UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
TRANSOCEAN SEDCO FOREX INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
[LETTERHEAD OF TRANSOCEAN SEDCO FOREX INC.]
MARCH 29, 2002
Dear Shareholder:
The 2002 annual general meeting of Transocean Sedco Forex Inc. will be
held on Thursday, May 9, 2002 at 9:00 a.m., at the Royal Pavilion Hotel, St.
James, Barbados. The Secretary's notice of annual general meeting, the proxy
statement and a proxy card are enclosed and describe the matters to be acted
upon at the meeting.
It is important that your shares be represented and voted at the
meeting. Please read the enclosed notice of annual general meeting and proxy
statement and date, sign and promptly return the proxy card in the enclosed
self-addressed envelope.
Sincerely,
/s/ Victor E. Grijalva /s/ J. Michael Talbert
------------------------------ ------------------------------
Victor E. Grijalva J. Michael Talbert
Chairman of the Board Chief Executive Officer
This proxy statement and the accompanying proxy card are dated March
29, 2002 and are first being mailed on or about April 4, 2002 to record
shareholders as of March 28, 2002.
NOTICE OF ANNUAL GENERAL MEETING OF TRANSOCEAN SEDCO FOREX INC.
TO BE HELD MAY 9, 2002
The annual general meeting of Transocean Sedco Forex Inc., a Cayman
Islands exempted company limited by shares, will be held at the Royal Pavilion
Hotel, St. James, Barbados at 9:00 a.m., Barbados time, on Thursday, May 9, 2002
for the following purposes:
1. To re-elect four directors as members of our board of directors
to serve until the 2005 annual general meeting and until their
respective successors have been duly elected.
2. To approve the appointment of Ernst & Young LLP as independent
auditors for 2002.
3. To change by our name by special resolution to "Transocean Inc."
4. To transact such other business as may properly be brought before
the meeting.
This constitutes notice of the meeting as required by Cayman Islands law and our
articles of association.
Only record holders of ordinary shares at the close of business on
Thursday, March 28, 2002 will be entitled to notice of, and to vote at, the
meeting.
The meeting may generally be adjourned from time to time without
advance notice other than announcement at the meeting, or any adjournment
thereof, and any and all business for which the meeting is hereby noticed may be
transacted at any such adjournment.
By order of the Board of Directors,
/s/ Eric B. Brown
-----------------------------------
Eric B. Brown
Secretary
Houston, Texas
March 29, 2002
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN AND PROMPTLY RETURN YOUR PROXY CARD IN THE ENCLOSED
RETURN ENVELOPE.
--------------------------------------------------------------------------------
2
PROXY STATEMENT
FOR ANNUAL GENERAL MEETING OF TRANSOCEAN SEDCO FOREX INC.
MAY 9, 2002
This proxy statement is furnished in connection with the solicitation of
proxies by Transocean Sedco Forex Inc., on behalf of our board of directors, to
be voted at our annual general meeting to be held on Thursday, May 9, 2002 at
9:00 a.m., at the Royal Pavilion Hotel, St. James, Barbados.
PROPOSALS
At the annual general meeting, shareholders will be asked to vote upon the
following:
- A proposal to reelect each of four nominees as directors to serve
three-year terms. These directors will be members of a class of
directors that will serve until the 2005 annual general meeting
and until their respective successors have been duly elected.
- A proposal to approve the appointment of Ernst & Young LLP as
independent auditors for 2002.
- A proposal to change our name by special resolution to
"Transocean Inc."
- Any other matters that may properly come before the meeting.
We know of no other matters that are likely to be brought before the annual
general meeting.
QUORUM
The presence, in person or by proxy, of shareholders holding a majority of
our outstanding ordinary shares will constitute a quorum. Abstentions and
"broker non-votes" will be counted as present for purposes of determining
whether there is a quorum at the meeting.
RECORD DATE
Only shareholders of record at the close of business on Thursday, March 28,
2002 are entitled to notice of and to vote, or to grant proxies to vote, at the
meeting.
VOTES REQUIRED
Approval of the proposal to re-elect the four nominees as directors
requires the affirmative vote of a plurality of the votes cast. Abstentions or
"broker non-votes" will not be counted in that vote.
Approval of the proposal to appoint Ernst & Young LLP as independent
auditors requires the affirmative vote of holders of at least a majority of the
ordinary shares present in person or by proxy at the meeting and entitled to
vote on the matter. Abstentions or "broker non-votes" on the proposal have the
effect of a vote against the proposal.
Approval of the proposal to change our name by special resolution to
"Transocean Inc." requires the affirmative vote of holders of at least
two-thirds of the ordinary shares present in person or by proxy at the meeting
and entitled to vote on the matter. Abstentions or "broker non-votes" on the
proposal have the effect of a vote against the proposal.
3
As of the record date for the meeting, there were 319,136,365 ordinary
shares outstanding and entitled to notice of and to vote at the meeting. Holders
of ordinary shares on the record date are entitled to one vote for each share
held.
PROXIES
A proxy card is being sent to each shareholder as of the record date. If
you properly received a proxy card, you may grant a proxy to vote on each of the
three proposals by marking your proxy card appropriately, executing it in the
space provided, dating it and returning it to us. We may accept your proxy by
any form of communication permitted by Cayman Islands law and our articles of
association. If you hold your shares in the name of a bank, broker or other
nominee, you should follow the instructions provided by your bank, broker or
nominee when voting your shares.
If you have timely submitted a properly executed proxy card and clearly
indicated your votes, your shares will be voted as indicated. If you have timely
submitted a properly executed proxy card and have not clearly indicated your
votes, your shares will be voted "FOR" each of the three proposals.
If any other matters are properly presented at the meeting for
consideration, the persons named in the proxy card will have the discretion to
vote on these matters in accordance with their best judgment. Proxies voted
against any of the three proposals will not be voted in favor of any adjournment
of the meeting for the purpose of soliciting additional proxies.
You may revoke your proxy card at any time prior to its exercise by:
- giving written notice of the revocation to our Secretary;
- appearing at the meeting, notifying our Secretary and voting in
person; or
- properly completing and executing a later-dated proxy and
delivering it to our Secretary at or before the meeting.
Your presence without voting at the meeting will not automatically revoke
your proxy, and any revocation during the meeting will not affect votes
previously taken. If you hold your shares in the name of a bank, broker or other
nominee, you should follow the instructions provided by your bank, broker or
nominee in revoking your previously granted proxy.
SOLICITATION OF PROXIES
The accompanying proxy is being solicited on behalf of the board of
directors. The expenses of preparing, printing and mailing the proxy and the
materials used in the solicitation will be borne by us. We have retained D. F.
King & Co., Inc. for a fee of $6,000, plus expenses, to aid in the solicitation
of proxies. Proxies may be solicited by personal interview, telephone and
telegram by our directors, officers and employees, who will not receive
additional compensation for those services. Arrangements also may be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of ordinary shares
held by those persons, and we will reimburse them for reasonable expenses
incurred by them in connection with the forwarding of solicitation materials.
ELECTION OF DIRECTORS
Our articles of association divide our board of directors into three
classes: Class I, Class II and Class III. Four Class III directors are to be
elected at our 2002 annual general meeting to serve for three-year terms
expiring at the annual general meeting in 2005.
4
The board has nominated for reelection as Class III directors Ronald L.
Kuehn, Jr., Paul B. Loyd, Jr., Roberto Monti and Ian C. Strachan. If any of the
nominees become unavailable for any reason, which we do not anticipate, the
board of directors in its discretion may designate a substitute nominee. If you
have submitted an executed proxy card, your vote will be cast for the substitute
nominee unless contrary instructions are given in the proxy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RE-ELECTION OF RONALD L.
KUEHN, JR., PAUL B. LOYD, JR., ROBERTO MONTI AND IAN C. STRACHAN AS CLASS III
DIRECTORS.
NOMINEES FOR DIRECTOR-CLASS III-TERMS EXPIRING 2005
RONALD L. KUEHN, JR., age 66, is former Chairman of the Board and a current
director of El Paso Corporation, a diversified natural gas company. He has
served as one of our directors since 1975. Mr. Kuehn is also a director of
AmSouth Bancorporation, The Dun & Bradstreet Corporation and Praxair, Inc.,
and is a member of the Board of Trustees of Tuskegee University. From 1984
to 1999, Mr. Kuehn served as Chairman and Chief Executive Officer of Sonat
Inc. prior to its merger with El Paso Energy Corporation (now known as El
Paso Corporation), and from 1999 to 2000 he served as Chairman of the Board
of El Paso Energy Corporation.
PAUL B. LOYD, JR., age 55, has served as one of our directors since our
merger with R&B Falcon Corporation described below. Before the merger, he
served as Chairman of the Board of R&B Falcon since January 1998 and Chief
Executive Officer since April 1999. He was CEO and Chairman of the Board of
R&B Falcon Drilling (International & Deepwater) Inc. (formerly Reading &
Bates Corporation) from 1991 through 1997. Mr. Loyd has over 30 years of
experience in the offshore drilling industry, having joined Reading & Bates
in 1970 in its management-training program. He also is a Director of
Carrizo Oil & Gas Inc., Frontier Oil Corporation, Enterprise Oil plc and is
on the Board of Trustees of Southern Methodist University.
