SCHEDULE 14A INFORMATION
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Tidewater Inc.
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[Tidewater Logo]
TIDEWATER INC.
601 Poydras Street, Suite 1900
New Orleans, Louisiana 70130
June 21, 2001
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Tidewater Inc. to be held at the Pan-American Life Center Auditorium, 11th
Floor, 601 Poydras Street, New Orleans, Louisiana, on Thursday, July 26, 2001,
at 10:00 a.m., C.D.S.T.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. During the meeting, we will
also report on the operations of the Company. Directors and officers of the
Company will be present to respond to any questions that stockholders may
have.
Stockholders are requested to vote by proxy as promptly as possible.
Stockholders can vote by signing, dating, and returning the enclosed proxy
card in the envelope provided. Stockholders can also call in their vote by
touchtone telephone or send it over the Internet using the instructions on the
proxy card. If you attend the meeting, which we hope you will do, you may vote
in person even if you have previously voted by proxy.
Sincerely,
/s/ William C. O'Malley
WILLIAM C. O'MALLEY
Chairman of the Board, President,
and Chief Executive Officer
INFORMATION ABOUT ATTENDING THE ANNUAL MEETING
If you plan to attend the meeting in person, please bring the following:
1. Proper identification (preferably a driver's license); and
2. Acceptable Proof of Ownership if your shares are held in "Street Name."
Street Name means your shares are held of record by brokers, banks or other
institutions.
Acceptable Proof of Ownership is a letter from your broker stating that you
owned Tidewater Inc. stock on the record date or an account statement showing
that you owned Tidewater Inc. stock on the record date.
The Company may exclude from the meeting any person who is not a stockholder
of record on the record date (or a duly designated proxy) or a street name
holder on the record date evidenced as described above.
TIDEWATER INC.
601 Poydras Street, Suite 1900
New Orleans, LA 70130
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of the Stockholders of TIDEWATER INC. will be held in the
Pan-American Life Center Auditorium, 11th Floor, 601 Poydras Street, New
Orleans, Louisiana, on Thursday, July 26, 2001, at 10:00 a.m., C.D.S.T., to
vote upon the following matters:
1. The election of three directors for a term of three years;
2. A proposal to approve the 2001 Stock Incentive Plan;
3. Ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 2002; and
4. Such other matters as may properly come before the meeting or any
adjournment thereof.
The record date for the determination of stockholders entitled to notice of
and to vote at the meeting has been fixed as June 11, 2001.
Stockholders are requested to vote by proxy as promptly as possible.
Stockholders can vote by signing, dating, and returning the enclosed proxy card
in the envelope provided. Stockholders can also call in their vote by touchtone
telephone or send it over the Internet using the instructions on the proxy
card. If you attend the meeting, which we hope you will do, you may vote in
person even if you have previously voted by proxy.
By Order of the Board of Directors
/s/ Cliffe F. Laborde
CLIFFE F. LABORDE
Executive Vice President, Secretary
and General Counsel
New Orleans, Louisiana
June 21, 2001
TABLE OF CONTENTS
Description Page
----------- ----
Solicitation of Proxies.................................................. 1
Revocation of Proxies.................................................... 1
Shares Outstanding and Voting Procedures................................. 1
Security Ownership of Certain Beneficial Owners.......................... 2
Security Ownership of Management......................................... 3
Election of Directors (Proposal 1)....................................... 4
Committees of the Board.................................................. 5
Compensation Committee Interlocks and Insider Participation.............. 5
Director Compensation.................................................... 6
Executive Compensation................................................... 7
Compensation Committee Report............................................ 11
Audit Committee Report................................................... 13
Performance Graph........................................................ 14
Interest in Certain Transactions......................................... 15
Proposal to Approve 2001 Stock Incentive Plan (Proposal 2)............... 15
Proposal for the Ratification of Selection of Independent Auditors
(Proposal 3)............................................................ 20
Stockholder Proposals and Director Nominations........................... 20
Other Matters............................................................ 21
Exhibit A (Audit Committee Charter)...................................... 22
TIDEWATER INC.
601 Poydras Street, Suite 1900
New Orleans, LA 70130
PROXY STATEMENT
SOLICITATION OF PROXIES
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation by the Board of Directors of Tidewater Inc.
(the "Company") of proxies to be used at the Annual Meeting of Stockholders of
the Company which will be held in the Auditorium of the Pan-American Life
Center, 601 Poydras Street, New Orleans, Louisiana, on Thursday, July 26,
2001, at 10:00 a.m., C.D.S.T., and at any adjournment thereof. Only
stockholders of record at the close of business on June 11, 2001, are entitled
to vote at the meeting or any adjournment thereof.
The Company will bear the costs of soliciting proxies. Proxies may be
solicited, without extra remuneration, by Directors, officers, or employees of
the Company, by mail, telephone, telex, telefax, telegram, or personal
interview. The Company will reimburse brokers, banks, and other custodians,
nominees, or fiduciaries for their reasonable expenses in forwarding proxies
and proxy materials to beneficial owners of shares.
REVOCATION OF PROXIES
Any stockholder giving a proxy may revoke it at any time before it is voted
by voting in person at the meeting or by delivering written revocation or a
later dated proxy to the Secretary of the Company.
SHARES OUTSTANDING AND VOTING PROCEDURES
The Bylaws of the Company (the "Bylaws") provide that the holders of a
majority of the shares of common stock of the Company, par value $.10 per
share (the "Common Stock"), issued and outstanding and entitled to vote at the
Annual Meeting, present in person or represented by proxy, shall constitute a
quorum at the Annual Meeting. The Bylaws further provide that, except as
otherwise provided by statute, the Certificate of Incorporation of the
Company, or the Bylaws, all matters coming before the Annual Meeting shall be
decided by the vote of a majority of the number of shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting.
Votes cast by proxy or in person at the Annual Meeting will be counted by
the persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will treat shares represented by proxies that
reflect abstentions as shares that are present and entitled to vote for
purposes of determining the presence of a quorum and for purposes of
determining the outcome of any matter submitted to the stockholders for a
vote.
Abstentions as to particular proposals will have the same effect as votes
against such proposals. Broker non-votes as to particular proposals will not,
however, be deemed to be a part of the voting power present with respect to
such proposals, will not therefore count as votes for or against such
proposals and will not be included in calculating the number of votes
necessary for approval of such proposals.
As of the close of business on June 11, 2001, the Company had 60,534,635
shares of Common Stock that were issued, outstanding, and entitled to vote.
Each share of Common Stock is entitled to one vote with respect to matters to
be voted upon at the meeting.
1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table indicates the name, address, and stock ownership of each
person known by the Company to own beneficially more than 5% of the Common
Stock as of June 11, 2001:
Amount and
Nature Percent
Name and Address of Beneficial of
of Beneficial Owner Ownership Class
------------------- ------------- -------
FMR Corporation................................... 5,060,742(1) 8.4%(5)
82 Devonshire St.
Boston, MA 02109
Mellon Financial Corporation...................... 3,214,281(2) 5.3%(5)
One Mellon Center
Pittsburgh, PA 15258
T. Rowe Price Associates, Inc..................... 4,040,800(3) 6.7%(5)
100 East Pratt St.
Baltimore, MD 21202
Whitney National Bank, as Trustee................. 4,475,945(4) 7.4%(5)
of the Tidewater Inc. Grantor
Stock Trust
228 St. Charles Avenue
New Orleans, LA 70130
--------
(1) Based on Schedule 13G dated February 14, 2001, filed with the Securities
and Exchange Commission by FMR Corporation.
(2) Based on Schedule 13G dated January 18, 2001, filed with the Securities
and Exchange Commission by Mellon Financial Corporation.
(3) Based on Schedule 13G dated February 12, 2001, filed with the Securities
and Exchange Commission by T. Rowe Price Associates, Inc.
(4) The Company created the Tidewater Inc. Grantor Stock Trust (the "Trust")
to acquire, hold and distribute shares of Common Stock for the payment of
benefits and compensation under the Company's employee benefit plans,
including the Company's stock option plans and 401(k) plan. Under the
Trust, Whitney National Bank as Trustee (the "Trustee"), will vote all
shares of Common Stock held in the Trust (the "Trust Shares") in
accordance with instructions received from current and former employees of
the Company (excluding members of the Board of Directors of the Company)
who participate in the Company's 401(k) plan or hold options to purchase
Common Stock granted under the Company's stock option plans (the "Eligible
Participants"). For each Eligible Participant, the Trustee will vote or
abstain from voting, according to instructions received from that Eligible
Participant, with respect to that number of Trust Shares that results from
multiplying (x) the total number of Trust Shares as of the record date by
(y) a fraction, the numerator of which is the sum of the number of shares
of Common Stock allocated to the account of such Eligible Participant in
the 401(k) Plan and the number of shares of Common Stock that are subject
to stock options held by such Eligible Participant, and the denominator of
which is the total number of shares of Common Stock in the 401(k) plan
allocated to Eligible Participants and the total number of shares of
Common Stock subject to options held by Eligible Participants, as to which
the Trustee has received voting instructions.
(5) Based on 60,543,667 shares of Common Stock outstanding on June 11, 2001.
2
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
as of June 11, 2001, with respect to each Director and the executive officers
named in the Summary Compensation Table and by all Directors and executive
officers as a group:
Amount and
Nature Percent
of Beneficial of
Name Ownership* Class(6)
---- ------------- --------
Robert H. Boh................................ 25,500(1) **
Donald T. Bollinger.......................... 34,565(1) **
Arthur R. Carlson............................ 21,600(1) **
Richard M. Currence.......................... 228,665(2)(3) **
Cliffe F. Laborde............................ 191,180(2)(3)(4) **
J. Keith Lousteau............................ 99,538(2)(3) **
Jon C. Madonna............................... 7,500(1) **
Paul W. Murrill.............................. 21,600(1) **
William C. O'Malley.......................... 981,033(2) 1.6%
Lester Pollack............................... 19,500(1) **
Larry T. Rigdon.............................. 21,500(2)(3) **
J. Hugh Roff, Jr............................. 153,942(1) **
Donald G. Russell............................ 12,900(1) **
Dean E. Taylor............................... 104,095(2)(3) **
All Directors and Executive Officers as a
group (14 persons).......................... 1,923,118(3)(5) 3.2%
--------
* Unless otherwise indicated by footnote, all shares are held by the named
individuals with sole voting and investment power.
