SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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Superior Energy Services, Inc.
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(Name of Registrant as Specified In Its Charter)
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[SUPERIOR ENERGY SERVICES, INC. LOGO]
SUPERIOR ENERGY SERVICES, INC.
1105 PETERS ROAD
HARVEY, LOUISIANA 70058
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the holders of common stock of Superior Energy Services, Inc.:
The annual meeting of stockholders of Superior Energy Services, Inc. (the
"Company") will be held at 201 St. Charles Avenue, 52nd Floor, New Orleans,
Louisiana 70170, on Tuesday, June 4, 2002, at 12:00 p.m., New Orleans time, to
consider and vote on:
1. The election of directors;
2. The Superior Energy Services, Inc. 2002 Stock Incentive Plan; and
3. Such other business as may properly come before the meeting or any
adjournment thereof.
Only holders of record of the Company's common stock at the close of
business on April 5, 2002 are entitled to notice of and to vote at the annual
meeting.
Even if you now expect to attend the annual meeting, you are requested to
mark, sign, date, and return the accompanying proxy in the enclosed addressed,
postage-paid envelope. If you attend the annual meeting, you may vote in person,
whether or not you have sent in your proxy. A proxy may be revoked at any time
prior to the voting thereof.
By Order of the Board of Directors
/s/ GREG ROSENSTEIN
GREG ROSENSTEIN
Secretary
Harvey, Louisiana
May 3, 2002
[SUPERIOR ENERGY SERVICES, INC. LOGO]
SUPERIOR ENERGY SERVICES, INC.
1105 PETERS ROAD
HARVEY, LOUISIANA 70058
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2002
This Proxy Statement is furnished to the stockholders of Superior Energy
Services, Inc. (the "Company") in connection with the solicitation on behalf of
the Board of Directors (the "Board") of proxies for use at the annual meeting of
stockholders to be held on June 4, 2002, at the time and place set forth in the
accompanying notice and any adjournment thereof (the "Meeting").
Only stockholders of record as of the close of business on April 5, 2002
are entitled to notice of and to vote at the Meeting. On that date, 73,682,694
shares of common stock, $0.001 par value per share (the "Common Stock"), were
outstanding, each of which is entitled to one vote.
A stockholder may revoke the enclosed proxy at any time prior to its
exercise by filing with the Secretary of the Company a written revocation or
duly executed proxy bearing a later date. A stockholder who votes in person at
the Meeting in a manner inconsistent with a proxy previously filed on the
stockholder's behalf will be deemed to have revoked such proxy as it relates to
the matter voted upon in person. Attendance at the Meeting will not in and of
itself constitute a revocation of a proxy. Unless otherwise marked, properly
executed proxies in the form of the accompanying proxy card will be voted for
the election of the nominees to the Board listed below and for the approval of
the proposal outlined herein.
This Proxy Statement is first being mailed to stockholders on or about May
3, 2002 and the cost of soliciting proxies in the enclosed form will be borne by
the Company. In addition to the use of the mails, the Company retained Georgeson
Shareholder to aid in the solicitation of proxies at an estimated fee of $6,500.
Proxies may also be solicited by personal interview, telephone and telegraph.
Banks, brokerage houses and other nominees or fiduciaries will be requested to
forward the soliciting material to their principals and to obtain authorization
for the execution of proxies, and the Company will, upon request, reimburse them
for their expenses in so acting.
ELECTION OF DIRECTORS
VOTING PROCEDURE
The Company's Bylaws authorize the Board to fix the number of directors.
Pursuant thereto, the Board has fixed the number of directors to be elected at
the Meeting at six, and proxies cannot be voted for a greater number of persons.
Unless authority is withheld, the persons named in the enclosed proxy will vote
the shares represented by the proxies received by them for the election of the
six nominees named below to serve until the next annual meeting and until their
successors are duly elected and qualified.
Unless authority to vote for the election of directors is withheld, the
proxies solicited hereby will be voted FOR the election of each individual named
below as a director or nominee. If any nominee should decline or be unable to
serve for any reason, votes will instead be cast for a substitute nominee
designated by the Board. The Board has no reason to believe that any nominee
will decline to be a candidate or, if elected, will be unable or unwilling to
serve. Under the Company's Bylaws, directors are elected by a plurality vote.
INFORMATION ABOUT DIRECTORS
The only incumbent director not to stand for re-election is Robert E. Rose,
who declined nomination to devote more time to his personal affairs. The
following sets forth certain information, as of March 31, 2002, about the
directors who have been nominated for re-election and the nominee to replace Mr.
Rose.
Richard A. Bachmann, age 57, has served as a Director of the Company 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 ("LL&E"), an independent oil and gas exploration company. From 1982 to
1995, Mr. Bachmann held various positions with LL&E, 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. Mr.
Bachmann is also a director of Penn Virginia Corporation, a developer of
national gas deposits and mineral leases.
Joseph R. Edwards, age 29, has served as a Director of the Company since
December 2001. Mr. Edwards is currently a vice president of First Reserve
Corporation ("First Reserve"), 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 joining First Reserve in 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.
Ben A. Guill, age 51, has served as a Director of the Company since July
1999. Mr Guill is President of First Reserve, 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 Destiny Resource Services Corp.,
National-Oilwell, Inc., TransMontaigne, Inc., and Chicago Bridge and Iron
Company N.V.
Terence E. Hall, age 56, has served as the Chairman of the Board, Chief
Executive Officer, President and a Director of the Company since December 1995.
Since 1989, he has also served as President and Chief Executive Officer of
Superior Energy Services, L.L.C., and Connection Technology, L.L.C., and their
predecessors, both of which are wholly-owned subsidiaries of the Company.
Richard A. Pattarozzi, age 58, has been nominated to serve as a Director.
Mr. Pattarozzi retired as 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, Inc., Transocean Sedco Forex, Inc., OSCA, Inc., and Tidewater, Inc. He
received a BS degree in Civil Engineering from the University of Illinois.
Justin L. Sullivan, age 62, has served as a Director of the Company 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 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.
BOARD COMMITTEES
The Board has an Audit and Compensation Committee, but does not have a
nominating committee since the selection of nominees to serve on the Board is
governed by the Company's stockholders' agreement with First Reserve described
under "Certain Relationships and Related Transactions." The current members of
the Audit Committee are Messrs. Sullivan, Bachmann and Rose. The Audit
Committee, which met six times during 2001, is responsible for assisting the
Board in fulfilling its fiduciary duties to the Company's stockholders with
respect to financial matters. In fulfilling this responsibility, the Audit
Committee has oversight responsibility for the Company's financial statements
and its financial reporting process, systems of internal accounting and
financial controls and the annual independent audit of its financial statements,
as established by Company management and the Board.
The current members of the Compensation Committee are Messrs. Guill and
Rose. The Compensation Committee met twice during 2001. The Compensation
Committee is responsible for administering the Company's stock incentive plans
and performing such other functions as may be prescribed by the Board.
2
In 2001, the Board held five meetings. Each director attended 75% or more
of the Board and committee meetings of which he was a member that were held
during the period in which he served.
DIRECTOR COMPENSATION
Each director who is not a full-time employee of the Company is paid a
director's fee of $15,000 annually, plus $1,000 for each Board and committee
meeting attended. Directors are also reimbursed for reasonable expenses incurred
in attending Board and committee meetings. Under the Company's 1999 Stock
Incentive Plan (the "1999 Plan"), directors who are not also full-time employees
of the Company receive options to acquire 20,000 shares of the Company's Common
Stock on the date such person first becomes a member of the Board and an option
to acquire 5,000 shares of the Company's Common Stock on the day following each
annual meeting of stockholders, if shares of the Company's Common Stock remain
available for grant under the 1999 Plan.
STOCK OWNERSHIP
COMMON STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table indicates the beneficial ownership, as of April 15,
2002, of the Company's Common Stock by each person known by the Company to own
more than 5% of the outstanding shares of the Company's Common Stock as
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934. Unless otherwise indicated, the shares are held with sole voting and
investment power.
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------------------------ -------------------- --------
First Reserve Fund VII, Limited Partnership(1)............. 10,769,778 14.6%
475 Steamboat Road, 2nd Floor
Greenwich, Connecticut 06830
Kotts Capital Holdings, Limited Partnership................ 7,696,095 10.4%
5 Post Oak Avenue, Suite 2250
Houston, TX 77027
First Reserve Fund VIII, L.P.(1)........................... 7,179,850 9.7%
475 Steamboat Road, 2nd Floor
Greenwich, Connecticut 06830
ICM Asset Management, Inc.(2).............................. 5,038,400 6.8%
601 West Main Avenue, Suite 600
Spokane, Washington 99201-0613
Franklin Resources, Inc.(3)................................ 4,622,496 6.3%
777 Mariners Island Boulevard
San Mateo, CA 94404
Westfield Capital Management Co., LLC(4)................... 4,309,160 5.8%
One Financial Center
Boston, Massachusetts 02111
FMR Corp(5)................................................ 4,113,500 5.6%
82 Devonshire Street
Boston, Massachusetts 02109
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(1) First Reserve is the indirect general partner of First Reserve Fund VII,
Limited Partnership and First Reserve Fund VIII, L.P. (together, the
"Funds") and is deemed to beneficially own the shares held by both of the
Funds.
3
(2) Based on a Schedule 13G, dated February 5, 2002, filed with the Securities
and Exchange Commission. In its Schedule 13G, ICM Asset Management, Inc.
reported shared dispositive power with respect to 5,038,400 shares and
shared voting power with respect to 3,245,496 shares as a result of
securities ownership owned by advisory clients of ICM Asset Management, Inc.
(3) Based on a Schedule 13G/A, dated February 14, 2002, filed with the
Securities and Exchange Commission. In its Schedule 13G/A, Franklin
Resources, Inc. reported that its direct and indirect advisory subsidiaries
collectively had sole dispositive power with respect to 4,622,496 shares and
sole voting power with respect to 3,999,300 shares.