ROBERTO MONTI, age 62, is the retired Executive Vice President of
Exploration and Production for Repsol YPF. He was the President and Chief
Executive Officer of YPF Sociedad Anonima from September 1995 to June 1999
prior to its acquisition by Repsol. From October 1993 to July 1995, he
served as President of Dowell, a division of Schlumberger. Mr. Monti has
served as one of our directors since the Sedco Forex merger described
below.
IAN C. STRACHAN, age 58, is a director of Reuters Group PLC, Instinet
Corporation, Harsco Corporation and Johnson Matthey plc. He served as
Deputy Chairman of Invensys plc from 1999 to 2000. He served as Chief
Executive Officer from January 1996 of BTR plc until its merger with Siebe
plc in 1999, when it changed its name to Invensys plc. From 1987 until
1995, Mr. Strachan was with Rio Tinto plc, serving as Chief Financial
Officer from 1987 until 1991 and as Deputy Chief Executive Officer from
1991 until 1995. He was employed by Exxon Corporation from 1970 to 1986.
Mr. Strachan has served as one of our directors since the Sedco Forex
merger.
CONTINUING DIRECTORS-CLASS I-TERMS EXPIRING 2003
VICTOR E. GRIJALVA, age 63, has served as Chairman of our board of
directors since the Sedco Forex merger. He is the retired Vice Chairman of
Schlumberger Limited. Before serving as Vice Chairman, he served as
Executive Vice President of Schlumberger's Oilfield Services division from
1994 to January 1999 and as Executive Vice President of Schlumberger's
Wireline, Testing & Anadrill division from 1992 to 1994. Mr. Grijalva is
also Chairman of the Board of Hanover Compressor Company.
ARTHUR LINDENAUER, age 64, is Chairman of Schlumberger Technology
Corporation, Schlumberger's principal U.S. subsidiary. He previously served
as Executive Vice President-Finance and Chief Financial Officer of
Schlumberger from January 1980 to December 1998. Mr. Lindenauer was a
partner with the accounting firm of Price Waterhouse from 1972 to 1980. Mr.
Lindenauer has served as one of our directors since the Sedco Forex merger.
Mr. Lindenauer is also a director of the New York Chapter of the Cystic
Fibrosis Foundation and a Trustee of the American University in Cairo.
5
RICHARD A. PATTAROZZI, age 58, served at Shell Oil Company as President and
CEO of Shell Deepwater Development Inc. and Shell Deepwater Production Inc.
from 1996 to 1999. In early 1999, he was promoted to Vice President of
Shell Oil Company, responsible for Shell Deepwater Development Inc., Shell
Deepwater Production Inc. and the company's Shallow Water Gulf of Mexico
exploration and production business. Mr. Pattarozzi has more than 33 years
of experience in the petroleum industry. He joined Shell in 1966 in its
offshore engineering organization and retired from the company in January
2000. Mr. Pattarozzi has served as one of our directors since the R&B
Falcon merger. Before the merger, he had served as a director of R&B Falcon
since February 2000. He is also a Director of Global Industries, Ltd.,
Stone Energy Company, OSCA Inc. and Tidewater, Inc., all of which are
publicly traded.
KRISTIAN SIEM, age 53, is Chairman and Chief Executive Officer of Siem
Industries, Inc., an industrial holding company that owns offshore oil and
gas drilling and subsea construction services businesses and a fleet of
reefer vessels through subsidiaries in Bermuda, the U.K. and Norway. Mr.
Siem has served as one of our directors since September 1996. Mr. Siem is
also a director of DSND Subsea ASA, Star Reefers Inc. and Four Seasons
Capital A.B. During the past five years, Mr. Siem has served as an
executive officer with Siem Industries, Inc., as Chairman of Wilrig AS and
Transocean ASA, which combined with us in 1996, and on the boards of
Kvaerner ASA, Norwegian Cruise Line, Lambert, Fenchurch Group Holdings plc
and Oslo Reinsurance ASA. He was also a member of the board of directors of
Saga Petroleum ASA until its merger with Norsk Hydro in September 1999.
J. MICHAEL TALBERT, age 55, has served as the Chief Executive Officer and a
member of our board of directors since August 1994. Mr. Talbert also served
as Chairman of our board of directors from August 1994 until December 1999,
and as President from December 1999 until December 2001. Mr. Talbert is
also a director of Equitable Resources, Inc. Prior to assuming his duties
with us, Mr. Talbert was President and Chief Executive Officer of Lone Star
Gas Company, a natural gas distribution company and a division of Ensearch
Corporation.
CONTINUING DIRECTORS-CLASS II-TERMS EXPIRING 2004
RICHARD D. KINDER, age 57, is Chairman of the Board and Chief Executive
Officer of both Kinder Morgan, Inc. and Kinder Morgan Energy Partners L.P.,
which own and operate diversified energy assets. He has served in such
capacity since February 1997. He has served as one of our directors since
November 1994. Mr. Kinder is also a director of Baker Hughes Incorporated.
MARTIN B. MCNAMARA, age 54, is Partner-in-Charge of the Dallas, Texas,
office of the law firm of Gibson, Dunn & Crutcher and a member of the
firm's finance and compensation committees. He has served as one of our
directors since November 1994. During the past five years, Mr. McNamara has
been in the private practice of law.
ALAIN ROGER, age 71, is a retired executive officer of Schlumberger. He
served as Executive Vice President of Health, Safety and Environment for
Schlumberger from October 1993 to December 1995. He served as Executive
Vice President of Drilling and Pumping for Schlumberger from July 1991 to
September 1993, as President of Sedco Forex, which was the former offshore
contract drilling business of Schlumberger Limited, from 1985 to 1991 and
as President of Forex Neptune from 1976 to 1984. Mr. Roger has served as
one of our directors since the Sedco Forex merger. Mr. Roger also served as
Chairman of the International Association of Drilling Contractors
(I.A.D.C.) in 1991.
MERGER WITH R&B FALCON AND DESIGNATION OF BOARD MEMBERS
On January 31, 2001, we completed a merger transaction with R&B Falcon in
which common shareholders of R&B Falcon received 0.5 newly issued ordinary
shares for each R&B Falcon share and R&B Falcon became our indirect wholly owned
subsidiary. Pursuant to the merger agreement, our board elected three new
members, who were designated by R&B Falcon in consultation with us and had
previously served on the R&B Falcon board of directors: Messrs. Donabedian, Loyd
and Pattarozzi. Mr. Donabedian did not stand for reelection as a director at our
2001 annual general meeting.
6
MERGER WITH SEDCO FOREX AND DESIGNATION OF BOARD AND COMMITTEE MEMBERS
On December 31, 1999, we completed a merger with Sedco Forex Holdings
Limited following the spin-off of Sedco Forex to Schlumberger stockholders on
December 30, 1999. As a result of the merger, Schlumberger stockholders
exchanged all of the Sedco Forex shares distributed to them by Schlumberger in
the Sedco Forex spin-off for our ordinary shares, and Sedco Forex became our
wholly owned subsidiary. Effective upon the merger, we changed our name from
"Transocean Offshore Inc." to "Transocean Sedco Forex Inc."
Each of our directors serving immediately following the merger was
designated to serve on the board pursuant to the merger agreement. Messrs.
Kinder, Kuehn, McNamara, Siem and Talbert were designated by Transocean's board
of directors in consultation with Schlumberger. Messrs. Grijalva, Lindenauer,
Monti, Roger and Strachan were designated by Schlumberger's board of directors
in consultation with Transocean. The committee chairmen of the Executive
Compensation and the Finance and Benefits Committees were Transocean board
designees, and the committee chairmen of the Audit and Corporate Governance
Committees were Schlumberger designees. The other members of those committees
were selected in a manner that resulted in an equal number of Transocean and
Schlumberger designees.
In the Sedco Forex merger agreement, we agreed to use all reasonable
efforts to maintain the above allocations and appointments for a period of three
years after completion of the merger. We also agreed not to nominate or fail to
nominate any person contrary to the above allocations, subject to the fiduciary
duties of our board of directors. We also agreed that if a director dies,
resigns or is removed from the board prior to the expiration of the three-year
period following the merger, the remaining Transocean designees, if the director
was a director designated by Transocean, or Schlumberger designees, if the
director was a director designated by Schlumberger, on the board will nominate a
replacement for action by the full board. We have also agreed to nominate Mr.
Grijalva to our board of directors to serve as Chairman until his 65th birthday,
at which time he will tender his resignation for action by the board of
directors.
BOARD MEETINGS AND COMMITTEES
During 2001, the board of directors held 5 regular meetings. Each of our
directors, other than Mr. Kinder, attended at least 75% of the meetings,
including committee meetings.