** Less than 1.0%.
(1) Includes shares that may be acquired within 60 days upon exercise of Non-
Employee Director Stock Options, as follows: Mr. Boh, 20,500; Mr.
Bollinger, 20,500; Mr. Carlson, 20,500; Mr. Madonna, 5,500; Dr. Murrill,
20,500; Mr. Pollack, 19,500; Mr. Roff, 19,500; and Mr. Russell, 12,500.
(2) Includes shares that may be acquired within 60 days upon exercise of
Employee Stock Options, together with related restricted stock awards, as
follows: Mr. Currence, 171,999 ; Mr. Laborde, 162,258; Mr. Lousteau,
95,625; Mr. O'Malley and a trust for his children, 850,000; Mr. Rigdon,
139,271; and Mr. Taylor, 101,111. Also includes shares attributable to
accounts under the Company's 401(k) Savings Plan as follows: Mr. Currence,
524, Mr. Laborde, 968; Mr. Lousteau, 3,913; Mr. O'Malley, 507; Mr. Rigdon,
1,505; and Mr. Taylor, 2,984.
(3) Does not include shares held in the Tidewater Inc. Grantor Stock Trust
with respect to which Messrs. Currence, Laborde, Lousteau, Rigdon and
Taylor and other participants (other than members of the Company's Board
of Directors) in the Company's stock option plans and 401(k) Savings Plan
have the power to direct the vote on a pro rata basis.
(4) Includes 636 shares held in trusts for Mr. Laborde's minor children,
beneficial ownership of which is disclaimed.
(5) Includes 1,659,264 shares of Common Stock that such persons have the right
to acquire within 60 days through the exercise of options together with
related restricted stock awards; 4,337 shares for which Directors and
executive officers reported indirect ownership and disclaim beneficial
ownership; and 10,401 shares of Common Stock attributable to such persons'
accounts in the Company's 401(k) Savings Plan, as to which shares such
persons have sole voting power only.
(6) Calculated on the basis of 60,543,667 shares of Common Stock outstanding
at June 11, 2001, and includes for each person and group the number of
shares the person or group has the right to acquire within 60 days.
3
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Certificate of Incorporation divides the Board of Directors
into three classes, as nearly equal in number as possible, with each class of
Directors serving a three year term. The term of office of each class of
Directors expires in rotation so that one class is elected at each Annual
Meeting for a full three-year term. All of the nominees for Director are
currently serving as Directors.
The Board of Directors has nominated and urges you to vote FOR the election
of Paul W. Murrill, Lester Pollack and J. Hugh Roff, Jr. for terms of office
ending in 2004. Proxies solicited hereby will be so voted unless stockholders
specify otherwise in their proxies.
It is intended that the proxies solicited hereby will be voted FOR the
election of each of the nominees. In the event any nominee is not a candidate
when the election occurs, it is intended that the proxies will be voted for
the election of the other nominees and may be voted for any substitute
nominee. The Board of Directors has no reason to believe that any nominee will
not be a candidate or, if elected, will be unable or unwilling to serve as a
Director. In no event, however, will the proxies be voted for a greater number
of persons than the number of nominees named.
Nominees for election at this meeting to terms expiring in 2004:
Paul W. Murrill, 66, Professional Engineer; Chairman of Piccadilly
Cafeterias, Inc., 1994-2000; Special Advisor to the Chairman of the Board of
Gulf States Utilities Co. (public utility), 1987-1989, its Chairman, 1982-
1987, and its Chief Executive Officer, 1982-1986; and Director of ChemFirst,
Inc., DTM Corporation, Entergy Corporation, and Howell Corporation. Director
since 1981.
Lester Pollack, 67, Managing Director of Centre Partners Management LLC
since 1995; Managing Director of Lazard Freres & Co. LLC 1986-1999 (prior
thereto a general partner); Chairman of the Board of Firearms Training
Systems, Inc.; and Director of American Seafoods Group, LLC, Bank Leumi USA,
Nationwide Credit, Parlex Corporation, and Rembrandt Photo Services. Director
since 1992.
J. Hugh Roff, Jr., 69, Chairman of the Board of Roff Resources LLC (energy
investments) since 1998; Chairman of the Board of PetroUnited Terminals, Inc.
(petrochemical terminals) 1986-1998; and Advisory Director of Chase Bank of
Texas, N.A. Director since 1986.
Directors whose terms continue until 2002:
Robert H. Boh, 70, Chairman and Former President and Chief Executive Officer
of Boh Bros. Construction Co. L.L.C. (general construction contractor); and
Chairman of Hibernia Corporation and Hibernia National Bank. Director since
1978.
Donald T. Bollinger, 51, Chairman of Bollinger Shipyards, Inc. since 1989
and its Chief Executive Officer since 1985; and Director of Louisiana Worker's
Compensation Corp. and Port of New Orleans. Director since 1990.
Donald G. Russell, 69, Chairman of Russell Companies (oil and gas
investments) since 1998; Executive Vice President of Sonat Inc. 1993-1998;
Chairman of the Board and Chief Executive Officer of Sonat Exploration Company
1988-1998; and Director of Grant Geophysical, Inc. Director since 1998.
Directors whose terms continue until 2003:
Arthur R. Carlson, 60, Managing Director, TCW Group, Inc. (investment
advisor); and Director of TCW Asset Management Company. Director since 1982.
4
Jon C. Madonna, 58, President, DigitalThink, Inc. since 2000; President and
Chief Executive Officer of Carlson Wagonlit Travel 1999-2000; Vice Chairman of
Travelers Group 1997-1998; Chairman and Chief Executive Officer of KPMG Peat
Marwick 1990-1996; and Director of Neuberger Berman, Inc. and DigitalThink
Inc. Director since 1999.
William C. O'Malley, 64, Chairman, President and Chief Executive Officer of
the Company since 1994; prior thereto, served as Chairman of the Board and
Chief Executive Officer of Sonat Offshore Drilling, Inc.; and Director of
Hibernia Corporation, BE&K, and American Bureau of Shipping. Director since
1994.
COMMITTEES OF THE BOARD
The Company has standing Audit, Compensation and Finance Committees of the
Board of Directors. During fiscal 2001, nine meetings of the Board of
Directors were held. Each Director attended at least 75% of the aggregate of
the meetings of the Board and the Committees on which he served.
The Company's Audit Committee is composed of Messrs. Madonna, Murrill, and
Russell. The Committee met four times during fiscal 2001. The Audit
Committee's functions are described in its charter, which is attached as
Exhibit A. The principal functions of the Committee are to recommend selection
of independent auditors, review the plan for and results of audit examinations
by internal and independent auditors, review the Company's annual and
quarterly financial statements, and review and approve the services provided
and fees charged by independent auditors. The Committee also monitors and
evaluates internal accounting controls of the Company and ensures continuing
adherence to stated management policies and regulatory requirements in the
area of financial reporting.
The Company's Compensation Committee is composed of Messrs. Boh, Carlson,
Pollack, and Roff. The Committee met six times during fiscal 2001. The
principal functions of the Committee include responsibility for considering
all substantive elements of the Company's total employee compensation package,
including overall plan design for each of the Company's major benefit
programs, and determining appropriate actuarial assumptions and funding
methods. The Committee also has responsibility for determining salary and
bonus awards for executive officers and determining stock option and
restricted stock awards for all key employees.
The Company's Finance Committee is composed of Messrs. Boh, Bollinger,
Carlson, and Murrill. The Committee met two times during fiscal 2001. The
principal functions of the Committee include responsibility for reviewing
capital structure, dividend policy, corporate liquidity, and issuance of debt
and equity securities. The Committee also has responsibility for appointing
and monitoring independent investment managers and establishing investment
policies and guidelines for employee benefit plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Messrs. Boh,
Carlson, Pollack and Roff. None of the members of the Compensation Committee
have been officers or employees of the Company or any of its subsidiaries. No
executive officer of the Company served in the last fiscal year as a director
or member of the compensation committee of another entity one of whose
executive officers served as a Director or on the Compensation Committee of
the Company.
5
DIRECTOR COMPENSATION
Outside Directors of the Company receive an annual retainer of $30,000 and a
fee of $1,500 for attendance at each Board meeting. The chairman of each Board
committee receives an additional annual retainer of $5,000, and each committee
member, including the chairman, receives a fee of $1,200 for attendance at
each committee meeting.
Outside Directors also receive an annual grant of options to purchase up to
5,000 shares of Common Stock, the exact number to be set by the Compensation
Committee. Outside Directors will receive an option to purchase 2,500 shares
of Common Stock on the day of the 2001 Annual Meeting of Stockholders. The
exercise price of the stock option is equal to the closing price for the
Common Stock reported on the New York Stock Exchange consolidated tape on that
date.
The Company provides a Deferred Compensation Plan pursuant to which an
Outside Director may elect to defer all or a portion of the fees that are
payable to him from the Company. Deferred amounts are credited to an account
in the name of the Director as phantom shares of the Company's Common Stock or
as units in one or more investment funds made available through the plan. Upon
termination of Board service with the Company or on another date chosen by the
Director, amounts accrued under the plan are payable either in a lump sum or
over a period of two to ten years, at the election of the participant. A
distribution from the plan may also be made upon a change of control of the
Company or in the event of hardship. Two Directors participated in the
Deferred Compensation Plan during fiscal 2001.
The Company also provides a Retirement Plan for the benefit of Outside
Directors who retire from the Board on or after reaching age 65 or after
completing five or more years of service on the Board. Under the Retirement
Plan, an eligible Director will be entitled to an annual benefit equal to the
annual retainer fee for a Board member at the time of his retirement. An
eligible Director who was a member of the Board on May 31, 2001, will receive
the annual benefit for a term equal to the number of years the retired
Director served as an Outside Director. An eligible Director who joins the
Board after May 31, 2001, will receive the annual benefit for a term equal to
the number of years the retired director served as an Outside Director, but
not to exceed five years.. If a Director dies prior to payment of his benefit,
a death benefit is payable to his beneficiaries equal to the then present
value of the unpaid benefit.