(4) Based on a Schedule 13G, dated January 1, 2002, filed with the Securities
and Exchange Commission. In its Schedule 13G, Westfield Capital Management
Co., LLC reported sole dispositive power with respect to 4,309,160 shares
and sole voting power with respect to 4,309,160 shares.
(5) Based on a Schedule 13G, dated February 14, 2002, filed with the Securities
and Exchange Commission. In its Schedule 13G, FMR Corp. reported sole
dispositive power with respect to 4,113,500 shares and sole voting power
with respect to 669,600 shares.
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table indicates the beneficial ownership, as of April 15,
2002, of the Company's Common Stock by (i) each of the Company's directors and
director nominees, (ii) each of the Company's executive officers, and (iii) all
of the Company's directors, director nominees and executive officers as a group
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934. Unless otherwise indicated, the shares are held with sole voting and
investment power.
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
------------------------ ----------------------- --------
Richard A. Bachmann................................... 33,828 *
Kenneth Blanchard..................................... 572,645(2) *
Joseph R. Edwards..................................... 20,000 *
Ben A. Guill.......................................... 17,979,627(3) 24.4%
Terence E. Hall....................................... 1,222,526 1.7%
James A. Holleman..................................... 267,500 *
Robert E. Rose........................................ 33,593 *
Justin L. Sullivan.................................... 40,000 *
Robert S. Taylor...................................... 321,666 *
Richard A. Pattarozzi................................. 3,150 *
All directors, director nominees and executive
officers as a group (ten persons)................... 20,492,035(3)(4) 27.8%
---------------
* Less than 1%.
(1) Includes the following number of shares subject to options that are
exercisable by June 15, 2002: Mr. Bachmann, 30,000; Mr. Blanchard, 516,373;
Mr. Edwards, 20,000; Mr. Guill, 30,000; Mr. Hall, 649,283; Mr. Holleman,
267,500; Mr. Rose, 30,000; Mr. Sullivan, 30,000; and Mr. Taylor, 321,666.
(2) Includes 36,136 shares held by Mr. Blanchard's children, of which Mr.
Blanchard is deemed to be the beneficial owner.
(3) Mr. Guill is the President of First Reserve, the indirect general partner of
each of the Funds. Mr. Guill expressly disclaims beneficial ownership of the
17,949,627 shares of Common Stock owned by the Funds.
(4) Includes 1,892,322 shares subject to options that are exercisable by June
15, 2002 held by directors and executive officers.
4
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table shows, for the three fiscal years ended December 31,
2001, the compensation of the Company's chief executive officer and the
Company's three other executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
------------------- OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS COMPENSATION(2)
--------------------------- ---- -------- -------- --------------- ------------ ---------------
Terence E. Hall............ 2001 $407,761 $464,063 -- 750,000 $6,975
Chairman, Chief 2000 376,024 314,250 -- 100,000 6,176
Executive Officer 1999 362,971 132,000 -- 488,617 6,339
Kenneth Blanchard.......... 2001 $181,840 $466,563(3) -- 72,000 $6,975
Vice President 2000 153,820 384,080(3) -- 50,000 6,167
1999 139,687 572,850(4) -- 372,000 6,339
Robert S. Taylor........... 2001 $158,476 $165,000 -- 65,000 $6,975
Chief Financial Officer 2000 140,096 121,510 -- -- 6,167
1999 130,681 72,850 -- 240,000 6,339
James A. Holleman.......... 2001 $132,365 $109,688 -- 7,500 $6,782
Vice President 2000 143,883 73,559 -- -- 8,762
1999 64,723 52,800 -- 265,000 1,993
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(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 the Company's matching contributions to the 401(k) plan and
hospitalization and health insurance.
(3) Mr. Blanchard received a non-compete payment in the amount of $250,000 in
July 2000 and July 2001.
(4) Includes a $500,000 bonus paid as a result of the executive's efforts
resulting in the acquisition of Cardinal Holding Corp. in July 1999.
EXECUTIVE EMPLOYMENT AGREEMENTS
Mr. Hall's employment agreement with the Company, which was amended in July
1999, has a term which now expires on July 15, 2005, but is automatically
renewed for an additional year on each anniversary date unless the Company 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 effective July 15, 2001 to
$450,000. Mr. Hall is also eligible to earn an annual incentive bonus based upon
the achievement of performance objectives, as determined by the Compensation
Committee. The agreement contains non-competition and other provisions intended
to protect the Company's interests in the event that Mr. Hall ceases to be
employed by the Company.
On July 15, 2001, the Company entered into an amendment of Mr. Taylor's
employment agreement to provide for an extension of the term of the agreement
until July 31, 2003 and an increase in base salary to $160,000. On July 15,
2001, the Company entered into an amendment of Mr. Blanchard's employment
agreement, providing for an extension of the term of the agreement until July
31, 2003 and an increase in his annual base salary to $210,000. Each of these
officers is also eligible to earn an annual incentive bonus based upon the
achievement of performance objectives, as determined by the Compensation
Committee. The officers' employment agreements contain non-competition and other
provisions intended to protect the
5
Company's interests in the event that either officer ceases to be employed by
the Company. In consideration of such non-competition provisions, Mr. Blanchard
received payments totaling an aggregate of $500,000, paid in equal installments
in 2000 and 2001.
All of the Company's employment agreements with its executive officers
provide for the termination of employment: (i) upon death; (ii) upon disability;
or (iii) by the Company for cause, which includes a willful and continued
failure by the officer to substantially perform his duties, or if the officer
willfully engages in misconduct that is materially injurious to the Company. Mr.
Hall's agreement also provides for the termination by Mr. Hall for good reason,
which includes a failure by the Company to comply with any material provision of
the employment agreement.
Upon termination of an executive officer's employment, the Company must pay
to such officer all compensation owing through the date of termination. Upon
termination of Mr. Hall due to his death or disability, in addition to all
compensation owing through the date of termination, the Company would pay to Mr.
Hall a benefit in an amount equal to one-year's base salary. If Mr. Hall's
agreement is terminated by the Company 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
then base salary and the bonus paid or payable to Mr. Hall for the preceding
fiscal year, multiplied by the greater of (a) two or (b) the number of years
remaining in the term of Mr. Hall's employment under the agreement.
2001 STOCK OPTION AND STOCK APPRECIATION RIGHT GRANTS
The following table contains information concerning the grants of options
granted to the Company's executive officers during 2001. No stock appreciation
rights were granted during 2001.
2001 STOCK OPTION GRANTS
PERCENT OF POTENTIAL REALIZABLE VALUE AT
TOTAL ASSUMED ANNUAL RATES OF
NO. OF SHARES OPTIONS STOCK APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES OR BASE EXPIRATION -----------------------------
NAME GRANTED IN 2001 PRICE DATE 5% 10%
---- ------------- ---------- -------- ---------- ------------- -------------
Terence E. Hall............ 150,000 8.0% $9.31 4/4/11 $ 878,251 $2,225,661
600,000 32.0% 8.25 7/11/11 3,113,028 7,889,025
Kenneth Blanchard.......... 72,000 3.8% 9.31 4/4/11 421,561 1,068,317
Robert S. Taylor........... 65,000 3.5% 9.31 4/4/11 380,576 964,453
James A. Holleman.......... 7,500 .4% 9.31 4/4/11 43,913 111,283
---------------
(1) Appreciation has been calculated over the term of the options, beginning
with the exercise price of each respective option.
AGGREGATE OPTION EXERCISES DURING 2001 AND OPTION VALUES AT FISCAL YEAR END
The following table contains information concerning the aggregate option
exercises during 2001 and the value of outstanding options as of December 31,
2001.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT YEAR END (#) YEAR END ($)(1)
EXERCISE(#) REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
----------- -------- ------------------------- --------------------------
Terence E. Hall............ -- -- 649,283/733,334 $1,775,435/284,584
Kenneth Blanchard.......... 60,500 $591,424 516,373/48,000 $ 1,106,050/0
Robert S. Taylor........... 50,000 483,918 321,666/43,334 $ 734,150/0
James A. Holleman.......... -- -- 267,500/5,000 $ 768,500/0
6
---------------
(1) Based on the difference between the closing sale price of the Company's
Common Stock of $8.65 on December 31, 2001, as reported by the New York
Stock Exchange and the exercise price of such options.
---------------------
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors (the "Audit Committee") is
comprised of Messrs. Bachmann, Rose and Sullivan. The duties and
responsibilities of the Audit Committee are set forth in the Audit Committee
Charter, adopted by the Board of Directors on May 15, 2000 and annually
reassessed and updated as needed in accordance with applicable rules of the
Securities and Exchange Commission and the New York Stock Exchange. Each member
of the Audit Committee is independent within the meaning of the New York Stock
Exchange's listing standards.
Management has the primary responsibility for the Company's systems of
internal controls and the overall financial reporting process. The independent
accountants are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted
accounting standards and to issue a report thereon. The Committee's
responsibility is to monitor and oversee these processes. However, the members
of the Audit Committee are not professional auditors or experts in the fields of
accounting and auditing and rely, without independent verification, on the
information provided to them and on the representations made by management and
the independent accountants.
The Audit Committee has: (i) reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2001 with the
Company's management; (ii) discussed with KPMG LLP, the Company's independent
auditor, the matters required to be discussed by Statement on Auditing Standards
No. 61; and (iii) received and discussed the written disclosures and the letter
from the Company's independent auditors required by Independence Standards Board
Statement No. 1 and has discussed with the auditors their independence from the
Company. Based on such review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2001 for filing with the
Securities and Exchange Commission.
THE AUDIT COMMITTEE
Richard A. Bachmann Robert E. Rose Justin Sullivan
AUDIT FEES
The aggregate fees billed by KPMG LLP for professional services rendered
for the audit of the Company's annual financial statements for the year ended
December 31, 2001 and for the reviews of the financial statements included in
the Company's Quarterly Reports on Form 10-Q for that year were $180,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION
KPMG LLP did not perform any non-audit services for the Company specified
in Rule 2-01 of Regulation S-X for the year ended December 31, 2001.