The board has standing audit, executive compensation, finance and benefits
and corporate governance committees. In addition, the board may from time to
time form special committees to consider particular matters that arise.
Audit Committee. The audit committee reviews and reports to the board the
scope and results of audits by our outside auditor and our internal auditing
staff. It also reviews with the outside auditor the adequacy of our system of
internal controls. It reviews transactions between us and our directors and
officers, our policies regarding those transactions and compliance with our
business ethics and conflict of interest policies. The audit committee also
recommends to the board of directors a firm of certified public accountants to
serve as our outside auditor, reviews the audit and other professional services
rendered by the outside auditor and periodically reviews the independence of the
outside auditor. The board of directors has adopted a written charter for the
audit committee, which is attached as Appendix A to this proxy statement. The
current members of the audit committee are Mr. Lindenauer, Chairman, and Messrs.
McNamara, Siem and Strachan. The audit committee met 6 times during 2001.
The rules of the New York Stock Exchange, Inc. restrict directors that have
relationships with the company that may interfere with the exercise of their
independence from management and the company from serving on the audit
committee. These relationships include employment by a predecessor or former
parent company. Mr. Lindenauer is the former Chief Financial Officer of
Schlumberger and currently serves as Chairman of Schlumberger Technology
Corporation, Schlumberger's principal U.S. subsidiary. While we do not believe
Mr. Lindenauer should be viewed as an employee of a predecessor or former parent
company, he could be deemed as such in light of the Sedco Forex merger.
7
The NYSE rules provide that a director with such relationships may, under
certain circumstances, be appointed to the audit committee if the company's
board of directors determines in its business judgment that membership on the
committee by the individual is required by the best interests of the company and
its shareholders. Accordingly, at a meeting of the board of directors held on
May 10, 2001, the board determined that, in light of Mr. Lindenauer's
significant financial experience and expertise, his continued membership on the
audit committee is required by the best interests of our company and our
shareholders. We believe that the other members of the audit committee have no
relationships that may interfere with the exercise of their independence from
management and the company.
Executive Compensation Committee. The executive compensation committee
reviews and approves the compensation of our officers, administers our executive
compensation programs and makes awards under the Long-Term Incentive Plan and
the Performance Award and Cash Bonus Plan. The current members of the executive
compensation committee are Mr. Kuehn, Chairman, and Messrs. Kinder, Monti,
Pattarozzi and Roger. The executive compensation committee met 6 times during
2001.
Finance and Benefits Committee. The finance and benefits committee approves
our long-term financial policies and annual financial plans, significant capital
expenditures, insurance programs and investment policies. It also makes
recommendations to the board concerning dividend policy, the issuance and terms
of debt and equity securities and the establishment of bank lines of credit. In
addition, the finance and benefits committee approves the creation, termination
and amendment of our employee benefit programs and periodically reviews the
status of these programs and the performance of the managers of the funded
programs. The current members of the finance and benefits committee are Mr.
Siem, Chairman, and Messrs. Kinder, Lindenauer, Loyd and Strachan. The finance
and benefits committee met 4 times during 2001.
Corporate Governance Committee. The corporate governance committee makes
recommendations to the board with respect to the selection and compensation of
the board, how the board functions and how the board should interact with
shareholders and management. It reviews the qualifications of potential
candidates for the board of directors, evaluates the performance of incumbent
directors and recommends to the board nominees to be elected at the annual
meeting of shareholders. The current members of the corporate governance
committee are Mr. Grijalva, Chairman, and Messrs. Kuehn, Loyd, McNamara and
Monti. The corporate governance committee met 5 times during 2001.
The corporate governance committee will consider nominees for director
recommended by shareholders. Please submit your recommendations in writing,
along with a resume of the nominee's qualifications and business experience and
a signed statement of the proposed candidate consenting to be named as a
candidate and, if nominated and elected, to serve as a director. Submit
nominations to Eric B. Brown, Secretary, Transocean Sedco Forex Inc., 4 Greenway
Plaza, Houston, Texas 77046.
COMPENSATION OF DIRECTORS
Fees and Retainers. Our employees receive no extra pay for serving as
directors. Other than Messrs. Grijalva and Loyd, both of whom have consulting
agreements with us, each director who is not one of our officers or employees
receives an annual retainer of $34,000. A committee chairman receives an
additional $5,000 annual retainer. Non-employee directors also receive a fee of
$2,000 for each board meeting and $1,500 for each board committee meeting
attended, plus incurred expenses where appropriate. Directors are eligible to
participate in our deferred compensation plan. The director may defer any fees
or retainer by investing those amounts in Transocean Sedco Forex ordinary share
equivalents or in other investments selected by the administrative committee.
Stock Options/Stock Appreciation Rights. When elected, each outside
director is granted an option to purchase 4,000 ordinary shares at the fair
market value of those shares on the date of grant. Following the initial grant,
if the outside director remains in office, the director is granted an additional
option to purchase 6,000 ordinary shares after each annual general meeting at
the fair market value of those shares on the date of grant. For tax reasons,
directors residing in Norway may receive share appreciation rights, commonly
referred to as SARs, instead of options.
8
Each stock option and SAR has a ten-year term and becomes exercisable in
equal annual installments on the first, second and third anniversaries of the
date of grant assuming continued service on the board. In the event of an
outside director's retirement in accordance with the board's retirement policy
or his earlier death or disability, or in the event of a change of control of
our company as described under "-Compensation Upon Change of Control," options
and SARs will become immediately exercisable and will remain exercisable for the
remainder of their ten-year term. Options and SARs will terminate 60 days after
an outside director leaves the board for any other reason. However, if that
person ceases to be a director for our convenience, as determined by the board,
the board may at its discretion accelerate the exercisability of those options
and SARs.
We have reserved an aggregate of 600,000 ordinary shares for issuance to
outside directors under our Long-Term Incentive Plan, of which 309,698 remained
available for grant as of March 1, 2002. The provisions of the Long-Term
Incentive Plan relating to grants to outside directors will terminate on May 1,
2003, unless terminated earlier by the board.
AUDIT COMMITTEE REPORT
Our committee has reviewed and discussed the audited financial statements
of the Company for the year ended December 31, 2001 with management. In
addition, we have discussed with Ernst & Young LLP, the independent auditing
firm for the Company, the matters required by Codification of Statements on
Auditing Standards No. 61 (SAS 61).
The Committee also has received the written disclosures and the letter from
Ernst & Young LLP required by Independence Standards Board Standard No. 1, and
we have reviewed, evaluated and discussed the written disclosures with that firm
and its independence from the Company. We also have discussed with management of
the Company and the auditing firm such other matters and received such
assurances from them as we deemed appropriate.
Based on the foregoing review and discussions and relying thereon, we have
recommended to the Company's Board of Directors the inclusion of the Company's
audited financial statements for the year ended December 31, 2001 in the
Company's Annual Report on Form 10-K for such year filed with the Securities and
Exchange Commission.
ARTHUR LINDENAUER, CHAIRMAN MARTIN B. MCNAMARA
KRISTIAN SIEM IAN C. STRACHAN
SECURITY OWNERSHIP OF 5% BENEFICIAL
OWNERS AND MANAGEMENT
The table below shows how many ordinary shares each of our directors and
nominees, each of the executive officers named in the summary compensation
section below and all directors and executive officers as a group owned as of
January 31, 2002. The table below also sets forth information concerning the
persons known by us to beneficially own 5% or more of our ordinary shares.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
SHARES OWNED PERCENT OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY (1)(2) OWNED BENEFICIALLY (3)
---------------------------------------------------------------- ------------------- ----------------------
Jean P. Cahuzac (4). . . . . . . . . . . . . . . . . . . . . . . 105,268
Jon C. Cole (4). . . . . . . . . . . . . . . . . . . . . . . . . 270,631
Victor E. Grijalva . . . . . . . . . . . . . . . . . . . . . . . 36,493
W. Dennis Heagney (4)(5) . . . . . . . . . . . . . . . . . . . . 146,643
9
Richard D. Kinder. . . . . . . . . . . . . . . . . . . . . . . . 43,005
Ronald L. Kuehn, Jr. . . . . . . . . . . . . . . . . . . . . . . 35,095
Arthur Lindenauer. . . . . . . . . . . . . . . . . . . . . . . . 9,120
Robert L. Long (4)(6). . . . . . . . . . . . . . . . . . . . . . 145,981
Paul B. Loyd, Jr.. . . . . . . . . . . . . . . . . . . . . . . . 1,469,021
Martin B. McNamara . . . . . . . . . . . . . . . . . . . . . . . 31,193
Roberto Monti. . . . . . . . . . . . . . . . . . . . . . . . . . 3,999
Richard A. Pattarozzi. . . . . . . . . . . . . . . . . . . . . . 31,333
Alain Roger. . . . . . . . . . . . . . . . . . . . . . . . . . . 9,541
Kristian Siem (7). . . . . . . . . . . . . . . . . . . . . . . . 16,188
Ian C. Strachan. . . . . . . . . . . . . . . . . . . . . . . . . 4,499
J. Michael Talbert (4)(8). . . . . . . . . . . . . . . . . . . . 552,606
All directors and executive officers as a group (24 persons) (4) 3,398,168 1.07%
Mutuelles AXA (9). . . . . . . . . . . . . . . . . . . . . . . . 19,140,486 6.00%
---------------
(1) The business address of each director and executive officer is c/o
Transocean Sedco Forex Inc., 4 Greenway Plaza, Houston, Texas 77046.
