-----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, Cs+HTxDJQKlMHsVwb/XyCG/jGH5HzZdMzoeIP7WGaBWOj8gbjIit87xyc7b7B2GM pxFx/cMEs1J9QYHo1+t2CA== 0000906520-98-000002.txt : 19980306 0000906520-98-000002.hdr.sgml : 19980306 ACCESSION NUMBER: 0000906520-98-000002 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980515 FILED AS OF DATE: 19980305 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN OILFIELD DIVERS INC CENTRAL INDEX KEY: 0000906520 STANDARD INDUSTRIAL CLASSIFICATION: OIL, GAS FIELD SERVICES, NBC [1389] IRS NUMBER: 720918249 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: SEC FILE NUMBER: 000-22032 FILM NUMBER: 98558435 BUSINESS ADDRESS: STREET 1: 900 TOWN & COUNTRY LANE SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77024 BUSINESS PHONE: 7134301100 MAIL ADDRESS: STREET 1: 900 TOWN & COUNTRY LANE SUITE 400 CITY: HOUSTON STATE: TX ZIP: 77024 PRE 14A 1 PRELIMINARY PROXY SCHEDULE 14a Information Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act of 1934 (Amendment No. __________) Filed by the Registrant /x/ Filed by a part other than the Registrant / / Check the appropriate box: /x/ Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12 AMERICAN OIFIELD DIVERS, INC. ----------------------------- (Name of Registrant as Specified in Its Charter) ----------------------------- (Name of Person(s) Filing Proxy Statment, if other than Registrant) Payment of Filing Fee (Check the appropriate box): /x/ No fee required / / Fee computed on table below per Exchange Act Rules 14a-6(e)(1) 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 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------- (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: -------------------------------------------------------- PRELIMINARY PROXY AMERICAN OILFIELD DIVERS, INC. 900 TOWN & COUNTRY LANE, SUITE 400 HOUSTON, TEXAS 77024 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 15, 1998 To the stockholders of American Oilfield Divers, Inc.: NOTICE IS HEREBY GIVEN that the 1998 annual meeting of stockholders of American Oilfield Divers, Inc. (the "Company" ) will be held Friday, May 15, 1997 at 9:00 a.m. local time in the Radisson Suite Hotel Houston West, 10655 Katy Freeway, Houston, Texas 77024, for the following purposes, more fully described in the accompanying proxy statement: 1. To elect two Class II directors. 2. To approve an amendment to the Amended and Restated Articles of Incorporation to change the Company name to "Ceanic Corporation." 3. To transact such other business as may properly come before the meeting or any adjournment thereof. Only common stockholders of record at the close of business on April 3, 1998 are entitled to notice of and to vote at the annual meeting and all adjournments thereof. Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the annual meeting, please mark, date and sign the enclosed proxy card and return it promptly in the enclosed stamped envelope. Furnishing the enclosed proxy will not prevent you from voting in person at the meeting should you wish to do so. BY ORDER OF THE BOARD OF DIRECTORS Quinn J. Hebert Secretary Houston, Texas April __, 1998 PRELIMINARY PROXY AMERICAN OILFIELD DIVERS, INC. 900 TOWN & COUNTRY LANE, SUITE 400 HOUSTON, TEXAS 77024 PROXY STATEMENT ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 15, 1998 GENERAL This Proxy Statement is being furnished in connection with the solicitation of proxies on behalf of the Board of Directors of American Oilfield Divers, Inc. (the "Company") for use at its annual meeting of shareholders to be held May 15, 1998 at the time and place for the purposes set forth in the accompanying Notice of Meeting, and at any adjournment thereof (the "Meeting"). This Proxy Statement is being mailed to shareholders together with the proxy materials on or about April ___, 1998. The costs of soliciting proxies in the enclosed form will be borne by the Company. In addition to soliciting proxies by mail, directors, officers, and employees of the Company and its subsidiaries, without receiving additional compensation therefor, may solicit proxies by telephone and in person. Arrangements will also be made with banks, brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of shares of the common stock of the Company ("Common Stock"), and the Company will reimburse such persons for reasonable out-of-pocket expenses incurred in connection therewith. The proxies that accompany this Proxy Statement permit each holder of record of Common Stock on April 3, 1998 to vote on all matters to come before the Meeting. On that date the Company had outstanding ____________ shares of Common Stock, each of which is entitled to one vote. If you specify your choice on the proxy with respect to a matter being voted upon, the shares represented by your proxy will be voted in accordance with your specification. If no specification is made, the shares will be voted in favor of both of the proposed nominees to the Board of Directors listed herein and for the proposal to amend the Company's Amended and Restated Articles of Incorporation to change its name to "Ceanic Corporation." The