ALL OTHER FEES
The aggregate fees billed by KPMG LLP for services rendered to the Company,
other than for the services described above for the year ended December 31, 2001
were $353,000.
The Audit Committee has considered whether the provision of the non-audit
services referred to under "All Other Fees" by KPMG LLP is compatible with
maintaining the principal accountant's independence.
7
COMPENSATION COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, which is currently
comprised of Messrs. Guill and Rose, provides overall guidance to the Company's
executive compensation programs, administers the Company's Management Incentive
Plan (the "Incentive Plan") and administers the Company's stock incentive plans.
The Compensation Committee makes recommendations to the Board regarding the
compensation of the Chief Executive Officer. The Chief Executive Officer does
not participate in discussions about his compensation or in the making of
recommendations by the Compensation Committee of his compensation. The Board
must approve all compensation actions regarding the Chief Executive Officer. The
Board approved all transactions which were recommended by the Compensation
Committee related to the compensation of the Chief Executive Officer for the
2001 fiscal year.
The Company's executive compensation policy seeks to ensure that the base
and cash bonus compensation of the Company's executive officers and other key
employees of the Company are competitive with other similar size companies in
the oilfield service industry while, within the Company, being fair and
discriminating on the basis of individual performance. Annual awards of stock
options are intended to retain executives and key employees and to motivate them
to improve long-term stock market performance.
BASE SALARY
In establishing base cash compensation for its executives, the Company
targets the median cash compensation of its competitors for their executives
having similar responsibilities. Base salaries have historically been set at or
below the median, so that bonuses, which are primarily determined by individual
performance, generally will constitute a larger portion of cash compensation.
Executive base salaries are reviewed annually, based on each executive's
performance, the competitiveness of the executive's base salary compared to the
external market, the Company's financial results and overall industry
conditions.
CASH INCENTIVE BONUSES
The Compensation Committee administers the Incentive Plan, which was
adopted by the Company in 1999 in an effort to advance the interests of the
Company by providing an annual cash incentive bonus to be paid to executive
officers and other key employees based upon the Company's performance during
each calendar year. The Compensation Committee establishes a formula to be used
to determine the size of a bonus pool for each year based upon the Company's
earnings before interest expense, taxes, depreciation and amortization
("EBITDA"). The Compensation Committee also determines the target bonus to be
awarded to each executive officer that it has designated as a participant in the
Incentive Plan at different levels of EBITDA and the Chief Executive Officer
determines the other amount to be distributed to each other participant. Target
bonuses are determined considering the Chief Executive Officer's recommendation
for executive officers other than himself. In its discretion, both the
Compensation Committee and Chief Executive Officer may determine to award either
more or less than the amount originally targeted at the beginning of the year
for any employee.
STOCK OPTIONS
The Compensation Committee believes that stock options are critical in
motivating and rewarding the creation of long-term stockholder value. The
Compensation Committee has established a policy of awarding stock options each
year based on competitive practices, the continuing financial progress of the
Company and individual performance. 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 the stock price of the Company increases after the option grant. In
2001, the Compensation Committee approved annual stock option grants to
executive officers and other key employees, as recommended by the Chief
Executive Officer. Option awards were made to 177 employees and executives and
covered approximately 1,872,500 shares of underlying common stock. The
Compensation Committee
8
considered the performance of each individual executive officer and key employee
in allocating 2001 stock option grants.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Components of the Chief Executive Officer's compensation for 2001 included
base salary, participation in the Incentive Plan and the grant of stock options.
Mr. Hall's base salary was increased to $450,000 in July 2001. His base
salary was increased after considering various factors, including his expertise
and performance and the extent to which his total compensation package is at
risk under the Company's Incentive Plan and stock option plans.
In April 2001, in recognition of Mr. Hall's leadership, the Compensation
Committee granted Mr. Hall 150,000 stock options, each with an exercise price of
$9.31 per share. In July 2001, the Compensation Committee granted Mr. Hall
600,000 stock options, each with an exercise price of $8.25 per share, in
recognition of the Company's growth, performance and increased profitability
over the past several years.
The Compensation Committee feels that the total compensation package
provided to Mr. Hall is fair and reasonable based on the competitive market in
which the Company conducts its business and his overall contribution to the
Company's success.
POLICY REGARDING SECTION 162(M) OF THE INTERNAL REVENUE CODE
For compensation in excess of $1 million, Section 162(m) of the Internal
Revenue Code generally limits the ability of the Company to take a federal
income tax deduction for compensation paid to the Chief Executive Officer and
the Company's other executive officers, except for qualified performance-based
compensation. Stock options granted by the Company have been structured to
qualify as performance-based and are thus 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. Although none of the executive
officers of the Company reached the deduction limitation in 2001, the
Compensation Committee plans to continue to evaluate the Company's salary, bonus
and stock incentive programs to determine the advisability of future compliance
with Section 162(m).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee served as an officer or employee of
the Company or any of its subsidiaries prior to or while serving on the
Compensation Committee. In 2001, no executive officer of the Company served as a
director or member of the compensation committee of another entity, any of whose
executive officers served on the Board of Directors or on the Compensation
Committee of the Company.
THE COMPENSATION COMMITTEE
Ben A. Guill Robert E. Rose
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1999, in connection with the acquisition of Cardinal Holding Corp.
("Cardinal"), the Company and the Funds entered into a stockholders' agreement
that, among other things, provides for the number and selection of the members
of the Company's Board. In accordance with the stockholder agreement, the six-
member board now consists of the Company's Chief Executive Officer, two
designees of the Funds (as long as the Funds beneficially own, in the aggregate,
at least 5% of the Company's voting power) and three independent directors. The
Funds may propose for consideration by the Board nominees for two of the
independent directorships as long as the Funds beneficially own, in the
aggregate, at least 15% of the voting power of the Company. In addition, the
stockholders agreement prevents the Funds from: (i) acquiring, other
9
than shares received in the Cardinal acquisition, additional shares of the
Company that would result in the Funds obtaining beneficial ownership of more
than an additional 10% of the outstanding shares of any class of the Company;
(ii) disposing of any securities of the Company, except in limited circumstances
primarily involving public sales; and (iii) facilitating a change of control of
the Company.
On July 15, 1999, in connection with the Cardinal acquisition, the Company
entered into a registration rights agreement with the Funds. The Funds have the
right to require the Company to file a registration statement under the
Securities Act of 1933 to sell not less than 20% of the Common Stock owned by
the Funds. The Company will not be obligated to make more than one such
registration during any twelve month period, nor more than four such
registrations during the term of the agreement. Under this agreement, the Funds
also have the right to include their shares of the Common Stock in any other
registration statement filed by the Company involving Common Stock.
The Company provides well intervention, field management and other services
to Energy Partners, Ltd., of which Mr. Bachmann is Chief Executive Officer. The
Company billed Energy Partners approximately $4.1 million for these services
during the 2001 fiscal year on terms that the Company believes are customary in
the industry. The Company expects to continue providing these services to Energy
Partners.
The Company leased a plane acquired in November 2001 for business travel
from a company in which Terence E. Hall, President and Chief Executive Officer,
then owned a 50% interest. The lease provided that the Company would make
monthly lease payments of $14,250 and pay all of the plane's operating and
maintenance costs. The Company paid $16,625 for the use of the plane during the
2001 fiscal year and $15,600 in operating and maintenance costs. Effective
December 31, 2001, the Company bought Mr. Hall's interest in the company that
owns the plane for $900,000, the same price Mr. Hall paid for his interest in
November 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and 10% stockholders to file with the Securities
and Exchange Commission reports of ownership and changes in ownership of equity
securities of the Company. The Company believes that, during 2001, its directors
and executive officers complied with all these filing requirements.
PROPOSAL TO APPROVE THE SUPERIOR ENERGY
SERVICES, INC. 2002 STOCK INCENTIVE PLAN
GENERAL
The Board believes that the growth of the Company depends upon the efforts
of its officers, directors and key employees and that the Superior Energy
Services, Inc. 2002 Stock Incentive Plan (the "Plan") will provide an effective
means of attracting and retaining qualified key personnel while enhancing their
long-term focus on maximizing stockholder value. The Plan has been adopted by
the Board of Directors, subject to approval by the stockholders at the Meeting.
The principal features of the Plan are summarized below. This summary is
qualified in its entirety, however, by reference to the Plan, which is attached
to this proxy statement as Exhibit A.
PURPOSE OF THE PROPOSAL
The Board believes that providing officers, directors and key personnel
with a proprietary interest in the growth and performance of the Company is
crucial to stimulating individual performance while at the same time enhancing
stockholder value. Currently, approximately 900,000 shares of Common Stock
remain available for grant under the Company's previous stock incentive plans.
The Board believes that adoption of the new Plan is necessary to provide the
Company with the continued ability to attract, retain and motivate key personnel
in a manner that is tied to the interests of stockholders.
10
TERMS OF THE PLAN
Administration of the Plan. The compensation committee of the Board
administers the Plan and has authority to make awards under the Plan, to set the
terms of the awards, to interpret the Plan, to establish any rules or
regulations relating to the Plan that it determines to be appropriate and to
make any other determination that it believes necessary or advisable for the
proper administration of the Plan. Subject to the limitations specified in the
Plan, the compensation committee may delegate its authority to appropriate
personnel of the Company.
Eligibility. Officers and key employees of the Company (including officers
who are also directors of the Company) will be eligible to receive awards
("Incentives") under the Plan when designated as plan participants. The Company
currently has four executive officers and approximately 520 key employees
eligible to receive Incentives under the Plan. Over the past several years the
Company has granted stock options to all of its executive officers and
approximately 250 key employees under the current stock incentive plans. In
addition, beginning at such time as a sufficient number of shares of Common
Stock no longer remain available for the grant of stock options to directors of
the Company who are not employees of the Company ("Outside Directors") under the
Superior Energy Services, Inc. 1999 Stock Incentive Plan, Outside Directors may
be granted non-qualified stock options under the Plan when they join the Board
and on an annual basis thereafter. There are currently five Outside Directors.