(2) Includes options exercisable within 60 days held by Messrs. Cahuzac
(103,595), Cole (207,993), Grijalva (3,999), Heagney (111,434), Kinder
(25,005), Kuehn (29,499), Lindenauer (3,999), Long (104,333), Loyd
(1,404,021), McNamara (25,005), Monti (3,999), Pattarozzi (31,333), Roger
(3,999), Siem (16,174), Strachan (3,999), Talbert (472,126) and all
directors and executive officers as a group (2,955,354). Also includes
rights to acquire ordinary shares under our deferred compensation plan held
by Messrs. Grijalva (7,347), Kuehn (5,596) and McNamara (5,188), and all
directors and executive officers as a group (18,131).
(3) As of January 31, 2002, each listed individual beneficially owned less than
1.0% of the outstanding ordinary shares.
(4) Includes:
All
directors
and
executive
officers as
Mr. Cahuzac Mr. Cole Mr. Heagney Mr. Long Mr. Talbert a group
----------- -------- ----------- -------- ----------- -----------
Shares of Restricted
Stock (Holders may
vote and receive
dividends, but may
not sell) . . . . . . 0 6,000 10,667 6,000 0 31,667
Shares held by
Trustee under
401(k) plan . . . . . 0 8,721 5,498 2,971 1,661 29,185
Shares held in
Employee Stock
Purchase Plan . . . . 1,291 2,648 2,200 2,648 0 17,880
(5) Includes 40 shares held by his children.
(6) Includes 30,029 shares held in a joint account with his wife.
10
(7) Siem Industries, Inc. holds 1,538,720 of our ordinary shares. Mr. Siem is
the Chairman and Chief Executive Officer of Siem Industries, Inc. As a
result, he may be deemed a beneficial owner of those ordinary shares.
(8) Includes 78,536 shares held in a joint account with his wife.
(9) Based on a Schedule 13G filed with the SEC on February 11, 2002 by AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Conseil Vie
Assurance Mutuelle and AXA Courtage Assurance Mutuelle (collectively
"Mutuelles AXA"), AXA and AXA Financial, Inc. ("AXA Financial"). The
Mutuelles AXA, as a group, control AXA which owns AXA Financial. According
to the filing, none of Mutuelles AXA, AXA and AXA Financial directly own
any shares of the Company. AXA Investment Managers Hong Kong Ltd., a
subsidiary of AXA, owns 18,883 shares. Alliance Capital Management L.P., a
subsidiary of AXA Financial, holds on behalf of clients' discretionary
investment advisory accounts 18,763,811 shares. The Equitable Life
Assurance Society of the United States, a subsidiary of AXA Financial, owns
357,792 shares. As a group, Mutuelles AXA has the sole voting power over
4,888,704 shares, the shared voting power over 9,622,852 shares, the sole
dispositive power over 19,140,484 shares and the shared dispositive power
over 2 shares. The address of AXA Conseil Vie Assurance Mutuelle, AXA
Assurances I.A.R.D. Mutuelle and AXA Assurances Vie Mutuelle is 370, rue
Saint Honore 75001 Paris, France. The address of AXA Courtage Assurance
Mutuelle is 26, rue Louis leGrand 75002 Paris, France. The address of AXA
is 25, Avenue Matignon 75008 Paris, France. The address of AXA Financial is
1290 Avenue of the Americas, New York, New York 10104.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
We believe all Section 16(a) reporting requirements related to our
directors and executive officers were timely fulfilled during 2001. This belief
is based solely on a review of the reports required to be filed under Section
16(a) of the U.S. Securities Exchange Act of 1934 that have been furnished to us
and written representations from those with filing obligations that all reports
were timely filed.
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The executive compensation committee is composed solely of nonemployee
directors. It administers our executive compensation program. The committee's
primary responsibility is to ensure that the executive compensation program
furthers our interests and those of our shareholders.
Our executive compensation program has three principal objectives:
(1) to attract and retain a highly qualified and motivated management
team;
(2) to appropriately reward individual executives for their contributions
to the attainment of key strategic goals; and
(3) to link the interests of executives and shareholders through
stock-based plans and performance measures.
The committee meets with outside consultants at least annually to review
and compare the level of compensation we pay or award to key executives to the
compensation practices of a peer group of companies. In 2001, the primary peer
group of companies used to determine compensation (base salary, annual cash
bonus incentives and stock options) for key executives was revised and updated
to better reflect the size of the combined companies, Transocean Sedco Forex and
R&B Falcon, and now consists of 18 publicly held companies which the committee
believes are generally of comparable financial size, business focus and scope;
however, as described below, we use a narrower group of companies for comparison
based on total shareholder return.
The key components of our executive compensation program are base salary,
annual cash bonus incentives and long-term stock incentives. The committee's
policies with respect to each component of the program, including the basis for
the compensation of the Chief Executive Officer, are described below. The
11
committee consults with the Chief Executive Officer in reviewing the individual
performance and compensation of key executives (other than the Chief Executive
Officer). The committee reviews the Chief Executive Officer's performance and
compensation at least annually.
Base Salaries. The committee reviews at least annually the base salaries of
key executive officers and determines whether salaries should be adjusted. Any
adjustments are based primarily on the executive's individual performance,
responsibilities and experience and salary survey information. In general, the
committee's objective is to maintain executive salaries at the size-adjusted
median of the salaries for comparable executives in our peer group. Executive
salaries for 2000 were below the median level as compared to the new peer group
of companies. Accordingly, at its salary review meeting on July 14, 2001, the
committee approved an adjustment of the base salaries of the executive officers
in accordance with a recommendation from a third party executive compensation
consultant. Mr. Talbert's salary was adjusted from $850,000 to $950,000, which
was effective July 15, 2001.
Annual Cash Bonus Incentives. We award annual cash bonus incentive
opportunities under the Performance Award and Cash Bonus Plan. The amount of an
executive's bonus opportunity, which is expressed as a percentage of base
salary, depends primarily upon that individual's position and responsibilities
and bonus opportunities provided to comparable positions within our peer group.
At the beginning of each year, the committee reviews and approves annual
performance goals. Shortly after the end of the year, the committee determines
the appropriate bonus payout levels based on the degree to which these goals
have been achieved. The annual incentive program is designed to pay total annual
cash compensation, which is salary plus bonus, above the median of our peer
group when we meet substantially all of the goals established for an executive's
bonus opportunity. Similarly, when the goals are not achieved, the program is
intended to result in total annual cash compensation below the median of our
peer group. The committee also has the discretion to award performance-based
cash bonuses under our Long-Term Incentive Plan.
The committee determined that the payout of an executive's 2001 bonus
opportunity was to be based on the level of achievement of a company-wide
financial goal, corporate goals and individual goals, as described below. The
financial goal was weighted at 50%, the corporate goals at 35% and the
individual goals at 15%. The committee also has discretion to make additional
cash bonus awards beyond the bonus opportunity to recognize exceptional
individual performance or to take account of other factors.
The financial goal included in the 2001 bonus opportunities under our
Performance Award and Cash Bonus Plan for senior executive officers was our 2001
earnings per share (''EPS'') as compared to our budgeted EPS. Payout of the EPS
goal was based on minimum, target and maximum levels of achievement. Mr. Talbert
had no financial goal under our Performance Award and Cash Bonus Plan, but he
had similar financial performance goals under our Long-Term Incentive Plan. The
corporate goals for all senior executives included in the 2001 bonus
opportunities included operating excellence, successful integration of
Transocean Sedco Forex and R&B Falcon, strategic goals and annual goals relating
to safety and customer focus programs.
The committee met in December 2001 and February 2002 to review the EPS
performance versus the goals and the attainment of the corporate goals and
objectives for the year 2001. Mr. Talbert's bonus under our Performance Award
Cash Bonus Plan and Long Term Incentive Plan was determined by the committee to
entitle him to a bonus payment of $625,000 or 96% of his bonus opportunity.
Long-Term Stock Incentives. The long-term stock incentive component of our
executive compensation program is designed to align executive and shareholder
interests by rewarding executives for the attainment of stock price appreciation
and total shareholder return.