Board of Directors of the Company is not aware of any business to be acted upon at the Meeting other than those matters set forth in the accompanying Notice of Meeting. If, however, other proper matters are brought before the Meeting, or any adjournment thereof, the persons appointed as proxies will have discretion to vote or abstain from voting thereon according to their best judgment. You may revoke your proxy by (i) giving written notice of revocation at any time before its exercise to Quinn J. Hebert, Secretary, American Oilfield Divers, Inc., 900 Town & Country Lane, Suite 400, Houston, Texas 77024, (ii) executing and delivering to Mr. Hebert at any time before its exercise a later dated proxy or (iii) attending the Meeting and voting in person. ELECTION OF DIRECTORS The Company's Amended and Restated Articles of Incorporation provide for a Board of Directors consisting of three classes, with the number of directors to be set forth in the By-laws. The By-laws provide for a Board of Directors of five persons. The term of office of the Class II directors will expire at the Meeting, and the persons listed as the Class II nominees in the table below will be nominated for the election to the Board of Directors for a term expiring in 2001. The term of office of the Class III directors will expire at the 1999 meeting. The term of office of the Class I director will expire at the 2000 meeting. Proxies cannot be voted for more than two nominees, and not more than two directors can be elected. In the absence of contrary instructions, it is the intention of the persons named in the accompanying proxy to vote the shares represented thereby for the election of the nominees listed below. In the unanticipated event that either Mr. O'Malley or Mr. Peterson is unavailable as a candidate for director, the Board of Directors will nominate a replacement candidate and the person named in the accompanying proxy will vote for such candidate. The following table sets forth certain information as of April 1, 1998 concerning the nominees for director, each director and each executive officer of the Company named, including the number and percentage of shares of Common Stock beneficially owned by him, determined in accordance with Rule 13d-3 of the Securities and Exchange Commission. The date shown under the caption "First Elected Director" for each nominee and director refers to the year in which he was first elected to the Board of Directors. Unless otherwise indicated, each person has been engaged in the principal occupation shown for the past five years or longer and shares indicated as beneficially owned are held directly with sole voting and investment power. In the case of directors who are also officers of the Company, unless otherwise indicated, such persons have been employed as an officer in one or more capacities by the Company or a subsidiary for the past five years or longer. The address of each director and executive officer is c/o American Oilfield Divers, Inc., 900 Town & Country Lane, Suite 400, Houston, Texas 77024. All executive officers of the Company, including Messrs. Stanley, Peterson, Suggs, Hebert, Cowe and Ms. Green serve at the pleasure of the Board of Directors. The Board of Directors recommends a vote FOR the nomineess named below:
Principal First Shares Occupation or Elected Beneficially Name Age Employment Director Owned Percent ----- --- ------------- -------- ------------ ------- Nominees for Class II Directors (For Term expiring in 2001) Kevin C. Peterson 41 Executive Vice President 1986 2,100 * and Chief Operating Officer William C. O'Malley 61 Chairman of the Board of 1993 20,150 * Directors, President and Chief Executive Officer of Tidewater, Inc. (marine services) Continuing Class III Directors (Term expires in 1999) George C. Yax 56 Chairman of the Board 1981 941,731 8.85% Stephen A. Lasher 50 President of The Gulf 1993 22,500 * Star Group, Inc. (financial advisory services) Continuing Class I Director (Term expires in 2000) Rodney W. Stanley 53 President and Chief 1996 113,800 * Executive Officer Executive Officers not serving as Directors Robert B. Suggs 50 Senior Vice President - --- --- * Americas Region Gordon J. Cowe 43 Vice President - --- --- * Corporate Engineering Quinn J. Hebert 34 Corporate Counsel and --- * * Secretary Cathy M. Green 32 Vice President - Finance --- 2,000 * and Chief Financial Officer --------- All nominees, directors and executive officers as a group (nine persons) 1,102,281 10.36% - ---------- * Less than one percent. Mr. Peterson has been Chief Operating Officer since October 13, 1997. He joined the Company as a Director and Executive Vice President and President - Technology Group on May 15, 1997. Until joining the Company in May, 1997, Mr. Peterson served as President and Chief Executive Officer of Coflexip Stena Offshore, Inc., a subsea contractor. From 1990 until May 1997 Mr. Peterson was President and Chief Operating Officer of Perry Tritech, Inc. manufacturer of remotely operated vehicles ("ROV"). Mr. O'Malley is a member of the Compensation Committee and is Chairman and a member of the Audit