The Plan also permits consultants and advisors to receive Incentives, although
neither the Company nor the compensation committee has any current intention of
awarding Incentives to consultants or advisors. Incentives under the Plan may be
granted in any one or a combination of the following forms:
- incentive stock options under Section 422 of the Internal Revenue Code
(the "Code");
- non-qualified stock options;
- restricted stock; and
- other stock-based awards.
Shares Issuable Through the Plan. A total of 1,400,000 shares of Common
Stock are authorized to be issued under the Plan, representing approximately 2%
of the outstanding shares of Common Stock. The closing sale price of a share of
Common Stock, as quoted on the New York Stock Exchange on April 24, 2002 was
$10.80.
Limitations and Adjustments to Shares Issuable Through the Plan. Incentives
relating to no more than 1,000,000 shares of Common Stock may be granted to a
single participant in one calendar year. In addition, an aggregate of no more
than 250,000 shares of Common Stock may be issued as restricted stock or other
stock-based awards.
For purposes of determining the maximum number of shares of Common Stock
available for delivery under the Plan, shares of Common Stock that are not
delivered because the Incentive is forfeited, canceled or settled in cash and
shares that are withheld to satisfy participants' tax withholding obligations
will not be deemed to have been delivered under the Plan. Also, if the exercise
price of any stock option granted under the Plan is satisfied by tendering
shares of Common Stock, only the number of shares issued net of the shares
tendered will be deemed delivered for purposes of determining the maximum number
of shares of Common Stock available for delivery under the Plan. However, no
more than 1,000,000 shares may be delivered upon exercise of stock options
intended to qualify as incentive stock options under Section 422 of the Code,
and shares withheld to cover taxes or shares delivered in payment of the
exercise price will not be credited against the 1,000,000 share limit applicable
to incentive stock options.
Proportionate adjustments will be made to all of the share limitations
provided in the Plan, including shares subject to outstanding Incentives, in the
event of any recapitalization, stock dividend, stock split, combination of
shares or other change in the shares of Common Stock, and the terms of any
Incentive will be adjusted to the extent appropriate to provide participants
with the same relative rights before and after the occurrence of any such event.
11
Amendments to the Plan. The Board may amend or discontinue the Plan at any
time. However, the Company's stockholders must approve any amendment that would:
- materially increase the benefits accruing to participants under the Plan;
- increase the number of shares of Common Stock that may be issued under
the Plan; or
- materially expand the classes of persons eligible to participate in the
Plan.
No amendment or discontinuance of the Plan may materially impair any
previously granted Incentive without the consent of the recipient.
Types of Incentives. Each of the types of Incentives that may be granted
under the Plan is described below:
Stock Options. The compensation committee may grant non-qualified stock
options or incentive stock options to purchase shares of Common Stock. The
compensation committee will determine the number and exercise price of the
options, and the time or times that the options become exercisable, provided
that the option exercise price may not be less than the fair market value of a
share of Common Stock on the date of grant, except for an option granted in
substitution of an outstanding award in an acquisition transaction. The term of
an option will also be determined by the compensation committee; provided that
the term of an option may not exceed 10 years. The compensation committee may
accelerate the exercisability of any stock option at any time. The compensation
committee may also approve the purchase by the Company of an unexercised stock
option from the optionee by mutual agreement for the difference between the
exercise price and the fair market value of the shares covered by the option.
The option exercise price may be paid in cash; by check; in shares of
Common Stock, subject to certain limitations; through a "cashless" exercise
arrangement with a broker approved in advance by the Company; or in any other
manner authorized by the compensation committee.
Incentive stock options will be subject to certain additional requirements
necessary in order to qualify as incentive stock options under Section 422 of
the Code.
Restricted Stock. Shares of Common Stock may be granted by the
compensation committee to an eligible employee and made subject to restrictions
on sale, pledge or other transfer by the employee for a certain period (the
restricted period). Except for shares of restricted stock that vest based on the
attainment of performance goals, the restricted period must be a minimum of
three years, with incremental vesting of portions of the award over the
three-year period permitted. If vesting of the shares is subject to the
attainment of specified performance goals, the restricted period must be at
least one year, with incremental vesting of portions of the award allowed. All
shares of restricted stock will be subject to such restrictions as the
compensation committee may provide in an agreement with the participant,
including provisions obligating the participant to forfeit or resell the shares
to the Company in the event of termination of employment or if specified
performance goals or targets are not met. Subject to the restrictions provided
in the agreement and the Plan, a participant receiving restricted stock shall
have all of the rights of a stockholder as to such shares.
Other Stock-Based Awards. The Plan also authorizes the compensation
committee to grant participants awards of Common Stock and other awards that are
denominated in, payable in, valued in whole or in part by reference to, or are
otherwise based on the value of, or the appreciation in value of, shares of
Common Stock (other stock-based awards). The compensation committee has
discretion to determine the participants to whom other stock-based awards are to
be made, the times at which such awards are to be made, the size of such awards,
the form of payment, and all other conditions of such awards, including any
restrictions, deferral periods or performance requirements. Other stock-based
awards are subject to the same minimum vesting requirements described above for
restricted stock, except that the compensation committee may make special grants
of other stock-based awards with respect to an aggregate of up to 140,000 shares
of Common Stock (subject to adjustment as permitted in the Plan) that do not
meet the minimum vesting requirements.
Performance-Based Compensation Under Section 162(m). Stock options granted
in accordance with the terms of the Plan will qualify as performance-based
compensation under Section 162(m) (as described
12
under "Compensation Committee's Report on Executive Compensation"). Grants of
any restricted stock or other stock-based awards that the Company intends to
qualify as performance-based compensation under Section 162(m) must be made
subject to the achievement of pre-established performance goals. The pre-
established performance goals will be based upon any or a combination of the
following business criteria applied to the Company, a division or a subsidiary:
earnings per share, return on assets, an economic value added measure,
stockholder return, earnings, stock price, return on equity, return on total
capital, safety performance, reduction of expenses or increase in cash flow. For
any performance period, the performance goals may be measured on an absolute
basis or relative to a group of peer companies selected by the compensation
committee, relative to internal goals, or relative to levels attained in prior
years.
The compensation committee has authority to use different targets from time
to time under the performance goals provided in the Plan. As a result, the
regulations under Section 162(m) require that the material terms of the
performance goals be reapproved by the stockholders every five years. To qualify
as performance-based compensation, grants of restricted stock and other
stock-based awards will be required to satisfy the other applicable requirements
of Section 162(m).
Termination of Employment. If an employee participant ceases to be an
employee of the Company for any reason, including death, his outstanding
Incentives may be exercised or shall expire at such time or times as may be
determined by the compensation committee and described in the Incentive
agreement.
Change of Control. In the event of a change of control of the Company, as
defined in the Plan, all Incentives will become fully vested and exercisable,
all restrictions or limitations on any Incentives will generally lapse and,
unless otherwise provided in the Incentive agreement, all performance criteria
and other conditions relating to the payment of Incentives will generally be
deemed to be achieved or waived.
In addition to the foregoing, upon a change of control the compensation
committee will have the authority to take a variety of actions regarding
outstanding Incentives. Within certain time periods, the compensation committee
may (i) require that all outstanding Incentives remain exercisable only for a
limited time, after which time all such Incentives will terminate, (ii) require
the surrender to the Company of some or all outstanding Incentives in exchange
for a stock or cash payment for each Incentive equal in value to the per-share
change of control value, calculated as described in the Plan, over the exercise
or base price, (iii) make any equitable adjustments to outstanding Incentives as
the compensation committee deems necessary to reflect the corporate change or
(iv) provide that an Incentive shall become an Incentive relating to the number
and class of shares of stock or other securities or property (including cash) to
which the participant would have been entitled in connection with the change of
control if the participant had been a stockholder.
Transferability of Incentives. The Incentives awarded under the Plan may
not be transferred except
- by will;
- by the laws of descent and distribution;
- pursuant to a domestic relations order; or
- in the case of stock options only, to immediate family members or to a
partnership, limited liability Company or trust for which the sole
owners, members or beneficiaries are the participant and/or immediate
family members, if permitted by the compensation committee and if so
provided in the stock option agreement.
Payment of Withholding Taxes. The Company may withhold from any payments
or stock issuances under the Plan, or collect as a condition of payment, any
taxes required by law to be withheld. Any participant may, but is not required
to, satisfy his or her withholding tax obligation by electing to deliver
currently owned shares of Common Stock or to have the Company withhold, from the
shares the participant would otherwise receive, shares of Common Stock, in each
case having a value equal to the minimum amount required to be withheld. This
election must be made prior to the date on which the amount of tax to be
withheld is determined and is subject to the compensation committee's right of
disapproval.
13
Grants to Outside Directors. Beginning at such time as a sufficient number
of shares of Common Stock no longer remain available for the grant of stock
options to Outside Directors under the Superior Energy Services, Inc. 1999 Stock
Incentive Plan and continuing for as long as the Plan remains in effect and
shares of Common Stock remain available for issuance thereunder, each Outside
Director will be automatically granted a non-qualified stock option to purchase
up to 30,000 shares of Common Stock upon joining the Board and will also be
automatically granted a non-qualified stock option to purchase up to 10,000
shares each year on the day following the annual meeting of stockholders. The
exact number of options that an Outside Director will receive will be set from
time to time by the compensation committee.
The options granted to Outside Directors are immediately exercisable after
grant and have a term of ten years. The per share exercise price of the options
granted to Outside Directors will be equal to the fair market value of a share
of Common Stock on the date of grant. If an Outside Director ceases to serve on
the Board because of retirement from the Board on or after reaching age 65 or
after completing five years of service, that director's options that have become
exercisable at the time of retirement must be exercised within five years
following retirement. If an Outside Director's service terminates for any other
reason, the options must be exercised within one year.