As a general rule, the committee administers the long-term stock incentive
program through annual grants of stock options to designated executive officers
and other key employees. In addition, the committee may consider the award of
restricted stock based on the company's total shareholder return ("TSR") when
compared to a peer group of companies, and the committee may also make special
awards to individual executives and other key employees during the year on a
discretionary basis. The peer group of companies used to measure our relative
TSR consists of fifteen (15) publicly traded companies with a narrower focus on
contract drilling and oilfield services. On July 14, 2001, the committee made
stock option grants to executives, including Mr. Talbert, and stock option
12
grants to other key employees in order to further the goal of aligning the
executives' and key employees' interests with those of the shareholders and to
encourage management continuity.
Each executive officer is given a grant opportunity based on the
executive's individual position and compensation survey data of our peer group.
The executives are granted stock options at the 50th percentile level each year,
subject to the committee's discretion to grant more or fewer options based upon
company performance. Vesting of options would occur over three years.
Restricted stock awards generally would only be made for company performance
based upon the last year's TSR, if TSR had been above the 50th percentile. The
committee determines whether or not the restricted stock grant opportunity is
earned by comparing our annual TSR, calculated by considering stock price
appreciation and dividends, to the total shareholder return of the companies in
the peer group. Restricted stock awards would provide long-term incentive
compensation between the competitive median and 75th percentile levels directly
proportional to TSF performance between the 50th and 75th percentiles.
Based upon the above criteria, on July 14, 2001, we granted Mr. Talbert
options to purchase 175,000 ordinary shares at an exercise price of $38.07 per
share, which was the fair market value of the ordinary shares at the date of the
grant. Based upon the formula, the executives, including Mr. Talbert, were not
awarded any restricted stock.
Stock Ownership Guidelines. In 1993, the committee established guidelines
designed to encourage our key executives to attain specified levels of stock
ownership over a five-year period. Stock ownership goals are based on the value
of the ordinary shares and are expressed as a multiple of the executive's base
salary.
Limitations on Deductibility of Non-Performance Based Compensation.
Section 162(m) of the U.S. Internal Revenue Code limits the tax deduction that
we or our subsidiaries can take with respect to the compensation of designated
executive officers, unless the compensation is ''performance-based.'' The
committee expects that all income recognized by executive officers upon the
exercise of stock options granted under the Long-Term Incentive Plan will
qualify as performance-based compensation. The committee also believes that all
restricted stock which it has awarded to date also qualifies as
performance-based.
Under the Long-Term Incentive Plan, the committee has the discretion to
award performance-based cash compensation that qualifies under Section 162(m) of
the U.S. Internal Revenue Code based on the achievement of objective performance
goals. For 2001, Mr. Talbert was the only executive eligible for a
performance-based cash award under the Long-Term Incentive Plan. The committee
may determine to award compensation that does not qualify under Section 162(m)
as performance-based compensation.
Conclusion. The committee believes that the executive compensation
philosophy that we have adopted effectively serves our interests and those of
our shareholders. It is the committee's intention that the pay delivered to
executives be commensurate with company performance.
Ronald L. Kuehn, Jr. Richard D. Kinder Roberto L. Monti
Richard A. Pattarozzi Alain Roger
EXECUTIVE COMPENSATION
The table below shows the compensation of our Chief Executive Officer and
four other most highly compensated executive officers (the "named executive
officers") for 1999, 2000, and 2001. All share amounts and related matters in
this proxy statement have been adjusted to reflect the corporate reorganization
we completed in May 1999 that effected our reorganization from a Delaware
corporation into a Cayman Islands company and a two-for-one share split effected
in September 1997 in the form of a 100% share dividend.
13
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------------- ----------------------------
Restricted Securities
Other Annual Stock Underlying All Other
Name and Principal Position Year Salary($) Bonus($)(1) Compensation($) Award($)(2) Options/SARs(3) Compensation($)(4)
---------------------------- ---- --------- ----------- --------------- ----------- --------------- ------------------
J. Michael Talbert . . . . . 2001 896,218 625,000 0 0 175,000 86,550
Chief Executive 2000 736,458 580,700 0 0 175,000 54,602
Officer 1999 625,000 601,563 0 0 117,000 646,903(5)
W. Dennis Heagney. . . . . . 2001 459,244 226,744 0 0 50,000 40,498
Executive Vice 2000 380,208 202,200 0 0 50,000 25,673
President and Chief 1999 342,500 282,563 0 0 38,900 36,061(5)
Operating Officer
Robert L. Long . . . . . . . 2001 460,494 260,039 0 0 50,000 46,938
President 2000 346,875 179,100 0 0 50,000 22,925
1999 280,000 311,750 0 0 35,000 27,322(5)
Jean P. Cahuzac(6) . . . . . 2001 384,244 196,656 50,365(7) 0 50,000 74,708
Executive Vice 2000 328,750 173,400 86,525 (8) 0 50,000 40,393
President,
Operations
Jon C. Cole . . . . . . . . 2001 349,244 163,848 0 0 45,000 29,299
Executive Vice 2000 317,292 154,700 0 0 50,000 22,143
President, Shallow 1999 292,500 221,203 0 0 35,000 27,098 (5)
Water and Inland
Water Operations
---------------
(1) The amount shown as "Bonus" for a given year includes amounts earned
with respect to that year but paid in the first quarter of the
following year.
(2) Represents the number of restricted shares times the market price of
the shares on the date of grant. Dividends are paid on all restricted
shares. As of December 31, 2001, the total number and value of
restricted ordinary shares held by the named executive officers were:
Mr. Talbert: 0 shares ($0); Mr. Heagney: 10,667 shares ($360,758); Mr.
Long: 6,000 shares ($202,920); Mr. Cahuzac: 0 shares ($0); and Mr.
Cole: 6,000 shares ($202,920).
(3) Represents options to purchase our ordinary shares at fair market
value on the date of the grants.
(4) With respect to 2001, the amounts shown as "All Other Compensation"
represent the following:
Mr. Talbert Mr. Heagney Mr. Long Mr. Cahuzac Mr. Cole
----------- ----------- -------- ----------- --------
Matching contributions
under the Savings Plan. . 7,650 7,650 7,650 7,650 7,650
Contributions under the
Supplemental Benefit Plan 41,274 17,538 15,394 10,281 11,675
Premiums and benefits
under the "split-dollar"
Executive Life Insurance
Program . . . . . . . . . 37,626 15,310 23,894 20,140 9,974
14
Defined contribution
international retirement
benefit plan. . . . . . . 0 0 0 36,637 0
(5) In connection with the waiver of certain employment agreement
provisions relating to the Sedco Forex merger, in 1999 Mr. Talbert
received a cash payment of $568,800 and Messrs. Heagney, Long and Cole
received accelerated vesting of certain restricted stock grants they
received on June 4, 1993. On that date, 32,000 restricted shares were
granted to Mr. Heagney and 18,000 restricted shares were granted to
each of Messrs. Long and Cole. Those shares were to vest fully on or
after January 8, 2011, but, in exchange for their waivers of those
provisions, those shares will vest in three equal installments on
December 31, 2000, December 31, 2001 and December 31, 2002. The amount
received by Mr. Talbert is included in "All Other Compensation."
(6) Mr. Cahuzac became one of our executive officers following the
completion of the Sedco Forex merger on December 31, 1999. Previously,
he had been employed by Sedco Forex. Accordingly, information for 1999
is omitted.
(7) Includes payments relating to school fees ($30,192) and home country
travel entitlement ($14,172).
(8) Includes payments relating to Mr. Cahuzac's relocation ($36,735) and
school fees ($26,852).
OPTIONS GRANTED
The table below contains information with respect to options to purchase
our ordinary shares granted to the named executive officers in 2001.
OPTION/SAR GRANTS IN 2001
Potential Realizable
Value at
Assumed Annual Rates
of Company
Share Price
Appreciation for Option
Individual Grants Term (10 Years)
--------------------------------------------------- ---------------------------
% of Total
Number of Options/SARs
Securities Granted to
Underlying Company Exercise
Options/SARs Employees in Price Expiration
Name Granted 2001 ($/share) Date(1) 5%(2) 10%(2)
------------------ ------------ ------------ ---------- ----------- ------------- -------------
J. Michael Talbert 175,000 7.1 $ 38.07 7/14/11 4,189,853 10,617,911
W. Dennis Heagney. 50,000 2.0 $ 38.07 7/14/11 1,197,101 3,033,689
Robert L. Long . . 50,000 2.0 $ 38.07 7/14/11 1,197,101 3,033,689
Jean P. Cahuzac. . 50,000 2.0 $ 38.07 7/14/11 1,197,101 3,033,689
Jon C. Cole. . . . 45,000 1.8 $ 38.07 7/14/11 1,077,391 2,730,320
---------------
(1) The options are subject to termination prior to their expiration date
in some cases where employment is terminated.
(2) These columns show the gains the named executives and all of our
shareholders could realize if our shares appreciate at a 5% or 10%
rate. These growth rates are arbitrary assumptions specified by the
Securities and Exchange Commission, not our predictions.
