, Limited Partnership................. 7,134,995 9.6%
3737 Willowick Road
Houston, Texas 77019
Westfield Capital Management Co., LLC....................... 4,309,160 5.8%
One Financial Center
Boston, Massachusetts 02111
Franklin Resources, Inc.(2)................................. 3,718,636 5.0%
One Franklin Parkway
San Mateo, California 94403
---------------
(1) First Reserve Corporation is the indirect general partner of First Reserve
Fund VII, Limited Partnership and First Reserve Fund VIII, L.P., and is
deemed to beneficially own the shares held by both of these funds. In
addition, the First Reserve funds have a beneficial interest in the options
held by Messrs. Guill and Edwards by virtue of the fact that the funds are
entitled to a portion of the profits from any option exercise by Messrs.
Guill or Edwards.
(2) Franklin Private Client Group, Inc. and Franklin Advisors, Inc., affiliated
companies of Franklin Resources, Inc. reported sole voting power with
respect to 1,153,443 and 2,565,193 shares, respectively, beneficially owned
by Franklin Resources, Inc.
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STOCK OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of our common stock
beneficially owned as of March 31, 2004 by our directors, our executive
officers, and all of our directors and executive officers as a group. The
information in the table is based on our review of filings with the Securities
and Exchange Commission. Each person listed below has sole voting and investment
power with respect to the shares beneficially owned unless otherwise stated.
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
------------------------ ----------------------- --------
Richard A. Bachmann.......................... 49,854 *
Kenneth Blanchard............................ 568,669(2) *
Enoch L. Dawkins............................. 20,000 *
Joseph R. Edwards............................ 30,000 *
Ben A. Guill................................. 17,989,627(3) 23.5%
Terence E. Hall.............................. 1,745,837 2.3%
Richard A. Pattarozzi........................ 33,150 *
Justin L. Sullivan........................... 40,000 *
Robert S. Taylor............................. 406,668 *
All directors and executive officers as
a group (nine persons)..................... 20,883,805 27.2%
---------------
* Less than 1%.
(1) Includes the number of shares subject to options that are exercisable by May
30, 2004 as follows: Mr. Bachmann, 40,000; Mr. Blanchard, 502,374; Mr.
Dawkins, 20,000; Mr. Edwards, 30,000; Mr. Guill, 40,000; Mr. Hall,
1,182,617; Mr. Pattarozzi, 30,000; Mr. Sullivan, 40,000; and Mr. Taylor,
406,668. The First Reserve funds have a beneficial interest in the options
held by Messrs. Guill and Edwards by virtue of the fact that the funds are
entitled to a portion of the profits from any option exercise by Messrs.
Guill or Edwards.
(2) Includes 37,161 shares held by Mr. Blanchard's children and 15,067 shares
held by Mr. Blanchard's spouse, of which Mr. Blanchard is deemed to be the
beneficial owner.
(3) Mr. Guill is the President of First Reserve Corporation, and he expressly
disclaims beneficial ownership of the 17,949,627 shares of our common stock
owned by the First Reserve funds.
9
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table shows the compensation of our chief executive officer
and two other executive officers for the three fiscal years ended December 31,
2003.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
------------------- OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS COMPENSATION(2)
----------------- ---- -------- -------- --------------- ------------- ---------------
Terence E. Hall............ 2003 $450,000 $300,000 -- -- $12,916
Chairman, President, 2002 451,620 300,000 --(3) -- 11,382
Chief Executive Officer 2001 407,761 464,063 -- 750,000 6,975
Kenneth Blanchard.......... 2003 $210,000 $125,000 -- 70,000 $12,547
Chief Operating Officer, 2002 211,113 105,000 -- 65,000 11,022
Vice President 2001 181,840 466,563(4) -- 72,000 6,975
Robert S. Taylor........... 2003 $160,000 $100,000 -- 70,000 $12,412
Chief Financial Officer, 2002 160,000 80,000 -- 55,000 10,806
Vice President, Treasurer 2001 158,476 165,000 -- 65,000 6,975
---------------
(1) Perquisites and other personal benefits paid in any of the years presented
did not exceed the lesser of $50,000 or 10% of salary and bonus for that
year.
(2) Comprised of our matching contributions to the 401(k) plan, hospitalization
and health insurance, disability and life insurance.
(3) Since January 1, 2002, Mr. Hall has been allowed to use the corporate
airplane for personal travel. Mr. Hall reimburses us for his personal travel
on the corporate airplane in an amount equal to the cost of a first class,
nonrefundable ticket to his destination. Mr. Hall also reimburses us for any
incidental expenses incurred during his personal travel, such as baggage
handling fees at the airport and meals for the pilots. Mr. Hall reimbursed
us approximately $11,000 for his personal use of the airplane during 2003.
(4) Mr. Blanchard received a non-compete payment in the amount of $250,000 in
July 2001.
EXECUTIVE EMPLOYMENT AGREEMENTS
Mr. Hall's employment agreement has a term that expires on July 15, 2006.
