[LOGO]
11200 Richmond Avenue, Suite 400
Houston, Texas 77082
April 4, 2003
Dear Stockholder:
You are cordially invited to attend the 2003 Annual Meeting of
Stockholders (the "Meeting") of SEACOR SMIT Inc. (the "Company"), which will be
held at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, 25th Floor,
New York, New York 10153 on Wednesday, May 14, 2003 at 10:00 a.m., local time.
All holders of record of the Company's outstanding common stock at the close of
business on March 21, 2003 will be entitled to vote at the Meeting.
Directors, officers and other representatives of the Company will be
present at the Meeting and they will be pleased to answer any questions you may
have.
Whether or not you expect to attend the Meeting and regardless of the
number of shares of SEACOR common stock you own, you are encouraged to read the
enclosed Proxy Statement and Annual Report carefully, and to complete, sign,
date and return the enclosed proxy in the postage-paid, self-addressed envelope
provided for such purpose so that your shares will be represented at the
Meeting. The prompt return of proxy cards will ensure the presence of a quorum.
We hope that you will be able to attend and look forward to seeing you at
the Meeting.
Sincerely,
/s/ Charles Fabrikant
Charles Fabrikant
Chairman of the Board
{LOGO]
11200 Richmond Avenue, Suite 400
Houston, Texas 77082
SEACOR SMIT INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 2003
----------------
April 4, 2003
To Our Stockholders:
The Annual Meeting of Stockholders (the "Meeting") of SEACOR SMIT Inc.
(the "Company") will be held on Wednesday, May 14, 2003, at 10:00 a.m., local
time, at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, 25th
Floor, New York, New York 10153, for the following purposes:
1. To elect nine directors to serve until the 2004 Annual Meeting of
Stockholders. Please see page 8.
2. To approve the SEACOR SMIT Inc. 2003 Non-Employee Director Share
Incentive Plan. Please see page 21.
3. To approve the SEACOR SMIT Inc. 2003 Share Incentive Plan. Please
see page 26.
4. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2003.
Please see page 34.
5. To transact such other business as may properly come before the
Meeting and any adjournments thereof.
Only holders of record of SEACOR common stock at the close of business on
March 21, 2003 will be entitled to notice of and to vote at the Meeting. YOUR
VOTE IS VERY IMPORTANT! Please complete, sign, date and return the enclosed
proxy, whether or not you expect to attend the Meeting, so that your shares may
be represented at the Meeting if you are unable to attend and vote in person. If
you attend the Meeting, you may revoke your proxy and vote your shares in
person.
For the Board of Directors
/s/ Randall Blank
Randall Blank
Secretary
SEACOR SMIT INC.
11200 RICHMOND AVENUE, SUITE 400
HOUSTON, TEXAS 77082
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 14, 2003
SOLICITATION OF PROXIES, VOTING AND REVOCATION
GENERAL
This Proxy Statement and the enclosed proxy are being furnished to
holders of record of the common stock, $.01 par value per share (the "Common
Stock"), of SEACOR SMIT Inc., a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board") for use at the Annual Meeting of Stockholders (the
"Meeting") to be held on Wednesday, May 14, 2003 and at any adjournments
thereof. This Proxy Statement and the enclosed proxy are first being mailed to
stockholders on or about April 7, 2003.
VOTING
The Board of Directors has fixed the close of business on March 21, 2003
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of and to vote at the Meeting. Each such stockholder will be
entitled to one vote for each share of Common Stock held as of the Record Date
on all matters properly to come before the Meeting, and may vote in person or by
proxy authorized in writing. Attendance at the Meeting, in person or represented
by proxy, by the holders of record of a majority of all shares of Common Stock
issued, outstanding, and entitled to vote constitutes a quorum. As of the Record
Date, there were 40,000,000 shares of Common Stock authorized, of which
19,658,146 were issued and outstanding. The Company has no other voting
securities issued or outstanding.
A list of the Company's stockholders as of the Record Date will be
available for examination by any stockholder, for purposes germane to the
Meeting, during ordinary business hours, for ten days prior to the date of the
Meeting, at the offices of the Company, 11200 Richmond Avenue, Houston, Texas
77042.
Stockholders are requested to complete, date, sign and promptly return
the accompanying proxy in the enclosed postage-paid, self-addressed envelope
provided for such purpose. Common Stock represented by properly executed proxies
that are received by the Company and not subsequently revoked will be voted at
the Meeting in accordance with the instructions contained therein. Abstentions
and broker non-votes will count towards the determination of a quorum at the
Meeting but will have the effect of votes "Against" a proposal, and will have no
effect on votes counted in connection with director elections. If instructions
are not given, proxies will be voted FOR election as a director of each of
management's nominees named under "Proposal No. 1 - Election of Directors" in
this Proxy Statement and listed under Item 1 of the enclosed proxy; FOR Proposal
No. 2, "Approval of the 2003 Non-Employee Director Share Incentive Plan" in this
Proxy Statement and listed under Item 2 of the enclosed proxy; FOR Proposal No.
3, "Approval of the SEACOR SMIT Inc. 2003 Share Incentive Plan" in this Proxy
Statement and listed under Item 3 of the enclosed proxy; and FOR Proposal No. 4,
"Ratification of Appointment of Independent Auditors" in this Proxy Statement
and listed under Item 4 of the
1
enclosed proxy. If other matters are properly presented at the Meeting for
consideration, the persons named in the proxy will have the discretion to vote
on those matters for the stockholder.
As a matter of policy, proxies, ballots and voting tabulations that
identify individual stockholders are kept confidential by the Company. Such
documents are made available only to the inspectors of election and certain
personnel associated with processing proxies and tabulating votes at the
Meeting. The votes of individual stockholders will not be disclosed except as
may be required by applicable law.
REVOCATION OF PROXIES
A stockholder who so desires may revoke such stockholder's proxy at any
time before it is exercised at the Meeting by: (i) providing written notice to
such effect to the Secretary of the Company, (ii) duly executing a proxy bearing
a date subsequent to that of a previously furnished proxy, or (iii) attending
the Meeting and voting in person. Attendance at the Meeting will not in itself
constitute a revocation of a previously furnished proxy and stockholders who
attend the Meeting in person need not revoke their proxy (if previously
furnished) and vote in person.
SOLICITATION EXPENSES
The Company will bear the costs of solicitation of proxies for the
Meeting. In addition to solicitation by mail, directors, officers and regular
employees of the Company may solicit proxies from stockholders by telephone,
electronic or facsimile transmission, personal interview or other means. The
Company has hired the Altman Group, Inc. to distribute and solicit proxies, and
will pay the Altman Group, Inc. a fee of $5,000 for these services, plus
reimbursement for certain additional out-of-pocket disbursements and expenses.
Nominees have been requested to forward proxy solicitation materials to
their customers, and such Nominees will be reimbursed for their reasonable
out-of-pocket expenses.
2
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership
of the Common Stock by: (i) all persons (including any "group" as that term is
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) who were known by the Company to be the beneficial owners
of more than 5% of the outstanding Common Stock, (ii) each director of the
Company, (iii) each executive officer of the Company named in the Summary
Compensation Table set forth below under "Executive Compensation," and (iv) all
directors and executive officers of the Company as a group (16 persons). Except
where otherwise indicated in the footnotes to the table, all beneficial
ownership information set forth below is as of the most recent practicable date.
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP(2) CLASS
---------------------------------------- ----------------------- -------------
Charles Fabrikant (3) 959,532 4.7%
Randall Blank (4) 82,878 *
Dick Fagerstal (5) 49,460 *
Alice N. Gran (6) 12,826 *
Rodney Lenthall(7) 18,667 *
James A. F. Cowderoy 48,832 *
Pierre de Demandolx (8) 9,000 *
Richard M. Fairbanks, III (9) 36,000 *
Michael E. Gellert (10) 389,262 2.0%
John C. Hadjipateras (11) 8,600 *
Oivind Lorentzen (12) 3,000 *
Andrew R. Morse (13) 33,031 *
Stephen Stamas (14) 10,500 *
AXA Financial, Inc. (15)
1290 Avenue of the Americas
New York, New York 10104 1,183,964 5.9%
Baron Capital Group, Inc. (16)
767 Fifth Avenue
New York, New York 10153 2,419,700 12.1%
Citigroup Inc. (17)
399 Park Avenue
New York, New York 10022 1,000,158 5.0%
Dimensional Fund Advisors Inc. (18)
1299 Ocean Avenue
Santa Monica, California 90401 1,147,550 5.8%
Porter Felleman (19)
666 Fifth Avenue
New York, New York 10103 1,005,900 5.0%
T. Rowe Price Associates, Inc. (20) 1,509,050 7.6%
100 East Pratt Street
Baltimore, Maryland 21202
All directors and executive officers as a group
(16 persons) 1,716,184 8.5%
----------
* Less than 1.0%.
3
(1) Unless otherwise indicated, the address of each of the persons whose name
appears in the table above is: c/o SEACOR SMIT Inc., 11200 Richmond
Avenue, Suite 400, Houston, Texas 77082.
(2) The information contained in the table above reflects "beneficial
ownership" of the Common Stock within the meaning of Rule 13d-3 under the
Exchange Act. Unless otherwise indicated, all shares of Common Stock are
held directly with sole voting and dispositive power. Beneficial
ownership information reflected in the table above includes shares
issuable upon the exercise of outstanding stock options exercisable
within 60 days after the date of this Proxy Statement.
(3) Includes 503,221 shares of Common Stock which Mr. Fabrikant may be deemed
to own through his interest in, and control of (i) Fabrikant
International Corporation ("FIC"), of which he is President, the record
owner of 372,727 shares of Common Stock, (ii) Fabrikant International
Profit Sharing Trust, of which he is the trustee, the record owner of
19,680 shares of Common Stock, (iii) the E Trust, of which he is Trustee,
the record owner of 3,789 shares of common stock, (iv) the H Trust, of
which he is trustee, the record owner of 3,789 shares of common stock and
(v) VSS Holding Corporation ("VSS Holdings"), of which he is President
and sole stockholder, the record owner of 103,236 shares of common stock.
Also includes 296,251 shares of Common Stock issuable upon the exercise
of options exercisable within 60 days and 53,000 shares of restricted
stock over which Mr. Fabrikant exercises sole voting power.
(4) Includes 50,084 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days and 7,866 shares of restricted stock
over which Mr. Blank exercises sole voting power.
(5) Includes 39,550 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days and 9,500 shares of restricted stock
over which Mr. Fagerstal exercises sole voting power.
(6) Includes 3,937 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days and 1,999 shares of restricted stock
over which Ms. Gran exercises sole voting power.
(7) Includes 15,667 shares of Common Stock issuable upon the exercise of
options exercisable within 60 days and 1,000 shares of restricted stock
over which Mr. Lenthall exercises sole voting power.
(8) Includes 9,000 shares of Common Stock issuable upon exercise of options
issued pursuant to the 2000 Stock Option Plan for Non-Employee Directors
(the "2000 Non-Employee Director Plan").
(9) Includes 9,000 shares of Common Stock issuable upon exercise of options
issued pursuant to the 2000 Non-Employee Director Plan.
(10) Includes 380,262 shares of Common Stock owned by Windcrest Partners,
L.P., of which Mr. Gellert is one of two general partners, and 9,000
shares of Common Stock issuable upon exercise of options issued pursuant
to the 2000 Non-Employee Director Plan.
(11) Includes 2,000 shares of Common Stock which Mr. Hadjipateras may be
deemed to own through a trust held for his children of which he is the
trustee, and 600 shares of Common Stock owned by his daughter of which he
is custodian until her 21st birthday. Also includes 6,000 shares of
Common Stock issuable upon exercise of options issued pursuant to the
2000 Non-Employee Director Plan.
(12) Includes 3,000 shares of Common Stock issuable upon exercise of options
issued pursuant to the 2000 Non-Employee Director Plan.
(13) Includes 9,000 shares of Common Stock issuable upon exercise of options
issued pursuant to the 2000 Non-Employee Director Plan.
(14) Includes 9,000 shares of Common Stock issuable upon exercise of options
issued pursuant to the 2000 Non-Employee Director Plan.
(15) According to a Schedule 13G filed jointly on February 12, 2003 by AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Conseil
Vie Assurance Mutuelle, AXA Courtage Assurance Mutuelle, as a group and
AXA and AXA Financial, Inc. (collectively, "AXA"), AXA beneficially owns
1,183,964 shares of Common Stock. AXA reported sole voting power for
910,121 shares, shared voting power for 4,875 shares, sole dispositive
power for 860,164 shares
4
and shared dispositive power for 323,800 shares. AXA disclaims beneficial
ownership of all reported shares.
(16) According to a Schedule 13G filed jointly on February 13, 2003 by Baron
Capital Group, Inc. ("BCG"), Ronald Baron ("Baron"), BAMCO, Inc.
("BAMCO"), Baron Asset Fund ("BAF"), and Baron Capital Management, Inc.
("BCM"): (1) BCG and Baron share beneficial ownership of 2,419,700
shares, and have shared dispositive and voting power with respect to such
shares; (2) BAMCO beneficially owns 2,008,000 shares and has shared
dispositive and voting power with respect to such shares; (3) BCM
beneficially owns 411,200 shares, and has shared dispositive and voting
power with respect to such shares; and (4) BAF has beneficial ownership
of 1,500,000 shares and shared dispositive and voting power with respect
to such shares. BCG and Baron disclaim beneficial ownership of shares
held by their respective controlled entities (or the investment advisory
clients thereof) to the extent such shares are held by persons other than
BCG and Baron. BAMCO and BCM disclaim beneficial ownership of shares held
by their investment advisory clients to the extent such shares are held
by persons other than BAMCO, BCM and their affiliates. BAMCO and BCM are
subsidiaries of BCG, BAF is an investment advisory client of BAMCO, and
Baron owns a controlling interest in BCG.
(17) According to a Schedule 13G filed on February 10, 2003 by Dimensional
Fund Advisors Inc. ("Dimensional Fund Advisors"), Dimensional Fund
Advisors has sole voting and dispositive power with respect to such
shares, but disclaims beneficial ownership of such shares.
(18) According to a Schedule 13G filed jointly on February 12, 2003 by
Citigroup Inc. ("Citigroup") and Salomon Smith Barney Holdings Inc.
("SSB"), Citigroup beneficially owns 1,015,158 shares, which includes
1,000,158 shares beneficially owned by SSB, a wholly owned subsidiary of
Citigroup. Each of Citigroup and SSB reports shared voting and
dispositive rights with respect to the shares beneficially owned by such
reporting person.
(19) According to a Schedule 13G filed jointly on February 19, 2003 by A. Alex
Porter ("Porter") and Paul Orlin ("Orlin"), Porter and Orlin share voting
and dispositive power with respect to such shares, but disclaim
beneficial ownership of such shares.
(20) According to a Schedule 13G filed on February 14, 2003 by T. Rowe Price
Associates, Inc. ("T. Rowe Price"), T. Rowe Price has sole voting power
with respect to 283,750 shares and sole dispositive power with respect to
1,509,050 shares. According to such Schedule 13G, these securities are
owned by various individual and institutional investors for which T. Rowe
Price serves as investment adviser with power to direct investments
and/or sole power to vote securities. T. Rowe Price expressly disclaims
beneficial ownership of such securities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that each director and
executive officer of the Company and each person owning more than 10% of the
Common Stock report his or its initial ownership of the Common Stock and any
subsequent changes in that ownership to the Securities and Exchange Commission.
The Company is required to disclose in this Proxy Statement any late filings of
such reports with respect to the most recent fiscal year.
Based solely upon a review of copies of forms furnished to the Company or
written representations from certain reporting persons that no Forms 5 were
required for such reporting persons, the Company believes that during the 2002
fiscal year all Section 16(a) filing requirements were satisfied.
5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Pursuant to applicable Delaware law (the jurisdiction of incorporation of
the Company) and the Company's Restated Certificate of Incorporation (the
"Certificate of Incorporation"), the business and affairs of the Company are
managed by or under the direction of the Board. Generally, the Board oversees
the management of the Company's business operations and determines the corporate
policies and appoints the chief executive officer, chief financial officer and
other executive officers of the Company.
Pursuant to the Company's Amended and Restated By-laws currently in
effect (the "By-laws"), the number of directors constituting the Board shall be
no less than five nor more than eleven, as may be fixed from time to time by
resolution of the entire Board. The size of the Board is presently fixed at nine
members. The By-laws provide that directors of the Company are elected annually
to serve until the next annual meeting of stockholders or until their earlier
resignation or removal. Accordingly, at the Meeting, nine directors are to be
elected to serve until the next annual meeting of stockholders or until their
respective successors are duly elected and qualified. All of the management
nominees for director named below are currently directors of the Company. Unless
otherwise specified, proxies will be voted FOR the election of each of the
management nominees named below. The Board does not expect that any of the
nominees will be unable to serve as a director. However, if for any reason one
or more of the nominees is unable to serve, proxies will be voted for such
substitute nominees as the Board may recommend unless otherwise specified in the
proxy.
Set forth below is certain biographical information with respect to each
nominee for director:
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
-----------------------------------------------------------------------------------------------------------------------
Charles Fabrikant 58 Chairman of the Board, President and December 1989
Chief Executive Officer of the Company
Andrew R. Morse (1) 57 Senior Vice President of UBS PaineWebber Inc. June 1998
Michael E. Gellert (2) 71 General Partner of Windcrest Partners, LP December 1989
Stephen Stamas (1) 72 Retired; former Vice President of Exxon Corporation December 1992
Richard M. Fairbanks, III (2) 62 Counselor, Center for Strategic and International April 1993
Studies
Pierre de Demandolx 62 Managing Director, Petroleum Development & April 1994
Diversification Ltd.
John C. Hadjipateras(1) 52 President, Eagle Ocean Inc. July 2000
Oivind Lorentzen(2) 52 President, Northern Navigation International Ltd. August 2001
James A. F. Cowderoy 43 Chairman, Harrisons (Clyde) Ltd. August 2001
----------
(1) Member of the Stock Option and Executive Compensation Committee.
(2) Member of the Audit Committee.
6
Charles Fabrikant is Chairman of the Board and has been a director of
SEACOR and several of its subsidiaries since 1989. Mr. Fabrikant is also a
counselor to the Washington, D.C.-based Center for Strategic and International
Studies, of which he is a member of the Center's Steering Commission guiding its
Committee for Enterprise Solutions to Environmental Problems. He is also
President of Fabrikant International Corporation ("FIC"), a privately owned
corporation engaged in marine operations and investments. FIC may be deemed an
affiliate of the Company. Mr. Fabrikant is a licensed attorney admitted to
practice in the State of New York and in the District of Columbia.
Andrew R. Morse has been Senior Vice President - Investments at the Morse
Group at UBS PaineWebber, Inc., a New York-based investment banking firm, since
October 2001. Mr. Morse was Senior Vice President - Investments of Salomon Smith
Barney Inc. of New York, an investment banking firm, and Smith Barney Inc., its
predecessor, from March 1993 to October 2001. Mr. Morse sits on numerous
philanthropic boards.
