-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FYbTyq0cPS1/MZdniGKH/OowTh7ix7cBPZ5wKF5e//yPGPY6Abfb65oYvGBOrSSX ZoelG+MhhHpW4dqhL/rhjw== 0000890566-98-001256.txt : 19980710 0000890566-98-001256.hdr.sgml : 19980710 ACCESSION NUMBER: 0000890566-98-001256 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980721 FILED AS OF DATE: 19980709 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OCEANEERING INTERNATIONAL INC CENTRAL INDEX KEY: 0000073756 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 952628227 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-10945 FILM NUMBER: 98662901 BUSINESS ADDRESS: STREET 1: 16001 PARK TEN PL STE 600 CITY: HOUSTON STATE: TX ZIP: 77084 BUSINESS PHONE: 7135788868 DEF 14A 1 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12 OCEANEERING INTERNATIONAL, INC. (Name of Registrant as Specified in its Charter) _____________________________________________________________________ (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1. Title of each class of securities to which transaction applies: 2. Aggregate number of securities to which transaction applies: 3. Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: 4. Proposed maximum aggregate value of transaction: 5. Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1. Amount Previously Paid: 2. Form, Schedule or Registration Statement No.: 3. Filing Party: 4. Date Filed: [OCEANEERING LOGO] OCEANEERING INTERNATIONAL, INC. 11911 FM 529, HOUSTON, TEXAS 77041-3011 July 15, 1998 Dear Shareholder: You are cordially invited to attend the 1998 Annual Meeting of Shareholders of Oceaneering International, Inc., which will be held at the Baker & Botts, L.L.P. Conference Room, One Shell Plaza - Mall Level, 910 Louisiana, Houston, Texas, on Friday, August 21, 1998, at 10:00 a.m. local time. On the following pages you will find the Notice of Annual Meeting of Shareholders and Proxy Statement giving information concerning the matters to be acted upon at the meeting. A copy of the Annual Report to Shareholders describing the Company's operations during the fiscal year ended March 31, 1998 is enclosed. I hope you will be able to attend the meeting in person. Whether or not you plan to attend, please sign and return the enclosed proxy card promptly. Your shares will be voted at the meeting in accordance with your proxy. If you have shares in more than one name, or if your stock is registered in more than one way, you may receive more than one copy of the proxy material. If so, please sign and return each of the proxy cards you receive so that all of your shares may be voted. I look forward to seeing you at the 1998 Annual Meeting of Shareholders. Sincerely, /s/ JOHN R. HUFF Chairman, President and Chief Executive Officer OCEANEERING INTERNATIONAL, INC. 11911 FM 529, HOUSTON, TEXAS 77041-3011 ------------------ NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 21, 1998 ------------------ To the Shareholders of Oceaneering International, Inc.: NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Oceaneering International, Inc., a Delaware corporation (the "Company"), will be held at the Baker & Botts, L.L.P. Conference Room, One Shell Plaza - Mall Level, 910 Louisiana, Houston, Texas on Friday, August 21, 1998 at 10:00 a.m. local time, for the following purposes: (1) To elect two Class III directors as members of the Board of Directors of the Company to serve until the 2001 Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified (Proposal 1); (2) To consider and act upon a proposal to ratify the appointment of Arthur Andersen LLP as independent auditors of the Company for the fiscal year ending March 31, 1999 (Proposal 2); and (3) To transact such other business as may properly come before the meeting or any adjournment thereof. The close of business on July 8, 1998 is the record date for the determination of shareholders entitled to notice of, and to vote at, the meeting or any adjournment thereof. The Board of Directors welcomes the personal attendance of shareholders at the meeting. Whether or not you expect to be present at the meeting, please fill in, date and sign the enclosed proxy and return it to the Company promptly in the enclosed envelope. If you attend the meeting, you may, if you so desire, withdraw your proxy and vote in person. By Order of the Board of Directors, /s/ George R. Haubenreich, Jr. Vice President, General Counsel and Secretary July 15, 1998 - -------------------------------------------------------------------------------- YOUR VOTE IS IMPORTANT TO SECURE THE LARGEST POSSIBLE REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND MAIL YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. - -------------------------------------------------------------------------------- OCEANEERING INTERNATIONAL, INC. --------------- PROXY STATEMENT --------------- SOLICITATION, VOTING AND REVOCABILITY OF PROXIES The accompanying proxy is solicited on behalf of the Board of Directors (the "Board of Directors" or the "Board") of Oceaneering International, Inc., a Delaware corporation (the "Company"), for use at the Company's annual meeting of shareholders to be held at the time and place set forth in the accompanying notice. The Company will pay all costs of soliciting proxies. Solicitation of proxies will be primarily by mail. In addition to solicitation by mail, officers, directors and employees of the Company may solicit proxies in person or by telephone and facsimile transmission, for which such persons will receive no additional consideration. The Company will reimburse brokerage houses, banks and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding proxy material to beneficial owners of the Company's Common Stock, $.25 par value (the "Common Stock"). The persons named as proxies were designated by the Board of Directors and are officers or directors of the Company. All properly executed proxies will be voted (except to the extent that authority to vote has been withheld), and where a choice has been specified by the shareholder as provided in the proxy, the proxy will be