The term is automatically renewed for an additional year on each July 15 unless
we or Mr. Hall gives at least 90 days written notice that the term will not be
extended. Mr. Hall's annual base salary was increased in July 2001 to $450,000.
Mr. Hall is also eligible to earn an annual incentive bonus of up to 125% of his
annual base salary based upon the achievement of performance objectives
determined by the Compensation Committee. The agreement contains non-competition
and other provisions intended to protect our interests in the event that Mr.
Hall ceases to be employed.
Mr. Taylor's employment agreement has a term that expires on July 31, 2005
and provides for an annual base salary of $160,000. Mr. Blanchard's employment
agreement has a term that expires on July 31, 2005 and provides for an annual
base salary of $210,000. Mr. Taylor's and Mr. Blanchard's employment agreements
are automatically renewed for an additional year on each December 31 unless we
or they give prior written notice that the term will not be extended. Each of
Messrs. Taylor and Blanchard is also eligible to earn an annual incentive bonus
based upon the achievement of performance objectives determined by the
Compensation Committee. Their employment agreements also contain non-competition
and other provisions intended to protect our interests in the event that either
officer ceases to be employed. In consideration of Mr. Blanchard's
non-competition provision, we paid him an aggregate of $500,000 in two equal
installments in 2000 and 2001.
10
All employment agreements with our executive officers provide for the
termination of employment upon their death or disability, or by us for cause.
Cause is defined to include a willful and continued failure by the officer to
substantially perform his duties, or willful misconduct by the officer that is
materially injurious to us. Mr. Hall's agreement also provides for a right of
termination by Mr. Hall for good reason, which includes a failure by us to
comply with any material provision of the employment agreement.
Upon termination of an executive officer's employment, we must pay him all
compensation owing through the date of his termination. Upon termination of Mr.
Hall due to his death or disability, in addition to all compensation owing
through the date of his termination, we would pay to Mr. Hall (or his estate in
the event of his death) a benefit in an amount equal to his annual base salary.
If Mr. Hall's agreement is terminated by us other than for cause or by Mr. Hall
for good reason, Mr. Hall would be entitled to an amount equal to the sum of his
annual base salary and the bonus paid or payable to Mr. Hall for the preceding
fiscal year, multiplied by the greater of two or the number of years remaining
in the term of Mr. Hall's employment under the agreement.
OPTION GRANTS IN 2003
The following table contains information concerning the grants of options
to our executive officers during 2003. No stock appreciation rights were granted
in 2003.
2003 STOCK OPTION GRANTS
POTENTIAL REALIZABLE
PERCENT OF VALUE
TOTAL AT ASSUMED ANNUAL RATES
NO. OF SHARES OPTIONS OF STOCK APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES OR BASE EXPIRATION -----------------------
NAME GRANTED IN 2003 PRICE DATE 5% 10%
---- ------------- ---------- -------- ---------- ---------- ----------
Terence E. Hall.................. -- -- -- -- -- --
Kenneth Blanchard................ 70,000 16.5% $8.77 3/19/13 $386,078 $978,398
Robert S. Taylor................. 70,000 16.5% $8.77 3/19/13 $386,078 $978,398
---------------
(1) Appreciation has been calculated over the term of the options, beginning
with the exercise price of each respective option.
AGGREGATE OPTION EXERCISES DURING 2003 AND OPTION VALUES AT FISCAL YEAR END
None of our executive officers exercised options to acquire shares of our
common stock during 2003. The following table contains information concerning
the value of outstanding options as of December 31, 2003 based on the difference
between the closing per share sale price of $9.40 on that date, as reported by
the New York Stock Exchange, and the exercise price of the options.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR END (#) AT YEAR END ($)
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------- -------------------------
Terence E. Hall................................... 1,132,617/250,000 $2,303,482/$234,500
Kenneth Blanchard................................. 562,040/137,333 $1,415,620/$ 46,260
Robert S. Taylor.................................. 361,667/128,333 $ 948,050/$ 46,050
AUDIT COMMITTEE REPORT
The Audit Committee is comprised of Messrs. Sullivan as Chairman, Bachmann,
Pattarozzi and Dawkins. Each of these individuals meet the independence
requirements of the New York Stock Exchange, as well as any other applicable
legal and regulatory requirements. The duties and responsibilities of the Audit
Committee are set forth in its written charter adopted by the Board. The
committee reassesses its charter as
11
conditions dictate, but in no event less than once a year, and updates it in
order to comply with the rules of the New York Stock Exchange and any other
applicable legal and regulatory requirements.
The Audit Committee reviewed and discussed our financial statements with
management, which is primarily responsible for preparing the statements, and our
independent auditors, KPMG LLP, who are responsible for expressing an opinion on
the conformity of the financial statements with generally accepted accounting
principles. The committee also discussed with KPMG the matters required to be
discussed by Statement on Auditing Standards No. 61, and has reviewed KPMG's
independence. As part of the committee's review of KPMG's independence, it
received and discussed the written disclosures and the letter from KPMG required
by Independence Standards Board Statement No. 1. The Audit Committee has also
considered whether KPMG's provision of non-audit services to us, which are
described below, was compatible with its independence. The committee has
concluded that it is.