Michael E. Gellert has been one of two general partners of Windcrest
Partners, L.P., a New York-based investment partnership, for more than the past
five years. Mr. Gellert is currently a director of the following public
corporations: Six Flags, Inc.; Devon Energy Corp.; Humana Inc.; High Speed
Access Corp.; Smith Barney World Funds, Inc.; Travelers Series Fund, Inc.; and
Dalet Technologies. Additionally, Mr. Gellert serves as a member of the Putnam
Trust Company Advisory Board to the Bank of New York.
Stephen Stamas formerly served as the Chairman of The American Assembly
of Columbia University, a New York-based not-for-profit organization involved in
the study of public affairs, from 1987 until March 2003. Mr. Stamas was the
Chairman of the New York Philharmonic from 1989 until 1996 and Vice Chairman of
the Rockefeller University from 1995 until November 1999. He is Chairman
Emeritus and a director of the Greenwall Foundation. From 1973 to 1986, he
served as Corporate Vice President of Exxon Corporation.
Richard M. Fairbanks, III has been a Counselor at the Center for
Strategic and International Studies, a Washington, D.C.-based research
organization, since April 2000, where he served as Managing Director for
Domestic and International Issues from 1994 until April 1999, and President and
Chief Executive Officer from May 1999 to April 2000. Mr. Fairbanks was the
Managing Partner of the Washington, D.C. office of Paul, Hastings, Janofsky &
Walker (a law partnership) from 1985 to 1992, when he became Senior Counsel, a
position he held until 1994. Mr. Fairbanks is also a director of Hercules Inc.,
GATX Corporation, and SPACEHAB, Inc.. He formerly served as an
Ambassador-at-Large for the United States and was International Chairman of the
Pacific Economic Cooperation Council. Mr. Fairbanks is admitted to practice law
in the District of Columbia and before the United States Supreme Court.
Pierre de Demandolx has been the Managing Director of Petroleum
Development and Diversification, a London-based consulting agency, since April
1999. From 1995 until September 2001, Mr. de Demandolx was also a director of
Compagnie Nationale de Navigation ("CNN"), a Paris-based public shipping company
owned by Compagnie Maritime Belge. From 1997 to 1999, Mr. de Demandolx was the
general partner of DPM Conseil, a Paris-based shipping and energy consulting
company. Mr. de Demandolx was the Chief Executive Officer of CNN from September
1990 to June 1996. From 1996 until October 1997, Mr. de Demandolx was the
Chairman of the Board of Heli-Union, a Paris-based helicopter transportation
company. From 1986 to 1996, Mr. de Demandolx was Chairman and is currently a
Director of Feronia International Shipping, a Paris-based shipping company, now
named SEACOR Marine (West Africa) SAS.
John C. Hadjipateras founded Eagle Ocean Inc., a Stamford,
Connecticut-based marine transportation agency concentrating in vessel sales and
purchases, chartering, insurance and finance, and has served as its President
since its inception in 1980. He is also Managing Director of Eagle Financial
Partners, LLC, a venture capital management company founded in 1998, and was
Managing Director of Peninsular Maritime Ltd. a shipbrokerage firm, from 1972
until 1993. From 1974 until 1999, Mr. Hadjipateras was a Council member of
INTERTANKO, the International Association of Independent Tanker Owners. From
1985 until 1989 he was a Board
7
Member of the Greek Shipping Co-operation Committee, and is currently a Director
of KIDSCAPE LTD., and a Member of the Board of Advisors to the Faculty of
Language and Linguistics of Georgetown University.
Since 1990, Oivind Lorentzen has been the President of the Northern
Navigation Group, a Greenwich, Connecticut-based investment and ship owning
company concentrating in specialized transportation and structured finance. From
1979 to 1990 Mr. Lorentzen was Managing Director of Lorentzen Empreendimentos
S.A., an industrial and shipping group in Brazil, and currently sits on its
Board of Directors. Mr. Lorentzen is also a director of Blue Danube Inc.. Mr.
Lorentzen is a member of the Council of Foreign Relations and its Task Force on
Brazil, the President of the Norwegian-American Chamber of Commerce Inc., and
Trustee of the American Scandinavian Foundation and International House.
James A. F. Cowderoy has been the Chairman of Harrisons (Clyde) Ltd., a
Glasgow-based ship owning and ship management company, since May 2002. Mr.
Cowderoy formerly served as Managing Director of SEACOR International Ltd., a
subsidiary of the Company, from May 2001 until April 2002. Mr. Cowderoy was
Managing Director of Stirling Shipping Company Ltd., a private offshore shipping
company based in Glasgow from 1995 until its acquisition by the Company in May
2001. Mr. Cowderoy is also a director of the North of England P&I Association
Ltd. and Marine Shipping Mutual Insurance Company Ltd..
Directors will be elected by a plurality of the shares of Common Stock
represented in person or by proxy at the Meeting. If you do not wish your shares
to be voted for any particular nominees, please identify those nominees for whom
you "withhold authority" to vote in the appropriate space provided on the
enclosed proxy.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF
THE DIRECTOR-NOMINEES NAMED ABOVE.
INFORMATION RELATING TO THE BOARD OF DIRECTORS AND
COMMITTEES THEREOF
MEETINGS
During the year ended December 31, 2002, the Board held four meetings and
acted by unanimous written consent on two occasions. Each director attended all
meetings of the Board and all committees of the Board of which he was a member
during 2002.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in fulfilling its
responsibility to oversee management's conduct of the Company's financial
reporting process, including the selection of the Company's outside auditors,
and the review of the financial reports and other financial information provided
by the Company to any governmental or regulatory body, the public or other users
thereof, the Company's systems of internal accounting and financial controls and
the annual independent audit of the Company's financial statements.
The Audit Committee held three meetings during the last fiscal year. The
Board of Directors adopted a charter for the Audit Committee on June 14, 2000
which sets forth the Committee's responsibilities. The Board of Directors has
determined that all members of the Audit Committee are "independent" under the
rules of the New York Stock Exchange currently applicable to the Company.
8
AUDIT COMMITTEE REPORT
The Audit Committee's principal functions are to annually review and
reassess the adequacy of its charter, to review the engagement of a firm of
independent public accountants including the firm's qualifications and
independence, to review with management and the independent public accountants
the Company's annual and quarterly financial statements, to review with
management the Company's major financial risk exposures, to review changes to
the Company's significant auditing and accounting principles and practices, to
consult with our independent public accountants regarding the firm's internal
quality-control procedures and the procedures for the Company's financial
reporting processes, to review the significant reports prepared by the internal
auditor and to assist the Board of Directors in monitoring compliance with legal
and regulatory requirements.
The Board of Directors has determined that each of the members of the
Audit Committee is independent as defined by the listing standards of the New
York Stock Exchange.
In connection with the Company's consolidated financial statements for
the year ended December 31, 2002, the Audit Committee has:
o reviewed and discussed the audited financial statements with
management;
o resolved to discharge Arthur Andersen LLP as the Company's
independent public accountants and approved the appointment of
Ernst & Young LLP to serve as the Company's independent public
accountants for the fiscal year ended December 31, 2002;
o discussed with the Company's independent public accountants, Ernst
& Young LLP, the matters required to be discussed by Statements on
Auditing Standards 61, as amended; and
o received the written disclosures and the letter from Ernst & Young
LLP as required by Independence Standards Board Standard No. 1 and
discussed with the independent public accountants their
independence.
Based on the review and discussions with the Company's management and
independent public accountants, as set forth above, the Audit Committee
recommended to the Company's Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002 for filing with the Securities and Exchange
Commission.
Respectfully submitted by the Audit Committee.
Michael E. Gellert
Richard M. Fairbanks, III
Oivind Lorentzen
THE FOREGOING REPORT SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT OR REFERENCE TO THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OR UNDER THE SECURITIES EXCHANGE ACT, EXCEPT TO THE EXTENT THAT
WE SPECIFICALLY INCORPORATE THIS INFORMATION BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED FILED UNDER THOSE ACTS.
9
STOCK OPTION AND EXECUTIVE COMPENSATION COMMITTEE
The Stock Option and Executive Compensation Committee is responsible,
subject to the general terms and provisions of the SEACOR SMIT Inc. 1996 Share
Incentive Plan (the "1996 Share Incentive Plan"), for the administration and
award of restricted stock and stock options under such plan. In addition, in
January 1993, the Board delegated to the committee responsibility for all
matters relating to the determination and award of executive compensation.
Messrs. Stamas, Morse, and Hadjipateras, all of whom are "Non-Employee
Directors" within the meaning of Rule 16b-3(b) under the Exchange Act with
respect to the 1996 Share Incentive Plan, serve as members of the Stock Option
and Executive Compensation Committee. The Stock Option and Executive
Compensation Committee met on two occasions and acted by unanimous written
consent on four occasions during 2002.
NOMINATING COMMITTEE
The Company does not maintain a Nominating Committee. See "Other Matters
- Stockholder Nomination of Directors" below for a description of the procedures
to be followed by stockholders in submitting recommendations for nominations of
Directors.
COMPENSATION OF DIRECTORS
Directors of the Company who are officers receive no remuneration by
reason of such directorship and are not compensated for attending meetings of
the Board or standing committees thereof. Directors who are not officers of the
Company receive an annual retainer of $15,000 and $1,500 for every regular Board
and Committee meeting, respectively, that they attend.
Under the 2000 Non-Employee Director Plan, Directors who are not
employees of the Company or a subsidiary are, each year through the 2004 Annual
Meeting of Stockholders, granted an option to purchase 3,000 shares of Common
Stock, subject to adjustment. The exercise price of the options granted is the
fair market value per share of the Common Stock on the date of grant. The 2000
Non-Employee Director Plan is administered by the Board of Directors or a
committee designated by the Board. Options granted under the 2000 Non-Employee
Director Plan become exercisable upon the earlier to occur of the first
anniversary of the date of grant or the first annual meeting of the Company's
stockholders after the date of grant, and remain exercisable for up to ten
years. Subject to certain exceptions, if a Non-Employee Director's service as a
Director is terminated, his or her options that are not then exercisable will
terminate. Exercisable options may, generally, be exercised for a specified time
after termination. In the event of a "Change in Control of the Company" (as
defined in the 2000 Non-Employee Director Plan), vesting of all outstanding
options granted under the 2000 Non-Employee Director Plan will be accelerated.
If the SEACOR SMIT Inc. 2003 Non-Employee Director Share Incentive Plan
(described below) is approved by stockholders at the Meeting, no further awards
will be made to non-employee directors under applicable provisions of the 2000
Non-Employee Director Plan, which will be terminated.
10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for the
Company's Chief Executive Officer and each of the four most highly compensated
executive officers of the Company (collectively, the "Named Executive Officers")
in respect of the fiscal year ended December 31, 2002. All option and restricted
stock grants described in the table below and related footnotes as having been
made prior to June 15, 2000 have been adjusted to give effect to a three-for-two
stock split on such date.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- -------------------------------------------------------
NUMBER OF
SECURITIES ALL OTHER
RESTRICTED STOCK UNDERLYING COMPENSATION
POSITION(S) YEAR SALARY ($) BONUS ($)(1) AWARDS ($)(2) OPTIONS (#)(3) ($)(4)
----------- ---- ---------- ------------ ------------- -------------- ------
Charles Fabrikant, (5)
Chairman of the Board, 2002 525,000 1,250,000 1,459,500 30,000 5,500
President, and Chief 2001 525,000 750,000 1,000,270 50,000 5,100
Executive Officer 2000 500,000 600,000 1,184,500 25,000 5,250
Randall Blank, (6)
Chief Financial Officer, 2002 335,000 350,000 216,840 7,500 5,500
Executive Vice President, 2001 335,000 175,000 226,148 7,500 5,100
and Secretary 2000 325,000 125,000 216,300 5,000 5,250
Dick Fagerstal, (7)
Sr. Vice President, 2002 250,000 265,000 271,050 10,000 5,500
Corporate Development 2001 235,000 165,000 195,705 3,000 5,100
and Treasurer 2000 200,000 165,000 231,750 - 5,250
Alice Gran, (8) 2002 235,000 80,000 62,550 1,500 11,900
Vice President 2001 235,000 120,000 43,490 1,000 12,000
and General Counsel 2000 200,000 60,000 25,750 - 8,900
Rodney Lenthall, (9)
Vice President and
President, 2002 288,774 - - 1,500 -
International Division 2001 211,638 - - 2,000 -
----------
(1) Sixty percent (60%) of the bonus is paid at the time of the award and the
remaining forty percent (40%) is paid in two equal annual installments
one and two years after the date of the grant. Any outstanding balance is
payable upon the death, disability, termination without "cause" of the
employee, or the occurrence of a "change-in-control" of the Company.
(2) The value indicated is based on the number of shares awarded and the
stock price on the issuance date. The Company provided to the Named
Executive Officers three types of Restricted Stock Awards. Each award of
Three-Year Restricted Stock ("Three-Year Stock") vests in three equal
annual installments, commencing on the first anniversary of the date of
award. Each award of One-Year Restricted Stock ("One-Year Stock") vests
approximately one year from the date of the award. Each award of
Five-Year Restricted Stock ("Five-Year Stock") vests in five equal annual
installments commencing on the first anniversary of the date of the
award. Each type of restricted stock vests immediately upon the death,
disability, termination "without cause" of the employee, or the
occurrence of a "change-in-control" of the Company. If cash dividends are
paid by the Company, holders of restricted stock are entitled to receive
such dividends whether or not the shares of restricted stock have vested.
11
(3) Stock option grants include options granted (or which the Company has
agreed to grant in installments during 2003) on January 15, 2003 and
February 5, 2003 for a combined total of 50,000 shares of Common Stock in
respect of the fiscal year ended 2002, all to be issued under the 1996
Share Incentive Plan. None of these stock options are exercisable prior
to January 15, 2004 and all of these stock options expire not later than
January 15, 2013. The Company's agreement to grant options with respect
to 23,750 shares of Common Stock to certain of the Named Executive
Officers is subject to approval by the stockholders of the 2003 Share
Incentive Plan.
(4) "All Other Compensation" includes contributions made by the Company to
match pre-tax elective deferral contributions (included under Salary)
made by Messrs. Fabrikant, Blank, and Fagerstal and Ms. Gran under the
SEACOR Savings Plan, a defined contribution plan established by the
Company effective July 1, 1994 which meets the requirements of Section
401(k) of the Internal Revenue Code of 1986, as amended (the "Code"). In
the case of Ms. Gran, such amount includes $6,400 for the approximate
amount paid for fiscal year 2002 under a defined contribution retirement
plan paid by a United Kingdom subsidiary of the Company.
(5) Mr. Fabrikant was granted restricted stock awards as follows: for 2002,
30,000 shares of Five-Year Stock pursuant to a Restricted Stock Agreement
dated January 15, 2003 and 5,000 shares of One-Year Stock pursuant to a
Restricted Stock Agreement dated January 15, 2003; for 2001, 18,000
shares of Three-Year Stock pursuant to a Restricted Stock Agreement dated
February 28, 2002 and 5,000 shares of One-Year Stock pursuant to a
Restricted Stock Agreement dated February 28, 2002; and for 2000, 18,000
shares of Three-Year Stock pursuant to a Restricted Stock Agreement dated
February 14, 2001 and 5,000 shares of One-Year Stock pursuant to a
Restricted Stock Agreement dated February 14, 2001. At December 31, 2002,
Mr. Fabrikant held 36,500 shares of restricted stock having a value of
$1,624,250 based upon a closing price of $44.50 per share of Common Stock
on December 31, 2002.
(6) Mr. Blank was granted restricted stock awards as follows: For 2002, 3,000
shares of Five-Year Stock pursuant to a Restricted Stock Agreement dated
January 15, 2003 and 2,200 shares of One-Year Stock pursuant to a
Restricted Stock Agreement dated January 15, 2003; for 2001, 3,000 shares
of Three-Year Stock pursuant to a Restricted Stock Agreement dated
February 28, 2002, and 2,200 shares of One-Year Stock pursuant to a
Restricted Stock Agreement pursuant to a Restricted Stock Agreement dated
February 28, 2002; and for 2000, 2,000 shares of Three-Year Stock
pursuant to a Restricted Stock Agreement dated February 14, 2001 and
2,200 shares of One-Year Stock pursuant to a Restricted Stock Agreement
dated February 14, 2001. At December 31, 2002, Mr. Blank held 7,033
shares of restricted stock having a value of $312,969 based upon a
closing price of $44.50 per share of Common Stock on December 31, 2002.
(7) Mr. Fagerstal was granted restricted stock awards as follows: For 2002,
5,000 shares of Five-Year Stock pursuant to a Restricted Stock Agreement
dated January 15, 2003 and 1,500 shares of One-Year Stock pursuant to a
Restricted Stock Agreement dated January 15, 2003; for 2001, 3,000 shares
of Three-Year Stock pursuant to a Restricted Stock Agreement dated
February 28, 2002, and 1,500 shares of One-Year Stock pursuant to a
Restricted Stock Agreement pursuant to a Restricted Stock Agreement dated
February 28, 2002; and for 2000, 750 shares of Three-Year Stock pursuant
to a Restricted Stock Agreement dated February 14, 2001 and 750 shares of
One-Year Stock pursuant to a Restricted Stock Agreement dated February
14, 2001. At December 31, 2002, Mr. Fagerstal held 6,750 shares of
restricted stock having a value of $300,375 based upon the closing price
of $44.50 per share of Common Stock on December 31, 2002.
(8) Ms. Gran was granted restricted stock awards as follows: For 2002, 1,000
shares of Five-Year Stock pursuant to a Restricted Stock Agreement dated
January 15, 2003 and 500 shares of One-Year Stock pursuant to a
Restricted Stock Agreement dated January 15, 2003; for 2001, 500 shares
of Three-Year Stock pursuant to a Restricted Stock Agreement dated
February 28, 2002, and 500 shares of One-Year Stock pursuant to a
Restricted Stock Agreement pursuant to a Restricted Stock Agreement dated
February 28, 2002; and for 2000, 500 shares of Three-Year Stock pursuant
to a Restricted Stock Agreement dated February 14, 2001. At December 31,
2002, Ms. Gran held 1,483 shares of restricted stock having a value of
$65,994 based upon a closing price of $44.50 per share of Common Stock on
December 31, 2002.
(9) Mr. Lenthall joined the Company January 1, 2001. His compensation for
2002 was $288,774, based on the exchange rate for Pounds Sterling in
effect at 2001 year end. Mr. Lenthall was granted restricted stock awards
of 3,000 shares of Three-Year Stock pursuant to a Restricted Stock
Agreement dated February 14, 2001. At December 31, 2002, Mr. Lenthall
held 1,000 shares of restricted stock having a value of $44,500 based
upon a closing price of $44.50 per share of Common Stock on December 31,
2002.
12
STOCK OPTIONS
On April 18, 1996, the Company's stockholders adopted the 1996 Share
Incentive Plan, which provides for the grant of stock options, stock
appreciation rights, restricted stock awards, performance awards and stock units
to officers and key employees of the Company. The 1996 Share Incentive Plan is
administered by the Stock Option and Executive Compensation Committee of the
Board. Each option or share granted to an officer or employee must be evidenced
by an agreement (an "Option Agreement", or a "Restricted Stock Agreement",
respectively) containing terms and provisions established by the Committee in
accordance with the 1996 Share Incentive Plan.
