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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MITCHAM INDUSTRIES, 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 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing is calculated
and state how it was determined):
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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MITCHAM INDUSTRIES, INC.
POST OFFICE BOX 1175
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77342
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 18, 2001
To our Shareholders:
The Annual Meeting of the Shareholders (the "Annual Meeting") of
Mitcham Industries, Inc., a Texas corporation (the "Company"), will be held on
July 18, 2001, at the Houston Marriott North, 225 North Sam Houston Parkway
East, Houston, Texas at 10:00 a.m., CST for the purpose of considering and
voting on the following matters:
1. The election of six directors to serve until the next Annual Meeting
and until their successors are elected and qualified.
2. The adoption of an amendment to the 2000 Stock Option Plan to
increase the number of shares of common stock available for option grants
thereunder to 1,000,000 shares from the 500,000 shares now authorized.
3. The approval of the selection of Hein + Associates LLP as the
Company's independent auditors for the fiscal year ended January 31, 2002.
4. The transaction of such other business as may properly come before
the meeting and any adjournment thereof.
The Board of Directors has established the close of business on May 30,
2001 as the record date for determining the shareholders entitled to notice and
to vote at the Annual Meeting and any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. TO ASSURE YOUR
REPRESENTATION AT THE ANNUAL MEETING, EVEN IF YOU PLAN TO ATTEND, PLEASE
COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
ACCOMPANYING ENVELOPE.
Sincerely,
P. Blake Dupuis
Secretary
June 8, 2001
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MITCHAM INDUSTRIES, INC.
POST OFFICE BOX 1175
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77342
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 18, 2001
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SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of the Company of proxies from the holders of record
of the common stock, par value $.01 per share ("Common Stock"), at the close of
business on May 30, 2001, for use at the Annual Meeting to be held at 10:00
a.m., CST, on July 18, 2001, and any adjournment thereof. This Proxy Statement,
the attached proxy and the Company's Annual Report for the fiscal year ended
January 31, 2001 are being mailed together on or about June 8, 2001, to
shareholders entitled to notice of and to vote at the Annual Meeting. The
principal executive office of the Company is Post Office Box 1175, 44000 Highway
75 South, Huntsville, Texas 77342.
Properly executed proxies will be voted as directed. If no direction is
indicated therein, proxies received in response to this solicitation will be
voted FOR: (i) the election of the six nominees for director; (ii) the adoption
of the amendment to the 2000 Stock Option Plan; (iii) the ratification of the
indicated independent auditors; and (iv) as recommended by the Board of
Directors with regard to any other matters, or if no recommendation is given, in
their own discretion.
A proxy on the enclosed form may be revoked by the shareholder at any
time before it is voted by filing with the Secretary of the Company a written
revocation, by voting in person at the meeting, or by delivering a proxy bearing
a later date. Attendance at the Annual Meeting will not, in itself, constitute
revocation of the proxy.
The Company will bear all costs of this Proxy Statement and the proxy
and the cost of soliciting proxies relating to the Annual Meeting. It is
anticipated that the solicitation of proxies for the Annual Meeting will be made
only by use of the mails and will cost approximately $15,000. However, the
Company may use the services of its directors, officers and employees to solicit
proxies personally or by telephone, without additional salary or compensation to
them. The Company will request that the brokerage houses, custodians, nominees,
and fiduciaries forward the proxy soliciting materials to the beneficial owners
of the Company's shares held of record for such persons, and the Company will
reimburse such persons for their related reasonable out-of-pocket expenses.
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VOTING OF SECURITIES
At the close of business on May 30, 2001, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, there were 8,890,415 issued and outstanding shares of Common Stock,
each of which share is entitled to one vote. Common Stock is the only class of
outstanding securities of the Company entitled to notice of and to vote at the
Annual Meeting.
The Company's Bylaws provide that the presence, either in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum for
the transaction of business. Assuming such a majority is present, the election
of directors will require a plurality of the votes cast at the Annual Meeting.
The adoption of the amendment to the 2000 Stock Option Plan and the ratification
of the selected independent public accountants will require the affirmative vote
of a majority of the shares entitled to vote and that voted or abstained at the
Annual Meeting. Abstentions from and broker non-votes on the proposal to elect
directors will be counted for purposes of determining the presence of a quorum,
but will not be included in the total shares voted for or against any nominee. A
broker non-vote occurs if a broker or other nominee holding shares for a
beneficial owner does not vote on a proposal because he does not have
discretionary authority to vote shares and has not received instructions from
the beneficial owner with respect to such proposal. Thus, abstentions from the
proposals will have the same legal effect as a vote against the proposals, but a
broker non-vote will not be counted for purposes of determining whether a
majority is achieved.
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PRINCIPAL HOLDERS OF SECURITIES AND SECURITY OWNERSHIP
OF MANAGEMENT
PRINCIPAL HOLDERS OF SECURITIES. The following table sets forth the
beneficial ownership of Common Stock as of May 30, 2001, with respect to each
person known by the Company to be the beneficial owners of 5% or more of the
Company's shares of outstanding Common Stock. All persons listed have sole
disposition and voting power with respect to the indicated shares except as
otherwise noted.
COMMON STOCK
BENEFICIALLY OWNED
NAME AND ADDRESS -------------------------------------------
OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
------------------- ---------------- ----------------
Billy F. Mitcham, Jr....................................... 745,814(1) 8.2%
P. O. Box 1175
Huntsville, Texas 77342
R. Chaney & Partners IV L.P................................ 1,274,300(2) 14.3%
909 Fannin, Suite 1275
Two Houston Center
Houston, Texas 77010
Wellington Management Company, LLP......................... 815,000(3) 9.2%
75 State Street
Boston, Massachusetts 02109
Dimensional Fund Advisors, Inc............................. 674,400(4) 7.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
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(1) Includes an aggregate of 242,564 shares of Common Stock owned by Billy
F. Mitcham, Sr. (95,040 shares), Paul C. Mitcham (89,930 shares), and
two trusts established for the benefit of Mr. Mitcham, Jr.'s sons (the
"Mitcham Children's Trusts") (57,594 shares), as to which Mr. Mitcham,
Jr. has sole voting rights under a Voting Agreement. Also includes
shares underlying currently exercisable options, and options that will
become exercisable within 60 days after May 30, 2001, to purchase an
aggregate of 243,250 shares of Common Stock, as follows: Billy F.
