UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

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Bristow Group Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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BRISTOW GROUP INC.
2000 W. SAM HOUSTON PKWY. S., SUITE 1700
HOUSTON, TEXAS 77042

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

The Annual Meeting of Stockholders of Bristow Group Inc. (the “Company”) will be held at the Houston Marriott Westchase Hotel, 2900 Briarpark Drive, Houston, Texas on August 2, 2007, at 8:00 a.m. for the following purposes:

 

 

The Board of Directors has fixed the close of business on June 25, 2007, as the record date for determination of stockholders entitled to notice of and to vote at the meeting.

 

STOCKHOLDERS WHO DO NOT ELECT TO ATTEND IN PERSON ARE REQUESTED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD USING THE ENCLOSED SELF-ADDRESSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU CAN ALSO CALL IN YOUR VOTE BY TOUCHTONE TELEPHONE OR SEND IT OVER THE INTERNET BY USING INSTRUCTIONS ON THE PROXY CARD.

 

By Order of the Board of Directors

 

Randall A. Stafford
Vice President and General Counsel,
Corporate Secretary

 

Houston, Texas

July 2, 2007

 

I.  GENERAL INFORMATION

 

Why did I receive this Proxy Statement?

 

The Board of Directors of Bristow Group Inc. (the “Company” or “we” or “us”) is soliciting proxies to be voted at the Annual Meeting of Stockholders (“Annual Meeting”) to be held on August 2, 2007, and at any adjournment of the Annual Meeting. When the Company asks for your proxy, we must provide you with a proxy statement that contains certain information specified by law. We are mailing this proxy statement and the enclosed proxy card to stockholders on approximately July 2, 2007. All proxies in the enclosed form that are properly executed and returned to us prior to the Annual Meeting will be voted at the Annual Meeting, and any adjournments thereof, as specified by the stockholders in the proxy or, if not specified, as set forth in this proxy statement.

 

What will the stockholders vote on at the Annual Meeting?

 

The stockholders will vote on the following:

 

 

Will there be any other items of business on the agenda?

 

We do not expect that any other items of business will be considered because the deadlines for stockholder proposals and nominations have already passed. Nonetheless, in case there is an unforeseen need, the accompanying proxy gives discretionary authority to the persons named on the proxy with respect to any other matters that might be brought before the meeting. Those persons intend to vote that proxy in accordance with their best judgment.

 

Who is entitled to vote?

 

Stockholders as of the close of business on June 25, 2007 (the “Record Date”) may vote at the Annual Meeting. You have one vote for each share of common stock you held on the Record Date. As of the Record Date we had 23,648,054 shares of common stock outstanding.

 

How many votes are required for the approval of each item?

 

The nominees for director receiving a plurality of the votes cast will be elected. Abstentions and instructions to withhold authority to vote for one or more of the nominees and broker nonvotes (as defined below) will result in those nominees receiving fewer votes but will not count as votes “against” a nominee.

 

Approval of the amendment of the Certificate of Incorporation to increase the number of authorized shares of common stock and to eliminate the Series B Convertible Preference Shares will require the affirmative vote of the holders of at least a majority of the shares of common stock outstanding on the Record Date. Abstentions and broker non-votes will be counted as present for the purposes of determining if a quorum is present, but will have the same effect as a vote against this amendment of the Certificate of Incorporation. A failure to vote shares of common stock will also have the effect of a vote against this amendment of the Certificate of Incorporation.

 

Approval of the amendment of the Bristow Group Inc. 2007 Long Term Incentive Plan will require the affirmative vote of the holders of at least a majority of the votes cast on the proposal, provided that the total number of votes cast on the proposal represents a majority of the votes entitled to be cast on the proposal. Abstentions and broker nonvotes will not affect the outcome of the vote on the proposal as long as holders of a majority of shares of common stock cast votes on the proposal.

 

The approval of KPMG LLP (“KPMG”) as the Company’s independent auditors for the fiscal year ending March 31, 2008 will be ratified if the votes cast for the proposal exceed the votes cast against the proposal. Abstentions and broker nonvotes will not count either for or against the proposal.

 

What are “Broker Nonvotes”?

 

If your shares are held by a broker, the broker will ask you how you want your shares to be voted. If you give the broker instructions, your shares must be voted as you direct. If you do not give instructions, one of two things can happen, depending on the type of proposal. For some proposals, such as election of directors and the approval and ratification of the Company’s independent auditors, the broker may vote your shares at its discretion. But for other proposals, such as the proposals to approve the amendment of our Certificate of Incorporation and the Bristow Group Inc. 2007 Long Term Incentive Plan, the broker may not vote your shares at all. When that happens, it is called a “broker nonvote.” Broker nonvotes are counted in determining the presence of a quorum at the Annual Meeting, but they are not counted for purposes of calculating the votes on particular matters considered at the Annual Meeting.

 

How do I vote by proxy?

 

If you are a stockholder of record, you may vote your proxy by marking your enclosed proxy card to reflect your vote, signing and dating each proxy card you receive and returning each proxy card in the enclosed self-addressed envelope. The shares represented by your proxy will be voted according to the instructions you give on your proxy card. In addition, you may vote your shares by telephone or via the Internet by following the instructions provided on the enclosed proxy card.

 

How do I revoke my proxy?

 

You have the right to revoke your proxy at any time before the meeting by notifying our Secretary in writing or by delivering a later-dated proxy. If you are a stockholder of record, you may also revoke your proxy by voting in person at the meeting.

 

How do I vote in person?

 

If you are a stockholder of record, you may vote your shares in person at the meeting. However, we encourage you to vote by proxy card, even if you plan to attend the meeting.

 

How do I submit a stockholder proposal or nominate a director for the 2008 Annual Meeting?

 

If a stockholder wishes to have a proposal considered for inclusion in next year’s proxy statement, he or she must submit the proposal in writing so that we receive it by March 5, 2008. However, if the date of next year’s Annual Meeting is more than 30 days from the first anniversary of this year’s Annual Meeting, notice is required a reasonable time before we print and mail our proxy materials. We will notify you of this deadline in a Quarterly Report on Form 10-Q or in another communication to you. Proposals should be addressed to our Secretary, 2000 W. Sam Houston Pkwy. S., Suite 1700, Houston, Texas 77042. In addition, our bylaws provide that any stockholder wishing to nominate a candidate for director or to propose any other business at next year’s Annual Meeting must also give us written notice not earlier than the close of business on the 90th day prior to and not later than the close of business on the 60th day prior to the first anniversary of this year’s Annual Meeting. However, if the date of the Annual Meeting is more than 30 days before or more than 60 days after such anniversary date, notice is required not earlier than 90 days prior to the Annual Meeting and not later than the later of 60 days prior to the Annual Meeting or the 10th day after publicly disclosing the meeting date. That notice must provide certain other information as described in the bylaws. Copies of the bylaws are available to stockholders free of charge upon request to our Secretary.

 

II.  CORPORATE GOVERNANCE

 

Corporate Governance Guidelines

 

The Board has adopted Corporate Governance Guidelines that govern the structure and functioning of the Board and set out the Board policies on a number of governance issues. A copy of our Corporate Governance Guidelines is posted on our website, www.bristowgroup.com, under the “Governance” caption and is available free of charge on request to the Company’s Secretary at 2000 W. Sam Houston Pkwy. S., Suite 1700, Houston, Texas 77042.

 

Director Independence

 

Our Corporate Governance Guidelines require that a majority of the Board consist of independent directors. In general, the Corporate Governance Guidelines require that an independent director must have no material relationship with the Company, directly or indirectly, except as a director. The Board determines independence on the basis of the standards specified by the New York Stock Exchange (the “NYSE”) and other facts and circumstances the Board considers relevant.

 

To assist it in determining the independence of our directors, the Board has adopted certain categorical standards. A copy of the standards is posted on our website, www.bristowgroup.com, under the “Governance” caption and is available free of charge on request to the Company’s Secretary at 2000 W. Sam Houston Pkwy. S., Suite 1700, Houston, Texas 77042. Our categorical standards are consistent with the standards set forth in the NYSE listing standards.

 

The Board has reviewed any business transactions and charitable relationships between the Company and each director standing for election to determine compliance with the categorical standards described above and to evaluate whether there are any other facts or circumstances that might impair the independence of a director. Based on that review, our Board has determined that Messrs. Amonett, Bolden, Cannon, Flick, Knudson, Tamblyn and Waldrup are independent.

 

Term of Office; Mandatory Retirement

 

All of our directors stand for election at each Annual Meeting.

 

Under our Corporate Governance Guidelines:

 

 

Executive Sessions

 

The Company’s Corporate Governance Guidelines provide that, at least twice a year, at regularly scheduled meetings, the Company’s non-management directors shall meet in executive session without any management participation. In addition, if any of the non-management directors are not independent under the applicable rules of the NYSE, then independent directors meet separately at least once a year. Normally, the Chairman of the Board will preside at executive sessions, but, if the roles of Chairman and Chief Executive Officer are combined, the non-management directors will select another director to serve as Lead Director to preside at such sessions. If an additional meeting of independent non-management directors is necessary, and the Chairman of the Board is not independent, then one of the independent non-management directors will be selected as Lead Director to preside at that meeting. In either case, the Lead Director of any such meeting will be, in rotation, the then-

Chairman of one of the committees of the Board of Directors required to be composed solely of independent directors, in the following order: Audit, Compensation, and Corporate Governance and Nominating Committees.

 

Stockholders and other interested parties who wish to communicate with the Lead Director of executive sessions or with the non-management directors as a group should send their correspondence to: Lead Director or Bristow Group Inc. Non-Management Directors, as the case may be, c/o Secretary, 2000 W. Sam Houston Pkwy. S., Suite 1700, Houston, Texas 77042. Communications so addressed and clearly marked as “Stockholder Communications” will be forwarded by our Secretary unopened to, as the case may be, the Chairman of the Board or the then-serving Lead Director (being the independent director scheduled to preside at the next meeting of the non-management or independent directors).

 

Code of Ethics and Business Conduct

 

The Board has adopted a Code of Business Integrity for directors and employees (the “Code”). Our Code applies to all directors and employees, including the chief executive officer, the chief financial officer, and all senior financial officers. Our Code covers topics including, but not limited to, conflicts of interest, insider trading, competition and fair dealing, discrimination and harassment, confidentiality, compliance procedures and employee complaint procedures. Our Code is posted on our website, www.bristowgroup.com, under the “Code of Integrity” caption and is available free of charge on request to our Secretary at 2000 W. Sam Houston Pkwy. S., Suite 1700, Houston, Texas 77042.

 

The Corporate Governance Committee will review any issues under the Code involving an executive officer or director and will report its findings to the full Board. The Board does not envision that any waivers of the Code will be granted, but, should a waiver be granted for an executive officer or director, it will also be promptly disclosed on our website.

 

Director Selection

 

The Board has adopted criteria for the selection of directors that describe the qualifications the Corporate Governance and Nominating Committee must evaluate and consider looks for in director candidates. Such criteria include (i) experience serving as chief executive officer or other senior corporate executive, (ii) international business experience, (iii) energy or oil service company experience and (iv) finance, accounting or banking experience. These criteria are included in the Corporate Governance Guidelines which are posted on our website.

 

The Corporate Governance and Nominating Committee proposes nominees for director and acts pursuant to its charter, which is posted on our website, www.bristowgroup.com, under the “Governance” caption and is available free of charge on request to our Secretary at 2000 W. Sam Houston Pkwy. S., Suite 1700, Houston, Texas 77042. It is the policy of the Corporate Governance and Nominating Committee to consider director candidates recommended by its employees, directors, stockholders, and others, including search firms.

 

The Corporate Governance and Nominating Committee has sole authority to retain and terminate any search firm used to identify candidates for director and has sole authority to approve the search firm’s fees and other retention terms.

 

If a stockholder wishes to recommend a director for nomination, he or she should follow the procedures set forth below for nominations to be made directly by a stockholder. In addition, the stockholder should provide such other information as such stockholder may deem relevant to the Corporate Governance and Nominating Committee’s evaluation. All recommendations, regardless of the source of identification, are evaluated on the same basis as candidates recommended by our directors, chief executive officer, other executive officers, third-party search firms or other sources.

 

Our bylaws permit stockholders to nominate directors for election at an annual stockholders meeting regardless of whether such nominee is submitted to and evaluated by the Corporate Governance and Nominating Committee. To nominate a director using this process, the stockholder must follow procedures set forth in our bylaws. Those procedures require a stockholder wishing to nominate a candidate for director at next year’s Annual Meeting to give us written notice not earlier than the close of business on the 90^th day prior to the anniversary date of the immediately preceding Annual Meeting and not later than the close of business on the 60^th day prior to the

anniversary date of the immediately preceding Annual Meeting. However, if the date of the Annual Meeting is more than 30 days before or more than 60 days after such anniversary date, notice is required not earlier than 90 days prior to the Annual Meeting and not later than the later of 60 days prior to the Annual Meeting or the 10^th day after we publicly disclose the meeting date. The notice to the Secretary must include the following:

 

 

We did not receive any nominations for director from stockholders for our 2007 Annual Meeting.