OPTION GRANTS IN 2002
The Company did not grant options during the fiscal year ended 2002 to
the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
TABLE
The following table sets forth certain information with respect to the
value of the options outstanding at year-end based on a December 31, 2002
closing price of the Company's Common Stock of $44.50 per share. Options issued
in 2003 in respect of 2002 performance are NOT included in this table.
Value of Unexercised
Number of Securities In-the-Money Options at
Underlying Unexercised Fiscal Year-End ($)
Shares Acquired on Value Options at Fiscal Year-End (#) Exercisable/
Name Exercise (#) Realized ($) Exercisable/Unexercisable Unexercisable
---------------------- ------------------ ------------ ------------------------------ -----------------------
Charles Fabrikant 102,917 3,313,588 296,251 / 67,499 7,084,791 / 342,082
Randall Blank 22,966 604,235 45,917 / 10,833 919,187 / 49,625
Dick Fagerstal - - 39,550 / 2,000 534,238 / 6,350
Alice Gran - - 3,437 / 1,166 46,005 / 8,865
Rodney Lenthall - - 10,667 / 6,333 137,118 / 71,732
EMPLOYMENT CONTRACTS AND OTHER ARRANGEMENTS
The Company has no employment contracts or formal remuneration
arrangements with any of the Named Executive Officers.
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CHILES MANAGEMENT SERVICES AGREEMENT AND MERGER
Prior to the merger of Chiles Offshore Inc. ("Chiles") with and into a
subsidiary of ENSCO International Incorporated ("ENSCO") on August 7, 2002, (the
"Chiles Merger"), SEACOR Offshore Rigs Inc. ("SEACOR Rigs"), which is a wholly
owned subsidiary of the Company, owned approximately 23.8% of Chiles' common
stock. Dick Fagerstal, the Company's Senior Vice President, Corporate
Development and Treasurer, served as Senior Vice President, Chief Financial
Officer, Secretary and a Director of Chiles. The Company and Chiles entered into
a Management and Administrative Services Agreement, dated as of February 27,
1998, (the "Management Services Agreement"), pursuant to which the Company
agreed to continue to perform certain administrative and technical services on
Chiles' behalf, including providing the services of Mr. Fagerstal, as well as
general management and financial services, including periodic advice and
consultation in connection with corporate, legal, finance and other matters that
may be required for Chiles' day-to-day operations. Under this agreement, Chiles
agreed to pay a fee to the Company not to exceed $15,000 per month for the
services of Mr. Fagerstal plus such other fees for services of others not to
exceed the reasonable value thereof and to reimburse the Company for all
out-of-pocket expenses related to the provision of such services. The fees
charged by the Company for such services rendered under the Management Services
Agreement are competitive with rates that would be charged by outside
non-related parties. In addition, Chiles agreed to indemnify the Company for
claims and damages arising from its provision of services under the Management
Services Agreement, unless due to the gross negligence or willful misconduct of
the Company. Under this agreement, Chiles paid the Company approximately $2.0
million for the year ending December 31, 2002 for services provided. The
Management Services Agreement was terminated on August 7, 2002, in connection
with the Chiles Merger.
Pursuant to a separate agreement with the Company, in connection with the
delivery of the jackup rig Chiles Discovery in February 2002, Chiles paid the
Company a commission of $1 million. In 2002, Chiles also paid the Company
approximately $65,000 for services provided by one of its offshore marine
vessels during 2001.
THE STIRLING ACQUISITION AND RELATED TRANSACTIONS
On May 4, 2001, the Company acquired all of the outstanding share capital
of Stirling Shipping Holdings Limited ("Stirling") from the shareholders of
Stirling (the "Stirling Acquisition"), including James Cowderoy, who
subsequently became a Director of the Company in connection with this
transaction, and members of his immediate family.
In connection with the Stirling Acquisition, the Company entered into a
Ship Management and Administrative Services Agreements, a Novation Agreement and
certain related agreements with Harrisons (Clyde) Limited and affiliated
entities (each a "Harrisons Entity", and, collectively "Harrisons") as described
below. Mr. Cowderoy is Chairman of Harrisons, and he and his immediate family
own an aggregate 66% interest in Harrisons. All prices set forth below are
denominated in U.S. dollars based on the exchange rate in effect on May 4, 2001,
the closing date of the Stirling Acquisition.
SHIPMANAGEMENT AND ADMINISTRATIVE SERVICES. Pursuant to the Ship
Management and Administrative Services Agreements, a Company subsidiary provided
a Harrisons Entity with operation management and administrative services for an
aggregate annual fee of (pound)62,219 ($89,357) in 2002. These agreements were
terminated, effective July 31, 2002.
NOVATION AGREEMENT AND RELATED AGREEMENT. Pursuant to a Novation
Agreement with a Harrisons Entity and a third party, a Company subsidiary
assigned all of its rights to the Harrisons Entity, and the Harrisons Entity
undertook all of the Company's subsidiary's obligations under certain contracts
originally with Stirling, but relating to assets not acquired in the Stirling
14
Acquisition (the "Contracts"). The Company also entered into an agreement with
the third party pursuant to which the Company's subsidiary guaranteed
performance by the Harrisons Entity of its obligations under the Contracts, and
the Harrisons Entity agreed to indemnify the Company's subsidiary from any
liabilities under it its guarantee. In consideration for this guarantee, the
Harrisons Entity paid to the Company's subsidiary a guarantee fee of
(pound)25,000 ($35,988) in 2002. A rebate of (pound)23,562 ($33,839) was paid to
Harrisons by the Company subsidiary to reflect the termination of the guarantee,
effective May 23, 2002.
LEASE AGREEMENT. A subsidiary of the Company was party to a lease
agreement entered into by a Stirling subsidiary with Woodside Crescent Limited
as lessor, prior to the Stirling Acquisition, in respect of office space in
Glasgow, Scotland. Members of Mr. Cowderoy's immediate family own Woodside
Crescent Holdings Limited and its wholly-owned subsidiary, Woodside Crescent
Limited. Pursuant to the lease agreement, the Company's subsidiary paid Woodside
Crescent Limited rent of (pound)35,000 ($50,266) in 2002. The lease was
terminated effective July 31, 2002.
SCF TOWBOAT III. SCF Management Services Inc. ("SCF") manages eleven
barges owned by SCF Towboat III, LP, a limited partnership, 14.25% of which is
owned by FIC, an affiliate of Mr. Fabrikant. In connection therewith, SCF
Towboat III, LP paid to SCF Management Services Inc. management fees of $12,045
in 2002.
SCF BARGE POOLS. SCF Marine Inc. manages two barge pools. Mr. Fabrikant
and FIC, FIC Barge Line Inc., VSS Holdings (each controlled by Mr. Fabrikant)
and two trusts established for the benefit of Mr. Fabrikant's children own
inland river barges that are operated in the SCF Barge Pool. In 2002, SCF
distributed an aggregate of $433,636 to Mr. Fabrikant and these affiliates
($36,816, $168,333, $67,204, $152,466 to each of Mr. Fabrikant and FIC, FIC
Barge Line Inc., and VSS Holdings, respectively, and $4,408 to each of the
trusts), net of a management fee of $86,509 paid by these parties to SCF.
HEALTH INSURANCE. FIC provides health insurance under its plans to
certain employees of the Company and is reimbursed by the Company for its actual
out-of-pocket expenses. The aggregate amount of such reimbursed out-of-pocket
payments was $55,746 in 2002.
BOND PARTICIPATION. The Company participates in an investment of certain
bonds that are held in the name of VSS Holdings. In 2002, in connection with
this arrangement, VSS Holdings paid to SCF $4,789 as its participatory share of
interest payable under the bonds and $2,337 as its participatory share of
principal repayments received during the year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Stamas, Morse, and Hadjipateras are currently members of the
Stock Option and Executive Compensation Committee.
15
REPORT ON EXECUTIVE COMPENSATION
GENERAL
The Stock Option and Executive Compensation Committee (the "Committee")
establishes and awards compensation to the Company's executive officers. The
Committee is comprised entirely of independent directors who are not officers or
employees of the Company.
The Company's compensation program is designed to attract, retain and
motivate highly qualified management personnel, and to engender a sense of
entrepreneurial commitment among its executive officers. The Company's
compensation philosophy is to provide levels of compensation competitive with
comparable companies in the industry, to reward individual initiative and
achievement, and to ensure that the amount and nature of executive compensation
is reasonably commensurate with the Company's financial condition, results of
operations, total assets, Common Stock performance (both absolute and relative),
the executive compensation programs of the Company's competitors, and each
individual's responsibility for segments of income and cash flow and
contribution to the execution of the Board's business philosophy. The Committee
takes into consideration the prevailing level of pay for the skills the Company
needs based on prevailing compensation in other industries and business sectors.
The Committee also takes into account the fact that the Company has at this time
no defined benefit plan or Supplemental Employee Retirement Plan for employees.
The Company's executive compensation program consists of three central
components: (1) base salary, (2) bonus awards, and (3) awards of restricted
stock and stock options. Base pay for senior executives consists of cash
compensation and restricted shares (if any) that vest approximately one year
after the date of grant. Bonus awards consist of a cash component, 60% of which
is payable in the following year for which the bonus is awarded, and 20% of
which is payable annually in each of the next two succeeding years. Payment of
the deferred amounts is contingent on continued employment with the Company.
Restricted stock awards granted for 2002 vest over either a one-year or
five-year period.
The Committee believes making restricted stock awards subject to vesting
and making the payment of deferred bonus amounts subject to continuing
employment assists in the retention of award recipients. The Committee also
determined to lengthen the vesting period for restricted stock from three years
to five years and for options from one year to five years, in an effort to
ensure that the interests of key employees are aligned with those of long-term
shareholders.
Among public offshore transportation, contract drilling and other oil
service companies, the number of options granted by the Company in 2002 was
among the lowest in proportion to total outstanding shares.
Although the foregoing provides the general intent of, and guidelines
used by, of the Committee in determining the compensation levels and components
for the executive officers, the Committee has authority to determine all
compensation matters in its sole discretion.
BASE SALARY
On an individual basis, executive salaries are a function of the
individual's background and professional training, experience, breadth of
responsibilities and ability to manage a complex administrative and financial
structure. The Committee believes that such salaries are consistent with
companies or service groups that use such skills or engage in activities
comparable to the Company's business.
BONUS AWARDS
The bonus portion of the executive compensation package is directly
related to the individual's and the Company's performance during the year for
which the bonus is paid. Bonus payments are awarded at the discretion of the
Committee. The Committee believes that, to the extent that the bonus awards
reward the executives in a fair and equitable way and targets are
16
appropriately set, they also provide an incentive for continued employment and
enhanced performance. Performance targets are set at the beginning of the year
based on the Company's annual forecasts, focusing on operating revenue, net
income, return on equity, earnings before interest, taxes, depreciation and
amortization (EBITDA), cash management, and the achievement of defined strategic
objectives. Given, however, the Company's history of growth through mergers,
acquisitions and asset purchases, along with market conditions for the offshore
marine segment (which are beyond management's control), the Company's actual
results can differ greatly from management's forecasts, and the Committee must
re-evaluate the targets set at the beginning of the year. In 2002, operating
revenue decreased 7%, and net income and earnings per share on a diluted basis
decreased 34%. Return on equity was 6%. Return on stockholders' equity, while
lower than the prior year, compared favorably to other companies in similar and
related industries. As part of a larger study, the Committee evaluated
comparative return on equity for a variety of companies directly competing with
SEACOR's largest business segment, offshore marine transportation, and other
companies engaged in contract drilling, shipping, and other oilfield services.
The Committee believes that SEACOR's performance exceeded the average and median
return on equity for each subgroup.
The Committee's policy also is to compensate management upon completion
of "liquidity events". From a strategic perspective, the most important event of
2002 was the disposition of the Company's investment in Chiles Offshore Inc. as
a result of the Chiles Merger. In August 2002, the Company received $25.4
million in cash and 3,176,646 shares of ENSCO common stock, which had a market
value on the date of the merger of $73.4 million.
During 2002, the Company sold 33 vessels, and continued to upgrade its
fleet primarily through new construction and the acquisition of vessels.
The foregoing financial and operating performance of the Company was
attributed by the Committee, in large part, to the efforts of the Named
Executive Officers and therefore was considered when determining such persons'
annual bonuses.
COMMON STOCK AWARDS AND OPTION GRANTS
The purpose of restricted stock awards and stock option grants is to
reward outstanding performance by key employees and officers, to provide
additional incentives for such persons to maximize value for stockholders and to
create long-term management commitment to the Company. The Committee believes
that such grants and awards foster a greater concern by management for the
performance of the Company, both in the short and long term, which serves to
align the interests of the Company's management with its stockholders. The
number of shares awarded or options granted to an individual manager reflects a
judgment on such person's performance to date, as well as on his or her
perceived ability to influence and enhance the Company's future performance. Mr.
Fabrikant was expressly recognized for his active contribution to projects
adding value to the performance of the Company's fleet and enhancing returns
from cash balances and the Company's investment portfolio, in addition to his
leadership role in the Company's development and his ability to continue to
influence the direction of the Company towards maximizing shareholder value.
17
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The determination of Mr. Fabrikant's compensation was based upon the
factors described above with respect to all executive officers and, in addition,
upon Mr. Fabrikant's role in organizing the Company's investment in Chiles,
recognition of his contribution to Chiles' development, and success in achieving
the related liquidity event. Other factors that the Committee took into account
were his diverse skills, extensive experience, leadership and reputation within
both the offshore marine and environmental services industries and his
leadership role in the Company's strong development. Mr. Fabrikant played an
instrumental role in the strategic direction of each of the Company's operating
segments and the positioning of the Company's assets to take advantage of
long-term growth opportunities, as well as taking day-to-day responsibility for
management of the company's investment decisions.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
prohibits the deduction by a publicly held corporation of compensation paid to a
"covered employee" in excess of $1 million per year, subject to exceptions for
certain performance-based compensation. Generally, the Company's covered
employees are those executive officers listed in the Summary Compensation Table
above. While the tax impact of any compensation arrangement is one factor to be
considered, such impact is evaluated by the Committee in light of the Company's
overall compensation philosophy and objectives. The Committee believes that
long-term stockholder value is enhanced by appropriately rewarding desirable
corporate and individual performance achievements and that under existing
circumstances such value may outweigh the advantages of qualifying compensation
as deductible under Section 162(m). Compensation to Mr. Fabrikant in 2002
exceeded the $1 million deductibility limit of Section 162(m). This amount is
not covered by any of the exceptions to Section 162(m), and thus is not
deductible by the Company.
The foregoing report is respectfully submitted by the Stock Option and
Executive Compensation Committee.
John C. Hadjipateras
Andrew R. Morse
Stephen Stamas
18
PERFORMANCE GRAPH
Set forth in the graph below is a comparison of the cumulative total
return that a hypothetical investor would have earned assuming the investment of
$100 over the five-year period commencing on December 31, 1997 in (i) the Common
Stock of the Company, (ii) the Standard & Poor's 500 Stock Index ("S&P 500") and
(iii) the Simmons Offshore Transportation Index, an index of oil service
companies published by Simmons and Company, Inc. (the "Simmons Peer Index").
[CHART]
DECEMBER 31,
-----------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
--------------- ---------------- ---------------- -------------- --------------- --------------
SEACOR SMIT Inc. 100.00 82.05 85.89 131.01 115.52 110.79
S&P 500 100.00 126.67 151.40 136.05 118.31 90.66
Simmons Peer Index 100.00 46.40 47.22 80.61 75.81 76.81
PROPOSAL NO. 2
APPROVAL OF THE SEACOR SMIT INC. 2003 NON-EMPLOYEE
DIRECTOR SHARE INCENTIVE PLAN
The Board is proposing for stockholder approval the SEACOR SMIT Inc. 2003
Non-Employee Director Share Incentive Plan (the "2003 Non-Employee Director
Plan"). The 2003 Non-Employee Director Plan is intended to provide incentives
which will attract, retain and motivate highly competent persons as non-employee
directors of the Company and to assist in further aligning the interests of the
non-employee directors with those of its other stockholders by providing
non-employee directors with opportunities to acquire shares of Common Stock. If
the 2003 Non-Employee Director Plan is approved by stockholders at the Meeting,
no further awards will be made to non-employee directors under applicable
provisions of the 2000 Non-Employee Director Plan, which will be terminated by
the Board following approval of the 2003 Non-Employee Director Plan.
19
The following summary describes the material features of the 2003
Non-Employee Director Plan but is not intended to be complete, and therefore the
summary is qualified in its entirety by the 2003 Non-Employee Director Plan, a
copy of which is attached to this Proxy Statement as ANNEX A.
ELIGIBILITY FOR PARTICIPATION
Each member of the Board who is not an employee of the Company or any
subsidiary of the Company (a "non-employee director") will participate in the
2003 Non-Employee Director Plan. There are currently eight non-employee
directors, all of whom have been nominated for re-election at the Meeting.
TYPES OF BENEFITS
The 2003 Non-Employee Director Plan provides for benefits in a
combination of stock options and stock awards (collectively, the "Benefits").
SHARES AVAILABLE
The maximum number of shares of Common Stock that may be delivered to
non-employee directors and their beneficiaries under the 2003 Non-Employee
Director Plan is 150,000 shares of Common Stock, which may be authorized and
unissued or treasury shares. Any shares covered by stock options granted under
the 2003 Non-Employee Director Plan that are forfeited, cancelled, or expire are
considered undelivered for the purposes of determining the maximum number of
shares of Common Stock available under the 2003 Non-Employee Director Plan. If
any stock option is exercised by tendering shares of Common Stock to the Company
as full or partial payment in connection with the exercise of a stock option
under the 2003 Non-Employee Director Plan, only the number of shares of Common
Stock issued net of the shares tendered will be deemed delivered for purposes of
determining the maximum number of share of Common Stock available for delivery
under the 2003 Non-Employee Director Plan.
ADMINISTRATION
The 2003 Non-Employee Director Plan will be administered by the Board or
a committee of the Board (and therefore references to the Board in this summary
include references to the committee). The Board may establish such rules and
regulations as it deems necessary for the proper administration of the 2003
Non-Employee Director Plan, including determinations, interpretations and
actions in connection with the 2003 Non-Employee Director Plan.
ANNUAL STOCK OPTIONS
On the date of each annual meeting of stockholders of the Company during
the term of the 2003 Non-Employee Director Plan (commencing with the Meeting),
each non-employee director in office immediately following such annual meeting
will be granted a stock option to purchase 3,000 shares of Common Stock. The
exercise price per share will equal the fair market value of a share on the date
of grant. The exercise price may be paid in cash or, in the discretion of the
Board, by the delivery of shares of Common Stock then owned by the non-employee
director, by the withholding of shares of Common Stock for which a stock option
is exercisable, or by a combination of these methods. The Board may prescribe
any other method of paying the exercise price that it determines to be
consistent with applicable law and the purpose of the 2003 Non-Employee Director
Plan. In determining which methods a non-employee director may utilize to pay
the exercise price, the Board may consider such factors as it determines are
appropriate.