Mitcham, Jr. (86,000 shares), Billy F. Mitcham, Sr. (45,750 shares) and
Paul C. Mitcham (111,500 shares).
(2) As of November 6, 1998, based upon information contained in a Form 4,
filed jointly by R. Chaney & Partners IV L.P. ("Fund IV"), R. Chaney &
Partners III L.P. ("Fund III"), R. Chaney Investments, Inc.
("Investments") and R. Chaney & Partners, Inc. ("Partners") with the
Securities and Exchange Commission. The Form 4 indicates that Fund IV
beneficially owns and has sole disposition and voting power over
1,009,300 shares and Fund III beneficially owns and has sole
disposition and voting power over 265,000 shares. Investments is the
sole general partner of Fund IV, Partners is the sole general partner
of Fund III and Robert H. Chaney is the sole shareholder of Investments
and Partners.
(3) As of December 31, 2000, based upon information contained in a Schedule
13G/A, dated February 14, 2001, filed by Wellington Management Company,
LLP ("Wellington") with the SEC. All securities reported in
Wellington's Schedule 13G/A are owned by certain of its clients, no one
of which is known by Wellington to own more than 5%. Wellington has
shared disposition power with respect to all of these shares and shared
voting power with respect to 665,000 of these shares.
(4) As of December 21, 2000, based upon information contained in a Schedule
13G, dated February 2, 2001, filed by Dimensional Fund Advisors filed
with the SEC. All securities reported in Dimensional's Schedule 13G are
owned by certain of its clients, no one of which is known by
Dimensional to own more than 5%.
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SECURITY OWNERSHIP OF MANAGEMENT. The following table sets forth the
beneficial ownership of Common Stock as of May 30, 2001, by (i) the executive
officers whose total annual salary and bonus exceeded $100,000 in the fiscal
year ended January 31, 2001 (the "Named Executives"); (ii) each director and
nominee; and (iii) all directors and executive officers as a group. All persons
listed have sole disposition and voting power with respect to the indicated
shares except as otherwise noted.
COMMON STOCK
BENEFICIALLY OWNED
------------------------------------------
NAME AND ADDRESS
OF BENEFICIAL OWNER(1) NUMBER OF SHARES PERCENT OF CLASS
---------------------- ---------------- ----------------
Billy F. Mitcham, Jr................................. 745,814(2) 8.2%
Paul C. Mitcham...................................... 201,430(3) 2.2%
William J. Sheppard.................................. 102,427(4) *
P. Blake Dupuis...................................... 67,000(5) *
Christopher C. Siffert............................... 28,334(6) *
R. Dean Lewis........................................ 27,000(6) *
John F. Schwalbe..................................... 29,000(6) *
Peter H. Blum........................................ 58,479(7) *
All directors and executive officers as a group
(7 persons).......................................... 1,058,054(8) 11.3%
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*Less than 1%
(1) The business address of each shareholder is the same as that
of the Company's principal executive offices.
(2) Paul C. Mitcham resigned as an officer and director of the
Company effective May 23, 2001. Includes an aggregate of
242,564 shares of Common Stock owned by Billy F. Mitcham, Sr.
(95,040 shares); Paul C. Mitcham (89,930 shares); and the
Mitcham Children's Trusts (57,594 shares), as to which Mr.
Mitcham, Jr. has sole voting rights under a Voting Agreement.
Also includes shares underlying currently exercisable options,
and options that will become exercisable within 60 days from
May 30, 2001, to purchase an aggregate of 243,250 shares of
Common Stock, as follows: Billy F. Mitcham, Jr. (86,000
shares), Billy F. Mitcham, Sr. (45,750 shares) and Paul C.
Mitcham (111,500 shares).
(3) Includes shares underlying currently exercisable options, and
options that will become exercisable within 60 days, to
purchase 111,500 shares of Common Stock.
(4) Includes shares underlying currently exercisable options, and
options that will become exercisable within 60 days, to
purchase 102,000 shares of Common Stock.
(5) Includes shares representing currently exercisable options,
and options that will become exercisable within 60 days, to
purchase 62,000 shares of Common Stock.
(6) Represents shares underlying currently exercisable options and
options that will become exercisable within 60 days.
(7) Includes 15,000 shares underlying options that will become
exercisable within 60 days.
(8) Includes shares underlying currently exercisable options, and
options that will become exercisable within 60 days, to
purchase an aggregate of 506,584 shares of Common Stock, as
follows: the 243,250 shares referred to in footnote (2) above,
and an aggregate of 263,334 shares attributable to William J.
Sheppard (102,000 shares), P. Blake Dupuis (62,000 shares),
Christopher C. Siffert (28,334 shares), R. Dean Lewis (27,000
shares), John F. Schwalbe (29,000 shares), and Peter H. Blum
(15,000 shares).
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ELECTION OF DIRECTORS
Six directors will be elected at the Annual Meeting. Shares or proxies
may not be voted for more than six nominees for directors. Each director so
elected will hold office until the next Annual Meeting and until his successor
is elected and qualified. All six director nominees are currently directors of
the Company.
The persons named as proxies in the proxy have been designated by the
Board of Directors and intend to vote such proxy "FOR" the persons named below
in the election of the Board of Directors, except to the extent authority to
vote is withheld from one or more nominees. If any such nominee is unable to
serve as a director, it is intended that the shares represented by proxies will
be voted in the absence of contrary indication for any substitute nominee that
the Board of Directors designates.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE SIX NOMINEES
NAMED BELOW.
INFORMATION ABOUT NOMINEES FOR DIRECTOR AND EXECUTIVE OFFICERS. The
following states each director nominee's and each executive officer's present
position with the Company, principal occupation, age, and, for the executive
officers who are directors, the year in which he was first elected a director
(each serving continuously since first elected). Christopher C. Siffert, Vice
President - Corporate Controller, is not a director or nominee.
NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
---- -------------------- --- --------------
Billy F. Mitcham, Jr. Chairman of the Board, President and Chief Executive 53 1987
Officer. Mr. Mitcham has more than 20 years of experience
in the geophysical industry. From 1979 to 1987, he served
in various management capacities with Mitcham Associates,
an unrelated equipment leasing company. From 1975 to
1979, Mr. Mitcham served in various capacities with
Halliburton Services, primarily in oilfield services.