AWARDS TO BE GRANTED
If the stockholders approve the Plan at the Meeting, grants of awards to
key employees, officers, consultants and advisors will be made in the future by
the compensation committee as necessary to attract and retain key personnel.
In addition, beginning at such time as a sufficient number of shares of
Common Stock no longer remain available for the grant of stock options to
Outside Directors under the Superior Energy Services, Inc. 1999 Stock Incentive
Plan, Outside Directors will receive options to purchase up to 30,000 shares
upon joining the Board and options to purchase up to 10,000 shares (with the
actual number to be determined by the compensation committee) following each
annual meeting of stockholders.
FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTIONS
Under existing federal income tax provisions, a participant who is granted
a stock option normally will not realize any income, nor will the Company
normally receive any deduction for federal income tax purposes, in the year the
option is granted.
When a non-qualified stock option granted pursuant to the Plan is
exercised, the participant will realize ordinary income measured by the
difference between the aggregate purchase price of the shares of Common Stock
acquired and the aggregate fair market value of the shares of Common Stock
acquired on the exercise date and, subject to the limitations of Section 162(m)
of the Code, the Company will be entitled to a deduction in the year the option
is exercised equal to the amount the participant is required to treat as
ordinary income.
An employee generally will not recognize any income upon the exercise of
any incentive stock option, but the excess of the fair market value of the
shares at the time of exercise over the option price will be an item of tax
preference, which may, depending on particular factors relating to the employee,
subject the employee to the alternative minimum tax imposed by Section 55 of the
Code. The alternative minimum tax is imposed in addition to the federal
individual income tax, and it is intended to ensure that individual taxpayers do
not completely avoid federal income tax by using preference items. An employee
will recognize capital gain or loss in the amount of the difference between the
exercise price and the sale price on the sale or exchange of stock acquired
pursuant to the exercise of an incentive stock option, provided the employee
does not dispose of such stock within two years from the date of grant and one
year from the date of exercise of the incentive stock option (the holding
periods). An employee disposing of such shares before the expiration of the
holding periods will recognize ordinary income generally equal to the difference
between the option price and the fair market value of the stock on the date of
exercise. The remaining gain, if any, will be capital gain. The Company will not
be entitled to a federal income tax deduction in connection with the exercise of
an incentive
14
stock option, except where the employee disposes of the shares of Common Stock
received upon exercise before the expiration of the holding periods.
If the exercise price of a non-qualified option is paid by the surrender of
previously owned shares, the basis and the holding period of the previously
owned shares carry over to the same number of shares received in exchange for
the previously owned shares. The compensation income recognized on exercise of
these options is added to the basis of the shares received. If the exercised
option is an incentive stock option and the shares surrendered were acquired
through the exercise of an incentive stock option and have not been held for the
holding periods, the optionee will recognize income on such exchange, and the
basis of the shares received will be equal to the fair market value of the
shares surrendered. If the applicable holding period has been met on the date of
exercise, there will be no income recognition and the basis and the holding
period of the previously owned shares will carry over to the same number of
shares received in exchange, and the remaining shares will begin a new holding
period and have a zero basis.
If, upon a change of control of the Company, the exercisability or vesting
of an Incentive is accelerated, any excess on the date of the change of control
of the fair market value of the shares or cash issued under accelerated
Incentives over the purchase price of such shares, if any, may be characterized
as "parachute payments" (within the meaning of Section 280G of the Code) if the
sum of such amounts and any other such contingent payments received by the
employee exceeds an amount equal to three times the "base amount" for such
employee. The base amount generally is the average of the annual compensation of
such employee for the five years preceding such change in ownership or control.
An "excess parachute payment," with respect to any employee, is the excess of
the parachute payments to such person, in the aggregate, over and above such
person's base amount. If the amounts received by an employee upon a change of
control are characterized as parachute payments, such employee will be subject
to a 20% excise tax on the excess parachute payment and the Company will be
denied any deduction with respect to such excess parachute payment.
VOTE REQUIRED
Approval of the Plan by the stockholders requires the affirmative vote cast
in person or by proxy of the holders of at least a majority of the shares of
Common Stock present and entitled to vote at the Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO APPROVE THE SUPERIOR ENERGY SERVICES, INC. 2002 STOCK INCENTIVE
PLAN.
15
PERFORMANCE GRAPH
The graph and corresponding table below compares the total stockholder
return on the Company's 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, 1997 at closing prices on December 31, 1996.
[PERFORMANCE GRAPH]
--------------------------------------------------------------------------------------
12/1996 12/1997 12/1998 12/1999 12/2000 12/2001
--------------------------------------------------------------------------------------
Superior Energy
Services, Inc. 100.0 337.5 94.8 225.0 383.3 288.3
S&P 500 Stocks 100.0 133.5 172.2 208.5 190.0 167.6
Self-Determined
Peer Group 100.0 161.2 85.9 121.4 168.0 116.1
Companies in the Self -- Determined Peer Group
B J SERVICES CO BAKER HUGHES INC
GLOBAL INDUSTRIES LTD HALLIBURTON COMPANY
SCHLUMBERGER LTD WEATHERFORD INTL INC NEW
Beginning with this Proxy Statement, the Company is changing 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.
The Company is making this change because it believes that investors are
increasingly comparing investment alternatives among the Company and the
companies presented in the Self-Determined Peer Group.
16
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
KPMG LLP was selected by the Board of Directors to serve as the Company's
independent public accountants for the fiscal year ended December 31, 2001. A
representative of KPMG LLP is expected to attend the Meeting, will have an
opportunity to make a statement if he wishes to do so, and will be available to
respond to appropriate questions.
OTHER MATTERS
QUORUM AND VOTING OF PROXIES
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum. Stockholders voting,
or abstaining from voting, by proxy on any issue will be counted as present for
purposes of constituting a quorum. If a quorum is present, the election of
directors is determined by a plurality vote of the shares present at the
Meeting. The Plan must be approved by a majority of the total votes cast in
person or by proxy on the Plan. All other matters shall be decided by a vote of
the holders of a majority of the outstanding shares of Common Stock, unless the
Certificate of Incorporation or By-laws of the Company, or any express provision
of law, require a different vote.
Abstentions and broker non-votes will have no effect on the election of
directors or the approval of the proposed Plan. An abstention as to any other
matters will have the effect of a vote against the proposals. Broker non-votes
as to all other matters will not be counted as votes for or against and will not
be included in calculating the number of votes necessary for approval of those
matters.
All proxies received by the Company in the form enclosed will be voted as
specified and, in the absence of instructions to the contrary, will be voted for
the election of the nominees named herein. The Company does not know of any
matters to be presented at the Meeting other than those described herein.
However, if any other matters properly come before the Meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares
represented by them in accordance with their best judgment.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The By-laws of the Company require that eligible stockholders who desire to
make a nomination for the election of a director or to bring any other matter
before a meeting of the stockholders of the Company must give timely written
notice of such intent to the Secretary of the Company. For the 2003 annual
meeting of stockholders, such notice must be received by the Secretary, at the
address set forth on the first page of this Proxy Statement, no earlier than
August 19, 2002 and no later than January 17, 2003.
Eligible stockholders who wish to present a proposal qualified for
inclusion in the proxy materials relating to the 2003 annual meeting of
stockholders must forward such proposal to the Secretary of the Company in time
to arrive at the Company prior to December 18, 2003. If such a proposal is in
compliance with all the requirements of Rule 14a-8 under the Securities Exchange
Act of 1934, it will be included in the proxy statement and set forth on the
form of proxy for such annual meeting of the stockholders of the Company. It is
urged that any such proposals be sent certified mail, return receipt requested.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ GREG ROSENSTEIN
GREG ROSENSTEIN
Secretary
Harvey, Louisiana
May 3, 2002
17
EXHIBIT A
SUPERIOR ENERGY SERVICES, INC.
2002 STOCK INCENTIVE PLAN
1. Purpose. The purpose of the 2002 Stock Incentive Plan (the "Plan") of
Superior Energy Services, Inc. ("Superior") is to increase stockholder value and
to advance the interests of Superior and its subsidiaries (collectively, the
"Company") by furnishing stock-based economic incentives (the "Incentives")
designed to attract, retain, reward and motivate key employees, officers,
directors and consultants or advisors to the Company and to strengthen the
mutuality of interests between such employees, officers and directors and
Superior's stockholders. Incentives consist of opportunities to purchase or
receive shares of common stock, $.001 par value per share, of Superior (the
"Common Stock"), on terms determined under the Plan. As used in the Plan, the
term "subsidiary" means any corporation, limited liability company or other
entity, of which Superior owns (directly or indirectly) within the meaning of
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
50% or more of the total combined voting power of all classes of stock,
membership interests or other equity interests issued thereby.
2. Administration.
2.1 Composition. The Plan shall be administered by the Compensation
Committee of the Board of Directors of Superior (the "Board")or by a
subcommittee thereof (the "Committee"). The Committee shall consist of not fewer
than two members of the Board of Directors, each of whom shall (a) qualify as a
"non-employee director" under Rule 16b-3 under the Securities Exchange Act of
1934 (the "1934 Act") or any successor rule, and (b) qualify as an "outside
director" under Section 162(m) of the Code ("Section 162(m)").
2.2 Authority. The Committee shall have plenary authority to award
Incentives under the Plan, to interpret the Plan, to establish any rules or
regulations relating to the Plan that it determines to be appropriate, to enter
into agreements with or provide notices to participants as to the terms of the
Incentives (the "Incentive Agreements") and to make any other determination that
it believes necessary or advisable for the proper administration of the Plan.
Its decisions in matters relating to the Plan shall be final and conclusive on
the Company and participants. The Committee may delegate its authority hereunder
to the extent provided in Section 3 hereof.