Committee. Mr. O'Malley has been Chairman of the Board, President and Chief Executive Officer of Tidewater Inc., a provider of offshore marine services, since September, 1994. Prior to that time, he had been Chairman of the Board of Directors of Sonat Offshore Drilling, Inc. ("Sonat Offshore"), an oil and gas contract drilling company, since April, 1987 and Chief Executive Officer of Sonat Offshore since May, 1990. Until May, 1993, Mr. O'Malley served as a director and Executive Vice President of Sonat, Inc., a holding company of various energy- related subsidiaries and principal stockholder of Sonat Offshore. Mr. O'Malley is also a director of Hibernia Corporation, a bank holding company. Shares beneficially owned by Mr. O'Malley include options to purchase 7,500 shares. Shares beneficially owned by Mr. Lasher include options to purchase 7,500 shares. Shares beneficially owned by Mr. Stanley includes options to purchase 60,000 shares and 16,000 shares held in a trust in which Stanley's is trustee. Shares beneficially owned by Ms. Green consist of options to purchase 2,000 shares. Mr. Yax served as President and Chief Executive Officer of the Company from its inception until December 1996. Mr. Lasher is a member of the Audit Committee and is Chairman and a member of the Compensation Committee. Mr. Lasher is also director of Weingarten Realty Investors, a publicly-held real estate investment trust, and Weingarten Properties, a public real estate investment trust. Since 1990, Mr. Lasher has been President of The Gulf Star Group, Inc., a provider of financial advisory services. Mr. Stanley has been a Director and President and Chief Executive Officer of the Company since December 1996. He joined the Company as a Director and Senior Vice President - International Operations on August 1, 1996. From 1995 to May 1996, he served as President and Chief Executive Officer of Hard Suits Inc., which was acquired by the Company in 1996. From 1986 to 1995 Mr. Stanley was President and Chief Executive Officer of Sonsub, Inc., a provider of subsea engineering and other services. Robert B. Suggs joined the Company in 1985 as the Company's Vice President-Operations. He became Vice President/General Manager-Offshore Division in 1990 and in 1997, became Senior Vice President-Americas Region. From 1981 to 1985, Mr. Suggs served as Vice President-Diving Services for Sea Con, Inc. In 1975, Mr. Suggs co-founded Sea Dive, Inc. which was sold to Sea Con, Inc. in 1981. He served in the United States Navy aboard a nuclear submarine from 1966 to 1970. Gordon J. Cowe joined the Company in 1997 as Vice President - Corporation Engineering. From 1996 until May 1997 he was a Senior Vice President of Sonsub International Inc., a provider of subsea and engineering services From 1994 to 1996, Mr. Cowe served as Engineering Manager/Deputy Alliance Manager for Transfield Worley Joint Venture. Prior to that time, he served in various engineering management positions. Mr. Hebert joined the Company in 1993. Until 1993 he was an associate with the law firm of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., New Orleans, Louisiana. Cathy M. Green joined the Company in 1994 as Corporate Controller. She became Vice President - Finance and Chief Financial Officer in January 1996. From 1992 to 1994, she was a manager with Price Waterhouse LLP, an independent public accounting firm.
_______________________ During 1997, the Board of Directors held eight meetings. During the period that he served as a director in 1997, each director of the Company attended 75% or more of the aggregate number of meetings of the Board of Directors and committees of which he is a member. Each director of the Company who is not an officer of the Company receives (i) an annual fee of $15,000, (ii) $500 for each meeting of the Board of Directors or any Board committee that the director attends and (iii) reimbursement of all ordinary and necessary expenses incurred in attending any meeting of the Board or any Board committee. Pursuant to the Company's Non-Employee Director Stock Option Plan (the "Director Plan"), each non-employee director will automatically receive options to purchase 1,500 shares of the Common Stock of the Company upon first becoming a director and annually thereafter on the day following the Company's annual meeting of shareholders at an exercise price equal to the fair market value of the Common Stock on the grant date, which, so long as the Company's Common Stock is quoted on The Nasdaq Stock Market, will be the final closing sales price per share for the trading day next preceding the grant date. A maximum of 50,000 shares may be issued pursuant to options granted under the Director Plan. As of December 31, 1997, options for 15,000 shares have been granted under the Director Plan. The Audit Committee, which met once in 1997, meets periodically with representatives of the Company's independent public accountants to assess the financial position and results of operations of the Company and reports to the Board of Directors with respect thereto. The Compensation Committee, which met three times in 1997, reviews, analyzes and recommends compensation programs to the Board, establishes executive compensation, evaluates the performance of certain executive officers and is responsible for the administration of and the grant of awards under the Company's Amended and Restated Incentive Compensation Plan. The Board of Directors does not have a standing nominating committee. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors, executive officers and beneficial owners of more than 10% of the Common Stock to file certain beneficial ownership reports with the Securities and Exchange Commission. Mr. Stanley, the Company's President and Chief Executive Officer, failed to file timely in 1997 a Form 4 reporting one transaction. Each of Mr. O'Malley and Mr. Lasher, directors of the Company, failed to file timely in 1995 and 1996 a Form 5 reporting one transaction. Each of Mr. Hebert and Ms. Green, executive officers of the Company, failed to file timely in 1997 a Form 4 reporting one transaction. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION The Board of Directors has unanimously approved a recommendation that the shareholders adopt an amendment to the Company's Amended and Restated Articles of Incorporation (the "Articles"). The effect of the amendment would be to change the name of the Company from "American Oilfield Divers, Inc." to "Ceanic Corporation". When the Company began in 1981, American Oilfield Divers, Inc. was a diving and vessel services company for the United States oil and gas industry, focusing primarily in the Gulf of Mexico. Since 1981, the Company has grown and diversified into an international subsea service company providing underwater services and products to the oil and gas industry as well as industrial and governmental customers, both domestically and internationally. Currently, the Company not only provides traditional oilfield diving and vessel services but also has expanded into general contracting services, deepwater ROV services and field development services. The Company adopted "Ceanic" as its tradename in February 1998. The Board of Directors believes that the new name "Ceanic Corporation" reflects its continued focus and growth on worldwide marketing and operations. The change of name will not affect the validity or transferability of stock certificates currently outstanding, and the Company's shareholders will not be required to surrender for exchange any certificates now held by them. The change will not affect the capital structure of the Company or the listing of any of its securities on any national securities exchange. The Company does not intend to change its stock ticker symbol "DIVE" at this time. The adoption of the proposal to approve the amendment to the Articles to change the Company's name requires an affirmative vote of the holders of two-thirds of the shares present, in person or by proxy, at the meeting. The text of the proposed amendment is as follows: ARTICLE I Name The name of the corporation is Ceanic Corporation. If the amendment is adopted by the shareholders, it will become effective upon its filing with the Louisiana Secretary of State, which is expected to be accomplished immediately after the annual meeting of shareholders. The Board of Directors recommends that the shareholders vote FOR the proposal to amend the Articles to change the Company name to "Ceanic Corporation." EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS Summary of Executive Compensation The following table provides a summary of the compensation for the fiscal year ended December 31, 1997, 1996 and 1995 of (i) the chief executive officer and (ii) the four most highly compensated executive officers of the Company during 1997 other than the chief executive officer (collectively, the "Named Executive Officers"). Summary Compensation Table --------------------------
Long Term Annual Compensation Compensation ------------------- ------------ Securities Underlying Name and Principal Position Year Salary Bonus Options(#) - --------------------------------------------------------------------------------- Rodney W. Stanley, 1997 $275,000 $ 0 300,000 President and 1996 90,185 0 Chief Executive Officer Kevin C. Peterson 1997 $119,166 $ 0 200,000 Executive Vice President and Chief Operating Officer Robert B. Suggs 1997 $136,666 $ 0 10,000 Senior Vice 1996 109,992 $30,000 President-Americas Region Quinn J. Hebert 1997 $125,000 $ 0 50,000 Corporate Counsel and 1996 90,000 30,000 Secretary Cathy M. Green 1997 $125,000 $ 0 20,000 Chief Financial 1996 82,083 30,000 Officer and Vice President-Finance _____ Mr. Stanley commenced employment on August 1, 1996, thus the amount stated as his 1996 salary reflects a partial year employment. For information with respect to his stock options, see "Stanley Employment Agreement" below. Mr. Peterson commenced employment on May 15, 1997; thus the amount stated as his 1997 salary reflects a partial year of employment. Mr. Peterson's annual salary as Executive Vice President and Chief Operating Officer is $230,000. For information with respect to his stock options see "Peterson Employment Agreement" below.