William J. Sheppard Executive Vice President - International Operations and a 53 1994
director of the Company. Mr. Sheppard has more than 25
years of experience in the geophysical industry. From
1987 until October 1994, Mr. Sheppard was the President
of Alberta Supply Company, a Canadian seismic equipment
sales and services company.
P. Blake Dupuis Executive Vice President - Finance, Secretary, Treasurer 47 2000
and a director of the Company. From September 1996 to
July 1998, Mr. Dupuis served as Chief Financial Officer
of UTI Energy Corp. From April 1996 to September 1996,
Mr. Dupuis served as Chief Financial Officer of
Adcor-Nicklos Drilling Company and from December 1993
to April 1996, he served as Chief Financial Officer of
Coastwide Energy Services, Inc. Mr. Dupuis is a Certified
Public Accountant.
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NAME PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
---- -------------------- --- --------------
Christopher C. Siffert Vice President - Corporate Controller. From November 33 _____
1994 to January 1998 Mr. Siffert served as Internal
Audit Manager for Houston Cellular Telephone Company
and from July 1990 to November 1994 he was employed
by Arthur Andersen LLP as a Senior Audit Supervisor.
Mr. Siffert is a Certified Public Accountant.
R. Dean Lewis Mr. Lewis is the Dean of the Business School at Sam 57 1995
Houston State University and he has served in this
capacity since October 1995. From 1987 to October 1995,
Mr. Lewis was the Associate Dean and Professor of
Marketing at Sam Houston State University. Prior to 1987,
Mr. Lewis held a number of executive positions in the
banking and finance industries.
John F. Schwalbe Mr. Schwalbe has been a Certified Public Accountant in 57 1994
private practice since 1978, with primary emphasis on tax
planning, consultation, and compliance.
Peter H. Blum Since January 1999, Mr. Blum has been President of Bear 44 2000
Ridge Capital, L.L.C., a private investment banking firm.
During 1997 and 1998, Mr. Blum served as Senior Managing
Director of GBI Capital Management. From December 1996
through 1997, Mr. Blum was a Managing Director and head
of the energy group at Rodman & Renshaw. From 1992 until
December 1996, Mr. Blum was managing director of the
energy group at Mabon Securities. Mr. Blum serves as a
director of Mallon Resources Corporation, an oil and gas
exploration and production company.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended January 31, 2001, the Board of Directors
of the Company held five meetings. The Board of Directors has two standing
committees - the Audit Committee and the Compensation Committee. The Board does
not have a Nominating Committee. Each director participated in at least 75% of
all meetings of the Board of Directors and all meetings of committees on which
he served.
AUDIT COMMITTEE. The Audit Committee, which is comprised of Messrs.
Schwalbe, Lewis, and Blum, held four meetings during the fiscal year ended
January 31, 2001. The Audit Committee operates under the written charter adopted
by the Board of Directors attached as EXHIBIT A to this Proxy Statement.
COMPENSATION COMMITTEE. The Compensation Committee, which is comprised
of Messrs. Schwalbe, Lewis, and Blum, held one meeting during the fiscal year
ended January 31, 2001. Its functions are to: (1) review the Company's general
compensation strategy; (2) recommend the salaries and bonuses of the Company's
executive officers; and (3) review and administer the Company's stock option
plans.
COMPENSATION OF DIRECTORS
The Company pays directors who are not employees of the Company a
$15,000 annual fee. The Board may also make discretionary option grants to its
non-employee directors.
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EXECUTIVE COMPENSATION
The following table shows all compensation earned for services rendered
to the Company during the fiscal years ended January 31, 1999, 2000 and 2001 by
the Chairman of the Board, President and Chief Executive Officer of the Company
and the Company's other Named Executives.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
SHARES
FISCAL YEAR UNDERLYING
NAME AND ENDED OPTIONS ALL OTHER
PRINCIPAL POSITION JANUARY 31, SALARY($) BONUS($) GRANTED(#) COMPENSATION($)
------------------ ----------- --------- -------- ---------- ---------------
Billy F. Mitcham, Jr. 2001 201,379 50,000 45,000 0
Chairman of the Board, 2000 187,820 49,584 70,500 0
President and Chief 1999 187,500 30,625 0 0
Executive Officer
Paul C. Mitcham 2001 108,665 25,000 30,000 0
Executive Vice President- 2000 101,275 27,709 70,500 0
Operations (1) 1999 100,000 12,500 0 0
William J. Sheppard 2001 108,665 25,000 30,000 0
Executive Vice President- 2000 100,482 27,709 70,500 0
International 1999 100,000 12,500 0 0
Operations
P. Blake Dupuis 2001 128,373 35,000 45,000 0
Executive Vice President- 2000 118,600 32,359 10,500 0
Finance, Secretary 1999(2) 40,902 30,650 60,000 0
and Treasurer
Christopher C. Siffert 2001 86,373 20,000 20,000 0
Vice President - 2000 75,500 22,129 10,000 0
Corporate Controller 1999(3) 30,276 18,812 15,000 0
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(1) Paul C. Mitcham resigned as an officer and director of the
Company effective May 23, 2001.
(2) Mr. Dupuis began his employment with the Company in September
1998.
(3) Mr. Siffert began his employment with the Company in August
1998.
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OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth
information concerning stock option grants made in the fiscal year ended January
31, 2001 to the Named Executives named in the Summary Compensation Table. There
were no grants of stock appreciation rights to said individuals during the year.
INDIVIDUAL GRANTS
------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATE OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- ------------ ----------- ---------- --------- ----------
Billy F. Mitcham, Jr. 45,000(1) 17.4 5.13 07/27/01 145,180 367,915
Paul C. Mitcham 30,000(1) 11.6 5.13 07/27/01 96,787 245,277
William J. Sheppard 30,000(1) 11.6 5.13 07/27/01 96,787 245,277
P. Blake Dupuis 45,000(1) 17.4 5.13 07/27/01 145,180 367,915
Christopher C. Siffert 20,000(1) 7.7 5.13 07/27/01 64,524 163,518
----------
(1) The options terminate on the earlier of their expiration date,
10 years after grant or three months after termination of
employment, subject to certain exceptions. The options become
exercisable in three equal annual installments beginning one
year after the grant date, but vesting may be accelerated on
the consummation of a specified change of control.