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Each stock option is exercisable at any time following the earlier of the
first anniversary of, or the first annual meeting of the Company's stockholders
after, the date of grant, provided that the non-employee director continues to
serve as a director of the Company on such anniversary. Prior to the first
anniversary, however, a stock option will become immediately exercisable in the
event of a "Change in Control" of the Company (described below), termination of
the non-employee director's service as a result of disability or death. Each
stock option terminates on the tenth anniversary of the date of grant unless
terminated earlier under the terms of the 2003 Non-Employee Director Plan.
If a non-employee director ceases to serve as a director of the Company
(except in the case of accelerated vesting of stock options upon a non-employee
director's death or disability), any outstanding stock option previously granted
under the 2003 Non-Employee Director Plan will terminate and become null and
void with respect to shares of Common Stock as to which such stock options are
not then exercisable. Any portion of a non-employee director's stock options
that are vested but have not been exercised may, subject to certain exceptions,
be exercised within three months after the date of termination of service as a
director in the case of termination by reason of voluntary retirement, failure
of the Company to nominate such director for re-election, or failure of such
director to be re-elected by stockholders after nomination by the Company, or
within one year in the case of termination of service as a director by reason of
death or disability.
Stock options held by a non-employee director that have a remaining term
of less than one year on the date of the non-employee director's death will
automatically be extended to the first anniversary of the date of death.
ANNUAL STOCK AWARDS FOR NON-EMPLOYEE DIRECTORS
The 2003 Non-Employee Director Plan provides that each non-employee
director will receive a grant of stock awards annually. On the date of each
annual meeting of stockholders of the Company during the term of the 2003
Non-Employee Director Plan (commencing with the Meeting), each non-employee
director in office immediately following such annual meeting will be granted the
right to receive 500 shares of Common Stock. Such shares of Common Stock will be
delivered to the non-employee director in four equal installments, with 125
shares to be delivered on the date of the annual meeting (or, in the case of the
Meeting, on the date the 2003 Non-Employee Director Plan is deemed effective)
and 125 shares to be delivered on the dates that are three, six, and nine months
after the date of the annual meeting. If a non-employee director's service as a
director terminates for any reason, any and all unvested stock awards will
terminate and become null and void.
OTHER PROVISIONS
The award of any Benefit under the 2003 Non-Employee Director Plan also
may be subject to such other provisions as the Board determines appropriate.
ADJUSTMENTS AND CHANGE IN CONTROL
The 2003 Non-Employee Director Plan contains provisions for equitable
adjustment of stock options and stock awards (including any unvested stock
award) in the event of merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, reverse stock split, split up, spin off,
combination of shares, exchange of shares, dividend in kind or other like change
in capital structure or distribution (other than normal cash dividends) to
stockholders of the Company. In addition, under any such circumstances the Board
has the authority to adjust, in an equitable manner, the number of shares of
Common Stock that may be issued under the 2003 Non-Employee Director Plan and
the number of stock options and stock awards that may be granted under the 2003
Non-Employee Director Plan.
21
If there is a Change in Control (as defined in the 2003 Non-Employee
Director Plan) of the Company, all outstanding stock options immediately become
exercisable and all outstanding stock awards (including all unvested stock
awards) immediately become vested and deliverable. In the event of a Change in
Control, the Board in its discretion, may cause each outstanding stock option to
terminate, and each option holder would have the right to receive the excess of
the fair market value of shares of Common Stock subject to his or her stock
options over its the exercise price, payable in cash or other property as
determined by the Board.
NONTRANSFERABILITY
The 2003 Non-Employee Director Plan provides that stock options may be
transferred generally only by the will of the non-employee director or under
applicable inheritance laws. At the discretion of the Board, a stock option may
be transferred solely to the non-employee director's spouse, siblings, parents,
children and/or grandchildren, or to trusts for the benefit of such persons, or
to partnerships, corporations, limited liability companies or other entities
owned solely by such persons, subject to any restriction included in the award
of the stock option.
AMENDMENTS
The Board may amend the 2003 Non-Employee Director Plan from time to time
or suspend or terminate the 2003 Non-Employee Director Plan at any time. No
amendment of the 2003 Non-Employee Director Plan may be made without approval of
the Company's stockholders if required by applicable law or by any listing
agreement to which the Company is a party with a national securities exchange or
other market system.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The statements in the following paragraphs of the principal U.S. federal
income tax consequences of the Benefits under the 2003 Non-Employee Director
Plan are based on statutory authority and judicial and administrative
interpretations, as of the date of this Proxy Statement, which are subject to
change at any time (possibly with retroactive effect). This discussion is
limited to the U.S. federal income tax consequences to individuals who are
citizens or residents of the United States. The law is technical and complex,
and the discussion below represents only a general summary. The following is not
be considered as tax advice to any persons who may be participants in the 2003
Non-Employee Director Plan and any such persons are advised to consult their own
tax counsel.
STOCK OPTIONS. Stock options granted under the 2003 Non-Employee Director
Plan are options that do not qualify as "incentive stock options" under Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code"). A
non-employee director who receives a stock option will not recognize any taxable
income upon grant. However, the non-employee director generally will recognize
ordinary income upon exercise in an amount equal to the excess of the fair
market value of the shares of Common Stock at the time of exercise over the
exercise price. As a result of Section 16(b) of the Securities Exchange Act of
1934, as amended, under certain circumstances, the timing of income recognition
may be deferred (the "Deferral Period"). Absent a written election pursuant to
Section 83(b) of the Code filed with the Internal Revenue Service within 30 days
after the exercise of the option (a "Section 83(b) Election"), recognition of
income by the non-employee director will be deferred until the expiration of the
Deferral Period, if any. A non-employee director's tax basis in the shares of
Common Stock received upon exercise of a stock option will be equal to the
amount of cash paid on exercise, plus the amount of ordinary income received by
such non-employee director as a result of the exercise of the stock option. The
holding period for the shares of Common stock would begin just after the
transfer of the shares or just after the Deferral Period, if any. A federal
income tax deduction generally will be allowed to the Company in an amount equal
to the ordinary income included by the non-employee director with respect to his
or her stock option, provided that such amount constitutes an ordinary and
necessary business expense to the Company and is reasonable and the limitations
of Section 280G of the Code do not apply.
22
If a non-employee director exercises a stock option by delivering shares
of common stock, other than shares previously acquired pursuant to the exercise
of an "incentive stock option" which are delivered prior to the expiration of
the holding periods specified in section 422(a) of the Code, the non-employee
director will not recognize gain or loss with respect to the exchange of such
shares, even if their then fair market value is different from the non-employee
director's tax basis. The non-employee director, however, will be taxed as
described above with respect to the exercise of the stock option as if he or she
had paid the exercise price in cash, and the Company likewise generally will be
entitled to an equivalent tax deduction.
If the Board permits a non-employee director to transfer stock option to
a member or members of the non-employee director's immediate family (or to a
trust for the benefit of such persons) or other entity owned by such persons,
makes such a transfer and such transfer constitutes a completed gift for gift
tax purposes (which determination may depend on a variety of factors including,
without limitation, whether the stock option has vested), then such transfer
will be subject to federal gift tax except, generally, to the extent protected
by the non-employee director's annual gift-tax exclusion, by his or her lifetime
unified credit or by the marital deduction. The amount of the non-employee
director's gift is the value of the stock option at the time of the gift. If the
transfer of the stock option constitutes a completed gift and the non-employee
director retains no interest in or power over the stock option after the
transfer, the stock option generally will not be included in his or her gross
estate for federal estate tax purposes. The transfer of the stock option will
not cause the transferee to recognize taxable income at the time of the
transfer. If the transferee exercises the stock option while the transferor is
alive, the transferor will recognize ordinary income as described above as if
the transferor had exercised the stock option. If the transferee exercises the
stock option after the death of the transferor, it is uncertain whether the
transferor's estate or the transferee will recognize ordinary income for federal
income tax purposes.
STOCK AWARDS. Non-employee directors generally will recognize ordinary
income with respect to stock awards at the time the shares of Common Stock are
received in an amount equal to their fair market value. With respect to stock
awards that are subject to a Deferral Period, absent a Section 83(b) Election, a
non-employee director will recognize ordinary income at the conclusion of the
Deferral Period, in an amount equal to the fair market value (on such date) of
the shares of Common Stock. If a Section 83(b) Election is made, the individual
will recognize ordinary income, as of the transfer date, in an amount equal to
the fair market value of the shares of Common Stock as of that date. The Company
generally will be allowed a deduction for federal income tax purposes in an
amount equal to the ordinary income recognized by the employee, provided that
such amount constitutes an ordinary and necessary business expense and is
reasonable and the limitations of Section 280G of the Code do not apply.
REGULATION. The Plan is neither qualified under the provisions of Section
401(a) of the Code, nor subject to any of the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
OTHER INFORMATION. If stockholders approve the 2003 Non-Employee Director
Plan at the Meeting, options to purchase an aggregate of 24,000 shares of Common
Stock and stock awards of an aggregate of 4,000 shares of Common Stock are
expected to be granted to non-employee directors immediately following the
Meeting.
The affirmative vote of a majority of the Common Stock represented in
person or by proxy at the Meeting is required to approve the 2003 Non-Employee
Director Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE 2003
NON-EMPLOYEE DIRECTORS SHARE INCENTIVE PLAN.
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PROPOSAL #3
APPROVAL OF THE SEACOR SMIT INC. 2003 SHARE INCENTIVE PLAN
The Board is proposing for stockholder approval the SEACOR SMIT Inc. 2003
Share Incentive Plan (the "2003 Share Incentive Plan"). The 2003 Share Incentive
Plan is intended to attract, retain and motivate highly competent key employees
and consultants and further align their interests with those of the Company's
other stockholders. As of the date of this Proxy Statement, there remained 8,355
shares of Common Stock available for delivery to participants under the 1996
Share Incentive Plan.
The following summary describes the material features of the 2003 Share
Incentive Plan but is not intended to be complete, and therefore the summary is
qualified in its entirety by the 2003 Share Incentive Plan, a copy of which is
attached to this Proxy Statement as ANNEX B.
SHARES AVAILABLE
The maximum number of shares of Common Stock that may be delivered to
participants under the 2003 Share Incentive Plan, subject to certain
adjustments, is an aggregate of 1,000,000. In addition, any shares of Common
Stock covered by a Benefit (defined below) granted under the 2003 Share
Incentive Plan, which for any reason is cancelled, forfeited or expires or, in
the case of a Benefit other than a stock option, is settled in cash, shall again
be available for Benefits under the 2003 Share Incentive Plan.
ADMINISTRATION
The 2003 Share Incentive Plan provides for administration by a committee
of the Board of Directors appointed from among its members (the "Committee"),
which is comprised, unless otherwise determined by the Board of Directors,
solely of not less than two members who shall be (1) "Non-Employee Directors"
within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (2)
"outside directors" within the meaning of Treasury Regulation section
1.162-27(e)(3) under Section 162(m) of the Code. The Committee is authorized,
subject to the provisions of the 2003 Share Incentive Plan, to establish such
rules and regulations as it deems necessary for the proper administration of the
2003 Share Incentive Plan and to make such determinations and interpretations
and to take such action in connection with the 2003 Share Incentive Plan and any
Benefits granted as it deems necessary or advisable. Thus, among the Committee's
powers are the authority to select officers and other key employees of, and
consultants to, the Company and its subsidiaries to receive Benefits, and to
determine the form, amount and other terms and conditions of Benefits. The
Committee also has the power to modify or waive restrictions on Benefits, to
amend Benefits and to grant extensions and accelerations of Benefits.
ELIGIBILITY FOR PARTICIPATION
Officers and key employees of, and consultants to, the Company or any of
its subsidiaries and affiliates are eligible to participate in the 2003 Share
Incentive Plan. The selection of participants from eligible persons is within
the discretion of the Committee. The estimated number of officers and key
employees who are eligible to participate in the 2003 Share Incentive Plan is
approximately 50, and an estimate of the number of consultants who are eligible
to participate in the 2003 Share Incentive Plan has not been made.
TYPES OF BENEFITS
The 2003 Share Incentive Plan provides for the grant of any or all of the
following types of benefits: (1) stock options, including incentive stock
options and non-qualified stock options; (2) stock appreciation rights; (3)
stock awards; (4) performance awards; and (5) stock units
24
(collectively, "Benefits"). Benefits may be granted singly, in combination, or
in tandem as determined by the Committee. Stock awards, performance awards and
stock units may, as determined by the Committee in its discretion, constitute
Performance-Based Awards, as described below.
STOCK OPTIONS
Under the 2003 Share Incentive Plan, the Committee may grant awards in
the form of options to purchase shares of Common Stock. Options may either be
incentive stock options, qualifying for special tax treatment, or non-qualified
options; however, no incentive stock option shall be issued to a participant in
tandem with a non-qualified stock option. The Committee will, with regard to
each stock option, determine the number of shares subject to the option, the
manner and time of the option's exercise and vesting, and the exercise price of
the option. The exercise price will not be less than 100% of the fair market
value of the Common Stock on the date the stock option is granted (the "Fair
Market Value"). The exercise price may be paid in cash or, in the discretion of
the Committee, by the delivery of shares of Common Stock then owned by the
participant, by the withholding of shares of Common Stock for which a stock
option is exercisable, or by a combination of these methods. In the discretion
of the Committee, payment may also be made by delivering a properly executed
exercise notice to the Company together with a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale or loan
proceeds to pay the exercise price. The Committee may prescribe any other method
of paying the exercise price that it determines to be consistent with applicable
law and the purpose of the 2003 Share Incentive Plan. In determining which
methods a participant may utilize to pay the exercise price, the Committee may
consider such factors as it determines are appropriate. No stock option is
exercisable later than ten years after the date it is granted except in the
event of a participant's death, in which case, the exercise period of a
non-qualified stock option may be extended but no later than one year after the
participant's death. The exercise of any option which remains exercisable after
termination of employment will be subject to satisfaction of the conditions
precedent that the holder thereof neither (1) competes with or takes other
employment with or renders services to a competitor of the Company, its
subsidiaries or affiliates without the consent of the Company nor (2) conducts
himself or herself in a manner adversely affecting the Company.
STOCK APPRECIATION RIGHTS (SARS)
The 2003 Share Incentive Plan authorizes the Committee to grant a SAR
either in tandem with a stock option or independent of a stock option. A SAR is
a right to receive a payment, in cash, Common Stock, or a combination thereof,
equal to the excess of (x) the Fair Market Value, or other specified valuation,
of a specified number of shares of Common Stock on the date the right is
exercised over (y) the Fair Market Value, or other specified valuation (which
shall not be less than Fair Market Value), of such shares of Common Stock on the
date the right is granted, all as determined by the Committee. SARs granted
under the 2003 Share Incentive Plan are subject to terms and conditions relating
to exercisability that are similar to those imposed on stock options, and each
SAR is subject to such terms and conditions as the Committee shall impose from
time to time.
STOCK AWARDS
The Committee may, in its discretion, grant Stock Awards (which may
include mandatory payment of bonus incentive compensation in stock) consisting
of Common Stock issued or transferred to participants with or without other
payments therefor. Stock Awards may be subject to such terms and conditions as
the Committee determines appropriate, including, without limitation,
restrictions on the sale or other disposition of such shares, the right of the
Company to reacquire such shares for no consideration upon termination of the
participant's employment or service within specified periods, and may constitute
Performance-Based Awards, as described below. The Stock Award will specify
whether the participant will have, with respect to the shares
25
of Common Stock subject to a Stock Award, all of the rights of a holder of
shares of Common Stock, including the right to receive dividends and to vote the
shares.
PERFORMANCE AWARDS
The 2003 Share Incentive Plan allows for the grant of performance awards
which may take the form of shares of Common Stock or Stock Units (defined
below), or any combination thereof and which may constitute Performance-Based
Awards. Such awards will be contingent upon the attainment, over a period to be
determined by the Committee, of certain performance goals. The length of the
performance period, the performance goals to be achieved and the measure of
whether and to what degree such goals have been achieved will be determined by
the Committee. Payment of earned performance awards will be made in accordance
with terms and conditions prescribed or authorized by the Committee. The
participant may elect to defer, or the Committee may require the deferral of,
the receipt of performance awards upon such terms as the Committee deems
appropriate.
STOCK UNITS
The Committee may, in its discretion, grant Stock Units to participants,
which may constitute Performance-Based Awards. A "Stock Unit" means a notional
account representing one share of Common Stock. The Committee determines the
criteria for the vesting of Stock Units and whether a participant granted a
Stock Unit shall be entitled to Dividend Equivalent Rights (as defined in the
2003 Share Incentive Plan). Upon vesting of a Stock Unit, unless the Committee
has determined to defer payment with respect to such unit or a participant has
elected to defer payment, shares of Common Stock representing the Stock Units
will be distributed to the participant (unless the Committee, with the consent
of the participant, provides for the payment of the Stock Units in cash, or
partly in cash and partly in shares of Common Stock, equal to the value of the
shares of Common Stock which would otherwise be distributed to the participant).
PERFORMANCE-BASED AWARDS
Certain Benefits granted under the 2003 Share Incentive Plan may be
granted in a manner such that the Benefit qualifies for the performance-based
compensation exemption to Section 162(m) of the Code ("Performance-Based
Awards"). As determined by the Committee in its sole discretion, either the
vesting or the exercise of such Performance-Based Awards will be based upon
achievement of hurdle rates and/or growth in one or more of the following
business criteria: (1) net sales; (2) pretax income before allocation of
corporate overhead and bonus; (3) budget; (4) earnings per share; (5) net
income; (6) division, group or corporate financial goals; (7) return on
stockholders' equity; (8) return on assets; (9) attainment of strategic and
operational initiatives; (10) appreciation in and/or maintenance of the price of
the Common Stock or any other publicly-traded securities of the Company; (11)
market share; (12) gross profits; (13) earnings before interest and taxes; (14)
earnings before interest, taxes, depreciation and amortization; (15) economic
value-added models and comparisons with various stock market indices; (16)
reductions in costs; or (17) any combination of the foregoing. In addition,
Performance-Based Awards may include comparisons to the performance of other
companies, such performance to be measured by one or more of the foregoing
criteria. With respect to Performance-Based Awards, the Committee shall
establish in writing (x) the performance goals applicable to a given period, and
such performance goals shall state, in terms of an objective formula or
standard, the method for computing the amount of compensation payable to the
participant if such performance goals are obtained and (y) the individual
employees or class of employees to which such performance goals apply no later
than 90 days after the commencement of such period (but in no event after 25% of
such period has elapsed). No Performance-Based Award shall be payable to, or
vest with respect to, as the case may be, any participant for a given fiscal
period until the Committee certifies in writing that the objective performance
goals (and any other material terms) applicable to such period have been
satisfied.
26
OTHER TERMS
The 2003 Share Incentive Plan provides that Benefits may be transferred
by will or the laws of descent and distribution. The Committee determines the
treatment to be afforded to a participant in the event of termination of
employment for any reason including death, disability or retirement. In addition
to the foregoing, other than with respect to ISOs, the Committee may permit the
transferability of a Benefit by a participant to certain members of the
participant's immediate family or trusts for the benefit of such persons or
other entities owned by such persons.