The Deferred Compensation Plan and the Retirement Plan both provide for the
protection of benefits in the event of a change of control of the Company and
also permit the acceleration of payment of benefits in such event.
6
EXECUTIVE COMPENSATION
The following table summarizes, for each of the three fiscal years ended
March 31, 1999, 2000, and 2001, the compensation paid to each of the executive
officers of the Company in all capacities in which they served:
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation(1)
-------------------------- --------------------------
No. of
Name and Principal Fiscal Options All Other
Position Year Salary Bonus Awarded Compensation(2)
------------------ ------ -------- ---------- ------- ---------------
William C. O'Malley, 2001 $700,000 $ 950,000 50,000(3) $25,359
Chairman, President and 2000 700,000 1,000,000 75,000 24,876
Chief Executive Officer 1999 700,000 975,000 150,000 24,876
Cliffe F. Laborde, 2001 233,448 241,260 75,000 11,362
Executive Vice
President, 2000 230,000 210,835 35,000 10,776
Secretary and General
Counsel 1999 230,000 203,547 80,000 10,776
Richard M. Currence, 2001 228,611 308,800 -0- 11,217
Executive Vice
President(4) 2000 290,000 319,003 50,000 12,576
1999 290,000 307,976 100,000 12,576
Larry T. Rigdon, 2001 201,379 247,014 75,000 9,930
Executive Vice President 2000 180,000 165,002 35,000 8,496
1999 180,000 106,730 80,000 8,646
Dean E. Taylor, 2001 194,138 247,104 75,000 10,183
Executive Vice President 2000 170,000 135,109 35,000 8,976
1999 170,000 90,645 60,000 8,876
J. Keith Lousteau, 2001 176,488 205,845 60,000 9,621
Senior Vice President 2000 140,000 128,335 30,000 8,076
and Chief Financial
Officer 1999 140,000 127,000 60,000 8,076
--------
(1) As of March 31, 2001, Mr. Currence held 581 shares of restricted stock
with a value of $26,261, Mr. Lousteau held 195 shares of restricted stock
with a value of $8,814 and Mr. O'Malley held 50,000 shares of restricted
stock with a value of $2,260,000.
(2) Consists of $4,358 in 2001 and $3,876 in 2000 and 1999 of health care
premiums paid by the Company each year on behalf of each named executive
officer under the Company's Executive Medical Plan and the following
amounts contributed by the Company on behalf of the named executive
officers pursuant to the Company's Savings Plan and Supplemental Savings
Plan: Mr. O'Malley, $21,000 in 2001, $21,000 in 2000, and $21,000 in 1999;
Mr. Laborde, $7,003 in 2001, $6,900 in 2000, and $6,900 in 1999; Mr.
Currence, $6,858 in 2001, $8,700 in 2000, and $8,700 in 1999; Mr. Rigdon,
$5,571 in 2001, $4,620 in 2000, and $4,770 in 1999; Mr. Taylor, $5,824 in
2001, $5,100 in 2000, and $5,000 in 1999; and Mr. Lousteau, $5,262 in
2001, $4,200 in 2000, and $4,200 in 1999.
(3) Does not include the grant of a replacement option for 100,000 shares.
This option was granted to replace a cancelled option with the same terms,
except that the replacement option may be exercised for five years, rather
than two years, following retirement.
(4) Mr. Currence ceased to serve as an executive officer on December 31, 2000.
7
Stock Options
The following table contains certain information concerning the grant of
stock options to the named individuals during the fiscal year ended March 31,
2001:
OPTION GRANTS IN FISCAL YEAR ENDED MARCH 31, 2001
% of Total
Number of Options
Shares Granted to
Underlying Employees Grant Date
Options in Last Exercise Expiration Present
Name Granted(1) Fiscal Year Price Date Value(2)
---- ---------- ----------- -------- ---------- ----------
William C. O'Malley.. 50,000(3) 8.4% $44.00 3/29/11 $ 959,000
Cliffe F. Laborde.... 75,000 12.6% 42.1875 1/18/11 1,379,250
Richard M. Currence.. -0- N/A N/A N/A N/A
Larry T. Rigdon...... 75,000 12.6% 42.1875 1/18/11 1,379,250
Dean E. Taylor....... 75,000 12.6% 42.1875 1/18/11 1,379,250
J. Keith Lousteau.... 60,000 10.1% 42.1875 1/18/11 1,103,400
--------
(1) The options become fully exercisable three years after the date of grant.
Exercisability is accelerated upon a change of control, and exercisability
of Mr. O'Malley's options will also be accelerated upon retirement at age
65 or older.
(2) The theoretical values on grant date are calculated under the Black-
Scholes Model. The Black-Scholes Model is a mathematical formula used to
value options traded on stock exchanges. This formula considers a number
of factors to estimate the option's theoretical value, including the
stock's historical volatility, dividend rate, exercise period of the
option and interest rates. The grant date theoretical value above assumes
an expected stock price volatility of 48.4%, an expected annual dividend
yield of 1.2%, a 4.7% risk free rate of return and an expected five year
stock option life.
(3) Does not include the grant of a replacement option for 100,000 shares.
This option was granted to replace a cancelled option with the same terms,
except that the replacement option may be exercised for five years, rather
than two years, following retirement.
Option Exercises and Holdings
The following table sets forth certain information concerning the exercise
of options during the fiscal year ended March 31, 2001, and unexercised
options held on March 31, 2001:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED MARCH 31, 2001 AND OPTION
VALUES AS OF MARCH 31, 2001
Number of Shares Value of Unexercised
Number of Underlying Unexercised In-the-Money Options at
Shares Options at March 31, 2001 March 31, 2001(2)
Acquired Value -------------------------- ----------------------------
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
William C. O'Malley..... -0- -0- 850,000(3) 150,000 $8,601,875(3) $1,830,000
Cliffe F. Laborde....... -0- -0- 161,855 125,001 1,725,789 1,126,787
Richard M. Currence..... 127,188 $2,680,738 171,999 66,668 1,179,301 1,180,024
Larry T. Rigdon......... 11,117 216,070 139,057 125,001 1,447,957 1,126,787
Dean E. Taylor.......... 5,000 128,130 100,933 118,334 1,129,045 977,113
J. Keith Lousteau....... 11,000 272,427 95,625 100,000 1,014,906 888,750
--------
(1) Reflects the difference between the closing sale price of the Company's
Common Stock on the exercise date and the exercise price of the options.
(2) Reflects the difference between the closing sale price of $45.20 per share
of the Company's Common Stock on March 30, 2001, and the exercise price of
the options.
(3) Includes exercisable options for 97,708 shares which Mr. O'Malley has
assigned to a trust for the benefit of his children. Mr. O'Malley does not
have voting or investment power with respect to the shares subject to
these options.
8
Pension Plans
The Company and its participating subsidiaries sponsor a defined benefit
pension plan ("Pension Plan") and a Supplemental Executive Retirement Plan
("SERP") covering eligible employees. The SERP provides certain benefits for
Company officers that the Pension Plan is prevented from providing because of
compensation and benefits limits in the Internal Revenue Code. The Pension
Plan and the SERP are referred to together as the "Pension Program".
An officer's benefits under the Pension Program are based on his highest
average of 5 consecutive calendar years of pay over the last 10 years ("final
average pay"). Upon normal retirement at age 65, an officer participating in
the Pension Program receives a monthly benefit equal to the sum of (i) 2% of
the portion of final average pay that exceeds Social Security covered
compensation, times years of service to a maximum of 35, plus (ii) 1.35% of
the portion of final average pay that does not exceed Social Security covered
compensation, times years of service to a maximum of 35, plus (iii) 1% of
final average pay times years of service in excess of 35 years.
Early retirement benefits are available upon retirement after attaining age
55 and completing 10 years of service. There is no reduction for benefits that
begin at age 62 or later. For retired employees electing commencement between
age 55 and 62, the reduction is 5% per year for each year prior to age 62. A
retired employee may select a life annuity or one of several optional forms of
settlement.
Employees completing five years of credited service are 100% vested in their
Pension Program benefits. Messrs. O'Malley, Laborde, Currence, Rigdon, Taylor
and Lousteau, have 6, 9, 27, 24, 22 and 23 years of credited service,
respectively, under the Company's Pension Program.
The following table sets forth estimated aggregate annual benefits payable
in the form of a straight life annuity under the Pension Program upon
retirement at age 65 to persons in the remuneration and years-of-service
classifications specified. Benefits are not subject to any deduction for
Social Security or other offset amounts.
PENSION PLANS TABLE
Years of Credited Service at Retirement
Five-Year Final Average --------------------------------------------------
Earnings 15 20 25 30 35
----------------------- -------- -------- ---------- ---------- ----------
$ 400,000.............. $116,372 $155,162 $ 193,953 $ 232,744 $ 271,534
$ 500,000.............. 146,372 195,162 243,953 292,744 341,534
$ 600,000.............. 176,372 235,162 293,953 352,744 411,534
$ 700,000.............. 206,372 275,162 343,953 412,744 481,534
$1,000,000.............. 296,372 395,162 493,953 592,744 691,534
$1,300,000.............. 386,372 515,162 643,953 772,744 901,534
$1,600,000.............. 476,372 635,162 793,953 952,744 1,111,534
$1,900,000.............. 566,372 755,162 943,953 1,132,744 1,321,534
$2,200,000.............. 656,372 875,162 1,093,953 1,312,744 1,531,534
Employment Contracts
On September 27, 2000, the Company entered into an Employment Agreement (the
"Employment Agreement") with William C. O'Malley, pursuant to which Mr.
O'Malley will serve as the Chairman, President and Chief Executive Officer of
the Company through his scheduled retirement on March 28, 2002. Under the
Employment Agreement, the Company has agreed to pay Mr. O'Malley an annual
base salary of $700,000. In addition, Mr. O'Malley will be eligible for an
annual incentive bonus in accordance with the terms of the Executive Officer
Annual Incentive Plan. Under the Employment Agreement, the Company has agreed
to pay Mr. O'Malley such additional amounts as are necessary in order that his
total retirement benefits will not be less than the benefits he would have
been entitled to receive under the retirement plans of his previous employer.