(2) The indicated 5% and 10% rates of appreciation are provided to
comply with Securities and Exchange Commission regulations and
do not necessarily reflect the views of the Company as to the
likely trend in the stock price. Actual gains, if any, on
stock option exercises and the sale of Common Stock holdings
will depend on, among other things, the future performance of
the Common Stock and overall stock market conditions.
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OPTION EXERCISES AND YEAR-END OPTION VALUES. The following table
provides information as to options exercised by the Named Executives in the 2001
fiscal year and year-end value of unexercised options held by the Named
Executives.
AGGREGATE OPTION EXERCISES IN 2001 FISCAL YEAR AND
JANUARY 31, 2001 OPTION VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
JANUARY 31, JANUARY 31,
2001(#) 2001($)
------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1)
---- --------------- ------------ ------------- ----------------
Billy F. Mitcham, Jr. 0 0 86,000/53,500 88,980/50,003
Paul C. Mitcham 0 0 111,500/43,500 114,582/47,553
William J. Sheppard 0 0 102,000/43,500 131,540/47,553
P. Blake Dupuis 0 0 62,000/53,500 56,165/28,083
Christopher C. Siffert 0 0 28,334/16,666 13,734/25,016
----------
(1) Market value of shares covered by in-the-money options on
January 31, 2001 ($5.375), minus the exercise price.
EMPLOYMENT AGREEMENT. Billy F. Mitcham, Jr.'s employment agreement with
the Company is for a term of five years, beginning January 15, 1997, which term
is automatically extended for successive one-year periods unless either party
gives written notice of termination at least 30 days prior to the end of the
current term. The Employment Agreement provides for an annual salary of $150,000
(increased to $208,125 in the 2001 fiscal year) and a bonus at the discretion of
the Board of Directors. It may be terminated prior to the end of the initial
term or any extension thereof if Mr. Mitcham dies; if it is determined that Mr.
Mitcham has become disabled (as defined); if Mr. Mitcham gives three months
prior notice of resignation; if the Company gives Mr. Mitcham notice of
termination "without cause"; or if the Board of Directors determines that Mr.
Mitcham has breached the Employment Agreement in any material respect, has
appropriated a material business opportunity of the Company or has engaged in
fraud or dishonesty with respect to the Company's business or is convicted of or
indicted for any felony criminal offense or any crime punishable by
imprisonment. If Mr. Mitcham terminates his employment within 60 days following
(i) a material reduction in his duties and responsibilities (without his
consent) or (ii) a reduction in, or failure by the Company to pay when due, any
portion of his salary, he will be entitled to payments equal to $450,000,
payable ratably over the 24 months following such termination. For a period of
two years after the termination of the Employment Agreement, Mr. Mitcham is
prohibited from engaging in any business activities which are competitive with
the Company's business and from diverting any of the Company's customers to a
competitor. The Company has no employment agreements with any of its other
executive officers.
CHANGE OF CONTROL AND TERMINATION AGREEMENTS. In February 1999, the
Company entered into severance and change of control agreements with Messrs.
Paul Mitcham, Sheppard and Dupuis; Mr. Mitcham's agreement terminated effective
on his resignation on May 23, 2001. Under the terms of the remaining two
severance and change of control agreements, if a covered executive officer's
employment terminates during the 24-month period after a "change of control" of
the Company (as defined in the agreements) (such period, the "Protection
Period") other than the officer's voluntary resignation (except as stated below)
or retirement or a termination of employment for "cause" (as defined in the
agreements) or by reason of death or disability, the
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officer will be entitled to receive certain severance payments and other
benefits. The officer's voluntary resignation for "good reason" (as defined in
the agreements) will also entitle the officer to the severance benefits and
other benefits. The severance payment amount, payable monthly over the 24 months
after termination, will be equal to two times such officer's annual base salary
on the effective date of the change of control or the date of the termination of
employment. In addition, the officer under those circumstances will be entitled
to receive continued medical and dental coverage under the Company's applicable
plans (to the extent permitted by law or by the plan carriers) for the period of
time remaining in the Protection Period after his termination is effective, or
until the officer becomes eligible to obtain comparable coverage from a
subsequent employer. In addition, any stock options and restricted stock that
have not fully vested shall accelerate and immediately become fully vested. Each
agreement terminates on December 31, 2001, but will automatically renew for
additional one-year terms absent prior written notice from the Company that it
is terminating the agreements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. The Company's
executive compensation program is designed to attract, motivate and retain
talented management personnel and to reward management for the Company's
successful financial performance and for increasing shareholder value. The
Company's executive compensation has three components: base salaries, annual
performance bonuses and long-term incentive stock-based awards.
BASE SALARIES. We determine the salary ranges for the Company's
executive officers based upon their responsibilities and the salary levels of
similarly positioned officers in comparable companies. Our philosophy has been
to establish base salaries in the median-to-low end of the range of such
salaries at comparable companies, because long-term stock based compensation is
considered more important than annual base salaries in aligning the executive's
financial rewards to the shareholders' financial interests for the long term. In
fiscal 2000, as part of the Company's efforts to optimize its capital resources,
none of the Company's executive officers received an increase in their base
salaries. In fiscal 2001, in recognition of the Company's improved performance
from the prior year's results, the executive officers received 11% salary
raises.
ANNUAL PERFORMANCE BONUSES. Annual bonuses are awarded on a
discretionary basis. In making our determination of whether to award an annual
bonus and the amount of the bonus, we consider several factors, including
financial performance of the Company in relation to planned expectations and
performance of the Company in relation to industry conditions, each executive
officer's performance, level of responsibility or duties, successful completion
of particular projects or acquisition and implementation of new technical
knowledge. In fiscal 2001, we awarded cash bonuses to the Company's executive
officers in the amount of 25% of their salaries.
LONG-TERM STOCK-BASED COMPENSATION. We believe that a substantial
percentage of executive compensation should be directly related to improvement
in shareholder value. In determining the number of options to grant, we make a
subjective determination based on the same factors as we do in determining
bonuses. For fiscal 2001, we approved the grant to executive officers of the
options shown in the Summary Compensation Table for that fiscal year, with a
three-year vesting period. However, we soon realized that the Company did not
have sufficient options remaining available for option grants in the future.
Since we believe that the grant of stock options is an important component of
our ability to keep our management team in place, we recommended to the Board
that it authorize additional shares under an existing plan, and present it to
shareholders for approval.