Upon the grant of any Benefit under the 2003 Share Incentive Plan, the
Committee may, by way of an agreement with the participant, establish such other
terms, conditions, restrictions and/or limitations covering the grant of the
Benefit as are not inconsistent with the Plan. The 2003 Share Incentive Plan
terminates on April 3, 2013, and no Benefit will be granted after April 3, 2013.
The Committee reserves the right to amend, suspend or terminate the 2003 Share
Incentive Plan at any time. However, no amendment may be made without approval
of the stockholders of the Company if the amendment will: (i) disqualify any
ISOs granted under the Plan; (ii) increase the aggregate number of Shares of
Common Stock that may be delivered through Stock Options under the Plan; (iii)
increase the maximum amounts which can be paid to an individual participant
under the Plan; (iv) change the types of business criteria on which
Performance-Based Awards are to be based under the Plan; or (v) modify the
requirements as to eligibility for participation in the Plan.
The 2003 Share Incentive Plan contains provisions for equitable
adjustment of Benefits in the event of a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, reverse stock split, split-up,
spin-off, combination of Shares, exchange of Shares, dividend in kind or other
like change in capital structure or distribution (other than normal cash
dividends) to stockholders of the Company. In addition, if there is a Change in
Control (as defined in the Plan) of the Company, Benefits that have not vested
or become exercisable at the time of such Change in Control will immediately
vest and become exercisable and all performance targets relating to such
Benefits will be deemed to have been satisfied as of the time of such Change in
Control; PROVIDED, HOWEVER, that: (i) any spin-off of a division or subsidiary
of the Company to its stockholders, and (ii) any event that would otherwise
constitute a Change in Control that the Board of Directors determines, in its
sole discretion, not to be a Change in Control for purposes of the Plan, will
not constitute a Change in Control. Furthermore, the Committee, in its sole
discretion, may determine upon the occurrence of a Change in Control (without
regard to any contrary determination by the Board of Directors) that each
Benefit outstanding will terminate and each holder will receive: (i) an amount
equal to the excess of the Fair Market Value of such Shares of Common Stock that
are subject to Stock Options or SARs and that are then vested, over the exercise
price thereof, and (ii) the Fair Market Value of Shares of Common Stock that are
subject to a Stock Award or Stock Unit and that are then vested. Such amounts,
in either case, may be paid in cash, property or a combination thereof.
The Committee may grant Benefits to participants who are subject to the
tax laws of nations other than the United States, which Benefits may have terms
and conditions as determined by the Committee as necessary to comply with
applicable foreign laws. The Committee may take any action which it deems
advisable to obtain approval of such Benefits by the appropriate foreign
governmental entity; provided, however, that no such Benefits may be granted,
and no action may be taken which would violate the Exchange Act, the Code or any
other applicable law.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The statements in the following paragraphs of the principal U.S. federal
income tax consequences of Benefits under the 2003 Share Incentive Plan are
based on statutory authority and judicial and administrative interpretations, as
of the date of this Proxy Statement, which are subject to change at any time
(possibly with retroactive effect). The law is technical and complex,
27
and the discussion below represents only a general summary. The following is not
to be considered as tax advice to any persons who may be participants in the
2003 Share Incentive Plan, and any such persons are advised to consult with
their own tax counsel.
INCENTIVE STOCK OPTIONS. Incentive stock options ("ISOs") granted under
the 2003 Share Incentive Plan are intended to meet the definitional
requirements of Section 422(b) of the Code for "incentive stock options."
An employee who receives an ISO does not recognize any taxable income
upon the grant of such ISO. Similarly, the exercise of an ISO generally
does not give rise to federal income tax to the employee, provided that
(1) the federal "alternative minimum tax," which depends on the
employee's particular tax situation, does not apply and (2) the employee
is employed by the Company from the date of grant of the option until
three months prior to the exercise thereof, except where such employment
terminates by reason of disability (where the three month period is
extended to one year) or death (where this requirement does not apply).
If an employee exercises an ISO after the requisite periods referred to
in clause (2) above, the ISO will be treated as an NSO (defined below)
and will be subject to the rules set forth below under the caption
"Non-Qualified Stock Options and Stock Appreciation Rights." Further, if
after exercising an ISO, an employee disposes of the Common Stock so
acquired more than two years from the date of grant and more than one
year from the date of transfer of the Common Stock pursuant to the
exercise of such ISO (the "applicable holding period"), the employee will
generally recognize capital gain or loss equal to the difference, if any,
between the amount received for the shares and the exercise price. If,
however, an employee does not hold the shares so acquired for the
applicable holding period--thereby making a "disqualifying
disposition"--the employee would recognize ordinary income equal to the
excess of the fair market value of the shares at the time the ISO was
exercised over the exercise price and the balance, if any, would
generally be treated as capital gain. If the disqualifying disposition is
a sale or exchange that would permit a loss to be recognized under the
Code (were a loss in fact to be realized), and the sales proceeds are
less than the fair market value of the shares on the date of exercise,
the employee's ordinary income therefrom would be limited to the gain (if
any) realized on the sale. An employee who exercises an ISO by delivering
Common Stock previously acquired pursuant to the exercise of another ISO
is treated as making a "disqualifying disposition" of such Common Stock
if such shares are delivered before the expiration of their applicable
holding period. Upon the exercise of an ISO with previously acquired
shares as to which no disqualifying disposition occurs, it appears that
the employee would not recognize gain or loss with respect to such
previously acquired shares. The Company will not be allowed a federal
income tax deduction upon the grant or exercise of an ISO or the
disposition, after the applicable holding period, of the Common Stock
acquired upon exercise of an ISO. In the event of a disqualifying
disposition, the Company generally will be entitled to a deduction in an
amount equal to the ordinary income included by the employee, provided
that such amount constitutes an ordinary and necessary business expense
to the Company and is reasonable and the limitations of Sections 280G and
162(m) of the Code (discussed below) do not apply.
NON-QUALIFIED STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. Non-qualified
stock options ("NSOs") granted under the 2003 Share Incentive Plan are
options that do not qualify as ISOs. An employee who receives an NSO or
an SAR will not recognize any taxable income upon the grant of such NSO
or SAR. However, the employee generally will recognize ordinary income
upon exercise of an NSO in an amount equal to the excess of the fair
market value of the shares of Common Stock at the time of exercise over
the exercise price. Similarly, upon the receipt of cash or shares
pursuant to the exercise of an SAR, the individual generally will
recognize ordinary income in an amount equal to the sum of the cash and
the fair market value of the shares received. As a result of Section
16(b) of the Exchange Act, under certain circumstances, the timing of
income recognition may be deferred following the exercise of an NSO or
SAR (the "Deferral Period") for any individual who is an executive
officer or director of the Company or a beneficial owner of more than ten
percent (10%) of any class of equity securities of the
28
Company. Absent a Section 83(b) election (described below under "Other
Awards"), recognition of income by the individual will be deferred until
the expiration of the Deferral Period, if any. The ordinary income
recognized with respect to the receipt of shares or cash upon exercise of
an NSO or an SAR will be subject to both wage withholding and other
employment taxes. In addition to the customary methods of satisfying the
withholding tax liabilities that arise upon the exercise of an SAR for
shares or upon the exercise of an NSO, the Company may satisfy the
liability in whole or in part by withholding shares of Common Stock from
those that otherwise would be issuable to the individual or by the
employee tendering other shares owned by him or her, valued at their fair
market value as of the date that the tax withholding obligation arises. A
federal income tax deduction generally will be allowed to the Company in
an amount equal to the ordinary income included by the individual with
respect to his or her NSO or SAR, provided that such amount constitutes
an ordinary and necessary business expense to the Company and is
reasonable and the limitations of Sections 280G and 162(m) of the Code do
not apply. If an individual exercises an NSO by delivering shares of
Common Stock, other than shares previously acquired pursuant to the
exercise of an ISO which is treated as a "disqualifying disposition" as
described above, the individual will not recognize gain or loss with
respect to the exchange of such shares, even if their then fair market
value is different from the individual's tax basis. The individual,
however, will be taxed as described above with respect to the exercise of
the NSO as if he or she had paid the exercise price in cash, and the
Company likewise generally will be entitled to an equivalent tax
deduction.
If the Committee permits an individual to transfer an NSO to a member or
members of the individual's immediate family or to a trust for the
benefit of such persons or other entity owned by such persons and such
individual makes such a transfer and such transfer constitutes a
completed gift for gift tax purposes (which determination may depend on a
variety of factors including, without limitation, whether the NSO or a
portion thereof has vested) then such transfer will be subject to federal
gift tax except, generally, to the extent protected by the individual's
annual gift tax exclusion, by his or her lifetime unified credit or by
the marital deduction. The amount of the individual's gift is the value
of the NSO at the time of the gift. If the transfer of the NSO
constitutes a completed gift and the individual retains no interest in or
power over the NSO after the transfer, the NSO generally will not be
included in his or her gross estate for federal estate tax purposes. The
transfer of the NSO will not cause the transferee to recognize taxable
income at the time of the transfer. If the transferee exercises the NSO
while the transferor is alive, the transferor will recognize ordinary
income as described above as if the transferor had exercised the NSO. If
the transferee exercises the NSO after the death of the transferor, it is
uncertain whether the transferor's estate or the transferee will
recognize ordinary income for federal income tax purposes.
OTHER AWARDS. With respect to other Benefits under the 2003 Share
Incentive Plan that are settled either in cash or in shares of Common
Stock that are either transferable or not subject to a substantial risk
of forfeiture (as defined in the Code and the regulations thereunder),
employees generally will recognize ordinary income equal to the amount of
cash or the fair market value of the Common Stock received. With respect
to Benefits under the 2003 Share Incentive Plan that are settled in
shares of Common Stock that are restricted to transferability and subject
to a substantial risk of forfeiture absent a written election pursuant to
Section 83(b) of the Code filed with the Internal Revenue Service within
30 days after the date of transfer of such shares pursuant to the award
(a "Section 83(b) election"), an individual will recognize ordinary
income at the earlier of the time at which (i) the shares become
transferable or (ii) the restrictions that impose a substantial risk of
forfeiture of such shares lapse, in an amount equal to the excess of the
fair market value (on such date) of such shares over the price paid for
the award, if any. If a Section 83(b) election is made, the individual
will recognize ordinary income, as of the transfer date, in an amount
equal to the excess of the fair market value of the Common Stock as of
that date over the price paid for such award, if any. The ordinary income
recognized
29
with respect to the receipt of cash, shares of Common Stock or other
property under the 2003 Share Incentive Plan will be subject to both wage
withholding and other employment taxes. the Company generally will be
allowed a deduction for federal income tax purposes in an amount equal to
the ordinary income recognized by the employee, provided that such amount
constitutes an ordinary and necessary business expense and is reasonable
and the limitations of Sections 280G and 162(m) of the Code do not apply.
DIVIDENDS AND DIVIDEND EQUIVALENTS. To the extent Benefits under the 2003
Share Incentive Plan earn dividends or dividend equivalents, whether paid
currently or credited to an account established under the 2003 Share
Incentive Plan, an individual generally will recognize ordinary income
with respect to such dividends or dividend equivalents.
CHANGE IN CONTROL. In general, if the total amount of payments to an
individual that are contingent upon a "change in control" of the Company
(as defined in Section 280G of the Code), including payments under the
2003 Share Incentive Plan that vest upon a "change in control," equals or
exceeds three times the individual's "base amount" (generally, such
individual's average annual compensation for the five calendar years
preceding the change in control), then, subject to certain exceptions,
the payments may be treated as "parachute payments" under the Code, in
which case a portion of such payments would be non-deductible to the
Company and the individual would be subject to a 20% excise tax on such
portion of the payments.
CERTAIN LIMITATIONS ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION. With
certain exceptions, Section 162(m) of the Code denies a deduction to
publicly held corporations for compensation paid to certain executive
officers in excess of $1 million per executive per taxable year
(including any deduction with respect to the exercise of an NSO or SAR or
the disqualifying disposition of stock purchased pursuant to an ISO). One
such exception applies to certain performance-based compensation provided
that such compensation has been approved by stockholders in a separate
vote and certain other requirements are met. If approved by its
stockholders, the Company believes that Stock Options, SARs and
Performance-Based Awards granted under the 2003 Share Incentive Plan
should qualify for the performance-based compensation exception to
Section 162(m) of the Code; provided, however, that Performance-Based
Awards granted after the Company's 2009 Annual Meeting of Stockholders
will only qualify for such exception if the 2003 Share Incentive Plan is
reapproved by the Company's stockholder at or prior to such meeting.
OTHER INFORMATION.
If stockholders approve the 2003 Share Incentive Plan at the Meeting, the
Company has agreed to grant options to purchase an aggregate of 23,750 shares of
Common Stock will be granted to executive officers of the Company in two
installments, on July 16, 2003 and October 15, 2003.
The affirmative vote of a majority of the Common Stock represented in
person or by proxy at the Meeting is required to approve the SEACOR SMIT Inc.
2003 Share Incentive Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE 2003
SHARE INCENTIVE PLAN.
30
NEW PLAN BENEFITS UNDER THE 2003 NON-EMPLOYEE DIRECTOR PLAN AND THE 2003 SHARE
INCENTIVE PLAN
The following table stock options and stock awards, to be received in
2003, will not be effective unless the stockholders approve the 2003
Non-Employee Director Plan and the 2003 Share Incentive Plan at the Meeting.
2003 NON-EMPLOYEE
DIRECTOR PLAN 2003 SHARE INCENTIVE PLAN
DOLLAR VALUE NUMBER OF DOLLAR VALUE NUMBER OF
NAME AND POSITION ($)(1) UNITS(2) ($)(3) UNITS(4)
----------------- ------------ --------- ------------ ---------
Charles Fabrikant, ............................
Chairman of the Board, President, and
Chief Executive Officer - - - 15,000
Randall Blank, ................................
Chief Financial Officer, Executive Vice
President, and Secretary - - - 3,750
Dick Fagerstal, ...............................
Sr. Vice President, Corporate
Development and Treasurer - - - 5,000
Alice Gran, ...................................
Vice President and General Counsel - - - -
Rodney Lenthall, .............................. - - - -
Vice President and President,
International Division
Executive Officer Group ....................... - - - 23,750
Non-Executive Director Group .................. 980,000 28,000 - -
Non-Executive Officer Employee Group .......... - - - -
(1) The dollar value shown relates only to shares of Common Stock to be granted
pursuant to stock awards and is based on the closing price of Common Stock on
March 31, 2003, which was $35.00 per share. No value is ascribed to grants of
stock options, as such value is not determinable.
(2) Includes total number of shares of Common Stock to be granted to all
non-employee directors as a group in 2003 under the 2003 Non-Employee Director
Plan pursuant to stock awards and stock options.
(3) No value is ascribed to grants of stock options, as such value is not
determinable.
(4) Includes number of shares of Common Stock to be granted to employees in 2003
under the 2003 Share Incentive Plan pursuant to stock options. Because awards
under the 2003 Share Incentive Plan are in the discretion of the Compensation
Committee, any additional awards to be received are not determinable.
31
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2002
regarding shares of the Company's common stock to be issued upon exercise and
the weighted-average exercise price of all outstanding options, warrants and
rights granted under the Company's equity compensation plans as well as the
number of shares available for issuance under such plans. No equity compensation
plans have been adopted without the approval of the Company's stockholders.
Number of securities remaining
Number of securities to be available for future issuance
issued upon exercise of Weighted-average exercise under equity compensation
outstanding options, price of outstanding plans (excluding securities
warrants and rights options, warrants and rights reflected in column (a))
-------------------------- ---------------------------- ------------------------------
PLAN CATEGORY (a) (b) (c)
-------------
Equity compensation
plans approved by
security holders...... 657,895 $28.27 153,040
Equity compensation
plans not approved
by security
holders............... - - -
Total.................... 657,895 153,040
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board recommends that stockholders ratify the appointment of
Ernst & Young LLP ("Ernst & Young"), certified public accountants, as
independent auditors to audit the accounts of the Company and its subsidiaries
for the fiscal year ending December 31, 2003. The appointment of Ernst & Young
was recommended to the Board by its Audit Committee. Ernst & Young served as
independent auditor for the Company for the fiscal year ended December 31, 2002.
Representatives of Ernst & Young will be present at the Meeting. They
will have an opportunity to make a statement if they desire to do so and will be
available to respond to stockholder questions after the conclusion of the
Meeting.
The affirmative vote of a majority of the Common Stock represented in
person or by proxy at the Meeting is required to ratify the appointment of Ernst
& Young.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG.
32
CHANGE IN ACCOUNTANTS
On June 25, 2002, the Company dismissed Arthur Andersen LLP ("Arthur
Andersen") as its independent auditor, and engaged Ernst & Young as its new
independent auditor for 2002, effective immediately. The decision to dismiss
Arthur Andersen was approved by the Company's Audit Committee.
The reports of Arthur Andersen on the Company's financial statements for
the year ended December 31, 2001 did not contain an adverse opinion or a
disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles.
During the year ended December 31, 2001 and through June 25, 2002, there
were no disagreements with Arthur Andersen on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Arthur
Andersen, would have caused it to make reference thereto in its report on the
financial statements for such periods.
During the year ended December 31, 2001 and through June 25, 2002, there
have occurred none of the "reportable events" listed in Item 304(a)(1)(v) of
Regulation S-K.
The Company requested that Arthur Andersen furnish a letter addressed to
the Securities Exchange Commission stating its agreement with the statements set
forth above. A copy of such letter, dated June 26, 2002, was filed as Exhibit
16.1 to the Company's Current Report on Form 8-K, filed with the Securities
Exchange Commission on July 1, 2002.
During the year ended December 31, 2001 and through June 25, 2002, the
Company did not consult with Ernst & Young regarding any of the matters or
events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
The following table sets forth the aggregate fees billed to the Company
for the fiscal year ended December 31, 2002 by Arthur Andersen for services
rendered through June 25, 2002, and the Company's principal accounting firm,
Ernst & Young LLP:
Paid to Paid to
Arthur Andersen Ernst & Young
--------------- -------------
o Audit Fees: $ 7,000 $ 275,000
o Financial Information Systems $ - $ -
and Design and Implementation Fees:
o All Other Fees: $ - $ 51,000
AUDIT FEES (aggregate $282,000). This category includes the fees for
quarterly review of interim financial statements by Arthur Andersen, and the
examination by Ernst & Young of the Company's consolidated financial statements
and the quarterly reviews of interim financial statements. This category also
includes advice on audit and accounting matters that arose during or as a result
of the audit or the review of interim financial statements, and the preparation
by Ernst & Young of an annual "management letter" on internal control matters.
ALL OTHER FEES ($51,000). This category consists of fees paid to Ernst &
Young for audit-related services ($36,000), and other services ($15,000).
Audit-related services are closely related to the financial audit process and
primarily consist of statutory audits required by non-U.S. jurisdictions; audits
of the Company's benefit plans; audits of vendors, licensees and customers to
confirm that contract terms of pricing and payment are being met; internal
control advisory services; work on registration statements filed with the U.S.