9
Upon death or disability, Mr. O'Malley or his estate will be paid 50% of the
base salary that he would have been paid under the Employment Agreement for
the remaining term.
The Company entered into a Continuing Employment and Separation Agreement
with Richard M. Currence effective December 31, 2000. Under that agreement,
Mr. Currence will continue to be employed by the Company through March 31,
2003, unless terminated earlier as a result of death or by the Company for
cause, as defined in the agreement. The agreement provides for an annual
salary of $44,445 and a total bonus of $308,800 for fiscal 2001. Mr. Currence
will not be entitled to receive future bonuses. Under the agreement, Mr.
Currence began receiving monthly benefits under the Company's Supplemental
Executive Retirement Plan (the "SERP") on January 1, 2001. The SERP benefits
are calculated based upon the inclusion of service to the Company through
December 31, 2002. Mr. Currence also remains eligible to participate in
certain of the Company's benefit plans, including health, life and disability
insurance plans, and continues to accrue service under the Pension Plan.
Change of Control Agreements
The Company has in effect change of control agreements (the "Change of
Control Agreements") with each current executive officer. Mr. O'Malley's
Change of Control Agreement supersedes his employment agreement upon a change
of control of the Company.
The Change of Control Agreement for each executive officer provide for
continued employment for a two-year period following a change of control (the
"Employment Term"). Should the officer's employment be terminated during the
Employment Term for any reason other than death, disability or "Cause", as
defined, or should the officer terminate his employment for "Good Reason", as
defined, the officer will become entitled to certain benefits. The benefits
include a lump sum payment equal to three times the officer's base salary at
termination, plus a payment equal to three times the greater of the average of
his last three bonuses or the target bonus for which the officer is eligible
within the following twelve months. The Change of Control Agreements also
provide for a pro-rated bonus assuming performance at the target level for the
portion of the year prior to termination. Also, the officer will be entitled
to continued life and health insurance benefits for thirty-six months
following the date of termination. The officer will immediately become fully
vested in his benefits under each supplemental or excess retirement plan of
the Company in which the officer participated. In addition, the Company will
contribute to a trust for the officer's account an amount equal to the
additional benefits to which the officer would have been entitled under any
qualified or non-qualified defined benefit or defined contribution plan of the
Company, as if the officer had continued to participate in such plan for three
years following the change of control.
Mr. O'Malley's Change of Control Agreement provides that he is entitled to
payments related to any excise tax that arises as a result of the "excess
parachute payment" provisions of section 4999 of the Internal Revenue Code of
1986. The payments are intended to place Mr. O'Malley in the same after-tax
position as he would have been in had such excise tax not been applicable to
him. The Change of Control Agreements with the other named executive officers
provide that if the officer would be in a better after-tax position if the
benefits payable under the Change of Control Agreements were reduced to avoid
the excise tax, then a reduction will occur. Mr. O'Malley's Change of Control
Agreement also continues in effect any additional retirement, death and
disability benefits provided by an employment agreement in effect at the time
of a change of control.
10
COMPENSATION COMMITTEE REPORT
Principles of Executive Compensation
The Compensation Committee of the Board of Directors is composed of
independent Outside Directors who are responsible for Tidewater's compensation
programs. The executive compensation program is designed to help the Company
attract, motivate, and retain the executive talent that the Company needs in
order to maximize its return to shareholders. Toward that end, the Company's
executive compensation program has been structured based on the following
principles:
. Competitive Levels of Compensation--Tidewater attempts to provide its
executives with a total compensation package that, at expected levels of
performance, is competitive with those provided to executives who hold
comparable positions or have similar qualifications. Total compensation is
defined to include base salary, annual incentive bonus, long-term incentives,
and executive benefits.
The Company's philosophy is to provide a total compensation package which is
market driven. The Company determines competitive levels of compensation for
executive positions based on information drawn from compensation surveys and
proxy statements for comparable organizations. Tidewater considers market pay
data for general industry companies with comparable revenues to Tidewater and
the Value Line oilfield service peer group of companies used in the total
shareholder return graph in this proxy statement in setting competitive
compensation levels.
. Pay for Performance--Tidewater's base salary and incentive plans are
managed within a pay for performance framework. As a result, while the
expected value of an executive's compensation package may be market driven,
actual payments made to executives in a given year may be higher or lower than
competitive market rates because of Company and individual performance.
. Focus on Annual and Long Term Results--As part of its pay for performance
program, Tidewater maintains both an annual and a long-term incentive plan for
key employees. The purpose of the annual incentive plan is to reward short-
term performance that is tied to the Company's annual business objectives. The
long-term incentive plan focuses on providing stock based incentives which are
intended to be consistent with the goals of long-term shareholders.
Description of the Current Executive Compensation Program
This section describes each of the principal elements of the Company's
executive compensation program with specific reference to the objectives
discussed above. The Company's compensation program is periodically reviewed
to ensure an appropriate mix of base salary, annual incentive, and long-term
incentive within the philosophy of providing competitive total direct
compensation opportunities.
Base Salary Program. Tidewater believes that offering competitive rates of
base pay plays an important role in its ability to attract and retain
executive talent. Discretionary base salary adjustments are also made based
upon each individual employee's performance over time. Consequently, employees
with higher levels of sustained performance over time will be paid
correspondingly higher salaries. Generally, salaries for executives are
reviewed annually based on a variety of factors, including individual
performance, general levels of market salary increases, the Company's overall
financial condition and industry conditions. All of the executive officers,
except for William O'Malley, received promotional base salary increases during
fiscal year 2001, as part of an organizational restructuring.
Annual Incentive Plan. Tidewater provides an annual management incentive
plan in which all executive officers other than Mr. O'Malley participate. The
annual incentive plan is intended to attract, motivate, and retain high
quality executives by offering variable pay tied to Company and individual
performance. This program is also an important component in providing a fully
competitive compensation package to the Company's executive officers.
11
A bonus pool is established each year based on the Company's overall
performance against measures established by the Compensation Committee of the
Board of Directors. In fiscal 2001, two performance measures were considered:
(1) adjusted net income compared to the budget, and (2) return on total
capital compared to a peer group consisting of the Value Line Oilfield
Services Group and three direct competitors. As in prior years, the weight of
the adjusted net income versus budget measure was 66.67% to once again
underscore the Company's emphasis on net income, and the weight of the return
on total capital measure was maintained at 33.33%.
For fiscal 2001, the Company reached the maximum award level for adjusted
net income as compared to the budget and exceeded the target for return on
total capital. As a result, the overall company performance measures generated
a bonus pool from which payouts were made. Individual awards from the
established bonus pool are approved by the Compensation Committee. The Chief
Executive Officer provides advice to the Committee for specific individual
awards. Individual awards from the pool are based on a combination of
objective performance criteria (such as operating margins, business unit
performance, and the attainment of safety goals), as well as discretionary
evaluation of individual employee performance. The Chief Executive Officer
participates in a separate Executive Officer Annual Incentive Plan, which is
described below under "2001 Chief Executive Officer Compensation."
Long-Term Incentive Plan. In recent years, Tidewater has provided long-term
incentives in the form of stock options to its executives. Stock options are
intended to reward participants for generating appreciation in the Company's
stock price through their individual performance. Stock options granted during
the last fiscal year were granted at the fair market value on the date of
grant. All stock options have a term of 10 years and vest one-third per year
commencing one year following the grant date.
Tidewater's overall stock option grant levels generally are established by
considering industry conditions and market data on grant levels. Individual
grants are based on a subjective evaluation of level of responsibility,
individual performance, and the expected value of future service to the
Company.
2001 Chief Executive Officer Compensation
During fiscal 2001, William C. O'Malley served as Chief Executive Officer
pursuant to an employment contract entered into in September 2000 with a term
ending with the date of his planned retirement in March 2002. The employment
contract continued Mr. O'Malley's annual base salary at $700,000. At the March
29, 2001, Compensation Committee meeting, in recognition of his service to the
Company, a $50,000 base salary increase was given to Mr. O'Malley for the
coming fiscal year, bringing his new base salary to $750,000.
In addition, under the terms of the Executive Officer Annual Incentive Plan,
Mr. O'Malley was eligible for an annual incentive award for fiscal 2001. This
plan provides for payment of a variable bonus contingent upon achievement of
certain Company performance goals. For fiscal 2001, the performance measures
were: 1) adjusted net income versus budget; 2) return on total capital as
compared to a peer group consisting of the Value Line Oilfield Services Group
and three direct competitors; and 3) safety performance. The actual amount of
the incentive award is dependent upon the attainment of corporate performance
in each of these three criteria. The target payout is 43% of base salary; the
maximum payout is 143% of base salary. For fiscal 2001, Company performance
exceeded the target for the return on total capital and safety measures, and
achieved the maximum award levels for adjusted net income as compared to the
budget. As a result, the overall Company performance measures generated a fund
from which $950,000 was awarded to Mr. O'Malley.
In fiscal 2001, Mr. O'Malley was granted stock options to purchase 50,000
shares of Common Stock based upon the Committee's subjective evaluation of Mr.
O'Malley's performance during the last fiscal year. The options vest one-third
per year beginning one year following grant, but will vest in full upon
retirement at age 65 or older. In recognition of Mr. O'Malley's planned
retirement in 2002, the Committee also took action to allow these and
previously granted stock options to remain exercisable for five years after
Mr. O'Malley's retirement, but no later than ten years after grant.
12
$1 Million Pay Deductibility Cap
Section 162(m) of the Internal Revenue Code limits the tax deductibility by
the Company of compensation, other than performance-based compensation, in
excess of $1 million paid to each of its most highly compensated executive
officers. Although the aggregate of Mr. O'Malley's salary and bonus for fiscal
2001 exceeded $1 million, Mr. O'Malley's bonus paid through the Executive
Officer Annual Incentive Plan qualified as performance-based compensation and
therefore was deductible by the Company. Stock options also qualify as
performance-based and are excluded in calculating the $1 million limit of
Section 162(m).