 

Director Attendance

 

The Board of Directors held nine meetings during the past fiscal year. During this period, no incumbent director attended fewer than 75% of the aggregate of (i) the total number of meetings of the Board of Directors during the period in which he was a director and (ii) the total number of meetings held by all committees on which he served during the period in which he was a director except for Mr. Bolden, who was unable to attend one regularly scheduled board meeting due to a prior commitment scheduled before he became a director and one teleconference board meeting held on short notice.

 

It is our policy that each director of the Company is expected to be present at each Annual Meeting of Stockholders, absent circumstances that prevent attendance. We facilitate director attendance at the Annual Meetings of Stockholders by scheduling such meetings in conjunction with regular meetings of directors. All of our directors attended last year’s Annual Meeting.

 

Communication with Directors

 

The Board of Directors maintains a process for stockholders and interested parties to communicate directly with the Board.

 

All communications should be delivered in writing addressed to the Corporate Secretary at 2000 West Sam Houston Pkwy. S., Houston, Texas 77042. The correspondence should be addressed to the appropriate party, namely: Bristow Group Inc. Board of Directors, Bristow Group Inc. Nominating and Governance Committee, Bristow Group Inc. Audit Committee, Bristow Group Inc. Executive Committee, Bristow Group Inc. Compensation Committee or the individual director designated by full name as it appears in the Company’s most recent proxy statement. All communications must be accompanied by the following information:

 

 

For more detail, refer to our Company Policy for Communications with the Board of Directors posted on our website, www.bristowgroup.com, under the caption “Governance”.

 

III.  COMMITTEES OF THE BOARD OF DIRECTORS

 

Our Board of Directors has the following committees, the membership of which as of the Record Date, is set forth below. The charters of our Executive, Audit, Compensation and Corporate Governance and Nominating Committees are posted on our website, www.bristowgroup.com, under the “Governance” caption and are available free of charge on request to our Secretary at 2000 W. Sam Houston Pkwy. S., Suite 1700, Houston, Texas 77042.

 

 

 

 

Executive Committee

 

In the intervals between meetings of the Board of Directors, to the extent it is not possible or feasible to have a meeting of the Board of Directors, the Executive Committee exercises the powers of the Board of Directors in directing the management of the business affairs of the Company, except in those matters which are expressly delegated to another committee of the Board of Directors or matters which, under the General Corporation Law of Delaware, the Company’s Certificate of Incorporation or the Company’s Bylaws cannot be delegated by the Board to a committee.

 

Audit Committee

 

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the Company’s independent registered public accountants. The Audit Committee also monitors the integrity of the Company’s financial statements and the independence and performance of the Company’s auditors and reviews the Company’s financial reporting processes. The Audit Committee reviews and reports to the Board of Directors the scope and results of audits by the Company’s independent registered public accountants and the Company’s internal auditing staff and reviews the audit and other professional services rendered by the independent registered public accountants. It also reviews with the independent registered public accountants the adequacy of the Company’s system of internal controls. It reviews transactions between the Company and the Company’s directors and officers, the Company’s policies regarding those transactions and compliance with the Company’s business ethics and conflict of interest policies.

 

The Board of Directors requires that all members of the Audit Committee meet the financial literacy standard required under the NYSE rules and that at least one member qualifies as having accounting or related financial management expertise under the NYSE rules. In addition, the SEC has adopted rules requiring that the Company disclose whether or not the Company’s audit committee has an “audit committee financial expert” as a member. An “audit committee financial expert” is defined as a person who, based on his or her experience, satisfies all of the following attributes:

 

 

The person is to further have acquired such attributes through one or more of the following:

 

 

The Board of Directors has reviewed the criteria set by the SEC and determined that all four members meet the financial literacy standards required by NYSE rules and that Mr. Tamblyn qualifies under NYSE rules as having accounting or related financial management expertise. The Board of Directors has also determined that Mr. Tamblyn qualifies as an “audit committee financial expert”. Mr. Tamblyn is an accountant by education, worked for twenty years as a certified public accountant and served as the Chief Financial Officer of Tidewater Inc. for over 14 years.

 

Compensation Committee

 

The Compensation Committee, among other matters: approves, either on its own or with the Company’s independent directors, the compensation of the Chief Executive Officer; evaluates the performance of the Chief Executive Officer against approved performance goals and other objectives and reports its findings to the Board; reviews and makes recommendations to the Board with respect to non-Chief Executive Officer compensation; reviews and makes recommendations with respect to changes in incentive compensation plans, equity-based plans and director compensation; and prepares a report to be included in the Company’s annual proxy statement.

 

The Compensation Committee consists entirely of “non-employee directors,” as defined by Rule 16b-3 under the Securities and Exchange Act of 1934, as amended, all of whom satisfy the requirements of an “outside director” for purposes of Section 162(m) of the Internal Revenue Code.

 

Corporate Governance and Nominating Committee

 

The Corporate Governance and Nominating Committee assist the Board of Directors in:

 

 

Compensation Committee Interlocks and Insider Participation

 

No member of the compensation committee was, during the fiscal year 2007, an officer or employee of Bristow; was formerly an officer of Bristow; or had any relationship requiring disclosure by Bristow under any paragraph of Item 404 (Transaction with Related Persons, Promoters and Certain Control Persons).

 

IV.  ELECTION OF DIRECTORS

 

The Board of Directors has fixed the number of directors at ten. The term of office of all of our present directors will expire no later than the day of the Annual Meeting upon the election of their successors. The directors elected at the Annual Meeting will serve until their respective successors are elected and qualified or until their earlier death, resignation or removal.

 

Unless authority to do so is withheld by the stockholder, each proxy executed and returned by a stockholder will be voted for the election of the nominees hereinafter named. Directors having beneficial ownership derived from presently existing voting power of approximately 7% of our common stock as of the Record Date have indicated that they intend to vote for the election of all nominees hereinafter named. If any nominee withdraws or for any reason is unable to serve as a director, the persons named in the accompanying proxy either will vote for such other person as the Board may nominate or, if the Board does not so nominate such other person, will not vote for anyone to replace the nominee. Our management knows of no reason that would cause any nominee hereinafter named to be unable to serve as a director or to refuse to accept nomination or election.

 

The nominees for director receiving a plurality of the votes cast will be elected. The proxyholder named in the accompanying proxy card will vote FOR each of the nominees named herein unless otherwise directed therein. Abstentions, instructions to withhold authority to vote for one or more of the nominees and broker non-votes will result in those nominees receiving fewer votes, but will not be counted as a vote AGAINST the nominee.

 

The Board of Directors recommends that stockholders vote FOR the election to the Board of each of the nominees named below.

 

Information Concerning Nominees

 

Our present Board of Directors proposes for election the following nine nominees for director. Each of the nominees named below is currently a director of the Company and each was elected at the Annual Meeting of Stockholders held on August 3, 2006. Robert W. Waldrup, a director since 2001, has advised the Board of Directors that he will resign at the end of this term and is therefore not standing for reelection. The Governance and Nominating Committees are currently actively seeking a replacement for Mr. Waldrup. Our board expects to appoint a new director before the end of 2007.

 

Thomas N. Amonett, age 63, and resident of Houston, Texas, joined our Board in February 2006. Mr. Amonett has served as President, Chief Executive Officer and a director of Champion Technologies, Inc. since 1999. Champion Technologies, Inc. is an international provider of specialty chemicals and related services primarily to the oilfield production sector. Mr. Amonett serves as Chairman of the Board of TODCO, where he serves on the Corporate Governance and Executive Compensation Committees, and a director of Reunion Industries, Inc., where he serves on the Compensation and Audit Committees. Mr. Amonett served as director of Stelmar Shipping Ltd. from 2002 to January 2005 and served on the Audit Committee during his tenure, serving as chairman of the Audit Committee from 2003 to 2005.

 

Charles F. Bolden, Jr., age 60, and a resident of Houston, Texas, joined our Board at our last annual meeting. Mr. Bolden was a space shuttle pilot astronaut for the National Aeronautics and Space Administration (NASA) for 13 years. Mr. Bolden retired from the United States Marine Corps on January 1, 2003 after serving more than 34 years. Following his retirement from military service, Mr. Bolden was the President and Chief Operating Officer of American PureTex Water Corporation and PureTex Water Works from January to April 2003. He was Senior Vice President at TechTrans International, Inc. from April 2003 until January 1, 2005. Mr. Bolden is currently Chief Executive Officer of JackandPanther LLC, a privately-held military and aerospace consulting firm. He is also a director of GenCorp Inc., Palmetto GBA, Blue Cross Blue Shield of South Carolina and Marathon Oil Corporation where he also serves on the Audit Committee.

 

Peter N. Buckley(1), age 64, and a resident of London, England, currently serves as the Chairman of Caledonia Investments plc (a U.K. listed investment trust company). Mr. Buckley joined our Board in 1997 in connection with our investment in Bristow Aviation Holdings Limited where he continues to serve as a director. Mr. Buckley serves as Chairman of the Cayzer Trust Company Ltd. He also serves as a director of Close Brothers Group plc. He has served as a member of our Executive Committee since 2000.

 

Stephen J. Cannon, age 53, and a resident of Southlake, Texas. Mr. Cannon joined our Board in 2002. He was the President and Chief Executive Officer of DynCorp International LLC, a technology company with annual revenues in excess of $2 billion from February 2005 to July 2006 and President from January 2000 to February 2005. Mr. Cannon worked at DynCorp for approximately 25 years and served in a variety of other capacities, including General Manager of its technical service subsidiary and Vice President of its aerospace technology subsidiary. He has served as a member of our Audit Committee since 2002 and served on our Corporate Governance and Nominating Committee during 2004 and 2005.

 

Jonathan H. Cartwright(1), age 53, is a resident of London, England, where he is the Finance Director of Caledonia Investments plc. He, too, joined our board in 1997 in conjunction with our investment in Bristow Aviation Holdings Limited where he continues to serve as a director. Mr. Cartwright joined Caledonia in 1989 and has served as its Financial Director since 1991. From 1984 until 1989, Mr. Cartwright held a variety of positions at Hanson PLC, including Group Financial Controller and director of various subsidiaries. From 1983 to 1984, Mr. Cartwright served as Finance Director of Transworld Petroleum (U.K.) Limited. From 1980 to 1983, he served as Group Controller of Shulton (GB) Limited, a subsidiary of the American Cyanamid Group. From 1975 to 1980, Mr. Cartwright was a Chartered Accountant with Peat Marwick, a predecessor of KPMG LLP.

 

William E. Chiles, age 58, and a resident of Houston, Texas, became the President and Chief Executive Officer of our Company effective July 15, 2004. Mr. Chiles was also elected Chief Financial Officer in December 2005 following the resignation of the prior chief financial officer and served in that capacity until Mr. Elders was elected to the position in February 2006. Mr. Chiles has been a member of our Board since 2004. Prior to his employment by the Company, Mr. Chiles was employed by Grey Wolf, Inc., an onshore oil and gas drilling company traded on the American Stock Exchange, from March 2003 until June 21, 2004 as Executive Vice President and Chief Operating Officer. Mr. Chiles served as Vice President of Business Development at ENSCO International Incorporated, an offshore oil and gas drilling company listed on the New York Stock Exchange, from August 2002 until March 2003. From August 1997 until its merger into an ENSCO International affiliate in August 2002, Mr. Chiles served as President and Chief Executive Officer of Chiles Offshore, Inc. Mr. Chiles serves as a director of Basic Energy Services, Inc., a contractor for land based oil and gas services. He has served as a member of our Executive Committee since 2004. Mr. Chiles earned a B.B.A. in Petroleum Land Management from The University of Texas and an M.B.A. in Finance and Accounting with honors from Southern Methodist University, Dallas.

 

Michael A. Flick, age 59, is a resident of New Orleans, Louisiana, joined our Board in February 2006. Mr. Flick began his career in commercial banking in 1970 at First National Bank, which subsequently became a wholly owned subsidiary of First Commerce Corporation, whose shares were traded on the NASDAQ. Mr. Flick held a variety of positions at First Commerce Corporation, including Chief Financial Officer and Chief Credit Policy Officer, and retired in 1998 as the Executive Vice President and Chief Administrative Officer. He serves as a director and chairman of the Audit Committee of Community Coffee Company, a privately held company. He also

 

 

(1)  Peter N. Buckley and Jonathan H. Cartwright, directors and executive officers of Caledonia Industrial & Services Limited (“CIS”), were designated by CIS and elected to our Board of Directors in February 1997 pursuant to a Master Agreement dated December 12, 1996 among the Company, CIS and certain other persons in connection with our acquisition of 49% and other substantial interests in Bristow Aviation Holdings Limited. The Master Agreement provides that so long as CIS owns (1) at least 1,000,000 shares of common stock of the Company or (2) at least 49% of the total outstanding ordinary shares of Bristow Aviation Holdings Limited, CIS will have the right to designate two persons for nomination of our Board of Directors and to replace any directors so nominated. On December 4, 2002, CIS transferred its rights and obligations under the Master Agreement to Caledonia Investments plc. For a further discussion of this transfer, see “Other Matters”.

serves as a director and member of the audit committee of the University of New Orleans Foundation. He was chairman of its Audit Committee for five years. Mr. Flick serves on our Audit Committee and our Nominating and Governance Committee.