3. Eligible Participants. Key employees and officers of the Company and
persons providing services as consultants or advisors to the Company shall
become eligible to receive Incentives under the Plan when designated by the
Committee. Employees may be designated individually or by groups or categories,
as the Committee deems appropriate. With respect to participants not subject to
Section 16 of the 1934 Act or Section 162(m) of the Code, the Committee may
delegate to appropriate officers of the Company its authority to designate
participants, to determine the size and type of Incentives to be received by
those participants and to set and modify the terms of the Incentives; provided,
however, that the per share exercise price of any options granted by an officer,
rather than by the Committee, shall be equal to the Fair Market Value (as
defined in Section 11.11) of a share of Common Stock on the date of grant.
Directors who are not also employees of the Company ("Outside Directors") may
participate in the Plan only as specifically provided in Section 10 hereof.
4. Types of Incentives. Incentives may be granted under the Plan to
eligible participants in the forms of (a) incentive stock options; (b)
non-qualified stock options; (c) restricted stock and (d) Other Stock-Based
Awards (as defined in Section 8 hereof).
5. Shares Subject to the Plan.
5.1 Number of Shares. Subject to adjustment as provided in Section 11.5,
the maximum number of shares of Common Stock that may be delivered to
participants and their permitted transferrees under the Plan shall be 1,400,000
shares.
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5.2 Share Counting. To the extent any shares of Common Stock covered by a
stock option are not delivered to a participant or permitted transferee because
the Option is forfeited or canceled, or shares of Common Stock are not delivered
because an Incentive is paid or settled in cash or used to satisfy the
applicable tax withholding obligation, such shares shall not be deemed to have
been delivered for purposes of determining the maximum number of shares of
Common Stock available for delivery under this Plan. In the event that shares of
Common Stock are issued as an Incentive and thereafter are forfeited or
reacquired by the Company pursuant to rights reserved upon issuance thereof,
such forfeited and reacquired Shares may again be issued under the Plan. If the
exercise price of any stock option granted under the Plan or the applicable
withholding tax obligation is satisfied by tendering shares of Common Stock to
the Company (by either actual delivery or by attestation), only the number of
shares of Common Stock issued net of the shares of Common Stock tendered shall
be deemed delivered for purposes of determining the maximum number of shares of
Common Stock available for delivery under the Plan.
5.3 Limitations on Awards. Subject to Section 11.5, the following
additional limitations are imposed under the Plan:
A. The maximum number of shares of Common Stock that may be issued
upon exercise of stock options intended to qualify as incentive stock
options under Section 422 of the Code shall be 1,000,000 shares.
Notwithstanding any other provision herein to the contrary, (i) all shares
issuable under incentive stock options shall be counted against this limit
and (ii) shares that are issued and are later forfeited, cancelled or
reacquired by the Company, shares withheld to satisfy withholding tax
obligations and shares delivered in payment of the option exercise price or
withholding taxes shall have no effect on this limitation.
B. The maximum number of shares of Common Stock that may be covered by
Incentives granted under the Plan to any one individual during any one
calendar-year period shall be 1,000,000.
C. The maximum number of shares of Common Stock that may be issued as
restricted stock and Other Stock-Based Awards (as defined in Section 8)
shall be 250,000 shares.
5.4 Type of Common Stock. Common Stock issued under the Plan may be
authorized and unissued shares or issued shares held as treasury shares.
6. Stock Options. A stock option is a right to purchase shares of Common
Stock from Superior. Stock options granted under the Plan may be incentive stock
options (as such term is defined in Section 422 of the Code) or non-qualified
stock options. Any option that is designated as a non-qualified stock option
shall not be treated as an incentive stock option. Each stock option granted by
the Committee under this Plan shall be subject to the following terms and
conditions:
6.1 Price. The exercise price per share shall be determined by the
Committee, subject to adjustment under Section 11.5; provided that in no event
shall the exercise price be less than the Fair Market Value of a share of Common
Stock on the date of grant, except in case of a stock option granted in
assumption of or substitution for an outstanding award of a company acquired by
the Company or with which the Company combines.
6.2 Number. The number of shares of Common Stock subject to the option
shall be determined by the Committee, subject to Section 5 and subject to
adjustment as provided in Section 11.5.
6.3 Duration and Time for Exercise. The term of each stock option shall
be determined by the Committee, but shall not exceed a maximum term of 10 years.
Each stock option shall become exercisable at such time or times during its term
as shall be determined by the Committee. Notwithstanding the foregoing, the
Committee may accelerate the exercisability of any stock option at any time, in
addition to the automatic acceleration of stock options under Section 11.10.
6.4 Repurchase. Upon approval of the Committee, the Company may
repurchase a previously granted stock option from a participant by mutual
agreement before such option has been exercised by payment to the participant of
the amount per share by which: (i) the Fair Market Value (as defined in Section
11.11) of the
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Common Stock subject to the option on the business day immediately preceding the
date of purchase exceeds (ii) the exercise price.
6.5 Manner of Exercise. A stock option may be exercised, in whole or in
part, by giving written notice to the Company, specifying the number of shares
of Common Stock to be purchased. The exercise notice shall be accompanied by the
full purchase price for such shares. The option price shall be payable in United
States dollars and may be paid (a) in cash; (b) by check; (c) by delivery of
shares of Common Stock which, unless otherwise determined by the Committee,
shall have been held by the optionee for at least six months, and which shares
shall be valued for this purpose at the Fair Market Value on the business day
immediately preceding the date such option is exercised; (d) by delivery of
irrevocable written instructions to a broker approved by the Company (with a
copy to the Company) to immediately sell a portion of the shares issuable under
the option and to deliver promptly to the Company the amount of sale proceeds
(or loan proceeds if the broker lends funds to the participant for delivery to
the Company) to pay the exercise price; or (e) in such other manner as may be
authorized from time to time by the Committee.
6.6 Incentive Stock Options. Notwithstanding anything in the Plan to the
contrary, the following additional provisions shall apply to the grant of stock
options that are intended to qualify as incentive stock options (as such term is
defined in Section 422 of the Code):
A. Any incentive stock option agreement authorized under the Plan
shall contain such other provisions as the Committee shall deem advisable,
but shall in all events be consistent with and contain or be deemed to
contain all provisions required in order to qualify the options as
incentive stock options.
B. All incentive stock options must be granted within ten years from
the date on which this Plan is adopted by the Board of Directors.
C. No incentive stock options shall be granted to any participant who,
at the time such option is granted, would own (within the meaning of
Section 422 of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the employer corporation
or of its parent or subsidiary corporation.
D. The aggregate Fair Market Value (determined with respect to each
incentive stock option as of the time such incentive stock option is
granted) of the Common Stock with respect to which incentive stock options
are exercisable for the first time by a participant during any calendar
year (under the Plan or any other plan of Superior or any of its
subsidiaries) shall not exceed $100,000. To the extent that such limitation
is exceeded, such options shall not be treated, for federal income tax
purposes, as incentive stock options.
7. Restricted Stock.
7.1 Grant of Restricted Stock. The Committee may award shares of
restricted stock to such eligible participants as the Committee determines
pursuant to the terms of Section 3. An award of restricted stock shall be
subject to such restrictions on transfer and forfeitability provisions and such
other terms and conditions, including the attainment of specified performance
goals, as the Committee may determine, subject to the provisions of the Plan. To
the extent restricted stock is intended to qualify as "performance-based
compensation" under Section 162(m), it must be granted subject to the attainment
of performance goals as described in Section 9 below and meet the additional
requirements imposed by Section 162(m).
7.2 The Restricted Period. At the time an award of restricted stock is
made, the Committee shall establish a period of time during which the transfer
of the shares of restricted stock shall be restricted and after which the shares
of restricted stock shall be vested (the "Restricted Period"). Except for shares
of restricted stock that vest based on the attainment of performance goals, the
Restricted Period shall be a minimum of three years, with incremental vesting of
portions of the award over the three-year period permitted. If the vesting of
the shares of restricted stock is based upon the attainment of performance
goals, a minimum Restricted Period of one year is allowed, with incremental
vesting of portions of the award over the one-year
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period permitted. Each award of restricted stock may have a different Restricted
Period. The expiration of the Restricted Period shall also occur as provided
under Section 11.3 and under the conditions described in Section 11.10 hereof.
7.3 Escrow. The participant receiving restricted stock shall enter into
an Incentive Agreement with the Company setting forth the conditions of the
grant. Certificates representing shares of restricted stock shall be registered
in the name of the participant and deposited with the Company, together with a
stock power endorsed in blank by the participant. Each such certificate shall
bear a legend in substantially the following form:
The transferability of this certificate and the shares of Common Stock
represented by it are subject to the terms and conditions (including conditions
of forfeiture) contained in the Superior Energy Services, Inc. 2002 Stock
Incentive Plan (the "Plan"), and an agreement entered into between the
registered owner and Superior Energy Services, Inc. thereunder. Copies of the
Plan and the agreement are on file at the principal office of the Company.
7.4 Dividends on Restricted Stock. Any and all cash and stock dividends
paid with respect to the shares of restricted stock shall be subject to any
restrictions on transfer, forfeitability provisions or reinvestment requirements
as the Committee may, in its discretion, prescribe in the Incentive Agreement.
7.5 Forfeiture. In the event of the forfeiture of any shares of
restricted stock under the terms provided in the Incentive Agreement (including
any additional shares of restricted stock that may result from the reinvestment
of cash and stock dividends, if so provided in the Incentive Agreement), such
forfeited shares shall be surrendered and the certificates cancelled. The
participants shall have the same rights and privileges, and be subject to the
same forfeiture provisions, with respect to any additional shares received
pursuant to Section 11.5 due to a recapitalization or other change in
capitalization.
7.6 Expiration of Restricted Period. Upon the expiration or termination
of the Restricted Period and the satisfaction of any other conditions prescribed
by the Committee, the restrictions applicable to the restricted stock shall
lapse and a stock certificate for the number of shares of restricted stock with
respect to which the restrictions have lapsed shall be delivered, free of all
such restrictions and legends, except any that may be imposed by law, to the
participant or the participant's estate, as the case may be.