voted in accordance with the specification so made. Proxies submitted without specification will be voted FOR Proposal 1 to elect the nominees for director proposed by the Board of Directors and FOR Proposal 2 to ratify the appointment of Arthur Andersen LLP as independent auditors of the Company for the fiscal year ending March 31, 1999. Any shareholder may revoke his or her proxy at any time before it is voted at the meeting by duly executing a proxy bearing a later date. A proxy may also be revoked by any shareholder at any time before it is voted by filing with the Corporate Secretary of the Company a written notice of revocation or by voting in person at the meeting. The mailing address of the executive offices of the Company is P. O. Box 40494, Houston, Texas 77240-0494. The requirement for a quorum at the meeting is the presence in person or by proxy of holders of a majority of the outstanding shares of Common Stock. There is no provision for cumulative voting. Only shareholders of record at the close of business on July 8, 1998 will be entitled to notice of, and to vote at, the meeting. As of such date, 23,002,477 shares of Common Stock were outstanding. Each of such outstanding shares is entitled to one vote at the meeting. This Proxy Statement and accompanying proxies are initially being mailed to shareholders of the Company on or about July 15, 1998. ELECTION OF DIRECTORS PROPOSAL 1 The Certificate of Incorporation of the Company divides the Board of Directors into three classes, each consisting as nearly as possible of one-third of the members of the whole Board. The members of each class serve for three years following their election, with one class being elected each year. The Class III directors are to be elected at the meeting. In accordance with the Company's Bylaws, the directors will be elected by a plurality of the votes cast. Accordingly, abstentions and broker "non-votes" marked on proxy cards will not be counted in the election. The Class III directors will serve until the 2001 Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified. The directors of Classes I and II, consisting of one member and two members respectively, will continue to serve their terms of office, which will expire at the Annual Meetings of Shareholders to be held in 1999 and 2000, respectively. 1 The persons named in the accompanying proxy intend to vote such proxy in favor of the election of the nominees named below, who are currently directors of the Company, unless authority to vote for the director is withheld in the proxy. Although the Board of Directors has no reason to believe that the nominees will be unable to serve as directors, if a nominee withdraws or otherwise becomes unavailable to serve, the persons named as proxies will vote for any substitute nominee designated by the Board of Directors. Set forth below is certain information with respect to each nominee for election as a director of the Company. NOMINEES - CLASS III DIRECTORS: NAME AND DIRECTOR BUSINESS EXPERIENCE AGE SINCE ------------------- --- ----- David S. Hooker ........................................... 55 1973 Mr. Hooker has been Chairman of Goshawk Insurance Holdings PLC, a marine insurance group since January 1996. Previously he served as Chairman of Bakyrchik Gold PLC, a natural resources company, from 1993 to 1996. He was Managing Director of Aberdeen Petroleum PLC, an oil and gas exploration and production company, from 1988 to 1993. He is also a director of Shiega Resources Corporation. Harris J. Pappas........................................... 53 1996 Mr. Pappas joined the Board in November 1996. He has been President and shareholder of Pappas Restaurants, Inc., a privately owned and operated multi-state restaurant group, since 1983. He serves as a trustee of Memorial Hermann Hospital in the Texas Medical Center in Houston. CONTINUING DIRECTORS Set forth below is comparable information for those directors whose terms will expire in 1999 and 2000. 1999 - CLASS I DIRECTOR: NAME AND DIRECTOR BUSINESS EXPERIENCE AGE SINCE ------------------- --- ----- D. Michael Hughes ............................................. 59 1970 Mr. Hughes is owner of Texas Wild Game Cooperative and the Broken Arrow Ranch. Mr. Hughes has been associated with the Company since its incorporation, serving as Chairman of the Board from 1984 to 1990. 2 2000 - CLASS II DIRECTORS: NAME AND DIRECTOR BUSINESS EXPERIENCE AGE SINCE ------------------- --- ----- Charles B. Evans ............................................. 73 1980 Mr. Evans has been Chairman of ResTech Inc., an oilfield service firm specializing in custom log data processing, since 1982. He previously served from 1977 to 1979 as Executive Vice President of Schlumberger Limited, an international oilfield evaluation and services company, until his retirement in 1979 after 31 years of service. John R. Huff ................................................. 52 1986 Mr. Huff has been Chairman of the Board of Directors of the Company since August 1990. He has been a director and Chief Executive Officer and President of the Company since joining the Company in 1986. He served from 1980 until 1986 as Chairman and President of Western Oceanic Inc., the offshore drilling subsidiary of The Western Company of North America. He is also a director of BJ Services Company, Triton Energy Limited and Suncor Energy Inc. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS The following table sets forth the number of shares of Common Stock of the Company beneficially owned as of July 8, 1998, by each director and nominee for director, each of the current executive officers named in the Summary Compensation Table in this Proxy Statement and all directors and officers as a group. Except as otherwise indicated, each individual named has sole investment and voting power with respect to the shares shown. NUMBER OF PERCENT NAME SHARES(1) OF CLASS ---- --------- -------- T. Jay Collins ............................... 132,629 * Bruce L. Crager .............................. 