The Compensation Committee intends to continue to establish executive
officer compensation programs that will maximize Tidewater's income tax
deduction, assuming the Committee determines that such actions are consistent
with its philosophy and in the best interest of Tidewater and its
shareholders. However, from time to time, the Committee may award compensation
that is not fully tax deductible if the Committee determines that such award
is consistent with its philosophy and in the best interest of Tidewater and
its shareholders.
Compensation Committee:
Robert H. Boh, Chairman
Arthur R. Carlson
Lester Pollack
J. Hugh Roff, Jr.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is composed of three
directors, all of whom the Board believes are independent under the rules of
the New York Stock Exchange. The responsibilities of the Audit Committee are
set forth in its Charter, which was adopted by the Board and is attached as
Exhibit A. The Audit Committee oversees the Company's financial reporting
process on behalf of the Board of Directors. Management has the primary
responsibility for the financial statements and the Company's reporting
process including the systems of internal controls.
In fulfilling its oversight responsibilities, the Audit Committee reviewed
and discussed the Company's financial statements with management and the
Company's independent auditors. In addition, the Audit Committee has discussed
with the independent auditors the matters required by Statement on Auditing
Standards No. 61 (Communications with Audit Committees). The independent
auditors also provided to the Audit Committee the written disclosures required
by Independence Standards Board Statement No. 1 (Independence Discussions with
Audit Committees), and the Audit Committee discussed with the independent
auditors their independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the year ended March 31, 2001, for filing with the Securities
and Exchange Commission. The Audit Committee and the Board have also approved,
subject to shareholder ratification, the selection of the Company's
independent auditors for fiscal year 2002.
Audit Committee:
Paul W. Murrill, Chairman
Jon C. Madonna
Donald G. Russell
13
PERFORMANCE GRAPH
The following graph compares the change in the cumulative total shareholder
return on Company shares with the cumulative total return of the Standard &
Poor's 500 Stock Index and the cumulative total return of the Value Line
Oilfield Services Group Index over the last five fiscal years. The graph
assumes the investment of $100 on April 1, 1996, at closing prices on March
31, 1996, and the reinvestment of dividends. The Value Line Oilfield Services
Group consists of 20 companies.
Fiscal Year Ending March 31
1996 1997 1998 1999 2000 2001
-------------------------------------------------------------------------------------------
Tidewater Inc. 100 122 118 71 89 129
-------------------------------------------------------------------------------------------
S&P 500 100 119 177 210 247 194
-------------------------------------------------------------------------------------------
Peer Group 100 140 194 133 202 190
14
INTEREST IN CERTAIN TRANSACTIONS
Related Party Transactions
During fiscal 2001, the Company contracted with Bollinger Shipyards, Inc.
("Bollinger Shipyards") for repair and storage of vessels owned by the Company
for an aggregate cost of approximately $1,366,000. The contracts for the
repair and storage services were awarded to Bollinger Shipyards on the basis
of competitive bidding and/or space availability. Donald T. Bollinger is the
Chairman and Chief Executive Officer of Bollinger Shipyards and a Director of
the Company. In the opinion of management, all of the Company's transactions
with Bollinger Shipyards were on terms that were usual, customary, and no less
favorable to the Company than would be available from unaffiliated parties.
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 beneficial owners of more than 10% of the
Common Stock to file certain beneficial ownership reports with the SEC. To the
Company's knowledge, based on the Company's review of copies of reports
received by the Company and on written representations by certain reporting
persons that no reports on Form 5 were required, the Company believes that
during fiscal year 2001 all Section 16(a) filing requirements applicable to
its officers, directors and 10% stockholders were complied with in a timely
manner.
PROPOSAL TO APPROVE 2001 STOCK INCENTIVE PLAN
(PROPOSAL 2)
General
The Board of Directors of the Company believes that the continued growth of
the Company depends significantly upon the efforts of its officers, directors
and key employees, and that such individuals are best motivated to put forth
maximum effort on behalf of the Company if they own an equity interest in the
Company and can participate in the long-term growth and financial success of
the Company. In accordance with this philosophy, the Board of Directors has
adopted the 2001 Stock Incentive Plan (the "Plan") and has directed that it be
submitted for approval by the stockholders at the Annual Meeting. The
principal features of the Plan are summarized below.
Purpose of the Proposal
The Board of Directors is committed to creating and maintaining a
compensation system based to a significant extent on grants of equity-based
incentive awards. Only approximately 5,000 shares of Common Stock will remain
available for issuance under the Company's 1997 Stock Incentive Plan (the
"1997 Plan") after the Annual Meeting, and the Board is proposing approval of
the Plan to allow for the future grant of stock options and other forms of
equity compensation. The Board believes that approval of the Plan will 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.
Terms of the Plan
Administration of the Plan. The Compensation Committee of the Board or a
sub-committee of the Compensation Committee (the "Committee") 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. With respect to awards to participants not subject
to Section 16 of the Securities Exchange Act of 1934 or Section 162(m) of the
Internal Revenue Code of 1986 (the "Code"), the Committee may delegate its
authority to appropriate officers of the Company.
15
Eligibility. Officers and other key employees of the Company will be
eligible to receive awards ("Incentives") under the Plan when designated by
the Committee. There are approximately 7 officers and 35 key employees of the
Company and its subsidiaries who may be expected to participate in the Plan.
In addition, directors of the Company who are not employees of the Company
("Outside Directors") may be granted non-qualified stock options under the
Plan on an annual basis. There are currently eight Outside Directors.
Shares Issuable through the Plan. A total of 2,850,000 Common Shares are
authorized to be issued under the Plan. In addition, the 5,169 shares that
remain available for grant under the 1997 Plan may be granted in the future
under the Plan, as may shares that are represented by currently outstanding
awards under the 1997 Plan that are forfeited, expire or are cancelled in the
future by their terms.
The closing sale price of a share of Common Stock, as quoted on the New York
Stock Exchange on June 6, 2001 was $45.49.
Limitations and Adjustments to Shares Issuable Through the Plan. Incentives
relating to no more than 500,000 shares of Common Stock may be granted to a
single participant in one calendar year and no more than 300,000 shares of
Common Stock may be issued as restricted stock or other stock-based awards
during the life of the Plan.
For purposes of determining the maximum number of shares available for
delivery under the Plan, shares 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 2,850,000
shares may be delivered upon the 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 be
deemed to have been delivered under the Plan for purposes of the 2,850,000
share limit applicable to incentive stock options.
Proportionate adjustments will be made to all share limitations provided in
the Plan, including the number of shares issuable through the Plan and shares
subject to outstanding Incentives, in the event of any recapitalization,
reclassification, stock dividend, stock split, combination of shares or other
change in the 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. In the event of any merger,
consolidation or reorganization of the Company, there will be substituted for
each of the shares of Common Stock then subject to the Plan, the number and
kind of shares of stock, other securities or property (including cash) to
which the holders of the shares of Common Stock will be entitled pursuant to
the transaction.
Amendments to the Plan. The Board may amend or discontinue the Plan at any
time. However, the shareholders 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 Committee may grant non-qualified stock options or
incentive stock options to purchase shares of Common Stock. The 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 in the case of a stock option granted in substitution of
an outstanding award of a company acquired by the Company or with which the
Company combines. The term of an option will also be determined by the
Committee; provided that the term of
16
an incentive stock option may not exceed 10 years. The Committee may
accelerate the exercisability of any stock option at any time.
The option exercise price may be paid (a) in cash; (b) in shares of Common
Stock, subject to certain limitations; (c) in a combination of cash and Common
Stock; (d) through a "cashless" exercise arrangement with a broker approved in
advance by the Committee; or (e) in any other manner authorized by the
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 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").
Restricted stock must vest over a minimum restricted period of three years,
except that if vesting of the shares is subject to the attainment of specified
performance goals, vesting over a period of one year or more is permitted.
Incremental vesting of shares at intervals during the three-year and one-year
periods is permitted. All shares of restricted stock will be subject to such
restrictions as the 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 restricted stock agreement and the Plan, a
participant receiving restricted stock shall have all of the rights of a
shareholder as to such shares.
Other Stock-Based Awards. The Plan also authorizes the 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 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. The Committee may grant other
stock-based awards for an aggregate of up to 100,000 shares without vesting
requirements. All additional grants must vest over a period of no less than
three years, except that a vesting period of at least one year is permitted if
the award vests based upon the achievement of performance goals. Incremental
vesting of shares at intervals during the three-year and one-year periods is
permitted.
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) of the Code, which protects the Company's
tax deduction for the income the participant recognizes on the stock option.
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, the Company together
with its subsidiaries, a division or a subsidiary: earnings per share, return
on assets, an economic value added measure, shareholder 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 Committee, relative to internal goals,
or relative to levels attained in prior years.
The 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 Committee and described in the applicable Incentive
agreement or an amendment thereto.
17
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 lapse and all
performance criteria and other conditions relating to the payment of
Incentives will generally be deemed to be achieved or waived. In addition, in
the event of a tender offer or exchange offer, all options shall become fully
vested and exercisable, all restrictions or limitations on any Incentive will
lapse and all performance criteria and other conditions relating to the
payment will be deemed waived for a 30-day period. After the 30-day period,
any options not exercised and any shares not tendered or exchanged will again
be subject to the terms and conditions applicable prior to the tender offer or
exchange offer.
Loans to Participants. The Plan permits loans on certain terms to Plan
participants in the maximum amount of the aggregate option exercise price and
maximum tax liability on the option exercises, but only in connection with a
change of control of the Company in which the participant's employment will be
terminated and the participant will be precluded from selling shares of Common
Stock.
Transferability of Incentives. The Incentives awarded under the Plan may not
be transferred except (a) by will; (b) by the laws of descent and
distribution; (c) pursuant to a domestic relations order; or (d) 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 immediate family members, if permitted by the 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 have the
Company withhold, from the shares the participant would otherwise receive,
shares of Common Stock 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 Committee's right of
disapproval.
Grant of Options to Outside Directors. The Plan permits the grant each year
to each Outside Director of options to acquire up to 5,000 shares of Common
Stock. The exact number of options that the Outside Director will receive will
be set from time to time by the Committee.
The options granted to Outside Directors generally become exercisable six
months 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 due to death or disability, options granted under
the Plan that have become exercisable at the time of death or disability must
be exercised within two years from the date of termination of Board service.