7.7 Rights as a Stockholder. Subject to the terms and conditions of the
Plan and subject to any restrictions on the receipt of dividends that may be
imposed in the Incentive Agreement, each participant receiving restricted stock
shall have all the rights of a stockholder with respect to shares of stock
during the Restricted Period, including without limitation, the right to vote
any shares of Common Stock.
8. Other Stock-Based Awards.
8.1 Grant of Other Stock-Based Awards. Subject to the limitations
described in Section 8.2 hereof, the Committee may grant to eligible
participants "Other Stock-Based Awards," which shall consist of awards (other
than options or restricted stock in Sections 6 and 7) the value of which is
based in whole or in part on the value of shares of Common Stock. Other
Stock-Based Awards may be awards of shares of Common Stock or may be denominated
or payable in, valued in whole or in part by reference to, or otherwise based on
or related to, shares of, or appreciation in the value of, Common Stock
(including, without limitation, securities convertible or exchangeable into or
exercisable for shares of Common Stock), as deemed by the Committee consistent
with the purposes of this Plan. The Committee shall determine the terms and
conditions of any Other Stock-Based Award (including which rights of a
stockholder, if any, the recipient shall have with respect to Common Stock
associated with any such award) and may provide that such award is payable in
whole or in part in cash. An Other Stock-Based Award may be subject to the
attainment of such specified performance goals or targets as the Committee may
determine, subject to the provisions of this Plan. To the extent that an Other
Stock-Based Award is intended to qualify as "performance-based compensation"
under Section 162(m), it must be granted subject to the attainment of
performance goals as described in Section 9 below and meet the additional
requirements imposed by Section 162(m).
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8.2 Limitations. Other Stock-Based Awards granted under this Section 8
shall be subject to a vesting period of at least three years, with incremental
vesting of portions of the award over the three-year period permitted; provided,
however, that if the vesting of the award is based upon the attainment of
performance goals, a minimum vesting period of one year is allowed, with
incremental vesting of portions of the award over the one-year period permitted,
and further provided that the Committee may make special awards under this
Section 8 with respect to an aggregate of no more than 140,000 shares of Common
Stock, as adjusted under Section 11.5, which special awards shall not be subject
to any minimum vesting requirements.
9. Performance Goals for Section 162(m) Awards. To the extent that shares
of restricted stock or Other Stock-Based Awards granted under the Plan are
intended to qualify as "performance-based compensation" under Section 162(m),
the vesting, grant or payment of such awards shall be conditioned on the
achievement of one or more performance goals and must satisfy the other
requirements of Section 162(m). The performance goals pursuant to which such
awards shall vest, be granted or be paid out shall be any or a combination of
the following performance measures applied to the Company, Superior, a division
or a subsidiary: earnings per share, return on assets, an economic value added
measure, stockholder return, earnings, stock price, return on equity, return on
total capital, safety performance, reduction of expenses or increase in cash
flow. For any performance period, such performance objectives may be measured on
an absolute basis or relative to a group of peer companies selected by the
Committee, relative to internal goals or relative to levels attained in prior
years. The performance goals may be subject to such adjustments as are specified
in advance by the Committee.
10. Stock Options for Outside Directors.
10.1 Grant of Options. Beginning at such time as a sufficient number of
shares of Common Stock no longer remain available for the grant of stock options
to Outside Directors under the Superior Energy Services, Inc. 1999 Stock
Incentive Plan and continuing for as long as the Plan remains in effect and
shares of Common Stock remain available for issuance hereunder, the following
grants shall be made to Outside Directors:
A. On the date a person first joins the Board of Directors as an
Outside Director, such Outside Director shall be automatically granted
non-qualified stock options to purchase up to 30,000 shares of Common
Stock, the exact number of which shall be set by the Committee; and
B. On the day following the annual meeting of stockholders of
Superior, each Outside Director shall be automatically granted
non-qualified stock options to purchase up to 10,000 shares of Common
Stock, the exact number of which shall be set by the Committee.
10.2 Exercisability of Stock Options. The stock options granted to
Outside Directors under this Section 10 shall be exercisable immediately and,
subject to Section 10.4 and 11.10c, shall expire ten years following the date of
grant.
10.3 Exercise Price. The exercise price of the stock options granted to
Outside Directors shall be equal to the Fair Market Value, as defined in the
Plan, of a share of Common Stock on the date of grant. The Exercise Price may be
paid as provided in Section 6.5 hereof.
10.4 Exercise After Termination of Board Service. In the event an Outside
Director ceases to serve on the Board, the stock options granted hereunder must
be exercised within one year from termination of Board service; provided,
however, that in the event of termination of Board service as a result of
retirement (at age 65 or later or after having completed five or more years of
service on the Board), the stock options may be exercised within five years from
the date of termination of Board service. Notwithstanding the foregoing, no
stock options may be exercised later than ten years after the date of grant.
11. General.
11.1 Duration. Subject to Section 11.9, the Plan shall remain in effect
until all Incentives granted under the Plan have either been satisfied by the
issuance of shares of Common Stock or otherwise been terminated under the terms
of the Plan and all restrictions imposed on shares of Common Stock in connection
with their issuance under the Plan have lapsed.
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11.2 Transferability. No Incentives granted hereunder may be transferred,
pledged, assigned or otherwise encumbered by a participant except: (a) by will;
(b) by the laws of descent and distribution; (c) pursuant to a domestic
relations order, as defined in the Code; or (d) as to options only, if permitted
by the Committee and so provided in the Incentive Agreement or an amendment
thereto, (i) to Immediate Family Members, (ii) to a partnership in which the
participant and/or Immediate Family Members, or entities in which the
participant and/or Immediate Family Members are the sole owners, members or
beneficiaries, as appropriate, are the sole partners, (iii) to a limited
liability company in which the participant and/or Immediate Family Members, or
entities in which the participant and/or Immediate Family Members are the sole
owners, members or beneficiaries, as appropriate, are the sole members, or (iv)
to a trust for the sole benefit of the participant and/or Immediate Family
Members. "Immediate Family Members" shall be defined as the spouse and natural
or adopted children or grandchildren of the participant and their spouses. To
the extent that an incentive stock option is permitted to be transferred during
the lifetime of the participant, it shall be treated thereafter as a
nonqualified stock option. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of Incentives, or levy of attachment or
similar process upon Incentives not specifically permitted herein, shall be null
and void and without effect.
11.3 Effect of Termination of Employment or Death. Except as provided in
Section 10.4 with respect to Outside Directors, in the event that a participant
ceases to be an employee of the Company or to provide services to the Company
for any reason, including death, disability, early retirement or normal
retirement, any Incentives may be exercised, shall vest or shall expire at such
times as may be determined by the Committee and provided in the Incentive
Agreement.
11.4 Additional Conditions. Anything in this Plan to the contrary
notwithstanding: (a) the Company may, if it shall determine it necessary or
desirable for any reason, at the time of award of any Incentive or the issuance
of any shares of Common Stock pursuant to any Incentive, require the recipient
of the Incentive, as a condition to the receipt thereof or to the receipt of
shares of Common Stock issued pursuant thereto, to deliver to the Company a
written representation of present intention to acquire the Incentive or the
shares of Common Stock issued pursuant thereto for his own account for
investment and not for distribution; and (b) if at any time the Company further
determines, in its sole discretion, that the listing, registration or
qualification (or any updating of any such document) of any Incentive or the
shares of Common Stock issuable pursuant thereto is necessary on any securities
exchange or under any federal or state securities or blue sky law, or that the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with the award of any Incentive,
the issuance of shares of Common Stock pursuant thereto, or the removal of any
restrictions imposed on such shares, such Incentive shall not be awarded or such
shares of Common Stock shall not be issued or such restrictions shall not be
removed, as the case may be, in whole or in part, unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
11.5 Adjustment. In the event of any recapitalization, stock dividend,
stock split, combination of shares or other similar change in the Common Stock,
the number of shares of Common Stock then subject to the Plan, including shares
subject to outstanding Incentives, and all limitations on the number of shares
that may be issued hereunder shall be adjusted in proportion to the change in
outstanding shares of Common Stock. In the event of any such adjustments, the
purchase price of any option and the performance objectives of any Incentive,
shall also be adjusted as and to the extent appropriate, in the reasonable
discretion of the Committee, to provide participants with the same relative
rights before and after such adjustment. No substitution or adjustment shall
require the Company to issue a fractional share under the Plan and the
substitution or adjustment shall be limited by deleting any fractional share.
11.6 Withholding.
A. The Company shall have the right to withhold from any payments made or
stock issued under the Plan or to collect as a condition of payment, issuance or
vesting, any taxes required by law to be withheld. At any time that a
participant is required to pay to the Company an amount required to be withheld
under applicable income tax laws in connection with the lapse of restrictions on
Common Stock or the exercise of an option, the participant may, subject to
disapproval by the Committee, satisfy this obligation in whole or in part
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by electing (the "Election") to deliver currently owned shares of Common Stock
or to have the Company withhold shares of Common Stock, in each case having a
value equal to the minimum statutory amount required to be withheld under
federal, state and local law. The value of the shares to be delivered or
withheld shall be based on the Fair Market Value of the Common Stock on the date
that the amount of tax to be withheld shall be determined ("Tax Date").
B. Each Election must be made prior to the Tax Date. The Committee may
disapprove of any Election, may suspend or terminate the right to make
Elections, or may provide with respect to any Incentive that the right to make
Elections shall not apply to such Incentive. If a participant makes an election
under Section 83(b) of the Code with respect to shares of restricted stock, an
Election to have shares withheld to satisfy withholding taxes is not permitted
to be made.
11.7 No Continued Employment. No participant under the Plan shall have any
right, because of his or her participation, to continue in the employ of the
Company for any period of time or to any right to continue his or her present or
any other rate of compensation.
11.8 Deferral Permitted. Payment of an Incentive may be deferred at the
option of the participant if permitted in the Incentive Agreement.