 

Thomas C. Knudson, age 61, is a resident of Houston, Texas. Mr. Knudson joined our Board in June 2004. Following seven years of active duty as a U.S. Naval aviator and an aerospace engineer, he joined Conoco in 1975. His diverse corporate career included engineering, operations, business development and commercial assignments across a broad spectrum of ConocoPhillips businesses, including service as the Chairman of Conoco Europe Exploration and Production. He retired from ConocoPhillips on January 1, 2004 as Senior Vice President, Human Resources, Government Affairs and Communications. Mr. Knudson is also a director and member of the Compensation Committee of NATCO Group, Inc., a leading provider of wellhead process equipment, systems and services used in the production of oil and gas and a director of Williams Partners L.P., a provider of midstream natural gas processing and transportation services. Mr. Knudson has served on our Corporate Governance and Nominating Committee since 2004 and served on our Compensation Committee from 2004 to August 2006 on our executive committee since August 2006.

 

Ken C. Tamblyn, age 64, is a resident of Folsom, Louisiana. Mr. Tamblyn joined our Board in 2002. He spent the first 20 years of his business career as a certified public accountant with Peat Marwick Mitchell & Co., a predecessor of KPMG LLP. In 1986 he joined Tidewater, Inc. as Executive Vice President and Chief Financial Officer. He served in that capacity until his retirement in August 2000. Mr. Tamblyn currently serves as a director of Gulf Island Fabrication, Inc. where he serves on the Audit Committee. Mr. Tamblyn has served on our Audit Committee since 2002 and is currently Chairman of the Committee.

 

V.  INCREASE IN AUTHORIZED SHARES

 

Amendment of Certificate of Incorporation to Increase the Number of Authorized Shares of Common Stock

 

On March 21, 2007, the Company’s Board of Directors approved resolutions proposing that the Company’s Certificate of Incorporation, as amended to date (the “Certificate of Incorporation”), be further amended to increase the number of authorized shares of common stock of the Company from 35,000,000 to 90,000,000 shares.

 

The proposed amendment would replace the first sentence of Article IV of the Certificate of Incorporation with the following sentence:

 

“1.1 Capitalization.  The corporation has authority to issue 98,000,000 shares, of which 90,000,000 shares, of the par value of $.01 each, shall be designated common stock, and of which 8,000,000 shares, of the par value of $.01 each, shall be designated Preferred Stock.”

 

Current Capital Structure

 

Under Delaware law, the Company may only issue shares of capital stock to the extent such shares have been authorized for issuance under the Certificate of Incorporation.

 

The Certificate of Incorporation currently authorizes the Company to issue 35,000,000 million shares of common stock and 8,000,000 million shares of preferred stock. As of the Record Date, 23,648,054 shares of common stock were issued and outstanding and (i) a total of 1,428,592 shares of common stock were reserved for issuance pursuant to outstanding stock options, restricted stock and restricted stock unit awards, (ii) a total of 65,000 shares of common stock were reserved for future option grants and other issuances under the Company’s 2003 Non-Qualified Stock Option Plan for Non-employee Directors and (iii) a total of 6,522,800 shares common stock were reserved for issuance upon the conversion of all of the shares of the Company’s mandatory convertible preferred stock. After taking into account such reserved shares, a balance of 3,341,333 authorized but unissued shares of common stock would be available for issuance under the Certificate of Incorporation as it now exists.

 

The Certificate of Incorporation designates 499,456.18 shares of preferred stock as Series B Convertible Preference Shares (as defined below). As of the Record Date, no Series B Convertible Preference Shares were issued and outstanding. The proposed amendment will not change the number of authorized shares of preferred stock.

 

Purpose of Authorizing Additional Shares of Common Stock

 

The number of issued and outstanding shares of common stock has increased from approximately 18,000,000 in November 1989, which is the date of the last increase in the Company’s authorized share capital to           as of the Record Date. As a result, the number of shares of common stock available for future issuance has been reduced. In this light, and although the Company has no current intent to issue shares (other than pursuant to the exercise or conversion of outstanding securities and grants under employee benefit plans), the Board of Directors deems it advisable and in the best interest of the stockholders to increase the number of shares of common stock authorized for issuance by the Company from 35,000,000 to 90,000,000 million. Having such shares available for issuance in the future would give the Company greater flexibility and would generally allow shares of common stock to be issued without the expense and delay of a special stockholders’ meeting. The additional 55,000,000 million shares of common stock to be authorized would be available for possible future stock dividends or stock splits, financings or acquisitions, employee benefit plan grants and other corporate purposes and may permit the Company to move more quickly and/or secure more advantageous terms in capital market or in acquisition transactions than would otherwise be available.

 

Immediately after the Company’s authorized share capital was increased in November 1989, the Company had approximately 18,000,000 shares of common stock issued and outstanding. Since then, the Company has issued approximately 5,648,000 shares of common stock pursuant to various benefit and incentive plans, in connection with the exercise of various warrants, and in connection with certain business acquisitions.

 

If the amendment of the Certificate of Incorporation to increase the number of authorized shares of common stock is approved by the stockholders, the Board of Directors does not intend to solicit further stockholder approval prior to the issuance of any additional shares of common stock, except as may be required by applicable law or the rules of any stock exchange or quotation system on which the common stock may be listed or quoted. The New York Stock Exchange, on which the common stock is listed, currently requires stockholder approval in certain instances, including in connection with equity compensation plans and certain transactions where the present or potential issuance of shares is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock.

 

The proposed increase in the number of authorized shares of common stock could, under certain circumstances, have an anti-takeover effect, although this is not the intention of this proposal. For example, in the event of a hostile attempt to take over control of the Company, it may be possible for the Company to endeavor to impede the attempt by issuing shares of common stock, which would dilute the voting power of the other outstanding shares and increase the potential cost to acquire control of the Company. The proposed increase in the number of authorized shares of common stock may have the effect of discouraging unsolicited takeover attempts and potentially limiting the opportunity for the Company’s stockholders to dispose of their shares at a premium, which is often offered in takeover attempts, or that may be available under a merger proposal. The proposed increase in the number of authorized shares of common stock may have the effect of permitting the Company’s current management, including the current Board of Directors, to retain its position, and place them in a better position to resist changes that stockholders may wish to make if they are dissatisfied with the conduct of the Company’s business. However, the Board of Directors is not aware of any attempt to take control of the Company, and the Board of Directors has not presented this proposal with the intent that it be utilized as a type of anti-takeover device. The Board of Directors has no current plans, commitment, arrangement, understanding or agreement regarding the issuance of the additional shares of common stock for which authorization is being sought.

 

To the extent that additional authorized shares are issued in the future, they may decrease the existing stockholders’ percentage equity ownership and, depending on the price at which they are issued, could be dilutive to the existing stockholders. The holders of common stock have no preemptive rights and the Board of Directors has no plans to grant such rights with respect to any such shares. Any newly authorized shares of common stock will have voting and other rights identical to those of the currently authorized shares of common stock.

 

If the proposed amendment of the Certificate of Incorporation to increase the number of authorized shares of common stock is adopted, it will become effective upon filing of a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware.

 

Required Vote and Board of Directors’ Recommendation

 

Approval of the amendment of the Certificate of Incorporation to increase the number of authorized shares of common stock will require the affirmative vote of the holders of at least a majority of the shares of common stock outstanding on the Record Date. The persons named in the accompanying proxy will vote in accordance with the choice specified thereon, or, if no choice is properly indicated, in favor of the adoption of the amendment of the Certificate of Incorporation to increase the number of authorized shares of common stock.

 

The Board of Directors recommends a vote FOR the adoption of the proposed amendment of the Certificate of Incorporation to increase the number of authorized shares of common stock.

 

Amendment of Certificate of Incorporation to Eliminate the Series B Convertible Preference Shares

 

On March 21, 2007, the Company’s Board of Directors approved resolutions proposing that the Certificate of Incorporation be further amended to eliminate certain provisions relating to the rights, preferences, privileges and restrictions of the Company’s nine series of convertible preference shares, Series B-1 through B-9 (collectively, the “Series B Convertible Preference Shares”).

 

The proposed amendment would delete Sections 1.2 through 2.4 of Article IV of the Certificate of Incorporation in their entirety.

 

Purpose of Elimination of Series B Convertible Preference Shares

 

The Company’s Certificate of Incorporation designates the rights, preferences, privileges and restrictions of the Class B Convertible Preference Shares. The Certificate of Incorporation, as proposed to be amended and restated, would eliminate all references to the Company’s designation of the Class B Convertible Preference Shares.

 

The Class B Convertible Preference Shares were issued in connection with a restructuring of the Company’s long-term debt and leases in December 1986 (the “Restructuring”) and the conversion of a convertible note that was issued in connection with the Restructuring. During the Company’s fiscal years ended June 30, 1989 and 1990, all of the outstanding Series B Convertible Preference Shares were converted into shares of common stock in accordance with their terms. No additional Class B Convertible Preference Shares have been issued since that time.

 

The Board of Directors does not intend to issue any Class B Convertible Preference Shares in the future and believes that the continued authorization to issue Class B Convertible Preference Shares is unnecessary.

 

If the proposed amendment of the Certificate of Incorporation to eliminate the Series B Convertible Preference Shares is adopted, it will become effective upon filing of a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware.

 

Required Vote and Board of Directors’ Recommendation

 

Approval of the amendment of the Certificate of Incorporation to eliminate the Series B Convertible Preference Shares will require the affirmative vote of the holders of at least a majority of the shares of common stock outstanding on the Record Date. The persons named in the accompanying proxy will vote in accordance with the choice specified thereon, or, if no choice is properly indicated, in favor of the adoption of the amendment of the Certificate of Incorporation to eliminate the Series B Convertible Preference Shares. Abstentions and broker non-votes will be counted as present for the purposes of determining if a quorum is present, but will have the same effect as a vote against this amendment of the Certificate of Incorporation. A failure to vote shares of common stock will also have the effect of a vote against this amendment of the Certificate of Incorporation.

 

The Board of Directors recommends a vote FOR the adoption of the proposed amendment of the Company’s Certificate of Incorporation to eliminate the Series B Convertible Preference Shares.

 

VI.  APPROVAL OF 2007 LONG TERM INCENTIVE PLAN

 

On May 3, 2007 the Board of Directors approved the establishment of the Bristow Group Inc. 2007 Long Term Incentive Plan (the “2007 Plan”) and directed that the 2007 Plan be submitted for the approval of the stockholders. The 2007 Plan appears as Appendix A to this proxy statement. The full text of the 2007 Plan is incorporated herein by reference, and the following summary is qualified in its entirety by reference to the text of the 2007 Plan. The 2007 Plan became effective on May 3, 2007 (the “2007 Plan Effective Date”) subject to the approval of the stockholders as set forth herein.

 

Under the Bristow 2004 Stock Incentive Plan (the “2004 Plan”) and the Bristow 2003 Nonqualified Plan for Non-Employee Directors (the “2003 Plan”), both plans referred to collectively as the “Existing Plans”, the Company could grant Incentive Awards with respect to an aggregate of 1,250,000 shares of common stock. As of the date hereof no shares remain available for grant under the 2004 Plan and only 65,000 shares remain available for grants under the 2003 Plan. No further Incentive Awards will be granted under the 2004 Plan. Shares subject to Incentive Awards that expire or are forfeited, terminated or otherwise cancelled or paid in cash in lieu of shares under the Existing Plans, if any, will become available for Incentive Awards under the 2007 Plan. There are currently 1,428,592 shares of our common stock reserved for issuance with respect to 878,887 unexercised options to purchase common stock, 75,300 unexercised shares of restricted stock and 474,405 unvested performance restricted stock units outstanding under the various stock incentive plans maintained by the Company excluding conditional grants made under the 2007 Plan described below. The Board of Directors believes that the adoption and approval of the 2007 Plan is necessary to allow the Company to continue to emphasize equity-based compensation in structuring compensation packages for non-employee directors, executive officers, consultants and other key employees. The Board of Directors believes that equity-based compensation is an important aspect of overall compensation that will yield the greatest benefit for the stockholders, as the value of such compensation is directly dependent on the return on stockholders’ investments.