JOHN F. SCHWALBE
R. DEAN LEWIS
PETER H. BLUM
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
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PERFORMANCE GRAPH. The graph below compares the cumulative total return
of the Company's Common Stock to the S&P's Smallcap 600 stock index and to the
S&P's Oil and Gas (Drilling & Equipment) index for the period from January 31,
1996 to January 31, 2001. The graph assumes that the value of an investment in
the Company's Common Stock and each index was $100 at January 31, 1996, and that
all dividends were reinvested.
[GRAPH]
1/31/96 1/31/97 1/31/98 1/31/99 1/31/00 1/31/01
---------- ---------- ---------- ---------- ---------- ----------
Mitcham Industries, Inc. ..... $ 100.00 $ 160.47 $ 336.04 $ 75.57 $ 67.44 $ 100.00
S&P Smallcap 600 ............. $ 100.00 $ 123.07 $ 149.06 $ 148.16 $ 163.43 $ 196.64
S&P Oil & Gas (Drilling &
Equipment) ................... $ 100.00 $ 152.09 $ 187.15 $ 121.53 $ 168.59 $ 225.16
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Effective September 20, 1993, the Company and Billy F. Mitcham, Jr.
entered into a Voting Agreement (the "Voting Agreement") with Billy F. Mitcham,
Sr., Paul C. Mitcham and two trusts established for the benefit of Mr. Mitcham,
Jr.'s sons. Under the Voting Agreement, the holders of shares subject thereto
have agreed that Mr. Mitcham, Jr. has the authority to vote an additional
242,564 shares, or 2.7%, of the Company's outstanding Common Stock. Mr. Mitcham,
Jr. had voting control of an aggregate of 745,814 shares, or 8.2%, of the
Company's Common Stock, as of May 30, 2001. The Voting Agreement will terminate
on the earlier of the agreement of the parties, the transfer by the parties
thereto of their shares or the expiration of 25 years. See "Principal Holders of
Securities and Security Ownership of Management."
PROPOSAL TO APPROVE AMENDMENT TO
THE 2000 STOCK OPTION PLAN
AMENDMENT TO INCREASE NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS
Subject to the approval of the Company's shareholders at the Annual
Meeting, the Board of Directors has adopted an amendment to the 2000 Stock
Option Plan increasing the number of shares reserved for issuance under the Plan
from 500,000 to 1,000,000. The shareholders are being asked to approve the
adoption of the proposed amendment to the Plan that is set forth as EXHIBIT B to
this Proxy Statement. The summary of the provisions of the Plan proposed to be
amended that follows is not intended to be complete and shareholders should
refer to the Plan for a complete statement of its terms and provisions.
11
15
GENERAL
The 2000 Stock Option Plan covers an aggregate of up to 500,000 shares
of Common Stock (subject to certain adjustments) and provides for grant of stock
options to employees, consultants and non-employee directors. The principal
advantage to the Company of the 2000 Stock Option Plan is to enable the Company
to better attract, retain, and develop a top-quality management team. As of May
30, 2001, 459,750 of the 500,000 options authorized for issuance under the 2000
Plan have been granted, 452,250 of which remained unexercised.
ADMINISTRATION
The 2000 Stock Option Plan is administered by the Compensation
Committee of the Board of Directors. The Compensation Committee has the power to
determine which employees will receive options, when such options will be
granted and the number of shares of Common Stock to be issued under the option
award.
ELIGIBILITY TO PARTICIPATE
Only persons who at the time of the award are employees, consultants or
non-employee directors of the Company or of any subsidiary of the Company are
eligible to receive awards under the 2000 Stock Option Plan. As of May 30, 2001,
all of the Company's employees, including four executive officers, and its three
non-employee directors were eligible to participate in the 2000 Stock Option
Plan.
TERMS OF OPTIONS
The 2000 Stock Option Plan provides for the grant of incentive and
non-qualified stock options. The Compensation Committee designates the
employees, consultants or non-employee directors to receive the options, the
number of shares subject to the options, and the terms and conditions of each
option granted under the 2000 Stock Option Plan. The term of any option granted
under the 2000 Stock Option Plan is determined by the Compensation Committee,
except that the term of any incentive stock option cannot exceed 10 years from
the date of the grant and any incentive stock option granted to an optionee who
possesses more than 10% of the total combined voting power of all classes of
shares of the Company or of its subsidiaries will not be exercisable after the
expiration of five years from the date of grant. No option may be exercised
sooner than six months from the date of grant, but the Compensation Committee
otherwise determines option vesting in its discretion. The exercise price per
share of Common Stock for options granted under the 2000 Stock Option Plan is
determined by the Compensation Committee, except that the exercise price of an
incentive stock option cannot be less than the fair market value of a share of
Common Stock on the date the option is granted. The 2000 Stock Option Plan
permits the payment of the exercise price of options to be made by cash, check,
other shares of Common Stock (with some restrictions), cashless exercise, or any
combination thereof.
CHANGE OF CONTROL PROVISIONS
The Compensation Committee in its discretion may on a Change of Control
(as defined in the 2000 Stock Option Plan): (a) require the surrender of vested
options to the Company in consideration for the payment to surrendering option
holder of the fair market value attributable to such options; (b) determine that
outstanding options shall be accelerated so that they are fully vested, and that
each option holder may then either (i) exercise his options and participate in
the transaction that will result in a Change of Control on the same basis as a
holder of Common Stock; or (ii) surrender the options to the Company for
cancellation, and receive cash in the amount equal to the fair market value
attributable to such options; or (c) otherwise provide that on any exercise of
options, the holder shall be entitled to purchase under such options, in lieu of
the number of shares of Common Stock then covered by such options, the number
and class of stock or other securities or property to which the holder would
have been entitled under the transaction that will cause a Change of Control if,
immediately prior to such transaction, the option holder had been the owner of
the shares of Common Stock then covered by such options.
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FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. An employee will generally not recognize
income on receipt or exercise of an incentive stock option ("ISO") so long as he
or she has been an employee of the Company from the date the option was granted
until three months before the date of exercise; however, the amount by which the
fair market value of the stock at the time of exercise exceeds the option price
is a required adjustment for purposes of the alternative minimum tax applicable
to the employee. If the employee holds the stock received on exercise of the
option for one year after exercise (and for two years from the date of grant of
the option), any difference between the amount realized upon the disposition of
the stock and the amount paid for the stock will be treated as long-term capital
gain (or loss, if applicable) to the employee. If the employee exercises an ISO
and satisfies these holding period requirements, the Company may not deduct any
amount in connection with the ISO.