Based on its reviews and discussions with management and KPMG, the Audit
Committee recommended to the Board, and the Board has approved, that the audited
financial statements be included in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2003 for filing with the Securities and Exchange
Commission.
THE AUDIT COMMITTEE
Justin L. Sullivan
Richard A. Bachmann
Richard A. Pattarozzi
Enoch L. Dawkins
FEES PAID TO INDEPENDENT AUDITORS
KPMG has billed us the following amounts for professional services rendered
during each of the fiscal years represented:
FISCAL YEAR ENDED
DECEMBER 31,
-------------------
2003 2002
-------- --------
Audit Fees(1)............................................... $278,517 $225,000
Audit-Related Fees(2)....................................... 14,100 46,000
Tax Fees(3)................................................. 74,635 378,040
All Other Fees(4)........................................... -- --
---------------
(1) Reflects fees for services rendered for the audits of our annual financial
statements for the fiscal year indicated and reviews of the financial
statements contained in our quarterly reports on Form 10-Q for that fiscal
year.
(2) Reflects fees for assurance and related services that are reasonably related
to the performance of the audit or review of our financial statements and
are not reported under "Audit Fees."
(3) Reflects fees for professional services rendered for tax compliance, tax
advice, and tax planning.
(4) KPMG did not perform any financial information systems design and
implementation services for us in 2003.
PRE-APPROVAL PROCESS
The services performed by the independent auditor in 2003 were pre-approved
by the Audit Committee. The Audit Committee has established a policy to
pre-approve all audit and non-audit services provided by our independent
auditor. For non-audit services permissible under law, management may either (i)
submit the project for pre-approval by the chairman of the audit committee, if
the total anticipated cost of the project is no more than $10,000 and the total
anticipated cost of all such projects pre-approved by the chairman during
12
the fiscal quarter does not exceed $25,000, or (ii) submit the project for
pre-approval by the full audit committee, either at its next regularly scheduled
meeting, at a special meeting, or by unanimous written consent.
Management may engage the independent auditors to perform specific
permissible audit-related and non-audit services described on an exhibit to the
policy without the pre-approval of the audit committee, provided that such
services are performed pursuant to separate engagement letters and the aggregate
cost of those services does not exceed $10,000 per calendar quarter. Once this
amount is exceeded in any calendar quarter, the independent auditors may not
provide additional services unless they are pre-approved as described above.
Permissible services not listed on the exhibit the must be separately
pre-approved by the audit committee.
At each regularly scheduled meeting of the audit committee, the chairman of
the audit committee and management will advise the full audit committee of the
scope and anticipated cost of all projects undertaken without the approval of
the full audit committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In 2003, the Compensation Committee discharged the Board's responsibilities
regarding the compensation of our Chief Executive Officer. The overall goal of
the committee is to align compensation of our executive officers with our
performance, and to attract, retain and reward executive officers and employees
whose contributions are critical to our long-term success. The committee has
recently adopted a new charter, which expands the scope of its responsibilities
in accordance with the corporate governance listing standards of the New York
Stock Exchange. This report concerns the committee's activities in fiscal year
2003.
As part of its duties, the Compensation Committee sets the compensation of
Mr. Hall, our Chief Executive Officer. Mr. Hall does not participate in these
discussions or in the making of recommendations by the committee of his
compensation.
Our executive compensation policy seeks to ensure that the base and cash
bonus compensation of our executive officers and other key employees are
competitive with other similar size companies in the oilfield service industry.
Annual awards of stock options are intended to retain executives and key
employees and to motivate them to improve our long-term stock market
performance.
BASE SALARY
In establishing base cash compensation for our executives, we intend to
target the median cash compensation of our competitors for their executives
having similar responsibilities. Base salaries of our executives have
historically been set at or below the median, so that bonuses generally will
constitute a larger portion of cash compensation. This also has the effect of
linking a significant portion of our executives' total cash compensation to our
overall performance.
CASH INCENTIVE BONUSES
The Compensation Committee approves all cash incentive bonuses awarded to
our executive officers. Historically, annual cash incentive bonuses for our
executive officers have been awarded based upon multiple performance criteria,
including subjective evaluations of personal job performance.
LONG-TERM INCENTIVE COMPENSATION
Consistent with our compensation philosophy, the Compensation Committee
believes that stock ownership and stock-based incentive awards are the best way
to align the interests of our executives with those of our stockholders. All
stock option awards are made with option exercise prices equal to the fair
market value of the underlying stock at the time of grant. Holders of stock
option awards benefit only when and to the extent that our stock price increases
after the option grant. In 2003, the Compensation Committee approved annual
stock option grants to executive officers and other key employees, as
recommended by the Chief
13
Executive Officer. Option awards were made to 209 employees and executives and
covered approximately 423,000 shares of underlying common stock.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Components of our Chief Executive Officer's compensation for 2003 included
base salary and an annual incentive bonus.
Mr. Hall's base salary for 2003 was $450,000. His base salary was last
increased in July 2001. Mr. Hall also received a cash incentive bonus in the
amount of $300,000 in recognition of his leadership during 2003. Mr. Hall did
not receive any stock options in 2003.