57,400 * Charles B. Evans ............................. 17,900 * George R. Haubenreich, Jr .................... 68,096 * David S. Hooker .............................. 16,000 * John R. Huff ................................. 532,195 2.3 D. Michael Hughes ............................ 83,363 * Marvin J. Migura ............................. 50,000 * Harris J. Pappas ............................. 0 * All directors and officers as a group (21 persons) .................... 1,403,735 6.1 - ------------------ * Less than 1% 3 (1) Includes the following shares subject to stock options exercisable within 60 days of July 8, 1998: Mr. Collins - 43,000; Mr. Crager - 9,400, Mr. Evans - 16,000, Mr. Haubenreich - 18,800, Mr. Hooker - 16,000, Mr. Huff - 125,000, Mr. Hughes - 16,000, Mr. Migura - 16,800, and all directors and officers as a group - 352,410. Includes the following shares granted pursuant to restricted stock award agreements with respect to which the recipient has sole voting power and no dispositive power: Mr. Collins - 50,205, Mr. Crager - 29,000, Mr. Haubenreich - 26,334, Mr. Huff - 114,061, Mr. Migura - 23,900, and all directors and officers as a group - 315,029. Also includes the following shares, which are fully vested, held in trust pursuant to the Oceaneering Retirement Investment Plan ("Retirement Plan") for which the individual has no voting rights until the shares are withdrawn from the Retirement Plan: Mr. Collins - 10,621, Mr. Huff - 1,577, Mr. Hughes - 21,057, and all directors and officers as a group - 59,272. Listed below are the only persons who to the knowledge of the Company may be deemed to be beneficial owners as of July 8, 1998 of more than 5% of the outstanding shares of the Company's Common Stock. This information is based upon statements filed with the Securities and Exchange Commission ("SEC"), as furnished to the Company by such persons. AMOUNT AND NATURE OF NAME AND ADDRESS OF BENEFICIAL PERCENT BENEFICIAL OWNER OWNERSHIP OF CLASS (1) ---------------- --------- ------------ The Equitable Companies Incorporated 1290 Avenue of the Americas New York, NY 10104 ........................... 2,363,000 (2) 10.3 Cowen & Company Financial Square New York, NY 10005 ........................... 1,254,600 (3) 5.5 - ------------------ (1) The percentages are based on the number of issued and outstanding shares of Common Stock at July 8, 1998. (2) According to a Schedule 13G filed with the SEC and dated April 10, 1998, The Equitable Companies Incorporated, through various subsidiaries, had sole voting and dispositive power over 922,600 and 2,363,300 shares, respectively, and shared voting power over 1,423,000 shares. (3) According to a Schedule 13G filed with the SEC and dated February 12, 1998, Cowen & Company had sole voting and dispositive power over 40,000 shares and shared voting and dispositive power over 917,700 and 1,214,600 shares, respectively. ADDITIONAL INFORMATION RELATING TO THE BOARD OF DIRECTORS The Company has standing Audit, Compensation and Nominating Committees of the Board of Directors. The Audit Committee, which held two meetings during fiscal year 1998, is comprised of Messrs. Hooker (Chairman), Hughes and Pappas. The functions of the Audit Committee are: (1) to recommend to the full Board the firm of independent auditors to be employed as the Company's independent auditors for the ensuing year; (2) to review with the independent auditors, internal auditors and management the scope and results of annual audits; (3) to consult with the independent auditors periodically with regard to the adequacy of internal controls and related matters; and (4) to review actions by management on recommendations of the independent and internal auditors. To promote independence, the Audit Committee consults separately and jointly with management, as well as the independent and internal auditors. The Compensation Committee is comprised of Messrs. Evans (Chairman) and Pappas. The Compensation Committee, which held three meetings during fiscal year 1998, establishes and reports to the full Board with respect to compensation plans under which officers and directors are eligible to participate, as well as the salary for the Chief Executive Officer. The Compensation Committee approves salaries for all other executive officers of the Company. The Compensation Committee administers the Company's annual bonus plans, the Company's Long-Term Incentive 4 Plans and the Company's Supplemental Executive Retirement Plan (the "Supplemental Executive Retirement Plan"), and reviews on a regular basis the Company's compensation program. The Compensation Committee also recommends to the full Board a successor to the Chief Executive Officer when a vacancy occurs. The Nominating Committee is comprised of Messrs. Hughes (Chairman), Evans and Hooker. The Nominating Committee, which held two meetings during fiscal year 1998, considers and recommends to the full Board nominees to fill Board vacancies and a director to serve as Chairman of the Board. The Nominating Committee receives and evaluates shareholder proposals for nominees to fill Board vacancies and recommends to the Board candidates for membership on the committees of the Board. As to each person whom a shareholder proposes to nominate for election or re-election as a director, the notice of proposal shall include the name, age, business address, residence address, principal occupation or employment, the class and number of shares beneficially owned and any other information relating to such person that is required by law to be disclosed, and include the written consent of the person to be named in the proxy statement as a nominee and to serve as a director if elected. The name and address of the shareholder making the proposal as they appear on the Company's books and the class and number of shares of the Company which are beneficially owned by such shareholder shall be included in the notice. This information should be sent to the Corporate Secretary, Oceaneering International, Inc., P. O. Box 40494, Houston, Texas 77240-0494, not less than 120 days prior to any meeting