11.9 Amendments to or Termination of the Plan. The Board may amend or
discontinue this Plan at any time; provided, however, that no such amendment
may:
A. without the approval of the stockholders, (i) except for
adjustments permitted herein, increase 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 or (iii) materially
expand the classes of persons eligible to participate in the Plan, or
B. materially impair, without the consent of the recipient, an
Incentive previously granted, except that the Company retains all of its
rights under Section 11.10.
11.10 Change of Control.
A. A Change of Control shall mean:
(i) the acquisition by any person of beneficial ownership of 50% or
more of the outstanding shares of the Common Stock or 50% or more of the
combined voting power of Superior's then outstanding securities entitled to
vote generally in the election of directors; provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control:
(a) any acquisition (other than a Business Combination (as defined
below) which constitutes a Change of Control under Section 11.10(A)(iii)
hereof) of Common Stock directly from the Company,
(b) any acquisition of Common Stock by the Company,
(c) any acquisition of Common Stock by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or
(d) any acquisition of Common Stock by any corporation or other
entity pursuant to a Business Combination that does not constitute a
Change of Control under Section 11.10(A)(iii) hereof; or
(ii) individuals who, as of January 1, 2002, constituted the Board of
Directors of Superior (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors; provided,
however, that any individual becoming a director subsequent to such date
whose election, or nomination for election by Superior's stockholders, was
approved by a vote of at least two-thirds of the directors then comprising
the Incumbent Board shall be considered a member of the Incumbent Board,
unless such individual's initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person other than the Incumbent Board; or
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(iii) consummation of a reorganization, share exchange, merger or
consolidation (including any such transaction involving any direct or
indirect subsidiary of Superior) or sale or other disposition of all or
substantially all of the assets of the Company (a "Business Combination");
provided, however, that in no such case shall any such transaction
constitute a Change of Control if immediately following such Business
Combination:
(a) the individuals and entities who were the beneficial owners of
Superior's outstanding Common Stock and Superior's voting securities
entitled to vote generally in the election of directors immediately
prior to such Business Combination have direct or indirect beneficial
ownership, respectively, of more than 50% of the then outstanding shares
of common stock, and more than 50% of the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors of the surviving or successor corporation, or, if
applicable, the ultimate parent company thereof (the "Post-Transaction
Corporation"), and
(b) except to the extent that such ownership existed prior to the
Business Combination, no person (excluding the Post-Transaction
Corporation and any employee benefit plan or related trust of either
Superior, the Post-Transaction Corporation or any subsidiary of either
corporation) beneficially owns, directly or indirectly, 25% or more of
the then outstanding shares of common stock of the corporation resulting
from such Business Combination or 25% or more of the combined voting
power of the then outstanding voting securities of such corporation, and
(c) at least a majority of the members of the board of directors of
the Post-Transaction Corporation were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of
the Board of Directors, providing for such Business Combination; or
(iv) approval by the stockholders of Superior of a complete
liquidation or dissolution of Superior.
For purposes of this Section 11.10, the term "person" shall mean a natural
person or entity, and shall also mean the group or syndicate created when two or
more persons act as a syndicate or other group (including, without limitation, a
partnership or limited partnership) for the purpose of acquiring, holding, or
disposing of a security, except that "person" shall not include an underwriter
temporarily holding a security pursuant to an offering of the security.
B. Upon a Change of Control of the type described in clause (A)(i) or
(A)(ii) of this Section 11.10 or immediately prior to any Change of Control of
the type described in clause (A)(iii) or (A)(iv) of this Section 11.10, all
outstanding Incentives granted pursuant to this Plan shall automatically become
fully vested and exercisable, all restrictions or limitations on any Incentives
shall automatically lapse and, unless otherwise provided in the applicable
Incentive Agreement, all performance criteria and other conditions relating to
the payment of Incentives shall be deemed to be achieved or waived by Superior
without the necessity of action by any person. As used in the immediately
preceding sentence, "immediately prior" to the Change of Control shall mean
sufficiently in advance of the Change of Control to permit the grantee to take
all steps reasonably necessary (i) if an optionee, to exercise any such option
fully and (ii) to deal with the shares purchased or acquired under any such
option or any Other Stock-Based Award and any formerly restricted shares on
which restrictions have lapsed so that all types of shares may be treated in the
same manner in connection with the Change of Control as the shares of Common
Stock of other stockholders.
C. No later than 30 days after a Change of Control of the type described in
subsections (A)(i) or (A)(ii) of this Section 11.10 and no later than 30 days
after the approval by the Board of a Change of Control of the type described in
subsections (A)(iii) or (A)(iv) of this Section 11.10, the Committee, acting in
its sole discretion without the consent or approval of any participant (and
notwithstanding any removal or attempted removal of some or all of the members
thereof as directors or Committee members), may act to effect one or more of the
alternatives listed below, which may vary among individual participants and
which may vary among Incentives held by any individual participant:
(i) require that all outstanding options or Other Stock-Based Awards
be exercised on or before a specified date (before or after such Change of
Control) fixed by the Committee, after which specified
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date all unexercised options and Other Stock-Based Awards and all rights of
participants thereunder shall terminate,
(ii) make such equitable adjustments to Incentives then outstanding as
the Committee deems appropriate to reflect such Change of Control
(provided, however, that the Committee may determine in its sole discretion
that no adjustment is necessary),
(iii) provide for mandatory conversion of some or all of the
outstanding options or Other Stock-Based Awards held by some or all
participants as of a date, before or after such Change of Control,
specified by the Committee, in which event such options and Other
Stock-Based Awards shall be deemed automatically cancelled and the Company
shall pay, or cause to be paid, to each such participant an amount of cash
per share equal to the excess, if any, of the Change of Control Value of
the shares subject to such option or Other Stock-Based Award, as defined
and calculated below, over the exercise price of such options or the
exercise or base price of such Other Stock-Based Awards or, in lieu of such
cash payment, the issuance of Common Stock or securities of an acquiring
entity having a Fair Market Value equal to such excess, or
(iv) provide that thereafter, upon any exercise of an option or Other
Stock-Based Award that entitles the holder to receive Common Stock, the
holder shall be entitled to purchase or receive under such option or Other
Stock-Based Award, in lieu of the number of shares of Common Stock then
covered by such option or Other Stock-Based Award, the number and class of
shares of stock or other securities or property (including, without
limitation, cash) to which the holder would have been entitled pursuant to
the terms of the agreement providing for the reorganization, share
exchange, merger, consolidation or asset sale, if, immediately prior to
such Change of Control, the holder had been the record owner of the number
of shares of Common Stock then covered by such option or Other Stock-Based
Award.
D. For the purposes of paragraph (iii) of Section 11.10(C), the "Change of
Control Value" shall equal the amount determined by whichever of the following
items is applicable:
(i) the per share price to be paid to stockholders of Superior in any
such merger, consolidation or other reorganization,
(ii) the price per share offered to stockholders of Superior in any
tender offer or exchange offer whereby a Change of Control takes place,
(iii) in all other events, the fair market value per share of Common
Stock into which such options being converted are exercisable, as
determined by the Committee as of the date determined by the Committee to
be the date of conversion of such options, or
(iv) in the event that the consideration offered to stockholders of
Superior in any transaction described in this Section 11.10 consists of
anything other than cash, the Committee shall determine the fair cash
equivalent of the portion of the consideration offered that is other than
cash.
11.11 Definition of Fair Market Value. Whenever "Fair Market Value" of
Common Stock shall be determined for purposes of this Plan, it shall be
determined as follows: (i) 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; (ii) 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 (iii) 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.
A-9
11.12 Loans. In order to assist a participant in acquiring shares of
Common Stock pursuant to an Incentive granted under this Plan, the Committee may
authorize, at either the time of the grant of the Incentive, at the time of the
acquisition of Common Stock pursuant to the Incentive, or at the time of the
lapse of restrictions on shares of restricted stock granted under this Plan, the
extension of a loan to the participant by the Company. The terms of any loans,
including the interest rate, collateral and terms of repayment, will be subject
to the discretion of the Committee. The maximum credit available hereunder shall
be equal to the aggregate purchase price of the shares of Common Stock to be
acquired pursuant to the Incentive plus the maximum tax liability that may be
incurred in connection with the Incentive.
A-10
SUPERIOR ENERGY SERVICES, INC.
Proxy Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders on June 4, 2002
The undersigned hereby appoints Terence E. Hall proxy for the undersigned,
with full power of substitution, to represent the undersigned and to vote, as
designated below, all of the shares of common stock of Superior Energy Services,
Inc. (the "Company") that the undersigned is entitled to vote at the annual
meeting of stockholders of the Company to be held on June 4, 2002, and any
adjournments thereof.
(continued and to be signed on reverse side.)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
SUPERIOR ENERGY SERVICES, INC.
June 4, 2002
o Please Detach and Mail in the Envelope Provided o
A [X] Please mark
your votes as
in this example.
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to vote for all
to the contrary nominees listed
below) at right
1. Election [ ] [ ] NOMINEES:
of six Terence E. Hall
Directors Justin L. Sullivan
Richard A. Bachmann
INSTRUCTIONS: To withhold authority to vote for Joseph R. Edwards
any nominee, strike a line through the nominee's Ben A. Guill
name listed at right. Richard A. Pattarozzi
The Board of Directors recommends a vote FOR the nominees
listed below
and for Proposal 2.
For Against Abstain
2. Approval of the Superior Energy Services, [ ] [ ] [ ]
Inc. 2002 Stock Incentive Plan.
3. In his discretion, to transact such other business as may properly come
before the meeting and any adjournments thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no directions are given, this proxy will be
voted for the director nominees listed at left. The proxy holder named above
will vote in his discretion on any other matter that may properly come before
the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature of Additional Signature,
Stockholder if held jointly DATE
------------------ ------------------ --------
NOTE: Please sign exactly as name appears hereon. When signing as attorney,
executor, administrator, trustee, or guardian, please give full title as
such. If a corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign in partnership
name by authorized persons.