The Compensation Committee believes that the total compensation package
provided to Mr. Hall is fair and reasonable based on the competitive market in
which we conduct our business and his overall contribution to our success.
POLICY REGARDING SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code generally limits our ability to
take a federal income tax deduction for compensation paid to our Chief Executive
Officer and other executive officers in excess of $1 million, except for
qualified performance-based compensation. The stock options we grant have been
structured to qualify as performance-based and are so not subject to this
deduction limitation. While the Compensation Committee will seek to utilize
deductible forms of compensation to the extent practicable, it does not believe
that compensation decisions should be made solely to maintain the deductibility
of compensation for federal income tax purposes.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2003, the Compensation Committee was composed entirely of outside,
non-employee directors and none of our executive officers served as a director
or member of the compensation committee of another entity whose executive
officers served on the Board.
THE COMPENSATION COMMITTEE
Richard A. Pattarozzi
Justin L. Sullivan
Richard A. Bachmann
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the acquisition of Cardinal Holding Corp. in July 1999,
we entered into a stockholders' agreement with First Reserve Fund VII, Limited
Partnership, and First Reserve Fund VIII, L.P. Under the agreement, the First
Reserve funds are now entitled to designate two members to the Board as long as
they beneficially and collectively own at least 5% of our voting power. In
addition, the stockholders' agreement prevents the First Reserve funds from: (i)
acquiring additional equity securities in an amount that would result in the
funds obtaining beneficial ownership of more than an additional 10% of the
outstanding shares of any class of our equity securities; (ii) disposing of any
of our securities, except in limited circumstances primarily involving public
sales; and (iii) facilitating a change of control.
Further in connection with the Cardinal acquisition, we entered into a
registration rights agreement with the First Reserve funds. The First Reserve
funds have the right to require us to file a registration statement under the
Securities Act of 1933 so that they may sell at least 20% of the shares of
common stock they own. We are not obligated to file more than one registration
statement for the First Reserve funds during any twelve month period, and in no
event are we obligated to make more than four registrations under the agreement.
The First Reserve funds also have the right to include their shares in any other
registration statement we file involving our common stock.
14
We provide well intervention, field management and other services to Energy
Partners, Ltd. Mr. Bachmann is the Chief Executive Officer of Energy Partners.
During 2003, we billed Energy Partners approximately $4.0 million for these
services on terms that we believe are customary in the industry. We expect to
continue providing these services to Energy Partners.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and 10% stockholders to file with the Securities
and Exchange Commission reports of ownership and changes in ownership of our
equity securities. To the best of our knowledge, all required forms were timely
filed with the SEC during 2003, except for a Form 4 filed on behalf of Mr.
Dawkins, due to a clerical error.
15
PERFORMANCE GRAPH
The graph and corresponding table below compares the total stockholder
return on our common stock for the last five years with the total return on the
S&P 500 Index and a Self-Determined Peer Group for the same period. The
information in the graph is based on the assumption of a $100 investment on
January 1, 1999 at closing prices on December 31, 1998.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
SUPERIOR ENERGY SERVICES, INC.
PRODUCED ON 03/11/2004 INCLUDING DATA TO 12/31/2003
(GRAPH)
--------------------------------------------------------------------------------------------
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
--------------------------------------------------------------------------------------------
Superior $100 $237.40 $404.40 $304.20 $288.40 $330.50
S&P 500 $100 $121.10 $110.30 $ 97.30 $ 75.80 $ 97.50
Self-Determined Peer
Group $100 $141.30 $195.60 $135.10 $121.90 $148.20
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on December 31, 1998.
Beginning with our Proxy Statement for 2002, we changed the peer company
index for this performance graph from the NASDAQ Stocks (SIC 1380-1389 US
Companies) Oil and Gas Field Services Index to a Self-Determined Peer Group. Our
Self-Determined Peer Group is comprised of BJ Services Company, Global
Industries, Ltd., Schlumberger Limited, Baker Hughes Incorporated, Halliburton
Company and Weatherford International Ltd. We made this change because we
believe that investors are increasingly comparing investment alternatives among
us and the companies presented in the Self-Determined Peer Group.
16
PROPOSAL TO APPROVE THE SUPERIOR ENERGY SERVICES, INC.
2004 DIRECTORS RESTRICTED STOCK UNITS PLAN
GENERAL
The Superior Energy Services, Inc. 2004 Directors Restricted Stock Units
Plan (the "Director Plan") has been approved by the Board, subject to the
approval by our stockholders at the annual meeting. The Board believes that the
Director Plan promotes our interests and the interests of our stockholders by
strengthening our ability to attract, motivate and retain directors of
experience and ability, and by encouraging the highest level of performance by
providing directors with a proprietary interest in our financial success and
growth. If the Director Plan is adopted, options will no longer be granted to
non-employee directors under the 2002 Stock Incentive Plan (the "2002 Plan"). If
the Director Plan is not approved by our stockholders at the annual meeting, the
option grants to the non-employee directors under the 2002 Plan will continue.