Securities and Exchange
33
Commission; and related accounting advice. Other services are services provided
by Ernst & Young to review state income and franchise tax returns.
The Company did not use Arthur Andersen and does not use Ernst & Young
for financial information system design and implementation. These services,
which include designing or implementing a system that aggregates source data
underlying the financial statements or generates information that is significant
to the Company's financial statements, are provided internally or by other
service providers. The Company does not engage Ernst & Young to provide
compliance outsourcing services.
OTHER MATTERS
OTHER ACTIONS AT MEETING
The Board does not intend to present any other matter at the Meeting. The
Board has not been informed that any other person intends to present any other
matter for action at this meeting. If any other matters properly come before the
Meeting, the persons named in the accompanying proxy intend to vote the proxies
in accordance with their best judgment.
LIMITATION ON STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS OF
STOCKHOLDERS; REMOVAL OF DIRECTORS; VACANCIES
The Restated Certificate of Incorporation provides that no action may be
taken by stockholders except at an annual or special meeting of stockholders or
by the affirmative written consent of the holders of not less than 66 2/3% (or
such greater percentage as may then be required by applicable law) in voting
power of the outstanding shares of Common Stock entitled to vote thereon. The
By-laws provide that, to be properly brought before an annual meeting, business
must be (i) specified in the notice of meeting and (ii) brought before the
meeting by or at the direction of the Board, or (iii) be brought before the
meeting by a stockholder upon timely written notice in proper form given to the
Secretary of the Company. In order to be considered timely, such stockholder
notice must be received by the secretary of the Company not less than 90 days
prior to the anniversary of the date of the annual meeting of stockholders held
in the previous year, subject to certain exceptions. The By-laws further provide
that, unless otherwise prescribed by law, special meetings of stockholders can
only be called by the Chairman of the Board, the President or pursuant to a
resolution approved by a majority of the Board and, in any such case, only to
consider such business as shall be provided in such resolution or in the notice
delivered to stockholders respecting the special meeting.
The By-laws also provide that directors of the Company can be removed
from office (prior to the expiration of their term) with or without "cause" by
the affirmative vote of a majority in voting power of the outstanding shares
entitled to vote at an election of directors, and that vacancies on the Board
can be filled only by the remaining directors then in office.
STOCKHOLDER NOMINATION OF DIRECTORS
The By-laws establish an advance notice procedure with regard to the
nomination (other than by or at the direction of the Board or a committee
thereof) of candidates for election as directors (the "Nomination Procedure").
Only persons who are nominated by the Board, a committee appointed by the Board,
or by a stockholder who has given timely prior written notice to the Secretary
of the Company prior to the meeting at which directors are to be elected, are
eligible for election as directors of the Company. In order to be timely, such
written notice must be received by the Secretary of the Company not less than 90
days prior to the anniversary of the date of the immediately preceding annual
meeting (subject to certain exceptions), and the notice must contain (i) the
name and address of the stockholder who intends to make the nomination and the
name and address of the person or persons to be nominated, (ii) a representation
that the stockholder is a holder of record of Common Stock entitled to vote at
such meeting and
34
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice, (iii) a description of all contracts,
arrangements or other understandings between the stockholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder, (iv) such
other information regarding each nominee proposed by such stockholder as would
be required to be included in a proxy or information statement filed pursuant to
the Exchange Act and (v) the consent of each nominee to serve as a director of
the Company if so elected. The presiding officer of the meeting may refuse to
acknowledge nomination of any person not made in compliance with the Nomination
Procedure.
Although the By-laws do not empower the Board with the right to approve
or disapprove of stockholder nominations for the election of directors or any
other business properly brought by the Company's stockholders at any annual or
special meeting, the foregoing Nomination Procedure may nevertheless have the
effect of (i) precluding a nomination for the election of directors or
precluding the transaction of business at a particular meeting if the proper
procedures are not followed, or (ii) deterring a third party from conducting a
solicitation of proxies or contest to elect his or its own slate of director
nominees or otherwise attempting to obtain control of the Company.
RESTRICTIONS ON FOREIGN OWNERSHIP OF COMMON STOCK AND RELATED MATTERS
The Company is subject to a variety of U.S. federal statutes and
regulations, including the Shipping Act, 1916, as amended (the "Shipping Act"),
and the Merchant Marine Act of 1920, as amended (the "1920 Act", and
collectively with the Shipping Act, the "Acts"), which govern, among other
things, the ownership and operation of vessels used to carry cargo between U.S.
ports.
Generally, the Acts require that vessels engaged in U.S. coastwise trade
must be owned by citizens of the U.S. In order for a corporation operating in
U.S. coastwise trade to qualify as a U.S. citizen, at least 75% of the
outstanding capital stock of the corporation must be owned by persons or
organizations that are U.S. citizens, as defined in the Shipping Act.
Accordingly, if persons or organizations that are not U.S. citizens as so
defined were to own more than 25% of the Common Stock, the Company would not
(until such Foreign ownership was reduced to or below 25%) be permitted to
continue its U.S. coastwise trade operations. To help facilitate compliance with
the Acts, the Restated Certificate of Incorporation requires the Company to
institute and to implement through the transfer agent for the Common Stock a
dual stock certificate system, pursuant to which certificates evidencing shares
of Common Stock bear legends which, among other things, designate such
certificates as either "foreign" or "domestic," depending on the citizenship of
the owner. The Restated Certificate of Incorporation also establishes procedures
designed to enable the Company to monitor and limit foreign ownership of the
Common Stock, and authorizes the Board under certain circumstances to redeem
shares of stock owned by non-U.S. citizens. Moreover, the By-laws provide that
the Chairman of the Board and Chief Executive Officer, and the President must
each be U.S. citizens, and restrict any officer who is not a U.S. citizen from
acting in the absence or disability of such person. The By-laws further provide
that the number of non-U.S. citizen directors shall not exceed a minority of the
number necessary to constitute a quorum for the transaction of business.
35
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 2002 accompanies this Proxy Statement and should be read in
conjunction herewith.
STOCKHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Stockholder proposals to be presented at the 2004 Annual Meeting must be
received by the Company on or before December 9, 2003 for inclusion in the proxy
statement and proxy card relating to the 2004 Annual Meeting pursuant to SEC
Rule 14a-8. Any such proposals should be sent via registered, certified or
express mail to: Secretary, SEACOR SMIT Inc., 11200 Richmond Avenue, Houston,
Texas 77082.
As a separate and distinct matter from proposals under Rule 14a-8, in
accordance with Article I, Section 1 of the Amended and Restated By-laws of the
Company, in order for business to be properly brought before the next annual
meeting by a stockholder, such stockholder must deliver to the Company timely
notice thereof. To be timely, a stockholder's notice must be delivered to or
mailed and received by the Secretary at the principal executive offices of the
Company, not less than 90 calendar days in advance of the anniversary date of
the previous year's annual meeting of stockholders (or if there was no such
prior annual meeting, not less than 90 calendar days prior to the date which
represents the second Tuesday in May of the current year); if, however, the date
of the annual meeting is advanced by more than 20 days, or delayed by more than
60 days, from such anniversary date, then, to be considered timely, notice by
the stockholders must be received by the Company not later than the close of
business on the later of (x) the 90th day prior to such annual meeting or (y)
the seventh day following the date on which notice of the date of the annual
meeting was mailed to stockholders or publicly disclosed.
For the Board of Directors
/s/ Randall Blank
Randall Blank
Secretary
36
ANNEX A
SEACOR SMIT INC.
2003 NON-EMPLOYEE DIRECTOR SHARE INCENTIVE PLAN
1. PURPOSE. The SEACOR SMIT Inc. Non-Employee Director Share Incentive Plan
(the "Plan") is intended (i) to provide incentives that will attract,
retain and motivate highly competent persons as non-employee directors of
SEACOR SMIT Inc. (the "Company"), and (ii) to assist in further aligning
the interests of the Company's non-employee directors with those of its
other stockholders, by providing non-employee directors with
opportunities to acquire shares of the Common Stock, par value $.01 per
share, of the Company ("Common Stock") pursuant to the Benefits (as
defined below) described herein.
2. ADMINISTRATION. The Plan will be administered by the Board of Directors
of the Company (the "Board") or a committee appointed by the Board from
among its members (and references herein to the Board shall be deemed to
include references to any such committee, except as the context otherwise
requires). The Board is authorized, subject to the provisions of the
Plan, to establish such rules and regulations as it deems necessary for
the proper administration of the Plan and to make such determinations and
interpretations and to take such action in connection with the Plan and
any Benefits granted hereunder as it deems necessary or advisable. All
determinations and interpretations made by the Board shall be binding and
conclusive on all participants and their legal representatives.
The Board may employ such legal or other counsel, consultants and agents
as it may deem desirable for the administration of the Plan and may rely
upon any opinion or computation received from any such counsel,
consultant or agent. Expenses incurred by the Board in the engagement of
such counsel, consultant or agent shall be paid by the Company.
3. PARTICIPANTS. Each member of the Board who is not an employee of the
Company or any subsidiary of the Company (a "Non-Employee Director")
shall be eligible to participate in the Plan.
4. TYPE OF BENEFITS. Benefits under the Plan shall be granted in a
combination of (a) Stock Options and (b) Stock Awards (each as described
below, and collectively, the "Benefits"). Benefits may be evidenced by
agreements (which need not be identical) in such forms as the Board may
from time to time approve; provided, however, that in the event of any
conflict between the provisions of the Plan and any such agreements, the
provisions of the Plan shall prevail.
5. COMMON STOCK AVAILABLE UNDER THE PLAN.
(a) Subject to the provisions of this Section 5 and any adjustments
made in accordance with Section 8 hereof, the maximum number of
shares of Common Stock that may be delivered to Non-Employee
Directors and their beneficiaries under the Plan shall be 150,000
shares of Common Stock, which may be authorized and unissued or
treasury shares. Any shares of Common Stock covered by a Stock
Option granted under the Plan, which is forfeited, is canceled, or
expires, shall be deemed not to have been delivered for purposes
of determining the maximum number of shares of Common Stock
available for delivery under the Plan.
(b) If any Stock Option is exercised by tendering shares of Common
Stock to the Company as full or partial payment in connection with
the exercise of a Stock Option under the Plan, only the number of
shares of Common Stock issued net of the shares of Common Stock
tendered shall be deemed delivered for purposes of determining the
maximum number of shares of Common Stock available for delivery
under the Plan.
A-1
6. ANNUAL STOCK OPTIONS.
(a) GRANT. On the date of each Annual Meeting of Stockholders of the
Company during the term of the Plan (commencing with the 2003
Annual Meeting of Stockholders scheduled to be held on May 14,
2003), each Non-Employee Director in office immediately following
such Annual Meeting shall be granted automatically a stock option
to purchase 3,000 shares of Common Stock (subject to adjustments
made in accordance with Section 8 hereof) (a "Stock Option").
Stock Options are not intended to constitute "incentive stock
options" within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). Any Non-Employee Director
entitled to receive Stock Options pursuant to the Plan may elect
to decline such Stock Options.
(b) EXERCISE PRICE. Each Stock Option granted hereunder shall have a
per-share exercise price equal to the Fair Market Value (as
defined in Section 12 hereof) of a share of Common Stock on the
date of grant (subject to adjustments made in accordance with
Section 8 hereof).
(c) PAYMENT OF EXERCISE PRICE. The option exercise price may be paid
in cash or, in the discretion of the Board, by the delivery of
shares of Common Stock then owned by the Non-Employee Director (to
be valued at their Fair Market Value on the date of exercise), by
the withholding of shares of Common Stock for which a Stock Option
is exercisable, or by a combination of these methods. The Board
may prescribe any other method of paying the exercise price that
it determines to be consistent with applicable law and the purpose
of the Plan, including, without limitation, in lieu of the
exercise of a Stock Option by delivery of shares of Common Stock
then owned by a Non-Employee Director, providing the Company with
a notarized statement attesting to the number of shares owned, in
which case upon verification by the Company, the Company would
issue to the Non-Employee Director only the number of incremental
shares to which the Non-Employee Director is entitled upon
exercise of the Stock Option. In determining which methods a
Non-Employee Director may utilize to pay the exercise price, the
Board may consider such factors as it determines are appropriate.
(d) EXERCISE PERIOD.
(i) GENERAL. Each Stock Option granted to a Non-Employee
Director hereunder shall become exercisable at any time
following the earlier to occur of (a) the first anniversary
of the date of grant and (b) the date of the first annual
meeting of the stockholders of the Company that occurs
after the date of grant, provided that the Non-Employee
Director continues to serve as a director of the Company on
such date; provided, however, that any such Stock Option
granted to a Non-Employee Director shall become immediately
exercisable in the event of (A) a Change in Control of the
Company (as defined in Section 8(b) hereof), as and to the
extent provided in Section 8(b) hereof, (B) the termination
of the service of a Non-Employee Director as a director as
a result of disability (as defined in Section 22(c)(3) of
the Code) or (C) the death of the Non-Employee Director.
Each Stock Option shall terminate on the tenth anniversary
of the date of grant unless terminated earlier pursuant to
the Plan or later pursuant to Section 6(d)(iii) hereof.
(ii) TERMINATION OF DIRECTORSHIP. If a Non-Employee Director's
service as a director of the Company is terminated, any
Stock Option previously granted to such Non-Employee
Director shall, to the extent not theretofore exercised,
terminate and become null and void; provided, however,
that:
(a) if the service of a Non-Employee Director holding an
outstanding Stock Option is terminated by reason of
(i) such a Non-Employee's disability (as defined in
Section 22(e)(3) of the Code), (ii) voluntary
retirement from service as a director of the
Company, (iii) failure of the Company to nominate
for re-election such Non-Employee who is otherwise
eligible, except if such failure to nominate for
re-
A-2
election is due to any act of (A) fraud or
intentional misrepresentation or (B) embezzlement,
misappropriation or conversion of assets or
opportunities of the Company or any subsidiary
corporation or parent corporation of the Company (in
which case, such Stock Option shall terminate and no
longer be exercisable), or (iv) the failure of such
Non-Employee Director to be re-elected by
Stockholders following nomination by the Company,
such Stock Option shall, to the extent not
previously exercised, remain exercisable at any time
up to and including (X) three (3) months after the
date of such termination of service in the case of
termination by reason of voluntary retirement,
failure of the Company to nominate for re-election
such Non-Employee Director who is otherwise eligible
(subject to the exceptions referred to in clause
(iii) above), or failure of such Non-Employee
Director to be re-elected by Stockholders following
nomination by the Company, and (Y) one (1) year
after the date of termination of service in the case
of termination by reason of disability.
(iii) EXTENSION OF TERM. The term of exercise of all outstanding
Stock Options held by a Non-Employee Director that have a
remaining term of less than one (1) year on the date of
such Non-Employee Director's death shall automatically be
extended to the first anniversary of the date of death.
7. ANNUAL STOCK AWARDS FOR NON-EMPLOYEE DIRECTORS. On the date of each
Annual Meeting of Stockholders of the Company during the term of the
Plan, each Non-Employee Director in office immediately following such
Annual Meeting shall be granted the right to receive 500 shares of Common
Stock (a "Stock Award"), such shares to be delivered to such Non-Employee
Director in four (4) equal installments as follows: 125 shares on the
date of such Annual Meeting (or, in the case of the 2003 Annual Meeting,
the "Effective Date" as defined in Section 17 hereof) and 125 shares on
the dates that are three (3) months, six (6) months and nine (9) months
thereafter or, if any such date is not a business day, the next
succeeding business day (each such installment of shares, until the
delivery date therefor, being referred to as an "Unvested Stock Award");
provided, however, if a Non-Employee Director's service as a director of
the Company terminates for any reason, any and all Unvested Stock Awards
shall terminate and become null and void.
8. ADJUSTMENT PROVISIONS; CHANGE IN CONTROL.
(a) If there shall be any change in the Common Stock, through merger,
consolidation, reorganization, recapitalization, stock dividend,
stock split, reverse stock split, split up, spin-off, combination
of shares, exchange of shares, dividend in kind or other like
change in capital structure or distribution (other than normal
cash dividends) to stockholders of the Company, an adjustment
shall be made to each outstanding Stock Option and Stock Award
(including any Unvested Stock Award) such that each such Stock
Option and Stock Award shall thereafter be exercisable or vested
and deliverable for such, cash and/or other property as would have
been received in respect of the Common Stock subject to such Stock
Option and Stock Award had such Stock Option and Stock Award been
exercised or vested and delivered in full immediately prior to
such change or distribution, and such an adjustment shall be made
successively each time any such change shall occur. In addition,
in the event of any such change or distribution, in order to
prevent dilution or enlargement of a Non-Employee Director's
rights under the Plan, the Board will have authority to adjust, in
an equitable manner, the number and kind of shares that may be
issued under the Plan, the number and kind of shares subject to
outstanding Stock Options and Stock Awards (including Unvested
Stock Awards), and the exercise price applicable to outstanding
Stock Options.
(b) Notwithstanding any other provision of this Plan, if there is a
Change in Control of the Company, all then outstanding Stock
Options shall immediately become exercisable and all Unvested
Stock Awards shall immediately become vested and deliverable, as
the
A-3
case may be. For purposes of this Section 8(b), a "Change in
Control" of the Company shall be deemed to have occurred upon any
of the following events:
(i) A change in control of the direction and administration of
the Company's business of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); or
(ii) During any period of two (2) consecutive years, the
individuals who at the beginning of such period constitute
the Board of Directors or any individuals who would be
"Continuing Directors" (as hereinafter defined) cease for
any reason to constitute at least a majority thereof; or
(iii) Common Stock shall cease to be publicly traded; or
(iv) The Board of Directors shall approve a sale of all or
substantially all of the assets of the Company, and such
transaction shall have been consummated; or
(v) The Board of Directors shall approve any merger,
consolidation, or like business combination or
reorganization of the Company, the consummation of which
would result in the occurrence of any event described in
Section 8(b)(ii) or (iii) above, and such transaction shall
have been consummated.
Notwithstanding the foregoing, none of the following shall
constitute a Change in Control of the Company: (A) any spin-off of
a division or subsidiary of the Company to its stockholders; or
(B) any event listed in (i) through (v) above that the Board
determines not to be a Change in Control of the Company.
(c) For purposes of Section 8(b), "Continuing Directors" shall mean
(x) the directors of the Company in office on the Effective Date
(as defined below) and (y) any successor to any such director and
any additional director who after the Effective Date was nominated
or elected by a majority of the Continuing Directors in office at
the time of his or her nomination or election.
(d) The Board, in its discretion, may determine that, upon the
occurrence of a Change in Control of the Company, each Stock
Option outstanding hereunder shall terminate within a specified
number of days after notice to the holder, and such holder shall
receive, with respect to each share of Common Stock subject to
such Stock Option, an amount equal to the excess of the Fair
Market Value of such shares of Common Stock immediately prior to
the occurrence of such Change in Control over the exercise price
per share of such Stock Option; such amount to be payable in cash,
in one or more kinds of property (including the property, if any,
payable in the transaction constituting the Change in Control) or
in a combination thereof, as the Board, in its discretion, shall
determine. The provisions contained in the preceding sentence
shall be inapplicable to a Stock Option granted within six (6)
months before the occurrence of a Change in Control if the holder
of such Stock Option is subject to the reporting requirements of
Section 16(a) of the Exchange Act and no exception from liability
under Section 16(b) of the Exchange Act is otherwise available to
such holder.