of shareholders called for the election of directors. During fiscal year 1998, the Board of Directors held a total of six meetings. Each member of the Board of Directors attended 100% of the aggregate of the total number of Board meetings and meetings of any committee on which he served. The Company pays its outside directors a $10,000 annual retainer, $1,000 for each Board meeting attended, $800 for each committee meeting attended (if the meeting is on a day other than the date of the Board meeting) and a consulting fee of $100 per hour up to a maximum of $800 per day for any consulting services. All directors are reimbursed for their travel and other expenses involved in attendance at Board and committee meetings. Nonemployee directors are participants in a 1990 Nonemployee Director Stock Option Plan. Under this plan, as amended, each nonemployee director of the Company was granted in June 1998 an option to purchase 10,000 shares of Common Stock at an exercise price per share equal to the fair market value of a share of Common Stock on the date the option was granted. The options granted are not exercisable until the later to occur of six months from the date of grant or the date the optionee has completed two years of service as a director of the Company. There are no family relationships between any director or executive officer. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Throughout fiscal year 1998, the Compensation Committee consisted of nonemployee directors none of whom were formerly officers of the Company. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's directors and executive officers to file with the SEC and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of Common Stock. Based solely on a review of the copies of such reports furnished to the Company and representations that no other reports were required, the Company believes that all its directors and executive officers during the fiscal year ended March 31, 1998 complied on a timely basis with all applicable filing requirements under Section 16(a) of the Exchange Act. 5 EXECUTIVE COMPENSATION The following table sets forth information for the fiscal years shown, with respect to the Chief Executive Officer and each of the other four most highly compensated executive officers of the Company serving as such on March 31, 1998. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ------------------------------------------------ ANNUAL COMPENSATION AWARDS PAYOUTS --------------------------------------- ------------------------- -------------------- OTHER ALL ANNUAL SECURITIES OTHER NAME AND COMPEN- RESTRICTED UNDERLYING LTIP COMPENSA- PRINCIPAL SATION STOCK OPTIONS PAYOUTS SATION POSITION YEAR SALARY($) BONUS($)(a) ($)(b) AWARDS (#) ($)(d) ($)(e) --------- ---- --------- ----------- ------ ---------- --------- -------- --------- John R. Huff 1998 420,000 200,000 0 0 30,000 1,364,504 110,925 Chairman, President and 1997 400,000 240,000 0 (c) 20,000 1,154,590 127,241 Chief Executive Officer 1996 375,000 60,000 0 0 0 652,099 76,417 T. Jay Collins 1998 210,000 140,000 0 0 15,000 159,192 54,342 Executive Vice President 1997 195,000 120,000 0 (c) 10,000 134,701 39,170 Oilfield Marine Services 1996 176,500 30,000 0 0 0 52,458 19,810 Marvin J. Migura 1998 177,000 60,000 0 0 8,000 53,064 37,187 Senior Vice President and 1997 175,000 80,000 0 (c) 6,000 44,900 9,301 Chief Financial Officer 1996 132,152 20,000 0 (c) 40,000 0 216 Bruce L. Crager (f) 1998 177,000 50,000 0 0 10,000 136,450 46,939 Senior Vice President Production Systems George R. Haubenreich, Jr. 1998 177,000 60,000 0 0 8,000 136,450 14,992 Vice President, General 1997 175,000 90,000 0 (c) 6,000 115,458 37,636 Counsel and Secretary 1996 161,500 25,000 0 0 0 116,460 25,380
(a) In fiscal years 1998 and 1997, Messrs. Huff, Collins, Migura and Haubenreich elected to receive all or part of their bonus awards in restricted stock. The bonus amounts stated for fiscal years 1998 and 1997 include the following restricted stock grants valued on the basis of the relevant closing market prices of $17.937 and $14.625 per share, respectively: Mr. Huff - 11,148 and 16,400 shares, Mr. Collins - 7,804 and 8,204 shares, Mr. Migura - 1,200 and 4,000 shares and Mr. Haubenreich - 3,344 and 6,152 shares. The restricted stock awards vest as follows: 25% of the 1998 and 1997 bonus award vested in June 1998 and 1997, respectively, with the remainder vesting over three years from the vesting date, conditional upon continued employment. At the time of each vesting, a tax assistance payment is made to the award recipients which must be reimbursed to the Company if the vested stock related thereto is sold within three years after the vesting date. (b) Excludes the value of perquisites and other personal benefits for each of the named executive officers because the aggregate amounts thereof did not exceed the lesser of $50,000 or 10% of the total annual salary and bonus reported for any named executive officer. (c) At March 31, 1998, the number and value of the long term incentive restricted stock holdings which have not vested (based upon the closing market price on that date of $19.75 per share) under restricted stock awards were as follows: Mr. Huff - 135,000 shares, $2,666,250; Mr. Collins - 47,250 shares, $933,187; Mr. Migura - 25,500 shares, $503,625; Mr. Crager - 34,500 shares, $681,375; and Mr. Haubenreich - 25,500 shares, $503,625. Dividends, if any, are paid on the restricted shares. The value of such stock for which restrictions were lifted in fiscal years 1998, 1997 and 1996 is reported in the LTIP payouts column in the table. 