 

In May 2007 the Company’s compensation committee authorized the Company’s annual grant of equity awards to employees under the 2004 Plan, the total of which would have exceeded the number of shares available under the 2004 Plan. Accordingly, the 29,000 employee stock options and 18,900 performance restricted stock units granted to Mr. Chiles and 4,675 of the performance restricted stock units granted to Mr. Elders were made under the 2007 Plan subject to stockholder approval of the 2007 Plan.

 

SUMMARY OF THE 2007 PLAN

 

The description set forth below summarizes the principal terms and conditions of the 2007 Plan; however, it does not purport to be complete and is qualified in its entirety by reference to the 2007 Plan. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the 2007 Plan.

 

General

 

The primary purpose of the 2007 Plan is to provide a means whereby the Company may advance the best interests of the Company and any parent or subsidiaries by providing Outside Directors, Employees and Consultants with additional incentives through the grant of Stock Options to purchase common stock of the Company, shares of Restricted Stock, Other Stock-Based Awards (payable in cash or common stock) and Performance Awards, thereby increasing the personal stake of such Outside Directors, Employees and Consultants in the continued success and growth of the Company.

 

Shares Subject to 2007 Plan

 

The number of shares of common stock reserved under the 2007 Plan and available for Incentive Awards under the 2007 Plan is 1,200,000. In addition, any grants or awards under the Existing Plans that expire or are forfeited, terminated or otherwise cancelled or that are settled in cash in lieu of shares under the Existing Plans shall be reserved and available for Incentive Awards under the 2007 Plan. Of the total amount of the shares available under the 2007 Plan, 1,200,000 shall be available for grants of Incentive Stock Options. Of the total amount of shares available under the 2007 Plan, 500,000 shall be available for grants of Incentive Awards based on common stock other than as a Stock Option or stock appreciation right (“SAR”). The number of shares of common stock that are the subject of Incentive Awards under the 2007 Plan, that are forfeited or terminated, expire unexercised, are

settled in cash in lieu of common stock or are exchanged for Incentive Awards that do not involve common stock, shall again immediately become available for Incentive Awards.

 

With respect to SARs, when a stock-settled SAR is exercised, the shares of common stock subject to the SAR Award Letter will be counted against the number of shares of common stock available for future grant or sale under the 2007 Plan, regardless of the number of shares of common stock used to settle the SAR upon exercise. shares of common stock used to pay the Exercise Price of a Stock Option or used to satisfy tax withholding obligations will not become available for future grant or sale under the 2007 Plan.

 

The number of shares available under the 2007 Plan, the limits on the number of shares available for certain types of Incentive Awards, and outstanding Incentive Awards are subject to adjustments to prevent enlargement or dilution of rights resulting from stock dividends, stock splits, recapitalization or similar transactions, or resulting from a change in applicable laws or other circumstances.

 

The following limitations shall apply to grants of Incentive Awards to Employees:

 

 

Administration

 

The 2007 Plan provides that it is to be administered by a Committee appointed by the Board of Directors consisting of not less than two directors who fulfill the “non-employee director” requirements of Rule 16b-3 under the Exchange Act, the “outside director” requirements of Code Section 162(m) and the “independent” requirement of the rules of any national securities exchange or NASDAQ, as the case may be, on which any of the securities of the Company are traded, listed or quoted, if any. The Committee may be the Compensation Committee of the Board, or any subcommittee of the Compensation Committee, provided that the members of the Committee satisfy the requirements of the previous provisions. Notwithstanding the foregoing, the term “Committee” as used in the 2007 Plan with respect to any Incentive Award for an Outside Director shall refer to the entire Board. The Committee has the full power and authority to grant to eligible persons the Incentive Awards described below. The Committee is authorized to, among other things, determine the size, duration and type, as well as terms and conditions (which need not be identical) of each Incentive Award. The terms of Incentive Awards will be reflected in an agreement between the Grantee and us. The Committee also construes and interprets the 2007 Plan and any related Award Letters. The Committee has the authority to grant Incentive Awards that comply with the performance-based requirements of Code Section 162(m). The Committee may in certain circumstances delegate any of its duties under the Plan to designated officers or other Employees. All determinations and decisions of the Committee are final, conclusive and binding on all parties.

 

Eligibility

 

All employees of the Company, its parent or any subsidiary are eligible to participate in the 2007 Plan as well as Consultants and Outside Directors.

 

Term of the 2007 Plan

 

Subject to stockholder approval as required under Code Sections 162(m) and 422, the 2007 Plan was made effective as of May 3, 2007. The 2007 Plan will remain in effect, subject to the right of the Board of Directors to terminate it earlier, until all shares of common stock subject to the 2007 Plan are purchased or acquired. However, no Incentive Awards may be granted under the 2007 Plan after the expiration of ten (10) years from the 2007 Plan Effective Date.

 

Types of Incentive Awards

 

Under the 2007 Plan, the Committee may grant Incentive Awards which may be any of the following:

 

 

Stock Options

 

Incentive Stock Options and Nonstatutory Stock Options as described below together are called “Stock Options.” The terms of each Stock Option will be reflected in a written Award Letter. Incentive Stock Options may be granted only to Employees.

 

Stock Options entitle the holder to purchase a specified number of shares of common stock at a specified Exercise Price subject to the terms and conditions of the option grant. The Exercise Price per Share of all Stock Options must be at least 100% of the Fair Market Value per share of common stock on the date of grant. The term of any Stock Option cannot exceed 10 years from the date of grant. If a Grantee owns more than 10% of the outstanding shares of common stock at the time the Grantee is granted an Incentive Stock Option, the option price per Share cannot be less than 110% of the Fair Market Value per Share on the date of grant and the term of the option cannot exceed 5 years. The Committee may not amend any Stock Option to reduce its initial Exercise Price.

 

Stock Options may be exercised by the delivery of a written or electronic notice of exercise to the Company as of a date set by the Company in advance of the effective date of the proposed exercise. The notice shall set forth the number of shares with respect to which the Stock Option is to be exercised, accompanied by full payment for the shares. The Exercise Price shall be payable to the Company in full in cash or its equivalent, or subject to prior approval by the Committee in its discretion, (i) by tendering previously acquired shares having an aggregate Fair Market Value at the time of exercise equal to the total Exercise Price, or (ii) by withholding shares which otherwise would be acquired on exercise having an aggregate Fair Market Value at the time of exercise equal to the total Exercise Price, or (iii) by a combination of (i) and (ii) above. Any payment in shares shall be effected by the surrender of such shares to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Stock Option is exercised.

 

Restricted Stock

 

A Restricted Stock award consists of a grant of common stock that is subject to a substantial risk of forfeiture and transfer restrictions until conditions established at the time of grant are satisfied. The Committee shall designate the vesting date or dates for each award of Restricted Stock, and may prescribe other restrictions, terms and conditions applicable to the vesting of such Restricted Stock. At the discretion of the Committee, the award or vesting of Restricted Stock may be conditioned upon the achievement of the performance goals described below with respect to Performance Awards. Unless otherwise specified in the Grantee’s Award Letter, each Restricted Stock Award shall constitute an immediate transfer of the record and beneficial ownership of the shares of Restricted Stock to the Grantee, subject to the satisfaction of the restrictions imposed at grant. Shares awarded pursuant to a grant of Restricted Stock may be issued in the name of the Grantee and held, together with a stock power endorsed in blank, by the Committee or the Company (or its delegates) or in trust or in escrow pursuant to an agreement satisfactory to the Committee, as determined by the Committee, until such time as the restrictions on transfer have expired. Unless otherwise designated by the Committee, the holder of Restricted Stock will have the

right to vote such shares and to exercise all of the rights, powers and privileges of a holder of shares of common stock. The Committee may also limit a holder’s right to receive dividends.

 

Performance Units and Shares and Other Stock-Based Awards

 

The 2007 Plan also authorizes the Committee to grant Performance Awards in the form of Performance Units or Performance Shares or Other Stock-Based Awards to individuals eligible to participate in the 2007 Plan.

 

Performance Awards may be granted by the Committee on such terms and conditions as determined by the Committee for a performance period. The grant, vesting or settlement of Performance Awards may, in the discretion of the Committee, be conditioned on the achievement of performance goals. For each performance period, the Committee will establish specific financial or non-financial performance goals, the number of Performance Awards and their contingent values, which values may vary depending on the degree to which such goals are met. For Performance Awards which are meant to qualify as performance-based compensation under Code Section 162(m), the Committee will establish the performance goals prior to or within 90 days of the beginning of the performance period relating to such performance goal or at such other date as may be permitted or required for the Performance Awards to qualify as performance-based compensation under Code Section 162(m), and not later than after 25% of such performance period has elapsed. For all other Performance Awards, the performance goals must be established before the end of the respective performance period. The Committee will also have the power to impose any other restrictions on Performance Awards meant to qualify as performance-based compensation under Code Section 162(m) as it may deem necessary or appropriate to ensure that such Performance Awards satisfy such requirements. The Committee may establish performance goals applicable to Performance Awards based upon performance criteria in one or more of the following categories: (i) performance of the Company as a whole, (ii) performance of a segment of the Company’s business, and (iii) individual performance and either as an absolute measure or as a measure of comparative performance relative to a peer group of companies, an index, budget, prior period, or other standard selected by the Committee. Performance criteria for the Company shall relate to the achievement of predetermined financial and operating objectives for the Company and its Subsidiaries on a consolidated basis. Performance criteria for a segment of the Company’s business shall relate to the achievement of financial and operating objectives of the segment for which the Grantee is accountable. Performance criteria means one or more of the following measures: sales, free cash flow, revenue, pre-tax or after-tax profit levels, including: earnings per share, operating earnings, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, net operating profits after tax, and net income; total stockholder return; return on assets, equity, capital or investment; cash flow and cash flow return on investment; economic value added and economic profit; growth in earnings per share, debt to equity ratio, market share, price per share of common stock, economic value added and market value added; levels of operating expense and maintenance expense or measures of customer satisfaction and customer service as determined from time to time including the relative improvement therein; safety measurements including: total recordable incident rate to labor hours ratios, lost time accidents to labor hours ratios, or flight accidents to flight hours ratios; or such similar objectively determinable financial or other measures as may be adopted by the Committee. Individual performance criteria shall relate to a Grantee’s overall performance, taking into account, among other measures of performance, the attainment of individual goals and objectives. The performance goals may differ among Grantees. Performance criteria shall be calculated in accordance with the Company’s financial statements or generally accepted accounting principles, on an operating basis, or under a methodology established by the Committee prior to the grant of the Performance Award that is consistently applied and identified. In establishing a performance goal applicable to a Performance Award, the Committee may provide that the attainment of the performance goal will be measured by appropriately adjusting the evaluation of performance goal achievement to exclude (i) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year, or (ii) the effect of any changes in accounting principles affecting the Company’s, a subsidiary’s or a business segment’s reported results. The Committee may reduce or eliminate the amount payable with respect to a Performance Award but, with respect to Performance Awards intended to qualify as performance-based compensation under Code Section 162(m), the Committee may not increase the amount payable except as provided in the Plan to prevent dilution in the event of certain capital adjustments including stock splits and recapitalizations. The Committee will determine whether performance goals have been achieved and, if so, the amount payable with respect to any

Performance Award. With respect to Performance Awards intended to qualify as performance-based compensation under Code Section 162(m), the Committee will certify the results of the performance goals for each performance period.

 

Other Stock-Based Awards may consist of awards that are valued, in whole or in part, by reference to, or otherwise based on, shares of common stock, including SARs. Subject to the terms of the 2007 Plan, the Committee may determine any terms and conditions of Other Stock-Based Awards; provided, however, that those Incentive Awards intended to qualify as performance-based compensation under Code Section 162(m) shall comply with the standards specified in the 2007 Plan in accordance with Section 162(m) and the regulations thereunder. At the discretion of the Committee, the award, vesting or payment of Other Stock-Based Awards may be conditioned upon the achievement of the performance goals described above with respect to Performance Awards. Payment of Other Stock-Based Awards will be in shares of common stock or other consideration, including cash, related to those Incentive Awards as the Committee determines in its discretion.

 

Termination of Employment and Change in Control

 

The 2007 Plan gives the Committee discretion to establish and include in Award Letters any acceleration of vesting or lapse of restrictions, the exercise period, the definition of disability and other terms and conditions in the event of termination of employment, death, disability or retirement. For this purpose, “employment” includes compensatory or advisory services performed as a Consultant and membership on the Board by an Outside Director. The 2007 Plan also gives the Committee discretion to establish and include in Award Letters any acceleration of vesting, lapse of restrictions and any other terms and conditions in the event of a change in control of the Company and the events that shall constitute a change in control of the Company.

 

Tax Withholding

 

The Company shall have the power and the right to deduct or withhold, or require a Grantee to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan or an Incentive Award. With respect to tax withholding required upon the exercise of Stock Options, upon the lapse of restrictions on Restricted Stock, or upon any other taxable event arising as a result of any Incentive Awards, Grantees may elect, subject to the approval of the Committee in its discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction.