15
AGGREGATE OPTION EXERCISES
The following table shows information concerning options to purchase our
ordinary shares the named executive officers exercised during 2001, and
unexercised options they held as of December 31, 2001:
AGGREGATED OPTION EXERCISES IN 2001 AND 2001 YEAR-END OPTION VALUE
Number of Securities
Underlying Value of Unexercised,
Unexercised Options In-the-Money Options
at Fiscal Year End at Fiscal Year End
--------------------- -------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable(1) Unexercisable
------------------ ----------- ---------- ----------- ------------- -------------- -------------
J. Michael Talbert -- -- 413,793 291,667 3,917,855 0
W. Dennis Heagney. 49,974 $1,840,211 94,766 83,334 493,526 0
Robert L. Long . . 51,180 $1,921,204 87,666 83,334 437,785 0
Jean P. Cahuzac. . 26,473 $ 765,898 86,928 83,334 310,509 0
Jon C. Cole -- -- 191,326 78,334 2,652,339 0
---------------
(1) The value of each unexercised in-the-money option or tandem SAR is
equal to the difference between $33.82, which was the closing price of
our ordinary shares on December 31, 2001, and the exercise price of
the option.
DEFINED BENEFIT PLANS
We maintain a U.S. Retirement Plan for our qualifying employees and
officers and those of participating subsidiaries. In general, we base annual
retirement benefits on average covered compensation for the highest five
consecutive years of the final ten years of employment. We include salaries and
bonuses and some personal benefits as covered compensation under the U.S.
Retirement Plan. We do not include (1) amounts relating to the grant or vesting
of restricted shares, the exercise of options and SARs, and receipt of
tax-offset supplemental payments with respect to options, SARs or restricted
shares, or (2) employer contributions under our Savings Plan or our Supplemental
Benefit Plan.
The maximum annual retirement benefit under our U.S. Retirement Plan is
generally 60% of the participant's average covered compensation minus 19.5% of
his or her covered social security earnings. However, some of our executive
officers, other than Mr. Talbert, and some other employees accrued additional
benefits under a previous retirement plan pursuant to the following formula
(subject to partial offset for certain social security benefits): (1) 2.4% of
average covered compensation, calculated as described above, for each year of
service prior to January 1, 1992; plus (2) 2.0% of average covered compensation
for each year of service after January 1, 1992; plus (3) when the total of (1)
plus (2) above equals 60% of average covered compensation, 1% of average covered
compensation for each year of service after January 1, 1992, not included in the
calculation in (2) above, up to five such additional years of service. The
eligible survivors of a deceased U.S. Retirement Plan participant are entitled
to a survivor's benefit under the plan. Benefits under our U.S. Retirement Plan
are generally paid as life annuities.
Eligible participants in our U.S. Retirement Plan and their eligible
survivors are entitled to receive retirement and survivors benefits that would
have been payable under the U.S. Retirement Plan but for the fact that benefits
payable under funded pension plans are limited by federal tax laws. As a general
rule, during 2001, the federal tax laws limited annual benefits under
tax-qualified retirement plans to $140,000, subject to reduction in some cases,
and required those plans to disregard any portion of the participant's 2001
compensation in excess of $170,000. A participant may choose to have these
benefits paid either as a life annuity or in a cash lump sum upon termination of
employment.
16
Mr. Cahuzac is a non-U.S. citizen and participates in a defined
contribution international retirement plan. He does not participate in our U.S.
Retirement Plan.
The following table contains the benefits payable to the named executive
officers under our U.S. Retirement Plan and related supplemental benefit plans
as of December 31, 2001:
DEFINED BENEFIT PLAN TABLE
Estimated Annual
Retirement
Current Years Benefit at
Name of Service(1) Age 65(2)
------------------ -------------- ------------------
J. Michael Talbert 7.3 $ 503,412
W. Dennis Heagney. 32.5 367,308
Robert L. Long . . 26.5 350,628
Jon C. Cole. . . . 24.2 289,572
---------------
(1) Includes years of service with Sonat Inc.
(2) Estimated annual retirement benefit payable under the Retirement Plan
and related supplemental benefit plans as a single life annuity at age
65 (based on the assumptions that the officer retires from employment
with us at age 65 with average covered compensation at his retirement
date equal to his 2001 covered compensation) and calculated prior to
the offset for covered social security earnings.
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return of (1) our
ordinary shares, (2) the Standard & Poor's 500 Stock Index and (3) the Simmons &
Company International Upstream Index over our last five fiscal years. The graph
assumes that $100 was invested in our ordinary shares and each of the other two
indices on December 31, 1996, and that all dividends were reinvested on the date
of payment.
CUMULATIVE TOTAL SHAREHOLDER RETURN
INDEXED TOTAL SHAREHOLDER RETURN
DECEMBER 31, 1996-DECEMBER 31, 2001
17
[GRAPHIC OMITTED]
December 31,
----------------------------------------------
1996 1997 1998 1999 2000 2001
------ ------ ------ ------ ------ ------
Transocean Sedco Forex 100.00 154.38 86.22 108.82 148.91 110.11
S&P 500 100.00 133.25 171.32 207.35 188.49 166.13
Simmons & Company 100.00 151.65 62.56 87.63 148.81 111.22
International Upstream Index
COMPENSATION UPON CHANGE OF CONTROL
Some of our benefit plans provide for the acceleration of benefits in the
event of a change of control of our company. A change of control generally
includes acquisitions of beneficial ownership of 20% or more of our ordinary
shares, changes in board composition and certain merger and sale transactions.
Upon the occurrence of a change of control, all outstanding restricted
shares granted under the Long-Term Incentive Plan will immediately vest and
all options and SARs granted under the Long-Term Incentive Plan to outside
directors or held by then-current employees will become immediately exercisable.
In addition, the executive compensation committee may provide that if a SAR is
exercised within 60 days of the occurrence of a change of control, the holder
will receive a payment equal to the excess over the amount otherwise due of the
highest price per ordinary share paid during the 60-day period prior to exercise
of the SAR. The executive compensation committee also may provide that the
holder is entitled to a supplemental payment on that excess. Those payments are
in addition to the amount otherwise due on exercise. Also, upon the occurrence
of a change of control, the participant will become vested in 100% of the
maximum performance award he could have earned under our Performance Award and
Cash Bonus Plan for the proportionate part of the performance period prior to
the change of control and will retain the right to earn out any additional
portion of his award if he remains in our employ.
The Sedco Forex merger constituted a change of control under our Long-Term
Incentive Plan and Performance Award and Cash Bonus Plan.
18
CONSULTING AGREEMENTS WITH DIRECTORS
As part of the Sedco Forex merger and as a condition to his appointment as
Chairman of the Board, we entered into a consulting agreement with Victor E.
Grijalva. The consulting agreement contains the following material terms:
- we will nominate Mr. Grijalva to the board of directors to serve as
Chairman until his 65th birthday, at which time he will tender his
resignation for action by the board of directors;
- until the time of his resignation, Mr. Grijalva will provide
consulting services to us, as an independent contractor, with regard
to long-range planning, strategic direction and integration and
rationalization matters;
- we will pay Mr. Grijalva $400,000 per year;
- we will indemnify Mr. Grijalva in connection with the services he
provides to the fullest extent available under our articles of
association; and
- Mr. Grijalva will be entitled to the non-cash compensation and
benefits we provide to non-employee directors.
At the time of the R&B Falcon merger, R&B Falcon entered into a consulting
agreement with Paul B. Loyd, Jr. The consulting agreement contains the following
material terms:
- the term of the consulting agreement is for a period of two years
following the date of Mr. Loyd's termination of employment from R&B
Falcon, which occurred on January 31, 2001, and he may terminate it at
any time on 30 days' advance written notice;
- Mr. Loyd will provide consulting services with regard to strategies,
policies, special projects, incentives, goals and other matters
related to the development and growth of R&B Falcon for a minimum of
30 hours per month;
- Mr. Loyd agrees not to perform substantially similar services during
the term of the consulting agreement for any other company that
provides offshore contract drilling services;
- we will pay Mr. Loyd $360,000 per year and he waives all director's
fees or other remuneration that he would otherwise receive for being a
member of our board of directors; and
- Mr. Loyd will be entitled to reimbursement of expenses incurred in
providing consulting services.
EMPLOYMENT AGREEMENTS
During September and October 2000, we entered into new agreements with some
of our executive officers, including Messrs. Talbert, Heagney, Cole, Long, Ray
and Brown and Ms. Koucouthakis. These agreements replaced employment agreements
entered into prior to the Sedco Forex merger. The prior agreements provided that
the occurrence of a change in control triggered provisions that allowed
executives to leave for any reason during a specified period following the
change of control and receive the payments defined in the employment agreements,
which generally guaranteed a minimum salary and bonus for a period of three
years. The Sedco Forex merger triggered these provisions, and as a result, the
executives could have left for any reason during January 2001 and received the
payments under the employment agreements. In order to induce the executives to
remove such right and remain with our company, we offered the executives either
(a) a cash payment equivalent to the amount otherwise due under the employment
agreement as if the executive left in January 2001 to be vested and paid, with
interest, over a three year period in equal annual installments commencing
January 2002, in exchange for termination of the employment agreement (such
amounts would become payable if the executive remained employed, and would
become payable in a lump sum if the executive's termination occurred due to
death, disability or termination without cause, or due to certain reductions in
19
authority or base salary), or (b) an extension of the existing employment
agreement for three years beyond the current one month trigger period with a
first term of 18 months during which the employee commits to remain with our
company, followed by an additional term of 18 months (commencing July 1, 2002)
during which the employee can self trigger the payment rights to predetermined
amounts, with interest, under the employment agreement by terminating his or her
employment. Messrs. Heagney and Brown and Ms. Koucouthakis entered into
agreements described in clause (a) of the foregoing sentence, and Messrs.