In the event of retirement from the Board on or after reaching age 65 or after
completing five years of service, exercisable 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, exercisable options must be exercised within one year. Options
that have not become exercisable at the time of termination of Board service
will be forfeited.
Awards To Be Granted
The grant of awards under the Plan is entirely in the discretion of the
Committee. Because benefits under the Plan will depend on the Committee's
actions, it is not possible to determine at this time the benefits that
officers, directors and key employees will receive if the Plan is approved by
the 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.
18
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 Common Stock acquired and the
aggregate fair market value of the 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 an
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 an applicable holding period 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
stock option, except where the employee disposes of the shares received upon
exercise before the expiration of an applicable holding period.
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 applicable holding period, 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 in control of the Company, the exercisability or vesting
of an Incentive is accelerated, any excess on the date of the change in
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 in 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.
This summary of federal income tax consequences of non-qualified and
incentive stock options does not purport to be complete. Reference should be
made to the applicable provisions of the Code. There also may be state and
local income tax consequences applicable to transactions involving options.
Vote Required
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented at the Annual Meeting and entitled to vote is
required for approval of the Plan.
19
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE APPROVAL OF THE PROPOSED 2001 STOCK INCENTIVE PLAN.
PROPOSAL FOR THE RATIFICATION OF
SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL 3)
Subject to ratification by the shareholders, the Board of Directors has
reappointed Ernst & Young LLP as independent auditors to audit the financial
statements of the Company for the fiscal year ending March 31, 2002. Proxies
solicited hereby will be so voted unless stockholders specify otherwise in
their proxies. The affirmative vote of the holders of a majority of the Common
Stock present in person or by proxy at the meeting and entitled to vote is
required for approval of this Proposal.
Audit Fees
The aggregate fees billed by Ernst & Young LLP for professional services
rendered for the audit of the annual financial statements of the Company for
2001 and the reviews of the financial statements included in the quarterly
reports of the Company for 2001 were $288,000.
All Other Fees
The aggregate fees billed for all other services rendered by Ernst & Young
LLP for 2001 were $391,000, including audit related services of $151,000.
Audit related services include fees for audits of subsidiaries, foreign
statutory audits, and accounting consultations on accounting standards or
specific transactions. Other fees were primarily related to tax consulting
services. No fees were paid related to financial information systems design
and implementation services.
Representatives of the firm of Ernst & Young LLP are expected to be present
at the Annual Meeting and will have an opportunity to make a statement if they
so desire and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 2002.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission and the Bylaws of the Company.
Should a stockholder intend to present a proposal at the Annual Meeting to
be held in 2002, under Securities and Exchange Commission rules, it must be
received by the Secretary of the Company (at 601 Poydras Street, Suite 1900,
New Orleans, Louisiana 70130) not less than 120 days in advance of June 21,
2002, in order to be included in the Company's Proxy Statement and form of
proxy relating to that meeting.
The Company's Bylaws provide that in addition to any other applicable
requirements for business to be properly brought before the Annual Meeting by
a stockholder, the stockholder must give timely notice in writing to the
Secretary. To be timely, a stockholder's notice must be delivered or mailed to
and received at the principal executive offices of the Company not less than
75 days nor more than 100 days prior to the anniversary date of the
immediately preceding Annual Meeting, provided that in the event that the
Annual Meeting is called for a date more than 50 days prior to such
anniversary date, notice by the stockholder, in order to be timely, must be
20
so received not later than the close of business on the 10th day following the
day on which such notice of the date of the meeting was mailed or public
disclosure of the date of the meeting was made, whichever occurs first. The
Bylaws provide that a stockholder's notice to the Secretary must set forth
among other things, specified information as to the matters to be brought
before the meeting and as to the stockholder making the proposal. This
requirement does not preclude discussion by any stockholder of any business
properly brought before the Annual Meeting in accordance with such procedures.
The Bylaws further provide that a stockholder of the Company entitled to vote
for the election of Directors may make nominations of persons for election to
the Board at a meeting of stockholders by complying with required notice
procedures. Such nominations shall be made pursuant to notice in writing to the
Secretary, which must be delivered or mailed to and received at the principal
executive offices of the Company not less than 75 days nor more than 100 days
prior to the anniversary date of the immediately preceding Annual Meeting,
provided that in the event the Annual Meeting is called for a date more than 50
days prior to such anniversary date, notice by the stockholder in order to be
timely must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
public disclosure of the date of the meeting was made, whichever occurs first.
Such stockholder's notice to the Secretary must set forth among other things,
specified information as to the nominees and as to the stockholder making the
nomination. The Company may require any proposed nominee to furnish such
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a Director of the Company.
OTHER MATTERS
The Board of Directors knows of no business, other than that described above,
that will be presented to the meeting but, should any other matters properly
arise before the meeting, the persons named in the enclosed proxies will vote
the proxies in accordance with their best judgment.
By Order of the Board of Directors
/s/ Cliffe F. Laborde
Cliffe F. Laborde
Executive Vice President, Secretary
and General Counsel
New Orleans, Louisiana
June 21, 2001
PLEASE COMPLETE AND RETURN YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
STOCKHOLDERS CAN ALSO CALL IN THEIR VOTE BY TOUCHTONE TELEPHONE OR SEND IT OVER
THE INTERNET USING THE INSTRUCTIONS ON THE PROXY CARD.
21
Exhibit A
AUDIT COMMITTEE CHARTER
PURPOSE
The primary purpose of the Audit Committee (the "Committee") is to assist
the Board of Directors (the "Board") in fulfilling its responsibility to
oversee management's conduct of the Company's financial reporting process,
including:
. the financial reports and other financial information provided by the
Company to any governmental or regulatory body, the public or other
users thereof;
. the Company's systems of internal accounting and financial controls;
. the annual independent audit of the Company's financial statements; and
. the Company's legal compliance and ethics programs as established by
management and the Board.
The Committee's job is one of oversight and it recognizes that the Company's
management is responsible for preparing the Company's financial statements and
that the outside auditors are responsible for auditing those financial
statements. Additionally, the Committee recognizes that financial management,
including the internal audit staff, as well as the outside auditors, have more
time, knowledge and more detailed information on the Company than do Committee
members. Consequently, in carrying out its oversight responsibilities, the
Committee is not providing any expert or special assurance as to the Company's
financial statements or any professional certification as to the outside
auditors' work.
In discharging its oversight role, the Committee is empowered to investigate
any matter that may come to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain
outside counsel, auditors or other experts for this purpose. Any person or
firm retained by the Committee may be discharged only by the Committee. Fees
and expenses for such services shall be established and approved by the
Committee and paid by the Company.
The Board and the Committee are in place to represent the Company's
shareholders; accordingly, the outside auditors are ultimately accountable to
the Board and the Committee.
The Committee shall review the adequacy of this Charter on an annual basis.
ORGANIZATION AND ADMINISTRATION
Membership
The Committee shall be comprised of not less than three members of the
Board, and the Committee's composition will meet the requirements of the Audit
Committee Policy of the New York Stock Exchange. Accordingly, all of the
members will be directors:
. who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
. who are financially literate or who become financially literate within
a reasonable period of time after appointment to the Committee.
In addition, at least one member of the Committee will have accounting or
related financial management expertise.
22
Appointment and Term
At its meeting next following the Company's Annual General Meeting, the
Board shall appoint, by a majority vote, the members of the Committee with one
of such members being designated as the chairperson of the Committee. Each
member of the Committee so appointed shall serve for a term of one year or
until his/her successor is duly appointed and qualified.
Any vacancy on the Committee may be filled by a majority vote of the Board.
If at anytime the number of members of the Committee is less than three (3),
the Board shall appoint, by a majority vote, a sufficient number of new
members to bring the minimum membership of the Committee to at least three
(3).
Quorum and Voting
A majority of the members of the Committee shall constitute a quorum. Each
member of the Committee is entitled to one vote. The affirmative vote of a
majority of the quorum shall be required to adopt and/or approve any matter.
KEY RESPONSIBILITIES
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. These functions are set
forth as a guide with the understanding that the Committee may diverge from
this guide as appropriate given the circumstances.
. The Committee shall review with management and the outside auditors the
audited financial statements to be included in the Company's Annual
Report on Form 10-K to be filed with the Securities and Exchange
Commission (or the Annual Report to Shareholders if distributed prior
to the filing of Form 10-K) and review and consider with the outside
auditors the matters required to be discussed by Statement of Auditing
Standards ("SAS") No. 61, as it may be modified or supplemented.
. The Committee shall discuss with management and the outside auditors
the quality and adequacy of the Company's internal controls.
. The Committee shall discuss with the outside auditors the auditors'
judgment about the quality, not just the acceptability, of the
Company's accounting principles as applied in its financial statements
and as selected by management.
. The Committee shall:
. request from the outside auditors annually, a formal written
statement delineating all relationships between the auditors and
their related entities and the Company and its related entities
consistent with Independence Standards Board Standard Number 1, as
it may be modified or supplemented;
. discuss with the outside auditors any such disclosed relationships
and their impact on the outside auditors' independence; and
. recommend, when necessary, that the Board take appropriate action in
response to the outside auditors' report to satisfy itself of the
auditors' independence.
. The Committee, subject to any action that may be taken by the full
Board, shall have the ultimate authority and responsibility to
recommend to the full Board for ratification by shareholders the
selection and, where appropriate, replacement of the outside auditors.
. The Committee shall review and approve annually the scope and cost of
audit and non-audit services to be performed by the outside auditors.
. The Committee shall review and approve annually the scope of work to be
performed by internal auditors, and shall review with the Company's
internal auditors their findings and recommendations.
23
. The Committee shall review annually management's programs governing
code of conduct, conflicts of interest, legal and environmental
compliance.
. The Committee shall prepare annually its report to be included in the
Company's proxy statement pursuant to Item 306 of Regulation SK, as it
may be modified or supplemented.
. The Committee shall review and approve all changes in accounting
principles other than those changes in accounting principles mandated
by newly-adopted authoritative accounting pronouncements.
. The Committee shall concur with the appointment or replacement of the
Company's senior internal auditor.