 

Incentive Awards Nontransferable

 

Generally, no Incentive Award may be assigned, sold or otherwise transferred by a Grantee, other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order under Code Section 414(p). A Stock Option may be exercised during the Grantee’s lifetime only by the Grantee or the Grantee’s legal guardian. However, in the discretion of the Committee, the Award Letter for a Nonstatutory Stock Option may provide that the Nonstatutory Stock Option is transferable to members of the Grantee’s immediate family, a trust or trusts for the exclusive benefit of such immediate family members (including the Grantee), or a partnership in which such immediate family members (including the Grantee) are the only partners. The 2007 Plan contains provisions permitting such a transfer if there is no consideration for such transfer, such transfer is approved by the Committee, and such transfer is expressly provided for in the applicable Award Letter.

 

Amendment and Termination of the 2007 Plan

 

The Board may amend or terminate the 2007 Plan at any time, except that the 2007 Plan may not be modified or amended without the approval of the stockholders of the Company (within the time period required by applicable law, if any), if such amendment would:

 

 

 

Except as otherwise provided in the 2007 Plan, no termination, amendment or modification of the 2007 Plan shall adversely affect in any material way any outstanding Incentive Award previously granted to a Grantee without his or her written or electronic consent.

 

Compliance with Code Section 409A

 

To the extent that the Committee determines that any Incentive Award granted under the 2007 Plan is subject to Code Section 409A, the applicable Award Letter shall incorporate the terms and conditions necessary to avoid the consequences specified in Code Section 409A(a)(1). To the extent applicable, the 2007 Plan and Award Letters shall be interpreted and construed in compliance with Code Section 409A and Treasury Department regulations and other interpretive guidance issued thereunder. In the event that the Board determines that any Incentive Award may be subject to Code Section 409A, the Board may, without the consent of Grantees, including the affected Grantee, but subject to the stockholder approval requirements of the 2007 Plan, if applicable, adopt such amendments to the 2007 Plan and the applicable Award Letters or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Board determines are necessary or appropriate to (i) exempt the Incentive Award from Code Section 409A or (ii) comply with the requirements of Code Section 409A and Treasury Department regulations and other interpretive guidance issued thereunder.

 

Federal Income Tax Consequences of Incentive Awards Granted Under the 2007 Plan

 

THE FOLLOWING IS A SUMMARY OF THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES THAT GENERALLY WILL ARISE UNDER THE CODE WITH RESPECT TO INCENTIVE AWARDS GRANTED UNDER THE 2007 PLAN AND DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF ALL RELEVANT PROVISIONS OF THE CODE. MOREOVER, THIS SUMMARY IS BASED UPON CURRENT FEDERAL INCOME TAX LAWS UNDER THE CODE, WHICH ARE SUBJECT TO CHANGE. THE TREATMENT OF FOREIGN, STATE, LOCAL OR ESTATE TAXES IS NOT ADDRESSED. THE TAX CONSEQUENCES OF THE INCENTIVE AWARDS ARE COMPLEX AND DEPENDENT UPON EACH INDIVIDUAL’S PERSONAL TAX SITUATION. ALL GRANTEES ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS RESPECTING INCENTIVE AWARDS.

 

Incentive Stock Options.  In general, a Grantee will not recognize taxable income upon the grant or a “qualified” exercise of any Incentive Stock Option. The Company is not entitled to a deduction at the time of the grant or at the time of a “qualified” exercise of any Incentive Stock Option. Instead, a Grantee will recognize taxable income with respect to Incentive Stock Options only upon the sale of shares of common stock acquired through the

“qualified” exercise of an Incentive Stock Option. The “qualified” exercise of an Incentive Stock Option, however, may subject the Grantee to the alternative minimum tax.

 

Generally, the tax consequences of selling shares of common stock acquired upon the exercise of an Incentive Stock Option will vary with the length of time that the Grantee has owned the shares of common stock at the time they are sold. If the Grantee sells shares of common stock acquired upon the “qualified” exercise of an Incentive Stock Option, which means selling the shares after having owned them for more than 2 years from the date the Incentive Stock Option was granted and 1 year from the date the Incentive Stock Option was exercised, then the Grantee will recognize long-term capital gain in an amount equal to the excess of the sale price of the shares of common stock sold over the Exercise Price. If a Grantee sells shares acquired upon the “qualified” exercise of an Incentive Stock Option for less than the Exercise Price, then the Grantee may recognize a capital loss in an amount equal to the excess of the Exercise Price over the sale price of the shares.

 

If the Grantee sells shares of common stock acquired upon the exercise of Incentive Stock Options for more than the Exercise Price prior to having owned the shares for more than 2 years from the date the Incentive Stock Option was granted and 1 year from the date the Incentive Stock Option was exercised (a “disqualifying” disposition), then the Grantee will recognize ordinary income in an amount equal to the difference between the Fair Market Value of the shares acquired on the date of exercise (or, if less, the sale price of the shares) and the Exercise Price. Any gain in excess of the taxable income portion will be taxable as long-term or short-term capital gain. The Company is generally entitled to a tax deduction at the same time and in the same amount as the ordinary income recognized by the Grantee from such disposition.

 

Nonstatutory Stock Options.  As in the case of an Incentive Stock Option, a Grantee will not recognize taxable income upon the grant of a Nonstatutory Stock Option nor will the Company be entitled to a deduction at that time. However, a Grantee who exercises a Nonstatutory Stock Option generally will recognize ordinary income in an amount equal to the excess of the Fair Market Value of the shares of common stock acquired through the exercise of the Nonstatutory Stock Option on the date the Nonstatutory Stock Option was exercised over the Exercise Price, and the Company will generally recognize a corresponding tax deduction in the same amount at the same time.

 

With respect to any shares of common stock acquired upon the exercise of a Nonstatutory Stock Option, a Grantee will have a tax basis equal to the Exercise Price plus any income recognized upon the exercise of the Nonstatutory Stock Option. Upon selling the shares, a Grantee will generally recognize a capital gain or loss in an amount equal to the difference between the sale price of the shares and the Grantee’s tax basis in the shares.

 

Cashless Exercise.  Under current rulings, if a Grantee transfers previously held shares of common stock (other than common stock acquired by exercise of an Incentive Stock Option that has not been held for the requisite holding period) in satisfaction of part or all of the Exercise Price of a Nonstatutory Stock Option or Incentive Stock Option, the Grantee will recognize income with respect to the common stock received in the manner described above, but no additional gain will be recognized as a result of the transfer of such previously held shares in satisfaction of the Exercise Price of the Nonstatutory Stock Option or Incentive Stock Option. Moreover, that number of shares of common stock received upon exercise that equals the number of shares of previously held common stock surrendered in satisfaction of the Exercise Price of the Nonstatutory Stock Option or Incentive Stock Option will have a tax basis that equals, and a holding period that includes, the tax basis and holding period of the previously held shares of common stock surrendered in satisfaction of the Exercise Price of the Nonstatutory Stock Option or Incentive Stock Option. Any additional shares of common stock received upon exercise will have a tax basis that equals the amount of cash (if any) paid by the Grantee, plus, in the case of a Nonstatutory Stock Option, the amount of ordinary income recognized by the Grantee with respect to the shares of common stock received.

 

Restricted Stock.  A Grantee will not recognize taxable income upon the grant of an award of Restricted Stock subject to forfeiture provisions and restrictions on transfer (nor will the Company be entitled to a deduction) unless the Grantee makes an election under Code Section 83(b). If the Grantee makes a Code Section 83(b) election within 30 days of the date the Restricted Stock is granted, then the Grantee will recognize ordinary income, for the year in which the award is granted, in an amount equal to the excess of the Fair Market Value of the shares of common stock at the time the award is granted over the purchase price, if any, paid for the shares of common stock. If such election is made and the Grantee subsequently forfeits some or all of the shares, then the Grantee generally

will not be entitled to any refund of taxes paid as a result of the Code Section 83(b) election, and may take a loss only with respect to the amount actually paid for the shares. If a Code Section 83(b) election is not made, then the Grantee will recognize ordinary income at the time that the forfeiture provisions or restrictions on transfer lapse, in an amount equal to the excess of the Fair Market Value of the shares of common stock at the time of such lapse over the original price paid for the shares of common stock, if any.

 

The Grantee will have a tax basis in the shares of common stock acquired equal to the sum of the price paid for the shares, if any, and the amount of ordinary income recognized at the time the Code Section 83(b) election is made or at the time the forfeiture provisions or transfer restriction lapse, as is applicable. Upon the disposition of shares of common stock acquired pursuant to an award of Restricted Stock, the Grantee will recognize a capital gain or loss in an amount equal to the difference between the sale price of the shares of common stock and the Grantee’s tax basis in the shares of common stock. This capital gain or loss will be a long-term capital gain or loss if the shares are held for more than 1 year. For this purpose, the holding period shall begin after the date on which the forfeiture provisions or restrictions lapse if a Code Section 83(b) election is not made, or on the date after the award is granted if the Code Section 83(b) election is made.

 

The Company will generally be entitled to a corresponding tax deduction at the time the Grantee recognizes ordinary income on the Restricted Stock, whether by vesting or due to a Code Section 83(b) election, in the same amount as the ordinary income recognized by the Grantee.

 

Other Stock-Based Awards.  Generally a Grantee will not recognize any taxable income upon the grant of Other Stock-Based Awards (including Performance Awards). Upon the payment of Other Stock-Based Awards, a Grantee will recognize compensation taxable as ordinary income, and the Company will be entitled to a corresponding tax deduction in the same amount and at the same time.

 

However, if the Other Stock-Based Award is settled in shares and any such shares are subject to substantial restrictions, such as a requirement of continued employment or the attainment of certain performance objectives, the Grantee will not recognize income and the Company will not be entitled to a deduction until the restrictions lapse, unless the Grantee elects otherwise by filing an election under Code Section 83(b) as described above. The amount of a Grantee’s ordinary income and the Company’s deduction will generally be equal to the Fair Market Value of the shares at the time the restrictions lapse.

 

When a Grantee is granted shares of common stock in settlement of Other Stock-Based Awards, the Grantee will have a tax basis in the shares acquired equal to the amount of ordinary income recognized. Upon the disposition of the shares of common stock acquired pursuant to Other Stock-Based Awards, the Grantee will recognize a capital gain or loss in an amount equal to the difference between the sale price of the shares of common stock and the Grantee’s tax basis in the shares.

 

Code Section 409A.  Code Section 409A generally provides that any deferred compensation arrangement which does not meet specific requirements regarding (i) timing of payouts, (ii) advance election of deferrals and (iii) restrictions on acceleration of payouts results in immediate taxation of any amounts deferred to the extent not subject to a substantial risk of forfeiture. In addition, amounts included in income under Code Section 409A are also subject to a 20% excise tax and interest. In general, to avoid a Code Section 409A violation, amounts deferred may only be paid out on separation from service, disability, death, a specified time, a change in control (as defined by the Treasury Department) or an unforeseen emergency. Furthermore, the election to defer generally must be made in the calendar year prior to performance of services, and any provision for accelerated payout other than for reasons specified by the Treasury may cause the amounts deferred to be subject to early taxation and to the imposition of the excise tax.

 

Code Section 409A is applicable to any form of deferred compensation, which is broadly defined. Code Section 409A does not apply to Incentive Stock Options, Nonstatutory Stock Options and SARs that are not discounted and Restricted Stock (provided there is no deferral of income beyond the date on which all restrictions lapse and there is no longer a risk of forfeiture). However, Code Section 409A may apply to Other Stock-Based Awards granted under the 2007 Stock Plan, including Performance Awards. Incentive Awards under the 2007 Plan that are subject to Code Section 409A are intended to satisfy the requirements of Code Section 409A.

 

Other Tax Considerations.  Upon accelerated exercisability of Stock Options and accelerated lapsing of restrictions upon Restricted Stock or other Incentive Awards due to a change in control (as defined in Code Section 280G) certain amounts associated with such Incentive Awards could, depending upon the individual circumstances of the Grantee, constitute “excess parachute payments” under the provisions of Code Section 280G. Under these provisions, the Company will be denied any deduction with respect to such excess parachute payment. In addition, a Grantee will be subject to a 20% excise tax on any “excess parachute payments” under Code Section 4999.

 

The limit on the Company’s federal income tax deduction with respect to annual compensation under Code Section 162(m) is also reduced by the amount of any excess parachute payments. Whether amounts constitute excess parachute payments depends upon, among other things, the value of the Incentive Awards accelerated and the past compensation of the Grantee.