The primary features of the Director Plan are summarized below. This summary is
qualified in its entirety, however, by reference to the Director Plan, which is
attached to this Proxy Statement as Appendix A.
TERMS OF THE DIRECTOR PLAN
Administration. The Compensation Committee of the Board (the "Committee")
administers the Director Plan and has authority to interpret the Director Plan,
to prescribe, amend and rescind rules relating to the Director Plan and to make
any other determinations necessary for the administration of the Director Plan.
Eligibility and Grants. Only our non-employee directors are eligible to
participate in the Director Plan. Currently, six non-employee directors will be
eligible to participate. If the Director Plan is approved by our stockholders,
on the day following each annual meeting of the stockholders, beginning May 26,
2004, each participant will receive a number of restricted stock units (RSUs)
having an aggregate value of $30,000, determined by dividing $30,000 by the fair
market value of the common stock on the day of the annual meeting. In addition,
upon any person's initial election or appointment as an eligible director,
otherwise than at an annual meeting of stockholders, such person shall receive a
pro rata number of RSUs based upon the number of full calendar months between
the date of grant and the first anniversary of the previous annual meeting.
Subject to certain adjustment provisions described below, the aggregate
number of shares of common stock that may be issued under the Director Plan is
200,000. The shares issued or delivered in connection with RSUs may be either
authorized but unissued shares of our common stock or shares acquired by us on
the open market or otherwise.
Terms of Restricted Stock Units. An RSU represents the right to
automatically receive from us, within 30 days of the date the participant ceases
to serve on the Board, one share of our common stock. An RSU does not entitle
the participant to ownership rights in any share of our common stock or in any
cash, securities or property credited to or deposited in a dividend equivalent
account (which is interest-bearing) until common stock relative to that RSU is
issued. The RSU will vest immediately upon grant.
Transferability of Restricted Stock Units. Under the Director Plan,
directors may not transfer, pledge, assign or otherwise encumber their RSUs
except:
- by will; or
- by the laws of descent and distribution.
Adjustment. In the event of any recapitalization, reclassification, stock
dividend, stock split, combination of shares or other change in the common
stock, all limitations on the number of shares of common stock provided in the
Director Plan and the number of shares of common stock subject to RSUs will be
adjusted in proportion to the change in the outstanding common stock. The
Committee will make any other adjustments that it determines to be equitable so
that participants will have the same relative rights before and after these
adjustments.
17
Term of the Director Plan. No RSUs may be granted under the Plan later
than May 25, 2014, which is ten years after the date of the meeting. However,
RSUs granted prior to such date shall remain in effect until all such RSUs have
either been paid out in common stock, expired, or been canceled under the terms
of the Plan.
Amendments to the Director Plan. The Board may amend or discontinue the
Director Plan at any time. However, our stockholders must approve any amendment
that would:
- materially increase the benefits accruing to participants under the
Director Plan;
- increase the number of shares of common stock that may be issued under
the Director Plan;
- materially expand the classes of persons eligible to participate in the
Director Plan; or
- materially extend the term of the Plan.
No amendment or discontinuance of the Director Plan may materially impair
any previously granted RSU without the consent of the recipient.
AWARDS TO BE GRANTED
If our stockholders approve the Director Plan at the annual meeting, RSUs
will be granted under the Director Plan on May 26, 2004, to the persons named
and in the amounts set forth below.
NEW PLAN BENEFITS
2004 DIRECTOR INCENTIVE PLAN
DOLLAR VALUE NO. OF UNITS
NAME ($)(1) (RSUs)
---- ------------ ------------
Richard A. Bachmann......................................... $ 30,000 (2)
Enoch L. Dawkins............................................ $ 30,000 (2)
Joseph R. Edwards........................................... $ 30,000 (2)
Ben A. Guill................................................ $ 30,000 (2)
Richard A. Pattarozzi....................................... $ 30,000 (2)
Justin L. Sullivan.......................................... $ 30,000 (2)
All non-employee directors as a group....................... $180,000
---------------
(1) The referenced grant of RSUs is contingent upon the director's re-election
at the annual meeting.
(2) The number of RSUs to be granted will be determined by dividing $30,000 by
the fair market value of a share of common stock on the date of the annual
meeting.
In addition, while the Director Plan is in effect and to the extent that
shares of common stock remain available for issuance thereunder, non-employee
directors will continue to receive a number of RSUs having an aggregate value of
$30,000 following each annual meeting of stockholders and upon joining the Board
if other than by election at an annual meeting of stockholders.
18
EQUITY COMPENSATION PLAN INFORMATION
The following table presents information as of December 31, 2003, regarding
compensation plans under which our common stock may be issued to employees and
non-employees as compensation.