6 (d) Amounts represent the aggregate value of long term incentive restricted stock for which restrictions were lifted and the associated tax assistance payment. Additionally, in fiscal year 1996 for Messrs. Huff and Haubenreich, the amounts include the last of four equal cash payments made pursuant to a previously granted stock performance-based award. (e) The amounts represent Company contributions under a nonqualified Executive Retirement Plan, which terminated in June 1997. As of March 31, 1998, none of the amounts accrued for each executive under the Supplemental Executive Retirement Plan, a successor and nonqualified plan, had vested. (f) Mr. Crager has been employed by the Company during each of the last three years but was not appointed an executive officer until fiscal year 1998. LONG-TERM INCENTIVE PLANS AND RETIREMENT PLANS Under the shareholder-approved 1990 and 1996 Long-Term Incentive Plans, the Compensation Committee may grant options, stock appreciation rights, stock and cash awards to employees and other persons (excluding nonemployee directors) having an important business relationship with the Company. The Company has in effect a Retirement Plan and a Supplemental Executive Retirement Plan. All employees of the Company and its United States subsidiaries who meet the eligibility requirements may participate in the Retirement Plan. Certain key management employees and executives of the Company, as approved by the Compensation Committee, are eligible to participate in the Supplemental Executive Retirement Plan, which was implemented effective July 1, 1997. Under the Retirement Plan, each participant directs the Company to defer between 1% and 16% of the participant's base pay and contribute the deferred compensation to the Retirement Plan, with such contributions being invested in shares of Common Stock, mutual funds and guaranteed investments. A participant's deferred compensation contributed to the plan is fully vested. The Company's contributions to this plan become vested to the participant in percentage increments over a six-year period, commencing with the participant's date of employment, provided that the participant remains employed by the Company. The Company is currently contributing an amount equal to the deferred compensation of each participant who has elected to invest in Common Stock up to the first 6% of the participant's base pay and 50% of the deferred compensation of each participant who has elected to invest in the other investments up to the first 6% of the participant's base pay. During fiscal year 1998, none of the executive officers listed in the Summary Compensation Table made contributions to the Retirement Plan. As of each July 1, the Company may establish an amount to be accrued pursuant to the Supplemental Executive Retirement Plan for the following 12-month period ("Plan Year") as it determines in its discretion and the amounts accrued may be different for each participant. No separate fund is maintained for the Supplemental Executive Retirement Plan. Amounts accrued pursuant to the Supplemental Executive Retirement Plan are adjusted for earnings and losses as if they were invested in one or more investment vehicles selected by the participant from those designated as alternatives by the Compensation Committee. The account balances vest in one-third increments on the close of the first, second and third years of continuous employment beginning with and including July 1 of the Plan Year with respect to which they are accrued. The account balances vest in any event upon ten years of continuous employment after becoming a participant, the date that the sum of the participants' attained age and years of participation equal 65, termination of employment by reason of death or disability or within two years of a change of control, or termination of the plan. A participant's interest in the plan is generally distributable upon termination of employment. The following table provides information concerning grants of stock options made to the named executive officers during the fiscal year ended March 31, 1998. 7 OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES INDIVIDUAL GRANTS(a) OF STOCK ------------------------------------------------------ PRICE APPRECIATION NUMBER OF % OF TOTAL FOR SECURITIES OPTIONS OPTION TERM(b) UNDERLYING GRANTED TO EXERCISE -------------------- OPTIONS EMPLOYEES IN PRICE EXPIRATION 5% 10% NAME GRANTED (#) FISCAL YEAR ($/SH) DATE ($) ($) - ------------------------------------- ----------- ------------ ----------- ----------- --------- --------- John R. Huff 30,000 7.5 14.69 4/21/03-06 205,095 932,342 T. Jay Collins 15,000 3.8 14.69 4/21/03-06 102,547 466,170 Marvin J. Migura 8,000 2.0 14.69 4/21/03-06 54,691 248,625 Bruce L. Crager 10,000 2.5 14.69 4/21/03-06 68,365 310,781 George R. Haubenreich, Jr. 8,000 2.0 14.69 4/21/03-06 54,691 248,625
- ----------------- (a) Stock options are awarded at the fair market value of Common Stock at the date of award and become exercisable over four years after the date of award. Options generally expire at the earliest of 5 years after the date the award becomes exercisable, one year after optionee's death, disability or retirement or at the time of optionee's termination of employment. (b) The amounts shown as potentially realizable values are based on arbitrarily assumed rates of stock price appreciations of five percent and ten percent over the full term of the options, as required by applicable SEC regulations. The actual value of the option grants is dependent on future performance of the Common Stock and overall market conditions. There is no assurance that the values reflected in this table will be achieved. The following table provides information concerning each stock option exercised during the fiscal year ended March 31, 1998 by each of the named executive officers and the value of unexercised options held by such officers at the end of the 1998 fiscal year. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT SHARES OPTIONS AT FY-END (#) FY-END ($) ACQUIRED ON VALUE --------------------------- --------------------------- NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ------------------------------------- ------------ ----------- ----------- ------------- ----------- ------------- John R. Huff 58,000 790,250 119,000 66,000 855,956 357,720 T. Jay Collins 30,000 281,250 40,000 35,000 269,751 210,329 Marvin J. Migura 10,000 118,750 7,200 36,800 60,263 279,926 Bruce L. Crager 0 0 7,400 24,000 42,409 124,125 George R. Haubenreich, Jr. 15,000 190,000 17,200 16,800 100,607 87,238