. The Committee shall review annually expense accounts of members of
executive management of the Company.
2730-PS-01
24
Appendix A to Proxy Statement
TIDEWATER INC.
2001 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the 2001 Stock Incentive Plan (the "Plan") of
Tidewater Inc. ("Tidewater") is to increase shareholder value and to advance the
interests of Tidewater and its subsidiaries (collectively, the "Company") by
furnishing stock-based economic incentives (the "Incentives") designed to
attract, retain and motivate key employees, officers and directors and to
strengthen the mutuality of interests between such employees, officers and
directors and Tidewater's shareholders. Incentives consist of opportunities to
purchase or receive shares of common stock, $.10 par value per share, of
Tidewater (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 Tidewater owns (directly or indirectly) within the
meaning of Section 425(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 Tidewater 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.
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. Directors who are not
also employees of the Company ("Outside Directors") may receive awards under the
Plan only as specifically provided in Section 9 hereof.
3. ELIGIBLE PARTICIPANTS. Key employees and officers of the Company
(including officers who also serve as directors of 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
1
Value (as defined below). Outside Directors may participate in the Plan only as
specifically provided in Section 9 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
10.5, the maximum number of shares of Common Stock that may be delivered to
participants and their beneficiaries under the Plan shall be equal to the sum of
(a) 2,850,000 shares of Common Stock (b) any shares of Common Stock available
for future awards under the Company's 1997 Stock Incentive Plan (the "Prior
Plan") as of July 27, 2001; and (c) any shares of Common Stock that are
represented by awards under the Prior Plan that are forfeited, expire or are
cancelled without delivery of shares of Common Stock or which result in the
forfeiture of shares of Common Stock back to the Company.
5.2. SHARE COUNTING. To the extent any shares of Common Stock
covered by a stock option are not delivered to a participant or beneficiary
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 NUMBER OF SHARES. Subject to Section 10.5, 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 2,850,000 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 price 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 500,000.
2
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 300,000 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 Tidewater. 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 10.5; 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 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 10.5.
6.3. DURATION AND TIME FOR EXERCISE. The term of each stock option
shall be determined by the Committee. 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 10.11.
6.4. 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 by (a) cash; (b) uncertified
or certified 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) 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.
3
6.5. 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. Unless sooner exercised, all incentive stock options shall
expire no later than ten years after the date of grant.
D. 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.
E. 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 Tidewater 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 officers and key employees 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) of the Code ("Section 162(m)"), it must be
granted subject to the attainment of performance goals as described in Section
7.2 below and meet the additional requirements imposed by Section 162(m).
7.2 PERFORMANCE-BASED RESTRICTED STOCK. To the extent that
restricted stock granted under the Plan is intended to qualify as "performance-
based compensation" under Section 162(m), the performance goals pursuant to
which the restricted stock shall vest shall be any or a combination of the
following performance measures applied to the Company, Tidewater, a division or
a subsidiary: earnings per share, return on assets, an economic value added
measure,
4
shareholder 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. If the performance-based restricted stock is intended to qualify as
performance-based compensation under Section 162(m), the Committee may not waive
any of the pre-established performance goal objectives, except for an automatic
waiver under Section 10.10 hereof, or as may be provided by the Committee in the
event of death or disability.
7.3. 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 or more
is permitted, with incremental vesting of portions of the award over the one-
year 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 10.3 and under the conditions described in Section 10.10
hereof.
7.4. 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 Tidewater Inc. 2001 Stock
Incentive Plan (the "Plan"), and an agreement entered into between the
registered owner and Tidewater Inc. thereunder. Copies of the Plan and the
agreement are on file at the principal office of the Company.
7.5. 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.
7.6. 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 10.5 due to a recapitalization, merger or other change in
capitalization.
5
7.7. 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.
7.8. RIGHTS AS A SHAREHOLDER. 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 shareholder 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. The Committee may grant to
eligible participants "Other Stock-Based Awards," which shall consist of awards,
other than options or restricted stock provided for 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 shareholder, 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 meet the additional requirements
imposed thereby.
8.2 PERFORMANCE-BASED OTHER STOCK-BASED AWARDS. Any grant of an Other
Stock-Based Award that is intended to qualify as "performance-based
compensation" under Section 162(m) shall be conditioned on the achievement of
one or more performance goals. The performance goals pursuant to which the Other
Stock-Based Award shall vest shall be any or a combination of the following
measures applied to the Company, Tidewater, a subsidiary or a division: earnings
per share, return on assets, an economic value added measure, shareholder
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. For grants of
Other Stock-Based Awards intended to qualify as "performance-based
compensation," the grants of Other Stock-Based Awards and the establishment of
performance measures shall be made during the period required under Section
162(m).
6
8.3 Limitations. Other Stock-Based Awards granted under this Section
8 shall be subject to vesting periods that are equivalent in length to the
Restricted Periods for restricted stock described in Section 7.3 hereof, except
that the Committee may make special awards under this Section 8 with respect to
an aggregate of no more than 100,000 shares of Common Stock, as adjusted under
Section 10.5, which special awards shall not be subject to the minimum vesting
period requirements described in Section 7.3.
9. Stock Options for Outside Directors.
9.1 GRANT OF OPTIONS. During the period beginning on the day
following the 2001 annual meeting of stockholders and ending on the day of the
2002 annual meeting of stockholders and during each period between annual
meetings thereafter, for as long as the Plan remains in effect and shares of
Common Stock remain available for issuance hereunder, each Outside Director may
be granted non-qualified stock options to purchase up to 5,000 shares of Common
Stock, the exact number of which shall be set by the Committee.
9.2 EXERCISABILITY OF STOCK OPTIONS. The stock options granted to
Outside Directors under this Section 9 shall be exercisable six months after the
date of grant and shall expire no later than ten years following the date of
grant.
9.3 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 6.4 hereof.
9.4 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, to the extent otherwise exercisable at the time of
termination of Board service, within one year from termination of Board service;
provided, however, that
A. In the event of termination of Board service as a result of
death or disability, the stock options must be exercised within two years
from the date of termination of Board service; and
B. 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 must be exercised within five
years from the date of termination of Board service;
and further provided, that no stock options may be exercised later than ten
years after the date of grant.
7
10. GENERAL.
10.1. DURATION. Subject to Section 10.9, 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 or 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.
10.2. 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, if permitted by the Committee
and so provided in the Incentive Agreement or an amendment thereto; 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 Immediate Family Members, or entities in which Immediate
Family Members are the sole owners, members or beneficiaries, as appropriate,
are the sole partners, (iii) to a limited liability company in which Immediate
Family Members, or entities in which 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 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.
10.3. EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH. Except as provided
in Section 9.4 with respect to Outside Directors, in the event that a
participant ceases to be an employee of 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. The Committee has complete
authority to modify the treatment of an Incentive in the event of termination of
employment of a participant by means of an amendment to the Incentive Agreement.
Consent of the participant to the modification is required only if the
modification materially impairs the rights previously provided to the
participant in the Incentive Agreement.
10.4. ADDITIONAL CONDITION. 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
8
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.
10.5. ADJUSTMENT. In the event of any merger, consolidation or
reorganization of the Company with any other corporation or corporations, there
shall be substituted for each of the shares of Common Stock then subject to the
Plan, including shares subject to restrictions, options or achievement of
performance objectives, the number and kind of shares of stock, other securities
or property (including cash) to which the holders of the shares of Common Stock
are entitled pursuant to the transaction. 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 share
issuances imposed by Section 5.3 hereof 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.
10.6. 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 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.
9
10.7. 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.
10.8. DEFERRAL PERMITTED. Payment of an Incentive may be deferred
at the option of the participant if permitted in the Incentive Agreement.
10.9. 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 shareholders, (i) increase, subject to
adjustments permitted herein, the maximum number of shares of Common Stock
that may be issued through the Plan, (ii) materially increase the benefits
accruing to participants under the Plan or (iii) materially expand the
classes of persons eligible to participate in this Plan, or
B. materially impair, without the consent of the recipient, an
Incentive previously granted.
10.10. CHANGE OF CONTROL; TENDER OFFER OR EXCHANGE OFFER.
A. Notwithstanding any other provision of the Plan (or any
provision of any agreement with respect to any grant hereunder),
immediately prior to any Change of Control of the Company (as defined in
Section 10.10(C) hereof), all stock options (whether non-qualified or
incentive and whether granted to an employee or to an Outside Director)
which are then outstanding hereunder shall become fully vested and
exercisable and all restrictions and limitations on shares of restricted
stock or Other Stock-Based Awards then outstanding hereunder shall
automatically lapse and all performance criteria and other conditions
relating to the payment of Incentives shall automatically be deemed to be
achieved or waived by the Company. 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 shareholders. To the
extent, if any, required by section 422(d) of the Code, incentive stock
options which become exercisable immediately prior to a Change of Control
pursuant to this Section 10.10(A) shall thereby become non-qualified stock
options. Notwithstanding any other provision of the Plan, including,
without limitation, Section 10.10(B) hereof (or any provision of any
agreement with respect to any grant hereunder), (i) any stock option which
becomes exercisable pursuant to this Section 10.10(A) shall remain
exercisable until the earlier of the end of the option term or the lapse of
the option, and (ii) any lapse and deemed waiver of restrictions and
limitations on any shares of restricted stock and any Other Stock-Based
Awards pursuant
10
to this Section 10.10(A) shall be a permanent lapse and deemed waiver of
such restrictions and limitations.
B. If any corporation, person or other entity (other than the
Company) makes a tender offer or exchange offer for shares of the Common
Stock pursuant to which purchases are made (an "Offer"), then from and
after the date of the first purchase of the Common Stock pursuant to the
Offer (the "Acceleration Date"), all outstanding options shall
automatically become fully exercisable, all restrictions or limitations on
any Incentives shall lapse and all performance criteria and other
conditions relating to the payment of Incentives shall be deemed to be
achieved or waived by the Company, without the necessity of any action by
any person, for a period of 30 calendar days following the Acceleration
Date. Subject to the other provisions of this Section 10.10, following the
expiration of the 30-day period, any options not exercised and any shares
of Common Stock issued hereunder not tendered or exchanged shall again be
subject to the terms and conditions applicable prior to the Offer.