Stock Options The following table sets forth information with respect to all stock options granted in 1997 by the Company to each of the Named Executive Officers. No stock appreciation rights have been granted by the Company to any of the Named Executive Officers. Option Grants in Last Fiscal Year
Grant Individual Grants Date Value - ------------------------------------------------------------------------------- (a) (b) (c) (d) (e) (f) Number of % of Total Securities Options Exercise Grant Underlying Granted to or Base Date Options Employees Price Expiration Present Name Granted(#)(F1> in Fiscal ($/Sh) Date Value ($) - ------------------------------------------------------------------------------- Rodney W. Stanley 300,000 26% $ 9.00 4/29/07 $[______] Kevin C. Peterson 200,000 18% $ 9.00 5/15/07 $[______] Robert B. Suggs 10,000 * $15.56 9/9/07 $[______] Quinn J. Hebert 50,000 4% $ 9.00 4/29/07 $[______] Cathy M. Green 20,000 1.7% $15.56 9/9/07 $[______] * Less than 1%. Each of the stock options granted in 1997 by the Company to the Named Executive Officers is not immediately exercisable. One-fifth of the number of stock options covered by each such grant will become exercisable on the first through fifth anniversaries of the respective date of grant thereof. Such stock options will, however, become immediately exercisable in their entirety at such time as determined by the Compensation Committee of the Board of Directors in its sole discretion or upon the occurrence of certain events specified in the Amended and Restated Incentive Compensation Plan. Mr. Stanley's option granted to purchase 375,000 options at $8.875 subject to performance criteria was cancelled in 1997. In an effort to bring Mr. Stanley's long-term compensation in line with the incentives of the Company's peer group and the Company's other executive officers, in April 1997, Mr. Stanley was granted an option to purchase 300,000 shares at $9.00 per share, vesting over a five-year term without being subject to performance criteria. (3) The Black-Scholes option pricing model was used to determine the grant date present value of the stock options granted in 1997 by the Company to the Named Executive Officers. Under the Black-Scholes option pricing model, the grant date present value of each stock option referred to in the table was calculated to be $_____. The following facts and assumptions were used in making such calculation: (a) an unadjusted exercise price of $_____ for each such stock option; (ii) a fair market value of $_____ for one share of Company common stock on the date of grant; (iii) no dividend yield; (iv) a stock option term of 10 years; (v) a stock volatility of _____%, based on an analysis of weekly closing stock prices of share of Company common stock during the three-year period prior to the date of grant; and (vi) an assumed risk-free interest rate of ______%, which is equivalent to the yield on a ten-year treasury note on the date of grant. No other discounts or restrictions related to vesting or the likelihood of vesting of stock options were applied. The resulting grant date present value of $______ was multiplied by the total number of stock options granted to each of the Named Executive Officers to determine the total grant date present value of such stock options granted to each Named Executive Officer, respectively.
The following table sets forth information with respect to any exercises of Company stock options in 1997 by each of the Named Executive Officers and all outstanding Company stock options held by each of the Named Executive Officers as of December 31, 1997. No stock appreciation rights have been granted by the Company to any of the Named Executive Officers. Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
(a) (b) (c) (d) (e) Number of Securities Value of Underlying Unexercised In-the Unexercised Money Options at Options at FY-End($) FY-End (#) ----------------- ----------- Shares Acquired Exercisable/ Exercisable/ Name on Exercise(#) Value Realized Unexercisable* Unexercisable* - -------------------------------------------------------------------------------- Rodney W. Stanley 0 0 60,000 $ 225,000 240,000* $ 900,000* Kevin C. Peterson 0 0 0 $ 0 200,000* $ 750,000* Robert B. Suggs 3,053 $26,644 0 $ 0 10,000* $ 0 Quinn J. Hebert 8,000 44,161 0 $ 0 50,000* $ 187,500* Cathy M. Green 4,000 39,376 2,000 $ 10,500 20,000* $ 0
Stanley Employment Agreement The Company and Mr. Stanley entered into a five-year employment agreement (the "Agreement") effective August 1, 1996. Pursuant to the provisions of the Agreement, Mr. Stanley's initial annual salary was $200,000 as Senior Vice President - International Operations and was increased to $275,000 upon Mr. Stanley's election as President and Chief Executive Officer in December, 1996. Mr. Stanley's salary is subject to review by the Board of Directors annually. Mr. Stanley is also entitled to participate in all pension, incentive, bonus and other employee benefit plans made available to the Company's executive officers. If Mr. Stanley (i) dies or becomes disabled, (ii) is terminated for "Cause", as defined in the Agreement, or (iii) leaves the employ of the Company for a reason other than "Good Reason", as defined in the Agreement, the Company owes Mr. Stanley no further amounts under the Agreement. If, however, Mr. Stanley is (i) terminated for a reason other than "Cause" or (ii) leaves the employ of the Company for "Good Reason", the Company is required to pay Mr. Stanley an amount equal to his then full current annual salary plus the full incentive bonus paid or payable for the year immediately preceding such termination. Under the Agreement, Mr. Stanley was eligible for an annual bonus upon the attainment of certain Company-wide performance goals, the amount of which is to be determined by the Company's Compensation Committee. Pursuant to the terms of the Agreement, Mr. Stanley was granted options to purchase 375,000 shares of Common Stock on August 1, 1996 at an option exercise price of $8.875 per share. After a review of the terms of the grant of