 

Under Code Section 162(m), the Company is denied a deduction for annual compensation paid to “covered employees” (as defined in Code Section 162(m)) in excess of $1.0 million. Taxable compensation earned by “covered employees” for Options, Restricted Stock or other applicable Incentive Awards is intended to constitute qualified “performance-based compensation” which is not subject to the Code Section 162(m) limits on annual compensation. In order to qualify as “performance-based compensation” under Code Section 162(m), Stock Options and other Incentive Awards must be granted by a Committee consisting solely of two or more “outside directors” (as defined under applicable regulations) and satisfy the limit on the total number of shares of common stock that may be awarded, or the total amount of cash that may be paid, to any one Grantee during any calendar year. In addition, for Incentive Awards other than Stock Options and SARs (that are not discounted) to qualify, the grant, issuance, vesting or retention of the Incentive Award must be contingent upon satisfying one or more performance goals, as established and certified by a Committee consisting solely of two or more “outside directors.” If these requirements are met, the Company should be entitled to a tax deduction for compensation paid in the same amount as the ordinary income recognized by the covered employees without any reduction under the limitations of Code Section 162(m) on deductible compensation paid to such employees. However, the Committee may determine, within its sole discretion, to grant Incentive Awards to such covered employees that do not qualify as performance-based compensation.

 

THE FOREGOING U.S. FEDERAL INCOME TAX INFORMATION IS ONLY A SUMMARY AND DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF ALL OF THE RELEVANT PROVISIONS OF THE CODE. THE EFFECT OF ANY FOREIGN, STATE, LOCAL OR ESTATE TAXES IS NOT ADDRESSED.

 

VOTE REQUIRED

 

The affirmative vote of a majority of the votes cast by stockholders on this proposal at the annual meeting is required for the adoption of the Bristow Group Inc. 2007 Long Term Incentive Plan described in this proposal, provided that the total number of votes cast on the proposal represents a majority of the votes entitled to be cast on the proposal. If you hold your shares through a broker, bank or other nominee and you do not instruct them on how to vote on this proposal, your broker will not have authority to vote your shares if your broker is a NASD or NYSE member organization. Abstentious and broker non-votes will not affect the outcome of the vote on the adoption of the Bristow Group Inc. 2007 Long Term Incentive Plan as long as holders of a majority of shares of common stock cast votes on the proposal.

 

BOARD RECOMMENDATION

 

The Board of Directors believes that it is in the best interests of the Company to continue to provide non-employee directors, consultants and employees with the opportunity to acquire an ownership interest in the Company through their participation in the Bristow Group Inc. 2007 Long Term Incentive Plan and thereby encourage them to remain in the Company’s service and more closely align their interests with those of the stockholders.

 

The Board of Directors unanimously recommends that you vote “FOR” the adoption of the Bristow Group Inc. 2007 Long Term Incentive Plan.

 

VII.  EXECUTIVE OFFICERS OF THE REGISTRANT

 

Under our by-laws, our Board of Directors elects our executive officers annually. Each executive officer remains in office until that officer ceases to be an officer or his or her successor is elected. There are no family relationships among any of our executive officers. At March 31, 2007, our executive officers were as follows except for Mr. Corr, who joined the Company on April 2, 2007:

 

 

Mr. Chiles joined us in July 2004 as Chief Executive Officer and President. Mr. Chiles was elected Chief Financial Officer in December, 2005 following the resignation of the prior chief financial officer and served in that capacity until Mr. Elders was elected to the position in February 2006. Mr. Chiles has been a member of our Board since 2004. Prior to his employment by the Company, Mr. Chiles was employed by Grey Wolf, Inc., an onshore oil and gas drilling company traded on the American Stock Exchange, from March 2003 until June 21, 2004 as Executive Vice President and Chief Operating Officer. Mr. Chiles served as Vice President of Business Development at ENSCO International Incorporated, an offshore oil and gas drilling company listed on the New York Stock Exchange, from August 2002 until March 2003. From August 1997 until its merger into an ENSCO International affiliate in August 2002, Mr. Chiles served as President and Chief Executive Officer of Chiles Offshore, Inc. Mr. Chiles serves as a director of Basic Energy Services, Inc., a contractor for land based oil and gas services. He has served as a member of our Executive Committee since 2004. Mr. Chiles earned a B.B.A. in Petroleum Land Management from The University of Texas and an M.B.A. in Finance and Accounting with honors from Southern Methodist University, Dallas.

 

Mr. Elders joined us in February 2006 as Executive Vice President and Chief Financial Officer. Prior to joining the Company, Mr. Elders was a Director with Sirius Solutions, L.L.P. from June 2005 to February 2006, during which time Mr. Elders was Senior Financial Advisor to the Company from November 2005 to February 2006 under a consulting arrangement with Sirius Solutions. From August 2004 to May 2005, Mr. Elders was with Vetco International Limited, a global oilfield equipment manufacturer and construction company, initially as a consultant and then as Vice President Finance and Chief Accounting Officer. From July 2002 to September 2003, Mr. Elders was a partner in the Houston audit practice of PricewaterhouseCoopers LLP. From September 1983 to June 2002, Mr. Elders was employed with the Houston audit practice of Arthur Andersen LLP, including as a partner for the last seven years and concluding as head of the energy service practice in the Houston, New Orleans, Austin and San Antonio markets. Mr. Elders is a Certified Public Accountant and member of the American Institute of Certified Public Accountants.

 

Mr. Burman joined us in 2004 as Senior Vice President, Eastern Hemisphere. He also serves as Managing Director of Bristow Helicopter Group Ltd. Prior to joining us, Mr. Burman held various positions within the Baker Hughes group of companies, most recently as Region General Manager, Mediterranean and Africa for Baker Hughes INTEQ.

 

Mr. Corr joined the Company in April 2007 as Senior Vice President, Global Training. Mr. Corr has over 20 years of experience in flight training and commercial helicopter operations and has been a commercial helicopter pilot since 1986. In 1987, Mr. Corr established Helicopter Adventures, Inc., a flight school with locations in Concord, California and Titusville, Florida, where he was owner and President since that time. His company was acquired by the Company in April, 2007. The school currently operates more than 50 aircraft, employing about 115 staff, and providing FAA, JAA and Military training programs.

 

Mr. Duncan joined us in January 2005 as Vice President, Global Business Development and was promoted to Senior Vice President, Global Business Development effective January 1, 2006. Prior to joining the Company, Mr. Duncan worked at ABB Lummus Global Inc. from 2002 to 2005. At ABB, Mr. Duncan served as Commercial Director in the Deepwater Floating Production Systems division, based in Houston, Texas. From 1985 to 2002, Mr. Duncan worked for the Halliburton/Brown & Root Group, mostly in the subsea sector where he filled various positions working in the North Sea, Brazil and several other international areas, ultimately holding the position of Senior Global Vice President Commercial for the Subsea7 entity.

 

Mr. Simon joined us in August 2006 as Executive Vice President of Grasso Production Management. He was promoted to Senior Vice President – Production Management in March 2007. Prior to joining the company, Mr. Simon worked for The Houston Exploration Co. as Operations Manager from 2000 to 2005 and from 2005 to 2006 as General Manager – Offshore Division. He has over 30 years experience in oil & gas operations, both onshore and offshore. Mr. Simon previously held operating and engineering positions at Sonat Exploration Co. and Gulf Oil Co.

 

Mr. Suldo joined us in 2002 as Assistant General Manager of Air Logistics and was appointed General Manager in 2003. In June 2005, Mr. Suldo was promoted to Senior Vice President, Western Hemisphere and President of Air Logistics, L.L.C. Prior to joining us, Mr. Suldo was employed at Petroleum Helicopters Inc. from July 1988 until March 2002 in Gulf of Mexico operations in various managerial positions. Before 1988, Mr. Suldo had a 20 year career in the US Navy, from which he retired as a Commander.

 

Mr. Baj joined us in July 2005 as Assistant Treasurer. In November 2005, Mr. Baj was elected Vice President, Treasurer and Secretary. In May 2006, Mr. Baj resigned his position as Secretary upon Mr. Stafford joining the Company. Prior to joining the Company, Mr. Baj was a treasury consultant from 2004 to 2005. Prior to 2004, Mr. Baj was Assistant Treasurer with Transocean Inc. from 1997 to 2003, held various treasury and investor relations positions with Sterling Chemicals, Inc. from 1987 to 1997, and worked in the treasury group of Anderson, Clayton and Co. from 1983 to 1987.

 

Ms. Brumley joined us and was elected Controller in November 2005. Ms. Brumley was subsequently elected Vice President and Chief Accounting Officer and Controller of the Company in December 2005. Before joining the Company, Ms. Brumley was the Vice President and Controller of Noble Drilling Services, Inc., a drilling company, from March 2005 to September 2005. From 1996 to March 2005, she served with MAXXAM Inc., a forest products, real estate investment and development, and racing company, where she served as Controller beginning in January 1999 and ultimately becoming Vice President and Controller in December 2003. She has also worked for GulfMark Offshore, Inc. (formerly GulfMark International, Inc.), an offshore marine services company, serving as Controller from 1990 until 1996. A Certified Public Accountant, Ms. Brumley was a senior auditor with Arthur Andersen LLP prior to joining GulfMark in 1987.

 

Mr. Frank joined Bristow Group Inc. in March 2006 as Director of Planning and Forecasting and was elected Vice President Planning in March 2007. Prior to joining Bristow, Mr. Frank was a Partner with Sense Corp, LLP and then Director with Sirius Solutions LLP from 2002 to 2006, where he provided business process improvement and system development services to a number of midstream and wholesale energy companies on a consultative basis. From 1998 to 2002, Mr. Frank was responsible for planning and forecasting in Enron Corporation’s wholesale energy businesses. Prior to joining Enron, Mr. Frank was responsible for planning, forecasting and analysis at Tom’s Foods, Inc., a food processing and distribution company, and Zapata Corporation, an offshore drilling contractor and provider of diversified oilfield services.

 

Mr. Hopkins joined the company in August 2004 as Vice President of Human Resources, Quality & Safety. Prior to joining Bristow, Mr. Hopkins was Manager of Employee Development at ENSCO based in Dallas, Texas from September 2002 to August 2004. From September 1997 to September 2002 he served as Vice President Human Resources and Safety of Chiles Offshore Inc. in Houston, Texas.

 

Mr. Stafford joined us in May 2006 as Vice President and General Counsel, Corporate Secretary. Prior to joining the Company, Mr. Stafford was Vice President, General Counsel and Corporate Secretary of TODCO from January 2003 to May 2006. From January 2001 until January 2003, Mr. Stafford served as Associate General Counsel of Transocean Inc. From January 2000 until January 2001, Mr. Stafford served as Counsel to R&B Falcon Corporation prior to its acquisition by Transocean Inc.

 

VIII.  SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Holdings of Principal Stockholders

 

The following table shows, as of March 31, 2007, certain information with respect to beneficial ownership of our common stock by any person known by us to be the beneficial owner of more than five percent of any class of our voting securities:

 

 

 

 

 

Holdings of Directors, Nominees and Executive Officers

 

The following table shows, as of the Record Date, certain information with respect to beneficial ownership of our common stock by (i) each director or nominee, (ii) each of the executive officers named in the Summary Compensation Table on page 16 of this proxy statement, and (iii) all of our directors, nominees and executive officers as a group:

 

 

 

 

IX.  DIRECTOR AND EXECUTIVE OFFICER COMPENSATION

 

Summary Compensation Table

 

The following information relates to compensation paid by the Company for fiscal 2007 to the Company’s Chief Executive Officer, Chief Financial Officer and each of the other three most highly compensated executive officers:

 

Summary Compensation Table

 

 

 

 

 

 

Employment Agreements

 

On June 6, 2006 the Company entered into an amended and restated employment agreement with William E. Chiles, the Company’s President and Chief Executive Officer. As amended and restated, Mr. Chiles’ employment agreement has a term of three years beginning on June 21, 2004 (the date of his original employment agreement), and, upon each anniversary, this term will be automatically extended by successive one year periods unless either party thereto gives appropriate notice of nonrenewal. Under the agreement, Mr. Chiles serves as President and Chief Executive Officer of the Company and reports to the Board of Directors. Effective April 1, 2007, Mr. Chiles’ annual base salary is $615,000, and he will be eligible for an annual cash bonus, if he and the Company meet certain performance targets, of up to 200% of his base salary. The Company will also credit an annual amount equal to 20% of Mr. Chiles’ annual salary and bonus to Mr. Chiles pursuant to the Deferred Compensation Plan. The Company will provide Mr. Chiles a ten-year term life insurance policy in the amount of $3 million payable to his designated beneficiaries. In addition, during calendar year 2006 Mr. Chiles received a car allowance of $1,500 per month and reimbursement of certain club dues. These items were eliminated from the employment agreement beginning January 1, 2007 and replaced with an equal amount of base salary. If Mr. Chiles’ employment is terminated by the Company without Cause or by him for Good Reason (as those terms are defined in Mr. Chiles’ employment agreement) or under certain other circumstances specified in the agreement, he will be entitled to a lump sum cash payment calculated pursuant to a formula set forth in the agreement, along with other benefits. The lump sum payment is equal to (i) if the termination occurs within two years of a Change of Control, as defined, three times the sum of Mr. Chiles’ Annual Base Salary, as defined, and Highest Annual Bonus, as defined and (ii) if the termination occurs at any other time, two times the sum of Mr. Chiles’ Annual Base Salary and Target Annual Bonus, as defined. The agreement also contains confidentiality, non-competition, non-employee solicitation, change-of-control and other provisions.