Talbert, Cole, Long and Ray entered into agreements described in clause (b) of
the foregoing sentence. None of the new agreements contain change of control
provisions. The agreements with Messrs. Talbert, Cole, Long, and Ray provide
that in the event the payments called for under the agreement would subject the
executive to an excise tax under Section 4999 of the U.S. Internal Revenue Code,
the executive will be entitled to receive an additional "gross-up" payment in
some circumstances.
The amount of the aggregate payments to Mr. Heagney pursuant to his
agreement, excluding interest, is $2,370,587. Mr. Cahuzac is not a party to an
employment agreement with us. If the other named executive officers terminate
their employment on July 1, 2002 in a manner entitling them to benefits under
the agreements, they would received amounts approximately equal to the following
lump sum cash payments, excluding any gross up payments and interest:
Mr. Talbert: $4,877,593
Mr. Long: $2,142,756
Mr. Cole: $1,999,933
SEVERANCE AGREEMENT
In December 2001, we entered into an agreement with Mr. Heagney who, in
accordance with the agreement, will retire from the Company on June 30, 2002.
The agreement provides Mr. Heagney with the following benefits:
- continuation of his current base salary through June 30, 2002; and
- a lump sum cash payment of $2,541,320, payable on or after January 2,
2002, in satisfaction of our obligations under the terms of Mr.
Heagney's previous employment agreement.
The agreement also entitles him to the following principal benefits, which
are payable after his retirement:
- subject to his continued employment through June 30, 2002, a lump sum
cash payment of $1,900,657, payable on July 30, 2002, in satisfaction
of our obligations to Mr. Heagney under the Supplemental Benefit Plan;
- a pro-rated performance bonus for 2002 in the amount of $112,800, a
lump sum payment of $1,000,000 representing an additional 3 years of
credit under the Supplemental Benefit Plan and two annual installment
payments of $500,000 each payable on July 30, 2002 and July 30, 2003;
and
- immediate vesting of Mr. Heagney's restricted stock, immediate vesting
of his outstanding unvested stock options, and the extension of
exercisability of such stock options for their remaining term.
All benefits payable under the agreement are subject to Mr. Heagney's
compliance with the confidentiality, non-solicitation, non-competition, and
nondisparagement provisions of the agreement. The agreement also provides for
execution of customary waivers by Mr. Heagney and includes requirements for Mr.
Heagney's continued service through June 30, 2002.
20
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the executive compensation committee of the board of
directors are Mr. Kuehn, Chairman, and Messrs. Kinder, Monti and Roger. There
are no matters relating to interlocks or insider participation that we are
required to report.
CERTAIN TRANSACTIONS
In January 2001, R&B Falcon purchased the 13.6% minority interest in
Reading & Bates Development Co., which was owned by former directors and
employees of R&B Falcon and directors and employees of that company, for $34.7
million. The interests of Messrs. Loyd and Donabedian were purchased for
$9,059,400 and $1,294,000 respectively. Mr. Pattarozzi received a bonus of
$267,000 in connection with the sale of the minority interest. R&B Falcon's oil
and gas business is operated primarily through its Reading & Bates Development
Co.
SELECTION OF AUDITOR
We have selected Ernst & Young LLP as our auditor for the 2002 calendar
year. Ernst & Young LLP served as our auditor for the 2001 calendar year.
Although the selection and appointment of independent auditors is not required
to be submitted to a vote of shareholders, the Board of Directors has decided to
ask our shareholders to approve this appointment. Approval of our appointment of
Ernst & Young LLP to serve as independent auditors for the year 2002 requires
the affirmative vote of holders of at least a majority of the ordinary shares
present in person or by proxy at the meeting and entitled to vote on the matter.
If the shareholders do not approve the appointment of Ernst & Young LLP, the
Board of Directors will consider the appointment of other independent auditors.
A representative of Ernst & Young LLP is expected to be present at the annual
general meeting with the opportunity to make a statement if so desired and to
respond to appropriate questions.
FEES PAID TO ERNST & YOUNG LLP
Ernst & Young LLP has billed us fees as set forth in the table below for
(i) the audit of our annual financial statements and reviews of quarterly
financial statements, (ii) financial information systems design and
implementation work rendered in 2001 and (iii) all other services rendered in
2001.
All Other Fees
--------------------------------------
Financial Information
Systems Design and Audit-Related Total of
Audit Fees Implementation Fees Fees Other All Other Fees
---------- --------------------- ------------- ------- --------------
Fiscal year 2001 402,000 0 534,462 670,662 1,205,124
The audit committee has considered whether the provision of services
rendered in 2001 other than the audit of our financial statements and reviews of
quarterly financial statements was compatible with maintaining the independence
of Ernst & Young LLP and determined that the provision of such services was
compatible with maintaining such independence.
PROPOSAL TO CHANGE OUR NAME
The Board of Directors has approved a proposal to adopt a special
resolution to change our name to "Transocean Inc."
On December 31, 1999, we completed a merger with Sedco Forex Holdings
Limited. Effective upon the merger, we changed our name from "Transocean
Offshore Inc." to "Transocean Sedco Forex Inc." The Board of Directors believes
that the name "Transocean Sedco Forex Inc." does not sufficiently reflect the
combined company after the R&B Falcon merger and has become cumbersome from
marketing and operational perspectives. By changing the name to "Transocean
Inc.," the Board of Directors believes our name will be simplified. The Board
also believes that this change will facilitate the use of our name in the names
of our subsidiaries and further help to unify our worldwide employees.
21
Adoption of the special resolution will require the affirmative vote of
holders of at least two-thirds of the ordinary shares present in person or by
proxy at the meeting and entitled to vote on the matter. The persons named on
the accompanying proxy will vote in accordance with the choice specified
thereon, or, if no choice is properly indicated, in favor of the adoption of the
proposed special resolution.
We do not intend to change our NYSE trading symbol. Shareholders will not
be required to exchange outstanding stock certificates for new certificates.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE NAME
CHANGE TO TRANSOCEAN INC.
PROPOSALS OF SHAREHOLDERS
Shareholder Proposals in the Proxy Statement. Rule 14a-8 under the
Securities Exchange Act of 1934 addresses when a company must include a
shareholder's proposal in its proxy statement and identify the proposal in its
form of proxy when the company holds an annual or special meeting of
shareholders. Under Rule 14a-8, in order for your proposals to be considered for
inclusion in the proxy statement and proxy card relating to our 2003 annual
general meeting, your proposals must be received at our principal executive
offices, 4 Greenway Plaza, Houston, Texas 77046, by no later than November 28,
2002. However, if the date of the 2003 annual general meeting changes by more
than 30 days from the anniversary of the 2002 annual general meeting, the
deadline is a reasonable time before we begin to print and mail our proxy
materials. We will notify you of this deadline in a Quarterly Report on Form
10-Q or in another communication to you. Shareholder proposals must also be
otherwise eligible for inclusion.
Shareholder Proposals and Nominations for Directors to Be Presented at
Meetings. If you desire to bring a matter before an annual general meeting and
the proposal is submitted outside the process of Rule 14a-8, you must follow the
procedures set forth in our articles of association. Our articles of association
provide generally that, if you desire to propose any business at an annual
general meeting, you must give us written notice not less than 90 days prior to
the anniversary of the originally scheduled date of the immediately preceding
annual general meeting. However, if the date of the forthcoming annual general
meeting is more than 30 days before or after that anniversary date, the deadline
is the close of business on the tenth day after we publicly disclose the meeting
date. The deadline under our articles of association for submitting proposals
will be February 8, 2003 for the 2003 annual general meeting unless it is more
than 30 days before or after the anniversary of the 2002 annual general meeting.
Your notice must set forth:
- a brief description of the business desired to be brought before the
meeting and the reasons for conducting the business at the meeting;
- your name and address;
- a representation that you are a holder of record of our ordinary
shares entitled to vote at the meeting, or if the record date for the
meeting is subsequent to the date required for shareholder notice, a
representation that you are a holder of record at the time of the
notice and intend to be a holder of record on the date of the meeting,
and, in either case, intend to appear in person or by proxy at the
meeting to propose that business; and
- any material interest you have in the business.