options under Mr. Stanley's employment agreement, the Compensation Committee voted to eliminate the performance criteria under the Agreement and issue Mr. Stanley a reduced number of shares consistent with issuance to those of the Company's other executive officers and the Company's peer group. The 375,000 options previously issued to Mr. Stanley were cancelled and a total of 300,000 options were granted to Mr. Stanley on April 29, 1997 at an exercise price of $9.00 per share, vesting over a five-year period. At the end of Mr. Stanley's employment with the Company, the Company may, in its sole discretion under the Agreement, elect to trigger a non-competition covenant pursuant to which Mr. Stanley will be prohibited from competing with the Company in various geographic areas for a period of up to two years. The amount of the noncompetition payment to Mr. Stanley under the Agreement will be either $100,000 per year or $200,000 per year, depending upon the reason for Mr. Stanley's employment termination. Peterson Employment Agreement The Company and Mr. Peterson entered into a five-year employment agreement (the "Agreement") effective May 15, 1997. Pursuant to the provisions of the Agreement, Mr. Peterson's initial annual salary was $220,000 as Executive Vice President and was increased to $230,000 upon Mr. Peterson's election as Chief Operating Officer. Mr. Peterson's salary is subject to review by the Board of Directors annually. Mr. Peterson is also entitled to participate in all pension, incentive, bonus and other employee benefit plans made available to the Company's executive officers. If Mr. Peterson (i) dies or becomes disabled, (ii) is terminated for "Cause", as defined in the Agreement, or (iii) leaves the employ of the Company for a reason other than "Good Reason", as defined in the Agreement, the Company owes Mr. Peterson no further amounts under the Agreement. If, however, Mr. Peterson is (i) terminated for a reason other than "Cause" or (ii) leaves the employ of the Company for "Good Reason", the Company is required to pay Mr. Peterson an amount equal to his then full current annual salary plus the full incentive bonus paid or payable for the year immediately preceding such termination. Mr. Peterson was granted options to purchase 200,000 shares of Common Stock on May 15, 1997 at an option exercise price of $9.00 per share vesting over a five year period. At the end of Mr. Peterson's employment with the Company, the Company may, in its sole discretion under the Agreement, elect to trigger a non-competition covenant pursuant to which Mr. Peterson will be prohibited from competing with the Company in various geographic areas for a period of up to two years. The amount of the noncompetition payment to Mr. Peterson under the Agreement will be $200,000 per year. Compensation Committee Interlocks and Insider Participation Messrs. Lasher and O'Malley serve on the Company's Compensation Committee, with Mr. Lasher acting as its Chairman. No executive officer of the Company during 1997 served as a director, or member of the compensation committee, of another entity, one of whose executive officers served as a director, or on the Compensation Committee, of the Company. Compensation Committee Report on Executive Compensation The Compensation Committee of the Board of Directors reviews, analyzes and establishes compensation for the Company's executive officers, reviews and provides general guidance for the compensation of the Company's profit center managers, evaluates the performance of the Chief Executive Officer and Chief Operating Officer and administers the grant of stock- based awards under the Company's Amended and Restated Incentive Compensation Plan. Messrs. O'Malley and Lasher, who comprise the Compensation Committee, are both independent, non-employee directors of the Company. In consultation with an employee benefits consultant retained by the Company to assess the Company's executive compensation in comparison to that of fourteen other publicly- held oilfield service companies (the "Comparison Group"), the Committee has adopted an executive compensation philosophy that seeks to (i) provide a competitive total compensation package that enables the Company to attract, hire, develop, reward and retain key executives, (ii) tie executive compensation to the Company's annual business objectives and strategies, and (iii) provide variable total reward opportunities that are directly tied to increases in stockholder value. The Company's compensation philosophy is also intended to reward individual initiative and achievement and to assure that the amount and nature of executive compensation is reasonably commensurate with the Company's financial condition, results of operations and Common Stock performance. The Company seeks to meet these objectives with base salaries that are generally competitive with those of the Comparison Group, annual incentive bonuses keyed primarily to the attainment of performance targets tied to the Company's budget and the award of stock options or other stock-based awards that focus on increases in stock value over a longer term. Factors considered from time to time in reviewing and establishing the Company's executive compensation program include the Company's financial performance, industry practices, the Company's culture and organizational structure, the responsibilities undertaken by a given executive and his or her success in doing so. In order to link a portion of executive compensation to Company performance, the Committee determined to continue during 1997 an annual bonus plan under which each executive officer and the Company's regional and other senior managers could earn an annual bonus of between approximately 15% to 60% of salary based on the quality of the individual's performance and the attainment of pre- established revenue and profit goals by the Company as a whole and by individual regions and business units. The exact amount of the bonus paid to the executive officers, however, was determined by the Compensation Committee. In 1997, Mr. Stanley received