In contrast, if an employee exercises an ISO but does not satisfy the
holding period requirements with respect to the stock acquired on exercise, the
employee generally will recognize ordinary income in the year of the disposition
equal to the excess, if any, of the fair market value of the stock on the date
of exercise over the option price; and any excess of the amount realized on the
disposition over the fair market value on the date of exercise will be taxed as
long- or short-term capital gain (as applicable). If, however, the fair market
value of the stock on the date of disposition is less than on the date of
exercise, the employee will recognize ordinary income equal only to the
difference between the amount realized on disposition and the exercise price. In
either event, the Company will be entitled to deduct an amount equal to the
amount constituting ordinary income to the employee in the year of the premature
disposition.
NONQUALIFIED STOCK OPTIONS. Nonqualified stock options granted under
the 2000 Stock Option Plan are not taxable to an optionee when granted but
result in taxation at exercise, at which time the optionee will recognize
ordinary income in an amount equal to the difference between the option exercise
price and the fair market value of the shares on the exercise date. The Company
will be entitled to deduct a corresponding amount as a business expense in the
year the optionee recognizes this income.
PLAN AMENDMENT AND TERMINATION
The Board may alter or amend the 2000 Stock Option Plan from time to
time but no change in any option may be made which would impair the rights of
the holder without the consent of the holder. The Board may not, without
approval of the shareholders, amend the 2000 Stock Option Plan to (a) increase
the maximum number of shares which may be issued on exercise or surrender of an
option (except in certain cases of Changes in Control as more fully set forth in
the 2000 Stock Option Plan), (b) change the class of employees eligible to
receive options, (c) extend the maximum period during which options may be
granted under the 2000 Stock Option Plan, or (d) materially modify the
requirements as to eligibility for participation in the 2000 Stock Option Plan.
No grants may be made under the 2000 Stock Option Plan after May 22, 2010. The
2000 Stock Option Plan shall remain in effect until all options granted have
been exercised or expired.
TRANSFER AND RESALE RESTRICTIONS
The options are not transferable except in the event of the
participant's death or under a "qualified domestic relations order" as defined
under applicable law. The optionees may not offer or resell shares acquired
under the 2000 Stock Option Plan without registration under the Securities Act
of 1933, or compliance with Rule 144. On May 30, 2001, the closing price of the
Common Stock as reported in The Wall Street Journal for Nasdaq National Market
transactions was $6.80.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE
AMENDMENT TO THE 2000 STOCK OPTION PLAN.
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REPORT OF AUDIT COMMITTEE
The Audit Committee has reviewed and discussed with management the
Company's audited financial statements as of and for the year ended January 31,
2001. In particular, the committee discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants.
The Committee has reviewed the written disclosures and the letter from
the independent auditors required by Independent Standard No. 1, Independence
Discussions with Audit Committee, as amended, by the Independence Standards
Board, and has discussed with the auditors their independence.
The aggregate audit and other fees (for tax services) billed by the
Company's auditors for the fiscal year ended January 31, 2001 were $92,539 and
$34,680, respectively.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the financial statements
referred to above be included in the Company's Annual Report on Form 10-K for
the year ended January 31, 2001.
JOHN F. SCHWALBE
R. DEAN LEWIS
PETER H. BLUM
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Hein + Associates LLP, which has
served as independent auditors of the Company since 1993, as independent
auditors to audit the books, records and accounts of the Company for the fiscal
year ended January 31, 2002. The Board of Directors recommends a vote FOR
approval of such selection. A representative of Hein + Associates LLP is
expected to be present at the Annual Meeting and will have the opportunity to
make a statement, if such representative chooses to do so, and will be available
to respond to appropriate questions.
ANNUAL REPORT
The Company's Annual Report covering the fiscal year ended January 31,
2001 accompanies this Proxy Statement. Except for the financial statements
included in the Annual Report that are specifically incorporated by reference
herein, the Annual Report is not incorporated in this Proxy Statement and is not
to be deemed part of this proxy soliciting material. Additional copies of the
Annual Report are available upon request.
FORM 10-K
The company will furnish without charge to each person whose proxy is
being solicited, upon the request of any such person, a copy of the company's
annual report on form 10-K for the fiscal year ended January 31, 2001, as filed
with the SEC (excluding exhibits), including the financial statements and
schedules thereto. Requests for copies of such report should be directed in
writing to the Secretary, Mitcham Industries, Inc., Post Office Box 1175, 44000
Highway 75 South, Huntsville, Texas 77342.
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OTHER MATTERS
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. Section 16(a) of the
Exchange Act requires the Company's directors, executive officers and persons
who own more than 10% of a registered class of the Company's Common Stock to
file initial reports of ownership and changes in ownership with the SEC and to
furnish the Company with copies of all Section 16(a) forms they file. The
Company believes that all filings required to be made under Section 16(a) were
timely made.
OTHER MATTERS. At the date hereof, the Board of Directors does not know
of any other business to be presented at the Annual Meeting of Shareholders. If
any other matter properly comes before the meeting, however, it is intended that
the persons named in the accompanying proxy will vote such proxy in accordance
with the discretion and instructions of the Board of Directors.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders wishing to submit proposals for consideration by the
Company's Board of Directors at the Company's 2002 Annual Meeting of
Shareholders should submit them in writing to the attention of the Secretary of
the Company no later than February 8, 2002, so that it may be considered by the
Company for inclusion in its proxy statement and form of proxy for that meeting.
A shareholder who wishes to make a proposal at the 2002 Annual Meeting
of Shareholders without complying with the requirements of Rule 14a-8 (and
therefore without including the proposal in the Company's proxy materials) must
notify the Company of that proposal by April 25, 2002. If a shareholder fails to
timely give notice, then the persons named as proxies in the proxy cards
solicited by the Company's Board of Directors for that meeting will be entitled
to vote the proxy cards held by them regarding that proposal, if properly raised
at the meeting, in their discretion or as directed by the Company's management.
By Order of the Board of Directors,
P. Blake Dupuis
Secretary
June 8, 2001
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EXHIBIT A
AUDIT COMMITTEE CHARTER
OF
MITCHAM INDUSTRIES, INC.