8 BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Company's executive compensation program is administered by the Compensation Committee of the Board of Directors (the "Committee"). Each member of the Committee is a nonemployee director. The Committee is dedicated to the establishment of a strong, positive link between the development and attainment of strategic goals, which enhance shareholder values, and the compensation and benefit programs needed to achieve those results. OVERALL EXECUTIVE COMPENSATION POLICY The Company's policy is designed to facilitate its mission of increasing the net wealth of its shareholders by: o Attracting, rewarding and retaining highly qualified and productive individuals. o Setting compensation levels that are externally competitive and internally equitable. o Interrelating annual executive compensation with the results of individual performance, the individual's profit center performance and overall Company performance. o Motivating executives and key employees towards achieving long-term strategic results by aligning employee and shareholder interests through the increased value of the Company's stock. There are three major components of the Company's executive compensation program: Base Salary, Annual Incentives and Long-Term Incentive Awards. The Committee considers all elements of compensation when determining individual components. BASE SALARY The Committee believes a competitive salary is essential to support management development and career orientation of executives. The Committee reviews annually the salary of executive officers. In determining appropriate salary levels, the Committee considers level and scope of responsibility and accountability, experience, individual performance contributions, internal equity and market comparisons. No specific weightings are assigned to these criteria. However, the Committee manages base salaries for the executive group in a conservative fashion in order to place more emphasis on incentive compensation. ANNUAL INCENTIVES The Committee administers an annual cash incentive bonus award plan to reward executive officers and other key employees of the Company based upon individual performance and the achievement of specific financial and operational goals determined for the year. The award interrelates individual performance, an individual's profit center performance and the Company's overall performance. For fiscal year 1998, the maximum annual bonus award established for executive officers was within a range of 30-100 percent of base salary. LONG-TERM INCENTIVE AWARDS Long-term incentive awards under shareholder-approved Long-Term Incentive Plans are designed to create a mutuality of interest between executive officers (and other key employees) and shareholders through stock ownership and other incentive awards. To achieve these objectives, the Committee granted restricted Common Stock to executive officers and other key employees of the Company in fiscal year 1997. Those awards are subject to earning requirements during the three-year performance period and subsequent vesting requirements. Up to one-third of the total grant may be earned each year, depending upon the Company's cumulative Common Stock performance from June 28, 1996 as compared with a specified peer group's cumulative common stock performance from that date, with any amount earned subject to vesting in four equal installments over three years commencing one year after earning, conditional upon continued employment. If the performance of the Company's Common Stock is less than 50% of the average of the performance of the common stock of the peer group, no shares of restricted stock are earned. If the performance of the Company's Common Stock 9 is 50% - 87.5% or greater than the average of the performance of the peer group, the amount of restricted stock earned will range from 16% to 100% of the maximum achievable for this period. At the time of each vesting, the participant receives a tax assistance payment, which must be reimbursed to the Company if the vested Common Stock is sold within three years after the vesting date. At the end of fiscal year 1998, one-third of the total grant was earned, subject to vesting requirements. The Committee awarded a similar grant in fiscal year 1994 in which all of the restricted stock granted was earned as a result of the performance of the Company's Common Stock, subject to vesting requirements. The Committee awards stock options to a broad group of executives and key employees. Stock option grants were made to all executive officers in fiscal year 1998. COMPENSATION OF CHIEF EXECUTIVE OFFICER John R. Huff has been Chief Executive Officer and President of the Company since August 1986 and Chairman of the Board since 1990. His compensation package has been designed to encourage the enhancement of shareholder value. Mr. Huff's compensation for fiscal year 1998 included the same components and methodology of salary and variable compensation as apply to other executive officers, with regard to his high level of accountability. A substantial portion of his compensation is at risk in the form of performance bonuses and stock awards. In fiscal year 1998, Mr. Huff's base annual salary was increased by 5% to $420,000 and he received an annual bonus of $200,000. This bonus is commensurate with the Company's financial performance during the year which generated a record high net income. These amounts reflect the Committee's assessment of the Company's financial performance compared to other oilfield service companies during the relevant periods, Mr. Huff's leadership and significant personal contribution to the Company's business, and compensation data of competitive companies. Compensation Committee Charles B. Evans, Chairman Harris J. Pappas COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m) Section 162(m) of the Internal Revenue Code generally disallows a deduction to public companies to the extent of excess annual compensation over