NUMBER OF
SECURITIES
NUMBER OF REMAINING AVAILABLE
SECURITIES TO BE WEIGHTED-AVERAGE FOR FUTURE ISSUANCE
ISSUED UPON EXERCISE PRICE OF UNDER EQUITY
EXERCISE OF OUTSTANDING COMPENSATION PLANS
OUTSTANDING OPTIONS, (EXCLUDING
OPTIONS, WARRANTS WARRANTS AND SECURITIES REFLECTED
PLAN CATEGORY AND RIGHTS RIGHTS IN COLUMN (A))
------------- ----------------- ----------------- --------------------
(A) (B) (C)
Equity compensation plans
approved by security holders........ 5,628,000 $7.53 1,401,101(1)
Equity compensation plans
not approved by security holders.... -- -- 8,885(2)
--------- ---------
Total............................... 5,628,000 1,409,986
========= =========
---------------
(1) Of the shares remaining available for issuance under our 1999 Stock
Incentive Plan and 2002 Stock Incentive Plan, no more than 250,000 shares
may be issued as restricted stock or "other stock-based awards" (which
awards are valued in whole or in part on the value of the shares of Common
Stock) under each plan. Of the shares remaining for issuance under our 1995
Stock Incentive Plan, there is no limit to how many of the shares may be
issued as restricted stock or "other stock-based awards."
(2) Under our Director's Stock Plan, our non-employee directors may elect to
receive up to 100%, in 25% increments, of any director fees paid by us in
common stock. The fees are converted into shares of common stock in an
amount equal to the director's compensation divided by the average price of
the stock for the calendar quarter in which the election is made.
VOTE REQUIRED
Approval of the Director Plan requires the affirmative vote of the holders
of a majority of the votes cast on the proposed plan.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO APPROVE THE DIRECTOR PLAN.
PROPOSAL TO RATIFY THE RETENTION OF INDEPENDENT AUDITORS
The audit committee has selected KPMG LLP as our independent auditors for
the fiscal year ending December 31, 2004, which selection is submitted to our
stockholders for ratification. If our stockholders do not ratify the selection
of KPMG LLP by the affirmative vote of holders of a majority of the voting power
present or represented at the annual meeting, the selection will be reconsidered
by the audit committee.
Representatives of KPMG LLP are expected to be present at the annual
meeting and will have an opportunity to make a statement if they desire to do
so. They will also be available to respond to appropriate questions from
stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE AUDIT COMMITTEE AND OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO
RATIFY THE RETENTION OF KPMG LLP AS OUR INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2004.
19
2005 STOCKHOLDER NOMINATIONS AND PROPOSALS
Our By-laws require that stockholders who wish to make a nomination for the
election of a director or to bring any other matter before a meeting of the
stockholders must give written notice of their intent to our Secretary not more
than 270 days and not less than 120 days in advance of the first anniversary of
the preceding year's annual meeting of stockholders. For our 2005 annual
meeting, a stockholder's notice must be received by our Secretary on or after
August 29, 2004, but on or before January 26, 2005. We urge our stockholders to
send their proposals by certified mail, return receipt requested.
By Order of the Board of Directors
/s/ Greg Rosenstein
GREG ROSENSTEIN
Secretary
Harvey, Louisiana
April 16, 2004
20
APPENDIX A
SUPERIOR ENERGY SERVICES, INC.
2004 DIRECTORS RESTRICTED STOCK UNITS PLAN
1. PURPOSE OF THE PLAN.
The purpose of the Superior Energy Services, Inc. 2004 Directors Restricted
Stock Units Plan is to promote the interests of the Company and its stockholders
by strengthening the Company's ability to attract, motivate and retain Directors
of experience and ability, and to encourage the highest level of Directors
performance by providing Directors with a proprietary interest in the Company's
financial success and growth.
2. DEFINITIONS.
Certain terms used herein are defined as follows:
2.1 "Award Notice" means any written or electronic notice of grant,
evidencing any grant of restricted stock units.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Committee" means the Compensation Committee of the Board or a
subcommittee thereof. The Committee shall consist of not fewer than two members
of the Board of Directors, each of whom shall (a) qualify as a "non-employee
director" under Rule 16b-3 promulgated under the Securities Exchange Act of 1934
(the "1934 Act"), or any successor rule, and (b) qualify as an "outside
director" under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations promulgated thereunder (collectively, "Section
162(m)").
2.4 "Common Stock" means the common stock, $.001 par value per share, of
the Company.
2.5 "Company" or "Superior" means Superior Energy Services, Inc., a
Delaware corporation.
2.6 "Director" means a member of the Board who is not employed by the
Company or any of its subsidiaries.
2.7 "Disability" shall occur if (a) a physical or mental illness renders
the Participant incapable of satisfactorily discharging his or her duties and
responsibilities as a Director for a period of 180 consecutive days, and (b) a
duly qualified physician chosen by the Company and reasonably acceptable to the
Participant or his or her legal representative certifies in writing that the
Participant has become disabled.
2.8 "Fair Market Value" means (a) if the Common Stock is listed on an
established stock exchange or any automated quotation system that provides sale
quotations, the closing sale price for a share of the Common Stock on such
exchange or quotation system on the applicable date, or if no sale of the Common
Stock shall have been made on that day, on the next preceding day on which there
was a sale of the Common Stock; (b) if the Common Stock is not listed on any
exchange or quotation system, but bid and asked prices are quoted and published,
the mean between the quoted bid and asked prices on the applicable date, and if
bid and asked prices are not available on such day, on the next preceding day on
which such prices were available; and (c) if the Common Stock is not regularly
quoted, the fair market value of a share of Common Stock on the applicable date
as established by the Committee in good faith.