The Board of Directors (the "Board") of Mitcham Industries, Inc. (the
"Company") approves and adopts the following Audit Committee Charter to specify
the composition, roles and responsibilities of the Audit Committee. As used in
this Charter, (i) "Company" includes the Company and its subsidiaries unless the
context otherwise requires, (ii) "Nasdaq" means the Nasdaq Stock Market and
(iii) "SEC" means the Securities and Exchange Commission.
PURPOSE
o The function of the Audit Committee is to assist the
Board in fulfilling its oversight responsibilities
with respect to the accounting, financial reporting
and related matters described below.
COMPOSITION
o Beginning no later than June 14, 2001, the Audit
Committee shall consist of not less than three
members, comprised solely of independent directors,
each of whom shall not:
o have been employed by the Company
or its affiliates in the current or
any of the past three years;
o have accepted any compensation from
the Company or its affiliates in
excess of $60,000 during the
previous fiscal year, except for
board service, retirement plan
benefits or non-discretionary
compensation;
o be an immediate family member of an
individual who is, or has in any of
the past three years, been employed
by the Company or its affiliates as
an executive officer;
o have been a partner, controlling
stockholder or an executive officer
of any for-profit business to which
the Company made, or from which it
received, payments, other than
those which arise solely from
investments in the Company's
securities, that exceed five
percent of the Company's
consolidated gross revenues for
that year, or $200,000, whichever
is more, in any of the past three
years; or
o be employed as an executive of
another entity where any of the
Company's executives serve on such
entity's compensation committee.
o In addition, each member of the Audit Committee shall
be able to read and understand fundamental financial
statements, including the Company's balance sheet,
income statement and cash flow statement, or will
become able to do so within a reasonable period of
time after his or her appointment to the Audit
Committee. Moreover, at least one member of the Audit
Committee shall have past employment experience in
finance or accounting, requisite professional
certification in accounting or any comparable
experience or background which results in financial
sophistication, including being or having been a
chief executive officer, chief financial officer or
other senior officer with financial oversight
responsibilities.
o The Chairman of the Audit Committee shall be
designated by the Board; however, if a Chairman is
not designated by the Board or present at a meeting,
the Audit Committee may designate a Chairman by
majority vote of the Audit Committee members then in
office.
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ROLES AND RESPONSIBILITIES
RELATIONSHIP WITH THE OUTSIDE AUDITORS
o The Company's outside auditors are ultimately
responsible first, to the Audit Committee, and then,
to the Board.
o The Audit Committee has the ultimate authority and
responsibility to select and replace the outside
auditors (or to nominate the outside auditors to be
proposed for shareholder approval in any proxy
statement). The Board has the authority and
responsibility to evaluate and make recommendations
to the Audit Committee regarding the selection and
replacement of outside auditors (or the nomination of
the outside auditors to be proposed for shareholder
approval in any proxy statement).
o The Audit Committee has the further authority and
responsibility to review the fees charged by the
outside auditors, the scope of their engagement and
proposed audit approach and to recommend such review
or auditing steps as the Audit Committee may consider
desirable.
o The Audit Committee shall review and confirm the
independence of the outside auditors by requiring
that the outside auditors submit to the Audit
Committee on a periodic basis a formal written
statement delineating all relationships between the
outside auditors and the Company, engaging in a
dialogue with the outside auditors with respect to
any disclosed relationships or services that may
impact their objectivity and independence, and
recommending that the Board take appropriate action
to ensure the independence of the outside auditors.
o Management is responsible for preparing the Company's
financial statements. The Company's outside auditors
are responsible for auditing the financial
statements. The activities of the Audit Committee are
in no way designed to supersede or alter these
traditional responsibilities.
INTERNAL CONTROLS
o The Audit Committee shall evaluate whether management
is setting the appropriate tone at the top level by
communicating the importance of internal controls.
o In consultation with management and the outside
auditors, the Audit Committee shall consider the
Company's significant financial risk exposures and
the steps management has taken to monitor, control
and report such exposures.
o The Audit Committee shall consider the extent to
which, and to which it is or would be necessary or
appropriate to have, outside auditors review computer
systems and applications, the security of such
systems and applications, and the contingency plan
for processing financial information in the event of
a systems breakdown.
o The Audit Committee shall consider and evaluate the
extent to which internal control recommendations made
by outside auditors have been implemented by
management.
o The Audit Committee shall request that the outside
auditors keep the Audit Committee informed about
fraud, illegal acts and deficiencies in internal
controls that come to their attention and such other
matters as the outside auditors decide should be
brought to the attention of the Audit Committee.
FINANCIAL REPORTING
General
o The Audit Committee shall review with management and
the outside auditors significant accounting and
reporting issues applicable to the Company, including
recent professional and regulatory pronouncements,
and their impact on the financial statements.
A-2
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Annual Financial Statements
o The Audit Committee shall meet with management and
the outside auditors to review the annual financial
statements and the results of the annual audit prior
to the release to the public of the results of
operations for each fiscal year.
o The Audit Committee shall review the annual financial
statements prior to release to the public or filing
with the SEC.
o The Audit Committee shall obtain explanations from
management or from the outside auditors on whether:
o Actual financial results for the
year varied significantly from
budgeted or projected results.
o Changes in financial ratios and
relationships in the annual
financial statements are consistent
with changes in the Company's
operations and financing practices.
o Generally accepted accounting
principles have been consistently
applied in the annual financial
statements.
o There are any actual or proposed
changes in accounting or financial
reporting practices.
o There are any significant or
unusual events or transactions.
o The Company's financial and
operating controls are functioning
effectively.
o The Company has complied with the
terms of any loan agreements.
o The annual financial statements
contain adequate and appropriate
disclosures.
o The Audit Committee shall review and discuss with
management and the outside auditors complex or
unusual transactions and judgmental areas, such as
those involving valuation of assets and liabilities.
o The Audit Committee shall consider management's
handling of proposed audit adjustments identified by
the outside auditors.
o The Audit Committee shall consider the outside
auditors' judgments about the quality and
appropriateness of the Company's accounting
principles as applied in its financial reporting.
o The Audit Committee shall discuss with management and
the outside auditors any significant changes to the
Company's accounting principles, the degree of
aggressiveness or conservatism of the accounting
principles and underlying estimates used in the
preparation of the Company's financial statements,
and any items required to be communicated by the
outside auditors in accordance with Statement of
Auditing Standards ("SAS") No. 61.
o Based on the review and discussions with management
and outside auditors contemplated by this Charter,
the Audit Committee shall recommend to the Board
whether the audited annual financial statements be
included in the Company's Form 10-K Annual Report.
o The Audit Committee shall review the Management's
Discussion and Analysis and other sections of the
Company's Form 10-K Annual Report before its release
and consider whether the information is adequate and
consistent with members' knowledge about the Company
and its operations.