If you desire to nominate directors at an annual general meeting, you must
give us written notice within the time period described in the preceding
paragraph. If you desire to nominate directors at an extraordinary general
meeting at which the board of directors has determined that directors will be
elected, you must give us written notice by the close of business on the tenth
day following our public disclosure of the meeting date. Notice must set forth:
- your name and address and the name and address of the person or
persons to be nominated;
22
- a representation that you are a holder of record of our ordinary
shares entitled to vote at the meeting or, if the record date for the
meeting is subsequent to the date required for that shareholder
notice, a representation that you are a holder of record at the time
of the notice and intend to be a holder of record on the date of the
meeting and, in either case, setting forth the class and number of
shares so held, including shares held beneficially;
- a representation that you intend to appear in person or by proxy as a
holder of record at the meeting to nominate the person or persons
specified in the notice;
- a description of all arrangements or understandings between you and
each nominee you proposed and any other person or persons under which
the nomination or nominations are to be made by you;
- any other information regarding each nominee you proposed that would
be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission; and
- the consent of each nominee to serve as a director if so elected.
The chairman of the meeting may refuse to transact any business or to
acknowledge the nomination of any person if you fail to comply with the
foregoing procedures.
You may obtain a copy of our articles of association, in which these
procedures are set forth, upon written request to Eric B. Brown, Secretary,
Transocean Sedco Forex Inc., 4 Greenway Plaza, Houston, Texas 77046.
23
Appendix A
TRANSOCEAN SEDCO FOREX
AUDIT COMMITTEE CHARTER
I. PURPOSE
The purpose of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibilities by reviewing; the Company's financial
statements contained in the annual report to stockholders; the Company's systems
of internal control regarding finance, accounting, legal compliance and ethics
that management and the Board have established; and the Company's auditing,
accounting and financial reporting processes in general. Consistent with this
oversight function, the Audit Committee should encourage continuous improvement
of and should foster adherence to the company's policies, procedures and
practices at all levels. The Audit Committee's primary duties and
responsibilities are to:
- Serve as an independent and objective party to monitor the
corporation's financial reporting process and internal control system.
- Review and appraise the audit efforts of the Company's independent
accountants and internal audit function.
- Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal auditing
department, and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall consist of at least three active members of the Board,
each of whom shall be independent directors, and free from any relationship
that, in the opinion of the Board, would interfere with the exercise of his or
her independent judgement as a member of the Committee. In no event shall an
active or retired officer or employee of the Company be a member of the
Committee.
The proposed committee members, Chairman and Secretary of the Audit Committee
shall be recommended to the Board of Directors by the Chairman of the Board. All
members of the committee shall have a working familiarity with basic finance and
accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise.
The members, Chairman and Secretary of the Committee shall be appointed annually
by the Board of Directors. Normally, each member will serve for at least three
consecutive years. The Secretary may, but need not, be a member of the
Committee.
III. MEETINGS
The Audit Committee shall meet at least three times annually, or more frequently
as circumstances dictate. As part of its responsibility to support open dialog,
the Committee should meet at least annually with management, the Director of
Internal Audit, and the independent accountants in separate executive sessions
to discuss any matters that the Committee or each of these groups believe should
be discussed privately.
IV. DUTIES AND RESPONSIBILITIES
It shall be the responsibility of the Audit Committee, under powers delegated to
it by the Board of Directors:
24
A. WITH REGARD TO THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- To review annually with Management their plans for the scope of the
accountants' activities, including the auditors' performance of
non-audit services, and expected fees to be incurred therefor, the
accountants' report of findings resulting from examination of the
Company's records and systems of internal accounting controls, and
matters affecting their independence in the performance of the audit
of Company accounts.
- To review with the Director of Internal Audit and the independent
public accountants their annual audit plans, including the degree of
coordination of the respective plans. The Committee should inquire as
to the extent to which the planned audit scope can be relied upon to
detect fraud or weaknesses in internal accounting controls.
- To have a clear understanding with the independent public accountants
that they are ultimately accountable to the Board and the Audit
Committee, as representatives of the shareholders, and that these
shareholder representatives have ultimate authority and responsibility
to engage, evaluate, and if appropriate, terminate their services. To
this end, the Committee will make recommendations to the Board of
Directors with regard to the appointment or discharge of independent
public accountants.
- On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional
services as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. In addition, review
with the independent auditors the nature and scope of any disclosed
relationships or professional services and take, or recommend that the
board of directors take, appropriate action to ensure the continuing
independence of the auditors.
- To review with the independent public accountants the cooperation
received from Management during the course of the audit and extent of
any restrictions that may have affected their examination.
B. WITH REGARD TO THE COMPANY'S FINANCIAL STATEMENTS AND FOOTNOTES, AND
INTERNAL ACCOUNTING CONTROL SYSTEMS
- To review the Annual Report and footnotes thereto prior to its
publication, and discuss with the independent public accountants any
significant transactions not a normal part of the Company's business,
significant adjustments proposed by them, and comments submitted by
the independent public accountants concerning the Company's system of
internal accounting control together with management's actions to
correct any deficiencies noted.
- To review with the independent public accountants the quality, not
just the acceptability, of the Company's accounting principles as
applied in its financial reporting in terms of clarity of disclosures,
degree of aggressiveness or conservatism of the Company's accounting
principles and underlying estimates and other significant decisions
made by the company in preparing the financial disclosures.
- To review steps taken to assure compliance with the Company's policy
regarding conflicts of interest and business ethics.
- To review transactions or relationships between the Company and any
Director, Officer, or stockholder owning more than 5% of the Company's
common stock (including any family members of the foregoing), and make
recommendation to the Board of Directors concerning whether such
relationships should continue.
25
- To ascertain that appropriate reporting of such transactions or
relationships is made to the Securities and Exchange Commission or
other regulatory agencies.
- To review the quality and depth of staffing of the Company's
financial, accounting, and internal audit personnel.
C. WITH REGARD TO THE COMPANY'S INTERNAL AUDITORS
- To review the scope of the internal auditors' activities, their report
of findings resulting from the examination of the Company's records,
operations, and systems of internal accounting controls, and matters
affecting their independence in the performance of the audit of
Company accounts, including the cooperation received from Management
during the course of any audit, and the extent of any restrictions
that may have affected their examination.
V. OTHER RESPONSIBILITIES
- To review expense accounts and executive perquisites of the Company's
senior officers.
- To review litigation involving claims of wrongdoing by shareholders or
by or against directors, officers, or independent public accountants
of the Company.
- Review and update this Charter periodically, at least annually, as
conditions dictate.
26
TRANSOCEAN SEDCO FOREX INC.
Walker House
Mary Street
P. O. Box 265 GT
George Town
Grand Cayman
Cayman Islands
P R O X Y
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, revoking any proxy heretofore given in connection with the
Annual General Meeting described below, hereby appoints J. Michael Talbert,
Robert L. Long and Eric B. Brown, and each of them, proxies, with full powers of
substitution, to represent the undersigned at the Annual General Meeting of
Transocean Sedco Forex Inc. to be held on Thursday, May 9, 2002 at 9:00 a.m., at
the Royal Pavilion Hotel, St. James, Barbados and at any adjournment thereof,
and to vote all ordinary shares that the undersigned would be entitled to vote
if personally present, as stated on the reverse side of this card.
The shares represented by this proxy will be voted as directed herein. IF
THIS PROXY IS DULY EXECUTED AND RETURNED, AND NO VOTING DIRECTIONS ARE GIVEN
HEREIN, SUCH SHARES WILL BE VOTED "FOR" ALL NOMINEES LISTED IN ITEM 1, "FOR" THE
PROPOSAL TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP AND "FOR" THE PROPOSAL
TO CHANGE THE NAME OF TRANSOCEAN SEDCO FOREX INC. TO "TRANSOCEAN INC." The
undersigned hereby acknowledges receipt of notice of, and the proxy statement
for, the aforesaid Annual General Meeting.
(Continued and to be signed and dated on the reverse side)
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES."
Item 1. Election of Directors
Nominees for the Board of Directors: Ronald L. Kuehn, Jr., Paul B.
Loyd, Jr., Roberto Monti and Ian C. Strachan
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote
for all nominees listed
[ ] FOR all nominees listed, except vote withheld for the following
nominee(s):
----------------------------------------------------------
Item 2. Approval of the appointment of Ernst & Young LLP to serve as independent
auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 3. Change of name of Transocean Sedco Forex Inc. by special resolution to
"Transocean Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
27
Change of Address and/or Comments Mark Here [ ]
Date
------------------------------------------
-----------------------------------------------
Signature
-----------------------------------------------
Signature
Sign exactly as name appears hereon. (If shares
are held in joint names, both should sign. If
signing as Attorney, Executor, Administrator,
Trustee or Guardian, please give your title as
such. If the signer is a corporation, please sign
in the full corporate name by duly authorized
officer.)
Votes must be indicated [x] in Black or Blue
Ink.
(Please sign, date and return this proxy promptly in the enclosed postage
prepaid envelope.)
28