2.9 "Participant" means each Director (as defined in Section 2.6).
2.10 "Plan" means the Superior Energy Services, Inc. 2004 Directors
Restricted Stock Units Plan as set forth herein and as amended, restated,
supplemented or otherwise modified from time to time.
2.11 "Restricted Stock Unit" or "RSU" means a restricted stock unit
granted under Section 5 of the Plan with the terms and conditions described in
this Plan.
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3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
The Company may issue up to 200,000 shares of Common Stock, subject to the
adjustment provisions of Section 7, pursuant to RSUs granted hereunder. Such
shares may be either authorized but unissued shares or shares issued and
thereafter acquired by the Company.
4. ADMINISTRATION OF THE PLAN.
4.1 The Plan shall be administered by the Committee, which shall have the
power to interpret the Plan and, subject to its provisions, to prescribe, amend
and rescind Plan rules and to make all other determinations necessary for the
Plan's administration.
4.2 All action taken by the Committee in the administration and
interpretation of the Plan shall be final and binding upon all parties. No
member of the Committee will be liable for any action or determination made in
good faith by the Committee with respect to the Plan or any RSU.
4.3 The Committee does not have the authority to make discretionary grants
of RSUs under the Plan. Grants may be made only as provided in Section 5 hereof.
5. GRANT OF RESTRICTED STOCK UNITS.
5.1 Beginning with the 2004 annual meeting of stockholders and for as long
as the Plan remains in effect and shares of Common Stock remain available for
issuance hereunder, each Participant will be automatically granted a number of
restricted stock units having an aggregate value of $30,000 on the day following
each annual meeting of stockholders. The number of restricted stock units to be
granted each year will be determined by dividing $30,000 by the Fair Market
Value of a share of Common Stock on the day of the annual meeting of
stockholders, and rounding up to the nearest whole number of RSUs.
5.2 While the Plan remains in effect and shares of Common Stock remain
available for issuance hereunder, any person who becomes a Director other than
by election at an annual meeting of stockholders shall be granted a pro rata
number of RSUs determined as follows (rounded up to the nearest whole number):
($2,500x)/y, where:
x = the number of full calendar months between the date the person
becomes a Director and the first anniversary of the most recent
annual meeting, and
y = the Fair Market Value of a share of Common Stock on the date the
person becomes a Director.
6. TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS.
6.1 Subject to the terms, conditions, and restrictions set forth herein,
each RSU granted under Section 5.1 hereof represents the right to automatically
receive from the Company, within 30 days following the date (the "Termination
Date") the Participant ceases to be a Director (a "Termination") for any reason,
one share (a "Share") of Common Stock, free of any restrictions and all cash,
securities and property credited to or deposited in the Participant's Dividend
Equivalent Account (as defined in Section 6.4) with respect to each RSU.
6.2 Each RSU shall vest immediately upon grant. A Participant shall not be
issued the Shares to which an RSU relates until the Participant's Termination
Date.
6.3 Except as provided in Section 6.4, until the Participant is issued the
Share to which an RSU relates, such RSU shall not entitle the Participant to any
incidents of ownership (including, without limitation, dividend and voting
rights) (a) in any Share nor (b) in any cash, securities or property credited to
or deposited in a Dividend Equivalent Account related to such RSU.
6.4 From and after the date of grant of an RSU until the issuance of the
Share payable in respect of such RSU, the Participant shall be credited, as of
the payment date therefor, with (a) the amount of any cash
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dividends and (b) the amount equal to the Fair Market Value of any Shares,
securities, or other property distributed or distributable in respect of one
share of Common Stock (a "Property Distribution") to which the Participant would
have been entitled had the Participant been a record holder of one share of
Common Stock for each RSU at all times from the date of grant of such RSU to
such issuance date. All such credits shall be made notionally to a dividend
equivalent account (a "Dividend Equivalent Account") established for the
Participant with respect to all RSUs granted on the same date. All credits to a
Dividend Equivalent Account for the Participant shall be notionally increased by
the Account Rate (as hereinafter defined), compounded quarterly, from and after
the applicable date of credit until paid in accordance with the terms of the
Plan and the applicable Award Notice. The "Account Rate" shall be the prime
commercial lending rate announced from time to time by JPMorgan Chase Bank or by
another major national bank headquartered in New York, New York designated by
the Committee. The Committee may, in its discretion, deposit in the
Participant's Dividend Equivalent Account the securities or property comprising
any Property Distribution in lieu of crediting such Dividend Equivalent Account
with the Fair Market Value thereof.
6.5 In the event of any Termination, a distribution of all amounts due
hereunder related to RSUs shall be made in full to the Participant or his or her
designated beneficiary within 30 days following the Termination Date.