9. NONTRANSFERABILITY. Stock Options and the right to receive Unvested Stock
Awards granted under the Plan to a Non-Employee Director shall not be
transferable otherwise except, in the case of Stock Options, by will or
the laws of descent and distribution, and Stock Options shall be
exercisable, during the Non-Employee Director's lifetime, only by the
Non-Employee Director. In the event of the death of a Non-Employee
Director, each Stock Option theretofore granted to him or her shall be
exercisable during such period after his or her death and by such persons
as set forth in Section 6 above. Notwithstanding the foregoing, at the
discretion of the Board, an award of a Stock Option may permit the
transferability of any such Stock Option by a Non-Employee Director
solely to the Non-Employee Director's
A-4
spouse, siblings, parents, children and/or grandchildren, or to trusts
for the benefit of such persons, or to partnerships, corporations,
limited liability companies or other entities owned solely by such
persons, including trusts for such persons, subject to any restriction
included in the award of the Stock Option.
10. OTHER PROVISIONS. The award of any Benefit under the Plan may also be
subject to such other provisions (whether or not applicable to the
Benefit awarded to any other Non-Employee Director) as the Board
determines appropriate.
11. ISSUANCE OF STOCK CERTIFICATES AND RELATED MATTERS. The Company may
endorse such legend or legends upon the certificates for shares of Common
Stock issued under this Plan and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as the
Board, in its sole discretion, determines to be necessary or appropriate
to (i) prevent a violation of, or to perfect an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act") or (ii) implement the provisions of the Plan and any
agreement between the Company and the Non-Employee Director.
Notwithstanding any other provision of the Plan, the Company shall have
no obligation to deliver any shares of Common Stock under the Plan or
make any other distribution of Benefits under the Plan unless such
delivery or distribution would comply with all applicable laws
(including, without limitation the Securities Act), and the applicable
requirements of any securities exchange or similar entity.
12. FAIR MARKET VALUE. For purposes of this Plan and any Benefits awarded
hereunder, Fair Market Value shall be the closing price of the Common
Stock on the date of calculation (or on the last preceding trading date
if Common Stock was not traded on such date) if the Common Stock is
readily tradable on a national securities exchange or other market
system, and if the Common Stock is not readily tradable, Fair Market
Value shall mean the amount determined in good faith by the Board as the
fair market value of the Common Stock.
13. TENURE. A Non-Employee Director's right, if any, to continue to serve as
a director of the Company or any of its subsidiaries or affiliates shall
not be enlarged or otherwise affected by his or her designation as a
participant under this Plan.
14. NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan. The Board shall determine
whether cash or other property shall be issued or paid in lieu of
fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
15. AMENDMENT AND TERMINATION. The Board may amend the Plan from time to time
or suspend or terminate the Plan at any time. However, no amendment shall
have a material adverse effect on an outstanding Stock Option or Unvested
Stock Awards without the consent of the holder. No amendment of the Plan
may be made without approval of the stockholders of the Company if
required by applicable law or by any listing agreement to which the
Company is a party with a national securities exchange or other market
system.
16. GOVERNING LAW. This Plan, Benefits granted hereunder and actions taken in
connection herewith shall be governed and construed in accordance with
the laws of the State of New York (regardless of the law that might
otherwise govern under applicable New York principles of conflict of
laws).
17. EFFECTIVE DATE AND TERM OF THE PLAN. The Plan shall become effective at
5:00 p.m., New York City time, on the fifth business day after the date
of the Company's 2003 Annual Meeting of Stockholders (the "Effective
Date"), if the Plan is approved by a vote of the Stockholders of the
Company at such Annual Meeting. If the Plan is not so approved, the Plan
shall be of no force or effect. If so approved, the Plan shall terminate
following the delivery of shares in respect of all Stock Awards granted
on the date of the Company's 2007 Annual Meeting of Stockholders (the
"Termination Date"), unless sooner terminated in accordance with its
terms.
A-5
ANNEX B
SEACOR SMIT INC.
2003 SHARE INCENTIVE PLAN
1. PURPOSE. SEACOR SMIT Inc. 2003 Share Incentive Plan (the "Plan") is
intended to provide incentives which will attract, retain and motivate
highly competent persons as officers and key employees of, and
consultants to, SEACOR SMIT Inc. (the "Company") and its subsidiaries and
affiliates, by providing them opportunities to acquire shares of the
Common Stock, par value $.01 per share, of the Company ("Common Stock")
or to receive monetary payments based on the value of such shares
pursuant to the Benefits (as defined below) described herein.
Additionally, the Plan is intended to assist in further aligning the
interests of the Company's officers, key employees and consultants to
those of its other stockholders.
2. ADMINISTRATION.
(a) The Plan will be administered by a committee (the "Committee")
appointed by the Board of Directors of the Company from among its
members (which may be the Compensation Committee) and shall be
comprised, unless otherwise determined by the Board of Directors,
solely of not less than two members who shall be (i) "Non-Employee
Directors" within the meaning of Rule 16b-3(b)(3) (or any
successor rule) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and (ii) "outside directors"
within the meaning of Treasury Regulation Section 1.162-27(e)(3)
under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Committee is authorized, subject to the
provisions of the Plan, to establish such rules and regulations as
it deems necessary for the proper administration of the Plan and
to make such determinations and interpretations and to take such
action in connection with the Plan and any Benefits granted
hereunder as it deems necessary or advisable. All determinations
and interpretations made by the Committee shall be binding and
conclusive on all participants and their legal representatives. No
member of the Committee and no employee of the Company shall be
liable for any act or failure to act hereunder, except in
circumstances involving his or her bad faith, gross negligence or
willful misconduct, or for any act or failure to act hereunder by
any other member or employee or by any agent to whom duties in
connection with the administration of this Plan have been
delegated. The Company shall indemnify members of the Committee
and any agent of the Committee who is an employee of the Company,
a subsidiary or an affiliate against any and all liabilities or
expenses to which they may be subjected by reason of any act or
failure to act with respect to their duties on behalf of the Plan,
except in circumstances involving such person's bad faith, gross
negligence or willful misconduct.
(b) The Committee may delegate to one or more of its members, or to
one or more agents, such administrative duties as it may deem
advisable, and the Committee, or any person to whom it has so
delegated duties, may employ one or more persons to render advice
with respect to any responsibility the Committee or such person
may have under the Plan. The Committee may employ such legal or
other counsel, consultants and agents as it may deem desirable for
the administration of the Plan and may rely upon any opinion or
computation received from any such counsel, consultant or agent.
Expenses incurred by the Committee in the engagement of such
counsel, consultant or agent shall be paid by the Company, or the
subsidiary or affiliate whose employees have benefited from the
Plan, as determined by the Committee.
3. PARTICIPANTS. Participants will consist of such officers and key
employees of, and such consultants to, the Company and its subsidiaries
and affiliates as the Committee in its sole discretion determines to be
significantly responsible for the success and future growth and
profitability of the Company and whom the Committee may designate from
time to time to receive Benefits under the Plan. Designation of a
participant in any year shall not require the Committee to designate such
person to receive a Benefit in any other year or, once designated, to
receive the same type or amount of Benefit as granted to the participant
in any other year. The Committee shall consider such factors as it deems
pertinent in selecting participants and in determining the type and
amount of their respective Benefits.
B-1
4. TYPE OF BENEFITS. Benefits under the Plan may be granted in any one or a
combination of (a) Stock Options, (b) Stock Appreciation Rights, (c)
Stock Awards, (d) Performance Awards and (e) Stock Units (each as
described below, and collectively, the "Benefits"). Stock Awards,
Performance Awards, and Stock Units may, as determined by the Committee
in its discretion, constitute Performance-Based Awards, as described in
Section 11 below. Benefits shall be evidenced by agreements (which need
not be identical) in such forms as the Committee may from time to time
approve; provided, however, that in the event of any conflict between the
provisions of the Plan and any such agreements, the provisions of the
Plan shall prevail.
5. COMMON STOCK AVAILABLE UNDER THE PLAN.
(a) Subject to the provisions of this Section 5 and any adjustments
made in accordance with Section 13 hereof, the maximum number of
shares of Common Stock that may be delivered to participants
(including permitted assignees) and their beneficiaries under this
Plan shall be 1,000,000 shares of Common Stock (subject to
adjustments made in accordance with Section 13 hereof), which may
be authorized and unissued or treasury shares.
(b) Any shares of Common Stock covered by a Benefit (or portion of a
Benefit) granted under the Plan, which is forfeited or canceled,
expires or, in the case of a Benefit other than a Stock Option, is
settled in cash, shall be deemed not to have been delivered for
purposes of determining the maximum number of shares of Common
Stock available for delivery under the Plan. The preceding
sentence shall apply only for the purposes of determining the
aggregate number of shares of Common Stock subject to Benefits and
that are available for delivery under the Plan, but shall not
apply for purposes of determining pursuant to Section 5(d) the
maximum number of shares of Common Stock with respect to which
Benefits (including the maximum number of shares of Common Stock
subject to Stock Options and Stock Appreciation Rights) may be
granted or measured to an individual participant under the Plan.
(c) If any shares of Common Stock are tendered to the Company, either
actually or by attestation or withholding, as full, or partial
payment of the exercise price or any tax withholding in connection
with the exercise of a Stock Option or Stock Appreciation Right or
the vesting of any other Benefit granted under this Plan or any
prior plan of the Company, only the number of shares of Common
Stock issued net of the shares of Common Stock tendered shall be
deemed delivered for purposes of determining the maximum number of
shares of Common Stock subject to Benefits that are available for
delivery under the Plan. Further, shares of Common Stock delivered
under the Plan in settlement, assumption or substitution of
outstanding awards (or obligations to grant future awards) under
the plans or arrangements of another entity shall not decrease the
number of shares of Common Stock subject to Benefits and shall not
reduce the maximum number of shares of Common Stock available for
delivery under the Plan, to the extent that such settlement,
assumption or substitution as a result of the Company or its
subsidiaries or affiliates acquiring another entity (or an
interest in another entity). This Section 5(c) shall apply only
for purposes of determining the aggregate number of shares of
Common Stock subject to Benefits and that are available for
delivery under the Plan, but shall not apply for purposes of
determining pursuant to Section 5(d) the maximum number of shares
of Common Stock (x) with respect to which Benefits (including the
maximum number of shares of Common Stock subject to Stock Options
and Stock Appreciation Rights) may be granted or measured to an
individual participant under the Plan or (y) that may be delivered
through Stock Options under the Plan.
(d) The maximum number of shares of Common Stock with respect to which
Benefits may be granted or measured to any individual participant
under the Plan during the term of the Plan, and the maximum number
of shares of Common Stock with respect to which Stock Options and
Stock Appreciation Rights may be granted to an individual
participant under the Plan during the term of the Plan shall not
exceed 1,000,000 shares of Common Stock (in each case, subject to
adjustments made in accordance with Section 13 hereof).
B-2
6. STOCK OPTIONS. Stock Options will consist of awards from the Company that
will enable the holder to purchase a number of shares of Common Stock, at
set terms. Stock Options may be "incentive stock options" ("Incentive
Stock Options"), within the meaning of Section 422 of the Code, or Stock
Options which do not constitute Incentive Stock Options ("Nonqualified
Stock Options"). The Committee will have the authority to grant to any
participant one or more Incentive Stock Options, Nonqualified Stock
Options, or both types of Stock Options (in each case with or without
Stock Appreciation Rights). Each Stock Option shall be subject to such
terms and conditions consistent with the Plan as the Committee may impose
from time to time, subject to the following limitations:
(a) EXERCISE PRICE. Each Stock Option granted hereunder shall have
such per share exercise price as the Committee may determine at
the date of grant; provided, however, subject to subsection (d)
below, that the per-share exercise price shall not be less than
100% of the Fair Market Value (as defined below) of the Common
Stock on the date the Stock Option is granted.
(b) PAYMENT OF EXERCISE PRICE. The option exercise price may be paid
in cash or, in the discretion of the Committee, by the delivery of
shares of Common Stock of the Company then owned by the
participant, by the withholding of shares of Common Stock for
which a Stock Option is exercisable or by a combination of these
methods. In the discretion of the Committee, payment may also be
made by delivering a properly executed exercise notice to the
Company together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or
loan proceeds to pay the exercise price. To facilitate the
foregoing, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms. The Committee may
prescribe any other method of paying the exercise price that it
determines to be consistent with applicable law and the purpose of
the Plan, including, without limitation, in lieu of the exercise
of a Stock Option by delivery of shares of Common Stock of the
Company then owned by a participant, providing the Company with a
notarized statement attesting to the number of shares owned, where
upon verification by the Company, the Company would issue to the
participant only the number of incremental shares to which the
participant is entitled upon exercise of the Stock Option. In
determining which methods a participant may utilize to pay the
exercise price, the Committee may consider such factors as it
determines are appropriate.
(c) EXERCISE PERIOD. Stock Options granted under the Plan shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee; provided,
however, that no Stock Option shall be exercisable later than ten
years after the date it is granted except in the event of a
participant's death, in which case, the exercise period of such
participant's Stock Options may be extended beyond such period but
no later than one year after the participant's death. All Stock
Options shall terminate at such earlier times and upon such
conditions or circumstances as the Committee shall in its
discretion set forth in such option agreement at the date of
grant.
B-3
(d) LIMITATIONS ON INCENTIVE STOCK OPTIONS. Incentive Stock Options
may be granted only to participants who are employees of the
Company or one of its subsidiaries (within the meaning of Section
424(f) of the Code) at the date of grant. The aggregate Fair
Market Value (determined as of the time the Stock Option is
granted) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by a participant during
any calendar year (under all option plans of the Company and of
any parent corporation or subsidiary corporation (as defined in
Sections 424(e) and (f) of the Code, respectively)) shall not
exceed $100,000. For purposes of the preceding sentence, Incentive
Stock Options will be taken into account in the order in which
they are granted. The per-share exercise price of an Incentive
Stock Option shall not be less than 100% of the Fair Market Value
of the Common Stock on the date of grant, and no Incentive Stock
Option may be exercised later than ten years after the date it is
granted; provided, however, Incentive Stock Options may not be
granted to any participant who, at the time of grant, owns stock
possessing (after the application of the attribution rules of
Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any parent
or subsidiary corporation of the Company, unless the exercise
price is fixed at not less than 110% of the Fair Market Value of
the Common Stock on the date of grant and the exercise of such
option is prohibited by its terms after the expiration of five
years from the date of grant of such option. In addition, no
Incentive Stock Option may be issued to a participant in tandem
with a Nonqualified Stock Option.
(e) POST-EMPLOYMENT EXERCISES. In addition to any other conditions to
which the participant is subject, the exercise of any Stock Option
after termination of employment shall be subject to satisfaction
of the conditions precedent that the participant neither (i)
competes with, or takes other employment with or renders services
to a competitor of, the Company, its subsidiaries or affiliates
without the written consent of the Company, nor (ii) conducts
himself or herself in a manner adversely affecting the Company.
7. STOCK APPRECIATION RIGHTS.
(a) The Committee may, in its discretion, grant Stock Appreciation
Rights to the holders of any Stock Options granted hereunder. In
addition, Stock Appreciation Rights may be granted independently
of, and without relation to, Stock Options. A Stock Appreciation
Right means a right to receive a payment, in cash, Common Stock or
a combination thereof, in an amount equal to the excess of (x) the
Fair Market Value, or other specified valuation, of a specified
number of shares of Common Stock on the date the right is
exercised over (y) the Fair Market Value, or other specified
valuation (which shall be no less than the Fair Market Value) of
such shares of Common Stock on the date the right is granted, all
as determined by the Committee; provided, however, that if a Stock
Appreciation Right is granted in tandem with or in substitution
for a Stock Option, the designated Fair Market Value in the award
agreement may be the Fair Market Value on the date such Stock
Option was granted. Each Stock Appreciation Right shall be subject
to such terms and conditions as the Committee shall impose from
time to time.
(b) Stock Appreciation Rights granted under the Plan shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee; provided,
however, that no Stock Appreciation Rights shall be exercisable
later than ten years after the date it is granted except in the
event of a participant's death, in which case, the exercise period
of such participant's Stock Appreciation Rights may be extended
beyond such period but no later than one year after the
participant's death. All Stock Appreciation Rights shall terminate
at such earlier times and upon such conditions or circumstances as
the Committee shall in its discretion set forth in such Stock
Appreciation Right at the date of grant.
(c) The exercise of any Stock Appreciation Right after termination of
employment shall be subject to satisfaction of the conditions
precedent that the participant neither (i) competes with, or takes
other employment with or renders services to a competitor of, the
Company, its subsidiaries or affiliates without the written
consent of the Company, nor (ii) conducts himself or herself in a
manner adversely affecting the Company.
B-4
8. STOCK AWARDS. The Committee may, in its discretion, grant Stock Awards
(which may include mandatory payment of bonus incentive compensation in
stock) consisting of Common Stock issued or transferred to participants
with or without other payments therefor. Stock Awards may be subject to
such terms and conditions as the Committee determines appropriate,
including, without limitation, restrictions on the sale or other
disposition of such shares, the right of the Company to reacquire such
shares for no consideration upon termination of the participant's
employment or service within specified periods, and may constitute
Performance-Based Awards, as described below. The Committee may require
the participant to deliver a duly signed stock power, endorsed in blank,
relating to the Common Stock covered by such Stock Award. The Committee
may also require that the stock certificates evidencing such shares be
held in custody or bear restrictive legends until the restrictions
thereon shall have lapsed. The Stock Award shall specify whether the
participant shall have, with respect to the shares of Common Stock
subject to a Stock Award, all of the rights of a holder of shares of
Common Stock of the Company, including the right to receive dividends and
to vote the shares.
9. PERFORMANCE AWARDS.
(a) Performance Awards may be granted to participants at any time and
from time to time, as shall be determined by the Committee.
Performance Awards may, as determined by the Committee in its sole
discretion, constitute Performance-Based Awards. The Committee
shall have complete discretion in determining the number, amount
and timing of awards granted to each participant. Such Performance
Awards may be in the form of shares of Common Stock or Stock
Units. Performance Awards may be awarded as short-term or
long-term incentives. With respect to those Performance Awards
that are intended to constitute Performance-Based Awards, the
Committee shall set performance targets at its discretion which,
depending on the extent to which they are met, will determine the
number and/or value of Performance Awards that will be paid out to
the participants, and may attach to such Performance Awards one or
more restrictions. Performance targets may be based upon, without
limitation, Company-wide, divisional and/or individual
performance.
(b) With respect to those Performance Awards that are not intended to
constitute Performance-Based Awards, the Committee shall have the
authority at any time to make adjustments to performance targets
for any outstanding Performance Awards which the Committee deems
necessary or desirable unless at the time of establishment of
goals the Committee shall have precluded its authority to make
such adjustments.
(c) Payment of earned Performance Awards shall be made in accordance
with terms and conditions prescribed or authorized by the
Committee. The participant may elect to defer, or the Committee
may require or permit the deferral of, the receipt of Performance
Awards upon such terms as the Committee deems appropriate.