Interim Financial Statements
o The Audit Committee shall meet with management and
the outside auditors to review the interim financial
statements and the results of the auditors' review
thereof prior to the release to the public of the
results for each quarter.
o The Audit Committee shall review the quarterly
financial statements prior to release to the public
or filing with the SEC.
o Obtain explanations from management or from the
outside auditors on whether:
A-3
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o Actual financial results for the
quarter or interim period varied
significantly from budgeted or
projected results.
o Changes in financial ratios and
relationships in the interim
financial statements are consistent
with changes in the Company's
operations and financing practices.
o Generally accepted accounting
principles have been consistently
applied in the quarterly financial
statements.
o There are any actual or proposed
changes in accounting or financial
reporting practices.
o There are any significant or
unusual events or transactions.
o The Company's financial and
operating controls are functioning
effectively.
o The Company has complied with the
terms of any loan agreements.
o The interim financial statements
contain adequate and appropriate
disclosures.
COMPLIANCE WITH LAWS AND REGULATIONS
o The Audit Committee shall review the effectiveness of
the system for monitoring compliance with laws and
regulations and the results of management's
investigation of and follow-up (including
disciplinary action) on any fraudulent acts or
accounting irregularities.
o The Audit Committee shall periodically obtain updates
from management regarding compliance.
o The Audit Committee shall be satisfied that
regulatory compliance matters have been considered in
the preparation of the financial statements.
o The Audit Committee shall review the findings of any
examinations of the Company by regulatory agencies
which have authority over the Company.
OTHER RESPONSIBILITIES
o The Audit Committee may meet with the outside
auditors, management and any employee seeking to meet
with the Audit Committee about any matter within its
purview in separate executive sessions to discuss any
matters that the Committee or these persons believe
should be discussed privately.
o The Audit Committee shall request that significant
findings and recommendations made by the outside
auditors be received and discussed on a timely basis.
o The Audit Committee shall review with the Company's
counsel any legal matters that could have a
significant impact on the Company's financial
statements.
o The Audit Committee shall review the policies and
procedures in effect for considering officers'
expenses and perquisites.
o The Audit Committee shall perform other oversight
functions as requested by the Board.
CHARTER SCOPE
o The Audit Committee shall review and reassess the
adequacy of this Charter at least annually.
o The Audit Committee shall submit this Charter to the
Board for approval, and have the Charter published at
least every three years in accordance with the rules
of the SEC from time to time in effect.
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REPORTING RESPONSIBILITIES
o The Audit Committee shall regularly update the Board
about Audit Committee activities and make appropriate
recommendations.
o The Audit Committee shall annually prepare a report
to shareholders as required by SEC rules for
inclusion in the Company's proxy statement.
MEETINGS
o The Audit Committee shall meet at least four times
annually and may meet more frequently as
circumstances dictate.
o Meetings of the Audit Committee may be in person or
by conference call in accordance with the Bylaws of
the Company.
o Meetings of the Audit Committee shall be held at such
time and place, and upon such notice, as the Chairman
of the Audit Committee may from time to time
determine.
o The Chairman of the Audit Committee shall develop the
agenda for each meeting and in doing so may consult
with management and the outside auditors.
o Except as specifically provided in this Charter, the
provisions of the Bylaws of the Company with respect
to committees of the Board shall apply to the Audit
Committee.
AUTHORITY
o The Audit Committee shall have the authority to
conduct any investigation appropriate to fulfilling
its responsibilities and shall have direct access to
the outside auditors as well as anyone in the
Company.
o The Audit Committee shall have the ability to retain,
at the Company's expense, such special legal,
accounting or other consultants or experts it deems
necessary in the performance of its duties.
o The Audit Committee may from time to time delegate to
its Chairman or any of its members the responsibility
for any particular matters.
A-5
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EXHIBIT B
PROPOSED AMENDMENT
TO THE MITCHAM INDUSTRIES, INC.
2000 STOCK OPTION PLAN
Set forth below is the text of Section 3 proposed to be amended
(bracketed information has been deleted and underlined information has been
added):
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of this Plan, the maximum aggregate number of shares of Stock which may be
optioned and sold under the Plan is [500,000] 1,000,000 shares. The Shares
---------
may be authorized, but unissued, or reacquired Stock. If an Option expires or
becomes unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan has been
terminated, become available for future grant under the Plan.
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MITCHAM INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD JULY 18, 2001
P The proxies are directed to vote as specified below and in their
discretion on all other matters coming before the meeting. If no
direction is made, the proxy will vote FOR all nominees listed below,
the adoption of the amendment to the 2000 Stock Option Plan and the
approval of independent auditors. This proxy is solicited by the Board
of Directors.
R 1. ELECTION OF DIRECTORS - Billy F. Mitcham, Jr., William J.
Sheppard, P. Blake Dupuis, R. Dean Lewis, John F. Schwalbe and
Peter H. Blum.
[ ] Vote FOR from all nominees listed above, except
vote withheld from (to withhold authority to vote for
any individual nominee, write in the names on the
line below:)
O
--------------------------------------------------------------
[ ] Vote WITHHELD from all nominees
X 2. ADOPTION OF AMENDMENT TO THE 2000 STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
y 3. APPROVAL OF INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] I plan to attend the meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
26
MITCHAM INDUSTRIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD JULY 18, 2001
The undersigned appoints Billy F. Mitcham, Jr. and P. Blake Dupuis, and each of
them, as attorneys and proxies of the undersigned, with power of substitution,
to represent the undersigned at the Annual Meeting of Shareholders of Mitcham
Industries, Inc. (the "Company") to be held July 18, 2001, and at any
adjournment thereof, and to vote all shares of Common Stock of the Company which
the undersigned is entitled to vote on all matters coming before said meeting.
Dated: , 2001
------------------------
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
THIS PROXY MUST BE SIGNED EXACTLY
AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give
full title as such. If the signer is a
corporation, please sign full corporate name
by duly authorized officer. If signer is a
partnership, please sign partnership name by
authorized person.