7. ADJUSTMENT PROVISIONS.
In the event of any recapitalization, reclassification, stock dividend,
stock split, combination of shares or other change in the Common Stock, all
limitations on numbers of shares of Common Stock provided in this Plan, and the
number of shares subject to RSUs, shall be equitably adjusted in proportion to
the change in outstanding shares of Common Stock. In addition, in the event of
any such change in the Common Stock, the Committee shall make any other
adjustment that it determines to be equitable in order to provide Participants
with the same relative rights before and after such adjustment.
8. GENERAL PROVISIONS.
8.1 Nothing in the Plan or in any instrument executed pursuant to the Plan
will confer upon any Participant any right to continue as a Director or affect
the right of the Company to terminate the services of any Participant.
8.2 No shares of Common Stock will be issued or transferred pursuant to an
RSU unless and until all then-applicable requirements imposed by federal and
state securities and other laws, rules and regulations and by any regulatory
agencies having jurisdiction, and by any stock exchanges upon which the Common
Stock may be listed, have been fully met. As a condition precedent to the
issuance of shares pursuant to an RSU, the Company may require the Participant
to take any reasonable action to meet such requirements.
8.3 The Company shall have the right to withhold from any payments or
stock issuances under this Plan, or to collect as a condition of payment, any
taxes required by law to be withheld.
8.4 No Participant and no beneficiary or other person claiming under or
through such Participant will have any right, title or interest in or to any
shares of Common Stock allocated or reserved under the Plan or subject to any
RSU except as to such shares of Common Stock, if any, that have been issued or
transferred to such Participant.
8.5 No RSUs granted hereunder may be transferred, pledged, assigned or
otherwise encumbered by a Participant except:
(a) by will; or
(b) by the laws of descent and distribution.
Any attempted assignment, transfer, pledge, hypothecation or other
disposition of an RSU or levy of attachment, or similar process upon an RSU not
specifically permitted herein, shall be null and void and without effect.
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8.6 Each RSU shall be evidenced by an Award Notice, including terms and
conditions consistent with the Plan, as the Committee may determine.
9. AMENDMENT, DISCONTINUANCE OR TERMINATION OF THE PLAN.
9.1 The Board may amend or discontinue the Plan at any time; provided,
however, that no such amendment may
(a) without the approval of the stockholders, (i) increase, subject to
adjustments permitted herein, the maximum number of shares of Common Stock
that may be issued through the Plan, (ii) materially increase the benefits
accruing to Participants under the Plan, (iii) materially expand the
classes of persons eligible to participate in the Plan, or (iv) materially
extend the term of the Plan, or
(b) materially impair, without the consent of the recipient, an RSU
previously granted.
10. TERM OF PLAN. No RSUs may be granted under the Plan later than May 25,
2014, which is ten years after the Plan was approved by the Company's
stockholders; provided, however, that RSUs granted prior to such date shall
remain in effect until all such RSUs have either been paid out in Shares,
expired or been canceled under the terms of the Plan.
* * * * * * *
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ANNUAL MEETING OF STOCKHOLDERS OF
SUPERIOR ENERGY SERVICES, INC.
MAY 25, 2004
PLEASE DATE, SIGN AND MAIL
YOUR PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON
AS POSSIBLE.
| |
V Please detach along perforated line and mail in the envelope provided. V
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW AND
FOR PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
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1. Election of directors
NOMINEES:
[ ] FOR ALL NOMINEES O Terence E. Hall
O Joseph R. Edwards
[ ] WITHHOLD AUTHORITY O Justin L. Sullivan
FOR ALL NOMINEES O Ben A. Guill
O Richard A. Bachmann
[ ] FOR ALL EXCEPT O Richard A. Pattarozzi
(See instructions below) O Enoch L. Dawkins
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: O
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FOR AGAINST ABSTAIN
2. 2004 Directors Restricted Stock Units Plan [ ] [ ] [ ]
3. Appointment of KPMG LLP as independent auditors
for the fiscal year ending December 31, 2004 [ ] [ ] [ ]
4. To vote in his discretion upon such other business as may properly come
before the annual meeting and any adjournments thereof
WHEN THIS PROXY IS PROPERLY EXECUTED, YOUR SHARES WILL BE VOTED AS DIRECTED.
IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED
ON THIS PROXY CARD. THE INDIVIDUAL DESIGNATED ON THE REVERSE SIDE WILL VOTE IN
HIS DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
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To change the address on your account, please check the box at right
and indicate your new address in the address space above. Please [ ]
note that changes to the registered name(s) on the account may not
be submitted via this method.
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Signature of Stockholder Date:
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Signature of Stockholder Date:
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NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as such. If
signer is a partnership, please sign in partnership name by authorized
person.
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SUPERIOR ENERGY SERVICES, INC.
1105 PETERS ROAD
HARVEY, LOUISIANA 70058
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 25, 2004
By signing this proxy, you revoke all prior proxies and appoint Terence E.
Hall, with full power of substitution, to represent you and to vote your shares
on the matters shown on the reverse side at Superior's annual meeting of
stockholders to be held on May 25, 2004, and any adjournments thereof.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
14475