one million dollars paid to the Chief Executive Officer or to any of the four other most highly compensated executive officers, except for qualified performance-based compensation. The Company had no non-deductible compensation expense for fiscal year 1998. The Company plans to review this matter as appropriate and take action as may be necessary to preserve the deductibility of compensation payments to the extent reasonably practical and consistent with the Company's compensation objectives. PERFORMANCE GRAPH The following line graph compares the Company's total shareholder return to the Standard & Poor's 500 Stock Index ("S&P 500") and with that of a peer group over a five-year period ending on March 31, 1998. The peer group companies at March 31, 1998 for this performance graph are Dresser Industries, Inc., which replaced Baroid Corporation after their merger, Global Industries, Ltd., Halliburton Company, McDermott International, Inc., Nabors Industries, Inc., Offshore Logistics, Inc., J. Ray McDermott, Inc. which replaced Offshore Pipelines, Inc. after their merger, Stolt Comex Seaway S.A., and Tidewater, Inc. Hornbeck Offshore Services, Inc. was included in the peer group through March 1996 when it merged into Tidewater, Inc. It is assumed in the graphs that (i) $100 was invested in the Company's Common Stock, the S&P 500 and the peer group on March 31, 1993, except that with respect to Stolt Comex Seaway S.A., it is assumed the investment was made in May 1993, the first month the stock for such company was publicly available for purchase; and the investment was made in Baroid Corporation through January 1994, and thereafter in Dresser Industries, Inc., and in Offshore Pipelines, Inc. through January 1996, and thereafter in J. Ray McDermott, Inc., as a result of their mergers, and in Hornbeck Offshore Services, Inc. through March 1996, when it merged with Tidewater, Inc., (ii) the peer group investment is weighted based on the market capitalization of each individual company within the peer group at the beginning of each period and (iii) any dividends are reinvested. The Company has not declared any dividends during the period covered by the graph. The shareholder return shown is not necessarily indicative of future performance. 10 COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURN FOR OCEANEERING INTERNATIONAL, INC., S&P 500 AND A SELECTED PEER GROUP [LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW] 1993 1994 1995 1996 1997 1998 ---- ---- ---- ---- ---- ---- Oceaneering 100.00 87.50 70.54 97.32 111.61 141.07 International, Inc. Peer Group 100.00 88.93 103.14 149.04 176.40 263.37 S&P 500 100.00 101.47 117.27 154.92 185.63 274.73 EXECUTIVE EMPLOYMENT AGREEMENTS Under a Senior Executive Severance Plan (the "Severance Plan") adopted by the Board of Directors in January 1983, and as amended in March 1989, in the event of a change in control of the Company (as defined in the Severance Plan) followed by termination of employment within one year thereafter for any reason other than termination as a consequence of death, disability or retirement, voluntary termination prior to three months after a change of control, or termination for cause due to commission of a felony related to employment with the Company, certain key executives, as determined by the Board of Directors, will receive a payment equal to 50% of one year's base salary, including bonuses, and all fringe benefits for six months after termination of employment. In such an event, stock options and other benefits of the executive will become immediately vested, and the executive may elect to either exercise his outstanding stock options or surrender them and be compensated for the difference between the exercise price and any higher fair market value of the outstanding stock options. The executive will also receive 25% of the amount of the difference between the exercise price and any higher fair market value of all stock options exercised or surrendered by the executive during the three-year period ending with the date of the executive's termination of employment. The executive officers listed in the Summary Compensation Table are participants in the Severance Plan. The Company has entered into an employment agreement with no expiration date with John R. Huff, which provides that, in the event of his termination from the Company for any reason except voluntary resignation or cause, he will receive compensation equivalent to one year's salary, inclusive of any amounts payable under the Severance Plan. Medical coverage is to be provided to Mr. Huff, his spouse and children during his employment with the Company and, under circumstances specified therein, thereafter for life. In March 1989, the Company also entered into an amended Supplemental Senior Executive Severance Agreement ("Supplemental Agreement") with Mr. Huff, which provides that, in the event of a change in control of the Company (as defined in the Supplemental Agreement) and termination of his employment for any reason (other than voluntary resignation for nonpermissible reasons or termination for cause due to commission of a felony related to employment with the Company), or reduction in the scope of his position or total annual compensation, or if he is 11 requested to relocate, Mr. Huff may either elect to receive the benefits under the Severance Plan, as described above, or the benefits under the Supplemental Agreement. If he elects to receive the Supplemental Agreement benefits, Mr. Huff will receive a payment equal to three years' base salary, including bonuses, and all fringe benefits for six months after termination of employment, and his stock options and other benefits will become immediately vested. Mr. Huff may elect either to surrender his outstanding stock options and receive an amount equal to twice the amount of the difference between the exercise price and any higher fair market value of the outstanding stock options, or to exercise such stock options and receive the amount of the difference. He will also receive 100% of the amount of