 

Mr. Elders and the Company entered into an Employment Agreement, effective as of February 16, 2006. The agreement has an initial term of two years, and, beginning on February 16, 2008, this term will be automatically extended by successive one-year periods unless either party gives appropriate notice. Under the agreement, Mr. Elders serves as Executive Vice President and Chief Financial Officer of the Company and reports to the President and Chief Executive Officer of the Company. Effective April 1, 2007 Mr. Elders base salary is $430,000, and he will be eligible for a cash bonus, if he and the Company meet certain performance targets, of up to 150% of his base salary. The Company will also credit an annual amount equal to 15% of Mr. Elders’ annual salary and bonus to Mr. Elders pursuant to the Company’s Deferred Compensation Plan. Upon signing the agreement, Mr. Elders received options to purchase 10,000 shares of the Company’s common stock and 10,000 Performance Accelerated Restricted Stock Units. The Company will provide Mr. Elders with a term life insurance policy in the amount of $500,000 payable to his designated beneficiaries. In addition, during calendar year 2006 Mr. Elders received a car allowance of $1,500 per month and reimbursement of certain club dues. These items were eliminated from the employment agreement beginning January 1, 2007 and replaced with an equal amount of base salary. If Mr. Elders’ employment is terminated by the Company without Cause or by him for “Good Reason” (as those terms are defined in Mr. Elders’ employment agreement) or under certain other circumstances specified in Mr. Elders’ employment agreement, he will be entitled to a lump sum cash payment calculated pursuant to a formula set forth therein, along with other benefits. The lump sum payment is equal to (i) if the termination occurs within two years of a Change of Control, as defined, three times the sum of Mr. Elders’ Annual Base Salary, as defined, and Highest Annual Bonus, as defined and (ii) if the termination occurs at any other time, two times the sum of Mr. Elders’ Annual Base Salary and Target Annual Bonus, as defined. The agreement also contains change of control, confidentiality, non-competition, employee non-solicitation and other provisions.

 

Mr. Burman and an affiliate of the Company entered into an Employment Agreement, effective as of October 15, 2004. The agreement continues unless terminated by either party upon twelve months notice. The agreement also terminates when Mr. Burman attains age 60. Mr. Burman currently serves as Senior Vice President of the Company and Managing Director of Bristow Aviation Holdings Limited. The Company pays Mr. Burman a base salary of £166,795, and he is eligible for a cash bonus, if he and the Company meet certain performance targets, of up to 100% of his base salary. The Company will also credit an annual amount equal to 12.5% of Mr. Burman’s annual salary to Mr. Burman’s retirement account pursuant to the Bristow Helicopters Group Ltd. Defined Contribution Retirement Plan. In fiscal year 2007, Mr. Burman also receives a car allowance of £908 per month and

reimbursement of expenses related to membership in a local golf club. These items were eliminated from the employment agreement beginning March 1, 2007 and replaced with an equal amount of base salary.

 

On June 6, 2006 the Company entered into an amended and restated employment agreement with Mark B. Duncan, the Company’s Senior Vice President, Global Business Development. As amended and restated, Mr. Duncan’s employment agreement has an initial term of two years beginning on January 24, 2005 (the date of his original employment agreement), and, beginning on January 24, 2007, this term is automatically extended by successive one-year periods unless either party gives appropriate notice of nonrenewal. Under the agreement, Mr. Duncan serves as Senior Vice President, Global Business Development of the Company and reports to the President and Chief Executive Officer of the Company. Effective April 1, 2006, Mr. Duncan’s annual base salary is $310,000, and he will be eligible for an annual cash bonus, if he and the Company meet certain performance targets, of up to 100% of his base salary. The Company will also credit an annual amount equal to 15% of Mr. Duncan’s annual salary and bonus to Mr. Duncan pursuant to the Company’s Deferred Compensation Plan. The Company will provide Mr. Duncan with a term life insurance policy in the amount of $500,000 payable to his designated beneficiaries. In addition, during 2006 Mr. Duncan received a car allowance of $1,500 per month and reimbursement of certain club dues. These items were eliminated from the employment agreement beginning January 1, 2007 and replaced with an equal amount of base salary. If Mr. Duncan’s employment is terminated by the Company without Cause or by him for Good Reason (as those terms are defined in the agreement) or under certain other circumstances specified in the agreement, he will be entitled to a lump sum cash payment calculated pursuant to a formula set forth in the agreement, along with other benefits. The lump sum payment is equal to (i) if the termination occurs within two years of a Change of Control, as defined, two and one half times the sum of Mr. Duncan’s Annual Base Salary, as defined, and Highest Annual Bonus, as defined and (ii) if the termination occurs at any other time, one and one half times the sum of Mr. Duncan’s Annual Base Salary and Target Annual Bonus, as defined. The agreement also contains confidentiality, non-competition, employee non-solicitation, change-of-control and other provisions.

 

Mr. Suldo and the Company entered into an Employment Agreement, effective as of June 1, 2005. The agreement initially has a term of two years, and, beginning May 31, 2007, this term is automatically extended by successive one-year periods unless either party gives appropriate notice. Under the agreement, Mr. Suldo serves as Senior Vice President of the Company and reports to the President and Chief Executive Officer of the Company. Effective April 1, 2007, Mr. Suldo’s annual base salary is $310,000, and he will be eligible for an annual cash bonus, if he and the Company meet certain performance targets, of up to 100% of his base salary. The Company will also credit an annual amount equal to 15% of Mr. Suldo’s annual salary and bonus to Mr. Suldo pursuant to the Deferred Compensation Plan. Upon signing the agreement, Mr. Suldo received options to purchase 3,700 shares of our common stock with an exercise price equal to the common stock’s closing price on the date of the grant. In addition, he received 3,700 Performance Accelerated Restricted Stock Units, the material terms of which are described in the form of Restricted Stock Unit Award Agreement filed previously. The Company will provide Mr. Suldo a term life insurance policy in the amount of $500,000 payable to his designated beneficiaries. In addition, during calendar year 2006 Mr. Suldo received a car allowance of $1,500 per month and reimbursement of certain club dues. These items were eliminated from the employment agreement beginning January 1, 2007 and replaced with an equal amount of base salary. If Mr. Suldo’s employment is terminated by the Company without Cause or by him for Good Reason (as those terms are defined in Mr. Suldo’s employment agreement) or under certain other circumstances specified in the agreement, he will be entitled to a lump sum cash payment calculated pursuant to a formula set forth therein, along with other benefits. The lump sum payment is equal to (i) if the termination occurs within two years of a Change of Control, as defined, three times the sum of Mr. Suldo’s Annual Base Salary, as defined, and Highest Annual Bonus, as defined and (ii) if the termination occurs at any other time, two times the sum of Mr. Suldo’s Annual Base Salary and Target Annual Bonus, as defined. Mr. Suldo’s Employment Agreement also contains change of control, confidentiality, non-competition, employee non-solicitation and other provisions. On March 8, 2006, Mr. Suldo’s employment agreement was amended to revise the definition of “Good Reason.”

 

Grants of Plan-Based Awards

 

The following table sets forth information concerning grants of awards to each of our named executive officers under our 2004 Stock Incentive Plan during fiscal 2007:

 

Grants of Plan-Based Awards Fiscal Year 2007

 

 

 

 

Options to purchase shares of our common stock and Performance Restricted Stock Units were granted under our 2004 Stock Incentive Plan by our Compensation Committee to certain of our employees, including our named executive officers, on June 14, 2006 (the “Grant Date”). The options have an exercise price of $35.06, vest in one-third increments on each of June 14, 2007, 2008, and 2009, and expire on June 14, 2016. The Performance Restricted Stock units give the holder the right to receive up to one share of common stock per unit subject to the attainment of certain performance goals, starting on the third anniversary of the grant date. To receive one share for each unit granted: (i) on the third anniversary of the Grant Date the Company’s Cumulative Annual Shareholder Return must have met or exceeded 15%; (ii) on the fourth anniversary of the Grant Date the Company’s Cumulative Annual Shareholder return must have met or exceeded 15%; or (iii) on the fifth anniversary of the Grant Date the Company’s Cumulative Annual Shareholder return must have met or exceeded 3%. Prorated amounts are awarded in the third and fourth years if the Company’s Cumulative Annual Shareholder Return Exceeds 10%. If none of these performance measures have been achieved by the fifth anniversary date, the units expire and no stock is received by the participant. “Total Shareholder Return” for any period equals (1) 100% multiplied by (2) a fraction, (i) the numerator of which is (x) the Market Value (as defined below) as of the last day of such period of the number of shares of Stock which had a Market Value of $100 as of the first day of such period, assuming the reinvestment of any dividends paid with respect to such shares during such period on a pre-tax basis in additional shares and taking into account any stock splits, reclassifications or any similar events minus (y) $100, and (ii) the denominator of which is 100. For purposes of this paragraph, the Market Value of a share of Stock on the first and last day of any such period is equal to the average of the 20 closing prices of such a share for the 20 consecutive trading days concluding on such day (or, if such day is not a trading day, concluding on the final trading day immediately preceding such day).

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table sets forth information concerning unexercised stock options and unvested restricted stock of each of our named executive officers as of March 31, 2007:

 

Outstanding Equity Awards at Fiscal Year-End – 2007

 

 

 

 

Option Exercises and Stock Vested

 

The following table sets forth information concerning exercises of stock options and vesting of restricted stock of each of our named executive officers during fiscal 2007:

 

Option Exercises and Stock Vested – 2007

 

Nonqualified Deferred Compensation Plans

 

Nonqualified Deferred Compensation – Fiscal Year 2007

 

 

 

 

Under the terms of the Company’s non-qualified deferred compensation plan for senior executives (the “Deferred Compensation Plan”), participants can elect to defer a portion of their compensation for distribution at a later date. Additionally, the Company contributes an amount to the Deferred Compensation Plan account of participants equal to the difference between the percentage matching contribution made by the Company to the applicable participant’s 401(k) Plan Account and in the case of each of our named executive officers up to 15% of annual base salary. Deferred Compensation Plan holdings are invested in the same funds available under the Company’s 401(k) Plan in accordance with the elections of the plan participant. Participants vest in Company contributions to the Deferred Compensation Plan over a five year term. Distributions upon retirement or termination of employment are made pursuant to the participant’s election subject to any applicable limitations of the Internal Revenue Code. We have general contractual obligations to pay the deferred compensation upon the participants’ termination of employment for any reason, including but not limited to death, disability or retirement.

 

Potential Payments upon Termination or Change-in-Control

 

Each of our named executive officers is party to an employment agreement as described above. Pursuant to these agreements, Messrs. Chiles, Elders, Duncan and Suldo are entitled to certain severance benefits. If such officer’s employment is terminated by the Company without cause or by the employee for good reason (as defined in the agreement), he would be entitled to a lump sum severance payment equal to a multiple of the sum of his base salary plus his current annual incentive target bonus for the full year in which the termination of employment occurred. For Messrs. Chiles, Elders and Suldo, the multiple is two, and for Mr. Duncan, the multiple is 1.50 but his contract also provides for six months notice of termination. The definition of “Cause” includes, among other things, conviction of the officer of a crime involving moral turpitude or a felony, commission by the officer of fraud upon, or misappropriation of funds of, the Company, knowing engagement by the officer in any activity in direct competition with the Company, and a material breach by the officer of covenants related to confidentiality, non-competition and non-solicitation. The definition of “Good Reason” includes, among other things, a reduction in the officer’s base salary or bonus opportunity, a relocation of more than fifty miles of the officer’s principal office, a material failure of the Company to comply with any material provision of such employment agreement. Prior to terminating his employment for Good Reason, the officer must comply with the notice provisions of his employment agreement.

 

The following amounts would be payable if the listed officer’s employment is terminated by the Company without cause or by the employee for good reason (as defined in the agreement).

 

 

 

 

Additionally, if any of the officers’ employment is terminated by the Company without Cause, by the officer for Good Reason or for Retirement, within the six months preceding or the twelve months following a Change in Control of our Company, he would be entitled to a lump sum severance payment equal to a multiple of the sum of his base salary plus the higher of (i) his current annual incentive target bonus for the full year in which the termination of employment occurred or (ii) the highest annual incentive bonus received by him for any of the last three fiscal years. For Mr. Chiles, Elders and Suldo, the multiple is three and for Mr. Duncan, the multiple is 2.50 but his contract also provides for six months notice of termination. In addition to the above, any outstanding stock options or PRSU’s would vest upon the effective date of a change of control and the Company will provide such employee with health care benefits for three years. The definition of “Change in Control” includes, subject to certain exceptions, (i) acquisition by any individual, entity or group of beneficial ownership of 35% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, (ii) a change in at least a majority of the Company’s Board of Directors (iii) approval by the shareholders of the Company of a merger, unless immediately following such merger, substantially all of the holders of the Company’s securities immediately prior to merger beneficially own more than 50.1% of the common stock of the corporation resulting from such merger, and (iii) the sale or other disposition of all or substantially all of the assets of the Company.