total cash compensation (in the form of salary) of $275,000 from the Company. Mr. Stanley's annual salary is fixed in his employment agreement, which is discussed above, although it may be increased upon annual review by the Board of Directors. Although the Company's 1997 revenues increased by approximately 25% from $105.8 million for 1996 compared to $132.7 million for 1997, the Company's net income level for fiscal 1997 of $2.2 million ($.22/share) was well below the Company's expectations and objective performance goals. Based primarily on the Company's 1997 financial performance, and notwithstanding the significant revenue growth in 1997, the Compensation Committee elected not to recommend to the Board of Directors an increase in Mr. Stanley's salary or to pay a bonus to Mr. Stanley, as the Chief Executive Officer. Moreover, due to the same factors discussed above, the Company did not pay a cash bonus to members of the Company's Executive Committee in 1997 which includes Mr.Peterson, Mr. Hebert, Mr. Cowe and Ms. Green in addition to Mr. Stanley. Another element of the Committee's performance-based compensation philosophy is the Amended and Restated Incentive Compensation Plan. The purpose of the Plan is to link the interests of management to the interests of shareholders and focus on intermediate and long-term results. Stock options grants are typically made at 100% of the market value of the stock on the date of the award, are not exercisable during the first year after the award and are exercisable thereafter under a vesting schedule selected by the Committee that specifies the number of the options becoming exercisable each year throughout the schedule. The size of option grants is determined subjectively, generally in approximate proportion to the officer's level of responsibility and experience. For those purposes, in 1997, the Company granted options to purchase shares of common stock in the amount of 300,000 to Mr. Stanley, 200,000 to Mr. Peterson, 10,000 to Mr. Suggs, 50,000 to Mr. Hebert, 20,000 to Mr. Cowe and 20,000 to Ms. Green. Under Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as amended, generally no deduction is allowed by a publicly held corporation for compensation paid by the corporation to its most highly compensated executive officers to the extent that the amount of such compensation for the taxable year for any such individual exceeds $1 million. Section 162(m) provides for the exclusion of compensation that qualifies as performance-based from the compensation that is subject to such deduction limitation. Other types of incentive compensation granted through such Plan may also qualify as performance-based compensation if additional requirements are met. The Company anticipates that the components of individual annual compensation for each highly compensated executive officer that do not qualify for any exclusion from the deduction limitation of Section 162(m) will not exceed $1 million and will therefore qualify for deductibility. Submitted by the Compensation Committee of the Board of Directors William C. O'Malley Stephen A. Lasher Performance Graph The following graph presents the cumulative total shareholder return on the Company's Common Stock for the period since the Company's initial public offering in July, 1993 compared to the cumulative total shareholder return, assuming reinvestment of dividends, for (i) all U.S. stocks quoted on the Nasdaq Stock Market as measured by the CSRP Total Return Index for The Nasdaq Stock Market (U.S.), (ii) the peer group previously selected by the Company (the "Old Peer Group") consisting of the following issuers, each of which is in the offshore construction business or the offshore oil and gas support services business, or both businesses: Coflexip Stena Offshore, Inc., Global Industries, Inc., J. Ray McDermott, S.ALtd., Oceaneering International, Inc., SEACOR Holdings, Inc., and Stolt Comex Seaway S.A., (iii) and a revised peer group (the "New Peer Group") recently selected by the Company that, except for the substitution of Cal Dive International, Inc. for Seacor Holdings, Inc. consist of the membership from the Old Peer Group. The Company elected to replace SEACOR with Cal Dive International, Inc. as Cal Dive recently became a public corporation in 1997 and is a provider of diving, vessel and related services in the Gulf of Mexico and hence better reflects peer group members who provide similar services and products as the Company. The Company's initial public offering was completed in July, 1993 and, accordingly, return information for earlier periods is not presented. The graph reflects the assumption that $100 was invested on July 21, 1993 in Company Common Stock and in the three indices presented. The returns of each member of the Old Peer Group and the New Peer Group have been weighted according to that issuer's stock market capitalization. The Company paid no dividends during the period presented. The cumulative total percentage returns for the period presented were as follows: Company Common Stock, 30.8%; all U.S. stocks quoted on the Nasdaq Stock Market, 132%; the Old Peer Group, 154.5%; and the New Peer Group, 161.7%. [insert graph here] CERTAIN TRANSACTIONS In 1997, the Company purchased the M/V American Defender, a 215 foot dynamically positioned vessel, from Tidewater, Inc. for the aggregate purchase price of $2.25 million. Mr. O'Malley, a director of the Company, is Chairman of the Board, President and Chief Executive Officer of Tidewater. Also, in 1997, the Company sold its environmental service subsidiary, American Pollution Control, Inc. for $275,000 cash to a company owned by Mr. Yax, the Company's Chairman of the Board. The Company believes that the prices involved in these transactions, which were negotiated at arm's length, are favorable to the Company. The price received by the Company on the sale of American Pollution Control, Inc. exceeded the value determined in an opinion from an independent investment banking firm. QUORUM AND VOTING OF PROXIES The presence, in person or by proxy, of a majority