C. As used in this Section 10.10, `Change of Control' shall
mean:
(i) the acquisition by any `Person' (as defined in Section
10.10(D) hereof) of `Beneficial Ownership' (as defined in Section
10.10(D) hereof) of 30% or more of the outstanding shares of the
Common Stock, or 30% or more of the combined voting power of the
Company's then outstanding securities; provided, however, that for
purposes of this subsection (C)(i), the following shall not constitute
a Change of Control:
(a) any acquisition (other than a `Business
Combination' (as defined in Section 10.10(C)(iii) hereof) which
constitutes a Change of Control under Section 10.10(C)(iii)
hereof) of Common Stock directly from the Company,
(b) any acquisition of Common Stock by the Company or
its subsidiaries,
(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
pursuant to a Business Combination which does not constitute a
Change of Control under Section 10.10(C)(iii) hereof; or
(ii) individuals who, as of the date of adoption of the Plan
by the Board (the "Adoption Date"), constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to the Adoption Date whose election, or
nomination for election by the Company's shareholders,
11
was approved by a vote of at least a majority 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
(iii) consummation of a reorganization, merger or
consolidation (including a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company), or sale or other
disposition of all or substantially all of the assets of the Company
(a `Business Combination'), in each case, unless, immediately
following such Business Combination,
(a) the individuals and entities who were the
Beneficial Owners of the Company's outstanding Common Stock and
the Company'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 Post-Transaction Corporation
(as defined in Section 10.10(D) hereof), 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 the Company, the Post-Transaction Corporation or
any subsidiary of either corporation) Beneficially Owns, directly
or indirectly, 30% or more of the then outstanding shares of
common stock of the corporation resulting from such Business
Combination or 30% 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, providing for such
Business Combination; or
(iv) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
D. As used in Section 10.10(C) hereof, the following words or
terms shall have the meanings indicated:
12
(i) Affiliate: `Affiliate' (and variants thereof) shall
mean a Person that controls, or is controlled by, or is under common
control with, another specified Person, either directly or indirectly.
(ii) Beneficial Owner: `Beneficial Owner' (and variants
thereof), with respect to a security, shall mean a Person who,
directly or indirectly (through any contract, understanding,
relationship or otherwise), has or shares (a) the power to vote, or
direct the voting of, the security, and/or (b) the power to dispose
of, or to direct the disposition of, the security.
(iii) Person: `Person' shall mean a natural person or
company, 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.
(iv) Post-Transaction Corporation: Unless a Change of
Control includes a Business Combination (as defined in Section
10.10(C)(iii) hereof), `Post-Transaction Corporation' shall mean the
Company after the Change of Control. If a Change of Control includes
a Business Combination, `Post-Transaction Corporation' shall mean the
corporation resulting from the Business Combination unless, as a
result of such Business Combination, an ultimate parent corporation
controls the Company or all or substantially all of the Company's
assets either directly or indirectly, in which case, `Post-Transaction
Corporation' shall mean such ultimate parent corporation.
10.11. DEFINITION OF FAIR MARKET VALUE. Whenever "Fair Market Value"
of Common Stock shall be determined for purposes of this Plan, it shall be the
closing sale price on the consolidated transaction reporting system for New York
Stock Exchange issues on the date of reference for a share of the Common Stock,
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.
10.12 LOANS TO OPTIONEES. In the event of a Change of Control of the
Company, as defined in Section 10.10, in connection with which a participant's
employment with the Company will be terminated and the participant is precluded
for any reason from selling shares of Common Stock, the Company shall, in
connection with the exercise of an option, if requested by the participant,
extend a loan to the participant in the maximum amount of the exercise price of
the options to be exercised, plus the maximum tax liability that may be incurred
in connection with the option exercise. Any such loan shall be unsecured, shall
be on market terms and shall be payable in full no later than thirty days after
the termination of the period during which the participant is precluded from
selling shares of Common Stock. Any participant to whom a loan is extended
hereunder shall, if requested by the Company, agree in writing not to sell
shares of Common Stock for such period as shall be requested, it being
understood that the Company's request that the participant not sell shares of
Common Stock shall only be invoked to
13
the extent necessary to preserve or recognize pooling-of-interests accounting
treatment, tax-free reorganization status, or comparable corporate benefits from
making such a request.
This Plan is executed effective the _____ day of _____________, 2001.
TIDEWATER INC.
By:
----------------------------------
Cliffe F. Laborde
Executive Vice President,
Secretary and General Counsel
14
P R O X Y
TIDEWATER, INC.
The undersigned appoints William C. O'Malley and Robert H. Boh as proxies, each
with power to act alone or by substitution, to vote all shares of the
undersigned at the Annual Meeting of Stockholders of Tidewater Inc. to be held
on July 26, 2001, and any adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NOT
DIRECTED, FOR EACH NOMINEE AND FOR ALL PROPOSALS LISTED HEREIN, AND, AS SAID
PROXIES DEEM ADVISABLE, ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING. RECEIPT OF THE NOTICE OF MEETING AND PROXY STATEMENT IS HEREBY
ACKNOWLEDGED. THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED.
SEE REVERSE SIDE. If you wish to vote in accordance with the Board of Directors'
recommendations, just sign on the reverse side. You need not mark any boxes.
SEE SEE
REVERSE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
VOTE BY TELEPHONE VOTE BY INTERNET
It's fast, convenient, and immediate! It's fast, convenient, and
your vote is immediately
confirmed and posted.
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683).
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy Statement and Proxy 1. Read the accompanying Proxy Statement and
Card. Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/tdw
3. Enter your 14-digit Voter Control Number located on 3. Enter your 14-digit Voter Control Number located on your Proxy
your Proxy Card above your name. Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/tdw anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
[2730 - TIDEWATER, INC.] [FILE NAME: ZTW12A.ELX] [VERSION - (3)] [06/04/01]
[orig. 05/31/01] DETACH HERE
ZTW12A
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE.
IF NO DIRECTION IS MADE, THE SHARES WILL BE VOTED IN FAVOR OF THE PROPOSALS SET
FORTH BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED
BELOW AND FOR PROPOSALS 2 AND 3.
FOR AGAINST ABSTAIN
1. To elect directors 2. To approve the Tidewater Inc. [ ] [ ] [ ]
2001 Stock Incentive Plan.
Nominees: (01) Paul W. Murrill,
(02) Lester Pollack, and 3. To ratify the selection of [ ] [ ] [ ]
(03) J. Hugh Roff, Jr. Ernst & Young LLP as
Independent auditors.
FOR ALL [ ] [ ] WITHHELD
NOMINEES FROM ALL 4. Such other matters as may properly
NOMINEES come before the meeting or any adjournment thereof.
[ ] __________________________
For all nominees except
as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please vote, date, sign and promptly return this proxy in the enclosed return
envelope which is postage prepaid if mailed in the United States.
Please sign exactly as your name appears hereon. If the stock is issued in the
names of two or more persons, each of them should sign the proxy. If the proxy
is executed by a corporation, it should be signed in the corporate name by an
authorized officer. When signing as attorney, executor, administrator,
trustee, or guardian, or if any other representative capacity, give full title
as such.
[2730 - TIDEWATER, INC. SAVINGS PLAN] [FILE NAME: ZTD33B.ELX] [VERSION - (1)]
[05/31/01] [ORIG. 05/31/01]
ZTD33B DETACH HERE
VOTING INSTRUCTIONS VOTING INSTRUCTIONS
TIDEWATER SAVINGS PLAN
AND TIDEWATER INC. GRANTOR STOCK TRUST
The undersigned directs the Trustees of the Tidewater Savings Plan (the
"Savings Plan") and the Tidewater Inc. Grantor Stock Trust (the "Grantor Trust")
to vote as designated herein the shares of Tidewater Inc. Common Stock held in
the Savings Plan and the Grantor Trust with respect to which the undersigned is
entitled to direct the vote under the terms of the Savings Plan and the Grantor
Trust at the Annual Meeting of Stockholders of the Company to be held on July
26, 2001, and any adjournment thereof (the "Meeting"). The undersigned
acknowledges receipt of the Company's Proxy Statement for the Meeting. The
Trustees are further authorized to vote, in their discretion, upon such other
business as may properly come before the Meeting.
SEE SEE
REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE REVERSE
SIDE SIDE
DIRECT YOUR VOTE DIRECT YOUR VOTE
BY TELEPHONE BY INTERNET
It's fast, convenient, and immediate! It's fast, convenient, and your vote
is immediately confirmed and posted.
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683).
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy Statement and Voting 1. Read the accompanying Proxy Statement and
Instruction Card. Voting Instruction Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/tdw
3. Enter your 14-digit Voter Control Number located on 3. Enter your 14-digit Voter Control Number located on your
your Voting Instruction Card above your name. Voting Instruction Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/tdw anytime!
DO NOT RETURN YOUR VOTING INSTRUCTION CARD IF YOU ARE DIRECTING YOUR VOTE BY
TELEPHONE OR INTERNET
[2730 - TIDEWATER, INC. savings plan] [FILE NAME: ZTD33A.ELX] [VERSION - (3)]
[06/04/01] [orig. 05/31/01]
DETACH HERE
ZTD33A
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE.
IF NO DIRECTION IS MADE, THE SHARES WILL BE VOTED IN FAVOR OF THE PROPOSALS SET
FORTH BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED
BELOW AND FOR PROPOSALS 2 AND 3.
FOR AGAINST ABSTAIN
1. To elect directors 2. To approve the Tidewater Inc. 2001 [ ] [ ] [ ]
Stock Incentive Plan.
Nominees: (01) Paul W. Murrill, (02) Lester
Pollack, and (03) J. Hugh Roff, Jr.
FOR [ ] [ ] WITHHELD 3. To ratify the selection of Ernst & [ ] [ ] [ ]
ALL FROM ALL Young LLP as Independent auditors.
NOMINEES NOMINEES
4. In the Trustees' discretion to vote upon such other
business as may properly come before the Meeting.
[ ] ______________________________________
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please vote, date, sign and promptly return this proxy in the enclosed
return envelope which is postage prepaid if mailed in the United States.