 

 

 

 

 

Any benefits payable pursuant to the above triggering events are payable in a cash lump sum not later than six months following the termination date.

 

The employment agreements of the named executive officers also contain certain non-competition and non-solicitation provisions. For additional information regarding these employment agreements, see “Executive Compensation Matters—Employment Agreements.”

 

Director Compensation

 

The following table sets forth information concerning the compensation of each of our directors other than Mr. Chiles, who is a named executive officer, for fiscal 2007:

 

Director Compensation - 2007

 

 

 

 

The Compensation Committee determines the annual retainer, meeting fees, stock options and other benefits for members of the Board of Directors. The Compensation Committee’s objective with respect to director compensation is to provide compensation incentives that attract and retain individuals of outstanding ability. Directors who are Company employees do not receive a retainer or fees for service on the board or any Committees. The Company pays non-employee members of the board for their service as directors. Directors who are not employees receive, as of the Record Date.

 

 

Directors are also reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the board or Committees and for other reasonable expenses related to the performance of their duties as directors.

 

X.  COMPENSATION DISCUSSION AND ANALYSIS

 

Compensation Philosophy

 

The overall mission of Bristow Group Inc. is to enhance long-term stockholder value by being the best oilfield services company providing aviation transportation, production management and related services. Specifically the Company strives to have:

 

 

The compensation program for executives is designed to support and reinforce the mission of the Company and lead to the consistent enhancement of stockholder value.

 

The program targets total compensation that is consistent with the market median when individual and organizational performance objectives are achieved and provides the opportunity to earn above average compensation when performance exceeds expectations. To achieve this objective, the program has a significant “at-risk” component in the form of variable annual and long-term incentives. The program also seeks to balance “fixed” (salary and benefits) and “variable” (annual and long-term incentives) compensation.

 

Variable incentives, both annual and longer-term, are important components of the program and are used to align actual pay levels with performance results. Long-term incentives are designed to create a strong emphasis on enhancing total stockholder value over the longer-term and align the interests of management with those of stockholders through share ownership. Annual incentives reward participants based on corporate, business unit and individual results. When annual and long-term results are above average, total compensation will be above average.

 

The Compensation Committee generally attempts to provide the Company’s executives, including Mr. Chiles, with a total compensation package that is competitive and reflective of the performance achieved by the Company compared to other companies, and is typically weighted toward long-term incentives.

 

The Company engaged Stone Partners for fiscal year 2007 to perform executive compensation surveys. The Compensation Committee reviewed information drawn by Stone Partners from national surveys including Watson Wyatt Worldwide and Pearl Meyer Partners. In addition, the Compensation Committee reviewed the results from Stone Partners’ annual Oilfield Manufacturing and Services Executive Compensation Survey. Compensation norms were adjusted for comparability of revenue size to the Company. The Compensation Committee used these surveys and the recommendations of Stone Partners in establishing fiscal year 2007 executive total compensation. Total cash compensation levels were found near the market median, and increased generally to move the targeted total compensation value of executives closer to the median where applicable and in accordance with anticipated normal industry increases. While the targeted value of an executive’s compensation package may be competitive, its actual value may exceed or fall below market average levels depending on performance.

 

Administration of Executive Compensation Program

 

Our executive compensation program is administered by the Compensation Committee of our board of directors. The Committee has established an annual process for reviewing and establishing executive compensation levels. Typically, annual base salaries are reviewed and adjusted effective April 1 of each year. The annual incentive plan performance goals are approved in May of each year. Determination of achievement of these goals, approval of bonuses under the annual incentive compensation for the prior year and granting of Long Term Incentive Equity Awards takes place immediately after the Company files its year end financial statements, with the effective date of equity awards being no sooner than two days after results are filed.

 

Stone Partners is also engaged from time to time to provide recommendations on other aspects of executive compensation as directed by the Compensation Committee. The Committee does not adopt all of Stone Partner’s recommendations, but utilizes their work as a check in arriving at its own judgment with respect to what it

deems to be appropriate. Stone Partners has direct access to Committee members and participates in Committee meetings, as requested by the Committee Chairman. Stone Partners also provides compensation advice to management with the knowledge and consent of the Committee.

 

William E. Chiles, our President and Chief Executive Officer, Perry L. Elders, our Executive Vice President and Chief Financial Officer, Randall A. Stafford, our General Counsel, and William H., Hopkins, our Vice President — Human Resources, Quality and Safety, support the Compensation Committee in performing its role with respect to administering our compensation program. The Compensation Committee conducts performance evaluations of Mr. Chiles, and Mr. Chiles conducts performance evaluations of our other executive officers and makes recommendations to the Compensation Committee regarding all aspects of their compensation. Mr. Chiles, with input from the entire senior management team and Stone Partners, makes recommendations to the Committee as to performance measures and levels to be used for annual incentive compensation. Messrs. Elders, Stafford and Hopkins act pursuant to delegated authority to fulfill various administrative functions of the Compensation Committee, such as coordinating the hiring process with respect to executives, providing legal and market updates to the Compensation Committee, and overseeing the documentation of equity plans and awards as approved by the Compensation Committee. No executive has the authority to establish or modify executive officer compensation.

 

Compensation Components

 

The compensation of our executives is separated into four basic components: base salary, annual incentive compensation, long term incentives and deferred compensation. The base salary for our named executive officers can represent 100% of compensation in any given year when incentives do not pay out or long-term awards do not vest. However, the general mix of compensation for target-level performances in the annual incentive plans, plus the net annualized present value of long-term compensation grants in fiscal year 2007 was as follows for our CEO and our other named executive officers. The Compensation Committee considered the following general percentage mix in establishing the total compensation for the Company’s executives at fiscal year 2007 target performance. It is important to note that the influences of the timing of awards, availability of stock, company financial performance and stock price performance could significantly change the basic mix of compensation components as a percentage of total compensation.

 

 

For the purpose of measuring total compensation, the Compensation Committee values stock options using the Black-Scholes method. Performance restricted stock units are valued at the full value of an equivalent amount of the Company’s common stock on the date of grant.

 

Base Salary

 

The base salary program targets the median of our compensation peer group. The performance of each executive and most employees is reviewed annually near the end of the Company’s fiscal year. Salary adjustments are typically effective at the beginning of the fiscal year and are based on the individual’s experience and background, the general movement of salaries in the marketplace, the Company’s financial position and a qualitative assessment of the individual’s performance by his or her immediate supervisor or in the case of Mr. Chiles, the Compensation Committee. In addition to its assessment of Mr. Chiles’ performance, the Compensation Committee reviews the evaluations for each of the Company’s other executive officers. Due to these factors, an executive’s base salary may be above or below the market median at any point in time. The Compensation Committee has approved internal pay ranges which establish pay relationships between positions.

 

In March 2007 the Committee reviewed the performance of the Chief Executive Officer and reviewed the Chief Executive Officer’s evaluations of the other executive officers. Following that review the base salaries for each of the named executive officers were adjusted as set forth below:

 

 

The adjusted base salaries were in each case slightly over the median for the position but no more than 5% over in any case. The amounts were arrived at by the Committee using peer compensation results and performance evaluations of each individual.

 

Annual Incentive Compensation

 

The Company maintains an annual incentive compensation plan to provide selected corporate officers and employees the opportunity to share in the improved performance of the company by achieving specific corporate and business unit financial and safety goals, and key individual objectives. Awards under the plan are determined based on specified performance standards, which we refer to as Key Performance Indicators (“KPIs”). Participants are also required to uphold and certify their compliance with the Company’s legal and ethical standards as described in the Company’s Code of Business Integrity and the policies that support the Code. The Compensation Committee periodically monitors the award target levels and variances to assure their competitiveness and that they mesh with compensation strategy for incentives and for total compensation. Our KPIs typically incorporate certain metrics that are based on our publicly reported financial results. There is no provision in our annual incentive plan for retroactively adjusting past performance compensation in the event of a restatement of these results leads to a different outcome, although such a restatement would be taken into consideration by the Compensation Committee in making future compensation decisions.

 

Fiscal Year 2007 Awards

 

For fiscal year 2007 the KPIs used were the following:

 

 

EBITDA is earnings before interest expense, taxes, depreciation and amortization and is computed by adding interest, income tax, depreciation and amortization expenses to net income. ROCE is return on capital employed and is computed by dividing EBITDA by the fair value of the related operating assets, including working capital.

 

The KPIs are designed to coincide with the goals and objectives established by the Company in its long term strategy. KPI weightings are varied by individual position to give emphasis to performance for which participants have the most direct control in subject areas. The KPI weightings for the CEO and other named executive officers for fiscal year 2007 are outlined below:

 

 

Annual Incentive targets and maximums are stated as a percentage of annual base salary and are set based on position grade levels. The annual incentive target and maximum levels for fiscal year 2007 for our CEO and the other named executive officers are outlined below:

 

 

Minimum KPI levels must be achieved in order to receive payout under the awards. If an individual is determined by the Committee to have violated the Company’s Code of Business Integrity, that individual may lose a portion or all of their incentive compensation as determined by the Committee on a case by case basis. In the event of a flight accident that results in a fatality, the safety portion of the award payout is lost for the related business unit and division employees as well as all corporate plan members. Participants may earn up to as much as double their annual incentive targets in the event of performance substantially exceeding the preset goals. Annual incentive compensation awards are paid in cash. In fiscal year 2007, the compensation committee set KPI levels for the performance incentive awards shortly after the end of the fiscal year and the budget for the next fiscal year was approved by the Board of Directors. The KPI’s for the target level were set at levels which required growth and improved profitability and improvement in safety when compared to actual results for the prior year.

 

Actual awards made included adjustments to the fiscal year 2007 year results for the book loss associated with the Company’s sale of Turbo Engines Inc., the dilutive effect from the sale of the Company’s Mandatory Convertible Preferred Stock and the reduction for U.K. Pension Plan accruals. The net effect of these adjustments for the entire plan was an increase of approximately $145,000 in the bonus amount paid to all participants in the plan (approximately 159 persons).

 

Fiscal Year 2008 Awards

 

In May 2007, the Compensation Committee of the Company approved and adopted an annual incentive compensation plan with the following KPIs for fiscal year 2008 for our senior employees, including each of our named executive officers:

 

 

 

The KPI weightings for the CEO and our other named executive officers for the fiscal year 2008 plan are outlined below:

 

 

The annual incentive target and maximum levels for fiscal year 2008 for our CEO and the other named executive officers are outlined below:

 

 

Fiscal year 2008 target bonus award levels for the Company’s executive officers were proposed by senior management working with the Compensation Committee and Stone Partners and approved by the Compensation Committee in May 2007 using the same process used for fiscal year 2007. The KPI’s for the target level were set at levels which would require continued growth and improved profitability and improvement in safety when compared to actual results for the prior year.

 

Long-Term Incentives

 

Long-term incentive awards are used to focus management attention on Company performance over a period of time longer than one year in recognition of the long-term horizons for return on investments and strategic decisions in our business. The awards are designed to motivate management to assist the Company in achieving a high level of long-term performance and serves to link this portion of executive compensation to long-term

stockholder value. They are also designed to assist in executive retention through extended vesting periods. Aggregate stock or option holdings of the executive have no bearing on the size of a long-term incentive award.

 

The Company’s 2004 Stock Incentive Plan (the “2004 Plan”), which was adopted by the board and has been approved by the Company’s stockholders permits the granting of any or all of the following types of awards: stock options; restricted stock; performance awards; phantom shares; other stock based awards; bonus shares; and cash awards. All non-employee directors and employees of, or consultants to, the Company or any of its affiliates are eligible for participation under the incentive plan. The incentive plan is administered by the Compensation Committee. The Compensation Committee directly oversees the plan as it relates to officers of the Company and oversees the plan in general, its funding and award components, the type and terms of the awards to be granted and interprets and administers the incentive plan for all participants.

 

Generally, awards under the 2004 Plan are granted a short time after the Company’s financial results for the prior fiscal year have been made public by the filing of the Company’s Annual Report of Form 10K. Occasionally, long term incentive awards are granted at other times when appropriate for new employees or special recognition of performance.

 

Fiscal Year 2007 Awards

 

In fiscal 2007, the Committee made grants of stock options (as set forth under “Executive Compensation — Grants of Plan-Based Awards”), which vest ratably over a three-year period beginning on the date of grant.

 

In fiscal 2007, the Committee made grants of Performance Restricted Stock Units (“PRSUs”), which give the participants the right to receive one share of common stock per unit assuming the performance standards are met (see “Executive Compensation — Grants of Plan-Based Awards”). The PRSU’s are designed to give some aspects of a full value award while ensuring that awards only vest to the extent shareholder value has been enhanced over the performance period.