of the outstanding shares of Common Stock of the Company is necessary to constitute a quorum. Shareholders voting, or abstaining from voting, by proxy on any issue will be counted as present for purposes of constituting a quorum. If a quorum is present, (i) the election of the directors to be elected at the Meeting will be determined by plurality vote (that is, the nominees receiving the two largest number of votes will be elected) and (ii) the affirmative vote of the holders of two-thirds of the shares present in person or by proxy at the Meeting will be required to approve the proposal to amend Article I of the Company's Articles to change the name of the Company to "Ceanic Corporation" and (iii) a majority of votes actually cast will decide any other matter properly brought before the Meeting for a vote of shareholders. Shares for which proxy authority to vote for any nominee for election as a director is withheld by the shareholders and shares that have not been voted by brokers who may hold shares on behalf of the beneficial owners ("broker non-votes") will not be counted as voted for the affected nominee. With respect to the proposal to amend the Articles, shares abstained from voting will be considered present at the Meeting for purposes of determining whether or not two- thirds of the shares present at the Meeting were voted for such proposal, but shares not voted as a result of broker non-votes will not be so considered. With respect to all other matters, shares not voted as a result of abstentions and broker non-votes will not be considered as voted for purposes of determining whether or not a majority of votes were cast for such matters. PRINCIPAL STOCKHOLDERS The following table sets forth information as to the only person known by the Company to have beneficial ownership, as of March 1, 1998, of more than 5% of the outstanding shares of Company Common Stock, other than George C. Yax, whose beneficial ownership and address is disclosed under "Election of Directors." As of March 1, 1998, the Company had 10,640,760 shares outstanding. To the Company's knowledge, all shares shown as beneficially owned are held with sole voting power and sole dispositive power unless otherwise indicated. The information set forth below has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934 on the basis of the most recent information furnished to the Company by the person listed. Name and Address Shares Beneficially Owned Percent of Class ---------------- ------------------------- ---------------- David L. Babson and Company 754,800 7.1% One Memorial Drive Cambridge, Massachusetts 02142 Wellington Management Group 587,500 5.5% 75 State Street Boston, Massachusetts - ---------- Of the 587,500 shares, Wellington Management Company has shared voting power over 307,500 shares and shared dispositive power over all 587,500 shares. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS The Company's financial statements for 1997 were audited by the firm of Price Waterhouse LLP. Representatives of Price Waterhouse LLP are not expected to be present at the Meeting, but will be available to respond to appropriate questions in writing. STOCKHOLDER PROPOSALS Eligible shareholders who desire to present a proposal qualified for inclusion in the proxy materials relating to the Company's 1999 annual meeting must forward their proposal to the Secretary of the Company at the address set forth on the Notice of the Meeting in time to arrive at the Company prior to December 18, 1998. By Order of the Board of Directors Quinn J. Hebert Secretary Houston, Texas April ___, 1998 PRELIMINARY PROXY PROXY This Proxy is Solicited on Behalf of the Board of Directors of AMERICAN OILFIELD DIVERS, INC. The undersigned hereby constitutes and appoints Quinn J. Hebert and Cathy M. Green, or either of them, proxies for the undersigned, with full power of substitution, to represent the undersigned and to vote, as designated below, all of the shares of Common Stock of American Oilfield Divers, Inc. (the "Company") that the undersigned is entitled to vote and held of record by the undersigned on April 3, 1998 at the annual meeting of the shareholders of the Company to be held on May 15, 1998 (the "Annual Meeting"), and at any and all adjournments thereof. The Board of Directors recommends a vote FOR the nominees listed below 1. Election of Directors. FOR / / The nominee listed below WITHHOLD AUTHORITY / / to vote for (except as marked to the the nominee contrary below) listed below) INSTRUCTIONS: To withhold authority to vote for any nominee, strike a line through the nominee's name below: Kevin C. Peterson William C. O'Malley The Board of Directors recommends a vote FOR the proposal to amend the Articles of Incorporation and to change the Company name to "Ceanic Corporation." 2. Approval of the amendment to the Articles of Incorporation to change the Company name to "Ceanic Corporation." / / FOR / / AGAINST 3. In their discretion to vote upon such other business as may properly come before the Annual Meeting or any adjournment thereof. (Please See Reverse Side) This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR the nominees listed on the reverse side and FOR the proposal to amend the Articles of Incorporation to change the Company name to "Ceanic Corporation." The individuals designated above will vote in their discretion on any other matter that may properly come before the meeting. Date: , 1998 ------------------------ Signature of Shareholder ------------------------ Signature if held jointly Please sign exactly as name appears on the certificate or certificates representing shares to be voted by this proxy, as shown on the label to the left. When signing as executor, administrator, attorney, trustee, or guardian please give full title as such. If a corporation, please sign full corporation name by president or other authorized officer. If a partnership, please sign in partnership name by authorized persons. Please mark, sign, date and return this proxy promptly using the enclosed envelope. -----END PRIVACY-ENHANCED MESSAGE-----