the difference between the exercise price and the fair market value of all stock options exercised or surrendered by him during the three-year period ending with the date of his termination of employment. CERTAIN TRANSACTIONS Except as set forth in this report, no director or executive officer of the Company or nominee for election as a director of the Company, or holder of more than 5% of its shares of Common Stock, and no member of the immediate family of any such director, nominee, officer or security holder, to the knowledge of the Company, had any material interest in any transaction since April 1, 1997 or has any interest in any proposed transaction to which the Company or its subsidiaries were or are a party in which the amount involved exceeded $60,000. No director or executive officer of the Company who served in such capacity since April 1, 1997 or any associate of any such director or officer, to the knowledge of the executive officers of the Company, has any material interest in any matter proposed to be acted upon at the 1998 Annual Meeting of Shareholders other than as described in this Proxy Statement. RATIFICATION OF APPOINTMENT OF AUDITORS PROPOSAL 2 Subject to ratification by the shareholders, the Board of Directors has appointed Arthur Andersen LLP, independent certified public accountants, as independent auditors of the Company for the fiscal year ending March 31, 1999, pursuant to the recommendation of the Audit Committee of the Board. Arthur Andersen LLP has served as the Company's independent auditors for 27 years. Representatives of Arthur Andersen LLP will be present at the meeting, will be given the opportunity to make a statement if they so desire and will be available to respond to appropriate questions of any shareholders. In accordance with the Company's Bylaws, the approval of the proposal to ratify the appointment of Arthur Andersen LLP as independent auditors of the Company for the fiscal year ending March 31, 1999 required the affirmative vote of a majority of the shares of Common Stock present in person or by proxy at the meeting. Accordingly, abstentions and broker "non-votes" marked on proxy cards will count as votes "against" this proposal. The persons named in the accompanying proxy intend to vote such proxy in favor of the ratification of the appointment of Arthur Andersen LLP as independent auditors of the Company for the fiscal year ending March 31, 1999, unless a contrary choice is set forth thereon or unless an abstention or broker "non-vote" is indicated thereon. THE BOARD OF DIRECTORS URGES THE SHAREHOLDERS TO VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 1999. 12 SHAREHOLDER PROPOSALS Shareholder proposals for the 1999 Annual Meeting of Shareholders of the Company must be received at the Company's principal executive offices, 11911 FM 529, Houston, Texas 77041-3011, addressed to the Corporate Secretary, no later than March 17, 1999. TRANSACTION OF OTHER BUSINESS As of the date of this Proxy Statement, the Board of Directors is not aware of any matters other than those set forth herein and in the Notice of Annual Meeting of Shareholders that will come before the meeting. Should any other matter requiring the vote of shareholders arise at the meeting, it is intended that proxies will be voted in respect thereto in accordance with the judgment of the person or persons voting the proxies. Please return your proxy as soon as possible. Unless a quorum consisting of a majority of the outstanding shares entitled to vote is represented at the Annual Meeting of Shareholders, no business can be transacted. Therefore, please be sure to date and sign your proxy exactly as your name appears on your stock certificate and return it in the enclosed postage prepaid return envelope. Please act promptly to ensure that you will be represented at this important meeting. THE COMPANY WILL PROVIDE WITHOUT CHARGE ON THE WRITTEN REQUEST OF ANY PERSON SOLICITED HEREBY A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE COMPANY'S FISCAL YEAR ENDED MARCH 31, 1998. WRITTEN REQUESTS SHOULD BE MAILED TO GEORGE R. HAUBENREICH, JR., SECRETARY, OCEANEERING INTERNATIONAL, INC., P.O. BOX 40494, HOUSTON, TEXAS 77240-0494. By Order of the Board of Directors, /s/ GEORGE R. HAUBENREICH, JR. Vice President, General Counsel and Secretary July 15, 1998 13 OCEANEERING INTERNATIONAL, INC. PROXY SOLICITED BY BOARD OF DIRECTORS John R. Huff and D. Michael Hughes, and each or any of them, with full P power of substitution, are hereby appointed proxies to vote the stock of the undersigned in Oceaneering International, Inc., held of record by the R undersigned on July 8, 1998, at the Annual Meeting of Shareholders on August 21, 1998, to be held at the Baker & Botts, L.L.P. Conference Room, O One Shell Plaza-Mall Level, 910 Louisiana, Houston, Texas 77002, and at any adjournment thereof. X YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE Y BOXES ON THE REVERSE SIDE. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. PLEASE MARK YOUR [X] VOTES AS IN THIS 1616 EXAMPLE. This Proxy when properly executed will be voted as directed. If no direction is made, this Proxy will be voted FOR the election of the two director nominees and FOR Proposal 2. MANAGEMENT RECOMMENDS THAT YOU VOTE FOR AUTHORITY ON PROPOSAL 1 AND FOR THE BOARD'S PROPOSAL 2. 1. Election of Directors FOR [ ] WITHHELD [ ] NOMINEES: DAVID S. HOOKER HARRIS J. PAPPAS For, except vote witheld from the following nominee: ____________________________________________________ 2. Proposal to ratify the appointment of FOR AGAINST ABSTAIN Arthur Andersen LLP as independent auditors [ ] [ ] [ ] for the fiscal year ended March 31, 1999. 3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof, including procedural and other matters relating to the conduct of the meeting. Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administra- tor, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. ______________________________________ ______________________________________ SIGNATURE(S) DATE -----END PRIVACY-ENHANCED MESSAGE-----