10. STOCK UNITS.
(a) The Committee may, in its discretion, grant Stock Units to
participants hereunder. The Committee shall determine the criteria
for the vesting of Stock Units and may provide for payment in
shares of Common Stock, in cash or in any combination of shares of
Common Stock and cash, at such time as the award agreement shall
specify. Stock Units may constitute Performance-Based Awards.
Shares of Common Stock issued pursuant to this Section 10 may be
issued with or without other payments therefor as may be required
by applicable law or such other consideration as may be determined
by the Committee. The Committee shall determine whether a
participant granted a Stock Unit shall be entitled to a Dividend
Equivalent Right (as defined below).
B-5
(b) Upon vesting of a Stock Unit, unless the Committee has determined
to defer payment with respect to such Stock Unit or a participant
has elected to defer payment under subsection (c) below, shares of
Common Stock representing the Stock Units shall be distributed to
the participant unless the Committee, with the consent of the
participant, provides for the payment of the Stock Units in cash
or partly in cash and partly in shares of Common Stock equal to
the value of the shares of Common Stock which would otherwise be
distributed to the participant.
(c) Prior to the year with respect to which a Stock Unit may vest, the
Committee may, in its discretion, permit a participant to elect
not to receive shares of Common Stock and/or cash, as applicable,
upon the vesting of such Stock Unit and for the Company to
continue to maintain the Stock Unit on its books of account. In
such event, the value of a Stock Unit shall be payable in shares
of Common Stock and/or cash, as applicable, pursuant to the
agreement of deferral.
(d) A "Stock Unit" means a notional account representing one share of
Common Stock. A "Dividend Equivalent Right" means the right to
receive the amount of any dividend paid on the share of Common
Stock underlying a Stock Unit, which shall be payable in cash or
in the form of additional Stock Units at the time or times
specified by the Committee or as the award agreement shall
specify.
11. PERFORMANCE-BASED AWARDS. Certain Benefits granted under the Plan may be
granted in a manner such that the Benefits qualify for the
performance-based compensation exemption of Section 162(m) of the Code
("Performance-Based Awards"). As determined by the Committee in its sole
discretion, either the vesting or the exercise of such Performance-Based
Awards shall be based on one or more business criteria that apply to the
individual participant, one or more business units of the Company as a
whole. The business criteria shall be as follows, individually or in
combination, adjusted in such manner as the Committee shall determine:
(i) net sales; (ii) pretax income before allocation of corporate overhead
and bonus; (iii) budget; (iv) earnings per share; (v) net income; (vi)
division, group or corporate financial goals; (vii) return on
stockholders' equity; (viii) return on assets; (ix) attainment of
strategic and operational initiatives; (x) appreciation in and/or
maintenance of the price of the Common Stock or any other publicly-traded
securities of the Company; (xi) market share; (xii) gross profits; (xiii)
earnings before interest and taxes; (xiv) earnings before interest,
taxes, depreciation and amortization; (xv) economic value-added models
and comparisons with various stock market indices; (xvi) reductions in
costs; or (xvii) any combination of the foregoing. In addition,
Performance-Based Awards may include comparisons to the performance of
other companies, such performance to be measured by one or more of the
foregoing business criteria. With respect to Performance-Based Awards,
(i) the Committee shall establish in writing (x) the performance goals
applicable to a given period, and such performance goals shall state, in
terms of an objective formula or standard, the method for computing the
amount of compensation payable to the participant if such performance
goals are obtained and (y) the individual employees or class of employees
to which such performance goals apply no later than 90 days after the
commencement of such period (but in no event after 25% of such period has
elapsed) and (ii) no Performance-Based Awards shall be payable to or vest
with respect to, as the case may be, any participant for a given period
until the Committee certifies in writing that the objective performance
goals (and any other material terms) applicable to such period have been
satisfied. With respect to any Benefits intended to qualify as
Performance-Based Awards, after establishment of a performance goal, the
Committee shall not revise such performance goal or increase the amount
of compensation payable thereunder (as determined in accordance with
Section 162(m) of the Code) upon the attainment of such performance goal.
Notwithstanding the preceding sentence, the Committee may reduce or
eliminate the number of shares of Common Stock or cash granted or the
number of shares of Common Stock vested upon the attainment of such
performance goal.
12. FOREIGN LAWS. The Committee may grant Benefits to individual participants
who are subject to the tax laws of nations other than the United States,
which Benefits may have terms and conditions as determined by the
Committee as necessary to comply with applicable foreign laws. The
Committee may take any action which it deems advisable to obtain approval
of such Benefits by the appropriate foreign governmental entity;
provided, however, that no such Benefits may be granted pursuant to this
Section 12 and no action may be taken which would result in a violation
of the Exchange Act, the Code or any other applicable law.
B-6
13. ADJUSTMENT PROVISIONS; CHANGE IN CONTROL.
(a) If there shall be any change in the Common Stock of the Company,
through merger, consolidation, reorganization, recapitalization,
stock dividend, stock split, reverse stock split, split up,
spin-off, combination of shares, exchange of shares, dividend in
kind or other like change in capital structure or distribution
(other than normal cash dividends) to stockholders of the Company,
an adjustment shall be made to each outstanding Stock Option and
Stock Appreciation Right such that each such Stock Option and
Stock Appreciation Right shall thereafter be exercisable for such
securities, cash and/or other property as would have been received
in respect of the Common Stock subject to such Stock Option or
Stock Appreciation Right had such Stock Option or Stock
Appreciation Right been exercised in full immediately prior to
such change or distribution, and such an adjustment shall be made
successively each time any such change shall occur. In addition,
in the event of any such change or distribution, in order to
prevent dilution or enlargement of participants' rights under the
Plan, the Committee will have authority to adjust, in an equitable
manner, the number and kind of shares that may be issued under the
Plan, the number and kind of shares subject to outstanding
Benefits, the exercise price applicable to outstanding Benefits,
and the Fair Market Value of the Common Stock and other value
determinations applicable to outstanding Benefits. Appropriate
adjustments may also be made by the Committee in the terms of any
Benefits under the Plan to reflect such changes or distributions
and to modify any other terms of outstanding Benefits on an
equitable basis, including modifications of performance targets
and changes in the length of performance periods. In addition,
other than with respect to Stock Options, Stock Appreciation
Rights, and other awards intended to constitute Performance-Based
Awards, the Committee is authorized to make adjustments to the
terms and conditions of, and the criteria included in, Benefits in
recognition of unusual or nonrecurring events affecting the
Company or the financial statements of the Company, or in response
to changes in applicable laws, regulations, or accounting
principles. Notwithstanding the foregoing, (i) each such
adjustment with respect to an Incentive Stock Option shall comply
with the rules of Section 424(a) of the Code, and (ii) in no event
shall any adjustment be made which would render any Incentive
Stock Option granted hereunder other than an incentive stock
option for purposes of Section 422 of the Code.
(b) Notwithstanding any other provision of this Plan, if there is a
Change in Control of the Company, all then outstanding Benefits
that have not vested or become exercisable at the time of such
Change in Control shall immediately vest and become exercisable
and all performance targets relating to such Benefits shall be
deemed to have been satisfied as of the time of such Change in
Control. For purposes of this Section 13(b), a "Change in Control"
of the Company shall be deemed to have occurred upon any of the
following events:
(i) A change in control of the direction and administration of
the Company's business of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act; or
(ii) During any period of two (2) consecutive years, the
individuals who at the beginning of such period constitute
the Company's Board of Directors or any individuals who
would be "Continuing Directors" (as hereinafter defined)
cease for any reason to constitute at least a majority
thereof; or
(iii) The Company's Common Stock shall cease to be publicly
traded; or
(iv) The Company's Board of Directors shall approve a sale of
all or substantially all of the assets of the Company, and
such transaction shall have been consummated; or
(v) The Company's Board of Directors shall approve any merger,
consolidation, or like business combination or
reorganization of the Company, the consummation of which
would result in the occurrence of any event described in
Section 13(b)(ii) or (iii) above, and such transaction
shall have been consummated.
B-7
Notwithstanding the foregoing, (A) any spin-off of a division or
subsidiary of the Company to its stockholders and (B) any event
listed in (i) through (v) above that the Board of Directors
determines, in its sole discretion, not to be a Change in Control
of the Company for purposes of the foregoing provision of this
Plan as to vesting, shall not constitute a Change in Control of
the Company.
For purposes of this Section 13(b), "Continuing Directors" shall
mean (x) the directors of the Company in office on the Effective
Date (as defined below) and (y) any successor to any such director
and any additional director who after the Effective Date was
nominated or selected by a majority of the Continuing Directors in
office at the time of his or her nomination or selection.
The Committee, in its sole discretion, may determine that, upon
the occurrence of a Change in Control of the Company (without
regard to any contrary determination by the Board of Directors
under paragraph (B) above), each Benefit outstanding hereunder
shall terminate within a specified number of days after notice to
the holder, and such holder shall receive (i) with respect to each
share of Common Stock that is subject to a Stock Option or a Stock
Appreciation Right and is then vested, an amount equal to the
excess of the Fair Market Value of such shares of Common Stock
immediately prior to the occurrence of such Change in Control over
the exercise price per share of such Stock Option or Stock
Appreciation Right (as the case may be) and (ii) with respect to
each share of Common Stock that is subject to a Stock Award or
Stock Unit and is then vested, the Fair Market Value of such
shares of Common Stock immediately prior to the occurrence of such
Change in Control, such amount to be payable in cash, in one or
more kinds of property (including the property, if any, payable in
the transaction) or in a combination thereof, as the Committee, in
its sole discretion, shall determine. The provisions contained in
the preceding sentence shall be inapplicable to a Stock Option or
Stock Appreciation Right granted within six (6) months before the
occurrence of a Change in Control if the holder of such Stock
Option or Stock Appreciation Right is subject to the reporting
requirements of Section 16 of the Exchange Act and no exception
from liability under Section 16 of the Exchange Act is otherwise
available to such holder.
14. NONTRANSFERABILITY. Each Benefit granted under the Plan to a participant
shall not be transferable otherwise than by will or the laws of descent
and distribution, and shall be exercisable, during the participant's
lifetime, only by the participant. In the event of the death of a
participant, each Stock Option or Stock Appreciation Right theretofore
granted to him or her shall be exercisable during such period after his
or her death as the Committee shall in its discretion set forth in such
Stock Option or Stock Appreciation Right at the date of grant and then
only by the executor or administrator of the estate of the deceased
participant or the person or persons to whom the deceased participant's
rights under the Stock Option or Stock Appreciation Right shall pass by
will or the laws of descent and distribution. Notwithstanding the
foregoing, at the discretion of the Committee, an award of a Benefit
other than an Incentive Stock Option may permit the transferability of a
Benefit by a participant solely to the participant's spouse, siblings,
parents, children and grandchildren or trusts for the benefit of such
persons or partnerships, corporations, limited liability companies or
other entities owned solely by such persons, including trusts for such
persons, subject to any restriction included in the award of the Benefit.
15. OTHER PROVISIONS. The award of any Benefit under the Plan may also be
subject to such other provisions (whether or not applicable to the
Benefit awarded to any other participant) as the Committee determines
appropriate, including, without limitation, for the installment purchase
of Common Stock under Stock Options, for the installment exercise of
Stock Appreciation Rights, to assist the participant in financing the
acquisition of Common Stock, for the forfeiture of, or restrictions on
resale or other disposition of, Common Stock acquired under any form of
Benefit, for the termination of any Benefit and the forfeiture of any
gain realized in respect of a Benefit upon the occurrence of certain
activity by the participant that is harmful to the Company, for the
acceleration of exercisability or vesting of Benefits or the payment of
the value of Benefits in the event that the control of the Company
changes (including, without limitation, a Change in Control), or to
comply with federal and state securities laws, or understandings or
conditions as to the participant's employment (including, without
limitation, any restrictions on the ability of the participant to engage
in activities that are competitive with the Company) in addition to those
specifically provided for under the Plan.
B-8
16. FAIR MARKET VALUE. For purposes of this Plan and any Benefits awarded
hereunder, Fair Market Value shall be the closing price of the Company's
Common Stock on the date of calculation (or on the last preceding trading
date if Common Stock was not traded on such date) if the Company's Common
Stock is readily tradable on a national securities exchange or other
market system, and if the Company's Common Stock is not readily tradable,
Fair Market Value shall mean the amount determined in good faith by the
Committee as the fair market value of the Common Stock of the Company.
17. WITHHOLDING. All payments or distributions of Benefits made pursuant to
the Plan shall be net of any amounts required to be withheld pursuant to
applicable federal, state and local tax withholding requirements. If the
Company proposes or is required to distribute Common Stock pursuant to
the Plan, it may require the recipient to remit to it or to the
corporation that employs such recipient an amount sufficient to satisfy
such tax withholding requirements prior to the delivery of any
certificates for such Common Stock. In lieu thereof, the Company or the
employing corporation shall have the right to withhold the amount of such
taxes from any other sums due or to become due from such corporation to
the recipient as the Committee shall prescribe. The Committee may, in its
discretion and subject to such rules as it may adopt (including any as
may be required to satisfy applicable tax and/or non-tax regulatory
requirements), permit an optionee or award or right holder to pay all or
a portion of the federal, state and local withholding taxes arising in
connection with any Benefit consisting of shares of Common Stock by
electing to have the Company withhold shares of Common Stock having a
Fair Market Value equal to the amount of tax to be withheld, such tax
calculated at rates required by statute or regulation.
18. TENURE. A participant's right, if any, to continue to serve the Company
or any of its subsidiaries or affiliates as an officer, employee,
consultant or otherwise, shall not be enlarged or otherwise affected by
his or her designation as a participant under the Plan.
19. UNFUNDED PLAN. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it
in meeting its obligations under the Plan. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship
between the Company and any participant, beneficiary, legal
representative or any other person. To the extent that any person
acquires a right to receive payments from the Company under the Plan,
such right shall be no greater than the right of an unsecured general
creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in the Plan. The
Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended.
20. NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Benefit. The Committee
shall determine whether cash, or Benefits, or other property shall be
issued or paid in lieu of fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.
21. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be granted more
than ten years after the Effective Date. The Committee may amend the Plan
from time to time or suspend or terminate the Plan at any time. No
amendment of the Plan may be made without approval of the stockholders of
the Company if the amendment will: (i) disqualify any Incentive Stock
Options granted under the Plan; (ii) increase the aggregate number of
shares of Common Stock that may be delivered through Stock Options under
the Plan; (iii) increase the maximum amounts which can be paid to an
individual under the Plan; (iv) change the types of business criteria on
which Performance-Based Awards are to be based under the Plan; or (v)
modify the requirements as to eligibility for participation in the Plan.
B-9
22. CANCELLATION AND NEW GRANT OF OPTIONS, ETC. The Board of Directors shall
have the authority to effect, at any time and from time to time, with the
consent of the affected optionees, (i) the cancellation of any or all
outstanding Stock Options under the Plan and the grant in substitution
therefor of new Stock Options under the Plan covering the same or
different numbers of shares of Common Stock and having an option exercise
price per share which may be lower or higher than the exercise price per
share of the cancelled Stock Options or (ii) the amendment of the terms
of any and all outstanding Stock Options under the Plan to provide an
option exercise price per share which is higher or lower than the then
current exercise price per share of such outstanding Stock Options.
23. GOVERNING LAW. This Plan, Benefits granted hereunder and actions taken in
connection herewith shall be governed and construed in accordance with
the internal laws of the State of Delaware, without giving effect to its
choice-of-law provisions.
24. EFFECTIVE DATE AND TERMINATION DATE.
(a) The Plan shall be effective as of April 4, 2003, the date on which
the Plan was adopted by the Board of Directors (the "Effective
Date"), provided that the Plan is approved by the stockholders of
the Company at an annual meeting or any special meeting of
stockholders of the Company within 12 months of the Effective
Date, and such approval of stockholders shall be a condition to
the right of each participant to receive any Benefits hereunder.
Any Benefits granted under the Plan prior to such approval of
stockholders shall be effective as of the date of grant (unless,
with respect to any Benefit, the Committee specifies otherwise at
the time of grant), but no such Benefit may be exercised or
settled and no restrictions relating to any Benefit may lapse
prior to such stockholder approval, and if stockholders fail to
approve the Plan as specified hereunder, any such Benefit shall be
cancelled.
(b) This Plan shall terminate on April 3, 2013 (unless sooner
terminated by the Committee).
B-10
PROXY PROXY
SEACOR SMIT INC., 11200 RICHMOND AVENUE, SUITE 400, HOUSTON, TEXAS 77082
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 14, 2003
The undersigned having received the Notice of Meeting and Proxy Statement
of SEACOR SMIT Inc. (the "Company") dated April 4, 2003 and Annual Report for
the fiscal year ended December 31, 2002, hereby appoints and constitutes Messrs.
Charles Fabrikant and Randall Blank, and each of them, proxies with full power
of substitution to vote for the undersigned at the Company's Annual Meeting of
Stockholders to be held on May 14, 2003, and at any adjournments thereof (the
"Annual Meeting"), as follows:
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SEACOR SMIT INC.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
--------------------------------------------------------------------------------
SEACOR SMIT INC.
PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
The Board of Directors recommends a vote FOR items 1, 2, and 3, and 4.
If no direction is made, this proxy will be voted FOR all management nominees
listed and FOR Item 2 (Approval of the SEACOR SMIT Inc. 2003 Non-Employee
Director Share Incentive Plan), FOR Item 3 (Approval of the SEACOR SMIT Inc.
2003 Share Incentive Plan), and FOR Item 4 (Ratification of Appointment of
Independent Auditors).
For Withhold For All
All All Except
1. ELECTION OF DIRECTORS--
NOMINEES: 01-Charles Fabrikant, 02- Michael E. Gellert, 03-Stephen Stamas, / / / / / /
04-Richard M. Fairbanks, III, 05-Pierre de Demandolx, 06-Andrew R. Morse,
07-John C. Hadjipateras, 08-James A. F. Cowderoy, 09-Oivind Lorentzen
INSTRUCTIONS: To withhold authority to vote for any one or more management
nominee, write the nominee's name.
For Against Abstain
2. Approval of the SEACOR SMIT Inc. 2003 Non-
Employee Director Share Incentive Plan / / / / / /
For Against Abstain
3. Approval of the SEACOR SMIT Inc. 2003 Share
Incentive Plan / / / / / /
For Against Abstain
3. Ratification of the appointment of Ernst & Young LLP as independent
auditors for 2003 / / / / / /
In their discretion, upon any other matters which may properly come
before the Annual Meeting or any adjournments thereof, hereby revoking
any proxy heretofore given by the undersigned for the Annual Meeting.
PROXY
Dated: _____________________________________________________, 2003
Signature(s)__________________________________________________________
__________________________________________________________
Please sign name as it appears hereon. When signed as
attorney, executor, trustee or guardian, please add
capacity in which signed. For joint- or co-owner, each
owner should sign.
This Proxy, when properly executed, will be voted by the
manner directed therein by the undersigned. If no direction
is made, this Proxy will be voted FOR all management
nominees listed.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.